 Chapter 7, Part G of the Wealth of Nations, Book 4. It is thus that the private interests and passions of individuals naturally disposed 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 disposed 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 affected 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 endeavors 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 endeavored 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. Countries 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 produce 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 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 roundabout 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 toward 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 for both the manufacturers 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 dear, 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 labor at home, where productive labor 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 anything 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 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, then to import them itself directly from the East Indies. What it might lose by the high price of those goods could sell them 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 defenseless 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 hotentots 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 unfavorable, and 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 Goa on 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 are 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 between the most frequented road from Indostan to China and Japan, and is nearly about midway 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 center 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 Tongguan, Malacca, Cochin China, and the island of Celebs 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 shown itself most distinctly. In the Spice Islands, the Dutch are set 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 the savage policy has now, it has said, almost completely extirpated. Even in the islands where they have settlements, they have very much reduced, it has 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 imagined 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 Malucas 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 of a factory, to order a peasant to plow up a rich field of poppies and sow it with rice or some other grain. The pretense 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 had 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 plowed 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 favor 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 labor, 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 Bingle, 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 another, 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 endeavor 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 Maluchas. 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 them 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 overalls 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 forever 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, upon pretense 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 endeavor to establish the same monopoly in favor 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, endeavor 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 the foreign trade. The monopoly of the company contend 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 rigorous 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 are capable of understanding it, is the same with that of the country, 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 anything 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 clamored 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 honor 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. End of Book 4, Chapter 7, Part G. Chapter 8, Part A, of the Wealth of Nations, Book 4. This is a LibriVox recording. All LibriVox recordings are in the public domain. For more information or to volunteer, please visit LibriVox.org. Recording by Stephen Escalera. The Wealth of Nations by Adam Smith. Book 4, Chapter 8, Part A. 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 manufacturers 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 manufacturers. To give any particular encouragement to the importation of such instruments would interfere too much with the interest of those manufacturers. 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 prized goods, was prohibited by the third 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 dying 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 evidity 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 of George II Chapter 46 a small duty of only one pence the pound was imposed upon the importation of foreign brown linen yarn instead of much higher duties to which it had been subjected before namely of six pence the pound upon sail yarn of one shilling the pound upon all French and Dutch yarn and of two pound thirteen shillings four pence upon the hundred weight of all spruce or muscavia yarn but our manufacturers were not long satisfied with this reduction by the 29th of the same king Chapter 15 the same law which gave a bounty upon the exportation of British and Irish linen of which the price did not exceed 18 pence 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 flax stressors 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 labor 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 deer 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 endeavor to sell their own goods as deer 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 endeavor 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 endeavor 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 one pound the ton upon masting timber and that of six pounds 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 first of January 1741 and that upon masting timber at the end of the session of parliament immediately following the 24th of June 1781. The bounties upon the importation of tar, pitch, and turpentine underwent during their continuance several alterations. Originally that upon tar was four pound the ton. That upon pitch the same and that upon turpentine three pounds the ton. The bounty of four pounds 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 two pound for shilling the ton. The bounty upon pitch was likewise reduced to one pound and that upon turpentine to one pound ten shillings the ton. The second bounty upon the importation of any materials of manufacture according to the order of time was that granted by the 21st to George the second Chapter 13 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 six pence the pound. This bounty which like most others was granted only for a limited time was continued by several prolongations but was reduced to four pence the pound. It was allowed to expire with the end of the session of parliament which followed the 25th of 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 fourth of George the third Chapter 26 upon the importation of hemp or undressed flax from the British plantations. This bounty was granted for 21 years from the 24th of June 1764 to the 24th of June 1785. For the first seven years it was to be at the rate of eight pounds the ton for the second at six pounds the ton and for the third at four pounds the ton. 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 fifth of George the third Chapter 45 upon the importation of wood from America. It was granted for nine years from the first of January 1766 to the first of January 1775. During the first three years it was to be for every 120 good deals at the rate of one pound and for every load containing 50 cubic feet of other square timber at the rate of 12 shillings. For the second three years it was for deals to be at the rate of 15 shillings and for other squared timber at the rate of eight shillings. And for the third three years it was for deals to be at the rate of 10 shillings and for every other squared timber at the rate of five shillings. The fifth bounty of this kind was that granted by the ninth of George the third Chapter 38 upon the importation of raw silk from the British plantations. It was granted for 21 years from the first of January 1770 to the first of January 1791. For the first seven years it was to be at the rate of 25 pounds for every 100 pounds value. For the second at 20 pounds. And for the third at 15 pounds. The management of the silkworm and the preparation of silk requires so much hand labor and labor 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 the 11th of George the third Chapter 50 for the importation of pipe, hogs heads and barrel staves and leading from the British plantations. It was granted for nine years from the first of January 1772 to the first of January 1781. For the first three years it was for a certain quantity of each to be at the rate of six pounds for the second three years at four pounds and for the third three years at two pounds. The seventh and last bounty of this kind was that granted by the 19th of George the third Chapter 37 upon the importation of hemp from Ireland. It was granted in the same manner as that for the importation of hemp and undressed flags from America for 21 years from the 24th of June 1779 to the 24th of 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 flags. 