OF SYSTEMS
OF POLITICAL ECONOMY.
Political economy,
considered as a branch
of the science
of a statesman
or legislator,
proposes two distinct objects;
first,
to provide a plentiful revenue
or subsistence
for the people,
or, more properly,
to enable them
to provide such a revenue
or subsistence
for themselves;
and, secondly,
to supply the state
or commonwealth
with a revenue sufficient
for the public services.
It proposes to enrich both
the people
and the sovereign.
The different progress
of opulence in different ages
and nations,
has given occasion
to two different systems
of political economy,
with regard to
enriching the people.
The one
may be called
the system of commerce,
the other
that of agriculture.
I shall endeavour
to explain both
as fully and distinctly
as I can,
and shall begin
with the system
of commerce.
It is the modern system,
and is best
understood
in our own country and
in our own
times.
OF THE PRINCIPLE
OF THE COMMERCIAL
OR MERCANTILE SYSTEM.
That wealth
consists in money,
or in gold and silver,
is a popular notion
which naturally arises
from the double function
of money,
as the instrument of commerce,
and as the measure of value.
In consequence of its being
the instrument of commerce,
when we
have money
we can more readily obtain
whatever else
we have
occasion for,
than by means
of any other commodity.
The great affair,
we always find,
is
to get money.
When that is obtained,
there
is no difficulty
in making
any subsequent purchase.
In consequence of its being
the measure of value,
we estimate
that of all
other commodities
by the quantity
of money which
they will exchange for.
We say of a rich man,
that he
is worth a great deal,
and of a poor man,
that he
is worth very little money.
A frugal man,
or a man eager
to be rich,
is said to love money;
and a careless,
a generous,
or a profuse man,
is said
to be indifferent about it.
To grow rich
is
to get money;
and wealth and money,
in short,
are, in common language,
considered
as
in every respect synonymous.
A rich country,
in the same manner
as a rich man,
is supposed
to be a country
abounding in money;
and to heap up gold
and silver in any country
is supposed
to be the readiest way
to enrich it.
For some time
after the discovery
of America,
the first inquiry
of the Spaniards,
when they
arrived
upon any unknown coast,
used to be,
if there was any gold
or silver
to be found
in the neighbourhood?
By the information which
they received,
they judged
whether it
was worth
while to make a settlement
there,
or if the country
was worth the conquering.
Plano Carpino,
a monk sent ambassador
from the king
of France
to one
of the sons
of the famous Gengis Khan,
says,
that the Tartars
used frequently
to ask him,
if there was plenty
of sheep and oxen
in the kingdom
of France?
Their inquiry
had the same object with
that of the Spaniards.
They wanted to know
if the country
was rich enough
to be worth the conquering.
Among the Tartars,
as among all
other nations of shepherds,
who are generally ignorant
of the use of money,
cattle
are the instruments
of commerce and
the measures of value.
Wealth,
therefore,
according to them,
consisted in cattle,
as,
according to the Spaniards,
it consisted
in gold and silver.
Of the two,
the Tartar notion,
perhaps,
was the nearest
to the truth.
Mr Locke
remarks a distinction
between money
and other moveable goods.
All other moveable goods,
he says,
are of so consumable
a nature,
that
the wealth
which consists in them
cannot be much
depended on;
and a nation
which abounds
in them one year may,
without any exportation,
but merely by their own waste
and extravagance,
be in great want
of them the next.
Money,
on the contrary,
is a steady friend,
which,
though it
may travel about
from hand to hand,
yet if it
can be kept from
going out of the country,
is not very liable
to be wasted and consumed.
Gold and silver,
therefore,
are, according to him,
the must solid
and substantial part
of the moveable wealth
of a nation;
and to multiply
those metals ought,
he thinks,
upon that account,
to be the great object
of its political economy.
Others
admit,
that if a nation
could be separated
from all the world,
it would be
of no consequence how much or
how little money circulated
in it.
The consumable goods,
which were circulated by means
of this money,
would only be exchanged
for a greater or
a smaller number of pieces;
but the real wealth or
poverty
of the country,
they allow,
would depend altogether
upon the abundance or scarcity
of those consumable goods.
But it is otherwise,
they think,
with countries which
have connections
with foreign nations,
and which
are obliged
to carry on foreign wars,
and to maintain fleets
and
armies in distant countries.
This,
they say,
cannot be done,
but by sending abroad money
to pay them with;
and
a nation
cannot send much money abroad,
unless it has
a good deal at home.
Every such nation,
therefore,
must endeavour,
in time
of peace,
to accumulate gold and silver,
that when occasion requires,
it may have wherewithal
to carry on foreign wars.
In consequence
of those popular notions,
all the different nations
of Europe
have studied,
though to little purpose,
every possible means
of accumulating gold
and silver
in their respective countries.
Spain and Portugal,
the proprietors of the principal
mines which
supply Europe
with those metals,
have either prohibited
their exportation
under the severest penalties,
or subjected it
to a considerable duty.
The like prohibition
seems anciently
to have made a part
of the policy
of most other European nations.
It
is even
to be found,
where we should least
of all
expect to find it,
in some old Scotch acts
of Parliament,
which
forbid,
under heavy penalties,
the carrying gold or silver
forth
of the kingdom.
The like policy
anciently took place both
in France and England.
When those countries
became commercial,
the merchants
found this prohibition,
upon many occasions,
extremely inconvenient.
They
could frequently buy more
advantageously
with gold and silver,
than with any other commodity,
the foreign goods which
they wanted,
either
to import into their own,
or to carry
to some other foreign country.
They remonstrated,
therefore,
against this
prohibition as hurtful
to trade.
They represented,
first,
that the exportation
of gold and silver,
in order to purchase
foreign goods,
did not always diminish
the quantity
of those metals
in the kingdom;
that,
on the contrary,
it might frequently increase
the quantity;
because,
if the consumption
of foreign
goods
was not thereby increased
in the country,
those goods
might be re-exported
to foreign countries,
and being there sold
for a large profit,
might bring
back much more treasure
than
was originally sent out
to purchase them.
Mr Mun
compares
this operation
of foreign trade
to the seed-time
and harvest of agriculture.
"If we
only behold,"
says he,
"the actions
of the husbandman
in the seed time,
when he
casteth away much good corn
into the ground,
we shall
account him
rather a madman
than a husbandman.
But when we
consider his labours
in the harvest,
which is the end
of his endeavours,
we shall find
the worth
and plentiful increase
of his actions."
They represented,
secondly,
that
this prohibition
could not hinder
the exportation
of gold and silver,
which,
on account
of the smallness
of their bulk
in proportion to their value,
could easily be smuggled abroad.
That this exportation
could only be prevented
by a proper attention to what they
called the balance of trade.
That when the country
exported
to a greater value than it
imported,
a balance
became due to it
from foreign nations,
which was necessarily paid
to it
in gold and silver,
and thereby increased
the quantity
of those metals
in the kingdom.
But that
when it imported
to a greater value than it
exported,
a contrary balance
became due to foreign nations,
which was necessarily paid
to them
in the same manner,
and thereby diminished
that quantity:
that in this case,
to prohibit the exportation
of those metals,
could not prevent it,
but only,
by making it more dangerous,
render it more expensive:
that
the exchange
was thereby turned more
against the country
which owed the balance,
than it
otherwise might have been;
the merchant
who purchased a bill
upon the foreign country
being obliged
to pay the banker
who sold it,
not
only for the natural risk,
trouble,
and expense
of sending the money
thither,
but for the extraordinary risk
arising from the prohibition;
but that the more
the exchange
was against any country,
the more
the balance
of trade
became necessarily against it;
the money of that country
becoming necessarily
of so much less value,
in comparison with
that of the country
to which the balance
was due.
That if the exchange
between England and Holland,
for example,
was five per cent.
against England,
it would require 105 ounces
of silver
in England
to purchase a bill
for 100 ounces of silver
in Holland:
that 105 ounces of silver
in England,
therefore,
would be
worth only 100 ounces
of silver
in Holland,
and would purchase only
a proportionable quantity
of Dutch goods;
but that 100 ounces of silver
in Holland,
on the contrary,
would be worth 105 ounces
in England,
and would purchase
a proportionable quantity
of English goods;
that
the English goods
which were sold to Holland
would be sold
so much cheaper,
and the Dutch goods
which were sold
to England so much dearer,
by the difference
of the exchange:
that
the one
would draw
so much less Dutch money
to England,
and the other
so much more English money
to Holland,
as this difference amounted to:
and that
the balance of trade,
therefore,
would necessarily be so much more
against England,
and would require
a greater balance
of gold and silver
to be exported to Holland.
Those arguments
were partly solid
and partly sophistical.
They
were solid,
so far
as they
asserted that the exportation
of gold and silver
in trade
might frequently be advantageous
to the country.
They
were solid, too,
in asserting
that no prohibition
could prevent their exportation,
when
private people found
any advantage
in exporting them.
But they were sophistical,
in supposing,
that either
to preserve
or to augment
the quantity of those metals
required more the attention
of government,
than
to preserve
or to augment the quantity
of any other useful commodities,
which the freedom of trade,
without any such attention,
never
fails to
supply in the proper quantity.
They
were sophistical, too,
perhaps,
in asserting
that the high price
of exchange necessarily
increased
what they
called
the unfavourable balance
of trade,
or occasioned the exportation
of a greater quantity of gold
and silver.
That high price,
indeed,
was extremely disadvantageous
to the merchants
who had any money
to pay in foreign countries.
They paid so much dearer
for the bills which
their bankers
granted them
upon those countries.
But though the risk
arising from the prohibition
might occasion some
extraordinary expense
to the bankers,
it would not necessarily carry
any more money
out of the country.
This expense
would generally be all laid out
in the country,
in smuggling the money
out of it,
and could seldom occasion
the exportation
of a single sixpence
beyond the precise sum
drawn for.
The high price
of exchange, too,
would naturally dispose
the merchants
to endeavour
to make their exports
nearly balance their imports,
in order that
they might have
this high exchange
to pay
upon as
small a sum as possible.
The high price of exchange,
besides,
must necessarily have operated
as a tax,
in raising the price
of foreign goods,
and thereby diminishing
their consumption.
It would tend,
therefore,
not to increase,
but to diminish,
what they
called
the unfavourable balance
of trade,
and consequently
the exportation
of gold and silver.
Such as they were,
however,
those arguments
convinced
the people
to whom they were addressed.
They were addressed
by merchants
to parliaments
and to the councils
of princes,
to nobles,
and to country gentlemen;
by those
who were supposed
to understand trade,
to those
who were conscious
to them selves
that
they knew nothing
about the matter.
That foreign trade
enriched the country,
experience
demonstrated
to the nobles
and country gentlemen,
as well as to the merchants;
but how,
or in what manner,
none of them well knew.
The merchants
knew perfectly
in what manner it
enriched themselves,
it was their business
to know it.
But to know in what
manner
it enriched the country,
was no part
of their business.
The subject
never came
into their consideration,
but when they had occasion
to apply
to their country
for some change
in the laws
relating to foreign trade.
It then became necessary
to say something
about the beneficial effects
of foreign trade,
and the manner
in which
those
effects
were obstructed by the laws
as they then stood.
To the judges who were
to decide the business,
it appeared
a most satisfactory account
of the matter,
when they
were told that foreign trade
brought money
into the country,
but that the laws
in question
hindered it from bringing so much as it
otherwise would do.
Those arguments,
therefore,
produced
the wished-for effect.
The prohibition
of exporting gold
and silver was,
in France and England,
confined
to the coin
of those
respective countries.
The exportation
of foreign coin
and of bullion
was made free.
In Holland,
and in some other places,
this liberty
was extended even to the coin
of the country.
The attention of government
was turned away
from guarding
against the exportation
of gold and silver,
to watch over the balance
of trade,
as the only cause
which could occasion
any augmentation
or diminution
of those metals.
From one fruitless care,
it was turned away
to another care
much more intricate,
much more
embarrassing,
and just equally fruitless.
The title of Mun's book,
England's Treasure
in Foreign Trade,
became a fundamental maxim
in the political economy,
not of England only,
but
of all other commercial countries.
The inland or home
trade,
the most important of all,
the trade
in which an equal
capital
affords the greatest revenue,
and creates
the greatest employment
to the people
of the country,
was considered as subsidiary
only to foreign trade.
It neither brought money
into the country,
it was said,
nor carried any out of it.
The country,
therefore,
could never
become either richer or poorer
by means of it,
except so far
as its prosperity or
decay
might indirectly influence
the state of foreign trade.
A country
that has no mines
of its own,
must undoubtedly draw its gold
and silver
from foreign countries,
in the same
manner as one
that has no vineyards
of its own
must draw its wines.
It does not seem necessary,
however,
that
the attention of government
should be more
turned
towards the one than
towards the other object.
A country
that has wherewithal
to buy wine,
will always get
the wine which it has
occasion for;
and a country
that has wherewithal
to buy gold and silver,
will never be in want
of those metals.
They
are to be bought
for a certain price,
like all other commodities;
and as they
are the price
of all other commodities,
so all other commodities
are the price
of those metals.
We trust,
with perfect security,
that the freedom of trade,
without any attention
of government,
will always supply us
with the wine which we
have
occasion for;
and we may trust,
with equal security,
that it
will always supply us
with all
the gold and silver which
we can afford to purchase or
to employ,
either
in circulating
our commodities or
in other uses.
The quantity
of every
commodity which
human industry can
either purchase or produce,
naturally
regulates itself
in every
country
according to
the effectual demand,
or according to
the demand of those
who are willing
to pay the whole rent,
labour,
and profits,
which must be paid
in order to
prepare and bring
it to market.
But no
commodities
regulate themselves more easily
or more exactly,
according to this
effectual demand,
than gold and silver;
because,
on account
of the small bulk
and great value
of those metals,
no commodities
can be more easily transported
from one place to another;
from the places
where they are cheap,
to those
where they are dear;
from the places where they
exceed,
to those where they
fall short
of this effectual demand.
If there were in England,
for example,
an effectual demand
for an additional quantity
of gold,
a packet-boat
could bring from Lisbon,
or from wherever else
it was to be had,
fifty tons of gold,
which could be coined
into more than five millions
of guineas.
But if
there were an effectual demand
for grain
to the same value,
to import
it would require,
at five guineas a-ton,
a million of tons
of shipping,
or a thousand ships
of a thousand tons each.
The navy of England
would not be sufficient.
When the quantity of gold
and
silver imported into any country
exceeds
the effectual demand,
no vigilance of government
can prevent
their exportation.
All the sanguinary laws
of Spain and Portugal
are not
able to keep their gold
and silver at home.
The continual importations
from Peru and Brazil
exceed the effectual demand
of those countries,
and sink the price
of those metals there below
that in the
neighbouring countries.
If,
on the contrary,
in any particular country,
their quantity fell short
of the effectual demand,
so as
to raise their price above
that of the
neighbouring countries,
the government
would have no occasion
to take any pains
to import them.
If it were even
to take pains
to prevent their importation,
it would not be able
to effectuate it.
Those metals,
when the Spartans
had got wherewithal
to purchase them,
broke through all
the barriers which
the laws of Lycurgus
opposed
to their entrance
into Lacedaemon.
All the sanguinary laws
of the customs
are not
able
to prevent the importation
of the teas
of the Dutch
and
Gottenburg East India companies;
because
somewhat cheaper than those
of the British company.
A pound of tea,
however,
is about a hundred times
the bulk
of one of the highest prices,
sixteen shillings,
that is commonly paid
for it in silver,
and more than two thousand
times the bulk
of the same price
in gold,
and, consequently,
just
so many times more difficult
to smuggle.
It is partly owing
to the easy transportation
of gold and silver,
from the places where they
abound to those
where they are wanted,
that
the price of those metals
does not fluctuate continually,
like that
of the greater part
of other commodities,
which are hindered
by their bulk
from shifting their situation,
when
the market happens
to be either
over or under-stocked
with them.
The price of those metals,
indeed,
is not altogether exempted
from variation;
but the changes to which it
is liable
are generally slow,
gradual,
and uniform.
In Europe,
for example,
it is supposed,
without much foundation,
perhaps,
that during the course
of the present
and preceding century,
they have been constantly,
but gradually,
sinking in their value,
on account
of the continual importations
from the Spanish West Indies.
But to make any sudden change
in the price
of gold and silver,
so as to raise
or lower at once,
sensibly and remarkably,
the money price
of all other commodities,
requires such
a revolution
in commerce
as that occasioned
by the discovery
of America.
If,
not withstanding all this,
gold and silver
should at any time
fall short
in a country
which has wherewithal
to purchase them,
there
are more expedients
for supplying their place,
than that
of almost any other commodity.
If the materials
of manufacture
are wanted,
industry
must stop.
If provisions are wanted,
the people
must starve.
But if money is wanted,
barter
will supply its place,
though
with a good deal
of inconveniency.
Buying and selling
upon credit,
and the different dealers
compensating their credits
with one another,
once a-month,
or once a-year,
will supply it
with less inconveniency.
A well-regulated paper-money
will supply it not
only without any inconveniency,
but,
in some cases,
with some advantages.
Upon every account,
therefore,
the attention of government
never was so
unnecessarily employed,
as
when directed
to watch over the preservation
or increase
of the quantity
of money in any country.
No complaint,
however,
is more common than
that of a scarcity of money.
Money,
like wine,
must always be scarce
with those
who have neither wherewithal
to buy it,
nor credit
to borrow it.
Those who have either,
will seldom be in want either
of the money,
or of the wine which they
have
occasion for.
This complaint,
however,
of the scarcity of money,
is not always confined
to improvident spendthrifts.
It is sometimes general
through a whole mercantile town
and
the country
in its neighbourhood.
Over-trading
is the common cause of it.
Sober men,
whose projects
have been disproportioned
to their capitals,
are as likely to have
neither wherewithal
to buy money,
nor credit
to borrow it,
as prodigals,
whose expense
has been disproportioned
to their revenue.
Before their projects
can be brought
to bear,
their stock
is gone,
and their credit with it.
They run about everywhere
to borrow money,
and everybody
tells them that they
have none
to lend.
Even such general complaints
of the scarcity of money
do not always prove
that the usual number
of gold
and silver pieces
are not circulating
in the country,
but that many people want
those pieces
who have nothing
to give for them.
When the profits of trade
happen
to be
greater than ordinary over-trading
becomes a general error,
both among great
and small dealers.
They do not always send
more money
abroad than usual,
but they buy upon credit,
both at home and abroad,
an unusual quantity of goods,
which
they send
to some distant market,
in hopes
that the returns
will come in
before the demand
for payment.
The demand
comes before the returns,
and they have nothing at hand
with which they
can either purchase money
or give solid security
for borrowing.
It is not any scarcity
of gold and silver,
but
the difficulty
which such people find
in borrowing,
and which their creditor find
in getting payment,
that occasions the general
complaint
of the scarcity of money.
It would be too ridiculous
to go about seriously
to prove,
that wealth
does not consist in money,
or in gold and silver;
but in what money purchases,
and is valuable
only for purchasing.
Money,
no doubt,
makes always
a part
of the national capital;
but it
has already been
shown that
it generally makes
but a small part,
and always
the most unprofitable part
of it.
It is not
because wealth
consists more essentially
in money than
in goods,
that the merchant finds it
generally more easy
to buy goods with money,
than
to buy money with goods;
but because money is
the known
and established instrument
of commerce,
for which
every thing
is readily given in exchange,
but which is not always
with equal readiness
to be got
in exchange for every thing.
The greater part of goods,
besides,
are more perishable
than money,
and he
may frequently sustain
a much greater loss
by keeping them.
When
his goods
are upon hand, too,
he is more liable
to such demands for money
as he
may not be able
to answer,
than when he has
got their price
in his coffers.
Over and above all this,
his profit
arises more directly
from selling than
from buying;
and he is,
upon all these accounts,
generally much more anxious
to exchange his goods
for money
than his money for goods.
But though
a particular merchant,
with abundance
of goods in his warehouse,
may sometimes be ruined
by not being able
to sell them in time,
a nation or country
is not liable
to the same accident,
The whole capital
of a merchant
frequently consists
in perishable goods
destined for purchasing money.
But it
is but a very small part
of the annual produce
of the land
and labour of a country,
which can ever be destined
for purchasing gold and silver
from their neighbours.
The far greater part
is circulated
and consumed among themselves;
and even of the surplus
which is sent abroad,
the greater part
is generally destined
for the purchase
of other foreign goods.
Though gold and silver,
therefore,
could not be had
in exchange for the goods
destined
to purchase them,
the nation
would not be ruined.
It might,
indeed,
suffer some loss
and inconveniency,
and be forced
upon some of those expedients
which are necessary
for supplying
the place of money.
The annual produce
of its land
and labour,
however,
would be the same,
or very nearly
the same as usual;
because the same,
or very nearly
the same consumable capital
would be employed
in maintaining it.
And though goods
do not always draw money so readily as
money draws goods,
in the long-run
they draw
it more necessarily than even
it draws them.
Goods
can serve many other purposes
besides purchasing money,
but money
can serve no other purpose
besides purchasing goods.
Money,
therefore,
necessarily runs after goods,
but goods
do not always
or necessarily run
after money.
The man who buys,
does not always mean
to sell
again,
but frequently to use or
to consume;
whereas
he who
sells always means to buy
again.
The one
may frequently have done
the whole,
but the other
can never have done
more than the one half
of his business.
It is not
for its own sake
that men desire money,
but for the sake of what
they
can purchase with it.
Consumable commodities,
it is said,
are soon destroyed;
whereas gold and silver
are of a more durable nature,
and were it
not for this
continual exportation,
might be accumulated
for ages
together,
to the incredible augmentation
of the real wealth
of the country.
Nothing,
therefore,
it is pretended,
can be more disadvantageous
to any country,
than the trade
which consists
in the exchange
of such lasting
for such perishable commodities.
We do not,
however,
reckon that trade
disadvantageous,
which consists
in the exchange
of the hardware
of England
for the wines of France,
and yet hardware
is a very durable commodity,
and were it
not for this
continual exportation,
might too be accumulated
for ages together,
to the incredible augmentation
of the pots
and pans of the country.
But it readily occurs,
that the number of such
utensils
is in every country
necessarily limited
by the use
which there is for them;
that
it would be absurd
to have more pots
and pans than
were necessary
for cooking
the victuals
usually consumed there;
and that,
if the quantity of victuals
were to increase,
the number of pots and pans
would readily increase along
with it;
a part
of the increased quantity
of victuals
being employed
in purchasing them,
or in maintaining
an additional number
of workmen
whose business
it was to make them.
It should as readily occur,
that
the quantity of gold and silver is,
in every country,
limited
by the use
which there is
for those metals;
that their use
consists
in circulating commodities,
as coin,
and in affording
a species
of household furniture,
as plate;
that the quantity
of coin in every country
is regulated
by the value
of the commodities
which
are to be circulated by it;
increase that value,
and immediately
a part of it
will be sent abroad
to purchase,
wherever
it is to be had,
the additional quantity
of coin requisite
for circulating them:
that the quantity of plate
is regulated
by the number and wealth
of those
private families
who choose
to indulge themselves
in that sort
of magnificence;
increase the number and wealth
of such families,
and a part of this
increased wealth
will most probably be employed
in purchasing,
wherever
it is to be found,
an additional quantity
of plate;
that
to attempt
to increase the wealth
of any country,
either
by introducing
or by detaining
in it an unnecessary quantity
of gold and silver,
is as absurd
as it
would be
to attempt
to increase the good cheer
of private families,
by obliging them
to keep an unnecessary number
of kitchen utensils.
As the expense of purchasing
those unnecessary utensils
would diminish,
instead of increasing,
either the quantity
or goodness
of the family provisions;
so the expense of purchasing
an unnecessary quantity
of gold and silver must,
in every country,
as necessarily diminish
the wealth which feeds,
clothes,
and lodges,
which maintains
and employs the people.
Gold and silver,
whether in the shape
of coin or of plate,
are utensils,
it must be remembered,
as much as the furniture
of the kitchen.
Increase the use of them,
increase
the consumable commodities
which are to be circulated,
managed,
and prepared by means
of them,
and you
will infallibly increase
the quantity;
but if you
attempt by extraordinary means
to increase the quantity,
you will as
infallibly diminish the use,
and even the quantity too,
which in those metals
can never be greater than
what the use requires.
Were they
ever to be accumulated
beyond this quantity,
their transportation
is so easy,
and the loss
which attends
their lying idle
and unemployed so great,
that no law could prevent
their being immediately sent
out of the country.
It is not always necessary
to accumulate gold and silver,
in order to
enable a country
to carry on foreign wars,
and to maintain fleets
and
armies in distant countries.
Fleets and armies
are maintained,
not with gold and silver,
but with consumable goods.
The nation which,
from the annual produce
of its domestic industry,
from the annual revenue
arising out of its lands,
and labour,
and consumable stock,
has wherewithal
to purchase
those consumable goods in
distant countries,
can maintain foreign wars
there.
A nation
may purchase the pay
and provisions
of an army in a
distant country
three different ways;
by sending abroad either,
first,
some part
of its accumulated gold
and silver;
or, secondly,
some part
of the annual produce
of its manufactures;
or, last of all,
some part
of its annual rude produce.
The gold and silver which
can properly be considered as
accumulated,
or stored up in any country,
may be distinguished
into three parts;
first,
the circulating money;
secondly,
the plate of private families;
and, last of all,
the money
which may have been collected
by many years parsimony,
and laid up
in the treasury
of the prince.
It can seldom happen
that much
can be spared
from the circulating money
of the country;
because in that
there can seldom be
much redundancy.
The value
of goods annually bought
and sold in any country
requires
a certain quantity
of money
to circulate
and distribute them
to their proper consumers,
and can give employment
to no more.
The channel of circulation
necessarily draws
to itself a sum sufficient
to fill it,
and never admits any more.
Something,
however,
is generally withdrawn
from this channel
in the case of foreign war.
By the great number
of people
who are maintained abroad,
fewer
are maintained at home.
Fewer goods
are circulated there,
and less money
becomes necessary
to circulate them.
An extraordinary quantity
of paper money
of some sort or other, too,
such as exchequer notes,
navy bills,
and bank bills,
in England,
is generally issued
upon such occasions,
and,
by supplying the place
of circulating gold and silver,
gives an opportunity
of sending a greater quantity
of it abroad.
All this,
however,
could afford
but
a poor resource for maintaining
a foreign war,
of great expense,
and several years duration.
The melting down
of the plate of private
families has,
upon every occasion,
been found
a still more insignificant one.
The French,
in the beginning
of the last war,
did not derive
so much advantage
from this expedient as
to compensate the loss
of the fashion.
The accumulated treasures
of the prince
have in former times
afforded
a much greater
and more lasting resource.
In the present times,
if you except the king
of Prussia,
to accumulate treasure
seems to be no part
of the policy
of European princes.
The funds
which maintained
the foreign wars
of the present century,
the most expensive
perhaps which history records,
seem to have had
little dependency
upon the exportation either
of the circulating money,
or of the plate
of private families,
or of the treasure
of the prince.
The last
French war cost Great Britain
upwards of £90,000,000,
including not only
the £75,000,000 of new debt
that was contracted,
but the additional 2s
in the pound land-tax,
and what
was annually borrowed
of the sinking fund.
More than two-thirds
of this expense
were laid out
in distant countries;
in Germany,
Portugal,
America,
in the ports
of the Mediterranean,
in the East and West Indies.
The kings of England
had no accumulated treasure.
We never heard
of any extraordinary quantity
of plate
being melted down.
The circulating gold
and silver
of the country
had not been supposed
to exceed £18,000,000.
Since the late recoinage
of the gold,
however,
it is believed
to have been a good deal
under-rated.
Let us
suppose,
therefore,
according to
the most exaggerated
computation which
I remember
to have either
seen or heard of,
that,
gold and silver together,
it amounted to £30,000,000.
Had the war
been carried on by means
of our money,
the whole of it must,
even according to this
computation,
have been sent out
and returned again,
at least
twice in a period of
between six and seven years.
Should
this be supposed,
it would afford
the most decisive argument,
to demonstrate how
unnecessary it
is for government
to watch over the preservation
of money,
since,
upon this supposition,
the whole money
of the country
must have gone from it,
and returned to it again,
two different
times in so short a period,
without
any body's knowing any thing
of the matter.
The channel of circulation,
however,
never
appeared more empty than usual
during any part
of this period.
Few people wanted money
who had wherewithal
to pay for it.
The profits of foreign trade,
indeed,
were greater than usual
during the whole war,
but especially towards the end
of it.
This
occasioned,
what it always occasions,
a general over-trading
in all
the ports of Great Britain;
and this
again occasioned
the usual complaint
of the scarcity of money,
which always follows
over-trading.
Many people wanted it,
who had neither wherewithal
to buy it,
nor credit
to borrow it;
and because the debtors
found it difficult
to borrow,
the creditors
found it difficult
to get payment.
Gold and silver,
however,
were generally
to be had for their value,
by those
who had that value
to give for them.
The enormous expense
of the late war,
therefore,
must have been chiefly defrayed,
not by the exportation
of gold and silver,
but by
that of British commodities
of some kind or other.
When the government,
or those
who acted under them,
contracted
with a merchant
for a remittance
to some foreign country,
he would naturally endeavour
to pay
his foreign correspondent,
upon whom
he granted a bill,
by sending abroad
rather commodities
than gold and silver.
If the commodities
of Great Britain
were not in demand in
that country,
he would endeavour
to send them
to some other country
in which he
could purchase a bill upon
that country.
The transportation
of commodities,
when properly suited
to the market,
is always attended
with a considerable profit;
whereas
that of gold and silver
is scarce ever attended
with any.
When
those metals
are sent abroad
in order to purchase
foreign commodities,
the merchant's profit
arises,
not from the purchase,
but from the sale
of the returns.
But when they
are sent abroad merely
to pay a debt,
he gets no returns,
and consequently no profit.
He naturally,
therefore,
exerts his invention
to find out a way
of paying his foreign debts,
rather
by the exportation
of commodities,
than by
that of gold and silver.
The great quantity
of British goods,
exported
during the course
of the late war,
without bringing back
any returns,
is accordingly remarked
by the author
of the Present State
of the Nation.
Besides the three sorts
of gold
and silver above mentioned,
there
is
in all great commercial countries
a good deal
of bullion alternately imported
and exported,
for the purposes
of foreign trade.
This bullion,
as it circulates
among different commercial countries,
in the same manner
as the national coin
circulates in every country,
may be considered
as the money
of the great mercantile republic.
The national coin
receives
its movement and
direction from the commodities
circulated
within the precincts
of each particular country;
the money
in the mercantile republic,
from those
circulated
between different countries.
Both
are employed
in facilitating exchanges,
the one
between different individuals
of the same,
the other
between those
of different nations.
Part of this money
of the great mercantile republic
may have been,
and probably was,
employed in carrying
on the late war.
In time
of a general war,
it is natural
to suppose
that a movement and direction
should be impressed upon it,
different from what
it usually follows
in profound peace,
that
it should circulate more
about the seat
of the war,
and be more
employed
in purchasing there,
and in the
neighbouring countries,
the pay and provisions
of the different armies.
But whatever
part of this
money
of the mercantile republic
Great Britain
may have annually employed
in this manner,
it must have
been annually purchased,
either
with British commodities,
or with something else
that had been purchased
with them;
which still brings us back
to commodities,
to the annual produce
of the land
and labour of the country,
as the ultimate resources
which enabled us
to carry on the war.
It is natural,
indeed,
to suppose,
that so great
an annual expense
must have been defrayed
from a great annual produce.
The expense of 1761,
for example,
amounted
to more than £19,000,000.
No
accumulation could have supported
so great an annual profusion.
There
is no annual produce,
even of gold and silver,
which could have supported it.
The whole gold and silver
annually imported
into both Spain and Portugal,
according to
the best accounts,
does not commonly much
exceed £6,000,000 sterling,
which,
in some years,
would scarce
have paid four months expense
of the late war.
The commodities most proper
for being transported
to distant countries,
in order to purchase
there either the pay
and provisions
of an army,
or some part
of the money
of the mercantile republic
to be employed
in purchasing them,
seem
to be the finer and more
improved
manufactures;
such as
contain a great value
in a small bulk,
and can
therefore
be exported
to a great distance
at little expense.
A country
whose industry
produces
a great annual surplus
of such
manufactures,
which are usually exported
to foreign countries,
may carry on
for many years
a very expensive foreign war,
without either
exporting
any considerable quantity
of gold and silver,
or even having
any such quantity
to export.
A considerable part
of the annual surplus
of its manufactures must,
indeed,
in this case,
be exported
without bringing back
any returns to the country,
though it
does to the merchant;
the government purchasing
of the merchant his bills
upon foreign countries,
in order to purchase
there the pay and provisions
of an army.
Some part of this surplus,
however,
may still continue
to bring back
a return.
The manufacturers during;
the war
will have
a double demand upon them,
and be called upon first
to work up goods
to be sent abroad,
for paying
the bills
drawn upon foreign countries
for the pay and provisions
of the army:
and, secondly,
to work up such as
are necessary
for purchasing
the common
returns
that had usually been consumed
in the country.
In the midst
of the most
destructive foreign war,
therefore,
the greater part of
manufactures
may frequently flourish greatly;
and, on the contrary,
they may decline
on the return of peace.
They
may flourish amidst the ruin
of their country,
and begin
to decay
upon the return
of its prosperity.
The different state
of many different branches
of the British
manufactures during the late war,
and for some time
after the peace,
may serve
as an illustration of
what
has been just now said.
No foreign war,
of great expense or duration,
could conveniently be carried on
by the exportation
of the rude produce
of the soil.
The expense
of sending such a quantity
of it
into a foreign country as
might purchase
the pay and
provisions of an army
would be too great.
Few countries, too,
produce
much more rude produce than what
is sufficient
for the subsistence
of their own inhabitants.
To send abroad
any great quantity
of it,
therefore,
would be
to send abroad a part
of the necessary subsistence
of the people.
It is otherwise
with the exportation of
manufactures.
The maintenance of the people
employed in them
is kept at home,
and only
the surplus part
of their work
is exported.
Mr Hume
frequently takes notice
of the inability
of the ancient kings
of England to carry on,
without interruption,
any foreign war
of long duration.
The English in those days
had nothing wherewithal
to purchase the pay
and provisions
of their
armies in foreign countries,
but either
the rude produce of the soil,
of which no considerable part
could be spared
from the home consumption,
or a few
manufactures
of the coarsest kind,
of which,
as
well as of the rude produce,
the transportation
was too expensive.
This inability
did not arise from the want
of money,
but of the finer and more
improved
manufactures.
Buying and selling
was transacted by means
of money
in England
then as well as now.
The quantity
of circulating money
must have borne
the same proportion,
to the number
and value
of purchases
and sales usually transacted
at that time,
which it
does to those
transacted at present;
or, rather,
it must have borne a greater
proportion,
because
there was then no paper,
which now occupies
a great part
of the employment
of gold and silver.
Among nations to whom commerce
and manufactures
are little known,
the sovereign,
upon extraordinary occasions,
can seldom draw
any considerable aid
from his subjects,
for reasons
which shall be explained
hereafter.
It is in such countries,
therefore,
that he generally endeavours
to accumulate a treasure,
as
the only resource
against such emergencies.
Independent of this necessity,
he is,
in such a situation,
naturally
disposed
to the parsimony requisite
for accumulation.
In that simple state,
the expense
even of a sovereign
is not directed by the vanity
which delights in
the gaudy finery
of a court,
but is employed in bounty
to his tenants,
and hospitality
to his retainers.
But bounty and hospitality
very seldom lead
to extravagance;
though vanity almost
always does.
Every Tartar chief,
accordingly,
has a treasure.
The treasures of Mazepa,
chief
of the Cossacks
in the Ukraine,
the famous
ally of Charles XII.,
are said
to have been very great.
The French kings
of the Merovingian race
had all treasures.
When they
divided their kingdom
among their different children,
they divided
their treasures too.
The Saxon princes,
and the first kings
after the Conquest,
seem likewise
to have accumulated
treasures.
The first
exploit of every new reign
was commonly
to seize the treasure
of the preceding king,
as
the most essential measure
for securing
the succession.
The sovereigns of improved
and commercial countries
are not
under the same necessity
of accumulating treasures,
because
they can generally draw
from their subjects
extraordinary aids
upon extraordinary occasions.
They
are likewise less
disposed
to do so.
They naturally,
perhaps necessarily,
follow the mode of the times;
and their expense
comes
to be regulated
by the same
extravagant vanity which
directs that of all
the other great proprietors
in their dominions.
The insignificant pageantry
of their court
becomes
every day more brilliant;
and the expense of it not
only prevents accumulation,
but frequently encroaches upon
the funds
destined
for more necessary expenses.
What Dercyllidas
said of the court of Persia,
may be applied to
that of several European princes,
that
he saw there much splendour,
but little strength,
and many servants,
but few soldiers.
The importation
of gold and silver
is not the principal,
much less the sole benefit,
which
a nation
derives
from its foreign trade.
Between
whatever places foreign trade
is carried on,
they all of them
derive two distinct benefits
from it.
It carries out
that surplus part
of the produce
of their land
and labour for which
there is no demand
among them,
and brings back
in return
for it something else
for which
there is a demand.
It gives a value
to their superfluities,
by exchanging them
for something else,
which may satisfy a part
of their wants
and increase
their enjoyments.
By means of it,
the narrowness
of the home market
does not hinder the division
of labour in
any particular branch
of art or manufacture from
being carried
to the highest perfection.
By opening
a more extensive market
for whatever
part of the produce
of their labour
may exceed
the home consumption,
it encourages them
to improve
its productive power,
and to augment
its annual produce
to the utmost,
and thereby to increase
the real revenue
and wealth
of the society.
These great and important services
foreign trade
is continually occupied
in performing to all
the different countries
between which
it is carried on.
They all
derive great benefit from it,
though that
in which the merchant
resides generally
derives the greatest,
as he
is generally more
employed
in supplying the wants,
and carrying
out the superfluities
of his own,
than of any
other particular country.
To import the gold
and silver which
may be wanted
into the countries
which
have no mines,
is, no doubt a part
of the business
of foreign commerce.
It is,
however,
a most insignificant part
of it.
A country
which carried
on foreign trade merely
upon this account,
could scarce
have occasion to freight
a ship in a century.
It is not
by the importation
of gold and silver
that
the discovery of America
has enriched Europe.
By the abundance
of the American mines,
those metals
have become cheaper.
A service of plate
can now be purchased for
about a third part
of the corn,
or a third part
of the labour,
which
it would have cost
in the fifteenth century.
With the same annual expense
of labour and commodities,
Europe
can annually purchase
about three
times the quantity
of plate which
it could have purchased
at that time.
But when a commodity
comes to be sold
for a third part
of what bad
been its usual price,
not only
those who purchased it
before can purchase
three times
their former quantity,
but it
is brought down
to the level
of a much greater number
of purchasers,
perhaps to more than ten,
perhaps to more than
twenty times
the former number.
So that
there may be
in Europe at present,
not
only more than three times,
but more than twenty or
thirty
times the quantity of plate
which would have been in it,
even in its present state
of improvement,
had the discovery
of the American
mines never been made.
So far Europe has,
no doubt,
gained a real conveniency,
though
surely a very trifling one.
The cheapness
of gold and silver
renders
those metals rather less fit
for the purposes
of money
than they were before.
In order to make
the same purchases,
we must load ourselves
with a greater quantity
of them,
and carry
about a shilling
in our pocket,
where
a groat
would have done before.
It is difficult
to say
which is most trifling,
this inconveniency,
or the opposite conveniency.
Neither the one nor the other
could have made
any very essential change
in the state of Europe.
The discovery of America,
however,
certainly
made a most essential one.
By opening
a new and inexhaustible market
to all
the commodities of Europe,
it gave occasion
to new divisions
of labour and improvements
of art,
which
in the narrow circle
of the ancient commerce
could never have taken place,
for want
of a market
to take off the greater part
of their produce.
The productive powers
of labour
were improved,
and its produce
increased in all
the different countries
of Europe,
and together with it
the real revenue
and wealth
of the inhabitants.
The commodities of Europe
were almost all new
to America,
and many of those
of America
were new to Europe.
A new set of exchanges,
therefore,
began to take place,
which had never been
thought of before,
and which
should naturally have proved
as advantageous
to the new,
as it
certainly did
to the old continent.
The savage injustice
of the Europeans
rendered an event,
which ought to have been
beneficial
to all,
ruinous and destructive
to several
of those
unfortunate countries.
The discovery
of a passage
to the East Indies
by the Cape of Good Hope,
which happened much
about the same time,
opened perhaps
a still more extensive range
to foreign commerce,
than
even that of America,
notwithstanding
the greater distance.
There
were but two nations
in America,
in any respect,
superior to the savages,
and these
were destroyed almost
as soon as discovered.
The rest
were mere savages.
But the empires of China,
Indostan,
Japan,
as well as several others
in the East Indies,
without having richer mines
of gold or silver,
were, in every other respect,
much richer,
better
cultivated,
and more advanced
in all arts
and manufactures,
than either Mexico or Peru,
even though we should credit,
what plainly deserves
no credit,
the exaggerated accounts
of the Spanish writers
concerning the ancient state
of those empires.
But rich and civilized nations
can always exchange
to a much greater value
with one another,
than
with savages and barbarians.
Europe,
however,
has hitherto derived
much less advantage
from its commerce
with the East Indies,
than from that with America.
The Portuguese
monopolized
the East India trade
to themselves for
about a century;
and it was only indirectly,
and through them,
that
the other
nations of Europe could
either
send out or receive
any goods from that country.
When the Dutch,
in the beginning of the last
century,
began to encroach upon them,
they vested
their whole East India commerce
in an exclusive company.
The English,
French,
Swedes,
and Danes,
have all followed their example;
so that no great nation
of Europe
has ever yet had the benefit
of a free commerce
to the East Indies.
No other reason
need be assigned why
it
has never been so advantageous
as the trade to America,
which,
between almost every nation
of Europe
and its own colonies,
is free to all its subjects.
The exclusive privileges
of those East India companies,
their great riches,
the great favour
and protection which these
have procured them
from their respective governments,
have excited
much envy against them.
This envy
has frequently represented
their trade
as altogether pernicious,
on account
of the great quantities
of silver which it
every year exports
from the countries from which
it is carried on.
The parties
concerned
have replied,
that their trade by this
continual exportation
of silver,
might indeed tend
to impoverish Europe
in general,
but not the particular country
from which
it was carried on;
because,
by the exportation
of a part
of the returns
to other European countries,
it annually brought
home a much greater quantity
of
that metal than it
carried out.
Both
the objection and the reply
are founded
in the popular notion which
I
have been just now examining.
It is therefore unnecessary
to say
any thing further
about either.
By the annual exportation
of silver
to the East Indies,
plate
is probably somewhat dearer
in Europe than it
otherwise might have been;
and coined silver
probably purchases
a larger quantity
both
of labour and commodities.
The former
of these two effects
is a very small loss,
the latter
a very small advantage;
both too insignificant
to deserve any part
of the public attention.
The trade to the East Indies,
by opening a market
to the commodities of Europe,
or,
what comes nearly
to the same thing,
to the gold and silver which
is purchased
with those commodities,
must necessarily tend
to increase
the annual production
of European commodities,
and consequently
the real wealth
and revenue
of Europe.
That
it has hitherto increased them
so little,
is probably owing
to the restraints which
it
everywhere labours under.
I thought it necessary,
though at the hazard
of being tedious,
to examine
at full
length this popular notion,
that wealth
consists
in money
or in gold and silver.
Money,
in common language,
as I have already observed,
frequently
signifies wealth;
and this
ambiguity of expression
has rendered
this
popular notion so familiar
to us,
that even
they
who are convinced
of its absurdity,
are very apt
to forget
their own principles,
and,
in the course
of their reasonings,
to take
it for granted
as a
certain and undeniable
truth.
Some of the best English writers
upon commerce
set out with observing,
that the wealth of a country
consists,
not in its gold
and silver only,
but in its lands,
houses,
and consumable goods
of all different kinds.
In the course
of their reasonings,
however,
the lands,
houses,
and consumable goods,
seem to slip
out of their memory;
and the strain
of their argument
frequently supposes
that all wealth
consists in gold and silver,
and that
to multiply those metals
is the great object
of national industry
and commerce.
The two principles
being established,
however,
that wealth
consisted in gold and silver,
and that those metals
could be brought
into a country
which had no mines,
only by the balance
of trade,
or by exporting
to a greater value than it
imported;
it necessarily became
the great object
of political economy
to diminish
as much as
possible the importation
of foreign goods
for home consumption,
and to increase
as much as
possible the exportation
of the produce
of domestic industry.
Its two great engines
for enriching the country,
therefore,
were restraints
upon importation,
and encouragement
to exportation.
The restraints
upon importation
were of two kinds.
First,
restraints
upon the importation
of such foreign goods
for home consumption
as could be produced at home,
from whatever country
they were imported.
Secondly,
restraints
upon the importation
of goods of almost all kinds,
from those
particular countries
with which the balance
of trade
was supposed
to be disadvantageous.
Those different restraints
consisted sometimes
in high duties,
and sometimes in absolute
prohibitions.
Exportation
was encouraged sometimes
by drawbacks,
sometimes by bounties,
sometimes by
advantageous treaties
of commerce
with foreign states,
and sometimes by the establishment
of colonies
in distant countries.
Drawbacks
were given
upon two different occasions.
When the home manufactures
were
subject to any duty or excise,
either
the whole or a part
of it
was frequently drawn back
upon their exportation;
and when foreign goods liable
to a duty
were imported,
in order to
be exported again,
either
the whole or a part
of this
duty
was sometimes given back
upon such exportation.
Bounties
were given
for the encouragement,
either of some
beginning
manufactures,
or of such sorts
of industry of other kinds
as were supposed
to deserve
particular favour.
By advantageous treaties
of commerce,
particular
privileges
were procured
in some foreign state
for the goods and merchants
of the country,
beyond
what were granted to those
of other countries.
By the establishment
of colonies
in distant countries,
not
only particular privileges,
but a monopoly
was frequently procured
for the goods
and merchants of the country
which established them.
The two sorts
of restraints
upon importation above mentioned,
together with these
four encouragements
to exportation,
constitute
the six principal means
by which the commercial system
proposes
to increase the quantity
of gold
and silver in any country,
by turning the balance
of trade in its favour.
I shall consider each of them
in a particular chapter,
and,
without taking much farther notice
of their supposed tendency
to bring money
into the country,
I shall examine chiefly
what
are likely
to be the effects of each
of them
upon the annual produce
of its industry.
According as they
tend either to increase
or diminish the value
of this annual produce,
they
must evidently tend either
to increase
or diminish the real wealth
and revenue
of the country.
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.
OF THE EXTRAORDINARY RESTRAINTS
UPON THE IMPORTATION
OF GOODS OF ALMOST ALL KINDS,
FROM THOSE COUNTRIES
WITH WHICH
THE BALANCE
IS SUPPOSED
TO BE DISADVANTAGEOUS.
Of the Unreasonableness
of those Restraints,
even upon the- Principles
of the Commercial System.
To lay extraordinary restraints
upon the importation
of goods of almost all kinds,
from those
particular countries
with which the balance
of trade
is supposed
to be disadvantageous,
is
the second expedient
by which the commercial system
proposes
to increase the quantity
of gold and silver.
Thus,
in Great Britain,
Silesia lawns
may be imported
for home consumption,
upon paying certain duties;
but French cambrics
and lawns
are prohibited
to be imported,
except
into the port of London,
there
to be warehoused
for exportation.
Higher duties
are imposed
upon the wines
of France than upon those
of Portugal,
or indeed of any other country.
By
what is called
the impost 1692,
a duty
of five and-twenty
per cent. of the rate
or value,
was laid
upon all French goods;
while the goods of other
nations were,
the greater part of them,
subjected to much lighter duties,
seldom exceeding
five per cent.
The wine,
brandy,
salt,
and vinegar of France,
were indeed excepted;
these commodities
being subjected
to other heavy duties,
either by other laws,
or by particular clauses
of the same law.
In 1696,
a second duty
of twenty-five per
cent. the first
not having been thought
a sufficient discouragement,
was imposed
upon all French goods,
except brandy;
together
with a new duty
of five-and-twenty pounds
upon the ton of French wine,
and another
of fifteen pounds
upon the ton
of French vinegar.
French goods
have never been
omitted in any
of those general subsidies
or duties
of five per cent. which
have been imposed upon all,
or the greater part,
of the goods
enumerated
in the book of rates.
If we
count the one-third
and two-third subsidies
as making a complete subsidy
between them,
there
have been five
of these general subsidies;
so that,
before the commencement
of the present war,
seventy-five per cent.
may be considered
as the lowest duty
to which the greater part
of the goods
of the growth,
produce,
or manufacture of France,
were liable.
But upon the greater part
of goods,
those duties
are equivalent
to a prohibition. T
he French,
in their turn,
have,
I believe,
treated our goods
and manufactures just as hardly;
though I
am not so well acquainted
with the particular hardships
which they
have imposed upon them.
Those mutual restraints
have put an end
to almost all fair commerce
between the two nations;
and smugglers
are now
the principal importers,
either
of British goods into France,
or of French goods
into Great Britain.
The principles which
I have been examining,
in the foregoing chapter,
took their origin
from private interest and
the spirit of monopoly;
those which
I am going te
examine in this,
from national prejudice
and animosity.
They are,
accordingly,
as might well be expected,
still more unreasonable.
They
are so,
even upon the principles
of the commercial system.
First,
Though it
were certain
that in the case
of a free trade
between France and England,
for example,
the balance
would be in favour
of France,
it would by no means
follow that such
a trade
would be disadvantageous
to England,
or that
the general balance
of its whole trade
would thereby be turned more
against it.
If the wines of France
are better and cheaper
than those
of Portugal,
or its linens than those
of Germany,
it would be more advantageous
for Great Britain
to purchase both
the wine
and the foreign linen
which it
had occasion for
of France,
than of Portugal and Germany.
Though
the value
of the annual importations
from France
would thereby be greatly augmented,
the value
of the whole annual importations
would be diminished,
in proportion
as the French goods
of the same quality
were cheaper than those
of the other two countries.
This
would be the case,
even upon the supposition
that
the whole French goods
imported
were to be consumed
in Great Britain.
But,
Secondly,
A great part of them
might be re-exported
to other countries,
where,
being sold with profit,
they
might bring back a return,
equal in value,
perhaps,
to the prime cost
of the whole French goods
imported.
What has frequently been
said of the East India trade,
might possibly be true
of the French;
that
though the greater part
of East India goods
were bought
with gold and silver,
the re-exportation
of a part
of them to other countries
brought
back more gold and silver to
that which carried
on the trade,
than the prime cost
of the whole amounted to.
One
of the most important branches
of the Dutch trade
at present,
consists
in the carriage
of French goods
to other European countries.
Some part even
of the French wine
drank in Great Britain,
is clandestinely imported
from Holland and Zealand.
If there was either
a free trade
between France and England,
or if French goods
could be imported
upon paying only
the same duties
as those
of other European nations,
to be drawn back
upon exportation,
England
might have
some share
of a trade
which is found so advantageous
to Holland.
Thirdly,
and lastly,
There
is no certain criterion
by which we
can determine on which side
what is called the balance
between any
two countries lies,
or which
of them
exports
to the greatest value.
National prejudice
and animosity,
prompted always
by the private interest
of particular traders,
are the principles which
generally direct
our judgment upon all
questions concerning it.
There
are two criterions,
however,
which
have frequently been
appealed to
upon such occasions,
the custom-house books
and the course
of exchange.
The custom-house books,
I think,
it is now generally acknowledged,
are
a very uncertain criterion,
on account
of the inaccuracy
of the valuation
at which
the greater part of goods
are rated in them.
The course of exchange is,
perhaps,
almost equally so.
When the exchange
between two places,
such as London and Paris,
is at par,
it is said
to be a sign that
the debts due from London to Paris
are compensated by those due
from Paris to London.
On the contrary,
when
a premium
is paid
at London
for a bill upon Paris,
it is said
to be a sign that
the debts due from London to Paris
are not compensated
by those due
from Paris to London,
but that a balance in money
must be sent out
from the latter place;
for the risk,
trouble,
and expense,
of exporting which,
the premium
is both demanded and given.
But the ordinary state
of debt and credit
between those
two cities
must necessarily be regulated,
it is said,
by the ordinary course
of their dealings
with one another.
When neither of them
imports from
from other
to a
greater
amount than it exports to
that other,
the debts
and credits of each
may compensate one another.
But when one of them
imports
from the other
to a greater value
than it exports to
that other,
the former
necessarily becomes indebted
to the latter
in a greater sum
than the latter
becomes indebted to it:
the debts
and credits
of each
do not compensate one another,
and money
must be sent out
from that place
of which
the debts overbalance
the credits.
The ordinary course
of exchange,
therefore,
being an indication
of the ordinary state
of debt and credit
between two places,
must likewise
be an indication
of the ordinary course
of their exports
and imports,
as these
necessarily regulate
that state.
But though the ordinary course
of exchange
shall be allowed
to be a sufficient indication
of the ordinary state
of debt and credit
between any two places,
it would not from
thence follow,
that the balance of trade
was in favour of that place
which had the ordinary state
of debt and credit
in its favour.
The ordinary state
of debt and credit
between any two
places
is not always entirely regulated
by the ordinary course
of their dealings
with one another,
but is often influenced
by
that of the dealings
of either
with many other places.
If it is usual,
for example,
for the merchants of England
to pay
for the goods which
they buy of Hamburg,
Dantzic,
Riga,.etc. by bills
upon Holland,
the ordinary state
of debt and credit
between England and Holland
will not be regulated entirely
by the ordinary course
of the dealings
of those two countries
with one another,
but will be influenced by
that of the dealings
in England
with those other places.
England
may be obliged
to send out every year money
to Holland,
though
its annual exports to that country
may exceed very much
the annual value
of its imports from thence,
and though
what is called
the balance of trade
may be very much
in favour of England.
In the way,
besides,
in which the par of exchange
has hitherto been computed,
the ordinary course
of exchange
can afford
no sufficient indication
that
the ordinary state
of debt and credit
is in favour of that
country
which seems to have,
or which is supposed
to have,
the ordinary course
of exchange in its favour;
or, in other words,
the real exchange
may be,
and in fact
often is,
so very different
from the computed one,
that,
from the course
of the latter,
no certain conclusion can,
upon many occasions,
be drawn concerning
that of the former.
When for a sum or money
paid in England,
containing,
according to
the standard
of the English mint,
a certain number
of ounces of pure silver,
you receive a bill
for a sum
of money
to be paid in France,
containing,
according to
the standard
of the French mint,
an equal number
of ounces of pure silver,
exchange
is said
to be
at par
between England and France.
When you pay more,
you are supposed
to give a premium,
and exchange is said
to be against England,
and in favour of France.
When you pay less,
you are supposed
to get a premium,
and exchange is said
to be against France,
and in favour of England.
