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

and thriving

cultivators of America, and the carriers, and in some respects

the manufacturers too, for almost all the different nations of

Asia, Africa, and America. Two new worlds have been opened to

their industry, each of them much greater and more extensive than

the old one, and the market of one of them growing still greater

and greater every day.

 

The countries which possess the colonies of America, and which

trade directly to the East Indies, enjoy indeed the whole show

and splendour of this great commerce. Other countries, however,

notwithstanding all the invidious restraints by which it is meant

to exclude them, frequently enjoy a greater share of the real

benefit of it. The colonies of Spain and. Portugal, for example,

give more real encouragement to the industry of other countries

than to that of Spain and Portugal. In the single article of

linen alone, the consumption of those colonies amounts, it is

said (but I do not pretend to warrant the quantity ), to more

than three millions sterling a-year. But this great consumption

is almost entirely supplied by France, Flanders, Holland, and

Germany. Spain and Portugal furnish but a small part of it. The

capital which supplies the colonies with this great quantity of

linen, is annually distributed among, and furnishes a revenue to,

the inhabitants of those other countries. The profits of it only

are spent in Spain and Portugal, where they help to support the

sumptuous profusion of the merchants of Cadiz and Lisbon.

 

Even the regulations by which each nation endeavours to secure to

itself the exclusive trade of its own colonies, are frequently

more hurtful to the countries in favour of which they are

established, than to those against which they are established.

The unjust oppression of the industry of other countries falls

back, if I may say so, upon the heads of the oppressors, and

crushes their industry more than it does that of those other

countries. By those regulations, for example, the merchant of

Hamburg must send the linen which he destines for the American

market to London, and he must bring back from thence the tobacco

which be destines for the German market; because he can neither

send the one directly to America, nor bring the other directly

from thence. By this restraint he is probably obliged to sell the

one somewhat cheaper, and to buy the other somewhat dearer, than

he otherwise might have done; and his profits are probably

somewhat abridged by means of it. In this trade, however, between

Hamburg and London, he certainly receives the returns of his

capital much more quickly than he could possibly have done in the

direct trade to America, even though we should suppose, what is

by no means the case, that the payments of America were as

punctual as those of London. In the trade, therefore, to

which those regulations confine the merchant of Hamburg, his

capital can keep in constant employment a much greater quantity

of German industry than he possibly could have done in the trade

from which he is excluded. Though the one employment, therefore,

may to him perhaps be less profitable than the other, it cannot

be less advantageous to his country. It is quite otherwise with

the employment into which the monpoly naturally attracts, if I

may say so, the capital of the London merchant. That employment

may, perhaps, be more profitable to him than the greater part of

other employments; but on account of the slowness of the returns,

it cannot be more advantageous to his country.

 

After all the unjust attempts, therefore, of every country in

Europe to engross to itself the whole advantage of the trade of

its own colonies, no country has yet been able to engross to

itself any thing but the expense of supporting in time of peace,

and of defending in time of war, the oppressive authority which

it assumes over them. The inconveniencies resulting from the

possession of its colonies, every country has engrossed to itself

completely. The advantages resulting from their trade, it

has been obliged to share with many other countries.

 

At first sight, no doubt, the monopoly of the great commerce of

America naturally seems to be an acquisition of the highest

value. To the undiscerning eye of giddy ambition it naturally

presents itself, amidst the confused scramble of politics and

war, as a very dazzling object to fight for. The dazzling

splendour of the object, however, the immense greatness of the

commerce, is the very quality which renders the monopoly of it

hurtful, or which makes one employment, in its own nature

necessarily less advantageous to the country than the greater

part of other employments, absorb a much greater proportion of

the capital of the country than what would otherwise have gone to

it.

 

The mercantile stock of every country, it has been shown in the

second book, naturally seeks, if one may say so, the employment

most advantageous to that country. If it is employed in the

carrying trade, the country to which it belongs becomes the

emporium of the goods of all the countries whose trade that stock

carries on. But the owner of that stock necessarily wishes to

dispose of as great a part of those goods as he can at home. He

thereby saves himself the trouble, risk, and expense of

exportation ; and he will upon that account be glad to sell them

at home, not only for a much smaller price, but with somewhat a

smaller profit, than he might expect to make by sending them

abroad. He naturally, therefore, endeavours as much as he can to

turn his carrying trade into a foreign trade of consumption, If

his stock, again, is employed in a foreign trade of consumption,

he will, for the same reason, be glad to dispose of, at home, as

great a part as he can of the home goods which he collects in

order to export to some foreign market, and he will thus

endeavour, as much as he can, to turn his foreign trade of

consumption into a home trade. The mercantile stock of every

country naturally courts in this manner the near, and shuns the

distant employment : naturally courts the employment in which the

returns are frequent, and shuns that in which they are distant

and slow; naturally courts the employment in which it can

maintain the greatest quantity of productive labour in the

country to which it belongs, or in which its owner resides, and

shuns that in which it can maintain there the smallest quantity.

