An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith (ebook reader with highlighter txt) 📖

the former beyond what the latter

can, in these circumstances, enjoy. The exclusive trade of the

colonies, therefore, as it diminishes, or at least keeps down

below what they would otherwise rise to, both the enjoyments and

the industry of the countries which do not possess it, so it

gives an evident advantage to the countries which do possess it

over those other countries.

 

This advantage, however, will, perhaps, be found to be rather

what may be called a relative than an absolute advantage, and to

give a superiority to the country which enjoys it, rather by

depressing the industry and produce of other countries, than by

raising those of that particular country above what they would

naturally rise to in the case of a free trade.

 

The tobacco of Maryland and Virginia, for example, by means of

the monopoly which England enjoys of it, certainly comes cheaper

to England than it can do to France to whom England commonly

sells a considerable part of it. But had France and all other

European countries been at all times allowed a free trade to

Maryland and Virginia, the tobacco of those colonies might by

this time have come cheaper than it actually does, not only to

all those other countries, but likewise to England. The produce

of tobacco, in consequcnce of a market so much more extensive

than any which it has hitherto enjoyed, might, and probably

would, by this time have been so much increased as to reduce the

profits of a tobacco plantation to their natural level with those

of a corn plantation, which it is supposed they are still

somewhat above. The price of tobacco might, and probably would,

by this time have fallen somewhat lower than it is at present. An

equal quantity of the commodities, either of England or of those

other countries, might have purchased in Maryland and Virginia a

greater quantity of tobacco than it can do at present, and

consequently have been sold there for so much a better price. So

far as that weed, therefore, can, by its cheapness and abundance,

increase the enjoyments, or augment the industry, either of

England or of any other country, it would probably, in the case

of a free trade, have produced both these effects in somewhat a

greater degree than it can do at present. England, indeed, would

not, in this case, have had any advantage over other countries.

She might have bought the tobacco of her colonies somewhat

cheaper, and consequently have sold some of her own commodities

somewhat dearer, than she actually does ; but she could neither

have bought the one cheaper, nor sold the other dearer, than any

other country might have done. She might, perhaps, have gained an

absolute, but she would certainly have lost a relative advantage.

 

In order, however, to obtain this relative advantage in the

colony trade, in order to execute the invidious and malignant

project of excluding, as much as possible, other nations from any

share in it, England, there are very probable reasons for

believing, has not only sacrificed a part of the absolute

advantage which she, as well as every other nation, might have

derived from that trade, but has subjected herself both to an

absolute and to a relative disadvantage in almost every other

branch of trade.

 

When, by the act of navigation, England assumed to herself the

monopoly of the colony trade, the foreign capitals which had

before been employed in it, were necessarily withdrawn from it.

The English capital, which had before carried on but a part of

it, was now to carry on the whole. The capital which had before

supplied the colonies with but a part of the goods which they

wanted from Europe, was now all that was employed to supply them

with the whole. But it could not supply them with the whole;

and the goods with which it did supply them were necessarily sold

very dear. The capital which had before bought but a part of the

surplus produce of the colonies, was now all that was employed to

buy the whole. But it could not buy the whole at any thing near

the old price ; and therefore, whatever it did buy, it

necessarily bought very cheap. But in an employment of capital,

in which the merchant sold very dear, and bought very cheap, the

profit must have been very great, and much above the ordinary

level of profit in other branches of trade. This superiority of

profit in the colony trade could not fail to draw from other

branches of trade a part of the capital which had before been

employed in them. But this revulsion of capital, as it must have

gradually increased the competition of capitals in the colony

trade, so it must have gradually diminished that competition in

all those other branches of trade ; as it must have gradually

lowered the profits of the one, so it must have gradually raised

those of the other, till the profits of all came to a new level,

different from, and somewhat higher, than that at which they had

been before.

 

This double effect of drawing capital from all other trades, and

of raising the rate of profit somewhat higher than it otherwise

would have been in all trades, was not only produced by this

monopoly upon its first establishment, but has continued to be

produced by it ever since.

 

First, This monopoly has been continually drawing capital from

all other trades, to be employed in that of the colonies.