But,
first,
We cannot always judge
of the value
of the current money
of different countries
by the standard
of their respective mints.
In some
it is more,
in others
it is less worn,
clipt,
and otherwise degenerated from
that standard.
But the value
of the current coin
of every country,
compared with
that of any other country,
is in proportion,
not to
the quantity
of pure silver which
it ought to contain,
but to that which
it actually does contain.
Before the reformation
of the silver coin
in King William's time,
exchange
between England and Holland,
computed in the usual manner,
according to
the standard
of their respective mints,
was five-and
twenty per cent.
against England.
But the value
of the current coin
of England,
as we learn from Mr Lowndes,
was at that time
rather more than five-and-twenty
per cent.
below its standard value.
The real exchange,
therefore,
may even at that time
have been
in favour of England,
notwithstanding
the computed exchange
was so much against it;
a smaller number or ounces
of pure silver,
actually paid in England,
may have purchased a bill
for a greater number
of ounces of pure silver
to be paid in Holland,
and the man
who was supposed
to give,
may in reality
have
got
the premium. The French coin was,
before the late reformation
of the English gold coin,
much less
wore than the English,
and was perhaps two
or three per cent.
nearer its standard.
If the computed exchange
with France,
therefore,
was not
more than two
or three per cent.
against England,
the real exchange
might have been
in its favour.
Since the reformation
of the gold coin,
the exchange
has been constantly
in favour of England,
and against France.
Secondly,
In some countries
the expense
of coinage
is defrayed by the government;
in others,
it is defrayed
by the private people,
who carry their bullion
to the mint,
and the government
even derives some revenue
from the coinage.
In England
it is defrayed
by the government;
and if you
carry a pound weight
of standard silver
to the mint,
you get back
sixty-two shillings,
containing a pound weight
of the like standard silver.
In France a duty
of eight per cent.
is deducted for the coinage,
which not only defrays
the expense of it,
but affords
a small revenue
to the government. I
n England,
as the coinage costs nothing,
the current coin
can never be
much more valuable
than the quantity
of bullion which
it actually contains.
In France,
the workmanship,
as you pay for it,
adds to the value,
in the same manner
as to that of wrought plate.
A sum of French money,
therefore,
containing an equal weight
of pure silver,
is more valuable
than a sum of English money
containing an equal weight
of pure silver,
and must require more bullion,
or other commodities,
to purchase it.
Though the current coin
of the two countries,
therefore,
were equally
near the standards
of their respective mints,
a sum of English money
could not well purchase a sum
of French money
containing an equal number
of ounces of pure silver,
nor,
consequently,
a bill
upon France for such a sum.
If,
for such a bill,
no more additional money
was paid than what
was sufficient
to compensate the expense
of the French coinage,
the real exchange
might be at par
between the two countries;
their debts and credits
might mutually compensate
one another,
while the computed exchange
was considerably
in favour of France.
If less than
this was paid,
the real exchange
might be in favour
of England,
while the
computed
was in favour of France.
Thirdly,
and lastly,
In some places,
as at Amsterdam,
Hamburg,
Venice,.etc.
foreign bills of exchange
are paid in what
they call bank money;
while in others,
as at London,
Lisbon,
Antwerp,
Leghorn,.etc.
they are paid
in the common currency
of the country.
What is called bank money,
is always
of more value
than the same nominal sum
of common currency.
A thousand guilders
in the bank of Amsterdam,
for example,
are of more value
than a thousand guilders
of Amsterdam currency.
The difference between them
is called the agio
of the bank,
which at Amsterdam
is generally
about five per cent.
Supposing the current money
of the two countries
equally near
to the standard
of their respective mints,
and that
the one pays
foreign
bills in this common currency,
while the other
pays them in bank money,
it is evident
that
the computed exchange
may be in favour of that
which pays in bank money,
though the real exchange
should be in favour of that
which pays in current money;
for the same reason that
the computed exchange
may be in favour of that
which pays in better money,
or in money nearer
to its own standard,
though
the real exchange
should be in favour of
that which
pays in worse.
The computed exchange,
before the late reformation
of the gold coin,
was generally against London
with Amsterdam,
Hamburg,
Venice,
and, I believe,
with all other
places which pay in
what is called bank money.
It will by no means
follow,
however,
that the real exchange
was against it.
Since the reformation
of the gold coin,
it has been in favour
of London,
even with those places.
The computed exchange
has generally been
in favour of London
with Lisbon,
Antwerp,
Leghorn,
and, if you except France,
I believe
with most other parts
of Europe
that pay in common currency;
and it is not improbable
that
the real exchange
was so too.
Digression concerning
Banks of Deposit,
particularly concerning
that of Amsterdam.
The currency
of a great state,
such as France or England,
generally
consists almost
entirely of its own coin.
Should this currency,
therefore,
be at any time worn,
clipt,
or otherwise degraded
below its standard value,
the state,
by a reformation
of its coin,
can effectually
re-establish its currency.
But the currency
of a small state,
such as Genoa or Hamburg,
can seldom consist altogether
in its own coin,
but must be made up,
in a great measure,
of the coins of all
the neighbouring states
with which
its inhabitants have
a continual intercourse.
Such a state,
therefore,
by reforming its coin,
will not always be able
to reform its currency.
If foreign bills of exchange
are paid in this currency,
the uncertain value
of any sum,
of
what is
in its own nature so uncertain,
must render
the exchange always very much
against such a state,
its currency
being
in all foreign states necessarily
valued even below what
it is worth.
In order to remedy
the inconvenience
to which
this disadvantageous exchange
must have subjected
their merchants,
such small states,
when they
began
to attend
to the interest of trade,
have frequently enacted that
foreign bills
of exchange
of a certain value
should be paid,
not in common currency,
but by an order upon,
or by a transfer
in the books
of a certain bank,
established upon the credit,
and under the protection
of the state,
this bank
being always obliged
to pay,
in good and true money,
exactly according to
the standard of the state.
The banks of Venice,
Genoa,
Amsterdam,
Hamburg,
and Nuremberg,
seem
to have been all originally established
with this view,
though some of them
may have afterwards been
made subservient
to other purposes.
The money of such banks,
being better
than the common currency
of the country,
necessarily
bore an agio,
which was greater or smaller,
according
as the currency was supposed
to be more or less
degraded below the standard
of the state.
The agio
of the bank of Hamburg,
for example,
which is said
to be commonly
about fourteen per cent.
is the supposed difference
between the good standard money
of the state,
and the clipt,
worn,
and diminished currency,
poured into it
from all
the neighbouring states.
Before 1609,
the great quantity of clipt
and worn foreign coin which
the extensive trade
of Amsterdam
brought
from all parts of Europe,
reduced the value
of its currency
about nine per cent. below
that of good money fresh
from the mint.
Such money no sooner
appeared,
than it
was melted down
or carried away,
as it
always is in such circumstances.
The merchants,
with plenty of currency,
could not always find
a sufficient quantity
of good
money
to pay their bills
of exchange;
and the value of those bills,
in spite of several
regulations
which were made
to prevent it,
became
in a great measure uncertain.
In order to
remedy these inconveniencies,
a bank
was established in 1609,
under the guarantee
of the city.
This bank received
both foreign coin,
and the light
and worn coin of the country,
at its real intrinsic value
in the good standard money
of the country,
deducting only so much as
was necessary
for defraying the expense
of coinage
and
the other necessary expense
of management.
For the value
which remained after this
small deduction was made,
it gave a credit
in its books.
This credit
was called bank money,
which,
as it represented
money exactly according to
the standard of the mint,
was always
of the same real value,
and intrinsically
worth
more than current money.
It was
at the same time enacted,
that all bills
drawn upon
or negotiated at Amsterdam,
of the value
of 600 guilders and upwards,
should be paid in bank money,
which at
once took away all uncertainty
in the value
of those bills.
Every merchant,
in consequence
of this regulation,
was obliged
to keep an account
with the bank,
in order to
pay his foreign bills
of exchange,
which necessarily occasioned
a certain demand
for bank money.
Bank money,
over and above both
its intrinsic superiority
to currency,
and the additional value which
this demand
necessarily gives it,
has likewise
some other advantages,
It is secure from fire,
robbery,
and other accidents;
the city of Amsterdam
is bound for it;
it can be paid away
by a simple transfer,
without the trouble
of counting,
or the risk
of transporting it
from one place to another.
In consequence
of those different advantages,
it seems from the beginning
to have borne an agio;
and it is generally believed
that all the money
originally deposited
in the bank,
was allowed to remain there,
nobody
caring to demand payment
of a debt which
he could sell
for a premium
in the market.
By demanding payment
of the bank,
the owner of a bank credit
would lose this premium.
As a shilling fresh
from the mint
will buy no more goods
in the market
than one
of our common worn shillings,
so the good and true money
which might be brought
from the coffers
of the bank into those
of a private person,
being mixed
and confounded
with the common currency
of the country,
would be
of no more value than
that currency,
from which
it could no longer
be readily distinguished.
While it
remained
in the coffers
of the bank,
its superiority
was known and ascertained.
When it
had come into those
of a private person,
its superiority
could not well be ascertained
without more trouble than perhaps
the difference was worth.
By being brought
from the coffers
of the bank,
besides,
it lost
all the other advantages
of bank money;
its security,
its easy and safe transferability,
its use
in paying
foreign bills of exchange.
Over and above all this,
it could not be brought
from those coffers,
as will appear by and by,
without previously paying
for the keeping.
Those deposits of coin,
or those deposits which
the bank was bound
to restore in coin,
constituted
the original capital
of the bank,
or the whole value of
what was represented by what
is called bank money.
At present
they are supposed
to constitute
but a very small part
of it.
In order to
facilitate the trade
in bullion,
the bank
has been for these many years
in the practice
of giving credit
in its books,
upon deposits
of gold and silver bullion.
This credit
is generally
about five per cent.
below the mint price
of such bullion.
The bank grants
at the same time
what is called a recipice
or receipt,
entitling
the person
who makes the deposit,
or the bearer,
to take out the bullion
again at any time
within six months,
upon transferring to the bank
a quantity
of bank money equal to
that for which credit
had been given in its books
when the deposit was made,
and upon paying
one-fourth per cent.
for the keeping,
if the deposit
was in silver;
and one-half per cent.
if it was in gold;
but at the same time
declaring,
that
in default of such payment,
and upon the expiration
of this term,
the deposit
should belong to the bank,
at the price at which it
had been received,
or for which credit
had been given
in the transfer books.
What is thus
paid for the keeping
of the deposit
may be considered
as a sort of warehouse rent;
and why this warehouse
rent
should be so much dearer
for gold than for silver,
several different reasons
have been assigned.
The fineness of gold,
it has been said,
is more difficult
to be ascertained than
that of silver.
Frauds
are more easily practised,
and occasion a greater loss
in the most precious metal.
Silver,
besides,
being the standard metal,
the state,
it has been said,
wishes
to encourage more the making
of deposits
of silver than those
of gold.
Deposits of bullion
are most commonly made
when the price
is somewhat lower
than ordinary,
and they
are taken out again
when it happens
to rise.
In Holland
the market price of bullion
is generally above
the mint price,
for the same reason that it
was so in England
before the late reformation
of the gold coin.
The difference
is said
to be commonly from
about six to sixteen stivers
upon the mark,
or eight ounces of silver,
of eleven parts
of fine and one part alloy.
The bank price,
or the credit which
the bank
gives
for the deposits
of such silver
(when made in foreign coin,
of which
the fineness
is well known and ascertained,
such as Mexico dollars),
is
twenty-two guilders the mark:
the mint price
is
about twenty-three guilders,
and the market price
is
from twenty-three guilders six,
to twenty-three guilders
sixteen stivers,
or from two
to three per
cent. above the mint price.
The following
are
the prices at which the bank
of Amsterdam at present
(September 1775)
receives bullion
and coin of different kinds:
Bar or ingot gold
is received in proportion
to its fineness,
compared
with the above foreign gold coin.
Upon fine bars
the bank gives 340 per mark.
In general,
however,
something more
is given
upon coin
of a known fineness,
than upon gold
and silver bars,
of which the fineness
cannot be ascertained but
by a process of
melting and assaying.
The proportions
between the bank price,
the mint price,
and the market price
of gold bullion,
are nearly the same.
A person
can generally sell his receipt
for the difference
between the mint price
of bullion
and the market price.
A receipt for bullion
is almost always worth something,
and it very seldom
happens,
therefore,
that anybody
suffers his receipts
to expire,
or allows
his bullion
to fall
to the bank
at the price at which it
had been received,
either by not taking
it out
before the end
of the six months,
or by neglecting
to pay one fourth
or one half per cent.
in order to
obtain a new receipt
for another six months.
This,
however,
though it happens seldom,
is said
to happen sometimes,
and more frequently
with regard to gold
than with regard to silver,
on account
of the higher warehouse
rent
which is paid
for the keeping
of the more precious metal.
The person who,
by making
a deposit of bullion,
obtains both
a bank credit and a receipt,
pays
his bills of exchange as they
become due,
with his bank credit;
and either
sells or keeps his receipt,
according
as he judges that
the price
of bullion
is likely
to rise or to fall.
The receipt
and the bank credit
seldom
keep long together,
and there is
no occasion that
they should.
The person
who has a receipt,
and who wants
to take out bullion,
finds always
plenty of bank credits,
or bank money,
to buy at the ordinary price,
and the person
who has bank money,
and wants
to take out bullion,
finds receipts
always in equal abundance.
The owners of bank credits,
and the holders
of receipts,
constitute two different sorts
of creditors
against the bank.
The holder of a receipt
cannot draw out the bullion
for which it is granted,
without re-assigning
to the bank
a sum of bank money equal to
the price
at which the bullion
had been received.
If he
has no bank money
of his own,
he must purchase it of those
who have it.
The owner of bank money
cannot draw out bullion,
without producing
to the bank receipts
for the quantity which
he wants.
If he
has none of his own,
he must buy them
of those who
have them.
The holder of a receipt,
when he
purchases bank money,
purchases the power
of taking out
a quantity of bullion,
of which the mint price
is
five per
cent. above the bank price.
The agio of five per cent.
therefore,
which
he commonly pays for it,
is paid,
not for an imaginary,
but for a real value.
The owner of bank money,
when he purchases a receipt,
purchases the power
of taking out
a quantity of bullion,
of which the market price
is commonly
from two
to three per
cent. above the mint price.
The price which
he pays for it,
therefore,
is paid likewise
for a real value.
The price of the receipt,
and the price
of the bank money,
compound or make
up between them
the full value
or price of the bullion.
Upon deposits
of the coin current
in the country,
the bank grant receipts likewise,
as well as bank credits;
but those receipts
are frequently of no value
and will bring
no price in the market.
Upon ducatoons,
for example,
which
in the currency pass
for three guilders
three stivers each,
the bank
gives a credit
of three guilders only,
or five per cent.
below their current value.
It grants a receipt likewise,
entitling the bearer
to take out the number
of ducatoons
deposited
at any time
within six months,
upon paying
one fourth per cent.
for the keeping.
This receipt
will frequently bring
no price in the market.
Three guilders,
bank money,
generally
sell in the market
for three guilders
three stivers,
the full value
of the ducatoons,
if they
were taken out of the bank;
and before they
can be taken out,
one-fourth per cent.
must be paid for the keeping,
which would be mere loss
to the holder
of the receipt.
If the agio of the bank,
however,
should at any time
fall to three per cent.
such receipts
might bring some price
in the market,
and might sell
for one and three-fourths
per cent.
But the agio of the bank
being now
generally about five per cent.
such receipts
are frequently allowed
to expire,
or, as they express it,
to fall to the bank.
The receipts
which are given
for deposits of gold
ducats fall to it
yet more frequently,
because
a higher warehouse rent,
or one half per cent.
must be paid for the keeping
of them,
before they
can be taken out again.
The five per cent. which
the bank gains,
when deposits either
of coin or bullion
are allowed
to fall to it,
maybe
considered
as the warehouse rent
for the perpetual keeping
of such deposits.
The sum of bank money,
for which the receipts
are expired,
must be very considerable.
It must comprehend
the whole original capital
of the bank,
which,
it is generally supposed,
has been allowed
to remain there from the time
it was first deposited,
nobody caring either
to renew his receipt,
or to take out his deposit,
as,
for the reasons already assigned,
neither the one nor the other
could be done without loss.
But whatever
may be the amount
of this sum,
the proportion which
it bears
to the whole mass
of bank money
is supposed
to be very small.
The bank of Amsterdam has,
for these many years past,
been the great warehouse
of Europe for bullion,
for which the receipts
are very seldom
allowed
to expire,
or, as they express it,
to fall to the bank.
The far greater part
of the bank money,
or of the credits
upon the books
of the bank,
is supposed
to have been created,
for these many years past,
by such deposits,
which
the dealers in bullion
are continually
both making
and withdrawing.
No demand
can be made upon the bank,
but by means
of a recipice or receipt.
The smaller mass
of bank money,
for which the receipts
are expired,
is mixed
and confounded
with the much greater mass
for which they are
still
in force;
so that,
though there may be
a considerable sum
of bank money,
for which
there are no receipts,
there
is no specific sum
or portion of it
which may not at any time
be demanded by one.
The bank
cannot be debtor
to two persons
for the same thing;
and the owner of bank money
who has no receipt,
cannot demand payment
of the bank till
he buys one.
In ordinary and quiet times,
he can find no difficulty
in getting one
to buy at the market price,
which generally corresponds
with the price
at which he
can sell
the coin or bullion
it entitles him
to take out of the bank.
It
might be otherwise
during a public calamity;
an invasion,
for example,
such as
that of the French in 1672.
The owners of bank money
being then all eager
to draw it
out of the bank,
in order to
have it in their own keeping,
the demand for receipts
might raise their price
to an exorbitant height.
The holders of them
might form
extravagant expectations,
and,
instead of two
or three per cent. demand half
the bank money for which
credit had been given
upon the deposits
that the receipts
had respectively been
granted for.
The enemy,
informed
of the constitution
of the bank,
might even buy them up,
in order to
prevent the carrying away
of the treasure.
In such emergencies,
the bank,
it is supposed,
would break
through its ordinary rule
of making payment
only to the holders
of receipts.
The holders of receipts,
who had no bank money,
must have received
within two
or three per cent.
of the value
of the deposit
for which
their respective receipts
had been granted.
The bank,
therefore,
it is said,
would
in this case make no scruple
of paying,
either with money or bullion,
the full value of
what the owners
of bank money,
who could get no receipts,
were credited for
in its books;
paying,
at the same time,
two or
three per
cent.
to such holders of receipts as
had no bank money,
that
being the whole value which,
in this state of things,
could justly be supposed
due to them.
Even in ordinary
and quiet times,
it is the interest
of the holders of receipts
to depress the agio,
in order
either
to buy bank money
(and consequently
the bullion which
their receipts
would then enable them
to take out of the bank )
so much cheaper,
or to sell
their receipts to those
who have bank money,
and who
want
to take out bullion,
so much dearer;
the price of a receipt
being generally equal to
the difference
between the market price
of bank money and
that of the coin or bullion
for which the receipt
had been granted.
It is the interest
of the owners
of bank money,
on the contrary,
to raise the agio,
in order either
to sell
their bank money so much dearer,
or to buy a receipt
so much cheaper.
To prevent
the stock-jobbing tricks which
those opposite interests
might sometimes occasion,
the bank
has of late
years come to the resolution,
to sell
at all times bank money
for currency
at five per cent. agio,
and to buy it
in again at four per
cent. agio.
In consequence
of this resolution,
the agio
can never either
rise above five,
or sink
below four per cent.; and the proportion
between the market price
of bank
and that of current money
is kept
at all times very
near the proportion
between their intrinsic values.
Before
this resolution was taken,
the market price
of bank money
used sometimes
to rise
so high as nine per
cent. agio,
and sometimes
to sink so low as par,
according
as opposite interests
happened
to influence the market.
The bank of Amsterdam
professes
to lend
out no part of
what is deposited with it,
but for every guilder
for which it
gives credit in its books,
to keep
in its repositories the value
of a guilder either
in money or bullion.
That it
keeps
in its repositories all
the money
or bullion
for which
there are
receipts
in force
for which it
is at all times liable
to be called upon,
and which in reality
is continually going from it,
and returning to it again,
cannot well be doubted.
But whether it
does so likewise
with regard to
that part of its capital
for which the receipts
are long ago expired,
for which,
in ordinary and quiet times,
it cannot be called upon,
and which,
in reality,
is very likely
to remain with it for ever,
or as long as the states
of the United Provinces
subsist,
may perhaps appear
more uncertain.
At Amsterdam,
however,
no point of faith
is better
established than that,
for every guilder
circulated as bank money,
there
is a correspondent guilder
in gold or silver
to be found
in the treasures
of the bank.
The city
is guarantee that
it should be so.
The bank
is under the direction
of the four reigning burgomasters
who are changed every year.
Each new set of burgomasters
visits the treasure,
compares it with the books,
receives it upon oath,
and delivers it over,
with the same awful solemnity
to the set
which succeeds;
and in
that sober and
religious country,
oaths
are not yet disregarded.
A rotation of this kind
seems alone
a sufficient security
against any practices
which cannot be avowed.
Amidst all the revolutions
which faction
has ever occasioned
in the government
of Amsterdam,
the prevailing party
has at no time
accused their predecessors
of infidelity
in the administration
of the bank.
No accusation
could have affected more deeply
the reputation and fortune
of the
disgraced party;
and if such
an accusation
could have been supported,
we may be assured that
it would have been brought.
In 1672,
when
the French king
was at Utrecht,
the bank of Amsterdam
paid so readily,
as left no doubt
of the fidelity
with which it
had observed
its engagements.
Some of the pieces
which were then brought
from its repositories,
appeared
to have been scorched
with the fire
which happened
in the town-house
soon after the bank
was established.
Those pieces,
therefore,
must have lain there
from that time.
What may be the amount
of the treasure
in the bank,
is a question
which has long
employed
the speculations
of the curious.
Nothing
but conjecture
can be offered concerning it.
It is generally reckoned,
that there are
about 2000 people
who keep accounts
with the bank;
and allowing them
to have,
one with another,
the value of £1500 sterling
lying
upon their respective accounts
(a very large allowance),
the whole quantity
of bank money,
and consequently of treasure
in the bank,
will amount to
about £3,000,000 sterling,
or,
at eleven guilders
the pound sterling,
33,000,000 of guilders;
a great sum,
and sufficient
to carry
on a very extensive circulation,
but vastly below the
extravagant ideas
which some people
have formed
of this treasure.
The city
of Amsterdam
derives a considerable revenue
from the bank.
Besides
what may be called
the warehouse
rent above mentioned,
each person,
upon first
opening
an account with the bank,
pays a fee of ten guilders;
and for every new account,
three guilder's three stivers;
for every transfer,
two stivers;
and if
the transfer
is for less than 300 guilders,
six stivers,
in order to
discourage the multiplicity
of small transactions.
The person
who neglects
to balance his account
twice in the year,
forfeits
twenty-five guilders.
The person
who orders
a transfer for more than
is upon his account,
is obliged
to pay three per cent.
for the sum overdrawn,
and his order
is set aside
into the bargain.
The bank
is supposed, too,
to make a considerable profit
by the sale
of the foreign coin or
bullion
which sometimes falls to it
by the expiring
of receipts,
and which
is always kept
till it
can be sold with advantage.
It makes a profit,
likewise,
by selling bank money
at five per cent. agio,
and buying
it in at four.
These different emoluments amount
to a good deal more than
what is necessary
for paying
the salaries of officers,
and defraying
the expense of management.
What is paid for the keeping
of bullion
upon receipts,
is alone
supposed
to amount
to a neat annual revenue of
between 150,000
and 200,000 guilders.
Public utility,
however,
and not revenue,
was the original object
of this institution.
Its object
was to relieve the merchants
from the inconvenience
of a disadvantageous exchange.
The revenue
which has arisen from it
was unforeseen,
and may be considered
as accidental.
But it
is now time to return
from this long digression,
into which
I have been insensibly led,
in endeavouring
to explain
the reasons
why the exchange
between the
countries which pay
in
what is called bank money,
and those
which pay in common currency,
should generally appear
to be
in favour of the former,
and against the latter.
The former pay
in a species of money,
of which
the intrinsic value
is always the same,
and exactly agreeable
to the standard
of their respective mints;
the latter
is a species of money,
of which the intrinsic value
is continually varying,
and is almost always more
or less below
that standard.
Of the Unreasonableness
of those
extraordinary Restraints,
upon other Principles.
In the foregoing part
of this chapter,
I have endeavoured
to show,
even upon the principles
of the commercial system,
how unnecessary it
is to lay extraordinary restraints
upon the importation
of goods from those countries
with which the balance
of trade
is supposed
to be disadvantageous.
Nothing,
however,
can be more absurd
than this whole doctrine
of the balance
of trade,
upon which,
not only these restraints,
but almost
all the other regulations
of commerce,
are founded.
When two places trade
with one another,
this doctrine
supposes that,
if the balance
be even,
neither of them either
loses or gains;
but if it
leans in any degree
to one side,
that one of them
loses,
and the other gains,
in proportion
to its declension
from the exact equilibrium.
Both suppositions
are false.
A trade,
which is forced by means
of bounties and monopolies,
may be,
and commonly is,
disadvantageous
to the country
in whose favour
it is meant
to be established,
as I shall endeavour
to show
hereafter.
But that trade which,
without force or constraint,
is naturally
and regularly carried on
between any two places,
is always advantageous,
though not always equally so,
to both.
By advantage or gain,
I understand,
not the increase
of the quantity of gold
and silver,
but that
of the exchangeable value
of the annual produce
of the land
and labour of the country,
or the increase
of the annual revenue
of its inhabitants.
If the balance
be even,
and if the trade
between the two places
consist altogether
in the exchange
of their native commodities,
they will,
upon most occasions,
not only both gain,
but they
will gain equally,
or very nearly equally;
each will,
in this case,
afford a market
for a part
of the surplus produce
of the other;
each
will replace a capital
which had been employed
in raising and preparing
for the market this part
of the surplus produce
of the other,
and which
had been distributed among,
and given revenue
and maintenance to,
a certain number
of its inhabitants.
Some part
of the inhabitants of each,
therefore,
will directly derive
their revenue
and maintenance
from the other.
As
the commodities exchanged, too,
are supposed
to be of equal value,
so the two capitals employed
in the trade will,
upon most occasions,
be equal,
or very nearly equal;
and both
being employed
in raising
the native commodities
of the two countries,
the revenue
and maintenance which
their distribution
will afford
to the inhabitants of each
will be equal,
or very nearly equal.
This revenue and maintenance,
thus mutually afforded,
will be greater or smaller,
in proportion to the extent
of their dealings.
If these
should annually amount
to £100,000,
for example,
or to £1,000,000,
on each side,
each of them
will afford an annual revenue,
in the one case,
of £100,000,
and, in the other,
of £1,000,000,
to the inhabitants
of the other.
If their trade
should be of such a nature,
that one of them
exported
to the other nothing but
native commodities,
while the returns of
that other
consisted altogether
in foreign goods;
the balance,
in this case,
would still be supposed even,
commodities
being paid for
with commodities.
They
would,
in this case too,
both gain,
but they
would not gain equally;
and the inhabitants
of the
country
which exported nothing but
native commodities,
would derive
the greatest revenue
from the trade.
If England,
for example,
should import
from France nothing
but the native commodities of
that country,
and not having
such commodities
of its own as
were in demand there,
should annually repay them
by sending
thither a large quantity
of foreign goods,
tobacco,
we shall suppose,
and East India goods;
this trade,
though it
would give some revenue
to the inhabitants
of both countries,
would give more to those
of France than to those
of England.
The whole French
capital annually employed
in it
would annually be distributed
among the people of France;
but that part
of the English capital only,
which was employed
in producing
the English commodities
with which those
foreign goods were purchased,
would be annually distributed
among the people
of England.
The greater part of it
would replace the capitals
which had been employed
in Virginia,
Indostan,
and China,
and which
had given revenue and maintenance
to the inhabitants
of those distant countries.
If the capitals
were equal,
or nearly equal,
therefore,
this employment
of the French capital
would augment much more
the revenue
of the people
of France,
than that
of the English capital
would the revenue
of the people
of England.
France
would,
in this case,
carry
on a direct foreign trade
of consumption
with England;
whereas
England
would carry
on a round-about trade
of the same kind
with France.
The different effects
of a capital
employed in the direct,
and of one
employed
in the round-about foreign trade
of consumption,
have already been fully explained.
There
is not,
probably,
between any two countries,
a trade
which consists altogether
in the exchange,
either of native commodities
on both sides,
or of native commodities
on one side,
and of foreign goods
on the other.
Almost all countries exchange
with one another,
partly native
and partly foreign goods
That country,
however,
in whose cargoes
there is
the greatest proportion
of native,
and the least
of foreign goods,
will always be
the principal gainer.
If it
was not
with tobacco and East India goods,
but with gold and silver,
that England
paid for the commodities
annually imported from France,
the balance,
in this case,
would be supposed uneven,
commodities
not being paid for
with commodities,
but with gold and silver.
The trade,
however,
would in this case,
as in the foregoing,
give some revenue
to the inhabitants
of both countries,
but more to those
of France
than to those of England.
It would give some revenue
to those
of England.
The capital
which had been employed
in producing
the English goods
that purchased
this gold and silver,
the capital
which
had been distributed among,
and given revenue to,
certain inhabitants
of England,
would thereby be replaced,
and enabled
to continue that employment.
The whole capital of England
would no more
be diminished
by this exportation
of gold and silver,
than by the exportation
of an equal value
of any other goods.
On the contrary,
it would,
in most cases,
be augmented.
No goods
are sent abroad but those
for which the demand
is supposed
to be greater
abroad than at home,
and of which the returns,
consequently,
it is expected,
will be
of more value at home
than the commodities exported.
If the tobacco which
in England
is worth only £100,000,
when sent to France,
will purchase wine
which is
in England worth £110,000,
the exchange
will augment the capital
of England by £10,000.
If £100,000 of English gold,
in the same manner,
purchase French wine,
which in England
is worth £110,000,
this exchange
will equally augment
the capital
of England by £10,000.
As a merchant,
who has £110,000 worth
of wine in his cellar,
is a richer man than he
who has only £100,000 worth
of tobacco in his warehouse,
so is
he likewise a richer man than
he
who has only £100,000 worth
of gold in his coffers.
He can put
into motion a greater quantity
of industry,
and give revenue,
maintenance,
and employment,
to a greater number
of people,
than either
of the other two.
But the capital
of the country
is equal to the capital
of all
its different inhabitants;
and the quantity of industry
which
can be annually maintained
in it
is equal to what all
those different capitals
can maintain.
Both the capital
of the country,
therefore,
and the quantity of industry
which
can be annually maintained
in it,
must generally be augmented
by this exchange.
It would,
indeed,
be more advantageous
for England
that
it could purchase
the wines
of France
with its own hardware
and broad cloth,
than with either
the tobacco of Virginia,
or the gold and silver
of Brazil and Peru.
A direct
foreign trade of consumption
is always more advantageous
than a round-about one.
But
a round-about foreign trade
of consumption,
which is carried on
with gold and silver,
does not seem
to be less advantageous
than any other
equally round-about one.
Neither
is a country
which has no mines,
more likely to be exhausted
of gold and silver by this
annual exportation
of those metals,
than one
which does not grow tobacco
by the like
annual exportation
of that plant.
As
a country which
has wherewithal to buy tobacco
will never be long
in want of it,
so neither
will one be long
in want
of gold and silver which
has wherewithal
to purchase those metals.
It is a losing trade,
it is said,
which
a workman
carries on with the alehouse;
and the trade which
a manufacturing nation
would naturally carry on
with a wine country,
may be considered
as a trade
of the same nature.
I answer,
that the trade
with the alehouse
is not necessarily
a losing trade.
In its own nature
it is just as
advantageous as any other,
though,
perhaps,
somewhat more liable
to be abused.
The employment of a brewer,
and even that
of a retailer
of fermented liquors,
are as necessary division's
of labour as any other.
It
will generally be
more advantageous
for a workman
to buy of the brewer
the quantity he has
occasion for,
than to brew it himself;
and if he
is a poor workman,
it will generally be
more advantageous
for him
to buy it
by little and little
of the retailer,
than a large quantity
of the brewer.
He may no doubt buy
too much
of either,
as he
may of any other dealers
in his neighbourhood;
of the butcher,
if he is a glutton;
or of the draper,
if he affects
to be a beau
among his companions.
It is advantageous
to the great body
of workmen,
notwithstanding,
that all these
trades should be free,
though this freedom
may be abused
in all of them,
and is more likely
to be so,
perhaps,
in some than in others.
Though individuals,
besides,
may sometimes ruin
their fortunes
by an excessive consumption
of fermented liquors,
there
seems
to be
no risk that
a nation
should do so.
Though in every country
there are many people
who spend upon such liquors
more than they can afford,
there
are always many more
who spend less.
It deserves
to be remarked, too,
that if we
consult experience,
the cheapness of wine seems
to be a cause,
not of drunkenness,
but of sobriety.
The inhabitants
of the wine countries
are in general
the soberest people of Europe;
witness the Spaniards,
the Italians,
and the inhabitants
of the southern provinces
of France.
People
are seldom guilty
of excess in
what is their daily fare.
Nobody
affects the character
of liberality
and good fellowship,
by being profuse
of a liquor which is
as cheap as small beer.
On the contrary,
in the countries which,
either
from excessive heat or cold,
produce no grapes,
and where wine
consequently is dear
and a rarity,
drunkenness
is
a common vice,
as among the northern nations,
and all
those
who live between the tropics,
the negroes,
for example
on the coast of Guinea.
When a French regiment
comes
from some of the northern provinces
of France,
where wine
is somewhat dear,
to be quartered
in the southern,
where it
is very cheap,
the soldiers,
I have frequently heard it
observed,
are at first debauched
by the cheapness and novelty
of good wine;
but after a few
months residence,
the greater part of them
become as sober
as the rest
of the inhabitants.
Were the duties
upon foreign wines,
and the excises upon malt,
beer,
and ale,
to be taken away all
at once,
it might,
in the same manner,
occasion
in Great Britain
a pretty general
and temporary drunkenness
among the middling
and inferior ranks of people,
which
would probably be soon followed
by a permanent
and almost universal sobriety.
At present,
drunkenness
is by no
means the vice of people
of fashion,
or of those
who can easily afford
the most expensive liquors.
A gentleman
drunk with ale
has scarce
ever been seen among us.
The restraints
upon the wine trade
in Great Britain,
besides,
do not so much
seem calculated
to hinder the people
from going,
if I may say so,
to the alehouse,
as from going
where they
can buy
the best and cheapest liquor.
They favour the wine trade
of Portugal,
and discourage that
of France.
The Portuguese,
it is said,
indeed,
are better customers
for our manufactures
than the French,
and should
therefore
be encouraged
in preference to them.
As they give us their custom,
it is pretended
we should give them ours.
The sneaking arts
of underling tradesmen
are thus
erected into political maxims
for the conduct
of a great empire;
for it
is the most underling
tradesmen only
who make it a rule
to employ chiefly
their own customers.
A great trader
purchases his goods always
where they
are cheapest and best,
without
regard
to any little interest
of this kind.
By such maxims as these,
however,
nations
have been taught
that their interest
consisted
in beggaring
all their neighbours.
Each nation
has been made
to look
with an invidious eye
upon the prosperity of all
the nations
with which it trades,
and to consider
their gain as its own loss.
Commerce,
which ought naturally
to be,
among nations
as among individuals,
a bond
of union and friendship,
has become
the most fertile source
of discord and animosity.
The capricious ambition
of kings and ministers
has not,
during the present
and the preceding century,
been more fatal
to the repose of Europe,
than the impertinent jealousy
of merchants and manufacturers.
The violence and injustice
of the rulers of mankind
is an ancient evil,
for which,
I am afraid,
the nature
of human affairs can scarce
admit of a remedy:
but the mean rapacity,
the monopolizing spirit,
of merchants and manufacturers,
who neither are,
nor ought to be,
the rulers of mankind,
though it cannot,
perhaps,
be corrected,
may very easily be prevented
from disturbing
the tranquillity
of anybody but themselves.
That
it was the spirit
of monopoly which
originally both invented
and propagated this doctrine,
cannot be doubted and they
who first taught it,
were by no means
such fools as they
who believed it.
In every country
it always is,
and must be,
the interest
of the great body
of the people,
to buy whatever
they want of those
who sell it cheapest.
The proposition
is so very manifest,
that
it seems ridiculous
to take any pains
to prove it;
nor could
it ever have been called
in question,
had not
the interested sophistry
of merchants and manufacturers
confounded
the common sense of mankind.
Their interest is,
in this respect,
directly opposite to
that of the great body
of the people.
As it
is the interest
of the freemen
of a corporation
to hinder the rest
of the inhabitants from employing
any workmen but themselves;
so it
is the interest
of the merchants
and manufacturers
of every country
to secure to themselves
the monopoly
of the home market.
Hence,
in Great Britain,
and in most
other European countries,
the extraordinary duties
upon almost all goods
imported by alien merchants.
Hence
the high duties and prohibitions
upon all those foreign
manufactures
which can come
into competition
with our own.
Hence, too,
the extraordinary restraints
upon the importation
of almost all sorts
of goods from those countries
with which the balance
of trade
is supposed
to be disadvantageous;
that is,
from those against
whom
national animosity
happens ta
be most violently inflamed.
The wealth
of neighbouring nations,
however,
though dangerous
in war and politics,
is certainly advantageous
in trade.
In a state of hostility,
it may enable our enemies
to maintain fleets
and armies superior
to our own;
but in a state
of peace and commerce
it must likewise
enable them
to exchange
with us
to a greater value,
and to afford
a better market,
either
for the immediate produce
of our own industry,
or for whatever
is purchased
with that produce.
As a rich man is likely
to be a better customer
to the industrious people
in his neighbourhood,
than a poor,
so is
likewise a rich nation.
A rich man,
indeed,
who is himself a manufacturer,
is a very dangerous neighbour
to all
those
who deal in the same way.
All the rest
of the neighbourhood,
however,
by far the greatest number,
profit
by the good market which
his expense affords them.
They even profit
by his underselling
the poorer workmen
who deal
in the same way
with him.
The manufacturers
of a rich nation,
in the same manner,
may no doubt
be
very dangerous rivals to those
of their neighbours.
This very competition,
however,
is advantageous
to the great body
of the people,
who profit greatly,
besides,
by the good market which
the great expense
of such
a nation
affords them
in every other way.
Private people,
who want
to make a fortune,
never
think of retiring
to the remote and poor provinces
of the country,
but resort either
to the capital,
or to some of the great commercial
towns.
They know,
that
where little wealth
circulates,
there
is little
to be got;
but that
where
a great deal
is in motion,
some share of it
may fall to them.
The same maxim
which would in this manner
direct the common sense
of one,
or ten,
or twenty individuals,
should regulate
the judgment of one,
or ten,
or twenty millions,
and should make
a whole nation
regard the riches
of its neighbours,
as a probable cause
and occasion
for itself
to acquire riches.
A nation
that would enrich itself
by foreign trade,
is certainly most likely
to do so,
when its neighbours
are all rich,
industrious and commercial nations.
A great nation,
surrounded
on all sides
by wandering savages
and poor barbarians,
might,
no doubt,
acquire riches
by the cultivation
of its own lands,
and by its own
interior commerce,
but not by foreign trade.
It seems to have been
in this
manner
that the ancient Egyptians
and the modern Chinese
acquired their great wealth.
The ancient Egyptians,
it is said,
neglected foreign commerce,
and the modern Chinese,
it is known,
hold it
in the utmost contempt,
and scarce
deign to afford it
the decent protection
of the laws.
The modern maxims
of foreign commerce,
by aiming
at the impoverishment
of all our neighbours,
so far as they
are capable
of producing
their intended effect,
tend to render
that
very commerce insignificant
and contemptible.
It is
in consequence
of these maxims,
that the commerce
between France and England has,
in both countries,
been subjected
to so many discouragements
and restraints.
If those two countries,
however,
were
to consider
their real interest,
without either mercantile
jealousy
or national animosity,
the commerce of France
might be more advantageous
to Great Britain than
that of any other country,
and,
for the same reason,
that of Great Britain
to France.
France
is the nearest neighbour
to Great Britain.
In the trade
between the southern coast
of England
and the northern
and north-western coast
of France,
the returns
might be expected,
in the same manner
as in the inland trade,
four,
five,
or six
times in the year.
The capital,
therefore,
employed in this trade
could,
in each
of the two countries,
keep in motion four,
five,
or six
times the quantity
of industry,
and afford employment
and subsistence
to four,
five,
or six times the number
of people,
which all equal capital
could do
in the greater part
of the other branches
of foreign trade.
Between the parts
of France
and Great Britain most remote
from one another,
the returns
might be expected,
at least,
once in the year;
and even this trade
would so far be
at least equally advantageous,
as the greater part
of the other branches
of our foreign European trade.
It would be,
at least,
three times more advantageous
than the boasted trade
with our North American colonies,
in which the returns
were seldom made
in less than three years,
frequently
not in less than four
or five years.
France,
besides,
is supposed
to contain 24,000,000
of inhabitants.
Our North American colonies
were never supposed
to contain
more than 3,000,000;
and France
is a much richer country
than North America;
though,
on account
of the more unequal distribution
of riches,
there
is much more poverty
and beggary
in the one country than
in the other.
France,
therefore,
could afford
a market at least eight times
more extensive,
and,
on account
of the superior frequency
of the returns,
four-and-twenty times
more advantageous
than
that which
our North American colonies
ever afforded.
The trade of Great Britain
would be just as advantageous
to France,
and,
in proportion to the wealth,
population,
and proximity
of the respective countries,
would have
the same superiority over
that which
France carries on
with her own colonies.
Such
is the very great difference
between that trade which
the wisdom of both
nations has thought proper
to discourage,
and that which it
has favoured the most.
But
the very same circumstances
which
would have rendered
an open
and free commerce
between the
two countries so advantageous
to both,
have occasioned
the principal obstructions to
that commerce.
Being neighbours,
they are necessarily enemies,
and the wealth
and power of each
becomes,
upon that account,
more formidable to the other;
and what
would increase the advantage
of national friendship,
serves
only to inflame the violence
of national animosity.
They
are both rich
and industrious nations;
and the merchants
and manufacturers of each
dread the competition
of the skill and activity
of those
of the other.
Mercantile jealousy
is excited,
and both
inflames,
and is itself inflamed,
by the violence
of national animosity,
and the traders of both
countries have announced,
with all
the passionate confidence
of interested falsehood,
the certain
ruin of each,
in consequence of
that unfavourable balance
of trade,
which,
they pretend,
would be the infallible effect
of an unrestrained commerce
with the other.
There
is no commercial country
in Europe,
of which the approaching
ruin
has not frequently been
foretold
by the pretended doctors
of this system,
from all
unfavourably balance of trade.
After all the anxiety,
however,
which they
have excited about this,
after all the vain attempts
of almost all trading
nations
to turn that balance
in their own favour,
and against their neighbours,
it does not appear
that any one nation
in Europe
has been,
in any respect,
impoverished by this cause.
Every town and country,
on the contrary,
in proportion as they
have opened their ports
to all nations,
instead of
being ruined
by this free trade,
as the principles
of the commercial system
would lead us
to expect,
have been enriched by it.
Though there are
in Europe indeed,
a few towns which,
in same respects,
deserve
the name of free ports,
there
is no country
which does so.
Holland,
perhaps,
approaches the nearest
to this character of any,
though still very remote
from it;
and Holland,
it is acknowledged,
not only derives
its whole wealth,
but a great part
of its necessary subsistence,
from foreign trade.
There
is another balance,
indeed,
which has already been
explained,
very different
from the balance of trade,
and which,
according
as it happens
to be
either favourable
or unfavourable,
necessarily occasions
the prosperity
or decay
of every nation.
This
is the balance
of the annual produce
and consumption.
If the exchangeable value
of the annual produce,
it has already been observed,
exceeds
that
of the annual consumption,
the capital of the society
must annually increase
in proportion to this excess.
The society
in this case lives
within its revenue;
and what
is annually saved
out of its revenue,
is naturally added
to its capital,
and employed
so as
to increase still
further the annual produce.
If the exchangeable value
of the annual produce,
on the contrary,
fall short
of the annual consumption,
the capital of the society
must annually decay in proportion
to this deficiency.
The expense of the society,
in this case,
exceeds its revenue,
and necessarily encroaches upon
its capital.
Its capital,
therefore,
must necessarily decay,
and, together with it,
the exchangeable value
of the annual produce
of its industry.
This balance
of produce and consumption
is entirely different from
what is called
the balance of trade.
It might take place
in a nation
which had no foreign trade,
but which
was entirely separated
from all the world.
It may take place
in the whole globe
of the earth,
of which the wealth,
population,
and improvement,
may be either
gradually increasing
or gradually decaying.
The balance
of produce and consumption
may be constantly
in favour of a nation,
though
what is called
the balance of trade
be generally against it.
A nation
may import
to a greater value
than it exports
for half a century,
perhaps,
together;
the gold and silver which
comes into it
during all this time,
may be all immediately sent
out of it;
its circulating coin
may gradually decay,
different sorts of paper money
being
substituted in its place,
and even the debts, too,
which
it contracts in
the principal nations
with whom it deals,
may be gradually increasing;
and yet its real wealth,
the exchangeable value
of the annual produce
of its lands
and labour,
may,
during the same period,
have been increasing
in a much greater proportion.
The state
of our North American colonies,
and of the trade which
they carried on
with Great Britain,
before the commencement
of the present disturbances,
(This paragraph
was written
in the year 1775.) may serve
as a proof
that this is by no
means
an impossible supposition.
Merchants and manufacturers
are not contented
with the monopoly
of the home market,
but desire likewise
the most extensive foreign sale
for their goods.
Their country
has no
jurisdiction in foreign nations,
and therefore
can seldom procure them
any monopoly
there.
They are generally obliged,
therefore,
to content themselves
with petitioning
for certain encouragements
to exportation.
Of these encouragements,
what are called drawbacks
seem
to be the most reasonable.
To allow
the merchant
to draw back upon exportation,
either the whole,
or
a part of
whatever excise or inland duty
is imposed
upon domestic industry,
can never occasion
the exportation
of a greater quantity
of goods
than
what would have been exported
had no duty been imposed.
Such encouragements
do not tend
to turn
towards any particular employment
a greater share
of the capital
of the country,
than
what would go to
that employment
of its own accord,
but only to hinder the duty
from driving away any part
of that share
to other employments.
They tend not
to overturn
that balance
which
naturally establishes itself
among all
the various employments
of the society,
but to hinder it from
being overturned by the duty.
They tend not to destroy,
but to preserve,
what it
is in most cases advantageous
to preserve,
the natural division
and distribution
of labour in the society.
The same thing
may be said
of the drawbacks
upon the re-exportation
of foreign goods imported,
which,
in Great Britain,
generally amount to
by much
the largest part
of the duty upon importation.
By the second
of the rules,
annexed
to the act of parliament,
which imposed
what is now called
the old subsidy,
every merchant,
whether English or alien.
was allowed
to draw back half
that duty
upon exportation;
the English merchant,
provided the exportation
took place within twelve months;
the alien,
provided
it took place
within nine months. W
ines,
currants,
and wrought silks,
were the only goods
which did not fall
within this rule,
having other
and
more advantageous allowances.
The duties
imposed
by this act
of parliament were,
at that time,
the only duties
upon the importation
of foreign goods.
The term within which this,
and all other
drawbacks could be claimed,
was afterwards
(by 7 George I. c.21. sect.
10.) extended
to three years.
The duties which
have been imposed
since the old subsidy,
are, the greater part
of them,
wholly
drawn back upon exportation.
This general rule,
however,
is liable
to a great number
of exceptions;
and the doctrine of drawbacks
has become
a much less simple matter
than it
was
at their first institution.
Upon the exportation
of some foreign goods,
of which
it was expected that
the importation
would greatly exceed
what was necessary
for the home consumption,
the whole duties
are drawn back,
without retaining even half
the old subsidy.
Before the revolt
of our North American colonies,
we had the monopoly
of the tobacco
of Maryland and Virginia.
We imported
about ninety-six thousand hogsheads,
and the home
consumption was not supposed
to exceed fourteen thousand.
To facilitate
the great exportation
which was necessary,
in order to
rid us of the rest,
the whole duties
were drawn back,
provided the exportation
took place within three years.
We still have,
though not altogether,
yet very nearly,
the monopoly
of the sugars
of our West Indian islands.
If sugars
are exported within a year,
therefore,
all the duties
upon importation
are drawn back;
and if
exported within three years,
all the duties,
except half the old subsidy,
which still continues
to be retained
upon the exportation
of the greater part
of goods.
Though the importation
of sugar
exceeds
a good deal what
is necessary
for the home consumption,
the excess
is inconsiderable,
in comparison of
what it used
to be in tobacco.
Some goods,
the particular objects
of the jealousy
of our own manufacturers,
are prohibited
to be imported
for home consumption.
They may,
however,
upon paying
certain duties,be
imported and warehoused
for exportation.
But upon such
exportation no part
of these duties
is drawn back.
Our manufacturers
are unwilling,
it seems,
that even this
restricted importation
should be encouraged,
and are afraid
lest some part of these goods
should be stolen
out of the warehouse,
and thus
come into competition
with their own.
It is under these regulations
only
that
we can import
wrought silks,
French cambrics and lawns,
calicoes,
painted,
printed,
stained,
or dyed,.etc.
We are unwilling even
to be the carriers
of French goods,
and choose rather
to forego a profit
to ourselves
than
to suffer
those whom
we consider
as our enemies
to make any profit
by our means.
Not only half
the old subsidy,
but
the second twenty-five per cent.
is retained
upon the exportation
of all French goods.
By the fourth
of the rules annexed
to the old subsidy,
the drawback
allowed
upon the exportation
of all wines amounted
to a
great deal more than half
the duties
which were
at that time paid
upon their importation;
and it seems at that time
to have been the object
of the legislature
to give somewhat
more than ordinary encouragement
to the carrying trade
in wine.
Several of the other duties,
too which
were imposed either
at the same time
or subsequent
to the old subsidy,
what is called
the additional duty,
the new subsidy,
the one-third
and two-thirds subsidies,
the impost 1692,
the tonnage on wine,
were allowed
to be wholly drawn back
upon exportation.
All those duties,
however,
except the additional duty
and impost 1692,
being paid down
in ready money
upon importation,
the interest of so large
a sum
occasioned an expense,
which made it unreasonable
to expect
any profitable carrying trade
in this article.
Only a part,
therefore of the duty
called the impost on wine,
and no part
of the twenty-five pounds
the ton upon French wines,
or of the duties
imposed in 1745,
in 1763,
and in 1778,
were allowed
to be drawn back
upon exportation.
The two imposts
of five per cent.
imposed in 1779 and 1781,
upon all
the former duties of customs,
being allowed
to be wholly drawn back
upon the exportation
of all other goods,
were likewise
allowed
to be drawn back upon
that of wine.
The last
duty
that
has been particularly imposed
upon wine,
that of 1780,
is allowed
to be wholly drawn back;
an indulgence which,
when so many heavy duties
are retained,
most probably
could never occasion
the exportation
of a single ton
of wine.
These
rules took place
with regard to all places
of lawful exportation,
except the British colonies
in America.
The 15th Charles II c.7,
called an act
for the encouragement
of trade,
had given Great Britain
the monopoly
of supplying
the colonies
with all the commodities
of the growth
or manufacture of Europe,
and consequently with wines.
In a country of so extensive
a coast
as
our North American
and West Indian colonies,
where our authority
was always so very slender,
and where the inhabitants
were allowed
to carry out in their own
ships
their non-enumerated commodities,
at first
to all parts of Europe,
and afterwards to all parts
of Europe south
of Cape Finisterre,
it is not very probable
that this monopoly
could ever be much respected;
and they
probably at all times
found means
of bringing back some cargo
from the countries
to which they were allowed
to carry out one.
They seem,
however,
to have found
some difficulty in
importing European wines
from the places
of their growth;
and they
could not well import them
from Great Britain,
where they
were loaded
with many heavy duties,
of which a considerable part
was not drawn back
upon exportation.
Madeira wine,
not being
an European commodity,
could be imported directly
into America
and the West Indies,
countries which,
in all
their non-enumerated commodities,
enjoyed a free trade
to the island of Madeira.
These circumstances
had probably introduced
that general taste
for Madeira wine,
which our officers
found
established in all
our colonies
at the commencement
of the war
which began in 1755,
and which
they brought back
with them
to the mother country,
where that wine
had not been much
in fashion before.
Upon the conclusion
of that war,
in 1763
(by the 4th George III c.15,
sect.
12),
all the duties except £3,
10s were allowed
to be drawn back
upon the exportation
to the colonies
of all wines,
except French wines,
to the commerce and consumption
of which
national prejudice
would allow no sort
of encouragement.
The period
between the granting
of this indulgence
and the revolt
of our North American colonies,
was probably too short
to admit
of any considerable change
in the customs
of those countries.
The same act which,
in the drawbacks
upon all wines,
except French wines,
thus
favoured
the colonies so much more
than other countries,
in
those upon the greater part
of other commodities,
favoured them much less.
Upon the exportation
of the greater part
of commodities
to other countries,
half
the old subsidy
was drawn back.
But this law enacted,
that no part of
that duty
should be drawn back
upon the exportation
to the colonies
of any commodities
of the growth
or manufacture either
of Europe or the East Indies,
except wines,
white calicoes,
and muslins.
Drawbacks were,
perhaps,
originally
granted
for the encouragement
of the carrying trade,
which,
as the freight of the ship
is frequently paid
by foreigners
in money,
was supposed
to be peculiarly fitted
for bringing gold and silver
into the country.
But though the carrying trade
certainly
deserves
no peculiar encouragement,
though the motive
of the institution was,
perhaps,
abundantly foolish,
the institution itself
seems reasonable enough.
Such drawbacks
cannot force
into this trade
a greater share
of the capital
of the country than
what would have gone to it
of its own accord,
had there been no duties
upon importation;
they only prevent
its being excluded altogether
by those duties.
The carrying trade,
though it
deserves no preference,
ought not
to be precluded,
but to be left free,
like all other trades.
It is a necessary resource
to those capitals
which cannot find employment,
either
in the agriculture
or in the manufactures
of the country,
either in its home trade,
or in its foreign trade
of consumption.
The revenue of the customs,
instead of suffering,
profits from such drawbacks,
by that part
of the duty
which is retained.
If the whole duties
had been retained,
the foreign goods upon which
they are paid
could seldom have been exported,
nor consequently imported,
for want of a market.
The duties,
therefore,
of which a part
is retained,
would never have been paid.
These reasons
seem sufficiently
to justify drawbacks,
and would justify them,
though the whole duties,
whether upon the produce
of domestic industry
or upon foreign goods,
were always drawn back
upon exportation.
