 Chapter 7 Part D of the Wealth of Nations, Book 4. Of the advantages which Europe has derived from the discovery of America, and from that of a passage to the East Indies by the Cape of Good Hope. Such are the advantages which the colonies of America have derived from the policy of Europe. What are those which Europe has derived from the discovery and colonization of America? Those advantages may be divided, first, into the general advantages which Europe, considered as one great country, has derived from those great events, and secondly, into the particular advantages which each colonizing country has derived from the colonies which particularly belong to it, and consequence of the authority or dominion which it exercises over them. The general advantages which Europe, considered as one great country, has derived from the discovery and colonization of America, consist, first, in the increase of its enjoyments, and secondly, in the augmentation of its industry. The surplus produce of America imported into Europe furnishes the inhabitants of this great continent with a variety of commodities which they could not otherwise have possessed. Some for convenience and use, some for pleasure, and some for ornament, and thereby contributes to increase their enjoyments. The discovery and colonization of America, it will readily be allowed, have contributed to augment the industry, first, of all the countries which trade to it directly, such as Spain, Portugal, France, and England, and secondly, of all those which, without trading to it directly, send, through the medium of other countries, goods to it of their own produce, such as Austrian Flanders, and some provinces of Germany, which, through the medium of the countries before mentioned, send to it a considerable quantity of linen and other goods. All such countries have evidently gained a more extensive market for their surplus produce, and must consequently have been encouraged to increase its quantity. But those great events should likewise have contributed to encourage the industry of countries such as Hungary and Poland, which may never, perhaps, have sent a single commodity of their own produce to America, is not perhaps altogether so evident. That those events have done so, however, cannot be doubted. Some part of the produce of America is consumed in Hungary and Poland, and there is some demand there for the sugar, chocolate, and tobacco of that new quarter of the world. But those commodities must be purchased with something which is either the produce of the industry of Hungary and Poland, or with something which had been purchased with some part of that produce. Those commodities of America are new values, new equivalents, introduced into Hungary and Poland, to be exchanged there for the surplus produce of those countries. By being carried thither, they create a new and more extensive market for that surplus produce. They raise its value, and thereby contribute to encourage its increase. Though no part of it may ever be carried to America, it may be carried to other countries, which purchase it with a part of their share of the surplus produce of America, and it may find a market by means of the circulation of that trade which was originally put into motion by the surplus produce of America. Those great events may even have contributed to increase the enjoyments, and to augment the industry of countries which not only never sent any commodities to America, but never received any from it. Even such countries may have received a greater abundance of other commodities from countries, of which the surplus produce had been augmented by means of the American trade. This greater abundance, as it must necessarily have increased their enjoyments, so it must likewise have augmented their industry. A greater number of new equivalents, of some kind or other, must have been presented to them to be exchanged for the surplus produce of that industry. A more extensive market must have been created for that surplus produce, so as to raise its value and thereby encourage its increase. The mass of commodities annually thrown into the great circle of European commerce, and by its various revolutions annually distributed among all the different nations comprehended within it, must have been augmented by the whole surplus produce of America. A greater share of this greater mass, therefore, is likely to have fallen to each of those nations to have increased their enjoyments and augmented their industry. The exclusive trade of the mother countries tends to diminish, or at least to keep down below what they would otherwise rise to, both the enjoyments and industry of all those nations in general, and of the American colonies in particular. It is a dead weight upon the action of one of the great springs, which puts into motion a great part of the business of mankind. By rendering the colony produce dearer in all other countries, it lessens its consumption and thereby cramps the industry of the colonies and both the enjoyments and the industry of all other countries, which both enjoy less when they pay more for what they enjoy and produce less when they get less for what they produce. By rendering the produce of all other countries dearer in the colonies, it cramps in the same manner the industry of all other colonies and both the enjoyments and the industry of the colonies. It is a clog which, for the supposed benefit of some particular countries, embarrasses the pleasures and encumbers the industry of all other countries, but of the colonies more than of any other. It not only excludes as much as possible all other countries from one particular market, but it confines as much as possible the colonies to one particular market, and the difference is very great between being excluded from one particular market when all others are open and being confined to one particular market when all others are shut up. The surplus produce of the colonies, however, is the original source of all that increase of enjoyments and industry which Europe derives from the discovery and colonization of America, and the exclusive trade of the mother countries tends to render this source much less abundant than it otherwise would be. The particular advantages which each colonizing country derives from the colonies which particularly belong to it are of two different kinds. First, those common advantages which every empire derives from the provinces subject to its dominion, and secondly, those peculiar advantages which are supposed to result from provinces of so very peculiar a nature as the European colonies of America. The common advantages which every empire derives from the provinces subject to its dominion consist, first, in the military force which they furnish for its defense, and secondly, in the revenue which they furnish for the support of its civil government. The Roman colonies furnished occasionally both the one and the other. The Greek colonies sometimes furnished a military force but seldom any revenue. They seldom acknowledged themselves subject to the dominion of the mother city. They were generally her allies in war but very seldom her subjects in peace. The European colonies of America have never yet furnished any military force for the defense of the mother country. The military force has never yet been sufficient for their own defense and in the different wars in which the mother countries have been engaged the defense of their colonies has generally occasioned a very considerable distraction of the military force of those countries. In this respect, therefore, all the European colonies have, without exception, been a cause rather of weakness than of strength to their respective mother countries. The colonies of Spain and Portugal only have contributed any revenue towards the defense of the mother country or the support of her civil government. The taxes which have been levied upon those of other European nations, upon those of England in particular, have seldom been equal to the expense laid out upon them in time of peace and never sufficient to defray that which they occasioned in time of war. Such colonies, therefore, have been a source of expense and not of revenue to their respective mother countries. The advantages of such colonies to their respective mother countries consist altogether in those peculiar advantages which are supposed to result from provinces of so very peculiar a nature as the European colonies of America and the exclusive trade it is acknowledged is the sole source of all those peculiar advantages. In consequence of this exclusive trade all that part of the surplus produce of the English colonies, for example, which consists in what are called enumerated commodities, can be sent to no other country but England. Other countries must afterwards buy it of her. It must be cheaper, therefore, in England than it can be in any other country and must contribute more to increase the enjoyments of England than those of any other country. It must likewise contribute more to encourage her industry. For all those parts of her own surplus produce, which England exchanges for those enumerated commodities, she must get a better price than any other countries can get for the like parts of theirs when they exchange them for the same commodities. The manufacturers of England, for example, will purchase a greater quantity of the sugar and tobacco of her own colonies than the like manufacturers of other countries can purchase of that sugar and tobacco. So far, therefore, as the manufacturers of England and those of other countries are both to be exchanged for the sugar and tobacco of the English colonies, this superiority of price gives an encouragement to the former beyond what the latter can and these circumstances enjoy. The exclusive trade of the colonies, therefore, as it diminishes, or at least keeps down below what they would otherwise rise to, both the enjoyments and the industry of the countries which do not possess it, so it gives an evident advantage to the countries which do possess it over those other countries. This advantage, however, will perhaps be found to be rather what may be called a relative than an absolute advantage and to give a superiority to the country which enjoys it, rather by depressing the industry and produce of other countries than by raising those of that particular country above what they would naturally rise to in the case of a free trade. The tobacco of Maryland and Virginia, for example, by means of the monopoly which England enjoys of it, certainly comes cheaper to England than it can do to France, to whom England commonly sells a considerable part of it. But had France and all other European countries been at all times allowed a free trade to Maryland and Virginia, the tobacco of those colonies might by this time have come cheaper than it actually does, not only to all those other countries, but likewise to England. The produce of tobacco, in consequence of a market so much more extensive than any which it has either to enjoyed, might and probably would by this time have been so much increased as to reduce the profits of a tobacco plantation to their natural level with those of a corn plantation, which it is supposed they are still somewhat above. The price of tobacco might and probably would by this time have fallen somewhat lower than it is at present. An equal quantity of the commodities, either of England or of those other countries, might have purchased in Maryland and Virginia a greater quantity of tobacco than it can do at present, and consequently have been sold there for so much a better price. So far as that weed therefore can by its cheapness and abundance increase the enjoyments or augment the industry, either of England or of any other country, it would probably, in the case of a free trade, have produced both these effects in somewhat a greater degree than it can do at present. England indeed would not in this case have had any advantage over other countries. She might have bought the tobacco of her colonies somewhat cheaper and consequently have sold some of her own commodities somewhat dearer than she actually does. But she could neither have bought the one cheaper nor sold the other dearer than any other country might have done. She might perhaps have gained an absolute, but she would