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 humor 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 poor 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 woolen 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 woolen 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 cruelest of our revenue laws I will venture to affirm are mild and gentle in comparison to some of those which the clamor 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, Chapter 3 The exporter of sheep, lambs or rams, was for the first offense to forfeit all his goods forever, 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 offense to be a judged 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, Chapter 18 the exportation of wool was made felony and the exporter subjected to the same penalties and forfeitures as a felon. For the honor 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 Sergeant Hawkins seems to consider it as still in force. It may however perhaps be considered as virtually repealed by the 12th of Charles II Chapter 13, Section 3 which without expressly taken away the penalties imposed by former statutes imposes a new penalty namely that of 20 shillings 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, Chapter 28, Section 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, duff enact the same to be deemed felony by the severity of which penalty the prosecution of offenders have not been so effectually put in execution. Be it therefore enacted by the authority of foresaid that so much of the said act which relates to the making the said offense 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 three shillings 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 offense 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 offense 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 offense forfeits all his interest in the ship and furniture. The master and mariners knowing this offense 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 impacts of leather or patcloth 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 eight shillings for every pound weight to be paid by the owner or packer. It cannot be loaded on any horse or cart or carried by land within five miles of the coast but between sunrise and sunsetting 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 pounds if the wool is under the value of 10 pounds 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 10 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 15 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 sow by shall be sold by him to any other person within 15 miles of the sea. If any wool is found carrying towards the seaside in the said counties unless it has been entered and security given as a foresad it is forfeited and the offender also forfeits three shillings for every pound weight. If any person lay any wool not entered as a foresad within 15 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 ex-checker that if he is cast upon trial he shall pay trouble 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 carryeth 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 and force against the exportation of wool. This law however first of William the third chapter 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 10 days after shearing and before he removed the wool he do under his hand certified 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 coastways is to be landed at the particular port for which it is entered outwards and if any 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 three shillings for every pound weight is likewise incurred our woolen 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 woolen 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 woolen 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 end of book four chapter eight part a chapter eight part b of the wealth of nations book four this is a LibriVox recording all LibriVox recordings are in the public domain for more information or to volunteer please visit LibriVox.org recording by Steven Escalera The Wealth of Nations by Adam Smith book four chapter eight part b conclusion of the mercantile system 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 a 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 formally 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 carcass 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 butchers 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 carcass 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 butchers meat its effect however even in this way it is probable is not very considerable but though it's 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 recompense which the price of the fleece is likely to make for the labor 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 carcass is in some respect sufficient for that of the fleece not withstanding 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 is 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 attacks of five or even of 10 shillings upon the exportation of every Todd 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 10 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 attacks which could produce any considerable revenue to the sovereign and at the same time occasion so little in convenience to anybody the prohibition not withstanding 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 rigor of the law cannot prevent it this illegal exportation is advantageous to nobody but the smuggler illegal exportation subject to attacks 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 woolen manufacturers 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 Chapter 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 shoemakers not only against our grazers 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 112 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 manufacturers of leather may be exported duty-free and the exporter is besides entitled to the drawback of the whole duties of excise our grazers still continue subject to the old monopoly grazers 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 grazers 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 wool and yarn and worsted are prohibited to be exported under the same penalties as wool even white cloths are 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 clockmakers and watchmakers 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 accepted 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 fifth of William and Mary Chapter 17 exempted from this prohibition iron copper and mondic metal made from British ore the exportation of all sorts of copper bars foreign as well as British was afterwards permitted by the ninth and tenth of William III Chapter 26 the exportation of unmanufactured brass of what is called gunmetal bell metal and shroff metal still continues to be prohibited brass manufacturers 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 eighth of George I Chapter 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 accepted alum lead lead ore tin tanned leather copperous coals wool cards white woollen cloths lapis calaminaris skins of all sorts glue coni hair or wool hairs wool hair of all sorts horses and lethargy of lead if you accept horses all these are either materials of manufacture or incomplete manufacturers 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 percent 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 seniga or gum arabic being among the enumerated dying drugs might be imported duty free they were subjected indeed to a small poundage duty amounting only to three pence 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 neighborhood 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 of George II therefore gum seniga 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 the species of trade so contrary to the general principles of the mercantile policy of England it imposed a duty of 10 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 manufacturers as soon as the peace was made endeavored to avail themselves of this advantage and to establish a monopoly in their own favor both against the growers and against the importers of this commodity by the 5th of George III therefore chapter 37 the exportation of gum seniga 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 West Indies its importation indeed was subjected to a small duty of six pence 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 unable 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 of George III chapter 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 apiece 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 16 pence upon each skin all of which except half the old subsidy amounting only to two pence 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 six pence which reduced the duty upon importation to six pence 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 be thought 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 seven pence each skin without any drawback of the duty upon importation by the same law a duty of 18 pence the pound was imposed upon the exportation of beaver wool or combs 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 four pence and five pence 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 15 shillings the cauldron 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 seventh and eighth of william the third chapter 20 section 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 40 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 of George the third chapter 71 the exportation to foreign parts of any utensils made use of in the cotton linen woolen and silk manufacturers is prohibited