The revenue of excise
would,
in this case indeed,
suffer a little,
and that
of the customs
a good deal more;
but the natural balance
of industry,
the natural division
and distribution
of labour,
which is always more or less
disturbed by such duties,
would be more nearly
re-established
by such a regulation.
These reasons,
however,
will justify drawbacks
only upon exporting goods
to those countries
which are altogether
foreign and independent,
not to
those in which our merchants
and manufacturers
enjoy a monopoly.
A drawback,
for example,
upon the exportation
of European goods
to our American colonies,
will not always occasion
a greater
exportation
than
what would have taken place
without it.
By means
of the monopoly which
our merchants
and manufacturers
enjoy there,
the same quantity
might frequently,
perhaps,
be sent thither,
though the whole duties
were retained.
The drawback,
therefore,
may frequently be pure loss
to the revenue of
excise and customs,
without altering
the state
of the trade,
or rendering it
in any respect
more extensive.
How far such drawbacks
can be justified
as a proper encouragement
to the industry
of our colonies,
or how far it
is advantageous to the mother
country
that they
should be exempted from taxes
which are paid by all
the rest
of their fellow-subjects,
will appear hereafter,
when
I come
to treat of colonies.
Drawbacks,
however,
it must always be understood,
are useful
only in those cases
in which the goods,
for the exportation
of which they are given,
are really exported
to some foreign country,
and not clandestinely re-imported
into our own.
That some drawbacks,
particularly those
upon tobacco,
have frequently been
abused in this manner,
and have given occasion
to many frauds,
equally hurtful both
to the revenue
and to the fair trader,
is well known.
Bounties upon exportation are,
in Great Britain,
frequently
petitioned for,
and sometimes granted,
to the produce
of particular branches
of domestic industry.
By means of them,
our merchants and manufacturers,
it is pretended,
will be enabled
to sell their goods
as cheap or cheaper
than their rivals
in the foreign market.
A greater quantity,
it is said,
will thus
be exported,
and the balance
of trade consequently
turned more in favour
of our own country.
We cannot give our workmen
a monopoly in the foreign,
as we
have done
in the home market.
We cannot force foreigners
to buy their goods,
as we
have done our own countrymen.
The next best expedient,
it has been thought,
therefore,
is to pay them
for buying.
It is in this manner
that
the mercantile system proposes
to enrich the whole country,
and to put money
into all our pockets,
by means
of the balance of trade.
Bounties,
it is allowed,
ought to be given
to those branches
of trade only
which cannot be carried on
without them.
But every branch of trade
in which
the merchant
can sell
his goods for a price
which replaces to him,
with the ordinary profits
of stock,
the whole capital employed
in preparing and sending them
to market,
can be carried on
without a bounty.
Every such branch
is evidently
upon a level with all
the other branches of trade
which are carried on
without bounties,
and cannot,
therefore,
require one more than they.
Those trades
only require bounties,
in which the merchant
is obliged
to sell
his goods for a price
which does not replace
to him his capital,
together
with the ordinary profit,
or in which he
is obliged
to sell them
for less than it
really cost him
to send them to market.
The bounty
is given
in order to make
up this loss,
and to encourage him
to continue,
or, perhaps,
to begin a trade,
of which the expense
is supposed
to be
greater than the returns,
of which every operation
eats up a part
of the capital
employed in it,
and which
is of such a nature,
that if all other trades
resembled it,
there
would soon be no capital
left in the country.
The trades,
it is to be observed,
which are carried on by means
of bounties,
are the only ones which
can be carried on
between two nations
for any considerable time
together,
in such a manner
as that one of them
shall alway's and
regularly lose,
or sell
its goods for less than it
really cost
to send them to market.
But if the bounty
did not repay
to the merchant
what he
would otherwise lose
upon the price
of his goods,
his own interest
would soon oblige him
to employ his stock
in another way,
or
to find out a trade in which
the price of the goods
would replace to him,
with the ordinary profit,
the capital
employed in sending them
to market.
The effect of bounties,
like that
of all
the other expedients
of the mercantile system,
can only be
to force the trade
of a country
into a channel
much less advantageous
than
that in which it
would naturally
run of its own accord.
The ingenious
and well-informed author
of the Tracts
upon the Corn Trade
has shown very clearly,
that since
the bounty
upon the exportation of corn
was first established,
the price of the corn
exported,
valued moderately enough,
has exceeded
that of the corn imported,
valued very high,
by a much greater sum
than the amount
of the whole bounties which
have been paid during
that period.
This,
he imagines,
upon the true principles
of the mercantile system,
is a clear proof that this
forced corn
trade is beneficial
to the nation,
the value
of the exportation exceeding
that of the importation
by a much greater sum
than the
whole extraordinary expense which
the public
has been at in order to
get it exported.
He does not consider
that this
extraordinary expense,
or the bounty,
is the smallest part
of the expense which
the exportation of corn
really costs the society.
The capital which the farmer
employed
in raising
it must likewise
be taken into the account.
Unless the price of the corn,
when sold
in the foreign markets,
replaces not only the bounty,
but this capital,
together
with the ordinary profits
of stock,
the society
is a loser by the difference,
or the national stock
is so much diminished.
But the very reason
for which it
has been thought necessary
to grant a bounty,
is the supposed insufficiency
of the price
to do this.
The average price of corn,
it has been said,
has fallen considerably
since the establishment
of the bounty.
That
the average price of corn
began
to fall somewhat
towards the end
of the last century,
and has continued
to do so
during the course
of the sixty-four first years
of the present,
I
have already endeavoured to show.
But this event,
supposing it to be real,
as I believe
it to be,
must have happened
in spite of the bounty,
and cannot possibly have happened
in consequence of it.
It has happened in France,
as well as in England,
though in France
there was not only no bounty,
but,
till 1764,
the exportation of corn
was subjected to a
general prohibition.
This gradual
fall in the average price
of grain,
it is probable,
therefore,
is ultimately owing neither
to the one regulation nor
to the other,
but to
that gradual and insensible
rise in
the real value of silver,
which,
in the first book
of this discourse,
I have endeavoured
to show,
has taken place
in the general market
of Europe
during the course
of the present century.
It seems
to be altogether impossible
that
the bounty
could ever contribute
to lower the price
of grain.
In years of plenty,
it has already been observed,
the bounty,
by occasioning
an extraordinary exportation,
necessarily
keeps
up the price
of corn
in the home market above what it
would naturally fall to.
To do
so was the avowed purpose
of the institution.
In years of scarcity,
though
the bounty
is frequently suspended,
yet
the great exportation which
it occasions in years
of plenty,
must frequently hinder,
more or less,
the plenty of one year
from relieving
the scarcity of another.
Both in years
of plenty
and in years of scarcity,
therefore,
the bounty
necessarily tends
to raise the money price
of corn
somewhat higher than it
otherwise would be
in the home market.
That in the actual state
of tillage
the bounty
must necessarily have
this tendency,
will not,
I apprehend,
be disputed
by any reasonable person.
But it
has been thought
by many people,
that it tends
to encourage tillage,
and that
in two different ways;
first,
by opening
a more extensive foreign market
to the corn
of the farmer,
it tends,
they imagine,
to increase the demand for,
and consequently
the production of,
that commodity;
and,
secondly by securing
to him a better price than
he could otherwise expect
in the actual state
of tillage,
it tends,
they suppose,
to encourage tillage.
This double encouragement
must
they imagine,
in a long period
of years,
occasion such an increase
in the production of corn,
as may lower
its price in the home market,
much more than the bounty
can raise it
in the
actual state
which tillage may,
at the end of
that period,
happen to be in.
I answer,
that
whatever
extension
of the foreign market
can be occasioned
by the bounty must,
in every particular year,
be altogether at the expense
of the home market;
as every bushel of corn,
which is exported by means
of the bounty,
and which
would not have been exported
without the bounty,
would have remained
in the home market
to increase the consumption,
and to lower the price of
that commodity.
The corn bounty,
it is to be observed,
as well as every other bounty
upon exportation,
imposes
two different taxes
upon the people;
first,
the tax
which they
are obliged
to contribute,
in order to pay the bounty;
and, secondly,
the tax
which arises
from the advanced price
of the commodity
in the home market,
and which,
as the whole body
of the people
are purchasers
of corn,
must,
in this particular commodity,
be paid by the whole body
of the people.
In this particular commodity,
therefore,
this second tax
is by much
the heaviest of the two.
Let us
suppose that,
taking one year with another,
the bounty of 5s
upon the exportation
of the quarter
of wheat raises the price of
that commodity
in the home market
only 6d the bushel,
or 4s
the quarter higher than it
otherwise would have been
in the actual state
of the crop.
Even upon this
very moderate supposition,
the great body of the people,
over and above contributing
the tax
which
pays the bounty of 5s
upon every quarter
of wheat exported,
must pay another of 4s
upon every quarter which
they
themselves consume.
But according to
the very well informed author
of the Tracts
upon the Corn Trade,
the average proportion
of the corn
exported to
that consumed at home,
is not more than
that of one
to thirty-one.
For every 5s therefore,
which
they contribute
to the payment
of the first tax,
they
must contribute £6:4s
to the payment
of the second.
So very heavy
a tax upon the
first necessary of life-must either
reduce the subsistence
of the labouring poor,
or it
must occasion some augmentation
in their pecuniary wages,
proportionable to
that in the pecuniary price
of their subsistence.
So far
as it
operates in the one way,
it must reduce the ability
of the labouring poor
to educate
and bring up their children,
and must,
so far,
tend to restrain
the population
of the country.
So far as it operate's
in the other,
it must reduce the ability
of the employers
of the poor,
to employ so great
a number as they
otherwise might do,
and must so far tend
to restrain the industry
of the country.
The extraordinary exportation
of corn,
therefore
occasioned by the bounty,
not
only in every particular year
diminishes the home,
just
as much as it
extends the foreign market
and consumption,
but,
by restraining the population
and industry
of the country,
its final tendency
is to stint
and restrain the gradual
extension
of the home market;
and thereby,
in the long-run,
rather
to diminish than
to augment the whole market
and consumption
of corn.
This enhancement
of the money price
of corn,
however,
it has been thought,
by rendering
that commodity more profitable
to the farmer,
must necessarily encourage
its production.
I answer,
that this might be the case,
if the effect of the bounty
was to raise the real price
of corn,
or to enable the farmer,
with an equal quantity of it,
to maintain a greater number
of labourers
in the same manner,
whether liberal,
moderate,
or scanty,
than other
labourers
are commonly maintained
in his neighbourhood.
But neither the bounty,
it is evident,
nor
any other human institution,
can have any such effect.
It is not the real,
but the nominal price
of corn,
which can in any considerable
degree
be affected by the bounty.
And though the tax,
which
that institution
imposes upon the whole body
of the people,
may be very burdensome
to those
who pay it,
it is
of very little advantage
to those who
receive it.
The real effect of the bounty
is not so much
to raise the real value
of corn,
as to degrade the real value
of silver;
or to make an equal quantity
of it exchange
for a smaller quantity,
not only of corn,
but
of all other home made
commodities;
for the money price
of corn
regulates
that
of all other home made commodities.
It regulates the money price
of labour,
which must always be
such as to enable
the labourer
to purchase a quantity
of corn sufficient
to maintain him
and his family,
either in the liberal,
moderate,
or scanty manner,
in which the advancing,
stationary,
or declining,
circumstances of the society,
oblige his employers
to maintain him.
It regulates the money price
of all the other parts
of the rude produce
of land,
which,
in every period
of improvement,
must bear
a certain proportion to
that of corn,
though this proportion
is different
in different periods.
It regulates,
for example,
the money price
of grass and hay,
of butcher's meat,
of horses,
and the maintenance of horses,
of land carriage consequently,
or of the greater part
of the inland commerce
of the country.
By regulating the money price
of all the other parts
of the rude produce
of land,
it regulates
that of the materials
of almost all
manufactures;
by regulating
the money price of labour,
it regulates
that of manufacturing art
and industry;
and by regulating both,
it regulates
that
of the complete manufacture.
The money price of labour,
and of every thing
that is the produce,
either of land or labour,
must necessarily either
rise or fall
in proportion
to the money price
of corn.
Though
in consequence of the bounty,
therefore,
the farmer
should be enabled
to sell his corn
for 4s the bushel,
instead of 3s:6d,
and
to pay his landlord a money
rent proportionable
to this rise
in the money price
of his produce;
yet if,
in consequence
of this rise
in the price of corn,
4s will purchase no
more home made goods
of any other kind
than 3s 6d
would have done before,
neither
the circumstances
of the farmer,
nor those of the landlord,
will be much
mended by this change.
The farmer
will not be able
to cultivate much better;
the landlord
will not be able
to live much better.
In the purchase
of foreign commodities,
this enhancement
in the price of corn
may give them
some little advantage.
In
that of home made commodities,
it can give them none
at all.
And almost
the whole expense
of the farmer,
and the far greater part even
of
that of the landlord,
is in home made commodities.
That degradation
in the value of silver,
which is the effect
of the fertility
of the mines,
and which operates equally,
or very nearly equally,
through the greater part
of the commercial world,
is a matter
of very little consequence
to any particular country.
The consequent rise
of all money prices,
though it
does not make
those
who receive them really
richer,
does not make them really
poorer.
A service of plate
becomes really cheaper,
and every thing else
remains precisely
of the same real value as
before.
But that degradation
in the value of silver,
which,
being the effect either
of the peculiar situation
or of the political institutions
of a particular country,
takes place only in
that country,
is a matter
of very great consequence,
which,
far from tending
to make anybody really richer,
tends to make every body
really poorer.
The rise
in the money price
of all commodities,
which is
in this case peculiar to
that country,
tends
to discourage more
or less every sort
of industry
which is carried on
within it,
and to enable foreign nations,
by furnishing almost all sorts
of goods
for a smaller quantity
of silver
than its own workmen
can afford
to do,
to undersell them,
not only in the foreign,
but
even in the home market.
It is the peculiar situation
of Spain and Portugal,
as proprietors of the mines,
to be
the distributers
of gold and silver
to all
the other countries
of Europe.
Those metals ought naturally,
therefore,
to be somewhat cheaper
in Spain and Portugal
than in any other part
of Europe.
The difference,
however,
should be no
more than the amount
of the freight and insurance;
and,
on account
of the great value
and small bulk
of those metals,
their freight
is no great matter,
and their insurance
is the same as
that of any other
goods of equal value.
Spain and Portugal,
therefore,
could suffer very little
from their peculiar situation,
if they
did not aggravate
its disadvantages
by their political institutions.
Spain
by taxing,
and Portugal by prohibiting,
the exportation
of gold and silver,
load that exportation
with the expense
of smuggling,
and raise the value
of those metals
in other countries so much more above
what it
is in their own,
by the whole amount
of this expense.
When you
dam up a stream of water,
as soon
as the dam is full,
as much water
must run over the dam-head
as if
there was no dam
at all.
The prohibition of exportation
cannot detain
a greater quantity
of gold and silver
in Spain and Portugal,
than
what they
can afford
to employ,
than what the annual produce
of their land
and labour
will allow them
to employ,
in coin,
plate,
gilding,
and other ornaments
of gold and silver.
When they
have
got this quantity,
the dam
is full,
and the whole stream
which flows
in
afterwards must run over.
The annual exportation
of gold and silver
from Spain and Portugal,
accordingly,
is, by all accounts,
notwithstanding
these restraints,
very near equal to
the whole annual importation.
As the water,
however,
must always be deeper
behind the dam-head
than before it,
so the quantity of gold
and silver which
these restraints
detain in Spain and Portugal,
must,
in proportion
to the annual produce
of their land
and labour,
be greater than
what
is to be found
in other countries.
The higher and stronger
the dam-head,
the greater
must be the difference
in the depth
of water
behind and before it.
The higher the tax,
the higher
the penalties
with which the prohibition
is guarded,
the more vigilant and severe
the police
which looks
after the execution
of the law,
the greater
must be the difference
in the proportion
of gold and silver
to the annual produce
of the land
and labour
of Spain and Portugal,
and to
that of other countries.
It is said,
accordingly,
to be very considerable,
and that you
frequently find there
a profusion
of plate in houses,
where there is
nothing else which
would in other
countries
be thought suitable
or correspondent
to this sort
of magnificence.
The cheapness
of gold and silver,
or,
what is the same thing,
the dearness
of all commodities,
which is the necessary effect
of this redundancy
of the precious metals,
discourages both
the agriculture
and manufactures
of Spain and Portugal,
and enables
foreign nations
to supply them
with many sorts of rude,
and with almost all sorts
of manufactured produce,
for a smaller quantity
of gold and silver
than what they themselves can
either raise
or make them for at home.
The tax and prohibition
operate
in two different ways.
They not
only lower very much
the value
of the precious metals
in Spain and Portugal,
but by detaining there
a certain quantity
of those metals
which
would otherwise flow over
other countries,
they keep
up their value
in those other countries
somewhat above
what it otherwise would be,
and thereby give
those countries
a double advantage
in their commerce
with Spain and Portugal.
Open the flood-gates,
and there will presently be less water above,
and more below the dam-head,
and it will soon
come to a level
in both places.
Remove the tax
and the prohibition,
and as the quantity
of gold and silver
will diminish considerably
in Spain and Portugal,
so it
will increase somewhat
in other countries;
and the value
of those metals,
their proportion
to the annual produce
of land and labour,
will soon
come to a level,
or very near
to a level,
in all.
The loss
which Spain and Portugal
could sustain
by this exportation
of their gold and silver,
would be altogether nominal
and imaginary.
The nominal value
of their goods,
and of the annual produce
of their land
and labour,
would fall,
and would be expressed
or represented
by a smaller quantity
of silver than before;
but their real value
would be the same as before,
and would be sufficient
to maintain,
command,
and employ the same quantity
of labour.
As the nominal value
of their goods
would fall,
the real value of
what remained
of their gold and silver
would rise,
and a smaller quantity
of those metals
would answer all
the same purposes
of commerce and circulation
which had employed a greater
quantity
before.
The gold and silver which
would go abroad
would not go abroad
for nothing,
but would bring back
an equal value
of goods
of some kind or other.
Those goods, too,
would not be all matters
of mere luxury and expense,
to be consumed
by idle people,
who produce nothing
in return
for their consumption.
As the real wealth and
revenue
of idle people
would not be augmented
by this
extraordinary exportation
of gold and silver,
so neither
would their consumption
be much augmented by it.
Those goods
would probably,
the greater part of them,
and certainly
some part of them,
consist in materials,
tools,
and provisions,
for the employment
and maintenance
of industrious people,
who would reproduce,
with a profit,
the full value
of their consumption.
A part
of the dead stock
of the society
would thus
be turned into active stock,
and would put
into motion a greater quantity
of industry
than had been employed before.
The annual produce
of their land
and labour
would immediately be augmented
a little,
and in a few years
would probably be augmented
a great deal;
their industry
being thus relieved
from one
of the most oppressive
burdens which
it at present
labours under.
The bounty
upon the exportation of corn
necessarily operates exactly
in the same way
as this absurd policy
of Spain and Portugal.
Whatever
be the actual state
of tillage,
it renders our corn somewhat
dearer
in the home market than it
otherwise would be
in that state,
and somewhat cheaper
in the foreign;
and as the average money price
of corn regulates,
more or less,
that of all other commodities,
it lowers the value of silver
considerably in the one,
and tends
to raise it
a little in the other.
It enables foreigners,
the Dutch in particular,
not only to eat our corn
cheaper
than
they
otherwise could do,
but sometimes to eat it
cheaper
than even
our own
people can do
upon the same occasions;
as we
are assured
by an excellent authority,
that of Sir Matthew Decker.
It
hinders
our own workmen from furnishing
their goods for so small
a quantity of silver as they
otherwise might do,
and enables
the Dutch
to furnish theirs
for a smaller.
It tends
to render
our manufactures somewhat
dearer in every market,
and theirs somewhat cheaper,
than they
otherwise would be,
and
consequently to give their industry
a double advantage
over our own.
The bounty,
as it
raises in the home market,
not so much the real,
as the nominal price
of our corn;
as it augments,
not the quantity
of labour which
a certain quantity
of corn can maintain
and employ,
but only the quantity
of silver which
it will exchange for;
it discourages
our manufactures,
without rendering
any considerable service,
either
to our farmers
or country gentlemen.
It puts,
indeed,
a little more money
into the pockets of both,
and it
will perhaps be somewhat
difficult
to persuade
the greater part of them
that this
is not rendering them
a very considerable service.
But if this money
sinks in
its value,
in the quantity of labour,
provisions,
and home-made commodities
of all different kinds which
it is capable
of purchasing,
as much as
it rises in its quantity,
the service
will be
little more than nominal
and imaginary.
There is,
perhaps,
but one
set of men
in the whole commonwealth
to whom the bounty
either was
or could be essentially
serviceable.
These
were the corn merchants,
the exporters and importers
of corn.
In years of plenty,
the bounty
necessarily occasioned
a greater
exportation
than
would otherwise have taken place;
and by hindering the plenty
of the one year
from relieving
the scarcity of another,
it occasioned
in years of scarcity
a greater importation than
would otherwise have been
necessary.
It increased the business
of the corn merchant in both;
and in the years
of scarcity,
it not only enabled him
to import a greater quantity,
but to sell it
for a better price,
and consequently with
a greater profit,
than he
could otherwise have made,
if the plenty of one year
had not been more or less
hindered
from relieving
the scarcity of another.
It is
in this set of men,
accordingly,
that
I have observed
the greatest zeal
for the continuance or renewal
of the bounty.
Our country gentlemen,
when they
imposed the high duties
upon the exportation
of foreign corn,
which in times
of moderate plenty amount
to a prohibition,
and when they
established the bounty,
seem to have imitated
the conduct
of our manufacturers.
By the one institution,
they secured to themselves
the monopoly
of the home market,
and by the other
they endeavoured
to prevent that market from
ever being overstocked
with their commodity.
By both
they endeavoured
to raise its real value,
in the same manner
as our manufacturers had,
by the like institutions,
raised the real value
of many different sorts
of manufactured goods.
They
did not,
perhaps,
attend
to the
great and essential
difference which nature
has established
between corn
and almost every other sort
of goods.
When,
either
by the monopoly
of the home market,
or by a bounty
upon exportation,
you enable our woollen
or linen manufacturers
to sell
their goods
for somewhat a better price
than
they otherwise could get
for them,
you raise,
not only the nominal,
but the real price
of those goods;
you render them equivalent
to a greater quantity
of labour and subsistence;
you increase not
only the nominal,
but the real profit,
the real wealth and revenue
of those manufacturers;
and you
enable them,
either
to live better themselves,
or to employ a greater
quantity
of labour in those particular
manufactures.
You really encourage those
manufactures,
and direct
towards them
a greater quantity
of the industry
of the country than
what would properly go
to them
of its own accord.
But when,
by the like institutions,
you raise the nominal
or money price
of corn,
you do not raise
its real value;
you do not increase
the real wealth,
the real revenue,
either
of our farmers
or country gentlemen;
you do not encourage
the growth
of corn,
because you
do not enable them
to maintain
and employ more labourers
in raising it.
The nature of things
has stamped
upon corn a real value,
which cannot be altered
by merely altering
its money price.
No bounty upon exportation,
no monopoly
of the home market,
can raise that value.
The freest competition
cannot lower it,
Through the world in general,
that value
is equal to
the quantity of labour which
it can maintain,
and in every particular place
it is equal to the quantity
of labour which
it can maintain in the way,
whether liberal,
moderate,
or scanty,
in which
labour is commonly maintained
in that place.
Woollen or linen cloth
are not
the regulating commodities
by which the real value
of all other
commodities
must be finally measured
and determined;
corn is.
The real value
of every other commodity
is finally measured
and determined
by the proportion which
its average money price bears
to the average money price
of corn.
The real value of corn
does not vary
with those variations
in its average money price,
which
sometimes occur from one century
to another;
it is the real value
of silver which
varies with them.
Bounties
upon the exportation
of any homemade commodity
are liable,
first,
to that general
objection
which may be made to all
the different expedients
of the mercantile system;
the objection of forcing some
part of the industry
of the country
into a channel less
advantageous
than
that in which
it would run
of its own accord;
and, secondly,
to the particular objection
of forcing it not
only into a channel
that is less advantageous,
but into one
that is actually disadvantageous;
the trade
which cannot be carried
on but by means
of a bounty
being necessarily
a losing trade.
The bounty
upon the exportation of corn
is liable
to this further objection,
that it can in no respect
promote the raising of
that particular commodity
of which it
was meant
to encourage the production.
When our country gentlemen,
therefore,
demanded
the establishment
of the bounty,
though they
acted
in imitation
of our merchants
and manufacturers,
they
did not act
with that complete comprehension
of their own interest,
which commonly directs
the conduct
of those
two other orders
of people.
They loaded the public revenue
with a very considerable expense:
they imposed a very heavy tax
upon the whole body
of the people;
but they did not,
in any sensible degree,
increase the real value
of their own commodity;
and by lowering somewhat
the real value of silver,
they discouraged,
in some degree,
the general industry
of the country,
and,
instead of advancing,
retarded more
or less
the improvement of their own
lands,
which
necessarily depend
upon the general industry
of the country.
To encourage the production
of any commodity,
a bounty upon production,
one should imagine,
would have
a more direct operation
than one
upon exportation.
It would,
besides,
impose only
one tax upon the people,
that which
they must contribute
in order to pay the bounty.
Instead of raising,
it would tend
to lower the price
of the commodity
in the home market;
and thereby,
instead of imposing
a second tax upon the people,
it might,
at least in part,
repay them for what
they had contributed
to the first.
Bounties upon production,
however,
have been very rarely granted.
The prejudices
established
by the commercial system
have taught us to believe,
that
national wealth
arises more immediately
from exportation than
from production.
It has been more favoured,
accordingly,
as the more immediate means
of bringing money
into the country.
Bounties upon production,
it has been said too,
have been found
by experience more liable
to frauds than those
upon exportation.
How far this is true,
I know not.
That bounties upon exportation
have been abused,
to many fraudulent purposes,
is very well known.
But it
is not the interest
of merchants and manufacturers,
the great inventors
of all these expedients,
that the home market
should be overstocked
with their goods;
an event which a bounty
upon production
might sometimes occasion.
A bounty upon exportation,
by enabling them
to send abroad
their surplus part,
and to keep
up the price of
what remains in
the home market,
effectually
prevents this.
Of all
the expedients
of the mercantile system,
accordingly,
it
is the one
of which
they are the fondest.
I have known
the different undertakers
of some particular works
agree privately
among themselves
to give a bounty
out of their own pockets
upon the exportation
of a certain proportion
of the goods which
they dealt in.
This expedient
succeeded so well,
that it
more than doubled the price
of their goods
in the home market,
notwithstanding
a very considerable increase
in the produce.
The operation
of the bounty upon corn
must have been wonderfully
different,
if it
has lowered the money price
of
that commodity.
Something
like a bounty upon production,
however,
has been granted
upon some particular occasions.
The tonnage bounties
given to the white herring
and whale fisheries may,
perhaps,
be considered as
somewhat of this nature.
They tend directly,
it may be supposed,
to render the goods cheaper
in the home market
than
they
otherwise would be.
In other respects,
their effects,
it must be acknowledged,
are the same
as those
of bounties upon exportation.
By means of them,
a part of the capital
of the country
is employed
in bringing goods
to market,
of which
the price
does not repay the cost,
together
with the ordinary profits
of stock.
But though the tonnage
bounties to those fisheries
do not contribute
to the opulence
of the nation,
it may,
perhaps,
be thought that
they contribute
to its defence,
by augmenting the number
of its sailors
and shipping.
This,
it may be alleged,
may sometimes be done
by means
of such bounties,
at a much smaller expense
than by keeping
up a great standing navy,
if I
may use such an expression,
in the same way
as a standing army.
Notwithstanding these
favourable allegations,
however,
the following considerations
dispose me to believe,
that
in granting
at least one
of these bounties,
the legislature
has been very grossly imposed upon:
First,
The herring-buss bounty
seems too large.
From the commencement
of the winter fishing 1771,
to the end
of the winter fishing 1781,
the tonnage
bounty
upon the herring-buss fishery
has been
at thirty shillings the ton.
During these eleven years,
the whole number
of barrels
caught
by the herring-buss fishery
of Scotland amounted to 378,347.
The herrings
caught and cured at sea
are called sea-sticks.
In order to
render them
what are called
merchantable herrings,
it is necessary
to repack them
with an additional quantity
of salt;
and in this case,
it is reckoned,
that three barrels
of sea-sticks
are usually repacked
into two barrels
of merchantable herrings.
The number
of barrels
of merchantable herrings,
therefore,
caught
during these eleven years,
will amount only,
according to this account,
to 252,231¼.
During these eleven years,
the tonnage bounties
paid amounted
to £155,463:11s or 8s:2¼d
upon every barrel
of sea-sticks,
and to 12s:3¾d
upon every barrel
of merchantable herrings.
The salt
with which these herrings
are cured
is sometimes Scotch,
and sometimes foreign salt;
both which
are delivered,
free of all
excise duty,
to the fish-curers.
The excise duty
upon Scotch salt
is at present 1s:6d,
that upon foreign salt 10s
the bushel.
A barrel of herrings
is supposed
to require
about one bushel
and one-fourth
of a bushel foreign salt.
Two bushels
are
the supposed average
of Scotch salt.
If the herrings
are entered for exportation,
no part of this duty
is paid up;
if entered
for home consumption,
whether
the herrings
were cured
with foreign
or with Scotch salt,
only one shilling
the barrel is paid up.
It was the old Scotch duty
upon a bushel of salt,
the quantity which,
at a low estimation,
had been supposed necessary
for curing
a barrel of herrings.
In Scotland,
foreign salt
is very little
used for any other purpose
but the curing of fish.
But from the 5th April 1771
to the 5th April 1782,
the quantity of foreign salt
imported amounted
to 936,974 bushels,
at eighty-four pounds
the bushel;
the quantity of Scotch salt
delivered
from the works
to the fish-curers,
to no more than 168,226,
at fifty-six pounds
the bushel only.
It would appear,
therefore,
that it is principally foreign
salt that is used
in the fisheries.
Upon every barrel
of herrings exported,
there is,
besides,
a bounty of 2s:8d,
and more than two-thirds
of the buss-caught herrings
are exported.
Put all these things together,
and you will find that,
during these eleven years,
every barrel
of buss-caught herrings,
cured with Scotch salt,
when exported,
has cost government 17s:11¾d;
and,
when entered
for home consumption,
14s:3¾d;
and that every barrel
cured with foreign salt,
when exported,
has cost government £1:7:5¾d;
and,
when entered
for home consumption, £
1:3:9¾d.
The price
of a barrel
of good merchantable
herrings runs
from seventeen and eighteen
to four
and five-and-twenty shillings;
about a guinea
at an average.
(See the accounts
at the end
of this Book.)
Secondly,
The bounty
to the white-herring fishery
is a tonnage bounty,
and is proportioned
to the burden
of the ship,
not to her diligence
or success
in the fishery;
and it has,
I am afraid,
been too common
for the vessels
to fit out
for the sole purpose
of catching,
not the fish but the bounty.
In the year 1759,
when
the bounty
was at fifty shillings
the ton,
the whole buss
fishery of Scotland
brought
in only four barrels
of sea-sticks.
In that year,
each barrel
of sea-sticks cost government,
in bounties alone, £
113:15s;
each barrel
of merchantable
herrings £159:7:6.
Thirdly,
The mode
of fishing,
for which this tonnage bounty
in the
white herring
fishery has been given
(by busses
or decked vessels
from twenty
to eighty tons burden ),
seems not so well adapted
to the situation
of Scotland,
as to that of Holland,
from the practice
of which country
it appears
to have been borrowed.
Holland lies
at a great distance
from the seas
to which herrings
are known principally
to resort,
and can,
therefore,
carry on
that fishery
only in decked vessels,
which can carry water
and provisions sufficient
for a voyage
to a distant sea;
but the Hebrides,
or Western Islands,
the islands of Shetland,
and the northern
and north-western coasts
of Scotland,
the countries
in whose neighbourhood
the herring
fishery
is principally carried on,
are everywhere intersected
by arms
of the sea,
which run
up a considerable way
into the land,
and which,
in the language
of the country,
are called sea-lochs.
It
is to these sea-lochs
that the herrings
principally resort
during the seasons
in which they
visit these seas;
for the visits of this,
and, I am assured,
of many other sorts of fish,
are not quite
regular and constant.
A boat-fishery,
therefore,
seems to be the mode
of fishing best adapted
to the peculiar situation
of Scotland,
the fishers
carrying
the herrings
on shore
as fast as they are taken,
to be either
cured or consumed fresh.
But
the great encouragement which
a bounty
of 30s
the ton
gives to the buss-fishery,
is necessarily
a discouragement
to the boat-fishery,
which,
having no such bounty,
cannot bring its cured fish
to market
upon the same terms
as the buss-fishery.
The boat-fishery;
accordingly,
which,
before the establishment
of the buss-bounty,
was very considerable,
and is said
to have employed a number
of seamen,
not inferior to what
the buss-fishery
employs at present,
is now gone almost entirely
to decay.
Of the former extent,
however,
of this
now ruined
and abandoned fishery,
I must acknowledge that
I cannot pretend
to speak with much precision.
As no bounty
was-paid
upon the outfit
of the boat-fishery,
no account was taken of it
by the officers
of the customs
or salt duties.
Fourthly,
In many parts of Scotland,
during certain seasons
of the year,
herrings make
no inconsiderable part
of the food
of the common people.
A bounty
which tended
to lower their price
in the home market,
might contribute a good deal
to the relief
of a great number
of our fellow-subjects,
whose circumstances
are by no means affluent.
But the herring-bus bounty
contributes
to no such good purpose.
It has ruined the boat
fishery,
which is by far the best
adapted
for the supply
of the home market;
and the additional bounty
of 2s:8d
the barrel upon exportation,
carries the greater part,
more than two-thirds,
of the produce
of the buss-fishery abroad.
Between thirty
and forty years ago,
before the establishment
of the buss-bounty,
16s the barrel,
I have been assured,
was the common price
of white herrings.
Between ten
and fifteen years ago,
before the boat-fishery
was entirely ruined,
the price
was said
to have run
from seventeen
to twenty shillings
the barrel.
For these last five years,
it has,
at an average,
been at twenty-five shillings
the barrel.
This high price,
however,
may have been owing
to the real scarcity
of the herrings
upon the coast
of Scotland.
I must observe, too,
that
the cask or barrel,
which is usually sold
with the herrings,
and of which
the price
is included
in all the foregoing prices,
has,
since the commencement
of the American war,
risen to
about double its former price,
or from
about 3s to about 6s.
I must likewise
observe,
that the accounts
I have received
of the prices
of former times,
have been by no
means quite uniform
and consistent,
and an old man
of great accuracy and
experience has assured me,
that,
more than fifty years ago,
a guinea
was the usual price
of a barrel
of good merchantable herrings;
and this,
I imagine,
may still be looked upon
as the average price.
All accounts,
however,
I think,
agree that the price
has not been lowered
in the home market
in consequence
of the buss-bounty.
When the undertakers
of fisheries,
after such liberal
bounties have been bestowed
upon them,
continue
to sell their commodity
at the same,
or even at a higher price
than
they
were accustomed to do before,
it might be expected that
their profits
should be very great;
and it is not improbable
that
those of some individuals
may have been so.
In general,
however,
I have every reason
to believe
they have been
quite otherwise.
The usual effect of such
bounties is,
to encourage rash undertakers
to adventure
in a business which they
do not understand;
and what they
lose by their own negligence
and ignorance,
more than
compensates
all that they
can gain
by the utmost liberality
of government.
In 1750,
by the same act which first
gave the bounty
of 30s the ton
for the encouragement
of the white herring fishery
(the 23d George II c.24),
a joint stock company
was erected,
with a capital of £500,000,
to which the subscribers
(over and above
all other encouragements,
the tonnage bounty
just now mentioned,
the exportation bounty
of 2s:8d the barrel,
the delivery
of both British
and foreign salt
duty free)
were,
during the space
of fourteen years,
for every hundred pounds which
they subscribed
and paid
into the stock
of the society,
entitled
to three pounds a-year,
to be paid
by the receiver-general
of the customs
in equal
half-yearly payments.
Besides this great company,
the residence of whose governor
and directors
was to be in London,
it was declared lawful
to erect different
fishing chambers
in all
the different out-ports
of the kingdom,
provided
a sum not less than £10,000
was subscribed
into the capital
of each,
to be managed
at its own risk,
and for its own profit
and loss.
The same annuity,
and the same encouragements
of all kinds,
were given
to the trade
of those inferior chambers
as to
that of the great company.
The subscription
of the great company
was soon filled up,
and several
different fishing chambers
were erected
in the different out-ports
of the kingdom.
In spite of all
these encouragements,
almost all those
different companies,
both great and small,
lost either the whole
or the greater part
of their capitals;
scarce
a vestige
now remains of any of them,
and the white-herring
fishery is now entirely,
or almost entirely,
carried on
by private adventurers.
If any particular manufacture
was necessary,
indeed,
for the defence
of the society,
it might not always be
prudent
to depend
upon our neighbours
for the supply;
and if such manufacture
could not otherwise be supported
at home,
it might not be unreasonable
that all the other branches
of industry
should be taxed
in order to support it.
The bounties
upon the exportation
of British made sail-cloth,
and British made gunpowder,
may,
perhaps,
both
be vindicated
upon this principle.
But though it
can very seldom
be reasonable
to tax the industry
of the great body
of the people,
in order to support
that of some particular class
of manufacturers;
yet,
in the wantonness
of great prosperity,
when the public
enjoys a greater revenue
than it
knows well what to do with,
to give
such bounties to favourite
manufactures,
may,
perhaps,
be as natural as to incur
any other idle expense.
In public,
as
well as in private expenses,
great wealth,
may,
perhaps,
frequently
be admitted as an apology
for great folly.
But there must surely be
something
more than ordinary absurdity
in continuing
such profusion
in times of general difficulty
and distress.
What is called a bounty,
is sometimes no
more than a drawback,
and, consequently,
is not liable
to the same objections as
what is properly a bounty.
The bounty,
for example,
upon refined sugar exported,
may be considered
as a drawback
of the duties
upon the brown
and Muscovado sugars,
from which
it is made;
the bounty upon wrought silk
exported,
a drawback
of the duties upon raw
and thrown silk imported;
the bounty upon gunpowder
exported,
a drawback
of the duties
upon brimstone and saltpetre
imported.
In the language
of the customs,
those allowances
only are called
drawbacks
which are given upon goods
exported in the same form
in which they are imported.
When that form
has been so
altered
by manufacture of any kind as
to come
under a new denomination,
they are called bounties.
Premiums
given by the public
to artists and manufacturers,
who excel
in their particular occupations,
are not liable
to the same objections as
bounties.
By encouraging extraordinary
dexterity
and ingenuity,
they serve
to keep
up the emulation
of the workmen
actually employed
in those
respective occupations,
and are not
considerable enough
to turn towards any one
of them
a greater share
of the capital of the country than what
would go to it
of its own accord.
Their tendency
is not
to overturn
the natural balance
of employments,
but to render
the work
which is done in
each as perfect
and complete as possible.
The expense of premiums,
besides,
is very trifling,
that of bounties very great.
The bounty
upon corn alone
has sometimes cost the public,
in one year,
more than £300,000.
Bounties
are sometimes called premiums,
as drawbacks
are sometimes called bounties.
But we must,
in all cases,
attend to the nature
of the thing,
without paying any
regard to the word.
I cannot conclude
this chapter
concerning bounties,
without observing,
that the praises which
have been bestowed
upon the law
which establishes the bounty
upon the exportation of corn,
and upon
that system of regulations
which is connected with it,
are altogether unmerited.
A particular examination
of the nature
of the corn trade,
and of the principal British
laws which
relate to it,
will sufficiently demonstrate
the truth
of this assertion.
The great importance
of this subject
must justify
the length
of the digression.
The trade
of the corn merchant
is composed
of four different branches,
which,
though they
may sometimes be all carried on
by the same person,
are, in their own nature,
four separate
and distinct trades.
These are,
first,
the trade
of the inland dealer;
secondly,
that of the merchant-importer
for home consumption;
thirdly,
that of the merchant-exporter
of home produce
for foreign consumption;
and, fourthly,
that of the merchant-carrier,
or of the importer
of corn,
in order to export it
again.
I. The interest
of the inland dealer,
and that
of the great body
of the people,
how opposite soever
they may at first
appear,
are, even in years
of the greatest scarcity,
exactly the same.
It is his interest
to raise
the price
of his corn as high
as the real scarcity
of the season requires,
and it
can never be his interest
to raise it higher.
By raising the price,
he discourages the consumption,
and puts every body more
or less,
but particularly
the inferior ranks of people,
upon thrift
and good management If,
by raising it too high,
he discourages
the consumption so much that
the supply of the season
is likely
to go
beyond the consumption
of the season,
and to last
for some time
after the next crop
begins to come in,
he runs the hazard,
not only of losing
a considerable part
of his corn
by natural causes,
but of being obliged
to sell what remains of it
for much less than
what he
might have had
for it several months before.
If,
by not raising
the price high enough,
he discourages the consumption
so little,
that
the supply of the season
is likely
to fall short
of the consumption
of the season,
he not only loses
a part of the profit which
he might otherwise have made,
but he
exposes the people
to suffer
before the end of the season,
instead of the hardships
of a dearth,
the dreadful horrors
of a famine.
It is the interest
of the people
that their daily,
weekly,
and monthly consumption
should be proportioned
as exactly as possible
to the supply
of the season.
The interest
of the inland corn dealer
is the same.
By supplying them,
as nearly as he
can judge,
in this proportion,
he is likely
to sell all
his corn
for the highest price,
and with the greatest profit;
and his knowledge
of the state
of the crop,
and of his daily,
weekly,
and monthly sales,
enables him
to judge,
with more or less accuracy,
how far they
really are supplied
in this manner.
Without intending
the interest of the people,
he is necessarily led,
by a regard
to his own interest,
to treat them,
even in years of scarcity,
pretty much
in the same manner
as the prudent master
of a vessel
is sometimes obliged
to treat his crew.
When he
foresees
that provisions
are likely to run short,
he puts them
upon short allowance.
Though from excess of caution
he should sometimes do this
without any real necessity,
yet all
the inconveniencies which
his crew can thereby suffer
are inconsiderable,
in comparison of the danger,
misery,
and ruin,
to which
they
might sometimes be exposed
by a less
provident conduct.
Though,
from excess of avarice,
in the same manner,
the inland corn merchant
should sometimes raise
the price
of his corn somewhat higher
than the scarcity
of the season
requires,
yet all
the inconveniencies which
the people
can suffer
from this conduct,
which effectually secures them
from a famine
in the end
of the season,
are inconsiderable,
in comparison of what they
might have been exposed to
by a
more liberal way of dealing
in the beginning
of it
the corn merchant
himself is likely
to suffer the most
by this excess
of avarice;
not
only from the indignation which
it generally excites
against him,
but,
though he
should escape the effects
of this indignation,
from the quantity
of corn which
it necessarily leaves
upon his hands
in the end
of the season,
and which,
if the next season
happens to prove favourable,
he must always sell
for a much lower price than
he
might otherwise have had.
Were it possible,
indeed,
for one great company
of merchants
to possess themselves
of the whole crop
of an extensive country,
it might perhaps be
their interest
to deal with it,
as the Dutch
are said
to do
with the spiceries
of the Moluccas,
to destroy or throw away
a considerable part of it,
in order to
keep
up the price of the rest.
But it is scarce possible,
even by the violence
of law,
to establish such
an extensive monopoly
with regard to corn;
and wherever
the law
leaves the trade free,
it is
of all commodities
the least liable
to be engrossed
or monopolized
by the forced
a few large capitals,
which buy
up the greater part of it.
Not only
its value far
exceeds
what the capitals
of a few private men
are capable
of purchasing;
but,
supposing
they were capable
of purchasing it,
the manner
in which it is produced
renders this purchase
altogether impracticable.
As,
in every civilized country,
it is the commodity of which
the annual consumption
is the greatest;
so a greater quantity
of industry
is annually employed
in producing corn
than in producing
any other commodity.
When it first
comes from the ground, too,
it is necessarily divided
among a greater number
of owners
than any other commodity;
and these owners
can never be collected
into one place,
like a number
of independent manufacturers,
but are necessarily scattered
through all
the different corners
of the country.
These first owners either
immediately supply
the consumers
in their own neighbourhood,
or they
supply other inland dealers,
who supply those consumers.
The inland dealers in corn,
therefore,
including
both
the farmer and the baker,
are necessarily more numerous
than the
dealers
in any other commodity;
and their dispersed situation
renders it
altogether impossible
for them
to enter
into any general combination.
If,
in a year of scarcity,
therefore,
any of them
should find that he
had a good deal more corn
upon hand than,
at the current price,
he could hope
to dispose of
before the end of the season,
he would never think
of keeping
up this price
to his own loss,
and to the sole benefit
of his rivals and competitors,
but would immediately lower it,
in order to
get rid of
his corn
before the new crop
began to come in.
The same motives,
the same interests,
which would thus
regulate the conduct
of any one dealer,
would regulate
that of every other,
and oblige them all
in general
to sell their corn
at the price which,
according to
the best of their judgment,
was most suitable
to the scarcity or plenty
of the season.
Whoever
examines,
with attention,
the history
of the dearths
and famines which
have afflicted any part
of Europe
during either the course
of the present or
that
of the two preceding centuries,
of several
of which we have
pretty exact accounts,
will find,
I believe,
that
a dearth
never has arisen
from any combination
among the inland dealers
in corn,
nor from any other cause
but a real scarcity,
occasioned sometimes,
perhaps,
and in some particular places,
by the waste of war,
but in by far
the greatest number
of cases
by the fault
of the seasons;
and that a famine
has never arisen
from any other cause
but the violence
of government
attempting,
by improper means,
to remedy the inconveniencies
of a dearth.
In an extensive corn country,
between all
the different parts
of which
there is a free commerce
and communication,
the scarcity
occasioned
by the most unfavourable seasons
can never be so great as
to produce a famine;
and the scantiest crop,
if managed
with frugality and economy,
will maintain,
through the year,
the same number of people
that are commonly fed
in a more affluent manner
by one
of moderate plenty.
The seasons most unfavourable
to the crop
are those
of excessive drought
or excessive rain.
But as corn
grows equally
upon high and low lands,
upon grounds
that are disposed
to be too wet,
and upon those
that are disposed
to be too dry,
either the drought
or the rain,
which is hurtful to one part
of the country,
is favourable to another;
and though,
both in the wet
and in the dry season,
the crop
is a good deal
less than
in one more properly tempered;
yet,
in both,
what is lost in one part
of the country
is in some measure
compensated by what
is gained in the other.
In rice countries,
where the crop not
only requires
a very moist soil,
but where,
in a certain period
of its growing,
it must be laid under water,
the effects of a drought
are much more dismal.
Even in such countries,
however,
the drought is,
perhaps,
scarce ever so universal
as
necessarily to occasion a famine,
if the government
would allow a free trade.
The drought in Bengal,
a few years ago,
might probably have occasioned
a very great dearth.
Some improper regulations,
some injudicious restraints,
imposed
by the servants
of the East India Company
upon the rice trade,
contributed,
perhaps,
to turn that dearth
into a famine.
When the government,
in order to
remedy the inconveniencies
of a dearth,
orders all the dealers
to sell their corn at what
it supposes
a reasonable price,
it either
hinders them
from bringing
it to market,
which may sometimes produce
a famine
even in the beginning
of the season;
or, if they
bring it thither,
it enables the people,
and thereby encourages them
to consume
it so fast as
must necessarily produce
a famine before
the end of the season.
The unlimited,
unrestrained freedom
of the corn trade,
as it
is
the only effectual preventive
of the miseries
of a famine,
so it
is the best palliative
of the inconveniencies
of a dearth;
for the inconveniencies
of a real scarcity
cannot be remedied;
they
can only be palliated.
No trade
deserves more
the full protection
of the law,
and no
trade requires it so much;
because no
trade is so much
exposed to popular odium.
In years of scarcity,
the inferior ranks of people
impute their distress
to the avarice
of the corn merchant,
who becomes the object
of their hatred
and indignation.
Instead of making profit
upon such occasions,
therefore,
he is often in danger
of being utterly ruined,
and of having
his magazines
plundered
and destroyed
by their violence.
It is in years of scarcity,
however,
when prices
are high,
that the corn merchant expects
to make his principal profit.
He is generally
in contract
with some farmers
to furnish him,
for a certain number of years,
with a certain quantity
of corn,
at a certain price.
This contract price
is settled according to
what is supposed
to be the moderate
and reasonable,
that is,
the ordinary or average price,
which,
before the late years
of scarcity,
was commonly about 28s
for the quarter
of wheat,
and for
that of other grain
in proportion.
In years of scarcity,
therefore,
the corn
merchant buys a great part
of his corn
for the ordinary price,
and sells it
for a much higher.
That this
extraordinary profit,
however,
is no more than sufficient
to put his trade
upon a fair level
with other trades,
and
to compensate the many losses
which
he sustains
upon other occasions,
both
from the perishable nature
of the commodity itself,
and from the frequent
and unforeseen fluctuations
of its price,
seems
evident enough,
from this single circumstance,
that
great fortunes
are as seldom made
in this
as in any other trade.
The popular odium,
however,
which attends it
in years of scarcity,
the only years
in which it
can be very profitable,
renders people
of character and fortune
averse
to enter into it.
It is abandoned
to an inferior set
of dealers;
and millers,
bakers,
meal-men,
and meal-factors,
together
with a number
of wretched hucksters,
are almost
the only middle people that,
in the home market,
come between the grower
and the consumer.
The ancient policy of Europe,
instead of discountenancing
this
popular odium
against a trade so beneficial
to the public,
seems,
on the contrary,
to have authorised
and encouraged it.
By the 5th
and 6th of Edward VI cap.
14,
it was enacted,
that whoever should buy
any corn or grain,
with intent
to sell it again,
should be reputed
an unlawful engrosser,
and should,
for the first fault,
suffer
two months imprisonment,
and forfeit the value
of the corn;
for the second,
suffer
six months imprisonment,
and forfeit
double the value;
and, for the third,
be set in the pillory,
suffer imprisonment
during the king's pleasure,
and forfeit all his goods
and chattels.
The ancient policy
of most other parts
of Europe
was no better than
that of England.
Our ancestors
seem to have imagined,
that
the people
would buy their corn cheaper
of the farmer than
of the corn merchant,
who,
they
were afraid,
would require,
over and above
the price which
he paid to the farmer,
an exorbitant profit
to himself.
They endeavoured,
therefore,
to annihilate
his trade altogether.
They even endeavoured
to hinder,
as much as possible,
any middle man of any kind
from coming in
between the grower
and the consumer;
and this
was the meaning
of the many restraints which
they imposed
upon the trade of those whom
they called kidders,
or carriers of corn;
a trade which nobody
was allowed
to exercise without a licence,
ascertaining
his qualifications
as a man
of probity and fair
dealing.
The authority
of three justices
of the peace was,
by the statute
of Edward VI. necessary
in order to
grant this licence.
But even this restraint
was afterwards thought
insufficient,
and, by a statute
of Elizabeth,
the privilege of granting
it was confined
to the quarter-sessions.
The ancient policy of Europe
endeavoured,
in this manner,
to regulate agriculture,
the great trade
of the country,
by maxims
quite different
from those which
it established with regard to
manufactures,
the great trade
of the towns.
By leaving
a farmer no
other customers but either
the consumers
or their immediate factors,
the kidders and carriers
of corn,
it endeavoured
to force him
to exercise the trade,
not only of a farmer,
but of a corn merchant,
or corn retailer.
On the contrary,
it,
in many cases,
prohibited the manufacturer
from exercising
the trade of a shopkeeper,
or from selling
his own goods by retail.
It meant,
by the one law,
to promote
the general interest
of the country,
or to render corn cheap,
without,
perhaps,
its being well understood
how this was to be done.
By the other,
it meant to promote
that of a particular order
of men,
the shopkeepers,
who
would be so much
undersold by the manufacturer,
it was supposed,
that
their trade would be ruined,
if he
was allowed
to retail at all.
The manufacturer,
however,
though he
had been allowed
to keep a shop,
and to sell his own goods
by retail,
could not have undersold
the common
shopkeeper.
Whatever
part of his capital
he might have placed
in his shop,
he must have withdrawn it
from his manufacture.
In order to
carry
on his business
on a level with
that of other people,
as
he must have had the profit
of a manufacturer
on the one part,
so he
must have had
that of a shopkeeper
upon the other.
Let us
suppose,
for example,
that in the particular town
where he
lived,
ten per cent.
was the ordinary profit both
of manufacturing
and shopkeeping stock;
he must in this case
have charged
upon every piece
of his own goods,
which
he sold in his shop,
a profit of twenty per cent.
When
he carried them
from his workhouse
to his shop,
he must have valued them
at the price
for which he
could have sold them
to a dealer or shopkeeper,
who would have bought them
by wholesale.
If he
valued them lower,
he lost a part
of the profit
of his manufacturing capital.
When,
again,
he sold them from his shop,
unless he
got the same price
at which a shopkeeper
would have sold them,
he lost a part
of the profit
of his shop-keeping capital.
Though he might appear,
therefore,
to make a double profit
upon the same piece
of goods,
yet,
as these goods
made successively a part
of two distinct capitals,
he made
but a single profit
upon the whole capital employed
about them;
and if he
made less than his profit,
he was a loser,
and did not employ
his whole capital
with the same advantage
as the greater part
of his neighbours.
What
the manufacturer
was prohibited
to do,
the farmer
was in some measure
enjoined
to do;
to divide his capital
between two different employments;
to keep one part of it
in his granaries
and stack-yard,
for supplying
the occasional demands
of the market,
and to employ the other
in the cultivation
of his land.
But as he
could not afford
to employ the latter
for less than the ordinary profits
of farming stock,
so he could as little
afford
to employ the former
for less than the ordinary profits
of mercantile stock.
Whether
the stock
which really carried
on the business
of a corn merchant
belonged
to the person
who was called a farmer,
or to the person
who was called a corn
merchant,
an equal profit
was in both cases requisite,
in order to
indemnify its owner
for employing it
in this manner,
in order to
put his business
on a level
with other trades,
and in order to
hinder him
from having an interest
to change it
as soon as possible
for some other.
The farmer,
therefore,
who was thus forced
to exercise
the trade of a corn merchant,
could not afford
to sell
his corn cheaper than any
other corn merchant
would have been obliged
to do
in the case
of a free competition.
The dealer
who can employ
his whole stock in
one single branch
of business,
has an advantage
of the same kind
with the workman
who can employ
his whole labour in
one single operation.
As the latter acquires
a dexterity
which enables him,
with the same two hands,
to perform
a much greater quantity
of work,
so the former
acquires
so easy and ready a method
of transacting his business,
of buying and disposing
of his goods,
that with the same capital
he can transact
a much greater quantity
of business.
