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

maintained by a capital returned

once in the year, the other can keep in constant employment but a

fourth or a fifth part of that industry. At some of the outports

a credit is commonly given to those foreign correspondents to

whom they export them tobacco. At the port of London, indeed, it

is commonly sold for ready money: the rule is Weigh and pay. At

the port of London, therefore, the final returns of the whole

round-about trade are more distant than the returns from America,

by the time only which the goods may lie unsold in the warehouse;

where, however, they may sometimes lie long enough. But, had not

the colonies been confined to the market of Great Britain for the

sale of their tobacco, very little more of it would probably have

come to us than what was necessary for the home consumption. The

goods which Great Britain purchases at present for her own

consumption with the great surplus of tobacco which she exports

to other countries, she would, in this case, probably have

purchased with the immediate produce of her own industry, or with

some part of her own manufactures. That produce, those

manufactures, instead of being almost entirely suited to one

great market, as at present, would probably have been fitted to a

great number of smaller markets. Instead of one great round-about

foreign trade of consumption, Great Britain would probably have

carried on a great number of small direct foreign trades of the

same kind. On account of the frequency of the returns, a part,

and probably but a small part, perhaps not above a third or a

fourth of the capital which at present carries on this great

round-about trade, might have been sufficient to carry on all

those small direct ones; might have kept inconstant employment an

equal quantity of British industry ; and have equally supported

the annual produce of the land and labour of Great Britain. All

the purposes of this trade being, in this manner, answered by a

much smaller capital, there would have been a large spare capital

to apply to other purposes; to improve the lands, to increase the

manufactures, and to extend the commerce of Great Britain; to

come into competition at least with the other British capitals

employed in all those different ways, to reduce the rate of

profit in them all, and thereby to give to Great Britain, in all

of them, a superiority over other countries, still greater than

what she at present enjoys.

 

The monopoly of the colony trade, too, has forced some part of

the capital of Great Britain from all foreign trade of

consumption to a carrying trade; and, consequently from

supporting more or less the industry of Great Britain, to be

employed altogether in supporting partly that of the colonies,

and partly that of some other countries.

 

The goods, for example, which are annually purchased with the

great surplus of eighty-two thousand hogsheads of tobacco

annually re-exported from Great Britain, are not all consumed in

Great Britain. Part of them, linen from Germany and Holland, for

example, is returned to the colonies for their particular

consumption. But that part of the capital of Great Britain which

buys the tobacco with which this linen is afterwards bought, is

necessarily withdrawn from supporting the industry of Great

Britain, to be employed altogether in supporting, partly that of

the colonies, and partly that of the particular countries who pay

for this tobacco with the produce of their own industry.

 

The monopoly of the colony trade, besides, by forcing towards it

a much greater proportion of the capital of Great Britain than

what would naturally have gone to it, seems to have broken

altogether that natural balance which would otherwise have taken

place among all the different branches of British industry. The

industry of Great Britain, instead of being accommodated to a

great number of small markets, has been principally suited to one

great market. Her commerce, instead of running in a great number

of small channels, has been taught to run principally in one

great channel. But the whole system of her industry and commerce

has thereby been rendered less secure; the whole state of her

body politic less healthful than it otherwise would have been. In

her present condition, Great Britain resembles one of those

unwholesome bodies in which some of the vital parts are

overgrown, and which, upon that account, are liable to many

dangerous disorders, scarce incident to those in which all the

parts are more properly proportioned. A small stop in that great

blood-vessel, which has been artificially swelled beyond its

natural dimensions, and through which an unnatural proportion of

the industry and commerce of the country has been forced to

circulate, is very likely to bring on the most dangerous

disorders upon the whole body politic. The expectation of a

rupture with the colonies, accordingly, has struck the people of

Great Britain with more terror than they ever felt for a Spanish

armada, or a French invasion. It was this terror, whether well or

ill grounded, which rendered the repeal of the stamp act, among

the merchants at least, a popular measure. In the total

exclusion from the colony market, was it to last only for a few

years, the greater part of our merchants used to fancy that they

foresaw an entire stop to their trade; the greater part of our

master manufacturers, the entire ruin of their business; and the

greater part of our workmen, an end of their employment. A

rupture with any of our neighbours upon the continent, though

likely, too, to occasion some stop or interruption in the

employments of some of all these different orders of people, is

foreseen, however, without any such general emotion. The blood,

of which the circulation is stopt in some of the smaller vessels,

easily disgorges itself into the greater, without occasioning any

dangerous disorder; but, when it is stopt in any of the greater

vessels, convulsions, apoplexy, or death, are the immediate and

unavoidable consequences. If but one of those overgrown

manufactures, which, by means either of bounties or of the

monopoly of the home and colony markets, have been artificially

raised up to any unnatural height, finds some small stop or

interruption in its employment, it frequently occasions a mutiny

and disorder alarming to government, and embarrassing even to the

deliberations of the legislature. How great, therefore, would be

the disorder and confusion, it was thought, which must

necessarily be occasioned by a sudden and entire stop in the

employment of so great a proportion of our principal

manufacturers?

