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

is, over and

above all this, the centre and principal mart of what is called

the country trade of the East Indies; not only of that part of it

which is carried on by Europeans, but of that which is carried on

by the native Indians; and vessels navigated by the inhabitants

of China and Japan, of Tonquin, Malacca, Cochin-China, and the

island of Celebes, are frequently to be seen in its port. Such

advantageous situations have enabled those two colonies to

surmount all the obstacles which the oppressive genius of an

exclusive company may have occasionally opposed to their growth.

They have enabled Batavia to surmount the additional disadvantage

of perhaps the most unwholesome climate in the world.

 

The English and Dutch companies, though they have established no

considerable colonies, except the two above mentioned, have both

made considerable conquests in the East Indies. But in the manner

in which they both govern their new subjects, the natural genius

of an exclusive company has shewn itself most distinctly. In the

spice islands, the Dutch are said to burn all the spiceries which

a fertile season produces, beyond what they expect to dispose of

in Europe with such a profit as they think sufficient. In the

islands where they have no settlements, they give a premium to

those who collect the young blossoms and green leaves of the

clove and nutmeg trees, which naturally grow there, but which

this savage policy has now, it is said. almost completely

extirpated. Even in the islands where they have settlements, they

have very much reduced, it is said, the number of those trees. If

the produce even of their own islands was much greater than what

suited their market, the natives, they suspect, might find means

to convey some part of it to other nations; and the best way,

they imagine, to secure their own monopoly, is to take care that

no more shall grow than what they themselves carry to market. By

different arts of oppression, they have reduced the population of

several of the Moluccas nearly to the number which is sufficient

to supply with fresh provisions, and other necessaries of life,

their own insignificant garrisons, and such of their ships as

occasionally come there for a cargo of spices. Under the

government even of the Portuguese, however, those islands are

said to have been tolerably well inhabited. The English company

have not yet had time to establish in Bengal so perfectly

destructive a system. The plan of their government, however, has

had exactly the same tendency. It has not been uncommon, I am

well assured, for the chief, that is, the first clerk or a

factory, to order a peasant to plough up a rich field of poppies,

and sow it with rice, or some other grain. The pretence was, to

prevent a scarcity of provisions; but the real reason, to give

the chief an opportunity of selling at a better price a large

quantity of opium which he happened then to have upon hand. Upon

other occasions, the order has been reversed ; and a rich field

of rice or other grain has been ploughed up, in order to make

room for a plantation of poppies, when the chief foresaw that

extraordinary profit was likely to be made by opium. The servants

of the company have, upon several occasions, attempted to

establish in their own favour the monopoly of some of the most

important branches, not only of the foreign, but of the inland

trade of the country. Had they been allowed to go on, it is

impossible that they should not, at some time or another, have

attempted to restrain the production of the particular articles

of which they had thus usurped the monopoly, not only to the

quantity which they themselves could purchase, but to that which

they could expect to sell with such a profit as they might think

sufficient. In the course of a century or two, the policy of the

English company would, in this manner, have probably proved as

completely destructive as that of the Dutch.

 

Nothing, however, can be more directly contrary to the real

interest of those companies, considered as the sovereigns of the

countries which they have conquered, than this destructive plan.

In almost all countries, the revenue of the sovereign is drawn

from that of the people. The greater the revenue of the people,

therefore, the greater the annual produce of their land and

labour, the more they can afford to the sovereign. It is his

interest, therefore, to increase as much as possible that annual

produce. But if this is the interest of every sovereign, it is

peculiarly so of one whose revenue, like that of the sovereign of

Bengal, arises chiefly from a land-rent. That rent must

necessarily be in proportion to the quantity and value of the

produce; and both the one and the other must depend upon the

extent of the market. The quantity will always be suited, with

more or less exactness, to the consumption of those who can

afford to pay for it; and the price which they will pay will

always be in proportion to the eagerness of their competition. It

is the interest of such a sovereign, therefore, to open the most

extensive market for the produce of his country, to allow the

most perfect freedom of commerce, in order to increase as much as

possible the number and competition of buyers ; and upon this

account to abolish, not only all monopolies, but all restraints

upon the transportation of the home produce from one part of the

country to mother, upon its exportation to foreign countries, or

upon the importation of goods of’ any kind for which it can be

exchanged. He is in this manner most likely to increase both the

quantity and value of that produce, and consequently of his own

share of it, or of his own revenue.