As the one
can commonly afford
his work a good deal
cheaper,
so the other
can commonly afford his goods
somewhat
cheaper,
than if
his stock and attention
were both employed
about a greater variety
of objects.
The greater part
of manufacturers
could not afford to retail
their own goods so cheap
as a
vigilant and active
shopkeeper,
whose sole business
it was to buy them
by wholesale
and to retail them again.
The greater part of farmers
could still
less afford
to retail their own corn,
to supply the inhabitants
of a town,
at perhaps four
or five miles distance
from the greater part
of them,
so cheap
as a
vigilant and active corn
merchant,
whose sole business
it was
to purchase corn by wholesale,
to collect it
into a great magazine,
and to retail it again.
The law
which prohibited
the manufacturer
from exercising
the trade of a shopkeeper,
endeavoured
to force
this division
in the employment of stock
to go on faster than it
might otherwise have done.
The law
which obliged
the farmer
to exercise
the trade of a corn merchant,
endeavoured
to hinder it
from going on so fast.
Both laws
were evident violations
of natural liberty,
and therefore unjust;
and they were both, too,
as impolitic
as they were unjust.
It is the interest
of every society,
that things of this kind
should never either
he forced or obstructed.
The man
who employs either
his labour or his stock
in a greater variety of ways
than his situation
renders necessary,
can never
hurt his neighbour
by underselling him.
He may hurt himself,
and he generally does so.
Jack-of-all-trades
will never be rich,
says the proverb.
But the law ought always
to trust people
with the care
of their own interest,
as in their local situations
they must generally be able
to judge better of it
than the legislature
can do.
The law,
however,
which obliged the farmer
to exercise
the trade of a corn merchant
was by far
the most pernicious
of the two.
It obstructed not only
that division
in the employment of stock
which is so advantageous
to every society,
but it obstructed
likewise the improvement
and cultivation
of the land.
By obliging
the farmer
to carry on two
trades instead of one,
it forced him
to divide his capital
into two parts,
of which one
only could be employed
in cultivation.
But if he had been
at liberty
to sell
his whole crop
to a corn merchant as fast
as he
could thresh it out,
his whole capital
might have returned immediately
to the land,
and have been employed
in buying more cattle,
and hiring more servants,
in order to
improve
and cultivate it better.
But by being obliged
to sell his corn by retail,
he was obliged
to keep a great part
of his capital
in his granaries
and stack-yard
through the year,
and could not
therefore
cultivate so well as
with the same capital
he might otherwise have done.
This law,
therefore,
necessarily
obstructed
the improvement of the land,
and,
instead of tending
to render corn cheaper,
must have tended
to render it scarcer,
and therefore dearer,
than it
would otherwise have been.
After the business
of the farmer,
that of the corn merchant
is in reality
the trade which,
if properly protected
and encouraged,
would contribute the most
to the raising
of corn.
It would support the trade
of the farmer,
in the same manner
as the trade
of the wholesale dealer supports
that of the manufacturer.
The wholesale dealer,
by affording
a ready market
to the manufacturer,
by taking
his goods
off his hand as fast
as he
can make them,
and by sometimes
even advancing
their price to him before he
has made them,
enables him
to keep his whole capital,
and sometimes even more
than his whole capital,
constantly
employed in manufacturing,
and
consequently to manufacture
a much greater quantity
of goods than
if he was obliged
to dispose
of them himself
to the immediate consumers,
or even to the retailers.
As the capital
of the wholesale merchant, too,
is generally sufficient
to replace
that of many manufacturers,
this intercourse between him
and them
interests the owner
of a large capital
to support the owners
of a great number
of small ones,
and to assist them
in those losses
and misfortunes
which might otherwise prove
ruinous
to them.
An intercourse
of the same kind
universally established
between the farmers
and the corn merchants,
would be attended
with effects equally beneficial
to the farmers.
They
would be enabled
to keep their whole capitals,
and even more
than their whole capitals
constantly employed
in cultivation.
In case of any
of those accidents
to which no
trade is more liable
than theirs,
they would find
in their ordinary customer,
the wealthy corn merchant,
a person
who had both
an interest
to support them,
and the ability
to do it;
and they would not,
as at present,
be entirely dependent
upon the forbearance
of their landlord,
or the mercy of his steward.
Were it possible,
as perhaps
it is not,
to establish
this intercourse universally,
and all at once;
were it possible
to turn all
at once
the whole farming stock
of the kingdom
to its proper business,
the cultivation of land,
withdrawing
it from every other employment
into which any part of it
may be at present diverted;
and were it possible,
in order to support
and assist,
upon occasion,
the operations
of this great stock,
to provide all
at once another stock
almost equally
great;
it is not,
perhaps,
very easy
to imagine how great,
how extensive,
and how sudden,
would be the improvement which
this change of circumstances
would alone produce
upon the whole face
of the country.
The statute of Edward VI
therefore,
by prohibiting
as much as
possible any middle man
from coming in
between the grower
and the consumer,
endeavoured
to annihilate a trade,
of which the free exercise
is not only
the best palliative
of the inconveniencies
of a dearth,
but the best preventive of
that calamity;
after the trade
of the farmer,
no trade contributing so much
to the growing
of corn as
that of the corn merchant.
The rigour of this law
was afterwards softened
by several
subsequent statutes,
which successively permitted
the engrossing
of corn when
the price of wheat
should not exceed 20s,
and 24s, 32s,
and 40s,
the quarter.
At last,
by the 15th
of Charles II c.7,
the engrossing or buying
of corn,
in order to
sell it again,
as long
as the price of wheat
did not exceed 48s
the quarter,
and that
of other grain in proportion,
was declared lawful
to all persons
not being forestallers,
that is, not selling again
in the same market
within three months.
All the freedom which
the trade
of the
inland corn
dealer has ever yet enjoyed
was bestowed upon it
by this statute.
The statute
of the twelfth
of the present king,
which repeals almost
all the other ancient laws
against engrossers
and forestallers,
does not repeal
the restrictions
of this particular statute,
which
therefore
still continue in force.
This statute,
however,
authorises in some
measure two very
absurd popular prejudices.
First,
It supposes,
that
when the price of wheat
has risen so high
as 48s the quarter,
and that
of other grain in proportion,
corn
is likely
to be so
engrossed as to
hurt the people.
But,
from
what has been already said,
it seems evident enough,
that corn
can at no price
be so engrossed
by the inland dealers as to
hurt the people;
and 48s the quarter,
besides,
though it
may be considered
as a very high price,
yet,
in years of scarcity,
it is a price
which
frequently takes place immediately
after
harvest,
when
scarce any part
of the new crop
can be sold off,
and when it
is impossible
even for ignorance
to suppose that
any part of it
can be so
engrossed as to
hurt the people.
Secondly,
It supposes
that there is
a certain price at which corn
is likely
to be forestalled,
that is, bought up
in order to
be sold again soon after
in the same market,
so as to hurt the people.
But if a merchant
ever buys up corn,
either
going to a particular market,
or in a particular market,
in order to
sell it again soon after
in the same market,
it
must be
because
he judges that
the market
cannot be so liberally supplied
through the whole season
as upon
that particular occasion,
and that the price,
therefore,
must soon rise.
If he judges wrong in this,
and if the price
does not rise,
he not only loses
the whole profit
of the stock which
he employs in this manner,
but a part
of the stock itself,
by the expense and loss which
necessarily attend the storing
and
keeping of corn.
He hurts himself,
therefore,
much more essentially than
he can hurt even
the particular people whom
he may hinder
from supplying themselves upon
that particular market day,
because they
may afterwards supply themselves just
as cheap
upon any other market day.
If he judges right,
instead of hurting
the great body of the people,
he renders them
a most important service.
By making them feel
the inconveniencies
of a dearth
somewhat earlier than
they
otherwise might do,
he prevents
their feeling them afterwards
so severely
as they
certainly would do,
if the cheapness of price
encouraged them
to consume faster than
suited the real scarcity
of the season.
When the scarcity
is real,
the best
thing
that can be done
for the people is,
to divide the inconvenience
of it as equally as possible,
through all
the different months and weeks and days
of the year.
The interest
of the corn merchant
makes him study
to do this
as exactly as he can;
and as no other person
can have
either the same interest,
or the same knowledge,
or the same abilities,
to do
it so exactly as he,
this
most important operation
of commerce
ought to be trusted entirely
to him;
or, in other words,
the corn trade,
so far at least
as concerns
the supply
of the home market,
ought to be left perfectly free.
The popular fear
of engrossing and forestalling
may be compared
to the popular terrors
and suspicions
of witchcraft.
The unfortunate wretches
accused of this latter crime
were not more innocent
of the misfortunes
imputed to them,
than those
who have been accused
of the former.
The law which
put an end
to all prosecutions
against witchcraft,
which
put it
out of any man's power
to gratify his own malice
by accusing his neighbour of
that imaginary crime,
seems effectually
to have put
an end
to those fears and suspicions,
by taking away
the great cause
which encouraged
and supported them.
The law
which would restore
entire freedom
to the inland trade
of corn,
would probably prove as effectual
to put an end
to the popular fears of
engrossing
and forestalling.
The 15th
of Charles II c.7,
however,
with all its imperfections,
has,
perhaps,
contributed more,
both to the plentiful
supply of the home market,
and to the increase
of tillage,
than any other law
in the statute book.
It
is from this law
that the inland corn
trade
has derived all the liberty
and protection
which it
has ever yet enjoyed;
and both the supply
of the home market
and the interest of tillage
are much more effectually promoted
by the inland,
than either
by the importation
or exportation trade.
The proportion
of the average quantity
of all sorts
of grain
imported into Great Britain to
that of all sorts of grain
consumed,
it has been computed
by the author
of the Tracts
upon the Corn Trade,
does not exceed
that of one
to five hundred and seventy.
For supplying the home market,
therefore,
the importance of
the inland trade
must be to
that of the importation trade
as five hundred and seventy
to one.
The average quantity
of all sorts
of grain exported
from Great Britain
does not,
according to the same author,
exceed
the one-and-thirtieth part
of the annual produce.
For the encouragement
of tillage,
therefore,
by providing
a market
for the home produce,
the importance of
the inland trade
must be to
that of the exportation trade
as thirty
to one.
I have
no great faith
in political arithmetic,
and I
mean not
to warrant the exactness
of either
of these computations.
I mention them only
in order to show
of how much less consequence,
in the opinion
of the most judicious
and experienced persons,
the foreign trade of corn
is than the home trade.
The great cheapness
of corn
in the
years immediately preceding
the establishment
of the bounty may,
perhaps with reason,
he ascribed in some measure
to the operation
of this statute
of Charles II,
which had been enacted
about five-and-twenty years
before,
and which had,
therefore,
full time
to produce its effect.
A very few words
will sufficiently explain all
that
I have
to say
concerning the
other three branches
of the corn trade.
II. The trade
of the merchant-importer
of foreign corn
for home consumption,
evidently
contributes to the immediate
supply of the home market,
and must so far be immediately
beneficial
to the great body
of the people.
It tends,
indeed,
to lower somewhat
the average money price
of corn,
but
not to diminish
its real value,
or the quantity of labour
which it
is capable
of maintaining.
If importation
was at all times free,
our farmers
and country gentlemen
would probably,
one year with another,
get less money
for their corn
than
they do at present,
when importation
is at most times
in effect prohibited;
but the money which
they got
would be of more value,
would buy more goods
of all other kinds,
and would employ more labour.
Their real wealth,
their real revenue,
therefore,
would be the same as
at present,
though it
might be expressed
by a smaller quantity
of silver,
and they would neither
be disabled nor discouraged
from cultivating corn
as much as they do
at present.
On the contrary,
as the rise in the real value
of silver,
in consequence
of lowering
the money price of corn,
lowers somewhat
the money price
of all other commodities,
it gives
the industry of the country
where it
takes place some advantage
in all foreign markets
and thereby tends
to encourage
and increase that industry.
But the extent
of the home market
for corn
must be
in proportion
to the general industry
of the country
where it grows,
or to the number of those
who produce something else,
and therefore,
have something else,
or,
what comes to the same thing,
the price of something else,
to give
in exchange for corn.
But in every country,
the home market,
as it
is
the nearest and most convenient,
so is it
likewise
the greatest and most important
market
for corn.
That rise
in the real value of silver,
therefore,
which is the effect
of lowering
the average money price
of corn,
tends
to enlarge
the greatest
and most important market
for corn,
and thereby to encourage,
instead of discouraging
its growth.
By the 22d
of Charles II c.13,
the importation of wheat,
whenever the price
in the home market
did not exceed 53s:4d
the quarter,
was subjected
to a duty
of 16s the quarter;
and to a duty of 8s
whenever
the price
did not exceed £4.
The former
of these two prices has,
for more than a century past,
taken place only
in times
of very great scarcity;
and the latter has,
so far as I know,
not taken place at all.
Yet,
till wheat
has risen above this
latter price,
it was,
by this statute,
subjected
to a very high duty;
and,
till it
had risen above the former,
to a duty which amounted
to a prohibition.
The importation
of other sorts of grain
was restrained
at rates and by duties,
in proportion
to the value
of the grain,
almost equally high.
Before the 13th
of the present king,
the following
were the duties payable
upon the importation
of the different sorts
of grain:
These different duties
were imposed,
partly by
the 22d of Charles II
in place of the old subsidy,
partly by the new subsidy,
by the one-third
and two-thirds subsidy,
and by the subsidy 1747.
Subsequent laws
still further
increased those duties.
The distress which,
in years of scarcity,
the strict execution
of those laws
might have brought
upon the people,
would probably have been
very great;
but,
upon such occasions,
its execution
was generally suspended
by temporary statutes,
which permitted,
for a limited time,
the importation of foreign corn.
The necessity
of these temporary statutes
sufficiently demonstrates
the impropriety
of this general one.
These restraints
upon importation,
though
prior to the establishment
of the bounty,
were dictated
by the same spirit,
by the same principles,
which afterwards enacted
that regulation.
How hurtful
soever in themselves,
these,
or some other restraints
upon importation,
became necessary
in consequence of
that regulation.
If,
when wheat
was either
below 48s the quarter,
or not much above it,
foreign corn
could have been imported,
either duty free,
or upon paying only
a small duty,
it might have been exported
again,
with the benefit
of the bounty,
to the great loss
of the public revenue,
and to the entire perversion
of the institution,
of which the object
was to extend the market
for the home growth,
not that for the growth
of foreign countries.
III.
The trade
of the merchant-exporter
of corn for foreign consumption,
certainly
does not contribute directly
to the plentiful
supply of the home market.
It does so,
however,
indirectly.
From
whatever
source this supply
maybe usually drawn,
whether from home growth,
or from foreign importation,
unless more corn
is either usually grown,
or usually imported
into the country,
than
what is usually consumed
in it,
the supply of the home market
can never be very plentiful.
But unless the surplus can,
in all ordinary cases,
be exported,
the growers
will be careful
never to grow more,
and the importers
never to import more,
than what
the bare consumption
of the home market requires.
That market
will very seldom
be overstocked;
but it
will generally be understocked;
the people,
whose business
it is to supply it,
being generally afraid
lest their goods
should be left
upon their hands.
The prohibition of exportation
limits
the improvement
and cultivation
of the country to
what the supply of its own
inhabitants require.
The freedom of exportation
enables it
to extend cultivation
for the supply
of foreign nations.
By the 12th
of Charles II c.4,
the exportation of corn
was permitted
whenever the price of wheat
did not exceed 40s
the quarter,
and that
of other grain in proportion.
By the 15th
of the same prince,
this liberty
was extended
till the price
of wheat exceeded 48s
the quarter;
and by the 22d,
to all higher prices.
A poundage,
indeed,
was to be paid
to the king
upon such exportation;
but all
grain was rated so low
in the book
of rates,
that this
poundage amounted only,
upon wheat to 1s,
upon oats to 4d,
and upon all other grain
to 6d the quarter.
By the 1st
of William and Mary,
the act
which established this bounty,
this
small duty
was virtually taken off
whenever the price of wheat
did not exceed 48s
the quarter;
and by the 11th and 12th
of William III c.20,
it was expressly taken off
at all higher prices.
The trade
of the merchant-exporter was,
in this manner,
not only encouraged
by a bounty,
but rendered much more free
than
that of the inland dealer.
By the last
of these statutes,
corn
could be engrossed
at any price
for exportation;
but it
could not be engrossed
for inland sale,
except when
the price
did not exceed 48s
the quarter.
The interest
of the inland dealer,
however,
it has already been shown,
can never be opposite to
that of the great body
of the people.
That
of the merchant-exporter may,
and in fact
sometimes is.
If,
while his own
country labours
under a dearth,
a neighbouring country
should be afflicted
with a famine,
it might be
his interest
to carry corn
to the latter country,
in such quantities
as might very much
aggravate the calamities
of the dearth.
The plentiful
supply of the home market
was not the direct object
of those statutes;
but,
under the pretence
of encouraging agriculture,
to raise the money price of
corn as high as possible,
and thereby to occasion,
as much as possible,
a constant dearth
in the home market.
By the discouragement
of importation,
the supply of that market;
even in times
of great scarcity,
was confined
to the home growth;
and by the encouragement
of exportation,
when the price
was so high
as 48s the quarter,
that market
was not,
even in times
of considerable scarcity,
allowed
to enjoy the whole of
that growth.
The temporary laws,
prohibiting,
for a limited time,
the exportation of corn,
and taking off,
for a limited time,
the duties
upon its importation,
expedients
to which Great Britain
has been obliged so frequently
to have recourse,
sufficiently
demonstrate the impropriety
of her general system.
Had that system been good,
she
would not so frequently have been reduced
to the necessity of
departing from it.
Were all nations
to follow the liberal system
of free exportation
and free importation,
the different states
into which
a great continent was divided,
would so far resemble
the different provinces
of a great empire.
As
among the different provinces
of a great empire,
the freedom
of the inland trade
appears,
both from reason
and experience,
not only the best palliative
of a dearth,
but
the most effectual preventive
of a famine;
so would
the freedom
of the exportation and
importation
trade be
among the different states
into which
a great continent
was divided.
The larger the continent,
the easier the communication
through all
the different parts of it,
both by land and by water,
the less
would any one
particular part of it
ever be exposed
to either of these calamities,
the scarcity
of any one country
being more likely
to be relieved
by the plenty
of some other.
But very few countries
have entirely adopted
this liberal system.
The freedom of the corn trade
is almost everywhere more
or less restrained,
and in many
countries
is confined
by such absurd regulations,
as frequently aggravate
the unavoidable misfortune
of a dearth
into the dreadful calamity
of a famine.
The demand of such
countries for corn
may frequently
become
so great and so urgent,
that a small state
in their neighbourhood,
which happened
at the same time
to be labouring
under some degree of dearth,
could not venture
to supply them
without exposing itself
to the like
dreadful calamity.
The very bad policy
of one country
may thus
render it,
in some measure,
dangerous and imprudent
to establish
what would otherwise be
the best policy
in another.
The unlimited freedom
of exportation,
however,
would be
much less dangerous
in great states,
in which the growth
being much greater,
the supply could seldom be much
affected
by any quantity or corn
that was likely
to be exported.
In a Swiss canton,
or in some of the little
states in Italy,
it may,
perhaps,
sometimes
be necessary
to restrain the exportation
of corn.
In such great countries
as France or England,
it scarce
ever can.
To hinder,
besides,
the farmer
from sending his goods
at all times
to the best market,
is evidently
to sacrifice the ordinary laws
of justice
to an idea of public utility,
to a sort of reasons
of state;
an act
or legislative authority
which
ought to be exercised only,
which can be pardoned only,
in cases
of the most urgent necessity.
The price
at which exportation of corn
is prohibited,
if it is ever
to be prohibited,
ought
always to be
a very high price.
The laws concerning corn
may everywhere be compared
to the laws
concerning religion.
The people
feel themselves
so much interested
in
what relates either
to their subsistence
in this life,
or to their happiness
in a life
to come,
that government
must yield
to their prejudices,
and, in order to
preserve
the public tranquillity,
establish that system which
they approve of.
It is upon this account,
perhaps,
that we so seldom find
a reasonable system
established
with regard to either
of those
two capital objects.
IV. The trade
of the merchant-carrier,
or of the importer
of foreign corn,
in order to export it
again,
contributes to the plentiful
supply of the home market.
It is not,
indeed,
the direct purpose
of his trade
to sell his corn there;
but he
will generally be willing
to do so,
and even for a
good deal less money
than
he might expect
in a foreign market;
because
he saves in
this manner the expense
of loading and unloading,
of freight and insurance.
The inhabitants
of the country which,
by means
of the carrying trade,
becomes the magazine
and storehouse
for the supply
of other countries,
can very seldom
be in want themselves.
Though the carrying trade
must thus
contribute
to reduce
the average money price
of corn
in the home market,
it would not thereby lower
its real value;
it would only raise somewhat
the real value of silver.
The carrying trade
was in effect prohibited
in Great Britain,
upon all ordinary occasions,
by the high duties
upon the importation
of foreign corn,
of the greater part
of which
there was no drawback;
and upon extraordinary occasions,
when a scarcity
made it necessary
to suspend those duties
by temporary statutes,
exportation
was always prohibited.
By this system of laws,
therefore,
the carrying trade
was in effect prohibited.
That system of laws,
therefore,
which is connected
with the establishment
of the bounty,
seems
to deserve
no part of the praise
which has been bestowed
upon it.
The improvement and prosperity
of Great Britain,
which
has been so often ascribed
to those laws,
may very easily be accounted
for
by other causes.
That security which the laws
in Great Britain
give to every man,
that he
shall enjoy the fruits
of his own labour,
is alone sufficient
to make any country flourish,
notwithstanding these
and
twenty other absurd regulations
of commerce;
and this security
was perfected
by the Revolution,
much about the same time
that
the bounty was established.
The natural effort
of every individual
to better his own condition,
when suffered
to exert itself
with freedom and security,
is so powerful a principle,
that it is alone,
and without any assistance,
not only capable
of carrying
on the society
to wealth and prosperity,
but of surmounting
a hundred impertinent obstructions,
with which the folly
of human laws too
often encumbers
its operations:
though the effect
of those obstructions
is
always,
more or less,
either
to encroach upon its freedom,
or to diminish its security.
In Great Britain industry
is perfectly secure;
and though it
is far
from being perfectly free,
it is as free or freer
than in any other part
of Europe.
Though the period
of the greatest prosperity
and improvement
of Great Britain
has been posterior to
that system
of laws
which is connected
with the bounty,
we must not upon
that account,
impute it to those laws.
It has been
posterior likewise
to the national debt;
but the national debt
has most assuredly not been
the cause
of it.
Though the system of laws
which is connected
with the bounty,
has exactly the same tendency
with the practice
of Spain and Portugal,
to lower somewhat
the value
of the precious metals
in the country
where it takes place;
yet Great Britain
is certainly one
of the richest countries
in Europe,
while Spain
and Portugal
are perhaps
amongst the most beggarly.
This difference of situation,
however,
may easily be accounted for
from two different causes.
First,
the tax in Spain,
the prohibition
in Portugal
of exporting gold and silver,
and the vigilant police
which watches over
the execution
of those laws,
must,
in two very poor countries,
which
between them import annually
upwards of six millions sterling,
operate not only more directly,
but much more forcibly,
in reducing the value
of those metals there,
than the corn laws
can do in Great Britain.
And, secondly,
this
bad policy
is not
in those countries counterbalanced
by the general liberty
and security
of the people.
Industry
is there
neither free nor secure;
and
the civil
and ecclesiastical governments
of both Spain and
Portugal are
such as
would alone
be sufficient
to perpetuate
their present state
of poverty,
even though their regulations
of commerce
were as wise
as the greatest part of them
are absurd and foolish.
The 13th
of the present king c.43,
seems
to have established a new system
with regard to the corn laws,
in many respects better
than the ancient one,
but in one or two
respects perhaps not quite
so good.
By this statute,
the high duties
upon importation
for home consumption
are taken off,
so soon as the price
of middling wheat rises
to 48s the quarter;
that of middling rye,
pease,
or beans,
to 32s;
that of barley to 24s;
and that
of oats to 16s;
and instead of them,
a small duty
is imposed of only 6d
upon the quarter
of wheat,
and upon
that or other grain
in proportion.
With regard to all those
different sorts
of grain,
but
particularly with regard to wheat,
the home market
is thus opened
to foreign supplies,
at prices considerably lower
than before.
By the same statute,
the old bounty
of 5s
upon the exportation of wheat,
ceases so soon
as the price rises
to 44s the quarter,
instead of 48s,
the price
at which it ceased before;
that of 2s:6d
upon the exportation
of barley,
ceases so soon
as the price rises
to 22s,
instead of 24s,
the price
at which it ceased before;
that of 2s:6d
upon the exportation
of oatmeal,
ceases so soon
as the price rises
to 14s,
instead of 15s,
the price
at which it ceased before.
The bounty upon rye
is reduced from 3s:6d to 3s
and it
ceases so soon
as the price rises
to 28s,
instead of 32s,
the price
at which it ceased before.
If bounties
are as improper as I
have endeavoured
to prove them to be,
the sooner
they cease,
and the lower
they are,
so much the better.
The same statute permits,
at the lowest prices,
the importation
of corn in order to
be exported again,
duty free,
provided
it is in the mean time
lodged
in a warehouse
under the joint locks
of the king
and the importer.
This liberty,
indeed,
extends
to no more than twenty-five
of the different ports
of Great Britain.
They are,
however,
the principal ones;
and there may not,
perhaps,
be warehouses proper
for this purpose
in the greater part
of the others.
So far this law
seems evidently
an improvement
upon the ancient system.
But by the same law,
a bounty of 2s
the quarter
is given
for the exportation of oats,
whenever the price
does not exceed
fourteen shillings.
No bounty had ever been
given before
for the exportation
of this grain,
no more than for
that of pease or beans.
By the same law, too,
the exportation of wheat
is prohibited so soon
as the price rises
to forty-four shillings
the quarter;
that of rye so soon
as it rises
to twenty-eight shillings;
that of barley so soon
as it rises
to twenty-two shillings;
and that
of oats so soon
as they rise
to fourteen shillings.
Those several prices
seem all of them
a good deal too low;
and there seems
to be an impropriety,
besides,
in prohibiting exportation
altogether at those
precise prices at which
that bounty,
which was given
in order to force it,
is withdrawn.
The bounty ought
certainly
either
to have been withdrawn
at a much lower price,
or exportation
ought to have been allowed
at a much higher.
So far,
therefore,
this law seems to be inferior
to the ancient system.
With all its imperfections,
however,
we may perhaps say of it
what was said of the laws
of Solon,
that though not the best
in itself,
it is
the best which the interest,
prejudices,
and temper of the times,
would admit of.
It may perhaps in due time
prepare the way
for a better.
When
a nation
binds itself by treaty,
either
to permit the entry
of certain goods
from one foreign country which
it prohibits from all others,
or to exempt
the goods
of one country from duties
to which
it subjects those
of all others,
the country,
or at least the merchants
and manufacturers
of the country,
whose commerce
is so favoured,
must necessarily derive
great advantage
from the treaty.
Those merchants and manufacturers
enjoy a sort
of monopoly in the country
which is so indulgent
to them.
That country
becomes a market,
both more extensive
and more advantageous
for their goods:
more extensive,
because the goods
of other nations
being
either excluded or subjected
to heavier duties,
it takes off a greater
quantity
of theirs;
more advantageous,
because the merchants
of the favoured country,
enjoying a sort of monopoly
there,
will often sell their goods
for a better price than if
exposed
to the free competition
of all other nations.
Such treaties,
however,
though they
may be advantageous
to the merchants
and manufacturers
of the
favoured,
are necessarily disadvantageous
to those
of the favouring country.
A monopoly
is thus granted
against them
to a foreign nation;
and they must frequently buy
the foreign goods
they have
occasion for,
dearer
than if the free competition
of other
nations was admitted.
That part
of its own produce
with which
such
a nation purchases foreign goods,
must consequently be sold
cheaper;
because,
when two things
are exchanged for one another,
the cheapness of the one
is a necessary consequence,
or rather
is the same thing,
with the dearness
of the other.
The exchangeable value
of its annual produce,
therefore,
is likely
to be diminished
by every such treaty.
This diminution,
however,
can scarce amount
to any positive loss,
but only to a lessening
of the gain which
it might otherwise make.
Though it
sells its goods cheaper
than it
otherwise might do,
it
will not probably sell them
for less than
they cost;
nor,
as in the case of bounties,
for a price
which will not replace
the capital
employed in bringing them
to market,
together
with the ordinary profits
of stock.
The trade
could not go on long
if it did.
Even the favouring country,
therefore,
may still gain by the trade,
though less than
if there was
a free competition.
Some treaties of commerce,
however,
have been supposed
advantageous,
upon principles very different
from these;
and a commercial country
has sometimes granted
a monopoly
of this kind,
against itself,
to certain goods
of a foreign nation,
because it expected,
that in the whole commerce
between them,
it would annually sell
more than it
would buy,
and that a balance
in gold and silver
would be annually returned
to it.
It is upon this principle
that the treaty
of commerce
between England and Portugal,
concluded in 1703
by Mr Methuen,
has been so much commended.
The following
is a literal translation of
that treaty,
which consists
of three articles only.
His sacred royal majesty
of Portugal promises,
both in his own name and
that of his successors,
to admit for ever hereafter,
into Portugal,
the woollen cloths,
and the rest of the woollen
manufactures of the British,
as was accustomed,
till they
were prohibited by the law;
nevertheless upon this condition:
That is
to say,
that
her sacred royal majesty
of Great Britain
shall,
in her own name,
and that of her successors,
be obliged,
for ever hereafter,
to admit the wines
of the growth
of Portugal into Britain;
so that at no time,
whether
there shall be peace or war
between the kingdoms
of Britain and France,
any thing more
shall be demanded
for these wines
by the name
of custom or duty,
or by whatsoever other title,
directly or indirectly,
whether
they shall be imported
into Great Britain
in pipes or hogsheads,
or other casks,
than
what shall be demanded
for the like quantity
or measure of French wine,
deducting
or abating a third part
of the custom or duty.
But if,
at any time,
this deduction or abatement
of customs,
which is to be made
as aforesaid,
shall in any manner
be attempted and prejudiced,
it shall be just and lawful
for his sacred royal majesty
of Portugal,
again to prohibit
the woollen cloths,
and the rest
of the British woollen
manufactures.
The most excellent lords
the plenipotentiaries
promise and take
upon themselves,
that
their above named masters shall ratify
this
treaty;
and within the space
of two months
the ratification
shall be exchanged.
By this treaty,
the crown of Portugal
becomes
bound
to admit
the English woollens
upon the same footing as
before the prohibition;
that is,
not to raise the duties
which had been paid
before that time.
But it does not become
bound
to admit them
upon any better terms
than those
of any other nation,
of France or Holland,
for example.
The crown of Great Britain,
on the contrary,
becomes
bound
to admit the wines
of Portugal,
upon paying only two-thirds
of the duty
which is paid for those
of France,
the wines
most likely to come
into competition with them.
So far this treaty,
therefore,
is evidently advantageous
to Portugal,
and disadvantageous
to Great Britain.
It has been celebrated,
however,
as a masterpiece
of the commercial policy
of England.
Portugal
receives annually
from the Brazils a greater
quantity
of gold
than
can be employed
in its domestic commerce,
whether in the shape
of coin or of plate.
The surplus
is too valuable
to be allowed
to lie idle
and locked up in coffers;
and as it
can find no
advantageous market at home,
it must,
notwithstanding;
any prohibition,
be sent abroad,
and exchanged for something
for which
there is
a more advantageous market
at home.
A large share of it
comes annually to England,
in return either
for English goods,
or for those
of other European nations that
receive their returns
through England.
Mr Barretti
was informed,
that
the weekly packet-boat
from Lisbon
brings,
one week with another,
more than £50,000
in gold to England.
The sum
had probably been exaggerated.
It would amount
to more than £2,600,000
a year,
which is
more than the Brazils
are supposed
to afford.
Our merchants were,
some years ago,
out of humour
with the crown of Portugal.
Some privileges
which had been granted them,
not by treaty,
but by the free grace
of that crown,
at the solicitation,
indeed,
it is probable,
and in return
for much greater favours,
defence and protection
from the crown
of Great Britain,
had been either infringed
or revoked.
The people,
therefore,
usually most interested
in celebrating
the Portugal trade,
were then rather disposed
to represent
it as less advantageous
than it
had commonly been imagined.
The far greater part,
almost the whole,
they pretended,
of this annual importation
of gold,
was not on account
of Great Britain,
but of other European nations;
the fruits and wines
of Portugal annually imported
into Great Britain
nearly compensating the value
of the British goods sent
thither.
Let us
suppose,
however,
that the whole
was on account
of Great Britain,
and that it amounted
to a still
greater
sum than Mr Barretti
seems to imagine;
this trade
would not,
upon that account,
be more advantageous
than any other,
in which,
for the same value
sent out,
we received an equal value
of consumable
goods in return.
It is
but a very small part
of this
importation which,
it can be supposed,
is employed
as an annual addition,
either
to the plate
or to the coin
of the kingdom.
The rest
must all be sent abroad,
and exchanged
for consumable goods
of some kind or other.
But if those
consumable goods
were purchased directly
with the produce
of English industry,
it would be more
for the advantage
of England,
than first
to purchase with that produce
the gold of Portugal,
and
afterwards to purchase with
that gold those
consumable goods.
A direct
foreign trade of consumption
is always more advantageous
than a round-about one;
and to bring the same value
of foreign
goods to the home market
requires
a much smaller capital
in the one way than
in the ether.
If a smaller share
of its industry,
therefore,
had been employed
in producing goods fit
for the Portugal market,
and a greater
in producing those lit
for the other markets,
where those
consumable goods for which
there is
a demand in Great Britain
are to be had,
it would have been more
for the advantage
of England.
To procure
both the gold which
it wants for its own use,
and the consumable goods,
would,
in this way,
employ a much smaller capital
than at
present.
There
would be a spare capital,
therefore,
to be employed
for other purposes,
in exciting
an additional quantity
of industry,
and in raising
a greater annual produce.
Though Britain
were entirely excluded
from the Portugal trade,
it could find
very little difficulty
in procuring all
the annual supplies
of gold which
it wants,
either
for the purposes of plate,
or of coin,
or of foreign trade.
Gold,
like
every other commodity,
is always somewhere or another
to be got
for its value by those
who have that value
to give for it.
The annual surplus
of gold in Portugal,
besides,
would still be sent abroad,
and though
not carried away
by Great Britain,
would be carried away
by some other nation,
which would be glad
to sell it
again for its price,
in the same manner
as Great Britain
does at present.
In buying gold of Portugal,
indeed,
we buy it
at the first hand;
whereas,
in buying it
of any other nation,
except Spain,
we should buy it
at the second,
and might pay somewhat
dearer.
This difference,
however,
would surely be too insignificant
to deserve
the public attention.
Almost all our gold,
it is said,
comes from Portugal.
With other nations,
the balance of trade
is either against as,
or not much
in our favour.
But we should remember,
that
the more gold
we import from one country,
the less
we must necessarily import
from all others.
The effectual demand for gold,
like that
for every other commodity,
is in every country
limited
to a certain quantity.
If nine-tenths of this
quantity
are imported from one country,
there
remains a tenth only
to be imported
from all others.
The more gold,
besides,
that is annually imported
from some particular countries,
over and above
what is requisite
for plate and for coin,
the more
must necessarily be exported
to some others:
and the more
that most insignificant object
of modern policy,
the balance of trade,
appears
to be
in our favour
with some particular countries,
the more
it must necessarily appear
to be
against us
with many others.
It was
upon this silly notion,
however,
that England
could not subsist
without the Portugal trade,
that,
towards the end
of the late war,
France and Spain,
without pretending either offence
or provocation,
required the king of Portugal
to exclude all
British ships from his ports,
and,
for the security
of this exclusion,
to receive
into them French
or Spanish garrisons.
Had
the king
of Portugal submitted to those
ignominious terms which
his brother-in-law the king
of Spain proposed to him,
Britain
would have been freed
from a much greater inconveniency
than the loss
of the Portugal trade,
the burden
of supporting
a very weak ally,
so unprovided of every thing
for his own defence,
that the whole power
of England,
had it
been directed to
that single purpose,
could scarce,
perhaps,
have defended him
for another campaign.
The loss
of the Portugal trade
would,
no doubt,
have occasioned
a considerable embarrassment
to the merchants
at that time
engaged in it,
who might not,
perhaps,
have found out,
for a year or two,
any other
equally advantageous method
of employing their capitals;
and in this
would probably have consisted
all the inconveniency which
England
could have suffered
from this notable piece
of commercial policy.
The great annual importation
of gold and silver
is neither
for the purpose
of plate nor of coin,
but of foreign trade.
A round-about foreign trade
of consumption
can be carried
on more advantageously
by means
of these metals
than of almost any
other goods.
As they
are the universal instruments
of commerce,
they
are more readily received
in return
for all commodities
than any other goods;
and,
on account
of their small bulk
and great value,
it costs less
to transport them backward
and forward
from one place
to another
than almost any other sort of
merchandize,
and they
lose less of their value
by being so transported.
Of all the commodities,
therefore,
which are bought
in one foreign country,
for no other purpose
but to be sold
or exchanged again
for some other goods
in another,
there
are none
so convenient as gold
and silver.
In facilitating all
the different
round-about foreign trades
of consumption
which are carried on
in Great Britain,
consists
the principal advantage
of the Portugal trade;
and though it
is not a capital advantage,
it is,
no doubt,
a considerable one.
That any annual addition which,
it can reasonably be supposed,
is made either
to the plate
or to the coin
of the kingdom,
could require
but
a very small annual importation
of gold
and silver,
seems evident enough;
and though we
had no direct trade
with Portugal,
this
small quantity could
always,
somewhere or another,
be very easily got.
Though the goldsmiths trade
be very considerable
in Great Britain,
the far greater part
of the new plate which
they annually sell,
is made from other old plate
melted down;
so that the addition
annually made
to the whole plate
of the kingdom
cannot be very great,
and could require
but
a very small annual importation.
It is the same case
with the coin.
Nobody
imagines,
I believe,
that even
the greater part
of the annual coinage,
amounting,
for ten years together,
before the late reformation
of the gold coin,
to upwards of £800,000 a-year
in gold,
was an annual addition
to the money before current
in the kingdom.
In a country
where
the expense
of the coinage
is defrayed by the government,
the value of the coin,
even
when it
contains
its full standard weight
of gold and silver,
can never be
much greater than
that of an equal quantity
of those metals uncoined,
because it
requires only the trouble of
going to the mint,
and the delay,
perhaps,
of a few weeks,
to procure for any quantity
of uncoined gold
and silver an equal quantity
of those metals
in coin;
but
in every country the greater part
of the current coin
is almost always more
or less worn,
or otherwise degenerated
from its standard.
In Great Britain
it was,
before the late reformation,
a good deal so,
the gold
being more than two per cent.,
and
the silver more than eight per
cent.
below its standard weight.
But if forty-four guineas
and a-half,
containing
their full standard weight,
a pound weight of gold,
could purchase
very little more than
a pound weight
of uncoined gold;
forty-four guineas
and a-half,
wanting
a part of their weight,
could not purchase
a pound weight,
and something
was to be added,
in order to make
up the deficiency.
The current price
of gold bullion at market,
therefore,
instead of being
the same with the mint price,
or £46:14:6,
was then about £47:14s,
and sometimes about £48.
When the greater part
of the coin,
however,
was in this
degenerate condition,
forty four guineas and a-half,
fresh from the mint,
would purchase no more goods
in the market
than any other ordinary guineas;
because,
when they
came into the coffers
of the merchant,
being confounded
with other money,
they
could not afterwards be
distinguished
without more trouble
than the difference
was worth.
Like other guineas,
they
were worth no more than £46:14:6.
If thrown
into the melting pot,
however,
they produced,
without any sensible loss,
a pound weight
of standard gold,
which could be sold
at any time for
between £47:14s and £48,
either in gold or silver,
as fit
for all the purposes
of coin
as that which
had been melted down.
There
was an evident profit,
therefore,
in melting
down new-coined money;
and it
was done so instantaneously,
that no precaution
of government
could prevent it.
The operations
of the mint were,
upon this account,
somewhat like the web
of Penelope;
the work
that was done in the day
was undone in the night.
The mint
was employed,
not so much
in making daily additions
to the coin,
as in replacing
the very best part of it,
which
was daily melted down.
Were the private people
who carry their gold
and silver
to the mint
to pay themselves
for the coinage,
it would add
to the value
of those metals,
in the same manner
as the fashion
does to that of plate.
Coined gold and silver
would be more valuable
than uncoined.
The seignorage,
if it was not exorbitant,
would add to the bullion
the whole value of the duty;
because,
the government
having everywhere
the exclusive privilege
of coining,
no coin
can come
to market cheaper than
they think proper
to afford it.
If the duty
was exorbitant,
indeed,
that is,
if it
was very much above
the real value
of the labour
and expense requisite
for coinage,
false coiners,
both at home and abroad,
might be encouraged,
by the great difference
between the value
of bullion and that of coin,
to pour in so great
a quantity of counterfeit money as
might reduce
the value
of the government money.
In France,
however,
though
the seignorage
is eight per cent.,
no sensible inconveniency
of this kind
is found
to arise from it.
The dangers
to which
a false coiner
is everywhere exposed,
if he
lives in
the country
of which he
counterfeits the coin,
and to which
his agents
or correspondents are exposed,
if he
lives in a foreign country,
are by far too great
to be incurred
for the sake
of a profit
of six or seven per cent.
The seignorage in France
raises
the value
of the coin higher than
in proportion
to the quantity
of pure gold which
it contains.
Thus,
by the edict
of January 1726,
the mint price of fine gold
of twenty-four carats
was fixed at seven hundred
and forty livres
nine sous
and one denier one-eleventh
the mark
of eight Paris ounces.
(See Dictionnaire des Monnoies,
tom. ii. article Seigneurage,
p. 439,
par 81.
Abbot de Bazinghen,
Conseiller-Commissaire en
la Cour des Monnoies à Paris.)
The gold coin of France,
making an allowance
for the remedy
of the mint,
contains twenty-one carats
and three-fourths
of fine gold,
and two carats one-fourth
of alloy.
The mark of standard gold,
therefore,
is worth no more than
about six hundred
and
seventy-one livres ten deniers.
But in France
this mark of standard gold
is coined
into thirty louis d'ors
of twenty-four livres each,
or into seven hundred
and twenty livres.
The coinage,
therefore,
increases the value
of a mark
of standard gold bullion,
by the difference
between six hundred
and seventy-one livres
ten deniers
and seven hundred
and twenty livres,
or by forty-eight livres
nineteen sous
and two deniers.
A seignorage will,
in many cases,
take away altogether,
and will in all cases
diminish,
the profit of melting
down the new coin.
This profit
always arises
from the difference
between the quantity
of bullion which
the common
currency
ought to contain
and that which
it actually does contain.
If this difference
is less than the seignorage,
there
will be loss
instead of profit.
If it
is equal to the seignorage,
there
will be
neither profit nor loss.
If it
is greater than
the seignorage,
there will,
indeed,
be some profit,
but less than
if there was no seignorage.
If,
before the late reformation
of the gold coin,
for example,
there
had been a seignorage
of five per cent.
upon the coinage,
there
would have been a loss
of three per cent.
upon the melting down
of the gold coin.
If the seignorage
had been two per cent.,
there
would have been
neither profit nor loss.
If the seignorage
had been one per cent.,
there
would have been a profit but
of one per cent. only,
instead of two per cent.
Wherever money
is received by tale,
therefore,
and not by weight,
a seignorage
is
the most effectual preventive
of the melting down
of the coin,
and,
for the same reason,
of its exportation.
It is the best
and heaviest pieces
that are commonly either
melted down or
exported,
because
it is upon such that
the largest profits
are made.
The law
for the encouragement
of the coinage,
by rendering it duty-free,
was first enacted
during the reign
of Charles II
for a limited time,
and afterwards continued,
by different prolongations,
till 1769,
when it
was rendered perpetual.
The bank of England,
in order to
replenish their coffers
with money,
are frequently obliged
to carry bullion to the mint;
and it was more
for their interest,
they probably imagined,
that
the coinage
should be
at the expense
of the government than
at their own.
It was probably
out of complaisance to this
great company,
that the government
agreed to render
this law perpetual.
Should the custom
of weighing gold,
however,
come to be disused,
as it is very likely
to be
on account
of its inconveniency;
should the gold coin
of England
come to be received by tale,
as it
was
before
the late recoinage this
great company may,
perhaps,
find that they have,
upon this,
as upon some other occasions,
mistaken
their own interest not
a little.
Before the late recoinage,
when the gold
currency of England
was two per cent.
below its standard weight,
as there was no seignorage,
it was two per cent.
below the value of
that quantity
of standard gold bullion which
it ought to have contained.
When this great company,
therefore,
bought gold bullion
in order to
have it coined,
they
were obliged
to pay for it
two per cent. more than it
was worth after the coinage.
But if
there had been a seignorage
of two per cent.
upon the coinage,
the common gold currency,
though two per cent.
below its standard weight,
would,
notwithstanding,
have been equal
in value
to the quantity
of standard gold which
it ought to have contained;
the value
of the fashion compensating
in this case
the diminution of the weight.
They
would,
indeed,
have had
the seignorage
to pay,
which
being two per cent.,
their loss
upon the whole transaction
would have been two per cent.,
exactly the same,
but no greater than it
actually was.
If the seignorage
had been
five per cent. and the gold
currency
only two per cent.
below its standard weight,
the bank
would,
in this case,
have gained three per cent.
upon the price
of the bullion;
but as
they would have had a seignorage
of five per
cent.
to pay upon the coinage,
their loss
upon the whole transaction
would,
in the same manner,
have been exactly
two per cent.
If the seignorage
had been only one per cent.,
and the gold currency
two per cent.
below its standard weight,
the bank
would,
in this case,
have lost only one per cent.
upon the price
of the bullion;
but as they
would likewise
have had a seignorage
of one per
cent. to pay,
their loss
upon the whole transaction
would have been exactly
two per cent.,
in the same manner
as in all other cases.
If there was
a reasonable seignorage,
while at the same time
the coin
contained
its full standard weight,
as it
has done very nearly
since the late recoinage,
whatever
the bank
might lose by the seignorage,
they would gain
upon the price
of the bullion;
and whatever
they might gain
upon the price
of the bullion,
they would lose
by the seignorage.
They
would neither
lose nor gain,
therefore,
upon the whole transaction,
and they
would in this,
as in all
the foregoing cases,
be exactly
in the same situation
as if
there was no seignorage.
When the tax upon a commodity
is so moderate as
not to encourage smuggling,
the merchant
who deals in it,
though he advances,
does not properly pay
the tax,
as he
gets it back
in the price
of the commodity.
The tax
is finally paid
by the last purchaser
or consumer.
But money
is a commodity,
with
regard to which
every man
is a merchant.
Nobody
buys it but in order to
sell it again;
and with regard to
it there is,
in ordinary cases,
no last purchaser or consumer.
When the tax upon coinage,
therefore,
is so moderate as
not to encourage
false coining,
though
every body advances the tax,
nobody
finally pays it;
because every body
gets it back
in the advanced value
of the coin.
A moderate seignorage,
therefore,
would not,
in any case,
augment
the expense of the bank,
or of any other private
persons
who carry their bullion
to the mint
in order to
be coined;
and the want
of a moderate seignorage
does not in any case
diminish it.
Whether
there is or is not
a seignorage,
if the currency
contains
its full standard weight,
the coinage costs nothing to
anybody;
and if it
is short of that weight,
the coinage
must always cost
the difference
between the quantity
of bullion
which ought to be contained
in it,
and that which
actually is contained in it.
The government,
therefore,
when it
defrays the expense
of coinage,
not only incurs
some small expense,
but loses
some small revenue which
it might get
by a proper duty;
and neither
the bank,
nor any other private persons,
are
in the smallest degree benefited
by this
useless piece
of public generosity.
The directors of the bank,
however,
would probably be unwilling to
agree to the imposition
of a seignorage
upon the authority
of a speculation
which promises them no gain,
but only pretends
to insure them
from any loss.
In the present state
of the gold coin,
and as long
as it continues
to be received by weight,
they
certainly would gain nothing
by such a change.
But if the custom
of weighing the gold coin
should ever go into disuse,
as it
is very likely
to do,
and if the gold coin
should ever fall
into the same state
of degradation
in which it
was before the late recoinage,
the gain,
or more properly the savings,
of the bank,
inconsequence
of the imposition
of a seignorage,
would probably be
very considerable.
The bank of England
is the only company which
sends
any considerable quantity
of bullion
to the mint,
and the burden
of the annual coinage
falls entirely,
or almost entirely,
upon it.
If this annual coinage
had nothing
to do
but to repair
the unavoidable losses
and necessary wear
and tear of the coin,
it could seldom exceed
fifty thousand,
or at most
a hundred thousand pounds.
But when
the coin
is degraded
below its standard weight,
the annual coinage must,
besides this,
fill up the
large vacuities
which exportation
and the melting pot
are continually making
in the current coin.
It was upon this account,
that during the ten
or
twelve years immediately preceding
the late reformation
of the gold coin,
the annual coinage amounted,
at an average,
to more than £850,000.
But if
there had been a seignorage
of four
or five per cent.
upon the gold coin,
it would probably,
even in the state
in which things
then were,
have put an effectual stop
to the business both
of exportation
and of the melting pot.
The bank,
instead of losing
every year about two and
a half per cent.
upon the bullion
which was to be coined
into more than eight hundred
and fifty thousand pounds,
or incurring
an annual loss
of more than £21,250 pounds,
would not probably have incurred
the tenth part
of that loss.
The revenue allotted
by parliament
for defraying
the expense of the coinage
is
but
fourteen thousand pounds a-year;
and the real expense which
it costs the government,
or the fees
of the officers
of the mint,
do not,
upon ordinary occasions,
I am assured,
exceed the half of that sum.
The saving
of so very small a sum,
or even the gaining
of another,
which could not well be
much larger,
are objects too inconsiderable,
it may be thought,
to deserve
the serious attention
of government.
But the saving of eighteen
or
twenty thousand pounds a-year,
in case of an event
which is not improbable,
which
has frequently happened before,
and which
is very likely
to happen
again,
is surely an object
which well
deserves
the serious attention,
even of so great
a company
as the bank of England.
Some of the foregoing reasonings
and observations might,
perhaps,
have been more properly placed
in those chapters
of the first book which treat
of the origin
and use of money,
and of the difference
between the real
and the nominal price
of commodities.
But as the law
for the encouragement
of coinage
derives its origin
from those
vulgar prejudices which
have been introduced
by the mercantile system,
I judged it more proper
to reserve them
for this chapter.
Nothing
could be more agreeable
to the spirit of
that system
than a sort
of bounty upon the production
of money,
the very thing which,
it supposes,
constitutes the wealth
of every nation.
It is one
of its many admirable expedients
for enriching the country.
Of the Motives
for Establishing New Colonies.
The interest
which occasioned
the first settlement
of the different European colonies
in America
and the West Indies,
was not altogether
so plain and distinct
as that
which directed
the establishment
of those
of ancient Greece and Rome.
All the different states
of ancient Greece
possessed,
each of them,
but a very small territory;
and when
the people
in anyone
of them multiplied beyond what
that territory
could easily maintain,
a part of them
were sent
in quest
of a new habitation,
in some remote
and distant part
of the world;
the warlike neighbours
who surrounded them
on all sides,
rendering it difficult for any
of them
to enlarge very much
its territory
at home.
The colonies of the Dorians
resorted chiefly
to Italy and Sicily,
which,
in the times preceding
the foundation of Rome,
were inhabited
by barbarous
and uncivilized nations;
those
of the Ionians and Aeolians,
the two other great tribes
of the Greeks,
to Asia Minor
and the islands
of the Aegean sea,
of which the inhabitants
sewn at that time
to have been pretty much
in the same state as those
of Sicily and Italy.
The mother city,
though she
considered
the colony as a child,
at all times
entitled
to great favour and assistance,
and owing
in return much gratitude
and respect,
yet considered
it as an emancipated child,
over whom
she pretended
to claim no direct authority
or jurisdiction.
The colony
settled
its own form of government,
enacted its own laws,
elected its own magistrates,
and made peace or war
with its neighbours,
as an independent state,
which had no occasion
to wait
for the approbation or consent
of the mother city.
Nothing
can be
more plain and distinct
than the interest
which directed
every such establishment.
Rome,
like most
of the
other ancient republics,
was originally founded
upon an agrarian law,
which divided
the public territory,
in a certain proportion,
among the different citizens
who composed the state.
The course of human affairs,
by marriage,
by succession,
and by alienation,
necessarily
deranged this original division,
and frequently threw the lands
which had been allotted
for the maintenance
of many different families,
into the possession
of a single person.
To remedy this disorder,
for such
it was supposed
to be,
a law
was made,
restricting the quantity
of land which any citizen
could possess
to five hundred jugera;
about 350 English acres.
This law,
however,
though we
read
of its having been executed
upon one or two occasions,
was either neglected
or evaded,
and the inequality of fortunes
went on continually increasing.
The greater part
of the citizens
had no land;
and without it
the manners and customs
of those times
rendered it difficult
for a freeman
to maintain his independency.
In the present times,
though
a poor man
has no land of his own,
if he
has a little stock,
he may either farm
the lands of another,
or he
may carry
on some little retail trade;
and if he
has no stock,
he
may find employment either
as a country labourer,
or as an artificer.
But among the ancient Romans,
the lands
of the rich
were all cultivated by slaves,
who wrought under an overseer,
who was likewise a slave;
so that a poor freeman
had little chance
of being employed
either
as a farmer or
as a labourer.
All trades
and manufactures, too,
even the retail trade,
were carried on
by the slaves
of the rich
for the benefit
of their masters,
whose wealth,
authority,
and protection,
made it difficult
for a poor freeman
to maintain the competition
against them.
The citizens,
therefore,
who had no land,
had scarce any other means
of subsistence
but the bounties
of the candidates
at the annual elections.
The tribunes,
when they
had a mind
to animate
the people
against the rich
and the great,
put them in mind
of the ancient divisions
of lands,
and represented that law
which restricted
this sort of private property
as the fundamental law
of the republic.
The people
became clamorous
to get land,
and the rich and the great,
we may believe,
were perfectly determined not
to give them any part
of theirs.
To satisfy them
in some measure,
therefore,
they frequently proposed
to send out a new colony.
But conquering Rome was,
even upon such occasions,
under no necessity
of turning out her citizens
to seek their fortune,
if one
may so,
through the wide world,
without knowing
where they were to settle.
She assigned them lands generally
in the conquered provinces
of Italy,
where,
being
within the dominions
of the republic,
they could never form
any independent state,
but were at best
but a sort of corporation,
which,
though it
had the power
of enacting bye-laws
for its own government,
was at all times
subject to the correction,
jurisdiction,
and legislative authority
of the mother city.