certainly have lost a relative advantage. In order however to obtain this relative advantage in the colony trade, in order to execute the invidious and malignant project of excluding, as much as possible, other nations from any share in it, England, there are very probable reasons for believing, has not only sacrificed a part of the absolute advantage which she as well as every other nation might have derived from that trade, but has subjected herself both to an absolute and to a relative disadvantage in almost every other branch of trade. When, by the act of navigation, England assumed to herself the monopoly of the colony trade, the foreign capitals which had before been employed in it were necessarily withdrawn from it. The English capital, which had before carried on, but a part of it, was now to carry on the whole. The capital which had before supplied the colonies with but a part of the goods which they wanted from Europe was now all that was employed to supply them with the whole, but it could not supply them with the whole, and the goods with which it did supply them were necessarily sold very dear. The capital which had before bought but a part of the surplus produce of the colonies was now all that was employed to buy the whole. But it could not buy the whole at anything near the old price, and therefore whatever it did by it necessarily bought very cheap. But in an employment of capital in which the merchants sold very dear and bought very cheap, the profit must have been very great, and much above the ordinary level of profit in other branches of trade. This superiority of profit in the colony trade could not fail to draw from other branches of trade a part of the capital which had before been employed in them. But this revulsion of capital, as it must have gradually increased the competition of capitals in the colony trade, so it must have gradually diminished that competition in all those other branches of trade, as it must have gradually lowered the profits of the one, so it must have gradually raised those of the other, till the profits of all came to a new level different from and somewhat higher than that at which they had been before. This double effect of drawing capital from other trades and of raising the rate of profit somewhat higher than it otherwise would have been in all trades was not only produced by this monopoly upon its first establishment, but has continued to be produced by it ever since. First, this monopoly has been continually drawing capital from all other trades to be employed in that of the colonies. Though the wealth of Great Britain has increased very much since the establishment of the active navigation, it certainly has not increased in the same proportion as that of the colonies. But the foreign trade of every country naturally increases in proportion to its wealth, its surplus produce in proportion to its whole produce, and Great Britain having engrossed to herself the whole of what may be called the foreign trade of the colonies, and her capital not having increased in the same proportion as the extent of that trade, she could not carry it on without continually withdrawing from other branches of trade some part of the capital which had before been employed in them, as well as withholding from them a great deal more which would otherwise have gone to them. Since the establishment of the active navigation, accordingly, the colony trade has been continually increasing while many other branches of foreign trade, particularly of that to other parts of Europe, have been continually decaying. Our manufacturers for foreign sale, instead of being suited, as before the active navigation, to the neighboring market of Europe, or to the more distant one of the countries which lie around the Mediterranean Sea, have the greater part of them been accommodated to the still more distant one of the colonies, to the market in which they have the monopoly, rather than to that in which they have many competitors. The causes of decay in other branches of foreign trade, which, by Sir Matthew Decker and other writers, have been sought for in the excess and improper mode of taxation, in the high price of labor, in the increase of luxury, etc., may all be found in the overgrowth of the colony trade. The mercantile capital of Great Britain, though very great, yet not being infinite, and though greatly increased since the active navigation, yet not being increased in the same proportion as the colony trade, that trade could not possibly be carried on without withdrawing some part of that capital from other branches of trade, nor consequently without some decay of those other branches. England, it must be observed, was a great trading country. Her mercantile capital was very great, and likely to become still greater and greater every day, not only before the active navigation had established the monopoly of the corn trade, but before that trade was very considerable. In the Dutch War, during the Government of Cromwell, her navy was superior to that of Holland, and in that which broke out in the beginning of the reign of Charles II, it was at least equal, perhaps superior, to the United Naves of France and Holland. Its superiority, perhaps, would scarce appear greater in the present times, at least if the Dutch Navy were to bear the same proportion to the Dutch commerce now, which it did then. But this great naval power could not, in either of those wars, be owing to the act of navigation. During the first of them, the plan of that act had been but just formed, and though, before the breaking out of the second, it had been fully enacted by legal authority, yet no part of it could have had time to produce any considerable effect, and least of all, that part which established the exclusive trade to the colonies. Both the colonies and their trade were inconsiderable then in comparison of what they are now. The island of Jamaica was an unwholesome desert, little inhabited and less cultivated. New York and New Jersey were in the possession of the Dutch, the half of St. Christopher's in that of the French. The island of Antigua, the two Carolinas, Pennsylvania, Georgia and Nova Scotia were not planted. Virginia, Maryland and New England were planted, and though they were very thriving colonies, yet there was not perhaps at that time in South or America a single person who foresaw or even suspected the rapid progress which they have since made in wealth, population and improvement. The island of Barbados in short was the only British colony of any consequence of which the condition at that time bore any resemblance to what it is at present. The trade of the colonies, of which England, even for some time after the act of navigation, enjoyed but a part, for the act of navigation strictly executed till several years after it was enacted, could not at that time be the cause of the great trade of England, nor of the great naval power which was supported by that trade. The trade which at that time supported that great naval power was the trade of Europe, and of the countries which lie around the Mediterranean Sea. But the share which Great Britain at present enjoys of that trade could not support any such great naval power. Had the growing trade of the colonies been to all nations, whatever share of it might have fallen to Great Britain, and a very considerable share would probably have fallen to her, must have been all in addition to this great trade of which she was before in possession. In consequence of the monopoly, the increase of the colony trade has not so much occasioned in addition to the trade which Great Britain had before as a total change in its direction. Secondly, this monopoly has necessarily contributed to keep the rate of profit in all the different branches of British trade, higher than it naturally would have been had all nations been allowed a free trade to the British colonies. The monopoly of the colony trade, as it necessarily drew towards that trade a greater proportion of the capital of Great Britain than what would have gone to it of its own accord, so by the expulsion of all foreign capitals it necessarily reduced the whole quantity of capital employed in that trade below what it naturally would have in the case of a free trade. But by lessening the competition of capitals in that branch of trade it necessarily raised the rate of profit in that branch. By lessening to the competition of British capitals in all other branches of trade, it necessarily raised the rate of British profit in all those other branches. Whatever may have been at any particular period since the establishment of the active navigation, the state or extent of the mercantile capital of Great Britain, the monopoly of the colony trade must, during the continuance of that state, have raised the ordinary rate of British profit higher than it otherwise would have been, both in that and in all the other branches of British trade. If, since the establishment of the active navigation the ordinary rate of British profit has fallen considerably, as it certainly has, it must have fallen still lower had not the monopoly established by that act contributed to keep it up. But whatever raises in any country the ordinary rate of profit higher than it otherwise would be, necessarily subjects that country both to an absolute and to a relative disadvantage in every branch of trade of which she has not the monopoly. It subjects her to an absolute disadvantage because, in such branches of trade, her merchants cannot get this greater profit without selling dearer than they otherwise would do both the goods of foreign countries which they import into their own and the goods of their own country which they export to foreign countries. Their own country must both buy dearer and sell dearer must both buy less and sell less, must both enjoy less and produce less than she otherwise would do. It subjects her to a relative disadvantage because in such branches of trade it sets other countries which are not subject to the same absolute disadvantage either more above her or less below her than they otherwise would be. It enables them both to enjoy more and to produce more in proportion to what she enjoys and produces. It renders their superiority greater or their inferiority less than it otherwise would be. By raising the price of her produce above what it otherwise would be it enables the merchants of other countries to undersell her in foreign markets and thereby to jostle her out of almost all those branches of trade of which she has been not the monopoly. Our merchants frequently complain of the high wages of British labor as the cause of their manufacturers being undersold in foreign markets but they are silent about the high profits of stock. They complain of the extravagant gain of other people but they say nothing of their own. The high profits of British stock however may contribute towards raising the price of British manufacturers in many cases as much and in some perhaps more than British labor. It is in this manner that the capital of Great Britain, one may justly say has partly been drawn and partly been driven from the greater part of the different branches of trade of which she has not the monopoly from the trade of Europe in particular and from that of the countries which lie around the Mediterranean Sea. It has partly been drawn from those branches of trade by the attraction of superior profit in the colony trade and consequence of the continual insufficiency of that trade and of the continual insufficiency of the capital which had carried it on one year to carry it on the next. It has partly been driven from them by the advantage which the high rate of profit established in Great Britain gives to other countries and all the different branches of trade of which Great Britain has not the monopoly. As the monopoly of the colony trade has drawn from those other branches a part of the British capital which would otherwise have been employed so it has forced into them many foreign capitals which would never have gone to them had they not been expelled from the colony trade. In those other branches of trade it has diminished the competition of British capitals and thereby raised the rate of British profit higher than it otherwise would have been. On the contrary it has increased the competition