 

But a company of merchants, are, it seems, incapable of

considering themselves as sovereigns, even after they have become

such. Trade, or buying in order to sell again, they still

consider as their principal business, and by a strange absurdity,

regard the character of the sovereign as but an appendix to that

of the merchant ; as something which ought to be made subservient

to it, or by means of which they may be enabled to buy cheaper in

India, and thereby to sell with a better profit in Europe. They

endeavour, for this purpose, to keep out as much as possible all

competitors from the market of the countries which are subject to

their government, and consequently to reduce, at least, some part

of the surplus produce of those countries to what is barely

sufficient for supplying their own demand, or to what they can

expect to sell in Europe, with such a profit as they may think

reasonable. Their mercantile habits draw them in this manner,

almost necessarily, though perhaps insensibly, to prefer, upon

all ordinary occasions, the little and transitory profit of the

monopolist to the great and permanent revenue of the sovereign;

and would gradually lead them to treat the countries subject to

their government nearly as the Dutch treat the Moluccas. It is

the interest of the East India company, considered as sovereigns,

that the European goods which are carried to their Indian

dominions should be sold there as cheap as possible; and that the

Indian goods which are brought from thence should bring there as

good a price, or should be sold there as dear as possible. But

the reverse of this is their interest as merchants. As

sovereigns, their interest is exactly the same with that of the

country which they govern. As merchants, their interest is

directly opposite to that interest.

 

But if the genius of such a government, even as to what concerns

its direction in Earope, is in this manner essentially, and

perhaps incurably faulty, that of its administration in India is

still more so. That administration is necessarily composed of a

council of merchants, a profession no doubt extremely

respectable, but which in no country in the world carries along

with it that sort of authority which naturally overawes the

people, and without force commands their willing obedience. Such

a council can command obedience only by the military force with

which they are accompanied ; and their government is, therefore,

necessarily military and despotical. Their proper business,

however, is that of merchants. It is to sell, upon their master’s

account, the European goods consigned to them, and to buy, in

return, Indian goods for the European market. It is to sell the

one as dear, and to buy the other as cheap as possible, and

consequently to exclude, as much as possible, all rivals from the

particular market where they keep their shop. The genius of the

administration, therefore, so far as concerns the trade of the

company, is the same as that of the direction. It tends to make

government subservient to the interest of monopoly, and

consequently to stunt the natural growth of some parts, at least,

of the surplus produce of the country, to what is barely

sufficient for answering the demand of the company,

 

All the members of the administration besides, trade more or less

upon their own account; and it is in vain to prohibit them from

doing so. Nothing can be more completely foolish than to expect

that the clerk of a great counting-house, at ten thousand miles

distance, and consequently almost quite out of sight, should,

upon a simple order from their master, give up at once doing any

sort of business upon their own account abandon for ever all

hopes of making a fortune, of which they have the means in their

hands; and content themselves with the moderate salaries which

those masters allow them, and which, moderate as they are, can

seldom be augmented, being commonly as large as the real profits

of the company trade can afford. In such circumstances, to

prohibit the servants of the company from trading upon their own

account, can have scarce any other effect than to enable its

superior servants, under pretence of executing their master’s

order, to oppress such of the inferior ones as have had the

misfortune to fall under their displeasure. The servants

naturally endeavour to establish the same monopoly in favour of

their own private trade as of the public trade of the company. If

they are suffered to act as they could wish, they will establish

this monopoly openly and directly, by fairly prohibiting all

other people from trading in the articles in which they choose to

deal; and this, perhaps, is the best and least oppressive way of

establishing it. But if, by an order from Europe, they are

prohibited from doing this, they will, notwithstanding, endeavour

to establish a monopoly of the same kind secretly and indirectly,

in a way that is much more destructive to the country. They will

employ the whole authority of government, and pervert the

administration of Justice, in order to harass and ruin those who

interfere with them in any branch of commerce, which by means of

agents, either concealed, or at least not publicly avowed, they

may choose to carry on. But the private trade of the servants

will naturally extend to a much greater variety of articles than

the public trade of the company. The public trade of the company

extends no further than the trade with Europe, and comprehends a

part only of the foreign trade of the country. But the private

trade of the servants may extend to all the different branches

both of its inland and foreign trade. The monopoly of the company

can tend only to stunt the natural growth of that part of the

surplus produce which, in the case of a free trade, would be

exported to Europe. That of the servants tends to stunt the

natural growth