The sending
out a colony
of this kind not
only gave some satisfaction
to the people,
but often established
a sort
of garrison, too,
in a newly conquered province,
of which the obedience
might otherwise have been
doubtful.
A Roman colony,
therefore,
whether we
consider the nature
of the establishment itself,
or the motives
for making it,
was altogether different
from a Greek one.
The words,
accordingly,
which
in the original languages
denote those
different establishments,
have very different meanings.
The Latin
word (colonia)
signifies simply a plantation.
The Greek word (apoixia),
on the contrary,
signifies a separation
of dwelling,
a departure from home,
a going out of the house.
But though
the Roman colonies were,
in many respects,
different from the Greek ones,
the interest
which prompted
to establish them was equally
plain and distinct.
Both institutions
derived their origin,
either
from irresistible necessity,
or from clear
and evident utility.
The establishment
of the European colonies
in America
and the West Indies
arose from no necessity;
and though the utility
which has resulted from them
has been very great,
it is not altogether so clear
and evident.
It was not understood
at their first establishment,
and was not the motive,
either of that establishment,
or of the discoveries
which gave
occasion to it;
and the nature,
extent,
and limits of that utility,
are not, perhaps,
well
understood at this day.
The Venetians,
during the fourteenth
and fifteenth centuries,
carried
on a very advantageous commerce
in spiceries
and other East India goods,
which
they distributed
among the other nations
of Europe.
They purchased them chiefly
in Egypt,
at that time
under the dominion
of the Mamelukes,
the enemies of the Turks,
of whom
the Venetians
were the enemies;
and this union of interest,
assisted
by the money of Venice,
formed such
a connexion as
gave the Venetians almost
a monopoly of the trade.
The great profits
of the Venetians
tempted the avidity
of the Portuguese.
They had been endeavouring,
during the course
of the fifteenth century,
to find out by sea
a way
to the countries from which
the Moors
brought them ivory
and gold dust
across the desert.
They discovered the Madeiras,
the Canaries,
the Azores,
the Cape de Verd islands,
the coast of Guinea,
that of Loango,
Congo,
Angola,
and Benguela,
and, finally,
the Cape of Good Hope.
They had long wished
to share
in the profitable traffic
of the Venetians,
and this last
discovery opened
to them a probable prospect
of doing so.
In 1497,
Vasco de Gamo
sailed
from the port
of Lisbon
with a fleet
of four ships,
and,
after a navigation
of eleven months,
arrived
upon the coast of Indostan;
and thus completed
a course of discoveries
which had been pursued
with great steadiness,
and with very little
interruption,
for near a century
together.
Some years before this,
while the expectations
of Europe
were in suspense
about the projects
of the Portuguese,
of which the success
appeared yet to be doubtful,
a Genoese pilot
formed
the yet more daring project
of sailing
to the East Indies
by the west.
The situation
of those countries
was at that time
very imperfectly known
in Europe.
The few European travellers
who had been there,
had magnified the distance,
perhaps through simplicity
and ignorance;
what was really very great,
appearing almost infinite
to those
who could not measure it;
or, perhaps,
in order to increase
somewhat more the marvellous
of their own adventures
in visiting regions
so immensely remote
from Europe.
The longer
the way
was by the east,
Columbus
very justly concluded,
the shorter it
would be by the west.
He proposed,
therefore,
to take that way,
as both the shortest
and the surest,
and he had the good fortune
to convince Isabella of Castile
of the probability
of his project.
He sailed
from the port
of Palos in August 1492,
near five years
before the expedition
of Vasco de Gamo
set out from Portugal;
and, after a voyage of
between two and three months,
discovered
first some of the small Bahama
or Lucyan islands,
and afterwards
the great island
of St. Domingo.
But
the countries
which Columbus discovered,
either in this or in any
of his subsequent voyages,
had no resemblance to those
which he had gone in
quest of.
Instead of the wealth,
cultivation,
and populousness
of China and Indostan,
he found,
in St. Domingo,
and in all
the other parts
of the new world which
he ever visited,
nothing
but a country quite covered
with wood,
uncultivated,
and inhabited only
by some tribes
of naked and
miserable savages.
He was not very willing,
however,
to believe that they
were not the same
with some of the countries
described by Marco Polo,
the first European
who had visited,
or at least
had left
behind him any description
of China
or
the East Indies;
and a very slight resemblance,
such as
that which
he found
between the name of Cibao,
a mountain in St. Domingo,
and that of Cipange,
mentioned by Marco Polo,
was frequently sufficient
to make him return
to this favourite prepossession,
though contrary
to the clearest evidence.
In his letters
to Ferdinand and Isabella,
he called the countries
which he
had discovered the Indies.
He entertained no
doubt
but that they
were the extremity of those
which had been described
by Marco Polo,
and that they
were not very distant
from the Ganges,
or from the countries
which had been conquered
by Alexander.
Even when at last
convinced
that they were different,
he still flattered himself
that
those
rich countries
were at no great distance;
and in a subsequent voyage,
accordingly,
went in quest
of them along the coast
of Terra Firma,
and towards the Isthmus of Darien.
In consequence
of this mistake of Columbus,
the name of the Indies
has stuck to those
unfortunate countries ever since;
and when it
was at last clearly
discovered that
the new
were altogether different
from the old Indies,
the former
were called the West,
in contradistinction
to the latter,
which were called
the East Indies.
It was
of importance to Columbus,
however,
that
the countries which he
had discovered,
whatever they were,
should be represented
to the court
of Spain as
of very great consequence;
and, in
what constitutes
the real riches
of every country,
the animal
and vegetable productions
of the soil,
there
was at that time nothing
which could well justify such
a representation of them.
The cori,
something
between a rat and a rabbit,
and supposed
by Mr Buffon
to be the same
with the aperea of Brazil,
was
the largest viviparous quadruped
in St. Domingo.
This species
seems never
to have been very numerous;
and the dogs
and cats of the Spaniards
are said
to have
long ago
almost entirely extirpated it,
as well as some other tribes
of a still smaller size.
These,
however,
together
with a pretty large lizard,
called the ivana or iguana,
constituted
the principal part
of the animal food which
the land afforded.
The vegetable food
of the inhabitants,
though,
from their want of industry,
not very abundant,
was not altogether so scanty.
It consisted in Indian corn,
yams,
potatoes,
bananas, etc.,
plants
which were then altogether
unknown
in Europe,
and which
have never since been very much
esteemed in it,
or supposed
to yield
a sustenance equal to what
is drawn
from the common sorts
of grain and pulse,
which
have been cultivated
in this part
of the world time
out of mind.
The cotton plant,
indeed,
afforded
the material
of a very important manufacture,
and was at that time,
to Europeans,
undoubtedly the most valuable
of all
the vegetable productions
of those islands.
But though,
in the end
of the fifteenth century,
the muslins
and other cotton goods
of the East Indies
were much
esteemed
in every part of Europe,
the cotton
manufacture itself
was not cultivated
in any part of it.
Even this production,
therefore,
could not at that time
appear
in the eyes of Europeans
to be
of very great consequence.
Finding nothing,
either in the animals
or vegetables
of the newly discovered countries
which could justify
a very advantageous representation
of them,
Columbus
turned his view
towards their minerals;
and in the richness
of their productions
of this third kingdom,
he flattered himself
he had found
a full compensation
for the insignificancy of those
of the other two.
The little bits of gold
with which
the inhabitants
ornamented their dress,
and which,
he was informed,
they frequently found
in the rivulets and
torrents
which fell from the mountains,
were sufficient
to satisfy him
that
those mountains
abounded with the richest gold
mines.
St. Domingo,
therefore,
was represented
as a country abounding
with gold,
and upon that account
(according to
the prejudices not
only of the present times,
but of those times),
an inexhaustible source
of real wealth
to the crown and kingdom
of Spain.
When Columbus,
upon his return
from his first voyage,
was introduced
with a sort
of triumphal honours
to the sovereigns
of Castile and Arragon,
the principal productions
of the countries which he
had discovered
were carried
in solemn procession
before him.
The only valuable part
of them
consisted
in some little fillets,
bracelets,
and other ornaments of gold,
and in some bales
of cotton.
The rest
were mere objects
of vulgar wonder
and curiosity;
some reeds
of an extraordinary size,
some birds
of a very beautiful plumage,
and some stuffed skins
of the huge alligator
and manati;
all of which
were preceded
by six or seven
of the wretched natives,
whose singular colour
and appearance added greatly
to the novelty
of the show.
In consequence
of the representations
of Columbus,
the council
of Castile determined
to take possession
of the countries
of which the inhabitants
were plainly incapable
of defending themselves.
The pious purpose
of converting them
to Christianity
sanctified
the injustice of the project.
But the hope
of finding treasures of gold
there was
the sole motive
which prompted
to undertake it;
and to give
this motive the greater
weight,
it was proposed by Columbus,
that
the half of all
the gold and silver
that should be found there,
should belong to the crown.
This proposal
was approved of
by the council.
As long as the whole,
or the greater part
of the gold which
the first adventurers
imported into Europe
was
got by so very easy
a method
as the plundering
of the defenceless natives,
it was not perhaps
very difficult
to pay even this heavy tax;
but when the natives
were once fairly stript
of all that they had,
which,
in St. Domingo,
and in all
the other
countries discovered
by Columbus,
was done completely
in six or eight years,
and when,
in order to find more,
it had become necessary
to dig for it
in the mines,
there
was no longer any possibility
of paying this tax.
The rigorous exaction of it,
accordingly,
first
occasioned,
it is said,
the total abandoning
of the mines
of St. Domingo,
which
have never been wrought since.
It was soon reduced,
therefore,
to a third;
then to a fifth;
afterwards to a tenth;
and at last
to a twentieth part
of the gross produce
of the gold mines.
The tax upon silver
continued
for a long time
to be a fifth
of the gross produce.
It was reduced
to a tenth
only in the course
of the present century.
But the first adventurers
do not appear
to have been much
interested about silver.
Nothing less precious
than gold
seemed worthy
of their attention.
All the other
enterprizes
of the Spaniards
in the New World,
subsequent
to those of Columbus,
seem to have been prompted
by the same motive.
It was the sacred thirst
of gold
that carried Ovieda,
Nicuessa,
and Vasco Nugnes de Balboa,
to the Isthmus of Darien;
that
carried Cortes to Mexico,
Almagro and Pizarro
to Chili and Peru.
When
those adventurers
arrived
upon any unknown coast,
their first inquiry
was always
if there was any gold
to be found
there;
and according to
the information which
they received
concerning this particular,
they determined either
to quit the country
or
to settle in it.
Of all
those expensive
and uncertain projects,
however,
which
bring bankruptcy
upon the greater part
of the people
who engage in them,
there
is none,
perhaps,
more perfectly ruinous
than the search
after new silver
and gold mines.
It is,
perhaps,
the most disadvantageous lottery
in the world,
or the one in which
the gain of those
who draw the prizes
bears the least proportion
to the loss of those
who draw the blanks;
for though
the prizes are few,
and the blanks many,
the common price of a ticket
is the whole fortune
of a very rich man.
Projects of mining,
instead of replacing
the capital
employed in them,
together
with the ordinary profits
of stock,
commonly
absorb both capital
and profit.
They are the projects,
therefore,
to which,
of all others,
a prudent lawgiver,
who desired
to increase the capital
of his nation,
would least
choose
to give
any extraordinary encouragement,
or to turn
towards them a greater share
of
that capital than
what would go to them
of its own accord.
Such,
in reality,
is
the absurd confidence which almost
all men
have in their own
good fortune,
that wherever
there is
the least probability
of success,
too great
a share of it
is apt
to go
to them
of its own accord.
But though the judgment
of sober
reason
and experience
concerning such projects
has always been extremely
unfavourable,
that of human avidity
has commonly been
quite otherwise.
The same passion
which has suggested
to so many people
the absurd idea
of the philosopher's stone,
has suggested
to others
the equally absurd one
of immense rich mines
of gold and silver.
They did not consider
that the value
of those metals has,
in all ages and nations,
arisen chiefly
from their scarcity,
and that
their scarcity
has arisen
from the very small quantities
of them which nature
has anywhere deposited
in one place,
from the hard
and intractable substances
with which she
has almost
everywhere surrounded those
small quantities,
and consequently from the labour
and expense
which are everywhere necessary
in order to
penetrate,
and get at them.
They flattered themselves
that veins of those metals
might in many places
be found,
as large and
as abundant
as those
which are commonly found
of lead,
or copper,
or tin,
or iron.
The dream
of Sir Waiter Raleigh,
concerning the golden city
and country
of El Dorado,
may satisfy us,
that even
wise men
are not always exempt
from such strange delusions.
More than
a hundred years after
the death
of
that great man,
the Jesuit Gumila
was still convinced
of the reality of
that wonderful country,
and expressed,
with great warmth,
and,
I dare say,
with great sincerity,
how happy
he should be
to carry the light
of the gospel
to a people
who could so well reward
the pious
labours of their missionary.
In the countries first
discovered by the Spaniards,
no gold
and silver mines
are at present
known
which are supposed
to be worth the working.
The quantities
of those metals which
the first adventurers
are said to have found
there,
had probably been very much
magnified,
as well as the fertility
of the mines
which
were wrought immediately
after the first discovery.
What those adventurers
were reported
to have found,
however,
was sufficient
to inflame the avidity
of all their countrymen.
Every Spaniard
who sailed to America
expected
to find an El Dorado.
Fortune, too,
did upon this
what she
has done
upon very few other occasions.
She realized in some measure
the extravagant hopes
of her votaries;
and in the discovery
and conquest
of Mexico and Peru
(of which
the one happened about thirty,
and the other about forty,
years after
the first expedition
of Columbus),
she presented them
with something not very unlike
that profusion
of the precious metals which
they sought for.
A project
of commerce
to the East Indies,
therefore,
gave occasion
to the first discovery
of the West.
A project of conquest
gave occasion
to all
the establishments
of the Spaniards in those
newly discovered countries.
The motive
which excited them
to this conquest
was a project
of gold and silver mines;
and a course
of accidents
which no human wisdom
could foresee,
rendered
this project
much more successful than the undertakers
had any reasonable grounds
for expecting.
The first adventurers of all
the other nations of Europe
who attempted
to make settlements
in America,
were animated
by the like chimerical views;
but they
were not equally successful.
It was
more than
a hundred years after
the first settlement
of the Brazils,
before any silver,
gold,
or diamond mines,
were discovered there.
In the English,
French,
Dutch,
and Danish colonies,
none
have ever yet been discovered,
at least none
that are at present
supposed
to be worth the working.
The first English settlers
in North America,
however,
offered a fifth
of all the gold
and silver which
should be found there
to the king,
as a motive for granting them
their patents.
In the patents
of Sir Waiter Raleigh,
to the London
and Plymouth companies,
to the council
of Plymouth,.etc. this fifth
was accordingly reserved
to the crown.
To the expectation
of finding gold
and silver mines,
those first settlers, too,
joined that of discovering
a north-west passage
to the East Indies.
They have hitherto been
disappointed in both.
Causes
of the Prosperity of New Colonies.
The colony
of a
civilized nation
which takes possession either
of a waste country,
or of one so thinly inhabited
that the natives
easily give place
to the new settlers,
advances more rapidly
to wealth and greatness
than any other human society.
The colonies
carry out
with them a knowledge
of agriculture
and of other useful arts,
superior to
what
can grow up
of its own accord,
in the course
of many centuries,
among savage
and
barbarous nations.
They carry out
with them, too,
the habit of subordination,
some notion
of the regular government
which takes place
in their own country,
of the system
of laws which support it,
and of a regular administration
of justice;
and they
naturally establish something
of the same kind
in the new settlement.
But among savage
and barbarous nations,
the natural progress
of law and government
is still slower
than the natural progress
of arts,
after law and government
have been so far established
as is necessary
for their protection.
Every colonist
gets more land than he
can possibly cultivate.
He has no rent,
and scarce any taxes,
to pay.
No landlord shares with him
in its produce,
and, the share
of the sovereign
is commonly but a trifle.
He has every motive
to render
as great as possible
a produce which is thus
to be almost entirely his own.
But his land
is commonly so extensive,
that,
with all his own industry,
and with all
the industry
of other people whom
he can get
to employ,
he can seldom make
it produce
the tenth part of what
it is capable
of producing.
He is eager,
therefore,
to collect labourers
from all quarters,
and to reward them
with the most liberal wages.
But those liberal wages,
joined
to the plenty and cheapness
of land,
soon make those labourers
leave him,
in order to
become landlords themselves,
and to reward
with equal liberality other labourers,
who soon leave them
for the same reason
that they
left their first master.
The liberal reward of labour
encourages marriage.
The children,
during the tender years
of infancy,
are well fed
and properly taken care of;
and when they are grown up,
the value of their labour
greatly overpays
their maintenance.
When arrived at maturity,
the high price of labour,
and the low price of land,
enable them
to establish themselves
in the same manner
as their fathers
did before them.
In other countries,
rent
and profit eat up wages,
and the two superior orders
of people
oppress the inferior one;
but in new colonies,
the interest
of the two superior orders
obliges them
to treat the inferior one
with more generosity
and humanity,
at least
where
that inferior one
is not in a state
of slavery.
Waste lands,
of the greatest natural fertility,
are to be had
for a trifle.
The increase
of revenue which
the proprietor,
who is always the undertaker,
expects
from their improvement,
constitutes his profit,
which,
in these circumstances,
is commonly very great;
but this great profit
cannot be made,
without employing the labour
of other people
in clearing
and cultivating the land;
and the disproportion
between the great extent
of the land
and the small number
of the people,
which commonly takes place
in new colonies,
makes it difficult for him
to get this labour.
He does not,
therefore,
dispute about wages,
but is
willing
to employ labour
at any price.
The high wages of labour
encourage population.
The cheapness and plenty
of good land
encourage improvement,
and enable the proprietor
to pay those high wages.
In those wages
consists almost
the whole price of the land;
and though they
are high,
considered
as the wages of labour,
they
are low,
considered
as the price of
what is so very valuable.
What encourages
the progress
of population and improvement,
encourages
that of real wealth
and greatness.
The progress
of many
of the ancient Greek colonies
towards wealth and greatness
seems accordingly
to have been very rapid.
In the course
of a century or two,
several of them
appear
to have rivalled,
and even to have surpassed,
their mother cities.
Syracuse and Agrigentum
in Sicily,
Tarentum and Locri in Italy,
Ephesus and Miletus
in Lesser Asia,
appear,
by all accounts,
to have been
at least equal to
any of the cities
of ancient Greece.
Though posterior
in their establishment,
yet all the arts
of refinement,
philosophy,
poetry,
and eloquence,
seem to have been cultivated
as early,
and to have been improved
as highly in them
as in any part
of the mother country
The schools
of the
two oldest Greek philosophers,
those
of Thales and Pythagoras,
were established,
it is remarkable,
not in ancient Greece,
but the one in an Asiatic,
the other
in an Italian colony.
All those colonies
had established themselves
in countries
inhabited
by savage and
barbarous nations,
who easily gave place
to the new settlers.
They had plenty
of good land;
and as they
were altogether independent
of the mother city,
they
were at liberty
to manage
their own affairs in the way
that
they judged
was most suitable
to their own interest.
The history
of the Roman colonies
is by no means so brilliant.
Some of them,
indeed,
such as Florence,
have,
in the course
of many ages,
and after the fall
of the mother city,
grown up
to be considerable states.
But the progress of no one
of them
seems ever
to have been very rapid.
They
were all established
in conquered provinces,
which
in most cases
had been fully inhabited before.
The quantity of land
assigned to each colonist
was seldom very considerable,
and, as the colony
was not independent,
they
were not always at liberty
to manage
their own affairs in the way
that
they judged
was most suitable
to their own interest.
In the plenty
of good land,
the European colonies
established in America
and the West Indies
resemble,
and even greatly
surpass,
those of ancient Greece.
In their dependency
upon the mother state,
they resemble those
of ancient Rome;
but their great distance
from Europe
has in all
of them alleviated more
or less the effects
of this dependency.
Their situation
has placed them less in
the view,
and less in the power
of their mother country.
In pursuing
their interest their own way,
their conduct
has upon many occasions
been overlooked,
either
because
not known
or not understood in Europe;
and upon some occasions
it has been fairly suffered
and
submitted to,
because their distance
rendered it difficult
to restrain it.
Even
the violent
and arbitrary government
of Spain has,
upon many occasions,
been obliged to recall
or soften the orders
which had been given
for the government
of her colonies,
for fear of a
general insurrection.
The progress
of all
the European colonies
in wealth,
population,
and improvement,
has accordingly been
very great.
The crown of Spain,
by its share
of the gold and silver,
derived some revenue
from its colonies
from the moment
of their first establishment.
It was a revenue, too,
of a nature
to excite
in human avidity
the most extravagant expectation
of still greater riches.
The Spanish colonies,
therefore,
from the moment
of their first establishment,
attracted very much
the attention
of their mother country;
while
those
of the other European nations
were for a long time
in a great measure neglected.
The former
did not,
perhaps,
thrive the better
in consequence
of this attention,
nor the latter the worse
in consequence
of this neglect.
In proportion to the extent
of the country which
they in some measure
possess,
the Spanish colonies
are considered
as less populous
and thriving than those
of almost any other European
nation.
The progress even
of the Spanish colonies,
however,
in population and improvement,
has certainly been
very rapid and very great.
The city of Lima,
founded since the conquest,
is represented by Ulloa
as containing
fifty thousand inhabitants
near thirty years ago.
Quito,
which had been
but a miserable hamlet
of Indians,
is represented
by the same author as
in his time equally populous.
Gemel i Carreri,
a pretended traveller,
it is said,
indeed,
but who seems everywhere
to have written
upon extreme good information,
represents the city of Mexico
as containing
a hundred thousand inhabitants;
a number which,
in spite of all
the exaggerations
of the Spanish writers,
is probably
more than five times
greater than
what it
contained
in the time of Montezuma.
These numbers
exceed greatly those
of Boston,
New York,
and Philadelphia,
the three greatest cities
of the English colonies.
Before the conquest
of the Spaniards,
there
were no cattle fit
for draught,
either in Mexico or Peru.
The lama
was their only beast
of burden,
and its strength
seems
to have been
a good deal inferior to
that of a common ass.
The plough
was unknown among them.
They
were ignorant
of the use of iron.
They had no coined money,
nor any established instrument
of commerce of any kind.
Their commerce
was carried on by barter.
A sort
of wooden spade
was their principal instrument
of agriculture.
Sharp stones
served them
for knives and hatchets
to cut with;
fish bones,
and the hard sinews
of certain animals,
served them
with needles to sew with;
and these
seem to have been
their principal instruments
of trade.
In this state of things,
it seems impossible
that
either of those empires
could have been so much
improved or so well cultivated
as
at present,
when they
are plentifully furnished
with all sorts
of European cattle,
and when the use of iron,
of the plough,
and of many
of the arts of Europe,
have been introduced
among them.
But the populousness of every
country
must be
in proportion
to the degree
of its improvement
and cultivation.
In spite of
the cruel destruction
of the natives
which followed the conquest,
these two great empires
are probably more populous
now than they ever were before;
and the people
are surely very different;
for we must acknowledge,
I apprehend,
that
the Spanish creoles
are in many respects superior
to the ancient Indians.
After the settlements
of the Spaniards,
that of the Portuguese
in Brazil
is the oldest
of any European nation
in America.
But as
for a long time
after
the first discovery
neither gold nor
silver mines
were found in it,
and as it
afforded upon
that account little
or no revenue
to the crown,
it was
for a long time
in a great measure neglected;
and during this state
of neglect,
it grew up
to be a great and powerful
colony.
While Portugal
was under the dominion
of Spain,
Brazil
was attacked by the Dutch,
who got possession
of seven
of the fourteen provinces
into which
it is divided.
They expected soon
to conquer the other seven,
when
Portugal recovered
its independency
by the elevation
of the family
of Braganza to the throne.
The Dutch,
then,
as enemies to the Spaniards,
became friends
to the Portuguese,
who were likewise
the enemies of the Spaniards.
They agreed,
therefore,
to leave that part of Brazil
which they
had not conquered
to the king of Portugal,
who agreed to leave
that part
which they
had conquered to them,
as a matter not worth
disputing about,
with such good allies.
But the Dutch government
soon began
to oppress
the Portuguese colonists,
who,
instead of amusing themselves
with complaints,
took arms
against their new masters,
and by their own valour
and resolution,
with the connivance,
indeed,
but without any avowed assistance
from the mother country,
drove them out of Brazil.
The Dutch,
therefore,
finding it impossible
to keep any part
of the country to themselves,
were contented
that it
should be entirely restored
to the crown of Portugal.
In this colony
there are said
to be
more than six hundred thousand people,
either Portuguese
or descended from Portuguese,
creoles,
mulattoes,
and a mixed race
between Portuguese
and Brazilians.
No one
colony in America
is supposed
to contain so great a number
of people
of European extraction.
Towards the end
of the fifteenth,
and during the greater part
of the sixteenth century,
Spain
and Portugal
were
the two great naval powers
upon the ocean;
for though
the commerce of Venice
extended
to every part of Europe,
its fleet
had scarce ever sailed
beyond the Mediterranean.
The Spaniards,
in virtue
of the first discovery,
claimed all America
as their own;
and though they
could not hinder
so great a naval power
as
that of Portugal from
settling in Brazil,
such
was at that time
the terror of their name,
that
the greater part
of the other nations
of Europe
were afraid
to establish themselves
in any other part of
that great continent.
The French,
who attempted
to settle in Florida,
were all murdered
by the Spaniards.
But the declension
of the naval power
of this latter nation,
in consequence
of the defeat or miscarriage
of what they
called
their invincible armada,
which happened
towards the end
of the sixteenth century,
put it out of their power
to obstruct any longer
the settlements
of the other European nations.
In the course
of the seventeenth century,
therefore,
the English,
French,
Dutch,
Danes,
and Swedes,
all the great nations
who had any ports
upon the ocean,
attempted
to make some settlements
in the new world.
The Swedes
established themselves
in New Jersey;
and the number
of Swedish families still
to be found there sufficiently
demonstrates,
that this colony
was very likely
to prosper,
had it
been protected
by the mother country.
But being neglected by Sweden,
it was soon swallowed up
by the Dutch colony
of New York,
which again,
in 1674,
fell under the dominion
of the English.
The small islands
of St. Thomas and Santa Cruz,
are the only countries
in the new world
that have ever been
possessed by the Danes.
These little settlements, too,
were under the government
of an exclusive company,
which had the sole right,
both
of purchasing
the surplus produce
of the colonies,
and of supplying them
with such goods
of other countries as they
wanted,
and which,
therefore,
both in its purchases
and sales,
had not only the power
of oppressing them,
but the greatest temptation
to do so.
The government
of an exclusive company
of merchants is,
perhaps,
the worst
of all governments
for any country
whatever.
It was not,
however,
able
to stop altogether
the progress
of these colonies,
though it
rendered it
more slow and languid.
The late king of Denmark
dissolved this company,
and since
that time the prosperity
of these colonies
has been very great.
The Dutch settlements
in the West,
as well as those
in the East Indies,
were originally put
under the government
of an exclusive company.
The progress of some of them,
therefore,
though it
has been considerable
in comparison with
that of almost any country
that
has been long peopled
and established,
has been languid and slow
in comparison with
that of the greater part
of new colonies.
The colony of Surinam,
though very considerable,
is still inferior
to the greater part
of the sugar colonies
of the other European nations.
The colony of Nova Belgia,
now divided
into the two provinces
of New York and New Jersey,
would probably have soon become
considerable too,
even though it
had remained
under the government
of the Dutch.
The plenty and cheapness
of good land
are such powerful causes
of prosperity,
that
the very worst government
is scarce capable
of checking altogether
the efficacy
of their operation.
The great distance, too,
from the mother country,
would enable the colonists
to evade more or less,
by smuggling,
the monopoly which the company
enjoyed against them.
At present,
the company
allows all
Dutch ships
to trade to Surinam,
upon paying two
and a-half per cent.
upon the value
of their cargo
for a license;
and only reserves
to itself exclusively,
the direct trade
from Africa to America,
which consists almost
entirely in the slave trade.
This relaxation
in the exclusive privileges
of the company,
is probably
the principal cause
of
that degree
of prosperity which
that colony at present
enjoys.
Curacoa and Eustatia,
the two principal islands
belonging to the Dutch,
are free ports,
open to the ships
of all nations;
and this freedom,
in the midst
of better colonies,
whose ports
are open to those
of one nation only,
has been the great cause
of the prosperity
of those
two barren islands.
The French colony
of Canada was,
during the greater part
of the last century,
and some part of the present,
under the government
of an exclusive company.
Under so unfavourable
an administration,
its progress
was necessarily very slow,
in comparison with
that of other new colonies;
but it became
much more rapid when this
company
was dissolved,
after the fall of
what is called
the Mississippi scheme.
When the English
got possession
of this country,
they found in it near double
the number
of inhabitants which father
Charlevoix
had assigned to it
between twenty
and thirty years before.
That jesuit
had travelled
over the whole country,
and had no inclination
to represent
it as less inconsiderable
than it
really was.
The French colony
of St. Domingo
was established
by pirates and freebooters,
who,
for a long time,
neither
required the protection,
nor acknowledged
the authority of France;
and when that race
of banditti
became so far citizens
as to acknowledge
this authority,
it was
for a long time necessary
to exercise it
with very great gentleness.
During this period,
the population and improvement
of this colony
increased very fast.
Even the oppression
of the exclusive company,
to which
it was
for some time subjected
with all
the other colonies of France,
though it no doubt
retarded,
had not been
able
to stop its progress altogether.
The course of its prosperity
returned as soon
as it
was relieved from
that oppression.
It is now the most important
of the sugar colonies
of the West Indies,
and its produce
is said
to be greater than
that of all
the English sugar
colonies put together.
The other sugar
colonies of France
are in general all very
thriving.
But there are no colonies
of which the progress
has been more rapid than
that of the English
in North America.
Plenty of good land,
and liberty
to manage
their own affairs their own way,
seem
to be the two great causes
of the prosperity
of all new colonies.
In the plenty
of good land,
the English colonies
of North America,
though no doubt very abundantly
provided,
are, however,
inferior to those
of the Spaniards
and Portuguese,
and not superior
to some of those
possessed by the French
before
the late war.
But the political institutions
of the English colonies
have been more favourable
to the improvement
and cultivation
of this land,
than those
of the other three nations.
First,
The engrossing
of uncultivated land,
though it has by no means
been prevented altogether,
has been more
restrained
in the English colonies
than in any other.
The colony law,
which imposes
upon every
proprietor the obligation
of
improving and cultivating,
within a limited time,
a certain proportion
of his lands,
and which,
in case of failure,
declares those
neglected lands grantable
to any other person;
though it
has not perhaps been very strictly
executed,
has,
however,
had some effect.
Secondly,
In Pennsylvania
there is no right
of primogeniture,
and lands,
like moveables,
are divided equally among all
the children of the family.
In three
of the provinces
of New England,
the oldest
has only a double share,
as in the Mosaical law.
Though in those provinces,
therefore,
too great
a quantity of land
should sometimes be engrossed
by a particular individual,
it is likely,
in the course
of a generation or two,
to be sufficiently divided
again.
In the other English colonies,
indeed,
the right of primogeniture
takes place,
as in the law of England:
But in all
the English colonies,
the tenure of the lands,
which are all held
by free soccage,
facilitates alienation;
and
the grantee of an extensive tract of land generally
finds it
for his interest
to alienate,
as fast as he can,
the greater part of it,
reserving only
a small quit-rent.
In the Spanish
and Portuguese colonies,
what is called
the right of majorazzo
takes place
in the succession of all
those great estates
to which any title of honour
is annexed.
Such estates
go all to one person,
and are
in effect entailed
and unalienable.
The French colonies,
indeed,
are subject to
the custom of Paris,
which,
in the inheritance of land,
is much more favourable
to the younger children
than the law of England.
But,
in the French colonies,
if any part of an estate,
held by the noble tenure
of chivalry and homage,
is alienated,
it is,
for a limited time,
subject to
the right of redemption,
either
by the heir of the superior,
or by the heir
of the family;
and all
the largest estates
of the country
are held
by such noble tenures,
which
necessarily embarrass
alienation.
But,
in a new colony,
a great uncultivated estate
is likely
to be much more speedily divided
by alienation than
by succession.
The plenty and cheapness
of good land,
it has already been observed,
are the principal causes
of the rapid prosperity
of new colonies.
The engrossing of land,
in effect,
destroys
this plenty and cheapness.
The engrossing
of uncultivated land,
besides,
is the greatest obstruction
to its improvement;
but the labour
that is employed
in the improvement and
cultivation of land
affords
the greatest
and most valuable produce
to the society.
The produce of labour,
in this case,
pays not only
its own wages
and the profit of the stock
which employs it,
but the
rent of the land
too upon which
it is employed.
The labour
of the English colonies,
therefore,
being more employed
in the improvement
and cultivation
of land,
is likely
to afford a greater
and more valuable produce
than
that of any
of the other three nations,
which,
by the engrossing of land,
is more or less
diverted
towards other employments.
Thirdly,
The labour
of the English colonists
is not only likely
to afford a greater
and more valuable produce,
but,
in consequence
of the moderation
of their taxes,
a greater
proportion of this produce
belongs to themselves,
which
they may store up and employ
in putting
into motion a still
greater quantity
of labour.
The English
colonists
have never yet contributed
any thing
towards the defence
of the mother country,
or towards the support
of its civil government.
They themselves,
on the contrary,
have hitherto been
defended almost
entirely at the expense
of the mother country;
but the expense
of fleets and armies
is out of all proportion
greater than
the necessary expense
of civil government.
The expense of their own
civil government
has always been very moderate.
It has generally been
confined to what
was necessary
for paying
competent salaries
to the governor,
to the judges,
and to some other officers
of police,
and for maintaining
a few
of the most useful public works.
The expense
of the civil establishment
of Massachusetts Bay,
before the commencement
of the present disturbances,
used to be but
about £18;000 a-year;
that of New Hampshire
and Rhode Island, £
3500 each;
that of Connecticut, £
4000;
that
of New York and Pennsylvania, £
4500 each;
that of New Jersey, £
1200;
that of Virginia
and South Carolina, £
8000 each.
The civil establishments
of Nova Scotia and Georgia
are partly supported
by an annual grant
of parliament;
but Nova Scotia pays,
besides,
about £7000 a-year
towards the public expenses
of the colony,
and Georgia
about £2500 a-year.
All
the different civil establishments
in North America,
in short,
exclusive of those
of Maryland and North Carolina,
of which no exact account
has been got,
did not,
before the commencement
of the present disturbances,
cost the inhabitants
about £64,700 a-year;
an ever memorable example,
at how small
an expense
three millions of people
may not only be governed
but well
governed.
The most important part
of the expense of government,
indeed,
that
of defence and protection,
has constantly fallen
upon the mother country.
The ceremonial, too,
of the civil government
in the colonies,
upon the reception
of a new governor,
upon the opening
of a new assembly,.etc.
though sufficiently decent,
is not accompanied
with any expensive pomp
or parade.
Their ecclesiastical government
is conducted
upon a plan equally frugal.
Tithes
are unknown among them;
and their clergy,
who are far
from being numerous,
are maintained either
by moderate stipends,
or by the
voluntary contributions
of the people.
The power
of Spain and Portugal,
on the contrary,
derives some support
from the taxes
levied upon their colonies. F
rance,
indeed,
has never drawn
any considerable revenue
from its colonies,
the taxes which
it levies upon them
being generally spent
among them.
But the colony government
of all
these
three nations
is conducted
upon a much more extensive plan,
and is accompanied
with a
much more expensive ceremonial.
The sums spent
upon the reception
of a new viceroy
of Peru,
for example,
have frequently been enormous.
Such ceremonials
are not only
real taxes
paid by the rich colonists
upon those
particular occasions,
but they
serve to introduce
among them the habit
of vanity and expense
upon all other occasions.
They are not only
very grievous occasional taxes,
but they
contribute
to establish perpetual taxes,
of the same kind,
still more grievous;
the ruinous taxes
of private luxury
and extravagance.
In the colonies
of all those
three nations, too,
the ecclesiastical government
is extremely oppressive.
Tithes
take place in all of them,
and are levied
with the utmost rigour
in those
of Spain and Portugal. A
ll of them,
besides,
are oppressed
with a numerous race
of mendicant friars,
whose beggary
being not only licensed
but consecrated
by religion,
is a most grievous tax
upon the poor people,
who are most carefully taught
that it
is a duty
to give,
and a very great sin
to refuse them their charity.
Over and above all this,
the clergy are,
in all of them,
the greatest engrossers
of land.
Fourthly,
In the disposal
of their surplus produce,
or of
what is
over and above
their own consumption,
the English colonies
have been more favoured,
and have been allowed
a more extensive market,
than those
of any other European nation.
Every European nation
has endeavoured,
more or less,
to monopolize to itself
the commerce of its colonies,
and, upon that account,
has prohibited the ships
of foreign nations from
trading to them,
and has
prohibited them
from importing European goods
from any foreign nation.
But the manner in which
this monopoly
has been exercised
in different nations,
has been very different.
Some
nations
have given
up the whole commerce
of their colonies
to an exclusive company,
of whom the colonists
were obliged
to buy all
such European goods
as they
wanted,
and to whom they were obliged
to sell the whole
of their surplus produce.
It was the interest
of the company,
therefore,
not
only to sell
the former as dear,
and
to buy the latter as cheap
as possible,
but to buy no more
of the latter,
even at this low price,
than what they
could dispose of
for a very high price
in Europe.
It was their interest
not only
to degrade
in all cases the value
of the surplus produce
of the colony,
but in many cases
to discourage
and keep
down the natural increase
of its quantity.
Of all the expedients
that can well be contrived
to stunt the natural growth
of a new colony,
that of an exclusive company
is undoubtedly
the most effectual.
This,
however,
has been
the policy of Holland,
though their company,
in the course
of the present century,
has given up in many
respects
the exertion
of their exclusive privilege.
This, too,
was the policy of Denmark,
till the reign
of the late king.
It has occasionally been
the policy
of France;
and of late,
since 1755,
after it
had been abandoned
by all other nations
on account
of its absurdity,
it has become
the policy of Portugal,
with
regard at least
to two
of the principal provinces
of Brazil,
Pernambucco,
and Marannon.
Other nations,
without establishing
an exclusive company,
have confined
the whole commerce
of their colonies
to a particular port
of the mother country,
from whence no ship
was allowed
to sail,
but either
in a fleet
and at a particular season,
or, if single,
in consequence
of a particular license,
which
in most cases
was very well paid for.
This policy
opened,
indeed,
the trade
of the colonies
to all the natives
of the mother country,
provided
they traded
from the proper port,
at the proper season,
and in the proper vessels.
But
as all
the different merchants,
who joined their stocks
in order to fit out those
licensed vessels,
would find it
for their interest
to act in concert,
the trade
which was carried on
in this manner
would necessarily be conducted very nearly
upon the same principles
as
that of an exclusive company.
The profit of those merchants
would be almost equally
exorbitant and oppressive.
The colonies
would be ill supplied,
and would be obliged
both to buy very dear,
and to sell very cheap.
This,
however,
till within these few years,
had always been
the policy of Spain;
and the price
of all European goods,
accordingly,
is said
to have been enormous
in the Spanish West Indies.
At Quito,
we are told by Ulloa,
a pound of iron
sold for about 4s:6d,
and a pound
of steel for
about 6s:9d sterling.
But it
is chiefly
in order to purchase European
goods
that the colonies part
with their own produce.
The more,
therefore,
they pay for the one,
the less
they really get
for the other,
and the dearness of the one
is the same thing
with the cheapness
of the other.
The policy of Portugal is,
in this respect,
the same
as the ancient policy
of Spain,
with regard to all
its colonies,
except Pernambucco and Marannon;
and with regard to
these
it has lately adopted
a still worse.
Other
nations leave the trade
of their colonies free
to all their subjects,
who may carry it on
from all the different ports
of the mother country,
and who
have occasion
for no other license
than the common despatches
of the custom-house.
In this case the number
and dispersed situation
of the different traders
renders it impossible for them
to enter
into any general combination,
and their competition
is sufficient to hinder them
from making
very exorbitant profits.
Under so liberal a policy,
the colonies
are enabled both
to sell their own produce,
and to buy the goods
of Europe
at a reasonable price;
but since the dissolution
of the Plymouth company,
when our colonies
were but in their infancy,
this
has always been
the policy of England.
It has generally, too,
been that of France,
and has been uniformly so since
the dissolution
of what
in England
is commonly called
their Mississippi company.
The profits of the trade,
therefore,
which France and England
carry on with their colonies,
though no doubt
somewhat higher than if
the competition
were free
to all other nations,
are, however,
by no means exorbitant;
and the price
of European goods,
accordingly,
is not extravagantly high
in the greater past
of the colonies of either
of those nations.
In the exportation
of their own surplus produce, too,
it is only
with regard to
certain commodities that
the colonies of Great Britain
are confined
to the market
of the mother country.
These commodities
having been enumerated
in the act of navigation,
and in some other subsequent acts,
have upon that account
been called
enumerated commodities.
The rest
are called non-enumerated,
and may be exported directly
to other countries,
provided
it is
in British
or plantation ships,
of which the owners
and three fourths
of the mariners
are British subjects.
Among the non-enumerated commodities
are
some of the most important
productions
of America
and the West Indies,
grain of all sorts,
lumber,
salt provisions,
fish,
sugar,
and rum.
Grain
is naturally the first
and principal object
of the culture
of all new colonies.
By allowing them
a very extensive market
for it,
the law
encourages them
to extend this culture much
beyond the consumption
of a thinly inhabited country,
and thus
to provide beforehand
an ample subsistence
for a continually increasing population.
In a country
quite covered with wood,
where timber consequently
is of little
or no value,
the expense
of clearing the ground
is the principal obstacle
to improvement.
By allowing
the colonies
a very extensive market
for their lumber,
the law endeavours
to facilitate improvement
by raising
the price of a commodity
which would otherwise be
of little value,
and thereby enabling them
to make
some profit of what
would otherwise be
mere expense.
In a
country
neither half peopled nor
half
cultivated,
cattle
naturally multiply
beyond the consumption
of the inhabitants,
and are often,
upon that account,
of little
or no value.
But it is necessary,
it has already been shown,
that
the price of cattle
should bear
a certain proportion to
that of corn,
before the greater part
of the lands
of any country
can be improved.
By allowing
to American cattle,
in all shapes,
dead and alive,
a very extensive market,
the law endeavours
to raise the value
of a commodity,
of which the high price
is so very essential
to improvement.
The good effects
of this liberty,
however,
must be somewhat diminished
by the 4th
of George III c.15,
which puts hides and skins
among the enumerated commodities,
and thereby tends
to reduce the value
of American cattle.
To increase
the shipping and naval power
of Great Britain
by the extension
of the fisheries
of our colonies,
is an object which
the legislature
seems
to have had almost
constantly in view.
Those fisheries,
upon this account,
have had
all the encouragement
which freedom
can give them,
and they
have flourished accordingly.
The New England fishery,
in particular,
was,
before the late disturbances,
one of the most important,
perhaps,
in the world.
The whale fishery which,
notwithstanding
an extravagant bounty,
is in Great Britain
carried on
to so little purpose,
that in the opinion
of many people
( which
I do not,
however,
pretend to warrant),
the whole produce
does not much
exceed the value
of the bounties
which are annually paid
for it,
is in New England
carried on,
without any bounty,
to a very great extent.
Fish
is one
of the principal articles
with which
the North Americans trade
to Spain,
Portugal,
and the Mediterranean.
Sugar
was originally
an enumerated commodity,
which could only be exported
to Great Britain;
but in 1751,
upon a representation
of the sugar-planters,
its exportation
was permitted to all parts
of the world.
The restrictions,
however,
with which this liberty
was granted,
joined
to the high price
of sugar in Great Britain,
have rendered it
in a great measure ineffectual.
Great Britain and her colonies
still continue
to be almost the sole market
for all sugar
produced
in the British plantations.
Their consumption increases
so fast,
that,
though
in consequence
of the increasing improvement
of Jamaica,
as
well as of the ceded islands,
the importation of sugar
has increased very greatly
within these twenty years,
the exportation to foreign
countries
is said
to be not much greater than
before.
Rum is
a very important article
in the trade which
the Americans
carry on
to the coast of Africa,
from which
they bring back negro
slaves in return.
If the whole surplus produce
of America,
in grain of all sorts,
in salt provisions,
and in fish,
had been put
into the enumeration,
and thereby forced
into the market
of Great Britain,
it would have interfered
too much
with the produce
of the industry
of our own people.
It was probably not so much
from any
regard
to the interest of America,
as from a jealousy
of this interference,
that
those important commodities
have not only been
kept out of the enumeration,
but that the importation
into Great Britain
of all grain,
except rice,
and of all salt provisions,
has,
in the ordinary state
of the law,
been prohibited.
The non-enumerated commodities
could originally be exported
to all parts
of the world.
Lumber and rice
having been once put
into the enumeration,
when they
were afterwards taken out of it,
were confined,
as to the European market,
to the countries that lie
south
of Cape Finisterre.
By the 6th
of George III c.52,
all non-enumerated commodities
were subjected
to the like restriction.
The parts of Europe
which
lie south of Cape Finisterre
are not manufacturing
countries,
and we
are less jealous
of the colony ships
carrying home
from them any
manufactures
which could interfere
with our own.
The enumerated commodities
are of two sorts;
first,
such as
are either
the peculiar produce
of America,
or as
cannot be produced,
or at least
are not produced
in the mother country.
Of this kind
are molasses,
coffee,
cocoa-nuts,
tobacco,
pimento,
ginger,
whalefins,
raw silk,
cotton,
wool,
beaver,
and other peltry of America,
indigo,
fustick,
and other dyeing woods;
secondly,
such as
are not
the peculiar produce
of America,
but which are,
and may be produced
in the mother country,
though not in such quantities
as to supply the greater part
of her demand,
which is principally supplied
from foreign countries.
Of this kind
are all naval stores,
masts,
yards,
and bowsprits,
tar,
pitch,
and turpentine,
pig and bar iron,
copper ore,
hides and skins,
pot and pearl ashes.
The largest importation
of commodities
of the first kind
could not discourage the growth,
or interfere with the sale,
of any part
of the produce
of the mother country.
By confining them
to the home market,
our merchants,
it was expected,
would not only be enabled
to buy them cheaper
in the plantations,
and consequently
to sell them
with a better profit at home,
but to establish
between the plantations
and
foreign countries
an advantageous carrying trade,
of which Great Britain
was necessarily
to be the centre or emporium,
as the European country
into which
those commodities
were first to be imported.
The importation
of commodities
of the second kind
might be so
managed too,
it was supposed,
as to interfere,
not with the sale of those
of the same kind which
were produced at home,
but with
that of those
which were imported
from foreign countries;
because,
by means of proper duties,
they
might be rendered always somewhat
dearer
than the former,
and yet a good deal cheaper
than the latter.
By confining
such commodities
to the home market,
therefore,
it was proposed
to discourage the produce,
not of Great Britain,
but of some foreign countries
with which the balance
of trade
was believed
to be unfavourable
to Great Britain.
The prohibition
of exporting
from the colonies
to any other country
but Great Britain,
masts,
yards,
and bowsprits,
tar,
pitch,
and turpentine,
naturally
tended
to lower the price
of timber in the colonies,
and
consequently to increase the expense
of clearing their lands,
the principal obstacle
to their improvement.
But about the beginning
of the present century,
in 1703,
the pitch and tar
company of Sweden endeavoured
to raise the price
of their commodities
to Great Britain,
by prohibiting
their exportation,
except in their own ships,
at their own price,
and in such quantities
as they
thought proper.
In order to counteract this
notable piece
of mercantile policy,
and to render herself
as much as possible independent,
not only of Sweden,
but of all
the other northern powers,
Great Britain
gave a bounty
upon the importation
of naval stores from America;
and the effect of this bounty
was to raise
the price of timber in America much more than the confinement to the home market
could lower it;
and as both regulations
were enacted
at the same time,
their joint effect
was rather
to encourage than
to discourage the clearing
of land in America.
Though pig
and bar iron, too,
have been put
among the enumerated commodities,
yet as,
when imported from America,
they
are exempted
from considerable duties
to which they
are subject when
imported
front any other country,
the one part
of the regulation
contributes
more to encourage the erection
of furnaces
in America than the other
to discourage it.
There
is no manufacture
which occasions so great
a consumption
of wood as a furnace,
or which
can contribute so much
to the clearing
of a country
overgrown with it.
The tendency
of some of these regulations
to raise the value
of timber in America,
and thereby
to facilitate the clearing
of the land,
was neither,
perhaps,
intended nor understood
by the legislature.
Though
their beneficial effects,
however,
have been
in this respect accidental,
they have not upon
that account
been less real.
The most perfect freedom
of trade
is permitted
between the British colonies
of America
and the West Indies,
both in the enumerated and
in the
non-enumerated commodities
Those colonies
are now become so populous
and thriving,
that each of them
finds in some of the others
a great and extensive market
for every part
of its produce.
All of them taken together,
they make
a great internal market
for the produce
of one another.
The liberality of England,
however,
towards the trade
of her colonies,
has been confined chiefly
to what
concerns
the market for their produce,
either in its rude state,
or in
what may be called
the very first stage
of manufacture.
The more advanced or more refined
manufactures,
even of the colony produce,
the merchants and manufacturers
of Great Britain chuse
to reserve to themselves,
and have prevailed
upon the legislature
to prevent their establishment
in the colonies,
sometimes by high duties,
and sometimes by absolute
prohibitions.
While,
for example,
Muscovado sugars
from the British plantations pay,
upon importation,
only 6s:4d the hundred weight,
white sugars
pay £1:1:1;
and refined,
either double or single,
in loaves, £
4:2:5 8/20ths.
When those
high duties were imposed,
Great Britain
was the sole,
and she
still continues
to be,
the principal market,
to which the sugars
of the British colonies
could be exported.
They amounted,
therefore,
to a prohibition,
at first
of claying
or refining sugar
for any foreign market,
and at present
of claying or refining
it for the market
which takes off,
perhaps,
more than nine-tenths
of the whole produce.
The manufacture
of claying or refining sugar,
accordingly,
though it
has flourished in all
the sugar colonies of France,
has been little cultivated
in any
of those
of England,
except
for the market
of the colonies themselves.
While Grenada
was in the hands
of the French,
there
was a refinery of sugar,
by claying,
at least
upon almost every plantation.
Since it
fell into those
of the English,
almost all works of this kind
have been given up;
and there are
at present (October 1773),
I am assured,
not above two or three
remaining in the island.
At present,
however,
by an indulgence
of the custom-house,
clayed
or refined sugar,
if reduced
from loaves into powder,
is commonly imported
as Muscovado.
While
Great Britain
encourages in America
the manufacturing
of pig and bar iron,
by exempting them
from duties
to which the like commodities
are subject
when imported
from any other country,
she imposes
an absolute prohibition
upon the erection
of steel furnaces and
slit-mills in any
of her American plantations.
She will not suffer
her colonies
to work in those more refined
manufactures,
even for their own
consumption;
but insists
upon their purchasing
of her merchants
and manufacturers all goods
of this kind which
they have
occasion for.
She prohibits the exportation
from one province to another
by water,
and even the carriage by land
upon horseback,
or in a cart,
of hats,
of wools,
and woollen goods,
of the produce of America;
a regulation
which effectually prevents
the establishment
of any manufacture
of such commodities
for distant sale,
and confines the industry
of her colonists in this way
to such coarse and household
manufactures
as a private family
commonly makes
for its own use,
or for
that of some of
its neighbours
in the same province.
To prohibit a great people,
however,
from making all
that they
can of every part
of their own produce,
or from employing
their stock and industry
in the way
that
they judge most advantageous
to themselves,
is a manifest violation
of the most sacred rights
of mankind.
Unjust,
however,
as such
prohibitions may be,
they have not hitherto been
very hurtful
to the colonies.
Land
is still so cheap,
and, consequently,
labour so dear among them,
that
they can import
from the mother country almost all
the more refined or more advanced
manufactures cheaper than
they could make them
for themselves.
Though they
had not,
therefore,
been prohibited
from establishing such
manufactures,
yet,
in their present state
of improvement,
a regard
to their own interest
would probably have prevented them
from doing so.
In their present state
of improvement,
those prohibitions,
perhaps,
without cramping
their industry,
or restraining
it from any employment
to which
it would have gone
of its own accord,
are only impertinent badges
of slavery imposed
upon them,
without any sufficient reason,
by the groundless jealousy
of the merchants
and manufacturers
of the mother country.
In a more advanced state,
they
might be really
oppressive
and insupportable.
Great Britain, too,
as she confines to her own
market
some of the most important
productions
of the colonies,
so,
in compensation,
she gives to some of them
an advantage in that market,
sometimes by imposing
higher duties
upon the like productions when imported
from other countries,
and sometimes by giving bounties
upon their importation
from the colonies.
In the first way,
she gives an advantage
in the home market
to the sugar,
tobacco,
and iron of her own colonies;
and, in the second,
to their raw silk,
to their hemp and flax,
to their indigo,
to their naval stores,
and to their building timber.
This second way
of encouraging
the colony produce,
by bounties upon importation,
is, so far as I
have been able
to learn,
peculiar to Great Britain:
the first
is not.
Portugal
does not content herself
with imposing higher duties
upon the importation
of tobacco
from any other country,
but prohibits it
under the severest penalties.
With regard to the importation
of goods from Europe,
England
has likewise
dealt more liberally
with her colonies
than any other nation.
Great Britain
allows a part,
almost always the half,
generally a larger portion,
and sometimes the whole,
of the duty
which is paid
upon the importation
of foreign goods,
to be drawn back
upon their exportation
to any foreign country.
No
independent foreign country,
it was easy
to foresee,
would receive them,
if they
came to it
loaded
with the heavy duties to which
almost all foreign goods
are subjected
on their importation
into Great Britain.
Unless,
therefore,
some part of those duties
was drawn back
upon exportation,
there
was an end
of the carrying trade;
a trade
so much favoured
by the mercantile system.
Our colonies,
however,
are by no means
independent foreign countries;
and Great Britain
having assumed
to herself the exclusive right
of supplying them
with all goods from Europe,
might have forced them
(in the same
manner as other
countries have done
their colonies)
to receive such goods
loaded with all
the same duties which
they paid
in the mother country.
But,
on the contrary,
till 1763,
the same drawbacks
were paid
upon the exportation
of the greater part
of foreign goods
to our colonies,
as to any independent foreign
country.
In 1763,
indeed,
by the 4th
of George III c.15,
this indulgence
was a good deal abated,
and it was enacted,
"That no
part of the duty
called the old subsidy
should be drawn back
for any goods
of the growth,
production,
or manufacture
of Europe or the East Indies,
which should be exported
from this kingdom
to any British colony
or plantation
in America;
wines,
white calicoes,
and muslins,
excepted."