under the penalty not only of the forfeiture of such utensils but of 200 pounds to be paid by the person who shall offend in this manner and likewise of 200 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 fifth of George the first chapter 27 the person who shall be convicted of enticing any artificer of or in any of the manufacturers of Great Britain to go into any foreign parts in order to practice or teach his trade is liable for the first offense to be fined in any sum not exceeding 100 pounds and to three months imprisonment and until the fine shall be paid and for the second offense to be fined in any sum at the discretion of the court and to imprisonment for 12 months and until the fine shall be paid by the 23rd of George the second chapter 13 this penalty is increased for the first offense to 500 pounds for every artificer so enticed and to 12 months imprisonment and until the fine shall be paid and for the second offense to 1000 pounds and to 2 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 gives 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 any 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 henceforth declared incapable of taking any legacy devised to him within this kingdom or of being an executor or administrator to any person or of taking any lands within this kingdom by dissent, device, or purchase he likewise forfeits to the king all his lands, goods, and tattles 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 effect 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 manufacturers not by their own improvement but by the depression of those of all our neighbors 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 endeavor, all of them to confine the knowledge of their respective employment 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 neighboring 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 perfusion 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 last two wars more than 200 millions have been spent and a new debt of more than 170 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 then the whole value of that trade or then 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 end of book four chapter eight part b chapter nine part a of the wealth of nations book four this is a LibriVox recording all LibriVox recordings are in the public domain for more information or to volunteer please visit LibriVox.org recording by Stephen Escalera the wealth of nations by Adam Smith book four chapter nine part a of the agricultural systems or of those systems of political economy which represent the produce of land as either the soul 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 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 and France it would not surely be worthwhile 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 endeavor to explain however as distinctly as I can the great outlines of this very ingenious system Mr. Colbert the famous minister of Louis 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 in essence a system of restraint and regulation and such as could scarce fail to be agreeable to a laborious and plotting 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 endeavored 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 manufacturers 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 their 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 and 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 undervalued the different orders of people who have ever been supposed to contribute in any respect towards the annual produce of the land and labor 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 laborers whom they honor with the peculiar appellation of the productive class the third is the class of artificers manufacturers and merchants whom they endeavor 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 enclosures 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 the cultivators or farmers contribute to the annual produce by what are in this system called the original and annual expenses 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 labor 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 honorable 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 occasionally 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 honored 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 labor it is said replaces only the stock which employs them together with its ordinary profits that stock consists in the materials tools and wages advance 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 bearing and unproductive expense the expense on the contrary laid out in employing farmers and country laborers 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 bearing 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 labor of artificers and manufacturers never adds anything 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 meantime 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 penny worth of flax to 30 pound sterling but though at first sight he appears thereby to multiply the value of a part of the rude produce about 7200 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 labor the 30 pounds 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 days months or years labor 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 anything 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 manufacturer 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 laborers 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 the 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 laborers 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 consists in a great measure of proprietors and cultivators can be enriched by industry and employment nations on the contrary which like Holland and Hamburg are composed chiefly of merchants artificers and manufacturers can grow rich only through parsimony and privation as the interest of nations so differently circumstance 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 and the latter narrowness meanness and a selfless disposition averse to all social pleasure and enjoyment the unproductive class that of merchants artificers and manufacturers is maintained and employed all together 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 but the one and the other however are equally maintained at the expense of the same masters the labor 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 labor than what they would be obliged to employ if they were to attempt in an awkward and unskillful 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 labor by leaving it at liberty to confine itself to its proper employment the cultivation of land and the plow goes frequently the easier and the better by means of the labor of the man whose business is most remote from the plow 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 the 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 Hamburg consists chiefly of this unproductive class are in the same manner maintained and employed all together at the expense of the proprietors and cultivators of land the only difference is that these 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 fun 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 dear 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 and do 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 do 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 fun 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 rivaled in the market of those landed nations and soon after undersold and jostled out of it altogether the cheapness of the manufacturers of those landed nations and 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 jostle 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 manufacturers 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 is 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 and navigation therefore they would be able to sell that cargo as cheap and 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 jostle 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 manufacturers it necessarily syncs 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 manufacturers 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 syncing 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 in manufacturers 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 the suppressive policy a land 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 to hastily one species of industry it would depress another more valuable species of industry by raising up to 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 sock with its profit affords likewise a neat produce a free rent to the landlord it would depress productive labor by encouraging to hastily that labor 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 labor 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. kesney 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 favored 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 and 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 the 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 occasion some degree of disease or disorder proportionate to the degree of the violation experience however it would seem to show 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. kesney 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 who 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 remitting many of the bad effects of the folly and injustice of man in the same manner as it has done in the natural body for remitting those of a sloth and in temperance end of book four chapter nine part a