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 AN 
 
 INQUIRY 
 
 INTO THE 
 
 NATURE AND CAUSES 
 
 OF THE 
 
 WEALTH OF NATIONS. 
 
 VOL. II.
 
 A N 
 
 INQUIRY 
 
 I NTO THE 
 
 NATURE AND CAUSES 
 
 OF TH E 
 
 WEALTH OF NATIONS. 
 
 BY 
 
 ADAM SMITH, LL.D. 
 
 AND F. R. S. OF LONDON AND EDINBURGH: 
 ONE OF THE COMMISSIONERS OF HIS MAJESTy's CUSTOMS 
 
 IN SCOTLAND; 
 
 t 
 
 AND rORMERLV PROFESSOR. OF MORAL PHILOSOPHY 
 
 IN THE UNIVERSITY OF GLASGOW. 
 
 IN THREE VOLUMES. 
 VOL. II. 
 
 THE TENTH EDITION. 
 
 LONDON: 
 
 Printed by A. Strahan, Printers-Street; 
 FOR T. CADELL JUN. AND W. DAVDf , IN THE STRAND, 
 
 J 802.
 
 H r2:- 
 
 SGH'l 
 
 CON f^E NTS 
 
 OF THE 
 
 SECOND VOLUME. 
 
 BOOK II. 
 
 CHAP. III. 
 
 r\F the Accumulation of Capital, or of produc- 
 tive and unprodiidive Labour — Page 2 
 
 CHAP. IV. 
 
 Of Stock le7it at hiterefi — — 2?> 
 
 CHAP. V. 
 
 Of the different Employment of Capitals — 46 
 VOL. II. a 
 
 i58549 
 
 t J. .'T 'y^} rr /'S
 
 CONTENTS. 
 
 BOOK III. 
 
 Of the different Progrefs of Opulence in 
 different Nations. 
 
 CHAP. I. 
 
 Of the tiatural Progrefs of Opulence Page 7^ 
 
 CHAP. 11. 
 
 Of the Difcouragement of Agriculture in the 
 ancient State of Europe after the Fall of the 
 Roman Etnpire — ^ -^ 3i 
 
 CHAP. III. 
 
 Of the Rife and Progrefs of Cities and Towns, 
 after the Fall of the Roman Empire — 99 
 
 CHAP. IV. 
 
 How the Commerce of the Towns contributed to 
 the Improvement of the Country — 117
 
 CONTENTS, 
 
 BOOK IV. 
 
 Of Syflems of political CEconomy, 
 Introduct;on — — Page i ?8 
 
 CHAP. I. 
 
 Of the Principle of the Commercial, or Mer- 
 cantile Syjem — — 120 
 
 CHAP. II. 
 
 Of Rejlramts upon the Importation from fo- 
 reign Cmntries of fuch Goods as can be 
 produced at Home — — 176 
 
 CHAP. III. 
 
 Of the eidraordinary Rejlrainis upon the hrh- 
 portatioz of Goods of almoji all Kinds, 
 from tijofe Countries with which the Ba- 
 lance i: fuppofed to be dif advantageous 209 
 
 Part I. Of the JJyireafonablenefs of thofe Re- 
 firaints even upon the Pri?iciples of the Com- 
 mercial Syfie?n — — ibid. 
 
 Digreffion concerning Banks of Depofit, parti- 
 cularly concer?iing that of AmUQidsLia 219 
 
 Part II. Of the Unreafonablenefs of thofe 
 extraordinary Rcftraints upon other Prin- 
 ciples — — — 235
 
 CONTENT 
 
 CHAP. IV. 
 
 Of Drawbacks — — Page 25: 
 
 CHAP. V. 
 
 Of Bounties — — i— 261 
 
 Digreffion concerning the Corn Trade aid Corn 
 
 Laivs — — -— 2qo 
 
 1 ^ 
 
 CHAP. VI. . 
 
 Of Treaties of Commerce — •+- 323 
 
 CHAP. VII. 
 
 Of Colonies — — -j^ 343 
 
 Part I. Of the Motives for eJiahUPnng new 
 Colonies. — — — ibid. 
 
 Part II. Caufes of the Profperity of new 
 Colonies — — — 35^ 
 
 Part III. Of the Advantages which Europe 
 has derived from the Difcovery of America^ 
 and from that of a Pajfage to the Eaji Indies 
 by the Cape of Good Hope — ' 400 
 
 CHAP. VIII. 
 
 Conclufion of the Mercantile Syflem — 485 
 
 AN
 
 AN 
 
 INQUIRY 
 
 INTO T'^E 
 
 NATURE AND CAUSES 
 
 .OF THE 
 
 WEALTH OF NATIONS. 
 
 BOOK IL 
 
 CHAP. III. 
 
 Of the Accumulation of Capital, or of produdive and 
 unproductive Labour* 
 
 THERE Is one fort of labour which adds book 
 to the value of the fubje£t upon which n* 
 It is beftowed : there is another which has chap* 
 no fuch effect. The former, as it produces ^^^ 
 a value, may be called produ6live ; the latter^ 
 unproductive * labour. Thus the labour of a 
 manufafturer adds, generally, to the value of the 
 materials which he works upon, that of his own 
 
 * Some French authors of great learning and ingenuity 
 have ufed thofe words in a different fenfe. In the lail chapter 
 ©f the fourth book, I fhall endeavour to fliew that their fenfe 
 is an improper one. 
 
 VOL. u. jj mainte-
 
 , THE Nx^TURE AND CAUSES OF 
 
 BOOK maintenance, and of his mafler's profit. The 
 II. labour of a menial fervant, on the contrary, adds 
 
 "■ ^^^ to the vakie of nothing. Though the manufac- 
 turer has his wages advanced to him by his 
 mafler, he, in reality, cofts him no expence, the 
 value of thofe wages being generally reflored, 
 together with a profu, in the improved value of 
 the fubjeft upon which his labour is beftowed. 
 But the maintenance of a menial fervant never is 
 reflored. A man grows rich by employing a 
 multitude of manufadurers : he grows poor, by 
 maintaining a multitude of menial fervants. The 
 labour of the latter, however, has its value, and 
 delerves its reward as well as that of the former. 
 But the labour of the manufacturer fixes and re- 
 alizes itfelf in fome particular fubjeft or vendible 
 conmiodity, which laits for fome time at leafl: 
 after that labour is pad. It is, as it were, a cer- 
 tain quantity of labour flocked and flored up to 
 be employed, if neceflary, upon fome other oc- 
 cafion. That fubjedl, or what is the fame thing, 
 the price of that fubjed, can afterwards, if n^r 
 ceffary, put into motion a quantity of labour 
 equal to that which had originally produced it« 
 The labour of the menial fervant, on the con-» 
 trary, does not fix or realize itfelf in any parti- 
 cular lubje6l or vendible commodity. His fer- 
 vices generally perifh in the very inflant of their 
 peiformance, and ieldom leave any trace of value 
 behind them, for which an equal quantity of fer- 
 vice could afterwards be procured, 
 
 The, labour of ibme of the mofl refpedlable 
 orders in the fociety is, like that of menial fer- 
 vants.
 
 THE WEALTH OF NATIONS, 3 
 
 vants, unprodu(5live of any value, and does not chap. 
 fix or realize itfelf in any permanent fubje£t, or m. 
 vendible commodity, which endures after that '"'''"'' 
 labour is pad, and for which an equal quantity 
 of labour could afterwards be procured. The 
 fovereign, for example, with all the officers both 
 of judice and war who ferve under him, the whole 
 army and navy, are unprodudive labourers. 
 They are the fervants of the public, and aie 
 maintained by a part of the annual produce of 
 the induftry of other people. Their fervice, how 
 honourable, how ufeful, or how neceffary foever, 
 produces nothinp; for which an equal quantity of 
 fervice can afterwards be procured. The pro- 
 teftion, fecurity, and defence of the common- 
 wealth, the effed of their labour this year, v/ill 
 not purchafe its proteftion, fecurity, and defence 
 for the year to come. In the fame clafs mull be 
 ranked, fome both of the graved and mod im- 
 portant, and fome of the mod frivolous pro- 
 feffions : churchmen, lawyers, phylicians, men of 
 letters of all kinds ; players, buftbons, muficians, 
 opera-fmgers, opera-dancers, &c. The labour 
 of the meaned of thefe has a certain value, regu- 
 lated by the very fame principles which regulate 
 that of every other foit of labour; and that of 
 the nobled and mod ufeful, produces nothing 
 which could afterwards purchafe or procure an 
 equal quantity of labour. Like the declamation 
 of the ador, the harangue of the qrator, or the 
 tune of the mufician, the work of all of them 
 peridies in the very indant of its produdion. 
 
 B 2 Both
 
 THE NATURE AND CAUSES. GF 
 
 Both produftlve and unprodudive labourers^ 
 and thofe who do not labour at all, are all 
 equally maintained by the annual produce of the 
 land and labour of the country. This produce, 
 how great foever, can never be Infinite, but muft 
 have certain limits. According, therefore, as a 
 fmaller or greater proportion of it is in any 
 one year employed In maintaining unprodu£live 
 hands, the more in the one cafe and the lefs in 
 the other will remain for the produdive, and the 
 next year's produce will be greater or fmaller 
 accordingly; the whole annual produce, if we 
 except the fpontaneous productions of the earth, 
 being the effeft of produdive labour. 
 
 Though the whole annual produce of the 
 land and labour of every country, is, no doubt, 
 ultimately deflined for fupplying the confump- 
 tlon of its Inhabitants, and for procuring a re- 
 venue to them ; yet when It firft comes either 
 from the ground, or from the hands of the pro- 
 duftive labourers, it naturally divides itfelf into 
 two parts. One of them, and frequently the 
 largeft, is, in the firft: place, deflined for replacing 
 a capital, or for renewing the provifions, mate- 
 rials, and nnifhed work, which had been with- 
 drawn from a capital, the other for conftituting 
 a revenue either to the owner of this capital, as 
 the profit of his (lock ; or to fome other" perfon, 
 as the rent of his land. Thus, of the produce of 
 land, one part replaces the capital of the farmer j 
 the other pays his profit and the rent of the land- 
 lord ; and thus conltitutes a revenue both to the 
 owner of this capital, as the profits of his flock j 
 
 and
 
 THE WEALTH OF NATIONS. 5 
 
 and to fome other perfon, as the rent of his land. chap. 
 Of the produce of a great manufactory, in the iii. 
 fame manner, one part, and that always the largeft, "— ^^'"**^ 
 replaces the capital of the undertaker of the 
 work ; the other pays his profit, and thus confti- 
 tutes a revenue to the owner of this capital. 
 
 That part of the annual produce of the land 
 and labour of any country which replaces a capi- 
 tal, never is immediately employed to maintain 
 any but produ6live hands. It pays the wages of 
 productive labour only. That which is immedi- 
 ately deftined for conflituting a revenue either as 
 profit or as rent, may maintain indifferently either 
 prodaCtive or unprodudive hands. 
 
 Whatever part of his flock a man employs as 
 a capital, he always expefts it to be replaced to 
 him with a profit. He employs it, "therefore, in 
 maintaining r rodu6tive hands only ; and affer 
 having ferved in the fun£lion of a capital to him. 
 It conflitutes a revenue to them. Whenever he 
 employs any part of it in maintaining unproduc- 
 tive hands of any kind, that part is, from that 
 moment, withdrawn from his capital, and placed 
 jn his flock referved for immediate confumpiion. 
 
 Unproductive labourers, and thofe who do 
 not labour at all, are all maintained by revenue ; 
 either, firfl, by that part of the annual produce 
 which is originally deilined for conflituting a. re- 
 venue to fome particular perfons, either as the 
 rent of land or as the profits of flock; or, fe- 
 condly, by that part whicii, though originally 
 deilined for replacing a capital and for maintain- 
 ing productive labourers only, yet when it comes 
 
 B 3 intQ
 
 6 TH£ NATURE AND CAUSES Op 
 
 BOOK into their hands, whatever part of it is over and 
 n, above their necefiary fubfiftence, may be employ- 
 ed in maintaining indifferently either produdive 
 or unprodudive lands. Thus, not only the 
 great landlord or the rich merchant, but even 
 the common workman, if his wages are confider- 
 able, may maintain a menial fervant ; or he may 
 fometimes go to a play or a puppet-fhow, and fo 
 contribute his (hare towards maintaining one fet 
 of unprodu6live labourers ; or he may pay fome 
 taxes, and thus help to maintain another fer, 
 more honourable and ufeful, indeed, but equally 
 unproductive. No part of the annual produce, 
 however, which had been originally deftined to 
 replace a capital, is ever direfted towards main- 
 taining unprodudive hands, till after it has put 
 into motion its full complement of productive 
 labour, or all that it could put into motion in the 
 way in which it was employed. The workman 
 muft have earned his wages by work done, before 
 he can employ any part of them in this manner. 
 That part too is generally but a fmall one. It 
 is his fpare revenue only, of which produ6live 
 labourers have feldom a great deal. They gene- 
 rally have fome, however ; and in the payment 
 of taxes the greatnefs of their number may com- 
 penfate, in fome meafure, the fmallnefs of their 
 contribution. The rent of land and the profits 
 of flock are every where, therefore, the princi- 
 pal fources from which unprodudive hands de- 
 rive their fubfiflence. Thefe are the two forts of 
 revenue of which the owners have generally molt 
 to fpare. They might both maintain indiffer- 
 ently
 
 THE WEALTH OF NATIONS. 7 
 
 ently either productive or unproduftlve hands- chap. 
 They feem, however, to have fome prediledion in- 
 for the latter. The expence of a great lord feeds 
 generally more idle than induftrious people. The 
 rich' merchant, though with his capital he main- 
 tains induftrious people only, yet by his expence, 
 that is, by the employment of his revenue, he 
 feeds commonly the very fame fort as the great 
 lord. 
 
 The proportion, therefore, betvv^een the pro- 
 dudive and unproduftive hands, depends very 
 much in every country upon [the proportion be- 
 tween that part of the annual produce, which, as 
 foon as it comes either from the ground or from 
 the hands of the produdive labourers, is deftined 
 for replacing a capital, and that which is deflined 
 for conftituting a revenue either as rent or as 
 profit. This proportion is very different in rich 
 from what it is in poor countries. 
 
 Thus, at prefent, in the opulent countries of 
 Europe, a very large, frequently the largefl por- 
 tion of the produce of the land, is deftined for 
 replacing the capital of the rich and independent 
 farmer ; the other for paying his profits, and the 
 rent of the landlord. But anciently, during the 
 prevalency of the feudal government, a very fmall 
 portion of the produce was fuflicient to replace 
 the capital employed in cultivation. It confided 
 commonly in a few wretched cattle, maintained 
 altogether by the fpontaneous produce of uncul- 
 tivatfd land, and which might, therefore, be 
 confidered as a part of that fpontaneous produce. 
 It generally too belonged to the landlord, and 
 
 B 4 was
 
 8 THE NATURE AND CAUSES OF 
 
 BOOK was by him advanced to the occupiers of the 
 n. land. All the reft of the produce properly be- 
 longed to him too, either as rent for his land, or 
 as profit upon this paltry capital. The occu- 
 piers of land were generally bondmen, wfiofe 
 pejQ)ns and effefts were equally his property. 
 Thofe who were not bondmen were tenants at 
 will, and though the rent which they paid was 
 ofren nominally little more than a quit-rent, it 
 really amounted to the whole produce of the 
 land. Their lord could at all times command 
 their labour in peace, and their fervice in war. 
 Though they lived at a diftance from his houfe, 
 they were equally dependant upon him as his 
 retainers who lived in it. But the whole pro- 
 duce of the land undoubtedly belongs to him, 
 who can difpofe of the labour and fervice of all 
 thofe whom it maintains. In the prefent ftate of 
 Europe, the fhare of the landlord feldorn exceeds 
 a third, fometimes not a fourth part of the whole 
 produce of the land. The rent of land, how- 
 ever, in all the improved parts of the country, 
 has been tripled and quadrupled lince thofe an- 
 cient times ; and this third or fourth part of the 
 annual produce is, it feems, three or four times 
 gre'ater than the whole had been before. In the 
 progrefs of improvement, rent, though it in- 
 creafes in proportion to the extent, diminifties in 
 proportion to the produce of the land. 
 
 In the opulent countries of Europe, great ca- 
 pitals are at prefent employed in trade and ma- 
 pufaftures. In the ancient ftate, the little trade 
 that W4S ftirring, and the few homely and coarle 
 
 manufa^ures,
 
 THE WEALTH OF NATIONS. 9 
 
 manufa6lures that were carried on, required but chap. 
 very fmall capitals. Thefe, however, mud have I'^i; 
 yielded very large profits. The rate of intereft 
 ■was no where lefs than ten per cent, and their 
 profits mud have been fuflicient to afford this 
 great intereft. At prefent the rate of intereft, 
 in the improved parts of Europe, is no-where 
 higher than fix per cent, and in fome of the moft 
 improved it is fo low as four^ three, and two per 
 cent. Though that part of the revenue of the in- 
 habitants which is derived from the profits of 
 flock is always much greater in rich than in poor 
 countries, it is becaufe the ftock is much greater : 
 in proportion to the ftock the profits are generally 
 much lefs. 
 
 That part of the annual produce, therefore, 
 which, as foon as it comes either from the ground, 
 or from the hands of the productive labourers, 
 is deftined for replacing a capital, is not only 
 much greater in rich than in poor countries, but 
 bears a much greater proportion to that which is 
 immediately deftined for conftituting a revenue 
 either as rent or as profit. The funds deftined for 
 the maintenance of produ6live labour, are not only 
 much greater in the former than in the latter, but 
 bear a much greater proportion to thofe which, 
 though they may be employed to maintain either 
 produftive or unproduclive hands, have generally 
 a predile6lion for the latter. 
 
 The proportion between thofe different funds 
 ncceffarily determines in every country the ge- 
 neral character of the inhabitants as to induflry 
 cr idlenefs, \ye are more induftrious than our 
 
 forefathers ^
 
 lo " THE NATURE AND CAUSES OF 
 
 BOOK forefathers ; becaufe in the prefent times the 
 n. funds deftined for tlie maintenance of induftry, 
 
 ' ^''-"*— ai-g niuch greater in proportion to thofe which 
 are likelv to be employed in the maintenance of 
 idltnefs, than they were two or three centuries 
 ago. Our anceftors were idle for want of a fuffi- 
 cient encouragement to induftry. It is better, 
 fays the proverb, to play for nothing, than to 
 work for nothing. In mercantile and manufac- 
 turing towns, where the inferior ranks of people 
 are chiefly maintained by the employment of ca- 
 pital, they are in general induftrious, fober, and 
 thriving ; as in many Englifh, and in mod: Dutch 
 towns. In thofe towns which are principally 
 fupported by the conflant or occafional refidence 
 of a court, and in which the inferior ranks of 
 people are chitfly maintained by the fpreading of 
 revenue, they are in general idle, diifolute, and 
 poor ; as at Rome, Verfailles, Compeigne, and. 
 Fontainbleau. If you except Rouen and Bour- 
 deaux, there is little trade or induftry in any of 
 the parliament towns of France, and the inferior 
 ranks of people, being chiefly maintained by the 
 expence of the members of the courts of juftice, 
 and of thofe who come to plead before them, are 
 in general idle and poor. The great trade of 
 Rouen and Bourdeaux feems to be altogether the 
 effect of their fituation. Rouen is neceflfarily 
 the entrepot of almoll all the goods which are 
 brought either from foreign countries, or from 
 the maritime provinces of France, for the con- 
 lumption of the great city of Paris. Bourdeaux 
 is in the fame manner the entrepot of the wines 
 
 which
 
 THE WEALTH OF NATIONS. n 
 
 which grow upon the banks of the Garonne, and chap, 
 of the rivers which run into It, one of the richen; ni. 
 wine countries in the world, and which feems to ^"'^ 
 produce the wine fittefh for exportation, or bed 
 fuited to the tafte of foreign nations. Such ad- 
 vantageous fituations necelTarily attract a great 
 capital by the great employment which they afford 
 it J and the employment of this capital is the 
 caufe of the induftry of thofe two cities. In the 
 other parliament towns of France, very little 
 more capital fecms to be employed than wliat is 
 neceffary for fupplying their own confumption ; 
 that is, little more than the fmalleft capital 
 which can be employed in them. The fame 
 thing may be faid of Paris, Madrid, and Vienna. 
 Of thofe three cities, Paris is by far the mofl in- 
 duflrious : but Paris itfelf is the principal mar- 
 ket of all the manufactures eitablifhed at Paris, 
 and its own confumption is the principal object 
 of all the trade which it carries on. London, 
 Lifbon, and Copenhagen, are, perhaps, the only- 
 three cities in Europe, which are both the con- 
 ftant refidence of a court, and can at the fame 
 time be confidered as trading cities, or as cities 
 which trade not only for their own confumption, 
 but for that of other cities and countries. The 
 fituation of all the three is extremely advantage- 
 ous, and naturally fits them to be the entrepots 
 of a great part of the goods deftined for the 
 confumption of dillant places. In a city where 
 a great revenue is fpent, to employ with ad- 
 vantage a capital for any other purpofe than 
 for fupplying the confumption of that city, is 
 
 probably
 
 12 THE NATURE AND CAUSES OF 
 
 BOOK probably more difficult than in one in which the 
 II. inferior ranks of people have no other mainte- 
 '"""^ nance but what they derive from the employment 
 of fuch a capital. The idlenefs of the greater 
 part of the people who are maintained by the ex- 
 pence of revenue, corrupts, it is probable, the 
 induftry of thofe who ought to be maintained by 
 the employment of capital, and renders it lefs 
 advantageous to employ a capital there than in 
 other places. There was litrle trade or induftry in 
 Edinburgh before the Union. When the Scotch 
 parliament was no longer to be affembled in it, 
 when it cenfed to be the neceflary refidence of 
 the principal nobility and gentry of Scotland, it 
 became a city of fome trade and indullry. It 
 ilill continues, however, to be the refidence of 
 the principal courts of juftice in Scotland, of the 
 boards of cuftoms and excife, &c. A coniider- 
 able revenue, therefore, ftill continues to be fpent 
 in it. In trade and induftry it is much inferior 
 to Glafgow, of which the inhabitants are chiefly 
 maintained by the employment of capital. The 
 inhabitants of a large village, it has fometimes 
 been obferved, after having made confiderable 
 progrefs in manufaclures, have become idle and 
 poor, in confequence of a great lord*s hav- 
 ing taken up his refidence in their neighbours- 
 hood. 
 
 The proportion between capital and revenue, 
 therefore, feems every-where to regulate the pro- 
 portion between induftry and idlenefs. Where- 
 ever capital predominates, induftry prevails : 
 \vherever revenue^ idlenefs, Every increafe or 
 
 diniinutioi^
 
 THE WEALTH OF NATIONS. 13 
 
 diminution of capital, therefore, naturally tends chap. 
 to increafc or diminiih the real quantity of in- in. 
 duflry, the number of produdive hands, and 
 confequently the exchangeable value of the an- 
 nual produce of the land and labour of the coun- 
 try, the real wealth and revenue of all its inha- 
 bitants. 
 
 Capitals are increafed by parfimony, and di- 
 minifhed by prodigality and mifcondud:. 
 
 Whatever a perfon faves from his revenue he 
 adds to his capital, and either employs it himfelf 
 in maintaining an additional number of produc- 
 tive hands, or enables fome other perfon to 
 do fo, by lending it to him for an intereft, that 
 is, for a fliare of the profits. As the capital of 
 an individual can be increafed only by what he 
 faves from his annual revenue or his annual 
 gains, fo the capital of a fociety, which is the 
 fame with that of all the individuals who com- 
 pofe it, can be increafed only in the fame .man- 
 ner. 
 
 Parsimony, and not induflry, is the imme- 
 diate caufe of the incieafe of capital. Induflry, 
 indeed, provides the fubjecl which parfimony ac- 
 cumulates. But whatever induflry might acquire, 
 if parfimony did not fave and ftore up, the capitai 
 would never be the greater. 
 
 Parsimony, by increafing the fund which is 
 dedined for the maintenance of produclive hands, 
 tends to increafe the number of thofe hands whofe 
 labour adds to the value of the fubjecl upon 
 which it is beflowed. It tends therefore to in- 
 creafe the exchangeable value of the annual pro- 
 duce
 
 1^ THE NATURE AND CAUSES OF 
 
 BOOK duce of the land and labour of the country. It 
 !!• puts into motion an additional quantity of in- 
 
 '""'^^ ' duftry, which gives an additional value to the 
 annual produce. 
 
 What is annually faved is as regularly con- 
 fumed as what is annually fpent, and nearly in 
 the fame time too ; but it is confumed by a dif- 
 ferent fet of people. That portion of his revenue 
 which a rich man annually fpends, is in moft 
 cafes confumed by idle guefis, and menial fer- 
 vants, v.'ho leave nothing behind them in return 
 for their confumption. That portion which he 
 annually faves, as for the fake of the profit it is 
 immediately employed as a capital, is confumed 
 in the fame manner, and nearly in the fame time 
 too, but by a different fet of people, by labour- 
 ers, manufacturers, and artificers, who re-pro-; 
 duce with a profit the value of their annual con- 
 fumption. His revenue, we fliall fuppofe, is 
 paid him in money. Had he fpent the whole, 
 the food, clothing, and lodging, which the whole 
 could have purchafed, would have been diftri- 
 buted among the former fet of people. By fav- 
 ing a part of it, as that part is for the fake of the 
 profit immediately employed as a capital either by 
 himfelf or by fome other perfon, the food, cloth- 
 ing, and lodging, which may be purchafed with 
 it are neceflarily rcferved for the latter. The 
 confumption is the fame, but the confumers are 
 dilTerent. 
 
 By what a frugal man annually faves, he not 
 only affords maintenance to an additional num- 
 ber of productive hands, for that or the enfuing 
 
 year.
 
 THE WEALTH OF NATIONS. 15 
 
 year, bur, like the founder of a public work- chap. 
 houfe, he eflabliOies as it were a perpetual fund ^^^' 
 for the maintenance of an equal number in all 
 times to come. The perpetual allotment and 
 deftination of this fund, indeed, is not ?,lways 
 guarded by any pofitive law, by any truft-right 
 or deed of mortmain. It is always guarded, 
 however, by a very powerful principle, the plain 
 and evident intereft of every individual to whom 
 any fiiare of it (hall ever belong. No part of it 
 can ever afterwards be employed to maintain any 
 but productive hands, without an evident lofs to 
 the perfon who thus perverts it from its proper 
 dedination. 
 
 The prodigal perverts it in this manner. By 
 not confming his expence within his income, he 
 encroaches upon his capital. Like him who 
 perverts the revenues of fome pious foundation 
 to prophane purpofes, he pays the wages of idle- 
 nefs with thofe funds which the frugality of his 
 forefathers had, as it were, confecrated to the 
 maintenance of induflry. By diminifning the 
 funds deftined for the employment of productive 
 labour he neceffarily diminidies, fo far as it de- 
 pends upon him, the quantity of that labour 
 which adds a value to the fubject upon which it 
 is bellowed, and, confequently, the value of the 
 annual produce of the land and labour of the 
 whole country, the real wealth and revenue of 
 its inhabitants. If the prodigality of fome were 
 not compenfated by the frugality of others, the 
 conduct of every prodigal, by feeding the idle 
 with the bread of the induftrious, tends not only 
 
 2 to
 
 r6 THE NATURE AND CAUSES OP 
 
 BOOK to beggar himfcif, but to impoverifli his coun» 
 II. try. 
 
 ^-"^"^"^ Though the expence of the prodigal fliould 
 be altogether in home-made, and no part of it in. 
 foreign commodities, its effed upon the pro- 
 ductive funds of the fociety would ftill be the 
 fame. Every year there would flill be a certain 
 quantity of food and clothing, which ought to 
 have maintained productive, employed in main- 
 taining unproductive hands. Every year, there- 
 fore, there would flill be fome diminution in 
 what would othervvife have been the value of the 
 annual produce of the land and labour of the 
 country. 
 
 This expence, it may be faid indeed, not be- 
 ing in foreign goods, and not occafioning any 
 exportation of gold and filver, the fame quantity 
 of money would remain in the country as before. 
 But if the quantity of food and clothing, which 
 were thus confumed by unproductive, had been 
 dillributed among productive hands, they would 
 have re-produced, together with a profit, the full 
 value of their confumption. The fam.e quantity 
 of money would in this cafe equally have re- 
 mained in the country, and there would befides 
 have been a re-produ6tion of an equal value of 
 confumable goods. There would have been two 
 values inftead of one. 
 
 The fame quantity of money, befides, cannot 
 long remain in any country in which the value 
 of the annual produce dimini{hes» The fole ufe 
 of money is to chxulate confumable goods. By 
 means of it, provifions, materials, and finifhed 
 
 13 work.
 
 ^HE WEALTH OF NATIONS; ^7 
 
 vork, are bought and fold, and diftrlbuted to chap. 
 their proper confumers. The quantity of nioney, in. 
 therefore, which can be annually employed in 
 any country, mud be determined by the value of 
 the confumable goods annually circulated within 
 it. Thefe mufl: confift either hi the immediate 
 produce of the land and labour of the country 
 itfelf, or in fomething v/hich had been purchafed 
 with fome part of that produce. Their value, 
 therefore, muft diminifli as the value of that pro- 
 duce diminiflics, and along with it the quantity 
 of money which can be employed in circulating 
 them. But the money which by this annual 
 diminution of produce is annually thrown out 
 of domeftic circulation, will not be allowed to 
 lie idle. The intereft of whoever pofleffes it, re- 
 quires that it fliould be employed. But having 
 no employment at home, it will, in fpite of all 
 Jaws and prohibitions, be fent abroad, and em- 
 ployed in purchafing confumable goods which 
 may be of fome ufe at home. Its annual export- 
 ation will in this manner continue for fome time 
 to add fomething to the annual confumption of 
 the country beyond the value of its own annual 
 produce. What in the days of its profperity had 
 been faved from that annual produce, and em- 
 ployed in purchafmg gold and filver, will con- 
 tribute, for fome little time, to fupport its con- 
 fumption in adverfity. The exportation of gold 
 and filver is, in this cafe, not the caufe, but the 
 cffetfl of its declenfion, and may even, for 
 fome little time, alleviate the mifery of that de^ 
 clenfion. 
 
 VOL. JI. -C TiiS
 
 I? THE NATURE AND CAUSES OF 
 
 The quantity of money, on the contrary, mufi: 
 in every country naturally increafe as the value 
 of the annual produce increafes. The value of 
 the confumable goods annually circulated within 
 the fociety being greater, will require a greater 
 quantity of money to circulate them. A part of 
 the increafed produce, therefore, will naturally 
 be employed in pur chafing, wherever it is to be 
 had, the additional quantity of gold and filver 
 neceflary for circulating the reft. The increafe 
 of thofe metals will in this cafe be the effeft, not 
 the caufe, of the public profperity. Gold and 
 filver are purchafed every where in the fame 
 manner. The food, dothing, and lodging, the 
 revenue and maintenance of all thofe whofe la- 
 bour or ftock is employed in bringing them from 
 the mine to the market, is the price paid for 
 them in Peru as well as in England. The coun- 
 try, which has this price to pay, will never be 
 long without the quantity of thofe metals which 
 it has occafion for ; and no country will ever 
 long retain a quantity which it has no occafion 
 for. 
 
 Whatever, therefore, we may imagine the 
 real wealth and revenue of :. country to confift 
 in, whether in the value of the annual produce 
 of its land and labour, as plain reafon feems to 
 dictate, or in the quantity of the precious metals 
 which circulate within it, as vulgar prejudices 
 fuppofe, in either view of the matter, every pro- 
 digal appears to be a public enemy, and every 
 frugal man a public beuefador. 
 
 The
 
 THE WEALTH OF NATIONS. i^ 
 
 The e{Fe(fls of mIfcondu£t are often the fatne chap. 
 as thofe of prodigality. Every injudicious and ni. 
 iinfuccefsful projed in agriculture, mines, fifli- "^ 
 eries, trade, or manufaftures, tends in the fame 
 manner to diminifh the funds deflined for the 
 maintenance of produftive labour. In every fuch 
 project, though the capital is confumed by pro- 
 ductive hands only, yet, as by the injudicious 
 manner in which they are employed, they do not 
 reproduce the full value of their confumption, 
 there mufl always be fome diminution in what 
 would otherwife have been the produdive funds 
 of the fociety. 
 
 It can feldom happen, indeed, that the cir- 
 cumflances of a great nation can be much affefted 
 either by the prodigality or mifconduft of indi- 
 viduals ; the profufion or imprudence of fome 
 being always more than compenfated by the fru- 
 gality and good condu6t of cithers. 
 
 With regard to profufion, the principle which 
 prompts to expence, is the paflion for prefent en- 
 joyment ; which, though fometimes violent and 
 very difficult to be reftrained, is in general only 
 momentary and occafional. But the principle 
 which prompts to fave, is the defire of better- 
 ing our condition, a defire which, though gene- 
 rally calm* and difpaffionate, comes with ps 
 from the womb, and never leaves us till we go 
 into the grave. In the v.hole interval which fe- 
 parates thofe two moments, there is fcarce per- 
 haps a fingle inftance in which any man is fo per- 
 fecily and completely fatisfied with his fituation, 
 as to be without any wifli of alteration or im- 
 
 c 2 provement
 
 20 THE NATURE AND CAUSES OF 
 
 2 o o K provement of any kind. An augmentation of 
 n« fortune is the means by which the greater part 
 of men propofe and wifli to better their condi- 
 tion. It is the means the mofl vulgar and the 
 niofl; obvious ; and the mofl hkely way of aug- 
 menting their fortune, is to fave and accumulate 
 fome part of what they acquire, either regularly 
 and annually, or upon fome extraordinary occa- 
 fions. Though the principle of expence, there- 
 fore, prevails in almofl all men upon fome occa- 
 sions, and in fome men upon almofl all occafions, 
 yet in the greater part of men, taking the whole 
 courfe of their life at an average, the principle of 
 frugality feems not only to predominate, but to 
 predominate very greatly. 
 
 With regard to mifcondu£l, the number of 
 prudent and fuccefsful undertakings is every-where 
 much greater than that of injudicious and unfuc- 
 cefsful ones. After all our complaints of the 
 frequency of bankruptcies, the unhappy men 
 who fall into this misfortune make but a very 
 fmall part of the whole number engaged in trade, 
 and all other forts of bufmefs ; not much more 
 perhaps than one in a thoufand. Bankruptcy is 
 perhaps the greateft and moll humiliating cala- 
 mity which can befal an innocent man. The 
 greater part of men, therefore, are ' fufEciently 
 careful to avoid it. Some, indeed, do not avoid 
 it J as fome do not avoid the gallows. 
 
 Great nations are never impoverifhed by 
 private, though they fometimes are by public 
 prodigality and mifcondu6l. The whole, or 
 almofl the whole public revenue, is in mofl 
 
 countries
 
 THE WEALTH OF NATIONS. 21 
 
 countries employed in maintaining unproduftlve chap. 
 hands. Such are the people who compofe a nu- ^"^ 
 merous and fplendid court, a great ecclefiaftical 
 eftablKhment, great fleets and armies, who in 
 time of peace produce nothing, and in time of 
 war acquire nothing which can compenfate the 
 expence of maintaining them, even while the war 
 lafts. Such people, as they themfelves produce 
 nothing, are all maintained by the produce of 
 other men's labour. When multiphed, there- 
 fore, to an unnecefTary number, they may in a 
 particular year confume fo great a fhare of this 
 produce, as not to leave a fufEciency for main- 
 taining the productive labourers, who ftiould re- 
 produce it next year. The next year's produce, 
 therefore, will be lefs than that of the foregoing, 
 and if the fame diforder (hould continue, that of 
 the third year will be ftill lefs than that of the 
 fecond. Thofe unprodudlive hands, who fhould 
 be maintained by a part only of the fpare re- 
 venue of the people, may confume fo great a 
 fliare of their whole revenue, and thereby oblige 
 fo great a number to encroach upon their capi- 
 tals, upon the funds deflined for the mainte- 
 nance of produ£live labour, that all the frugality 
 and good condud: of individuals may not be able 
 to compenfate the wafte and degradation of pro- 
 duce occafioned by this violent and forced en- 
 croachment. 
 
 This frugality and good eonducl, howeverj 
 is upon moft occafions, it appears from expe- 
 rience, fufficient to comperifare, not only the 
 private prodigality and mifcondmft of indivi- 
 
 Q 3 duals.
 
 28 THE NATURE AND CAUSES OF 
 
 BOOK dualsj but the public extravagance of govern- 
 i't-^« menr. The uniform, conftant, and uninter- 
 rupted effort of every man to better his condi- 
 tion, the principle from which public and na- 
 tional, as -weW as private opulence is originally 
 derived, is frequently powerful enough to main- 
 tain the natural progrefs of things toward im- 
 provement, in fpite both of the extravagance of 
 government, and of the greatelf errors of admini- 
 flration. Like the unknown principle of ani- 
 mal life, it frequently reftores health and vigour 
 to the conftitution, in fpite not only of the 
 difeafe, but of the abfurd prefcriptions of the 
 doftor. 
 
 The annual produce of the land and labour of 
 any nation can be increafed in its value by no 
 other means, but by increafmg either the num- 
 ber of its produdlive labourers, or the productive 
 powers of thofe labourers who had before been 
 employed. The number of its produdive la- 
 bourers, it is evident, can never be much in- 
 creafed, but in confequence of an increafe of ca- 
 pital, or of the funds deftined for maintaining 
 them. The productive powers of the fame num- 
 ber of labourers cannot be increafed, but in con- 
 fequence either of fome addition and improve- 
 ment to thofe machines and inftruments which fa- 
 cilitate and abridge labour ; or of a more proper 
 divifion and diflribution of employment. In 
 either cafe an additional capital is almofl always 
 required. It is by means of an additional capital 
 only, that the undertaker of any work can either 
 provide his workmeix with better machinery, or 
 
 make
 
 THE WEALTH OF NATIONS. »3 
 
 make a more proper dldributlori of employment chap. 
 among them. When the work to be done con- in« 
 lifts of a number of parts, to keep every man '-"^•''**^ 
 conflantly employed in one way, requires a much 
 greater capital than where every man is occafion- 
 ally employed in every diffeient part of the work. 
 When we conipare, therefore, the ftate of a na- 
 tion at two diiferent periods, and find, that the 
 annual produce of its land and labour is evidently 
 greater at the latter than at the former, that its- 
 lands are better cultivated, its manufactures more 
 numerous and more flouriHiinor and its trade 
 more extenfive, we may be affured that its capi- 
 tal muff have increafed during the interval be- 
 tween thofe two periods, and that more muft 
 have been added to it by the good conduct of 
 feme, than had been taken from it either by the 
 private mifcondutl of others, or by the public 
 extravagance of government. Bat we fliall find 
 this to have been the cafe of aimed all nations, 
 in all tolerably quiet and peaceable times, even 
 of thofe who have not enjoyed the mod prudent 
 and parfimonious governments. To form a right 
 judgment of it, indeed, we mufl compare the 
 date of the country at periods fomewhat didant 
 from one another. The progrefs is frequently 
 fo gradual, that at near periods, the improye- 
 ment is not only not fenfible, but from the de- 
 clenfion either of certain branches of indudry, or 
 of certain didricls of the country, things which 
 fometimes happen though the country in general 
 be in great profperity, there frequently arifes a 
 
 c 4 fufpicionj.
 
 24 THE NATURE AND CAUSES OF 
 
 BOOK fufpicion, that the riches and induftry of the 
 II- whole are decaying. 
 
 The annual produce of the land and labour of 
 England, for example, is certainly much greater 
 than it was, a little more than a century ago at 
 the refloration of Charles II. Though, at pre^ 
 fent, few people, I beheve, doubt of this, yet 
 durino- this period, five years have feldom pafled 
 away in which fome book or pamphlet has not 
 been publifhed, written too with fuch abilities 
 as to- gaiii fome authority with the public, and 
 pretending to demonftrate that the wealth of the 
 nation was fad declining, that the country was 
 depopulated, agricukure negleded, manufaClureS 
 decaying, and trade undone. Nor have thefe 
 publications been all party pamphlets, the 
 wretched offspring of falfehood and venality. 
 Many of them have been written by very candid 
 and very intelligent people ; who wrote nothing 
 but what they believed, and for no othe^ reafon 
 but becaufe they believed it. 
 
 The annual produce of the land and labour of 
 England again was certainly much greater at the 
 refloration than we can fuppofe it to have been 
 about an hundred years before, at the accefTion of 
 Elizabeth. At this period too, we have all rea- 
 fon to believe, the country was much more ad- 
 vanced in improvement, than it had been about a 
 century before, towards the clofe of the diffen- 
 fions between the houfes of York and Lancafter. 
 Even then it was, probably, in a better condition 
 than it had been at the Norman conqueff, and at 
 the Norman conqueft, than during the confufion 
 
 of
 
 THE WEALTH OF NATIONS. 25 
 
 of the Saxon Heptarchy. Even at this early pe- c h a p, 
 riod, it was certainly a more improved country iii. , 
 than at the invafion of Julius Casfar, when its in- '^""^ 
 habitants were nearly in the fame ftate with the 
 favages in North America. 
 
 In each of thofe periods, however, there was 
 not only much private and public profufion, 
 many expenfne and unnecefiliry wars, great per- 
 verfion of the annual produce from maintaining 
 produftive to maintain unproduftive hands ; but 
 fometimes, in the confudon of civil difcord, fuch 
 abfolute wafle and deilru6lion of flock, as might 
 be fuppofed, not only to retard, as it certainly 
 did, the natural accumulation of riches, but to 
 have left the country, at the end of the period, 
 poorer than at the beginning. Thus, in the hap- 
 piell and mofl: fortunate period of them all, that 
 which has palled fmce the relloration, how many 
 diforders and misfortunes have occurred, which, 
 could they have been forefeen, not only the im- 
 poverifhment, but the total ruin of the country 
 would have been expelled from them ? The fire 
 and the plague of London, the two Dutch wars, 
 the diforders of the revolution, the war in Ireland, 
 the four expenfive French wars of 1688, 1702, 
 1742, and 1756, together wiih the two rebel- 
 fions of 1715, and 1745. In the courfe of the 
 four French wars, the nation has contraded more 
 than a hundred and forty-five millions of debt, 
 over and above all tlie other extraordinary an- 
 nual expence which they occafioned, fo that the 
 whole cannot be computed at lefs than two hun- 
 dred millions. So great a fharc Q>i the annual 
 
 produce
 
 a6 THE NATURE AND CAUSES OF 
 
 BOOK produce of the land and labour of the country, 
 II* ' has, fmce the revoUuion, been employed upon 
 different occafions, in maintaining an extraordi- 
 nary number of unprodu6live hands. But had 
 not thofe wars given this particular diredtion to 
 fo large a capital, the greater part of it would 
 naturally have been employed in maintaining 
 produdlive hands, whofe labour would have re- 
 placed, with a profit, the whole value of their 
 confumption. The value of the annual produce 
 of the land and labour of the country, would have 
 been confiderably increafed by it every year, and 
 every year's incieafe would have augmented ftill 
 more that of the following year. More houfes 
 would have been built, more lands would have 
 been improved, and thofe which had been im- 
 proved before would have been better cultivated, 
 more manufactures v/ould have been ellabliflied, 
 and thofe which had been eftablifiied before would 
 have been more extended ; and to what height 
 the real wealth and revenue of the country might, 
 by this time, have been raifed, it is not perhaps 
 very eafy even to imagine. 
 
 But though the profufion of government muft, 
 undoubtedly, have retarded the natural progrefs 
 of England towards wealth and improvement, it 
 has not been able to flop it. The annual pro- 
 duce of its land and labour is, undoubtedly, 
 much greater at prefent than it was either at the 
 refloration or at the revolution. The capiral, 
 therefore, annually employed in cultivating this 
 land, and in maintaining this labour, muft like- 
 wife be much greater. In the midft of all the 
 
 10 exadions
 
 THE WEALTH OF NATIONS, 35 
 
 exactions of government, this capital has been chap. 
 filently and gradually accumulated by the private in. 
 frugality and good condud of individuals, by '~"""-'**^ 
 their univerfal, continual, and uninterrupted ef- 
 fort to better their own condition. It is this 
 eflort, proteded by law and allowed by liberty to 
 exert itfelf in the manner that is mod advan- 
 tageous, which has maintained the progrefs of. 
 England towards opulence and improvement in 
 almoft all former times, and which, it is to be 
 hoped, will do fo in all future times. England, 
 however, as it has never been blefl'ed with a very 
 parfimonious government, fo parfimony has at 
 no time been the characleriftical virtue of its in- 
 habitants. It is the higheH: impertinence and 
 prefumptlon, therefore, in kings and minifters, 
 to pretend to watch over the ceconomy of private 
 people, and to reftrain their expence, either by 
 fumptuary laws, or by prohibiting the importa- 
 tion of foreign luxuries. They are themfelves 
 always, and without any exception, the greatefl 
 fpendthrifts in the fociety. Let them look well 
 after their own expence, and they may fafely truft 
 private people with theirs. If their ow^n extra- 
 vagance does not ruin the date, that of their fub- 
 jecls never will. 
 
 As frugality increafes, and prodigality dimi- 
 nifhes the public capital, fo the condud of thofe 
 whofe expence juft equals their revenue, without 
 either accumulating or encroaching, neither in- 
 creafes nor diminilhes it. Some modes of ex- 
 pence, however, feem to contribute more to the 
 growth of public opulence than others. 
 
 Ths
 
 2S THE NATURE AND CAUSES OF 
 
 BOOK The revenue of an individual may be fpent 
 il» either in things which are confumed immediately, 
 and in which one day's expence can neither alle- 
 viate nor fupport that of another ; or it may be 
 fpent in things more durable, which can there- 
 fore be accumulated, and in which every day's 
 expence may, as he chufes, either alleviate or 
 fupport and heighten the effed of that of the fol- 
 lowing day. A man of fortune, for example, 
 may either fpend his revenue in a profufe and 
 fumptuous table, and in maintaining a great 
 number of menial fervants, and a multitude of 
 dogs and horfes ; or contenting himfelf with a 
 frugal table and few attendants, he may lay out 
 the greater part of it in adorning his houfe or his 
 country villa, in ufeful or ornamental buildings, 
 in ufeful or ornamental furniture, in coUefting 
 books, ftatues, pidures; or in things more fri- 
 volous, jewels, baubles, ingenious trinkets of 
 different kinds j or what is mofl trifling of all, 
 in amafling a great wardrobe of fine clothes, like 
 the favourite and minifter of a great prince who 
 died a few years ago. Were two men of equal 
 fortune to fpend their revenue, the one chiefly in 
 the one way, the other in the other, the magnifi- 
 cence of the perfon whofe expence had been 
 chiefly in durable commodities, would be con- 
 tinually increafing, every day's expence contri- 
 buting fomething to fupport and heighten the 
 effed of that of the following day ; that of the 
 other, on the contrary, would be no greater at 
 the end of the period than at the beginning. 
 The former too would, at the end of the period, 
 
 be
 
 THE WEALTH OF NATIONS. 59 
 
 be the richer man of the two. He would have chap. 
 a flock of goods of fome kind or other, which, ' ni. 
 though it might not be worth all that it cod, 
 would always be worth fomething. |No trace or 
 veftige of the expence of the latter would remain, 
 and the effe6ls of ten or twenty years profufion 
 would be as completely annihilated as if they had 
 never exifted. 
 
 As the one mode of expence is more favour- 
 able than the other to the opulence of an indivi- 
 •dual, fo it is likevvife to that of a nation. The 
 houfes, the furniture, the clothing of the rich, 
 in a little time, become ufeful to the inferior and 
 middling ranks of people. They are able to 
 purchafe them when their fuperiors grow weary 
 of them, and the general accommodation of the 
 whole people is thus gradually improved, when 
 this mode of expence becomes univerfal among 
 men of fortune. In countries which have lone: 
 been rich, you will frequently find the inferior 
 ranks of people in poiTeffion both of houfes and 
 furniture perfectly good and entire, but of which 
 neither the one could have been built, nor the 
 other have been made for their ufe. What was 
 formerly a feat of the family of Seymour, is now 
 an inn upon the Bath road. The marriage-bed 
 of James the Firfl: of Great Britain, which his 
 Queen brought with her from Denmark, as a 
 prefent fit for a fovcreign to make to a fovereign, 
 was, a few years ago, the ornament of an ale- 
 houfe at Dunfermline. In fome ancient cities, 
 which either have been long ftationary, or have 
 gone fomewhat to decay, you will fometimes 
 
 7 icarce
 
 3* ^^'^ NATURE AND CAUSES OF 
 
 fcarce find a Tingle houfe which could have been 
 built for its prefent inhabitants. If you go into 
 thofe houfes too, you will frequently find many 
 excellent, though antiquated pieces of furniture, 
 which are dill very fit for ufe, and which could 
 as little have been made for them. Noble pa- 
 laces, magnificent villas, great coile6lions of 
 books, flatues, pictures, and other curiofities, are 
 frequently both an ornament and an honour, not 
 only to the neighbourhood, but to the whole 
 country to which they belong. Verfailles is an • 
 ornament and an honour to France, Stovve and 
 Wilton to England. Italy (till continues to 
 command fome fort of veneration by the number 
 of monuments of this kind which it poflefles, 
 though the wealth which produced them has de- 
 cayed, and though the genius which planned 
 them feems to be extinguiihed, perhaps from not 
 having the fame employment. 
 
 The expence too which is laid out in durable 
 commodities, is favourable not onlv to accumu- 
 lation, but to frugality. If a perfon fhould at 
 any time exceed in it, he can eafily reform with- 
 out expofing himfelf to the cenfure of the pub- 
 lic. To reduce very much the number of his 
 fervants, to reform his table from great profufion 
 to great frugality, to lay down his equipage after 
 he has once fet it up, are changes which cannot 
 efcape the obfervation of his neighbours, and 
 which are fuppofed to imply fome acknowledge- 
 ment of preceding bad condu6l. Few, there- 
 fore, of thofe who have once been fo unfortunate 
 as to launch out too far into this fort of expence, 
 
 have
 
 THE WEALTH OF NATIONS. 31 
 
 have afterwards the courage to reform, till ruin c h a p. 
 and bankruptcy oblige them. But if a perfon m. 
 has, at any time, been at too great an expence in '^^"^ 
 building, in furniture, in books or piiSlures, no 
 imprudence can be inferred from his changing 
 his condu6t. Thefe are things in which further 
 expence is frequently rendered unnecefTary by 
 former expence ; and when a perfon flops (hort, 
 he appears to do fo, not becaufe he has ex- 
 ceeded his fortune, but becaufe he has fatished 
 his fancy. 
 
 The expence, bcfides, that is laid out in dura- 
 ble commodities, gives maintenance, commonlv, 
 to a greater number of people, than that which 
 is employed in the mofl profufe hofpitality. Of 
 two or three hundred vv^eight of provifions, which 
 may fometimes be ferved up at a great fellival, 
 one-half, perhaps, is thrown to the dunghill, and 
 there is always a great deal wafted and abufed. 
 But if the expence of this entertainment had been 
 employed iri fetting to work mafons, carpenters, 
 upholfterers, mechanics, &c. a quantity of pro- 
 vifions of equal value would have been diftri- 
 buted among a ftill greater number of people, 
 who would have bought them in penny-worths 
 and pound weights, and not have lofl nor throwa 
 away a fmgle ounce of them. In the one way, 
 befides, this expence maintains produdive, in the 
 other unprodu(5live hands. In the one way, 
 therefore, it increafes, in the other, it does not 
 increafe, the exchangeable value of the annual 
 produce of the land and labour of the country. 
 
 I WOULD
 
 32 THE NATURE AND CAUSES OF 
 
 I WOULD not, however, by all this be under- 
 (lood to mean, that the one fpecies of expence 
 always betokens a more Hberal or generous fpirit 
 than the other. When a man of fortune fpends 
 his revenue chiefly in hofpitality, he fhares the 
 greater part of it with his friends and compa- 
 nions ; but when he employs it in purchafmg 
 fuch durable commodities, he often fpends the 
 whole upon his own perfon, and gives nothing to 
 any body without an equivalent. The latter 
 fpecies of expence, therefore, efpecially when di- 
 recled towards frivolous objeds, the little orna- 
 ments of drefs and furniture, jewels, trinkets, 
 gewgaws, frequently indicates, not only a trifling, 
 but a bafe and felfiih difpofition. All that I 
 mean is, that the one fort of expence, as it always 
 occafions feme accumulation of valuable com- 
 modities, as it is more favourable to private fru- 
 gality, and, confequently, to the increafe of the 
 public capital, and as it maintains produftive, 
 rather than unprodudive hands, conduces more 
 than the other to the growth of pubhc opulence. 
 
 CHAP.
 
 THE WEALTH OF NATIONS. 53 
 
 CHAP. IV. 
 
 Of Stock lent at Intereji. 
 
 p-pHE {lock which Is lent at interefl: is always chap. 
 "*" confidered as a capital by the lender. He iv. 
 expe£ls that in due time it is to be reftored to 
 him, and that in the mean time the borrower is 
 to pay him a certain annual rent for the ufe of it. 
 The borrower may ufe it either as a capital, or 
 as a ftock referved for immediate confumption. 
 If he ufes it as a capital, he employs it in the 
 maintenance of productive labourers, who repro- 
 duce the value with a profit. He can, in this 
 cafe, both reftore the capital and pay the interefl: 
 without alienating or encroaching upon any 
 other fource of revenue. If he ufes it as a flock 
 referved for immediate confumption, he ads the 
 part of a prodigal, and diffipates in the mainte- 
 nance of the idle, what was deflined for the fup- 
 port of the induflrious. He can, in this cafe,- 
 neither reflore the capital nor pay the interefl, 
 without either ahenating or encroaching upon 
 fome other fource of revenue, fuch as the prg- 
 perty or the rent of land. 
 
 The flock which is lent at interefl Is, no doubt, 
 occafionally employed in both thefe ways, but in 
 the former much more frequently than in the 
 latter. The man who borrows In order to fpend 
 will foon be ruined, and he who lends to him 
 will generally have occafion to repent of his 
 VOL. n. D fully.
 
 3^ THE NATURE AND CAUSES OF 
 
 BOOK folly. To borrow or to lend for fuch a purpofe, 
 n. therefore, is in all cafes, where grofs ufury is out 
 " ""^"^ of the queftion, contrary to the intereft of both 
 parties ; and though it no doubt happens fome- 
 times that people do both the one and the other j 
 yet, from the regard that all men have for their 
 own intereft, we may be aflured, that it cannot 
 happen fo very frequently as we are fometimes 
 apt to imagine. Afk any rich man of common 
 prudence, to which of the two forts of people he 
 has lent the greater part of his flock, to thofe 
 who, he thinks, will employ it profitably, or to 
 thofe who will fpend it idly, and he will laugh at 
 you for propofing the queflion. Even among bor- 
 rowers, therefore, not the people in the world moft 
 famous for frugality, the number of the frugal 
 and induftrious furpaiTes confiderably that of the 
 prodigal and idle. 
 
 The only people to whom ftock is commonly 
 lent, without their being expeded to make any 
 very profitable ufe of it, are country gentlemen 
 who borrow upon mortgage. Even they fcarce 
 ever borrow merely to fpend. What they bor- 
 row, one may fay, is commonly fpent before they 
 borrow it. They have generally confumed fo 
 great a quantity of goods, advanced to them 
 upon credit by fhopkeepers and tradefmen, that 
 they find it necelTary to borrow at intereft in order 
 to pay the debt. The capital borrowed replaces 
 the capitals of thofe fliopkeepers and tradefmen, 
 which the country gentlemen could not have re- 
 placed from the rents of their eftates. It is not 
 properly borrowed in order to be fpent, but in 
 
 order
 
 THE WEALTH OF NATIONS, 35 
 
 order to replace a capital which had been fpent chap. 
 before. iv. 
 
 Ai-MOST all loans at Interefl: are made in mo- 
 ney, either of paper, or of gold and filver. But 
 what the borrower really wants, and what the 
 lender readily fupplies him with, is not the money, 
 but the money's worth, or the goods which it 
 can purchafe. If he wants it as a flock for im- 
 mediate confumption, it is thofe goods only 
 which he can place in that flock. If he wants it 
 as a capital for employing induflry, it is from 
 thofe goods only that the induftrious can be fur- 
 nifhed with the tools, materials, and mainte- 
 nance, neceflary for carrying on their work. By- 
 means of the loan, the lender, as it were, afTigns 
 to the borrower his right to a certain portion of 
 the annual produce of the land and labour of the 
 country, to be employed as the borrower pleafes. 
 
 The quantity of flock, therefore, or, as it is 
 commonly exprelTed, of money, which can be lent 
 at interefl in any country, is not regulated by the 
 value of the money, whether paper or coin, which 
 ferves as the inflrument of the diHerent loans made 
 in that country, but by the value of that part of 
 the annual produce, which, as foon as it comes 
 either from the ground, or from the hands of the 
 productive labourers, is deflined not only for re- 
 placing a capital, but fuch a capital as the owner 
 does not care to be at the trouble of employing 
 himfelf. As fuch capitals are commonly lent out 
 and paid back in money, they conflitute what is 
 called the monied interefl. It is diflinft, not 
 only from the landed, but from the tradinp- and 
 
 i^ 2 manu-
 
 35 THE NATURE AND CAUSES OF 
 
 manufadunng interefls, as in thefe laft the owners 
 themfelves employ their own capitals. Even in 
 the monied intereft, however, the money is, as it 
 were, but the deed of afiignment, which conveys 
 from one hand to another thofe capitals which the 
 owners do not care to employ themfelves, Thofe 
 capitals may be greater in almoft: any proportion, 
 than the amount of the money which ferves as the 
 inftrument of their conveyance; the fame pieces 
 of money fucceflively ferving for many different 
 loans, as well as for many different purchafes. A, 
 for example, lends to W a thoufand pounds, with 
 which W immediately purchafes of B a thoufand 
 pounds worth of goods. B haying no occafion 
 for the money himfelf, lends the identical pieces 
 to X, with which X immediately purchafes of C 
 another thoufand pounds worth of goods. C, in 
 the fame manner, and for the fame reafon, lends 
 them to Y, who again purchafes goods with them 
 of D. In this manner the fame pieces, either 
 of coin or of paper, may, in the courfe of a few 
 davs, ferve as the inftrument of three different 
 loans, and of three different purchafes, each of 
 which is, in value, equal to the whole amount of 
 thofe pieces. What the three monied men. A, B, 
 and C, aflign to the three borrowers, W, X, Y, 
 is the power of making thofe purchafes- In this 
 pov/er confift both the value and the ufe of the 
 loans. The flock lent by the three monied men 
 is equal to the value of the goods which can be 
 purchafed with it, and is three times greater than 
 that of the money with which the purchafes are 
 made. Thofe loans, however, may be all per- 
 
 feaiy
 
 THE V/EALTH OF NATFONS. ^ 
 
 fe(5lly well fecured, the goods purcbafed by the c h a p, 
 different debtors being fo employed, as in due iv. 
 time to bring back, with a profit, an equal value 
 either of coin or of papei'. And as the fame 
 pieces of money can thus ferve as the inflrument 
 of different loans to three, or for the fame reafon, 
 to thirty times their value, fo they may likevv^ife 
 fucceffively ferve as the inftrument of repayment. 
 
 A CAPITAL lent at interefl may, in this manner, 
 be confidered as an affignment from the lender to 
 the borrower of a certain confiderable portion of 
 the annual produce ; upon condition-that the bor- 
 rower in return fhall, during the continuance of 
 the loan, annually aifign to the lender a fmaller 
 portion, called the interefl ; and at the end of it, 
 a portion equally confiderable with that which 
 had originally been afligned to him, called the 
 repayment. Though money, either coin or pa- 
 per, ferves generally as the deed of affignment 
 both to the fmaller, and to the more confiderable 
 portion, it is itfelf altogether different from what 
 is affigned by it. 
 
 In proportion as that Ihare of the annual pro- 
 duce which, as foon as it comes either from the 
 ground or from the hands of the produftive la- 
 bourers, is deflined for replacing a capital, in- 
 creafes in any country, what is called the monied. 
 interefl naturally increafes with it. The increafe 
 of thofe particular capitals from which the owners 
 wifh to derive a revenue, without being , at the 
 trouble of employing them themfelves, naturally 
 accompanies the general increafe of capitals ; or, 
 in other words, as flock increafes, the quantity of 
 
 D 3 flock 

 
 3« THE NATURE AND CAUSES OF 
 
 Book flock to be lent at intereft grows gradually greater 
 and greater. 
 
 As the quantity of flock to be lent at intereft 
 ^increafes, the interefl, or the price which niufl be 
 paid for the ufe of that flock, neceffarily dimi- 
 nifhes, not only from thofe general caufes which 
 make the market price of things commonly di- 
 minifli as their quantity increafes, but from other 
 caufes which are peculiar to this particular cafe. 
 As capitals increafe in any country, the profits 
 which can be made by employing them necelTa- 
 rily diminifh. It becomes gradually more and 
 more difficult to find within the country a pro- 
 fitable method of employing any new capital. 
 There arifes in confequence a competition be- 
 tween different capitals, the owner of one endea- 
 vouring to get poflellion of that employment 
 which is occupied by another. But upon moft 
 occafions he can hope to juflle that other out of 
 this employment, by no other means but by deal- 
 ing upon more reafonable terms. He mud not 
 only fell what he deals in fomewhat cheaper, but 
 in order to get it to fell, he mufl fometimes too 
 buy it dearer. The demand for productive la- 
 bour, by the increafe of the funds which are de- 
 ilined for maintaining it, grows every day greater 
 and greater. Labourers eafily find employment, 
 but the owners of capitals find it difficult to get 
 labourers to employ. Their competition raifes 
 the wages of labour, and finks the profits of 
 flock. But when the profits which can be made 
 by the ufe of a capital are in this manner di- 
 miniflied, as it were, at both ends, the price 
 
 which
 
 THE WEALTH OF NATIONS. 39 
 
 which can be paid for the ufe of it, that is, the c H a p, 
 rate of intereft, muft necelTarily be diminifhed •^'^'* 
 with them. 
 
 Mr. Locke, Mr. Law, and Mr. Montefquieu, 
 as well as many other writers, feem to have ima- 
 gined that the increafe of the quantity of gold 
 and filver, in confequence of the difcovery of the 
 Spanifh Weft Indies, was the real caufe of the 
 lowering of the rate of intereft through the 
 greater part of Europe. Thofe metals, they fay, 
 having become of l&Ts value themfelves, the ufe 
 of any particular portion of them necelTarily be- 
 came of lefs value too, and confequently the price 
 which could be paid for it. This notion, which 
 at firft fight feems fo plaufible, has been fo fully 
 expofdd by Mr. Hume, that it is, perhaps, un- 
 neceffary to fay any thing more about it. The 
 following very fhort and plain argument, how- 
 ever, may ferve to explain more diftinftly the 
 fallacy which feems to have milled thofe gentle- 
 men. 
 
 Before the difcovery of the Spanifh Weft In- 
 dies, ten per cent feems to have been the com- 
 mon rate of intereft through the greater part of 
 Europe. It has fmcc that time in difterent coun- 
 tries funk to fix, five, four, and three per cent. 
 Let us fuppofe that in every particular country 
 ■ the value of filvcr has funk precifely in the fame 
 proportion as the rate of intereft ; and that in 
 thofe countries, for example, where intereft has 
 been reduced from ten to five per cent., the fame 
 quantity of filver can now purchafe juft half the 
 quantity of goods which it could have purchafed 
 
 D 4 before.
 
 40 THE NATURE AND CAUSES OF 
 
 BOOK before. This fuppofition will not, I believe, be 
 II- found any where agreeable to the truth, but it is 
 the moft favourable to the opinion which we are 
 going to examine ; and even upon this fuppofi- 
 tion it is utterly impolTible that the lowering of 
 the value of filver could have the fmalleft ten- 
 dency to lower the rate of intereft. If a hundred 
 pounds are in thofe countries now of no more 
 value than fifty pounds were then, ten pounds 
 muft now be of no more value than five pounds 
 w^ere then. Whatever were the caufes which 
 lowered the value of the capital, the fame raufi: 
 neceflarily have lowered that of the intereft, and 
 exadly in the fame proportion. The proportion 
 between the value of the capital and that of the 
 intereft, muft have remained the fame, though 
 the rate had never been altered. By altering the 
 rate, on the contrary, the proportion between, 
 thofe two values is necelTarily altered. If a hun- 
 dred pounds now are worth no more than fifty 
 were then, five pounds now can be worth no more 
 than tv/o pounds ten fhillings were then. By re- 
 ducing the rate of intereft, therefore, from ten to 
 five per cent., we give for the ufe of a capital, 
 which is fuppofed to be equal to one-half of its 
 former value, an intereft which is equal to one- 
 fourth only of the value of the former intereft. 
 
 Any increafe in the quantity of filver, while 
 that of the commodities circulated by means of 
 it remained the fame, could have no other efte6l 
 than to diminlfh the value of that metal. The 
 nominal value of ail forts of goods would be 
 greater, but their real value would be precifely 
 
 the
 
 THE WEALTH OF NATIONS. 41 
 
 the fame as before. They would be exchanged c h a f, 
 for a greater number of pieces of filver ; but the iv. 
 quantity of labour which they could command, ' ^'~*^' 
 the number of people whom they could maintain 
 and employ, would be preciiely fhe fame. The 
 capital of the country would be the fame, though 
 a greater number of pieces might be requifite for 
 conveying any equal portion of it from one hand 
 to another. The deeds of afiignment, like the 
 conveyances of a verbofe attorney, would be more 
 cumberfome, but the thing afligned would be 
 precifely the fame as before, and could produce 
 only the fame effefts. The funds for maintain- 
 ing produi^live labour being the fame, the de- 
 mand for it would be the fame. Its price or 
 wages, therefore, though nominally greater, 
 would really be the fame. They would be paid 
 in a greater number of pieces of fdver ; but they 
 would purchafe only the fame quantity of goods. 
 The profits of ftock would be the fame both no- 
 minally and really. The wages of labour are 
 commonly computed by the quantity of fdver 
 which is paid to the labourer. When that is in- 
 creafcd, therefore, his wages appear to be in- 
 creafed, though they may fometimes be no greater 
 'than before. But the profits of ftock are not 
 computed by the number of pieces of filver with 
 which they are paid, but by the proportion which 
 thofe pieces bear to the whole capital employed. 
 Thus ii;! a particular country five fhillings a week 
 are faid to be the common wages of labour, and 
 ten per cent, the common profits of flock. But 
 the whole capital of the country being the fame 
 
 as
 
 4? THE NATURE AND CAUSES OF 
 
 BOOK as before, the competition between the different 
 II. capitals of individuals into which it was divided 
 would likewii'e be the fame. They would all 
 trade with the fame advantages and difadvan- 
 tages. The common proportion between capital 
 and profit, therefore, would be the fame, and 
 confequently the common interefl of money ; 
 what can commonly be given for the ufe of mo- 
 ney being neceifarily regulated by what can com- 
 monly be made by the ufe of it. 
 
 Any increafe in the quantity of commodities 
 annually circulated within the country, while that 
 of the money which circulated them remained 
 the fame, would, on the contrary, produce many 
 other important effeds, befides that of raifmg the 
 value of the money. The capital of the country, 
 though it might nominally be the fame, would 
 really be augmented. It might continue to be 
 exprefied by the fame quantity of money, but it 
 would command a greater quantity of labour. 
 The quantity of produdive labour which it could 
 maintain and employ would be increafed, and 
 confequently the demand for that labour. Its 
 wages would naturally rife with the demand, and 
 yet might appear to fink. They might be paid 
 with a fmaller quantity of money, but that fmaller 
 quantity might purchafe a greater quantity of 
 goods than a greater had done before. The 
 profits of flock would be diminifhed both really 
 and in appearance. The whole capital of the 
 country being augmented, the competition be- 
 tween the different capitals of which it was com- 
 pofed, would naturally be augmented along witli* 
 
 it.
 
 THE WEALTH OF NATIONS. 43 
 
 it. The owners of thofe particular capitals chap. 
 would be obliged to content themfelves with a I v. 
 fmaller proportion of the produce of that labour ^"*'^' 
 which their refpeftive capitals employed. The 
 intereft of money, keeping pace always with the 
 profits of (lock, might, in this manner, be greatly 
 diminiflied, though the value of money, or the 
 quantity of goods which any particular funi could 
 purchafe, was greatly augmented. 
 
 In fome countries the intereft of money has 
 been prohibited by law. But as fomething can 
 every-where be made by the ufe of money, fome- 
 thing ought every-where to be paid for the ufe of 
 it. This regulation, inftead of preventing, has 
 been found from experience to increafe the evil 
 of ufury ; the debtor being obliged to pay, not 
 only for the ufe of the money, but for the rifle 
 which "his creditor runs by accepting a compen- 
 fation for that ufe. He is obliged, if one may 
 fay fo, to infure his creditor from the penalties of 
 ufury. 
 
 In countries where interefl: Is permitted, the 
 law, in order to prevent the extortion of ufury, 
 generally fixes the higheft rate which can be 
 taken without incurring a penalty. This rate 
 ou,a;ht alwavs to be fomewhat above the lowed 
 market price, or the price v/hich is commonly 
 paid for the ufe of money by thofe who can give 
 the mod undoubted fecurity. If this legal rate 
 fhould be fixed below the lowed market rate, the 
 effeds of this fixation mud be nearly the fame as 
 thofe of a total prohibition of intered. The cre- 
 ditor will not lend his money for lefs than the ufe 
 
 9 of
 
 44 THE NATURE AND CAUSES OF 
 
 BOOK of It is worth, and the debtor mud pay him for 
 n. the rifk which he runs by accepting the full value 
 of that ufe. If it is fixed precifely at the lowed 
 market price, it ruins, with honed people, who 
 refpeft the laws of their country, the credit of all 
 thofe who cannot give the very bed fecurity, and 
 obliges them to have recourfe to exorbitant 
 ufurers. In a country, fuch as Great Britain, 
 where money is lent to government at three per 
 cent, and to private people upon good fecurity 
 at four and four and a half, the prefent legal 
 rate, five per cent., is, perhaps, as proper as any. 
 The legal rate, it is to ^be obferved, though it 
 ought to be fomewhat above, ought not to be 
 much above the lowed market rate. If the legal 
 rate of intered in Great Britain, for example, was 
 iixed fo high as eight or ten per cent., the greater 
 part of the money which was to be lent, \^ould be 
 lent to prodigals and projedors, who alone would 
 be willing to give this high intered. Sober 
 people, who will give for the ufe of money no 
 more than a part of what they are likely to make 
 by the ufe of it, would not venture into the com- 
 petition. A great part of the capital of the 
 country would thus be kept out of the hands 
 which were mod likely to make a profitable and 
 advantageous ufe of it, and thrown into thofe 
 which were mod likely to wade and dedroy it. 
 Where the legal rate of intered, on the contrary, 
 is fixed but a very little above the lowed market 
 rate, fober people are univerlcilly preferred, as 
 borrowers, to prodigals and projectors. Tne 
 perfon who lends money gets nearly as much 
 
 6 intered
 
 THE WEALTH OF NATIONS. 45 
 
 interefl: from the former as he dares to take from 
 the latter, and his money is much fafer in the 
 hands of the one fet of people, than in thofe of 
 the other. A great part of the capital of the 
 country is thus thrown into the hands in which 
 it is moil hkely to be employed with advantage. 
 