Before this law,
many different sorts
of foreign
goods might have been bought
cheaper
in the plantations
than in the mother country,
and some may still.
Of the greater part
of the regulations concerning
the colony trade,
the merchants
who carry it on,
it must be observed,
have been
the principal advisers.
We must not wonder,
therefore,
if,
in a great part
of them,
their interest
has been more
considered than either
that of the colonies or
that of the mother country.
In their exclusive privilege of supplying
the colonies
with all the goods which
they wanted from Europe,
and of purchasing all
such parts of their surplus produce as
could not interfere
with any of the trades which
they themselves
carried on at home,
the interest of the colonies
was sacrificed
to the interest
of those merchants.
In allowing the same drawbacks
upon the re-exportation
of the greater part
of European
and East India goods
to the colonies,
as upon their re-exportation
to any independent country,
the interest
of the mother country
was sacrificed to it,
even according to
the mercantile ideas
of that interest.
It was
for the interest
of the merchants
to pay as
little as possible
for the foreign goods which
they sent to the colonies,
and, consequently,
to get back
as much as possible
of the duties which
they advanced
upon their importation
into Great Britain.
They
might thereby be enabled
to sell in the colonies,
either the same quantity
of goods
with a greater profit,
or a greater quantity
with the same profit,
and, consequently,
to gain something either
in the one way
or the other.
It was likewise
for the interest
of the colonies
to get all such goods
as cheap,
and in
as great
abundance as possible.
But this
might not always be
for the interest
of the mother country.
She might frequently suffer,
both in her revenue,
by giving back
a great part of the duties
which had been paid
upon the importation
of such goods;
and in her
manufactures,
by being undersold
in the colony market,
in consequence
of the easy terms
upon which foreign
manufactures
could be carried thither
by means
of those drawbacks.
The progress
of the linen manufacture
of Great Britain,
it is commonly said,
has been
a good deal
retarded
by the drawbacks
upon the re-exportation
of German linen
to the American colonies.
But though the policy
of Great Britain,
with regard to
the trade of her colonies,
has been dictated
by the same mercantile spirit
as
that of other nations,
it has,
however,
upon the whole,
been
less illiberal and oppressive
than
that of any of them.
In every thing
except their foreign trade,
the liberty
of the English colonists
to manage
their own affairs their own way,
is complete.
It is
in every respect equal to
that
of their fellow-citizens at home,
and is secured
in the same manner,
by
an assembly of the representatives
of the people,
who claim the sole right
of imposing taxes
for the support
of the colony government.
The authority
of this assembly
overawes the executive power;
and neither
the meanest nor
the most obnoxious colonist,
as long
as he obeys the law,
has any thing
to fear from the resentment,
either of the governor,
or of any other civil
or military officer
in the province.
The colony assemblies,
though,
like the house
of commons in England,
they are not always
a very equal representation
of the people,
yet they
approach more nearly to
that character;
and
as the executive power either
has not
the means
to corrupt them,
or,
on account
of the support which
it receives
from the mother country,
is not under the necessity
of doing so,
they are,
perhaps,
in general more
influenced
by the inclinations
of their constituents.
The councils,
which,
in the colony legislatures,
correspond
to the house of lords
in Great Britain,
are not composed
of a hereditary nobility.
In some of the colonies,
as in three
of the governments
of New England,
those councils
are not appointed
by the king,
but chosen
by the representatives
of the people.
In none of the English
colonies
is there
any hereditary nobility.
In all of them,
indeed,
as in all other free countries,
the descendant
of an old colony family
is more
respected
than an upstart
of equal merit
and fortune;
but he
is only more respected,
and he has no privileges
by which he
can be troublesome
to his neighbours.
Before the commencement
of the present disturbances,
the colony assemblies
had not only the legislative,
but a part
of the executive power.
In Connecticut and Rhode Island,
they elected the governor.
In the other colonies,
they appointed
the revenue officers,
who collected the taxes
imposed
by those
respective assemblies,
to whom
those officers
were immediately responsible.
There
is more equality,
therefore,
among the English colonists
than among the inhabitants
of the mother country.
Their manners
are more re publican;
and their governments,
those
of three
of the provinces
of New England in particular,
have hitherto been
more republican too.
The absolute governments
of Spain,
Portugal,
and France,
on the contrary,
take place in their colonies;
and the discretionary powers
which such governments
commonly delegate to all
their inferior officers are,
on account
of the great distance,
naturally
exercised there
with more than ordinary
violence.
Under all absolute governments,
there
is more liberty
in the capital
than in any other part
of the country.
The sovereign himself
can never have
either interest
or inclination
to pervert the order
of justice,
or to oppress the great body
of the people.
In the capital,
his presence overawes,
more or less,
all his inferior officers,
who,
in the remoter provinces,
from
whence the complaints
of the people
are less likely
to reach him,
can exercise
their tyranny
with much more safety.
But the European colonies
in America
are more remote
than the most distant provinces
of the greatest empires
which had ever been
known before.
The government
of the English colonies is,
perhaps,
the only one which,
since the world began,
could give perfect security
to the inhabitants
of so very distant
a province.
The administration
of the French colonies,
however,
has always been
conducted
with much more gentleness
and moderation
than
that of the Spanish
and Portuguese.
This
superiority of conduct
is suitable both
to the character
of the French nation,
and to
what forms the character
of every nation,
the nature
of their government,
which,
though arbitrary and violent
in comparison with
that of Great Britain,
is legal and free
in comparison with those
of Spain and Portugal.
It is
in the progress
of the North American colonies,
however,
that the superiority
of the English policy
chiefly appears.
The progress of the sugar
colonies of France
has been at least equal,
perhaps superior,
to that
of the greater part of those
of England;
and yet
the sugar colonies of England
enjoy a free government,
nearly of the same kind with
that which
takes place
in her colonies
of North America.
But the sugar colonies
of France
are not discouraged,
like those
of England,
from refining their own sugar;
and what
is still
of greater importance,
the genius of their government
naturally introduces
a better management
of their negro slaves.
In all European colonies,
the culture of the sugar-cane
is carried on
by negro slaves.
The constitution of those
who have been born in the
temperate climate
of Europe
could not,
it is supposed,
support the labour
of digging the ground
under the burning sun
of the West Indies;
and the culture
of the sugar-cane,
as it
is managed at present,
is all hand labour;
though,
in the opinion of many,
the drill plough
might be introduced into it
with great advantage.
But,
as
the profit
and success of the cultivation
which is carried on by means
of cattle,
depend very much
upon the good management
of those cattle;
so the profit
and success of that which
is carried on
by slaves must depend equally
upon the good management
of those slaves;
and in the good management
of their slaves
the French planters,
I think
it is generally allowed,
are superior to the English.
The law,
so far
as it gives
some weak protection
to the slave
against the violence
of his master,
is likely
to be better
executed in a colony where
the government
is
in a great measure arbitrary,
than in one
where it
is altogether free.
In ever country
where the unfortunate law
of slavery
is established,
the magistrate,
when he protects the slave,
intermeddles in some
measure in the management
of the private property
of the master;
and, in a free country,
where the master is,
perhaps,
either a member
of the colony assembly,
or an elector
of such a member,
he dares not
do this but
with the greatest caution
and circumspection.
The respect
which he is obliged
to pay to the master,
renders it more difficult
for him
to protect the slave.
But in a country
where
the government
is
in a great measure arbitrary,
where it
is usual
for the magistrate
to intermeddle
even in the management
of the private property
of individuals,
and to send them,
perhaps,
a lettre de cachet,
if they
do not manage it
according to his liking,
it is much easier for him
to give some protection
to the slave;
and common humanity
naturally disposes him
to do so.
The protection
of the magistrate
renders the slave less
contemptible
in the eyes
of his master,
who is thereby induced
to consider him with more
regard,
and to treat him
with more gentleness.
Gentle usage
renders the slave
not only more faithful,
but more intelligent,
and, therefore,
upon a double account,
more useful.
He approaches more
to the condition
of a free servant,
and may possess some degree
of integrity and attachment
to his master's interest;
virtues which
frequently belong
to free servants,
but which
never can belong to a slave,
who is treated
as slaves
commonly are in countries
where the master
is perfectly free
and secure.
That
the condition of a slave
is better
under an arbitrary
than under a free government,
is,
I believe,
supported
by the history
of all ages and nations.
In the Roman history,
the first time
we read
of the magistrate interposing
to protect the slave
from the violence
of his master,
is under the emperors.
When Vidius Pollio,
in the presence of Augustus,
ordered one of his slaves,
who had committed
a slight fault,
to be cut
into pieces
and thrown
into his fish-pond,
in order to feed his fishes,
the emperor
commanded him,
with indignation,
to emancipate immediately,
not only that slave,
but all
the others
that belonged to him.
Under the
republic no magistrate
could have had authority enough
to protect the slave,
much less
to punish the master.
The stock,
it is to be observed,
which has improved
the sugar colonies
of France,
particularly
the great colony
of St Domingo,
has been raised almost
entirely from the
gradual improvement
and cultivation
of those colonies.
It has been almost altogether
the produce
of the soil
and of the industry
of the colonists,
or,
what comes to the same thing,
the price of that produce,
gradually
accumulated by good management,
and employed
in raising a still
greater produce.
But the stock which
has improved
and cultivated
the sugar colonies of England,
has,
a great part of it,
been sent out from England,
and has by no means
been altogether the produce
of the soil and industry
of the colonists.
The prosperity
of the English sugar colonies
has been
in a great measure owing
to the great riches
of England,
of which
a part has overflowed,
if one
may say so,
upon these colonies.
But the prosperity
of the sugar
colonies of France
has been entirely owing
to the good conduct
of the colonists,
which must
therefore
have had some superiority over
that of the English;
and this superiority
has been remarked
in nothing so much as
in the good management
of their slaves.
Such
have been the general outlines
of the policy
of the different European nations
with regard to
their colonies.
The policy of Europe,
therefore,
has very little to boast of,
either
in the original establishment,
or, so far
as concerns
their internal government,
in the subsequent prosperity
of the colonies of America.
Folly and injustice
seem
to have been the principles
which presided
over
and directed the first project
of establishing
those colonies;
the folly of hunting
after gold
and silver mines,
and the injustice
of coveting the possession
of a country
whose harmless natives,
far from having ever injured
the people of Europe,
had received
the first adventurers
with every mark
of kindness and hospitality.
The adventurers,
indeed,
who formed
some of the latter establishments,
joined
to the chimerical project
of finding gold
and silver mines,
other motives more reasonable
and more laudable;
but even these motives
do very little honour
to the policy of Europe.
The English puritans,
restrained at home,
fled for freedom to America,
and established there
the four governments
of New England.
The English catholics,
treated
with much greater injustice,
established that of Maryland;
the quakers,
that of Pennsylvania.
The Portuguese Jews,
persecuted by the inquisition,
stript of their fortunes,
and banished to Brazil,
introduced,
by their example,
some sort
of order and industry
among the transported felons
and strumpets
by
whom
that colony
was originally peopled,
and taught them
the culture
of the sugar-cane.
Upon all these
different occasions,
it was not the wisdom
and policy,
but the disorder and injustice
of the European governments,
which peopled
and cultivated America.
In effectuation some
of the most important
of these establishments,
the different governments
of Europe
had as little merit
as in projecting them.
The conquest of Mexico
was the project,
not of the council
of Spain,
but of a governor of Cuba;
and it
was effectuated
by the spirit
of the bold adventurer
to whom it was entrusted,
in spite of every thing which
that governor,
who soon repented
of having trusted
such a person,
could do to thwart it.
The conquerors
of Chili and Peru,
and of almost
all
the other Spanish settlements
upon the continent of America,
carried out
with them
no other public encouragement,
but
a general permission to make settlements
and conquests
in the name
of the king of Spain.
Those adventures
were all
at the private risk
and expense
of the adventurers.
The government of Spain
contributed scarce any thing
to any
of them.
That of England
contributed as little
towards effectuating
the establishment
of some of
its most important colonies
in North America.
When those establishments
were effectuated,
and had become so considerable
as to attract the attention
of the mother country,
the first regulations which
she made with regard to them,
had always
in view
to secure to herself
the monopoly
of their commerce;
to confine their market,
and to enlarge her own
at their expense,
and, consequently,
rather to damp
and discourage,
than
to quicken
and forward the course
of their prosperity.
In the different ways
in which this monopoly
has been exercised,
consists one
of the most essential differences
in the policy
of the different European nations
with regard to
their colonies.
The best of them all,
that of England,
is only somewhat
less illiberal and oppressive
than
that of any of the rest.
In what way,
therefore,
has the policy of Europe
contributed either
to the first establishment,
or to the present grandeur
of the colonies of America?
In one way,
and in one way only,
it has contributed
a good deal.
Magna virum mater!
It bred and formed
the men
who were capable
of achieving such great actions,
and of laying the foundation
of so great an empire;
and there is no other quarter
of the world;
of which the policy
is capable
of forming,
or has ever actually,
and in fact,
formed such men.
The colonies
owe to the policy of Europe
the education and great views
of their active
and enterprizing founders;
and some
of the
greatest and most important
of them,
so far
as concerns
their internal government,
owe to it
scarce anything else.
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.
The maintenance
of this monopoly
has hitherto been
the principal,
or more properly,
perhaps,
the sole end
and purpose
of the dominion which
Great Britain
assumes over her colonies.
In the exclusive trade,
it is supposed,
consists
the great advantage
of provinces,
which
have never yet afforded
either revenue
or military force
for the support
of the civil government,
or the defence
of the mother country.
The monopoly
is the principal badge
of their dependency,
and it
is the sole
fruit which has hitherto been
gathered
from that dependency.
Whatever expense
Great Britain
has hitherto laid out
in maintaining this dependency,
has really been
laid out in order to
support this monopoly.
The expense
of the
ordinary peace establishment
of the colonies amounted,
before the commencement
of the present disturbances
to the pay
of twenty regiments of foot;
to the expense
of the artillery,
stores,
and extraordinary provisions,
with which it
was necessary
to supply them;
and to the expense
of a very
considerable naval force,
which was constantly kept up,
in order to guard
from the smuggling vessels
of other nations,
the immense coast
of North America,
and that
of our West Indian islands.
The whole expense
of this peace establishment
was a charge
upon the revenue
of Great Britain,
and was,
at the same time,
the smallest part
of what the dominion
of the colonies
has cost the mother country.
If we
would know the amount
of the whole,
we must add
to the annual expense
of this peace establishment,
the interest
of the sums which,
in consequence
of their considering
her colonies
as provinces subject to
her dominion,
Great Britain has,
upon different occasions,
laid out upon their defence.
We must add to it,
in particular,
the whole expense
of the late war,
and a great part of
that of the war
which preceded it.
The late war
was altogether a colony quarrel;
and the whole expense of it,
in whatever
part of the world
it might have been laid out,
whether in Germany
or the East Indies,
ought
justly
to be stated
to the account
of the colonies.
It amounted to
more than ninety millions sterling,
including not only
the new debt
which was contracted,
but the two shillings
in the pound
additional land tax,
and the sums
which were every year
borrowed
from the sinking fund.
The Spanish war which
began in 1739
was principally
a colony quarrel.
Its principal object
was to prevent the search
of the colony ships,
which carried
on a contraband trade
with the Spanish Main.
This whole expense is,
in reality,
a bounty
which has been given
in order to
support a monopoly.
The pretended purpose of it
was
to encourage the manufactures,
and to increase the commerce
of Great Britain.
But its real effect has been
to raise the rate
of mercantile profit,
and to enable our merchants
to turn into a branch
of trade,
of which the returns
are more slow and distant
than those
of the greater part
of other trades,
a greater proportion
of their capital
than
they
otherwise would have done;
two events which,
if a bounty
could have prevented,
it might perhaps have been
very well worth
while to give
such a bounty.
Under the present system
of management,
therefore,
Great Britain
derives nothing
but
loss from the dominion which
she assumes
over her colonies.
To propose
that Great Britain
should voluntarily give
up all authority
over her colonies,
and leave them
to elect
their own magistrates,
to enact their own laws,
and to make peace and war,
as they
might think proper,
would be
to propose such a measure
as never was,
and never will be,
adopted by any nation
in the world.
No
nation ever voluntarily gave
up the dominion
of any province,
how troublesome
soever
it might be
to govern it,
and how small soever
the revenue which it afforded
might be
in proportion
to the expense which it
occasioned.
Such sacrifices,
though they
might frequently be agreeable
to the interest,
are always mortifying
to the pride of every nation;
and,
what is perhaps
of still greater consequence,
they
are always contrary
to the private interest
of the governing part of it,
who would thereby be deprived
of the disposal
of many places of trust
and profit,
of many opportunities
of acquiring wealth
and distinction,
which the possession
of the most turbulent,
and,
to the great body
of the people,
the most unprofitable province,
seldom
fails to afford.
The most visionary enthusiasts
would scarce
be capable
of proposing such a measure,
with any serious hopes at least
of its ever being adopted.
If it was adopted,
however,
Great Britain
would not only be immediately freed
from the whole annual expense
of the peace establishment
of the colonies,
but might settle
with them such a treaty
of commerce
as would effectually secure
to her a free trade,
more advantageous
to the great body
of the people,
though less
so to the merchants,
than the monopoly which
she at present enjoys.
By thus parting good friends,
the natural affection
of the colonies
to the mother country,
which,
perhaps,
our late dissensions
have well nigh extinguished,
would quickly revive.
It
might dispose them not only
to respect,
for whole centuries together,
that treaty
of commerce which they
had concluded with us
at parting,
but to favour us
in war as well as in trade,
and instead of turbulent
and factious subjects,
to become our most faithful,
affectionate,
and generous allies;
and the same sort
of parental affection
on the one side,
and filial respect
on the other,
might revive
between Great Britain
and her colonies,
which used
to subsist between those
of ancient Greece
and the mother city
from which
they descended.
In order to
render
any province advantageous
to the empire
to which
it belongs,
it ought to afford,
in time of peace,
a revenue to the public,
sufficient not only for defraying
the whole expense
of its own peace establishment,
but for contributing
its proportion
to the support
of the general government
of the empire.
Every province
necessarily contributes,
more or less,
to increase the expense of
that general government.
If any particular province,
therefore,
does not contribute its share
towards defraying
this expense,
an unequal burden
must be thrown
upon some other part
of the empire.
The extraordinary revenue, too,
which every province
affords to the public
in time of war,
ought,
from parity of reason,
to bear the same proportion
to the extraordinary revenue
of the whole empire,
which
its ordinary revenue
does in time of peace.
That neither
the ordinary nor
extraordinary revenue which
Great Britain
derives from her colonies,
bears
this proportion
to the whole revenue
of the British empire,
will readily be allowed.
The monopoly,
it has been supposed,
indeed,
by increasing
the private revenue
of the people
of Great Britain,
and thereby enabling them
to pay greater taxes,
compensates the deficiency
of the public revenue
of the colonies.
But this monopoly,
I have endeavoured
to show,
though a very grievous tax
upon the colonies,
and though it
may increase the revenue
of a particular order of men
in Great Britain,
diminishes,
instead of increasing,
that of the great body
of the people,
and consequently diminishes,
instead of increasing,
the ability
of the great body
of the people
to pay taxes.
The men, too,
whose revenue
the monopoly increases,
constitute a particular order,
which it
is both absolutely impossible
to tax
beyond the proportion
of other orders,
and extremely impolitic even
to attempt
to tax beyond that proportion,
as I shall endeavour
to show
in the following book.
No particular resource,
therefore,
can be drawn
from this particular order.
The colonies
may be taxed either
by their own assemblies,
or by the parliament
of Great Britain.
That
the colony assemblies
can never be so
managed as to levy
upon their constituents
a public revenue,
sufficient,
not only to maintain
at all times
their own
civil and military establishment,
but to pay
their proper proportion
of the expense
of the general government
of the British empire,
seems not very probable.
It was a long time
before even the parliament
of England,
though placed immediately
under the eye
of the sovereign,
could be brought under such
a system of management,
or could be rendered sufficiently
liberal
in their grants
for supporting
the civil
and military establishments
even of their own country.
It was only
by distributing
among the particular members
of parliament
a great part either
of the offices,
or of the disposal
of the offices
arising
from this
civil and military establishment,
that such a system
of management
could be established,
even with
regard
to the parliament of England.
But the distance
of the colony assemblies
from the eye
of the sovereign,
their number,
their dispersed situation,
and their various constitutions,
would render it very difficult
to manage them
in the same manner,
even though the sovereign
had the same means
of doing it;
and those means
are wanting.
It would be absolutely impossible
to distribute
among all the leading members
of all the colony assemblies
such a share,
either of the offices,
or of the disposal
of the offices,
arising
from the general government
of the British empire,
as to dispose them
to give
up their popularity at home,
and to tax
their constituents
for the support of
that general government,
of which almost
the whole emoluments
were to be divided
among people
who were strangers
to them.
The unavoidable ignorance
of administration,
besides,
concerning the relative importance
of the different members
of those different assemblies,
the offences
which
must frequently be given,
the blunders
which
must constantly be committed,
in attempting
to manage them
in this manner,
seems to render such a system
of management
altogether impracticable
with regard to them.
The colony assemblies,
besides,
cannot be supposed
the proper judges of what
is necessary for the defence
and support
of the whole empire.
The care
of that defence
and support
is not entrusted to them.
It is not their business,
and they
have no
regular means
of information concerning it.
The assembly of a province,
like the vestry of a parish,
may judge very properly
concerning the affairs
of its own particular district,
but can have no proper means
of judging concerning those
of the whole empire.
It cannot even judge properly
concerning the proportion which
its own
province
bears to the whole empire,
or concerning the relative degree
of its wealth and importance,
compared
with the other provinces;
because those other
provinces
are not
under the inspection
and superintendency
of the assembly of
a particular province.
What is necessary
for the defence
and support
of the whole empire,
and in what proportion
each part ought to contribute,
can be judged of only by
that assembly which
inspects and super-intends
the affairs
of the whole empire.
It has been proposed,
accordingly,
that the colonies
should be taxed
by requisition,
the parliament
of Great Britain
determining
the sum
which each colony
ought to pay,
and the provincial assembly
assessing and levying
it in the way
that suited
best the circumstances
of the province.
What concerned
the whole empire
would in this way
be determined
by the assembly which
inspects and
superintends the affairs
of the whole empire;
and
the provincial affairs of each colony
might still be regulated
by its own assembly.
Though the colonies should,
in this case,
have no representatives
in the British parliament,
yet,
if we
may judge by experience,
there
is no probability
that
the parliamentary requisition
would be unreasonable.
The parliament of England
has not,
upon any occasion,
shewn the smallest disposition
to overburden
those parts of the empire
which are not represented
in parliament.
The islands
of Guernsey and Jersey,
without any means
of resisting
the authority of parliament,
are more lightly taxed
than any part
of Great Britain.
Parliament,
in attempting
to exercise its supposed
right,
whether well or ill grounded,
of taxing the colonies,
has never hitherto demanded
of them anything
which even approached
to a just proportion to
what
was paid
by their
fellow subjects at home.
If the contribution
of the colonies,
besides,
was to rise
or fall
in proportion
to the rise or
fall of the land-tax,
parliament
could not tax them
without taxing,
at the same time,
its own constituents,
and the colonies might,
in this case,
be considered as
virtually represented
in parliament.
Examples
are not wanting
of empires in which all
the different provinces
are not taxed,
if I
may be allowed the expression,
in one mass;
but in which
the sovereign
regulates the sum
which each province
ought to pay,
and in some provinces assesses
and levies
it
as he
thinks proper;
while in others
he
leaves it to be assessed
and levied
as the respective states
of each province
shall determine.
In some provinces of France,
the king not
only imposes what taxes
he thinks proper,
but assesses and levies them
in the way
he thinks proper.
From others
he demands a certain sum,
but leaves
it to the states
of each
province to assess and levy
that sum as they
think proper.
According to the scheme
of taxing
by requisition,
the parliament
of Great Britain
would stand nearly
in the same situation
towards the colony assemblies,
as the king of France
does towards the states
of those provinces which
still enjoy the privilege
of having states
of their own,
the provinces of France
which are supposed
to be the best governed.
But though,
according to this scheme,
the colonies
could have no just reason
to fear that
their share
of the public burdens
should ever exceed
the proper proportion to
that
of their fellow-citizens at home,
Great Britain
might have
just reason to fear
that
it never would amount to
that proper proportion.
The parliament
of Great Britain
has not,
for some time past,
had
the same established authority
in the colonies,
which
the French king
has in those provinces
of France which
still enjoy the privilege
of having states
of their own.
The colony assemblies,
if they
were not very favourably disposed
(and unless
more skilfully managed than
they ever have been hitherto,
they
are not very likely
to be so),
might still find many pretences
for evading
or rejecting
the most reasonable requisitions
of parliament.
A French war breaks out,
we shall suppose;
ten millions
must immediately be raised,
in order to
defend the seat
of the empire.
This sum
must be borrowed
upon the credit
of some parliamentary fund
mortgaged
for paying the interest.
Part of this fund parliament
proposes
to raise
by a tax
to be levied
in Great Britain;
and part of it
by a requisition
to all
the different colony assemblies
of America
and the West Indies.
Would people
readily advance
their money
upon the credit
of a fund
which partly depended
upon the good humour
of all those assemblies,
far distant
from the seat
of the war,
and sometimes,
perhaps,
thinking themselves not much
concerned
in the event of it?
Upon such a fund,
no more money
would probably be advanced
than what
the tax
to be levied in Great Britain
might be supposed
to answer for.
The whole burden
of the debt contracted
on account of the war
would in this manner fall,
as it always has done
hitherto,
upon Great Britain;
upon a part
of the empire,
and not upon the whole empire.
Great Britain is,
perhaps,
since the world began,
the only state which,
as it
has extended its empire,
has only increased its expense,
without once augmenting
its resources.
Other
states have generally
disburdened themselves,
upon their subject
and subordinate provinces,
of the most considerable part
of the expense
of defending the empire.
Great Britain
has hitherto suffered
her subject
and subordinate provinces
to disburden themselves
upon her
of almost this whole expense.
In order to
put Great Britain
upon a footing
of equality
with her own colonies,
which
the law
has hitherto supposed
to be subject
and subordinate,
it seems necessary,
upon the scheme
of taxing them
by parliamentary requisition,
that parliament
should have some means
of rendering its requisitions
immediately effectual,
in case the colony assemblies
should attempt
to evade or reject them;
and what those means are,
it is not very easy
to conceive,
and it
has not yet been explained.
Should the parliament
of Great Britain,
at the same time,
be ever fully established
in the right
of taxing the colonies,
even independent
of the consent
of their own assemblies,
the importance of
those assemblies would,
from that moment,
be at an end,
and with it,
that of all the leading men
of British America.
Men desire
to have some share
in the management
of public affairs,
chiefly on account
of the importance which
it gives them.
Upon the power which
the greater part
of the leading men,
the natural aristocracy
of every country,
have of preserving
or defending
their respective importance,
depends the stability
and duration
of every system
of free government.
In the attacks which
those
leading men
are continually making
upon the
importance of one another,
and in the defence
of their own,
consists the whole play
of domestic faction
and ambition.
The leading men of America,
like those
of all other countries,
desire
to preserve
their own importance.
They feel,
or imagine,
that if their assemblies,
which they are fond
of calling parliaments,
and of considering as equal
in authority
to the parliament
of Great Britain,
should be so far degraded as
to become
the humble ministers
and executive officers
of
that parliament,
the greater part
of their own importance
would be at an end.
They have rejected,
therefore,
the proposal
of being taxed
by parliamentary requisition,
and,
like other ambitious
and high-spirited men,
have rather chosen
to draw the sword
in defence
of their own importance.
Towards the declension
of the Roman republic,
the allies of Rome,
who had borne
the principal burden
of defending the state
and extending the empire,
demanded
to be admitted to all
the privileges
of Roman citizens.
Upon being refused,
the social war
broke out.
During the course
of that war,
Rome
granted those privileges
to the greater part
of them,
one by one,
and in proportion
as they
detached themselves
from the general confederacy.
The parliament
of Great Britain
insists upon taxing
the colonies;
and they
refuse to be taxed
by a parliament
in which they
are not represented.
If to each
colony
which should detach itself
from the general confederacy,
Great Britain
should allow such a number
of representatives
as suited
the proportion of
what it
contributed
to the public revenue
of the empire,
in consequence
of its being subjected
to the same taxes,
and in compensation
admitted
to the same freedom
of trade
with its fellow-subjects at home;
the number
of its representatives
to be augmented
as the proportion
of its contribution
might afterwards augment;
a new method
of acquiring importance,
a new and more
dazzling object of ambition,
would be presented
to the leading men
of each colony.
Instead of piddling
for the little prizes
which
are to be found in what
may be called
the paltry raffle
of colony faction,
they might then hope,
from the presumption which men
naturally have
in their own ability
and good fortune,
to draw
some of the great prizes which
sometimes come
from the wheel
of the great state lottery
of British politics.
Unless this
or some other method
is fallen upon,
and there seems
to be none more obvious
than this,
of preserving
the importance
and of gratifying the ambition
of the leading men
of America,
it is not very probable
that they
will ever voluntarily submit
to us;
and we ought to consider,
that
the blood
which must be shed
in forcing them
to do so,
is, every drop of it,
the blood either of those
who are,
or of those whom
we wish
to have
for our fellow citizens.
They
are very weak
who flatter themselves that,
in the state to which things
have come,
our colonies
will be easily conquered
by force alone.
The persons who now govern
the resolutions of
what they call
their continental congress,
feel in themselves
at this moment a degree
of importance which,
perhaps,
the greatest
subjects in Europe
scarce feel.
From shopkeepers,
trades men,
and attorneys,
they
are become statesmen
and legislators,
and are employed
in contriving a new form
of government
for an extensive empire,
which,
they flatter themselves,
will become,
and which,
indeed,
seems very likely
to become,
one
of the greatest
and most formidable
that ever was
in the world.
Five hundred different people,
perhaps,
who,
in different ways,
act immediately
under the continental congress,
and five hundred thousand,
perhaps,
who act
under those five hundred,
all feel,
in the same manner,
a proportionable
rise in their own importance.
Almost every individual
of the governing party
in America
fills,
at present,
in his own fancy,
a station superior,
not only to what he
had ever filled before,
but to what he
had ever expected
to fill;
and unless some new object
of ambition
is presented either
to him or to his leaders,
if he
has the ordinary spirit
of a man,
he will die
in defence of that station.
It is a remark
of the President Heynaut,
that we
now read
with pleasure the account
of many little transactions
of the Ligue,
which,
when they happened,
were not, perhaps,
considered
as very important pieces
of news.
But everyman then,
says he,
fancied himself
of some importance;
and
the innumerable memoirs which
have come down to us
from those times,
were the greater part of them
written by people
who took pleasure in recording
and magnifying events,
in which they
flattered themselves
they had been
considerable actors.
How obstinately
the city of Paris,
upon that occasion,
defended itself,
what a dreadful famine it
supported,
rather than
submit to the best,
and afterwards
the most beloved
of all the French kings,
is well known.
The greater part
of the citizens,
or those
who governed the greater part
of them,
fought
in defence
of their own importance,
which,
they
foresaw,
was to be at an end
whenever
the ancient government
should be re-established.
Our colonies,
unless they can be induced
to consent to a union,
are very likely
to defend themselves,
against the best
of all mother countries,
as obstinately
as the city of Paris
did against one
of the best of kings.
The idea
of representation
was unknown in ancient times.
When
the people of one state
were admitted
to the right
of citizenship in another,
they had no other means
of exercising that right,
but by coming
in a body to vote
and deliberate with the people
of that other state.
The admission
of the greater part
of the inhabitants
of Italy
to the privileges
of Roman citizens,
completely
ruined the Roman republic.
It was no longer possible
to distinguish between
who was,
and who was not,
a Roman citizen.
No tribe could know
its own members.
A rabble of any kind
could be introduced
into the assemblies
of the people,
could drive
out the real citizens,
and decide
upon the affairs
of the republic,
as if they
themselves had been such.
But though America
were to send fifty
or sixty new representatives
to parliament,
the door-keeper
of the house of commons
could not find
any great difficulty
in distinguishing
between
who was and
who was not a member.
Though the Roman constitution,
therefore,
was necessarily ruined
by the union
of Rome
with the allied states
of Italy,
there
is not
the least probability
that the British constitution
would be hurt
by the union
of Great Britain
with her colonies.
That constitution,
on the contrary,
would be completed by it,
and seems
to be imperfect without it.
The assembly which
deliberates and decides
concerning the affairs
of every part
of the empire,
in order to
be properly informed,
ought
certainly to have representatives
from every part of it.
That this union,
however,
could be easily effectuated,
or that difficulties,
and great difficulties,
might not occur
in the execution,
I do not pretend.
I have yet heard of none,
however,
which
appear insurmountable.
The principal,
perhaps,
arise,
not from the nature
of things,
but from the prejudices
and opinions of the people,
both on this
and on the other side
of the Atlantic.
We on this side
the water are afraid
lest the multitude
of American representatives
should overturn the balance
of the constitution,
and increase
too much either the influence
of the crown
on the one hand,
or the force
of the democracy
on the other.
But if the number
of American representatives
were to be
in proportion
to the produce
of American taxation,
the number
of people
to be managed
would increase exactly
in proportion to the means
of managing them,
and the means
of managing to the number
of people
to be managed.
The monarchical
and democratical parts
of the constitution
would,
after the union,
stand exactly
in the same degree
of relative force
with regard to one another
as they had done before.
The people
on the other side
of the water
are afraid
lest their distance
from the seat of government
might expose them
to many oppressions;
but their representatives
in parliament,
of which the number ought
from the first
to be considerable,
would easily be able
to protect them
from all oppression.
The distance
could not much
weaken the dependency
of the representative
upon the constituent,
and the former
would still feel
that he
owed his seat in parliament,
and all the consequence which
he derived from it,
to the good-will
of the latter.
It would be
the interest of the former,
therefore,
to cultivate that good-will,
by complaining,
with all the authority
of a member
of the legislature,
of every outrage
which any civil
or military officer
might be guilty of in those
remote parts of the empire.
The distance
of America
from the seat of government,
besides,
the natives of that country
might flatter themselves,
with some appearance
of reason too,
would not be
of very long continuance.
Such
has hitherto been
the rapid progress
of
that country
in wealth,
population,
and improvement,
that in the course
of little more than
a century,
perhaps,
the produce of the American
might exceed
that of the British taxation.
The seat of the empire
would then naturally remove itself
to that part
of the empire
which contributed most
to the general defence
and support of the whole.
The discovery of America,
and that
of a passage
to the East Indies
by the Cape of Good Hope,
are
the two greatest
and most important events
recorded
in the history of mankind.
Their consequences
have already been great;
but,
in the short period of
between two
and three centuries which
has elapsed
since these discoveries
were made,
it is impossible
that
the whole extent
of their consequences
can have been seen.
What benefits or
what
misfortunes to mankind
may hereafter result
from those great events,
no human wisdom
can foresee.
By uniting in some measure
the most distant parts
of the world,
by enabling them
to relieve
one another's wants,
to increase
one another's enjoyments,
and to encourage
one another's industry,
their general tendency
would seem to be beneficial.
To the natives,
however,
both of the East
and West Indies,
all the commercial benefits
which can have resulted
from those events
have been sunk
and lost
in the dreadful misfortunes
which they
have occasioned.
These misfortunes,
however,
seem to have arisen rather
from accident than
from any thing
in the nature
of those events themselves.
At the particular time
when these discoveries
were made,
the superiority of force
happened
to be so great
on the side
of the Europeans,
that they
were enabled
to commit
with impunity every sort
of injustice
in those remote countries.
Hereafter,
perhaps,
the natives of those countries
may grow stronger,
or those of Europe
may grow weaker;
and the inhabitants of all
the different quarters
of the world
may arrive at
that equality
of courage and force which,
by inspiring mutual fear,
can
alone overawe the injustice
of independent nations
into some sort
of respect
for the rights
of one another.
But nothing
seems more likely
to establish this equality
of force,
than that mutual communication
of knowledge,
and of all sorts
of improvements,
which an extensive commerce
from all countries
to all countries naturally,
or rather necessarily,
carries along with it.
In the mean time,
one of the principal effects
of those discoveries
has been,
to raise the mercantile system
to a degree
of splendour and glory which
it
could never otherwise have attained to.
It is the object of
that system
to enrich a great nation,
rather by trade
and manufactures than
by the improvement
and cultivation
of land,
rather
by the industry
of the towns
than by that of the country.
But in consequence
of those discoveries,
the commercial towns
of Europe,
instead of being
the manufacturers and carriers
for
but a very small part
of the world
(that part of Europe
which is washed
by the Atlantic ocean,
and the countries which
lie round the Baltic
and Mediterranean seas),
have now become
the manufacturers
for the numerous and
thriving cultivators
of America,
and the carriers,
and in some respects
the manufacturers too,
for almost
all the different nations
of Asia,
Africa,
and America.
Two new worlds
have been opened
to their industry,
each of them
much greater and more extensive
than the old one,
and the market
of one
of them growing still greater
and greater every day.
The countries which
possess the colonies
of America,
and which trade directly
to the East Indies,
enjoy indeed the whole show
and splendour
of this great commerce.
Other countries,
however,
notwithstanding all
the invidious restraints
by which it
is meant
to exclude them,
frequently
enjoy a greater share
of the real benefit of it.
The colonies of Spain and.
Portugal,
for example,
give more real encouragement
to the industry
of other countries than to
that of Spain and Portugal.
In the single article
of linen alone,
the consumption
of those colonies amounts,
it is said
(but I
do not pretend
to warrant the quantity ),
to more than three millions
sterling a-year.
But this
great consumption
is almost entirely supplied
by France,
Flanders,
Holland,
and Germany.
Spain and Portugal
furnish
but a small part of it.
The capital
which supplies
the colonies with this
great quantity
of linen,
is annually distributed among,
and furnishes a revenue to,
the inhabitants
of those other countries.
The profits of it
only are spent
in Spain and Portugal,
where they
help to support
the sumptuous profusion
of the merchants
of Cadiz and Lisbon.
Even
the regulations by which
each nation endeavours
to secure
to itself the exclusive trade
of its own colonies,
are frequently more hurtful
to the countries
in favour
of which they are established,
than to those against which
they are established.
The unjust oppression
of the industry
of other countries falls back,
if I may say so,
upon the heads
of the oppressors,
and crushes
their industry
more than it
does that
of those other countries.
By those regulations,
for example,
the merchant of Hamburg
must send the linen which
he destines
for the American market
to London,
and he
must bring back
from thence the tobacco which
he destines
for the German market;
because he can neither
send the one
directly to America,
nor bring the other
directly from thence.
By this restraint
he is probably obliged
to sell the one somewhat
cheaper,
and to buy the other somewhat
dearer,
than he
otherwise might have done;
and
his profits
are probably somewhat abridged
by means
of it.
In this trade,
however,
between Hamburg and London,
he certainly receives
the returns
of his capital much more quickly
than
he could possibly have done
in the direct trade
to America,
even though we should suppose,
what is
by no means the case,
that
the payments of America
were as punctual as those
of London.
In the trade,
therefore,
to which
those regulations
confine the merchant
of Hamburg,
his capital
can keep
in constant
employment
a much greater quantity
of German industry than
he possibly could have done
in the trade from which
he is excluded.
Though the one employment,
therefore,
may to him
perhaps be less profitable
than the other,
it cannot be less advantageous
to his country.
It is quite
otherwise with the employment
into which
the monopoly
naturally attracts,
if I may say so,
the capital
of the London merchant.
That employment may,
perhaps,
be more profitable
to him
than the greater part
of other employments;
but on account
of the slowness
of the returns,
it cannot be more advantageous
to his country.
After all the unjust attempts,
therefore,
of every country in Europe
to engross
to itself the whole advantage
of the trade
of its own colonies,
no country has yet been
able to engross
to itself
any thing but the expense
of supporting
in time of peace,
and of defending
in time
of war,
the oppressive authority which
it assumes over them.
The inconveniencies
resulting
from the possession
of its colonies,
every country
has engrossed
to itself completely.
The advantages
resulting from their trade,
it has been obliged
to share
with many other countries.
At first sight,
no doubt,
the monopoly
of the great commerce
of America
naturally seems
to be an acquisition
of the highest value.
To the undiscerning eye
of giddy ambition
it naturally presents itself,
amidst the confused
scramble of politics and war,
as a very dazzling object
to fight for.
The dazzling splendour
of the object,
however,
the immense greatness
of the commerce,
is the very quality which
renders the monopoly
of it hurtful,
or which makes one employment,
in its own
nature necessarily less
advantageous
to the country
than the greater part
of other employments,
absorb
a much greater proportion
of the capital
of the country than
what
would otherwise have gone
to it.
The mercantile stock
of every country,
it has been shown
in the second book,
naturally
seeks,
if one
may say so,
the employment
most advantageous to
that country.
If it
is employed
in the carrying trade,
the country
to which
it belongs
becomes
the emporium
of the goods of all
the countries
whose trade
that stock carries on.
But the owner of that stock
necessarily wishes
to dispose of as great
a part of those goods
as he
can at home.
He thereby saves himself
the trouble,
risk,
and expense of exportation;
and he will upon that account
be glad
to sell them at home,
not
only for a much smaller price,
but with somewhat
a smaller profit,
than he might expect
to make
by sending them abroad.
He naturally,
therefore,
endeavours
as much as he
can to turn
his carrying trade
into a foreign trade
of consumption,
If his stock,
again,
is employed
in a foreign trade
of consumption,
he will,
for the same reason,
be glad to dispose of,
at home,
as great
a part
as he
can of the home goods which
he collects
in order to export
to some foreign market,
and he will thus endeavour,
as much as he can,
to turn his foreign trade
of consumption
into a home trade.
The mercantile stock
of every country
naturally courts
in this manner the near,
and shuns
the distant employment:
naturally courts
the employment
in which the returns
are frequent,
and shuns that
in which they
are distant and slow;
naturally courts
the employment in which it
can maintain
the greatest quantity
of productive labour
in the country
to which
it belongs,
or in which
its owner resides,
and shuns
that in which
it can maintain there
the smallest quantity.
It naturally courts
the employment which
in ordinary cases
is most advantageous,
and shuns that which
in ordinary cases
is least advantageous to
that country.
But if,
in any one
of those distant employments,
which
in ordinary cases
are less advantageous
to the country,
the profit
should happen
to rise somewhat higher than
what is sufficient
to balance
the natural preference which
is given to nearer employments,
this
superiority of profit
will draw stock
from those nearer employments,
till the profits
of all return
to their proper level.
This superiority of profit,
however,
is a proof that,
in the actual circumstances
of the society,
those distant employments
are somewhat understocked
in proportion
to other employments,
and that the stock
of the society
is not distributed
in the properest manner
among all
the different employments
carried on in it.
It
is a proof that something
is either
bought cheaper
or sold dearer than it
ought to be,
and that
some particular class
of citizens
is more or less oppressed,
either by paying more,
or by getting less than what
is suitable to that
equality
which ought to take place,
and which
naturally does take place,
among all
the different classes
of them.
Though the same capital
never will maintain
the same quantity
of productive labour
in a distant as
in a near employment,
yet a distant employment
maybe as necessary
for the welfare
of the society
as a near one;
the goods which
the distant employment deals
in being necessary,
perhaps,
for carrying
on many
of the nearer employments.
But if the profits of those
who deal
in such goods
are above their proper level,
those goods
will be sold dearer than
they
ought to be,
or somewhat above
their natural price,
and all those
engaged
in the nearer employments
will be more
or less
oppressed by this high price.
Their interest,
therefore,
in this case,
requires,
that some stock
should be withdrawn
from those nearer employments,
and turned towards
that distant one,
in order to
reduce its profits
to their proper level,
and the price
of the goods which
it deals in
to their natural price.
In this extraordinary case,
the public interest
requires that some stock
should be withdrawn
from those employments which,
in ordinary cases,
are more advantageous,
and turned towards one which,
in ordinary cases,
is less advantageous
to the public;
and,
in this extraordinary case,
the natural interests
and inclinations of men
coincide
as
exactly with the public interests
as
in all other ordinary cases,
and lead them
to withdraw stock
from the near,
and to turn it
towards the distant employments.
It is thus
that the private interests
and passions
of individuals
naturally dispose them
to turn their stock
towards the employments which
in ordinary cases,
are most advantageous
to the society.
But if
from this natural preference
they should turn too much
of it
towards those employments,
the fall
of profit in them,
and the rise of it
in all others,
immediately
dispose them
to alter
this faulty distribution.
Without any intervention
of law,
therefore,
the private interests
and passions of men
naturally lead them to divide
and distribute the stock
of every society
among all
the different employments
carried on in it;
as nearly
as possible in the proportion
which is most agreeable
to the interest
of the whole society.
All the different regulations
of the mercantile system
necessarily derange more
or less this natural
and most advantageous distribution
of stock.
But those
which concern
the trade to America and
the East Indies derange it,
perhaps,
more than any other;
because the trade
to those two great continents
absorbs a greater quantity
of stock
than any two other branches
of trade.
The regulations,
however,
by which
this derangement
is effected in those
two different branches
of trade,
are not altogether the same.
Monopoly
is the great engine of both;
but it
is a different sort
of monopoly.
Monopoly
of one kind or another,
indeed,
seems to be the sole engine
of the mercantile system.
In the trade to America,
every nation endeavours
to engross
as much as
possible the whole market
of its own colonies,
by fairly excluding all
other nations
from any direct trade
to them.
During the greater part
of the sixteenth century,
the Portuguese
endeavoured
to manage the trade
to the East Indies
in the same manner,
by claiming the sole right
of sailing
in the Indian seas,
on account of the merit
of having first found out
the road to them.
The Dutch
still continue
to exclude
all other European nations
from any direct trade
to their spice islands.
Monopolies of this kind
are evidently established
against all
other European nations,
who
are thereby not only excluded
from a trade
to which it
might be convenient
for them
to turn some part
of their stock,
but are obliged
to buy the goods which
that trade deals in,
somewhat dearer than if they
could import them themselves directly
from the countries
which produced them.
But since the fall
of the power of Portugal,
no European nation
has claimed
the exclusive right
of
sailing in the Indian seas,
of which the principal ports
are now open
to the ships
of all European nations.
Except in Portugal,
however,
and within these few years
in France,
the trade
to the East Indies has,
in every European country,
been subjected
to an exclusive company.
Monopolies of this kind
are properly established
against the very nation which
erects them.
The greater part of
that nation
are thereby not only excluded
from a trade
to which it
might be convenient
for them
to turn some part
of their stock,
but are obliged
to buy
the goods which
that trade deals
in somewhat dearer
than if
it was open and free
to all their countrymen.
Since the establishment
of the
English East India company,
for example,
the other inhabitants
of England,
over and
above being excluded
from the trade,
must have paid,
in the price
of the East India goods
which they
have consumed,
not only for all
the extraordinary profits which
the company
may have made
upon those goods
in consequence
of their monopoly,
but for all
the extraordinary waste which
the fraud
and abuse inseparable
from the management
of the affairs of so great
a company
must necessarily have occasioned.
The absurdity
of this second kind
of monopoly,
therefore,
is much more manifest than
that of the first.
Both these kinds
of monopolies derange more
or less
the natural distribution
of the stock
of the society;
but they
do not always derange it
in the same way.
Monopolies of the first kind
always attract
to the particular trade
in which they
are established a greater
proportion
of the stock
of the society than
what would go to that trade
of its own accord.
Monopolies of the second kind
may sometimes attract stock
towards the particular trade
in which they are established,
and sometimes repel it
from that trade,
according to
different circumstances.
In poor countries,
they naturally attract
towards that trade more stock
than
would otherwise go to it.
In rich countries,
they naturally repel from it
a good deal of stock
which would otherwise go
to it.
Such poor countries
as Sweden and Denmark,
for example,
would probably have never sent
a single ship
to the East Indies,
had not
the trade
been subjected
to an exclusive company.
The establishment of such
a company
necessarily encourages
adventurers.
Their monopoly
secures them
against all competitors
in the home market,
and they
have the same chance
for foreign markets
with the traders
of other nations.
Their monopoly
shows them the certainty
of a great profit
upon a considerable quantity
of goods,
and the chance
of a considerable profit
upon a great quantity.
Without such extraordinary
encouragement,
the poor traders of such poor
countries
would probably never have thought
of hazarding
their small capitals
in so very distant and uncertain
an adventure
as the trade
to the East Indies
must naturally have appeared
to them.
Such
a rich country as Holland,
on the contrary,
would probably,
in the case
of a free trade,
send many more ships
to the East Indies than it
actually does.
The limited stock
of the
Dutch East India company
probably repels
from that trade
many great mercantile capitals
which would otherwise go
to it.
The mercantile capital
of Holland
is so great,
that it is,
as it were,
continually
overflowing,
sometimes into the public funds
of foreign countries,
sometimes into loans
to private traders
and adventurers
of foreign countries,
sometimes into the most
round-about foreign trades
of consumption,
and sometimes into
the carrying trade.
All near employments
being completely filled up,
all the capital
which can be placed
in them
with any tolerable profit
being already placed in them,
the capital of Holland
necessarily flows
towards the most distant
employments.
The trade to the East Indies,
if it were altogether free,
would probably absorb
the greater part
of this redundant capital.
The East Indies offer
a market
both
for the manufactures
of Europe,
and for the gold and silver,
as
well as for the
several other productions
of America,
greater and more extensive
than both Europe
and America put together.
Every derangement
of the natural distribution
of stock
is necessarily hurtful
to the society
in which
it takes place;
whether it
be by repelling
from a particular trade
the stock
which would otherwise go
to it,
or by attracting
towards a particular trade
that
which would not otherwise
come to it.
If,
without any exclusive company,
the trade
of Holland
to the East Indies
would be greater than
it actually is,
that country
must suffer
a considerable loss,
by part of its capital
being excluded
from the
employment most convenient
for that port.
And,
in the same manner,
if,
without an exclusive company,
the trade
of Sweden and Denmark
to the East Indies
would be less than
it actually is,
or,
what perhaps is more probable,
would not exist at all,
those
two countries must likewise
suffer a considerable loss,
by part of their capital
being drawn into an employment
which must be more
or less unsuitable
to their present circumstances.
Better for them,
perhaps,
in the present circumstances,
to buy East India goods
of other nations,
even though they
should pay somewhat dearer,
than to turn
so great a part
of their small capital
to so very distant a trade,
in which the returns
are so very slow,
in which
that capital
can maintain
so small a quantity
of productive labour at home,
where productive labour
is so much wanted,
where so little
is done,
and where so much
is to do.
Though
without an exclusive company,
therefore,
a particular country
should not be able
to carry
on any direct trade
to the East Indies,
it will not from
thence follow,
that such
a company
ought to be established
there,
but only
that such
a country ought not,
in these circumstances,
to trade directly
to the East Indies.
That
such companies
are not
in general necessary for
carrying
on the East India trade,
is sufficiently demonstrated
by the experience
of the Portuguese,
who enjoyed almost
the whole of it for
more than a century together,
without
any exclusive company.
No private merchant,
it has been said,
could well have
capital sufficient
to maintain factors and agents
in the different ports
of the East Indies,
in order to
provide goods
for the ships which
he might occasionally send
thither;
and yet,
unless he was able
to do this,
the difficulty
of finding a cargo
might frequently make
his ships
lose the season for returning;
and the expense of so long
a delay
would not only eat
up the whole profit
of the adventure,
but frequently occasion
a very considerable loss.
This argument,
however,
if it proved any thing
at all,
would prove
that no one great branch
of trade
could be carried on
without an exclusive company,
which is contrary
to the experience
of all nations.
There
is no great branch of trade,
in which the capital
of any one private merchant
is sufficient for
carrying
on all
the subordinate
branches
which must be carried on,
in order to
carry on the principal one.
But when a nation
is ripe for any great branch
of trade,
some
merchants naturally turn
their capitals towards
the principal,
and some
towards the subordinate
branches of it;
and though all
the different branches of it
are in this manner
carried on,
yet it very seldom
happens
that they
are all carried on
by the capital
of one private merchant.
If a nation,
therefore,
is ripe
for the East India trade,
a certain portion
of its capital
will naturally divide itself
among all
the different branches
of that trade.
Some of
its merchants
will find it
for their interest
to reside in the East Indies,
and to employ
their capitals
there in providing goods
for the ships
which are to be sent out
by other
merchants
who reside in Europe.
The settlements
which different European nations
have obtained
in the East Indies,
if they
were taken
from the exclusive companies
to which they at present
belong,
and put
under the immediate protection
of the sovereign,
would render
this residence
both safe and easy,
at least
to the merchants
of the particular nations
to whom
those settlements belong.
If,
at any particular time,
that part
of the capital
of any country which
of its own accord
tended and inclined,
if I may say so,
towards the East India trade,
was not sufficient
for carrying
on all those
different branches
of it,
it would be a proof that,
at that particular time,
that country
was not ripe
for that trade,
and that
it would do better
to buy for some time,
even at a higher price,
from other European nations,
the East India goods it
had occasion for,
than
to import them itself directly
from the East Indies.
What it
might lose
by the high price
of those goods,
could seldom be
equal to the loss which
it would sustain
by the distraction
of a large portion
of its capital
from other employments
more necessary,
or more useful,
or more suitable
to its circumstances
and situation,
than a direct trade
to the East Indies.
Though the Europeans
possess
many considerable settlements
both
upon the coast
of Africa
and in the East Indies,
they have not yet established,
in either of those countries,
such numerous
and thriving colonies as those
in the islands and continent
of America.
Africa,
however,
as well as several
of the countries
comprehended
under the general name
of the East Indies,
is inhabited
by barbarous nations.
But those nations
were by no means
so weak and defenceless
as the
miserable
and helpless Americans;
and in proportion
to the natural fertility
of the countries which
they inhabited,
they were,
besides,
much more populous.
The most barbarous nations either
of Africa
or of the East Indies,
were shepherds;
even the Hottentots
were so.
But the natives
of every part of America,
except Mexico and Peru,
were only hunters
and the difference
is very great
between the number
of shepherds and
that of hunters
whom the same extent
of equally fertile
territory
can maintain.
In Africa and the East Indies,
therefore,
it was more difficult
to displace the natives,
and to extend
the European plantations
over the greater part
of the lands
of the original inhabitants.
The genius
of exclusive companies,
besides,
is unfavourable,
it has already been observed,
to the growth
of new colonies,
and has probably been
the principal cause
of the little progress
which they
have made
in the East Indies.
The Portuguese
carried
on the trade both
to Africa
and the East Indies,
without any exclusive companies;
and their settlements
at Congo,
Angola,
and Benguela,
on the coast of Africa,
and at Goa
in the East Indies
though much depressed
by superstition and every sort
of bad government,
yet bear some resemblance
to the colonies of America,
and are partly inhabited
by Portuguese
who
have been established there
for several generations.