 

Though the wealth of Great Britain has increased very much since

the establishment of the act of navigation, it certainly has not

increased in the same proportion as that or the colonies. But the

foreign trade of every country naturally increases in proportion

to its wealth, its surplus produce in proportion to its whole

produce; and Great Britain having engrossed to herself almost the

whole of what may be called the foreign trade of the colonies,

and her capital not having increased in the same proportion as

the extent of that trade, she could not carry it on without

continually withdrawing from other branches of trade some part of

the capital which had before been employed in them, as well as

withholding from them a great deal more which would otherwise

have gone to them. Since the establishment of the act of

navigation, accordingly, the colony trade has been continually

increasing, while many other branches of foreign trade,

particularly of that to other parts of Europe, have been

continually decaying. Our manufactures for foreign sale, instead

of being suited, as before the act of navigation, to the

neighbouring market of Europe, or to the more distant one of the

countries which lie round the Mediterranean sea, have the greater

part of them, been accommodated to the still more distant one of

the colonies; to the market in which they have the monopoly,

rather than to that in which they have many competitors. The

causes of decay in other branches of foreign trade, which, by Sir

Matthew Decker and other writers, have been sought for in the

excess and improper mode of taxation, in the high price of

labour, in the increase of luxury, etc. may all be found in the

overgrowth of the colony trade. The mercantile capital of Great

Britain, though very great, yet not being infinite, and though

greatly increased since the act of navigation, yet not being

increased in the same proportion as the colony trade, that trade

could not possibly be carried on without withdrawing some part of

that capital from other branches of trade, nor consequently

without some decay of those other branches.

 

England, it must be observed, was a great trading country, her

mercantile capital was very great, and likely to become still

greater and greater every day, not only before the act of

navigation had established the monopoly of the corn trade, but

before that trade was very considerable. In the Dutch war, during

the government of Cromwell, her navy was superior to that of

Holland ; and in that which broke out in the beginning of the

reign of Charles II., it was at least equal, perhaps superior to

the united navies of France and Holland. Its superiority,

perhaps, would scarce appear greater in the present times, at

least if the Dutch navy were to bear the same proportion to the

Dutch commerce now which it did then. But this great naval

power could not, in either of those wars, be owing to the act of

navigation. During the first of them, the plan of that act had

been but just formed; and though, before the breaking out of the

second, it had been fully enacted by legal authority, yet no part

of it could have had time to produce any considerable effect, and

least of all that part which established the exclusive trade to

the colonies. Both the colonies and their trade were

inconsiderable then, in comparison of what they are how. The

island of Jamaica was an unwholesome desert, little inhabited,

and less cultivated. New York and New Jersey were in the

possession of the Dutch, the half of St. Christopher’s in that of

the French. The island of Antigua, the two Carolinas,

Pennsylvania, Georgia, and Nova Scotia, were not planted.

Virginia, Maryland, and New England were planted; and though they

were very thriving colonies, yet there was not perhaps at that

time, either in Europe or America, a single person who foresaw,

or even suspected, the rapid progress which they have since made

in wealth, population, and improvement. The island of Barbadoes,

in short, was the only British colony of any consequence, of

which the condition at that time bore any resemblance to what it

is at present. The trade of the colonies, of which England, even

for some time after the act of navigation, enjoyed but a part

(for the act of navigation was not very strictly executed till

several years after it was enacted), could not at that time be

the cause of the great trade of England, nor of the great naval

power which was supported by that trade. The trade which at that

time supported that great naval power was the trade of Europe,

and of the countries which lie round the Mediterranean sea. But

the share which Great Britain at present enjoys of that trade

could not support any such great naval power. Had the growing

trade of the colonies been left free to all nations, whatever

share of it might have fallen to Great Britain, and a very

considerable share would probably have fallen to her, must have

been all an addition to this great trade of which she was before

in possession. In consequence of the monopoly, the increase of

the colony trade has not so much occasioned an addition to the

trade which Great Britain had before, as a total change in its

direction.

 

Secondly, This monopoly has necessarily contributed to keep up

the rate of profit, in all the different branches of British

trade, higher than it naturally would have been, had all nations

been allowed a free trade to the British colonies.

 

The monopoly of the colony trade, as it necessarily drew towards

that trade a greater proportion of the capital of Great Britain

than what would have gone to it of its own accord, so, by the

expulsion of all foreign capitals, it necessarily reduced the

whole quantity of capital employed in that trade below what it

naturally would have been in the case of a free trade. But, by

lessening the competition of capitals in that branch of trade, it

necessarily raised the rate of profit in that branch. By

lessening, too, the competition of British capitals in all other

branches of trade, it necessarily raised the rate of British

profit in all those other branches. Whatever may have