 

Some moderate and gradual relaxation of the laws which give to

Great Britain the exclusive trade to the colonies, till it is

rendered in a great measure free, seems to be the only expedient

which can, in all future times, deliver her from this danger ;

which can enable her, or even force her, to withdraw some part of

her capital from this overgrown employment, and to turn it,

though with less profit, towards other employments; and which, by

gradually diminishing one branch of her industry, and gradually

increasing all the rest, can, by degrees, restore all the

different branches of it to that natural, healthful, and proper

proportion, which perfect liberty necessarily establishes, and

which perfect liberty can alone preserve. To open the colony

trade all at once to all nations, might not only occasion some

transitory inconveniency, but a great permanent loss, to the

greater part of those whose industry or capital is at present

engaged in it. The sudden loss of the employment, even of the

ships which import the eighty-two thousand hogsheads of tobacco,

which are over and above the consumption of Great Britain, might

alone be felt very sensibly. Such are the unfortunate effects of

all the regulations of the mercantile system. They not only

introduce very dangerous disorders into the state of the body

politic, but disorders which it is often difficult to remedy,

without occasioning, for a time at least, still greater

disorders. In what manner, therefore, the colony trade ought

gradually to be opened ; what are the restraints which ought

first, and what are those which ought last, to be taken away ; or

in what manner the natural system of perfect liberty and justice

ought gradually to be restored, we must leave to the wisdom of

future statesmen and legislators to determine.

 

Five different events, unforeseen and unthought of, have very

fortunately concurred to hinder Great Britain from feeling, so

sensibly as it was generally expected she would, the total

exclusion which has now taken place for more than a year (from

the first of December 1774) from a very important branch of the

colony trade, that of the twelve associated provinces of North

America. First, those colonies, in preparing themselves for their

non-importation agreement, drained Great Britain completely of

all the commodities which were fit for their market ; secondly,

the extra ordinary demand of the Spanish flota has, this year,

drained Germany and the north of many commodities, linen in

particular, which used to come into competition, even in the

British market, with the manufactures of Great Britain; thirdly,

the peace between Russia and Turkey has occasioned an

extraordinary demand from the Turkey market, which, during the

distress of the country, and while a Russian fleet was cruizing

in the Archipelago, had been very poorly supplied ; fourthly, the

demand of the north of Europe for the manufactures of Great

Britain has been increasing from year to year, for some time

past; and, fifthly, the late partition, and consequential

pacification of Poland, by opening the market of that great

country, have, this year, added an extraordinary demand from

thence to the increasing demand of the north. These events are

all, except the fourth, in their nature transitory and

accidental; and the exclusion from so important a branch of the

colony trade, if unfortunately it should continue much longer,

may still occasion some degree of distress. This distress,

however, as it will come on gradually, will be felt much less

severely than if it had come on all at once ; and, in the mean

time, the industry and capital of the country may find a new

employment and direction, so as to prevent this distress from

ever rising to any considerable height.

 

The monopoly of the colony trade, therefore, so far as it has

turned towards that trade a greater proportion of the capital of

Great Britain than what would otherwise have gone to it, has in

all cases turned it, from a foreign trade of consumption with a

neighbouring, into one with a more distant country ; in many

cases from a direct foreign trade of consumption into a

round-about one; and, in some cases, from all foreign trade of

consumption into a carrying trade. It has, in all cases,

therefore, turned it from a direction in which it would have

maintained a greater quantity of productive labour, into one in

which it can maintain a much smaller quantity. By suiting,

besides, to one particular market only, so great a part of the

industry and commerce of Great Britain, it has rendered the whole

state of that industry and commerce more precarious and less

secure, than if their produce had been accommodated to a greater

variety of markets.

 

We must carefully distinguish between the effects of the colony

trade and those of the monopoly of that trade. The former are

always and necessarily beneficial ; the latter always and

necessarily hurtful. But the former are so beneficial, that the

colony trade, though subject to a monopoly, and, notwithstanding

the hurtful effects of that monopoly, is still, upon the whole,

beneficial, and greatly beneficial, though a good deal less so

than it otherwise would be.

 

The effect of the colony trade, in its natural and free state, is

to open a great though distant market,