of foreign capitals and thereby sunk the rate of foreign profit lower than it otherwise would have been. Both in the one way and in the other it must evidently have subjected Great Britain to a relative disadvantage in all those other branches of trade. The colony trade however it may perhaps be said is more advantageous to Great Britain than any other and the monopoly by forcing into that trade a greater proportion of the capital of Great Britain than what would otherwise have gone to it has turned that capital into an employment more advantageous to the country than any other which it could have found. The most advantageous employment of any capital to the country to which it belongs is that which maintains there the greatest quantity of productive labor and increases the most the annual produce of the land and labor of that country. But the quantity of productive labor which any capital employed in the foreign trade of consumption can maintain is exactly in proportion it has been shown in the second book to the frequency of its returns. A capital of a thousand pounds for example employed in a foreign trade of consumption of which the returns are made regularly once in the year can keep in constant employment in the country to which it belongs a quantity of productive labor equal to what a thousand pounds can maintain there for a year. If the returns are made twice or thrice in the year it can keep in constant employment a quantity of productive labor equal to what two or three thousand pounds can maintain there for a year. But the monopoly of the colony trade so far as it has operated upon the employment of the capital of Great Britain has in all cases forced some part of it from a foreign trade of consumption carried on with a neighboring is upon that account in general more advantageous than one carried on with a distant country and for the same reason a direct foreign trade of consumption as it has likewise been shown in the second book was a direct foreign trade of consumption carried on with a neighbor carried on with a more distant country and in many cases from a direct foreign trade of consumption to a roundabout one. First the monopoly of the colony trade has in all cases forced some part of the capital of Great Britain from a foreign trade of consumption carried on with a neighboring carried on with a more distant country it has in all cases trade with Europe, and with the countries which lie around the Mediterranean Sea, to that with the more distant regions of America and the West Indies, from which the returns are necessarily less frequent not only on account of the greater distance, but on account of the peculiar circumstances of those countries. New colonies, it has already been observed, are always understocked. Their capital is always much less than what they could employ with great profit and advantage in the improvement and cultivation of their land. They have a constant demand therefore for more capital than they have of their own, and in order to supply the deficiency of their own, they endeavor to borrow as much as they can of the mother country, to whom they are therefore always in debt. The most common way in which the colonies contract this debt is not by borrowing upon bond of the rich people of the mother country, though they sometimes do this too, but by running as much in a rear to their correspondence who supply them with goods from Europe as those correspondents will allow them. Their annual returns frequently do not amount to more than a third, and sometimes not to so great a proportion of what they owe. The whole capital, therefore, which their correspondents advance to them, is seldom returned to Britain in less than three, and sometimes not in less than four or five years. But a British capital of a thousand pounds, for example, which is returned to Great Britain only once in five years, can keep in constant employment only one-fifth part of the British industry which it could maintain, if the whole was returned once in the year. And instead of the quantity of industry which a thousand pounds could maintain for a year, can keep in constant employment the quantity only which two-hundred pounds can maintain for a year. The planter, no doubt, by the high price which he pays for the goods from Europe, by the interest upon the bills which he grants at distant dates, and by the commission upon the renewal of those which he grants at near dates, makes up, and probably more than makes up, all the loss which his correspondent can sustain by this delay. But, though he make up the loss of his correspondent, he cannot make up that of Great Britain. In a trade of which the returns are very distant, the profit of the merchant may be as great or greater than in one in which they are very frequent and near. But the advantage of the country in which he resides, the quantity of productive labor constantly maintained there, the annual produce of the land and labor, must always be less. That the returns of the trade to America, and still more those of that to the West Indies, are in general not only more distant, but more irregular and more uncertain too, than those of the trade to any part of Europe, or even the countries which lie around the Mediterranean Sea, will readily be allowed, I imagine, by everybody who has any experience of those different branches of trade. Secondly, the monopoly of the colony trade has in many cases four forced some part of the capital of Great Britain from a direct foreign trade of consumption into a roundabout one. Among the enumerated commodities which can be sent to no other market but Great Britain, there are several of which the quantity exceeds very much the consumption of Great Britain, and of which a part therefore must be exported to other countries. But this cannot be done without forcing some part of the capital of Great Britain into a roundabout foreign trade of consumption. Maryland and Virginia, for example, send annually to Great Britain upwards of 96,000 hogsheads of tobacco, and the consumption of Great Britain is said not to exceed 14,000. Upwards of 82,000 hogsheads therefore must be exported to other countries, to France, to Holland, and to the countries which lie around the Baltic and Mediterranean Seas. But that part of the capital of Great Britain which brings those 82,000 hogsheads to Great Britain, which re-exports them from France to those other countries, and which brings back from those other countries to Great Britain either goods or money in return, is employed in a roundabout foreign trade of consumption, and is necessary forced into this employment in order to dispose of this great surplus. If we would compute in how many years the whole of this capital is likely to come back to Great Britain, we must add to the distance of the American returns that of the returns from those other countries. If in the direct foreign trade of consumption which we carry on with America, the whole capital employed frequently does not come back in less than three or four years, the whole capital employed in this roundabout one is not likely to come back in less than four or five. If the one can keep in constant employment but a third or a fourth part of the domestic industry which could be maintained by a capital returned once in the year, the other can keep in constant employment but a fourth or a fifth part of that industry. At some of the outports, a credit is commonly given to those foreign correspondents to whom they export their tobacco. At the Port of London, indeed, it is commonly sold for ready money. The rule is way and pay. At the Port of London, therefore, the final returns of the whole roundabout trade are more distant than the returns from America, by the time only which the goods may lie unsold in the warehouse, where, however, they may sometimes lie long enough. But had not the colony been confined to the market of Great Britain for the sale of their tobacco, very little more of it would probably have come to us than what was necessary for the home consumption. The goods which Great Britain purchases at present for her own consumption with the great surplus of tobacco which she exports to other countries, she would in this case probably have purchased with the immediate produce of her own industry or with some part of her own manufacturers. That produce, those manufacturers, instead of being almost entirely suited to one great market, as at present, would probably have been fitted to a great number of smaller markets. Instead of one great roundabout foreign trade of consumption, Great Britain would probably have carried on a great number of small direct foreign trades of the same kind. On account of the frequency of the returns, a part, and probably but a small part, perhaps not above a third or a fourth of the capital which at present carries on this great roundabout trade, might have been sufficient to carry on all those small direct ones, might have kept in constant employment an equal quantity of British industry, and have equally supported the annual produce of the land and labor of Great Britain. All the purposes of this trade, meaning in this manner, answered by a much smaller capital, there would have been a large spare capital to apply to other purposes, to improve the lands, to increase the manufacturers, and to extend the commerce of Great Britain, to come into competition at least with the other British capitals employed in all those different ways, to reduce the rate of profit in them all, and thereby to give to Great Britain in all of them a superiority over other countries still greater than what she at present enjoys. The monopoly of the colony trade, too, has forced some part of the capital of Great Britain from all foreign trade of consumption to a carrying trade, and consequently from supporting more or less the industry of Great Britain to be employed altogether in supporting partly that of the colonies, and partly that of some other countries. The goods, for example, which are annually purchased with a great surplus of 82,000 hogs heads of tobacco annually re-exported from Great Britain, are not all consumed in Great Britain. Part of them, linen from Germany and Holland, for example, is returned to the colonies for their particular consumption. But that part of the capital of Great Britain, which buys the tobacco with which this linen is afterwards bought, is necessarily with John from supporting the industry of Great Britain to be employed altogether in supporting partly that of the colonies, and partly that of the particular countries who pay for this tobacco with the produce of their own industry. End of Book 4, Chapter 7, Part D. Chapter 7, Part E, 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 Ascalara. The Wealth of Nations by Adam Smith. Book 4, Chapter 7, Part E, of colonies. The monopoly of the colony trade, besides by forcing towards it a much greater proportion of the capital of Great Britain than what would naturally have gone to it, seems to have broken altogether that natural balance which would otherwise have taken place among all the different branches of British industry. The industry of Great Britain, instead of being accommodated to a great number of small markets, has been principally suited to one great market. Her commerce, instead of running in a great number of small channels, has been taught to run principally in one great channel. But the whole system of her industry and commerce has thereby been rendered less secure, the whole state of her body politic less helpful than it otherwise would have been. In her present condition, Great Britain resembles one of those unwholesome bodies in which some of the vital parts are overgrown and which, upon that account, are liable to many dangerous disorders, scarce incident to those in which all the parts are more properly proportioned. A small stop in that great blood vessel, which has been artificially swelled beyond its natural dimensions, and through which an unnatural proportion of the industry and commerce of the country has been forced to circulate, is very likely to bring on the most dangerous disorders upon the whole body politic. The expectation of a rupture with the colonies accordingly has struck the people of Great Britain with more terror than they ever felt for a Spanish armada or a