 No law can reduce the common rate of intereft 
 below the lov/eft ordinary market rate at the time 
 when that law is made. Notwithftanding the 
 edict of 1/65, by which the French king at- 
 tempted to -/educe the rate of interefl from five 
 to four per cent., money continued to be lent in 
 France at five per cent., the law being evaded in 
 fever al different ways* 
 
 The ordinary market price of land, it is to be 
 obferved, depends every-where upon the ordinary 
 market rate of intereft. The perfon who has a 
 capital from which he wifhes to derive a revenue, 
 without taking the trouble to employ it himfelf, 
 deliberates whether he fhould buy land with it, 
 or lend it out at interefl. The fuperior fecurity 
 of land, together v,'lth fome other advantages 
 which almofl every-where attend upon this.fpecies 
 of property, will generally difpofe him to con- 
 tent himfelf with a fmaller revenue from land, 
 than what he might have by lending out his mo- 
 ney at intereft. Thefe advantages are fufiicient 
 to compenfate a certain difference of revenue ; 
 but they will compenfate a certain difference 
 only ; and if the rent of land fhould fall fhort of 
 the intereft of money by a greater difference, no- 
 body would buy land, which would foon reduce 
 its ordinary price. On the contrary, if the ad- 
 vantages
 
 6 THE NATURE AND CAUSES OF 
 
 4 
 
 BOOK vantaf^es fhould much more than compenfate the 
 
 II. difference, every body would buy land, which 
 '~*~ again would foon raife its ordinary price. When 
 intereft was at ten per cent., land was commonly 
 fold for ten and twelve years purchafe. As in- 
 tereft funk to fix, five, and four per cent., the 
 price of land rofe to twenty, five and twenty, and 
 thirty years purchafe. The market rate of inte- 
 reft is higher in France than in England ; and 
 the common price of land is lower. In England 
 it commonly fells at thirty, in France at twenty 
 years purchafe. 
 
 CHAP. V. 
 
 Of the different Employment of Capitals* 
 
 ''p HOUGH all capitals are deftined for the main- 
 tenance of productive labour only, yet the 
 quantity of that labour, which equal capitals are 
 capable of patting into motion, varies extremely 
 according to the diverfity of their employment ; 
 as does likewife the value which that employment 
 adds to the annual produce of the land and labour 
 of the country. 
 
 A CAPITAL may be employed in four difterent 
 ways : either, firft, in procuring the rude produce 
 annually required for the ufe and confumption of 
 the fociety, or, fecondly, in manufaduring and 
 preparing that rude produce for immediate ufe and 
 
 con^
 
 TEIE WEALTH OF NATIONS; 47 
 
 confumption ; or, thirdly, in tranfporting either c h a p« 
 the rude or manufadured produce from the places '^^* 
 where they abound to thofe where they are want- ^'*^' 
 ed ; or, laftly, in dividing particular portions of 
 either into fuch fmall parcels as fuit the occa- 
 fional demands of thofe who want them. In the 
 firft way are employed the capitals of all thofe 
 who undertake the improvement or cultivation 
 of lands, mines, or fifiieries ; in the fecond, thofe 
 of all mailer manufadlurers ; in the third, thofe 
 of all wholefale merchants ; and in the fourth, 
 thofe of all retailers. It is difficult to conceive 
 that a capital fhould be employed in any way 
 which may not be claifed under fome one or ether 
 of thofe four. 
 
 Each of thofe four methods of employing a 
 capital is efientially necelfary either to the exift- 
 ence or extenfion of the other three, or to the ge- 
 neral conveniency of the fociety. 
 
 Unless a capital was employed in furnlfhing 
 rude produce to a certain degree of abundance, 
 neither manufactures nor trade of any kind could 
 exift. 
 
 Unless a capital was employed in manu- 
 fafturing that part of the rude produce which 
 requires a good deal of preparation before it can 
 be fit for ufe and confumption, it either would 
 never be produced, becaufe there could be no 
 demand for it ; or if it was produced fponta- 
 neoufly, it would be of no value in exchange, 
 and could add nothing to the wealth of the 
 fociety. 
 
 UnI.£S8
 
 4S THE NATURE AND CAUSES OF 
 
 BOOK Uni.ess a capital was employed in tranrport- 
 II* ing, either the rude or maiiufa£lured produce, 
 
 *'^'~^' from the places where it abounds to thofe where 
 it is wanted, no more of either could be produced 
 than was neceflary for the confumption of the 
 neighbourhood. The capital of the merchant ex- 
 changes the furplus produce of one place for that 
 of another, and thus encourages the induflry and 
 increafes the enjoyments of both. 
 
 Unless a capital was employed in breaking 
 and dividing certain portions either of the rude 
 or manufactured produce, into fuch fmall parcels 
 as fuit the occafional demands of thofe who want 
 them, every man would be obliged to purchafe 
 a greater quantity of the goods he wanted, than 
 his immediate cccafions required. If there was 
 no fuch trade as a butcher, for example, every 
 man would be obliged to purchafe a whole ox or 
 a whole fiieep at a time. This would generally 
 be inconvenient to the rich, and much more fo 
 to the poor. If a poor v/orkm-an was obliged to 
 purchafe a month's or fix months' provifions at a 
 time, a great part of the ftock w^hich he employs 
 as a capit?! in the inftruments of his trade, or 
 in the furniture of his fhop, and which yields him 
 a revenue, he would be forced to place in that 
 part of his flocl: which is referved for immediate 
 confumption, and which yields him no revenue. 
 Nothing can be more convenient for fuch a per- 
 fon than to be able to purchafe his fubfiftence 
 from day to day, or even from hour to hour, as he 
 wants it. He is thereby enabled to employ almofl 
 his whole flock as a capital. He is thus enabled 
 
 to
 
 THE WEALTH OF NATIONS. 49 
 
 to furnidi work to a greater value, and the profit chap, 
 which he makes by it in this way, much more v. 
 than compenfates the additional price which the "— '^""*^. 
 profit of the retailer impofes upon the goods. 
 The prejudices of fome political writers againffc 
 fliopkeepers and tradefmen, are altogether with- 
 out foundation. So far is it from being necef- 
 fary either to tax them, or to reflrid their num- 
 bers, that they qan never be multiphed fo as to 
 hurt the public, though they may fo as to hurt 
 one another. The quantity of grocery goods, 
 for example, which can be fold in a particular 
 town, is limited by the demand of that town 
 and its neighbourhood. The capital, therefore, 
 which can be employed in the grocery trade can- 
 not exceed what is fufficient to purchafe that 
 quantity. If this capital is divided between two 
 different grocers, their competition will tend to 
 make both of them fell cheaper, 'than if it were 
 in the hands of one only ; and if it were divided 
 among twenty, their competition would be jult 
 fo much the greater, and the chance of their com- 
 bining together, in order to raifc the price, 
 jult lb much the lefs. Their competition might 
 perhaps ruin fome of themfelves ; but to take care 
 of this is the bufmefs of the parties concerned^ 
 and it may fafely be trufted to their difcretion. 
 It can never hurt either the confumer, or the 
 producer ; on the contrary, it mud tend to make 
 the retailers both fell cheaper and buy dearer, 
 than if the whole trade was monopolized by one 
 or two perfons. Some of them, perhaps, may 
 fometimes decoy a weak cuftomer to buy what 
 VOL, II, £ he
 
 50 THE NATURE AND CAUSES OF 
 
 BOOK he has no occafion for. 'J'his evil, however, is 
 n. of too Httle importance to deferve the public at- 
 '"•"^■''-'^ tention, nor v.'ould it necediuily be prevented by 
 reflriiSlin'T their numbers. It is not the multi- 
 tude of ale-houfes, to give the moft fufpicious 
 eicample, that occafions a general difpofition to 
 driinkennefs among the common people : but 
 that difpofition arifmg from other caufes necef- 
 farily gives employment to a multitude of ale- 
 houfes. 
 
 The perfons whofe capitals are employed in 
 any of thofe four ways are themfelves produdive 
 labourers. Their labour, when properly di- 
 rected, fixes and realizes itfelf in the fubje6l or 
 vendible commodity upon which it is bellowed, 
 and generally adds to its price the value at leaft 
 of their own maintenance and confumption. 
 The profits of the farmer, of the manufacturer, 
 of tlic merchant, and retailer, are all drawn from 
 the price of the goods which the two firfl pro- 
 duce, and the two laft buy and fell. Equal ca- 
 pitals, however, employed in each of. thofe four 
 different ways will immediately put into motion 
 very different quantities of productive labour, and 
 augment too in very different proportions the va- 
 lue of the annual produce of the land and labour 
 of the fociety to which they belong. 
 
 Thje capital of the retailer replaces, together 
 with its profits, that of the merchant of whom he 
 purchafes goods, and thereby enables him to 
 continue his bufinefs. The retailer himfelf is 
 the only produftive labourer whom it imme- 
 diately employs. In his profits confifls the 
 
 whole
 
 THE WEALTH OF NATIONS. 
 
 S^ 
 
 U'hole value which its employment adds to the chap. 
 annual produce of the land and labour of the v. 
 fbciety. ''""**' 
 
 The capital of the wholefale merchant replaces, 
 together with their profits, the capitals of the 
 farmers and manufadurers of whom he purchafes 
 the rude and manufaftured produce which he 
 deals in, and thereby enables them to continue 
 their refpe€live trades. It is by this fervice 
 chiefly that he contributes indiredly to fupport 
 the produ6live labour of the fociety, and to in- 
 creafe the value of its annual produce. His ca- 
 pital employs too the failors and carriers who 
 tranfport his goods from one place to another, 
 and it augments the price ot thofe goods by the 
 value, not only of his profits, but of their wages. 
 This is all the productive labour which it imme- 
 diately puts into motion, and all the value which 
 it immediately adds to the annual produce. Its 
 operation in both thefe refpeds is a good deal 
 fuperior to that of the capital of the retailer. 
 
 Part of the capital of the mailer manufa6lurer 
 is employed as a fixed capital in the infiruinents 
 of his trade, and replaces, together with its pro- 
 fits, that of fome other artificer of whom he pur- 
 chafes them. Part of his circulating capital is 
 employed in purchafing materials, and replaces^ 
 with their pTofits^ the capitals of the farmers and 
 miners of whom he purchafes them. But a great 
 part of it is always, either annually, or in a much 
 fliorter period, diftributed among the dijFerent 
 workmen whom he employs. It augments the 
 value of thofe materials by their wages, and by 
 
 .¥ 2 their
 
 52 THE NATURE AND CAUSES OF 
 
 BOOK their maflers' profits upon the whole ftock of 
 II. wages, materials, and mflruments of trade em- 
 ployed in the bufmefs. It puts immediately into 
 inotion, therefore, a much greater quantity of 
 productive labour, and adds a much greater value 
 to the annual produce of the land and labour of 
 the fociety, than an equal capital in the hands 
 of any wholefale merchant. 
 
 No equal capital puts into motion a greater 
 quantity of productive labour, than that of the 
 farmer. Not only his labouring fervants, but 
 his labouring cattle, are produdive labourers. 
 In agriculture too, nature labours along with man ; 
 i\nd though her labour cofts no expence, its pro- 
 duce has its value, as well as that of the mofl ex- 
 penfive vv'orkmen. The mofl Important opera- 
 tions of agriculture, feem intended not fo much 
 to increafe, though they do that too, as to dired 
 the fertility of nature towards the produdion of 
 the plants mofl profitable to man. A field over- 
 grown with briars and brambles may frequently 
 produce as great a quantity of vegetables as the 
 befl cultivated vineyard or corn field. Plant- 
 ing and tillage frequently regulate more than they 
 animate the adive fertihty of nature; and after 
 all their labour, a great part of the work always 
 remains to be done by her. The labourers and 
 labouring cattle, therefore, employed in agri- 
 culture, not only occafion, like the workmen in 
 manufadures, the reprodudion of a value equal 
 to their own confumption, or to the capital which 
 employs them, together with its owners' profits 5 
 but of 51 much greater value. Over and above 
 
 the
 
 THE WEALTH OF NATIONS. 5^ 
 
 the capital of the farmer and all its profits, they chap. 
 regularly occafion the reprodu(5):ion of the rent of v. 
 the landlord. This rent may be confidered as — ^'— ^ 
 the produce of thofe powers of nature, the ufe 
 of which the landlord lends to the farmer. It is 
 greater or fmaller according to the fuppofed ex- 
 tent of thofe powers, or, in other words, accord- 
 ing to the fuppofed natural or improved fertility 
 of the land. It is the work of nature which re- 
 mains after deducing or compenfating every 
 thing which can be regarded as the work of man. 
 It k feldom lefs than a fourth, and frequently 
 more than a third of the whole produce. No 
 equal quantity of productive labour employed in 
 manufadures can ever occafion fo great a repro- 
 dudion. In them nature does nothing ; man 
 does all; and the reprodu6lion muft- always be in 
 proportion to the flrength of the agents that oc- 
 cafion it. The capital employed in agriculture, 
 therefore, not only puts into motion a greater 
 quantity of produftive labour than any equal 
 capital employed in manufadures, but in pro- 
 portion too to the quantity of produdlive labour 
 which it employs, it adds a much greater value 
 to the annual! produce of the land and labour of 
 the country, to the real wealth and revenue of its 
 inhabitants. Of all the ways in which a capital 
 can be employed, it is by far the mod: advan- 
 tageous to the fociety. 
 
 The capitals employed in the agriculture and 
 in the retail trade of any fociety, muft always 
 refide within that fociety. Their employment is 
 confined alruoll to a precife fpot, to the farm, 
 
 £ 3 and
 
 J4. THE NATURE AND CAUSES OF 
 
 BOOK and to the (hop of the retailer. They mufl gene- 
 II. rally too, though there are fome exceptions to this, 
 
 *— ^''^*— ^ belong to refident members of the fociety. 
 
 The capital of a wholefale merchant, on the 
 contrary, feems to have no fixed or neceffary re- 
 fidence any-where, but may wander about from 
 place to place, according as it can either buy 
 cheap or fell dear. 
 
 The capital of the manufa£lurer mud no doubt 
 refide where the manufafture is carried on : but 
 where this fnali be is not always neceflarily deter- 
 mined. It may frequently be at a great diftance 
 both from the place where the materials grow, 
 and from that where the complete manufafture 
 is confumed. Lyons is very diflant both frora 
 the places which aftbrd the materials of its ma- 
 nufactures, and from thofe which confume them. 
 The people of fafliion in Sicily are clothed in 
 filks made in other countries, from the mate- 
 rials which their own produces. Part of the 
 wool of Spain is manufadlured in Great Britain, 
 and fome part of that cloth is afterwards fent back 
 to Spain. 
 
 Whether the merchant whofe capital exports 
 the furplus produce of any fociety be a native or 
 a foreigner, is of very little importance. If he is 
 a foreigner, the number of their productive la- 
 bourers is neceflaiily lefs than if he had been a 
 native by one man only ; and the value of their 
 annual produce, by the profits of that one man. 
 The failors or carriers whom he employs may ftill 
 belong indifferently either to his country, or to 
 their country, or to fome third country, in the 
 
 fame
 
 THE Wx^^ALTH OF NATIONS. 
 
 55 
 
 fame manner as if he had been a native. Tlie chap. 
 capital of a foreigner gives a value to their fur- v. 
 plus produce equally with that of a native, by ex- — ^•"'•^ 
 changing it for foraething for which there is a 
 demand at home. It as eifcdually replaces the 
 capital of the pcrfon who produces that furplas, 
 and as effedtually enables him to continue his 
 bufmefs, the fervice by which the capital of a 
 wholefale merchant chiefly contributes to fuppoit 
 the productive labour, and to augment the value 
 of the annual produce of the fociety to which he 
 belongs. 
 
 It is of more confeouence that the canital of 
 the manufafturer fhould refide within the coun- 
 try. It neceflarily puts into motion a greater 
 quantity of produftive labour, and adds a greater 
 value to the annual produce of the land and la- 
 bour of the fociety. It may, however, be very 
 ufeful to the country, though it fliould not refide 
 within it. The capitals of the Britifli manu- 
 faciurers who work up the flax and hemp annu- 
 ally imported from the coads of the Baltic, are 
 furely very ufeful to the countries which produce 
 them. Thofe materials are a part of the furplus 
 produce of thofe countries which, unlefs it was 
 annually exchanged for fomething which is in de- 
 mand there, would be of no value, and would 
 foon ceafe to be produced. The merchants who 
 export it, replace the capitals of the people who 
 produce it, and thereby encourage them to con- 
 tinue the produftion ; and the Britifli nunufac- 
 turers replace the capitals of thofe merchants. 
 
 E 4 A PAUTI-
 
 56 THE NATURE AND CAUSES OF 
 
 A PARTICULAR country, in the fame manner 
 as a particular perfon, may frequently not have 
 capital fufficient both to improve and cultivate 
 all its lands, to manufadlure and prepare their 
 whole rude produce for immediate ufe and con- 
 fumptlon, and to tranfport the furplus part either 
 of the rude or manufaclured produce to thofe 
 diftant markets where it can be exchanged for 
 fomething for which there is a demand at home. 
 The inhabitants of many different parts of Great 
 Britain have not capital fuflicient to improve and 
 cultivate all their lands. I'he wool of the fouth- 
 ern counties of Scotland is, a great part of it, 
 after a long land-carriage through very bad roads, 
 manufaclured in Yorkfhire, for want of a capital 
 to manufacture it at home. There are many 
 little manufaQuring towns in Great Britain, of 
 which the inhabitants have not a capital fufficient 
 to tranfport the produce of their own induftry to 
 thofe diffant markets where there is demand and 
 confumpiion for it. If there are any merchants 
 among them, they are properly only the agents 
 of wealthier merchants, \vho refide in fome of the 
 great commercial cities. 
 
 When the capital of any country is not fuffi- 
 cient for all thofe three purpofes, in proportion 
 as a greater Ihare of it is employed in agricul- 
 ture, the greater will be the quantity of pro- 
 dudive labour which it puts into motion within 
 the country J as will likcwife be the value which 
 its employment adds to the annual produce of 
 the land and labour of the fociety. After agri- 
 cuhure, the ca|)ital employed in manufadures 
 
 puts
 
 TE^E WEALTH OF NATIONS. 57 
 
 puts into motion the greateft quantity of pro- ciiaf. 
 du6live labour, and adds the greateft value to the v. 
 annual produce. That which is employed in the 
 trade of exportation, has the lead effect of any of 
 the three. 
 
 The country, indeed, which has not capital 
 fufficient for all thofe three purpofes, has not 
 arrived at that degree of opulence for which it 
 feems naturally deftined. To attempt, however, 
 prematurely, and with an infufficient capital, to 
 do all the three, is certainly not the flrortefl way 
 for a fociety, no more than it would be for an 
 individual, to acquire a fufficient one. The 
 capital of all the individuals of a nation, has its 
 limits in the fame manner as that of a fingle indi- 
 vidual, and is capable of executing only cer- 
 tain purpofes. The capital of all the individuals 
 of a nation is increafed in the fame manner as 
 that of a fmgle individual, by their continually 
 accumulating and adding to it whatever they fave 
 out of their revenue. It is likely to increafe the 
 fafteft, therefore, when it is employed in the way 
 that affords the greatefl revenue to all the inha- 
 bitants of the country, as they will thus be en- 
 abled to make the greateft favings. But the re- 
 venue of all the inhabitants of the country is ne- 
 ceflarily in proportion to the value of the annual 
 produce oi their land and labour. 
 
 It has been the principal caufe of the rapid 
 progrefs of our American colonies tovvards wealth 
 and greatnefs, that almoft their whole capitals 
 have hitherto been employed in agriculture. 
 They have no manufai^lures, thofe houfchold and 
 
 coarfer
 
 ^.]. THE NATURE AND CAUSES OF 
 
 h o o K coarfer manufactures excepted which neeeffarily 
 11. accompany the progrefs of agriculture, and 
 
 '■"^^-"^ which are the work of the women and children 
 in every private family. The greater part both 
 of the exportation and coafting trade of Ame- 
 rica, is carried on by the capitals of merchants 
 who refide in Great Britain. Even the (lores 
 and warehoufes from which goods are retailed in 
 fome provinces, particularly m Virginia and Mary- 
 land, belong many of them to merchants who 
 refide in the mother country, and afford one of 
 the few inflances of the retail trade of a fociety 
 being carried en by the capitals of thofe who are 
 not relTdent members of it. Were the Anie- 
 licans, either by combination or by any otlier fort 
 of violence, to iiop the importation of Euro- 
 pean manufaclures, and, by thus giving a mono- 
 poly to fuch of their ou'n countrymen as could 
 manufacture the like goods, divert any confi- 
 derable part of their capital into this employ- 
 ment, they would retard inflead of accelerating 
 the further increafe in the value of their annual 
 produce, and would obftrucl inftead of promoting 
 the progrefs of their country towards real wealth 
 and greatnefs. This would be rlill more the cafe, 
 were they to attempt, in the fame manner, to 
 monopolize to themfcLves their whole exportatiou 
 trade. 
 
 The courfe of human profperity, indeed, feems 
 fcarce ever to have been of fo long continuance 
 as to enable any great country to acquire capital 
 fufEcient for all thofe three purpofes ; unlefs, 
 perhaps, we .give credit to the wonderful ac- 
 
 *4 counts
 
 THE WEALTH OF NATIONS. 55 
 
 counts of the wealth and cultivation of China, chat. 
 of thofe of ancient Egypt, and of the ancient v. 
 ftate of Indoftan. Even thofe three countries, '"*"^" 
 the wealthiefl:, according to all accounts, that 
 ever were in the world, are chiefly renowned for 
 their fuperiority in agriculture and manufac- 
 tures. They do not appear to have been emi- 
 nent for foreign trade. The ancient Egyptians 
 had a fuperftitious antipathy to the fea ; a fuper- 
 ftition nearly of the fame kind prevails among 
 the Indians ; and the Chinefe have never excelled 
 in foreign commerce. The greater part of the 
 furplus produce of all thofe three countries feems 
 fo have been always exported by foreigners, who 
 gave in exchange for it fomething elfe for which 
 they found a demand there, frequently gold and 
 filver. 
 
 It is thus that the fame capital will in any 
 country put into motion a greater or fmaller 
 quantity of productive labour, and add a greater 
 or fmaller value to the annual produce of its 
 land and labour, according to the different pro- 
 portions In which it is employed in agriculture, 
 manufadtures, and wholefale trade. Tlie differ- 
 ence too is very great, according to the different 
 forts of wholefale trade in which any part of it is 
 employed. 
 
 All wholefale trade, all buying In order to 
 fell again by wholefale, may be reduced to three 
 different forts. The home trade, the foreign 
 trade of confumption, and the carrying trade. 
 The home trade is employed in purchafing in one 
 part of the fame country, and felling in another, 
 
 the
 
 6o ^ THE NATURE AND CAUSES OF 
 
 BOOK the produce of the induflry of that country. It 
 II. comprehends both the inland and the coafling 
 
 '""'*^'''**^ trade. The foreign trade of confumption is em- 
 ployed in purchafmg foreign goods for home 
 confumption. The carrying trade is employed 
 in tranfacling the commerce of foreign countries, 
 or in carrying the furplus produce of one to an- 
 other» 
 
 The capital which is employed in purchafing 
 in one part of the country, in order to fell in an- 
 other, the produce of the induflry of that country, 
 generally replaces by every fuch operation two 
 diflindl capitals that had both been employed in. 
 the agriculture or manufactures of that country, 
 and thereby enables them to continue that em- 
 ployment. When it fends out from the relidence 
 of the merchant a certain value of commodities, 
 it generally brings back in return at lead an equal 
 value of other commodities. When both are the 
 produce of domeftic induflry, it necelTarily re- 
 places by every fuch operation two diflinft ca- 
 pitals, which had both been employed in fupport- 
 ing productive labour, and thereby enables them 
 to continue that fupport. The capital which 
 fends Scotch manufadures to London, and brings 
 back Enghfh corn and manufadures to Edin- 
 burgh, necelTarily replaces, by every fuch ope- 
 ration, two Britifh capitals which had both been 
 employed in the agriculture or manufadlures of 
 Great Britain. 
 
 The capital employed in purchafrng foreign 
 goods for home-confumption, when this purchafc 
 is made with the produce of domellic induflry, 
 
 replaces
 
 THE WEALTH OF NATIONS, 61 
 
 replaces too, by every fuch operation, two dif- c h a p. 
 tind capitals : but one of them only is employed v. 
 in fupporting domeftic induflry. The capital ^"^ 
 which fends Britifh goods to Portugal, and brings 
 back Portuguefe goods to Great Britain, replaces 
 by every fuch operation only one BritiOi capital. 
 The other is a Portuguefe onCc 'I'hough the re- 
 turns, therefore, of the foreign trade of confamp- 
 tion fliould be as quick as thofe of the home-trade, 
 the capital employed in it will give but one half 
 the encouragement to the indudry or productive 
 labour of the country. 
 
 But the returns of the fareicrn trade of con- 
 
 O 
 
 fumption are very feldom {o quick as thofe of the 
 home-trade. The returns of the home-trade 
 generally come in before the end of the year, 
 and fometimes three or four times in the rear. 
 The returns of the foreign trade of confumption 
 feldom come in before the end of the year, and 
 fometimes not till after two or three years. A 
 capital, therefore, employed in the home-trade 
 will fometimes make twelve operations, or be fent 
 out and returned twelve times, before a capital 
 employed in the foreign trade of confumption has 
 made one. If the capitals are equal, therefore, 
 the one will give four and twenty times more en- 
 couragement and fupport to the induftry of the 
 country than the other. 
 
 The foreign goods for home-confumption may 
 fometimes be purchafed, not with the produce of 
 domeftie induflry, but with fome other foreign 
 goods. Thefe lad, however, mufl: have been 
 purchafed either immediately with the produce 
 
 *2 of
 
 fz THE NATURE AND CAUSES OF 
 
 BOOK of donienic IndufLiy, or with fomething elfe 
 II. that had been purchafed with it ; for, the cafe of 
 
 ■"^ '"' war and conqueft excepted, foreign goods can 
 never be acquired, but in exchange for fome- 
 thing that had been produced at home, either 
 immediately, or after two or more different ex- 
 ehxmges. The effeds, therefore, of a capital 
 employed in fuch a round-about foreign trade of 
 confumption, are, in every refpefl, the fame as 
 thofe of .one employed in the moft direct trade of 
 the fame kind, except that the final returns are 
 likely to be Hill more diftant, as they muff de- 
 pend upon the returns of two or three diftinft 
 foreign trades. If the hemp and flax of Riga are 
 purchafed with the tobacco of Virginia, which 
 Lad been purchafed with Britlfii manufaftures, 
 the merchant muft wait for the returns of two 
 dlflind foreign trades before he can employ the 
 fame capital in repurchafmg a like quantity of 
 Britifli manufactures. If the tobacco of Virgi- 
 nia had been purchafed not with Britifh manu- 
 fafiures, but with the fugar and rum of Jamaica 
 which had been purchafed with thofe manu- 
 factures, he muft wait for the returns of three. 
 If thofe two or three diftinct foreign trades fliould 
 happen io be carried on by two or three diftindl 
 merchants, of whom the fecond buys the goods 
 imported by the firft, and the third buys thofe 
 imported bv the fecond, in order to export them 
 again, each merchant indeed will in this cafe 
 receive the returns of his own capital more 
 quickly ; but the final returns of the whole ca- 
 pital employed in the trade will be juft as flow as 
 
 ever.
 
 THS V/EALTH OF NATIONS. €5 
 
 ev^er. Whether the whole capital employed In c n a p. 
 fuch a round-about trade belong to one merchant v. 
 or to three, can make no difference with regard ^-^ "•-• 
 to the country, though it may with regard to the 
 particular merchants. Three times a greater ca- 
 pital mud in both cafes be employed, in order 
 to exchange a certain value of Britifh manufac- 
 tures for a certain c]uantity of ilax and hemp, 
 than would have been neceffary, had the manu- 
 factures and the fiax and hemp been directly ex- 
 chann-ed for one another. The w^hole capital 
 employed, therefore, in ilich a round-about 
 foreign trade of confumption, will generally give 
 iefs encouragement and fupport to the produc- 
 tive labour of the country, than an equal capital 
 employed in a more direct trade of the fame 
 kind. 
 
 Whatever be the foreign commodity with 
 which the foreign goods for home-confumption 
 are purchafed, it can occafion no effential differ- 
 ence either in the nature of the trade, or in the 
 encouragement and fupport which it can give to 
 ?he produclive labour of the country from which 
 it is carried on. If they are purchafcd with the 
 gold of Brazil, for example, or with the filver of 
 Peru, this gold and filver, like the tobacco of 
 Virginia, mult have been purchafed with fome- 
 thing that either was the produce of the induffry 
 of the country, or that had been purchafcd with 
 fomething elfe that w-as fo. So far, therefoiCj 
 as the produftive labour of the country is con- 
 cerned, the foreign trade of confumption which 
 h carried on by means of gold and filver. ha; all 
 
 the
 
 64 THE NATURE AND CAUSES OF 
 
 BOOK tlie advantages and all the inconveniencles of any 
 
 II. other equally round-about foreign trade of con- 
 
 v-:^,,-*^ fyjyjpfj^j^^ jjj-^j ^,j|} replace jud as fad or jufl as 
 
 flow the capital which is immediately employed 
 in fupporting that produ6live labour. It feems 
 even to have one advantage over any other 
 equally round-about foreign trade. The tranf- 
 portation of thofe metals from one place to an- 
 other, on account of their fmall bulk and great 
 value, is lefs expenfive than that of almod any 
 other foreign goods of equal value. Their 
 freight is much left?, and their infurance not 
 greater ; and no goods, befides, are lefs liable 
 to fuffer by the carriage. An equal quantity of 
 foreign goods, therefore, may frequently be pur- 
 chafed with a fmaller quantity of the produce of 
 domeflic induflry, by the intervention of gold 
 and filver, than by that of any other foreign 
 goods. The demand of the country may fre- 
 quently, in this manner, be fupplied more com- 
 pletely, and at a fmaller expence than in any 
 other. Whether, by the continual exportation 
 of thofe metals, a trade of this kind is likely to 
 impoverifli the country from which it is carried 
 on, in any other way, I fliall have occafion to ex- 
 amine at great length hereafter. 
 
 That part of the capital of any country which 
 is employed in the carrying trade, is altogether 
 withdrawn from fupporting the produ6live la- 
 bour of that particular country, to fupport that 
 of fome foreign countries. Though it may re- 
 place by every operation two diftind capitals, 
 , yet neither of them belongs to that particular 
 
 country.
 
 THE WEALTH OF NATIONS. 65 
 
 country. The capital of the Dutch merchant, chap. 
 which carries the corn of Poland to Portugal, ^' 
 and brings back the fruits and wines of Portugal 
 to Poland, replaces by every fuch operation two 
 capitals, neither of which had been employed in 
 fupporting the produdtive labour of Holland ; 
 but one of them in fupporting that of Poland, 
 and the other that of Portugal. The profits 
 only return regularly to Holland, and conftitute 
 the whole addition which this trade neceffarily 
 makes to the annual produce of the land and la- 
 bour of that country. When, indeed, the car- 
 rying trade of any particular country is carried 
 on with the fhips and failors of that country, that 
 part of the capital employed in it which pays the 
 freight, is diftributed among, and puts into mo- 
 tion, a certain number of productive labourers of 
 that country. Almofl: all nations that have had 
 any confiderable (hare of the carrying trade have, 
 in fad, carried it on in this manner. The trade 
 itfelf has probably derived its name from it, the 
 people of fuch countries being the carriers to 
 other countries. It does not, however, feem 
 eflential to the nature of the trade that it fhould 
 be fo. A Dutch merchant may, for example, 
 employ his capital in tranfacling the commerce 
 of Poland and Portugal, by carrying part of the 
 furplus produce of the one to the other, not in 
 Dutch, but in Britifli bottoms. It may be pre- 
 fumed, that he adlually does fo upon fome particu- 
 lar occafions. It is upon this account, however, 
 that the carrying trade has been fuppofed pecu- 
 liarly advantageous to fuch a country as Great 
 VOL. n. f Britain,
 
 66 THE NATURE AND CAUSES OF 
 
 5 o o K Britain, of which the defence and fecurity depend 
 n. upon the number of its failors and fhipping. 
 But the fame capital may employ as many failors 
 and fhipping either in the foreign trade of con- 
 fumption or even in the home-trade, when car- 
 ried on by coafting veffels, as it could in the 
 carrying trade. The number of failors and 
 fhipping which any particular capital can employ, 
 does not depend upon the nature of the trade, 
 but partly upon the bulk of the goods in propor- 
 tion to their value, and partly upon the diftance 
 of the ports between which they are to be car- 
 ried ; chiefly upon the former of thofe two cir-. 
 cumflances. The coal trade from Newcaftle to 
 London, for example, employs more fhipping 
 than all^he carrying trade of England, though 
 the ports are at no great diftance. To force, 
 therefore, by extraordinary encouragements, a 
 larger fhare of the capital of any country into 
 the carrying trade, than what would naturally go 
 to it, will not always neceflarily increafe the fhip- 
 ping of that country. 
 
 The capital, therefore, employed in the home- 
 trade of any country will generally give encou- 
 ragement and fupport to a greater quantity of 
 produdive labour in that country, and increafe 
 the value of its annual produce more than an equal 
 capital employed in the foreign trade of con- 
 fumption : and the capital employed in this lat- 
 ter trade has in both thefe refpeds a ftill greater 
 advantage over an equal capital employed m the 
 carrying trade. The riches, and, fo far as power 
 deper^is upon riches, the power of every country, 
 
 4 muft
 
 THE WEALTH OF NATIONS. 67 
 
 mufl always be In proportion to the value of its c h a p. 
 annual produce, the fund from which all taxes v. 
 ttiuft ultimately be paid. But the great obje^l 
 of the political oeconomy of every country, is 
 to increafe the riches and power of that country. 
 It ought, thereorfe, to give no preference nor 
 fuperior encouragement to the foreign trade of 
 confumption above the home- trade, nor to the 
 carrying trade above either of the other two. It 
 ought neither to force nor to allure into either of 
 thofe two channels, a greater fhare of the capital 
 of the country than what would naturally flow 
 into them of its own accord. 
 
 Each of thofe different branches of trade, 
 however, is not only advantageous, but necef- 
 fary and unavoidable^ when the courfe of things, 
 without any conftraint or violence, naturally in- 
 troduces it. 
 
 When the produce of any particular branch 
 of induftry exceeds what the demand of the 
 country requires, the furplus mud be fent abroad, 
 and exchanged for fomething for which there is 
 a demand at home. Without fuch exportation, 
 a part of the produdlive labour of the country 
 mufl ceafe, and the value of its annual produce 
 diminifli. The land and labour of Great Bri- 
 tain produce generally more corn, woollens, 
 and hard ware, than the demand of the home- 
 market requires. The furplus part of them, 
 therefore, mufl be fent abroad, and exchanged 
 for fomething for which there is a demand at 
 home. It is only by means of fuch exportation, 
 that this furplus can acquire a value fufficient to 
 
 F % com-
 
 68 THE NATURE AND CAUSES OF 
 
 BOOK compenfate the labour and expence of producing 
 II* it. The neighbourhood of the fea coaft, and 
 the banks of all navigable rivers, are advan- 
 tageous fituations for indurtry, only becaufe they 
 facilitate the exportation and exchange of fuch 
 furplus produce for fomething elfe which is more 
 in demand there. 
 
 When the foreign goods which are thus pur- 
 chafed with the furplue produce of domeftic in- 
 duftry exceed the demand of the home-market, 
 the furplus part of them mufl be fent abroad 
 again, and exchanged for fomething more in 
 demand at home. About ninety-fix thoufand 
 hog{heads of tobacco are annually purchafed in 
 Virginia and Maryland, with a part of the fur- 
 plus produce of Britifli indullry. But the de- 
 mand of Great Britain does not require, per- 
 haps, more than fourteen thoufand. If the 
 remaining eighty- two thoufand, therefore, could 
 not be fent abroad and exchanged for fomething 
 more in demand at home, the importation of 
 them muft ceafe immediately, and with it the 
 produdive labour of all thofe inhabitants of 
 Great Britain, who are at prefent employed in 
 preparing the goods with which thefe eighty-two 
 thoufand hogflieads are annually purchafed, 
 Thofe goods, which are part of the produce of 
 the land and labour of Great Britain, having no 
 market at home, and being deprived of that 
 which they had abroad, muft ceafe to be pro- 
 duced. The mod round-about foreign trade of 
 confumption, therefore, may, upon fome occa- 
 fions, be as neceflary for fupporting the produc- 
 
 14 tive
 
 THE WEALTH OF NATIONS; 6g 
 
 tive labour of the country, and the value of its c H a p. 
 annual produce, as the mod direft. v. 
 
 When the capital flock of any country is in- ''^^'"'^ 
 creafed to fuch a degree, that it cannot be all 
 employed in fupplying the confumption, and 
 fupporting the produdive labour of that parti- 
 cular country, the furplus part of it naturally 
 difgorges itfelf into the carrying trade, and is 
 employed in performing the fame offices to other 
 countries. The carrying trade is the natural 
 efFed and fympiom of great national wealth ; but 
 it does not fecm to be the natural caufe of it. 
 Thofe ftatefmen who have been difpofed to fa- 
 vour it with particular encouragements, feem to 
 have miftaken the effecl: and fymptom for the 
 caufe. Holland, in proportion to the extent of 
 the land, and the number of its inhabitants, by 
 far the richefl country in Europe, has, accord- 
 ingly, the greateft (hare of the carrying trade of 
 Europe. England, perhaps the fecond richeft 
 country of Europe, is likewife fuppofed to have 
 a confiderable fhare of it ; though what com- 
 monly pafies for the carrying tiade of England, 
 will frequently, perhaps, be found to be no more 
 than a round-about foreign trade of confump- 
 tion. Such are, in a great meafure, the trades 
 which carry the goods of the Eafl: and Weft In- 
 dies, and of America, to the different European 
 markets. Thofe goods are generally purchafed 
 either immediately with the produce of Britifh 
 induftry, or with fomething elfe which had been 
 purchafed with that produce, and the final re- 
 turns of thofe trades are generally ufed or con- 
 
 F 3 fumed
 
 70 THE NATURE AND CAUSES OF 
 
 BOOK fumed in Great Britain. The trade which is 
 11. carried on in Britifh bottoms between the dif^ 
 
 ^^"^■""^ ferent ports of the Mediterranean, and fome trade 
 of the fame kind carried on by Britifh merchants 
 between the different ports of India, make, per- 
 haps, the principal branches of what is properly 
 the carrying trade of Great Britain. 
 
 The extent of the home-trade and of the ca- 
 pital which can be employed in it, is neceflarily 
 limited by the value of the furplus produce of all 
 thofe diflant places within the country which 
 have occafion to exchange their refpeclive pro- 
 dudions with one another. That of the foreign 
 trade of confumption, by the value of the fur- 
 plus produce of the whole country and of what 
 can be purchafed with it. That of the carryino- 
 trade, by the value of the furplus produce of all 
 the different countries in the world. Its pofTible 
 extent, therefore, is in a manner infinite in com- 
 parifon of that of the other two, and is capable 
 of abforbing the greateft capitals. 
 
 The confideration of his own private profit, is 
 the fole motive which determines the owner of 
 any capital to employ it either in agriculture, in 
 manufactures, or in fome particular branch of 
 the wholelale or retail trade. The different 
 quantities of produdive labour which it may put 
 into motion, and the different values which it 
 may add to the annual produce of the land and 
 labour of the fociety, according as it is employed 
 in one or other of thofe different ways, never 
 V enter into his thoughts. In countries, there- 
 fore, where agriculture is the mofl profitable of 
 
 aU
 
 THE WEALTH OF NATIONS. 71 
 
 all employments, and farming and improving the chap, 
 mofl: dived roads to a fplendid fortune, the ca- v. 
 pitals of individuals will naturally be employed '"^ ''"'"^ 
 in the manner mo ft advantageous to the whole 
 fociety. The profits of agriculture, however, 
 feem to have no fuperiority over thofe of other 
 employments in any part of Europe. Projeclors, 
 indeed, in every corner of it, have within thefe 
 few years amufed the public with moft magnifi- 
 cent accounts of the profits to be made by the 
 cultivation and improvement of land. Without 
 entering into any particular difcufllon of their 
 calculations, a very fimple obfervation may fa- 
 tisfy us that the refult of them mufl: be falfe. 
 We fee every day the mofl fplendid fortunes that 
 have been acquired in the courfe of a fmgle Hfe 
 by trade and manufaftures, frequently from a 
 very fmall capital, fometimes from no capital. 
 A fmgle inftance of fuch a fortune acquired by 
 agriculture in the fame time, and from fuch a 
 capital, has not, perhaps, occurred in Europe 
 during the courfe of the prefent century. In all 
 the great countries of Europe, however, much 
 good land ftill remains uncultivated, and the 
 greater part of what is cultivated, is far from be-' 
 jng improved to the degree of which it is ca- 
 pable. Agriculture, therefore, is almoli every- 
 where capable of abforbing a much greater capi? 
 tal than has ever yet been employed in it. What 
 circumflances in the policy of Europe have given 
 the trades which are carried on in towns fo great 
 an advantage over that which is carried on in the 
 
 F 4 country.
 
 72 THE NATURE AND CAUSES OF 
 
 BOOK country, that private perfons frequently find it 
 II. more for their advantage to employ their capitals 
 in the mofl diflant carrying trades of Afia and 
 America, than in the improvement and cultiva- 
 tion of the mofl: fertile fields in their own neigh- 
 bourhood, I fliall endeavour to explain at full 
 length in the two following books.
 
 THE WEALTH OF NATIONS. 73 
 
 BOOK III. 
 
 Of the different Progrefs of Opulence in 
 different Nations. 
 
 C H A P. I. 
 
 Of the natural Frogrcfs of Opulence, 
 
 ''pHE great commerce of every civilized fo- book 
 
 ciety, is that carried on between the inha- m* 
 bitants of the town and thofe of the country. It 
 confifls in the exchange of rude for manufadured 
 produce, either immediately, or by the interven- 
 tion of money, or of fome fort of paper which re- 
 prefents money. The country fupplies the town 
 with the means of lubhllence and the materials 
 of manufaclurc. The town repays this fapply 
 by fending back a part of the nranufaclured pro- 
 duce to the inhabitants of the country. The 
 town, in which there neither is nor can be any 
 reproduclion of fubftances, may very properly 
 be faid to gain its whole wealth and fubfiftence 
 from the country. We mull not, however, 
 upon this account, imagine that the gain of the 
 town is the lofs of the country. The gains of 
 both are mutual and reciprocal, and the divi- 
 fion of labour is in this, as in all other cafes, 
 advantageous to all the different perfons em- 
 ployed in the various occupations into which it is 
 
 fubdi'
 
 j^ THE NATURE AND CAUSES OF" 
 
 jj c o K fubdivlded. The inhabitants of the country 
 III. purchafe of the town a greater quantity of ma- 
 nufactured goods with the produce of a much 
 fmaller quantity of their own labour, than they 
 mud have employed had they attempted to pre- 
 pare them themfelves. The town affords '4 mar- 
 ket for the furplus produce of the country, or 
 what is over and above the maintenance of the 
 cultivators, and it is there that the inhabitants 
 of the country exchange it for fomething elfe 
 which is in demand among them. The greater 
 the rmmber and revenue of the inhabitants of 
 the town, the more extenfive is the market which 
 it affords to thofe of the country ; and the more 
 extenfive that market, it is always the more 
 advantageous to a great number. The corn 
 which grows within a mile of the town, fells 
 there for the fame price with that which comes 
 from twenty miles diRance, But the price of 
 the latter mufi generally, not only pay the ex- 
 pence of raifmg and bringing it to market, but 
 afford too the ordinary profits of agriculture to 
 the farmer. The proprietors and cultivators of 
 the country, therefore, which lies in the neigh- 
 bourhood of the town, over and above the or- 
 dinary profits of agriculture, gain in the price 
 of what they fell, the whole value of the carr 
 riage of the like produce that is brought from 
 more diftant parts, and they fave, befides, the 
 whole value of this carriage in the price of what 
 they buy. Compare the cultivation of the lands 
 in the neighbourhood of any conlrtkrable town, 
 with that of thofe which lie at fome diftance 
 
 ' from
 
 THE WEALTH OF NATIONS. 75 
 
 from it, and you will eafily fatisfy yourfelf how chap. 
 much the country is benefited by the commerce i. 
 of the town. Among all the abfurb fpeculations 
 that have been propagated concerning the ba- 
 lance of trade, it has never been pretended that 
 either the country lofes by its commerce with the 
 town, or the town by that with the country which 
 maintains it. 
 
 As fubfiftence is, in the nature of things, prior 
 to conveniency and luxury, fo the induftry which 
 procures the former, mufl: neceiTarily be prior to 
 that which minifters to the latter. The cultiva- 
 tion and improvement of the country, there- 
 fore, which affords fubfifience, muft, neceffarily, 
 be prior to the increafe of the town, which fur- 
 nifhes only the means of conveniency and luxury. 
 It is the furplus produce of the country only, or 
 what is over and above the maintenance of the 
 cultivators, that conftitutes the fubfiftence ' of 
 the town, which can therefore increafe only with 
 the increafe of this furplus produce. The town, 
 indeed, may not always derive its whole fub- 
 fiftence from the country in its neighbourhood, 
 or even from the territory to vi'hich it belongs, 
 but from very diftant countries ; and this, 
 though it forms no exception from the gene- 
 ral rule, has occafioned confiderable variations 
 in the progrefs of opulence in different ages and 
 nations. 
 
 That order of things which neceffity impofes 
 in general, though not in every particular coun- 
 try, is, in every particular country, promoted by 
 the natural inclinations of man. If human infti- 
 
 tutions
 
 ^^6 THE NATURE AND CAUSES OF 
 
 BOOK tutions had never thwarted thofe natural inclina- 
 iii. tions, the towns could no-where have increafed 
 
 '■"^'"''^ beyond what the Improvement and cultivation 
 of the territory in which they were fituated could 
 fupport : rill fuch time, at leafl, as the whole of 
 that territory was completely cultivated and im- 
 proved. Upon equal, or nearly equal profits, 
 moft men Vv'ill chufe to employ their capitals, 
 rather in the improvement and cultivation of 
 land, than either in manufadures or in foreign 
 trade. The man who employs his capital in 
 land, has it more under his view and command, 
 and his fortune is much lefs liable to accidents, 
 than that of the trader, who is obliged frequently 
 to commit it, not only to the winds and the 
 waves, but to the more uncertain elements of 
 human folly and injuftice, by giving great credits 
 in diftant countries to men, with whofe character 
 and fituation he can feldom be thoroughly ac- 
 quainted. The capital of the landlord, on the 
 contrary, which is fixed in the improvement of 
 his land, feems to be as well fecured as the nature 
 of human aflairs can admit of. The beauty of 
 the country befides, the pleafures of a country 
 life, the tranquillity of mind which it promifes, 
 and wherever the injuftice of human laws does 
 not difturb it, the Independency which it really 
 affords, have charms that more or lefs attract 
 every body ; and as to cultivate the ground was 
 the original deflination of man, fo in every flage 
 of his exigence he feems to retain a prediledion 
 for this primitive employment. 
 
 Without
 
 THE WEALTH OF NATIONS. 7; 
 
 Without the affiflance of fome artificers, in- c 11 a p. 
 deed, the cultivation of land cannot be carried i- 
 on, but with great inconveniency and continual 
 interruption. Smiths, carpenters, wheel-vvrights, 
 and plough-vvrights, mafons, and bricklayers, 
 tanners, flioemakers, and taylors, are people, 
 whofe fervice the farmer has frequent occafion 
 for. Such artificers too ftand, occafionally, in 
 need of the afTiftance of one another ; and as their 
 refidence is not, like that of the farmer, ne- 
 cefTarily tied down to a precife fpot, they natu- 
 rally fettle in the neighbourhood of one another, 
 and thus form a fmall town or village. The 
 butcher, the brevv^er, and the baker, foon join 
 them, together with many other artificers and 
 retailers, neceflfary or ufeful for fupplying their 
 cccafional wants, and who contribute flill far- 
 ther to augment the town. The inhabitants of 
 the town and thofe of the country are mutually 
 the fervants of one another. The town is a con- 
 tinual fair or market, to which the inhabitants of 
 the country refort, in order to exchange their 
 rude for manufactured produce. It is this com- 
 merce which fupplies the inhabitants of the town 
 both with the materials of their work, and the 
 means of their fubfidence. The quantity of the 
 fmifhed work which they fell to the inhabitants 
 of the country, neceffarily regulates the quan- 
 tity of the materials and provifions which they 
 buy. Neither their employment nor fubfidence, 
 therefore, can augment, but in proportion to the 
 augmentation of the demand from the country 
 for fniiflied work j and this demand can augment 
 
 only
 
 78 THE NATURE AND CAUSES OF 
 
 BOOK only in proportion to the extenfion of improve- 
 in. ment and cultivation. Had human inftitutions^ 
 ^"'^^ therefore, never diflurbed the natural courfe of 
 things, the progreffive wealth and increafe of the 
 towns would, in every political fociety, be con- 
 fequential, and in proportion to the improvement 
 and cultivation of the territory or country. 
 
 In our North American colonies, where un- 
 cultivated land is ftill to be had upon eafy terms, 
 no. manufaftures for diftant fale have ever yet 
 been eftabliflied in any of their towns. When 
 an artificer has acquired a little more frock than 
 is necefiary for carrying on his own bufmefs in 
 Supplying the neighbouring country, he does 
 not, in North-America, attempt to eftablifh with 
 it a manufafture for more diftant fale, but em- 
 ploys it in the purchafe and improvement of un- 
 cultivated land. From artificer he becomes 
 planter, and neither the large wages nor the eafy 
 fubfiltence which that country affords to arti- 
 ficers, ean bribe him rather to work for other 
 people than for himfelf. He feels that an artifi- 
 cer is the fervant of his cuftomers, from whom 
 he derives his fubfiflence : but that a planter who 
 cultivates his own land, and derives his neceffary 
 fubfiftence from the labour of his own family, 
 is really a mafter, and independent of all the 
 world. 
 
 In countries, on the contrary, where there is 
 either no uncultivated land, or none that can be 
 had upon eafy terms, every artificer who has ac- 
 quired more flock than he can employ in the oc- 
 cafional jobs of the neighbourhood, endeavours to 
 
 prepare
 
 THE WEALTH OF NATIONS. 79 
 
 prepare work for more diftant fale. The fmith chap. 
 ereds fome fort of iron, the weaver fome fort of i« 
 linen or woollen manufadory. Thofe different 
 manufactures come, in procefs of time, to be 
 gradually fubdivided, and thereby improved and 
 refined in a great variety of ways, which may 
 eafily be conceived, and which it is therefore un- 
 neceffary to explain any further. 
 
 In feeking for employment to a capital, manu- 
 faftures, are, upon equal or nearly equal profits, 
 naturally preferred to foreign commerce, for the 
 fame reafon that agriculture is naturally preferred 
 to manufadures. As the capital of the landlord 
 or farmer h more fecure than that of the manu- 
 facturer, fo the capital of the manufacturer be- 
 ing at all times more within his view and com- 
 mand, is more fecure than that of the foreign 
 merchant. In every period, indeed, of every fo- 
 ciety, the furplus part both of the rude and ma- 
 nufactured produce, or that for which there is 
 no demand at home, mud be fent abroad in 
 order to be exchanged for fomething for which 
 there is fome demand at home. But whether 
 the capital, which carries this furplus produce 
 abroad, be a foreign or a domeftic one, is of 
 very little importance. If the fociety has not 
 acquired fufEcient capital both to cultivate all 
 its lands, and to manufacture in the completed 
 manner the whole of its rude produce, there is 
 even a confiderable advantage that that rude 
 produce fhould be exported by a foreign capi- 
 tal, in order that the whole ftock of the fociety 
 may be employed in more ufeful purpofes. The 
 
 wealth
 
 So THE NATURE AND CAUSES OF 
 
 BOOK wealth of ancient Egypt, that of China and In- 
 nu doftan, fufficiently demonflrate that a nation may 
 
 ""^^^ '' attain a very high degree of opulence, though 
 the greater part of its exportation trade be car- 
 ried on by foreigners. The progrefs of our 
 North American and Wefl: Indian colonies would 
 have been much lefs rapid, had no capital but 
 what belonged to themfelves been employed in 
 exporting their furplus produce. 
 
 According to the natural courfe of things, 
 therefore, the greater part of the capital of every 
 irrowing fociety is, firft, directed to agriculture, 
 afterwards to manufadures, and lafl: of all to 
 foreign commerce. This order of things is fo 
 very natural, that in every fociety that had any 
 territory, it has always, I beheve, been in fome 
 degree obferved. Some of their lands muft have 
 been cultivated, before any conhderable towns 
 could be eilablillied, and fome fort of coarfe in- 
 duftry of the manufacluring kind muft have been 
 carried on in thofe towns, before they could well 
 think of employing themfelves in foreign com- 
 merce. 
 
 But though this natural order of things muft 
 have taken place in fome degree in every fuch 
 fociety, it has, in all the modern ftates of Eu- 
 rope, been, in many refpeds, entirely inverted. 
 The foreign commerce of fome of their cities 
 has introduced all their finer manufaftures, or 
 fuch as were fit for diftant fale ; and manufadures 
 and foreign commerce together, have given birth 
 to the principal improvements of agriculture. 
 The manners and cuftoms which the nature of 
 
 their
 
 THE WEALTH OF NATIONS. 8p 
 
 their original government introduced, and which chap. 
 remained after that government was greatly al- '• 
 
 tered, neceffarily forced them into this unnatural '^^^^"'^ 
 and retrograde order. 
 
 C H A P. ir. 
 
 Of the Difcoiiragejnent of Agriculture in the ancient 
 State of Europe after the Fall of the Roman 
 Empire* 
 
 ^T7HEN the German and Scythian nations 
 over-ran the weftern provinces of the 
 Roman empire, the confufions which followed fo 
 great a revolution laded for feveral centuries. 
 The rapine and violence which the barbarians ex- 
 ercifed againft the ancient inhabitants, interrupted 
 the commerce between the towns and the country. 
 The towns were deferted, and the country was 
 left uncultivated, and the weftern provinces of 
 Europe, which had enjoyed a confiderable de- 
 gree of opulence under the Roman empire, funk 
 into the loweft (late of poverty and barbarifm. 
 During the continuance of thofe confufions, the 
 chiefs and principal leaders of thofe nations, ac- 
 quired or ufurped to themfelves the greater part of 
 the lands of thofe countries. A great part of 
 them was uncultivated j but no part of them, 
 whether cultivated or uncultivated, was left 
 without a proprietor. All of them were en- 
 voi-, II. G grolTed,
 
 9z THE NATURE AND CAUSES OF 
 
 BOOK grofled, and the greater part by a few great pro- 
 III. prietors. 
 
 This original engroffing of uncultivated lands, 
 though a great, might have been but a tranfitory 
 evil. They might foon have been divided 
 again, and broke into fmall parcels either by 
 fucceflion or by alienation. The law of primo- 
 geniture hindered them from being divided by 
 fucceffion ; the introduclion of entails prevented 
 their being broke into fmall parcels by alien- 
 ation. 
 
 When land, like moveables, is confidered as 
 the means only of fubfiflence and enjoyment, the 
 natural law of fucceffion divides it, like them, 
 among all the children of the family ; of all of 
 whom the fubfiflence and enjoyment may be fup- 
 pofed equally dear to the father. This natural 
 law of fucceffion accordingly took place among 
 the Romans, who made no more diflindlion be- 
 tween elder and younger, between male and fe- 
 male, in the inheritance of lands, than we do in 
 the diitribution of moveables. But when land 
 was confidered as the means, not of fubfiflence 
 merely, but of power and protedion, it was 
 thought better that it fhould defcend undivided 
 to one. In thofe diforderty times, every great 
 landlord was a fort of petty prince. His tenants 
 were his fubjeds. Me was their judge, and in 
 fome refpe<^ls their legiflutor in peace, and their 
 leader iu war. fie made war according to his 
 own difcretion, frequently againfl; his neighbours, 
 and fometimes againfl: his fovereign. The fe- 
 curity of a landed eltate, therefore, the proteftion 
 
 which
 
 THE WEALTH OF NATIONS. • 83 
 
 which Its owner could afford to thofe who dwelt chap. 
 on it, depended upon its greatnefs. To divide i^' 
 it was to ruin it, and to expofe every part of it to 
 be oppreffed and fwallowed up by the incurfions 
 of its neighbours. The law of primogeniture, 
 therefore, came to take place, not immediately, 
 indeed, but in procefs of time, in the fucceffion. 
 of landed eflates, for the fame reafon that it has 
 generally taken place in that of monarchies, 
 though not always at their firft inftitution. That 
 the power, and confequently the fecurity of the 
 monarchy, may not be weakened by divifion, it 
 nmil defcend entire to one of the children. To 
 which of them fo important a preference fnall be 
 given, mufl be determined by fome general rule, 
 founded not upon the doubtful diftinclions of 
 perfonal merit, but upon fome plain and evident 
 difference which can admit of no difpute. 
 Among the children of the fame family, there 
 can be no indifputable difference but that of fex, 
 and that of age. The male fex is univerfally 
 preferred to the female ; and when all other 
 things are equal, the elder every where takes 
 place of the younger. Hence the origin of the 
 right of primogeniture, and of what is called lineal 
 fucceffion. 
 
 Laws frequently continue in force long after 
 the circumftances, which firfl: gave occafion to 
 them, and which could alone render them reafon- 
 able, are no more. In the prefent ftate of Eu- 
 rope, the proprietor of a fmgle acre of land is as 
 perfedly fecure of his poffeflion as the proprietor 
 of a hundred thouiand. The right of primo- 
 
 2 gemture,
 
 ?4 THE NATURE AND CAUSES OF 
 
 BOOK geniturc, however, ftill continues to be refpeded, 
 ni. and as of all inRitutions it is the fitieft to lup- 
 
 ' '^^ port the pride of family diilindions, it is ftill 
 
 likely to endure for many centuries. In every 
 other refpeft, nothing can be more contrary to 
 the real interefl: of a numerous family, than a 
 right which, in order to enrich one, beggars all 
 the reft of the children. 
 
 Entails are the natural confequences of the 
 law of primogeniture. They were introduced to 
 preferve a certain lineal fucceilion, of which the 
 law of primogeniture firft gave the idea, and to 
 hinder any part of the original eftate from being 
 carried out of the propofed line either by gift, or 
 devife, or alienation ; either by the folly, or by 
 the misfortune of any of its fucceflive owners. 
 They were altogether unknown to the Romans. 
 Neither their fubftitutions, nor fideicommiifes 
 bear any refemblance to entails, though fome 
 French lawyers have thought proper to drefs the 
 modern inftitution in the language and garb of 
 tlifefe ancient ones. 
 
 When great landed eflates were a fort of prin- 
 cipalities, entails might not be unreafonable. 
 ' Like what are called the fundamental laws of 
 
 fome monarchies, they might frequently hinder 
 the fecurity of thoufands from being endangered 
 by the caprice or extravagance of one man. But 
 in the prefent ftate of Europe, when fmall as well 
 as great eftates derive their fecurity from the 
 laws of their country, nothing can be more com- 
 pletely abfurd. They are founded upon the 
 moll abfurd of all fuppofitions, the fuppofition 
 
 that
 
 THE WEALTH OF NATION?. 85 
 
 that every fuccefiive generation of men have not c h a p# 
 an equal rig-ht to the earth, and to all that it n* 
 poiTefles ; but that the property of the prefent 
 generation fhould be reftrained and regulated ac- 
 cording to the fancy of thofe who died perhaps 
 five hundred years ago. Entails, however, are 
 flill refpe£led through the greater part of Europe, 
 in thofe countries particularly in which noble 
 birth is a neceflary qualification for the enjoy- 
 ment either of civil or military honours. Entails 
 are thought necelHiry for maintaining this ex- 
 clufive privilege of the nobility to the great offices 
 and honours of their country ; and that order 
 having ufurped one unjufl advantage over the 
 reft of their fellow-citizens, left their poverty 
 (hould render it ridiculous, it is thought reafon- 
 able that they fhould have another. The com- 
 mon law of England, indeed, is faid to abhor per- 
 petuities, and they are accordingly more reftrided 
 there than in any other European monarchy ; 
 though even England is not altogether without 
 them. In Scotland more than one-fifth, perhaps 
 more than one-third part of the whole lands of 
 the country, are at prefent fuppofed to be under 
 drift entail. 
 
 Great trails of uncultivated land were, in 
 this manner, not only engrofled by particular fa- 
 milies, but the poflibility of their being divided 
 again was as much as poffible precluded for ever. 
 It feldom happens, however, that a great pro- 
 prietor is a great irhprover. In the diforderly 
 times which gave birth to thofe barbarous infli- 
 tutions, the great proprietor was fufficiently em- 
 
 G 3 ployed
 
 86 THE NATURE AND CAUSES OF 
 
 BOOK ployed in defending his own territories, or in 
 lii* extending his jurifdiclion and authority over 
 thofe of his neighbours. He had no leifure to 
 attend to the cultivation and improvement of 
 land. "When the ellablifhment of law and order 
 afforded him this leifure, he often wanted the 
 inclination, and almoft always the requifite abili- 
 ties. If the expence of his houfe and perfon 
 either equalled or exceeded his revenue, as it did 
 very frequently, he had no flock to employ in 
 this manner. If he was an oeconomift, he ge. 
 nerally found it more profitable to employ his 
 annual favings in new purchafes, than in the im- 
 provement of his old eflate. To improve land 
 with profit, like all other commercial projedsj 
 requires an exaft attention to fmali favings and 
 fmall gains, of which a man born to a great for- 
 tune, even though naturally frugal, is very fel- 
 dam capable. The fituation of fuch a perfon 
 naturally difpofes him to attend rather to orna- 
 ment which pleafes his fancy, than to profit for 
 which he has fo little occafion. The elegance of 
 his drefs, of his equipage, of his houfe, and 
 houfehold furniture, are objecls which from his 
 infancy he has been accuflomed to have fome 
 anxiety about. The turn of mind which this 
 habit naturally forms, follows him when he 
 comes to think of the improvement of land. 
 He embellifhes perhaps four or five hundred 
 acres in the neighbourhood of his houfe, at ten 
 times the expence which the land is worth after 
 all his improvements ; and finds that Jf he was to 
 improve his whole eftate in . the fame manner, 
 
 and
 
 THE WEALTH OF NATIONS. 87 
 
 and he has Httle tafle for any other, he would be chap. 
 a bankrupt before he had finiflied the tenth part n. ' 
 of it. There ftill remain in both parts of the '^-^''~*^ 
 united kingdom fome great eflates which have 
 continued without interruption in the hands of 
 the fame family fnice the times of feudal anarchy. 
 Compare the prefent condition of thofe eflates 
 with the poflefTions of the fmall proprietors in 
 their neighbourhood, and you will require no 
 other argument to convince you how unfavourable 
 fuch extenfive property is to improvement. 
 
 If little improvement was to be expected from 
 fuch great proprietors, flill lefs was to be hoped 
 for from thofe who occupied the land under 
 them. In the antient ftate of Europe, the occu- 
 piers of land were all tenants iit will. They 
 were all or almofl all flaves : but their flavery 
 was of a milder kind than that known among 
 the antient Greeks and Romans, or even in our 
 Weft Indian colonies. They were fuppofed to 
 belong more direclly to the land than to their 
 mafler. They could, therefore, be fold with it, 
 but not feparately. They could marry, pro- 
 vided it was with the confent of their mafter ; 
 and he could not afterwards diffolve the mar- 
 riage by felling the man and wife to different 
 perfons. If he maimed or murdered any of 
 them, he was liable to fome penalty, though ge- 
 nerally but to a fmall one. They were nor, 
 however, capable of acquiring property. What- 
 ever they acquired was acquired to their mafler^ 
 and he could take it from them at pleafure. 
 Whatever cultivation and improvement could be 
 
 G 4 carried
 
 88 THE NATURE AND CAUSES OF 
 
 BOOK carried on by means of fuch flaves, was properly 
 III. carried on by their mafter. It was at his ex- 
 pence. The feed, the cattle and the inftruments 
 of hufbandry were all his. It was for his benefit. 
 Such flaves could acquire nothing but their daily 
 maintenance. It was properly the proprietor 
 himfelf therefore, that, in this cafe, occupied 
 his own lands, and cultivated them by his own 
 bondmen. This fpecies of flavery flill fubfifts in 
 RufTia, Poland, Hungary, Bohemia, Moravia, and 
 other parts of Germany. It is only in the weftern 
 and fouth-vveftern provinces of Europe, that it has 
 gradually been aboliflied altogether. 
 
 But if great improvements are feldom to be 
 expedled from great proprietors, they are leaft 
 of all to be expected when they employ flaves 
 for their v;orkmen. The experience, of all ages 
 and nations, I believe, demonftrates that the 
 work done by flaves, though it appears to cofl 
 only their maintenance, is in the end the dearefl: 
 of any. A perfon who can acquire no property, 
 can have no other interefl but to eat as much, 
 and to labour as little as pofTible. Whatever 
 work he does beyond what is fufficient to pur- 
 chafe his own maintenance, can be fqueezed out 
 of him by violence only, and not by any interefh 
 of his own. In ancient Italy, how much the 
 cultivation of corn degenerated, how unprofit- 
 able it became to the mafter, when it fell under 
 the management of flaves, is remarked by both 
 Pliny and Columella. In the time of Ariflotle 
 it had not been much better in ancient Greece. 
 Speaking of the ideal republic defcribed in the 
 
 laws
 
 THE WEALTH OF NATIONS. t^ 
 
 laws of Plato, to maintain five thoufand idle chap. 
 men (the number of warriors fappofed neceiTary u* 
 for its defence), together with their women and 
 fervants, would require, he fays, a territory of 
 boundlefs extent and fertility, like the plains of 
 Babylon. 
 
 The pride of man makes him love to domi- 
 neer, and nothing mortifies him fo much as to be 
 obliged to condefcend to perfuade his inferiors. 
 Wherever the law allows it, and the nature of 
 the work can afford it, therefore, he will gene- 
 rally prefer the fervice of fiaves to that of free- 
 men. The planting of fugar and tobacco can 
 aflbrd the expence of flave cultivation. The 
 raifmg of corn, it feems, in the prefent times, 
 cannot. In the Englifh colonies, of which the 
 principal produce is corn, the far greater part of 
 the work is done by freemen. The late refolu- 
 tion of the C)uakers in Pennfylvania to fet at 
 liberty all their negro flaves, may fatisfy us that 
 their number cannot be very great. ?Iad they 
 made any confiderable part of their property, 
 fach a refolution could never have been agreed 
 to. In our fugar colonies, on the contrary, the 
 whole work is done by Haves, and in our to- 
 bacco colonies a very great part of it. The 
 profits of a fugar-plantation in any of our Well 
 Indian ctilonies are generally much greater than 
 thofe of any other cultivation that is known either 
 in Europe or America : and the profits of a to- 
 bacco plantation, though inferior to thofe of 
 fugar, are luperior to thofe of corn, as has al- 
 ready been obfcrved. Both can afford the ex- 
 pence
 
 50 THE NATURE AND CAUSES OF 
 
 BOOK pence of flave cultivation, but fugar can afford 
 HI. it flill better than tobacco. The number of 
 negroes accordingly is much greater, in propor- 
 tion to that of whites, in our fugar than in our 
 tobacco colonies. 
 
 To the flave cultivators of ancient times, gra- 
 dually fucceeded a fpecies of farmers known at 
 prefent in France by the name of Metayers. 
 They are called in Latin, Coloni Partiarii. 
 They have been fo long in difufe in England 
 that at prefent I know no Englifli name for them. 
 The proprietor furnifhed them with the feed, 
 cattle, and inftruments of huilDandry, the whole 
 {lock, m fliort, necelTary for cultivating the 
 farm. The produce was divided equally between 
 the proprietor and the farmer, ,after fetting afide 
 what was judged neccifary for keeping up the 
 ftock, which was reftored to the proprietor when 
 the farmer either quitted, or was turned out of 
 the farm. 
 
 Land occupied by fuch tenants is properly 
 cultivated at the expence of the proprietor as 
 much as that occupied by flaves. There is, 
 however, one very efrjntial difference between 
 them. Such tenants, being freemen, are ca- 
 pable of acquiring property, and having a certain 
 proportion of the produce of the land, they have 
 a plain interell that the whole produce fliould be 
 as great as poffible, in order that their own pro- 
 portion may be fo. A Have, on the contrary, 
 ■who can acquire nothing but his maintenance, 
 confults his own eafe by making the land pro- 
 duce as little as pofiible over and above that 
 
 mai^-
 
 THE WEALTH OF NATIONS. 91 
 
 maintenance. It Is probable that it was partly c h a i\ 
 upon account of this advantage, and partly upon ii* 
 account of the encroachments which the fove- ^"*^ 
 reign, always jealous of the great lords, gra- 
 dually encouraged their villains to make upon 
 their authority, and which feem at laft to have 
 been fuch as rendered this fpecies of fervitude 
 altogether inconvenient, that tenure in villanage 
 gradually wore out through the greater part of " 
 Europe. The time and manner, however, in 
 which fo important a revolution was brought 
 about, is one of the moft obfcure points in mo- 
 dern hiftory. The church of Rome claims great 
 merit in it ; and it is certain that fo early as the 
 twelfth century, Alexander III. publi/hed a bull 
 for the general emancipation of flaves. It feems, 
 however, to have been rather a pious exhorta- 
 tion, than a law to which exafl obedience was 
 required from the faitrjful. Slavery continued 
 to take place almofl univerfally for feveral cen- 
 turies afterwards, till it was gradually abolifhed 
 by the joint operation of the two intcrefts above 
 mentioned, that of the proprietor on the one 
 hand, and that of the fovereign on the other. 
 A villain enfranchifed, and at the fame time al- 
 lowed to continue in pofleffion of the land, hav- 
 ing no ftock of his own, could cultivate it only 
 by means of wliat the landlord advanced to him, 
 and mufl, therefore, have been vv-hat the French 
 call a Metayer. 
 
