Chapter XLIV: Part III: Of the Advantages which Europe has derived From the Discovery of (1)

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, in 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 conveniency 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 that 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 these 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 defence; 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 defence of the mother country. The military force has never
yet been sufficient for their own defence; and in the different wars in
which the mother countries have been engaged, the defence 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 defence 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 manufactures of England, for
example, will purchase a greater quantity of the sugar and tobacco of her
own colonies than the like manufactures of other countries can purchase of
that sugar and tobacco. So far, therefore, as the manufactures 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, 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 consequence 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 been, at any particular period since the
establishment of the act of 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 act of 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 justle her out of almost all those branches of trade, of which
she has not the monopoly.

Our merchants frequently complain of the high wages of British labour, as
the cause of their manufactures 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 manufactures, in many cases, as much, and in some perhaps
more, than the high wages of British labour.

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 round the Mediterranean sea.

It has partly been drawn from those branches of trade, by the attraction
of superior profit in the colony trade, in consequence of the continual
increase 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, in 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 in
them, 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
labour, and increases the most the annual produce of the land and labour
of that country. But the quantity of productive labour 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 labour, 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
labour, equal to what two or three thousand pounds can maintain there for
a year. A foreign trade of consumption carried on with a neighbouring, 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, is in
general more advantageous than a round-about one.

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
neighbouring, to one carried on with a more distant country, and in many
cases from a direct foreign trade of consumption to a round-about 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 neighbouring, to one carried on with a more distant
country.

It has, in all cases, forced some part of that capital from the trade with
Europe, and with the countries which lie round 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 endeavour 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 arrear to their correspondents, 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 labour constantly
maintained there, the annual produce of the land and labour, must always
be much 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 of the countries which lie round 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, forced
some part of the capital of Great Britain from a direct foreign trade of
consumption, into a round-about 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 round-about foreign trade of
consumption. Maryland, and Virginia, for example, send annually to Great
Britain upwards of ninety-six thousand hogsheads of tobacco, and the
consumption of Great Britain is said not to exceed fourteen thousand.
Upwards of eighty-two thousand hogsheads, therefore, must be exported to
other countries, to France, to Holland, and, to the countries which lie
round the Baltic and Mediterranean seas. But that part of the capital of
Great Britain which brings those eighty-two thousand hogsheads to Great
Britain, which re-exports them from thence 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 round-about foreign trade of
consumption; and is necessarily 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
round-about 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 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 in constant 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, for such parts of the produce of British
industry as may exceed the demand of the markets nearer home, of those of
Europe, and of the countries which lie round 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 labour 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 any thing 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 with, 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 labour annually maintained there, the
whole annual produce of the land and labour 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 labour 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 labour.

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 opened 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 labour 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 employments, or keeps them
from going to any other employment. There are few hands to spare for the
necessary, and none for the ornamental manufactures. The greater part of
the manufactures of both kinds they find it cheaper to purchase of other
countries than to make for themselves. It is chiefly by encouraging the
manufactures 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 butcher’s 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, manufactures 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
industrious 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 manufactures 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 manufactures 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 expedients 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 favour it is established.