French invasion. It was this terror, whether well or ill-grounded, which rendered the repeal of the Stamp Act, among the merchants at least, a popular measure. In the total exclusion from the colony market, was it to last only for a few years, the greater part of our merchants used to fancy that they foresaw an entire stop to their trade, the greater part of our master manufacturers, the entire ruin of their business, and the greater part of our workmen, an end of their employment. A rupture with any of our neighbors upon the continent, though likely too, to occasion some stop or interruption in the employment of some or all these different orders of people, is foreseen, however, without any general emotion. The blood, of which the circulation is stopped and some of the smaller vessels easily disgorges itself into the greater, without occasioning any dangerous disorder. But when it is stopped in any of the greater vessels, conversions, apoplexy, or death are the immediate and unavoidable consequences. If but one of those overgrown manufacturers, which, by means either of bounties or of the monopoly of the home and colony markets, have been artificially raised up to any unnatural height, finds some small stop or interruption in its employment, it frequently occasions a mutiny and disorder alarming to government, and embarrassing even to the deliberations of the legislature. How great, therefore, would be the disorder and confusion, it was thought, which must necessarily be occasioned by a sudden and entire stop in the employment of so great a proportion of our principal manufacturers. Some moderate and gradual relaxation of the laws, which give to Great Britain the exclusive trade to the colonies till it is rendered in a great measure free, seems to be the only expedient which can, in all future times, deliver her from this danger, which can enable her or even force her to withdraw some part of her capital from this overgrown employment and to turn it, though with less profit, towards other employment, and which, by gradually diminishing one branch of her industry and gradually increasing all the rest, can, by degrees, restore all the different branches of it to that natural, healthful, and proper proportion which perfect liberty necessarily establishes and which perfect liberty can alone preserve. To open the colony trade all at once to all nations might not only occasion some transitory inconvenience, but a great permanent loss to the greater part of those whose industry or capital is at present engaged in it. The sudden loss of the employment, even of the ships which import the 82,000 hogs heads of tobacco, which are over and above the consumption of Great Britain, might alone be felt very sensibly. Such are the unfortunate effects of all the regulations of the mercantile system. They not only introduce very dangerous disorders into the state of the body politic, but disorders which it is often difficult to remedy, without occasioning, for a time at least, still greater disorders. In what manner therefore the colony trade ought gradually to be opened, what are the restraints which ought first, and what are those which ought last to be taken away, or in what manner the natural system of perfect liberty and justice ought gradually to be restored, we must leave to the wisdom of future statesmen and legislators to determine. Five different events, unforeseen and unthought of, have very fortunately concurred to hinder Great Britain from feeling, so sensibly as it was genuinely expected she would, the total exclusion which has now taken place for more than a year from the first of December 1774, from a very important branch of the colony trade, that of the twelve associated provinces of North America. First, those colonies, in preparing themselves for their non-importation agreement, drain Great Britain completely of all the commodities which were fit for their market. Secondly, the extraordinary demand of the Spanish flota has, this year, drained Germany and the north of many commodities, linen in particular, which used to come into competition, even in the British market, with the manufacturers of Great Britain. Thirdly, the peace between Russia and Turkey has occasioned an extraordinary demand from the Turkey market, which, during the distress of the country, and while a Russian fleet was cruising in the archipelago, had been very poorly supplied. Fourthly, the demand of the north of Europe for the manufacturers of Great Britain has been increasing from year to year for some time And, fifthly, the late partition and consequential pacification of Poland, by opening the market of that great country, have, this year, added an extraordinary demand from thence to the increasing demand of the north. These events are all, except the fourth, in their nature transitory and accidental, and the inclusion from so important a branch of the colony trade, if unfortunately it should continue much longer, may still occasion some degree of distress. This distress, however, as it will come on gradually, will be felt much less severely than if it had come on all at once. And in the meantime, the industry and capital of the country may find a new employment and direction, so as to prevent this distress from ever rising to any considerable height. The monopoly of the colony trade, therefore, so far as it has turned towards that trade a greater proportion of the capital of Great Britain than what would otherwise have gone to it, has in all cases turned it from a foreign trade of consumption with a neighboring into one with a more distant country, in many cases from a direct foreign trade of consumption into a roundabout one, and in some cases from all foreign trade of consumption into a carrying trade. It has, in all cases, therefore, turned it from a direction in which it would have maintained a greater quantity of productive labor, into one in which it can maintain a much smaller quantity. By suiting, besides to one particular market only, so great a part of the industry and commerce of Great Britain, it has rendered the whole state of that industry and commerce more precarious and less secure than if their produce had been accommodated to a greater variety of markets. We must carefully distinguish between the effects of the colony trade and those of the monopoly of that trade. The former are always and necessarily beneficial. The latter always and necessarily hurtful. But the former are so beneficial that the colony trade, though subject to a monopoly and not withstanding the hurtful effects of that monopoly, is still, upon the whole, beneficial and greatly beneficial, though a good deal less so than it otherwise would be. The effect of the colony trade in its natural and free state is to open a great, though distant market for such parts of the produce of British industry as may exceed the demand of the markets near home of those of Europe and of the countries which lie around the Mediterranean Sea. In its natural and free state, the colony trade, without drawing from those markets any part of the produce which had ever been sent to them, encourages Great Britain to increase the surplus continually by continually presenting new equivalents to be exchanged for it. In its natural and free state, the colony trade tends to increase the quantity of productive labor in Great Britain, but without altering in any respect the direction of that which had been employed there before. In the natural and free state of the colony trade, the competition of all other nations would hinder the rate of profit from rising above the common level, either in the new market or in the new employment. The new market, without drawing anything from the old one, would create, if one may say so, a new produce for its own supply, and that new produce would constitute a new capital for carrying on the new employment, which, in the same manner, would draw nothing from the old one. The monopoly of the colony trade, on the contrary, by excluding the competition of other nations, and thereby raising the rate of profit, both in the new market and in the new employment, draws produce from the old market and capital from the old employment. To augment our share of the colony trade beyond what it otherwise would be is the avowed purpose of the monopoly. If our share of that trade were to be no greater width than it would have been without the monopoly, there could have been no reason for establishing the monopoly. But whatever forces into a branch of trade, of which the returns are slower and more distant than those of the greater part of other trades, a greater proportion of the capital of any country than what, of its own accord, would go to that branch necessarily renders the whole quantity of productive labor annually maintained there, the whole annual produce of the land and labor of that country less than they otherwise would be. It keeps down the revenue of the inhabitants of that country below what it would naturally rise to, and thereby diminishes their power of accumulation. It not only hinders, at all times, their capital from maintaining so great a quantity of productive labor as it would otherwise maintain, but it hinders it from increasing so fast as it would otherwise increase, and consequently, from maintaining a still greater quantity of productive labor. The natural good effects of the colony trade, however, more than counterbalance to Great Britain, the bad effects of the monopoly, so that monopoly and altogether that trade, even as it is carried on at present, is not only advantageous, but greatly advantageous. The new market and the new employment, which are open by the colony trade, are of much greater extent than that portion of the old market and of the old employment, which is lost by the monopoly. The new produce and the new capital, which has been created, if one may say so, by the colony trade, maintain in Great Britain a greater quantity of productive labor than what can have been thrown out of employment by the revulsion of capital from other trades of which the returns are more frequent. If the colony trade, however, even as it is carried on at present, is advantageous to Great Britain, it is not by means of the monopoly, but in spite of the monopoly. It is rather for the manufactured, than for the rude produce of Europe, that the colony trade opens a new market. Agriculture is the proper business of all new colonies, a business which the cheapness of land renders more advantageous than any other. They abound therefore in the rude produce of land, and instead of importing it from other countries, they have generally a large surplus to export. In new colonies, agriculture either draws hands from all other employment, or keeps them from going to any other employment. There are a few hands to spare for the necessary, and none for the ornamental manufacturers. The greater part of the manufacturers of both kinds, they find it cheaper to purchase of other countries than to make for themselves. It is chiefly by encouraging the manufacturers of Europe, that the colony trade indirectly encourages its agriculture. The manufacturers of Europe, to whom that trade gives employment, constitute a new market for the produce of the land, and the most advantageous of all markets. The home market for the corn and cattle, for the bread and butchers meat of Europe, is thus greatly extended by means of the trade to America. But that the monopoly of the trade of populous and thriving colonies is not alone sufficient to establish, or even to maintain, manufacturers in any country, the examples of Spain and Portugal sufficiently demonstrate. Spain and Portugal were manufacturing countries before they had any considerable colonies. Since they had the richest and most fertile in the world, they have both ceased to be so. In Spain and Portugal, the bad effects of the monopoly, aggravated by other causes, have perhaps nearly overbalanced the natural good effects of the colony trade. These causes seem to be other monopolies of different kinds. The degradation of the value of gold and silver below what it is in most other countries, the exclusion from foreign markets by improper taxes upon exportation and the narrowing of the home market by still more improper taxes upon the transportation of goods from one part of the country to