 It could never, however, be the Intereft even 
 of this lafl fpecies of cultivators to lay out, in the 
 further improvement of the land, any part of the 
 
 6 little
 
 58 THE NATURE AND CAUSES OP 
 
 BOOK little {lock which they might fave from their 
 in* own fliare of the produce, becaufe the lord, who 
 
 ''""^''"'^ ]^}j^ Q^jt nothing, was to get one half of whatever 
 it produced. The tithe, which is but a tenth 
 of the produce, is found to be a very great 
 hindrance to improvement. A tax, therefore, 
 which amounted to one-half, mufl: have been an 
 efleclual bar to it. It might be the interefl: of 
 a metayer to make the land produce as much as 
 could be brought out of it by means of the (lock 
 furnifhed by the proprietor ; but it could never 
 be his intereft to mix any part of his own with it. 
 In France, where five parts out of fix of the 
 whole kingdom are faid to be flill occupied by 
 this fpecies of cultivators, the proprietors com- 
 plain that their metayers take every opportunity 
 of employing the mafter's cattle rather in carriage 
 than in cultivation ; becaufe in the one cafe they 
 get the whole profits to themfelves, in the other 
 they fhare them with their landlord. This fpecies 
 of tenants flill fubfifls in fome parts of Scotland. 
 They are called fleel-bow tenants. Thofe an- 
 cient Englifh tenants who are faid by Chief 
 Baron Gilbert and Doctor Blackftone to have 
 been rather bailiffs of the landlord than farmers 
 properly fo called, were probably of the fame 
 kind. 
 
 T6 this fpecies of tenancy fucceeded, though 
 by very flow degrees, farmers properly fo called, 
 who cultivated the land with their own flock, 
 paying a rent certain to the landlord. When 
 luch farmers have a leafe for a term of years, 
 they may fometimes find it for their interefl to 
 
 lay
 
 THE WEALTH OF NATIONS. 93 
 
 lay out part of their capital in the further im- chap. 
 provement of the farm ; becaufe they may fome- n. 
 times expeft to recover it, with a large profit, ' '-""^ 
 before the expiration of the leafe. The pofTef- 
 fion even of fuch farmers, however, was long 
 extremely precarious, and dill is fo in many parts 
 of Europe. They could before the expiration of 
 their term be legally oufted of their leafe, by a 
 new purchafer ; in England even by the fidi- 
 tious aflion of a common recovery. If they 
 were turned out illegally by the violence of their 
 mafter, the adion by which they obtained re« 
 drefs was extremely imperfecl. It did not al- 
 ways re-inftate them in the poffeffion of the land, 
 but gave them damages which never amounted 
 to the real lofs. Even in England, the country 
 perhaps of Europe where the yeomanry has al- 
 ways been mod refpefted, it was not till about 
 the 14th of Henry the Vllth that the adion of 
 ejedment was invented, by which the tenant re- 
 covers, not damages only but poffeffion, and in 
 which his claim is not neceffarily concluded by 
 the uncertain decifion of a fmgle affize. This 
 a6lion has been found fo efiedual a remedy that, 
 in the modern pradice, when the landlord has 
 occafion to fue for the pofleffion of the land, he 
 feldom makes ufe of the adions which properly 
 belong to him as landlord, the writ of right or 
 the writ of entry, but fues in the name of his 
 tenant, by the writ of ejeclmcnr. In England, 1 
 
 therefore, the fecurity of the tenant is equal to 
 that of the proprietor. In England befides a 
 leafe for life of forty fhillings a year value is a 
 
 freehold.
 
 94 THE NATURE AND CAUSES OF 
 
 BOOK freehold, and entitles the lelTee to vote for a 
 m* member of pailiament ; and as a great part of 
 the yeomanry have freeholds of this kind, the 
 whole order becomes refpetlable to their land- 
 lords on account of the political confideration 
 which this gives them. There is, I believe, 
 no-where in Europe except in England, any in- 
 flance of the tenant building upon the land of 
 which he had no leafe, and trufling that the ho- 
 nour of his landlord would take no advantage of 
 fo important an improvement. Thofe laws and 
 cuftoms fo favourable to the yeomanry, have 
 perhaps contributed more to the prefent gran- 
 deur of England, than all their boafted regulations 
 of commerce taken together. 
 
 The law which fecures the longed leafes againfl 
 
 fuccefibrs of every kind is. To far as I know, 
 
 peculiar to Great Britain. It was introduced 
 
 into Scotland fo early as 1449, by a law of James 
 
 the lid. Its beneficial influence, however, has 
 
 been much obftrucled by entails j the heirs of 
 
 entail being generally retrained from letting 
 
 leafes for any long term of years, frequently for 
 
 more than one year. A late acl of parliament 
 
 has, in this refped, fomewhat llackened their 
 
 fetters, though they are flill by much too ftrait. 
 
 In Scotland, befides, as no leafehold gives a 
 
 vote for a member of parliament, the yeomanry 
 
 are upon this account lefs refpeclable to their 
 
 landlords than in England. 
 
 In other parts of Europe, after it was found 
 convenient to fecure tenants both againft heirs 
 and purchafers, the term of their fecurity was 
 
 dill
 
 THE WEALTH OF NATIONS. 95 
 
 ftill limited to a very fliort period ; in France, c h a r. 
 for example, to nine years from the commence- n. 
 ment of the leafe. It has in that country, in- '"-*^'''"*~' 
 deed, been lately extended to tvventy-feven, a 
 period ft ill too lliort to encourage the tenant to 
 make the molt important improvements. The 
 proprietors of land were anciently the legiflators 
 of every part of Europe. The laws relaiing to 
 land, therefore, were all calculated for what they 
 fuppofed the intereft of the proprietor. It was 
 for his intereft, they had imagined, that no leafe 
 granted by any of his predeceffors ihould hinder 
 him from enjoying, during a long term of years, 
 the full value of his land. Avarice and injuflice 
 are always (liort fighted, and they did not fore- 
 fee how much this regulation mud obfl:ru£l im- 
 provement, and thereby hurt in the long-run the 
 real intereft of the landlord. 
 
 The farmers too, befides paying the rent, were 
 anciently, it was fuppofed, bound to perform a 
 great number of fervices to the landlord, which 
 were feldom either fpecified in the leafe, or regu- 
 lated by any precife rule, but by the ufe and 
 wont of the munor or barony. Thefe fervlces,j 
 therefore, being almoft entirely arbitrary, fub- 
 jeded the tenant to many vexations. In Scotland 
 the abolition of all fervices, not precifely ftipulated 
 in the leafe, has in the courfe of a fev/ years very 
 much altered for the better the condition of the 
 yeomanry of that country. 
 
 Tfie public fervices to which the yeomanry 
 were bound, were not lefs arbitrary rhan the 
 private ones. Tp make and maintain the high 
 
 loads,
 
 96 TKE NATURE AND CAUSES OF 
 
 roadi-, a fervitude which llili fubfids, I beh'eve 
 every-where, though with different degrees of 
 oppreilion in different countries, was not the 
 only one. When the king's troops, when his- 
 houlehold or his officers of any kind, paffed 
 through any part of the country, the yeomanry 
 were bound to provide them with horfes, car- 
 riages, and provifions, at a price regulated by 
 the purveyor. Great Britain is, I believe, the 
 only monarchy in Europe where the oppreilion 
 of purveyance has been entirely abolifhed. It 
 flill fubfifls in France and Germany. 
 
 The public taxes- to which they were fubjecl 
 were as irregular and opprefiive as the fervices. 
 The ancient lords, though extremely unwilling 
 to grant themfelves any pecuniary aid to their 
 fovereign, eafily allowed him to tallage, as they 
 called it, their tenants, and had not knowledge 
 enough to forefee how much this muff in the end 
 affecl their ow^n revenue. The taille, as it flill 
 fubfiRs in France, may ferve as an example of 
 thofe ancient tallages. It is a tax upon the fup- 
 poled profits of the farmer, w^hich they eftimate 
 by the ftock that he has upon the farm. It is 
 his intereff, therefore, to appear to have as little 
 as polfiWe, and confequently to employ as little 
 as poffible in its cultivation, and none in its im- 
 l^rovement. Should any flock happen to accu- 
 mulate in the hands of a French farmer, the taille 
 is almod equal to a prohibition of its ever being 
 employed upon the land. This tax befides is 
 fuppofed to difnonour whoever is fubjeft to it, 
 and to degrade him below, not only the rank of 
 
 1 4 a gen-
 
 THE WEALTH OF NATIONS. 
 
 a gentleman, but that of a burgher, and who- 
 ever rents the lands of another becomes fubjedl 
 to it. No gentleman, nor even any burgher 
 who has flock, will fubmit to this degradation. 
 This tax, therefore, not only hinders the Hock 
 which accumulates upon the land from- being 
 employed in its improvement,, but drives away 
 J^ll other flock from it. The ancient tenths and 
 fifteenths, fo ufual in England in former times, 
 feem, fo far as they afiefted the land, to have 
 been taxes of the fame nature with the taille. 
 
 Under all thefe difcouragements, little im- 
 provement could be expected from the occupiers 
 of land. That order of people, with all the li- 
 berty and fecurity which law can give, mud al- 
 ways improve under great difadvantages. The 
 farmer compared with the proprietor, is as a mer- 
 chant who trades v/ith borrowed money compared 
 with one who trades with his own. The flock of 
 both may improve, but that of the one, with 
 only equal good conduft, mufl always improve 
 more flowly than that of the other, on account 
 of the large fhare of the profits which is confum- 
 ed by the interefl of the loan. The lands cul- 
 tivated by the farmer muft, in the fame man- 
 ner, with only equal good conduft, be improved 
 more Howly than thofe cultivated by the proprie- 
 tor ; on account of the large fhare of the pro- 
 duce which is confun^ed in the rent, and which, 
 had the farmer been proprietor^ he might have 
 employed in the further improvement of the 
 land. The flation of a farmer befides is, from 
 the nature of things, inferior to that of a pro- 
 
 voL, II. K prietor. 
 
 97
 
 98 THE NATURE AND CAUSES OF 
 
 BOOK prietor. Through the greater part of Europe 
 III. the yeomanry are regarded as an inferior rank of 
 people, even to the better fort of tradefmen and 
 mechanics, and in all parts of Europe to the 
 great merchants and mailer manufacturers. It 
 can feldom happen, therefore, that a man of any 
 confiderable (lock fliould quit the fuperior, ia 
 order to place himfelf in an inferior ftation. 
 Even in the prefent ftate of Europe, therefore, 
 little {lock is likely to go from any other pro- 
 feffion to the improvement of land in the way of 
 farming. More does perhaps in Great Britain 
 than in any other country, though even there the 
 great flocks which are, in fome places, employed 
 in farming, have generally been acquired by 
 farming, the trade, perhaps, in which, of all 
 others, (lock is commonly acquired moll flowly. 
 After fmall proprietors, however, rich and great 
 farmers are, in every country, the principal im- 
 provers. There are more fuch perhaps in Eng- 
 land than in any other European monarchy. In 
 the republican governments of Holland, and of 
 Berne in Switzerland, the farmers are faid to be 
 not Inferior to thofe of England. 
 
 The ancient policy of Europe was, over and 
 above all this, unfavourable to the improvement 
 and cultivation of land, whether carried on by 
 the proprietor or by the farmer ; firft, by the 
 general prohibition of the exportation of corn 
 without a fpecial licence, which feems to have 
 been a very univerfal regulation j and fecondly, 
 by the reflraints which were laid upon the inland 
 commerce, not only of corn but of almofl every 
 
 other
 
 THE WEALTH OF NATIONS*. 99 
 
 Other part of the produce of the farm, by the chap. 
 abfurd laws againft ingroffers, regraters, and ii« 
 foreftallers, and by the privileges of fairs and ^"^ ' ~ 
 markets. It has already been obferved in what 
 manner the prohibition of the exportation of 
 corn, together with fome encouragement given 
 to the importation of foreign corn, obftrufted 
 the cukivation of ancient Italy, naturally the 
 molt fertile country in Europe, and at that time 
 the feat of the greateft empire in the world. To 
 what degree fuch reftraints upon the inland com- 
 merce of this commodity, joined to the general 
 prohibition of exportation, mufl: have difcou- 
 raged the cultivation of countries lefs fertile, and 
 lefs favourably circumftanced, it is not perhaps 
 very eafy to imagine. 
 
 CHAP. III. 
 
 Of the Rife and Progrefs of Cities and Towns^ 
 after the Fall of the Roman Etnpire, 
 
 nPHE inhabitants of cities and tovv^ns were, 
 after the fall of the Roman empire, not 
 more favoured than thole of the country. They 
 confifted, indeed, of a very ditferent order of 
 people from the firft inhabitants of the ancient 
 republics of Greece and Italy. Thefe lad were 
 compofed chiefly of the proprietors of lands, 
 among whom the public territory was originally 
 divided, and who found it convenient to build 
 
 H 2 their
 
 lOo . THE NATURE AND CAUSES OF 
 
 ■BOOK their houfes in the neio-hbourhood of one arro- 
 m* ther, and to furround them with a wall, for the 
 
 '~^''^~'' fake of common defence. After the fall of the 
 Roman empire, on the contrary, the propiietors 
 of land feem generally to have lived in fortified 
 callles on their own eilates, and in the midft of 
 their own tenants and dependants. The towns 
 ■were chiefly inhabited by tradefmen and mecha- 
 nics, who feem in thofe davs to have been of 
 fervile, or very nearly of fervile condition. The 
 privileges which we find granted by ancient char- 
 ters to the inhabitants of fome of the principal 
 towns in Europe, fufiiciently fhew what they 
 were before thofe grants. The people to whom 
 it is granted as a privilege that they might give 
 away their own daughters in marriage without 
 the confent of their lord, that upon their death 
 their own children, and not their lord, fliould 
 fucceed to their goods, and that they might dif- 
 pofe of their own effedls, by will, muft, before 
 thofe grants, have been either altogether, or very 
 nearly in the fame (late of viilanage with the oc- 
 cupiers of land in the country. 
 
 They feem, indeed, to have been a very poor^ 
 mean fet of people, v/ho ufed to travel about 
 with their goods from place to place, and from 
 fair to fair, like the hawkers and pedlars of the 
 prefent times. In all the different countries of 
 Europe then, in the fame manner as in feveral of 
 the Tartar governments of Afia at prefent, taxes 
 ufed to be levied upon the perfons and goods of 
 travellers, when they paiTed through certain ma- 
 2aors, when they went over certain bridges, when 
 
 they
 
 THE WEALTH OF NATIONS. roi 
 
 tl>ey carried about their goods from place to place chap. 
 in a fiiir, when they ere<5led in it a booth or i^^* 
 (tall to fell them in. Thefe different taxes were 
 known in England by the names of paifage, 
 pontage, laftage, and ftallage. Sometimes the 
 l^ing, fometimes a great lord, who had, it feems, 
 upon fome occafions, authority to do this, would 
 grant to particular traders, to fuch particularly 
 as lived in their own demefnes, a general exemp- 
 tion from fuch taxes. Such traders, though ia 
 other refpe£ls of fervile, or very nearly of fer- 
 vile condition, were upon this account called 
 Free-traders. They in return ufually paid to 
 their prote^or a fort of annual poll-tax. In 
 thofe days proteftion was feldoni granted without 
 a valuable confideration, and this tax might, 
 perhaps, be confidered as compenfation for what 
 their patrons might lofe by their exemption from 
 other taxes. At firft, both thofe poll-taxes and 
 -thofe exemptions feem to have been altogether 
 perfonal, and to have affefted only particular 
 individuals, during either their lives, or the 
 pleafure of their proteftors. In the very imper- 
 fed accounts which have been publiflied from 
 Domefday-book, of feveral of the towns of Eng- 
 land, mention is frequently made fometimes of 
 the ^tax which particular burghers paid, each of 
 (hem, either to the king, or to fome other great 
 lord, for this fort of protedion ; and fometimes 
 of the general amount only of all thofe taxes *. 
 
 * See Brady's hillorical TrcatiTe of Cities and Boroughs, 
 p. 3, &c. 
 
 H 3 But
 
 loi THE NATURE AND CAUSES OF 
 
 BOOK But how fervile foever may have been originally 
 iir. the condition of the inhabitants of the towns, it 
 
 '"^''"""^ appears evidently, that they arrived at liberty and 
 independency much earlier than the occupiers of 
 land in the country. That part of the king's re- 
 venue which arofe from fuch poll-taxes in any par- 
 ticular town ufed commonly to be let in farm, 
 during a term of years for a rent certain, fome- 
 times to the fherifF of the county, and fometimes 
 to other perfons. The burghers themfelves fre- 
 quently got credit enough to be admitted to farm 
 the revenues of this fort which arofe out of their 
 own town, they becoming jointly and feverally 
 anfwerable for the whole rent *. To let a farm 
 in this manner was quite agreeable to the ufual 
 ceconomy of, I believe, the fovereigns of all the 
 different countries of Europe ; who ufed fre- 
 quently to let whole manors to all tnie tenants 
 of thofe manors, they becoming jointly and fe- 
 verally anfwerable for the whole rent ; but in 
 return being allowed to colleft it in their own 
 way, and to pay it into the king's exchequer by 
 the hands of their own bailiff", and being thus 
 altogether freed from the infolence of the king's 
 officers; a circumflance in thofc days regarded 
 as of the greateft importance. 
 
 At firft the farm of the tov/n was probably 
 let to the burghers, in the fame manner as it 
 had been to other farmers, for a term of years 
 only. In procefs of time, however, it feems to 
 
 * See Madox Firma Burgi, p 18. alfo Hillory of the Ex- 
 ■^ ckequer, chap. 10. fed v p. 223, firft edition. 
 
 4 have
 
 THE WEALTH OF NATIONS. 103 
 
 have become the general pradice to grant it to chap, 
 them in fee, that is for ever, referving a rent l^J. 
 certain never afterwards to be augmented. The 
 payment having thus become perpetual, the ex- 
 emptions, in return, for which it was made, na- 
 turally became perpetual too. Thofe exemptions, 
 therefore, ceafed to Ipe perfoual, and could not 
 afterwards be confidered as belonging to indivi- 
 duals as individuals, but as burghers of a parti- 
 cular burgh, which, upon this account, was 
 called a Free-burgh, for the fame reafon that 
 they had been called Free-burghers or Free- 
 traders. 
 
 Along with this grant, the important privi- 
 leges above mentioned, that they might give 
 away their own daughters in marriage, that their 
 children (hould fucceed to them, and that they 
 might difjjofe of their own effe£ls by will, were 
 generally beftovi'ed upon the burghers of the 
 town to whom it was given. Whether fuch 
 privileges had before been ufually granted along 
 with the freedom of trade, to particular burghers, 
 as individuals, I know not. I reckon it not im- 
 probable that they were, though I cannot produce 
 any direct evidence of it. But however this may 
 have been, the principal attributes of villanage 
 and flavery being thus taken away from them, 
 they now, at lead, became really free in our pre- 
 fent fenfc of the word Freedom. 
 
 Nor was this all. They were generally at the 
 fame time ereded into a commonalty or corpo- 
 ration, with the privilege of having magiftrates 
 and a town-council of their own, of making 
 
 H 4 bye-
 
 104 THE NATURE AND CAUSES OF 
 
 BOOK bye-laws for their own government, of building 
 m» walls for their own defence, and of reducing all 
 their inhabitants under a fort of military difci- 
 pline, by obliging them to watch and ward ; 
 that is, as anciently underftood, to guaid and 
 defend thofe walls againfl all attacks and far- 
 prifes by night as well as by day. In England 
 they were generally exempted from fuit to the 
 hundred and county courts ; and all fuch plea^ 
 as fhould arife among them, the pleas of the 
 crown excepted, were left to the decifion of their 
 own magillrates. In other countries much greater 
 and more extenfive jurifdi6lions were frequently 
 granted to them *. 
 
 It might, probably, be neceffary to grant to 
 fuch towns as were admitted to farm their own 
 revenues, fome fort of compulfive jurifdidion to 
 oblige their own citizens to make payment. In 
 thofe diforderly times it might have been ex- 
 tremely inconvenient to have left them to feek 
 this fort of juftice from any other tribunal. But 
 it muft feem extraordinary that the fovereigns of 
 all the different countries of Europe, fhould have 
 exchanged in this manner for a rent certain, 
 never more to be augmented, that branch of 
 their revenue, which was, perhaps, of all others, 
 the mod likely to be improved by the natural 
 courfe of things, without either expence or at- 
 tention 01 their own : and that they fhould, be- 
 
 * See Madox Firma Burgi ; See alfo PfefFel in the remark, 
 able events under FredericIL and his fucceflbrs of the hoiife 
 of Suabia. 
 
 fides.
 
 THE WEALTH OF NATIONS. loc 
 
 3 
 
 fides, have in this manner vohjntarily ere£led chap. 
 a fort of independent republics in the heart of iii. 
 their own dominions. 
 
 In order to underdand this, it muft be re- 
 membered, that in thofe days the fovereign of 
 perhaps no cguntry in Europe was able to pro- 
 tect, through the whole extent of his dominions, 
 the weaker part of his fubjefts from the oppref- 
 fion of the great lords. Thofe whom the law 
 could not prote£l, and who were not ilrong enough 
 to defend themfclveSi were obliged either to have 
 recourfe to the protection of fome great lord, 
 and in order to obtain it to become either his 
 flaves or vafTals ; or to enter into a league of 
 mutual defence for the common protedion of 
 one another. The inhabitants of cities and 
 burghs, confidered as fmgle individuals, had no 
 power to defend ihemfelves ; but by entering 
 into a league of mutual defence with their neigh- 
 bours, they weie capable of making no con- 
 temptible refiRance. The lords defpifed the 
 burghers, whom they confidered not only as of 
 a different order, but as a parcel of emancipated 
 ilaves, almoil of a different fpecies from them- 
 felves. The wealth of the burghers never failed 
 to provoke their envy and indignation, and they 
 plundered them upon every occafion without 
 mercy or remorfe. The burghers naturally hated 
 and feared the lords. The king hated and feared 
 them too ; but though perhaps he might defpife, 
 he had no reafon either to hate or fear the burgh- 
 ers. Mutual interefl, therefore, difpofed them 
 to fupport the king, and the king to fupport 
 
 them
 
 io6 THE NATURE AND CAUSES OF 
 
 BOOK them againfl: the lords. They were the enemies 
 !"• of his enemies, and it was his intereft to render 
 them as fecure and independent of thofe enemies 
 as he could. By granting them magiftrates of 
 their own, the privilege of making bye-laws for 
 their own government, that of building walls for 
 their own defence, and that of reducing all their 
 inhabitants under a fort of military difcipiine, he 
 gave them all the means of fecurity and inde- 
 pendency of the barons which it was in his power 
 to beftow. Without the eftablifliment of fome 
 regular government of this kind, without fome 
 authority to compel their inhabitants to ad ac- 
 cording to fome certain plan or fyftem, no volun^ 
 tary league of mutual defence could either have 
 afforded them any permanent fecurity, or have 
 enabled them to give the king any confiderable 
 fupport. By granting them the farm of their 
 town in fee, he took av/ay from thofe whom he 
 wifhed to have for his friends, and, if one may 
 fay fo, for his allies, all ground of jealoufy and 
 fufpiclon, that he was ever afterwards to opprefs 
 them, either by raifing the farm-rent of their 
 town, or by granting it to fome other farmer. 
 
 The princes who lived upon the word terms 
 with their barons, feem accordingly to have been 
 the moft liberal in grants of this kind to their 
 burghs. King John of England, for example, 
 appears to have been a mofl munificent bene- 
 hhor to his towns*. Philip the Fir ft of France 
 loft all authority over his barons. Towards the 
 
 * See Madox. 
 
 end
 
 THE WEALTH OF NATIONS. 107 
 
 end of his reign, his fon Lewis, known after- chap. 
 wards by the name of Lewis the Fat, confulted, in. 
 accofding to Father Daniel, with the bifliops of 
 the royal demefnes, concerning the mod proper 
 means of reftraining the violence of the great 
 lords. Their advice confifted of two different 
 propofals. One was to ered a new order of ju- 
 rifdidion, by eftablifhing magiitrates and a lown- 
 council, in every connderable town of his de- 
 mefnes. The other was to form a new militia, by 
 making the inhabitants of thofe towns, under the 
 command of their own magiftrates, march out 
 upon proper occafions to the afliftance of the 
 king. It is from this period, according to the 
 French antiquarians, that we are to date the in- 
 ftitution of the magiftrates and councils of cities 
 in France, It was during the unprofperous 
 reigns of the princes of the houfe of Suabla that 
 the greater part of the free towns of Germany 
 received the firft grants of their privileges, and 
 that the famous Hanfeatic league firft became 
 formidable *. 
 
 The militia of the cities feems, in thofe times, 
 not to have been inferior to that of the country, 
 and as they could be more readily affembled 
 upon any fudden occafion, they frequently had 
 the advantage in their difputes with the neigh- 
 bouring lords. In countries, fuch as Italy and 
 Switzerland, in which, on account either of 
 their diftance from the principal feat of govern- 
 ment, of the natural ftrength of the country 
 
 * See PfcfFd. 
 
 itfelf.
 
 108 «r"HE NATURE ANfiT CAUSES OF 
 
 BOOK itfelf, or of fome other reafon, the fovereign 
 in. came to lofe the whole of his authority, the 
 
 ^'"^''"**' cities generally became independent republics, 
 and conquered all the nobility in their neigh- 
 bourhood ; obliging them to pull down their 
 caflles in the country, and to live, like other 
 peaceable inhabitants, in the city. This is the 
 Ihort hidory of the republic of Berne, as well 
 as of feveral other cities in Switzerland. If you 
 except Venice, for of that city the hiftory is 
 fomewhat different, it is the hiftory of all the 
 confiderable Italian republics, of which fo great 
 a number arofe and periflied, between the end of 
 the twelfth and the beginning of the fixteenth 
 century. 
 
 In countries fuch as France or England, where 
 the authority of the fovereign, though frequently 
 very low, never was deftroyed altogether, the 
 cities had no opportunity of becoming entirely 
 independent. They became, however, fo con- 
 fiderable, that the fovereign could impofe no tax 
 upon them, befides the ftated farm- rent of the 
 town, without their own confent. They were, 
 therefore, called upon to fend deputies to the 
 general aflembly of the dates of the kingdom, 
 where they might join with the clergy and the 
 barons in granting, upon urgent occafions, fome 
 extraordinary aid to the king. Being generally 
 too more favourable to his power, their deputies 
 feem, fometimes, to have been employed by him 
 as a counter-balance in thofe alTemblies to the 
 authority of the great lords. Hence the origin 
 
 of
 
 THE WEALTH OF NATIONS. 109 
 
 of the reprefentation of burghs in the dates gene- chap. 
 ral of all great monarchies in Europe. in. 
 
 Order and good government, and along with ""^ " 
 them the liberty and fecurity of individuals, 
 were, in this manner, eflabhfhed in cities, at a 
 time when the occupiers of land in the country 
 were expofed to every fort of violence. But men 
 in this defencelefs ftate naturally content them- 
 felves with their necelTary fubiiftence ; becaufe 
 to acquire more might only tempt the injuftice 
 of their oppreflbrs. On the contrary, when they 
 are fecure of enjoying the fruits of their industry, 
 they naturally exert it to better their condition, 
 and to acquire not only the neceffaries, but the 
 conveniencies and elegancies of life. That in- 
 duftry, therefore, which aims at fomething more 
 than neceffkry fubfiftence, was eftablifhed in 
 cities long before it was commonly pra6tifed by 
 the occupiers of land in the country. If in the 
 hands of a poor cultivator, opprelTed with the 
 fervitude of villanage, fome little (lock Ihould 
 accumulate, he would naturally conceal it with 
 great care from his mafler, to whom it would 
 otherwife have belonged, and take the firfl op- 
 portunity of running av/ay to a town. The la\y 
 was at that time fo indulgent to the inhabitants 
 of towns, and fo defirous of diminifl:»ing the au- 
 thority of the lords over thofe of the country, 
 that if he could conceal himfelf there from the 
 purfuit of his lord for a year, he was free for 
 ever. Whatever flock, therefore, accumulated 
 in the hands of the induflrious part of the inha- 
 bitants of the country, naturally took refuge in 
 
 14 cities.
 
 1,6 THE NATURE AND CAUSES OF 
 
 BOOK cities, as the only fan£luaries in which it could be 
 in. fecure to the perCon that acquired it 
 
 '^"^'^''^ Xhe inhabitants of a city, it is true, mud 
 always ultimately derive their fubfiftence, and 
 the whole materials and means of their induftry, 
 from the country. But thofe of a city, fituated 
 near either the fea-coaft or the banks of a navi- 
 gable river, are not neceflarily confined to derive 
 them from the country in their neighbourhood. 
 They have a much wider range, and may draw 
 them from the moft remote corners of the world, 
 either in exchange for the manufad:ured produce 
 of their own induftry, or by performing the 
 office of carriers between diftant countries, and 
 exchanging the produce of one for that of an- 
 other. A city might in this manner grow up to 
 great wealth and fplendor, while not only the 
 country in its neighbourhood, but all thofe to 
 which it traded, were in poverty and wretchednefs. 
 Each of thofe countries, perhaps, taken fingly, 
 could afford it but a fmall part, either of its fub- 
 fiftence, or of its employment ; but all of them 
 taken together could afford it both a great fubfift- 
 ence, and a great employment. There was, how- 
 ever, within the narrow circle of the commerce 
 of thofe times, fome countries that were opulent 
 and induftrious. Such was the Greek empire 
 as long as it fubfifted, and that of the Saracens 
 during the reigns of the Abaffides. Such too 
 was Egypt till it was conquered by the Turks, 
 fome part of the coaft of Barbary, and all thofe 
 provinces of Spain which were under the govern- 
 ment of the Moors. 
 
 The
 
 THE WEALTH OF NATIONS. iii 
 
 The cities of Italy feem to have been the firft chap. 
 in Europe which were raifed by commerce to any m* 
 confiderable degree of opulence. Italy lay in the 
 centre of what was at that time the improved and 
 civilized part of the world. The crufades too, 
 though by the great wafte of flock and deftru6lion 
 of inhabitants which they occafioned, they muft 
 neceiTarily have retarded the progrefs of the 
 greater part of Europe, were extremely favour- 
 able to that of fome Italian cities. The great 
 armies, which marched from all parts to the con- 
 queft of the Holy Land, gave extraordinary en- 
 couragement to the (hipping of Venice, Genoa, 
 and Pifa, fometimes in tranfporting them thither, 
 and always in fupplying them with provifions. 
 They were the commiflaries, if one may fay fo, of 
 thofe armies ; and the moft deftructive frenzy that 
 ever befel the European nations, was a fource of 
 opulence to thofe republics. 
 
 The inhabitants of trading cities, by import- 
 ing the improved manufaftures and expenfive 
 luxuries of richer countries, afforded fome food 
 to the vanity of the great proprietors, who 
 eagerly purchafed them with great quantities of 
 the rude produce of their own lands. The com- 
 merce of a great part of Europe in thofe times, 
 accordingly, confided chiefly in the exchange of 
 their own rude, for the manufactured produce 
 of more civilized nations. Thus the wool of 
 England ufed to be exchanged for the wines of 
 France, and the fine cloths of Flanders, in the 
 fame manner as the corn in Poland is at this 
 
 day
 
 nz THE NATURE AND CAUSES OF 
 
 £ o o K day exchanged for the wines and brandies of 
 III. France, and for the filks and velvets of France 
 and Italy. 
 
 A TASTE for the finer and more improved 
 manufaclures, was in this manner introduced by 
 foreign commerce into countries where no fuch 
 works were carried on. But when this tafte 
 became fo general as to occafion a confiderable 
 demand, the merchants, in order to fave the ex- 
 pence of carriage, naturally endeavoured to eda- 
 blifli fome manutaclures of the fame kind in their 
 own country. Hence the origin of the firll: ma- 
 nufadlures for diftant fa!e that feem to have been 
 eftabliflied in the weftern provinces of Europe, 
 after the fall of the Roman empire. 
 
 No large country, it muft be obferved, ever 
 did or could fubfift without fome fort of manu- 
 faclures being carried on in it ; and when it is 
 faid of any fuch country that it has no manu- 
 factures, it muft always be underifood of the 
 fmer and more improved, or of fuch as are lit 
 for diftant fale. In every large country, both 
 the clothing and houfehold furniture of the far 
 greater part of the people, are the produce of 
 their own induflry. This is even more univer- 
 fally the cafe in thofe poor countries which are 
 commonly faid to have no manufa6lures, than in 
 thofe rich ones that are faid to abound in them. 
 In the latter, you will generally find, both in the 
 clothes and houfehold furniture of the loweft rank 
 of people, a much greater proportion of foreign 
 produi^ions than in the former. 
 
 Those
 
 THE WEALTH OF NATIONS. 113 
 
 Those manufaftures which are fit for dlflant chap. 
 tale, feem to have been introduced into different m. 
 countries in two different ways. 
 
 Sometimes they have been introduced, in the 
 manner above mentioned, by the violent opera- 
 tion, if one may fay foj of the flocks of parti- 
 cular merchants and undertakers, who eflabliihed 
 them in imitation of fome foreign manufadures 
 of the fame kind. Such manufadures, there- 
 fore, are the offspring of foreign commerce, and 
 fuch feem to have been the ancient manufactures 
 of filks, velvets, and brocades, which fiourifhed 
 in Lucca, during the thirteenth century. They 
 were baniflied from thence by the tyranny of one 
 of Machiavel's heroes, Caftruccio Caflracani. 
 in i3T,o, nine hundred families were driven out 
 of Lucca, of whom thirty-one retired to A^enice, 
 and offered to introduce there the filk manu- 
 fadure *. Their oficr was accepted, many pri- 
 vileges were conferred upon them, and they be- 
 gan the manufacture with three hundred work- 
 men. Such too feem to have been the manu- 
 factures of fine cloths that anciently flourifiied in 
 Flanders, and which were introduced into Eng- 
 land in the beginning of the reign of Elizabeth ; 
 and fuch are the prefent filk manufa^ftures of 
 Lvons and Soital-fields. Manufactures intro- 
 duced in this manner are generally employed 
 upon foreign materials, being imitations of fo- 
 reign manufactures. When the Venetian manu- 
 
 * See Sandi Iftoria Civile de Vinezia, Part 2. vol. i. pnge 
 2^7, and 256. 
 
 VOL. II. 1 faclure
 
 114 THE NATURE AND CAUSES OF 
 
 j3 o o K failure was firfl: eftabllfhed, the materials were all 
 ni. brought from Sicily and the Levant. The more 
 ancient manufadure of Lucca was likewife car- 
 ried on with foreign materials. The cultivation 
 of mulberry trees, and the breeding of filk- 
 worms, feem not to have been common in the 
 northern parts of Italy before the fixteenth cen- 
 tury. Thoie arts were not introduced into 
 France till the reign of Charles IX. The ma- 
 nufaftuies of Flanders were carried on chiefly 
 with Spanifli and Englifli wool. Spanilh wool 
 was the material, not of the firfl: woollen manu- 
 facluie of England, but of the firfl: that was fit 
 for difl:ant fale. More than one half the mate- 
 rials of the Lyons manufaclure is at this day 
 foreign filk ; when it was firfl: efl:abliflied, the 
 whole or very nearly the whole was fo. No part 
 of the materials of the Spital-fields manufadlure 
 is ever likely to be the produce of England. 
 The feat of fuch raanufa6lures, as they are ge- 
 nerally introduced by the fcheme and project of 
 a few individuals, is fometimes efl:abHflied in a ma- 
 ritime city, and fometimes in an inland town, ac- 
 cording as their interefl:, judgment, or caprice 
 happen to determine. 
 
 At other times manufaftures for difl:ant fale 
 grow up naturally, and as it were of their 'own 
 accord, by the gradual refinement of thofe 
 houfehold and coarfer m.anufadures which mufl: 
 at all times be carried on even in the poorefl: and 
 Tudeft: countries. Such manufactures are ge- 
 nerally employed upon the materials which the 
 country produces, and they feem frequently to 
 
 4 have
 
 THE WEALTH OF NATIONS. 115 
 
 have been firfl refined and improved in fuch in- 
 land countries as were, not indeed at a very- 
 great, but at a Confiderable diftance from the fea 
 icoaft, and fometimes even ftom all water car- 
 riage. An inland country naturally fertile and 
 eafily cultivated, produces a great furplus of pro- 
 vifions beyond what is neceflary for maintaining 
 the cultivators, and on account of the expence of 
 land carriage, and inconveniency of river navi- 
 gation, it may frequently be difficult to fend this 
 furplus abroad. Abundance, therefore, ren- 
 ders provifions cheap, and encourages a great 
 number of workmen to fettle in the neighbour" 
 hood, who find that their induftry can there pro- 
 cure them more of the neceflaries and conve- 
 niencies of life than in other places. They work 
 up the materials of manufacture which the land 
 produces, and exchange their finifhed work, 
 or what is the fame thing the price of it, for 
 more materials and provifions. They give a 
 new value to the furplus part of the rude produce, 
 by faving the expence of carrying it to the water 
 fide, or to fome didant market ; and they furnifh 
 the cultivators with fomething in exchange for 
 it that is either ufcful or agreeable to them, up- 
 on eafier terms than they could have obtained 
 it before. The cultivators get a better price for 
 their furplus produce, and can purchafe cheaper 
 other conveniencies which they have occafion 
 for. They are thus both encouraged and en- 
 abled to increafe this furplus produce by a further 
 improvement and better cultivation of the land ; 
 and 2£> the fertility of the land had given birth 
 
 1 2 to
 
 ii6 THE NATURE AND CAtJSES OP 
 
 BOOK to the manufa£lure, fo the progrefs of the manu- 
 in. fadure re-aQs upon the land, and increafes flill 
 further its fertility. The manufadurers firft 
 fupply the neighbourhood, and afterwards, as 
 their work improves and rehnes, more diftant 
 markets. For though neither the rude produce, 
 nor even the coarfe manufadure, could, without 
 the greatefl difficulty, fupport the expence of a 
 confiderable land carriage, the refined and im- 
 proved manufadlure eafily may. In a fmall 
 bulk it frequently contains the price of a great 
 quantity of rude produce. A piece of fine cloth, 
 for example, which weighs only eighty pounds, 
 contains in it, the price, not only of eighty 
 pounds weight of wool, but fometimes of feveral 
 thoufand weight of corn, the maintenance of the 
 different working people, and of their immediate 
 employers. The corn which could with diffi- 
 culty have been carried abroad in its own fhape, 
 is in this manner virtually exported in that of the 
 complete manufadure, and may eafily be fent to 
 -the remotefl corners of the world. In this man- 
 ner have grown up naturally, and as it were of 
 their own accord, the manufactures of Leeds, 
 Hahfax, Sheffield, Birmingham, and Wolver- 
 hampton. Such manufactures are the offspring 
 of agriculture. In the modern hiftory of Eu- 
 rope, their extenfion and improvement have ge- 
 nerally been pofterior to thofe which were the 
 offspring of foreign commerce. England was 
 noted for the manufacture of fine cloths made of 
 Spanifh wool, more than a century before any of 
 thofe which now flourifh in the places above 
 
 mentioned
 
 THE WEALTH OF NATIONS, 117 
 
 mentioned were fit for foreign fale. The exten- chap. 
 fion and improvement of thefe laft could not take m. 
 place but in confequence of the extenfion and im- "^"^'"^^ 
 provement of agriculture, the laft and greateft 
 Q^td: of foreign commerce, and of the manu- 
 factures immediately introduced by it, and which 
 I fhall now proceed to explain. 
 
 CHAP. IV. 
 
 How the Co?mnerce of the Toivns co7itributed to the 
 Improvemsnt of the Country, 
 
 T^HE increafe and riches of commercial and ma- 
 nufaduring towns, contributed to the im- 
 provement and cultivation of the countries to 
 which they belonged, in three different ways. 
 
 First, by affording a great and ready market 
 for the rude produce of the country, they gave 
 encouragement to its cultivation and further im- 
 provement. This benefit was not even confined 
 to the countries in which they were fituated, but 
 extended more or lefs to all thofe with which 
 they had any dealings. To all of them they 
 afforded a market for fome part either of their 
 rude or manufaclurcd produce, and confequently 
 gave fome encouragement to the induftry and 
 improvement of all. Their own country, how- 
 ever, on account of its neighbourhood, necelfa- 
 fily derived the greateff benefit from this market, 
 
 \ 3 its
 
 118 THE NATURE AND CAUSES OF 
 
 BOOK Its rude produce being charged with lefs carriage 
 m* the traders could pay the growers a better price 
 for it, and yet aftbrd it as cheap to the confumers 
 as that of more difiant countries. 
 
 Secondly, the wealth acquired by the inha- 
 bitants of cities was frequently employed in pur- 
 chafmg fuch lands as were to be fold, of which a 
 great part would frequently be uncultivated. 
 Merchants are commonly ambitious of becoming 
 country gentlemen, and when they do, they are 
 generally the beft of all improvers. A merchant 
 
 ; is accuftomed to employ his money chiefly in 
 profitable projecls ; whereas a mere country gen- 
 tleman *is accuftomed to employ it chiefly in 
 expence. The one often fees his money go from 
 him, and return to him again with a profit : the 
 other, when once he parts with it, very feldom 
 expe^ls to fee any more of it. Thofe different 
 habits naturally affect their temper and difpo- 
 fition in every fort of bufmefs. A merchant is 
 commonly a bold ; a country gentleman, a timid 
 undertaker. The one is not afraid to lay out at 
 
 . once a large capital upon the improvement of 
 his land, when he has a probable profpeft of 
 raifing the value of it in proportion to the ex- 
 pence. The other, if he has any capital, which 
 is not always the cafe, feldom ventures to employ 
 it in this manner. If he improves at all, it 
 is comm.only not with a capital, but with what 
 he can fave out of his annual revenue. "Who- 
 ever has had the fortune to live in a mercantile 
 town fituated in an unimproved country, raufl 
 have frequently obferved how much more fpirited 
 
 the
 
 THE WEALTH OF NATIONS. ' 119 
 
 the operations of merchants were \n this way, chap. 
 than thofe of mere country gentlemen. The ha- ^^'^ 
 bits, befides, of order, oeconomy, and atten- 
 tion, to which mercantile bufinefs naturally 
 forms a merchant, render him much fitter to 
 execute, with profit and fuccefs, any project of 
 improvement. 
 
 Thirdly, and ladly, commerce and manu- 
 faclures gradually introduced order and good go,' 
 vernment, and with them, the hberty and fecu- 
 rity of individuals, among the inhabitants of the 
 country, who had before lived almoft in a conti- 
 nual ftate of war with their neighbours, and of 
 fervile dependency upon their fuperiors. This, 
 though it has been the leaft obferved, is by far 
 the mod important of all their effeds. Mr. 
 Hume is the only writer who, fo far as I know, 
 has hitherto taken notice of it. 
 
 In a country which has neither foreign com- 
 merce, nor any of the finer manuflictures, a great 
 proprietor, having nothing for which he can ex- 
 change the greater part of the produce of his. 
 lands which is over and above the maintenance 
 of the cultivators, confumes the whole in ruftic 
 hofpitality at home. U' this furplus produce is 
 fufficient to maintain a hundred or a ihoufand 
 men, he can make ufe of it in no other way than 
 by maintaining a hundred or a thouAmd men. 
 He is at all times, therefore, furrounded with a 
 multitude of retainers and dependants, who hav- .. '^ 
 
 ing no equivalent to give in return for their main- 
 tenance, but being fed entirely by his bounty, ^^ " 
 mufl obey him, for the fame reafon that fol- 
 
 1 4 diers
 
 120 THE NATURE AND CAUSES OF 
 
 BOOK diers mufl: obey the prince who pays them. Be, 
 in. fore the extenfion of commerce and manufa6lures 
 in Europe, the hofpitahty of the rich and the 
 great, from the fovereign down to the fmallell 
 baron, exceeded every thing which in the pre- 
 fent times we can eafily form a notion of. Weft- 
 minfler-hall was the dining-room of WiUiam 
 Rufus, and might frequently, perhaps, not be 
 too large for his company. It was reckoned a 
 piece of magnificence in Thomas Becket, that 
 he ftrowed the floor of his hall with clean hay or 
 rufiies in the feafon, in order that the knights and 
 fquires, who could not get feats, might not fpoil 
 their fine clothes when they fat down on the floor 
 to eat their dinner. The great earl of VvTarwick 
 is faid to have entertained every day at his differ- 
 ent manors, thirty thoufand people ; and though 
 the number here may have been exaggerated, it 
 muft, however, have been very great to admit 
 of fuch exaggeration. A hofpitality nearly of 
 the fame kind was exercifed not many years ago 
 in many different parts of the highlands of Scot- 
 land. It feems to be common in all nations to 
 whom commerce and manufadlures are little 
 known. I have feen, fays Dodor Pocock, an 
 Arabian chief dine in the Itreets of a town where 
 he had come to fell his cattle, and invite all 
 pafTengers, even common beggars, to fit down 
 with him and partake of his banquet. 
 
 The occupiers of land were in every refpeft as 
 dependent upon the great proprietor as his re- 
 tainers. Even fuch of them as were not in a 
 ilate of viilanage, mere tenants at will, who pai4 
 
 a rent
 
 THE WEALTH OF NATIONS. I2j 
 
 a rent in no refpeft equivalent to the fubfiftence chap, 
 which the land afforded them. A crown, half a iv. 
 crown, a fheep, a lamb, was fome years ago in 
 the highlands of Scotland a common rent for 
 lands which maintained a family. In fome places 
 it is fo at this day ; nor will money at prefent 
 purchafe a greater quantity of commodities there 
 than in other places. In a country where the 
 furplus produce of a large eftate muft be con- 
 fumed upon the eflate itfelf, it will frequently be 
 more convenient for the proprietor, that part of 
 it be confumed at a diftance from his own houfe, 
 provided they who confume it are as dependent 
 upon him • as either his retainers or his menial 
 fervants He is thereby faved from the embar- 
 raffment of either too large a company or too 
 large a family. A tenant at will, who poffeffes 
 land fufficient to maintain his family for little 
 more than a quit-rent, is as dependent upon the 
 proprietor as any fervant or retainer whatever, 
 and mud obey him with as little referve. Such 
 a proprietor, as he feeds his fervants and retain- 
 ers at his own houfe, fo he feeds his tenants at 
 their houfes. The fubfiftence of both is derived 
 from his bounty, and its continuance depends 
 upon his good pleafure. 
 
 Upon the authority which the great proprie- 
 tors neceffarily had in fuch a ftate ol things over 
 their tenants and retainers, was founded the power 
 of the ancient barons. They neceffarily became 
 the judges in peace, and the leaders in war, of 
 all who dv/elt upon their eftates. They could 
 jnaintain order and execute the law within their 
 
 refpedive
 
 I2Z 
 
 THE NATURE AND CAUSES OF 
 
 3 o o K refpeclive demefnes, becaufe each of them could 
 in. there turn the whole force of all the Inhabitants 
 againfl the injuflice of any one. No other per- 
 fon had fufficient authority to do this. The king 
 in particular had not. In thofe ancient times he 
 was little more than the greateft proprietor in 
 his dominions, to whom, for the fake of common 
 defence againft their common enemies, the other 
 great proprietors paid certain refpecls. To have 
 enforced payment of a fmall debt within the lands 
 of a great proprietor, where all the inhabitants 
 were armed and accuftomed to iland by one ano- 
 ther, would have cod the king, had he attempt- 
 ed it by his own authority, almofl; the fame 
 effort as to extinguiih a civil war. He was, 
 therefore, obliged to abandon the adminiftration 
 of juftice, through the greater part of the country, 
 to thofe who were capable of adminiftering it ; 
 and for the fame reafon to leave the command of 
 the country militia to thofe whom that militia 
 would obey. 
 
 It is a miflake to imagine that thofe territo- 
 rial jurifdiclions took their origin from the feudal 
 law. Not only the higheft jurifdiclions, both civil 
 and criminal, but the power of levying troops, 
 of coining money, and even that of making bye- 
 laws for the government of their own people, 
 were all rights polfeffed allodially by the great 
 proprietors of land feveral centuries before even 
 the name of the feudal law was known in Europe. 
 The authority and jurifdidion of the Saxon lords 
 in England, appear to have been as great be- 
 fore the conqueft, as that of any of the Norman 
 
 lords
 
 THE WEALTH Ox" NATIONS. ,23 
 
 lords after it. But the feudal law is not fup- chap, 
 pofed to have become the common law of Eng- iv. 
 land till after the conqueft. That the moft ex- *'""'°^"*^ 
 tenfive authority and jurifdidions were pofleffed 
 by the great lords in France allodially, long be- 
 fore the feudal law was introduced into that 
 country, is a matter of fadl that admits of no 
 doubt. That authority and thofe jurifdidions 
 all neceffarily flowed from the ftate of property 
 and manners juft now defcribed. Without re- 
 mounting to the remote antiquities of either the 
 French or Englifli monarchies, we may find in 
 much later times many proofs that fuch effeds 
 mud always flow from fuch caufes. It is not 
 thirty years ago fmce Mr. Cameron of Lochiel, 
 a gentleman of Lochaber in Scotland, without 
 any legal warrant whatever, not being what was 
 then called a lord of regality, nor even a tenant 
 in chief, but a vaffal of the duke of Argyle, and 
 without being fo much as a juftice of peace, ufed, 
 notwithfl:anding, to exercife the higheft criminal 
 jurifdidion over his own people. He is laid to 
 have done fo with great equity, though without 
 any of the formalities of juflice ; and it is not 
 improbable that the fl:ate of that part of the coun- 
 try at that time made it neceflary for him to 
 aflume this authority in order to maintain the 
 public peace. That gentleman, whofe rent 
 never exceeded five hundred pounds a year, car- 
 ried^ in 1745, eight hundred of his own people 
 into the rebellion with him. 
 
 The
 
 ,24 THE NATURE AND CAUSES OF 
 
 The introdu6lion of the feudal law, fo far- 
 from extending, may be regarded as an attempt 
 to moderate the authority of the great allodial 
 lords. It eftablifned a regular fubordinatlon, 
 accompanied with a long train of fervices and 
 duties, from the king down to the fmallefl pro- 
 prietor. During the minority of the proprietor, 
 the rent, together with the management of his 
 lands, fell into the hands of his immediate fupe- 
 rior, and, confequently, thofe of all great pro- 
 prietors into the hands of the king, who was 
 charged with the maintenance and education of 
 the pupil, and who, from his authority as guar- 
 dian, was fuppofed to have a right of difpofing 
 of him in marriage, provided it was in a manner 
 not unfuitable to his rank. But though this in- 
 ftitution neceffarily tended to ftrengthen the 
 authority of the king, and to weaken that of the 
 great proprietors, it could not do either fuffici- 
 ently for eftabHOiing order and good government 
 among the inhabitants of the country ; becaufe 
 it could not alter fufficiently that flate of pro- 
 perty and manners from which the diforders 
 arofe. The authority of government (till conti- 
 nued to be, as before, too weak in the head and 
 too ftrong in the inferior members, and the ex^ 
 ceffive ftrength of the inferior members was the 
 caufe of the weaknefs of the head. After the 
 inftitution of feudal fubordination, the king was 
 as incapable of reftraining the violence of the 
 great lords as before. They flill continued tQ 
 make war according to their own difcretion, al-
 
 THE WEALTH OF NATIONS. 125 
 
 tnofl: continually upon one another, and very chap. 
 frequently upon the king; and the open country iv. 
 ftill continued to be a fcene of violence, rapine, ' ^^"^ 
 and diforder. 
 
 But what all the violence of the feudal infll- 
 tutions could never have effedled, the filent and 
 infenfible operation of foreign commerce and ma- 
 nufaftures gradually brought about. Thefe gra- 
 dually furniflied the great proprietors with fome- 
 thing for which they could exchange the whole 
 furplus produce of their lands, and which they 
 could confume themfelves without fharing it 
 either with tenants or retainers. All for our- 
 felves, and nothing for other people, feems, in 
 every age of the world, to have been the vile 
 maxim of the maflers of mankind. As foon, 
 therefore, as they could find a method of con- 
 fuming the whole value of their rents themfelves, 
 they had no difpofition to fnare them with any 
 other perfons. For a pair of diamond buckles, 
 perhaps, or for fomething as frivolous and ufe^ 
 lefs, they exchanged the maintenance, or what 
 is the fame thing, the price of the maintenance 
 of a thoufand men for a year, and with it the 
 whole weight and authority v/hich it could give 
 them. The buckles, however, were to be all 
 their own, and no other human creature was to 
 have any fhare of them ; whereas in the more 
 ancient method of expcnce they mud have fliared 
 with at lead a thoufand people. With the judges 
 that were to determine the preference, this dif- 
 ference was perfectly decifive ; and thus, for the 
 jgratilication of the mod childifli, the meaned, and 
 
 7 th?
 
 126 THE NATURE AND CAUSES OF 
 
 BOOK the mofl: fordid of all vanities, they gradually bar- 
 in. tered their whole power and authority. 
 
 '"•"^^'"'^ jjj ji country where there is no foreign com- 
 merce, nor any of the finer manufadures, a marl 
 of ten thoufand a year cannot well employ his 
 revenue in any other way than in maintaining, 
 perhaps, a thoufand families, who are all of them 
 necelTarily at his command. In the prefent ftate 
 of Europe, a man of ten thoufand a year can 
 fpend his whole revenue, and he generally does 
 fo, without directly maintaining twenty people^ 
 or being able to command more than ten foot- 
 men not worth the commanding. Indirectly, 
 perhaps, he maintains as great, or even a greatefj 
 number of people than he could have done by the 
 ancient method of expence. For though the 
 quantity of precious produ6lions for which he ex- 
 changes his whole revenue be very fmall, the 
 number of workmen employed in collecting and 
 preparing it, muft neceffarily have been very 
 great. Its great price generally arifes from the 
 wages of their labour, and the profits of all their 
 immediate employers. By paying that price he 
 indirectly pays all thofe wages and profits, and 
 thus indirectly contributes to the maintenance of 
 all the workmen and their employers. He ge- 
 nerally contributes, however, but a very fmall 
 proportion to that of each, to very few perhaps 
 a tenth, to many not a hundredth, and to fome 
 not a thoufandth, nor even a ten thoufandth part 
 of their whole annual maintenance. Though he 
 contributes, therefore, to the maintenance of 
 them all, they are all more or lels independent 
 
 of
 
 THE WEALTH OF NATIONS. 127 
 
 of him, becaufe generally they can all be main- chap. 
 tained without him. iv. 
 
 When the great proprietors of land fpcnd 
 their rents in maintaining their tenants and re- 
 tainers, each of them maintains entirely all his 
 own tenants and all his own retainers. But when 
 they fpcnd them in maintaining tradefmen and 
 artificers, they may, alf of them taken together, 
 perhaps, maintain as great, or, on account of the 
 wafte which attends ruftic hofpilality, a greater 
 number of people than before. Each of them, 
 however, taken fingly, contributes often but a 
 very fmall (hare to the maintenance of any indi- 
 vidual of this greater number. Each tradefman 
 or artificer derives his fubfillence from the em- 
 ployment, not of one, but of a hundred or a 
 thoufand different cuftomers. Though in fome 
 meafure obliged to them all therefore, he is not 
 abfolutely dependent upon any one of them. 
 
 The perfonal expence of the great proprietors 
 having in this manner gradually increafed, it was 
 impoflible that the number of their retainers 
 ihould not as gradually diminifh, till they were 
 at lad difmiffed altogether. The fame caufe 
 gradually led them to difmifs the unneceflary 
 part of their tenants. Farms were enlarged, and 
 the occupiers of land, notwithflanding the com- 
 plaints of depopulation, reduced to the number 
 necefHiry for cultivating it, according to the im- 
 perfed (late of cultivation and improvement in 
 thofe times. By the removal of ^ the unneceffary 
 mouths, and by exadling from the farmer the 
 full value of the farm, a greater furplus, or what 
 
 is
 
 iz8 THE ^fATURE AND CAUSES OF 
 
 BOOK is the fame thing, the price of a greater furplu's> 
 111. was obtained for the proprietor, which the mer- 
 chants and manufacturers foon furnifhed hiui 
 with a method of fpending upon his own perfon 
 in the fame manner as he had done the reft* 
 The fame caufe continuing to operate, he was 
 defirous to raife his rents above what his lands^ 
 in the actual ftate of their improvement, could 
 afford. His tenants could agree to this upon 
 one condition only, that they fhould be fecured 
 in their poffeffion, for fuch a term of years as 
 might give them time to recover with profit 
 whatever they fhould lay out in the further im^ 
 provement of the land. The expenfive vanity 
 of the landlord made him willing to accept of 
 this condition ; and hence the origin of long 
 leafes. 
 
 Even a tenant at will, who pays the full value 
 of the land, is not altogether dependent upon the 
 landlord. The pecuniary advantages which they 
 receive from one another, are mutual and equal, 
 and fuch a tenant will expofe neither his life nor 
 his fortune in the fervice of the proprietor. But 
 if he has a leafe for a long term of years, he is 
 altogether independent ; and his landlord mufl 
 not expert from him even the moft trifling fervice 
 beyond what is either exprefsly ftipulated in the 
 leafe, or impofed upon him by the common and 
 known law of the country. 
 
 The tenants having in this manner become 
 independent, and the retainers being difmifled', 
 the great proprietors were no longer capable of 
 interrupting the regular execution of juftiee, or 
 
 of
 
 THE WEALTH OF NATIONS. 129 
 
 bf difturbing the peace of the country. Having c H a p. 
 fold their birth-right, not like Efau for a mefs i^* 
 of pottage in time of hunger and neceffity, but 
 in the wantonnefs of plenty, for trinkets and 
 baubles, fitter to be the play-things of children 
 than the ferious purfuits of men, they became as 
 iniignificant as any fubftantial burgher or tradef- 
 tnan in a city. A regular government was efta- 
 bliflied in the country as well as in the city, 
 nobody having fufficient power to difturb its 
 operations in the one, any more than in the 
 other. 
 
 It does not, perhaps, relate to the prefent 
 fubje<fb, but 1 cannot help remarking it, that 
 Very old families, fuch as have poffeffed fome 
 confiderable eftate from father to fon for many 
 fucceffive generations, are very rare in commer- 
 cial countries. In countries which have little 
 commerce, on the contrary, fuch as Wales, or 
 the highlands of Scotland, they are very com- 
 mon. The Arabian hiftories feem to be all full 
 of genealogies, and there is a hiftory written by 
 a Tartar Khan, which has been tranflated'into 
 feveral Eurojpean languages, and which contains 
 fcarce any thing elfe ; a proof that ancient fami- 
 lies are very common among thofe nations. In 
 countries where a rich man can fpend his revenue 
 in no other way than by maintaining as many 
 people as it can maintain, he is not apt to run 
 out, and his benevolence it feems is feldom fo 
 violent as to attempt to maintain more than he 
 can afford. But where he can fpend the greateft 
 revenue upon his own perfon, he frequently has 
 VOL. II. K no
 
 j:o TPIE NATURE AND CAUSES OF 
 
 BOOK no bounds to his expence, becaufe he frequently 
 HI. has no bounds to his vanity, or to his afFedion 
 for his own perfon. In commercial countries, 
 therefore, riches, in fpite of the mod violent re- 
 pjulations of law to prevent their diflipation, very 
 ieldom remain long in the fame family. Among 
 fimple nations, on the contrary, they frequently 
 do without any rejjulations of law : for amono- 
 nations of fhepherds, fuch as the Tartars and 
 Arabs, the confumable nature of their property 
 neceffarily renders all fuch regulations impollible. 
 
 A REVOLUTION of the greateft importance to 
 the public happinefs, was in this manner brought 
 about by two different orders of people, who had 
 not the leafi: intention to ferve the public. To 
 gratify the moil childifli vanity was the fole mo- 
 tive of the great proprietors. The merchants and 
 artificers, much lefs ridiculous, a6led merely from 
 a view to their ov/n interefl, and in purfuit of 
 their ov/n pedlar principle of turning a penny 
 wherever a penny was to be got. Neither of them 
 bad either knowledge or forefight of that great 
 revolution which the folly of the one, and the 
 induftry of the other, was gradually bringing 
 about. 
 
 It Is thus that through the greater part of Eu- 
 rope the commerce and manufadures of cities, 
 inllead of being the eft"e6l, have been the caufe 
 and occafion of the improvement and cultivation 
 .of the country. 
 
 This order, however, being contrary to the 
 natural courfe of things, is neceffarily both flow 
 and uncertain. Compare the flow progrefs of 
 
 thofe
 
 THE WEALTH OF NATIONS, 131 
 
 thofe European countries of which the wealth chat. 
 depends very much upon their commerce and iv. 
 manufaflures, with the rapid advances of our ^^'^'^""^ . 
 North American colonies, of which the wealth 
 is founded altogether in agriculture. Through 
 the greater part of Europe the number of inhabi- 
 tants is not fuppofed to double in lefs than five 
 hundred years. In feveral of our North Ameri- 
 can colonies, it is found to double in twenty or 
 five and twenty years. In Europe, the law of 
 primogeniture, and perpetuities of different kinds, 
 prevent the divifion of great eftates, and there- 
 by hinder the multiplication of fmall proprietors. 
 A fmall proprietor, however, who knows every 
 part of his little territory, views it with all the 
 afFedion which property, efpecially fmall proper- 
 ty, naturally infpires, and who upon that ac- 
 count takes pleafure not only in cultivating but 
 in adorning it, is generally of all improvers the 
 mod induftrious, the mofl intelligent, and the 
 mofl fuccefsful. The fame regulations, befides, 
 keep fo much land out of the market, that there 
 are always more capitals to buy than there is 
 land to fell, fo that what is fold always fells at a 
 monopoly price. The rent never pays the in- 
 terell of the purchafe money, and is befides bur- 
 dened with repairs and other occafional charges, 
 to which the intereft of money is not liable. 
 To purchafe land is every-where in Europe a 
 mofl unprofitable employment of a fmall capital. 
 For the fake of the fuperior fecurity indeed, a 
 man of moderate circumflances, when he retires 
 from bufinefs, will fometimes chufe to lay out 
 
 K 2 his
 
 132 THE NATURE AND CAUSES OF 
 
 BOOK his little capital in land. A man of profefTion 
 ni. too, whofe revenue is derived from another 
 fource, often loves to fecure his favings in the 
 fame way. But a )''oung man, who, inftead of 
 applying to trade or to fome profeflion, fhould 
 employ a capital of two or three thoufand pounds 
 in the purchafe and cultivation of a fmall piece 
 of land, might indeed expe(5l to live very hap- 
 pily, and very independently, but muff bid adieu, 
 for ever, to all hope of either great fortune or 
 great lUuftration, which by a different employment 
 of his flock he might have had the fame ctiance 
 of acquiring with other people. Such a per- 
 fon tooj though he cannot afpire at being a 
 proprietor, will often difdain to be a farmer. 
 The fmall quantity of land, therefore, which is 
 brought to market, and the high price of what 
 is brought thither, prevents a great number of 
 capitals from being employed in its cultivation 
 and improvement which would otherwife have 
 taken that direclion. In North America, on 
 the contrary, fifty or fixty pounds is often found 
 a fuflicient flock to begin a plantation with. 
 The purchafe and improvement of uncultivated 
 land, is there the moft profitable employment 
 of the fmallefl as well as of the greateft capi- 
 tals, and the mod direct road to all the for- 
 tune and illuflration which can be acquired in 
 that country. Such land, indeed, is in North 
 America to be had almofl for nothing, or at a 
 price much below the value of the natural pro- 
 duce 5 a thing impofTible in Europe, or, indeed, 
 in any country where all lands have long been 
 
 4 private
 
 THE WEALTH OF NATIONS. 133 
 
 private property. If landed eflates, however, chap, 
 were divided equally among all the children, iv. 
 upon the death of any proprietor who left a nu- ' ^"^^ 
 merous family, the eftate would generally be fold. 
 So much land would come to market, that it 
 could no longer fell at a monopoly price. The 
 free rent of the land would go nearer to pay the 
 interefl of the purchafe-money, and a fmall ca- 
 pital might be emplo)'ed in purchafmg land as 
 profitably as in any other way. 
 
 England, on account of the natural fertility 
 of the foil, of the great extent of the fea-coaft in 
 proportion to that of the whole country, and of 
 the many navigable rivers which run through it, 
 and afford the conveniency of water carriage to 
 fome of the mod inland parts of it, is perhaps as 
 well fitted by nature as any large country in Eu- 
 rope, to be the feat of foreign commerce, of ma- 
 mufa6lures for diftant fale, and of all the im- 
 provements which thefe can occafion. From the 
 beginning of the reign of Elizabeth too, the 
 Englifli legiflature has been peculiarly attentive 
 to the intereft of commerce and manufadures, 
 and in reality there is no country in Europe, 
 Holland hfelf not excepted, of which the law is, 
 upon the whole, more favourable to this fort of 
 induilry. Commerce and manufactures have ac- 
 cordingly been continually advancing during all 
 this period. The cultivation and improvement 
 of the country has, no doubt, been gradually ad- 
 vancing too : but it feems to have followed llow- 
 ly, and at a diftance, the more rapid progrefs 
 of commerce and manufadures. The greater 
 
 K 3 part
 
 1^4 THE NATURE AND CAUSES OF 
 
 BOOK part of the country muft probably have been 
 in. cultivated before the reign of Elizabeth ; and a 
 '""^ very great part of it flill remains uncultivated, 
 and the cultivation of the far greater part, much 
 inferior to what it might be. The law of Eng- 
 land, however, favours agriculture not only in- 
 diredlly by the prote6lion of commerce, but by 
 feveral dired encouragements. Except in ' times 
 of fcarcity, the exportation of corn is not only 
 free, but encouraged by a bounty. In times of 
 moderate plenty, the importation of foreign corn 
 is loaded with duties that amount to a prohibi- 
 tion. The importation of live cattle, except 
 from Ireland, is prohibited at all times, and it is 
 but of late that it was permitted from thence. 
 Thofe who cultivate the land, therefore, have a 
 monopoly againft their countrymen for the two 
 greatefl and moft important articles of land pro- 
 duce, bread and butchers' meat. Thefe en- 
 couragements, though, at bottom, perhaps, as I 
 Ihall endeavour to Ihow hereafter, altogether il- 
 lufory, fufficiently demonftrate at lead the good 
 intention of the legiflature to favour agriculture. 
 But what is of much more importance than all of 
 them, the yeomanry of England are rendered as 
 fecure,. as independent, and as refpedlable as law 
 can make them. No country, therefore, in 
 wh.ich the right of primogeniture takes place, 
 which pays tithes, and where perpetuities, though 
 contrary to the fpirit of the law, are admitted in 
 feme cafes, can give more encouragement to 
 agriculture than England. Such, however, not- 
 withflanding, is the ftate of its cultivation. 
 
 What
 
 THE WEALTH OF NATIONS. 135 
 
 What would it have been, had the law given no c h a r. 
 dlrc^l encouragement to agriculture befides what iv. 
 arifes indiredly from the progrefs of commerce, 
 and had left the yeomanry in the fame condition 
 as in mofl other countries of Europe ? It is now 
 more than two hundred years fnice the beginning 
 of the reign of Elizabeth, a period as long as the 
 courfe of human profperity ufoally endure^;. 
 
 FiiANcii feems to have had a confiderable fliare 
 of foreign commerce near a century before Eng- 
 land v.as diftinguiftied as a commercial coun- 
 try. The marine of France was confiderable, 
 according to the notions of the times, before tl>e 
 expedition of Charles the Vlllth to Naples. 
 The cultivation and improvement of France, 
 however, is, upon the whole, inferior to that of 
 England. The law of the country has never 
 given the fame direct encouragement to agricul- 
 ture. 
 
 The foreign commerce of Spain and Portugal 
 to the other parts of Europe, though chiefly car- 
 ried on in foreign fliips, is very confiderable. 
 That to their colonies is carried on in their ovv'n, 
 and is much greater on account of the great 
 riches and extent of thofe colonies. But it has 
 never introduced any confiderable manufaclurc5 
 for diftant fale into either of thofe countries, and 
 the greater part of both ftill remains uncultivated. 
 The foreign commerce of Portugal is of older 
 (landing than that of any great country in Europe, 
 except Italy. 
 
 Italy is the only great country of Europe 
 Tvhich feems to have been cultivated and im- 
 
 K 4 proved
 
 136 THE NATURE AND CAUSES OF 
 
 5 o o K proved in every part, by means of foreign com- 
 III. merce and manufa6lures for diftant fale. Before 
 the invafion of Charles the Vlllth, Italy, ac- 
 cording to Guicciardin, v^as cultivated not lefs 
 in the mod mountainous and barren parts of the 
 country, than in the plaineft and mofl fertile. 
 The advantageous fit nation of the country, and 
 the great number of independent ftates which at 
 that time fubfifled in it, probably contributed 
 not a Httle to this general cultivation. It is 
 not impofTible too, notwith (landing this general 
 expreflion of one of the molt judicious and re- 
 ferved of modern hiftorians, that Italy was not 
 at that time better cultivated than England is at 
 prefent. 
 
 The capital, however, that is acquired to any 
 country by commerce and manufactures, is all a 
 very precarious and uncertain pofleffion, till fome 
 part of it has been fecured and realized in the 
 cultivation and improvement of its lands. A 
 merchant, it has been faid very properly, is not 
 neceifarily the citizen of any particular country. 
 It is in a great meafure indifferent to him from 
 what place he carries on his trade ; and a very 
 trifling difgufh will make him remove his capital, 
 and together with it all theinduflry which it fup- 
 ports, from one country to another. No part of 
 it can be faid to belong to any particular country, 
 till it has been fpread as it were over the face pf 
 that country, either in buildings, or in the lad- 
 ing improvement of lands. No veftige now re- 
 mains of the great wealth, faid to have been 
 poifeffed by the greater part of the Hans towns, 
 
 except
 
 THE WEALTH OF NATIONS. 137 
 
 except In the obfcure hiftories of the thirteenth chap. 
 and fourteenth centuries. It is even uncertain iv, 
 where fome of them were fituated, or to what 
 towns in Europe the Latin names given to fome 
 of them belong. But though the misfortunes of 
 Italy in the end of the fifteenth and beginning of 
 the fixteenth centuries greatly diminifhed the 
 commerce and manufaftures of the cities of 
 Lombardy and Tufcany, thofe countries (till con- 
 tinue to be among the mod populous and befl: 
 cultivated in Europe. The civil wars of Flan- 
 ders, and the Spanifh government which fucr 
 ceeded them, chafed away the great commerce 
 of Antwerp, Ghent, and Bruges. But Flanders 
 flill continues to be one of the richcft, beft v ulti- 
 vated, and mod populous province? of Europe. 
 The ordinary revolutions of war and government 
 eafily dry up the fources of that wealth vvhJch 
 arifes from commerce only. That which arifes 
 from the more folid improvements of agriculture, 
 is much more durable, and cannot be deftroyed 
 but by thofe more violent convulfions occafioned 
 by the depredations of hoftile and barbarous na- 
 tions continued for a century or two together ; 
 fuch as thofe that happened for fome time before 
 and after the fall of the Roman empire in the 
 weftern provinces of Europe.
 