It naturally courts the employment which in ordinary cases is

most advantageous, and shuns that which in ordinary cases is

least advantageous to that country.

 

But if, in any one of those distant employments, which in

ordinary cases are less advantageous to the country, the profit

should happen to rise somewhat higher than what is sufficient to

balance the natural preference which is given to nearer

employments, this superiority of profit will draw stock from

those nearer employments, till the profits of all return to their

proper level. This superiority of profit, however, is a proof

that, in the actual circumstances of the society, those distant

employments are somewhat understocked in proportion to other

employments, and that the stock of the society is not distributed

in the properest manner among all the different employments

carried on in it. It is a proof that something is either bought

cheaper or sold dearer than it ought to be, and that some

particular class of citizens is more or less oppressed, either by

paying more, or by getting less than what is suitable to that

equality which ought to take place, and which naturally does take

place, among all the different classes of them. Though the same

capital never will maintain the same quantity of productive

labour in a distant as in a near employment, yet a distant

employment maybe as necessary for the welfare of the society as a

near one; the goods which the distant employment deals in being

necessary, perhaps, for carrying on many of the nearer

employments. But if the profits of those who deal in such goods

are above their proper level, those goods will be sold dearer

than they ought to be, or somewhat above their natural price, and

all those engaged in the nearer employments will be more or less

oppressed by this high price. Their interest, therefore, in this

case, requires, that some stock should be withdrawn from those

nearer employments, and turned towards that distant one, in order

to reduce its profits to their proper level, and the price of the

goods which it deals in to their natural price. In this

extraordinary case, the public interest requires that some stock

should be withdrawn from those employments which, in ordinary

cases, are more advantageous, and turned towards one which, in

ordinary cases, is less advantageous to the public; and, in this

extraordinary case, the natural interests and inclinations of men

coincide as exactly with the public interests as in all other

ordinary cases, and lead them to withdraw stock from the near,

and to turn it towards the distant employments.

 

It is thus that the private interests and passions of individuals

naturally dispose them to turn their stock towards the

employments which in ordinary cases, are most advantagenus to the

society. But if from this natural preference they should turn too

much of it towards those employments, the fall of profit in them,

and the rise of it in all others, immediately dispose them to

alter this faulty distribution. Without any intervention of law,

therefore, the private interests and passions of men naturally

lead them to divide and distribute the stock of every society

among all the different employments carried on in it; as nearly

as possible in the proportion which is most agreeable to the

interest of the whole society.

 

All the different regulations of the mercantile system

necessarily derange more or less this natural and most

advantageous distribution of stock. But those which concern the

trade to America and the East Indies derange it, perhaps, more

than any other ; because the trade to those two great continents

absorbs a greater quantity of stock than any two other branches

of trade. The regulations, however, by which this derangement is

effected in those two different branches of trade, are not

altogether the same. Monopoly is the great engine of both ; but

it is a different sort of monopoly. Monopoly of one kind or

another, indeed, seems to be the sole engine of the mercantile

system.

 

In the trade to America, every nation endeavours to engross as

much as possible the whole market of its own colonies, by fairly

excluding all other nations from any direct trade to them. During

the greater part of the sixteenth century, the Portuguese

endeavoured to manage the trade to the East Indies in the same

manner, by claiming the sole right of sailing in the Indian seas,

on account of the merit of having first found out the road to

them. The Dutch still continue to exclude all other European

nations from any direct trade to their spice islands. Monopolies

of this kind are evidently established against all other European

nations, who are thereby not only excluded from a trade to which

it might be convenient for them to turn some part of their stock,

but are obliged to buy the goods which that trade deals in,

somewhat dearer than if they could import them themselves

directly from the countries which produced them.

 

But since the fall of the power of Portugal, no European nation

has claimed the exclusive right of sailing in the Indian seas, of

which the principal ports are now open to the ships of all

European nations. Except in Portugal, however, and within these

few years in France, the trade to the East Indies has,