The Dutch settlements
at the Cape of Good Hope
and at Batavia,
are at present
the most
considerable colonies which
the Europeans
have established,
either
in Africa
or in the East Indies;
and both
those settlements
an peculiarly
fortunate
in their situation.
The Cape of Good Hope
was inhabited
by a race
of people almost as barbarous,
and quite as incapable
of defending themselves,
as the natives of America.
It is,
besides,
the half-way house,
if one
may say so,
between Europe
and the East Indies,
at which
almost every European ship
makes some stay,
both in going and returning.
The supplying
of those ships
with every sort
of fresh provisions,
with fruit,
and sometimes with wine,
affords
alone a very extensive market
for the surplus produce
of the colonies.
What the Cape of Good Hope
is between Europe and
every part
of the East Indies,
Batavia
is
between the principal countries
of the East Indies.
It lies
upon the most frequented road
from Indostan
to China and Japan,
and is nearly
about mid-way upon
that road.
Almost all the ships too,
that sail
between Europe and China,
touch at Batavia;
and it is,
over and above all this,
the centre and principal mart
of
what is called
the country trade
of the East Indies;
not only of that part
of it
which is carried on
by Europeans,
but of that which
is carried on
by the native Indians;
and vessels
navigated
by the inhabitants
of China and Japan,
of Tonquin,
Malacca,
Cochin-China,
and the island of Celebes,
are frequently
to be seen in its port.
Such advantageous situations
have enabled those
two colonies
to surmount
all the obstacles which
the oppressive genius
of an exclusive company
may have occasionally opposed
to their growth.
They have enabled Batavia
to surmount
the additional disadvantage
of perhaps
the most unwholesome climate
in the world.
The English and Dutch companies,
though they
have established
no considerable colonies,
except the two above mentioned,
have
both made considerable conquests
in the East Indies.
But in the manner
in which they both
govern their new subjects,
the natural genius
of an exclusive company
has shewn itself most distinctly.
In the spice islands,
the Dutch
are said
to burn all
the spiceries which
a fertile season produces,
beyond what they
expect
to dispose of
in Europe with such
a profit as they
think sufficient.
In the islands where they
have no settlements,
they give a premium
to those who
collect
the young blossoms
and green leaves
of the clove
and nutmeg trees,
which
naturally grow there,
but which
this savage policy has now,
it is said,
almost completely extirpated.
Even in the islands
where they have settlements,
they have very much reduced,
it is said,
the number of those trees.
If the produce even
of their own
islands
was much greater than what
suited their market,
the natives,
they suspect,
might find means
to convey some part
of it
to other nations;
and the best way,
they imagine,
to secure their own monopoly,
is to take care
that no more
shall grow than what they
themselves carry to market.
By different arts
of oppression,
they have reduced
the population
of several
of the Moluccas
nearly to the number
which is sufficient
to supply with fresh provisions,
and other necessaries of life,
their own
insignificant garrisons,
and such of their ships
as occasionally come there
for a cargo
of spices.
Under the government
even of the Portuguese,
however,
those islands
are said
to have been tolerably well inhabited.
The English company
have not yet had time
to establish
in Bengal
so perfectly destructive
a system.
The plan of their government,
however,
has had exactly
the same tendency.
It has not been uncommon,
I am well assured,
for the chief,
that is,
the first clerk or a factory,
to order a peasant
to plough
up a rich field
of poppies,
and sow it with rice,
or some other grain.
The pretence was,
to prevent a scarcity
of provisions;
but the real reason,
to give
the chief an opportunity of
selling at a better
price a large quantity
of opium which
he happened then
to have upon hand.
Upon other occasions,
the order
has been reversed;
and a rich field
of rice or other
grain has been ploughed up,
in order to make room
for a plantation of poppies,
when
the chief
foresaw
that extraordinary profit
was likely
to be made by opium.
The servants
of the company have,
upon several occasions,
attempted
to establish in their own
favour the monopoly
of some of the most important
branches,
not only of the foreign,
but of the inland trade
of the country.
Had
they been allowed
to go on,
it is impossible
that they should not,
at some time or another,
have attempted
to restrain
the production
of the particular articles
of which they
had thus usurped the monopoly,
not only to the quantity which
they themselves
could purchase,
but to that which
they could expect
to sell with such
a profit
as they
might think sufficient.
In the course
of a century or two,
the policy
of the English company would,
in this manner,
have probably proved
as completely destructive as
that of the Dutch.
Nothing,
however,
can be more directly contrary
to the real interest
of those companies,
considered as the sovereigns
of the countries which they
have conquered,
than this destructive plan.
In almost all countries,
the revenue of the sovereign
is drawn from
that of the people.
The greater
the revenue of the people,
therefore,
the greater the annual produce
of their land
and labour,
the more
they can afford
to the sovereign.
It is his interest,
therefore,
to increase
as much as possible
that annual produce.
But if this
is the interest
of every sovereign,
it is peculiarly so
of one whose revenue,
like that
of the sovereign of Bengal,
arises chiefly
from a land-rent.
That
rent
must necessarily be
in proportion
to the quantity
and value of the produce;
and both
the one and the other
must depend upon the extent
of the market.
The quantity
will always be suited,
with more or less exactness,
to the consumption of those
who can afford
to pay for it;
and the price which
they will pay
will always be
in proportion to the eagerness
of their competition.
It is the interest
of such a sovereign,
therefore,
to open
the most extensive market
for the produce
of his country,
to allow
the most perfect freedom
of commerce,
in order to increase
as much as
possible the number
and competition
of buyers;
and upon this
account
to abolish,
not only all monopolies,
but all restraints
upon the transportation
of the home produce
from one part
of the country
to mother,
upon its exportation
to foreign countries,
or upon the importation
of goods of'
any kind
for which it
can be exchanged.
He is
in this manner most likely
to increase both
the quantity
and value of that produce,
and consequently of his own share
of it,
or of his own revenue.
But a company of merchants,
are, it seems,
incapable
of considering themselves
as sovereigns,
even after they
have become such.
Trade,
or buying in order to
sell again,
they still consider
as their principal business,
and by a strange absurdity,
regard
the character
of the sovereign as
but an appendix to
that of the merchant;
as something
which ought to be made
subservient
to it,
or by means
of which they
may be enabled
to buy cheaper
in India,
and thereby
to sell
with a better profit
in Europe.
They endeavour,
for this purpose,
to keep out
as much as
possible all competitors
from the market
of the countries
which are
subject to their government,
and consequently to reduce,
at least,
some part
of the surplus produce
of those countries to
what is barely sufficient
for supplying
their own demand,
or to
what they can expect
to sell in Europe,
with such
a profit
as they
may think reasonable.
Their mercantile habits
draw them in this manner,
almost necessarily,
though perhaps insensibly,
to prefer,
upon all ordinary occasions,
the little and transitory profit
of the monopolist
to the
great and permanent revenue
of the sovereign;
and would gradually lead them
to treat
the countries subject to
their government nearly
as the Dutch treat
the Moluccas.
It is the interest
of the East India company,
considered as sovereigns,
that
the European goods
which are carried
to their Indian dominions
should be sold there as
cheap as possible;
and that
the Indian goods
which are brought
from
thence should bring there
as good a price,
or should be sold there as
dear as possible.
But the reverse of this
is
their interest as merchants.
As sovereigns,
their interest
is exactly the same with
that of the country which
they govern.
As merchants,
their interest
is directly opposite
to that interest.
But if the genius
of such a government,
even as to
what concerns
its direction
in Europe,
is in this manner essentially,
and perhaps incurably faulty,
that of its administration
in India
is still more so.
That administration
is necessarily composed
of a council
of merchants,
a profession no doubt extremely
respectable,
but which
in no country
in the world
carries along
with it that sort
of authority which naturally
overawes the people,
and without force
commands their willing
obedience.
Such
a council
can command obedience
only by the military force
with which they
are accompanied;
and their government is,
therefore,
necessarily military
and despotical.
Their proper business,
however,
is that of merchants.
It is to sell,
upon their master's account,
the European goods
consigned to them,
and to buy,
in return,
Indian goods
for the European market.
It is
to sell the one as dear,
and
to buy the other as cheap
as possible,
and consequently to exclude,
as much as possible,
all
rivals
from the particular market
where they keep their shop.
The genius
of the administration,
therefore,
so far
as concerns
the trade of the company,
is the same as
that of the direction.
It tends to make
government subservient
to the interest of monopoly,
and consequently
to stunt the natural growth
of some parts,
at least,
of the surplus produce
of the country,
to
what is barely sufficient
for answering
the demand of the company,
All the members
of the administration
besides,
trade more or less
upon their own account;
and it is in vain
to prohibit them
from doing so.
Nothing
can be more completely foolish
than to expect
that
the clerk
of a great counting-house,
at ten thousand miles distance,
and consequently almost
quite out of sight,
should,
upon a simple order
from their master,
give up
at once doing any sort
of business
upon their own account
abandon for ever all hopes
of making a fortune,
of which
they have the means
in their hands;
and content themselves
with the moderate salaries which
those masters
allow them,
and which,
moderate as they are,
can seldom be augmented,
being commonly
as large as the real profits
of the company trade
can afford.
In such circumstances,
to prohibit the servants
of the company
from trading
upon their own account,
can have
scarce any other effect than
to enable
its superior servants,
under pretence
of executing
their master's order,
to oppress such
of the inferior ones
as have had
the misfortune
to fall
under their displeasure.
The servants naturally endeavour
to establish the same monopoly
in favour
of their own private trade as
of the public trade
of the company.
If they
are suffered
to act as they
could wish,
they
will establish
this monopoly openly
and directly,
by fairly
prohibiting
all other people from trading
in the articles
in which they
choose to deal;
and this,
perhaps,
is the best
and least oppressive way
of establishing it.
But if,
by an order from Europe,
they
are prohibited from doing this,
they will,
notwithstanding,
endeavour
to establish a monopoly
of the same kind secretly
and indirectly,
in a way
that is much more destructive
to the country.
They will employ
the whole authority
of government,
and pervert the administration
of Justice,
in order to
harass and ruin
those
who interfere
with them in any branch
of commerce,
which by means of agents,
either concealed,
or at least not publicly avowed,
they may choose to carry on.
But the private trade
of the servants
will naturally extend
to a much greater variety
of articles
than the public trade
of the company.
The public trade
of the company
extends no further
than the trade
with Europe,
and comprehends a part
only of the foreign trade
of the country.
But the private trade
of the servants
may extend
to all the different branches
both
of its inland
and foreign trade.
The monopoly of the company
can tend only
to stunt the natural growth
of that part
of the surplus produce which,
in the case
of a free trade,
would be exported to Europe.
That of the servants
tends
to stunt
the natural growth
of every part
of the produce
in which they
choose to deal;
of
what is destined
for home consumption,
as well as of
what is destined
for exportation;
and consequently
to degrade the cultivation
of the whole country,
and to reduce the number
of its inhabitants.
It tends
to reduce the quantity
of every sort of produce,
even that
of the necessaries of life,
whenever the servants
of the country
choose
to deal in them,
to what those servants
can both
afford to buy
and expect
to sell with such a profit
as pleases them.
From the nature
of their situation, too,
the servants
must be more
disposed
to support
with rigourous
severity their own interest,
against
that of the country which
they govern,
than their masters
can be to support theirs.
The country
belongs to their masters,
who cannot avoid having some
regard for the interest of
what belongs to them;
but it
does not belong
to the servants.
The real interest
of their masters,
if they
were capable
of understanding it,
is the same with
that of the country;
(The interest
of every proprietor
of India stock,
however,
is by no
means the same with
that of the country
in the government of which
his vote
gives him some influence.
--See book v, c.1, part ii.)
and it
is from ignorance chiefly,
and the meanness
of mercantile prejudice,
that
they ever oppress it.
But the real interest
of the servants
is by no
means the same with
that of the country,
and
the most perfect information
would not necessarily
put an end
to their oppressions.
The regulations,
accordingly,
which
have been sent out
from Europe,
though they
have been frequently weak,
have upon most occasions
been well meaning.
More intelligence,
and perhaps less good meaning,
has sometimes appeared
in those
established
by the servants
in India.
It
is a very singular government
in which every member
of the administration wishes
to get out of the country,
and consequently
to have done
with the government,
as soon as he can,
and to whose interest,
the day
after he has left it,
and carried
his whole fortune with him,
it is perfectly
indifferent though
the whole country
was swallowed up
by an earthquake.
I mean not,
however,
by any thing which
I have here said,
to throw any odious imputation
upon the general character
of the servants
of the East India company,
and touch less upon
that of any particular persons.
It is the system
of government,
the situation
in which they are placed,
that
I mean to censure,
not the character
of those who
have acted in it.
They acted
as
their situation naturally directed,
and they
who have clamoured
the loudest against them
would probably not have acted
better themselves.
In war and negotiation,
the councils
of Madras and Calcutta,
have upon several occasions,
conducted themselves
with a resolution
and decisive wisdom,
which would have done honour
to the senate
of Rome
in the best days of
that republic.
The members of those councils,
however,
had been bred
to professions very different
from war and politics.
But their situation alone,
without education,
experience,
or even example,
seems
to have formed
in them all at once
the great qualities which it
required,
and to have inspired them
both
with abilities and virtues which
they
themselves
could not well know that
they possessed.
If upon some occasions,
therefore,
it has animated them
to actions of magnanimity
which
could not well have been expected
from them,
we should not wonder if,
upon others,
it has prompted them to
exploits
of somewhat
a different nature.
Such exclusive companies,
therefore,
are
nuisances in every respect;
always
more or less inconvenient
to the countries
in which they are established,
and destructive to those
which
have the misfortune
to fall
under their government.
CONCLUSION
OF THE MERCANTILE SYSTEM.
Though the encouragement
of exportation,
and the discouragement
of importation,
are
the two great engines
by which the mercantile system
proposes
to enrich every country,
yet,
with regard to
some particular commodities,
it seems
to follow an opposite plan:
to discourage exportation,
and to encourage importation.
Its ultimate object,
however,
it pretends,
is always the same,
to enrich the country
by an advantageous balance
of trade.
It discourages the exportation
of the materials
of manufacture,
and of the instruments
of trade,
in order to
give
our own workmen an advantage,
and to enable them
to undersell those
of other nations
in all foreign markets;
and by restraining,
in this manner,
the exportation of a few
commodities,
of no great price,
it proposes
to occasion a much greater
and more valuable exportation
of others.
It encourages the importation
of the materials
of manufacture,
in order that our own
people may be enabled
to work them up more cheaply,
and thereby prevent a greater
and more valuable importation
of the manufactured commodities.
I do not observe,
at least
in our statute book,
any encouragement
given
to the importation
of the instruments of trade.
When manufactures
have advanced
to a certain pitch
of greatness,
the fabrication
of the instruments of trade
becomes itself
the object
of a great number
of very important
manufactures.
To give
any particular encouragement
to the importation
of such instruments,
would interfere too much
with the interest of those
manufactures.
Such importation,
therefore,
instead of being encouraged,
has frequently been prohibited.
Thus the importation
of wool cards,
except from Ireland,
or when
brought in
as wreck or prize goods,
was prohibited by the 3rd
of Edward IV;
which prohibition
was renewed by the 39th
of Elizabeth,
and has been continued
and rendered perpetual
by subsequent laws.
The importation
of the materials
of manufacture
has sometimes been
encouraged
by an exemption
from the duties
to which other
goods are subject,
and sometimes by bounties.
The importation
of sheep's wool
from several
different countries,
of cotton wool
from all countries,
of undressed flax,
of the greater part
of dyeing drugs,
of the greater part
of undressed
hides from Ireland,
or the British colonies,
of seal skins
from the
British Greenland fishery,
of pig and bar iron
from the British colonies,
as
well as
of several other materials
of manufacture,
has been encouraged
by an exemption
from all duties,
if properly entered
at the custom-house.
The private interest
of our merchants
and manufacturers may,
perhaps,
have extorted
from the legislature
these exemptions,
as well as the greater part
of our
other commercial regulations.
They are,
however,
perfectly just and reasonable;
and if,
consistently with the necessities
of the state,
they could be extended to all
the other materials
of manufacture,
the public
would certainly be
a gainer.
The avidity
of our great manufacturers,
however,
has in some cases
extended
these exemptions a good deal
beyond
what
can justly be considered
as the rude materials
of their work.
By the 24th George II c.46,
a small duty
of only 1d the pound
was imposed
upon the importation
of foreign brown linen yarn,
instead of much higher duties,
to which it
had been subjected before,
viz. of 6d the pound
upon sail yarn,
of 1s the pound
upon all French
and Dutch yarn,
and of £2:13:4
upon the hundred weight
of all spruce
or Muscovia yarn.
But our manufacturers
were not long
satisfied with this reduction:
by the 29th
of the same king c.15,
the same law
which gave a bounty
upon the exportation
of British and Irish linen,
of which the price
did not exceed 18d the yard,
even this small duty
upon the importation
of brown linen yarn
was taken away.
In the different operations,
however,
which are necessary
for the preparation
of linen yarn,
a good deal more industry
is employed,
than
in the subsequent operation
of preparing linen
cloth from linen yarn.
To say nothing
of the industry
of the flax-growers
and flaxdressers,
three
or four spinners at least
are necessary
in order to keep
one weaver in constant employment;
and more than four-fifths
of the whole quantity
of labour necessary
for the preparation
of linen cloth,
is employed in
that of linen yarn;
but our spinners
are poor people;
women commonly scattered
about in all different parts
of the country,
without support or protection.
It is not by the sale
of their work,
but by
that of the complete work
of the weavers,
that
our great master
manufacturers make their profits.
As it
is their interest
to sell
the complete manufacture
as dear,
so it
is to buy the materials as
cheap as possible.
By extorting
from the legislature bounties
upon the exportation
of their own linen,
high duties
upon the importation
of all foreign linen,
and a total prohibition
of the home consumption
of some sorts
of French linen,
they endeavour
to sell their own goods as
dear as possible.
By encouraging the importation
of foreign linen yarn,
and thereby bringing it
into competition with
that
which is made
by our own people,
they endeavour
to buy the work
of the poor spinners as
cheap as possible.
They
are as intent to keep
down the wages
of their own weavers,
as the earnings
of the poor spinners;
and it
is by no means
for the benefit
of the workmen
that they endeavour
either
to raise the price
of the complete work,
or to lower
that of the rude materials.
It is the industry
which is carried on
for the benefit
of the rich
and
the powerful,
that is principally encouraged
by our mercantile system.
That
which is carried on
for the benefit
of the poor
and the indigent
is too often either
neglected
or oppressed.
Both the bounty
upon the exportation of linen,
and the exemption
from the duty
upon the importation
of foreign yarn,
which were granted only
for fifteen years,
but continued
by two different prolongations,
expire
with the end
of the session
of parliament
which
shall immediately follow
the 24th
of June 1786.
The encouragement
given
to the importation
of the materials
of manufacture by bounties,
has been principally confined
to such as
were imported
from our American plantations.
The first bounties
of this kind
were those
granted about the beginning
of the present century,
upon the importation
of naval stores from America.
Under this denomination
were comprehended timber fit
for masts,
yards,
and bowsprits;
hemp,
tar,
pitch,
and turpentine.
The bounty,
however,
of £1 the ton
upon masting-timber,
and that of £6
the ton upon hemp,
were extended to such as
should be imported
into England
from Scotland.
Both these bounties
continued,
without any variation,
at the same rate,
till they
were severally allowed
to expire;
that upon hemp
on the 1st of January 1741,
and that upon masting-timber
at the end
of the session of parliament
immediately following
the 24th June 1781.
The bounties
upon the importation of tar,
pitch,
and turpentine,
underwent,
during their continuance,
several alterations.
Originally,
that upon tar
was £4 the ton;
that upon pitch the same;
and that
upon turpentine £3 the ton.
The bounty of £4
the ton upon tar
was afterwards confined
to such as
had been prepared
in a particular manner;
that upon other good,
clean,
and merchantable tar
was reduced
to £2:4s the ton.
The bounty upon pitch
was likewise reduced to £1,
and that
upon turpentine
to £1:10s the ton.
The second bounty
upon the importation
of any of the materials
of manufacture,
according to
the order of time,
was that granted
by the 21st George II,
chap.30,
upon the importation of indigo
from the British plantations.
When the plantation indigo
was worth three-fourths
of the price
of the best French indigo,
it was,
by this act,
entitled
to a bounty
of 6d the pound.
This bounty,
which,
like most others,
was granted only
for a limited time,
was continued
by several prolongations,
but was reduced
to 4d the pound.
It was allowed
to expire
with the end
of the session of parliament
which followed
the 25th March 1781.
The third bounty of this kind
was
that granted
(much about the time
that we
were beginning sometimes
to court,
and sometimes
to quarrel
with our American colonies),
by the 4th.
George III c.26,
upon the importation of hemp,
or undressed flax,
from the British plantations.
This bounty
was granted
for twenty-one years,
from the 24th June 1764
to the 24th June 1785.
For the first seven years,
it was to be
at the rate
of £8 the ton;
for the second at £6;
and for the third at £4.
It was not extended
to Scotland,
of which the climate
(although hemp
is sometimes raised there
in small quantities,
and of an inferior quality)
is not very fit
for that produce.
Such
a bounty
upon the importation
of Scotch flax
in England
would have been too
great a discouragement
to the native produce
of the southern part
of the united kingdom.
The fourth bounty
of this kind
was
that granted
by the 5th George III c.45,
upon the importation
of wood from America.
It was granted
for nine years
from the 1st January 1766
to the 1st January 1775.
During the first three years,
it was
to be
for every hundred-and-twenty
good deals,
at the rate of £1,
and for every load
containing fifty cubic feet
of other square timber,
at the rate of 12s.
For the second three years,
it was for deals,
to be
at the rate of 15s,
and for other squared timber
at the rate of 8s;
and for the third three years,
it was for deals,
to be
at the rate of 10s;
and for every
other squared timber
at the rate of 5s.
The fifth bounty of this kind
was
that granted
by the 9th George III c.38,
upon the importation
of raw silk
from the British plantations.
It was granted
for twenty-one years,
from the 1st January 1770,
to the 1st January 1791.
For the first seven years,
it was
to be
at the rate of £25
for every hundred pounds value;
for the second,
at £20;
and for the third,
at £15.
The management
of the silk-worm,
and the preparation of silk,
requires so much hand-labour,
and labour is so very dear
in America,
that even this great bounty,
I have been informed,
was not likely
to produce
any considerable effect.
The sixth Bounty of this kind
was
that granted
by 11th George III c.50,
for the importation of pipe,
hogshead,
and barrelstaves
and leading
from the British plantations.
It was granted
for nine years,
from 1st January 1772
to the 1st January 1781.
For the first three years,
it was,
for a certain quantity
of each,
to be
at the rate of £6;
for the second three years at £4;
and for the third three years at £2.
The seventh and last bounty
of this kind
was
that granted
by the 19th George III c.37,
upon the importation
of hemp from Ireland.
It was granted
in the same manner as
that for the importation
of hemp
and undressed flax
from America,
for twenty-one years,
from the 24th June 1779
to the 24th June 1800.
The term
is divided likewise
into three periods,
of seven years each;
and in each
of those periods,
the rate of the Irish bounty
is the same with
that of the American.
It does not,
however,
like the American bounty,
extend
to the importation
of undressed flax.
It would have been too
great a discouragement
to the cultivation
of that plant
in Great Britain.
When this last
bounty was granted,
the British
and Irish legislatures
were not
in much better humour
with one another,
than the British and American
had been before.
But this boon to Ireland,
it is to be hoped,
has been granted
under more fortunate auspices
than all those to America.
The same commodities,
upon which we thus
gave bounties,
when imported from America,
were subjected
to considerable duties
when imported
from any other country.
The interest
of our American colonies
was regarded as the same with
that of the mother country.
Their wealth
was considered as our wealth.
Whatever money
was sent out to them,
it was said,
came all back
to us
by the balance of trade,
and we could never
become a farthing the poorer
by any expense which
we could lay out upon them.
They
were
our own in every respect,
and it was an expense
laid out
upon the improvement
of our own property,
and for the profitable employment
of our own people.
It is unnecessary,
I apprehend,
at present
to say anything further,
in order to
expose the folly
of a system which fatal experience
has now sufficiently exposed.
Had our American colonies
really been
a part of Great Britain,
those bounties
might have been considered
as bounties
upon production,
and would still have been
liable
to all
the objections
to which such bounties
are liable,
but to no other.
The exportation
of the materials
of manufacture
is sometimes discouraged
by absolute prohibitions,
and sometimes by high duties.
Our woollen manufacturers
have been more successful
than any other class
of workmen,
in persuading
the legislature
that the prosperity
of the nation
depended
upon the success and extension
of their particular business.
They have not only obtained
a monopoly
against the consumers,
by an absolute prohibition
of importing woollen cloths
from any foreign country;
but they
have likewise
obtained another monopoly
against the sheep farmers
and growers
of wool,
by a similar prohibition
of the exportation
of live sheep and wool.
The severity
of many
of the laws which
have been enacted
for the security
of the revenue
is very justly
complained of,
as imposing heavy penalties
upon actions which,
antecedent to the statutes
that declared them
to be crimes,
had always been
understood to be innocent.
But the cruellest
of our revenue laws,
I will venture
to affirm,
are mild and gentle,
in comparison
to some of those which
the clamour
of our merchants
and manufacturers
has extorted
from the legislature,
for the support
of their own absurd
and oppressive monopolies.
Like the laws of Draco,
these laws
may be said
to be all written
in blood.
By the 8th
of Elizabeth c.3,
the exporter of sheep,
lambs,
or rams,
was for the first offence,
to forfeit all
his goods for ever,
to suffer
a year's imprisonment,
and
then to have
his left hand cut off
in a market town,
upon a market day,
to be there nailed up;
and for the second offence,
to be adjudged a felon,
and
to suffer death accordingly.
To prevent the breed
of our sheep
from being propagated
in foreign countries,
seems to have been the object
of this law.
By the 13th and 14th
of Charles II c.18,
the exportation of wool
was made felony,
and the exporter
subjected
to the same penalties
and forfeitures
as a felon.
For the honour
of the national humanity,
it is to be hoped
that neither
of these statutes
was ever executed.
The first of them,
however,
so far as I know,
has never been directly repealed,
and serjeant Hawkins
seems to consider it as
still in force.
It may,
however,
perhaps
be considered
as virtually repealed
by the 12th
of Charles II c.32,
sect.
3,
which,
without expressly taking away
the penalties
imposed by former statutes,
imposes a new penalty,
viz. that
of 20s
for every sheep exported,
or attempted
to be exported,
together
with the forfeiture
of the sheep,
and of the owner's share
of the sheep.
The second of them
was expressly repealed
by the 7th and 8th
of William III c.28,
sect.
4,
by which
it is declared that
"Whereas the statute
of the 13th and 14th
of king Charles II
made against the exportation
of wool,
among other things
in the said act mentioned,
doth enact the same
to be deemed felony,
by the severity
of which penalty
the prosecution of offenders
hath not been so effectually put in
execution;
be it therefore enacted,
by the authority aforesaid,
that so much
of the said act,
which relates
to the making
the said offence felony,
be repealed
and made void."
The penalties,
however,
which are either
imposed by this milder statute,
or which,
though imposed
by former statutes,
are not repealed by this one,
are still sufficiently severe.
Besides
the forfeiture of the goods,
the exporter
incurs the penalty of 3s
for every pound weight
of wool,
either
exported or attempted
to be exported,
that is,
about four or five times
the value.
Any merchant,
or other person convicted
of this offence,
is disabled
from requiring any debt
or account
belonging
to him
from any factor
or other person.
Let his fortune
be what it will,
whether he
is or is not
able
to pay those heavy penalties,
the law means
to ruin him completely.
But,
as the morals
of the great body
of the people
are not yet so corrupt
as those
of the contrivers
of this statute,
I have not heard
that any advantage
has ever been
taken of this clause.
If the person convicted
of this offence
is not able
to pay
the penalties
within three months
after judgment,
he is
to be transported
for seven years;
and if he
returns
before the expiration
of that term,
he is liable
to the pains of felony,
without benefit of clergy.
The owner of the ship,
knowing this offence,
forfeits all his interest
in the ship and furniture.
The master and mariners,
knowing this offence,
forfeit all their goods
and chattels,
and suffer
three months imprisonment.
By a subsequent statute,
the master
suffers
six months imprisonment.
In order to
prevent exportation,
the whole inland commerce
of wool
is laid
under very burdensome
and oppressive restrictions.
It cannot be packed
in any box,
barrel,
cask,
case,
chest,
or any other package,
but only in packs of leather
or pack-cloth,
on which
must be marked
on the outside the words
WOOL
or YARN,
in large letters,
not
less than three inches long,
on pain
of forfeiting
the same and the package,
and 8s
for every pound weight,
to be paid
by the owner or packer.
It cannot be loaden
on any horse or cart,
or carried
by land
within five miles
of the coast,
but between sun-rising,
and sun-setting,
on pain
of forfeiting the same,
the horses and carriages.
The hundred next adjoining
to the sea coast,
out of,
or through which the wool
is carried or exported,
forfeits £20,
if the wool
is under the value of £10;
and if of greater value,
then treble that value,
together with treble costs,
to be sued for
within the year.
The execution
to be against any two
of the inhabitants,
whom
the sessions must reimburse,
by an assessment
on the other inhabitants,
as in the cases of robbery.
And if any person compounds
with the hundred
for less than this penalty,
he is
to be imprisoned
for five years;
and any other person
may prosecute.
These regulations
take place
through the whole kingdom.
But
in the particular counties
of Kent and Sussex,
the restrictions
are still more troublesome.
Every owner
of wool
within ten miles
of the sea coast
must give an account
in writing,
three days
after shearing,
to the next officer
of the customs,
of the number
of his fleeces,
and of the places
where they are lodged.
And before
he removes any part of them,
he must give the like notice
of the number and weight
of the fleeces,
and of the name and abode
of the person
to whom they are sold,
and of the place
to which it
is intended
they
should be carried.
No person
within fifteen miles
of the sea,
in the said counties,
can buy any wool,
before he
enters into bond to the king,
that no part
of the wool which
he shall so
buy shall be sold
by him to any other person
within fifteen miles
of the sea.
If any wool
is found
carrying towards the sea
side in the said counties,
unless it
has been entered and security
given as aforesaid,
it is forfeited,
and the offender
also forfeits 3s
for every pound weight,
if any person lay any wool,
not entered as aforesaid,
within fifteen miles
of the sea,
it
must be seized
and forfeited;
and if,
after such seizure,
any person
shall claim the same,
he must give security
to the exchequer,
that if he
is cast upon trial
he shall pay treble costs,
besides all
other penalties.
When
such restrictions
are imposed
upon the inland trade,
the coasting trade,
we may believe,
cannot be left very free.
Every owner of wool,
who carrieth,
or causeth
to be carried,
any wool to any port
or place on the sea coast,
in order to
be from thence transported
by sea
to any other place or port
on the coast,
must first cause
an entry thereof
to be made
at the port from whence
it is intended
to be conveyed,
containing the weight,
marks,
and number,
of the packages,
before
he brings the same
within five miles
of that port,
on pain
of forfeiting the same,
and also the horses,
carts,
and other carriages;
and also of suffering
and forfeiting,
as by the other laws
in force
against the exportation
of wool.
This law,
however
(1st of William III c.32),
is so very indulgent as
to declare,
that
this shall not hinder
any person
from carrying his wool home
from the place
of shearing,
though it
be
within five miles of the sea,
provided that in ten days
after shearing,
and before he
remove the wool,
he do under his hand
certify
to the next officer
of the customs
the true number of fleeces,
and where it is housed;
and do not remove the same,
without certifying
to such officer,
under his hand,
his intention
so to do,
three days before.
Bond
must be given
that the wool
to be carried coast-ways
is to be landed
at the particular port
for which it
is entered outwards;
and if my part of it
is landed
without the presence
of an officer,
not only the forfeiture
of the wool is incurred,
as in other goods,
but
the usual additional penalty of 3s
for every pound weight
is likewise incurred.
Our woollen manufacturers,
in order to
justify their demand
of such extraordinary
restrictions
and regulations,
confidently asserted,
that English wool
was of a peculiar quality,
superior to
that of any other country;
that the wool of other
countries could not,
without some mixture of it,
be wrought up
into any tolerable manufacture;
that fine cloth
could not be made without it;
that England,
therefore,
if the exportation of it
could be totally prevented,
could monopolize
to herself almost
the whole woollen trade
of the world;
and thus,
having no rivals,
could sell at what price
she pleased,
and in a short time
acquire
the most incredible degree
of wealth
by the most advantageous balance
of trade.
This doctrine,
like most other doctrines
which are confidently asserted
by any considerable number
of people,
was, and still continues
to be,
most implicitly
believed
by a much greater number:
by almost all those
who are either unacquainted
with the woollen trade,
or who
have not made
particular inquiries.
It is,
however,
so perfectly false,
that English wool
is in any respect necessary
for the making
of fine cloth,
that it
is altogether unfit for it.
Fine cloth
is made altogether
of Spanish wool.
English wool,
cannot be even so mixed
with Spanish wool,
as to enter
into the composition without
spoiling and degrading,
in some degree,
the fabric of the cloth.
It has been shown
in the foregoing part
of this work,
that
the effect
of these regulations
has been
to depress the price
of English wool,
not only below what
it naturally would be
in the present times,
but very much below what
it actually was
in the time
of Edward III.
The price of Scotch wool,
when,
in consequence of the Union,
it became
subject to
the same regulations,
is said
to have fallen
about one half.
It is observed
by the
very accurate
and intelligent author
of the Memoirs of Wool,
the Reverend Mr. John Smith,
that the price
of the best English wool
in England,
is generally below what
wool
of a very inferior quality
commonly sells for
in the market of Amsterdam.
To depress
the price
of this commodity below what
may be called its natural
and proper price,
was the avowed purpose
of those regulations;
and there seems
to be no doubt
of their having produced
the effect
that was expected
from them.
This reduction of price,
it may perhaps be thought,
by discouraging
the growing of wool,
must have reduced very much
the annual produce
of
that commodity,
though not below what
it formerly was,
yet below what,
in the present state
of things,
it would probably have been,
had it,
in consequence of an open
and free market,
been allowed
to rise
to the natural and proper price.
I am,
however,
disposed
to believe,
that
the quantity
of the annual produce
cannot have been much,
though it may,
perhaps,
have been
a little affected
by these regulations.
The growing of wool
is not
the chief purpose
for which the sheep farmer
employs
his industry and stock.
He expects his profit,
not so much
from the price
of the fleece,
as from that of the carcase;
and the average or ordinary
price of the latter
must even,
in many cases,
make up to him
whatever deficiency
there may be
in the average or ordinary price
of the former.
It has been observed,
in the foregoing part
of this work,
that
'whatever regulations
tend to sink the price,
either
of wool
or of raw hides,
below what
it naturally would be,
must,
in an improved
and cultivated country,
have some
tendency
to raise the price
of butcher's meat.
The price,
both
of the great and small cattle
which are fed on improved
and cultivated land,
must be sufficient to pay
the rent which the landlord,
and the profit which
the farmer,
has reason
to expect from improved
and cultivated land.
If it is not,
they
will soon cease
to feed them.
Whatever part of this price,
therefore,
is not paid
by the wool and the hide,
must be paid by the carcase.
The less there is paid
for the one,
the more
must be paid for the other.
In what manner
this price
is to be divided
upon the different parts
of the beast,
is indifferent
to the landlords and farmers,
provided
it is all paid to them.
In an improved
and cultivated country,
therefore,
their interest
as landlords and farmers
cannot be much
affected by such regulations,
though
their interest as
consumers may,
by the rise
in the price of provisions.'
According to this
reasoning,
therefore,
this degradation
in the price of wool
is not likely,
in an improved
and cultivated country,
to occasion any diminution
in the annual produce of
that commodity;
except so far as,
by raising
the price of mutton,
it may somewhat diminish
the demand for,
and consequently
the production of,
that particular species
of butcher's meat,
Its effect,
however,
even in this way,
it is probable,
is not very considerable.
But though its effect
upon the quantity
of the annual produce
may not have been
very considerable,
its effect upon the quality,
it may perhaps be thought,
must necessarily have been
very great.
The degradation
in the quality
of English wool,
if not below what
it was in former times,
yet below what
it naturally would have been
in the present state
of improvement and cultivation,
must have been,
it may perhaps be supposed,
very nearly
in proportion
to the degradation of price.
As the quality
depends upon the breed,
upon the pasture,
and upon the management
and cleanliness
of the sheep,
during the whole progress
of the growth
of the fleece,
the attention
to these circumstances,
it may naturally enough
be imagined,
can never be
greater than
in proportion
to the recompence which
the price
of the fleece
is likely
to make
for the labour
and expense which
that attention
requires.
It happens,
however,
that the goodness
of the fleece
depends,
in a great measure,
upon the health,
growth,
and bulk of the animal:
the same attention
which is necessary
for the improvement
of the carcase is,
in some respect,
sufficient for
that of the fleece.
Notwithstanding
the degradation of price,
English wool
is said
to have been improved considerably
during the course even
of the present century.
The improvement,
might,
perhaps,
have been greater
if the price
had been better;
but the lowness
of price,
though it may have obstructed,
yet certainly
it
has not altogether prevented
that improvement.
The violence
of these regulations,
therefore,
seems to have affected
neither
the quantity nor the quality
of the annual produce
of wool,
so much as it
might have been expected
to do
(though I
think
it probable that
it may have affected
the latter a good deal
more than the former);
and the interest
of the growers of wool,
though it
must have been hurt
in some degree,
seems upon the whole,
to have been much less
hurt than
could well have been imagined.
These considerations,
however,
will not justify
the absolute prohibition
of the exportation
of wool;
but they
will fully justify
the imposition
of a considerable tax upon
that exportation.
To hurt,
in any degree,
the interest of any
one order of citizens,
for no other purpose
but to promote
that of some other,
is evidently contrary to
that justice and equality
of treatment which
the sovereign
owes to all
the different orders
of his subjects.
But the prohibition
certainly hurts,
in some degree,
the interest
of the growers of wool,
for no other purpose
but to promote
that of the manufacturers.
Every different order
of citizens
is bound
to contribute
to the support
of the sovereign
or commonwealth.
A tax of five,
or even of ten shillings,
upon the exportation
of every tod
of wool,
would produce
a very considerable revenue
to the sovereign.
It would hurt the interest
of the growers somewhat
less than the prohibition,
because it
would not probably lower
the price
of wool quite so much.
It would afford
a sufficient advantage
to the manufacturer,
because,
though he
might not buy his wool
altogether so cheap
as
under the prohibition,
he would still buy it
at least five
or ten shillings cheaper
than any foreign manufacturer
could buy it,
besides
saving
the freight and insurance which
the other
would be obliged
to pay.
It is scarce possible
to devise a tax
which could produce
any considerable revenue
to the sovereign,
and at the same time occasion
so little inconveniency
to anybody.
The prohibition,
notwithstanding all
the penalties which guard it,
does not prevent
the exportation of wool.
It is exported,
it is well known,
in great quantities.
The great difference
between the price
in the home and
that in the foreign market,
presents
such
a temptation to smuggling,
that all the rigour
of the law
cannot prevent it.
This illegal exportation
is advantageous to nobody
but the smuggler.
A legal exportation,
subject to a tax,
by affording
a revenue to the sovereign,
and thereby saving
the imposition of some other,
perhaps
more burdensome
and inconvenient taxes,
might prove advantageous
to all
the different subjects
of the state.
The exportation
of fuller's earth,
or fuller's clay,
supposed
to be
necessary for preparing
and cleansing
the woollen
manufactures,
has been subjected to nearly
the same penalties
as the exportation of wool.
Even tobacco-pipe clay,
though acknowledged
to be different
from fuller's clay,
yet,
on account
of their resemblance,
and because fuller's clay
might sometimes be exported
as tobacco-pipe clay,
has been laid
under the same prohibitions
and penalties.
By the 13th and 14th
of Charles II chap, 7,
the exportation,
not only of raw hides,
but of tanned leather,
except
in the shape of boots,
shoes,
or slippers,
was prohibited;
and the law
gave a monopoly
to our boot-makers
and shoe-makers,
not only against our graziers,
but against our tanners.
By subsequent statutes,
our tanners
have
got themselves
exempted from this monopoly,
upon paying a small tax
of only one shilling
on the hundred weight
of tanned leather,
weighing one hundred
and twelve pounds.
They have obtained likewise
the drawback
of two-thirds of the
excise duties
imposed upon their commodity,
even
when exported
without further manufacture.
All manufactures of leather
may be exported duty free;
and the exporter
is besides entitled
to the drawback
of the whole duties of
excise.
Our graziers
still continue
subject to the old monopoly.
Graziers,
separated from one another,
and dispersed through all
the different corners
of the country,
cannot,
without great difficulty,
combine together
for the purpose either
of imposing monopolies
upon their fellow-citizens,
or of exempting themselves
from such as
may have been imposed
upon them
by other people.
Manufacturers of all kinds,
collected
together in numerous
bodies in all great cities,
easily can.
Even
the horns
of cattle
are prohibited
to be exported;
and the two insignificant trades
of the horner and comb-maker
enjoy,
in this respect,
a monopoly
against the graziers.
Restraints,
either by prohibitions,
or by taxes,
upon the exportation of goods
which are partially,
but not
completely manufactured,
are not peculiar
to the manufacture
of leather.
As long as anything
remains
to be done,
in order to fit any commodity
for immediate use
and consumption,
our manufacturers
think that they
themselves ought to have
the doing
of it.
Woollen yarn and worsted
are prohibited
to be exported,
under the same penalties
as wool even white cloths
we subject to
a duty upon exportation;
and our dyers
have so far obtained
a monopoly
against our clothiers.
Our clothiers
would probably have been able
to defend themselves against it;
but it happens
that
the greater part
of our principal clothiers
are themselves likewise dyers.
Watch-cases,
clock-cases,
and dial-plates
for clocks and watches,
have been
prohibited
to be exported.
Our clock-makers
and watch-makers are,
it seems,
unwilling
that the price
of this sort of workmanship
should be raised
upon them
by the competition
of foreigners.
By some old statutes
of Edward III,
Henry VIII and Edward VI,
the exportation of all
metals was prohibited.
Lead and tin
were alone excepted,
probably on account
of the great abundance
of those metals;
in the exportation
of which a considerable part
of the trade
of the kingdom
in those days consisted.
For the encouragement
of the mining trade,
the 5th
of William and Mary, chap.17,
exempted
from this prohibition iron,
copper,
and mundic metal
made from British ore.
The exportation
of all sorts
of copper bars,
foreign as well as British,
was afterwards permitted
by the 9th and 10th
of William III chap 26.
The exportation
of unmanufactured brass,
of
what is called gun-metal,
bell-metal,
and shroff metal,
still
continues
to be prohibited.
Brass
manufactures of all sorts
may be exported duty free.
The exportation
of the materials
of manufacture,
where it
is not altogether prohibited,
is, in many cases,
subjected
to considerable duties.
By the 8th George I. chap.15,
the exportation of all goods,
the produce
of manufacture
of Great Britain,
upon which any
duties had been imposed
by former statutes,
was rendered duty free.
The following goods,
however,
were excepted:
alum,
lead,
lead-ore,
tin,
tanned leather,
copperas,
coals,
wool,
cards,
white woollen cloths,
lapis calaminaris,
skins of all sorts,
glue,
coney hair or wool,
hares wool,
hair of all sorts,
horses,
and litharge of lead.
If you except horses,
all these
are either materials
of manufacture,
or incomplete
manufactures
(which
may be considered
as materials for
still further manufacture),
or instruments of trade.
This statute
leaves them subject to all
the old duties
which had ever been
imposed upon them,
the old subsidy,
and one per cent. outwards.
By the same statute,
a great number
of foreign drugs for dyers
use are exempted
from all duties
upon importation.
Each of them,
however,
is afterwards subjected
to a certain duty,
not indeed a very heavy one,
upon exportation.
Our dyers,
it seems,
while they
thought it for their interest
to encourage the importation
of those drugs,
by an exemption
from all duties,
thought it likewise
for their own interest
to throw some
small discouragement
upon their exportation.
The avidity,
however,
which suggested
this notable piece
of mercantile ingenuity,
most probably
disappointed itself
of its object.
It necessarily taught
the importers
to be more careful than
they
might otherwise have been,
that
their importation
should not exceed
what was necessary
for the supply
of the home market.
The home market
was at all
times likely
to be more scantily supplied;
the commodities
were at all
times likely
to be somewhat dearer
there than
they
would have been,
had the exportation
been rendered
as free as the importation.
By the above-mentioned statute,
gum senega,
or gum arabic,
being
among the enumerated dyeing drugs,
might be imported duty free.
They
were subjected,
indeed,
to a small poundage duty,
amounting only to threepence
in the hundred weight,
upon their re-exportation.
France
enjoyed,
at that time,
an exclusive trade
to the country most productive
of those drugs,
that which lies in
the neighbourhood
of the Senegal;
and the British market
could not be easily supplied
by the immediate importation
of them
from the place of growth.
By the 25th George II,
therefore,
gum senega
was allowed
to be imported
(contrary
to the general dispositions
of the act of navigation)
from any part of Europe.
As the law,
however,
did not mean
to encourage this species
of trade,
so contrary
to the general principles
of the mercantile policy
of England,
it imposed a duty
of ten shillings
the hundred weight
upon such importation,
and no part of this duty
was
to be afterwards drawn back
upon its exportation.
The successful war
which began in 1755
gave Great Britain
the same exclusive trade
to those countries which
France had enjoyed before.
Our manufactures,
as soon as the peace
was made,
endeavoured
to avail themselves
of this advantage,
and to establish a monopoly
in their own favour both
against the growers
and against the importers
of this commodity.
By the 5th
of George III c.37,
therefore,
the exportation of gum senega,
from his majesty's dominions
in Africa,
was confined to Great Britain,
and was subjected
to all the same restrictions,
regulations,
forfeitures,
and penalties,
as that
of the enumerated commodities
of the British colonies
in America
and the West Indies.
Its importation,
indeed,
was subjected
to a small duty
of sixpence
the hundred weight;
but its re-exportation
was subjected
to the enormous duty
of one pound
ten shillings
the hundred weight.
It was the intention
of our manufacturers,
that the whole produce
of those countries
should be imported
into Great Britain;
and in order that
they
themselves might be enabled
to buy it
at their own price,
that no part of it
should be exported
again,
but at such
an expense as
would sufficiently discourage
that exportation.
Their avidity,
however,
upon this,
as
well as
upon many other occasions,
disappointed itself
of its object.
This enormous duty
presented
such
a temptation to smuggling,
that great quantities
of this commodity
were clandestinely exported,
probably to
all
the manufacturing countries
of Europe,
but particularly to Holland,
not only from Great Britain,
but from Africa.
Upon this account,
by the 14th George III,
chap.10,
this
duty upon exportation
was reduced
to five shillings
the hundred weight.
In the book of rates,
according to which
the old subsidy was levied,
beaver
skins were estimated
at six shillings
and eight pence a piece;
and the different subsidies
and imposts which,
before the year 1722,
had been laid
upon their importation,
amounted
to one-fifth part
of the rate,
or to sixteen pence
upon each skin;
all of which,
except half the old subsidy,
amounting only to twopence,
was drawn back
upon exportation.
This duty,
upon the importation
of so important
a material of manufacture,
had been thought too high;
and, in the year 1722,
the rate
was reduced
to two shillings and sixpence,
which reduced the duty
upon importation to sixpence,
and of this only one-half
was to be drawn back
upon exportation.
The same successful war
put
the country most productive
of beaver
under the dominion
of Great Britain;
and beaver skins
being
among the enumerated commodities,
the exportation from America
was consequently confined
to the market
of Great Britain.
Our manufacturers
soon bethought themselves
of the advantage which
they might make
of this circumstance;
and in the year 1764,
the duty
upon the importation
of beaver skin
was reduced to one penny,
but the duty upon exportation
was raised
to sevenpence each skin,
without any drawback
of the duty upon importation.
By the same law,
a duty of eighteen pence
the pound
was imposed
upon the exportation
of beaver wool or woumbs,
without making any alteration
in the duty
upon the importation of
that commodity,
which,
when imported by British,
and in British shipping,
amounted
at that time
to between fourpence and fivepence
the piece.
Coals
may be considered both
as a material
of manufacture,
and as an instrument
of trade.
Heavy duties,
accordingly,
have been imposed
upon their exportation,
amounting at present (1783)
to more than five shillings
the ton,
or more than fifteen shillings
the chaldron,
Newcastle measure;
which is,
in most cases,
more than the original value
of the commodity
at the coal-pit,
or even at the shipping port
for exportation.
The exportation,
however,
of the instruments of trade,
properly so called,
is commonly restrained,
not by high duties,
but by absolute prohibitions.
Thus,
by the 7th and 8th
of William III chap.20,
sect.8,
the exportation
of frames or engines
for knitting gloves
or stockings,
is prohibited,
under the penalty,
not only of the forfeiture
of such frames
or engines,
so exported,
or attempted
to be exported,
but of forty pounds,
one half to the king,
the other to the person
who shall inform
or sue for the same.
In the same manner,
by the 14th George III c.71,
the exportation
to foreign parts,
of any utensils made use of
in the cotton,
linen,
woollen,
and silk
manufactures,
is prohibited
under the penalty,
not only of the forfeiture
of such utensils,
but of two hundred pounds,
to be paid by the person
who shall offend
in this manner;
and likewise
of two hundred pounds,
to be paid
by the master
of the ship,
who shall knowingly suffer
such utensils
to be loaded
on board his ship.
When
such heavy penalties
were imposed
upon the exportation
of the dead instruments
of trade,
it could not well be expected
that the living instrument,
the artificer,
should be allowed
to go free.
Accordingly,
by the 5th George I. c.27,
the person
who shall be convicted
of enticing any artificer,
of or in any
of the
manufactures of Great Britain,
to go into any foreign parts,
in order to practise
or teach his trade,
is liable,
for the first offence,
to be fined
in any sum not
exceeding one hundred pounds,
and to three months imprisonment,
and until the fine
shall be paid;
and for the second offence,
to be fined in any sum,
at the discretion
of the court,
and to imprisonment
for twelve months,
and until the fine
shall be paid.
By the 23d George II c.13,
this penalty
is increased,
for the first offence,
to five hundred pounds
for every artificer
so enticed,
and to twelve months imprisonment,
and until the fine
shall be paid;
and for the second offence,
to one thousand pounds,
and to two years imprisonment,
and until the fine
shall be paid.
By the former
of these two statutes,
upon proof
that any person
has been enticing
any artificer,
or that any artificer
has promised
or contracted
to go into foreign parts,
for the purposes aforesaid,
such artificer
may be obliged
to give security,
at the discretion
of the court,
that he
shall not go beyond the seas,
and may be committed
to prison
until he give
such security.
If any artificer
has gone beyond the seas,
and is exercising
or teaching his trade
in any foreign country,
upon warning
being given
to him by any
of his majesty's ministers
or consuls abroad,
or by one
of his majesty's secretaries
of state,
for the time
being,
if he does not,
within six months
after such warning,
return into this realm,
and from
henceforth abide
and inhabit continually
within the same,
he is
from thenceforth declared incapable
of taking any legacy
devised
to him within this kingdom,
or of being executor
or administrator
to any person,
or of taking any lands
within this kingdom,
by descent,
devise,
or purchase.
He likewise
forfeits
to the king all his lands,
goods,
and chattels;
is declared
an alien in every respect;
and is put
out of the king's protection.
It is unnecessary,
I imagine,
to observe how
contrary such regulations
are to the boasted liberty
of the subject,
of which we
affect to be so very jealous;
but which,
in this case,
is so plainly sacrificed
to the futile interests
of our merchants
and manufacturers.
The laudable motive
of all these regulations,
is to extend our own
manufactures,
not by their own improvement,
but by the depression
of those
of all our neighbours,
and by putting an end,
as much as possible,
to the troublesome competition
of such odious
and disagreeable rivals.
Our master
manufacturers
think it reasonable that they
themselves should have
the monopoly
of the ingenuity
of all their countrymen.
Though by restraining,
in some trades,
the number of apprentices
which can be employed
at one time,
and by imposing the necessity
of a long apprenticeship
in all trades,
they endeavour,
all of them,
to confine the knowledge
of their respective employments to
as small a number
as possible;
they
are unwilling,
however,
that any part
of this small number
should go abroad
to instruct foreigners.
Consumption
is
the sole end
and purpose of all production;
and the interest
of the producer
ought to be attended to,
only so far
as it
may be necessary
for promoting
that of the consumer.
The maxim
is so perfectly self-evident,
that
it would be absurd to attempt
to prove it.
But in the mercantile system,
the interest of the consumer
is almost constantly sacrificed to
that of the producer;
and it seems
to consider production,
and not consumption,
as
the ultimate end and object
of all industry
and commerce.
In the restraints
upon the importation
of all foreign commodities
which can come
into competition with those
of our own growth
or manufacture,
the interest
of the home consumer
is evidently sacrificed to
that of the producer.
It is altogether
for the benefit
of the latter,
that the former
is obliged
to pay
that enhancement
of price which this
monopoly almost
always occasions.
It is altogether
for the benefit
of the producer,
that bounties
are granted
upon the exportation
of some of his productions.
The home consumer
is obliged
to pay,
first the tax
which is necessary
for paying the bounty;
and, secondly,
the still greater tax which
necessarily arises
from the enhancement
of the price
of the commodity
in the home market.
By the famous treaty
of commerce with Portugal,
the consumer
is prevented by duties from
purchasing of a
neighbouring country,
a commodity which
our own
climate does not produce;
but is obliged
to purchase it
of a distant country,
though it is acknowledged,
that
the commodity
of the distant country
is of a worse quality than
that of the near one.
The home consumer
is obliged
to submit to this inconvenience,
in order that
the producer
may import
into the
distant country some of
his productions,
upon more advantageous terms
than
he
otherwise would have been allowed
to do.
The consumer, too,
is obliged
to pay
whatever enhancement
in the price
of those very productions this
forced exportation
may occasion
in the home market.
But in the system of laws
which has been established
for the management
of our American
and West Indian colonies,
the interest
of the home consumer
has been sacrificed to
that of the producer,
with a
more extravagant profusion
than in all
our other commercial regulations.
A great empire
has been established
for the sole purpose
of raising
up a nation of customers,
who should be obliged
to buy,
from the shops
of our different producers,
all
the goods with which these
could supply them.
For the sake of
that little enhancement
of price which
this monopoly might afford
our producers,
the home
consumers
have been burdened
with the whole expense
of maintaining
and defending that empire.
For this purpose,
and for this purpose only,
in the two last wars,
more than two hundred millions
have been spent,
and a new debt
of more than a hundred
and seventy millions
has been contracted,
over and above all
that had been expended
for the same purpose
in former wars.