 X3^ THE NATURE ANP CAUSES OF 
 
 BOOK IV. 
 
 Of Syilems of political CEconomy. 
 
 INTRODUCTION. 
 
 BOOK "Political ceconomy, conHdered as a 
 iv. "*• branch of the fcience of a ftatefman or legif- 
 lator, propofes two djilinct objeOs : firfl, to 
 provide a plentiful revenue or fubfidence for the 
 people, or more properly to enable them to pro- 
 vide fuch a revenue or fubfiflence for themfelves ; 
 and fecondly, to fupply the flate or common- 
 wealth with fi revenue fufficient for the public 
 Tervices. It propofes to enrich both the people 
 and the fovereign. 
 
 The diiferent progrefs of opulence in different 
 ages and nations, has given occafion to two 
 different fyftems of political ceconomy, with re- 
 gard to enriching the people. The one may be 
 called the fyflem of commerce, the other that of 
 agriculture. I ihall endeavour to explain both 
 as fully and diftinclly as I can, and fliall begin 
 with the fyflem of commerce. It is the modern 
 fyftem, and is befl underftood in our own country 
 and in our own times.
 
 THE WEALTH OF NATIONS, 139 
 
 C H A P. I. 
 
 Of the Principle of the commercial^ or mercardik- 
 
 Syjlem, 
 
 T 
 
 HAT wealth confifls in money, or in gold chap. 
 and filver, is a popular notion which na- i. 
 turally arifes from the double function of money, -— ^<''*~' 
 as the inftrument of commerce, and as the 
 meafure of value. In confequence of its being 
 the inftrument of commerce, when we have mo- 
 ney we can more readily obtain whatever elle we 
 have occafion for, than by means of any other 
 commodity. The great affair, we always find, 
 is to get money. When that is obtained, there 
 is no difficulty in making any fublequent pur- 
 chafe. In confequence of its being the meafure 
 of value, we eftimate that of all other commo- 
 dities by the quantity of money which they will 
 exchange for. We fay of a rich man that he is 
 worth a great deal, and of a poor man that he is 
 worth very little money. A frugal man, or a 
 man eager to be rich, is faid to love money ; and 
 a carelefs, a generous, or a profufe man, is faid to 
 be indifferent about it. To ^xow rich is to get 
 money ; and wealth and money, in fliort, are, 
 in conmion language, confidered as in every 
 refpecl fynonymous. 
 
 A RicFi country, in the fame manner as a rich 
 man, is fuppofed to be a country abounding in 
 money j and to heap up gold and filver in any 
 
 I country
 
 ,4o THE NATURE AND CAUSES OF 
 
 BOOK country is fuppofed to be the readied way to en- 
 IV. rich it. For fome time after the difcovery of 
 
 ^■^"^'""^ America, the firfl enquiry of the Spaniards, 
 when they arrived upon any"unknown coaft, ufed 
 to be, if there was any gold or filver to be found 
 in the neighbourhood ? By the information 
 uhich they received, they judged whether it was 
 worth while to make a fettlement there, or if the 
 country was worth the conquering. Piano Car- 
 pino, a monk fent ambaffador from the king of 
 France to one of the fons of the famous Gengis 
 Khan, fays, that the Tartars ufed frequently to 
 alk him, if there was plenty of fheep and oxen in 
 the kingdom of France ? Their enquiry had the 
 fame object with that of the Spaniards. They 
 wanted to know if the country was rich enough 
 to be worth the conquering. Among the Tar- 
 tars, as among all other nations of fhepherds, 
 who are generally ignorant of the ufe of money, 
 cattle are the inflruments of commerce and the 
 meafures of value. Wealth, therefore, accord- 
 ing to them, confided in cattle, as according to 
 the Spaniards it confided in gold and filver. Of 
 the two, the Tartar notion, perhaps, was the 
 Beared to the truth. 
 
 Mr. Locke remarks a didindion between 
 money and other moveable goods. All other 
 moveable goods, he fays, are of fo confumable 
 a nature that the wealth which confids in them 
 cannot be much depended on, and a nation 
 which abounds in them one year may, without 
 any exportation, but merely by their own wade 
 and extravagance, be in great want of them the 
 
 next.
 
 TME WEALTH OF NATIONS. 141 
 
 next. Money, on the contrary, is a fteady friend, c h a f. 
 which, though it may travel about from hand to i- 
 hand, yet if it can be kept from going out of the 
 country, is not very liable to be v/afted and 
 confumed. Gold and filver, therefore, are, ac- 
 cording to him, the mod folid and fubftantial part 
 of the moveable wealth of a nation, and to multiply 
 thofe metals ought, he thinks, upon that account, 
 to be the great object of its political ceconomy. 
 
 Others admit that if a nation could be fepa- 
 rated from all the world, it would be of no con- 
 fequence how much, or how little money circu- 
 lated in it. The confumable goods which were 
 circulated by means of this money, would only 
 be exchanged for a greater or a fmaller number of 
 pieces ; but the real wealth or poverty of the 
 country, they allow, would depend altogether 
 upon the abundance or fcarcity of thofe con- 
 fumable goods. But it is otherwife, they think, 
 with countries which have connexions with fo- 
 reign nations, and which are obliged to carry 
 on foreign wars, and to maintain fleets and 
 armies in diftant countries. This, they fay, can- 
 not be done, but by fending abroad money to pay 
 them with ; and a nation cannot fend much mo- 
 ney abroad, unlefs it has a good deal at home. 
 Every fuch nation, therefore, muft endeavour in 
 time of peace to accumulate gold and filver, that, 
 when occafion requires, it may have wherewithal 
 to carry on foreign wars. 
 
 In confequence of thefe popular notions, all the 
 different nations of Europe have ftudied, though 
 to little purpofe, every poffible means of accu- 
 mulating
 
 142 THE NATURE AND CAUSES OF 
 
 BOOK mulating gold and filver In their refpedive coun- 
 IV. tries. Spain and Portugal, the proprietors of 
 the principal mines which fupply Europe with 
 thofe metals, have either prohibited their ex- 
 portation under the feverefl penalties, or fub- 
 je£led it to a confiderable duty. The like pro- 
 hibition feems anciently to have made a part of 
 the policy of moll other European nations. It 
 is even to be found, vi'here we ihould leaft of all 
 expecl to fmd it, in fome old Scotch ads of par- 
 liament, which forbid under heavy penalties the 
 carrying gold or filver forth of the kingdom. The 
 like policy anciently took place both in France and 
 England. 
 
 When thofe countries became commercial, 
 the merchants found this prohibition, upon many 
 occafions, extremely inconvenient. They could 
 frequently buy more advantageoufly with gold 
 and filver than with any other commodity, the 
 foreign goods which they wanted, either to im- 
 port into their own, or to carry to fome other 
 foreign country. They remonflraled, therefore, 
 againil this prohibition as hurtful to trade. 
 
 They reprefented, firft, that the exportation 
 of gold and filver in order to purchafe foreign 
 goodsj did not always diminifli the quantity of 
 thofe metals in the kingdom. That, on the 
 contrary, it might frequently increafe that quan- 
 tity ; becaufe, if the confumption of foreign 
 goods was not thereby increafed in the country, 
 thofe goods might be re-exported to foreign 
 countries, and, being there fold for a large 
 profit, might bring back much more treafure 
 
 than
 
 THE WEALTH OF NATIONS. 143 
 
 th^n was originally fent out to purchafe them. 
 Mr. Mun compares this operation of foreign 
 trade to the feed-time and harveft of agriculture. 
 " If we only behold," fays he, " the adions of 
 " the huibandman in the feed-time, when he 
 " cafleth awav much good corn into the ground, 
 *' we (hall account him rather a madman than a 
 " huihandman. But when we confider his la- 
 " hours in the harvefl", which is the end of his 
 " endeavours, we (liall fmd the worth and plenti- 
 " ful increafe of his aftions.'* 
 
 They reprefented, fecondly, that this prohi- 
 bition could not hinder the exportation of gold 
 and filver, which, on account of the fmallnefs of 
 their bulk in proportion to their value, could 
 eafily be fmuggled abroad. That this exporta- 
 tion could only be prevented by a proper atten- 
 tion to what they called the balance of trade. 
 That when the country exported to a greater 
 value than it imported, a balance became due 
 to it from foreign nations, which was necelTarily 
 paid to it in gold and filver, and thereby in- 
 creafed the quantity of thofe metals in the king- 
 dom. But that when it imported to a greater 
 value than it exported, a contrary balance be- 
 came due to foreign nations, which was ne- 
 ceflarily paid to them in the fame manner, and 
 thereby diminidied that quantity. That in this 
 cafe to prohibit the exportation of thofe metals 
 could not prevent it, but only by making it 
 more dangerous, render it more expenfive. That 
 the exchange was thereby turned more agalnfl 
 the country which owed the balance, than it 
 
 otherwife
 
 t44 THE NATURE AND CAtFSES OF 
 
 BOOK otherwife might have been ; the merchant wha 
 IV. purchafed a bill upon the foreign country being 
 obliged to pay the banker who fold it, not only 
 for the natural riik, trouble, and expence of fend- 
 ing the money thither, but for the extraordinary 
 rillv arifing from the prohibition. But that the 
 more the exchange was againft any country, the 
 more the balance of trade became neceifarily 
 againfl: it ; the money of that country becoming 
 necefTarily of fo much lefs value, in comparifon, 
 with that of the country to which the balance 
 was due. That if the exchange between Eng- 
 land and Holland, for example, was five per 
 cent, againfl: England, it would require a hun- 
 dred and five ounces of filver in England to pur- 
 chafe a bill for a hundred ounces of filver in 
 Holland : that a hundred and five ounces of 
 filver in England, therefore, would be worth 
 only a hundred ounces of filver in Holland, and 
 would purchafe only a proportionable quantity 
 of Dutch goods: but that a hundred ounces of 
 filver in Holland, on the contrary, would be 
 worth a hundred and five ounces in England^ 
 and would purchafe a proportionable quantity 
 of Englifh goods : that the Enghfh goods which 
 were fold to Holland would be fold fo much 
 cheaper, and the Dutch -goods which were fold 
 to England, fo much dearer, by the difference 
 of the exchange ; that the one would draw fo 
 much lefs Dutch money to England, and the 
 other fo much more Englifh money to Holland, 
 as this difference amounted to : and that the 
 balance of trade, therefore, would necefTarily be 
 
 fo
 
 THE WEALTH OF NATIONS. 145 
 
 fo much more againfl England, and would re- c ri a p. 
 quire a greater balance of gold and filver to be ex- i- 
 ported to Holland. 
 
 Those arguments were partly folid and partly 
 fophiftical. They were folid fo far as they 
 allerted that the exportation of gold and filver in 
 trade might frequently be advantageous to the 
 country. They were folid too, in aflerting that 
 no prohibition could prevent their exportation, 
 when private people found any advantage in ex- 
 porting them. But they v/ere fophiftical in fup- 
 pofmg, that either to preferve or to augment the 
 quantity of thofe metals required more the at- 
 tention of government, than to preferve or to 
 augment the quantity of any other ufeful com- 
 modities, which the freedom of trade, without 
 any fuch attention, never fails to fupply in the 
 proper quantity. They were fophiftical too, 
 perhaps, in aflerting that the high price of ex- 
 change neccflarily increafed, what they called, 
 the unfavourable balance of trade, or occafioned 
 the exportation of a greater quantity of gold and 
 filver. That high price, indeed, was extremely 
 difadvantageous to the merchants who had any 
 money to pay in foreign countries. They paid 
 fo much dearer for the bills which their bankers 
 granted them upon thofe countries. But though 
 the rifk arifmg from the prohibition might occa- 
 fion fome extraordinary expence to tlie bankers, 
 it would not neceflarily carry any more money 
 out of the country. This expence would gene- 
 rally be all laid out in the country, in fmuggling 
 the money out of it, and could feldoin occafion 
 VOL. II. h the
 
 146 THE NATURE AND CAUSES OF 
 
 BOOK the exportation of a fingle fix-pence beyond the 
 ^'^'' precife fum drawn for. The high price of ex- 
 change too would naturally difpofe the merchants 
 to endeavour to make their exports nearly ba-^ 
 lance their imports, in order that they might 
 have this high exchange to pay upon as fmall a 
 fum as poffible. The high price of exchange, 
 befides, mufl neceflarily have operated as a tax, 
 in raifmg the price of foreign goods, and thereby 
 diminifhing their confumption. It would tend, 
 therefore, not to increafe, but to diminifh, what 
 they called, the unfavourable balance of trade, 
 and confequently the exportation of gold and 
 filver. 
 
 Such as they were, however, thofe arguments 
 convinced the people to whom they were ad- 
 drelfed. They were addreffed by merchants to 
 parliaments, and to the councils of princes, to 
 nobles, and to country gentlemen ; by thofe who 
 were fuppofed to underRand trade, to thofe who 
 were confcious to themfelves that they knew no- 
 thing about the matter. That foreign trade en- 
 riched the country, experience demonftrated to 
 the nobles and country gentlemen, as well as to 
 the merchants ; but how, or in what manner, 
 none of them well knev/. The raerchrints knew 
 perfeftly in what manner it enriched themfelves. 
 It was their bufmefs to know it. But to know 
 in what manner it enriched the country, was no 
 part of their bufmefs. The fubjecl never came 
 into their confideration, but when they had occa- 
 fion to apply to their country for fome change in 
 the laws relating to foreign trade. It then be- 
 came
 
 THE WEALTH OF NATIONS. 147 
 
 came necefTary to fay fomething about the bene- chap. 
 ficial effeds of foreign trade, and the manner in i- 
 which thofe effeds were obflrufted by the laws as 
 they then flood. To the judges who were to 
 decide the bufinefs, it appeared a mofl fatisfac- 
 tory account of the matter, when they were told 
 that foreign trade brought money into the coun- 
 try, but that the laws in queftion hindered it 
 from bringing fo much as it otherwife would do. 
 Thofe arguments therefore produced the wifhed- 
 for efFecl. The prohibition of exporting gold 
 and filver was in France and England confined 
 to the coin of thofe refpeftive countries. The 
 exportation of foreign coin and of bullion was 
 made free. In Holland, and in fome other 
 places, this liberty was extended even to the coin 
 of the country. The attention of government 
 was turned away from guarding againft the ex- 
 portation of gold and filver, to watch over the 
 balance of trade, as the only caufe which could 
 occafion any augmentation or diminution of thofe 
 metals. From one fruitlefs care it was turned 
 away to another care much more intricate, much 
 more embarrafTing, and juil equally fruitlefs. 
 The title of Mun's book, England's Treafure 
 in Foreign Trade, became a fundamental maxim 
 in the political oeconomy, not of England only, 
 but of all other commercial countries. Tlie in- 
 land or home trade, the mod important of all, 
 the trade in which an equal capital affords the 
 greatefl revenue, and creates the greatefl em- 
 ployment to the people of the country, v/as con- 
 fidered as fubfidiary only to foreign trade. It 
 
 L 2 neither
 
 T4^ TliE NATURE AND CAUSES OF 
 
 BOOK neither brought money into the country, it was- 
 
 i-v. faid, nor carried any out of it. The country 
 
 ^"*^''"*^ therefore could never become either richer or 
 
 poorer by means of it, except fo far as its pro- 
 
 fperity or decay might indiredlly influence the 
 
 liate of foreign trade. 
 
 A COUNTRY that has no- mines of its own. mu-ft 
 undoubtedly draw its c;.old and filver from fo- 
 
 J o 
 
 reign countries, in the fame manner as one that 
 has no vineyards of its own mufl; draw its wines. 
 it does not feem neceflary, however, that the at- 
 tention of government fhould be more turned 
 towards the one than towards the other objeft. 
 A country that has wherewithal to buy wine, 
 will always get the wine which it has occafion 
 for ; and a country that has wherevv^ithal to buy 
 gold and filver, will never be in want of thofe 
 metals. They are to be bought for a certain price 
 like all other commodities, and as they are the 
 price of all other commodities, fo all other com- 
 modities are the price of thofe metals. We trufl: 
 with perfed fecurity that the freedom of trade, 
 without any attention of government, will always 
 fupply us with the Vv'ine which we have occafion 
 for : and we may trufl: with equal fecurity that it 
 will always fupply us with all the gold and filver 
 which we can afl'ord to purchafe or to employ, 
 either in circulating our commodities, or in other 
 ufes. 
 
 The quantity of every commodity which hu- 
 man indudry can either purchafe or produce, 
 naturally regulates itfelf in every country accord- 
 ing ta the effectual demand, or according to the 
 
 demand;
 
 THE WEALTH OF NATIONS, ♦ I49 
 
 demand of thofe who are willing to pay the wliole cH a p. 
 
 Tent, labour and profits which mufl be paid in J» 
 
 order to prepare and bring it to market. But no ''°'^''''*^ 
 
 commodities regulate themfelvcs more eafily or 
 
 more exactly according to this effeftual demand 
 
 than gold and filver ; becaufe, on account of the 
 
 fmall bulk and great value of thofe metals, no 
 
 commodities can be more eafily traufported from 
 
 one place to another, from the places where they 
 
 are cheap, to thofe where they are dear, from the 
 
 places where they exceed, to thofe where they 
 
 fall fhort of this efteclual demand. If there were 
 
 in England, for example, an effect ual demand 
 
 for an additional quantity of gold, a packet- boat 
 
 could bring from LilLon, or from wherever elfe 
 
 it was to be had, fifty tons of gold, which could 
 
 be coined into more than five millions of p-uineas. 
 
 But if there were an cl^Feftual depnand for grain to 
 
 the fame value, to import it would require, at five 
 
 guineas a ton, a million of tons of (Inpping, or a 
 
 thoufand fliips of a thoufand tons each. The navy 
 
 of England would not be fufficient. 
 
 Whe^ the quantity of gold and filver imported 
 into any country exceeds the effectual demand, no 
 vigilance of government can prevent their ex- 
 portation. All the fangninary laws of Spain and 
 Portugal are not able to keep I heir gold and fil- • 
 ver at home. The continual importarions froPii 
 Peru and Brazil exceed the effectwal demand of 
 thofe countries, and link the price of thofe me- 
 tals there below that in the neighbouring coun- 
 tries. If, on the contrary, in any particular 
 ■coantjy their quantity fell fhort of the effe^lual 
 
 L 3 ■ demand.
 
 J50 THE NATURE AND CAUSE? OF 
 
 BOOK demand, fo as to ralfe their price above that of 
 IV. the neighbouring countries, the government 
 would have no occafion to take any pains to im- 
 port them. If it were even to take pains to pre- 
 vent their importation,, it would not be able to 
 effedluate it. Thofe metals, when the Spartans 
 had got wherewithal to purchafe them, broke 
 through all the barriers which the laws of Lycur- 
 gus oppofed to their entrance into Lacedemon. 
 All the fanguinary laws of the cuftoms are not 
 able to prevent the importation of the teas of the 
 Dutch and Gottenburgh Eaft India companies ; 
 becaufe fomewhat cheaper than thofe of the Bri- 
 tifli company. A pound of tea, however, is 
 about an hundred times the bulk of one of the 
 higheft prices, fixteen {hillings, that is commonly 
 paid for- it in filver, and more than two thoufand 
 times the bulk of the fame price in gold, and 
 confequently juft fo many rimes more difficult to 
 fmuggle. 
 
 It is partly owing to the eafy tranfportation of 
 gold and hlver from the places where they abound 
 to thofe where they are wanted, that the price of 
 thofe metals does not fluctuate continually like 
 that of the greater part of other commodities, 
 which are hindered by their bulk from fhifting 
 their fituation, when the market happens to be 
 either over or under-flocked with them. The 
 price of thofe metals, indeed, is not altogether 
 exempted from variation, but the changes to 
 which it is liable are generally flow, gradual, 
 and uniform. In Europe, for example, it is 
 fuppofed, without much foundation, perhaps, 
 
 that.
 
 THE WEALTH OF NATIONS. 151 
 
 that, during the courfe of the prefent and pre- c k a p. 
 ceding century, they have been conftantly, but i- 
 gradually, fmking in their value, on account of ''''^' 
 the continual importations from the Spanifh Well 
 Indies. But to make any fudden change in the 
 price of gold and filver, fo as to raife or lower 
 at once, fenfibly and remarkably, the money price 
 of all other commodities, requires fuch a revolu- 
 tion in commerce as that occafioned by the dif- 
 covery of America. 
 
 If, notvi^ithilanding all this, gold and filvei* , 
 (liould at any time fall fhoir in a country which 
 has wherewithal to purchafe them, there are more 
 expedients for fuoplying their place, than that of 
 almoft any other commodity. If the materials of 
 manuFaclure are wanted, induflry mull Hop. If 
 provifions are wanted, the people mud itarve. 
 But if money is vvauted, barter will fupply its 
 place, though with a good deal of inconveniency. 
 Buying and feUing upon credit, and the different 
 , dealers compenlating their credits with one an- 
 other, once a month or once a year, will fupply 
 it with lefs inconveniency. A well-regulated paper 
 money will fupply it, not only without any incon- 
 veniency, but, in fome cafes, with fome advan- 
 tages. Upon every account, therefore, the at- 
 tention of government never was fo unnecelTarily 
 employed, as when directed to watch over the 
 prefervation or increafe of the quantity of money 
 in anv countrv. 
 
 No complaint, however, is more common than 
 tliat of a fcarcity of money. /Money, like wine, 
 maft always be fcarce with thofe who have nei- 
 
 L 4 thcr
 
 J5i THE NATURE AND CAUSES OF 
 
 BOOK ther \^herewlthal to buy it, nor credit to borrow 
 IV. it. Thole who have either, will feldom be in 
 want either of the nioneyj or of the wine which 
 they have cccaliou for. This complaint, how- 
 ever, of the fcarcity of money, is not always con- 
 fined to improvident fpendtlirifts. It is fome- 
 times general through a whole mercantile town, 
 and the country in its neighbourhood. Over- 
 trading is the common caufe of it. Sober men, 
 whofe projefts have been difproportioned to their 
 capitals, are as likely to have neither where- 
 withal to buy money, nor credit to borrow it, a^j 
 prodigals whofe expence has been difpropor- 
 tioned to their revenue. Before their, projeds 
 can he brought to bear, their ft:ock is gone, and 
 their credit with it. Tney run about every- 
 where to borrow money, and every body tells 
 them that they have none to lend. Even fuch 
 general complaints of the fcarcity of money do 
 not always prove that the ufual number of gold 
 and filver pieces are not circulating in tlie coun- 
 try, but that many people want thofe pieces who 
 have nothing to give for them. When the pro- 
 fits of trade happen to be greater than ordinary, 
 over-trading becomes a general error both among 
 great and fmall dealers. They do not always 
 fend more money abroad than ufual, but they 
 buy upon credit, both at home and abroad, an 
 unufual quantity of goods, which they fend to 
 fome diflant market, in hopes that the returns 
 will come in before the demand for payment. 
 The demand comes before the returns, and they 
 have nothing at hand^ v/ith which they can either 
 
 purchafe
 
 THE WEALTH OF NATIQNS. irj 
 
 purchafe money, or give folld fecurity for bor- chap? 
 rowing. It is not any fcarcity of gold and filver, i. 
 
 but the difficulty which fuch people find in bor? 
 rowing, and which their creditors find in getting 
 payment, that occafions the general complaint of 
 the fcarcity of money. 
 
 It would be too ridiculous to go about feri- 
 oufly to prove, that wealth does not confift in 
 money, or in gold and filver ; but in what money 
 purchafes, and is valuable only for purchafing. 
 Money, no doubr, makes always a part of the 
 national capital ; but it has already been fhown 
 that it generally makes but a fmall part, and al- 
 ways the moft unprofitable part of it. 
 
 It is not becaufe wealth confifts more effen- 
 tially in money than in goods, that the merchant 
 finds it generally more eafy to buy goods with 
 money, than to buy money with goods ; but 
 becaufe money i^ the known and eftablifiied in- 
 ftrument of commerce, for which every thing is 
 readily given in exchange, but which is not al- 
 \^'ays with equal readinels to be got in exchange 
 for every thing. The greater part of goods be- 
 ^des are more^ periniabic than money, and he 
 may frequently furtain a much greater lofs by 
 keeping them. When his goods are upon hand - 
 too, he is more liable to fuch demands for mo- 
 ney as he may not be able to anfwer, than when 
 he has got their price in his coffers. Over and 
 above all this, his profit arifes more directly 
 from felling than from buying, and he is upon 
 all thefe accounts generally much more anxious 
 to exchange his goods for money, than his mo- 
 ney
 
 i54 THE NATURE AND CAUSES OF 
 
 BOOK iiey for goods. But though a particular mer« 
 IV. chant, with abundance of goods in his warehoufe, 
 
 '""^■'"''^ jYiay fometimes be ruined by not being able to 
 fell them in time, a nation or country is not lia- 
 ble to the fame accident. The whole capital of 
 a merchant frequently confifts in perifhable goods 
 defined for purchafmg money. But it is but a 
 very fmall part of the annual produce of the land 
 and labour of a country which can ever be de- 
 llined for purchafmg gold and filver from thei^ 
 neighbours. The far greater part is circulated 
 and confumed among themfelves ; and even of 
 the furplus which is fent abroad, the greater part 
 is generally dellined for the pur chafe of oiher fo- 
 reign goods. Though gold and fiiver, therefore, 
 could not be had in exchange for the goods de- 
 ftined to purchafe them, the nation* would not be 
 ruined. It might, indeed, fuller fome lofs and 
 inconveniency, and be forced upon fome of thofe 
 expedients wf.ich are neceifary for fupplying the 
 place of money. The annual produce of its land 
 and labour, however, would be the fame, or 
 very nearly the fame, as ufual, becaufe the fame, 
 or very nearly the fame, confumable capital would 
 be employed in maintaining it. And though 
 goods do not always draw money fo readily as 
 money draws goods, in the long run they draw 
 it more neceffarily than even it draws them. 
 Goods can ferve many other purpofes befides pur- 
 chafmg money, but money can ferve no other 
 purpofe befides purchafmg goods. Money, 
 therefore, necelfarily runs after goods, but goods 
 do not always or neceffarily run after monty, 
 
 I The
 
 THE WEALTH OF NATIONS. 155 
 
 The man who buys, does not always mean to fell c h a p. 
 again, but frequently to ufe or to confume ; i- 
 
 whereas he who fells, always means to buy again. 
 The one mav frequently have done the whole, 
 but the other can never have done more than the 
 one-half of his bufmefs. It is not for its own 
 fake that men defire money, but for the fake 
 of what they can purchafe with ir. 
 
 Consumable commodities, it is faid, are foon 
 deftroyed ; whereas gold and filver are of a more 
 durable nature, and, were it not for this con- 
 tinual exportation, might be accumulated for 
 ages together, to the incredible augmentation of 
 the real wtalth of the country. Nothing, there- 
 fore, it is pretended, can be more difadvan- 
 tageous to any country, than the trade Vv'hich 
 confi(ts in the exchange of luch lading for fuch 
 perifhable commodities. We do not, however, 
 jeckon that trade difadvantageous which confilts 
 m the exchange of the hard-ware of England for 
 the wines of France ; and yet hard-ware is a veiy 
 durable commodity, and were it not for this con- 
 tinual exportation, might too be accumulated for 
 ages together, to the incredible augmentation 
 of the pots and pans of the country. But it 
 readily occurs that the number of fuch ,utenfils 
 is in every country neceflarily limited by the ufe 
 which there is for them ; that it would be abfurd 
 to have more pots and pans than were neceifary 
 for cooking the vi3:uals ufually confumed there : 
 and that, if the quantity of victuals were to in- 
 creafe, the number of pots and pans would 
 readily increafe along with it, a part of the in- 
 
 creafed
 
 ,56 THE NATURE AND CAUSES OP 
 
 BOOK creafed quantity of vicluals being employed la 
 IV. purchafing them, or in maintaining an additional 
 number of workmen whofe bufinefs it was to make 
 them. It fliould as readily occur that the quan- 
 tity of gold and filver is in every country limited 
 by the ufe which there is for thofe metals ; that 
 their ufe confifts in circulating commodities as 
 coin, and in affording a fpecies of houfehold furni- 
 ture as plate; that the quantity of coin in every 
 country is regulated by the value of the commo- 
 dities which are tc be circulated by it : increafe 
 that value, and immediately a part of it will be 
 fent abroad to pur chafe, wherever it is to be had, 
 the additional quantity of coin requifite for circu- 
 lating them : that the quantity of plate is regulated 
 by the number and wealth of thofe private fami- 
 lies who chufe to indulge themfelves in that fort 
 of magnificence : increafe the number and wealth 
 of fuch families, and a part of this increafed 
 wealth will moll: probably be employed in purchaf- 
 ing, wherever it is to be found, an additional 
 quantity of plate : that to attempt to increafe the 
 wealth of any country, either by introducing or by 
 detaining in it an unnecellary quantity of gold and 
 filver, is as abfurd ;as it would be to attempt to 
 increafe the gpod cheer of private families, by 
 obliging them to keep an unneceffary number of 
 kitchen utenfils. As the expence of purchafmg 
 thofe unneceffary utenfds would diminilh inftead of 
 increafing either the quantity or the goodnefs of 
 the family provifions ; fo the expence of purchaf- 
 ing an unneceffary quantity of gold and filver 
 muft, in every country, as neceffarily diminifli 
 
 7 the
 
 TBE WEALTH OF NATIONS. i^ 
 
 the wealth which feeds, clothes, and lodges, 
 which maintains and employs the people. Gold 
 and filver, whether in the fhape of coin or of 
 plate, are utenfils, it muff be remembered, as 
 much as the furniture of the kitchen. Increafe 
 the ufe for them, increafe the confumable com- 
 modities which are to be circulated, managed 
 and prepared by means of them, and you will 
 infiiUibly increafe the quantity ; but if you at- 
 tempt, by extraordinary means, to increafe the 
 quantity, you will as infallibly diminiih the ufe 
 and even the quantity too, which in thofe metals 
 can never be greater than wliat the ufe requires. 
 Were they ever to be accumulated beyond this 
 quantity, their tranfportation is fo eafy, and the 
 lofs which attends their lying idle and unem- 
 ployed fo great, that no law could prevent their 
 . being immediately fent out of the country. 
 
 It is not always neceffary to accumulate gold 
 and filver, in order to enable a country to carry 
 on foreign wars, and to maintain fleets and ar- 
 mies in diftant countries. Fleets and armies are 
 maintained, not with gold and filver, but with 
 confumable goods. The nation which, from the 
 annual produce of its domeftic induflry, from the 
 annual revenue arifmg out of its lands, and labour, 
 and confumable flock, has wherewithal to purchafe 
 thofe confuir.able goods in dillant countries, can 
 maintain foreign wars there. 
 
 A NATION may purchafe the pay and provifions 
 of an army in a diftant country three different 
 ways ; by fending abroad either, firll, fume part 
 <^f its accumulated gold and filver j or fecondly.
 
 158 THE NATURE AND CAUSES OF 
 
 BOOK feme part of the annual produce of its manu- 
 I'V'. failures ; or lad of all, fome part of its annual 
 
 ""^ ' rude produce. 
 
 The gold and filver which can properly be 
 confidered as accumulated or ftored up in any 
 country, may be diflinguiflied into three parts ; 
 firft, the circulating money ; fecondly, the plate 
 of private families ; and lad of all, the money 
 which may have been colleded by many years 
 parfimony, and laid up in the treafury of the 
 prince. 
 
 It can feldom happen that much can be fpared 
 from the circulating money of the country ; be-- 
 caufe in that there can feldom be much redun- 
 dancy. The value of goods annually bought and 
 fold in any country requires a certain quantity 
 of money to circulate and didribute them to 
 their proper confumers, and can give emplov- 
 ment to no more. The channel of circulation 
 neceffarily draws to itfelf a fum fufficient to fill 
 it, and never admits any more. Something, 
 however, is generally withdrawn from this chan- 
 nel in the cafe of foreign war. By the great 
 number of people who are maintained abroad, 
 fewer are maintained at home. Fewer goods are 
 circulated there, and lefs money becomes necef- 
 fary to circulate them. An extraordinary quan- 
 tity of paper money, of fome fort or other too, 
 fuch as exchequer notes, navy bills, and bank 
 bills in England, is generally ilTued upon fuch 
 occafions, and by fupplying the place of circu- 
 lating gold and filver, gives an opportunity of 
 fending a greater quantity of it abroad. All 
 
 this.
 
 THE WEALTH OF NATIONS. 159 
 
 this, however, could afiord but a poor refourcei c h a i\ 
 for maintaining a foreign war, of great expence i« 
 and feveral years duration. ' "' 
 
 The melting down of the plate of private fa- 
 milies, has upon every occafion been found a ftlll 
 more infignificant one. The French, in the be- 
 ginning of the lad war, did not derive fo much 
 advanta^-e from this expedient as to compenfate 
 the lofs of the fadnon. 
 
 The accumulated treafures of the pnnce have, 
 in former tim.es, afforded a much greater and 
 more lading refource. In the prefent times, if 
 you except the king of Pruflia, to accumulate 
 treafure feems to be no part of the policy of Eu- 
 ropean princes. 
 
 The funds which maintained the foreign wars 
 of the prefent century, the mod expenfive, per- 
 haps, which hidory records, feem to have had 
 little dependency upon the exportation either of 
 the circulating money, or of the plate of private 
 families, or of the treafure of the prince. The 
 lad French war cod Great Britain upwards of 
 ninety millions, including not only the feventy- 
 five millions of new debt that v/as contraded, 
 but the additional tv--o fliillings in the pound 
 land tax, and what was annually borrowed of the 
 finking fund. More than two-thirds of this ex- 
 pence were laid out in didant countries ; in Ger- 
 many, Portugal, America, in the ports of the 
 Mediterranean, in the Ead and Wed Indies. 
 The kings of England had no accumulated trea- 
 fure. We never heard of any extraordinary 
 quantity of plate being melted down. The cir- 
 : culating
 
 l6o THk NATURE AND CAUSES OF 
 
 BOOK culating gold and filver of the country had not' 
 !v. been fuppofed to exceed eighteen millions. Since 
 
 V— ..--^ the late recoinage of the gold, however, it is 
 believed to have been a good deal under-rated. 
 Let us fuppofe, therefore, according to the mod 
 exaggerated conipuiation vi'hich 1 remember to 
 have either ken or heard of, that, gold and filver 
 together, it amounted to thirty millions. Had 
 the w^ar been carried on by means of our rhoney, 
 the whole of it mud, even according to this com- 
 putation, have been fent out and returned agaiii 
 at lead twice, in a period of bettveen fix and 
 feven years. Should this be fuppofed, it would 
 afford the moft decifne argument to demonflrate 
 how unnecelTary it is for government to watch 
 over the prefervation of money, fince upon this 
 fuppofition the whole money of the country mud 
 have gone from it and returned to it again, two 
 different times in fo fhort a period, without any 
 body's knowing any thing of the matter. The 
 channel of circulation, however, never appeared 
 mere empty than ufual during any part of this 
 period. Few people wanted money who had 
 wherewithal to pay for it. The profits of foreign 
 trade, indeed, were greater than ufual during 
 the whole war ; but efpecially towards the end of 
 it. This occafioned, what it always occafions, 
 a general over-trading in all the ports of Great 
 Britain ; and this again occailoned the ufual com- 
 plaint of the fcarcity of money, which always 
 follows over-trading. Many people wanted 
 it, who had neither wherewithal to buy it, nor 
 credit to borrow it j and bccaufe the debtors 
 
 found
 
 THE WEALTH OF NATIONS. l6i' 
 
 found it difficult to borrow, the creditors found chap. 
 it difficult to get payment. Gold and filver, i. 
 however, were generally to be had for their 
 talue, by thofe who had that value to give for 
 them. 
 
 The enormous expence of the late war, there- 
 fore, mufl: have been chiefly defrayed, not by 
 the exportation of gold and filver, but by that 
 of Briiifh commodities of fome kind or other. 
 When the government, or thofe who acled under 
 them, contraded with a merchant for a remit- 
 tance to /ome foreign country, he would natu- 
 rally endeavour to pay his foreign correfpondent, 
 upon vi'hom he had granted a bill, by fending 
 abroad rather commodities than gold and filver. 
 If the commodities of Great Britain were not in 
 demand in that country, he would endeavour to 
 fend them to fome other country, in which he 
 could purchafe a bill upon that country. The 
 tranfportation of commodities, when properly 
 fuited to the market, is always attended with a, 
 confiderable proht ; whereas that of gold and 
 filver is fcarce ever attended with any. When 
 thofe metals are fent abroad in order to purchafe 
 foreign commodities, the merchant's profit arifes, 
 not from the purchafe, but from the fale of the 
 returns. But when they are fent abroad merely 
 to pay a debt, he ,e;ets ^lo returns, and confe- 
 quently no profit. He naturally, therefore, 
 exerts his invention to find out a way of paying 
 his foreign debts, rather by the exportation of 
 commodities than by that of gold and filven 
 The great quantity of Britifli goods, exported 
 
 VOL. II. M during
 
 i6z THE NATURE AND CAUSES OF 
 
 BOOK during the courfe of the late war, without bring- 
 IV. ing back any returns, is accordingly remarked 
 by the author of The Prefent State of the 
 Nation. 
 
 Besides the three forts of gold and iilver above 
 mentioned, there is in all great commercial 
 countries a good deal of bullion alternately im- 
 ported and exported for the purpofes of foreign 
 trade. This bullion, as it circulates among 
 different commercial countries in the fame man- 
 ner as the national coin circulates- in every par- 
 ticular country, may be confidered as the money 
 of the great mercantile republic. The national 
 coin receives its movement and direction from 
 the commodities circulated within the precinda 
 of each particular country : the money of the 
 mercantile republic, from thofe circulated be- 
 tween different countries. Both are employed 
 in facilitating exchanges, the one between differ- 
 ent individuals of the fame, the other between 
 thoi'e of different nations. Part of this money 
 of the great mercantile republic may have been, 
 and probably ^vas, employed in carrying on the 
 late war. In time of a general war, it is natural 
 to fuppofe that a movement and direction fhould 
 be impreffed upon it, different from what ife- 
 ufually follows in profound peace ; that it fhould 
 circulate more about the feat of the war, and be 
 more employed in purchafmg there, and in the 
 neighbouring countries, the pay and provifions 
 of the different armies. But whatever part of 
 this money of the mercantile republic Grerat 
 -Britain may have annually employed in this 
 
 manner.
 
 THE WEALTH OF NATIONS. 163 
 
 manner, it mufl have been annually purchafed, 
 either with Britifh commoditieSs or with fome* 
 thing elfe that had been purchafed with them • 
 which dill bring us back to commodities, to the 
 annual produce of the land and labour of the 
 country, as the ultimate refources which enabled 
 us to carry on the war. It is natural indeed to 
 fuppofe, that fo great an annual expence mud 
 have been defrayed from a great annual produce. 
 The expence of 1761, for example, amounted to 
 more than nineteen millions. No accumulation 
 could have fupported fo great an annual profu- 
 lion. There is no annual produce even of gold 
 and filver which could have fupported it. The 
 whole gold and filver annually imported into 
 both Spain and Portugal, according to the bell 
 accounts, does not commonly much exceed fix 
 millions (terUng, which, in fome years, would 
 fcarce have paid four months expence of the 
 late war. 
 
 The commodities moft proper for being tranf- 
 ported to diftant countries, in order to purchafe 
 there, either the pay and provifions of an army, 
 or fome part of the money of the mercantile re- 
 public to be employed in purchafmg them, 
 feem to be the finer and more improved manu- 
 faftures ; fuch as contain a great value in a fmall 
 bulk, and can, therefore, be exported to a great 
 diltance at little expence. A country w^hofe in- 
 dull ry produces a great annual furphis of fuch 
 manufactures, which are ufnally exported to fo- 
 rein countries, may carrv on for many years a 
 very expenfive foreign war, without eirher ex- 
 
 M 2 -^ porting
 
 1 64 THE NATURE AND CAUSES' OF 
 
 BOOK porting any confiderable quantity of gold and 
 IV. filver, or even having any fuch quantity to ex- 
 port. A confiderable part of the annual fur- 
 plus of its manufaftures muft, indeed, in this 
 cafe, be exported, without bringing back any re- 
 turns to the country, though it does to the mer- 
 chant ; the government purchafmg of the mer- 
 chant his bills upon foreign countries, in order 
 to purchafe there the pay and provifions of an 
 army. Some part of this furplus, however, may 
 ftill continue to bring back a return. The ma- 
 nufadurers, during the war, will have a double 
 demand upon them, and be called upon, firft, 
 to work up goods to be fent abroad, for paying 
 the bills drawn upon foreign countries for the 
 pay and provifions of the army ; and, fecondly, 
 to work up fuch as are necefPary for purchafing 
 the common returns that had ufually been con- 
 fumed in the country. In the midft of the mod 
 dellrudive foreign war, therefore, the greater 
 part of manufaftures may frequently fiourifh 
 greatly ; and, on the contrary, they may decline 
 on the return of the peace. They may flourifh 
 amidft the ruin of their country, and begin to 
 decay upon the return of its profperity. The 
 difierent ftate of many different branches of the 
 Britifh manufactures during the late war, and for 
 fome time after the peace, may ferve as an illuf- 
 tration of what has been juft now faid. 
 
 No foreign war of great expence or duration 
 could conveniently be carried on by the exporta- 
 tion of the rude produce of the foil. The ex- 
 pence of fending ' fuch a quantity of it to a fo- 
 reign
 
 THE WEALTH OF NATIONS. 165 
 
 reign country as might purchafe the pay and c h a r. 
 provifions of an army, would be too great. Few ^' 
 countries too produce much more rude produce 
 than what is fufficient for the fubfiftence of their 
 own inhabitants. To fend abroad any great 
 quantity of it, therefore, would be to fend 
 abroad a part of the necefl'ary fubfiftence of the 
 people. It is otherwife with the exportation of 
 manufaftures. The maintenance of the people 
 employed in them is kept at home, and only the 
 furplus part of their work is exported. Mr. 
 Hume frequently takes notice of the inability of 
 the ancient kings of England to carry on, with- 
 out interruption, any foreign war of long dura- 
 tion. The Engiifh, in thofe days, had nothing 
 wherewithal to purchafe the pay and provifions 
 of their armies in foreign countries, but cither 
 the rude produce of the foil, of which no consi- 
 derable part could be fpared from the home con- 
 fumption, or a few manuFadures of the coarfeft 
 kind, of which, as well as of the rude produce, 
 the tranfportation was too expenfive. This in- 
 ability did not arife from the want of money, but 
 of the finer and more improved nianufadures. 
 Buying and felling was traniadled by means of 
 money in England then, as well as now. The 
 quantity of circulating money inuft have borne 
 the fame proportion to the number and value of 
 purchafes and fales ufually tranfacfed at that 
 time, which it does to thofe tranfaded at prefent j 
 or rather it mull have borne a greater proportion, 
 becaufe there was then no paper, which now 
 occupies a great part of the employment of gold 
 
 M 3 and
 
 i66 THE NATURE AND CAUSES OF > 
 
 BOOK and filver. Among nations to whom commerce 
 IV. and manufa<5lures are little known, the fovereign, 
 upon extraordinary occafions, can feldom draw 
 any confiderable aid from his fubjeds, for reafons 
 which fhall be explained hereafter. It is in fuch 
 countries, therefore, that he generally endeavours 
 to accumulate a treafure as the only refource 
 againfl: fuch emergencies. Independent of this 
 neceiTity, he is in fuch a fituation naturally dif- 
 poied to the parfimony requifite for accumula- 
 tion. In that fimple Hate, the expence even of 
 a fovereign is not direcled by the vanity which 
 delights in the gaudy finery of a court, but is 
 employed in bounty to his tenants, and hofpita- 
 lity to his retainers. But bounty and hofpita- 
 lity very feldom lead to extravagance ; though 
 vanity almoit always does. Every Tartar chief, 
 accordingly, has a treafure. The treafures of 
 Mc.zepa. ch'ef of the Cclfacs in the Ukraine, 
 the famous ally of Charles the Xllth, are faid to 
 have been very great. The French kings of the 
 Merovingian race had all treafures. When they 
 divided their kingdom among their different 
 children, they divided their treafure too. The 
 Saxon princes, and the firlt kings after the con- 
 queR, fetm like\vife to have accumulated trea- 
 fures. The firil exploit of every new reign was 
 commonly to feize the treafure of the precedino- 
 kiiig, as the moft effential meafure for fecuring 
 the fucceffum. I'he fovereigns of improved and 
 commercial countries are not under the fame 
 neceffity of accumulating treafures, becaufe they 
 can generally draw from their fubjeds extraordi, 
 
 3 nai'y
 
 THE WEALTH OF NATIONS. 167 
 
 nary aids upon extraordinary occafions. They chap. 
 are likewife lefs difpofed to do fo. They natu- i* 
 rally, perhaps necefiarily, follow the mode of the 
 times, and their expence comes to be regulated 
 by the fame extravagant vanity which direds 
 that of all the other great proprietors in their 
 dominions. The infignificant pageantry of their 
 court becomes every day more brilliant, and the 
 expence of it not only prevents accumulation, 
 but frequently encroaches upon the funds de- 
 flined for more neceflary expences. What Der- 
 cyllidas faid of the court of Perfia, may be ap- 
 plied to that of feveral European princes, that 
 he faw there much (plendor but little ftrength, 
 and many fervants but few foldiers. 
 
 The importation of gold and filver is not the 
 principal, much lefs the fole benefit which a 
 nation derives from its foreign trade. Between 
 whatever places foreign trade is carried on, they 
 all of them derive two diftind benefits from it. 
 It carries out that furplus part of the produce of 
 their land and labour for which there is no de- 
 mand among them, and brings back in return 
 for it fomething elfe for which there is a deaiand. 
 It gives a value to their fuperfluities, by ex- 
 changing them for fomething elfe, which may 
 fatisfy a part of their wants, and Increafe their 
 enjoyments. By means of it, the narrownefs of 
 the home market does not hinder the divifion of 
 labour in any particular branch of art or manu- 
 fafture from being carried to the higheft per- 
 feftion. By opening a more extenfive market 
 for whatever part of the produce of their labour 
 
 M 4 may
 
 i63 THE NATURE AND CAUSES OF 
 
 BOOK may exceed the home confumption, it encourages 
 iv. them to improve its produclive powers, and to 
 augment its annual produce to the utmoft, and 
 thereby to increafe the real revenue and wealth of 
 the fociet^v. Thefe_ great and important fervices 
 foreign trade is continually occupied in perform- 
 ing, to all the different countries between which 
 it is carried on. They all derive great benefit 
 from it, though that in which the merchant re- 
 fides generally derives the greateft, as he is gene- 
 rally more employed in fupplying the wants, and 
 carrying out the fuperfluities of his own, than of 
 any other particular country. To import the 
 gold and filver which may be wanted, into the 
 countries which have no mines, is, no doubt, a 
 part of the bufmefs of foreign commerce. It is, 
 however, a moll infignificant part of it, A coun- 
 try which carried on foreign trade merely upon 
 this account, could fcarce have occafion to freight 
 a fliip in a century. 
 
 It is not by the importation of gold and filver, 
 that the difcovery of America has enriched Eu- 
 rope. By the abundance pf the American 
 mines, thofe metals have become cheaper. A 
 fervice of plate can now be purchafed for about 
 a third part of the corn, or a third part of ^the 
 labour, which it would have cofl: in the fifteenth 
 century. With the fame annual expence of la- 
 bour and commodities, Europe can annually 
 purchafe about three times the quantity of plate 
 which it could have purchafed at that time. 
 But when a commodity comes to be fold for a 
 third part of what had been its ufual price, not 
 
 only
 
 THE WEALTH OF NATIONS. 169 
 
 only thofe who purchafed it before can purchafe chap, 
 three times their former quantity, but it is i« 
 brought down to the level of a much greater '^'""^ 
 number of purchafers, perhaps no more than ten, 
 perhaps no more than twenty times the former 
 number. So that there may be in Europe at 
 prefent not only more than three times, but 
 piore than twenty or thirty times the quantity of 
 plate which would have been in it, even in its 
 prefent ftate of improvement, had the difcovery 
 of the American mines never been made. So far 
 Europe has, no doubt, gained a real convenir 
 ency, though furely a very trifling one. The 
 cheapnefs of gold and filver renders thofe metals 
 lather lefs fit for the purpofes of money than they 
 were before. In order to make the fame pur- 
 chafes, vi'e muft load ourfelves with a greater 
 quantity of them, and carry about a fliiiling in 
 our pocket where a groat would have done be- 
 fore. It is difficult to fay which is mofl trifling, 
 this inconveniency, or the oppofite conveniency. 
 Neither the one nor the other could have made 
 any very eflential change in the Hate of Europe. 
 The difcovery of America, however, certainly 
 made a mofl: elfential one. By opening a new 
 and inexhaufl:ible market- to ail the commodities 
 of Europe, it gave occafion to new divifions of 
 labour and improvements of art, which, in the 
 narrow circle of the ancient commerce, could 
 never have taken place for want of a market to 
 take off the greater part of their produce. The 
 produdive powers of labour were improved, and 
 its produce increafed in all the diflerent coun- 
 tries
 
 170 THE NATURE AND CAUSES OF 
 
 BOOK tries of Europe, and together with it the real 
 IV. revenue and wealth Ox^ the inhabitants. The 
 "'~^' commodities of Europe were alniofl all new to 
 America, and many of thofe of America were 
 new to Europe. A new fet of exchanges, there- 
 fore, began to take place which had never been 
 thought of before, and which fliould naturally 
 have proved as advantageous to the nev/, as it 
 certainly did to the old continent. The favage 
 injuftice of the Europeans rendered an event, 
 which ought to have been beneticial to all, ruin- 
 ous and defiruftive to feveral of thofe unfortunate 
 countries. 
 
 The difcovery of a paflage to the Eaft Indies, 
 by the Cape of Good Hope, which happened 
 much about the fame time, opened, perhaps, a 
 ftill more extenfive range to foreign commerce 
 than even that of America, notwithftanding the 
 greater diftance. There were but tvio nations 
 in America, in any refpeft fuperior to favages, 
 and thefe were deftroyed almofl: as foon as dif- 
 covered. The reft were mere favages. But the 
 empires of China, Indoftan, Japan, as well as 
 feveral others in the Eafl: Indies, without having 
 richer mines of gold or filver, were in every 
 other refpect much richer, better cultivated, and 
 more advanced in all arts and manufactures than 
 either Mexico or Peru, even though we fliould 
 credit, what plainly deferves no credit, the exag- 
 gerated accounts of the Spanifli writers, con- 
 cerning the ancient flate of thofe empires. But 
 rich and civilized nations can always exchange 
 to a much greater value with one another, than 
 
 with .
 
 THE WEALTH OF NATIONS. 171 
 
 with favages and barbarians. Europe, however, 6 H a p. 
 has hitherto derived much lefs advantage from i. 
 its commerce with the Eaft Indies, than from ^"^^""^ 
 that with America. The Portuguefe monopo- 
 lized the Eaft India trade to themfelves for about 
 a century, and it was only indireftly and through 
 them, that the other nations of Europe could 
 either fend out or receive any goods from that 
 country. When the Dutch, in the beginning of 
 the lalt century, began to encroach upon them, 
 they vefted their whole Eaft India commerce in 
 an exclufive company. The Englifh, French, 
 Swedes, and Danes, have all followed their ex- 
 ample, fo that no great nation in Europe has 
 ever yec had the benefit of a free commerce to 
 fhe Eaft Indies. No other reafon need be 
 afiigned why it has never been fo advantageous 
 as the trade to America, which, between almoft 
 every nation of Europe and its own colonies, is 
 free to all its fubjeds. The exclufive privileges 
 of thofe Eaft India Companies, their great riches, 
 the great favour and protection which thefe have 
 procured them from their refpective govern- 
 ments, have excited much envy againft them. 
 This envy has frequently reprefented their trade 
 as altogether pernicious, on account of the great 
 quantities of filver, which it every year exports 
 from the countries from which it is carried on. 
 The parties concerned have replied, that their 
 trade, by this continual exportation of filver, 
 might, indeed, tend to impovcrilh Europe in 
 general, but not the particular country from 
 which it was carried on j becaufe, by the export- 
 ation
 
 ,72 THE NATURE AND CAUSES OF 
 
 3j o o K ation of a part of the returns to other European 
 IV. countries, it annually brought home a much 
 
 ^""^"^"^ greater quantity of that metal than it carried 
 out. Both the objedion and the reply are 
 founded in the popular notion which I have been 
 juil now examining. It is, therefore, unneceflary 
 to fay any thing further about either. By the 
 annual exportation of filver to the Eafl Indies^, 
 plate is probably fomewhat dearer in Europe than 
 it otherv.'ife might have been ; and coined filver 
 probably purchafes a larger quantity both of 
 labour and commodities. The former of thefe 
 two effeds is a very fmall lofs, the latter a very 
 fmall advantage j both too infignificant to de- 
 ferve any part of the public attention. The 
 trade to the Eafh Indies, by opening a market 
 to the commodities of Europe, or, what comes 
 nearly to the fame thing, to the gold and filver 
 which is purchafed v/ith thofe commodities, muil 
 necelTarily tend to increafe the annual produdlion 
 of European, commodities, and confequently the 
 real wealth and revenue of Europe. That it 
 has hitherto increafed them fo little, is probably 
 owing to the reilraints which it every- where la- 
 bours under. 
 
 I THOUGHT it neceffary, though at the hazard 
 of being tedious, to examine at full length this 
 popular notion that v.'ealth confifts in money, or 
 in gold and filver. Money in common lan- 
 guage, as I have already obferved, frequently 
 fignifies wealth ; and this am.bigulty of expreffion 
 has rendered ihis popular notion fo familiar to 
 us, that even they, who are convinced of its ab- 
 
 furdity.
 
 THE WEALTH OF NATIONS. 175 
 
 furdity, are very apt to forget their own princl- chap. 
 pies, and in the courfe of their reafonings to i* 
 take it for granted as a certain and undeniable ^"''°^' """'' 
 truth. Some of the beft EngHfh writers upon 
 commerce fet out with obferving, that the wealth 
 of a country confifts, not in its gold and filvet 
 only, but in its lands, houfes, and confumable 
 goods of all different kinds. In the courfe of 
 their reafonings, however, the lands, houfes, 
 and confumable goods feem to flip out of their 
 memory, and the ftrain of their argument fre- 
 quently fuppofcs that all wealth confifts in gold 
 and filver, and that to multiply thofe metals is 
 the great object of national induftry and com- 
 merce. 
 
 The two principles being eftablifhed, how- 
 ever, that wealth confifled in gold and filver, 
 and that thofe metals could be brought into a 
 country which had no mines only by the balance 
 of trade, or by exporting to a greater value than 
 it imported ; it necelTarily became the great ob- 
 ject of political oeconomy to dimini(h as much 
 as pofllble the importation of foreign goods for 
 home confumption, and to increafe as much as 
 pofllble the exportation of the produce of do- 
 meflic induflry. Its two great engines for 
 enriching the country, therefore, were reftraints 
 upon importation, and encouragements to ex- 
 portation. 
 
 The reftraints upon importation were of two 
 kinds. 
 
 First, Reftraints upon the Importation of 
 fuch foreign goods for home confumption as 
 
 could
 
 ,74 THE NATURE AND CAUSES OF 
 
 BOOK could be produced at home, from whatever coun* 
 IV. try they were imported. 
 
 StcoNDLY, Reiiraints upon the importation of 
 goods of ahnoft all kinds from thofe particular 
 countries with which the balance of trade was 
 fuppofed to be di 'advantageous. 
 
 Those different reftraints confided fomelimes 
 in high duties, and fomedmes in abfolute pro- 
 hibitions. 
 
 Exportation was encouraged fometimes by 
 drawbacks, fometimes by bounties, fometimes by 
 advantageous treaties of commerce with foreign 
 ftates, and fometimes by the cflablilhment of co- 
 lonies in didant countries. 
 
 Drawbacks were given upon two different 
 occafions. When the home-manufattures were 
 fubjed; to any duty or excife, either the whole or 
 a part of it was frequently drawn back upon their 
 exportation ; and when foreign goods liable to 
 a duty were imported in order to be exported 
 again, either the whole or a part of this duty 
 was fometimes given back upon fuch export- 
 ation. 
 
 Bounties were given for the encouragement 
 either of fome beginning manufadures, or of fuch 
 forts of induflry of other kinds as were fuppofed 
 to deferve particular favour. 
 
 By advantageous treaties of commerce, par- 
 ticular privileges were procured in fome foreign 
 ftate for the goods and merchants of the country, 
 beyond what were granted to thofe of other 
 countries. 
 
 By
 
 THE WEALTH OF NATIONS. 
 
 7> 
 
 By the eftablifliment of colonies In diflant chap. 
 countries, not only particular privileges, but a ^^ 
 monopoly, was frequently procured for the goods '/-**> 
 and merchants of the country which eftabliihed 
 them. 
 
 Th£ two forts of rellraints upon importation 
 above mentioned, together with thefe four en- 
 couragements to exportation, conQitute the fix 
 principal means by which the commercial fyftem 
 propofes to increafe the quantity of gold and 
 filver in any country by turning the balance of 
 trade in its favour. I (hail confider each of 
 them in a particular chapter, and without taking 
 much further notice of their fuppofed tendency 
 to bring money into the country, I fhall examine 
 chiefly what are likely to be the eftedls of each 
 of them upon the annual produce of its indulfry. 
 According as they tend either to increafe or dimi- 
 ni(h the value of this annual produce, they mufl 
 evidently tend either to increafe or diminifli the 
 real wealth and revenue of the countrv.
 
 i^S THE NATURE AND CAUSES OF 
 
 CHAP. II. 
 
 Of Rejlraints ilpon the Importation from foreigfi 
 Countries of fuch Goods as can be produced at 
 Horae, 
 
 BOOK T^^ retraining, either by high duties, or by 
 , IV. abiblute prohibitions, the importation of 
 
 fuch goods from foreign countries as can be pro- 
 duced at home, the monopoly of the home- 
 market is more or lefs fecured to the domeftic 
 induPtry employed in producing them. Thus 
 the prohibition of importing either live cattle or 
 fait provifions from foreign countries fecures to 
 the graziers of Great Britain the monopoly of 
 the home-market foi' butchers' meat. The high 
 duties upon the importation of corn, which in 
 times of moderate plenty amount to a prohibi- 
 tion, give a like advantage to the grov;ers of that 
 commodity. The prohibition of the importa- 
 tion of foreign woollens is equally favourable to 
 the woollen m. an u fact u res. The filk manufac- 
 ture, though altogether employed upon foreign 
 materials, has lately obtained the fame advantage^ 
 The linen manufafture has not yet obtained it, 
 but is making great ftrides towards it. Many 
 other forts of manufactures have, in the fame 
 manner, obtained in Great Britain, either alto- 
 gether, or very nearly, a monopoly againft their 
 countrymen. The variety of goods of which the 
 ■importation into Great Britain is prohibited, 
 
 either
 
 THfi WEALTH OF NATIONS. 177 
 
 either abfolutcly, or under certain circurtiftances, 
 greatly exceeds what can eafily be fufpedted by 
 thofe who are not well acquainted with the laws 
 of the cuftoms. 
 
 That this monopoly of the home-market fre- 
 quently gives great encouragement to that parti- 
 cular fpecies of induftry which enjoys it, and 
 frequently turns towards that employment a 
 greater fhare of both the labour and flock of the 
 fociety than would otherwife have gone to itj 
 cannot be doubted. But whether it tends either 
 to increafe the general induftry of the fociety, or 
 to give it the moft advantageous direction, is not, 
 perhaps, altogether fo evident. 
 
 The general induftry of the fociety never can 
 exceed what the capital of the fociety can employ. 
 As the number of workmen that can be kept in 
 employment by any particular perfon muft bear 
 a certain proportion to his capital, fo the num- 
 ber of thofe that can be continually employed by 
 all the members of a great fociety, muft bear a 
 certain proportion to the whole capital of that 
 fociety, and never can exceed that proportion^ 
 No regulation of commerce can increafe the 
 q^uantity of induftry in any fociety beyond what 
 its capital can maintain. It can only divert a part 
 of it into a dire(5lion into which it might not 
 otherwife have gone ; and it is by no means cer- 
 tain that this artificial dire(5\ion is likely to be more 
 advantageous to the fociety than that into which 
 it would have gone of its own accord. 
 
 Every individual is continually exerting him- 
 
 felf to find out the moft advantageous employ- 
 
 voi>. ij. N ment
 
 178 THE NATURE AND CAUSES OF 
 
 BOOK ment for whatever capital he can command. It 
 IV. is his own advantage, indeed, and not that of the 
 fociety, which he has in view. But the ftudy of 
 his own advantage naturally, or rather neceflarily, 
 leads him to prefer that employment which is mofl 
 advantageous to the fociety. 
 
 First, every individual endeavours to employ 
 his capital as near home as he can, and confe- 
 quently as much as he can in the fupport of do- 
 meflic induftry; provided always that he can 
 thereby obtain the ordinary, or not a great deal 
 kfs than the ordinary profits of flock. 
 
 Thus, upon equal or nearly equal profits, 
 every wholefale merchant naturally prefers the 
 home-trade to the foreign trade of confuraption, 
 and the foreign trade of confumption to the car- 
 rying trade. In the home-trade his capital is 
 never fo long out of his fight as it frequently is 
 in ,the foreign trade of confumption. He can 
 know better the character and fituation of the 
 perfons whom he trufts, and if he fhould 
 happen to be deceived, he knows better the 
 laws of the country from which he mufl feek 
 redrefs. In the carrying trade, the capital of the 
 merchant is, as it were, divided between two 
 foreign countries, and no part of it is ever ne- 
 cefTaiily brought home, or placed under his own 
 immediate view and command. The capital 
 which an Amflerdam merchant employs in car- 
 rying corn from KonnigilDerg to Lifbon, and fruit 
 and wine from Lifbon to Konnigfberg, mufl ge- 
 nerally be the one half of it at Konniglberg and 
 the other half a^t Lifbon. No part of it need ever 
 
 come
 
 THE WEALTH OF NATIONS. i;-^ 
 
 Come to Amfterdam. The natural refidence of chap. 
 fuch a merchant fhould either be at Konnigfberg or n- 
 Lifbon, and it can only be fome very particular 
 circumflances which can make him prefer the 
 refidence of Amfterdara. The uneafmefs, how- 
 ever, which he feels at being feparated fo far 
 from his capital, generally determines him to 
 bring part both of the Konnigfberg goods which 
 he deflines for the market of Lifbon, and of the 
 Lifbon goods which he deflines for that of Kon- 
 nigfberg, to Amfterdam : and though this ne- 
 ceflarily fubjedls him to a double charge of load- 
 ing and unloading, as well as to the payment of 
 fome duties and cuftoms, yet for the fake of hav- 
 ing fome part of his capital always under his own 
 view and command, he willingly fubmits to this 
 extraordinary charge ; and it is in this manner 
 that every country which has any coniiderable 
 fliare of the carrying trade, becom.es always the 
 emporium, or general market, for the goods of 
 all the different countries whofe trade it carries 
 on. The merchant, in order to fave a fecond ^ 
 loading^ and unloadinc^, endeavours alwavs to 
 fell in the home-market as much of the goods of 
 all thofe different countries as he can, and thus, 
 fo far as he can, to convert his carrying trade 
 into a foreign trade of confumption. A mer- 
 chant, in the fame manner, who is engaged in 
 the foreign trade of confumption, when he col- 
 leds goods for foreign markets, will always be 
 glad upon equal or nearly equal profits, to (ell 
 as great a part of them at home as he can. He 
 faves himfelf the rifk and trouble of exportation, 
 
 N 2 - when.
 
 i8o THE NATURE AND CAUSES OF 
 
 BOOK when, fo far as he can, he thus converts his fo- 
 IV. reis^n trade of confumption into a home-trade. 
 ^~'^''""*^ Home is- in this manner the center, if I may fay 
 fo, round which the capitals of the inhabitants 
 of every country are continually circulating, and 
 towards which they are always tending, though 
 by particular caufes they may fometimes be 
 driven off and repelled from it towards more 
 diftant employments. But a capital employed 
 in the home-trade, it has already been fliown, 
 neceffarily puts into motion a greater quantity of 
 domeftic induftry, and gives revenue and em- 
 ployment to a greater number of the inhabitants 
 of the country, than an equal capital employed 
 in the foreign trade of confumption : and one 
 employed in the foreign trade of confumption 
 has the fame advantage over an equal capital 
 employed in the carrying trade. Upon equal, 
 or only nearly equal profits, therefore, every in- 
 dividual naturally inclines to employ his capital 
 in the manner in which it is likely to afford the 
 greateft fupport to domeffic induftry, and to give 
 revenue and employment to the greatell nuniber- 
 of people of his own country. 
 
 Secondly, every individual who employs his 
 capital in the fupport of domefdc induftry, ne- 
 ceffarily endeavours fo to direft that induftry, that 
 its produce may be of the greateft poffible value. 
 
 The produce of induftry is what it adds to the 
 fubjecl or materials upon which it is employed. 
 In proportion as the value of this produce is great 
 or fraall, fo will hkewife be the profits of the 
 employer. But it is only for the fake of profit 
 
 Q that
 
 THE WEALTH OF NATIONS. i8i 
 
 that any man employs a capital in the fupport of c ii a p. 
 induflry ; and he will always, therefore, endea- iJ« 
 vour to employ it in the fupport of that induftry 
 of which the produce is likely to be of the greatefl 
 value, or to exchange for the greatefl quantity 
 either of money or of other goods. 
 
 But the annual revenue of every foclety is 
 always precifely equal to the exchangeable value 
 of the whole annual produce of its induftry, or 
 rather is precifely the fame thing with that ex- 
 changeable value. As every individual, there- 
 fore, endeavours as much as he can both to em- 
 ploy his capital in the fupport of domeflic hi- 
 duftry, and fo to direcl that induflry that its 
 produce may be of the greatefl value ; every in- 
 dividual necefTarily labours to render the annual 
 revenue of the fociety as great as he can. He 
 generally, indeed, neither intends to promote 
 the public interefl, nor knows how much he is 
 promoting it. By preferring the fupport of do- 
 meflic to that of foreign induflry, he intends 
 only his own fecurity ; and by direding that in- 
 duflry in fuch a manner as its produce may be 
 of the greateft value, he intends only his own 
 gain, and he is in this, as in many other cafes, 
 led by an Invifible hand to promote an end which 
 was no part of his intention. Nor is it always 
 the worfe for the fociety that it was no part of it. 
 By purfuing his own interefl he frequently pro- 
 motes that of the fociety more effedually than 
 when he really intends to promote it. I have 
 never known much good done by thofe who af- 
 fed.ed to trade for the public good. It is an 
 
 N 3 affectation.
 
 ii^2 THE NATURE AND CAUSES OF 
 
 BOOK afie£lation, indeed, not very common among 
 ^^' merchants, and very few words need be employed 
 in diffuading them from it. 
 
 What is the fpecies of domefiic induftry 
 which his capital can employ, and of which the 
 produce is likely to be of the greatefl value, 
 every individual, it is evident, can, in his local 
 fituation, judge much better than any fLatefmaii 
 or lawgiver can do for him. The ilatefman, 
 who fliould attempt to dired private people in 
 'hat manner they ought to employ their capitals, 
 ild not only load himfelf with a mod unne- 
 ccilary attention, but aifume an authority which 
 could fafely be trufted, not only to no fmgle 
 perfon, but to no council or fenate whatever, 
 and which would no-where be fo dangerous as in 
 the hands of a man who had folly and prefump- 
 tion enough to fancy himfelf fit to exercife it. 
 
 To give the monopoly of the home- market to 
 the produce of domeftic induftry, in any parti- 
 cular art or manufadure, is in fome m.eafure to 
 dired private people in what manner they ought 
 to employ their capitals, and mull, in almoft all 
 cafes, be either a ufelefs or a hurtful regulation. 
 If the produce of domeftic can be brought there- 
 las cheap as that of foreign indullry, the regula- 
 tion is evidently ufelefs. If it can not, it mud 
 generally be hurtful. It is the maxim of every 
 prudent mafter of a family, never to attempt to 
 make at home what it vyill coft him more to make 
 than to buy. The taylor does not attempt to 
 niake his own fhoes, but buys them of the fhoe- 
 inaker. The Ihoemaker does not attempt to 
 
 make
 
 THE WEALTH OF NATIONS. if 3 
 
 make his own clothes, but employs a taylor. 
 The farmer attempts to make neither the one 
 nor the other, but employs thofe different arti- 
 ficers. All of them find it for their intereft to 
 employ their whole induftry in a way in which 
 they have fome advantage over their neighbours, 
 and to purchafe with a part of its produce, or 
 what is the fame thing, with the price of a part 
 of it, whatever elfe they have occafion for. 
 
 What is prudence in the condu£l of every 
 private family, can fcarce be folly in that of a 
 great kingdom. If a foreign country can fupply 
 us with a commodity cheaper than we ourfelves 
 can make it, better buy it of them with fome 
 part of the produce of our own induftry, em- 
 ployed in a way in which we have fome advan- 
 tage. The general induftry of the country, being 
 always in proportion to the capital which em- 
 ploys it, will not thereby be diminifhed, no more 
 than that of the above-mentioned' artificers ; but 
 only left to find out the v/ay in which it can be' 
 employed with the greateft advantage. It is cer- 
 tainly not employed to the greateft advantage, 
 when it is thus directed towards an obje6l which it 
 can buy cheaper than it can make. The value of 
 its annual produce is certainly more or lefs dimi- 
 niflied, when it is thus turned away from pro- 
 ducing commodities evidently of more value than 
 the commodity which it is directed to produce. 
 According to the fuppofition, that commodity 
 could be purchafed from foreign countries 
 cheaper than it can be made at home. It 
 could, therefore, have been purchafed with a 
 
 N 4 part
 
 j84 the nature and CAUSES OF 
 
 BOOK part only of the commodities, or, what is the 
 IV. fame thing, with a part only of the price of the 
 commodities, which the induftry employed by 
 an equal capital would have produced at home, 
 had it been left to follow its natural courfe. 
 The induftry of the country, therefore, is thus 
 turned away from a more to a lefs advantage- 
 ous employment, and the exchangeable value of 
 its annual produce, inftead of being increafed, 
 according to the intention of the lawgiver, muft 
 neceffarily be diminifhed by every fuch regula- 
 tion. 
 
 By means of fuch regulations, indeed, a par- 
 ticular manufacture may fometimes be acquired 
 fooner than it could have been otherwife, and 
 after a certain time may be made at home as 
 cheap or cheaper than in the foreign country. 
 But though the induftry of the fociety may be 
 thus canied with advantage into a particular 
 channel fooner than it could have been other- 
 wife, it will by no means follow that the fum 
 total, either of its induftry, or of its revenue, can 
 ever be augmented by any fuch regulation. The 
 induftry of the fociety can augment only in pro- 
 portion as its capital augments, and its capital 
 can augment only in proportion to what can be 
 gradually faved out of its revenue. But the im- 
 mediate effect of every fuch regulation is to di- 
 minifti its revenue, and what diminiflies its reve- 
 nue is certainly not very likely to augment its 
 capital fafter than it wouM have augmented of 
 its own accord, had both capital and induftry 
 been left to find out their natural employments. 
 