another. But above all, that irregular and partial administration of justice, which often protects the rich and powerful debtor from the pursuit of his injured creditor, and which makes the industry as part of the nation afraid to prepare goods for the consumption of those haughty and great men, to whom they dare not refuse to sell upon credit, and from whom they are altogether uncertain of repayment. In England on the contrary, the natural good effects of the colony trade assisted by other causes have in a great measure conquered the bad effects of the monopoly. These causes seem to be the general liberty of trade, which notwithstanding some restraints is at least equal, perhaps superior to what it is in any other country. The liberty of exporting, duty-free, almost all sorts of goods which are the produce of domestic industry, to almost any foreign country, and what perhaps is of still greater importance, the unbounded liberty of transporting them from one part of our own country to any other, without being obliged to give any account to any public office, without being liable to question or examination of any kind. But above all, that equal and impartial administration of justice, which renders the rights of the meanest British subject respectable to the greatest, and which, by securing to every man the fruits of his own industry, gives the greatest and most effectual encouragement to every sort of industry. If the manufacturers of Great Britain, however, have been advanced, as they certainly have, by the colony trade, it has not been by means of the monopoly of that trade, but in spite of the monopoly. The effect of the monopoly has been not to augment the quantity, but to alter the quality and shape of a part of the manufacturers of Great Britain, and to accommodate to a market from which the returns are slow and distant, what would otherwise have been accommodated to one from which the returns are frequent and near. Its effect has consequently been to turn a part of the capital of Great Britain from an employment in which it would have maintained a greater quantity of manufacturing industry, to one in which it maintains a much smaller, and thereby to diminish, instead of increasing the whole quantity of manufacturing industry maintained in Great Britain. The monopoly of the colony trade therefore, like all the other mean and malignant expedience of the mercantile system, depresses the industry of all other countries, but chiefly that of the colonies without in the least increasing, but on the contrary diminishing, that of the country in whose favor it is established. The monopoly hinders the capital of that country, whatever may at any particular time be the extent of that capital, from maintaining so great a quantity of productive labor as it would otherwise maintain, and from affording so great a revenue to the industrious inhabitants as it would otherwise afford. But as capital can be increased only by savings from revenue, the monopoly, by hindering it from affording so great a revenue as it would otherwise afford, necessarily hinders it from increasing so fast as it would otherwise increase, and consequently from maintaining a still greater quantity of productive labor and affording a still greater revenue to the industrious inhabitants of that country. One great original source of revenue therefore, the wages of labor, the monopoly must necessarily have rendered at all times less abundant than it otherwise would have been. By raising the rate of mercantile profit, the monopoly discourages the improvement of land. The profit of improvement depends upon the difference between what the land actually produces, and what, by the application of a certain capital, it can be made to produce. If this difference affords a greater profit than what can be drawn from an equal capital and any mercantile employment, the improvement of land will draw capital from all mercantile employment. If the profit is less, mercantile employment will draw capital from the improvement of land. Whatever therefore raises the rate of mercantile profit, either lessens the superiority, or increases the inferiority of the profit of improvement, and, in the one case, hinders capital from going to improvement, and in the other, draws capital from it. But by discouraging improvement, the monopoly necessarily retards the natural increase of another great original source of revenue, the rent of land. By raising the rate of profit, too, the monopoly necessarily keeps up the market rate of interest higher than it otherwise would be. But the price of land, in proportion to the rent which it affords, the number of years purchase which is commonly paid for it necessarily falls as the rate of interest rises, and rises as the rate of interest falls. The monopoly therefore hurts the interest of the landlord two different ways by retarding the natural increase, first of his rent, and, secondly, of the price which he would get for his land in proportion to the rent which it affords. The monopoly, indeed, raises the rate of mercantile profit, and thereby augments somewhat the gain of our merchants. But as it obstructs the natural increase of capital, it tends rather to diminish than to increase the sum total of the revenue which the inhabitants of the country derive from the profits of stock, a small profit upon a great capital, generally affording a greater revenue than a great profit upon a small one. The monopoly raises the rate of profit, but it hinders the sum of profit from rising so high as it otherwise would do. All the original sources of revenue, the wages of labor, the rent of land, and the profits of stock, the monopoly renders much less abundant than they otherwise would be. To promote the little interest of one little order of men in one country, it hurts the interest of all other orders of men in that country and of all the men in all other countries. It is solely by raising the ordinary rate of profit that the monopoly either has proved or could prove advantageous to any one particular order of men. But besides all the bad effects to the country in general, which have already been mentioned as necessarily resulting from a higher rate of profit, there is one more fatal perhaps than all these put together, but which, if we may judge from experience, is inseparably connected with it. The high rate of profit seems everywhere to destroy that parsimony which, in other circumstances, is natural to the character of the merchant. When profits are high, that sober virtue seems to be superfluous, and expensive luxury to suit better the affluence of his situation. But the owners of the great mercantile capitals are necessarily the leaders and conductors of the whole industry of every nation, and their example has a much greater influence upon the manners of the whole industrious part of it than that of any other order of men. If his employer is attentive and parsimonious, the workman is very likely to be so too. But if the master is dissolute and disorderly, the servant, who shapes his work according to the pattern which his master prescribes to him, will shape his life too according to the example which he sets him. Accumulation is thus prevented in the hands of all those who are naturally the most disposed to accumulate, and the funds destined for the maintenance of productive labor receive no augmentation from the revenue of those who ought naturally to augment them most. The capital of the country, instead of increasing, gradually dwindles away, and the quantity of productive labor maintained in it grows every day less and less. Have the exorbitant profits of the merchants of Cadiz and Lisbon augmented the capital of Spain and Portugal? Have they alleviated the poverty? Have they promoted the industry of those two beggarly countries? Such has been the tone of mercantile expense in those two trading cities that those exorbitant profits, far from augmenting the general capital of the country, seem scarce to have been sufficient to keep up the capitals upon which they were made. Foreign capitals are every day intruding themselves if I may say so, more and more into the trade of Cadiz and Lisbon. It is to expel those foreign capitals from a trade which their own grows every day more and more insufficient for carrying on, that the Spaniards and Portuguese endeavor every day to straighten more and more the galling bands of their absurd monopoly. Compare the mercantile manners of Cadiz and Lisbon with those of Amsterdam, and you will be sensible how differently the conduct and character of merchants are affected by the high and by the low profits of stock. The merchants of London, indeed, have not yet generally become such magnificent lords as those of Cadiz and Lisbon, but neither are they in general such attentive and parsimonious burgers as those of Amsterdam. They are supposed, however, many of them, to be a good deal richer than the greater part of the former, and not quite so rich as many of the latter, but the rate of their profit is commonly much lower than that of the former, and a good deal higher than that of the latter. Light come, light go, says the proverb, and the ordinary tone of expense seems everywhere to be regulated, not so much according to the real ability of spending, as to the supposed facility of getting money to spend. It is thus that the single advantage which the monopoly procures to a single order of men is in many different ways hurtful to the general interest of the country. To found a great empire for the sole purpose of raising up a people of customers may at first sight appear a project fit only for a nation of shopkeepers. It is, however, a project altogether unfit for a nation of shopkeepers, but extremely fit for a nation whose government is influenced by shopkeepers. Such statesmen, and such statesmen only, are capable of fancying that they will find some advantage in employing the blood and treasure of their fellow citizens to found and maintain such an empire. Say to a shopkeeper, buy me a good estate, and I shall always buy my clothes at your shop, even though I should pay somewhat dear than what I can have them for at other shops, and you will not find him very forward to embrace your proposal. But should any other person buy you such an estate, the shopkeeper will be much obliged to your benefactor if he would enjoin you to buy all your clothes at his shop. England purchased for some of her subjects who found themselves uneasy at home a great estate in a distant country. The price, indeed, was very small, and instead of thirty years' purchase, the ordinary price of land in the present times, it amounted to little more than the expense of the different equipment which made the first discovery, reconordered the coast, and took a fictitious possession of the country. The land was good, and of great extent, and the cultivators, having plenty of good ground to work upon, and being for some time at liberty to sell their produce where they pleased, became, in the course of little more than thirty or forty years, between 1620 and 1660, so numerous and thriving a people that the shopkeepers and other traders of England wished to secure to themselves the monopoly of their custom. Without pretending, therefore, that they had paid any part, either of the original purchased money or of the subsequent expense of improvement, they petitioned the Parliament that the cultivators of America might for the future be confined to their shop. First, for buying all the goods which they wanted from Europe, and secondly, for selling all such parts of their own produce as those traders might find it convenient to buy. For they did not find it convenient to buy every part of it. Some parts of it imported into England might have interfered with some of the trades which they themselves carried on at home. Those particular parts of it, therefore, they were willing that the colonists should sell where they could. The farther off, the better, and upon that account proposed that their market should be confined to the country's south of Cape Finastera. A clause in the famous Act of Navigation established this truly shopkeeper proposal into a law. The maintenance of this monopoly has hitherto been the principle, or more properly, perhaps, the sole end and purpose of the dominion which Great Britain assumes