The interest
of this debt alone
is not only
greater than
the whole
extraordinary profit which,
it never could be pretended,
was made by the monopoly
of the colony trade,
but than the whole value
of that trade,
or than the whole value
of the goods which,
at an average,
have been annually exported
to the colonies.
It cannot be very difficult
to determine who have been
the contrivers
of this
whole mercantile system;
not the consumers,
we may believe,
whose interest
has been entirely neglected;
but the producers,
whose interest
has been so carefully attended to;
and among this latter class,
our merchants and manufacturers
have been
by far
the principal architects.
In the mercantile regulations which
have been taken notice
of in this chapter,
the interest
of our manufacturers
has been most peculiarly attended to;
and the interest,
not so much
of the consumers,
as that
of some other sets
of producers,
has been sacrificed to it.
OF THE AGRICULTURAL SYSTEMS,
OR OF THOSE SYSTEMS
OF POLITICAL ECONOMY WHICH
REPRESENT THE PRODUCE OF LAND,
AS EITHER
THE SOLE
OR THE PRINCIPAL SOURCE
OF THE REVENUE AND WEALTH
OF EVERY COUNTRY.
The agricultural systems
of political economy
will not require
so long an explanation
as that which
I have thought it necessary
to bestow
upon the
mercantile or commercial
system.
That system
which represents
the produce
of land as the sole source
of the revenue and wealth
of every country,
has so far as I know,
never
been adopted by any nation,
and it at present
exists only
in the speculations
of a few men
of great learning
and ingenuity
in France.
It would not,
surely,
be worth
while to examine
at great length the errors
of a system
which never has done,
and probably
never will do,
any harm
in any part
of the world.
I shall endeavour
to explain,
however,
as distinctly as I can,
the great outlines
of this
very ingenious system.
Mr. Colbert,
the famous minister
of Lewis XIV.
was a man of probity,
of great industry,
and knowledge of detail;
of great experience and acuteness
in the examination
of public accounts;
and of abilities,
in short,
every way fitted
for introducing method
and good order
into the collection
and expenditure
of the public revenue.
That minister
had unfortunately embraced
all the prejudices
of the mercantile system,
in its nature and essence
a system
of restraint and regulation,
and such as
could scarce
fail to be agreeable
to a laborious and plodding man
of business,
who had been accustomed
to regulate
the different departments
of public offices,
and
to establish the necessary checks
and controls
for confining each
to its proper sphere.
The industry and commerce
of a great country,
he endeavoured
to regulate
upon the same model
as the departments
of a public office;
and instead of allowing
every man
to pursue
his own interest his own way,
upon the liberal plan
of equality,
liberty,
and justice,
he bestowed
upon certain branches
of industry
extraordinary privileges,
while he
laid others
under
as extraordinary restraints.
He was not only disposed,
like other European ministers,
to encourage more the industry
of the towns than
that of the country;
but,
in order to
support the industry
of the towns,
he was willing
even to
depress and keep down
that of the country.
In order to
render provisions cheap
to the inhabitants
of the towns,
and
thereby to encourage
manufactures
and foreign commerce,
he prohibited altogether
the exportation of corn,
and thus
excluded the inhabitants
of the country
from every foreign market,
for by far
the most important part
of the produce
of their industry.
This prohibition,
joined to the restraints
imposed
by the ancient provincial laws
of France
upon the transportation
of corn
from one province to another,
and to the arbitrary
and degrading taxes
which are levied
upon the cultivators
in almost all the provinces,
discouraged and kept
down the agriculture of
that country very much
below the state
to which
it would naturally have risen
in so very fertile a soil,
and so very happy a climate.
This state
of discouragement and depression
was felt more or
less in every different part
of the country,
and many different inquiries
were set on foot
concerning the causes of it.
One of those causes appeared
to be the preference given,
by the institutions
of Mr. Colbert,
to the industry
of the towns above
that of the country.
If the rod
be bent too much one way,
says the proverb,
in order to make it straight,
you must bend
it as much the other.
The French philosophers,
who have proposed the system
which
represents agriculture
as the sole source
of the revenue and wealth
of every country,
seem to have adopted
this proverbial maxim;
and,
as in the plan
of Mr. Colbert,
the industry of the towns
was certainly overvalued
in comparison with
that of the country,
so in their system
it seems to be
as certainly under-valued.
The different orders
of people,
who have ever been
supposed
to contribute
in any respect
towards the annual produce
of the land
and labour of the country,
they divide
into three classes.
The first
is the class
of the proprietors of land.
The second
is the class
of the cultivators,
of farmers and country
labourers,
whom
they honour
with the peculiar appellation
of the productive class.
The third
is the class of artificers,
manufacturers,
and merchants,
whom they endeavour
to degrade
by the humiliating appellation
of the
barren
or unproductive class.
The class of proprietors
contributes
to the annual produce,
by the expense which
they may occasionally lay out
upon the improvement
of the land,
upon the buildings,
drains,
inclosures,
and other ameliorations,
which they may
either make
or maintain upon it,
and by means
of which the cultivators
are enabled,
with the same capital,
to raise a greater produce,
and consequently to pay
a greater rent.
This
advanced
rent
may be considered
as the interest or profit
due to the proprietor,
upon the expense
or capital which
he thus
employs in the improvement
of his land.
Such expenses
are in this
system called ground expenses
(depenses foncieres).
The cultivators or farmers
contribute
to the annual produce,
by
what are in this system
called
the original and annual expenses
(depenses primitives,
et depenses annuelles),
which
they lay out
upon the cultivation
of the land.
The original expenses
consist in the instruments
of husbandry,
in the stock of cattle,
in the seed,
and in the maintenance
of the farmer's family,
servants,
and cattle,
during at least a great part
of the first year
of his occupancy,
or till
he can receive some return
from the land.
The annual expenses
consist in the seed,
in the wear
and tear of instruments
of husbandry,
and in the annual maintenance
of the farmer's servants
and cattle,
and of his family too,
so far as any
part of them
can be considered
as servants employed
in cultivation.
That part
of the produce
of the land which remains
to him after paying
the rent,
ought to be sufficient,
first,
to replace to him,
within a reasonable time,
at least
during the term
of his occupancy,
the whole
of his original expenses,
together
with the ordinary profits
of stock;
and, secondly,
to replace to him annually
the whole
of his annual expenses,
together likewise
with the ordinary profits
of stock.
Those two sorts of expenses
are two capitals which
the farmer
employs in cultivation;
and unless they
are regularly restored to him,
together
with a reasonable profit,
he cannot carry
on his employment
upon a level
with other employments;
but,
from a regard
to his own interest,
must desert it
as soon as possible,
and seek some other.
That part
of the produce
of the land
which is thus necessary
for enabling the farmer
to continue his business,
ought to be considered
as a fund sacred
to cultivation,
which,
if the landlord violates,
he necessarily reduces
the produce
of his own land,
and, in a few years,
not only disables the farmer
from paying this racked rent,
but from paying
the reasonable rent which
he might otherwise have
got for his land.
The rent
which properly belongs
to the landlord,
is no
more than the neat produce
which remains
after paying,
in the completest manner,
all the necessary expenses
which
must be previously laid out,
in order to raise
the gross
or the whole produce.
It
is because the labour
of the cultivators,
over and
above paying completely all
those necessary expenses,
affords a neat produce
of this kind,
that this
class of people
are in this
system
peculiarly distinguished
by the honourable appellation
of the productive class.
Their original and annual expenses
are for the same reason
called,
In this system,
productive expenses,
because,
over and above replacing
their own value,
they occasion
the annual reproduction
of this neat produce.
The ground expenses,
as they are called,
or what
the landlord
lays out
upon the improvement
of his land,
are, in this system, too,
honoured
with the appellation
of productive expenses.
Till the whole
of those expenses,
together
with the ordinary profits
of stock,
have been completely repaid
to him by the advanced
rent which
he gets from his land,
that
advanced
rent
ought to be regarded
as sacred and inviolable,
both by the church
and by the king;
ought to be subject neither
to tithe nor
to taxation.
If it is otherwise,
by discouraging
the improvement of land,
the church
discourages
the future increase
of her own
tithes,
and the king
the future increase
of his own
taxes.
As in a well ordered state
of things,
therefore,
those
ground expenses,
over and above reproducing
in the completest manner
their own value,
occasion likewise,
after a certain time,
a reproduction
of a neat produce,
they
are in this system
considered
as productive expenses.
The ground expenses
of the landlord,
however,
together
with the original
and the annual expenses
of the farmer,
are the only three sorts
of expenses which
in this system
are considered as productive.
All other expenses,
and all other orders
of people,
even those who,
in the common apprehensions
of men,
are regarded
as the most productive,
are, in this account
of things,
represented
as altogether barren
and unproductive.
Artificers and manufacturers,
in particular,
whose industry,
in the common apprehensions
of men,
increases so much the value
of the rude produce
of land,
are in this system
represented as a class
of people
altogether barren and unproductive.
Their labour,
it is said,
replaces only the stock
which employs them,
together
with its ordinary profits.
That stock
consists in the materials,
tools,
and wages,
advanced
to them by their employer;
and is the fund destined
for their employment
and maintenance.
Its profits
are the fund destined
for the maintenance
of their employer.
Their employer,
as he advances to them
the stock of materials,
tools,
and wages,
necessary for their employment,
so he advances to himself
what is necessary
for his own maintenance;
and this maintenance
he generally proportions
to the profit which
he expects
to make
by the price
of their work.
Unless
its price
repays
to him the maintenance which
he advances to himself,
as well as the materials,
tools,
and wages,
which
he advances to his workmen,
it evidently does not repay
to him
the whole expense which
he lays out upon it.
The profits
of manufacturing stock,
therefore,
are not, like the
rent of land,
a neat produce which remains
after completely repaying
the whole expense which
must be laid out
in order to
obtain them.
The stock of the farmer
yields him a profit,
as well as that
of the master manufacturer;
and it
yields a rent likewise
to another person,
which
that of the master manufacturer
does not.
The expense,
therefore,
laid out
in employing
and maintaining artificers
and manufacturers,
does no more than
continue,
if one
may say so,
the existence
of its own value,
and does not produce
any new value.
It is,
therefore,
altogether
a barren and unproductive
expense.
The expense,
on the contrary,
laid out
in employing farmers
and country labourers,
over and above continuing
the existence
of its own value,
produces
a new value
the rent of the landlord.
It is,
therefore,
a productive expense.
Mercantile stock
is equally barren
and unproductive
with manufacturing stock.
It only continues
the existence
of its own value,
without producing
any new value.
Its profits
are only the repayment
of the maintenance which
its employer advances
to himself
during the time
that he employs it,
or till
he receives the returns
of it.
They are only
the repayment
of a part
of the expense
which must be laid out
in employing it.
The labour
of artificers and manufacturers
never adds any thing
to the value
of the whole annual amount
of the rude produce
of the land.
It adds,
indeed,
greatly to the value
of some particular parts
of it.
But the consumption which,
in the mean time,
it occasions of other parts,
is precisely
equal to the value which
it adds to those parts;
so that the value
of the whole amount is not,
at any one moment
of time,
in the least augmented
by it.
The person
who works the lace
of a pair
of fine ruffles for example,
will sometimes raise
the value of,
perhaps,
a pennyworth
of flax to £30 sterling.
But though,
at first sight,
he appears thereby
to multiply the value
of a part
of the rude produce
about seven thousand
and two hundred times,
he in reality
adds nothing
to the value
of the whole annual amount
of the rude produce.
The working of that lace
costs him,
perhaps,
two years labour.
The £30 which
he gets for it
when it is finished,
is no
more than the repayment
of the subsistence which
he advances
to himself
during the two years
that he
is employed about it.
The value which,
by every day's,
month's,
or year's labour,
he adds to the flax,
does no more than
replace the value
of his own consumption during
that day,
month,
or year.
At no moment of time,
therefore,
does
he add any thing
to the value
of the whole annual amount
of the rude produce
of the land:
the portion
of that produce
which he
is continually consuming,
being always equal to
the value
which he
is continually producing.
The extreme poverty
of the greater part
of the persons
employed in this expensive,
though trifling manufacture,
may satisfy us
that the price
of their work does not,
in ordinary cases,
exceed the value
of their subsistence.
It is otherwise
with the work
of farmers and country labourers.
The rent of the landlord
is a value which,
in ordinary cases,
it
is continually producing
over and above replacing,
in the most complete manner,
the whole consumption,
the whole expense laid out
upon the employment
and maintenance both
of the workmen
and of their employer.
Artificers,
manufacturers,
and merchants,
can augment the revenue
and wealth
of their society
by parsimony only;
or,
as it
is expressed in this system,
by privation,
that is,
by depriving themselves
of a part
of the funds
destined
for their own subsistence.
They annually reproduce
nothing but those funds.
Unless,
therefore,
they annually save some part
of them,
unless they
annually deprive themselves
of the enjoyment
of some part of them,
the revenue and wealth
of their society
can never be,
in the smallest degree,
augmented by means
of their industry.
Farmers and country labourers,
on the contrary,
may enjoy completely
the whole funds
destined
for their own subsistence,
and yet augment,
at the same time,
the revenue and wealth
of their society.
Over and above
what is destined
for their own subsistence,
their industry
annually affords
a neat produce,
of which the augmentation
necessarily augments
the revenue
and wealth
of their society.
Nations,
therefore,
which,
like France or England,
consist in a great measure,
of proprietors and cultivators,
can be enriched
by industry and enjoyment.
Nations,
on the contrary,
which,
like Holland and Hamburgh,
are composed chiefly
of merchants,
artificers,
and manufacturers,
can grow rich
only through parsimony
and privation.
As the interest
of nations so differently
circumstanced
is very different,
so is
likewise the common character
of the people.
In those of the former kind,
liberality,
frankness,
and good fellowship,
naturally
make a part
of their common character;
in the latter,
narrowness,
meanness,
and a selfish disposition,
averse
to all social pleasure
and enjoyment.
The unproductive class,
that of merchants,
artificers,
and manufacturers,
is maintained
and employed altogether
at the expense
of the two other classes,
of that of proprietors,
and of that of cultivators.
They furnish it both
with the materials
of its work,
and with the fund
of its subsistence,
with the corn
and cattle which
it
consumes
while it
is employed about that work.
The proprietors and cultivators
finally pay both
the wages of all
the workmen
of the unproductive class,
and the profits
of all their employers.
Those workmen
and their employers
are properly the servants
of the proprietors
and cultivators.
They are only
servants who work
without doors,
as menial
servants work within.
Both the one and the other,
however,
are equally maintained
at the expense
of the same masters.
The labour of both
is equally unproductive.
It adds nothing
to the value
of the sum total
of the rude produce
of the land.
Instead of increasing
the value
of that sum total,
it is a charge
and expense
which
must be paid out of it.
The unproductive class,
however,
is not only useful,
but greatly useful,
to the other two classes.
By means
of the industry of merchants,
artificers,
and manufacturers,
the proprietors and cultivators
can purchase
both the foreign goods
and the manufactured produce
of their own country,
which they
have
occasion for,
with the produce
of a much smaller quantity
of their own labour,
than
what they
would be obliged
to employ,
if they were to attempt,
in an
awkward and unskilful manner,
either
to import the one,
or to make the other,
for their own use.
By means
of the unproductive class,
the cultivators
are delivered from many
cares,
which
would otherwise distract
their attention
from the cultivation of land.
The superiority of produce,
which
in consequence
of this undivided attention,
they
are enabled
to raise,
is fully sufficient
to pay
the whole expense which
the maintenance
and employment
of the
unproductive class
costs either
the proprietors
or themselves.
The industry of merchants,
artificers,
and manufacturers,
though
in its own nature
altogether unproductive,
yet contributes in this manner
indirectly
to increase the produce
of the land.
It increases
the productive powers
of productive labour,
by leaving it at liberty
to confine itself
to its proper employment,
the cultivation of land;
and the plough
goes frequently
the easier and the better,
by means
of the labour of the man
whose business
is most remote
from the plough.
It can never be the interest
of the proprietors
and cultivators,
to restrain or
to discourage,
in any respect,
the industry of merchants,
artificers,
and manufacturers.
The greater
the liberty which this
unproductive class enjoys,
the greater
will be the competition
in all
the different trades which
compose it,
and the cheaper
will the other two classes
be supplied,
both with foreign goods and
with the manufactured produce
of their own country.
It can never be the interest
of the unproductive class
to oppress
the other two classes.
It is the surplus produce
of the land,
or what remains
after deducting
the maintenance,
first of the cultivators,
and afterwards of the proprietors,
that maintains
and employs
the unproductive class.
The greater this surplus,
the greater
must likewise
be
the maintenance and employment
of that class.
The establishment
of perfect justice,
of perfect liberty,
and of perfect equality,
is
the very simple secret
which
most effectually secures
the highest degree
of prosperity
to all the three classes.
The merchants,
artificers,
and manufacturers
of those mercantile states,
which,
like Holland and Hamburgh,
consist chiefly
of this unproductive class,
are in the same manner maintained
and employed altogether
at the expense
of the proprietors
and cultivators of land.
The only difference is,
that
those proprietors
and cultivators are,
the greater part of them,
placed
at a most inconvenient distance
from the merchants,
artificers,
and manufacturers,
whom they
supply with the materials
of their work
and the fund
of their subsistence;
are the inhabitants
of other countries,
and the subjects
of other governments.
Such mercantile states,
however,
are not only useful,
but greatly useful,
to the inhabitants
of those other countries.
They fill up,
in some measure,
a very important void;
and supply the place
of the merchants,
artificers,
and manufacturers,
whom
the inhabitants
of those countries
ought to find at home,
but whom,
from some
defect in their policy,
they do not find at home.
It can never be
the interest of those
landed nations,
if I may call them so,
to discourage
or distress the industry
of such mercantile states,
by imposing
high duties upon their trade,
or upon the commodities which
they furnish.
Such duties,
by rendering
those commodities dearer,
could serve only
to sink the real value
of the surplus produce
of their own land,
with which,
or,
what comes to the same thing,
with the price
of which those commodities
are purchased.
Such duties
could only serve
to discourage the increase of
that surplus produce,
and consequently
the improvement
and cultivation
of their own land.
The most effectual expedient,
on the contrary,
for raising the value of
that surplus produce,
for encouraging its increase,
and consequently
the improvement
and cultivation
of their own land,
would be
to allow
the most perfect freedom
to the trade
of all such mercantile nations.
This perfect
freedom of trade
would even be
the most effectual expedient
for supplying them,
in due time,
with all the artificers,
manufacturers,
and merchants,
whom
they wanted at home;
and for filling up,
in the properest
and most advantageous manner,
that
very important void which
they felt there.
The continual increase
of the surplus produce
of their land
would,
in due time,
create a greater capital than
what would be employed
with the ordinary rate
of profit
in the improvement
and cultivation
of land;
and the surplus part of it
would naturally turn itself
to the employment
of artificers and manufacturers,
at home.
But
these artificers and manufacturers,
finding at home both
the materials
of their work and
the fund of their subsistence,
might immediately,
even with much less art
and skill
be able
to work
as cheap
as
the little artificers and
manufacturers
of such mercantile states,
who had both
to bring
from a greater distance.
Even though,
from want
of art and skill,
they might not for some time
be able to work as cheap,
yet,
finding a market at home,
they
might be
able to sell their work there
as cheap as
that of the artificers
and manufacturers
of such mercantile states,
which could not be brought
to that market
but from so great a distance;
and as their art and skill
improved,
they
would soon be
able to sell it cheaper.
The artificers and manufacturers
of such mercantile states,
therefore,
would immediately be rivalled
in the market of those
landed nations,
and soon after undersold
and justled
out of it altogether.
The cheapness
of the manufactures of those
landed nations,
in consequence
of the gradual improvements
of art and skill,
would,
in due time,
extend their sale
beyond the home market,
and carry them
to many foreign markets,
from which they would,
in the same manner,
gradually justle
out many
of the manufacturers
of such mercantile nations.
This continual increase,
both of the rude
and manufactured
produce of those
landed nations,
would,
in due time,
create a greater capital than
could,
with the ordinary rate
of profit,
be employed either
in agriculture or in
manufactures.
The surplus of this capital
would naturally turn itself
to foreign trade
and be employed in exporting,
to foreign countries,
such parts of the rude
and manufactured produce
of its own country,
as exceeded
the demand
of the home market.
In the exportation
of the produce
of their own country,
the merchants
of a landed nation
would have an advantage
of the same kind over those
of mercantile nations,
which its artificers
and manufacturers
had over the artificers
and manufacturers
of such nations;
the advantage
of finding at home
that cargo,
and those stores and provisions,
which
the others
were obliged to seek for
at a distance.
With inferior art and skill
in navigation,
therefore,
they
would be able
to sell
that cargo as cheap
in foreign markets
as
the merchants of such mercantile
nations;
and with equal art and skill
they would be
able to sell it cheaper.
They
would soon,
therefore,
rival those mercantile nations
in this branch
of foreign trade,
and, in due time,
would
justle them
out of it altogether.
According to this liberal
and generous system,
therefore,
the most advantageous method
in which
a landed nation
can raise up artificers,
manufacturers,
and merchants of its own,
is to grant
the most perfect freedom
of trade to the artificers,
manufacturers,
and merchants
of all other nations.
It thereby raises the value
of the surplus produce
of its own land,
of which
the continual increase gradually
establishes a fund,
which,
in due time,
necessarily raises
up all the artificers,
manufacturers,
and merchants,
whom it has
occasion for.
When a landed nation
on the contrary,
oppresses,
either by high duties or
by prohibitions,
the trade of foreign nations,
it necessarily hurts
its own interest in
two different ways.
First,
by raising the price
of all foreign goods,
and of all sorts of
manufactures,
it necessarily sinks
the real value
of the surplus produce
of its own land,
with which,
or,
what comes to the same thing,
with the price of which,
it purchases those
foreign goods
and manufactures.
Secondly,
by giving a sort
of monopoly
of the home market
to its own merchants,
artificers,
and manufacturers,
it raises the rate
of mercantile
and manufacturing profit,
in proportion to
that of agricultural profit;
and, consequently,
either draws from agriculture
a part of the capital
which had before been
employed in it,
or hinders
from going
to it a part of what
would otherwise have gone
to it.
This policy,
therefore,
discourages
agriculture
in two different ways;
first,
by sinking
the real value
of its produce,
and thereby lowering
the rate of its profits;
and, secondly,
by raising the rate
of profit
in all other employments.
Agriculture
is rendered less advantageous,
and trade
and manufactures
more advantageous,
than they
otherwise would be;
and every man
is tempted
by his own interest
to turn,
as much as he can,
both his capital
and his industry
from the former
to the latter employments.
Though,
by this oppressive policy,
a landed nation
should be able
to raise up artificers,
manufacturers,
and merchants of its own,
somewhat sooner than it
could do by the freedom
of trade;
a matter,
however,
which is not
a little doubtful;
yet it would raise them up,
if one
may say so,
prematurely,
and before it
was perfectly ripe
for them.
By raising up too hastily
one species of industry,
it would depress
another more
valuable species of industry.
By raising up too hastily
a species of industry
which duly replaces the stock
which employs it,
together
with the ordinary profit,
it would depress a species
of industry which,
over and above replacing
that stock,
with its profit,
affords likewise
a neat produce,
a free rent to the landlord.
It would depress
productive labour,
by encouraging too hastily
that labour
which is altogether barren
and unproductive.
In what manner,
according to this system,
the sum total
of the annual produce
of the land
is distributed
among the three classes
above mentioned,
and in what manner
the labour
of the unproductive class
does no
more than
replace the value
of its own consumption,
without increasing
in any respect the value
of that sum total,
is represented by Mr Quesnai,
the very ingenious
and profound
author of this system,
in some arithmetical formularies.
The first
of these formularies,
which,
by way of eminence,
he peculiarly distinguishes
by the name
of the Economical Table,
represents
the manner
in which he
supposes this distribution
takes place,
in a state
of the most perfect liberty,
and, therefore,
of the highest prosperity;
in a state
where the annual produce
is such as
to afford
the greatest possible
neat produce,
and where
each class
enjoys its proper share
of the whole annual produce.
Some subsequent formularies
represent
the manner
in which he
supposes this
distribution
is made in different states
of restraint and regulation;
in which,
either the class
of proprietors,
or the barren
and unproductive class,
is more
favoured
than the class of cultivators;
and in which either
the one or the other
encroaches,
more or less,
upon the share
which ought properly
to belong
to this productive class.
Every such encroachment,
every violation of
that natural distribution,
which
the most perfect liberty
would establish,
must,
according to this system,
necessarily
degrade,
more or less,
from one year to another,
the value
and sum total
of the annual produce,
and must necessarily occasion
a gradual
declension
in the real wealth
and revenue
of the society;
a declension,
of which the progress
must be quicker or slower,
according to the degree
of this encroachment,
according as
that natural distribution,
which
the most perfect liberty
would establish,
is more or less violated.
Those subsequent formularies
represent
the different degrees
of declension which,
according to this system,
correspond
to the different degrees in which this
natural distribution
of things
is violated.
Some speculative physicians
seem
to have imagined
that the health
of the human body
could be preserved only
by a certain precise regimen
of diet and exercise,
of which every,
the smallest violation,
necessarily
occasioned some degree
of disease or disorder
proportionate
to the degree
of the violation.
Experience,
however,
would seem
to shew,
that
the human body
frequently preserves,
to all appearance at least,
the most perfect state
of health
under a vast variety
of different regimens;
even under some which
are generally believed
to be very far
from being perfectly wholesome.
But the healthful state
of the human body,
it would seem,
contains in itself
some unknown principle
of preservation,
capable either
of preventing
or of correcting,
in many respects,
the bad
effects even
of a very faulty regimen.
Mr Quesnai,
who was himself a physician,
and a very speculative physician,
seems
to have entertained a notion
of the same kind concerning
the political body,
and to have imagined that
it would thrive and
prosper only
under a certain precise regimen,
the exact regimen
of perfect liberty
and perfect justice.
He seems not
to have considered,
that in the political body,
the natural effort which every man
is continually making
to better his own condition,
is a principle
of preservation capable of
preventing and correcting,
in many respects,
the bad effects
of a political economy,
in some degree both partial
and oppressive.
Such a political economy,
though it no doubt
retards more or less,
is not always capable
of stopping altogether,
the natural progress
of a nation
towards wealth and prosperity,
and still less of making
it go backwards.
If a nation
could not prosper
without the enjoyment
of perfect liberty
and perfect justice,
there
is not in the world
a nation
which
could ever have prospered.
In the political body,
however,
the wisdom of nature
has fortunately made
ample provision
for remedying many
of the bad effects
of the folly and injustice
of man;
it the same manner
as it
has done in the natural body,
for remedying those
of his sloth and intemperance.
The capital error
of this system,
however,
seems
to lie in its representing
the class of artificers,
manufacturers,
and merchants,
as altogether barren
and unproductive.
The following observations
may serve
to shew the impropriety
of this representation:
First,
this class,
it is acknowledged,
reproduces annually
the value
of its own annual consmnption,
and continues,
at least,
the existence
of the stock or capital
which maintains
and employs it.
But,
upon this account alone,
the denomination
of barren or unproductive
should seem
to be very improperly applied
to it.
We should not call
a marriage barren
or unproductive,
though it produced only
a son and a daughter,
to replace the father
and mother,
and though it
did not increase the number
of the human species,
but only continued
it as it
was before.
Farmers and country labourers,
indeed,
over and above
the stock
which maintains
and employs them,
reproduce annually
a neat produce,
a free rent to the landlord.
As a marriage
which affords three children
is certainly more productive
than one
which affords only two,
so the labour
of farmers and country
labourers
is certainly more productive
than
that of merchants,
artificers,
and manufacturers.
The superior produce
of the one class,
however,
does not,
render the other barren
or unproductive.
Secondly,
it seems,
on this account,
altogether improper
to consider artificers,
manufacturers,
and merchants,
in the same light as
menial servants.
The labour
of menial
servants
does not continue
the existence of the fund
which maintains
and employs them.
Their maintenance
and employment
is altogether
at the expense
of their masters,
and the work which
they perform
is not of a nature
to repay that expense.
That work
consists in services which
perish generally
in the very instant
of their performance,
and does not fix
or realize itself
in any vendible commodity,
which can replace the value
of their wages
and maintenance.
The labour,
on the contrary,
of artificers,
manufacturers,
and merchants,
naturally
does fix
and realize itself
in some such vendible commodity.
It is upon this account that,
in the chapter
in which
I treat
of productive
and unproductive labour,
I have classed artificers,
manufacturers,
and merchants
among the productive labourers,
and menial servants
among the
barren or unproductive.
Thirdly,
it seems,
upon every supposition,
improper
to say,
that the labour of artificers,
manufacturers,
and merchants,
does not increase
the real revenue
of the society.
Though we should suppose,
for example,
as it seems to be supposed
in this system,
that the value of the daily,
monthly,
and yearly consumption
of this class
was exactly equal to
that of its daily,
monthly,
and yearly production;
yet it would not from
thence follow,
that its labour
added nothing
to the real revenue,
to the real value
of the annual produce
of the land
and labour of the society.
An artificer,
for example,
who,
in the first six months
after harvest,
executes
ten pounds worth of work,
though he should,
in the same time,
consume
ten pounds worth
of corn and other necessaries,
yet really adds the value
of ten pounds
to the annual produce
of the land
and labour of the society.
While he
has been consuming
a half-yearly revenue
of ten pounds worth
of corn and other necessaries,
he has produced
an equal value
of work,
capable
of purchasing,
either to himself,
or to some other person,
an equal half-yearly revenue.
The value,
therefore,
of
what
has been consumed
and produced
during these six months,
is equal,
not to ten,
but to twenty pounds.
It is possible,
indeed,
that
no more than ten pounds worth
of this value
may ever have existed
at any one moment
of time.
But if the ten pounds worth
of corn and other
necessaries
which were consumed
by the artificer,
had been consumed
by a soldier,
or by a menial servant,
the value
of that part
of the annual produce
which existed
at the end
of the six months,
would have been
ten pounds less than
it actually is
in consequence
of the labour
of the artificer.
Though the value of what
the artificer produces,
therefore,
should not,
at any one moment
of time,
be supposed greater than
the value he consumes,
yet,
at every moment of time,
the actually existing value
of goods
in the market is,
in consequence of what he
produces,
greater than it
otherwise would be.
When the patrons of this
system
assert,
that the consumption
of artificers,
manufacturer's,
and merchants,
is equal to
the value of what they
produce,
they probably mean no
more than
that their revenue,
or the fund
destined
for their consumption,
is equal to it.
But if they
had expressed themselves
more accurately,
and only asserted,
that the revenue
of this class
was equal to
the value of what they
produced,
it might readily have occurred
to the reader,
that
what
would naturally be saved
out of this revenue,
must necessarily increase more
or
less the real wealth
of the society.
In order,
therefore,
to make
out something
like an argument,
it was necessary
that
they
should express themselves
as they
have done;
and this argument,
even supposing things
actually were as it seems
to presume them to be,
turns out
to be
a very inconclusive one.
Fourthly,
farmers and country
labourers can no more
augment,
without parsimony,
the real revenue,
the annual produce
of the land
and labour of their society,
than artificers,
manufacturers,
and merchants.
The annual produce
of the land
and labour of any society
can be augmented only
in two ways;
either,
first,
by some improvement
in the productive powers
of the useful labour
actually maintained within it;
or, secondly,
by some increase
in the quantity
of that labour.
The improvement
in the productive powers
of useful labour
depends,
first,
upon the improvement
in the ability
of the workman;
and, secondly,
upon that of the machinery
with which he works.
But the labour
of artificers and manufacturers,
as it
is capable
of being more subdivided,
and the labour
of each workman
reduced
to a greater simplicity
of operation,
than that
of farmers and country labourers;
so it
is likewise capable
of both these sorts
of improvement
in a much higher degree
(See book i c.1.)
In this respect,
therefore,
the class of cultivators
can have no sort
of advantage over
that
of artificers and manufacturers.
The increase
in the quantity
of useful labour
actually
employed within any society
must depend altogether
upon the increase
of the capital
which employs it;
and the increase of
that capital,
again,
must be exactly
equal to the amount
of the savings
from the revenue,
either
of the particular persons
who manage
and direct the employment of
that capital,
or of some other persons,
who lend it to them.
If merchants,
artificers,
and manufacturers are,
as this system
seems to suppose,
naturally more
inclined
to parsimony and saving
than proprietors and cultivators,
they are,
so far,
more likely to augment
the quantity
of useful labour
employed within their society,
and
consequently to increase
its real revenue,
the annual produce
of its land
and labour.
Fifthly and lastly,
though the revenue
of the inhabitants
of every country
was supposed
to consist altogether,
as this system
seems to suppose,
in the quantity
of subsistence which
their industry
could procure to them;
yet,
even upon this supposition,
the revenue of a
trading and manufacturing
country must,
other things
being equal,
always
be much greater than
that of one without trade
or manufactures.
By means of trade
and manufactures,
a greater
quantity of subsistence
can be annually imported
into a particular country,
than what its own lands,
in the actual state
of their cultivation,
could afford.
The inhabitants of a town,
though they
frequently possess no lands
of their own,
yet draw to themselves,
by their industry,
such a quantity
of the rude produce
of the lands
of other people,
as supplies them,
not only with the materials
of their work,
but with the fund
of their subsistence.
What
a town
always is with regard to
the country
in its neighbourhood,
one independent state
or country
may frequently be
with regard to
other independent states
or countries.
It is thus
that Holland
draws a great part
of its subsistence
from other countries;
live cattle
from Holstein and Jutland,
and corn
from almost
all the different countries
of Europe.
A small quantity
of manufactured
produce,
purchases
a great quantity
of rude produce.
A trading
and manufacturing country,
therefore,
naturally purchases,
with a small part
of its manufactured produce,
a great part
of the rude produce
of other countries;
while,
on the contrary,
a country without trade
and manufactures
is generally obliged
to purchase,
at the expense
of a great part
of its rude produce,
a very small part
of the manufactured produce
of other countries.
The one exports
what can subsist
and accommodate
but a very few,
and imports the subsistence
and accommodation
of a great number.
The other
exports the accommodation
and subsistence
of a great number,
and imports
that of a very few only.
The inhabitants of the one
must always enjoy
a much greater quantity
of subsistence
than what their own lands,
in the actual state
of their cultivation,
could afford.
The inhabitants of the other
must always enjoy
a much smaller quantity.
This system,
however,
with all its imperfections,
is perhaps
the nearest approximation
to the truth
that has yet been
published
upon the subject
of political economy;
and is upon that account,
well
worth
the consideration of every man
who wishes
to examine with attention
the principles of
that very important science.
Though in representing
the labour
which is employed
upon land
as the only productive labour,
the notions which
it inculcates are,
perhaps,
too
narrow and confined;
yet in representing the wealth
of nations
as consisting,
not in the unconsumable riches
of money,
but in the consumable goods
annually reproduced
by the labour
of the society,
and in representing
perfect liberty
as
the only effectual expedient
for rendering
this
annual reproduction
the greatest possible,
its doctrine
seems to be
in every respect as just
as it
is generous and liberal.
Its followers
are very numerous;
and as men are fond
of paradoxes,
and of appearing
to understand
what surpasses
the comprehensions
of ordinary people,
the paradox which
it maintains,
concerning the unproductive nature
of manufacturing labour,
has not,
perhaps,
contributed
a little
to increase the number
of its admirers.
They have
for some years
past made
a pretty considerable sect,
distinguished
in the French republic
of letters
by the name
of the Economists.
Their works
have certainly been
of some service
to their country;
not only by bringing
into general discussion,
many subjects
which had never been well
examined before,
but by influencing,
in some measure,
the public administration
in favour of agriculture.
It has been in consequence
of their representations,
accordingly,
that the agriculture of France
has been delivered
from several
of the oppressions which it
before laboured under.
The term,
during which such
a lease can be granted,
as will be valid
against every future purchaser
or proprietor
of the land,
has been prolonged from nine
to twenty-seven years.
The ancient
provincial restraints
upon the transportation
of corn
from one province
of the kingdom to another,
have been entirely taken away;
and the liberty
of exporting it
to all foreign countries,
has been established
as the common law
of the
kingdom
in all ordinary cases.
This sect,
in their works,
which are very numerous,
and
which treat not only of what
is properly called
Political Economy,
or of the nature
and causes or
the wealth of nations,
but of every
other branch of the system
of civil government,
all follow implicitly,
and without any
sensible variation,
the doctrine of Mr. Qttesnai.
There is,
upon this account,
little variety
in the greater part
of their works.
The most distinct
and best connected account
of this doctrine
is to be found
in a little book
written
by Mr. Mercier de la Riviere,
some time intendant
of Martinico,
entitled,
The natural
and essential Order
of Political Societies.
The admiration
of this whole sect
for their master,
who was himself a man
of the greatest modesty
and simplicity,
is not inferior to
that of any
of the ancient philosophers
for the founders
of their respective systems.
'There
have been
since the world began,'
says
a very diligent
and respectable author,
the Marquis de Mirabeau,
'three great inventions which
have principally given stability
to political societies,
independent
of many other inventions which
have enriched
and adorned them.
The first
is the invention of writing,
which alone
gives human nature the power
of transmitting,
without alteration,
its laws,
its contracts,
its annals,
and its discoveries.
The second
is the invention of money,
which binds
together all the relations
between civilized societies.
The third
is the economical table,
the result of the other two,
which completes them both
by perfecting their object;
the great discovery
of our age,
but of which
our posterity
will reap the benefit.'
As the political economy
of the nations of modern
Europe has been
more favourable to
manufactures
and foreign trade,
the industry of the towns,
than to agriculture,
the industry of the country;
so that
of other
nations
has followed a different plan,
and has been more favourable
to agriculture than to
manufactures
and foreign trade.
The policy
of China favours
agriculture more than all
other employments.
In China,
the condition of a labourer
is said
to be as much superior to
that of an artificer,
as in most parts of Europe
that of an artificer
is to that of a labourer.
In China,
the great ambition
of every man
is to get possession
of a little bit
of land,
either in property
or in lease;
and leases are there said
to be granted
upon very moderate terms,
and to be sufficiently secured
to the lessees.
The Chinese
have little respect
for foreign trade.
Your beggarly commerce!
was the language
in which the mandarins
of Pekin used
to talk to Mr. De Lange,
the Russian envoy,
concerning it
(See
the Journal of Mr. De Lange,
in Bell's Travels,
vol. ii. p. 258, 276,
293.).
Except with Japan,
the Chinese
carry on,
themselves,
and in their own bottoms,
little or no foreign trade;
and it
is only
into one or two ports
of their kingdom
that
they even admit the ships
of foreign nations.
Foreign trade,
therefore,
is, in China,
every way confined
within a much narrower circle
than
that
to which it
would naturally extend itself,
if more freedom
was allowed to it,
either in their own ships,
or in those
of foreign nations.
Manufactures,
as in a small bulk
they frequently contain
a great value,
and can upon that account
be transported
at less expense
from one country to another
than most parts
of rude produce,
are, in almost all countries,
the principal support
of foreign trade.
In countries,
besides,
less extensive,
and less favourably
circumstanced
for inferior commerce
than China,
they generally require
the support
of foreign trade.
Without an extensive foreign
market,
they could not well flourish,
either
in countries
so moderately extensive
as to afford
but a narrow home market,
or in countries
where the communication
between one province and
another
was so difficult,
as to render it impossible
for the goods
of any particular place
to enjoy
the whole
of that home market which
the country could afford.
The perfection
of manufacturing industry,
it must be remembered,
depends altogether
upon the division
of labour;
and the degree
to which
the division of labour
can be introduced
into any manufacture,
is necessarily regulated,
it has already been shewn,
by the extent of the market.
But the great extent
of the empire of China,
the vast multitude
of its inhabitants,
the variety of climate,
and consequently of productions
in its different provinces,
and the easy communication
by means
of water-carriage
between the greater part
of them,
render the home market of
that country
of so great extent,
as to be alone sufficient
to support very great
manufactures,
and to admit
of very considerable subdivisions
of labour.
The home market of China is,
perhaps,
in extent,
not much inferior
to the market
of all
the different countries
of Europe
put together.
A more extensive foreign trade,
however,
which
to this great home market
added the foreign market
of all
the rest of the world,
especially
if any considerable part
of this trade
was carried on
in Chinese ships,
could scarce
fail to increase very much
the manufactures of China,
and to improve very much
the productive powers
of its manufacturing industry.
By a more extensive navigation,
the Chinese
would naturally learn the art
of
using and constructing,
themselves,
all
the different machines made use of
in other countries,
as well as
the other improvements
of art and industry
which are practised in all
the different parts
of the world.
Upon their present plan,
they have little opportunity
of improving themselves
by the example
of any other nation,
except that
of the Japanese.
The policy
of ancient Egypt, too,
and that
of the Gentoo government
of Indostan,
seem to have favoured
agriculture more than all
other employments.
Both in ancient Egypt and Indostan,
the whole body of the people
was divided
into different casts
or tribes each
of which
was confined,
from father to son,
to a particular employment,
or class of employments.
The son of a priest
was necessarily a priest;
the son of a soldier,
a soldier;
the son of a labourer,
a labourer;
the son of a weaver,
a weaver;
the son of a tailor,
a tailor,.etc.
In both countries,
the cast
of the priests holds
the highest rank,
and that
of the soldiers the next;
and in both countries
the cast of the farmers and
labourers
was superior to the casts
of merchants and manufacturers.
The government of both
countries
was particularly attentive
to the interest
of agriculture.
The works
constructed
by the ancient sovereigns
of Egypt,
for the proper distribution
of the waters
of the Nile,
were famous in antiquity,
and the ruined remains
of some of them
are still the admiration
of travellers.
Those of the same kind which
were constructed
by the ancient sovereigns
of Indostan,
for the proper distribution
of the waters
of the Ganges,
as
well as of many other rivers,
though they
have been less celebrated,
seem to have been equally
great.
Both countries,
accordingly,
though subject occasionally
to dearths,
have been famous
for their great fertility.
Though both
were extremely populous,
yet,
in years of moderate plenty,
they
were both able
to export great quantities
of grain
to their neighbours.
The ancient Egyptians
had a superstitious aversion
to the sea;
and as the Gentoo religion
does not permit
its followers
to light a fire,
nor consequently
to dress any victuals,
upon the water,
it,
in effect,
prohibits them
from all distant sea voyages.
Both
the Egyptians and Indians
must have depended almost
altogether upon the navigation
of other nations
for the exportation
of their surplus produce;
and this dependency,
as it
must have confined the market,
so it
must have discouraged
the increase
of this
surplus produce.
It must have discouraged, too,
the increase
of the manufactured produce,
more than
that of the rude produce.
Manufactures
require
a much more extensive market
than the most important parts
of the rude produce
of the land.
A single shoemaker
will make more than 300 pairs
of shoes
in the year;
and his own
family will not,
perhaps,
wear out six pairs.
Unless,
therefore,
he has the custom of,
at least,
50 such families as his own,
he cannot dispose
of the whole product
of his own labour.
The most numerous class
of artificers
will seldom,
in a large country,
make more than one in 50,
or one in a 100,
of the whole number
of families contained in it.
But in such large countries,
as France and England,
the number
of people employed
in agriculture has,
by some authors
been computed at a half,
by others
at a third and by no
author that I know of,
at less that a fifth
of the whole inhabitants
of the country.
But as the produce
of the agriculture
of both France
and England is,
the far greater part of it,
consumed at home,
each person
employed in it must,
according to
these computations,
require little more than
the custom of one,
two,
or, at most,
of four such families
as his own,
in order to
dispose
of the whole produce
of his own labour.
Agriculture,
therefore,
can support itself
under the discouragement
of a confined market much better
than
manufactures.
In both ancient Egypt
and Indostan,
indeed,
the confinement
of the foreign market
was in some measure
compensated
by the conveniency
of many inland navigations,
which opened,
in the most advantageous manner,
the whole extent
of the home market
to every part
of the produce
of every different district
of those countries.
The great extent
of Indostan, too,
rendered the home market of
that country very great,
and sufficient
to support a great variety of
manufactures.
But
the small extent of ancient Egypt,
which was never
equal to England,
must at all times,
have rendered the home market
of
that country
too narrow
for supporting any great variety
of
manufactures.
Bengal accordingly,
the province of Indostan
which commonly exports
the greatest quantity
of rice,
has always been more remarkable
for the exportation
of a great variety of
manufactures,
than for that of its grain.
Ancient Egypt,
on the contrary,
though it exported some
manufactures,
fine linen in particular,
as well as some other goods,
was always most distinguished
for its great exportation
of grain.
It was long
the granary
of the Roman empire.
The sovereigns of China,
of ancient Egypt,
and of the different kingdoms
into which
Indostan has,
at different times,
been divided,
have always derived the whole,
or by far
the most considerable part,
of their revenue,
from some sort of land tax
or land rent.
This land tax,
or land rent,
like the tithe in Europe,
consisted
in a certain proportion,
a fifth,
it is said,
of the produce
of the land,
which was either
delivered in kind,
or paid in money,
according to
a certain valuation,
and which,
therefore,
varied from year to year,
according to all
the variations
of the produce.
It was natural,
therefore,
that
the sovereigns
of those countries
should be particularly attentive
to the interests
of agriculture,
upon the prosperity
or declension
of which
immediately depended
the yearly increase or diminution
of their own revenue.
The policy
of the ancient republics
of Greece,
and that
of Rome,
though it honoured agriculture
more than
manufactures or foreign trade,
yet seems rather
to have discouraged
the latter employments,
than
to have given
any direct
or intentional encouragement
to the former.
In several
of the ancient states
of Greece,
foreign trade
was prohibited altogether;
and in several others,
the employments
of artificers and manufacturers
were considered as hurtful
to the strength and agility
of the human body,
as rendering it incapable
of those habits which
their military
and gymnastic exercises
endeavoured
to form in it,
and
as thereby disqualifying it,
more or less,
for undergoing
the fatigues and encountering
the dangers of war.
Such occupations
were considered as fit only
for slaves,
and the free
citizens of the states
were prohibited
from exercising them.
Even in those states
where
no such prohibition
took place,
as in Rome and Athens,
the great body of the people
were in effect
excluded from all
the trades
which
are now commonly exercised
by the lower sort
of the inhabitants of towns.
Such trades were,
at Athens and Rome,
all occupied
by the slaves
of the rich,
who exercised them
for the benefit
of their masters,
whose wealth,
power,
and protection,
made it almost impossible
for a poor freeman
to find a market
for his work,
when it
came into competition with
that of the slaves
of the rich.
Slaves,
however,
are very seldom inventive;
and all
the most important improvements,
either in machinery,
or in the arrangement
and distribution
of work,
which
facilitate and abridge labour
have been the discoveries
of freemen.
Should a slave
propose any improvement
of this kind,
his master
would be very apt
to consider
the proposal
as the suggestion of laziness,
and of a desire
to save his own labour
at the master's expense.
The poor slave,
instead of reward
would probably meet
with much abuse,
perhaps with some punishment.
In the manufactures carried on
by slaves,
therefore,
more
labour
must generally have been employed
to execute the same quantity
of work,
than in those
carried on by freemen.
The work of the farmer must,
upon that account,
generally
have been dearer than
that of the latter.
The Hungarian mines,
it is remarked
by Mr. Montesquieu,
though not richer,
have always been
wrought with less expense,
and therefore
with more profit,
than the Turkish mines
in their neighbourhood.
The Turkish
mines are wrought by slaves;
and the arms of those slaves
are the only machines which
the Turks
have ever thought of employing.
The Hungarian
mines are wrought by freemen,
who employ a great deal
of machinery,
by which they
facilitate and abridge
their own labour.
From the very little
that is known
about the price of
manufactures
in the times
of the Greeks and Romans,
it would appear
that
those of the finer sort
were excessively dear.
Silk
sold for its weight in gold.
It was not,
indeed,
in those times
an European manufacture;
and as it
was all brought
from the East Indies,
the distance of the carriage
may in some measure account
for the greatness
of the price.
The price,
however,
which a lady,
it is said,
would sometimes pay
for a piece
of very fine linen,
seems
to have been equally extravagant;
and
as linen
was always either an European,
or at farthest,
an Egyptian manufacture,
this high price
can be accounted for
only by the great expense
of the labour
which must have been employed
about It,
and the expense
of this labour
again could arise from nothing
but the awkwardness
of the machinery
which is made use of.
The price
of fine woollens, too,
though not
quite so extravagant,
seems,
however,
to have been much above
that of the present times.
Some cloths,
we are told by Pliny
(Plin. 1. ix.c.39.),
dyed in a particular manner,
cost a hundred denarii,
or £3:6s:8d
the pound weight. Others,
dyed in another manner,
cost
a thousand denarii the pound weight,
or £33:6s:8d.
The Roman pound,
it must be remembered,
contained only twelve
of our avoirdupois ounces.
This high price,
indeed,
seems
to have been principally owing
to the dye.
But had not the cloths
themselves
been much dearer
than any which
are made
in the present times,
so very expensive
a dye
would not probably have been bestowed
upon them.
The disproportion
would have been too great
between the value
of the accessory and
that of the principal.
The price mentioned
by the same author
(Plin. 1. viii.c.48.),
of some triclinaria,
a sort of woollen pillows
or cushions made use of
to lean upon
as they
reclined
upon their couches at table,
passes all credibility;
some of them
being said
to have cost
more than £30,000,
others more than £300,000.
This high price, too,
is not said
to have arisen from the dye.
In the dress
of the people
of fashion of both sexes,
there
seems
to have been
much less variety,
it is observed
by Dr. Arbuthnot,
in ancient
than in modern times;
and
the very little variety which
we find in
that of the ancient statues,
confirms his observation.
He infers from this,
that their dress must,
upon the whole,
have been cheaper than ours;
but the conclusion
does not seem
to follow.
When the expense
of fashionable dress
is very great,
the variety
must be very small.
But when,
by the improvements
in the productive powers
of manufacturing art
and industry,
the expense of any
one dress
comes to be very moderate,
the variety
will naturally be very great.
The rich,
not being
able to distinguish themselves
by the expense
of any one dress,
will naturally endeavour
to do so
by the multitude and variety
of their dresses.
The greatest
and most important branch
of the commerce
of every nation,
it has already been observed,
is that
which is carried on
between the inhabitants
of the town and those
of the country.
The inhabitants
of the town draw
from the country
the rude produce,
which constitutes both
the materials
of their work and
the fund of their subsistence;
and they
pay for this rude produce,
by sending back
to the country
a certain portion of it
manufactured
and prepared
for immediate use.
The trade
which is carried on
between these
two different sets of people,
consists ultimately
in a certain quantity
of rude produce
exchanged
for a certain quantity
of manufactured produce.
The dearer the latter,
therefore,
the cheaper the former;
and whatever
tends in any country
to raise
the price
of manufactured produce,
tends to lower
that of the rude produce
of the land,
and
thereby to discourage
agriculture.
The smaller
the quantity of manufactured
produce,
which any given quantity
of rude produce,
or,
what comes to the same thing,
which the price
of any given quantity
of rude produce,
is capable of purchasing,
the smaller
the exchangeable value of
that given quantity
of rude produce;
the smaller
the encouragement which either
the landlord
has to increase its quantity
by improving,
or the farmer
by cultivating the land.
Whatever,
besides,
tends to diminish
in any country
the number
of artificers and manufacturers,
tends
to diminish the home market,
the most important
of all markets,
for the rude produce
of the land,
and thereby still further
to discourage agriculture.
Those systems,
therefore,
which preferring agriculture
to all other employments,
in order to
promote it,
impose restraints upon
manufactures
and foreign trade,
act contrary
to the very end which
they propose,
and indirectly discourage
that very species
of industry which
they mean to promote.
They
are so far,
perhaps,
more inconsistent
than even
the mercantile system.
That system,
by encouraging
manufactures
and
foreign trade
more than agriculture,
turns a certain portion
of the capital
of the society,
from supporting
a more advantageous,
to support
a less
advantageous species
of industry.
But still it really,
and in the end,
encourages that species
of industry which
it means to promote.
Those agricultural systems,
on the contrary,
really,
and in the end,
discourage
their own favourite species
of industry.
It is thus that
every system
which endeavours,
either,
by extraordinary encouragements
to draw
towards a particular species
of industry a greater share
of the capital
of the society
than
what
would naturally go to it,
or, by extraordinary restraints,
to force
from a particular species
of industry
some share of the capital
which
would otherwise be employed
in it,
is, in reality,
subversive
of the great purpose which
it means to promote.
It retards,
instead of accelerating
the progress
of the
society towards real wealth
and greatness;
and diminishes,
instead of increasing,
the real value
of the annual produce
of its land
and labour.
All systems,
either
of preference or of restraint,
therefore,
being thus
completely taken away,
the obvious and simple system
of natural liberty
establishes itself
of its own accord.
Every man,
as long
as he
does not violate the laws
of justice,
is left perfectly
free
to pursue his own interest
his own way,
and to bring
both his industry
and capital
into competition
with those
of any other man,
or order of men.
The sovereign
is completely discharged
from a duty,
in
the attempting to perform which
he must always be exposed
to innumerable delusions,
and for the proper performance
of which,
no human wisdom or knowledge
could ever be sufficient;
the duty
of superintending
the industry
of private people,
and of directing it
towards the
employments most suitable
to the interests
of the society.
According to
the system of natural liberty,
the sovereign
has only
three duties to attend to;
three duties of great importance,
indeed,
but plain and intelligible
to common
understandings:
first,
the duty
of protecting
the society
from the violence and invasion
of other independent societies;
secondly,
the duty
of protecting,
as far as possible,
every member
of the society
from the injustice or oppression
of every other member
of it,
or the duty
of establishing
an exact administration
of justice;
and, thirdly,
the duty
of erecting
and maintaining
certain public works,
and certain public institutions,
which
it can never be
for the interest
of any individual,
or small number
of individuals to erect
and maintain;
because
the profit
could never repay the expense
to any individual,
or small number
of individuals,
though it
may frequently do much more
than
repay it
to a great society.
The proper performance
of those several duties
of the sovereign
necessarily supposes
a certain expense;
and this expense again
necessarily requires
a certain revenue
to support it.
In the following book,
therefore,
I shall endeavour
to explain,
first,
what are
the necessary expenses
of the sovereign
or commonwealth;
and which of those expenses
ought to be defrayed
by the general contribution
of the whole society;
and which of them,
by that
of some particular part only,
or of some particular members
of the society:
secondly,
what are the different methods
in which the whole society
may be made
to contribute towards defraying
the expenses
incumbent on
the whole society;
and what
are the principal advantages
and inconveniencies
of each
of those methods:
and thirdly,
what are the reasons
and causes which
have induced almost
all modern governments
to mortgage some part
of this revenue,
or to contract debts;
and what
have been the effects
of those debts
upon the real wealth,
the annual produce
of the land
and labour of the society.
The following book,
therefore,
will naturally be divided
into three chapters.