 Though
 
 THE WEALTH OF NATIONS. 185 
 
 • Though for want of fuch regulations the fo- c h a p. 
 ciety fhould never acquire the propofed raanu- ^^' 
 failure, it would not, upon that account, necef- 
 farily be the poorer in any one period of its 
 duration. In every period of its duration its 
 whole capital and induftry might ftill have been 
 employed, though upon difl'erent objeds, in 
 the manner that was moil advantageous at 
 the time. In every period its revenue might 
 have been the greatefl which its capital could 
 afford, and both capital and revenue might have 
 been augmented with the greateft poffible rapi- 
 dity. 
 
 The natural advantages which one country has 
 over another in producing particular commodities 
 are fometimes fo great, that it is acknowledged 
 by all the world to be in vain to ftrugglc with 
 them. By means of glalfes, hotbeds, and hot- 
 walls, very good grapes can be railed in Scot- 
 land, and very good wine too can be made of 
 them at about thirty times the expence for which 
 at lead equally good can be brought from fo- 
 reign countries. Would it be a reafonable law 
 to prohibit the importation of all foreign wines, 
 merely to encourage the making of claret and 
 burgundy in Scotland? But if there would be 
 a manifefl abfurdity in turning towards any em- 
 ployment, thirty times more of the capital and 
 indulfry of the country, than would be neceilary 
 to purchafe from foreign countries an equal 
 quantity of the commodities wanted, there mud 
 be an abfurdity, though not altogether fo gla- 
 ring, yet cxadly of the fame kind, in turning 
 
 towards
 
 i86 THE NATURE AND CAUSES OF 
 
 BOOK towards any fuch employment a thirtieth, or 
 i"^^* even a three hundredth part more of either, 
 '"*"' Whether the advantages which one country has 
 over another, be natural or acquired, is in this 
 refpeft of no confequence. As long as the one 
 country has thofe advantages, and the other 
 wants them, it will always be more advantage- 
 ous for the latter, rather to buy of the former, 
 than to make. It is an acquired advantage only, 
 which one artificer has over his neighbour, who 
 exercifes another trade ; and yet they both find 
 it more advantageous to buy of one another, 
 than to make what does not belong to their par- 
 ticular trades. 
 
 Merchants and manufafturers are the people 
 who derive the greatefl advantage from this mo- 
 nopoly of the home-market. The prohibition of 
 the importation of foreign cattle, and of fait pro- 
 vifions, together with the high duties upon fo- 
 reign corn, which in times of moderate plenty 
 amount to a prohibition, are not near fo advan- 
 tageous to the graziers and farmers of Great 
 Britain, as other regulations of the fame kind 
 are to its merchants and manufafturers. Manu- 
 fadures, thofe of the finer kind efpecially, are 
 more eafily tranfported from one country to an- 
 other than corn or cattle. It is in the fetching 
 and carrying manufactures, accordingly, that 
 foreign trade is chiefly employed. In manu- 
 fadures, a very fmall advantage will enable fo- 
 reigners to underfell our own v^orkmen, even in 
 the home-market. It will require a very great 
 one to enable them to do fo in the rude produce 
 
 of
 
 THE WEALTH OF NATIONS. 187 
 
 of the foil. If the free niiportation of foreign chap, 
 manufadures were permitted, feveral of the home ii. 
 manufadlures would probably fuffer, and feme "'*^' 
 of them, perhaps, go to ruin altogether, and a 
 confiderable part of the flock and induRry at 
 prefent employed in them would be forced to 
 find out fome other employment. But the freeft 
 importati n of the rude produce of the foil could 
 have no fuch efFetl upon the agriculture of the 
 country. 
 
 If the importation of foreign cattle, for ex- 
 ample, were made ever fo free, fo few could be 
 imported, that the grazing trade of Great Bri- 
 tain could be httle afFefted by it. Live cattle 
 are, perhaps, the only commodity of which the 
 tranfportation is more expenfive by fea than by 
 land. By land they carry themfelves to market. 
 By fea, not only the cattle, but their food and . 
 
 their water too, mufl be carried at no fmall ex- 
 pence and inconveniency. The Ihort fea be- 
 tween Ireland and Great Britain, indeed, renders 
 the importation of Irifh cattle more eafy. But 
 though the free importation of them, which was 
 lately permitted only for a lim.ited time, were 
 rendered perpetual, it could have no confider- 
 able efPedt upon the intereft of the graziers of 
 Great Britain. Thofe parts of Great Britain 
 which border upon the Irifli fea are all grazing 
 countries. Irifh cattle could never be imported 
 for their ufe, but muff be drove through thofe 
 very extenfive countries, at no fmall expence and 
 inconveniency, before they could arrive at their 
 proper market. Fat cattle could not be drove 
 
 fo
 
 i8S THE NATURE AND CAUSES OF 
 
 BOOK fo far. Lean cattle, therefore, only could be 
 IV. imported, and fuch importation could interfere, 
 not with the intereft of the feeding or fattening 
 countries, to which, by reducing the price of 
 lean cattle. It would rather be advantageous, 
 but with that of the breeding countries only. 
 The fmall number of Iriih cattle imported fmce 
 their importation was permitted, together with 
 the good price at which lean cattle Itill continue 
 to fell, feem to demonllrate that even the breed- 
 ing countries of Great Britain are never likely to 
 be much ailefted by the free importation of Irilh 
 cattle. The common people of Ireland, indeed, 
 are faid to have fometimes oppofed with violence 
 the exportation of their cattle. But if the ex- 
 porters had found any great advantage in conti- 
 nuing the trade, they could eafily, when the law 
 was on their fide, have conquered this mobbilh 
 oppofition. 
 
 Feeding and fattening countries, befides, muft 
 always be highly improved, whereas breeding 
 countries are generally uncultivated. The high 
 price of lean cattle, by augmenting the value of 
 uncultivated land, is like a bounty againfl im- 
 provement. To V any country which was highly 
 improved throughout, it would be more advan- 
 tageous to import its lean cattle than to breed 
 them. The province of Holland, accordingly, 
 is faid to follow this maxim at prefent. The 
 mountains of Scotland, Wales, and Northum- 
 berland, indeed, are countries not capable of 
 much improvement, and feem deftined by nature 
 to be the breeding countries of Great Britain. 
 
 Ihe
 
 THE WEALTPI OF NATIONS. tdy 
 
 The freed importatloa of foreign cattle could chap. 
 have no other effeft than to hinder thofe breed- n. 
 ing countries from taking advantage of the in- 
 creafing population and improvement of the reft 
 of the kingdom, from raifing their price to an 
 exorbitant height, and from laying a real tax 
 upon all the more improved and cultivated parts 
 of the country. 
 
 The freed importation of fait provifions, in 
 the fame manner, could have as little effect upon 
 the intereft of the graziers of Great Britain as 
 that of live cattle. Salt provifions are not only 
 a very bulky commodity, but when compared 
 with frefli meat, they are a commodity both of 
 worfe quality, and, as they cofl more labour and 
 expence, of higher price. They could never, 
 therefore, come into competition with the frefh 
 meat, though they might with the fait provifions 
 of the country. They might be ufed for vi£lual- 
 ling {hips for diftant voyages, and fuch like ufes, 
 but could never make any confiderable part of the 
 food of the people. The fmall quantity of fait 
 provifions imported from Ireland fmce their im- 
 portation was rendered free, is an experimental 
 proof that our graziers have nothing to appre- 
 hend from it. It does not appear that the price 
 of butchers*- meat has ever been fenfibly affeded 
 by it. 
 
 Even the free importation of foreign corn 
 could very little affeft the interefl: of the farmers 
 of Great Britain. Corn is a much more bulky 
 commodity than butchers'-meat. A pound of 
 wheat at a penny is as dear as a pound of but- 
 chers*-
 
 19© THE NATURE AND CAUSES OF 
 
 BOOK chers'-meat at fourpence. The fmall quantity of 
 IV. foreign corn imported even in times of the 
 greateft fcarcity, may fatisfy our farmers that 
 they can have nothing to fear from the freed 
 importation. The average quantity imported 
 one year with another, amounts only, according 
 to the very well informed author of the trads 
 upon the corn trade, to twenty-three thoufand 
 feven hundred and twenty-eight quarters of all 
 forts of grain, and does not exceed the five hun- 
 dredth and feventy-one part of the annual con- 
 fumption. But as the bounty upon corn occa- 
 lions a greater exportation in years of plenty, 
 fo it muil of confequencc occafion a greater 
 importation in years of fcarcity, than in the 
 actual ftate of tillage would otherwife take place. 
 By means of it, the plenty of one year does not 
 compenfate the fcarcity of another, and as the 
 average quantity exported is neceffarily aug- 
 mented by it, fo mufi likewife, in the adual 
 fbate of tillage, the average quantity imported. 
 If there were no bounty, as lefs corn would be 
 exported, fo it is probable that, one year with 
 another, lefs would be imported than at prefent. 
 The corn merchants, the fetchers and carriers of 
 corn between Great Britain and foreign coun- 
 tries, would have much lefs employment, and 
 might fuffer confiderably ; but the country gen- 
 tlemen and farmers could lufier very little. It is 
 in the corn merchants accordingly, laiher than in 
 the country gentlemen and farmers, that I have 
 obferved the greatefl ^nxiety for the renewal and 
 ^continuation of the bounty. 
 
 Country
 
 THE WEALTH OF NATIONS. ipf. 
 
 Country gentlemen and farmers are, to their chap. 
 great honour, of all people, the lead fubject to n. 
 the wretched fpirit of monopoly. The under- 
 taker of a great manufactory is fometimes alarm- 
 ed if another work of the fame kind is eftablifhed 
 within twenty miles of him. The Dutch under- 
 taker of the woollen manufacture at Abbeville 
 flipulated, that no work of the fame kind fhould 
 be eftablidied within thirty leagues of that city. 
 Farmers and country gentlemen, on the con- 
 trary, are generally difpofed rather to promote 
 than to obftrucl the cultivation and improvement 
 of their neighbours* farms and eftates. They 
 have no fecrets, fuch as thofe of the greater part 
 of manufacturers, but are generally rather fond 
 of communicating to their neighbours, and of 
 extending as far as poffible any new praClice 
 which they have found to be advantageous. 
 Pius ^ejlus^ fays old Cato, JiabiliJJhnufque, mi- 
 nimeqiie invidiofiis ; ?nini7neque male cogitanfes funt, 
 qui in eojludio occupati funt. Country gentlemen 
 and farmers, difperfed in diiferent parts of the 
 country, cannot fo eafily combine as merchants 
 and manufacturers, who being collected into 
 towns, and accuftomed to that exclufive corpo- 
 ration fpirit which prevails in theai, naturally 
 endeavour to obtain, againft all their countrymen, 
 the fame exclufive privilege which they generally 
 poflefs againft the inhabitants of their refpeCtive 
 towns. They accordingly feem to have been 
 the original inventors of thofe reltraints upon 
 the importation of foreign goods, which fecure 
 to them the monopoly of the home-market. It 
 
 was
 
 192 
 
 THE NATURE AND CAUSES OF 
 
 BOOK was probably in imitation of them, and to put 
 IV. themfelves upon a level with thofe who, they 
 
 ''^•^^"^ found, were difpofed to opprefs them, that the 
 country gentlemen and farmers of Great Britain 
 fo far forgot the generofity which is natural to 
 their flation, as to demand the exclufive privi- 
 lege of fupplying their countrymen with corn 
 and butchers*-meat. They did not perhaps 
 take time to confider how much lefs their in- 
 tereft could be affeded by the freedom of trade 
 than that of the people whofe example they fol- 
 lowed. 
 
 To prohibit by a perpetual law the importa- 
 tion of foreign corn and cattle, is in reality to 
 ena^l, that the population and induftry of the 
 country Ihall at no time exceed what the rude 
 produce of its own foil can maintain. 
 
 There feem, however, to be two cafes in which 
 it will generally be advantageous to lay fome bur- 
 den upon foreign, for the encouragement of do- 
 medic induftry. 
 
 The firft is, when fome particular fort of in- 
 duftry is neceflary for the defence of the country. 
 The defence of Great Britain, for example, de- 
 pends very much upon the number of its failors 
 and fhipping. The a6t of navigation, therefore, 
 very properly endeavours to give the failors and 
 fhipping of Great Britain the monopoly of the 
 trade of their own country, in fome cafes, by 
 abfolute prohibitions, and in others by heavy 
 burdens upon the fhipping of foreign countries. 
 The following are the principal difpofiiions of 
 this acl. 
 
 First,
 
 THE WEALTH OF NATIONS. 193 
 
 First, all fhips, of which the owners, ma- 
 fteis, and three-fourths of the mariners are not 
 Britifh fubjedts, are prohibited, upon pain of 
 forfeiting Ihip and cargo, from trading to the 
 Britifli fettlements and plantatior^ or from 
 being employed in the coafting trade of Great 
 Britain. 
 
 Secondly, a great variety of the mofl: bulky 
 articles of importation can be brought into Great 
 Britain only, either in fuch fhips as are above 
 defcribed, or in fhips of the country where thofe 
 goods are produced, and of which the owners, 
 mafters, and three-fourths of the mariners, are 
 of that particular country ; and when imported 
 even in fhips of this latter kind, they are fubje6t 
 to double aliens duty. If imported in fliips of 
 any other country, the penalty is forfeiture of 
 fhip and goods. When this a6l was made, the 
 Dutch were, what they (till" are, the great car- 
 riers of Europe, and by this regulation they were 
 entirely excluded from being t! carriers to Great 
 Britain, or from importing to us the goods of any 
 other European country. 
 
 Thirdly, a great variety of the moft bulky 
 articles of importation are prohibited from being 
 imported even in Britilh fhips, from any coun- 
 try but that in which they are produced ; under 
 pain of forfeiting fhip and cargo. This regu- 
 lation too was probably intended agamfl :he 
 Dutch. Holland was then, as now, the great 
 emporium for all European goods, and by this 
 regulation, Britifh fliips were hindered from 
 VOL. II. o loading
 
 X94 THE NATURE AND CAUSES OF 
 
 BOOK loading in Holland the goods of any other Euro- 
 IV. pean country. 
 
 Fourthly, fait fifli of all kinds, whale-fins, 
 whale-bone, oil, and blubber, not caught by 
 and cured on board Britifli veflels, when im- 
 ported into Great Britain, are fubjeded to double 
 aliens duty. The Dutch, as - they are ftill the 
 principal, were then the only fifhers in Europe 
 that attempted to fupply foreign nations with 
 fifh. By this regulation, a very heavy burden was 
 laid upon their fupplying Great Britain. 
 
 When the a6t of navigation was made, though 
 England and Holland were not actually at war, 
 the mod violent animofity fubfifted between the 
 two nations. It had begun during the govern- 
 ment of the long parliament, which firft framed 
 this a6l, and it broke out foon after in the Dutch 
 wars during that of the Protestor and of Charles 
 the fecond. It is not impoffible, therefore, that 
 fome of the regulations of this famous act may 
 have proceeded from national animofity. They 
 are as wife, however, as if they had all been 
 dictated by the mod deliberate wifdom. Na- 
 tional animofity at that particular time aimed at 
 the very fame objed which the mod deliberate 
 wifdom would have recommended, the diminu- 
 tion of the naval power of Holland, the only 
 naval power which could endanger the fecurity 
 of England. 
 
 The a<5l of navigation is not favourable to 
 foreign commerce, or to the growth of that opu- 
 lence which can arife from it. The intereft of 
 a nation in its commercial relations to foreign 
 
 nations
 
 THE V/EALTH OF NATIONS. 19J 
 
 nations Is, like that of a merchant with regard to chap. 
 the different people with whom he deals, to buy 11. 
 as cheap and to fell as dear as poffible. But it ^— ^■'""^ 
 will be mod likely to buy cheap, when by the 
 mod perfect freedom of trade it encourages all 
 nations to bring to it the goods which it has oc- 
 cafion to purchafe j and, for the fame reafon, it 
 will be moll likely to fell dear, when its markets 
 are thus filled with the greatefl number of buyers. 
 The 2.6: of navigation, it is true, lays no burden 
 upon foreign fliips that come to export the pro- 
 duce of Britifli induftry. Even the ancient aliens 
 duty, which ufed to be paid upon all goods ex- 
 ported as well as imported, has, by feveral fub- 
 fequent acts, been taken off from the greater 
 part of the articles of exportation. But if fo- 
 reigners, either by prohibitions or high duties, 
 are hindered from coming to fell, they cannot 
 always afford to come to buy ; becaufe coming 
 without a cargo, they muff lofc the freight from 
 their own country to Great Britain. By dimi- 
 nllhing the number of fellers, therefore, we ne- 
 ceffarily dimlnifli that of buyers, and are thus 
 likely not only to buy foreign goods dearer, but 
 to fell our own cheaper, than If there was a more 
 perfe£l freedom of trade. As defence, however, is 
 of much more importance than opulence, the adt 
 of navigation is, perhaps, the wifeft of all the com™ 
 mercial regulations of England. 
 
 The fecond cafe, in which it will generally be 
 advantageous to lay fome burden upon foreign 
 for the encouragement of domeflic induftry, is, 
 when fome tax is impo'ed at home upon the pro- 
 
 o 2 duce
 
 196 THE NATURE AND CAUSES OF 
 
 BOOK duce of the latter. In this cafe, it feems reafon- 
 IV, able that an equal tax fhould be impofed upon 
 the like produce of the former. This would not 
 give the monopoly of the home market to do- 
 meftic induftry, nor turn towards a particular 
 employment a greater fliare of the flock and la- 
 bour of the country, than what would naturally 
 go to it. It would only hinder any part of what 
 would naturally go to it from being turned away 
 by the tax, into a lefs natural direftion, and 
 would leave the competition between foreign and 
 domed ic induftry, after the tax, as nearly as 
 pofiible upon the fame footing as before it. In 
 Great Britain, when any fuch tax is laid upon 
 the produce of domeftic induftry, it is ufual 
 at the fame time, in order to ftop the clamorous 
 complaints of our merchants and manufacturers, 
 that they will be underfold at home, to lay a much 
 heavier duty upon the importation of all foreign- 
 goods of the fame kind. 
 
 This fecond limitation of the freedom of trade, 
 according to fome people, fliould, upon fome oc- 
 cafions, be extended much farther than to the" 
 precife foreign commodities which could come 
 into competition with thofe which had been 
 taxed at home. When the neceflarles of life 
 have been taxed in any country, it becomes 
 proper, they pretend, to tax not only the like 
 neceflaries of life imported from other countries, 
 but all forts of foreign goods which can come 
 into competition with any thing that rs the pro- 
 duce of domeftic induftry. Subfiftence, they 
 fay, becomes neceflarily dearer in confequence 
 
 of
 
 THE WEALTH OF NATIONS. 197 
 
 of fuch taxes ; and the price of labour mufl: al- chap, 
 ways rife with the price of the labourer's fubfift- 11. 
 ence. Every commodity, therefore, which is ^— ^•'-^ 
 the produce of domeftic induflry, though not 
 immediately taxed itfelf, becomes dearer in con- 
 fequence of fuch taxes, becaufe the labour which 
 produces it becomes fo. Such taxes, therefore, 
 are really equivalent, they fay, to a tax upon 
 every particular commodity produced at home. 
 In order to put domeftic upon the fame footing 
 with foreign induftry, therefore, it becomes ne- 
 ceflary, they think, to lay fome duty upon every 
 foreign commodity, equal to this enhancement 
 of the price of the home commodities with which 
 it can come into competition. 
 
 Whether taxes upon the necelTaries of life, 
 fuch as thofe in Great Britain upon foap, fait, 
 leather, candles, &:c. neceffarily raife the price 
 of labour, and confequently that of all other 
 commodities, I fliall confider hereafter, when I 
 come to treat of taxes. Suppofing, however, | 
 
 in the mean time, that they have this effedl:, and 
 they have it undoubtedly, this general enhance- 
 ment of the price of all commodities, in confe- 
 quence of that of labour, is a cafe which differs 
 in the two following refpeds from that of a par- 
 ticular commodity, of which the price was en- 
 hanced by a particular tax immediately impofed 
 upon it. 
 
 First, It might always be known with great 
 exaftnefs how far the price of fuch a commodity- 
 could be enhanced by fuch a tax : but how far 
 the general enhancement of the price of labour 
 
 o 3 might
 
 198 THE NATURE AND CAUSES OF 
 
 BOOK might aifefb that of every different commodity 
 IV. about which labour was employed, could never 
 be known with any tolerable exadnefs. It would 
 be impolTible, therefore, to proportion with any 
 tolerable exaftnefs the tax upon every foreign, 
 to this enhancement of the price of every home, 
 commodity. 
 
 Secondly, Taxes upon the neceflaries of life 
 have nearly the fame effedl upon the circuni- 
 ftances of the people as a poor foil and a bad 
 climate. Provifions are thereby rendered dearer 
 in the fame manner as if it required extraordi- 
 nary labour and expence to raife them. As in 
 the natural fcarcity arifmg from foil and climate, 
 it would be abfurd to direft the people in what 
 manner they ought to employ their capitals and 
 induftry, fo is it likewife in the artificial fcarcity 
 arifmg from fuch taxes. To be left to accom- 
 modate, as well as they could, their induflry to 
 their fituation, and to find out thofe employ- 
 ments in which, notwithftanding their unfavour- 
 able circumftances, they might have fome ad- 
 vantage either in the home or in the foreign 
 market, is what in both cafes would evidently 
 be mofl for their advantage. To lay a new tax 
 upon them, becaufe they are already overbur- 
 dened with taxes, and becaufe they already pay 
 too dear for the necelfaries of life, to make them 
 likewife pay too dear for the greater part of other 
 conimodities, is certainly a moft abiurd way of 
 making amends. 
 
 Such taxes, when they have grown up to a 
 certain height, are a curfe equal to the barren^ 
 
 nefs
 
 THE WEALTH OF NATIONS. 199 
 
 nefs of the earth and the inclemency of the hea- chap. 
 vens ; and yet it is in the richefl and mod in- ii« 
 duftrioLis countries that they have been moft ge- """"^ 
 nerally impofed. No other countries could fup- 
 port fo great a diforder. As the flrongeft bodies 
 only can live and enjoy health, under an un- 
 wholefome regimen ; fo the nations only, that 
 in every fort of induftry have the greatefl natural 
 and acquired advantages, can fubfift and profper 
 under fuch taxes. Holland is the country in 
 Europe in which they abound moft, and which 
 from peculiar circumftances continues to profper, 
 not by means of them, as has been moft abfurdly 
 fuppofed, but in fpite of them. 
 
 As there are two cafes in which it will gene- 
 rally be advantageous to lay fome burden upon 
 foreign, for the encouragement of domeftic, in- 
 duftry ; fo there are two others in which it may 
 fometimes be a matter of deliberation ; in the 
 one, how far it is proper to continue the free 
 importation of certain foreign goods ; and in the 
 other, hovi' far, or in what manner, it may be 
 proper to reftorc that free importation after it has 
 been for fome time interrupted. 
 
 The cafe in which it may fometimes be a 
 matter of deliberation how far it is proper to con- 
 tinue the free importation of certain foreign 
 goods, is, when fome foreign nation reftrains by 
 high duties or prohibitions the importation of 
 fome of our manufadures into their country. 
 Revenge in this cafe naturally dictates retalia- 
 tion, and that we fhould impofe the like duties 
 and prohibitions upon the importation of fome 
 
 04 or
 
 203 THE NATURE AND CAUSES OF ^ 
 
 BOOK or all of their maniifaclures into ours. Nations 
 IV. accordingly feldom fail tc retaliate in this man- 
 ner. The French have been particularly for- 
 ward to favour their own manufaclures ^y re- 
 flraining the importatioi. of fuch foreign goods 
 as could come into competition with them. In 
 this confifted a great part of the policy of Mr. 
 Colbert, who, notwithftanding his great abiU- 
 ties, feems in this cafe to have been impofed 
 upon by the fophiftry of merchants and manu- 
 fa£turers, who are always demanding a mono- 
 poly againft their countrymen. It is at prefent 
 the opinion of the moft intelligent men in 
 France, that his operations of this kind have not 
 been beneficial to his country. That minifter, 
 by the tarif of 1667, impofed very high duties 
 upon a great number of foreign manufactures. 
 Upon his refufmg to moderate them in favour of 
 the Dutch, they in 1671 prohibited the import- 
 ation of the wines, brandies, and manufadures 
 of France. The war of 1672 feems to have 
 been in part occafioned by this commercial dif- 
 pute. The peace of Nimeguen put an end to it 
 in 1678, by moderating fome of thofe duties in 
 favour of the Dutch, who in confequence took 
 oft" their prohibition. It was about the fame time 
 that the French and Englifh began mutually 
 to opprefs each other's induflry, by the like 
 duties and prohibitions, of which the French, 
 however, feem to have fet the firft example. 
 The fpirit of hoftility which has fubfifted be- 
 tween the two nations ever fmce, has hitherto 
 hindered them from being moderated on either 
 
 fide.
 
 THE WEALTH OF NATIONS. aoi 
 
 fide. In 1697 the Englifh prohibited the im- chap. 
 portation of bonelace, the manufacture of Flan- ii* 
 ders. The government of that country, at that 
 time under the dominion of Spain, prohibited in 
 return the importation of Englifh woollens. In 
 1700, the prohibition of importing bonelace into 
 England was taken off upon condition that the 
 importation of Englifh woollens into Flanders 
 fhould be put on the fame footing as before. 
 
 There may be good policy in retaliations of 
 this kind, when there is a probability that they 
 will procure the repeal of the high duties or ^ 
 prohibitions complained of. The recovery of a 
 great foreign market will generally more than 
 compenfate the tranfitory inconveniency of pay- 
 ing dearer during a fliort time for fome forts of 
 goods. To judge whether fuch retaliations are 
 Ukely to produce fuch an effed, does not, per- 
 haps, belong fo much to the fcience of a legif- 
 lator, whofe deliberations ought to be governed 
 by general principles which are always the fame, 
 as to the fkill of that infidious and crafty animal, 
 vulgarly called a ftateftnan or politician, whofe 
 councils are directed by the momentary fiudlua- 
 tions of affairs. When there is no probability 
 that any fuch repeal can be procured, it feems a 
 bad method of compenfating the injury done to 
 certain claffes of our people, to do another injury 
 ourfelves, not only to thofe claffes, but to al- 
 mofl all the other claffes of them. When our 
 neighbours prohibit fome manufafture of ours, 
 we generally prohibit, not only the fame, for 
 that alone would feldom affed them confider- 
 
 10 ably.
 
 202 THE NATURE AND CAUSES OF 
 
 BOOK ably, but feme other manufa6lure of theirs, 
 fv. This may no doubt give encouragement to fome 
 particular clafs of workmen among ourfelves, 
 and by excluding fome of their rivals, may 
 enable them to raife their price in the home- 
 market. Thofe workmen, however, who fuffered 
 by our neighbours prohibition, will not be be- 
 nefited by ours. On the contrary, they and al- 
 moft all the other claiTes of our citizens will 
 thereby be obliged to pay dearer than before for 
 certain goods. Every fuch law, therefore, im- 
 pofes a real tax upon the whole country, not in 
 favour of that particular clafs of workmen who 
 were injured by our neighbours prohibition, but 
 of fome other clafs. 
 
 The cafe in which it may fometimes be a 
 matter of deliberation, how far, or in what man- 
 ner, it is proper to reftore the free importation of 
 foreign goods, after it has been for fome time 
 interrupted, is, when particular manufadures, 
 by means of high duties or prohibitions upon all 
 foreign goods which can come into competition 
 with them, have been fo far extended as to em- 
 ploy a great multitude of hands. Humanity 
 may in this cafe require that the freedom of 
 trade fhould be reftored only by flow gradations, 
 and with a good deal of referve and circum- 
 fpedion. Were thofe high duties and prohi- 
 bitions taken away all at once, cheaper foreign 
 goods of the fame kind might be poured fo fad 
 into the home market, as to deprive all at once 
 many thoufands of our people of their ordinary 
 employment and means of fubfiflence. The dif, 
 
 order
 
 THE WEALTH OF NATIONS, 203 
 
 order which this would occafion might no doubt chap. 
 be very confiderable. It would in all probability, H. 
 however, be much lefs than is commonly imagined, ' ^"*^ 
 for the two following reafons : 
 
 First, all thofe manufaclures, of which any 
 
 part is commonly exported to other European 
 
 countries without a bounty, could be very little 
 
 affefted by the freed importation of foreign 
 
 goods. Such manufactures mud be fold as 
 
 cheap abroad as any other foreign goods of the 
 
 fame quality and kind, and confequently muft 
 
 be fold cheaper at home. They would ftill, 
 
 therefore, keep poiTeffion of the home market, 
 
 and though a capricious man of fafhion might 
 
 fometimes prefer foreign wares, merely becaufe 
 
 they were foreign, to cheaper and better goods 
 
 of the fame kind that were made at home, this 
 
 folly could, from the nature of things, extend 
 
 to fo few, that it could make no fenfible impref- 
 
 fion upon the general ejnployment of the people. 
 
 But a great part of all the different branches of 
 
 our Vv^oollen manufacture, of our tanned leather, 
 
 and of our hardware, are annually exported to 
 
 other European countries without any bounty, 
 
 and thcfe are the manufactures which employ the 
 
 greateft number of hands. The filk, perhaps, is 
 
 the manufacture which would fuffer the mod by 
 
 this freedom of trade, and after it the linen, though 
 
 the latter much lefs than the former. 
 
 Secondly, though a great number of people 
 fliould, by thus reftoring the freedom of trade, 
 be thrown all at once out of their ordinary em- 
 ployment and common method of fubfiftence, it 
 
 1 1 would
 
 204. THE NATURE AND CAUSES OF 
 
 BOOK would by no means follow that they would there- 
 IV. by be deprived either of employment or fub- 
 
 ^*"^'~*~' fiftence. By the reduction of the army and navy 
 at the end of the late war, more than a hundred 
 thoufand foldiers and feamen, a number equal to 
 what is employed in the greateft manufatlures, 
 were all at once thrown out of their ordinary 
 employment ; but, though they no doubt fuf- 
 fered fome inconveniency, they were not thereby 
 deprived of all employment and fubfiftence. 
 The greater part of the feamen, it is probable, 
 gradually betook themfelves to the merchanu- 
 fervice as they could find occafion, and in the 
 mean time both they and the foldiers were ab- 
 forbed in the great mafs of the people, and em- 
 ployed in a great variety of occupations. Not 
 only no great convulfion, but no fenfible difor- 
 der arofe from [o great a change in the fituation 
 of more than a hundred thoufand men, all ac- 
 cufiomed to the ufe of arms, and many of them 
 to rapine and plunder. The number of vagrants 
 was fcarce any-where fenfibly increafed by it, even 
 the wages of labour were not reduced by it in 
 any occupation, fo far as I have been able to 
 learn, except in that of feamen in the merchant 
 fervice. But if we compare together the habits 
 of a foldier and of any fort of manufadurer, we 
 Ihall find that thofe of the latter do not tend fo 
 much to difqualify him from being employed in 
 a new trade, as thofe of the former from being 
 employed in any. The manufadurer has always 
 been accuftomed to look for his fubfiftence from 
 his labour only : the foldier to exped it from his pay. 
 
 Application
 
 THE WEALTH OF NATIONS. 205 
 
 Application and induftry have been familiar to c H a p. 
 the one ; idlenefs and difiipation to the other. 11. 
 But it is furely much eafier to change the direc- 
 tion of induftry from one fort of labour to an- 
 other, than to turn idlenefs and difiipation to 
 any. To the greater part of manufaftures be- 
 fides, it has aljkady been obferved, there are 
 other collateral manufadures of fo fmiilar a na- 
 ture, that a workman can eafdy transfer his in- 
 duftry from one of them to another. The greater 
 part of fuch workmen too are occafionally em- 
 ployed in country labour. The flock which 
 employed them in a particular manufafture be- 
 fore, will flill remain in the country to employ 
 an equal number of people in fome other way. 
 The capital of the country remaining the fame, 
 the demand for labour will likewife be the fame, 
 or very nearly the fame, though it may be ex- 
 erted in different places and for different occupa- 
 tions. Soldiers and feamen, indeed, when dif- 
 charged from the king's fervice, are at liberty 
 to exercife any trade within any town or place 
 of Great Britain or Ireland. Let the fame na- 
 tural liberty of exercifmg what fpecies of induftry 
 they pleafe, be reflored to all his majefty's fub- 
 jeds, in the fame manner as to foldicrs and fea- 
 men ; that is, break down the exclufive privi- 
 leges of corporations, and repeal the flatute of 
 apprenticefiiip, both which are really encroach- 
 ments upon natural liberty, and add to thefe the 
 repeal of the law of fettlements, fo that a poor 
 workman, when thrown out of employment either 
 in one trade or in one place, may feek for it in 
 
 another
 
 2c6 THE NATURE AND CAUSES OF 
 
 BOOK another trade or in another place, without the 
 IV. fear either of a profecution or of a removal, and 
 neither the public nor the individuals will fuf- 
 fer much more from the occafional difbanding 
 forae particular clalTes of manufafturers, than 
 from that of foldiers. Oar manufa£lurers have 
 no doubt great merit with their country, but 
 they cannot have more than thofe who defend it 
 with their blood, nor deferve to be treated with 
 more delicacy. 
 
 To expeft, indeed, that the freedom of trade 
 fliould ever be entirely reftored in Great Britain, 
 is as abfurd as to expe6l that an Oceana or Uto- 
 pia fhould ever be eftabliflied in it. Not only 
 the prejudices of the public, but what is much 
 more unconquerable, the private interefts of 
 many individuals, irrefidibly oppofe it. Were 
 the officers of the army to oppofe with the fame 
 zeal and unanimity any reduction in the number 
 of forces, with which mafter manufafturers fet 
 themfelves againfl every law that is likely to 
 increafe the number of their rivals in the home 
 market ; were the former to animate their fol- 
 diers, in the fame manner as the latter inflame 
 their vi^orkmen, to attack with violence and out- 
 rage the propofers of any fuch regulation; to 
 attempt to reduce the army would be as danger- 
 ous as it has now become to attempt to diminifh 
 in any refpeft the monopoly which our manu- 
 fadurers have obtained againft us. This mono- 
 poly has fo much increafed the number of feme 
 particular tribes of them, that, like an over- 
 grown (landing army, they have become formi- 
 dable
 
 THE WEALTH OF NATIONS. 207 
 
 dable to the government, and upon many occa- chap. 
 fions intimidate the legiflature. The member n. 
 of parliament who fupports every propofal for ''— ^'''*~' 
 ftrengthening this monopoly, is fure to acquire 
 not only the reputation of undqrftanding trade, 
 but great popularity and influence with an order 
 of men whofe numbers and wealth render them 
 of great importance. If he oppofes them, on 
 the contrary, and (till more if he has authority 
 enough to be able to thwart them, neither the 
 mofl acknowledged probity, nor the higheft rank, 
 nor the greatefl public fervices, can proted him 
 from the mofl infamous abufe and detradion, 
 from perfonal intuits, nor fometimes from real 
 danger, arifmg from the infolent outrage of fu- 
 rious and difappointed monopollfts. 
 
 The undertaker of a great manufacture, who, 
 by the home markets being fuddenly laid open 
 to the competition of foreigners, fliould be 
 obliged to abandon his trade, would no doubt 
 fuffer very confiderably. That part of his capi- 
 tal which had ufually been employed in purchaf- 
 ing materials and in paying his workmen, might, 
 without much difficulty, perhaps, find another 
 employment. But that part of it which was 
 fixed in workhoufes, and in the infl:ruments of 
 trade, could fcarce be difpofed of without con- 
 fiderable lofs. The equitable regard, therefore, 
 to his interefl: requires that changes of this kind 
 fhould never be introduced fuddenly, but flowly, 
 gradually, and after a very long warning. The 
 legiflature, were it pofllble that its deliberations 
 could be always directed, not by the clamorous 
 
 importunity
 
 2o8 THE NATURE AND CAUSES OF 
 
 BOOK importunity of partial interefls, but by an ex- 
 IV. tenfive view ot the general, good, ought upon this 
 very account, perhaps, to be particularly careful 
 neither to eftablifli any new monopolies of this 
 kind, nor to extend further thofe which are al- 
 ready eftabliflied. Every fuch regulation intro- 
 duces fome degree of real diforder into the con- 
 ftitution of the ftate, which it will be difficult 
 afterwards to cure without occafioning another 
 diforder. 
 
 How far it may be proper to impofe taxes 
 upon the importation of foreign goods, in order, 
 not to prevent their importation, but to raife a 
 revenue for government, I fliall confider here- 
 after when I come to treat of taxes. Taxes im- 
 pofed with a view to prevent or even to dimi- 
 nifh importation, are evidently as deflrudive of 
 the revenue of the cuftoms as of the freedom of 
 trade.
 
 THE WEALTH OF NATIONS. ^09 
 
 CHAP. III. 
 
 0/ the extraordinary Rejiraints upon the Import" 
 ation of Goods of almoji all Kinds., from thofe 
 Countries with which the Bala?ice is fuppofed tQ 
 be dif advantageous. 
 
 PARTI. 
 
 Of the Utireafonablenefs of thofe Rejiraints e<ven upon 
 the Principles jf the Commercial Sy/iem, 
 
 T^o lay extraordinary reftralnts upon the im- chap. 
 
 portation of goods of almofl all kinds, 111, 
 from thofe particular countries with which the "— ^•'"*-' 
 balance of trade is fuppofed to be difadvantage-. 
 ous, is the fecond expedient by which the com- 
 mercial fydem propofes to increafe the quantity 
 of gold and filver. Thus in Great Britain, Silefia 
 lawns may be imported for home coniumption, 
 upon paying certain duties. But French cam- 
 bricks and lawns are prohibited to be imported, 
 except into the port of London, there to be ware- 
 houfed for exportation. Higher duties are im- 
 pofed upon the wines of France than upon thofe 
 of Portugal, or indeed of any other country. 
 By what is called the impofl: 1692, a duty of 
 five and twenty per cent., of the rate or value, 
 was laid upon all French goods ; while the goods 
 of other nations were, the greater part of them, 
 lubjefted to much lighter duties, feldom exceed- 
 voL. II. E ing
 
 «io THE NATURE AND CAUSES OP 
 
 BOOK ing five per cent. The wine, brandy, fait and 
 iv. vinegar of France were indeed excepted ; thefe 
 commodities being fubjeded to other heavy du- 
 ties, either by other laws, or by particular claufes 
 of th^e fame law. In 1696, a fecond duty of 
 twenty-five per cent., the firfl not having been 
 thought a fufficient difcouragement, was impofed 
 upon all French goods, except brandy ; toge- 
 ther with a new duty of five and twenty pounds 
 upon the ton of French wine, and another of 
 fifteen pounds upon the ton of French vinegar, 
 Ffench goods have never been omitted in any 
 of thofe general fubfidies, or duties of five per 
 cent., which have been impofed upon all, or 
 the greater part of the goods enumerated in the 
 book of rates. If we count the one third and 
 two tnird fubfidies as making a complete fubfidy 
 between them, there have been five of thefe ge- 
 neral fubfidies ; fo that before the commence- 
 ment of the prefent war feventy-five per cent. 
 may be confidered as the loweft duty, to which 
 the greater part of the goods of the growth, 
 produce, or manufadure of France were liable. 
 But upon the greater part of goods, thofe duties 
 are equivalent to a prohibition. The French in 
 their turn have, I believe, treated our goods and 
 manufadures jud as hardly ; though I am not fo 
 well acquainted with the particular hardfhips 
 which they have impofed upon them. Thofe 
 mutual reflraints have put an end to almofi; all 
 fair commerce between the two nations, and 
 finugglers are now the principal importers, either 
 of Briti/h goods into France, or of French goods 
 
 into
 
 THE WEALTH OF NATIONS. 2H 
 
 into Great Britain. The principles which I have chap. 
 been examining in the foregoing chapter took ii^* 
 their origin from private interefl and the fpirit 
 of monopoly ; thofe which I am going to exa- 
 mine in this, from national prejudice and am*- 
 mofity. They are, accordingly, as might well 
 be expeded, ftill more unreafonable. They are 
 fo, even upon the principles of the commercial 
 fyftem. 
 
 First, though it were certain that in the cafe 
 of a free trade between France and England, for 
 example, the balance would be in favour of 
 France, it would by no means follow that fuch 
 a trade v/ould be difadvantageous to England, 
 or that the general balance of its whole trade 
 would thereby be turned more againft it. If the 
 wines of France are better and cheaper than thofe 
 of Portugal, or its linens than thofe of Germany, 
 it would be more advantageous for Great Bri- 
 tain to purchafe both the wine and the foreign 
 linen which it had occafion for of France, than 
 of Portugal and Germany. Though the value 
 of the annual importations from France would 
 thereby be greatly augmented, the value of the 
 whole annual importations would be diminiflied, 
 in proportion as the French goods of the fame 
 quality were cheaper than thofe of the other two 
 countries. This would be the cafe, even upon the 
 fuppofition that the whole French goods imported 
 were to be confumed in Great Britain. 
 
 But, fecondly, a great part of them might be 
 re-exported to other countries, where, being fold 
 with profit, they might bring back a return equal 
 
 p 2 in
 
 (II THE NATURE AND CAUSES OF 
 
 BOOK in value, perhaps, to the prime coft of the whole 
 IV. French goods imported. What has frequently 
 
 ' ' "^ been faid of the Eaft India trade might poflibly 
 
 be true of the French ; that though the greater 
 part of Eaft India goods were bought with gold 
 and filver, the re-exportation of a part of them 
 to other countries, brought back more gold and 
 filver to that v/hich carried on the trade than the 
 prime coft of the whole amounted to. One of 
 the moft important branches of the Dutch trade, 
 at prefent, confifts in the carriage of French 
 goods to other European countries. Some part 
 even of the French wine drank in Great Britain 
 is clandeftinely imported from Holland and Zea- 
 hmd. If there was either a free trade between 
 France and England, or if French goods could 
 be imported upon paying only the fame duties as 
 thofe of other European nations, to be drawn 
 back upon exportairon, England might have fomc 
 fliare of a trade which is found fo advantageous 
 to Holland. 
 
 Thirdly, and laftly, there is no certain cri- 
 terion by which we can determine on which fide 
 what is called the balance between any two coun- 
 tries lies, or which of them exports to the great- 
 eft value. National prejudice and animofity, 
 prompted always by the private intereft of parti- 
 cular traders, are the principles which generally 
 dired our judgment upon all queftions concern- 
 ing it. There are two criterions, however, 
 which have frequently been appealed to upon 
 fuch occafions, the cuftom-houfe books and the 
 courfe of exchange. The cuftom-houfe books, 
 
 I think.
 
 THE WEALTH OF NATIONS. «I3 
 
 I think, it is now generally acknowledged, are a chap. 
 very uncertain criterion, on account of the inac- ni. 
 curacy of the valuation at which the greater part • — •'"— ^ 
 of goods are rated in them. The courfe of ex- 
 change is, perhaps, almoft equally fo. 
 
 When the exchange between two places, fuch 
 as London and Paris, is at par, it is faid to be 
 a fign that the debts due from London to Paris 
 are compenfated by thofe due from Paris to 
 London. On the contrary, when a premium is 
 paid at London for a bill upon Paris, it is faid 
 to be a fign that the debts due from London to 
 Paris are not compenfated by thofe due from Pa- 
 ris to London, but that a balance in money mufl 
 be fent out from the latter place ; for the riik, 
 trouble, and expence of exporting which, the 
 premium is both demanded and given. But the 
 ordinary Hate of debt and credit between thofe 
 two cities muft: neceffarily be regulated, it is 
 faid, by the ordinary courfe of their dealings 
 with one another. When neither of them im- 
 ports from the other to a greater amount than it 
 exports to that other, the debts and credits of 
 each may compenfate one another. But when 
 one of them imports from the other to a greater 
 value than it exports to that other, the former 
 neceffarily becomes indebted to the latter in a 
 greater fum than the latter becomes indebted to 
 it; the debts and credits of each do not com- 
 penfate one another, and money muft; be fent out 
 from that place of which the debts over-balance 
 the credits. The ordinary courfe of exchange, 
 therefore, being an indication of the ordinary 
 
 ^ 3 ilatc
 
 214 THE NATURE AND CAUSES OF 
 
 BOOK ftate of debt and credit between two places, mufl: 
 IV. likewlfe be an indication of the ordinary courfe 
 of their exports and imports, as thefe necelTarily 
 regulate that flate. 
 
 But though the ordinary courfe of exchange 
 Hiall be allowed to be a fufEcient indication of 
 the ordinary ftate of debt and credit between any 
 two places, it would not from thence follow, 
 that the balance of trade was in favour of that 
 place which had the ordinary flate of debt and 
 credit in its favour. The ordinary ftate of debt 
 and credit between any two places is not always 
 entirely regulated by the ordinary courfe of their 
 dealings with one another ; but is often influ- 
 enced by that of the dealings of either with many 
 other places. If it is ufiial, for example, for 
 the merchants of England to pay for the goods 
 which they buy of Hamburgh, Dantzic, Riga, 
 &c. by bills upon Holland, the ordinary flate 
 of debt and credit between England and Holland 
 will not be regulated entirely by the ordinary 
 courfe of the dealings of thofe two countries with 
 one another, but will be influenced by that of 
 the dealings in England with thofe other places. 
 England may be obliged to fend out every year 
 money to Holland, though its annual exports to 
 that country may exceed very much the annual 
 value of its imports from thence ; and though 
 what is called the balance of trade may be very 
 much in favour of England, 
 
 In the way, befides, in which the par of ex- 
 change has hitherto been computed, the ordinary 
 courfe of exchange can afford no fuflicient indi- 
 cation
 
 THE WEALTH OF NATIONS. 215 
 
 cation that the ordinary ftate of debt and credit c H a p^ 
 is in favour of that country which feems to have, in» 
 or which is fuppofed to have, the ordinary courfe "^~''~"'~'' 
 of exchange in its favour ; or, in other words, 
 the real exchange may be, and, in faft, often is, 
 fo very different from the computed one, that, 
 from the courfe of the latter, no certain conclu- 
 fion can, upon many occafions, be drav/n con- 
 cerning that of the former. 
 
 When for a fum of money paid in England, 
 containing, according to the flandard of the 
 Englifti mint, a certain number of ounces of 
 pure filver, you receive a bill for a fum of mo- 
 ney to be paid in France, containing, according 
 to the flandard of the French mint, an equal 
 number of ounces of pure filver, exchange is faid 
 to be at par between England and France. 
 When you pay more, you are fuppofed to give a 
 premium, and exchange is faid to be againfl 
 England, and in favour of France. When you 
 pay lefs, you are fuppofed to get a premium, and 
 exchange is faid to be againft France, and in fa- 
 vour of England. 
 
 But, firft. We cannot always judge of the value 
 of the current money of different countries by 
 the flandard of their refpe£live mints. Ii> fomc 
 it is more, in others it is lefs worn, dipt, and 
 othervvlfe degenerated from that flandard. But 
 the value of the current coin of every country, 
 compared with that of apy other country, is in 
 proportion not to the quantity of pure filver 
 which it ought to contain, but to that which it 
 a^^ually does contain. Before the reformation of 
 
 p 4 the '
 
 ^i6 THE NATURE AND CAUSES OF 
 
 p o o K the filver coin in king William's time, exchange 
 IV. between England and Holland, computed, in 
 the ufual manner, according to the ftandard of 
 their refpeclive mints, was five and twenty per 
 cent, againft England. But the value of the 
 current coin of England, as we learn from Mr. 
 Lowndes, was at that time rather more than five 
 and twenty per cent, below its ftandard value. 
 The real exchange, therefore, may even at that 
 time have been in favour of England, notwith- 
 ftanding the computed exchange was fo much 
 againft it ; a fmaller number of ounces of pure 
 filver, adually paid in England, may have pur- 
 chafed a bill for a greater number of ounces of 
 pure filver to be paid in Holland, and the man 
 who was fuppofed to give, may in reality have 
 got the premium. The French coin was, before 
 the late reformation of the Englifti gold coin, 
 much lefs worn than the Englilh, and was, per- 
 haps, two or three per cent, nearer its ftandard. 
 If the computed exchange with France, there- 
 fore, was not more than two or three per cent, 
 againft England, the real exchange might have 
 been in its favour. Since the reformation of the 
 gold coin, the exchange has been conftantly in 
 favour of England, and againft France. 
 
 Secondly, In forae countries the expence of 
 coinage is defrayed by the government ; in others, 
 it is defrayed by the private people who carry 
 their bullion to the mint, and the government 
 even derives fome revenue from the coinage. In 
 England, it is defrayed by the government, and 
 if you carry a pound weight of ftandard filver to 
 
 the
 
 THE WEALTH OF NATIONS. a, 7 
 
 the mint, you get back fixty-two (hillings, con- chap. 
 taining a pound weight of the like ftandard fil- m. 
 ver. In France, a duty of eight per cent, is de- ^— ^^~^ 
 dueled for the coinage, which not only defrays 
 the expence of it, but affords a fmall revenue 
 to the government. In England, as the coinage 
 cofts nothing, the current coin can never be 
 much more valuable than the quantity of bullion 
 which it adlually contains. In France, the 
 workmanfhip, as you pay for it, adds to the va- 
 lue, in the fame manner as that of wrought 
 plate. A fum of French money, therefore, con- 
 taining a certain weight of pure filver, is more 
 valuable than a fum of Englifh money contain- 
 ing an equal weight of pure filver, and muft re- 
 quire more bullion, or other commodities, to 
 purchafe it. Though the current coin of the 
 two countries, therefore, were equally near the 
 ftandards of their refpedive mints, a fum of 
 Englifli money could not well purchafe a fum 
 of French money, containing an equal number 
 of ounces of pure filver, nor confequently a bill 
 upon France for fuch a fum. If for fuch a bill 
 no more additional money was paid than what 
 was fufficient to compenfate the expence of the 
 French coinage, the real exchange might be at 
 par between the two countries, their debts and 
 credits might mutually compenfate one another, 
 while the computed exchange was confiderably 
 in favour of France. If lefs than this was paid, 
 the real exchange might be in favour of Eng- 
 land, while the computed was in favour of 
 
 France. 
 
 Thirdly,
 
 *i8 THE NATURE AND CAUSES OF 
 
 Thirdly, and laftly. In fome places, as at 
 Amflerdam, Hamburgh, Venice, &c. foreign 
 bills of exchange are paid in what they call bank 
 money ; while in others, as at London, Lifbon, 
 Antwerp, Leghorn, &c. they are paid in the 
 common currency of the country. What is call- 
 ed bank money is always of more value than 
 the fame nominal fum of common currency. A 
 thoufand guilders in the bank of Amfterdam, for 
 example, are of more value than a thoufand 
 guilders of Amfterdam currency. The differ- 
 ence between them is called the agio of the bank, 
 which, at Amfterdam, is generally about five per 
 cent. Suppofing the current money of the two 
 countries equally near to the ftandard of their 
 refpedive mints, and that the one pays foreign 
 bills in this common currency, while the other 
 pays them in bank money, it is evident that the 
 computed exchange may be in favour ot that 
 which pays in bank money, though the real ex- 
 change fhould be in favour of that which pays in 
 current money ; for the fame reafon that the 
 computed exchange may be in favour of that 
 which pays in better money, or in money nearer 
 to its own ftandard, though the real exchange 
 (hould be in favour of that which pays in worfe. 
 The computed exchange, before the late reform- 
 ation of the gold coin, was generally againft 
 London with Amfterdam, Hamburgh, Venice, 
 and, I believe, with all other places which pay 
 in what is called bank money. It will by no 
 means follow, however, that the real exchange 
 ',^•as againft it. Since the reformation of the gold 
 ' ' coin.
 
 THE WEALTH OF NATIONS. $ig 
 
 coin, it has been in favour of London even with c h a r^ 
 thofe places. The computed exchange has ge- ui. 
 nerally been in favour of London with Lifbon, "^ ^^""^ 
 Antwerp, Leghorn, and, if you except France, 
 I believe with mofl: other parts of Europe that 
 pay in common currency ; and it is not impro- 
 bable that the real exchange was h too.^ 
 
 Digrejfion concerning Banks of Depofit, particularly 
 concerning that c/'Amfterdam, 
 
 'T^'HE currency of a great (late, fuch as France, 
 or England, generally confifts almoft en- 
 tirely of its own coin. Should this currency, 
 therefore, be at any time worn, dipt, or other- 
 wife degraded below its ftandard value, the (late 
 by a reformation of its coin can effedually re- 
 eftablifli its currency. But the currency of a 
 i'mall Hate, fuch as Genoa or Hamburgh, can 
 feldom confi{t altogether in its own coin, but 
 mud be made up, in a great meafure, of the 
 coins of all the neighbouring (fates [with which 
 its inhabitants have a continual intercourfe. 
 Such a (late, therefore, by reforming its coin, 
 will not always be able to reform its currency. 
 If foreign bills of exchange are paid in this cur- 
 rency, the uncertain value of any fum, of what 
 is in its own nature fo uncertain, mufl: render the 
 exchange always very much againft fuch a ftate,, 
 its currency being, in all foreign ftates, necefTa- 
 xily valued even below what it is worth. 
 
 In
 
 ',2o THE NATURE AND CAUSES OF 
 
 BOOK In order to remedy the inconvenience to which 
 IV. this difadvantageous exchange muft have fub* 
 jefted their merchants, fuch fmall flates, when 
 they began to attend to the intereft of trade, 
 have frequently enaded, that foreign bills of 
 exchange of a certain value (hould be paid, not 
 in common currency, but by an order upon, 
 or by a transfer in the books of a certain bank, 
 eftabliflied upon the credit, and under the pro. 
 tedlion of the ftate ; this bank being always 
 obliged to pay, in good and true money, exadly 
 according to the Itandard of the ftate. The 
 banks of Venice, Genoa, Amfterdam, Ham, 
 burgh, and Nuremberg, feem to have been all 
 originally eftablifhed with this view, though 
 fome of them may have afterwards been made 
 fubfervient to other purpofes. The money of 
 fuch banks being better than the common cur- 
 rency of the country, necelfarily bore an agio, 
 which was greater or fmaller, according as the 
 currency was fuppofed to be more or lefs de- 
 graded below the ftandard of the flate. The 
 agio of the bank of Hamburgh, for example, 
 which is faid to be commonly about fourteen 
 per cent., is the fuppofed difference between the 
 good ftandard money of the flate, and the dipt, 
 worn, and dimlniflred currency poured into it 
 from all the neighbouring flates. 
 
 Before 1609 the great quaiitity of dipt and 
 worn foreign coin which the extenfive trade of 
 Amfterdam brought from all parts of Europe, 
 reduced the value of its currency about nine 
 per cent, below that of good money frelh from 
 
 4 th
 
 THE WEALTH OF NATIONS. 221 
 
 the mint. Such money no fooner appeared than chap. 
 it was melted down or carried away, as it always m* 
 is in fuch circumftances. The merchants, with 
 plenty of currency, could not always find a fufE- 
 cient quantity of good money to pay their bills 
 of exchange ; and the value of thofe bills, in 
 fpire of feveral regulations which were made to 
 prevent it, became in a great meafure uncertain. 
 
 In order to remedy thefe inconveniences, a 
 bank was eftabliOied in 1609 under the guarantee 
 of the city. This bank received both foreign 
 coin, and the light and worn coin of the country, 
 as its real intrinfic value in the good ftandard 
 money of the country, deducing only fo much 
 as was neceflary for defraying the expence of coin- 
 age, and the other neceflary expence of ma- 
 nagement. For the value which remained, after 
 this fmall dedudion was made, it gave a credit 
 in its books. This credit was called bank mo- 
 ney, which, as it reprefented money exadly ac- 
 cording to the ftandard of the mint, was always 
 of the fame real value, and intrinfically worth 
 more than current money. It was at the fame 
 time enacted, that all bills drawn upon or nego- 
 ciated at Amfterdam of the value of fix hundred 
 guilders and upwards fliould be paid in bank 
 money, which at once took away all uncer- 
 tainty in the value of thofe bills. Every mer- 
 chant, in confequence of this regulation, was 
 obliged to keep an account whh the bank in 
 order to pay his foreign bills of exchange, which 
 neceflarily occafioned a certain demand for bank 
 money. 
 
 Bank
 
 221 THE NATURE AND CAUSES OF 
 
 BOOK Bank money, over and above both its intrln* 
 IV. fic fuperiority to currency, and the additional va» 
 
 '""^^"'^ lue which this demand neceffarily gives it, has 
 likewife feme other advantages. It is fecure 
 from fire, robbery, and other accidents ; the city 
 of Amfterdam is bound for it ; it can be paid 
 away by a fimple transfer, without the trouble 
 of counting, or the rifk of tranfporting it from, 
 one place to another. In confequence of thofe 
 different advantages, it feems from the beginning 
 to have borne an agio, and it is generally be- 
 lieved that all the money originally depofited in 
 the bank was allowed to remain there, nobody 
 caring to demand payment of a debt which he 
 could fell for a premium in the market. By 
 demanding payment of the bank, the owner of 
 a bank credit would lofe this premium. As a 
 fhilling frelh from the mint will buy no more 
 goods in the market than one of our commoa 
 worn IhilHngs, (o the good and true money 
 which might be brought from the coffers of the 
 bank into thofe of a private perfon, being mixed 
 and confounded with the common currency of 
 the country, would be of no more value than 
 that currency, from which it could no longer 
 be readily dillinguiflied. While it remained in 
 the coffers of the bank, its fuperiority was known 
 and afcertained. When it had come into thofe 
 of a private r»erfon, its fuperiority could not well 
 be afcertained without more trouble than per- 
 haps the difference was worth. By being brought 
 from the coffers of the bank, befides, it loft ali 
 the other advantages of bank money; its fecu-
 
 THE WEALTH OF NATIONS. 223 
 
 rfty, its eafy and fafe transferability, its ufe in c H a p, 
 paying foreign bills of exchange. Over and in» 
 above all this, it could not be brought from thofe 
 coffers, as vi'ill appear by and by, without pre- 
 vioufly paying for the keeping. 
 
 Those depofits of coin, or thofe depofits 
 >vhich the bank was bound to reftore in coin, 
 conftituted the original capital of the bank, or 
 the whole value of what was reprefented by what 
 is called bank money. At prefent they are fup- 
 pofed to conflitute but a very fmall part of it. 
 In order to facilitate the trade in bullion, the 
 bank has been for thefe many years in the practice 
 of giving credit in its books upon depofits of 
 gold and filver bullion. • This credit is generally 
 about five per cent, below the mint price of fuch 
 bullion. The bank grants at the fame time 
 what is called a recipice, or receipt, entitling the 
 perfon who makes the depofit, or the bearer, to 
 take out the bullion again at any time within fix 
 months, upon transferring to the bank a quan- 
 tity of bank money equal to that for which cre- 
 dit had been given in its books when the de- 
 pofit was made, and upon paying one-fourth per 
 cent, for the keeping, if the depofit was in 
 filver ; and one-half per cent, if it was in gold ; 
 but at the fame time declaring, that in default of 
 fuch payment, and upon the expiration of this 
 term, the depofit ihould belong to the bank at 
 the price at which it had been received, or for 
 which credit had been given in the transfer 
 books. What is thus paid for the keeping of 
 the depofit may be conQdered as a fort of ware- 
 
 1 3 houfe
 
 22+ THE NATURE AND CAUSES OF 
 
 BOOK houfe rent ; and why this warehoufe rent fliould 
 IV. be fo much dearer for gold than for filver, feve- 
 ral different reafons have been affigned. The 
 finenefs of gold, it has been faid, is more diffi- 
 cult to be afcertained than that of filver. Frauds 
 are more eafily pradifed, and occafion a greater 
 lofs in the mod precious metal. Silver, befides, 
 being the ftandard metal, the ftate, it has been 
 faid, wifhes to encourage more the making of 
 depofits of filver than thofe of gold. 
 
 Deposits of bullion are moft commonly made 
 when the price is fomewhat lower than ordinary; 
 and they are taken out again when it happens to 
 rile. In Holland the market price of bullion is 
 generally above the mint price, for the fame 
 reafon that it was fo in England before the late 
 reformation of the gold coin. The difference is 
 faid to be commonly from about fix to fixteen 
 flivers upon the mark, or eight ounces of filver 
 of eleven parts fine, and one part alloy. The 
 bank price, or the credit which the bank gives 
 for the depofits of fuch filver (when made in foreign 
 coin, of which the finenefs is well known and 
 afcertained, fuch as Mexico dollars), is twenty- 
 two guilders the markj the mint price is about 
 twenty-three guilders, and the market price is 
 from twenty-three guilders fix, to twenty-three 
 guilders fixteen ftivers, or from two to three 
 per cent, above the mint price *. The propor- 
 tions 
 
 * The following are the prices at which the Bank of Am- 
 fterdam at prefent (September, 1775,) receives bullion and 
 coin of different kinds : 
 
 SIL.
 
 THE WEALTH OF NATIONS. 225 
 
 tions between the bank price, the mint price, and chap. 
 the market price of gold bullion, are nearly the m* 
 fame. A perfon can generally fell his receipt for 
 the difference between the mint price of bullion 
 and the market price. A receipt for bullion is 
 almoft always worth fomething, and it very fel- 
 <^om happens, therefore, that any body fuffers 
 his receipt to expire, or allows his bullion to 
 fall to the bank at the price at which it had been, 
 received, either by not taking it out before the 
 end of the fix months, or by neglefting to pay 
 the one-fourth or one-half per cent, in order 
 
 SILVER. 
 
 Mexico dollars "^ >-,.,* 
 
 ■17 1 f Guilders. 
 
 iTench crowns \ , 
 
 •c* 1-n r^ ' \ -^ — 22 per mark, 
 
 r-ngluh fdver coin J ^ 
 
 Mexico dollars new coin - 21 10 
 
 Ducatnons - - - - 3 
 
 Rix dollars - - - - 2 8 
 Bar filver containing -fl ^"^ fdver 2 1 per markj and In 
 this proportion down to :|: fine, on which 5 guilders are 
 given. 
 
 Fine bars, 23 per mark» 
 
 GOLD. 
 
 Portugal coin 
 
 Guineas ^ B— 310 per mark. 
 
 Louis d'ors new 
 
 Ditto old - - - - 200 
 
 New ducats 4 19 S per ducat. 
 
 [.'-. 
 
 Bar or ingot gold is received in proportion to its finenefs 
 compared with the above foreign gold coin. Upon fine bars 
 the bank gives 34.0 per mark. In general, however, Tome- 
 thing more is given upon coin of a known finenefs, than upon 
 gold and filver bars, of which the finenefs cannot be iifcer* 
 tained but by a procefs of melting and affaying. 
 
 VOL. II, Q to
 
 i{36 THE NATURE AND CAUSES OF 
 
 BOOK to obtain a new receipt for another fix months. 
 J^'- This, however, though ic happens feldom, is 
 faid to happen fometimes, and more frequently 
 with regard to gold, than with regard to filver, 
 on account of the higher warehoufe-rent which 
 is paid for the keeping of the more precious 
 metal. 
 
 The perfon who by making a depofit of bul- 
 lion obtains both a bank credit and a receipt, 
 pays his bills of exchange as they become due 
 with his bank credit ; and either fells or keeps his 
 receipt according as he judges that the price of 
 bullion is likely to rife or to fall. The receipt 
 and the bank credit ieldoin keep long together, 
 and there is no occafion that they fliould. The 
 perfon who has a receipt, and who wants to take 
 out bullion, finds always plenty of bank credits, 
 or bank money, to buy at the ordinary price ; 
 and the perfon who has bank money, and wants 
 to take out bullion, finds receipts always in equal 
 abundance. 
 
 The owners of bank credits, and the holders 
 of receipts, conftitute two different forts of cre- 
 ditors againft the bank. The holder of a receipt 
 cannot draw out the bullion for which it is 
 granted, without re-affigning to the bank a fum 
 .flf bank money equal to the price at which the 
 bullion had been received. If he lias no bank 
 money of his own, he mufl purchafe it of thofe 
 who have it. The owner of bank money cannot 
 draw out bullion without producing to the bank 
 receipts for the quantity which he wants. If he 
 has none of his own, he muft buy them of thofe 
 
 who
 
 THE WEALTH OF NATlOxNS. rlf 
 
 W'ho have them. The holder of a receipt, when c h a f. 
 he purchafes bank money, purchafes the pov/er i'^- 
 of taking out a quantity of bullion, of which the ''^^' 
 mint price is five per cent, above the hank price. 
 The agio of five per cent, therefore, which he 
 commonly pays for it, is paid, not for an imagi- 
 nary, but for a real value^ The owner of bank 
 money when he purchafes a receipt, purchafes 
 the power of taking out a quantity of bullion of 
 which the market price is commonly from two to 
 three per cent, above the mint price. The price 
 which he pays for it, therefore, is paid likewife 
 for a real value. The price of the receipt, and 
 the price ot the bank money, compound or make 
 up between them the full value or price of the 
 bullion. 
 
 Upon depofits of the coin current in the coun- 
 try, the bank grants receipts likewife as well as 
 bank credits ; but thofe receipts are frequently 
 of no value, and will bring no price in the mar- 
 ket. Upon ducatoons, for example, which in 
 the currency pafs for three guilders three flivers 
 each, the bank gives a credit of three guilders 
 only, or five per cent, below their current value. 
 It grants a receipt likewife intitling the bearer 
 to take out the number of ducatoons deoofited 
 at any time within fix months, upon paying one- 
 fourth per cent, for the keeping. This receipt 
 will frequently bring no price in the m-arket. 
 Three guilders bank money generally fell in the 
 market for three guilders three (livers, the fuJl 
 value of the ducatoons, if thev were taken out of 
 the bankj and before they can be taken our, 
 
 Q^ 2 on<;-
 
 ja8 THE NATURE AND CAUSES OF 
 
 U o o K one-fourth per cent, mufl: be paid fot the keep- 
 IV. ing, -which would be mere lofs to the holder of 
 the receipt. If the agio of the bank, however, 
 lliould at any time fall to three per cent, fuch 
 receipts might bring fome price in the market^ 
 and might fell for one and three-fourths per 
 cent. But the agio of the bank being now gene- 
 rally about five per cent, fuch receipts are fre- 
 quently allowed to expire, or, as they exprefs it^ 
 to fall to the bank. The receipts which are 
 given for depofits of gold ducats fall to it yet 
 more frequently ^ becaufe a higher warehoufe- 
 rent, or one half per cent, muft; be paid for the 
 keeping of them before they can be taken out 
 again. The five per cent, which the bank gains, 
 when depofits either of coin or bullion are al- 
 lowed to fall to it, may be confidered as the 
 warehoufe-rent for the perpetual keeping of fuch 
 depofits. 
 
 The fum of bank money for which the re- 
 ceipts are expired mufl be very confiderable. It 
 muft comprehend the whole original capital of 
 the tank, which, it is generally fuppofed, has 
 been allowed to remain there from the time it 
 was firft depofited, nobody earing either to re- 
 new his receipt or to take out his depofit, as, 
 for the reafons already afligned, neither the one 
 nor the other could be done without lofs. But 
 whatever may be the amount of this fum, the 
 proportion u'hich it bears to the whole mafs of 
 bank money is fuppofed to be very fmalU The 
 bank of Amfterdam has for thefe many years pad 
 been the great warehoufe of Europe for bul- 
 lion,
 
 THE WEALTH OF NATIONS. ??9 
 
 lion, for which the receipts are very feldoni al- c h a p. 
 lowed to expire, or, as they exprefs it, to fall to m. 
 the bank. The far greater part of the bank mo- 
 ney, or of the credits upon the books of the bank, 
 is fuppofed to have been created, for thefe many 
 years paft, by fuch depofits which the dealers 
 in bullion are continually both making and with* 
 drawing. 
 
 No demand can be made upon the bank but by 
 means of a recipice or receipt. The fmaller 
 mafs of bank money, for which the receipts are 
 expired, is mixed and confounded with the 
 much greater mafs for which they are (till in 
 force ; fo that, though there may be a confider- 
 able funi of bank money, for which there are no 
 receipts, there is no fpecific fum or portion of 
 it, which may not at any time be demanded by 
 one. The bank cannot be debtor to two perfons 
 for the fame thing ; and the owner of bank mo- 
 ney who has no receipt, cannot demand payment 
 of the bank till he buys one. In ordinary and 
 quiet times, he can find no difficulty in getting 
 one to buy at the market price, which generally 
 correfponds with the price at which he can fell the 
 coin or bullion it intitles him to take out of the 
 bank. 
 
 It might be otherwifc during a public cala- 
 mity ; an invafion, for example, fuch as that of 
 the French in 1672. The owners of bank mo- 
 ney being then all eager to d;-aw it out of the 
 bank, in order to have it in their own keeping, 
 the demand for receipts might raife their price 
 to an exorbiti^iu height. The holders of thern
 
 230 THE NATURE AND CAUSES CH? 
 
 BOOK might form extravagant expeftations, and, in- 
 1^'* ftead of two or three per cent, demand half the 
 '^""^ bank money for which credit had been given 
 upon the deppfits that the receipts had refpec- 
 tively been granted for. The enemy, informed 
 of the conRitution of the bank, might even buy 
 them up, in order to prevent the carrying away 
 of the treafure. In fuch emergencies, the bank, 
 it is fuppofed, would break- through its ordinary 
 rule of milking payment only to the holders of 
 receipts. Tlie holders of receipts, who had no 
 bank money, mufl have received within two or 
 three per cent, of the value of the depofit for 
 which their refpedive receipts had been granted. 
 The bank, therefore, it is faid, would in this 
 cafe make no fcruple of paying, either with money 
 or bullion, the full value of what the owners of 
 bank money who could get no receipts were cre- 
 dited for in its books ; paying at the fame time 
 two or three per cenr. to fuch holders of receipts 
 as had no bank money, that being the whole 
 value which in this fiate of things could juftly be 
 fuppofed due to them. 
 