over her colonies. In the exclusive trade, it is supposed, consists the great advantage of provinces which have never yet afforded either revenue or military force for the support of the civil government or the defense of the mother country. The monopoly is the principal badge of their dependency, and it is the sole fruit which has hitherto been gathered from that dependency. Whatever expense Great Britain has hitherto laid out in maintaining this dependency has really been laid out in order to support this monopoly. The expense of the ordinary peace establishment of the colonies amounted before the commencement of the present disturbances to the pay of 20 regiments of foot, to the expense of the artillery, stores and extraordinary provisions with which it was necessary to supply them, and to the expense of a very considerable naval force which was constantly kept up in order to guard from the smuggling vessels of other nations the immense coast of North America and that of our West Indian islands. The whole expense of this peace establishment was a charge upon the revenue of Great Britain, and was at the same time the smallest part of what the dominion of the colonies has cost the mother country. If we would know the amount of the whole we must add to the annual expense of this peace establishment the interest of the sums which in consequence of their considering her colonies as provinces subject to her dominion Great Britain has upon different occasions laid out upon their defense. We must add to it in particular the whole expense of the late war and a great part of that of the war which preceded it. The late war was altogether a colony quarrel and the whole expense of it in whatever part of the world it might have been laid out whether in Germany or the East Indies ought justly to be stated to the account of the colonies. It amounted to more than 90 millions sterling including not only the new debt which was contracted but the two shillings in the pound additional land tax and the sums which were every year borrowed from the sinking fund. The Spanish war which began in 1739 was principally a colony quarrel. Its principal object was to prevent the search of the colony ships which carried on a contraband trade with the Spanish main. This whole expense is in reality a bounty which has been given in order to support a monopoly. The pretended purpose of it was to encourage the manufacturers and to increase the commerce of Great Britain. But its real effect has been to raise the rate of mercantile profit and to enable our merchants to turn into a branch of trade of which the returns are more slow and distant than those of the greater part of other trades a greater proportion of their capital than they otherwise would have done. Two events which if a bounty could have prevented it might perhaps have been very well worthwhile to give such a bounty. Under the present system of management therefore Great Britain derives nothing but loss from the dominion which she assumes over her colonies. To propose that Great Britain should voluntarily give up all authority over her colonies and leave them to elect their own magistrates to enact their own laws and to make peace and more as they might think proper would be to propose such a measure as never was and never will be adopted by any nation in the world. No nation ever voluntarily gave up the dominion of any province how troublesome so ever it might be to govern it and how small so ever the revenue which it afforded might be in proportion to the expense which it occasioned. Such sacrifices though they might frequently be agreeable to the interest are always mortifying to the pride of every nation and what is perhaps of still greater consequence there are always contrary to the private interest of the governing part of it who would thereby be deprived of the disposal of many places of trust and profit of many opportunities of acquiring wealth and distinction which the possession of the most turbulent and to the great body of the people the most unprofitable province seldom fails to afford. The most visionary enthusiast would scarce be capable of proposing such a measure with any serious hopes at least of its ever being adopted. If it was adopted however Great Britain would not only be immediately freed from the whole annual expense of the peace establishment of the colonies but might settle with them such a treaty of commerce as would effectually secure to her a free trade more advantageous to the great body of the people though less so to the merchants than the monopoly which she at present enjoys. By thus parting good friends the natural affection of the colonies to the mother country which perhaps our late dissensions have well my extinguished would quickly revive. It might dispose them not only to respect for whole centuries together that treaty of commerce which they had concluded with us at parting but to favor us in war as well as in trade and instead of turbulent and factious subjects to become our most faithful affectionate and generous allies and the same sort of parental affection on the one side and filial respect on the other might revive between Great Britain and her colonies which used to subsist between those of ancient Greece and the mother city from which they descended. In order to render any province advantageous to the empire to which it belongs it ought to afford in time of peace a revenue to the public sufficient not only for defraying the whole expense of its own peace establishment but for contributing its proportion to the support of the general government of the empire. Every province necessarily contributes more or less to increase the expense of that general government. If any particular province therefore does not contribute its share towards defraying this expense an unequal burden must be thrown upon some other part of the empire. The extraordinary revenue too which every province affords to the public in time of war ought from parody of reason to bear the same proportion to the extraordinary revenue of the whole empire which its ordinary revenue does in time of peace. That neither the ordinary nor extraordinary revenue which Great Britain derives from her colonies bears this proportion to the whole revenue of the British empire will readily be allowed. The monopoly it has been supposed indeed by increasing the private revenue of the people of Great Britain and thereby enabling them to pay greater taxes compensates the deficiency of the public revenue of the colonies. But this monopoly I have endeavored to show though a very grievous tax upon the colonies and though it may increase the revenue of a particular order of men in Great Britain diminishes instead of increasing that of the great body of the people and consequently diminishes instead of increasing the ability of the great body of the people to pay taxes. The men too whose revenue the monopoly increases constitute a particular order which it is both absolutely impossible to tax beyond the proportion of other orders and extremely impolitic even to attempt to tax beyond that proportion as I shall endeavor to show in the following book. No particular resource therefore can be drawn from this particular order. The colonies may be taxed either by their own assemblies or by the parliament of Great Britain. That the colony assemblies can never be so managed as to levy upon their constituents a public revenue sufficient not only to maintain at all times their own civil and military establishment but to pay their proper proportion of the expense of the general government of the British Empire seems not very probable. It was a long time before even the parliament of England though placed immediately under the eye of the sovereign could be brought under such a system of management or could be rendered sufficiently liberal in their grants for supporting the civil and military establishments even of their own country. It was only by distributing among the particular members of parliament a great part either of the offices or of the disposal of the offices arising from this civil and military establishment that such a system of management could be established even with regard to the parliament of England. But the distance of the colony assemblies from the eye of the sovereign their number their dispersed situation and their various constitutions would render it very difficult to manage them in the same manner even though the sovereign had the same means of doing it and those means are wanting. It would be absolutely impossible to distribute among all the leading members of all the colony assemblies such a share either of the offices or of the disposal of the offices arising from the general government of the British Empire as to dispose them to give up their popularity at home and to tax their constituents for the support of that general government of which almost the whole emoluments were to be divided among people who were strangers to them. The unavoidable ignorance of administration besides concerning the relative importance of the different members of those different assemblies the offenses which must frequently be given the blunders which must constantly be committed in attempting to manage them in this manner seems to render such a system of management altogether impracticable with regard to them. The colony assemblies besides cannot be supposed the proper judges of what is necessary for the defense and support of the whole empire. The care of that defense and support is not entrusted to them it is not their business and they have no regular means of information concerning it. The assembly of a province like the vestry of a parish may judge very properly concerning the affairs of its own particular district but can have no proper means of judging concerning those of the whole empire. It cannot even judge properly concerning the proportion which its own province bears to the whole empire or concerning the relative degree of its wealth and importance compared with the other provinces. Because those other provinces are not under the inspection and superintendency of the assembly of a particular province. What is necessary for the defense and support of the whole empire and in what proportion each part ought to contribute can be judged of only by that assembly which inspects and superintends the affairs of the whole empire. It has been proposed accordingly that the colonies should be taxed by requisition. The parliament of Great Britain determining the sum which each colony ought to pay and the provincial assembly assessing and levying it in the way that suited best the circumstances of the province. What concern the whole empire would in this way be determined by the assembly which inspects and superintends the affairs of the whole empire and the provincial affairs of each colony might still be regulated by its own assembly. Though the colonies should in this case have no representatives in the British Parliament yet if we may judge by experience there is no probability that the parliamentary requisition would be unreasonable. The parliament of England has not upon any occasion shown the smallest disposition to overburden those parts of the empire which are not represented in parliament. The islands of Guernsey and Jersey without any means of resisting the authority of parliament are more lightly taxed than any part of Great Britain. Parliament in attempting to exercise its supposed right whether well or ill-grounded of taxing the colonies has never hitherto demanded of them anything which even approached to adjust proportion to what was paid by their fellow subjects at home. If the contribution of the colonies besides was to rise or fall in proportion to the rise or fall of the land tax parliament could not tax them without taxing at the same time its own constituents and the colonies might in this case be considered as virtually represented in parliament. End of Book 4 Chapter 7 Part E Chapter 7 Part F 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 7 Part F of Colonies Examples are not wanting of empires in which all the different provinces are not taxed if I may be allowed the expression in one mass but in which the sovereign regulates the sum which each province ought to pay and in some provinces assesses and levies it as he thinks proper while in others he leaves it to be assessed and levied as the respective states of each province shall determine. In some provinces of France the king not only imposes what taxes he thinks proper but assesses and levies them in the way he thinks proper. From others he demands a certain sum but leaves it to the states of each province to assess and levy that sum as they think proper. According to the scheme of taxing by requisition the parliament of Great Britain would stand nearly in the same situation towards the colony assemblies as the king of France does towards the states of those provinces which still enjoy the privilege of having states of their own the provinces of France which are supposed to be the best governed. But though according to this scheme the colonies could have no just reason to fear that their share of the public burdens should ever exceed the proper proportion to that of their fellow citizens at home Great Britain might have just reason to fear that it never would amount to that proper proportion. The parliament of Great Britain has not for some time past had the same established authority in the colonies which the French king has in those provinces of France which still enjoy the privilege of having states of their own. The colony assemblies if they were not very favorably disposed and unless more skillfully managed than they ever have been hitherto they are not very likely to be so might still find many pretenses for evading or rejecting the most reasonable requisitions of parliament. A French war breaks out we shall suppose. Ten millions must immediately be raised in order to defend the seat of the empire. This sum must be borrowed upon the credit of some parliamentary fund mortgaged for paying the interest. Part of this fund parliament proposes to raise by attacks to be levied in Great Britain and part of it by a requisition to all the different colony assemblies of America and the West Indies. Would people readily advance their money upon the credit of a fund which partly depended upon the good humor of all those assemblies far distant from the seat of the war and sometimes perhaps thinking themselves not much concerned in the event of it? Upon such a fund no more money would probably be advanced than what the tax to be levied in Great Britain might be supposed to answer for. The whole burden of the debt contracted on account of the war would in this manner fall as it always has done hitherto upon Great Britain upon a part of the empire and not upon the whole empire. Great Britain is perhaps since the world began the only state which as it has extended its empire has only increased its expense without once augmenting its resources. Other states have generally disburdened themselves upon their subject and subordinate provinces of the most considerable part of the expense of defending the empire. Great Britain has hitherto suffered her subject and subordinate provinces to disburden themselves upon her of almost this whole expense. In order to put Great Britain upon a footing of equality with their own colonies which the law has hitherto supposed to be subject and subordinate, it seems necessary upon the scheme of taxing them by parliamentary requisition that parliament should have some means of rendering its requisitions immediately effectual in case the colony assemblies should attempt to evade or reject them. And what those means are, it is not very easy to conceive and it has not yet been explained. Should the parliament of Great Britain at the same time be ever fully established in the right of taxing the colonies, even independent of the consent of their own assemblies, the importance of those assemblies would, from that moment, be at an end and with it, that of all the leading men of British America. Men desire to have some share in the management of public affairs chiefly on account of the importance which it gives them. Upon the power which the greater part of the leading men, the natural aristocracy of every country, have of preserving or defending their respective importance, depends the stability and duration of every system of free government. In the attacks which those leading men are continually making upon the importance of one another and in the defense of their own, consists the whole play of domestic faction and ambition. The leading men of America, like those of all other countries, desire to preserve their own importance. They feel or imagine that if their assemblies, which they are fond of calling parliaments, and of considering as equal in authority to the parliament of Great Britain, should be so far degraded as to become the humble ministers and executive officers of that parliament, the greater part of their own importance would be at an end. They have rejected therefore the proposal of being taxed by parliamentary requisition and, like other ambitious and high-spirited men, have rather chosen to draw the sword in defense of their own importance. Towards the declension of the Roman Republic, the allies of Rome who had borne the principal burden of defending the state and extending the empire demanded to be admitted to all the privileges of Roman citizens. Upon being refused, the social war broke out. During the course of that war, Rome granted those privileges to the greater part of them, one by one, and in proportion as they detached themselves from the General Confederacy. The Parliament of Great Britain insists upon taxing the colonies, and they refuse to be taxed by a parliament in which they are not represented. If to each colony which should detach itself from the General Confederacy, Great Britain should allow such a number of representatives as suited the proportion of what it contributed to the public revenue of the empire and consequence of its being subjected to the same taxes, and in compensation admitted to the same freedom of trade with its fellow subjects at home, the number of its representatives to be augmented as the proportion of its contribution might afterwards augment, a new method of acquiring importance, a new and more dazzling object of ambition, would be presented to the leading men of each colony. Instead of piddling for the little prizes which are to be found in what may be called the paltry raffle of colony faction, they might then hope from the presumption which men naturally have in their own ability and good fortune to draw some of the great prizes which sometimes come from the wheel of the great state lottery of British politics. Unless this or some other method has fallen upon, and there seems to be none more obvious than this, of preserving the importance and of gratifying the ambition of the leading men of America, it is not very probable that they will ever voluntarily submit to us, and we ought to consider that the blood which must be shed enforcing them to do so is, every drop of it, the blood either of those who are or of those whom we wish to have for our fellow citizens. They are very weak who flatter themselves that in the state to which things have come, our colonies will be easily conquered by force alone. The persons who now govern the resolutions of what they call their continental Congress feel in themselves at this moment a degree of importance which perhaps the greatest subjects in Europe scarce feel. From shopkeepers, tradesmen, and attorneys, they are become statesmen and legislators, and are employed in contriving a new form of government for an extensive empire which they flatter themselves will become and which indeed seems very likely to become one of the greatest and most formidable that ever was in the world. Five hundred different people perhaps who in different ways act immediately under the continental Congress and five hundred thousand perhaps who act under those five hundred all feel in the same manner a proportionable rise in their own importance. Almost every individual of the governing party in America fills at present in his own fancy a station superior not only to what he had ever filled before but to what he had ever expected to fill. And unless some new object of ambition is presented either to him or to his leaders if he has the ordinary spirit of a man he will die in defense of that station. It is a remark of the President Hénon that we now read with pleasure the account of many little transaction of the League which when they happened were not perhaps considered as very important pieces of news. But every man then says he fancied himself of some importance and the innumerable memoirs which have come down to us from those times were the greater part of them written by people who took pleasure in recording and magnifying events in which they flattered themselves they had been considerable actors. How obstinately the city of Paris upon that occasion defended itself what a dreadful famine it supported rather than submit to the best and afterwards the most beloved of all the French kings is well known. The greater part of the citizens or those who govern the greater part of them fought in defense of their own importance which they foresaw was to be at an end whenever the ancient government should be re-established. Our colonies unless they can be induced to consent to a union are very likely to defend themselves against the best of all mother countries as obstinately as the city of Paris did against one of the best of kings. The idea of representation was unknown in ancient times. When the people of one state were admitted to the right of citizenship in another they had no other means of exercising that right but by coming in a body to vote and deliberate with the people of that other state. The admission of the greater part of the inhabitants of Italy to the privileges of Roman citizens completely ruined the Roman Republic. It was no longer possible to distinguish between who was and who was not a Roman citizen. No tribe could know its own members. A rabble of any kind could be introduced into the assemblies of the people, could drive out the real citizens and decide upon the affairs of the Republic as if they themselves had been such. But though America were to send fifty or sixty new representatives to Parliament the doorkeeper of the House of Commons could not find any great difficulty in distinguishing between who was and who was not a member. Though the Roman Constitution therefore was necessarily ruined by the Union of Rome with the Allied States of Italy there is not the least probability that the British Constitution would be hurt by the Union of Great Britain with her colonies. That Constitution on the contrary would be completed by it and seems to be imperfect without it. The assembly which deliberates and decides concerning the affairs of every part of the Empire in order to be properly informed ought certainly to have representatives from every part of it. That this Union however could be easily effectuated or that difficulties and great difficulties might not occur in the execution I do not pretend. I have yet heard of none however which appear insurmountable. The principle perhaps arise not from the nature of things but from the prejudices and opinions of the people both on this and on the other side of the Atlantic. We on this side of the water are afraid lest the multitude of American representatives should overturn the balance of the Constitution and increase too much either the influence of the crown on the one hand or the force of the democracy on the other. But if the number of American representatives were to be in proportion to the produce of American taxation the number of people to be managed would increase exactly in proportion to the means of managing them and the means of managing to the number of people to be managed. The monarchical and democratical parts of the Constitution would after the Union stand exactly in the same degree of relative force with regard to one another as they had done before. The people on the other side of the water are afraid lest their distance from the seat of government might expose them to many oppressions but the representatives in Parliament of which the number ought from the first to be considerable would easily be able to protect them from all oppression. The distance could not much weaken the dependency of the representative upon the constituent and the former would still feel that he owed