 EvKN in ordinary and quiet times it is the 
 interefl: of the holders of receipts to deprefs the 
 agio, in order either to buy bank money (and 
 confequently the bullion, which their receipts 
 would then enable them to take out of the bank) 
 fo much cheaper, or to fell their receipts to 
 thofe who have bank money, and who want to 
 take out bullion, fo much dearer ; the price of 
 a receipt being generally equal to the difference 
 between the market price of bank money, and 
 
 that
 
 THE WEALTH OF NATIONS. 13^ 
 
 that of the coin or bullion for which tiTe receipt chap. 
 had been granted. It is the interefl of the own- hi. 
 ers of bank money, on the contrary, to raife 
 the agio, in order either to fell their bank mo- 
 ney fo much dearer, or to buy a receipt fo much 
 cheaper. To prevent the flock-jobbing tricks 
 which thofe oppofite interefts might fometimes 
 occafion, the bank has of late years corns to the 
 refolution to fell at all times bank money for 
 currency, at five per cent, agio, and to buy it 
 in again at four per cent. agio. In coniequence 
 of this refolution the agio can never either rife 
 above five, or fmk below four per cent, and the 
 proportion between the market price of bank 
 and that of current money, is kept at all times 
 very near to the propoition between their in- 
 trinfic values. Before this refolution was taken, 
 the market price of bank money ufed fometimes 
 to rife fo high as nine per cent, agio, and fome- 
 times to fink fo low as par, according as oppofite 
 interefts happened to iuliuc^nce the market. 
 
 The bank of Amfterdam profefles to lend out 
 no part of what is depofited with it, but, for 
 every guilder for which it gives credit in it^ 
 books, to K.eep in its repofitories the value of a 
 guilder eiiher in money or bullion. That it keeps 
 in its repofitories all t'le money or bullion for 
 which there are receipts in forc^, for which it i^i 
 at all times liable to be called upon, and which, 
 in reality, is continually g'^ing from i: and re- 
 turning' to it ao;ain, cannot well be doubted. 
 But whether it does fo likewife with regard to 
 that part of its capital, for which the receipts 
 
 q_^4 are
 
 23^ THE NATURE AND CAUSES OF 
 
 BOOK are long r.go expired, for which in ordinary and 
 IV. quiet times it cannot be called upon, and which 
 in reality is very likely to remain with it for ever, 
 or as long as the States of the United Provinces 
 fubfiH:, may perhaps appear more uncertain. 
 At Amfterdam, however, no point of faith is 
 better eftablifhed than that for every guilder, 
 circulated as bank money, there is a correfpond- 
 ent guilder in gold or filver to be found in the 
 treafure of the bank. The city is guarantee that 
 it fhould be fo. The bank is under the direcliori 
 of the four reigning burgomafters, who are 
 changed every year. Each new fet of burgo- 
 mafters vifits the treafure, compares it with the 
 books, receives it upon oath, and delivers it 
 over, with the fame awful folemnity, to the kt 
 which fucceeds ; and in that fober and religious 
 country oaths are not yet difregarded, A rota- 
 tion of this kind feems alone a fufScient fecurity 
 againft any praftices which cannot be avowed. 
 Amidfl all the revolutions which fadion has ever 
 Qccafioned in the government of Amfterdam, the 
 prevailing party has at no time accufed their 
 predecefl"ors of infidelity in the adminiftration of 
 the bank. No accufation could have affeded 
 more deeply the reputation and fortune of the 
 difgraced party, and if fuch an accufation could 
 have been fupported, we may be affured that it 
 would have been brought. In 1672, when the 
 French king was at Utrecht, the bank of Am- 
 fterdam paid fo readily as left no doubt of the 
 fidelity \vith which it had obferved its engage- 
 ments. Some of the pieces which were then 
 
 brought
 
 THE WEALTH OF NATIONS. 233 
 
 brought from its repofitories appeared to have c h a f. 
 been fcorched with the fire which happened in the in. 
 town houfe foon after the bank was eftablifhed. '^"^■^^"^ 
 Thofe pieces, therefore, mufl: have lain there from 
 that time. 
 
 What may be the amount of the treafure in 
 the bank, is a queftion which has long employed 
 the fpeculations of the curious. Noiliing but 
 conjedure can be otTered concerning it. It is 
 generally reckoned that there are about two 
 thoufand people who keep accounts with the 
 bank, and allov/ing them to have, one with an- 
 other, the value of fifteen hundred pounds fter- 
 ling lying upon their refpe^live accounts (a very 
 large allowance) the whole quantity of bank 
 money, and confequently of treafure in the bank, 
 will amount to about three millions fterling, or, 
 at eleven guilders the pound fterling, thirty-three 
 millions of guilders ; a great fum, and fufficient 
 to carry on a very extenfive circulation ; but vaftly 
 below the extravagant ideas which fome people 
 have formed of this treafure. 
 
 The city of Amfterdam derives a confiderable 
 revenue from the bank. Befides what may be 
 called the warehoufe rent above mentioned, each 
 perfon, upon nrft opening an account with the 
 bank, pays a fee of ten guilders ; and for every 
 new account three guilders three ftivers ; for 
 every transfer two ftivers ; and if the transfer is 
 for lefs than three hundred guilders, fix ftivers, 
 in order to difcourage the multiplicity of fmall 
 tranra(5lions. The perfon who neglects to ba- 
 lance his account twice in the year, forfeits 
 
 twenty-
 
 53+ THE NATURE AND CAUSES OF 
 
 BOOK twenty-five guilders. The perfon who orders a 
 IV. transfer for more than is upon his account, is 
 
 *-**^'"*^ obliged to pay three per cent, for the fum over- 
 drawn, and his order is fet afide into the bar- 
 gain. The bank is fuppofed too to make a con- 
 fiderable profit by the fale of the foreign coin or 
 bullion which fometimes falls to it by the ex- 
 piring of receipts, and which is always kept till 
 it can be fold with advantage. It makes a profit 
 likewife by feliuig bank money at five per cent, 
 agio, and buying it in at four. I'hefe different 
 emoluments amount to a good deal more than 
 what is neceifary for paying the falaries of offi- 
 cers, and defraying the expence of management. 
 What is paid for the keeping of bullion upon 
 receipts, is alone fuppofed to amount to a neat 
 annual revenue of between one hundred and fifty 
 thoufand and two hundred thoufand guilders. 
 Public utility, however, and not revenue, was 
 the original objc6t of this infiitution. Its objed; 
 was to relieve the merchants from the inconve- 
 nience of a difadvantageous exchange. The re- 
 venue which has arifcn from it was unfotefeen, 
 and may be confidered as accidental. But it is 
 now time to return from this longr difjrefiion, 
 
 DO ' 
 
 into which I have been infenfibly led in en- 
 deavouring to explain the reafons why the ex- 
 change between the countries which pay in what 
 is called bank money, and thofe which pay in 
 conrmon currency, fhould generally appear lo be 
 in favour of the former, and againft the latter. 
 The former pay in a fpecies of money of which 
 the intrhific value is always the fame, and exadlly 
 
 7 agreeable
 
 THE WEALTH OF NATIONS, ' 23^ 
 
 agreeable to the ftandard of their refpeftive mints ; c h a'p. 
 
 the latter is a fpecies of money of which the in- in. 
 
 tripfic value is continually varying, and is ahnoft '-—-/-"*-' 
 always more or lei's below that Itandard, 
 
 PART II. 
 
 Of the TJnreafonahlencfs of thofe extraordinary 
 Reftrnints upon other Principles. 
 
 TN the foregoing Part of this Chapter I have 
 endeavoured 10 fljevv, even upon the prin- 
 ciples of the commercial fydem, hov unneceiTary 
 it is to lay extraordinary reltraints upon the im- 
 portation of goods from thofe countries, with 
 which the balance of trade is fuppofed. to be dif- 
 advantageous. 
 
 NoTiiiNc;, however, can be more abfurd than 
 this whole doctrine of the bahmce of trade, upon 
 which, not only thefe relbaints, but almoll all 
 the other regulations of commerce are founded. 
 When tv^o places trade Vvith one another, this 
 doclrine fuppofes that, if the balance be even, 
 neither of them either lofes or gains ; but if it 
 leans in any degree to one fide, that one of them 
 lofes, and the other gains in proportion to its 
 declenfion from the exacl equilibrium. Both 
 luppofjtions are falfe. A trade wliich is forced 
 by means of bounties and monopolies, may be, 
 and commonly is, difadvantageous to the country 
 in whole favour it is meant 10 be eflabliHied, as 
 I fhall endeavour to (hew hereafter. But that 
 
 trade
 
 236 THE NATURE AND CAUSES OF 
 
 BOOK trade which, without force or conflraint, is na- 
 i^' turally and regularly carried on between any two 
 
 ''*^''''*^ places, is always advantageous, 'though not always 
 equally fo, to both. 
 
 By advantage or gain, I underfland, not the 
 increafe of the quantity of gold and filver, but 
 that of the exchangeable value of the annual 
 produce of the land and labour of the country, 
 or the increafe of the annual revenue of its inha- 
 bitants. 
 
 If the balance be even, and if the trade be-, 
 tween the two places confift altogether in the 
 exchange of their native commodities, they will, 
 upon moft occafions, not only both gain, but 
 they will gain equally, or very near equally i 
 each will in this cafe afford a market for a part 
 of the furplus produce of the other : each will 
 replace a capital which had been employed in 
 raihng and preparing for the market this part of 
 the furplus produce of the other, and which had 
 been diflributed among, and given revenue and 
 maintenance to, a certain number of its inhabitr 
 ants. Some part of the inhabitants of each, there- 
 fore, will dire£i:ly derive their revenue and 
 maintenance from the other. As the commodi- 
 ties exchanged too are fuppofed to be of equal 
 value, fo the two capitals employed in the trade 
 will, upon mod occafions, be equal, or very 
 nearly equal ; and both being employed in rail- 
 ing the native commodities of the two countries, 
 the revenue and maintenance which their diflri- 
 bution will afford to the inhabitants of each will 
 be equal, or very nearly equal. This revenue 
 
 and
 
 THE WEALTH OF NATIONS. 237 
 
 and maintenance, thus mutually afTordeJ, will c H a P. 
 be greater or fmaller in proportion to the extent m. 
 of their dealings. If thefe fliould annually 
 amount to an hundred thoufand pounds, for ex- 
 ample, or to a million on each fide, each of them 
 \vill afford an annual revenue, in the one cafe 
 of an hundred thoufand pounds, in the other, of 
 a million, to the inhabitants of the other. 
 
 If their trade fliould be of fuch a nature that 
 one of them exported to the other nothing but 
 native commodities, while the returns of that 
 other confifled altogether in foreign goods ; the 
 balance, in this cafe, would dill be fuppofed 
 even, commodities being paid for with commo- 
 dities. They wouldj in this cafe too, both gain, 
 but they would not gain equally ; and the inha- 
 bitants of the country which exported nothing 
 but native commodities, would derive the greatefl 
 revenue from the trade. If England, for ex*- 
 ample, (hould import from France nothing but 
 the native commodicies of that country, and, 
 not having fuch commodities of its own as were 
 in demand there, fhoidd annually repay them by 
 fending thither a large quantity of foreign goods, 
 tobacco, we fhall fuppofc, and EaPt India goods ; 
 this trade, though it would give fosahe revenue to 
 the inhabitants of both countries, would give 
 more to thofe of France than to thofe of Eng- 
 land. The whole French capital annually em- 
 ployed in it would annually be didrihuted among 
 the people of France. But that part of the Eng- 
 lifh capital only which Vvas employeil in pro- 
 ducing the Englifli commodities with which thofe 
 
 foreign
 
 2^3 THE NATURE AND CAUSES OF 
 
 BOOK foreign goods were purchafed, would be annually 
 IV. diftributed among the people of England. The 
 
 ^•"^■^ — ^ greater part of it would replace the capitals 
 which had been employed in Virginia, Indoftan, 
 and China, and which had given revenue and 
 maintenance to the inhabitants of thofe diftant 
 countries. If the capitals were equal, or nearly 
 equal, therefore, this employment of the French 
 capital would augment much more the revenue 
 of the people of France than that of the Englifli 
 capital would the revenue of the people of Eng- 
 land. France would in this cafe carry on a di- 
 reft foreign trade of confumption with England ; 
 whereas England would carry on a round-about 
 trade of the fame kind with France. The differ- 
 ent effefts of a capital employed in the direft, and 
 of one employed in the round-about foreign trade 
 of confumption, have already been, fully ex- 
 plained. 
 
 There Is not, probably, between any two 
 countries, a trade which confifls altogether in 
 the exchange either of native commodities on 
 both fides, or of native commodities on one fide 
 and of foreign goods on the other. Almoft all 
 countries exchange with one another partly na- 
 tive and partly foreign goods. That country, 
 however, in whofe cargoes there is the greateft 
 proportion of native, and the lead of foreign 
 goods will always be the principal gainer. 
 
 If it was not with tobacco and Eaft India 
 goods, but with gold and filver, that England 
 paid for the commodides annually imported from 
 France, the balance, in this cafe, would be fup- 
 
 pofed
 
 THE WEALTH OF NATIONS. 239 
 
 pofed uneven, commodities not being paid for cha p, 
 with commodities, but with gold and filver. ^^^' 
 The trade, however, would in this cafe, as in 
 the foregoing, give fome revenue to the inha- 
 bitants of both countries, but more to thofe of 
 France than to thofe of England. It would give 
 fome revenue to thofe of England. The capital, 
 which had been employed in producing the l^^n^- 
 I'lih goods that purchafed this gold and fdver, 
 the capital which had been dillributed among, 
 and given revenue to, certain inhabitants of Eng- 
 land, would thereby be replaced, and enabled 
 to continue that employment. The whole capi- 
 tal of England w^ould no more be diuiiniflied by 
 this exportation of .gold and fdver, than by the 
 exportation of an equal value of any other goods. 
 On the contrary, it v/ould, in moii cafes, be 
 augmented. No goods are fent abroad but thofe 
 for which die demand is fuppofed to be greater 
 abroad than at home, and of which the returns 
 confequently, it is expecled, will be of more value 
 at home than the commodities exported. If the 
 tobacco which, in England, is worth only a 
 hundred thoufand pounds, wdien fent to France 
 will purchafe v;ine which is, in England, worth 
 a hundred and ten ihoufand pounds, the ex- 
 change will augment the capital of England by" 
 ten thoufand pounds. If a hundred thoufand 
 pounds of Englifh gold, in the fame manner, 
 purchafe French wine, which, in England, is 
 worth a hundred and ten thoufand, this exchange 
 will equally augment the capital of England by 
 ien thoufand pounds. As a merchant who has 
 *- a hundred
 
 240 TtiE NATURE AND CAUSES OF 
 
 B o o K a hundred and ten thoufand pounds worth of 
 IV. wine in his cellar, is a richer man than he who 
 has only a hundred thoufand pounds worth of 
 tobacco in his warehoufe, fo is he hkewife a 
 richer man than he who has only a hundred thou- 
 fand pounds worth of gold in his coffers. He 
 can put into motion a greater quantity of in- 
 duftry, and give revenue, maintenance, and em- 
 ployment, to a greater number of people than 
 either of the other two. But the capital of the 
 country is equal to the capital of all its differ- 
 ent inhabitants, and the quantity of induflry 
 which can be annually maintained in it, is equal 
 to what all thofe different capitals can maintain. 
 Both the capital of the country, therefore, and 
 the [quantity of induftry which can be annually 
 maintained in it, mud generally be augmented 
 by this exchange. It vvouldj indeed, be more 
 advantageous for England that it could purchafe 
 the wines of France with its own hard ware and 
 broad cloth, than with either the tobacco of 
 Virginia, or the gold and filver of Brazil and 
 Peru. A direfl foreign trade of confumption is 
 always more advantageous than a round-about 
 one. But a round-about foreign trade of con- 
 fum.ption, which is carried on with gold and fil- 
 ver, does not feem to be lefs advantageous than 
 any other equally round-about one. Neither is 
 a country which has no mines, more likely [to be 
 exhaufled of gold and filver by this annual ex- 
 portation of thofe metals, than one which does 
 not grov/ tobacco by the like annual exportation 
 of that plant. As a country which has where- 
 3 withal
 
 THE WEALTH OF NATIONS. 441 
 
 withal to buy tobacco will never be long in Want c H a p, 
 of it, fo neither will one be long in want of gold in* 
 and filver which has wherewithal to purchafe 
 thofe metals. 
 
 It is a lofing trade, it is faid, which a work- 
 man carries on with the alehoufe ; and the trade 
 which a manufacturing nation would naturally 
 carry on with a wine country, may be conndered 
 as a trade of the fame nature. I anfvver, that 
 the trade with the alehoufe is not neceflarily a 
 lofmg trade. In its own nature it is jufl as ad- 
 vantageous as any other, though, perhaps, fome- 
 what more liable to be abufed. The employ- 
 ment of a brewer, and even that of a retailer of 
 fermented liquors, are as neceiTary divifions of 
 labour as any other. It will generally be more 
 advantageous for a workman to buy of the 
 brewer the quantity he has occafion for, than to 
 brew it himfelf, and if he is a poor workman, it 
 will generally be more advantageous for him to 
 buy it, by little and httle, of the retailer than a 
 large quantity of the brewer. He may no doubt 
 buy too much of either, as he may of any other 
 dealers in his neighbourhood, of the butcher, if 
 he is a glutton, or of the draper, if he affeds to 
 be a beau among his companions. It is advan- 
 tageous to the great body of workmen, notvvith- 
 ftanding, that all thefe trades fhould be free, 
 though this freedom may be abufed in all of 
 them, and is more likely to be fo, perhaps, in 
 fome than in others. Though individuals, be- 
 fides, may fometimes ruin their fortunes by an 
 exceffive confumption of fermented liquors, there 
 
 VOL. If. B. feeni-s
 
 241 THE NATURE AND CAUSES OF 
 
 feems to be no riik that a nation fliould do fo. 
 Though in every country there are many people 
 who Ipend upon fuch liquors more than they can 
 afford, there are always many more who fpend 
 lefs. Ir deferves to be remarked too, that, if we 
 confult experience, the cheapnefs of wine feems 
 to be a caufe, not of drunkennefs, but of fo- 
 briety. The inhabitants of the wine countries 
 are in general the fobereft people in Europe ; 
 witnefs the Spaniards, the Itahans, and the in- 
 habitants of the fouthern provinces of France. 
 People are feldom guilty of excefs in what is 
 their daily fare. Nobody afFecls the characler of 
 liberality and good fellowfliip, by being profufe 
 of a liquor which is as cheap as fmall beer. On 
 the contrary, in the countries, which, either from 
 exceffive heat or cold, produce no grapes, and 
 where wine confequently is dear and a rarity, 
 drunkennefs is a common vice, as among the 
 northern nations, and all thofe who live between 
 the tropics, the negroes, .for example, on the 
 coaft of Guinea. When a French regiment 
 comes from fome of the northern provinces of 
 France, where wine Is fomewhat dear, to be 
 quartered in the fouthern, where it is very cheap, 
 the foldiers, I have frequently heard it obferved, 
 are at firft debauched by the cheapnefs and no- 
 velty of good wine ; but after a few months refi- 
 dence, the greater part of them become as fober 
 as the reft of the inhabitants. Were the duties 
 upon foreign wines, and the excifes upon malt, 
 beer, and ale, to be taken away all at once, it 
 might, in the fame manner^, occafion in Great 
 
 Britaia
 
 THE WEALTH OF NATIONS. 243 
 
 Britain a pretty general and temporary drunk- c H a p» 
 ennefs among the middling and inferior ranks of in» 
 people, which would probably be foon followed '^^'^^'"^ 
 by a permanent and ahiioft univerfal fobriety. 
 At prefent drunkennefs is by no means the vice 
 of people of fafhion, or of thofe who can eafily 
 afford the moft expenfive liquors. A gentleman 
 drunk with ale, has fcarce ever been feen amono- 
 us. The reftraints upon the wine trade in Great 
 Britain, befides, do not fo much feem calculated 
 to hinder the people from going, if I may fay 
 fo, to the alehoufe, as from going where they 
 can buy the beil and cheapeft liquor. They fa- 
 vour the wine trade of Portugal, and difcourage 
 that of France. The Portuguefe, it is faid, in- 
 deed, are better cuftomers for our manufaftures 
 than the French, and fliould therefore be encou- 
 raged in preference to them. As they give us 
 their cuftom, it is pretended, we fhould give 
 them ours. The fneaking arts of underling 
 tradefmen are thus erected into political maxims 
 for the condudl of a great empire ; for it is the 
 mofl underling tradefmen only who make it a 
 rule to employ chiefly their own cuftomers. A 
 great trader purchafes his goods always where 
 they are cheapeft and beft, without regard to 
 any little intereft of this kind. 
 
 By fuch maxims as thefe, however, nations 
 have been taught that their intereft confifted in 
 beggaring all their neighbours. Each nation 
 has been made to look with an invidious eye 
 upon the profperity of all the nations with which 
 it trades, and to confider their gain as its own 
 
 R 2 lofs.
 
 J44 THE NATURE AND CAUSES OF 
 
 BOOK lofs. Commerce, which ought naturally to be, 
 VI. among nations, as among individuals, a bond of 
 
 ""-^^^"^ union and friendfhip, has become the molt fer- 
 tile fource of difcord and animofity. The ca- 
 pricious ambition of kings and miniflers has not, 
 during the prefent and the preceding century, 
 been move fatal to the repofe of Europe, than the 
 impertinent jealoufy of merchants and manufac- 
 turers. The violence and injuftice of the rulers 
 of mankind is an ancient evil, for which, I am 
 afraid, the nature of human affairs can fcarce 
 admit of a remedy. But the mean rapacity, the 
 monopolizing fpirit of merchants and manufac- 
 turers, who neither are, nor ought to be, the 
 rulers of mankind, though it cannot perhaps be 
 correfl:ed, may very eafily be prevented from 
 diifurbing the tranquillity of any body but them- 
 felves. 
 
 That h was the fpirit of monopoly which origi- 
 nally both invented and propagated this dodrine, 
 cannot be doubted : and they who firfl taught it 
 were by no means fuch fools as they who believed 
 it. In every country it always is and muft be 
 the intcreft of the great body of the people to 
 buy whatever they want^ of thofe who fell it 
 cheapen. The proportion is fo very manifeft, 
 that it feems ridiculous to take any pains to prove 
 it ; nor could it ever have been called in queftion, 
 had not the interefted fophiftry of merchants and 
 manufadurers confounded the common fenfe of 
 mankind. Their intereft is, in this refpedt, 
 diredly oppofite to that of the great body of the 
 people. As it is the intereft of the freemen 
 
 of
 
 THE WEALTH OF NATIONS. J4S 
 
 of a corporation to hinder the reft of the inha- chap. 
 bitants from employing any workmen but them- m* 
 felves, fo it is the intereft of the merchants and ~''"''~"'~' 
 manufadurers of every country to fecure to 
 themfelves the monopoly of the home market- 
 Hence in great Britain, and in moft other Eu- 
 ropean countries, the extraordinary duties upon 
 almoft all goods imported by alien merchants. 
 Hence the high duties and prohibitions upon all 
 thofe foreign manufactures which can come into 
 competition with our own. Hence too the ex- 
 traordinary reftraints upon the importation of 
 almoft all forts of goods from thofe countries 
 with which the balance of trade is fuppofed to be 
 difadvantageous ; than is, from thofe againft 
 whom national animoficy happens to be moft 
 violently inflamed. 
 
 The wealth of a neighbouring nation, how- 
 ever, though dangerous in war and politics, is 
 certainly advantageous in trade. In a ftate of 
 hoftility it may enable our enemies to maintain 
 fleets and armies fuperior to our own ; but in a 
 ftate of peace and commerce it muft likewife 
 enable them to exchange with us to a greater 
 value, and to afford a better market, either for 
 the immediate produce of our own induftry, or 
 for whatever is purchafed with that produce. 
 As a rich man is hkely to be a better cuftomer 
 to the induftrious people in his neighbourhood, 
 than a poor, fo is likewife a rich nation. A rich 
 man, indeed, who is himfelf a manufadurer, is 
 a very dangerous neighbour to, all thofe who 
 deal in the fame way. All the reft of the neigh- 
 
 R 3 bourhood,
 
 245 THE NATURE AND CAUSES OF 
 
 BOOK bourhood, however, by far the greateft number, 
 IV. profit by the good market which his expence 
 affords them. They even profit by his under- 
 feUing the poorer workmen who deal in the fame 
 way with him. The manufadlurers of a rich 
 nation, in the fame manner, may no doubt be 
 very dangerous rivals to thofe of their neigh- 
 bours. This very competition, however, is ad- 
 vantageous to the great body of the people, who 
 profit greatly befides by the good market which 
 the great expence of fuch a nation affords them 
 in every other way. Private people who want to 
 make a fortune, never think of retiring to the 
 remote and poor provinces of the country, but 
 refort either to the capital, or to fome of the great 
 commercial towns. They know, that, where 
 little wealth circulates, there is little to be got, 
 but that where a great deal is in motion, fome 
 fhare of it may fall to them. The fame maxim 
 which would in this manner direct the common 
 fenfe of one, or ten, or twenty individuals, fliould 
 regulate the judgment of one, or ten, or twenty 
 millions, and ffiould make a whole nation regard 
 the riches of its neighbours, as a probable caufe 
 and occafion for itfelf to acquire riches. A na- 
 tion that would enrich itfelf by foreign trade, is 
 certainly mofb likely to do fo when its neighbours 
 are all rich, induftrious, and commercial na- 
 tions. A great nation furrounded on all fides by 
 wandering favages and poor barbarians might, 
 no doubt, acquire riches by the cultivation of its 
 own lands, and by its own interior commerce, 
 but not by foreign trade. It feems to have been 
 
 in
 
 THE WEALTH OF NATIONS. 249 
 
 in this manner that the ancient Egyptians and chap. 
 the modern Chinefe acquired their great wealth. HI. 
 The ancient Egyptians, it is faid, negleded fo- """^'^ 
 reign commerce, and the modern Chinefe, it is 
 known, hold it in the iirmoft contempt, and 
 fcarce deign to afford it the decent protedlion 
 of the laws. The modern maxims of foreign 
 commerce, by aiming at the impoverifhment of 
 all our neighbours, fo far as they are capable of 
 producing their intended effedl, tend to ren- 
 der that very commerce infignificant and con- 
 temptible. 
 
 It is in confequence of thefe maxims that the 
 commerce between France and England has in 
 both countries been fubjeded to fo many dif- 
 couragements and reflraints. If thofe two coun- 
 tries, however, were to confider their real in- 
 terell, without either mercantile jealoufy or na- 
 tional animofity, the commerce of France might 
 be more advantageous to Great Britain than that 
 of any other country, and for the fame reafon 
 that of Great Britain to France. France is the 
 nearefl: neighbour to Great Britain. In the trade 
 between the fouthern coaft of England and the 
 northern and north-weftern coafts of France, the 
 returns might be expected, in the fame manner 
 as in the inland trade, four, five, or fix times in 
 the year. Tlie capital, therefore, employed in 
 this trade, could in each of the two countries 
 keep in motion, four, five, or fix times the quan- . 
 tity of indultry, and afford employment and fub- 
 Cftence to four, five, or fix times the number of 
 people, which ao equal capital could do in the 
 
 R 4 greater
 
 248 THE NATURE AND CAUSES OF 
 
 greater part of the other branches of foreign 
 trade. Between the parts of France and Great 
 Britain moft remote from one another, the re- 
 turns might be • expeded, at leaft, once in the 
 year, and even this trade would fo far be at leaft 
 equally advantageous as the greater part of the 
 other branches of our foreign European trade. 
 It would be, at leaft, three times more advan- 
 tageous than the boafted trade with our North 
 American colonies, in which the returns were 
 feldom made in lefs than three years, frequently 
 not in lefs than four or five years. France, be- 
 fides, is fuppofed to contain twenty-four mil- 
 lions of inhabitants. Our North Ameiican co- 
 lonies were never fuppofed to contain more than 
 three millions : and France is a much richer 
 country than North America ; though, on account 
 of the more unequal diftribution of riches, there 
 is much more poverty and beggary in the one 
 country, than in the other. France, therefore, 
 could afford a market at leaft eight times more 
 extenfive, and, on account of the fuperior fre- 
 quency of the returns, four and twenty times 
 jBore advantageous, than that which our North 
 American colonies ever allorded. The trade of 
 Great Britain would be juft as advantageous to 
 France, and, in proportion to the wealth, popu- 
 lation, and proximity of the refpeclive countries, 
 would have the fame fuperiority over that which 
 France carries on with her own colonies. Such 
 \s the very great difference between that trade 
 ^vhich the wifdom of both nations has thought 
 
 propey
 
 THE WEALTH OF NATIONS. 249 
 
 proper to difcourage, and that which it has fa- 
 voured the mofl. 
 
 But the very fame circumdances which would 
 have rendered an open and free commerce be- 
 tween the two countries fo advantageous to both, 
 have occafioned the principal obflrucflions to 
 that commerce. Being neighbours, they are 
 neceffarily enemies, and the wealth and power 
 of each becomes, upon that account, more for- 
 midable to the other ; and what would increafe 
 the advantage of national friendfhip, ferves only 
 to inflame the violence of national animofity. 
 They are both rich and induftrious nations ; and 
 the merchants and manufacturers of each, dread 
 the competition of the fkill and activity of thofe 
 of the other. Mercantile jealoufy is excited, and 
 both inflames, and is itfelf inflamed, by the 
 violence of national animofity : and the traders 
 of both countries have announced, with all the 
 palfionate confidence of interefl:ed falfehood, the 
 certain ruin of each, in confequence of that un- 
 favourable balance of trade, which, they pretend, 
 would be the infallible effect of an unreftrained 
 cammerce with the other. 
 
 There is no commercial country in Europe of 
 which the approaching ruin has not frequently 
 been foretold by the pretended dod:ors of this 
 fyfliem, from an unf^ivourable balance of trade. 
 After all the anxiety, however, which they have 
 excited about this, after all the vain attempts of 
 almoft all trading nations to turn that balance in 
 their own favour and againft their neighbours, 
 it does not appear that any one nation in JEurope 
 
 has
 
 25© THE NATURE AND CAUSES OF 
 
 BOOK has been in any refpeft impoverlfhed by this 
 IV. caufe. Every town and country, on the con- 
 trary, in proportion as they have opened their 
 ports to all nations, inflead oF being ruined by 
 this free trade, as the principles of the com- 
 mercial fyflem would lead us to expeft, have 
 been enriched by it. Though there are in Eu- 
 rope, indeed, a few towns which in fome refpects 
 deferve the name of free ports, there is no coun- 
 try which does fo. Holland, perhaps, approaches 
 the neareft; to this character of any, though flill 
 very remote from it : and Holland, it is acknow- 
 ledged, not only derives its whole wealth, but 
 a great part of its neceifary fubfiftence, from fo- 
 reign trade. 
 
 There is another balance, indeed, which has 
 already been explained, very different from the 
 balance of trade, and which, according as it hap- 
 pens to be either favourable or unfavourable, 
 neceifarily occafions the profperity or decay of 
 every nation. This is the balance of the annual 
 produce and confumption. If the exchangeable 
 value of the annual produce, it has already been 
 cbferved, exceeds that of the annual confump- 
 tion, the capital of the fociety mud annually 
 increafe in proportion to this excefs. The fo- 
 ciety in this cafe lives within its revenue, and 
 what is annually faved out of its revenue, is na- 
 turally added to its capital, and euiployed fo as 
 to increafe ilill further the annual produce. If 
 the exchangeable value of the annual produce, 
 on the contrary, fall fliort of the annual con- 
 fumption, the capital of the fociety mud an- 
 
 1 1 nually
 
 THE WEALTH OF NATIONS. 251 
 
 nually decay in proportion to this deficiency, chap. 
 The expence of the focieiy in this cafe exceeds m- 
 its revenue, and neceffarily encroaches upon its '^•"•^^"^ 
 capital. IlS capital, therefore, muft neceflarily 
 decay, and, together with it, the exchangeable 
 value of the annual produce of its induftry. 
 
 This balance of produce and confumption is 
 entirely different from, what is called, the ba- 
 lance of trade. It might take place in a nation 
 which had no foreign trade, but which was en- 
 tirely feparated from all the world. It may take 
 place in the w^hole globe of the earth, of which 
 the wealth, population, and improvement may 
 be either gradually increafing or gradually de- 
 caying. 
 
 The balance of produce and confumption 
 may be conffantly in favour of a nation, though 
 what is called the balance of trade be generally 
 againft it. A nation may import to a greater 
 value than it exports for half a century, perhaps, 
 together ; the gold and filver which comes into 
 it during all this time may be all immediately 
 fent out of it ; its circulating coin may gradually 
 decay, different forts of paper money being fub- 
 (lituted in its place, and even the debts too which 
 it contracts in the principal nations with whom 
 it deals, may be gradually increafing ; and vet 
 its real wealth, the exchangeable value of the 
 annual produce of its lands and labour, may, 
 during the fame period, have been increafing in 
 a much greater proportion. "J'he ftate of oar 
 North American colonies, and of the trade 
 which they carried on with Great Britain, before 
 
 the
 
 252 THE NATURE AND CAUSES OF 
 
 BOOK the commencement of the prefent difturbances *, 
 
 IV. may ferve as a proof that this is by no means an 
 
 '-""^•'"''^ impoffible fuppofition. 
 
 M' 
 
 CHAP. IV. 
 
 Of Drawbacks. 
 
 ERCHANTs and manufacturers are not con- 
 tented with the monopoly of the home 
 market, but defire likewife the moil extenfive 
 foreign fale for their goods. Their country has 
 no jurifdiflion in foreign nations, and therefore 
 can feldom procure them any monopoly there. 
 They are generally obliged, therefore, to content 
 themfelves with petitioning for certain encourage- 
 ments to exportation. 
 
 Of thefe encouragements what are called 
 Drawbacks feem to be the mod reafonable. To 
 allow the merchant to drawback upon exporta- 
 tion, either the whole or a part of whatever ex- 
 cife or inland duty is impofed upon domeftic in- 
 duflry, can never occafion the exportation of a 
 greater quantity of goods than what would have 
 been exported had no duty been impofed. Such 
 encouragements do not tend to turn towards any 
 paiticular employment a greater fliare of the ca- 
 pital of the country, than what would go to that 
 employment of its own accord, but only to 
 hinder the duty from driving away any part of 
 
 * This paragraph was wrilten in the year 1775. 
 
 that
 
 THE WEALTH OF NATIONS. 253 
 
 • 
 
 that fhare to other employments. They tend not c K a p. 
 to overturn that balance which naturally efta- iv. 
 bliflies itfelf among all the various employments '-'"•''— 
 of the fociety ; but to hinder it from being over- 
 turned by the duty. They tend not to deftroy, 
 but to preferve, what it is in mod cafes advan- 
 tageous to preferve, the natural divifion and dif- 
 tribution of labour in the fociety. ^ 
 
 The fame thing may be faid of the drawbacks 
 upon the re-exportation of foreign goods import- 
 ed ; which in Great Britain generally amount 
 to by much the largeft part of the duty upon 
 importation. By the fecond of the rules, an- 
 nexed to the ad of parliament, which impoied, 
 what is now called, the old fubfidy, every mer- 
 chant, whether Engli(h or alien, was allowed to 
 draw back half that duty upon exportation ; the 
 Englifh merchant, provided the exportation took 
 place within twelve months ; the alien, provided 
 it took place within nine months. Wines, cur- 
 rants, -and wrought filks were the only goods 
 which did not fall within this rule, having other 
 and more advantageous allowances. The duties 
 impofed by this aft df parliament were, at that 
 time, the only duties upon the importation of 
 foreign goods. The term within which this, and 
 all other drawbacks, could be claimed, was after- 
 wards (by 7 Geo. f. chap. 21. feet. :o.) extended 
 to three years. 
 
 The duties which have been impofed fmce 
 the old fubfidy, are, the greater part of them, 
 wholly drawn back upon exportation. This ge- 
 neral rule, however, is liable to a great number 
 
 'A of
 
 25+ THE NATURE AND CAUSES OF 
 
 u o o K of exceptions, and the dodlrine of drawbacks has 
 Jv. become a much lefs fimple matter, than it was 
 at their firfl inditution. 
 
 Upon the exportation of fome foreign goods, 
 of which it was expeded that the importation 
 would greatly exceed what was neceflary for the 
 home confumption, the whole duties are drawn 
 back, without retaining even half the old fubfidy. 
 Before the revolt of our North American colo- 
 nies, we had the monopoly of the tobacco of 
 Maryland and Virginia. We imported about 
 ninety-fix thoufand hogflieads, and the home 
 confumption was not fuppofed to exceed fourteen 
 thoufand. To facilitate the great exportation 
 which was neceflary, in order to rid us of the 
 rell, the whole duties were drawn back, pro- 
 vided the exportation took place within three 
 years. 
 
 We ftill have, though not altogether, yet very 
 nearly, the monopoly of the fugars of our Well 
 Indian illands. If fugars are exported within a 
 year, therefoie, all the duties upon importation 
 are drawn back, and if exported within three 
 years, all the duties, except half the old fubfidy, 
 which dill continues to be retained upon the ex- 
 portation of the greater part of goods. Though 
 the importation of fugar exceeds, a good deal, 
 what is neceflary for the home confumption, the 
 exccfs is inconfiderable, in comparifon of what it 
 ufed to be in tobacco. 
 
 Some goods, the particular obje6ts of the jea- 
 loufy of our own manufafturers, are prohibited 
 to be imported for home confumption. They 
 
 may,
 
 THE WEALTH OF NATIONS. 255 
 
 may, however, upon paying certain duties, be chap. 
 imported and warehoufed for exportation. But iv. 
 upon fuch exportation, no part of thefe duties 
 is drawn back. Our manufafturers are unwil- 
 ling, it feems, that even this reflrided import- 
 ation (hould be encouraged, and are afraid left 
 fome part of thefe goods jfhould be flolen out of 
 the warehoufe, and thus come into competition 
 with their own. It is under thefe regulations 
 
 o 
 
 only that we can import wTought filks, French 
 cambricks and lawns, callicoes painted, printed, 
 ilained, or dyed, &;c» 
 
 We are unwilling even to be the carriers of 
 French goods, and choofe rather to forego a pro- 
 fit to ourfelves, than to fuffer thofe, whom we 
 confider as our enemies, to make any profit by 
 our means. Not only half the old fubfidy, but 
 the fecond twenty-five per cent, is retained upon 
 the exportation of all French goods. 
 
 By the fourth of the rules annexed to the old 
 fubfidy, the drawback allowed upon the exporta- 
 tion of all vvines amounted to a great deal more 
 than half the duties which were, at that time, 
 paid upon their importation ; and it feems, at 
 that time, to have been the object of the iegif- 
 lature to give fomewhat more than ordinary en- 
 couragement to the carrying trade in wine. Se- 
 veral of the other duties too, which were ira- 
 pofed, either at the fame time, or fubfequent to 
 the old fubfidy ; what is called the additional 
 duty, the new fubfidy, the one-third and two- 
 thirds fubfidies, the impoit 1692, the tonnage 
 on wine, were allowed to be wholly drawn back 
 
 upon
 
 3^6 THE NATURE AND CAUSES OF 
 
 BOOK Upon exportation. All thofe duties, however, 
 IV. except the additional duty and impofl 1692, be- 
 ing paid down in ready money, upon importa- 
 tion, the interefl of fo large a fum occafioned 
 an expence, which made it unreafonable to ex- 
 pe6l any profitable carrying trade in this article. 
 Only a part, therefore, of the duty called the 
 impofl on wine, and no part of the twenty-five 
 pounds the ton upon French wines, or of the 
 duties impofed in 1745, in 1763, and in 1778, 
 were allowed to be drawn back upon exporta- 
 tion. The two imports of five per cent, im- 
 pofed in 1779 and 1781, upon all the former 
 duties of cufloms, being allowed to be wholly 
 drawn back upon the exportation of all other 
 goods, were likewife allowed to be drawn back 
 upon that of wine. The lad duty that has been 
 particularly impofed upon wine, that of 1780, 
 is allowed to be \\holly drawn back, an indui- 
 gence, which, when fo many heavy duties are 
 retained, mofl probably could never occafion 
 the exportation of a fingle ton of wine. Thefe 
 rules take place with regard to all places of law- 
 ful exportation, except the Britiih colonies in 
 America. 
 
 The i5th Charles II. chap. 7. called an ad 
 for the encouragement of trade, had given Great 
 Britain the monopoly of fupplying the colonies 
 with all the commodities of the growth or ma- 
 nufadure of Europe ; and confequenlly with 
 wines. In a country of fo extenfive a coaft as 
 our North American and Weft Indian colo- 
 nies, where our authority was always fo very 
 
 ilender.
 
 THE WEALTH OF NATIONS. 257 
 
 flender, and where the inhabitants were allowed chap., 
 to carry out, in their own fhips, their non-enu- iv. 
 merated commodities, at firft, to all parts of Eu- """'^ 
 rope, and afterwards, to all parts of Europe 
 South of Cape Finifterre, it is not very proba- 
 ble that this monopoly could ever hz much re- 
 fpecled ; and they, probably, at all times, found 
 means of bringing back fome cargo from the 
 countries to which they were allowed to carry 
 out one. They feem, however, to have found 
 fome difficulty in importing European wines from 
 the places of their growth, and they could not " 
 well import them irom Great Britain, where 
 they were loaded with many heavy duties, of 
 which a confiderable part was not drawn back 
 upon exportation. Madeira wine, not being an 
 European commodity, could be imported d'- 
 reftly into America and the Weft Indies ; coun- 
 tries which, in all their non-enumerated com- 
 modities, enjoyed a "free trade to the ifland of 
 Madeira. Thefe circumflances had probably 
 introduced that general tafte for Madeira wine, 
 which our officers found eflablifhed in all our co# 
 Ionics at the commencement of the war which 
 began in 1755, and which they brought back 
 \*ith them to the mother country, where that 
 wine had not been much in fafhion before. 
 Upon the conclufion of that war, in 1763 (by 
 the 4th Geo. III. Chap. ij. Sed. 12.) ail 
 the duties, except 3/. ids. were allowed to be 
 drawn back, upon the exportation to the co- 
 lonies, of all wines, except French wines, to 
 the commerce aod confutnption of which, na- 
 VQL. ri. s tional
 
 258 THE NATURE AND CAUSES OF 
 
 BOOK tional prejudice would allow no fort of encou- 
 iv. ragement. The period between the granting 
 of this indulgence and the revolt of our North 
 American colonies, was probably too fhort to 
 admit of any confiderable change in the cuftoms 
 of thofe countries. 
 
 The fame acl, which, in the drawback upon 
 all wines except French wines, thus favoured 
 the colonies fo much more than other countries ; 
 in thofe, upon the greater part of other com- 
 modities, favoured them much lefs. Upon the 
 exportation of the greater part of commodities 
 to other countries, half the old fubfidy was 
 drawn back. But this law enafted, that no part 
 of that duty fhould be drawn back upon the ex- 
 portation to the colonies of any commodities of 
 the growth or manufafture either of Europe or 
 the Eafh Indies, except wines, white callicoes, and 
 muflins. 
 
 Drawbacks were, perhaps, originally grant- 
 ed for the encouragement of the carrying trade ; 
 which, as the freight of the fhips is frequently 
 paid by foreigners in money, was fuppofed to be 
 peculiarly fitted for bringing gold and filver into 
 the country. But though the carrying trade 
 certainly deferves no peculiar encouragement, 
 though the motive of the inftitution was, per- 
 haps, abundantly foolifh, the inftitution itfelf 
 feems reafonable enough. Such drawbacks can- 
 not force into this trade a greater fhare of the 
 capital of the country than what would have 
 gone to it of its own accord, had there been no 
 duties upon importation. They only prevent 
 
 its
 
 THE WEALTH Ox^ NATIONS. 259 
 
 Its being excluded altogether by thofe duties, chap. 
 The carrying trade, though it deferves no pre- iv. 
 ference, ought not to be precluded, but to be 
 left free like all other trades. It is a neceflary 
 refource to thofe capitals which cannot find em- 
 ployment either in the agriculture or in the ma- 
 nufactures of the country, either in its home trade^ 
 or in its foreign trade of confumption. 
 
 The revenue of the cuQoms, inftead of fuffer- 
 ing, profits from fuch drawbacks, by that part 
 of the duty which is retained. If the whole 
 duties had been retained, the foreign goods, 
 upon which they are paid, could feldom have 
 been exported, nor confequently imported, for 
 want of a market. The duties, therefore, of 
 which a part is retained, would never have been 
 paid. 
 
 These reafons feem fufficiently to juflify 
 drawbacks, and would juflify them, though the 
 whole duties, whether upon the produce of do- 
 meftic indufiry, or upon foreign goods, were 
 always drawn back upon exportation. The re- 
 venue of excife would in this cafe, indeed, fufFer 
 a little, and that of the cuftoms a good deal 
 more; but the natural balance of induftry, the 
 natural divifion and diifribution of labour, which 
 is always more or lefs difturbed by fuch duties, 
 would be more nearly re-eftabllfhed by fuch a 
 regulation. 
 
 These reafons, however, will juflify draw- 
 backs only upon exporting goods to thofe coun- 
 tries which are altogether foreign and inde- 
 pendent, not to thofe in v/hich our merchants 
 
 s 2 and
 
 26o THE NATURE AND CAUSES OF 
 
 E o o K and manufadurers enjoy a monopoly. A draw- 
 IV. back, for example, upon the exportation of Eu- 
 ropean goods to our American colonies, will not 
 always occafion a greater exportation than what 
 would have taken place without it. By means 
 of the monopoly which our merchants and ma- 
 nufafturers enjoy there, the fame quantity might 
 frequently, perhaps, be fent thither, though the 
 whole duties were retained. The drawback, 
 therefore, may frequently be pure lofs to the 
 revenue of excife and cufloms, without altering 
 the (late of the trade, or rendering it in any re- 
 fpeft more extenfive. How far fuch drawbacks 
 can be juHified, as a proper encouragement to 
 the induftry of our colonies, or how far it is ad- 
 vantageous to the mother-country, that they 
 fhould be exempted from taxes which are paid by 
 all the reft of their fellow-fubjedls, will appear 
 hereafter, when I come to treat of colonies. 
 
 Drawbacks, however, it muft always be un- 
 derftood, are ufeful only in thofe cafes in which 
 the g.oods for the exportation of which they are 
 given are really exported to fome foreign coun- 
 try; and not clandeftinely re-imported into our 
 own. That fome drawbacks, particularly thofe 
 upon tobacco, have frequently been abufed in 
 this manner, and have given occafion to many 
 frauds equally hurtful both to the revenue and to 
 the fair trader, is well known.
 
 B 
 
 THE WEALTH OF NATIONS, ;»5; 
 
 CHAP. V. 
 
 Of Bounties. 
 
 ouNTiF.s upon exportation are, in Greoif c h a r- 
 Britain, frequently petitioned for, and y. 
 fometimes granted to the produce of particular ^— ^•'~*— ' 
 branches of domeflic indudry. By means of 
 them our merchants and mtnufadurers, it is 
 pretended, will be enabled to fell their goods as 
 cheap or cheaper than their rivals in the foreign 
 market. A greater quantity, it is faid, will 
 thus be exported, and the balance of trade con- 
 fequently turned more in favour of our own 
 country. We cannot give our workmen a mo- 
 nopoly in the loreign, as we have done in the , 
 home market, W'e cannot force foreigners to 
 buy their goods, as we have done our ou-n coun- 
 trymen. The next bed expedient, it has been 
 thought, therefore, is to pay them for buying. 
 It is in this manner that the mercantile fyfteni 
 propofes to enrich the M^hole country, and to put 
 money into all our pockets by means of the ba- 
 lance of trade. 
 
 Bounties, it is allowed, ought to be given to 
 thofe branches of trade only which cannot be 
 carried on without them. But every branch of 
 trade in which the merchant can fell his goods 
 for a price which replaces to him, wiih the ordi- 
 nary prcjfits of flock, tl.e whole capital employed 
 In preparing and fending them to market, can be 
 
 s 3 carried
 
 36» THE NATURE AND CAUSES OF 
 
 BOOK carried on without a bounty. Every fuch branch 
 i^'« is evidently upon a level with all the other 
 ■'"*''' branches of trade which are carried on without 
 bounties., and cannot therefore require one more 
 than they. Thofe trades only require bounties 
 in which the merchant is obliged to fell his 
 goods or a price which does not replace to him 
 his capital, together with the ordinary profit ; 
 or in which he is obliged to fell them for lefs 
 than it really cofls him to fend them to market. 
 The bounty is given in order to make up this 
 lofs, and to encourage him to continue, or per- 
 haps to begin, a trade of which the expence is 
 fuppofed to be greater than the returns, of which 
 every operation eats up a part of the capital em- 
 ployed in it, and which is of fuch a nature, that, 
 if all other trades refembled it, there would foon 
 be no capital left in the country. 
 
 The trades, it is to be obferved, which are 
 carried on by means of bounties, are the only 
 ones which can be carried on between two na- 
 tions for any conf]derable time together, in fuch 
 a manner as that one of them fliall always and 
 regularly lole, or fell its goods for lefs than it 
 really cods to fend them to market. But if the 
 bounty did not repay to the merchant what he 
 would otherwife lofe upon the price of his goods, 
 his own intereft would foon oblige him to em- 
 ploy his flock in another way, or to find out a 
 trade in which the price of the goods would re- 
 place to him, with the ordinary profit, the capi- 
 tal employed in fending them to market. The 
 effe6t of bounties, like that of all the other ex- 
 pedients
 
 THE WEALTH OF NATIONS. 263 
 
 pedlents of the mercantile fyflem, can only be to chap. 
 force the trade of a country into a channel much v. 
 lefs advantageous than that in which it would 
 naturally run of its own accord. 
 
 The ingenious and well-informed author of 
 the trads upon the corn trade has (hown very 
 clearly, that fince the bounty upon the exporta- 
 tion of corn was firft eftablifhed, the price of the 
 corn exported, valued moderately enough, has 
 exceeded that of the corn imported, valued very 
 high, by a much greater fiim than the amount of 
 the whole bounties which have been paid during 
 that period. This, he imagines, upon the true 
 principles of the mercandle fyflem, is a clear 
 proof that this forced corn trade is beneficial to 
 the nation ; the value of the exportation exceed- 
 ing that of the importation by a much greater 
 fum than the whole extraordinary expence which 
 the public has been at in order to get it export- 
 ed. He does not confider that this extraordi- 
 nary expence, or the bounty, is the fmallefl part 
 of the expence which the exportation of corn 
 really cofls the fociety. The capital which the 
 farmer employed in ralfmg it, muft likewife be 
 taken into the account. Unlefs the price of the 
 corn when fold in the foreign markets replaces, 
 not only the bounty, but this capital, together 
 with the ordinary profits of flock, the fociety is 
 a lofer by the difference, or the national flock 
 is fo much diminifhed. But the very reafon for 
 which it has been thought neceffary to grant a 
 bounty, is the fuppofed infufficiency of the price 
 to do this. 
 
 § 4 The
 
 j54 the nature and CAUSES OF 
 
 BOOK The average price of corn, it has been faid, 
 IV. has fallen confiderably fince the eftablilhment of 
 
 ' — ^"^^ the bounty. That the average price of corn be- 
 gan to fall fomewhat towards the end of the ^^ 
 century, and has continued to do fo during the 
 courfe of the fixty-four firft years of the prefent, 
 I have already endeavoured to ihow. But this 
 event, fuppofnig it to be real, as I believe it to 
 be, mud have happened in fpite of the bounty, 
 and cannot poffibly have happened in confe- 
 quence of it. It lias happened in France, as 
 well as in England, though in France there 
 was, not only no bounty, but, till 1764, the 
 exportation of corn was fubjecled to a general 
 prohibition. This gradual fall in the average 
 price of grain, it is probable, therefore, is ulti- 
 mately owing neither to the one regulation 
 nor to the other, but to that gradual and in- 
 fenfible rife in the real value of filver, which, 
 in the firft book of this difcourfe, I have en- 
 deavoured to fhew has taken place in the 
 general market of Europe, during the courfe of 
 the prefent century. It feems to be altogether 
 impoffible that the bounty could ever contribute 
 to lower the price of grain. 
 
 In years of plenty, it has already been ob- 
 served, the bounty, by occafioning an extraor- 
 dinary exportation, neceffarily keeps up the price 
 of corn in the home market above vv^hat it would 
 naturally fall to. To do fo was the avowed 
 purpofe of the inflitution. In years of fcarcity, 
 though the bounty is frequently fufpended, yet 
 the great exportation which it occafions in years 
 
 of
 
 THE WEALTH OF NATIONS; 265 
 
 of plenty, mufl: frequently hinder more or lefs Chap. 
 the plenty of one year from relieving the fcarcity v. 
 of another. Both in years of plenty, and in 
 years of fcarcity, therefore, the bounty neceffa- 
 rily tends to raife the money price of corn fome- 
 what higher than it otherwife would be in the 
 home market. 
 
 That, in the aflual flate of tillage, the 
 bounty muft neceflarily have this tendency, will 
 not, 1 apprehend, be difputed by any reafonable 
 perfon. But it has been thought by many peo- 
 ple that it tends to encourage tillage, and that 
 in tvvfo different ways ; firfl, by opening a more 
 cxtenfive foreign market to the corn of the far- 
 mer, it tends, they imagine, to increafe the de- 
 mand for, and confequently the produftion of, 
 that commodity ; and fecondly, by fecuring to 
 him a better price than he could or.herwife expert 
 in the adual ftate of tillage, it tends, they fup- 
 fofe, to encourage tillage. This double encou- 
 ragement muft, they imagine, in a long period 
 of years, occafioil fuch an increafe in the pro- 
 du6lion of corn, as may lower its price in the 
 home market, much more than the bounty can 
 raife it, in the a6lual ftate which tillage may, at 
 the end of that period, happen to be in. 
 
 I ANSWER, that whatever extenfion of the fo- 
 reign market can be occafioned by the bounty, 
 muft, in every particular year, be altogether at 
 the expence of the home market ; as every bufliel 
 of corn which is exported by means of the boun- 
 ty, and which would not have been exported 
 wirhcufthe bounty, would have remained in the 
 
 home
 
 266 THE NATURE AND CAUSES OF 
 
 BOOK home market to Increafe the confumption, and 
 IV. to lower the price of that commodity. The 
 corn bounty, it is to be obferved, as well as 
 every other bounty upon exportation, impofes 
 two different taxes upon the people ; lirft, the 
 tax which they are obliged to contribute, in order 
 to pay the bounty ; and fecondly, the tax which 
 arifes from the advanced price of the commo- 
 dity in the home market, and which, as the 
 whole body of the people are purchafers of corn, 
 muft, in this particular commodity, be paid by 
 the whole body of the people. In this parti- 
 cular commodity, therefore, this fecond tax is 
 by much the heavieft of the two. Let us fup- 
 pofe that, taking one year with another, the 
 bounty of five fliillings upon the exportation of 
 the quarter of wheat, raifes the price of that 
 commodity in the home market only fixpence 
 the bufhel, or four fhlllings the quarter, higher 
 than it otherways would have been in the aclual 
 ftate of the crop. Even upon this very mode- 
 rate fuppofition, the great body of the people, 
 over and above contributing the tax which pays 
 the bounty of five fliillings upon every quarter 
 of wheat exported, mud pay another of four 
 ihillings upon every quarter which they them- 
 felves confume. But, according to the very well- 
 informed author of the trads upon the corn- 
 trade, the average proportion of the corn ex- 
 ported to that confumed at home, is not more 
 than that of one to thirty-one. For every five 
 fliillings, therefore, which they contribute to the 
 payment of the firfl tax, they muft coniribute fix 
 
 pounds
 
 THE WEALTH OF NATIONS. 267 
 
 pounds four fhillings to the payment of the 
 fecond. So very heavy a tax upon the firft ne- 
 ceflary of life, mufl: either reduce the fubfiftence 
 of the labouring poor, or it mud occafion fome 
 augmentation in their pecuniary wages, propor- 
 tionable to that in the pecuniary price of their 
 fubfiftence. So far as it operates in the one 
 way, it muft reduce the ability of the labouring 
 poor to educate and bring up their children, and 
 muft, fo far, tend to reftrain the population of 
 the country. So far as it operates in the other, 
 it muft reduce the ability of the employers of 
 the poor, to employ fo great a number as they 
 otherwife might do, and muft, fo far, tend to 
 reftrain the induftry of the country. The ex- 
 traordinary exportation of corn, therefore, oc- 
 cafioned by the bounty, not only, in every par- 
 ticular year diminifhes the home, juft as much 
 as it extends the foreign market and confump- 
 tion, but, by reftraining the population and in- 
 duftry of the country, its final tendency is to 
 ftint and reftrain the gradual extenfion of the 
 home market ; and thereby, in the long run, 
 rather to diminifli, than to augment, the whole 
 market and confumption of corn. 
 
 This enhancement of the money price of 
 corn, however, it has been thought, by render- 
 ing that commodity more profitable to the far- 
 mer, muft neceflarily encourage its produ£lion. 
 
 I ANSWER, that this might be the cafe if the 
 effe<Sl of the bounty was to raife the real price 
 of corn, or to enable the fiu-mer, with an equal 
 quantity of it, to maintain a greater number 
 
 of
 
 263 THE NATURE AND CAUSES OF 
 
 is o o K of labourers in the fame manner, whether liberal, 
 i'^'* moderate, or fcanty, than other labourers are 
 commonly maintained in his neighbourhood. 
 But neither the bounty, it is evident, nor any 
 other human inflitution, can have any fuch 
 efl'c£t. It is not the real, but the nominal price 
 of corn, which can in any confiderable degree 
 be affefted by the bounty. And though the tax 
 which that inflitution impofes upon the whole 
 body of the people, may be very burdenfome to 
 thofe who pay it, it is of very little advantage 
 to thofe who receive it. 
 
 The real effeft of the bounty is not fo much 
 to raife the real value of corn, as to degrade the 
 real value of filver ; or to make an equal quan- 
 tity of it exchange for a fmaller quantity, not 
 only of corn, but of all other home-made com- 
 modities : for the money price of corn regulates 
 that of all other home-made commodities. 
 
 It regulates the money price of labour, which 
 mud always be fuch as to enable the labourer to 
 purchafe a quantity of corn fufficlent to maintain 
 him and his family eicher in the liberal, moderate, 
 or fcanty manner in which the advancing, fta- 
 tionary, or declining circumftances of the fociety 
 oblige his employers to maintain him. 
 
 It regulates the money price of all the other 
 parts of the rude produce of land, which, in , 
 every period of improvement, mud bear a cer- 
 tain proportion to that of corn, though this 
 proportion is different in different periods. It 
 regulates, for example, the money price of grafs 
 
 7 ^^
 
 THE WEALTH OF NATIONS. 269 
 
 and hay, of butchers'-meat, of horfes, and the chap. 
 maiiitenance of horfes, of land carriage confe- v. 
 quently, or of the greater part of the inland com- '-""^'"^ 
 merce of the country. 
 
 By regulating the money price of all the other 
 parts of the rude produce of land, it regulates 
 that of the materials of almofc all manufadures. 
 By regulating the money price of kbour, it re- 
 gulates that of manufafturing art and indudry. 
 And by regulating both, it regulates that of the 
 complete manufafture. The money price of la- 
 bour, and of every thing that is the produce 
 either of land or labour, mufl neccflarily either 
 rife or fall in proportion to the money price of 
 corn. 
 
 Though in confequence of the bounty, there- 
 fore, the farmer ihould be enabled to fell his corn 
 for four fliillings the bu(hel inflead of three and 
 fixpence, and to pay his landlord a money rent 
 proportionable to this rife in the money price of 
 his produce ; yet if in confeqQence of this rife 
 in the price of corn, four fliiliings will purchafe 
 no more home-made goods of any other kind 
 than three and fixpence would have done before, 
 neither the circumftances of the farmer, nor thofe 
 of the landlord, will be much mended bv this 
 chancre. The farmer will not be able to culti- 
 vate much better : the landlord will not be able 
 to live much better. In the purchafe of foreign 
 commodities this enhancement in the price of 
 corn may give them fome little advantage. In 
 that of home-made commodities it can give them 
 .none at all. And almoft the whole expence of 
 
 tile
 
 2-jo « THE NATURE AND CAUSES OF 
 
 BOOK the farmer, and the far greater part even of that 
 IV. of the landlord, is in home-made commodities. 
 
 ^-"^^""^ That degradation in the value of lilver which 
 is the effecl of the fertility of the mines, and 
 which operates equally, or very near equally, 
 through the greater part of the commercial world, 
 is a matter' of very little confequence to any par- 
 ticular country. The confequent rife of all money 
 prices, though it does not make thofe who receive 
 them really richer, does not make them really 
 poorer. A fervice of plate becomes really cheaper, 
 and every thing elfe remains precifely of the fame 
 real value as before. 
 
 But that degradation in the value of filver 
 which, being the effect either of the peculiar 
 fituatlon, or of the political inflitutions of a par- 
 ticular country, takes place only in that country, 
 is a matter of very great confequence, which, 
 far from tending to make any body really richer, 
 tends to make every body really poorer. The 
 rife in the money price of all commodities, which 
 is in this cafe peculiar to that country, tends to 
 difcourage more or lefs every fort of induflry 
 which is carried on within it, and to enable fo- 
 reign nations, by furnifhing almoft all forts of 
 goods for a fmaller quantity of filver than its own 
 workmen can afford to do, to underfell them, 
 not only in the foreign, but even in the home 
 market. 
 
 It is the peculiar fituatlon of Spain and Por- 
 tugal as proprietors of the mines, to be the 
 diftributors of gold and filver to all the other 
 countries of Europe. Thofe metals ought na- 
 
 i I turally.
 
 THE WEALTH OF NATIONS. 271 
 
 turally, therefore, to be fomewhat cheaper in chap, 
 Spain and Portugal than in any other part of v. 
 Europe. The difference, however, fhould be 
 no more than the amount of the freight and in- 
 furance ; and, on account of the great value and 
 fmall bulk of thofe metals, their freight is no 
 great matter, and their infurance is the fame as 
 that of any other goods of equal value. Spain 
 and Portugal, therefore, could fufFer very little 
 from their peculiar fituation, if they did not 
 aggravate its diladvantages by their political in- 
 ftitutions. 
 
 Spain by taxing, and Portugal by prohibiting,' 
 the exportation of gold and filver, load that ex- 
 portation with the expence of fmuggling, and 
 raife the value of thofe metals in other countries 
 fo much more above what it is in their own, by 
 the whole amount of this expence. When you 
 dam up a ftreatn of water, as foon as the dam 
 is full, as much water mud run over the dam- 
 head as if there was no dam at all. The pro- 
 hibition of exportation cannot detain a greater 
 quantity of gold and filver in Spain and Portu- 
 gal than what they can afford to employ, than 
 what the annual produce of their land and 
 labour will allow them to employ, in coin, 
 plate, gilding, and other ornaments of gold and 
 filver. When they have got this quantity the 
 dam is full, and the whole dream which flows 
 in afterwards mufl run over. The annual ex;, 
 portation of gold and filver from Spain and 
 Portugal accordingly is, by all accounts, not- 
 withflanding thefe reflraints, very near equal to 
 
 the
 
 272 THE NATURE AND CAUSES OF 
 
 BOOK the whole annual importation. As the water, 
 IV. however, mufl always be deeper behind the 
 dam head than before it, fo the quantity of gold 
 and filver which thefe reflraints detain in Spain 
 and Portugal muft, in proportion to the annual 
 produce of their land and labour, be greater 
 than what is to be found in other countries. 
 The higher and ftronger the dam-head, the 
 greater mufl be the difference in the depth of 
 water behind and before it. The higher the tax, 
 the higher the penalties with which the pro- 
 hibition is guarded, the more vigilant and fevere 
 the police which looks after the execution of the 
 law, the greater muft be the difference in the 
 proportion of gold and filver to the annual pro- 
 duce of the land and labour of Spain and Portu- 
 gal, and to that of other countries. It is faid 
 accordingly to be very confiderable, and that 
 you frequently find there a profufion of plate In 
 houfes, where there is nothing elfe which would, 
 in other countries, be thought fuitable or cor- 
 refpondent to this fort of magnificence. The 
 cheapnefs of gold and filver, or what is the fame 
 thing, the dearnefs of all commodities, which Is . 
 the necefrrary effe6l of this redundancy of the 
 precious metals, difcourages both the agriculture 
 and manufaftures of Spain and Portugal, and 
 enables foreign nations to fupply them with many 
 foits of rude, and with almoft all forts of manu- 
 fadured produce, for a fmaller quantity of gold 
 and filver than what they themfelves can either 
 raife or make them for at home. The tax and 
 prohibition operate In two different ways. They 
 
 act
 
 THE WEALTH OF NATIONS. 27^ 
 
 not only Icvt^r very much the value of the chap. 
 precious metals in Spain and Portugal, but by '^• 
 detaining there a certain quantity of thofe metals 
 which would otherwife flow over othtr countries, 
 they keep up their value in thofe other countries 
 fomewhat above what it otherwife would he, 
 and thereby give thofe countries a double ad- 
 vantage in their commerce with Spain and t'^or- 
 tugal. Open the flood-gates, and there will 
 prefently be lefs water above, and more b^^low, 
 the dam-head, and it will foon come to a level in 
 both places. Remove the tax and the prohi- 
 bition, and as the quantity of gold and filver 
 will diminifh confiderably in Spain and Portugal, 
 fo it will increafe fomewhat in other countries, 
 and the value of thofe metals, their proportion 
 to the annual produce of land and labour, will 
 foon come to a level, or very near to a level, in 
 all. The lofs which Spain and Portugal could 
 fuftain by this exportation of their o-olc; and filver 
 ■would be altogether nominal and imaginary. 
 The nominal value of their goods, and of the 
 annual produce of their land and labour, would 
 fall, and would be exprefled or reprefented by a 
 fmaller quantity of filver than before : but their 
 real value would be the fame as before, and 
 would be fufficient to maintain, command, and 
 employ, the fame quantity of labour. As the 
 nominal value of their goods would tall, the real 
 value of what remained of their gold and filver 
 would rife, and a fmaller quantity, of thofe 
 Hietals would anfwer all the fame purpoles of 
 commerce and circulation which had employed a 
 . VOL. II. T greater
 
 ^74 • THE NATURE AND CAUSES OF 
 
 jB o o K greater quantity before. The gold and filver 
 IV. which would go abroad would not go abroad for 
 nothing, but would bring back an equal value 
 of goods of fome kind or another. Thofe goods 
 too would not be all matters of mere luxury and 
 expence, to be confumed by idle people who 
 produce nothing in return for their confumption. 
 As the real wealth and revenue of idle people 
 would not be augmented by this extraordinary 
 exportation of gold and filver, fo neither would 
 their confumption be much augmented by it. 
 Thofe goods would, probably, the greater part 
 of them, and certainly fome part of them, con- 
 fifl in materials, tools, and provifions, for the 
 employment and maintenance of induftrious peo- 
 ple, who would reproduce, with a profit, the 
 full value of their confumption. A part of the 
 dead Hock of the fociety would thus be turned 
 into adlive ilock, and would put into motion a 
 greater quantity of induftry than had been em- 
 ployed before*. The annual produce of their 
 land and labour would immediately be aug- 
 mented a little, and in a few years would, pro- 
 bably, be augmented a great deal ; their induftry 
 being thus relieved from one of the mofl: op- 
 preiiive burdens which it at prefent labours 
 under. 
 
 The bounty upon the exportation of corn 
 neceifarily operates exactly in the fame way as 
 this abfurd policy of Spain and Portugal. 
 Whatever be the atlual Hate of tillage, it renders 
 our corn fomewhat dearer in the home market 
 than it otherwife would be in that ftate, and 
 
 fomewhat
 
 THE WEALTH OF NATIONS. 27^ 
 
 foitiewhat cheaper in the foreign ; and as the chap* 
 average money price of corn regulates more or v. 
 lefs that of all other commodities, it lowers the 
 value of filver confiderably in the one, and tends 
 to raife it a little in the other. It enables fo- 
 reigners, the Dutch in particular, not only to 
 eat our corn cheaper than they othervvife could 
 do, but fometimes to eat it cheaper than even 
 our own people can do upon the fame occalions ; 
 as we are aifured by an excellent authority, that 
 of Sir Matthew Decker. It hinders our own 
 workmen from furnifliing their goods for fo fmall 
 a quantity of filver as they otherwife might do ; 
 and enables the Dutch to furnifh theirs for a 
 fmailer. It tends to render our manufactures 
 fomewhat dearer in every market, and theirs 
 fomewhat cheaper than they otherwife would be, 
 and confequently to give their induftry a double 
 advantage over our own. 
 
 The bounty, as it raifes in the home market, 
 not fo much the real, as the nominal price of our 
 corn, as it augments, not the quantity of labour 
 which a certain quantity of corn can maintain 
 and employ, but only the quantity of filver 
 which it will exchange for, it difcourages our 
 manufaftures, without rendering any confiderable 
 fervice either to our farmers or country gentle- 
 men. It puts, indeed, a little more money 
 into the pockets of both, and it will perhaps be 
 fomewhat difficult to perfuade the greater part 
 of them that this is not rendering them a very 
 confiderable fervice. But if this money fmks in 
 its value, in the quantity of labour, provifion;>, 
 
 T 2 and
 
 276 THE NATURE AND CAUSES OF 
 
 BOOK and home-made commodities of all different kinds 
 IV. which it is capable of purchafing, as much •'as it 
 '^"^ lifes in its quantity, the fervice will be little more 
 than nominal and imaginary. 
 
 There is, perhaps, but one fet of men in the 
 whole commonwealth to whom the bounty either 
 was or could be effentially ferviceable. Thefe 
 were the corn merchants, the exporters and im.- 
 porters of corn. In years of plenty the bounty 
 neceffarily occafioned a greater exportation than 
 would otherwife have taken place ; and by hin- 
 dering the plenty of the one year from relieving 
 the fcarcity of another, it occafioned in years of 
 fcarcity a greater importation than would other- 
 wife have been neceffary. It increafed the bufi- 
 nefs of the corn merchant in both ; and in years 
 of fcarcity, it not only enabled him to import a 
 greater quantity, but to fell it for a better price, 
 and confequently with a greater profit than he 
 could otherwife have made, if the plenty of one 
 year had not been more or lefs hindered from 
 relieving the fcarcity of another. It is in this 
 fet of men, accordingly, that I have obferved the 
 greateft zeal for the continuance or renewal of 
 the bounty. 
 