his seat in Parliament and all the consequence which he derived from it to the good will of the latter. It would be the interest of the former therefore to cultivate that good will by complaining with all the authority of a member of the legislature of every outrage which any civil or military officer might be guilty of in those remote parts of the Empire. The distance of America from the seat of government besides the natives of that country might flatter themselves with some appearance of reason too would not be a very long continuance. Such has hitherto been the rapid progress of that country in wealth, population and improvement that in the course of little more than a century perhaps the produce of the American might exceed that of the British taxation. The seat of the Empire would then naturally remove itself to that part of the Empire which contributed most to the general defense and support of the whole. The discovery of America and that of a passage to the East Indies by the Cape of Good Hope are the two greatest and most important events recorded in the history of mankind. Their consequences have already been great but in the short period of between two and three centuries which has elapsed since these discoveries were made it is impossible that the whole extent of their consequences can have been seen. What benefits or what misfortunes to mankind may hereafter result from those great events no human wisdom can foresee. By uniting in some measure the most distant parts of the world by enabling them to relieve one another's wants to increase one another's enjoyments and to encourage one another's industry their general tendency would seem to be beneficial. To the natives however both of the East and West Indies all the commercial benefits which can have resulted from those events have been sunk and lost in the dreadful misfortunes which they have occasioned. These misfortunes however seem to have arisen rather from accident than from anything in the nature of those events themselves. At the particular time when these discoveries were made the superiority of force happened to be so great on the side of the Europeans that they were enabled to commit with impunity every sort of injustice in those remote countries. Hereafter perhaps the natives of those countries may grow stronger or those of Europe may grow weaker and the inhabitants of all the different quarters of the world may arrive at that equality of courage and force which by inspiring mutual fear can alone overall the injustice of independent nations into some sort of respect for the rights of one another. But nothing seems more likely to establish this equality of force than that mutual communication of knowledge and of all sorts of improvements which an extensive commerce from all countries to all countries naturally or rather necessarily comes along with it. In the meantime one of the principal effects of those discoveries has been to raise the mercantile system to a degree of splendor and glory which you could never otherwise have attained to. It is the object of that system to enrich a great nation rather by trade and manufacturers then by the improvement and cultivation of land rather by the industry of the towns then by that of the country. But in consequence of those discoveries the commercial towns of Europe instead of being the manufacturers and carriers for but a very small part of the world that part of Europe which is washed by the Atlantic Ocean and the countries which lie around the Baltic and Mediterranean seas have now become the manufacturers for the numerous and thriving cultivators of America and the carriers and in some respects the manufacturers too for almost all the different nations of Asia Africa and America. Two new worlds have been open to their industry each of them much greater and more extensive than the old one and the market of one of them growing still greater and greater every day. The countries which possess the colonies of America and which trade directly to the East Indies enjoy indeed the whole show and splendor of this great commerce. Other countries however notwithstanding all the invidious restraints by which it is meant to exclude them frequently enjoy a greater share of the real benefit of it. The colonies of Spain and Portugal for example give more real encouragement to the industry of other countries than to that of Spain and Portugal. In the single article of Lenin alone the consumption of those colonies amounts it is said but I do not pretend to want the quantity to more than three million sterling a year but this great consumption is almost entirely supplied by France Flanders Holland and Germany. Spain and Portugal furnished but a small part of it. The capital which supplies the colonies with this great quantity of Lenin is annually distributed among and furnishes a revenue to the inhabitants of those other countries. The profits of it only are spent in Spain and Portugal where they help to support the sumptuous profusion of the merchants of Cadiz and Lisbon. Even the regulations by which each nation endeavors to secure to itself the exclusive trade of its own colonies are frequently more hurtful to the countries in favor of which they are established than to those against which they are established. The unjust oppression of the industry of other countries falls back if I may say so upon the heads of the oppressors and crushes their industry more than it does that of those other countries. By those regulations for example the merchant of Hamburg must send the Lenin which he destines for the American market to London and he must bring back from thence the tobacco which he destines for the German market because he can neither send the one directly to America nor bring the other directly from thence. By this restraint he is probably obliged to sell the one somewhat cheaper and to buy the other somewhat dear than he otherwise might have done and his profits are probably somewhat abridged by means of it. In this trade however between Hamburg and London he certainly receives the returns of his capital much more quickly than he could possibly have done in the direct trade to America even though we should suppose what is by no means the case that the payments of America were as punctual as those of London. In the trade therefore to which those regulations confine the merchant of Hamburg his capital can keep in constant employment a much greater quantity of German industry than he could possibly have done in the trade from which he is excluded. Though the one employment therefore made to him perhaps be less profitable than the other it cannot be less advantageous to his country. It is quite otherwise with the employment into which the monopoly naturally attracts if I may say so the capital of the London merchant. That employment may perhaps be more profitable to him than the greater part of other employment but on account of the slowness of the returns it cannot be more advantageous to his country. After all the unjust attempts therefore of every country in Europe to engross to itself the whole advantage of the trade of its own colonies no country has yet been able to engross to itself anything but the expense of supporting in time of peace and of defending in time of war the oppressive authority which it assumes over them. The inconveniences resulting from the possession of its colonies every country has engrossed to itself completely. The advantages resulting from their trade it has been obliged to share with many other countries. At first sight no doubt the monopoly of the great commerce of America naturally seems to be an acquisition of the highest value. To the undiscerning eye of giddy ambition it naturally presents itself amidst the confused scramble of politics and war as a very dazzling object to fight for. The dazzling splendor of the object however the immense greatness of the commerce is the very quality which renders the monopoly of it hurtful or which makes one employment in its own nature necessarily less advantageous to the country than the greater part of other employment absorb a much greater proportion of the capital of the country than what would otherwise have gone to it. The mercantile stock of every country it has been shown in the second book naturally seeks if one may say so the employment most advantageous to that country. If it is employed in the carrying trade the country to which it belongs becomes the emporium of the goods of all the countries whose trade that stock carries on. But the owner of that stock necessarily wishes to dispose of as great a part of those goods as he can at home. He thereby saves himself the trouble risk and expense of exportation and he will upon that account be glad to sell them at home not only for a much smaller price but with somewhat a smaller profit then he might expect to make by sending them abroad. He naturally therefore endeavors as much as he can to turn his carrying trade into a foreign trade of consumption. If his stock again is employed in a foreign trade of consumption he will for the same reason be glad to dispose of at home as great a part as he can of the home goods which he collects in order to export to some foreign market and he will thus endeavor as much as he can to turn his foreign trade of consumption into a home trade. The mercantile stock of every country naturally courts in this manner the near and shuns the distant employment. Naturally courts the employment in which the returns are frequent and shuns that in which they are distant and slow. Naturally courts the employment in which it can maintain the greatest quantity of productive labor in the country to which it belongs or in which its owner resides and shuns that in which it can maintain there the smallest quantity. It naturally courts the employment which in ordinary cases is most advantageous and shuns that which in ordinary cases is least advantageous to that country. But if in any one of those distant employment which in ordinary cases are less advantageous to the country the profit should happen to rise somewhat higher than what is sufficient to balance the natural preference which is given to nearer employment. This superiority of profit will draw stock from those nearer employment till the profits of all return to their proper level. This superiority of profit however is a proof that in the actual circumstances of the society those distant employment are somewhat understocked in proportion to other employment and that the stock of the society is not distributed in the properest manner among all the different employment carried on in it. It is a proof that something is either bought cheaper or sold dearer than it ought to be and that some particular class of citizens is more or less oppressed either by paying more or by getting less than what is suitable to that equality which ought to take place and which naturally does take place among all the different classes of them. Though the same capital never will maintain the same quantity of productive labor in a distant as in a near employment yet a distant employment may be as necessary for the welfare of the society as a near one. The goods which the distant employment deals in being necessary perhaps for carrying on many of the nearer employment. But if the profits of those who deal in such goods are above their proper level those goods will be sold dearer than they ought to be or somewhat above their natural price and all those engaged in the nearer employment will be more or less oppressed by this high price. Their interest therefore in this case requires that some stock should be withdrawn from those nearer employment and turn towards that distant one in order to reduce its profits to their proper level and the price of the goods which it deals in to their natural price. In this extraordinary case the public interest requires that some stock should be withdrawn from those employment which in ordinary cases are more advantageous and turn towards one which in ordinary cases is less advantageous to the public and in this extraordinary case the natural interest and inclinations of men coincide as exactly with the public interest as in all other ordinary cases and lead them to withdraw stock from the near and turn it towards the distant employment. End of book 4 chapter 7 part F.