 . Our country gentlemen, when they impofed 
 the high duties upon the impoitation of foreign 
 corn, which in times of moderate plenty amount 
 to a prohibition, and when they eflablifned the 
 bounty, feemed to ha\'e imitated the condu6l of 
 our manufaflurers. By the one inftitution, they 
 fecured to themfelves the monopoly of the home 
 market j and by the other, they endeavoured 
 
 to
 
 THE WEALTH OF NATIONS; 27^ 
 
 to prevent that market from ever being over- chap. 
 flocked with their commodity. By both they v. 
 endeavoured to raife its real value, in the fame '^"^^""^ 
 manner as our manufacturers had, by the Hke 
 inflitutions, raifed the real value of many dif- 
 ferent forts of manufadured goods. They did 
 not perhaps attend to the great and eflential 
 difference which nature has eftablifhed between 
 corn and almofl every other fort of goods. 
 When, either by the monopoly of the home 
 market, or by a bounty upon exportation, you 
 enable our woollen or linen manufafturers to fell 
 their goods for fomewhat a better price than they 
 otherwife could get for them, you raife, not only 
 the nominal, but the real price of thofe goods. 
 You render them equivalent to a greater quan- 
 tity of labour and fubfillence, you increafe not 
 only the nominal, but the real profit, the real 
 wealth and revenue of thofe manufa6lurers, and 
 you enable themi either to live better themfelves, 
 or to employ a greater quantity of labour in 
 thofe particular manufactures. You really en- 
 courage thofe manufactures, and direft towards 
 them a greater quantity of the indultry of the 
 country, than what would probably go to them 
 of its own accord. But when by the like infli- 
 tutions you raife the nominal or money price of 
 corn, you do not raife its real value. You do 
 not increafe the real wealth, the real revenue 
 either of our farmers or country gentlemen. 
 You do not encourage the growth of corn, be- 
 caufe you do not enable them to maintain and 
 employ more labourers in raifmg it. The nature 
 
 T 3 of
 
 fjB THE NATURE AND CAUSES OF 
 
 BOOK of things has ftamped upon corn a real value, 
 jy. which cannot be altered by merely altering its 
 
 ^^■^''~*~' money price. No bounty upon exportation, no 
 monopoly of the home market, can raife that 
 value. The freeft competition cannot lower it. 
 Through the world in general that value is equal 
 to the quantity of labour which it can maintain, 
 and in every particular place it is equal to the 
 quantity of labour which it can maintain in the 
 way, whether liberal, moderate, or fcanty, in 
 which labour is commonly maintained in that 
 place. Woollen or linen cloth are not the re- 
 gulating commodities by which the real value of 
 all other commodities mud be finally meafured 
 ?nd determined ; corn is. The real value of 
 every other commodity is finally meafured and 
 determined by the proportion which its average 
 money price bears to the average money price of 
 corn. The real value of corn does not vary 
 with thofe variations in its average money price, 
 \vhich fometimes occur from one century to an? 
 other. It is the real value of filver which varies 
 with them. 
 
 Bounties upon the exportation of any home- 
 made commodity are liable, firlt, to that general 
 objeftion which may be made to all the different 
 expedients of the mercantile fyftem ; the ob- 
 jeftion of forcing fome part of the induflry of the 
 country into a channel lefs advantageous than 
 that in which it would run of its own accord : 
 and, fecondly, to the particular objeftion of 
 forcing it, not only into a channel that is lefs 
 advantageous, but into one that is aftiially dif-: 
 
 advantageous $
 
 THE WEALTH OF NATIONS. 279 
 
 advantageous ; the trade which cannot be carried chap. 
 on but by means of a bounty being neceffarily a v. 
 lofing trade. The bounty upon the exportation '''*'^' 
 of corn is liable to this further objedion, that 
 it can in no refped promote the raifing of that 
 particular commodity of which it was meant to 
 encourage the production. "When our country 
 gentlemen, therefore, demanded the eftablifli- 
 ment of the bounty, though they acted in imi- 
 tation of our merchants and manufa6lurers, they 
 did not act with that complete comprehenfion of 
 their own interefl which commonly directs the 
 conduft of thofe two other orders of people. 
 They loaded the public revenue with a very 
 confiderable expence ; they impofed a very heavy 
 tax upon the whole body of the people ; but they 
 did not, in any fenfible degree, increafe the real 
 value of their own commodity ; and by lowering 
 fomewhat the real value of filver, they difcou- 
 raged, in fome degree, the general induftry of 
 the country, and, inftead of advancing, retarded 
 more or lefs the improvement of their own lands, 
 which neceflarily depends upon the general in- 
 duftry of the country. 
 
 To encourage the production of any com,- 
 modify, a bounty upon produdion, one fhould 
 imagine, would have a more direct operation 
 than one upon exportation. It would, befides, 
 impofc only one tax upon the people, that which 
 they mufl: contribute in order to pay the bounty. 
 Indead of raifmg, it would tend to lower the 
 price of the commodity in the home market ; 
 5ind thereby, inftead of impofmg a fecond tax 
 
 T 4 upon
 
 2So THE NATURE AND CAUSES OF 
 
 BOOK upon the people, it might, at leaft in part, re-- 
 IV. pay them for what they had contributed to the 
 firft. Bounties upon produdion, however, have 
 been very rarely granted. The prejudices efta- 
 bhflied by the commercial fyftem have taught 
 us to believe, that national wealth arifes more 
 immediately from exportation than from pro- 
 duction. It has been more favoured according- 
 ly, as the more immediate means of bringing 
 money into the country. Bounties upon pro- 
 du£l;ion, it has been laid too, have been found 
 by experience more liable to frauds, than thofe 
 upon exportation. Hew far this is true, I know 
 not. That bounties upon exportation have been 
 abufed to many fraudulent purpofes, is very 
 well known. But it is not the intereft of mer- 
 chants and manufadurers, the great inventors 
 of all thefe expeuients, that the home market 
 fhould be overftocked with their goods ; an event 
 which a bounty upon production might fome- 
 times occafion. A bounty upon exportation, by 
 enablhig them to fend abroad their furplus part, 
 and to keep up the price of what remains in the 
 home market, effedually prevents this. Of all 
 the expedients of the mercantile fyftem, accord- 
 ingly, it is the one of which they are the fondeft^. 
 I have known the different undertakers of fome 
 particular works agree privately among them- 
 felves to give a bounty out of their own pockets 
 upon the exportation of a certain proportion of 
 the goods which they dealt in. This expedient 
 fucceeded fo well, that it more than doubled the 
 price of their goods in the home market, not- 
 
 withftanding
 
 THE WEALTH OF NATIONS. 281 
 
 withftanding a very confiderable mcreafe in the chap. 
 produce. The operation of the bounty upon v. 
 corn mufl have been wonderfully different, if it ^-^''""■^ 
 has lowered the money price of that commodity. 
 
 Something like a bounty upon produdion, 
 however, has been granted upon fome particular 
 occafions. The tonna«Te bounties given to the 
 white-herring and whale-fifheries mav, perhaps, 
 be confidered as fomewhat ot this nature. They 
 tend diredly, it may be fuppofed, to render the 
 goods cheaper in the home market than they 
 otherwife would be. In other refpecls their ef- 
 fects, it muft be acknowledged, are the fame as 
 thofe of bounties upon exportation. By means 
 of them a part of the capital of the country is 
 employed in bringing goods to market, of which 
 the price does not repay the coft, together with 
 the ordinary profits of ftock. 
 
 But though the tonnage bounties to thofe 
 fifheries do not contribute to the opulence of the 
 nation, it may, perhaps, be thought that they 
 contribute to its defence, by augmenting the 
 number of its failors and fliipping. This, it 
 may be alleged, may lometimes be done by 
 means of fuch bounties at a much fmalier ex- 
 pence, than by keeping up a great {landing 
 navy, if I may ufe fuch an expreffion, in the 
 fame way as a {landing arniy. 
 
 Notwithstanding thefe favourable allega- 
 tions, however, the following confiderations dif- 
 pofe me to believe, that in granting at leaft one 
 of thefe bounties, the legiflature has been very 
 grofsly impofed upon. 
 
 First,
 
 iSz THE NATURE AND CAUSES OF 
 
 BOOK First, the herring bufs bounty feems too large* 
 IV. From the commencement of the winter fifhing 
 
 *'''^' '~ 1 77 1 to the end of the winter fifhing 178 1, the 
 tonnage bounty upon the herring bufs fifhery has 
 been at thirty fhillings the ton. During the'e 
 eleven years the whole number of barrels caught 
 by the herring bufs fifhery of Scotland amounted 
 to 378,347. The herrings caught and cured at 
 fea are called fea flicks. In order to render 
 them what are called merchantable herrings, it 
 is neceflary to repack them with an additional 
 quantity of fait ; and in this cafe, it is reckoned, 
 that three barrels of fea fticks are ufually re- 
 packed into two barrels of merchantable her- 
 rings. The number of barrels of merchantable 
 herrings, therefore, caught during thefe eleven 
 years, will amount only, according to this ac- 
 count, to 252,231^. During thefe eleven 
 years the tonnage bounties paid amounted to 
 155,463/. lis. or to 8 J. 2 lei. upon every bar- 
 rel of fea flicks, and to i2x. 3l<3'. upon every 
 barrel of merchantable herrings. 
 
 The fait with which thefe herrings are cured 
 Is fometimes Scotch, and fometimes foreign, fait; 
 both which are delivered free of all excife duty to 
 the fifh curers. The excife duty upon Scotch 
 / fait is at prefent is. 6 d. that upon foreign fait 
 
 10 J. the bufliel. A barrel of herrings is fuppofed 
 to require about one bufhel and one-fourth of a 
 bufhel foreign fait. Tv;o bulhels are the fuppofed 
 average of Scotch fak. If the herrings are en- 
 tered for exportation, no part of this duty is paid 
 up ; if entered for home confumption, whether the 
 
 3 herrings
 
 THE WEALTH OF NATIONS. 283 
 
 herrings were cured with foreign or with Scotch chap, 
 fait, only one fiiilling the barrel is paid up. It v. 
 was the old Scotch duty upon a builiel of fait, """^^"'"'^ 
 the quantity which, at a low eftimation, had been 
 fuppofed neceflary for curing a barrel of herrings. 
 In Scotland, foreign fait is very little ufed for any 
 other purpofe but the curing of fifli. But from 
 the 5th April 1771, to the 5th April 1782, 
 the quantity of foreign fait imported amounted 
 to 936,974 bufhels, at eighty-four pounds the 
 bulhel : the quantity of Scotch fait delivered 
 from the works to the fifli-curers, to no more 
 than 168,226, at fifty-fix pounds the bufhel only. 
 It would appear, dierefore, that it is principally 
 foreign fait that is ufed in the fiflieries. Upon 
 every barrel of herrings exported there is, befides, 
 a bounty of 2 s. 8 d. and more than two-thirds 
 of the bufs caught herrings are exported. Put all 
 thefe things together, and you will find that dur- 
 ing thefe eleven years, every barrel of bufs caught ' 
 herrings, cured with Scotch fait, when exported, 
 has cod government lys. ii^ ci. and when en- 
 tered for home confamption i^s ^l-d.: and that 
 every barrel cured with foreign fait, when ex- 
 ported, has cod government 1/. y s. sld.; and 
 when entered for home confumption, i /. 3 j. 9^ d» 
 The price of a barrel of good merchantable her- 
 rings runs from feventeen and eighteen to four 
 and five and twenty fhillings ; about a guinea at 
 an average *. 
 
 Secondly, the bounty to the white herring 
 fifliery is a tonnage bounty j and is proportioned 
 
 * Sec the accounts at the cud of the volume. 
 
 to
 
 534 THE NATURE AND CAUSES OF 
 
 3 o o K to the burden of the fliip, not to her diligence 
 IV. or fuccefs in the fifliery ; and it has, I am afraid, 
 
 •""^'"'^ \jQQYi too common for vefTels to fit out for the 
 fole purpofe of catching, not the fifli, but the 
 bounty. In the year 1759, when the bounty was 
 at fifty fhiliings the ton, the whole bufs fifliery 
 of Scotland brought In only four barrels of fea 
 flicks. In that year each barrel of fea flicks cofl 
 government in bounties alone 113/. 1 5 ■?• ; each 
 barrel of merchantable herrings 159/. y s. 6 d. 
 
 Thirdly, the mode of filing for which this 
 tonnage bounty in the white herring fifhery has 
 been given (by bulTes or decked veffels from 
 twenty to eighty tons burden), feems not fo well 
 adapted to the fituation of Scotland as to that of 
 Holland ; from the practice of which country it 
 appears to have been borrowed. Holland Hes 
 at a great diflance from the feas to which her- 
 rings are known principally to refort ; and can, 
 therefore, carry on that fifhery only in decked 
 veffels, which can carry water and provifions 
 fufficient for a voyage to a diftant fea. But the 
 Hebrides, or weflern iflands, the iflands of Shet- 
 land, and the northern and north-weflern coafls 
 of Scotland, the countries in whofe neighbour- 
 hood the herring fifhery is principally carried on, 
 are every where interfecled by arms of the fea, 
 which run up a confiderable way into the land, 
 and which, in the language of the country, are 
 called fea-lochs. It is to thefe fea-lochs that 
 the herrings principally refort during the fea- 
 fons in which they vifit thofe feas ; for the vifits 
 of this, and, I am aflured, of many other forts 
 
 of
 
 THE WEALTH OF NATIONS. 285 
 
 of fifli, are not quite regular and conftant. A 
 boat filhery, therefore, feems to be the mode of 
 filhing bed adapted to the peculiar fituation of 
 Scotland : the fifhers carrying the herrings on 
 Ihore as fad as they are taken, to be either cured 
 or conlumed fre/h. But the great encouragement 
 which a bounty of thirty (hillings the ton gives 
 t© the bufs fifliery, is neceflarily a difcouragement 
 to the boat fifliery ; which having no fuch bounty, 
 cannot bring its cured fifh to market upon the 
 fame terms as the bufs fifliery. The boat fifhery, 
 accordingl)'-, which, before the eflabiifliment of 
 the bufs bounty was very confiderable, and is 
 faid to have employed a number of fcamen, not 
 inferior to -what the bufs fidiery employs at pre- 
 fent, is now gone almofl entirely to decay. Of 
 the former extent, however, of this now ruined 
 and abandoned fifliery, I mufl acknowledge, that 
 I cannot pretend to fpeak with much precifion. 
 As no bounty was paid upon the outfit of the 
 boat fifliery, no account was taken of it by the 
 officers of the cuftoms or fait duties. 
 
 Fourthly, in many parts of Scotland, during 
 certain feafons of the year, herrings make no in- 
 confiderable part of the food of the common 
 people. A bounty, which tended to lower their 
 price in the home market, might contribute a 
 good deal to the relief of a great number of our 
 fellow fubjeds, whofe circumfiances are by no 
 means affluent. But the herring bufs bounty 
 contributes to no fuch good purpofe. It has 
 ruined the boat filhery, which is, by far, the 
 bed adapted for the fupply of the home market, 
 
 10 and
 
 '286 THE NATURE AND CAUSES OF 
 
 'BOOK and the additional bounty of 2 s. 8 d. the barrel 
 IV. upon exportation, carries the greater part, more 
 
 **^'^**^ than two thirds, of the produce of the bufs 
 filhery abroad. Between thirty and forty years 
 ago, before the eflablifhment of the bufs bounty, 
 fixteen jfhilh'ngs the barrel, I have been affured, 
 was the common price of white herrings. Be- 
 tween ten and fifteen years ago, before the boat 
 fifhery was entirely ruined, the price was faid to 
 have run from feventeen to twenty fliillings the 
 barrel. For thefe laft five years, it has, at an 
 average, been at twenty-five fhillings the barrel. 
 This high price, however, may have been owing 
 to the real fcarcity of the herrings upon the 
 coaft of Scotland. I muft obferve too, that the 
 caik or barrel, which is ufually fold with the 
 herrings, and of which the price is included in 
 all the foregoing prices, has, fince the com- 
 mencement of the American war^ rifen to about 
 double its former price, or from about three 
 Ihillings to about fix fhillings. I muft like- 
 wife obferve, that the accounts I have received 
 of the prices of former times, have been by no 
 means quite uniform and confident ; and an old 
 man of great accuracy and experience has aflured 
 me, that more than fifty years ago, a guinea wa3 
 the ufual price of a barrel of good merchantable 
 herrings j and this, I imagine, may Hill be looked 
 upon as the average price. All accounts, how- 
 ever, I think, agree, that the price has not been 
 lowered in the home market, in confequence of 
 the bufs boimty.
 
 THE WEALTH OF NATIONS. 287 
 
 When the undertakers of fifheries, after fuch chap. 
 liberal bounties have been beflowed upon them, v. 
 continue to fell their commodity at the fame, or 
 even at a higher price rhan they were accuf- 
 tomed to do before, it might be expedled that 
 their profits fhould be very great ; and it is not 
 improbable that thofe of fome individuals may 
 have been fo. In general, however, I have 
 every reafon to believe they have been quite 
 other wife. The ufual effect of fuch bounties is 
 to encourage rafli undertakers to adventure in a 
 bufmefs which they do not underftand, and what 
 they lofe by their own negligence and ignorance, 
 more than compenfates all that they can gain 
 by the utmoft liberality of government. In 
 1750, by the fame acl which firft gave the 
 bounty of thirty fhillings the ton for the en- 
 couragement of the white herring filhery (the 
 23 Geo. II. chap. 24.) a joint ftock company 
 was ereSed, with a capital of five hundred thou- 
 fand pounds, to which the fubfcribers (over and 
 above all other encouragements, the tonnage 
 bounty jufl: now mentioned, the exportation, 
 bounty of two fhillings and eight pence the bar- 
 rel the delivery of both Britifli and foreign fait 
 duty free) were, during the fpace of fourteen, 
 years, for every hundred pounds which they 
 fubfcribed and paid into the flock of the fo- 
 ciety, entitled to three pounds a year, to be 
 paid by the receiver-general of the cufloms in. 
 equal half-yearly payments. Befides this great 
 company, the refidence of whofe governor and 
 •diredors was to be in London, it was declared 
 
 lawful
 
 ,8g THE NATURE AND CAUSES OF 
 
 BOOK lawful to ereft different fifliing-chambers in ali 
 IV. the different out-ports of the kingdom, provided 
 a fum not lels than ten thoufand pounds was fub= 
 fcribed into the capital of each, to be managed 
 as its own ri{k, and for its own profit and lofs. 
 The fame annuity, and the fame encourage- 
 ments of all kinds, were given to the trade of 
 thofe inferior chambers, as to that of the great 
 company. The fubfcription of the great com- 
 pany was foon filled up, and feveral different 
 fifliing-chambers were erecled in the different 
 out-ports of the kingdom. In fpite of all thefe 
 encouragements, almofl all thofe different com- 
 panies, both great and finall, lofl either the 
 whole, or the greater part of their capitals ; 
 fcarce a veftige now remains of any of them, 
 and the white herring fifhery is nov/ entirely^, 
 or almofl entirely, carried on by private ad- 
 venturers.. 
 
 If any particular manufacture was neceffary,- 
 indeed, for the defence of the fociety, it might 
 not always be prudent to depend upon our 
 neighbours for the fupply ; and if fuch manu- 
 fafture could not otherwife be fupported at 
 home, it might not be unreafonable that all the 
 other branches of indullry fhould be taxed in 
 order to fupport it. The bounties upon the 
 exportation of Britifli-made fail-cloth, and Bri- 
 tifli-made gunpowder, may, perhaps, both be 
 vindicated upon this principle. 
 
 But though it can very feldom be reafonable 
 to tax the induflry of the great body of the 
 people, in order to fupport that of fome par- 
 ticular
 
 tHE WEALTH OF NATIONS. 
 
 dcular clafs of manufaftures ; yet In the waii- 
 totinefs of great profperity, when the public 
 enjoys a greater revenue than it knows well what 
 to do with, to give fuch bounties to favourite 
 manufactures, may, perhaps, be as natural, as to 
 incur any other idle expence. In public, as 
 well as in private expences, great wealth may, 
 perhaps, frequently be admitted as an apology 
 for great folly. But there mufl: furely be fome- 
 thing more than ordinary abfurdity, in conti- 
 nuing fuch profufion in times of general difficulty 
 and diltrefs. 
 
 What is called a bounty is fometlmes no 
 more than a drawback, and confequently is not 
 liable to the fame objedions as what is properly 
 a bounty. The bounty, for example, upon re- 
 fined fugar exported, may be confidered as a 
 drawback of the duties upon the brown and 
 mufcovado fugars, from which it is made. The 
 bounty upon wrought filk exported, a drawback 
 of the duties upon raw and thrown filk im- 
 ported. The bounty upon gunpowder exported, 
 a drawback of the duties upon brimftone and 
 faltpetre imported. In the language of the 
 cuftoms thofe allowances only are called draw- 
 backs, which are given upon goods exported in 
 . the fame form in which they are imported. When 
 that form has been fo altered by manufadure 
 of any kind, as to come under a new denomina- 
 tion, they are called bounties. 
 
 Premiums given by the public to artifts and 
 manufadurers who excel in their particular oc- 
 cupations, are not liable to the fame objedions 
 
 VOL. n. u as
 
 ,90 THE NATURE AND CAUSES OF 
 
 BOOK as bounties. By encouraging extraordinary dex- 
 IV. terity and ingenuity, they ferve to keep up the 
 
 '"'^^^^ emulation of the workmen actually employed in 
 , thofe refpedive occupations, and are not con- 
 fiderable enough to turn towards an.' one of 
 them a greater fhare of the capital of the country 
 than what would go to it of its own accord. 
 Their tendency is not to overturn the natural 
 balance of employments, but to render the work 
 which is done in each as perfect and complete as 
 pollible. The expence of premiums, befides, 
 is very trifling ; that of bounties very great. 
 The bounty upon corn alone has fometimes coll 
 the public in one year more than three hundred 
 thoufand pounds. 
 
 Bounties are fometimes called premiums, as 
 drawbacks are fometimes called bounties. Bur 
 we muft in all cafes attend to the nature of the 
 thing, without paying any regard to the word. 
 
 Digrejfion concerning the Corn Trade and Corn 
 
 haius. 
 
 T CANNOT conclude this chapter concerning 
 bounties, without obferving that the praifes 
 which have been beftowed upon the law which 
 eftabliihes the bounty upon the exportation of 
 corn, and upon that fyflem of regulations which 
 is conneded with it, are altogether unmerited. 
 A particular examination of the nature of the 
 corn trade, and of the principal Britifh laws 
 which relate to it, will fufficiently demonflrate 
 
 the
 
 THE WEALTH OF NATIONS. 2^1 
 
 the truth of this aflertlon. The great importance chap. 
 of this fubjed muft jullify the length of the di- ^* 
 greffion. 
 
 The trade of the corn merchant is compofed 
 of four different branches, which, though they 
 may fometimes be all carried on by the fame 
 perfon, are in their own nature four feparate and 
 didind trades. Thefe are, firfl;, the trade of 
 the inland dealer ; fecondly, that of the mer- 
 chant importer for home confumption ; thirdly, 
 that of the merchant exporter of home produce 
 for foreign confumption j and fourthly, that of 
 the merchant carrier, or of the importer of corn 
 in order to export it again. 
 
 I. The intereft of the inland dealer, and that 
 of the great body of the people, how oppofite 
 foever they may at firll: fight appear, are, even 
 in years of the greatefl: fcarcity, exactly the fame. 
 It is his intereil to raife the price of his corn as 
 high as the real fcarcity of the feafon requires, 
 and it can never be his intereft to raife it higher. 
 By raifmg the price he difcourages the confump- 
 tion, and puts every body, more or lefs, but 
 particularly the inferior ranks of people, upon 
 thrift and good management. If, by raifmg it 
 too high, he difcourages the confumption fo 
 much that the fupply of the feafon is hkely to 
 go beyond the confumption of the feafon, and 
 to laft for fome time af-cr the next crop begins 
 to come in, he runs the hazard., not only of 
 lofmg a confiderable part of his corn by natural 
 caufes, but of being obliged to fell what remains 
 of it for much lefs than what he might have had 
 
 u 2 for
 
 2^2 THE NATURE AND CAUSES OF 
 
 BOOK for it feveral months before. If, by not raifing 
 IV. the price high enough, he difcourages the con- 
 fuinption fo little that the fupply of the feafon 
 is likely to fall (hort of the confumption of the 
 feafon, he not only lofes a part of the profit 
 which he might otherwife have made, but he 
 cxpofes the people to fuffer before the end of the 
 feafon, inftead of the hardfliips of a dearth, the 
 dreadful horrors of a famine. It is the intereft 
 of the people that their daily, weekly, and 
 monthly confumption, fliould be proportioned as 
 exactly as pofTible to the fupply of the feafon. 
 The intereft: of the inland corn dealer is the 
 fame. By fupplying them, as nearly as he can 
 judge, in this projportion, he is likely to fell all 
 his corn for the bigheft price, and with the 
 greateil profit ; and his knowledge of the (late of 
 the crop, and of his daily, weekly, and monthly 
 fales, enables him to judge with more or lefs 
 accuracy, how far they really are fupplied in this 
 manner. Without intending the intereft of the 
 people, he is neceffarily led, by a regard to his 
 own intereft, to treat them, even in years of 
 fcarcity, pretty much in the fame manner as the 
 prudent mailer of a veifel is fometimes obliged 
 to treat his crew. When he forefees that pro- 
 •vifions are likely to run fhort, he puts them 
 upon fliort allowance. Though from excefs of 
 caution he fhould fomeihnes do this without any 
 real neceffity, yet all the inconveniencies which 
 his crew can thereby fuffer are inconfiderable, in 
 comparifon of the danger, mifery, and ruin, to 
 which they might fometioies be expofed by a lefs 
 
 provident
 
 THE WEALTH OF NATIONS. 293 
 
 provident condu6l. Though from excefs of chap. 
 avarice, in the fame manner; the inland corn v. 
 merchant fhould fometimes raife the pric^e of his 
 corn fomewhat higher than the fcarcity of the 
 feafon requires, yet all the inconveniencies vi'hich 
 the people can fuffer from this condufl, which 
 effectually fecures them from a famine in the end 
 of the feafon, are ineonfiderable, in comparifon 
 of what they might have been expo fed to by a 
 more liberal way of dealing in the beginning of 
 it. The corn merchant himfelf is likely to fuffer 
 the mofl by this excefs of avarice ; not only from 
 the indignation which it generally excites againfl: 
 him, but, though he fliould efcape the effects 
 of this indignation, from the quantity of corn 
 which it neceffarily leaves upon his hands in the 
 end of the feafon, and which, if the next feafon. 
 happens to prove favourable, he muft always 
 fell for a much lower price than he might other- 
 wife have had. 
 
 Werh it poffible, indeed, for one great com-, 
 pany of merchants to poffefs themfelves of the 
 v/hole crop of an extenfive country, it might, 
 perhaps, be their intereft to deal with it as the 
 Dutch are faid to do with the fpiceries of the 
 Moluccas, to deftroy or throw away a confider- 
 able part of it, in order to keep up the price of 
 the reft. But it is fcarce poffible, even by the 
 violence of law, to eftablifh fuch an extenfive 
 monopoly with regard to corn ; and wherever 
 the law leaves the trade free, it is of all commo- 
 dities the leafl liable to be engroffed or mono- 
 polized by the force of a few large capitals, 
 
 u 3 which
 
 294 THE NATURE AND CAUSES OF 
 
 HOOK which buy up the greater part of it. Not only 
 IV. its value far exceeds what the capitals of a few 
 private men are capable of purchafing, but fup- 
 pofing they were capable of purchafing it, the 
 manner in which it is produced renders this 
 purchafe altogether impracticable. As in every 
 civilized country it is the commodity of which 
 the annual confumption is the greatefl, fo a 
 greater quantity of induft ry is annually employed 
 in producing corn tharl in producing any other 
 commodity. When it firfl: comes from the 
 ground too, it is neceffarily divided among a 
 greater number of owners than any other com- 
 modity ; and thefe owners can never be collefted 
 nito one place like a number of independent 
 manufaclurers, but are neceflfarily fcattered 
 through all the different corners of the country. 
 Thefe firft owners either immediately fupply the 
 confumers in their own neighbourhood, or they 
 fupply other inland dealers who fupply thofe 
 confumers. The inland dealers in corn, there- 
 fore, including both the farmer and the baker, 
 are necefiarily more numerous than the dealers 
 in any other commodity, and their difperfed 
 fituation renders it altogether impofiible for them 
 to enter into any general combination. If in a 
 year of fcarcity, therefore, any of them flrould 
 find that he had a good deal more corn upon 
 hand than, at the current price, he could hope 
 to difpofe of before the end oi the feafon, he 
 would never think of keeping up this price to 
 his own lofs, and to the foie benefit of his rivals 
 and competitors, but would immediately lower 
 
 it.
 
 THE WEALTH OF NATIONS. ig'i 
 
 It, in order to get rid or his corn before the new chap. 
 crop begcin to come in. The fame motives, the v. 
 fame interefts, which would thus regulate the "'''^' 
 condu6l of any one dealer, would regulate that of 
 every other, and oblige them all in general to fell 
 their corn at the price which, according to the 
 beft of their judgment, was mod fuitable to the 
 fcarcity or plenty of the feafon. 
 
 Whoever examines, with attention, the hiftory 
 of the dearths and famines which have affli^led 
 any part of Europe, during either the courfe of 
 the prefent or that of the two preceding cen- 
 turies, of feveral of which we have pretty exact 
 accounts, will find, I believe, that a dearth 
 never has arifen from any combination among 
 the inland dealers in corn, nor from any other 
 caufe but a real fcarcity, occafioned fometimes, 
 perhaps, and in fome particular places, by the 
 wafle of war, but in by far the greateft number 
 of cafes, by the fault of the feafons j and that a 
 famine has never arifen from any other caufe 
 but the violence of government attempting, by 
 improper means, to remedy the inconveniencies 
 of a dearth. 
 
 In an extenfive corn country, between all the 
 different parts of which there is a free commerce 
 and communication, the fcarcity occafioned by 
 the moft unfavourable feafons can never be fo 
 great as to produce a famine ; and the fcantiefl 
 crop, it managed with frugality and oeconomy, 
 will maintain, through the year, the fame num- 
 ber ot people that are commonly fed in a more 
 affluent manner by one of nwderate plenty. 
 
 u 4 The
 
 296 THE NATURE AND CAUSES OF 
 
 BOOK The feafons mofl unfav6urable to the crop are 
 IV. thofe of exceilive drought or excefiive rain. But 
 as corn grows equally upon high and low lands, 
 upon grounds that are difpofed to be too wet, 
 and upon thofe that are difpyfed to be too dry, 
 either the drought or the rain which is hurtful 
 to one part of the country is favourable to 
 another ; and though both in the ,wet and in 
 the dry feafon the crop is a good deal lefs than 
 in one more properly tempered, yet in both 
 what is loft in one part of the country is in fome 
 meafure compenfated by what is gained in the 
 other. In rice countries, where the crop not 
 only requires a very moift foil, but where in a 
 certain period of its growing it muft be laid 
 under water, the effe£ts of a drought are much 
 piore difmal. Even in fuch countries, however, 
 the drought is, perhaps, fcarce ever fo univerfal, 
 as neceflarily to occafion a famine, if the govern- 
 ment would allow a free trade. The drought in 
 Bengal, a few years ago, might probably have 
 occafioned a very great dearth. Some improper 
 regulations, fome injudicious reftraints impofed 
 by the fervants of the Eaft India Company upon 
 the rice trade, contributed, perhaps, to turn that 
 dearth into a famine. 
 
 When the government, in order to remedy 
 the inconveniencies of a dearth, orders all the 
 dealers to fell their corn at what it fuppofes a 
 reafonable price, it either hinders them from 
 l^ringing it to market, which may fometimes 
 produce a famine even in the beginning of the 
 feafon 5 or if they bripg it thither, it enables 
 
 the
 
 THE WEALTH OF NATIONS. 297 
 
 the people, and thereby eneourages them to con- chap. 
 fume it fo faft, as muft neceiTarily produce a fa- v. 
 mine before the end of the feafon. The unli- ""^ ^^-^-^ 
 mited, unreftrained freedom of the corn trade, 
 ^s it is the only efFedual preventive of the mi- 
 feries of a famine, fo it is the beft palliative 
 of the inconveniencies of a dearth ; for the in- 
 conveniencies of a real fcarcity cannot be reme- 
 died ; they can only be palliated. No trade de- 
 ferves more the -full protection of the law, and no 
 trade requires it fo much ; becaufe no trade is fo 
 much expofed to popular odium. 
 
 In years of fcarcity the inferior ranks of peo- 
 ple impute their diftrefs to the avarice of the corn 
 merchant, who becomes the objeft of their 
 hatred and indignation. Inftead of making pro- 
 fit upon fuch occafions, therefore, he is often 
 in danger of being utterly ruined, and of having 
 his magazines plundered and deftroyed by their 
 violence. It is in years of fcarcity, however, 
 when prices are high, that the corn merchant 
 expefts to make his principal profit. He is ge- 
 nerally in contract with fome farmers to furnlfli 
 him for a certain number of years with a certain 
 quantity of corn at a certain price. This con- 
 trad price is fettled according to what is fup- 
 pofed to be the moderate and reafonable, that is, 
 the ordinary or average price, which, before the 
 late years of fcarcity, was commonly about eight- 
 and-twenty fliillings for the quarter of wheat, 
 and for that of other grain in proportion. In 
 years of fcarcity, therefore, the corn merchant 
 buys a great part of his corn for the ordinary 
 
 price.
 
 298 THE NATURE AND CAUSES OF 
 
 15 o o K price, and fells it for a much higher. That 
 IV. this extraordinary profit, however, is no more 
 
 ' "'"**^ than fufficient to put his trade upon a fair level 
 with other trades, and to compenfate the many 
 lolTcs which he fultains upon other occafions, 
 both from the perifhable nature of the commo- 
 dity itielf, and from the frequent and unforefeen 
 fluctuations of its price, feems evident enough, 
 from this fingle circumflance, that great fortunes 
 are as feldom made in this as in any other trade. 
 The popular odium, however, which attends it 
 in years of fcarcity, the only years in which it 
 can be very profitable, renders people of cha- 
 racter and fortune averfe to enter into it. It is 
 abandoned to an inferior fet of dealers j and 
 millers, bakers, mealraen, and meal factors, to- 
 gether with a number of wretched huckfters, are 
 almoft the only middle people that, in the home 
 market, come between the grower and the con- 
 fumer. 
 
 The ancient policy of Europe, inflead of dif- 
 countenancing this popular odium againll: a trade 
 fo beneficial to the public, feems, on the contrary, 
 to have' authorifed and encouraged it. 
 
 By the 5th and 6th of Edward VI. cap. 14. it, 
 was enacted. That whoever (hould buy any corn 
 or grain with intent to fell it again, fhould be 
 reputed an unlawful engroffer, and fliould, for 
 the firfl fault, fnffer two months imprifonment, 
 and forfeit the value of the corn ; for the fecond, 
 fuffer fix months imprifonment, and forfeit 
 double the value ; and for the third, be fet in 
 the pillory, fuller imprifonment during the king's 
 
 10 pleafure.
 
 THE WEALTH OF NATIONS. 299 
 
 pleafure, and forfeit all his goods and chattels, chap. 
 The ancient policy of molt other parts of Europe v, 
 was no better than that of England. " ^"""^ 
 
 Our anceflors feem to have imagined that the 
 people would buy their corn cheaper of the far- 
 mer than of the corn merchant, who, they were 
 afraid, would require, over and above the price 
 which he paid to the farmer, an exorbitant pro- 
 fit to himTLlf. They endeavoured, therefore, to 
 annihilate his trade altogether. They even en- 
 deavoured to hinder as much as poffible any 
 middle man ot any kind from coming in be- 
 tween the grower and the confumer ; and this 
 was the meaning of the many reftraints which 
 they impofed upon the trade of thofe whom they 
 called kidders or carriers of corn, a trade which 
 nobody was allowed to exercife without a licence 
 afcertaining his qualifications as a man of pro- 
 bity and fair dealing. The authority of three 
 juftices of the peace was, by the ftatute of Ed- 
 ward VI. neccflary, in order to grant this licence. 
 But even this reltraint was afterwards thought 
 infuiTicient, and by a flatute of Elizabeth, the 
 privilege of granting it was confined to the quar- 
 ter-feflions. 
 
 The ancient policy of Europe endeavoured in 
 this manner to regulate agriculture, the great 
 trade of the country, by maxims quite different 
 from thofe which it eftablifhed with regard to 
 manufactures, the great trade of the towns. By 
 leaving the farmer no other cultomers but either 
 the confumers or their immediate factors, the 
 kidders and carriers of corn, it endeavoured to 
 
 force
 
 3CO THE NATURE AND CAUSES OF 
 
 BOOK force him to exercife the trade, not only of a far- 
 iv. mer, but of a corn merchant or corn retailer. 
 On the contrary, it in many cafes prohibited the 
 manufadlurer from exercifmg the trade of a fhop- 
 keeper, or from felling his own goods by retail. 
 It meant by the one law to promote the general 
 interefl: of the country, or to render corn cheap, 
 without, perhaps, its being well underftood how 
 this was to be done. By the other it meant to 
 prortiote that of a particular order of men, the 
 fhopkeepers, who would be fo much underfold 
 by the manufacturer, it was fuppofed, that their 
 trade would be ruined if he was allowed to retail 
 at all. 
 
 The manufadurer, however, though he had 
 been allowed to keep a fliop, and to fell his own 
 goods by retail, could not have underfold the 
 common fhopkeeper. Whatever part of his ca- 
 pital he might have placed in his fhop, he mufl 
 have withdrawn it from his manufacture. In 
 order to carry on his bufmefs on a level with 
 tha^ of other people, as he mud have had the 
 profit of a manufacturer on the one part, (o he 
 mud have had that of a fliopkeeper upon the 
 other. Let us fuppofe, for example, that in the 
 particular town where he lived, ten per cent, was 
 the ordinary profit both of manufacturing and 
 (hopkeeping ftock ; he mufl in this cafe have 
 charged upon every piece of his own goods 
 which he fold in his fhop, a profit of twenty per 
 cent. When he carried them from his work- 
 houfe to his fliop, he mufl have valued them at 
 the price for which he could have fold them to a 
 
 3 dealer
 
 THE WEALTH OF NATIONS. 301 
 
 dealer or fliopkeeper, who would have bought chap. 
 them by wholefale. If he valued them lower, v. 
 he loft a part of the profit of his manufafturing """^""^ 
 capital. When agaiu he fold them from his 
 fhop, unlefs he got the fame price at which a 
 fhopkeeper would hays fold them, he loft a part 
 of the profit of his fhopkeeping capital. Though 
 he might appear, therefore, to make a double 
 profit upon the fame piece of goods, yet as thefe 
 goods made fuccefiively a part of two diftinft 
 capitals, he made but a fingle profit upon the 
 whole capital employed about them ; and if he 
 made lefs than his profit, he was a lofer, or did 
 not employ his whole capital with the fame advan- 
 tage as the greater part of his neighbours. 
 
 What the manufaclurer was prohibited to do, 
 the farmer was in fome meafure enjoined to do ; 
 to divide his capital between two different em- 
 ployments ; to keep one part of it in his gra- 
 naries and ftack yard, for fupplying the occafional 
 demands of the market ; and to employ the 
 other in the cultivation of his land. But as he 
 could not afford to employ the latter for lefs 
 than the oidinary profits of farming ftock, fo 
 he could as little afford to employ the former for 
 lefs than the ordinary profits of mercantile ftock. 
 Whether the ftock which really carried on the 
 bufinefs of a corn mtrchant belonged to the 
 perfon who was called a farmer, or to the perfou 
 who was called a corn merchant, an equal profit 
 was in both cafes requifite, in order to incemnify 
 its owner for employing it in this manner ; in 
 order to put his bufinefi on a level with other 
 
 trades,
 
 302 THE NATURE AND CAUSES OF 
 
 BOOK trades, and in order to hinder him from having 
 IV". an inrereft to change it as foon as poflible for 
 
 ^'^'''*^ fome other. The farmer, therefore, who was 
 thus forced to exercife the trade of a corn mer- 
 chant, could not afford to fell his corn cheaper 
 than any other corn merchant w-ould have been 
 ■ obliged to do in the cafe of a free compe- 
 tition. 
 
 The dealer who can employ his whole flock 
 in one fmgle branch of bulinefs, has an advan- 
 tage of the fame kind with the workman who 
 can employ his whole labour in one fmgle opera- 
 tion. As the latter acquires a dexterity which 
 enables him, with the fame two hands, to per- 
 form a much greater quantity of work ; fo the 
 former acquires fo eafy and ready a method of 
 tranfafting his bufmefs, of buying and difpofmg 
 of his goods, that with the fame capital he can 
 tranfaft a much greater quantity of bufinefs. As 
 the one can commonly afford his work a good 
 deal cheaper, fo the other can commonly afford 
 his goods fomewhat cheaper than if his flock and 
 attention were both employed about a greater 
 variety of objects. The greater part of manu- 
 facturers could not afford to retail their own 
 goods fo cheap as a vigilant and adive fhop- 
 keeper, whofe fole bufmefs it was to buy them 
 by wholefale, and to retail them again. The 
 greater part of farmers could flill lefs afford to 
 retail their own corn, to fupply the inhabitants 
 of a town, at perhaps four or five miles dif- 
 tance from the greater part of them, fo cheap 
 as a vigilant and adive corn merchant, whofe 
 
 fole
 
 THE WEALTH OF NATIONS. 303 
 
 fole bufinefs it was to purchafe corn by wholefale, chap. 
 to colled it into a great magazine, and to retail ^* 
 it again. 
 
 The law which prohibited the manufadurer 
 from exercifing the trade of a fhopkeeper, endea- 
 voured to force this divifion in the employment 
 of itock to go on fafter than it might otherwife 
 have done. The law which obliged the farmer 
 to exercife the trade of a corn merchant, endea- 
 voured to hinder it from going on fo fad. Both 
 laws W'cre evident violations of natural liberty, 
 and therefore unjufl ; and they were both too as 
 impolitic as they were unjufl. It is the intereft 
 of every fociety, that things of this kind fliould 
 never either be forced or obftruded. The man 
 who employs either his labour or his ftock in a 
 greater variety of ways than his fituation renders 
 necelTary, can never hurt his neighbour by un- 
 derfelling him. He may hurt himfelf, and he 
 generally does fo. Jack of all trades will never 
 be rich, favs the proverb. But the law oujiht 
 always to trufl: people with the care of their own 
 interefl:, as in their local lituations they muft: ge- 
 nerally be able to judge better of it than the 
 legiflator can do. The law, however, which 
 obliged the farmer tq exercife the trade of a 
 corn merchant, was by far the moft pernicious of 
 the tv.'o.. 
 
 It obftruded not only that divifion in the 
 employment of ftock which is fo advantageous 
 to every fociety, but it obdruded likewife the 
 improvement and cultivation of the land. By 
 obliging the farmer to carry on two trades, in- 
 
 (lead
 
 ,^4 THE NATURE AND CAUSES OF 
 
 BOOK Head of one, it forced him to divide his capital 
 IV. into two parts, of which one only could be em- 
 
 """■^ — •'***^ ployed in cultivation. But if he had been at 
 liberty to fell his whole crop to a corn merchant 
 as faft as he could threfh it out, his whole capi- 
 tal might have returned immediately to the land, 
 and have been employed in buying more cattle, 
 and hiring more fervants, in order to improve 
 and cultivate it better. But by being obliged 
 to fell his corn by retail, he was obliged to keep 
 a great part of his capital in his granaries and 
 ftack yard through the year, and could not, 
 therefore, cultivate fo well as with the fame ca- 
 pital he might otherwife have done. This law, 
 therefore, neceffarily obftrucled the improvement 
 of the land, and, inftead of tending to render 
 corn cheaper, rnufl have tended to render it 
 fcarcer, and therefore dearer, than it would other- 
 wife have been. 
 
 After the bufinefs of the farmer, that of the 
 corn merchant is in reality the trade which, if 
 properly protected and encouraged, would con- 
 tribute the moft to the raifmg of corn. It would 
 fupport the trade of the farmer, in the fame man- 
 ner as the trade of the wholefale dealer fupports 
 that of the manufafturer. 
 
 The wholefale dealer, by affording a ready 
 market to the manufadurer, by taking his good's 
 off' his hand as faft as he can make them, and by 
 fometimes even advancing their price to him be- 
 fore he has made them, enables him to keep his 
 whole capital, and fometimes even more than 
 his whole capital, conftantly employed in manu- 
 
 fafturing
 
 THE WEALTH OF NATIONS. 305 
 
 faduring, and confequently to manufaclure a much chap, 
 greater quantity of goods than if he was obh'ged '^• 
 to difpofe of them himfelf to the immediate ^^ 
 confumers, or even to the retailers. As the ca- 
 pital of the wholefale merchant too is generally 
 fufficient to replace that of many manufacturers, 
 this intercourfe between him and them interefts 
 the owner of a -large capital to fupport the own- 
 ers of a great number of fmall ones, and to affift 
 them in thofc lofles and misfortunes which might 
 otherwife prove ruinous to them. 
 
 An intercourfe of the fame kind univerfally 
 eftablilhed between the farmers and the corn 
 merchants, would be attended with effe£ls equally 
 beneficial to the farmers. They would be en- 
 abled to keep their whole capitals, and even 
 more than their whole capitals, conftantly em- 
 ployed in cultivation. In cafe of any of thofe 
 accidents, to which no trade is more liable than 
 theirs, they would find in their ordinary cuf- 
 tomer, the wealthy corn merchant, a perfon who 
 had both an intereft to fupport them, and the 
 ability to do it ; and they would not, as at pre- 
 fent, be entirely dependent upon the forbearance 
 of' their landlord, or the mercy of his (leward. 
 Were it poflible, as perhaps it is not, to eftablifh 
 this intercourfe univerfally, and all at once, were 
 it poffible to turn all at once tlie whole farming 
 ftock of the kingdom to its proper bufinefs, the 
 cultivation of land, withdrawing it from every 
 other employment into Vv'hich any part of it may 
 be at prefent diverted, and were it poffible, in 
 order to fupport and nflift upon occafion the 
 
 VOL. II. X operations
 
 3o5 THE NATURE AND CAUSES OF 
 
 BOOK operations of this great ftock, to provide all at 
 i'^' once another flock almofl equally great, it is not 
 '~^ perhaps very eafy to imagine how great, how ex- 
 tenfive, and how fudden would be the improve- 
 ment which this change of circumftances would 
 alone produce upon the whole face of the 
 country. 
 
 The (larute of Edward VI., therefore, by pro- 
 hibiting as much as poffible any middle man 
 from coming in between the grower and the. 
 tonfumer, endeavoured to annihilate a trade, of 
 v^hich the free exercife is not only the bed pal- 
 liative of the inconveniencies of a dearth, but 
 'he belt preventive of that calamity 5 after the 
 irade of the farmer, no trade contributing fo 
 much to the growing of corn as that of the cora 
 iaerchant. 
 
 The rigour of this law was afterwards foftened 
 ^•)y feveral fubfequent ftatutes, which fucceffively 
 permitted tke engroiling of corn when the price 
 of wheat fhould not exceed twenty, twenty-four, 
 thirty-two, and forty {hillings the quarter. At 
 laft, by the i5th of Charles II. c. 7. the engroff- 
 ing or buying of corn in order to fell it again, as 
 long as the price of wheat did not exceed forty- 
 eight fliillings the quarter, and that of other 
 grain in proportion, was declared lawful to all 
 perfons not being foreftallers, that is, not felling 
 again in the fame market within three months. 
 All the freedom which the trade of the inland 
 corn dealer has ever yet enjoyed, was bellowed 
 upon it by this ftatute. The flatute of the 
 twelfth of the prefent king, which repeals almoft 
 
 all
 
 THE WEALTH OF NATIONS. 367 
 
 ail the other ancient laws agalnfl engroflers and c k a p. 
 foreftallers, does not repeal the reftriclions of this v. 
 particular ftatute, which therefore dill continue in 
 
 force. 
 
 This flatute, however, aiithorifes in fome mea- 
 
 fure two very abfurd popular prejudices. 
 
 First, it fuppofcs that when the price of 
 wheat has rifen fo high as forty-eight fhiUings 
 the quarter, and that of other grain in propor- 
 tion, corn is likely to be fo engroffed as to hurt 
 the people. But from what has been already 
 faid, it feems evident enough that corn can at no 
 price be fo engroffed by the inland dealers as to 
 hurt the people : and forty-eight fhillings the 
 quarter be fides, though it may be confidered as 
 a very high price, yet in years of fcarcity it is a 
 price which frequently takes place immediately 
 after harveft, when fcarce any part of the new 
 crop can be fold off, and when it is impoflible 
 even for ignorance to fuppofe that any part of it 
 can be fo engroffed as to hurt the people. 
 
 Secondly, it fuppofes that there is a certain 
 price at which corn is likely to be foreflalled, 
 that is, bought up in order to be fold again foon 
 after in the fame market, fo as to hurt the 
 people. But if a merchant ever buys up corn, 
 either going to a particular market or in a parti-- 
 cular market, in order to fell it again foon after 
 in the fame market, it muff be becaufe he judges 
 that the market cannot be fo liberally fupplied 
 through the whole feafon as upon that particular 
 occafion, and that the price, therefore, muff 
 
 X 2 ^oon
 
 303 THE NATURE AND CAUSES OF 
 
 BOOK foon rife. If he judges wrong in this, and if the 
 i^^' price does not rife, he not only lofes 'the whole 
 '^'^' profit of the flock which he employs in this 
 ' manner, but a part of the ^ock itfelf, by the ex- 
 pence and lofs which neceffiirily attend the 
 Coring and keeping of corn. He hurts himfelf, 
 therefore, much more eflentially than he can hurt 
 even the particular people whom he may hinder 
 from fupplying thetnfelves upon that particular 
 market day, becaufe they may afterwards fupply 
 themfelves juft as cheap upon any other market 
 day. If he judges right, inftead of hurting the 
 great body oF the people, he renders them a mofl 
 important fervic?. By making them feel the in- 
 conveniencies of a dearth fomewhat earlier than 
 they otherwife might do, he prevents their feel- 
 ing them afterwards fo feverely as they certainly 
 would do, if the cheapnefs of price encouraged 
 them to confume fader than fuited the real fear- 
 city of the feafon. When the fcarcity is real, 
 the bed thing that can be done for the people is 
 to divide the inconveniencies of it as equally as 
 poiTible through all the different months, and 
 weeks, and days of the year. The interefl of the 
 corn merchant makes him (fudy to do this as 
 exadly as he can : and as no other perfon can 
 have either the fame interefl:, or the fame know- 
 ledge, or the fame abihties to do it fo exadlly as 
 he, this mofl: important operation of commerce 
 ought to be trufl:ed entirely to him ; or, in other 
 words, the corn trade, fo far at lexifl: as concerns 
 the fupply of the home market, ought to' be left 
 perfectly free. 
 
 The
 
 THE WEALTH OF NATIONS. 309 
 
 The popular fear of engroffing and fpre- c 11 a p. 
 Hailing may be comparcJ to the popular terrors v. 
 and fufpicions of witchcraft. The unfortunate ''-^"^'^ ' 
 wretches accufed of this latter crime were not 
 more innocent of the misfortunes imputed to 
 them, than thofe who have been accufed of the 
 former. The law which put an end to all pro- 
 fecutions againfl witchcraft, which put it out of 
 any man's power to gratify his own malice by 
 accufing his neighbour of that imaginary crime, 
 feems effeftually to have put an end to thofe • 
 
 fears and fufpicions, by taking away the great 
 caufe which encouraged and f^ipportcd them. 
 The law which fliould reftore entire freedom to 
 the inland trade of corn, would .probably prove 
 as effedual to put an end to the popular fears of 
 engroffmg and forepLalling. 
 
 The 15th of Charles II. c. 7. however, with 
 all its imperfections, has perhaps contributed 
 more both to the plentiful fupply of the home 
 market, and to the increafe of tillage, than any 
 other law in the flatute book. It is from this 
 law that the inland corn trade has derived all the 
 liberty and protection which it has ever yet 
 enjoyed ; and both the fupply of the home mar- 
 ket, and the intereft of tillage, are much more 
 effedually promoted by the inland, than either 
 by the importation or exportation trade. 
 
 The proportion of the average quantity of all 
 forts of grain imported into Great Britain to that 
 of all forts of grain confumed, it has been com- 
 puted by the author of the trads upon the corn 
 trade, does not exceed" that of one to five hunr 
 
 3v 3 dred
 
 3IO THE NATURP: AND CAUSES OF 
 
 BOOK dred and feventy. For fupplying the home 
 IV' market, therefore, the importance of the mland 
 trade mull be to that of the importation trade as 
 five hundred and feventy to one. 
 
 The average quantity of all. forts of grain ex- 
 ported from Great Britain does not, according to 
 the fame author, exceed the one-and-thirtietk 
 part of the annual produce. For the encourage- 
 ment of tillage, therefore, by providing a market 
 for the home produce, the importance of the in- 
 land trade mufl: be to that of the exportation trade 
 as thirty to one. 
 
 I HAVE no great faith in political arithmetic, 
 and I mean not to warrant the exaftnefs of 
 
 either of thefe computations. I mention them 
 only in order to ihew of how much lefs confe- 
 quen'Ce, in the opinion of the moit judicious and 
 experienced perfons, the foreign trade of corn is 
 than the home trade, "i'he great cheapnefs of 
 corn in the years im.mediately preceding the efta- 
 bliihment of the bounty, may, perhaps, with rea- 
 fon, be afcribed in fome meafure to the operation 
 of this llatute of Charles II., which had been 
 enabled about five-and-twenty years before, and 
 which had therefore full time to produce its 
 effea. 
 
 A VERY few words will fufficiently explain all 
 that I have to fay concerning the other three 
 branches of the corn trade. 
 
 II. The trade of the merchant importer of 
 foreign corn for home confumption, evidently 
 contributes to the immediate fupply of the home 
 market, and mud fo far be immediately bene- 
 ficial
 
 THE WEALTH OF NATIONS. 311 
 
 ficial to the great body of the people. It tends, chap. 
 indeed, to lower fomewhat the average money '^''* 
 price of corn, but not to diminifh its real value, 
 or the quantity of labour which it is capable of 
 maintaining. If importation was at all times 
 free, our farmers and country gentlemen v/ould 
 probably, one year with another, get iefs money 
 for their corn than they do at prefent, when im- 
 portation is at mod times in effedt prohibited ; 
 but the money which they got would be of more 
 value, would buy more goods of all other kinds, 
 and would employ more labour. Their real 
 wealth, their real revenue, therefore, would be 
 the fame as at prefent, though it might be ex- 
 prefled by a fmaller quantity of filver ; and they 
 would neither be difabled nor difcouraged from 
 cultivating corn as m.uch as they do at prefent. 
 On the contrary, as the rife in the real value of 
 filver, in confequence of lowering the money 
 price of corn, lowers fomewhat the money price 
 of all other commodities, it gives the induftry 
 of the country where it takes place, fome advan- 
 tage in all foreign markets, and thereby tends 
 to encourage and increafe that induftry. But 
 the extent of the home market for corn mufl be 
 in proportion to the general induftry of the 
 country where it grows, or to the number ot 
 thofe who produce fomething elfe, and there- 
 fore have fomething elfe, or what comes to the 
 iame thing, the price of fomething elfe, to give 
 in exchange for corn. But in every country the 
 home market, as it is the neareft and moll con- 
 venient, fo is it likewife the greatefl: and moft 
 
 X 4 important
 
 3,2 THE NATURE AND CAUSES OF 
 
 BOOK important market for corn. That rife in tlie 
 IV. real value of filver, therefore, which is the effed 
 
 ^"^ — """^ of lowering the average money price of corn, 
 tends to enlarge the greatelt and mofl: important 
 market for corn, and thereby to encourage, in- 
 ftead of difcouraging, its growth. 
 
 By the 2 2d of Charles II. c. 13. the import- 
 ation of wheat, whenever the price in the home 
 market did not exceed fifcy-three fliillings and 
 four pence the quarter, was fubjecled to a duty 
 of fixteen fliillings the quarter ; and to a duty 
 of eight fhillings whenever the price did not, exceed 
 four pounds. The former of thefe two prices 
 has, for more than a century pad, taken place 
 only in times of very great fcarcity ; and the 
 latter has, fo far as I know, not taken place at 
 all. Yet, till wheat has rifen above this latter 
 price, it was by this ilatute fubje£ted to a very 
 high duty ; and, till it had rifen above the for- 
 mer, to a duty which amounted to a prohibition. 
 The importation of other forts of grain was re- 
 trained at rates, and by duties, in proportion to 
 the value of the grain, almoft equally high *, 
 
 * Before the 13th of the preftnt king;, tlie following were tlie duties pay- 
 able upon the importation of the different forts of grain: 
 
 Grain. Du'ici. Duties. Duties^ 
 
 Beans to aS s.per qr. 19 s. 10 d after till 40 s. - 16 s. 8 d. thtn i2d. 
 Barley to 28 s. ijs 10 d. 32 s. - 16 s. 12 rl. 
 
 Malt is prohibited by the annu.l Malt-tax Cill. 
 
 Oats to 16 s. 5 s. 10 d. after 9-i-d. 
 
 Veafe to 40 s. 16 s. o d. after 9;|tl. 
 
 Rye to j6 s. 19 s. icd. till 40 s. - 16 s. R d. then izd. 
 
 AVIieat to 44 s. 21 s. 9 d. till 53 s. 4d. 17 s. then 8 s. 
 
 til! 4 1. and after that about 1 s. 4d. 
 Buck wheat to 32 s per qr to pay 16 s. 
 
 Thefe differei t duties were impofrrd, partly by the 22d of Charles If in 
 place of the Old Subfidy, partly by the New Subfidy, by the One-third nnd 
 Two-thirds Sijbfidy, and by the Subfidy 1747. 
 
 Subfequent
 
 THE WEALTH OF NATIONS. 313 
 
 Subfequent laws Hill further increafed thofe c n a p. 
 
 duties. ^'' 
 
 The dlftrefs which, in years of fcarcity, the '~"^' 
 ftri6t execution of thofe laws might have brought 
 upon the people, would probably have been very 
 great. But, upon fuch occafions, its execution 
 was generally fufpended by temporary ftatuteSy 
 which permitted, for a limited time, the im- 
 portation of foreign corn. The neceffity of thefe 
 temporary ftatutes fufficiently demonftrates the 
 impropriety of this general one. 
 
 Thjlse reftraints upon importation, though 
 prior to the eftabliihment of the bounty, were 
 dictated by the fame fpirit, by the fame prin- 
 ciples, which afterwards enacted that regulation. 
 How hurtful foever in themfelves, thefe or fome 
 other redraints upon importation became necef- 
 fary in confcquence of that regulation. If, when * 
 
 wheat w^as either below forty-eight fliillings the 
 quarter, or not much above it, foreign corn 
 could have been imported either duty free, or 
 upon paying .only a fmall duty, it might have, 
 been exported again, with the benefit of the 
 bounty, to the great lofs of the public revenue, 
 and to the entire perverfion of the infUtution, 
 of which the objeft was to extend the market 
 for the home growth, not that for the growth of 
 foreign countries. 
 
 III. The trade of the merchant exporter of 
 corn for foreign confumption, certainly does not 
 contribute directly to the plentiful fupply of the 
 home market. It does fo, however, indirectly. 
 From whatever fource this fupply may be ufually 
 
 drawn.
 
 3,4 THE NATURE AND CAUSES OF 
 
 BOOK drawn, whether from home growth or from fo- 
 IV. reign importation, unlefs more corn is either 
 ufually grown, or ufually imported into the 
 country, than what is ufually confumed in it, 
 the fupply of the home market can never be very 
 plentiful. But unlefs the furplus can, in all or- 
 dinary cafes, be exported, the growers will be . 
 careful never to grow more, and the importers 
 never to im.port more, than what the bare con- 
 fumption of the home market requires. That 
 market will very feldom be overftocked ; but it 
 v/ill generally be underllocked, the people, whofe 
 bufinefs it is to fupply it, being generally afraid 
 left their goods fhould be left upon their hands. 
 The prohibition of exportation limits the im- 
 provement and cultivation of the .country to what 
 the fupply of its own inhabitants requires. The 
 freedom of exportation enables it to extend cul- 
 tivation for the fupply of foreign nations. 
 
 By the 12th of Charles 11. c. 4. the export- 
 ation of corn was permitted whenever the price of 
 wheat did not exceed forty (liillings the quarter, 
 and that of other grain in proportion. By the 
 J 5th of the fame prince, this liberty was extendecl 
 till the price of wheat exceeded forty-eight {liil- 
 lings the quarter; and by the 2 2d, to all higher 
 prices. A poundage, indeed, was to be paid to 
 th-e king upon fuch exportation. But all grain 
 was rated fo low in the book of rates, that ihi:^ 
 poundage amounted only upon wheat to a flnl- 
 ling, upon oats to four pence, and upon all other 
 grain to fix pence the quarter. By the ill of 
 William and Mary, the aft which tftablifhed 
 
 the
 
 THE WEALTH OF NATIONS. 3,5 
 
 the bounty, this fmall duty was virtually taken oiF c h a p. 
 whenever the price of wheat did not exceed forty- v. 
 eight (hillings the quarter; and by the rith and """'"^^ 
 1 2th of William ill. c. 20. it was exprefsly 
 taken off at all higher prices. 
 
 The trade of the merchant exporter was, in 
 this manner, not only encouraged by a bounty, 
 but rendered much more free than that of the in- 
 land dealer. By the laft of thefe itatutes, corn 
 could be engroffed at any price for exportation ; ; 
 but it could not be engroffed for inland fale, 
 except when the price did not exceed forty-eight 
 {hillings the quarter. The interelt of the in- 
 land dealer, however, it has already been fhown, 
 can never be oppofite to that ot the great body 
 of the people. That of the merchant exporter 
 may, and in fad: fometimes is. It, while his 
 own country labours under a dearth, a neighbour- 
 ing country fhould be afflicted with a famine, it 
 might be his intereft to carry corn to the latter 
 country in fuch quantities as might very much 
 aggravate the calamities of the dearth. The 
 plentiful fupply of the home market was not the 
 diredl object of thofe ftatutes ; but, under the 
 pretence of encouraging agriculture, to raife the 
 money price of corn as high as poilible, and 
 thereby to occafion, as much as poilible, a con- 
 ftant dearth in the home market. By the dil- 
 couragcment of iuiportation, the fupply of that 
 market, even in times of great fcarcity, was 
 confined to the home growth ; and by t'le en- 
 couragement of exportation, when the price was 
 fo high as forty-eight fhillings the quarter, that 
 
 market
 
 IV. 
 
 3i6 THE NATURE AND CAUSE'S OF 
 
 BOOK market was not, even in times of confTtierable 
 fcarcity, allowed to enjoy the whole of that 
 growth. The temporary laws, prohibiting for a 
 limited time the exportation -of corn, and taking 
 off for a limited time the duties upon its import- 
 ation, expedients to which Great Britain has 
 been obliged fo frequently to have recourfe, 
 fufiiciently demonflrate the impropriety of her 
 general fyftem. Had that fyfteni been good, 
 fne would not fo frequently have been reduced 
 to the neceflity of departing from it. 
 
 Were all nations to follow the hberal fyftem 
 of free exportation and free importation, the 
 different ftates into which a great continent was 
 divided would fo far refemble the different pro- 
 vinces of a great empire. As among the dif- 
 ferent provinces of a great empire the freedom 
 of the inland trade appears, both from reafon 
 and experience, not only the beft palliative of a 
 dearth, but the moft effedual preventive of a 
 famine ; fo would the freedom of the export- 
 ation and importation trade be among the dif- 
 ferent ftates into which a great continent was 
 divided. l^he larger the continent, the eafier 
 the communication through all the different 
 parts of it, both by land and by water, the lefs 
 ^'ould any one particular part of it ever be ex- 
 pofed to either of thefe calamities, the fcarcity 
 of any one country being more likely to be re- 
 lieved by the plenty of fome other. But very 
 few countries have entirely adopted this liberal 
 fyftem. The freedom of the corn trade is al- 
 moft every where more or lefs reftrained, and, 
 *8 ' .
 
 THE WEALTH OF NATIONS. 317 
 
 in many countries, is confined by fuch abfurd c h a f. 
 regulations, as frequently aggravate the una- v. 
 voidable misfortune of a dearth, into the dread- '--•^^''•^ 
 ful calamity of a famine. The demand of fuch 
 countries for corn may frequently become fo 
 great and fo urgent, that a fmall ftate in their 
 neighbourhood, which happened at the fame 
 time to be labouring under fome degree of 
 dearth, could not venture to fupply them with- 
 out expofmg itfelf to the like dreadful calamity. 
 The very bad policy of one country mav thus 
 render it in fome meafiire dangerous and impru- 
 dent to eflablifh what would otherwife be the bed 
 policy in another. The unlimited freedom of ex- 
 portation, hov/ever, would be much Icfs danger- 
 ous in great dates, in which the growth being 
 much greater, the fuppiy could feldom be much 
 afFefted by any quantity of corn that was likely 
 to be exported. In a SwKs canton, or in fome . 
 of the little ftates of Italy, it may, perhaps, 
 fometimes be neceiTary to relfrain the exportation 
 of corn. In fuch great countries as France or 
 England it fcarce ever can. To hinder, bcfides, 
 the farmer from fending his goods at all times 
 to the bed market, is evidenily to facrifice the 
 ordinary laws of judice to an idea of public 
 utility, to a fort of reafons of date ; an ad: of 
 legiflative authority which ought to be exercifed 
 only, which can be pardoned only, in cafes of 
 the mod urgent neceflity. The price at which 
 the exportation of corn is prohibited, if it is 
 ever to be prohibited, ought always to be a very 
 high price, 
 
 TlIF.
 
 3i8 THE NATURE AND CAUSES OF 
 
 Book The laws concerning corn may every where 
 IV. be compared to the laws concerning reHgion. 
 "'""^ The people feel themfelves fo much interefted in 
 whai relates either to their fubfiftence in this life, 
 or to their happinefs in a life to come, that go- 
 vernment mud yield to their prejudices, and, 
 in order to preferve the public tranquillity, efta- 
 blifli that fyftem which they approve of. It is 
 upon this account, perhaps, that we fo feldom 
 find a reafonable fyftem eflablifned with regard to 
 either of thofe two capital objecls. 
 
 IV. Th£ trade of the merchant carrier, or of 
 the importer of foreign corn in order to export It 
 again, conrributes to the plentiful fupply of the 
 home market- It is not indeed the direft pur- 
 pofe of his trade to fell his corn there. But he 
 will generally be willing to do fo, and even for 
 a good deal lefs money than he might expect in 
 a foreign market ; becaufe he faves in this man- 
 ner the expence of loading and unloading, of 
 freight and infurance. The inhabitants of the 
 
 o 
 
 country which, by means of the carrying trade, 
 becomes the magazine and ftorehouie for the 
 fupply of other countries, can very feldom be in 
 want themfelves. Though the carrying trade 
 mufl: thus contribute to reduce the average 
 money price of corn in the home market, it 
 would not thereby lower its real value. It 
 would only raifc fomevvhat the real value of 
 filver. 
 
 The carrying trade was in ejtitcl prohibited in 
 
 Great Brifain, upon all ordinary occafions, by 
 
 the high duties upon the importati^ui of foreign 
 
 ^■■7 coruy
 
 THE WEALTH OF NATIONS. 319 
 
 corn, of the greater part of which there was no 
 drawback ; and upon extraordinary occafions, 
 when a fcarcity made it neceflary to fufpend thofe 
 duties by temporary ftatutes, exportation was al- 
 ways prohibited. By this fyftein of laws, there- 
 fore, the carrying trade was in effe<Sl prohibited 
 upon all occafions. 
 
 That fyftem of laws, therefore, which is con- 
 nected with the efcablifliment of the bounty, 
 feems to deferve no part of the praife which has 
 been beftowed upon it. The improvement and 
 profperity of Grear Britain, which has been fo 
 often afcribed to thofe laws, may very eafily be 
 accounted for by other caufes. That fecurity 
 which the laws in Gr^at Britain give to every 
 man that he (hall enjoy the fruits of his own la- 
 bour, is alone fufficient to make any country 
 flourilTi, notwithftanding thefe and twenty other 
 abfurd regulations of commerce ; and this fecu- 
 liry was perfected by the revolution, much about 
 the fame time that the bounty was eflabliflied. 
 The natural effort of every individual to better 
 his own condition, when iuffered to exert itfelf 
 with freedom and fecurity, is fo powerful a prin- 
 ciple, that it is alone, and without any affiftance, 
 not only capable of carrying on the fociety to 
 wealth and profperity, but of furmounting a 
 hundred impertinent obflructions with which the 
 folly of human laws too often incumbers irs ope- 
 rations ; though the eife£l of thefe obltruttions 
 is always more or lefs either to encroach upon irs 
 freedom, or to diminifh its fecurity. In Great 
 Britaiu induflry is perfectly fecurej and though 
 
 it
 
 320 THE NATURE AND CAUSES OF 
 
 BOOK it is far from being perfectly free, it is as free or 
 IV. freer than in any other pait of Europe. 
 
 Though the period of the greateft profperity 
 and improvement of Great Britain has been 
 poftcrior to that fyftem of laws which is con- 
 neQed with the bounty, we muft not upon that 
 account impute it to thofe laws. It has been 
 pofterior likewife to the national debt. But the 
 national debt has mofl affuredly not been the 
 caiife of it. 
 
 Though the fyflem of laws which is conneft- 
 ed with the bounty, has exadlly the fame ten- 
 dency wirh the police of Spain and Portugal ; 
 to lower fomewhat the value of the precious 
 metals in the country where it takes place ; yet 
 Great Britain is certainly one of the richeft 
 countries in Europe, while Spain and Portugal 
 are perhaps among the mod beggarly. This dif- 
 ference of fituation, however, may eafily be ac- 
 counted for from tv.'o different caufes. Firfl:, the 
 tax in Spain, the prohibition in Portugal of ex- 
 porting gold and filver, and the vigilant police 
 which watches over the execution of thofe laws, 
 mufl;, in two very poor countries, which between 
 them import annually upwards of fix millions 
 flerling, operate, not only more directly, but 
 much more forcibly in reducing the value of 
 thofe metals there, than the corn laws can do in 
 Great Britain* And, fecondly, this bad policy 
 is not in thofe countries counterbalanced by the 
 general liberty and fecurity of the people. In- 
 duflry is there neither free nor fecure, and the 
 civil and ecclefiaftical governments of both Spain 
 
 and
 
 THE WEALTH OF NATIONS. 321 
 
 and Portugal, are fuch as would alone be fuffi- chap. 
 cient to perpetuate their prefent ftate of poverty, v. 
 even though their regulations of commerce were 
 as wife as the greater part of them are abfurd 
 and foolifli. 
 
 The 13th of the prefent king, c. 43. feems 
 to have eftablifhed a new fyftem with regard to 
 the corn laws, in many refpecls better than the 
 ancient one, but in one or two refpecls perhaps 
 not quite fo good. 
 
 By this flatute the high duties upon importa- 
 tion for home confumption are taken off fo foon 
 as the price of middling wheat rifes to forty- 
 eight fliillings the quarter ; that of middling rye, 
 peafe or beans, to thirty-two fhilhngs ; that of 
 barley to twenty-four fliillings ; and that of oats 
 to fixteen {hillings ; and inltead of them a fmall 
 duty is impofed of only fix-pence upon the quar- 
 ter of wheat, and upon that of other grain in 
 proportion. With regard to all thefe difierent 
 foits of grain, but particularly with regard to 
 wheat, the home market is thus opened to fo- 
 reign fupplies at prices confiderably lower than 
 before. 
 
 By the fame ftatute the old bounty of five 
 fiiillings upon the exportation of wheat ceafes fo 
 foon as the price rifes to forty-four fliillings the 
 quarter, inflead of forty-eight, the price at which 
 it ceafed before ; that of two fliillings and fix- 
 pence upon the exportation of barley ceafes fo 
 foon as the price rifes to twenty-two fliillings, 
 inftead of twenty-four, the price at which it^ 
 
 VOL. II. Y ceafed
 
 322- THE NATURE AND CAUSES OF 
 
 BOOK ceafed before ; that of two (lilllings and fix-penc^ 
 i"^. upon the exportation of oatmeal ceafes fo foon as 
 ^""^ the price rifes to fourteen fliillings, inflead of 
 fifteen, the price at which it ceafed before. The 
 bounty upon rye is reduced from three fhillings 
 and fix-pence to three fhillings, and it ceafes 
 fo foon as the price rifes to tv;enty-eight fliil- 
 lings, inftead of thirty-two, the price at which 
 it ceafed before. If bounties are as improper as 
 I have endeavoured to prove them to be, the 
 fooner they ceafe, and the lower they are, fo 
 much the better. 
 
 The fame (latute permits, at the loweft prices^ 
 the importation of corn, in order to be exported 
 again, duty free, provided it is in the mean time 
 lodged in a warchoufe under the joint locks of 
 the king and the importer. This liberty, indeed, 
 extends to no more than twenty-five of the dif- 
 ferent ports of Great Britain. They are, how- 
 ever, the principal ones, and there may not, per- 
 haps, be warehoufes proper for this purpofe in 
 the greater part of the others. 
 
 So far this law feems evidently an improve- 
 ment upon the ancient fyflem. 
 
 But by the fame law a bounty of two fliillings 
 the quarter is given lor the exportation of oats 
 whenever the price does not exceed fourteen fhil- 
 lings. No bounty had ever been given before 
 for the exportation of this grain, no more than 
 for that of peafe or beans. 
 
 By the fame law too, the exportation of wheat 
 is prohibited fo foon as the price rifes to forty- 
 four
 
 THE WEALTH OF NATIONS. 3«3 
 
 four fhillings the quarter ; that of rye fo foon as chap. 
 it rifes to twenty-eight (hillings ; that of barley fo v. 
 foon as it lifes to twenty-two fliillings ; and that 
 of oats fo foon as they rife to fourteen (hillings. 
 Thofe feveral prices feem all of them a good 
 deal too low, and there fecms to be an impro- 
 priety, befides, in prohibiting exportation alto- 
 gether at thofe precife prices at which that boun- 
 ty, which was given in order to force it, is with- 
 drawn. The bounty ought certainly either to 
 have been withdrawn at a much lower price, or 
 exportation ought to have been allowed at a 
 much higher. 
 
 So far, therefore, this law feems to be inferior 
 to the ancient fyftem. With all its imperfections, 
 however, we may perhaps fay of it what was faid 
 of the laws of Solon, that though not the bed 
 in itfelf, it is the bed which the intereds, preju- 
 dices, and temper of the times would admit of. 
 It may perhaps in due time })repare the way for 
 a better. 
 
 CHAP. VI. 
 
 Of Treaties of Commerce. 
 
 •f T7HEN a nation binds itfelf by treaty eifhcr 
 to permit the entry of certain goods from 
 one foreign country which it prohibits from all 
 others, or to exempt the goods of one ?ountry 
 from duties to which it fubjtiSts thofe of all others, 
 
 Y 2 the
 
 j24 THE NATURE AND CAUSES OF 
 
 BOOK the country, or at leaft the merchants and ma- 
 1'^' nufadlurers of the country, whofe commerce is 
 ^'"^ fo favoured, muft neceffarily derive great advan- 
 tage from the treaty. Thofe merchants and 
 manufacturers enjoy a fort of monopoly in the 
 V country which is fo indulgent to them. That 
 country becomes a market both more exten- 
 five and more advantageous for their goods : 
 more extenfive, becaufe the goods of other na- 
 tions being either excluded or fubjefled to heavier 
 duties, it takes off a greater quantity of theirs : 
 more advantageous, becaufe the merchants of 
 the favoured country enjoying a fort of mono- 
 poly there, will often fell their goods for a . better 
 price than if expofed to the free competition of 
 all other nations. 
 
 ^ Such treaties, however, though they may be 
 advantageous to the merchants and manufac- 
 turers of the favoured, are neceffarily difadvan- 
 tageous to thofe of the favouring country. A 
 monopoly is thus granted againft them to a fo- 
 reign nation ; and they muft frequently buy the 
 foreign goods they have occafion for, dearer than 
 if the free competition of other nations was ad- 
 v^mitted. That part of its own produce with 
 which fuch a nation purchafes foreign goods, 
 muft confequently be fold cheaper, becaufe when 
 two things are exchanged for one another, the 
 cheapnefs of the one is a neceffary confequence, 
 or rather is the fame thing with the dearnefs of 
 the other. The exchangeable value of its annual 
 produce, therefore, is likely to be diminiflied by 
 every fuch treaty. This diminution, however, 
 
 can
 
 THE WEALTH OF NATIONS. 3^5 
 
 can fcarce amount to any pofitive lofs, but only c 11 a p. 
 to a leflening of the gain which it might other- vi, 
 wife make. Though it fells its goods cheaper '"''^'~*~' 
 than it otherwife might do, it will not probably 
 fell them for lefs than they coll ; nor, as in the 
 cafe of bounties, for a price which will not re- 
 place the capital employed in bringing them to 
 market, together with the ordinary profits of 
 flock. The trade could not go on long if it did. 
 Even the favouring country, therefore, may liill 
 gain by the trade, though lefs than if there was a 
 free competition. 
 
 Some treaties of commerce, however, have 
 been fuppofed advantageous upon pr nciples very 
 different from thefe ; and a commercial country 
 has fometimes granted a monopoly of this kind 
 againft itfelf to certain goods of a foreign nation, 
 becaufe it expected that in the whole commerce 
 between them, it would annually fell more than 
 it would buy, and that a balance in gold and 
 filver would be annually returned to it. It is 
 upon this principle that the treaty of commerce 
 between England and Portugal, concluded in 
 1703, by Mr. Methuen, has been fo much 
 commended. The following is a literal tranfla- 
 tion of that treaty, which confilts of three articles 
 only. 
 
 ART. I. 
 
 Kis facred royal majefly of Portugal promifes, 
 both in his own name and that of his fucceifors, 
 to admit, for ever hereafter, into Portugal, the 
 
 Y 3 woollen
 
 3j5 the nature At'TD CAUSES OP 
 
 BOOK woollen cloths, and the reft of t^ie woollen ma- 
 r/. nufadures of the Bntifli as was accullomed, till 
 they were prohibited by the law ; neverthelefs 
 upon this condition ; 
 
 ART. II. 
 
 That is to fay, that her facred royal inajefty 
 of Great Britain fhall, in her own name, and 
 that of her fuccefl'ors, be obliged, for ever here- 
 after, to admit the wines of the growth of Portu- 
 gal into Britain: fo that at no time, whether 
 there fhall be peace or war between the king- 
 <^oms of Britain and France, any thing more 
 Ihall be demanded for thefe wines by the name 
 of cuftom or duty, or by whatioever other title^ 
 directly or indiredlly, whether they fliall be im- 
 ported into Great Britain in pipes or hogflieadsj, 
 or other cafks, than what fhall ^be demanded for 
 the like quantity or meafure of French wine, 
 deducing or abating a third part of the cuftom. 
 or duty. But if at any time this deduQion or 
 abatement of cuftomiS, which is to be made as 
 aforefaid, fhall in any manner be attempted and 
 prejudiced, it fnall be juft and lawful for his facred 
 royal majefty of Portugal, again to prohibit the 
 woollen cloths, and the reft of the Biitifh woollen 
 jnanufaftures. 
 
 ART. HI. 
 
 The moll: excellent lords the plenipotentiaries 
 promife and take upon themfelves, that their 
 above-named mafters fhall ratify this treaty; and 
 
 withia
 
 THE WEALTH OF NATIONS. 32; 
 
 within the fpace of two months the ratifications c h a p. 
 fliall be exchanged. vi. 
 
 By this treaty the crown of Portugal becomes 
 bound to admit the Englifli woollens upon the 
 fame footing as before the prohibition ; that is, 
 not to raife the duties which had been paid be- 
 fore that time. But it does not become bound 
 to admit them upon any better terms than thofe 
 of any other nation, of France or Holland, for 
 example. The crown of Great Britain, on the 
 contrary, becomes bound to admit the wines of 
 Portugal upon paying only two-thirds of the 
 duty, which is paid for thofe of France, the 
 wines moft likely to come into com.petition with 
 them. So far this treaty, therefore, is evidently 
 advantageous to Portugal, and difadvantageous to 
 Great Britain. 
 
 |t has been celebrated, however, as a maffer- 
 piece of the commercial policy of England, 
 Portugal receives annually from the Brazils a 
 p;reater quantity of gold than can be employed 
 in its domeftice commerce, whether in the fliape 
 of coin or of plate. The furplus is too valuable 
 to be allowed to lie idle and locked up in coffers, 
 and as it can find no advantageous market at 
 home, it mafl", notwithdanding any prohibition, 
 be fent abroad, and exchanged for fomething for 
 which there is a more advantageous market at 
 home. A large fliare of it comes annually to 
 Jlngland, in return either for Englifh goods, or 
 Upr thofe of other European nations that receive 
 iheir returns through England. Mr. Barretti 
 
 Y 4 vyaa
 
 328 THE NATURE AND CAUSES OF 
 
 BOOK was informed that the weekly packet boat from 
 IV. Lifoon brings, one week with another, more than 
 ■^^^ fifty thoufand pounds in gold to England. The 
 fum had probably been exaggerated. It would 
 amount to more than two millions Ux hundred 
 thoufand pounds a year, which is more than the 
 .Brazils are fuppofed to afford. 
 
 ■ Our merchants were feme years ago out of 
 humour with the crown of Portugal. Some pri- 
 vileges which had been granted them, not by 
 treaty, but by the free grace of that crown, at 
 the folicitation, indeed, it is probable/ and in 
 return for much greater favours, defence,, and 
 protedion, from the crown of Great Britain, had 
 been either infringed or revoked. The people, 
 therefore, ufually mofl interefted in celebrating 
 the Portugal trade, were then rather difpofed to 
 reprefent it as lefs advantageous than it had com- 
 monly been imagined. The far greater part, 
 almoft the whole, they pretended, of this annual 
 importation of gold, was not on account of Great 
 Britain, but of other European nations ; the fruits 
 and wines of Portugal annually imported into 
 Great Britain nearly compenfating the value of the 
 Britifh goods fent thither. 
 
 Let us fuppofe, however, that the whole was 
 on account of Great Britain, and that it amount- 
 ed to a ftill greater fum than Mr. Barretti feems 
 to imagine : this trade would not, upon that 
 account, be more advantageous than any other 
 in which, for the fame value fent out, we re- 
 ceived an equal value of confumable goods in 
 return. 
 
 It
 
 THE WEALTH OF NATIONS. 329 
 
 It is but a very fmall part of this importation chap, 
 which, it can be fuppofed, is employed as an vi. 
 annual addition either to the plate or to the coin ^^"^ 
 of the kingdom. The reft muft all be fent 
 abroad and exchanged for confumable goods of 
 fome kind or other. But if thofe confumable 
 goods were purchafed dire6lly with the produce 
 of Englifli induftry/ it would be more for the 
 advantage of England, than firft to purchafe with 
 that produce the gold of Portugal, and after- 
 wards to purchafe with that gold thofe con- 
 fumable goods. A direfl: foreign trade of con- 
 fumption is always more advantageous than a 
 round-about one ; and to bring the fame value 
 of foreign goods to the home-market, requires a 
 much fmaller capital in the one way than in the 
 other. If a fmaller iliare of its induftry, there- 
 fore, had been employed in producing goods fit 
 for the Portugal market, and a greater in pro- 
 ducing thofe fit for the other markets, where thofe 
 confumable goods for which there is a demand 
 in Great Britain are to be had, it would have 
 been more for the advantage of England*- To 
 procure both the gold, which it wants for its 
 own ufe, and the confumable goods, would, in 
 this way, employ a much fmaller capital than at 
 prefent. There would be a fpare capital, there- 
 fore, to be employed for other purpofes, in ex- 
 citing an additional quantity of induftry, and in 
 raifmg a greater annual produce. 
 
 Though Britain were entirely excluded from 
 the Portugal trade, it could fmd very little diffi- 
 culty in procuring all the annual fupplies of gold 
 
 which
 
 330 THE NATURE AND CAUSES OF 
 
 BOOK which it wants, either for the purpofes of piate, 
 IV' or of coin, or of foreign tiade. Gold, like every 
 other commodity, is always fomewhere or ano- 
 ther to be got for its value by thofe who have 
 that value to give for it. The annual furplus of 
 gold in Portugal, befides, would Ml be fent 
 abroad, an4 though not carried away by Great 
 Britain, would be carried away by fome other 
 jiation, which would be glad to fell it again for 
 its price, in the fame manner as Great Britain 
 does at prefent. In buying gold of Portugal, 
 indeed, we buy it at the firfl hand ; whereas, in 
 buying it of any other nation, except Spain, we 
 fhould buy it at the fecond, and might pay fome- 
 what dearer. This difference, however, would 
 furely be too infignificant to deferve the public 
 attention. 
 ^ Almost all our gold, it Is faid, comes from 
 Portugal. With other nations the balance of 
 trade is either againfl us, or not much in our 
 favour. But we fhould remember, that the 
 more gold we import from one country, the lefs 
 we muff neceifarily import from all others. The 
 effeftual demand for gold, like that for every 
 other commodity, is in every country limited to 
 a certain quantity. If nine tenths of this quan- 
 tity are imported from one country, there re- 
 mains a tenth only to be imported from all 
 others. The more gold befides that is annually 
 imported from fome particular countries, over 
 and above what is requifite for plate and for 
 coin, the more muft neceifarily be exported to 
 fome others j and the more that moft infignifi° 
 
 can
 
 THE WEALTH OF NATIONS. 331 
 
 cant object of modern policy, the balance of c h a f. 
 trade, appears to be in our favour with fome par- vi. 
 ticular countries, the more it mull neceffarily ap- '^-"^^^'^ 
 •pear to be againft us with many others. ^ 
 
 It was upon this filly notion, however, that 
 England could not fublift without the Portugal 
 trade, that, towards the end of the late war, 
 France and Spain, without pretending either 
 offence or provocation, required the king of 
 Portugal to exclude all Britifii fhips from his 
 ports, and for the fecurity of this exclufion, to 
 receive into them French or Spanilh garriions. 
 Had the king of Portugal fubmitted to thofe ig- 
 nominious terms which his brother-in-law the 
 king of Spain propofed to him, Britain would 
 have been freed from a much greater incon- 
 veniency than the lofs of the Portugal trade, the 
 burden of fupporting a very weak r.Ily, fo un- 
 provided of every thing for his own defence, 
 that the whole power of England, had it been, 
 directed to that fingle purpofe, could fcarce per- 
 haps have defended him fjr another campaign. 
 The lofs of the Portugal trade would, no doubt, 
 have occafioned a coniidorable embarraffment to 
 the merchants at that' time engaged in it, who 
 might not, perhaps, have found out, for a year 
 or two, an/ other equally advantageous method 
 of employing their capitals ; and in this would 
 probably have confifted all the inconveniency 
 which England could have fuffered from this 
 potable piece of commercial policy. 
 
 The great annual importation of gold and 
 ^Ivcr is neither for the purpofe of plate nor of 
 
 coin*
 
 33r ' THE NATURE AND CAUSES OF 
 
 BOOK coin, but of foreign trade. A round-about 
 IV. foreign trade of confumption can be carried on 
 more advantageoully by means of thefe metals 
 than of almoft: any other goods. As they are the 
 univerfal inftruments of commerce, they are 
 more readily received in turn for all commo- 
 dities than any other goods ; and on account of 
 their fmall bulk and great value, it cods lefs to 
 tranfport them backvv^ard and forward from one 
 place to another than ahnoft any other fort of 
 merchandize, and they lofe lefs of their value by 
 being fo tranfported. Of all the commodities, 
 therefore, which are bought in one foreign coun- 
 try, for no other purpofe but to be fold or ex- 
 changed again for fome other goods in another, 
 there are none fo convenient as gold and filver. 
 In facilitating all the different round-about fo- 
 reign trades of confumption which are carried on 
 in Great Britain, confifts the principal advan- 
 tage of the Portugal trade ; and though it is not 
 a capital advantage, it is, no doubt, a confiderable 
 one. 
 
 That any annual addition which, it can rea- 
 fonably be fuppofed, is made either to the plate 
 or to the coin of the kingdom, could require but 
 a very fmall annual importation of gold and fil- 
 ver, feems evident enough ; and though we had 
 no direft trade with Portugal, this fmall quan- 
 tity could always, fomewhere or another, be very 
 eafily got. 
 
 Though the goldfmiths' trade be very con- 
 fiderable in Great Britain, the far greater part 
 of the new plate which they annually fell, is 
 
 made
 
 THE WEALTH OF NATIONS. 333 
 
 made from other old plate melted down ; fo that chap. 
 the addition annually made to the whole plate vi. 
 of the kingdom cannot be very great, and could 
 require but a very fmall annual importation. 
 
 It is the fame cafe with the coin. Nobody 
 imagines, I believe, that even the greater part of 
 the annual coinage, amounting, for ten years to- 
 gether, before the late reformation of the gold 
 coin, to upwards of eight hundred thoufand 
 pounds a year in gold, was an annual addition to 
 ihe money before current in the kingdom. In 
 a country where the expence of the coinage is 
 defrayed by the government, the value of the 
 coin, even when it contains its full flandard 
 weight of gold and filver, can never be much 
 greater than that of an equal quantity of thofe 
 metals uncoined ; becaufe it requires only the 
 trouble of going to the mint, and the delay per- 
 haps of a few weeks, to procure for any quantity 
 of uncoined gold and filver an equal quantity of 
 thofe metals in coin. But, in every country, 
 the greater part of the current coin is almoll 
 always more or leis worn, or otherwife degene- 
 rated from its ftandard. In Great Britain it 
 was, before the late reformation, a good deal fo, 
 the gold being more than two per cent, and the, 
 filver more than eight per cent, below its fland- 
 ard weight. But if forty-four guineas and a 
 half, containing their full ftandard weight, a 
 pound weight of gold, could purchafe very little 
 more than a pound weight of uncoined gold, 
 forty-four guineas and a half wanting a part of 
 their weight could not purchafe a pound weight, 
 
 and
 
 334 THE NATURE AND CAtJSES 6F 
 
 Book and fomething was to be added in order to mak^ 
 i"^' up the deficiency. The current price of gold 
 ^""^ bullion at market, therefore, inftead of being 
 the fame with the mint price, or 46/. 14 s. 6 do 
 was then about 47/. 14 s. arid fotnetimes about 
 forty-eight pbundiJ. When the greater part of 
 the coin, however, was in this degenerate con- 
 dition, forty-four guineas and a half, frefli from 
 the mint, would purchafe no more goods in the 
 market than any oiher ordinary guineas, becaufe 
 when they came into the coffers of the merchant, 
 being confounded with other money, they could 
 not afterwards be diftinguifhed without more 
 trouble than the difference was worth. Like 
 other guineas they were worth no more than 
 46 1. 14 s, 6d, If thrown into the melting pot, 
 however, they produced, without any fenfible 
 lofs, a pound weight of flandard gold, which 
 could be fold at any time for between 47 /. 14 j. 
 and 48/. either in gold or filver, as fit for all 
 the purpofes of coin as that which had been 
 melted down. There was an evident profit, 
 therefore, in melting down new coined money, 
 and it was done fo indantaneoufly, that no pre- 
 caution of government could prevent it. The 
 operations of the mint were, upon this account, 
 fomewhat hke the web of Penelope ; the work that 
 was done in the day was undone in the night. The 
 mint was employed, not fo much in making daily 
 additions to ihe coin, as in replacing the very befi 
 part of it which was daily melted down. 
 
 Were the private people, who carry their 
 gold and filver to the mint, to pay themfelves 
 
 for
 
 THE WEALTH OF NATIONS. 355 
 
 for the coinage, it would add to the value of c h a[p. 
 
 thofe metals in the fame manner as the fafhion "^'i* 
 
 does to that of plate. Coined gold and filver ^""^'"'^ 
 
 would be more valuable than uncoined. The 
 
 feignorage, if it was not exorbitant, would add 
 
 to the bullion the whole value of the duty ; be- 
 
 caufe, the government having every where the 
 
 exclufive privilege of coining, no coin can come 
 
 to market cheaper than they think proper to 
 
 afford it. If the dury was exorbitant indeed, 
 
 that is, if it was very much above the real value 
 
 of the labour and expence requifite for coinage, 
 
 falfe coiners, both at home and abroad, might 
 
 be encouraged, by the great difference between 
 
 the value of bullion and that of coin, to pour m 
 
 fo great a quantity of counterfeit money as might 
 
 reduce the value of the government money. In 
 
 France, however, though the feignorage is eight 
 
 per cent, no fenfible inconveniency of this kind 
 
 is found to arife from it. I'he dangers to which 
 
 a falfe coiner is every where expofed, if he lives 
 
 in the country of which be counterfeits the coin, 
 
 and to which his agents or correfoondents are 
 
 expofed if he hves in a foreign country, are by 
 
 far too great to be incurred for the fike of a profit 
 
 of fix or feven per cent. 
 
 The feignorage in France raifes the value 
 of the coin higher than in proportion to the 
 quantity of pure gold which it contains. Thus 
 by the edift of January 1726, the * mint price 
 
 * See Diciionnaire des Monr.oics, tom. ii. article ^tl- 
 
 gneurage, p. 489. par M. Abut de Bazinghen, Confallcr- 
 Commifraire en la Cour des Monncics a Parii. 
 
 7 - ^ of
 
 336 THE NATURE. AND CAUSES OF 
 
 BOOK of fine gold of twenty-four carats was fixed at 
 IV. feven hundred and forty livres nine fous, and 
 one denier one eleventh, the mark of eight 
 Paris ounces. The gold coin of France, making 
 an allowance for the remedy of the mint, con- 
 tains twenty-one carats and three-fourths of fine 
 gold, and two carats one-fourth of alloy. The 
 mark of ftandard gold, therefore, is worth no 
 more than about fix hundred and feventy-one 
 livres • ten deniers. But in France this mark of 
 ftandard gold is coined into thirty Louis-d*ors 
 of twenty-four livres each, or into feven hun- 
 dred and twenty livres. The coinage, therefore, 
 increafes the value of a mark of ftandard gold 
 bullion, by the difi'erence between fix hundred 
 and feventy-one livres ten deniers, and kven 
 hundred and twenty livres ; or by forty-eight 
 livres nineteen fous and two deniers. 
 
 A SEiGNOPvAGE Will, in many cafes, take away 
 altogether, * and will, in all cafes, diminifti the 
 profit of melting down the new coin. This 
 profit alv/ays arifes from the ditference between 
 the quantity of bullion which the common cur- 
 rency ought to contain, and that which it 
 aiftually does contain. If this difference is lefs 
 than the feignorage, there will be lofs inftead of 
 profit. If it is equal to the feignorage, there 
 "will neither be profit nor lofs. If it is greater 
 than the feignorage, there will indeed be fome 
 profit, but lefs than if there was no feignorage. 
 If, before the late reformation of the gold coin, 
 for example, there had been a feignorage of five 
 per ^cent. upon the coinage, there would have 
 
 8 been
 
 THE WEALTH OF NATIONS. 337 
 
 been a lofs of three per cent, upon the meltino- chap. 
 down of the gold coin. If the feignorage had vi. 
 been two per cent, there would have been neither 
 profit nor lofs. If the feignorage had been one 
 per cent, there would have been a profit, but of 
 one per cent, only inftead of two per cent. 
 Wherever money is received by tale, therefore, 
 and not by weight, a feignorage is the mofl 
 effedual preventive of the melting down of the 
 coin, and, for the fame reafon, of its exporta- 
 tion. It is the beft and heavieft pieces that are 
 commonly either melted down or exported ; be- 
 caufe it is upon fuch that the largeft profits are 
 made. 
 
 The law for the encouragement of the coin- 
 age, by rendering it duty-free, was firit enacted, 
 during the reign of Charles II. for a limited 
 time ; and afterwards continued, by different 
 prolongations, till 1769, when it was rendered 
 perpetual. The bank of England, in order to 
 replenifli their coffers with money, are frequently 
 obliged to carry bullion to the mint ; and it was 
 more for their intereft, they probably imagined, 
 that the coinage fhould be at the expence of the 
 government, than at their own. It was, pro- 
 bably, out of complaifance to this great com- 
 pany that the government agreed to render this 
 law perpetual. Should the cuftom of weighing 
 gold, however, come to be difufed, as it is very 
 likely to be on account of its inconveniency ; 
 fliould the gold coin of England come to be re- 
 ceived by tale, as it was before the late re- 
 coinage, this great company may, perhaps, find 
 
 VOL. II. z that
 
 338 THE NATURE AND CAUSES OF 
 
 BOOK that they have upon this, as, upon fome other 
 iv. occafions, miftaken their own interefl not a 
 ^"^"■^ little. 
 
 Before the late re-colnage, when the gold 
 currency of England was two per cent, below its 
 ftandard weight, as there was no feigndrage, it 
 was two per cent, below the value of that quan- 
 tity of ftandard gold bullion which it ought to 
 have contained. When this great company, 
 therefore, bought gold bullion in order to have 
 it coined, they were obliged to pay for it two 
 per cent, more than it was worth after the coin- 
 age. But if there had been a feignorage of two 
 per cent, upon the coinage, the common gold 
 currency, though two per cent, below its ftand- 
 ard weight, would notwithftanding have been 
 equal in value to the quantity of ftandard gold 
 which it ought to have contained ; the value of 
 the fafhion compenfating iii this cafe the diminu- 
 tion of the weight. They would indeed have had 
 the feignorage to pay, which being two per cent, 
 their lofs upon the whole tranfadion would have 
 been two per cent, exaclly the fame, but no greater 
 than it adually was. 
 
 If the feignorage had been five per cent, and 
 the gold currency only two per cent, below its 
 ftandard weight, the bank would in this cafe 
 have' gained three per cent, upon the price of 
 the bullion ; but as they would have had a 
 feignorage of five per cent, to pay upon the 
 coinage, their lofs upon the whole tranfadion 
 would, in the fame manner, have been exad?y 
 two per cent. 
 
 If
 
 THE WEALTH OF NATIONS; 339 
 
 If the feignorage had been only one per cent. chap. 
 and the gold currency two per cent, below its vr. 
 flandard weight, the bank would in this cafe 
 have loft only one per cent, upon the price of 
 the bullion ; but as they would likewife have 
 had a feignorage of one per cent, to pay, their 
 lofs upon the whole tranfadlion would have been 
 exadly two per cent, in the fame manner as in all 
 other cafes. 
 
 If there was a reafonable feignorage, while at 
 the' fame time the coin contained its full flandard 
 weight, as it has done very neatly fmce the late 
 re-coinage, whatever the bank might lofe by the 
 feignorage, they would gain upon the price of 
 the bullion ; and vi^hatever they might gain upon 
 the price of the bullion, they would lofe by the 
 feignorage. They would neither lofe nor gain, 
 therefore, upon the whole tranfadion, and they 
 would in this, as in all the foregoing cafes, be 
 exactly in the fame fituation as if there was no 
 feignorage. 
 
 When the tax upon a commodity is fo mode- 
 rate as not to encourage fmuggling, the mer- 
 chant v/ho deals in it, though he advances, does 
 not properly pay the tax, as he gets it back in 
 the price of the commodity. The tax is finally 
 paid by the laft purchafer or confumer. But 
 money is a commodity with regard to which 
 every man is a merchant. Nobody buys it but 
 in order to fell it again ; and with regard to it 
 there is in ordinary cafes no laft purchafer or 
 confumer. When the tax upon coinage, there- 
 fore, is fo moderate as not to encourage falfe 
 
 z 2 coining.
 
 340 "THE NATURE AND CAUSES OF 
 
 BOOK coining, though every body advances the tax, nO"* 
 IV. body finally pays it ; becaufe every body gets it 
 back in the advanced value of the coin. 
 
 A MODERATE feignorage, therefore, would not 
 in any cafe augment the expence of the bank, or 
 of any other private perfons who carry their bul- 
 lion to the mint in order to be coined, and the 
 want of a moderate feignorage does not in any 
 cafe diminifli it. V/hether there is or is not a 
 leignorage, if the currency contains its full ftand- 
 ard weight, the coinage cofts nothing to any body, 
 and if it is fhort of that weight, the coinage mufl 
 always cod the difference between the quantity of 
 bullion which ought to be contained in it, and 
 that which actually is contained in it. 
 
 The government, therefore, when It defrays 
 the expence of coinage, not only incurs fome 
 fmall expence, but lofes fome fmall revenue 
 which it might get by a proper duty ; and neither 
 the bank nor any other private perfons are in the 
 fmallefl degree benefited by this ufelefs piece of 
 public generofity. 
 
 The directors of the bank, however, would 
 probably be unwilling to agree to the impofition 
 of a feignorage upon the authority of a fpecu- 
 lation which promifes them no gain, but only pre- 
 tends to infure them from any lofs. In the pre- 
 fent (late of the gold coin, and as long as it con- 
 tinues to be received by weight, they certainly 
 would gain nothing by fuch a change. But if 
 the cuftom of Vv^eighing the gold coin fhould ever 
 go into difufe, as it is very likely to do, and if 
 the gold coin iOhould ever fall into the fame flare of 
 
 degradation
 
 THE WEALTH OF NATIO^^S. 3|i 
 
 degradation in which it was before the late re- a: h a p, 
 coinage, the gain, or more properly the favings vi. 
 of the bank, in confequence of the impofition 
 of a feJjTnorage, would probably be very con- 
 fiderable. The bank of England is the only 
 company which fends any confiderabie quantity 
 of bullion to the mint, and the burden of the 
 annual coinage falls entirely, or almoft entirel)^, 
 upon it. If this annual coinage had nothing to 
 do but to repair the unavoidable lofles and ne- 
 ceffary wear and tear of the coin, it could feldom 
 exceed fifty thoufand or at mod a hundred thou- 
 fand pounds. But when the coin is degraded 
 below its itandard weight, the annual coinage 
 mud, befides this, fill up the large vacuities 
 which exportation and the melting pot are con- 
 tinually making in the current coin. It was 
 upon this account that during the ten or twelve 
 years inimediately preceding the late reforma- 
 tion of the gold coin, the annual coinage 
 amounted at an average to more than eight hun- 
 dred and fifty thoufand pounds. But if there 
 had been a feignorage of four or five per cent, 
 upon the gold coin, it v.ould probably, even in 
 the (late in which things then v/ere, have put an 
 effeftual flop to the bufinefs both of exportation 
 and of the melting pot. The bank, inflead of 
 lofmg every year about two and a half per cent, 
 upon the bullion which was to be coined into 
 more than eight hundred and fifty thoufand 
 pounds, or incurring an annual lofs of more than 
 twenty-one thoufand two hundred and fifty 
 
 z 3 pounds.
 
 34« THE NATURE AND CAUSES OF 
 
 BOOK pounds, would not probably have incurred the 
 IV. tenth part of that lofs. 
 
 The revenue allotted by parliament for de- 
 fraying the expence of the coinage is but four- 
 teen thoufand pounds a year, and the real ex- 
 pence which it cofts the government, or the fees 
 of the officers of the mint, do not, upon ordinary 
 occafions, I am affured, exceed the half of that 
 fum. The faving of fo very fmall a fum, or 
 even the gaining of another which could not 
 well be much larger, are objeds too inconfider- 
 able, it may be thought, to defeive the ferious 
 attention of government. But the faving of 
 eighteen or twenty thoufand pounds a year in 
 cafe of an event which is not improbable, which 
 has frequently happened before, and which is 
 very hkely to happen again, is furely an objed: 
 which well deferves the ferious attention even of 
 fo great a company as the bank of England. 
 
 Some of the foregoing reafonings and obferva- 
 tions might perhaps have been more properly 
 placed in thofe chapters of the firll; book which 
 treat of the origin and ufe of money, and of the 
 difference between the real and the nominal 
 price of commodities* But as the law for the 
 encouragement of coinage derives its origin 
 from thofe vulgar prejudices which have been 
 introduced by the mercantile fydem, I judged 
 it more proper to referve them for this chapter. 
 Nothing could be more agreeable to the fpirit of 
 that fyftem than a fort of bounty upon the pro- 
 du6lion of money, the very thing which, it fup- 
 
 pofeSj
 
 THE WEALTH OF NATIONS. 343 
 
 ptsfes, conftitutes the wealth of every nation. It 
 is one of its many admirable expedients for en- 
 riching the country. 
 
 CHAP. VII. 
 Of Coloniei, 
 
 Part First. 
 
 Of the Motives for ejlahlifljing neiv Colonics, 
 
 AyiHE interefl: which occafioned the firft fet- 
 '*' tlement of the different European colonies 
 In America and the Weft Indies, was not alto- 
 gether fo plain and diftintc as that which direded 
 the eftablifliment of thofe of ancient Greece and 
 Rome. 
 
 All the different ftates of ancient Greece 
 poflefled, each of them, but a very fmall terri- 
 tory, and when the people in any one of thera 
 multiplied beyond what that territory could 
 eafily maintain, a part of them were fent in quell: 
 cf a new habitation in feme remote and diftant 
 part of the world ; the warlike neighbours who 
 furrounded them on all fides, rendering it diffi- 
 cult for any of them to enlarge very much its 
 territory at home. The colonies of the Dorians 
 reforted chiefly to Italy and Sicily, which, in the 
 times preceding the foundation of Rome, were 
 inhabited by barbaroqs and uncivilized nations : 
 
 z 4 thofe
 
 3^4 THE NATURE AND CAUSES OF 
 
 LOOK thofe of the lonians and EoHans, the two other 
 IV. great tribes of the Greeks, to Afia Minor and 
 the iflands of the Egean Sea, of which the inha- 
 bitants feem at that time to have been pretty 
 much in the fame flate as thofe of Sicily and 
 Italy. The mother city, though fhe confidered 
 the colony as a child, at all times entitled to 
 great favour and affiftance, and owing in return 
 much gratitude and refpe^t, yet confidered it as 
 an emancipated child, over whom fhe pretended 
 to claim no dire6l authority or jurifdidlion. The 
 colony fettled its own form of government, en- 
 acted its own laws, elected its own magiftrates, 
 ?.nd made peace or war with its neighbours as an 
 independent (late, which had no occafion to wait 
 for the approbation or confent of the mother 
 city. Nothing can be more plain and diftind 
 than the interefl which direded every fuch efta- 
 blilhment. 
 
 Rome, like mofl of the other ancient repub- 
 lics, was originally founded upon an Agrarian 
 law, which divided the public territory in a cer- 
 tain proportion among the different citizens who 
 compofed the (late. The courfe of human af- 
 fairs, by marriage, by fucceffion, and by alien* 
 ation, neceflarily deranged this original divifion, 
 and frequently threw the lands, which had been 
 allotted for the maintenance of many different 
 families, into the poffeilion of a fmgle perfon. 
 To remedy this diforder, for fuch it was fup- 
 pofed to be, a law was made, reftriding the 
 quantity of land which any citizen could poffefs 
 to five hundred jugera, about three hundred and 
 
 fifty
 
 THE WEALTH OF NATIONS. 345 
 
 fifty Englifh acres. This law, however, though c h a p, 
 we read of its having been executed upon one or vii, 
 two occafions, was either negleded or evaded, 
 and the inequality of fortunes went on continu- 
 ally increafing. The greater part of the citi- 
 zens had no land, and without it the manners 
 and cuftoms of thofe times rendered it difficult 
 for a freeman to maintain his independency. In 
 the prefent times, though a poor man has no 
 land of his own, if he has a little (lock, he may 
 either farm the lands of another, or he may carry 
 on fome little retail trade ; and if he has no 
 flock, he may find employment either as a coun- 
 try labourer, or as an artificer. But among the 
 ancient Romans, the lands of the rich were all 
 cultivated by flaves, who wrought under au 
 overfeer, who was likewife a flave ; fo that a 
 poor freeman had litde chance of being cm- 
 ployed either as a farmer or as a labourer. All 
 trades and manufaftures too, even the retail 
 trade, were carried on by the flaves of the rich 
 for the benefit of their mafters, whofe wealth, 
 authority, and protedion, made it difficult for a 
 poor freeman to maintain the competition againfl: 
 them. The citizens, therefore, who had no 
 land, had fcarce any other means of fubfiftence 
 but the bounties of the candidates at the annual 
 eleftions. The tribunes, when they /had a mind 
 to animate the people againfl the rich and the 
 great, put them in mind of the ancient divifion 
 of lands, and reprefented that law which re- 
 ilri<5led this fort of private property as the funda- 
 ^lental law of the republic. The people be- 
 came
 
 346 THE NATURE AND CAUSES OF 
 
 BOOK came clamorous to get land, and the rich and 
 IV. the great, we may believe, were perfeftly deter^ 
 mined not to give them any part of theirs. To 
 fatisfy them in fome meafure, therefore, they 
 frequently propofed to fend out a new colony. 
 But conquering Rome was, even upon fuch oc- 
 cafions, under no neceffity of turning out her 
 citizens to feek their fortune, if one may fay fo, 
 through the wide world, without knowing where 
 they were to fettle. She affigned them lands 
 generally lin the conquered provinces of Italy, 
 where, being within the dominions of the re- 
 public, they could never form any independent 
 flate ; but were at bed but a fort of corporation, 
 which, though it had the power of enading bye- 
 laws for its own government, was at all times 
 fubjecl to the correftion, jurifdidlion, and le- 
 gillative authority of the mother city. The fend- 
 ing out a colony of this kind not only gave 
 fome fatisfaftion to the people, but often efta- 
 bliflied a fort of garrifon too in a newly con- 
 quered province, of which the obedience might 
 otherwife have been doubtful. A Roman colony, 
 therefore, whether we confider the jiature of the 
 eftabliflmient itfelf, or the motives for making 
 it, was altogether different from a Greek one. 
 The words accordingly, whiqh in the original 
 languages denote thofe different eflablifhments, 
 have very different meanings. The Latin word 
 (Colonia) fignifies fimply a plantation. The 
 Greek word (aTroixta), on the contrary, fignifies ^ 
 feparation of dwelling, a departure from home, 
 a going out of the houfe. But, though the 
 
 Roman
 
 THE WEALTH OF NATIONS. 
 
 Roman colonies were in many refpedls different 
 from the Greek ones, the intereft which prompt- 
 ed to eftabhfli them was equally plain and dif- 
 tincl. Both inftitutions derived their origin either 
 from irrefidible neceflity, or from clear and evi- 
 dent utility. 
 
 The eftablifhment of the European colonies 
 in Amer'ca and the Weft Indies arofe from no 
 necefTity : and though the utility which has re- 
 fulted from them has been very great, it is not 
 altogether fo clear and evident. It was not un- 
 derftood at their firft eftabliftiment, and was not 
 the motive either of that eftablifliment or of the 
 difcoveries which gave occafion to it ; and the na- 
 ture, extent, and Hmits of that utility are not, 
 perhaps, well underftood at this day. 
 
 The Venetians, during the fourteenth and fif- 
 teenth centuries, carried on a very advantageous 
 commerce in fpiceries, and other Eaft India 
 goods, which they diftributed among the other 
 nations of Europe. They purchafed them chiefly 
 in Egypt, at that time under the dominion of 
 the Mammeluks, the enemies of the Turks, of 
 whom the Venetians were the enemies ; and this 
 union of intereft, affifted by the money of Venice, 
 formed fuch a connexion as gave the Venetians 
 almoft a monoply of the trade. 
 
 The great profits of the Venetians tempted 
 the avidity of the Portuguefe. They had been 
 endeavouring, during the courfe of the fifteenth 
 century, to find out by fea a way to the countries 
 from which the Moors brought them ivory and 
 gold duft acrcfs the Dt^fart. They difcovered 
 
 the 
 
 347
 
 34? THE NATURE AND CAUSES OP 
 
 3 o o K the Madeiras, the Canaries, the Azores, the Cape 
 IV. da Verd iflands, the coaft of Guinea, that of 
 
 w— ^.r-^ Loango, Congo, Angola, and Benguela, and, 
 finally, the Cape of Good Hope. They had long 
 vvifhed to fhare in the profitable traffic of the Ve- 
 netians, and this laft difcovery opened to them a 
 probable profped: of doing fo. In 1497, '^^^co 
 de Gama failed from the port of Lilbon with a 
 fleet of four ihips, and after a navigation of 
 eleven months, arrived upon the coafl of Indollan, 
 and thus completed a courfe of difcoveries which 
 had been purfued with great fteadinefs, and with 
 very little interruption, for near a century to- 
 gether. 
 
 Some years before this, while the expe61:ations 
 of Europe were in fufpenfe about the projects of 
 the Portuguefe, of which the fuccefs appeared yet 
 to be doubtful, a Genoefe pilot formed the yet 
 more daring project of failing to the Eaft Indies 
 by the Weft. The firuation of thofe countries 
 was at that time very imperfedly known in Eu- 
 rope, The few European travellers who had 
 been there had magnified the diilance ; perhaps 
 through fimplicity and ignorance, what was really 
 very great, appearing almolt infinite to thofe who 
 could not meafure it ; or, perhaps, in order to 
 increafe fomewhat more the marvellous of their 
 own adventures in vifiting regions fo immenfely 
 remote from Europe. The longer the way was 
 by the Eaft, Columbus very juftly concluded, the 
 Ihorter it would be by the Weft. Ele propofed, 
 therefore, to take that way, as both the fnorteft 
 and the fureft, and he had the good fortune to 
 
 4 convince
 
 THE WEALTH OF NATIONS. 349 
 
 convince Ifabella of Caftile of the probability of 
 his projeft. He failed from the port of Pabs in 
 Atiguft 1492, near five years before the expe- 
 dition of Vafco de Gama fet out from Portugal, 
 and, after a voyage of between two and three 
 months, difcovered firft fome of the fmall Bahama 
 or Lucayan illands, and afterwards the great iHand 
 of St. Domingo. 
 
 But the countries which Columbus difcover- 
 ed either in this or in any of his fubfequent 
 voyages, had no refemblance to thofe which he 
 had gone in queft of. Inftead of the wealth, 
 cultivation, and populoufnefs of China and In- 
 doftan, he found, in St. Domingo, and in all the 
 other parts of the new world which he ever vi- 
 fited, nothing but a country quite covered with 
 wood, uncultivated, and 'inhabited only by fome 
 tribes of naked and miferable favages. He was 
 not very willing, however, to believe that they 
 were not the fame with fome of the countries 
 defcribed by Marco Polo, the firft European who 
 had vifited, or at leaft had left behind him any 
 defcription of China or the Eaft Indies ; and a 
 very flight refemblance, fuch as that which he 
 found between the nan^ of Cibao, a mountain 
 in St. Domingo, and that of Cipango, mention* 
 €d by Marco Pc^lo, was frequently fufficient to 
 make him return to this favourite prepolTeflion, 
 though contrary to the cleareft evidence. In 
 his letters to Ferdinand and Ifabella, he called 
 the countries which he had difcovered the Indisis. 
 He entertained no doubt but that they were the 
 extremity of thofe which had been defcribed by 
 
 Marco
 
 350 THE NATURE AND CAUSES OF 
 
 BOOK Marco Polo, and that they were not very diflant 
 IV. from the Ganges, or from the countries which 
 '"*^'^*^ had been conquered by Alexander. Even when 
 at laft convinced that they were different, he ftill 
 flattered himfelf that thofe rich countries were at 
 no great diftance ; and in a fubfequent voyage, 
 accordingly, went in queft of them along the 
 coafi: of Terra Firma, and towards the iflhmus of 
 Darien. 
 
 In confequence of this miftake of Columbus, 
 the name of the Indies has fluck to thofe unfor- 
 tunate countries ever fince : and when it was at 
 lad clearly difcovered that the new were altoge- 
 ther different from the old Indies, the former were 
 called the Wed, in contradidindtion to the latter, 
 which were called the Eaft Indies. 
 
 It was of importance to Columbus, however, 
 that the countries which he had difcovered, what- 
 ever they were, fhould be reprefented to the court 
 of Spain as of very great confequence ; and, in 
 ■what conflitutes the real riches of every country, 
 the animal and vegetable produdions of the foil, 
 there was at that time nothing which could well 
 judify fuch a reprefentation of them. 
 
 The Cori, fomething between a rat and a rab- 
 bit, and fuppofed by Mr. Buffon to be the fame 
 with the Aperea of Brazil, was the larged vivipa- 
 rous quadruped in St. Domingo. This fpecies 
 feems never to have been very numerous, and the 
 dogs and cats of the Spaniards are faid to have 
 long ago almod entirely extirpated ir, as well as 
 fome other tribes of a dill fmaller fize. Thefe, 
 however, together with a pretty large lizard, called 
 
 the
 
 I^HE WEALTH OF NATIONS. 3P 
 
 the Ivana or Iguana, conflituted the principal part chap. 
 of the animal food which the land afforded. vii. 
 
 The vegetable food of the inhabitants, though "-"^^""^ 
 from their want of induftry not very abun- 
 dant, was not altogether fo fcanty. It confided 
 in Indian corn, yams, potatoes, bananes, &c. 
 plants which were then altogether unknown in 
 Europe, and which have never fmce been very 
 much efteemed in it, or fuppofed to yield a fuf- 
 tenance equal to what is drawn from the com- 
 mon forts of grain and pulfe, which have been 
 cultivated in this part of the world time out of 
 mind. 
 
 The cotton plant indeed afforded the material 
 of a very important manufacture, and was at that 
 time to Europeans undoubtedly the moft valuable 
 of all the vegetable productions of thofe illands. 
 But though in the end of the fifteenth century, 
 the muflins and other cotton goods of the Eall 
 Indies were much efteemed in everv Dart of Eu- 
 tope, the cotton manufacture itfelf was not cul- 
 tivated in any part of it. Even this produdion, 
 therefore, could not at that time appear in the 
 eyes of Europeans to be of very great confe- 
 quence. 
 
 Finding nothing either in the animals or ve- 
 getables of the newly difcovered countries, which • 
 could juftify a very advantageous reprefentation 
 of them, Columbus turned his view towards 
 their minerals ; and in the richnefs of their pro- 
 ductions of this third kingdom, he flattered him- 
 felf, he had found a full conpenfation for the 
 infignificancy of thofe of the other two. The 
 
 little
 
 352 THE NATURE AND CAUSES OP 
 
 BOOK little bits of gold with which the inhabitants orna- 
 IV. mented their drefs, and which, he was informedj 
 they frequently found in the rivulets and tor- 
 rents that fell from the mountains, were fuffi- 
 clent to fatlsfy him that thofe mountains abound- 
 ed with the richeft gold mines. St. Domingo, 
 therefore, was reprefented as a country abound- 
 ing with gold, and, upon that account (accord- 
 ing to the prejudices not only of the prefent times, 
 but of thofe times), an inexhauftible fource of 
 real wealth to the crown and kingdom of Spain. 
 When Columbus, upon his return from his firft 
 voyage, was introduced with a fort of tri- 
 umphal honours to the fovereigns of Caflile 
 and Arragon, the principal productions of the 
 countries which he had difcovered were carried 
 in folemn proceffion before him. The only va- 
 luable part of them confided in fome Httle fillets, 
 bracelets, and other ornaments of gold, and in 
 fome bales of cotton. The refl: were mere ob- 
 jecls of vulgar wonder and curiofity ; fome reeds 
 of an extraordinary fize, fome birds of a very 
 beautiful plumage, and fome Huffed fklns of the 
 huge alligator and manati ; all of which were 
 preceded by fix or feven of the wretched natives, 
 whofe fingular colour and appearance added 
 greatly to the novelty of the fhew. 
 
 In confequence of the reprefentations of Co- 
 lumbus, the council of Caflile determined to take 
 poffefTion of countries of which the inhabitants 
 were plainly incapable of defending themfelves. 
 The pious purpofe of converting them to Chrifti- 
 anity fanctified the injuflice of the proje^:. But 
 
 the
 
 THE WEALTH OF NATIONS.* 353 
 
 the hope of finding treafures of gold there, was chap* 
 the fole motive which prompted to undertake it ; vii. 
 and to give this motive the greater weight, it 
 was propofed by Columbus that the half of all the 
 gold and filver that fliould be found there fhould 
 belong to the crown. This propofal was approved 
 of by the council. 
 
 As long as the whole or the greater part of 
 the gold, which the firft adventurers imported 
 into Europe, was got by io very eafy a method 
 as the plundering of the defencelefs natives, it 
 was not perhaps very difficult to pay even this 
 heavy tax. But when the natives were once 
 fairly flript of all that they had, which, in St, 
 Domingo, and in all the other countries dif- 
 covered by Columbus, was done complet^dy in. 
 fix or eight years, and when in order to find 
 more it had become necefiary to dig for it in the 
 mines, there was no longer any poiribiiity of 
 paying this tax» The rigorous exaction of ir, 
 accordingly, firll occafioned, it is laid, the total 
 abandoning of the mines of St. Domingo, which 
 have never been wrought fince. It was foon re- 
 duced therefore to a third ; then to a fifih ; after- 
 wards to a tenth ; and at lad to a twentieth part 
 of the grofs produce of the gold mines. The 
 tax upon filver continued for a long time to be 
 a fifth of the grofs produce. It was reduced to 
 a tenth only in the courfe of the prefent century. 
 But the firft adventurers do not appear to have 
 been much interefted about filver. Nothinp- lefs 
 precious than gold feemcd worthy of their atten- 
 tion. 
 
 VOL. II. A A All,
 
 ^S^ THE NATURE AND CAUSES OP 
 
 BOOK All the other enterprlfes of the Spaniards iti 
 IV. the new world, fubfequent to thofe of Columbus, 
 feem to have been prompted by the fame mo- 
 tive. It was the facred third of gold that carried 
 Oieda, Nicuefla, and Vafco Nugnes de Balboa, 
 to the ifthmus of Darien, that carried Cortez to 
 Mexico, and Almagro and Pizzaro to Chili and 
 Peru. When thofe adventurers arrived upon 
 any unknown coaft, their firfl inquiry was al- 
 ways if there was any gold to be found there ; 
 and according to the information which they 
 received concerning this particular, they deter- 
 mined either to quit the country or to fettle 
 in it. 
 
 Of all thofe expenfive and uncertain projeds, 
 however, which bring bankruptcy upon the 
 greater part of the people who engage in them, 
 there is none perhaps more perfectly ruinous 
 than the fearch after new filver and gold mines. 
 It is perhaps the moil difadvantageous lottery in 
 the world, or the one in which the gain of thofe 
 who draw the prizes bears the leafl proportion to 
 the lofs of thofe who draw the blanks : for 
 though the prizes are few and the blanks many, 
 the common price of a ticket is the whole for- 
 tune of a very rich man. Projects of mining, 
 inltead of replacing the capital employed in 
 them, together with the ordinary profits of flock, 
 commonly abforb both capital and profit. They 
 are the projeds, therefore, to which of all others 
 a prudent law-giver, who defired to increafe the 
 capital of his nation, would leafl chufe to give 
 any extraordinary encouragement, or to turn to- 
 
 5 wards
 
 THE WEALTH OF NATIONS: ^55 
 
 tvards them a greater fhare of that capital than chap. 
 what would go to them of its own accord. ^^^' 
 Such in reality is the abfurd confidence which ""^ 
 slmofl all men have in their own good fortune, 
 that wherever there is the leafl probability of 
 fuccefs, too great a Ihare ' of it is apt to go to 
 them of its own accord. 
 
 But though the judgment of fober reafon and 
 experience concerning fuch projefts has always 
 been extremely unfavourable, that of human 
 avidity has commonly been quite otherwife. 
 The fame pafTion v/hich has fuggefted to fo many- 
 people the abfurd idea of the philofopher's ftone, 
 has fuggefled to others the equally abfurd 
 one of immenfe rich mines of gold and filver. 
 They did not confider that the value of thofe 
 metals has, in all ages and nations, arifen chiefly 
 from their fcarcity, and that their fcarcity 
 has arifen from the very fmall quantities of 
 them which nature has any where depofitcd ia 
 one place, from the hard and intradable fub- 
 fiances with which Ihe has almofi: every where 
 furrounded thofe fmall quantities, and confe- 
 quently from the labour and expence which are 
 every where necelTary in order to penetrate to 
 and get at them. They flattered themfelves 
 that veins of thofe metals might in many places 
 be found as larc:e and as abundant as thofe which 
 are commonly found of lead, or copper, or tin^ 
 or iron. The dream of Sk \Valter Raleigh con- 
 cerning the golden city and country of Eldorado, 
 may fatisfy us, that even wife men are not al- 
 ways exempt from fuch (Irange delufions. i\Iore 
 
 A A 2 thau
 
 5s5 THE NATURE AND CAUSES OF 
 
 BOOK than an hundred years after the death of that great 
 IV. man, the Jefuit Gumila was ftill convinced of 
 the reality of that wonderful country, and ex- 
 preffed with great warmth, and, I dare to fay 
 with great fmcerity, hov/ happy he fhould be to 
 carry the light of the gofpel to a people who 
 could fo well reward the pious labours of their 
 miflionary. 
 
 In the countries firft difcovered by the Spa- 
 niards, no gold and filver mines are at prefent 
 known which are fuppofed to be worth the work- 
 ing. The quantities of thofe metals which the 
 firffc adventurers are faid to have found there, had 
 probably been very much magnified, as well as 
 the fertility of the mines which were wrought im- 
 mediately after the firfl difcovery. What thofe ad- 
 venturers were reported to have found, however, 
 was fufficient to inflame the avidity of all their 
 countrymen. i Every Spaniard who failed to 
 America expeded to fmd an Eldorado. Fortune 
 too did upon this what fhe has done upon very 
 few other occafions. She realized in fome mea- 
 fure the extravagant hopes of her votaries, and 
 in the difcovery and conquefl: of Mexico and 
 Peru (of which the one happened about thirty, 
 the other about forty years after the firft expe- 
 dition of Columbus), fhe prefented them with 
 fomething not very unlike that profufion of the 
 precious mteals which they fought for. 
 
 A PRojFXT of "commerce to the Eafl Indies, 
 therefore, gave occafion to the firfl difcovery of 
 the Welt. A projeft of conqueft gave occafion 
 to all the eftablifhments of the Spaniards in thofe 
 
 newly
 
 THE WEALTH OF NATIONS. 357 
 
 newly difcovered countries. The motive which 
 excited them to this conquefl was a projedl of 
 gold and filver mines ; and a courfe of accidents, 
 which no human wildom could forefee, rendered 
 this proje(5l much more fuccefsful than the un- 
 dertakers had any reafonable grounds for exped- 
 ing. 
 
 The firfh adventurers of all the other nations 
 of Europe, who attempted to make fettlements 
 in America, were animated by the like chimeri- 
 cal views ; but they were not equally fuccefsful. 
 It was more than a hundred years after the firfl 
 fettlement of the Brazils before any filver, gold, 
 or diamond mines were difcovered there. In the 
 Enghfti, French, Dutch, and Danifli colonies, 
 none have ever yet been difcovered ; at lead none 
 that are at prefent fuppofed to be worth the worl^- 
 ingf. The firfl Eneliih fettlers in North Ame- 
 rica, however, offered a fifth of all the gold and 
 fdver which fhould be found there to the king, 
 as a motive for granting them their patents. In 
 the patents to Sir Walter Raleigh, to the Lon- 
 don and Plymouth companies, to the council of 
 Plymouth, 6<:c. this filth was accordingly re- 
 ferved to the crown. To the expectation of 
 finding gold and filver mines, thofe firfl fettlers 
 too joined that of dlfcovering a north-wefl paflage 
 to the Eafl Indies. They have hitherto been 
 difappointed in both. 
 
 A A 3 Part
 
 358 THE NATURE AND CAUSES O? 
 
 Part Second, 
 
 Caufes of the Profperity of new Colonies. 
 
 npHE colony of a civilized nation which takes 
 poffeliion, either of a wafle country, or of 
 one fo thinly inhabited that the natives eafily 
 give place to the new fettlers, advances more 
 rapidly to wealth [and "greatnefs than any other 
 human fociety. 
 
 The Golonifts carry out with them a know- 
 ledge of agriculture and of other ufeful arts, 
 fuperior to what can grow up of its own accord 
 in the courfe of many centuries among favage 
 and barbarous nations. They carry out with 
 them too the habit of fubordination, fome notion 
 of the regular government which takes place in 
 their own country, of the fyllem of laws which 
 fupports it, and^ of a regular adminiftration of 
 juflice ; and they naturally eflabliih fomething 
 of the fame kind in the new fettlement. But 
 among favage and barbarous nations, the natural 
 progrefs of law and government is flill flower 
 than the natural progrefs of arts, after law and 
 government have been fo far eftablifhed, as is 
 neceifary for their protedlion. Every colonift 
 gets more land than he can poflibly cultivate. 
 He has no rent, and fcarce any taxes to pay. No 
 landlord fliares with him in its produce, and the 
 fhare of the fovereign is commonly but a trifle. 
 lit has every motive to render as great as pof- 
 fible a produce, which is thus to be almofl: en- 
 tirely
 
 THE WEALTH OF NATIONS. 359 
 
 firely his own. But his land is commonly i'o chap. 
 extenuve, that, with all his own induftry, and vii, 
 with all the induflry of other people whom he 
 can get to employ, he can feldom make it pro- 
 duce the tenth part of what it is capable of pro- 
 ducing. He is eager, therefore, to colled la- 
 bourers from all quarters, and to reward them 
 with the mofl liberal wages. But thofe liberal 
 wages, joined 10 the plenty and cheapnefs of 
 land, foon make thofe labourers leave him, in 
 order to become landlords themfelves, and to 
 reward, with equal liberality, other labourers, 
 who foon leave them for the fame reafon that 
 they left their firft mafter. The liberal reward 
 of labour encourages marriage. The children, 
 during the tender years of infancy, are well fed 
 and properly taken care of, and when they are 
 grown up, the value of their labour greatly over- 
 pays their maintenance. When arrived at ma- 
 turity, the high price of labour, and the low 
 price of land, enable them to eftablifh them- 
 felves in the fame manner as their fathers did 
 before them. 
 
 In other countries rent and profit eat up 
 wages, and the two fuperior orders of people 
 opprefs the inferior one. But in new colonies, 
 the intereft of the two fuperior orders obliges 
 them to treat the inferior one with more gene- 
 rofity and humanity ; at lead, where that in- 
 ferior one is not in a flate of flavery. Waftc 
 lands of the greatefl natural fertility, are to be 
 had for a trifle. The increafe of revenue which 
 the proprietor, who is always the undertaker, 
 
 A A 4 expels
 
 i 
 
 360 THE NATURE AND CAUSES OF 
 
 BOOK expe^ls from their improvement, conftitutes his 
 iv. profit ; which in thefe circumftances is com- 
 monly very great. But this great profit camiot 
 be made without employing the labour of other 
 people in clearing and cultivating the land ; and 
 the difproportion betvveeen the great extent of the 
 land and the fmall number of the people, which 
 commonly takes place in new colonies, makes 
 it difficult for him to get this labour. He does 
 not, therefore, difpute about wages, but is 
 willing to employ labour at any price. The 
 high wages of labour encourage population. 
 The cheapnefs and plenty of good land encourage 
 improvement, and enable the proprietor to pay 
 thofe high wages. In thofe wages confifls almoft 
 the whole price of the land ; and though they are 
 high, confidered as the wages of labour, they 
 are low, confidered as the price of what is fo 
 very valuable. What encourages the progrefs 
 of population and improvement, encourages that 
 of real wealth and greatnefs. 
 
 The progrefs of many of the ancient Greek 
 colonies towards wealth and greatnefs, feems ac- 
 cordingly to have been very rapid. In the 
 courfe of a century or two, feveral of them ap- 
 pear to have rivalled, and even to have fur- 
 palTed, their mother cities. Syracufe and Agri- 
 gentum in Sicily, Tarentum and Locri in Italy, 
 Ephefus and Miletus in Leffer Afia, appear by 
 all accounts to have been at lead equal to any of 
 the cities of ancient Greece. Though poflerior 
 in their eftablifliment, yet all the arts of refine- 
 siient, philofophy, poetry, and eloquence, feern 
 
 to
 
 THE WEALTH OF NATIONS. 361 
 
 to have been cultivated as early, and to have ^^ h a p. 
 been improved as highly in them, as in any part vii. 
 of the mother country. The fchools of the two ' — %-*-' 
 oldeft Greek philofophers, thole of Thales and 
 Pythagoras, were edabiifhed, it is remarkable, 
 not in ancient Greece, but the one in an 
 Afiatic, the other in an Italian colony. All 
 thofe colonies had eftabliflied themfelves in coun- 
 tries Inhabited by favage and barbarous nations, 
 who eafily gave place to the new fettlers. They 
 had plenty of good land, and as they were alto- 
 gether independent of the mother city, they 
 were at liberty to manage their own affairs in the 
 way that they judged was mod fuitable to their 
 own intereft. 
 
 The hiftory of the Roman colonies is by no 
 means fo brilliant. Some of them, indeed, fuch 
 as Florence, have in the courfe of many ages, 
 and after the fall of the mother city, grown up 
 to be confiderable dates. But the progrefs of no 
 one of them feems ever to have been very 
 rapid. They were all eftablifhed in conquered 
 provinces, which in moft cafes had been tuily in- 
 habited before. The quantity of land afligned to 
 each coloniil was feldom very confiderable, and 
 as the colony was not independent, they were not 
 always at liberty to manage their own affairs in 
 the way that they judged was moft fuitable to 
 their own intereft. 
 
 In the plenty of good land, the European 
 colonies eftabliflied in America and the Weft 
 Indies refemble, and even greatly furpafs, thofe 
 of ancient Greece. In their dependency upon 
 
 the
 
 «($2 THE NATURE AND CAUSES OF 
 
 
 
 1 
 
 BOOK the mother ft ate, they refemble thofe of ancient 
 IV. Rome ; but their great diftance from Europe has 
 
 ■•^'~^"*^ in all of them alleviated more or lefs the effects 
 of this dependency. Their fituation has placed 
 them lefs in the view and lefs in the power of 
 their mother country. In purfuing their interefl 
 their own way, their conduift has, upon many oc- 
 cafions, been overlooked, cither becaufe not 
 known or not underftood in Europe j and upon 
 fome oceafions it has been fairly fuffered and fub- 
 mitted to, becaufe their diftance rendered it dif- 
 ficult to reftrain it. Even the violent and arbi- 
 trary government of Spain has, upon many ocea- 
 fions, been obliged to recall or foften the orders 
 which had been given for the government of her 
 colonies, for fear of a general infurreftion. The 
 progrefs of all the European colonies in wealth, 
 population, and improvement, has accordingly 
 been very great. 
 
 The crown of Spain, by its /hare of the gold 
 and filver, derived fome revenue from its colo- 
 nies, from the moment of their firft eflablilh- 
 jnent. It was a revenue too, of a nature to 
 excite in human avidity the mofl extravagant ex- 
 pectation of flill greater riches. The Spaniih 
 colonies, therefore, from the moment of their 
 firft eftablilhment, attraded very much the at- 
 tention of their mother country ; while thofe of 
 the other European nations were for a long time 
 in a great meafure negledled. The former did 
 not, perhaps, thrive the better in confequence 
 of this attention ; nor the latter the worfe in con- 
 fequence of this negle<^. In proportion to the 
 
 extent
 
 THE WEALTH OF NATIONS. 365 
 
 extent of the country which they In feme mea!ure chap. 
 poiTefs, the Spanifh colonies are confidered as vii. 
 lefs populous and thriving than tho'e of aln-^oft --"^r"^ 
 any other European nation. The progrefs even 
 of the Spanifli colonies, however, in population 
 and improvement, has certainly been very rapid 
 and very great. The city of Lima, founded 
 fmce the conqueft, is reprefented by Ulloa, as 
 containing fifty thoufand inhabitants near thirty 
 years ago. Quito, which had been but a mife- 
 rable hamlet of Indians, is reprefented by the 
 fame author as in his time equally populous. 
 Gemelli Carreri, a pretended traveller, it is faid, 
 indeed, but who feems every where to have 
 written upon extreme good information, repre- 
 fents the city of Mexico as containing a hundred 
 thoufand inhabitants ; a number which, in fpite 
 of all the exaggerations of the Spanifh writers, 
 is, probably, more than five times greater than 
 what it contained in the time of Montezuma. 
 Thefe numbers exceed greatly thofe of Bofton, 
 New York, and Philadelphia, the three greateft 
 cities of the Englifli colonies. Before the con- 
 quell of the Spaniards there v/ere no cattle fit 
 for draught either in Mexico or Peru. The 
 lama was their only bsart: of burden, and its 
 ftrength feems to have been a good deal inferior 
 to that of a common afs. The plough was un- 
 known among them. They were ignorant of 
 the ufe of iron. They had no coined money, 
 nor any eilablifhed inftrument of commerce of 
 any kind. Their commerce was carried on by 
 |)arter, A fort of wooden fpade was their prin- 
 cipal
 
 364 THE NATURE AIkD CAUSES OF 
 
 BOOK clpal inftrument of agriculture. Sharp frones 
 IV. ferved them for knives and hatchets to cut with ; 
 fiih bones and the hard fmews of certain animals 
 ferved them for needles to few with ; and thefe 
 feem to have been their principal inftruments of 
 trade. In this itate of things, it feems impof- 
 fible that either of thofe empires could have been 
 fo much improved or fo well cultivated as at 
 prefent, when they are plentifully furnifhed with 
 all forts of European cattle, and when the ufe 
 of iron, of the plough, and of many of the arts 
 of Europe, has been introduced among them. 
 But the populoufnefs of every country muft be 
 in proportion to the degree of its improvement 
 and cultivation. In fpite of the cruel deftru^lion 
 of the natives which followed the conqueft, thefe 
 two great empires are, probably, more popu- 
 lous now than they ever were before : and the 
 people are furely very different ; for we mud ac- 
 knowledge, I apprehend, that the Spanifli Creoles 
 are in many refpects fuperior to the ancient 
 Indians. 
 
 After the fettlements of the Spaniards, that 
 of the Portugueze in Brazil is the oldeft of any 
 European nation in America. But as for a long 
 time after the firfl difcovery, neither gold nor 
 iilver mines were found in it, and as it aftbrded, 
 upon that account, little or no revenue to the 
 crown, it was for a long time in a great meafure 
 negledted ; and during this flate of neglecl, it 
 grew up to be a great and powerful colony. 
 While Portugal was under the dominion of 
 Spain, Brazil was attacked by the Dutch, who
 
 THE WEALTH OF NATIONS. 3C5 
 
 got poffeffion of feven of the fourteen provinces q h ^ p, 
 into which it is divided. They expected foon to vii. 
 conquer the other feven, wheji Portugal re- ^— ^.'-*— ' 
 covered its independency by the elevation of the 
 family of Braganza to the throne. The Dutch 
 then, as enemies to the Spaniards, became 
 friends to the Portuguese, who were likewife the 
 enemies of the Spaniards. They agreed, there- 
 fore, to leave that part of Brazil, which they 
 had not conquered, to the king of Portugal, 
 who agreed to leave that part which they had 
 conquered to them, as a matter not worth dlf- 
 puting about with fuch good allies. But the 
 Dutch government foon began to opprefs the 
 Portugueze colunids, who, indead of amufing 
 themfclves with complaints, took arms againft 
 their new maflers, and by their own valour and 
 refohuion, with the connivance, indeed, but with- 
 out any avowed afli fiance from the mother coun- 
 try, drove them out of Brazil. The Dutch 
 therefore, finding it impoffible to keep any part 
 of the country to themfelves, were contented that 
 it Ihould be entirely reflored to the crown of Por- 
 tugal. In this colony there are faid to be more 
 than Hk hundred thoufand people, either Portu- 
 gueze or defcended from Portugueze, Creoles, 
 mulattoes, and a mixed race between Portugueze 
 and Brazilians. No one colony in America is 
 fuppofed to contain fo great a number of people 
 of European extradion. 
 
 Towards the end of the fifteenth, and during 
 
 the greater part of the fixteenth century, Spain 
 
 znd Portugal were the two great naval powers 
 
 7 upon
 
 j55 THE NATURE AND CAUSES OP 
 
 BOOK tiporl the ocean ; for though the commerce of 
 IV. Venice extended to every part of Europe, its 
 
 ^"'^""'^ fleet Jiad fcarce ever failed beyond the Mediter- 
 ranean. The Spaniards, in virtue of the firfl dif- 
 covery, claimed all America as their own ; and 
 though they could not hinder fo great ?. naval 
 power as that of Portugal from fettling in Brazil, 
 fuch was, at that time, the terror of their name, 
 that the greater part of the other nations of 
 Europe were afraid to eflablifh themfelves in any 
 other part of that great continent. The French, 
 who attempted to fettle in Florida, were all mur- 
 dered' by the Spaniards. But the declenfion of 
 the naval power of this latter nation, in confe- 
 quence of the defeat or mifcarriage of what they 
 called their Invincible Armada, which happened 
 towards the end of the fixteenth century, put it 
 out of their power to obflruft any longer the 
 fettlements of the other European nations. In 
 the courfe of the feventeenth century, therefore, 
 the Engliili, French,. Dutch, Danes, and Swedes, 
 all the great nations who had any ports upon the 
 ocean, attempted to make fome fettlements in the 
 new world. 
 
 The Swedes eflablidied themfelves in New 
 Jerfey ; and the number of Swedifh families flill 
 to be found there, fafHciently demonftrates, that 
 this colony was very likely to profper, had it 
 been protefted by the mother country. But 
 being neglected by Sweden, it was foon fwal- 
 lowed up by the Dutch colony of New York, 
 which again, in 1674, fell under the dominion of 
 
 the Englifli. 
 
 The
 
 THE WEALTH OF NATIONS. 35^ 
 
 ' The fmall iflands of St. Thomas and Santa c i-i a r. 
 Cruz are the only countries in the new world vir. 
 that have ever been poflefTed by the Danes. ' — ^^^'^' 
 Thefe little fettlements too were under the go- 
 vernment of an exclufive company, which had 
 the fole right, both of purchafmg the furplus 
 produce of the colonifts, and of fupplyino- them 
 with fuch goods of other countries as they 
 wanted, and which, therefore, botn in its pur- 
 chafes and fales, had not only the power of op- 
 prefling them, but the greateft temptation to do 
 fo. The government of an exclufive company 
 of merchants is, perhaps, the word of all go- 
 vernments for any country whatever. It was 
 not, however, able to flop altogether the pro- 
 grefs of thefe colonies, though it rendered it 
 more flow and languid. The late king of Den- 
 mark diffolved this company, and fince that 
 time the profperity of thefe colonies has been 
 very great. 
 
 The Dutch fettlements in the Weft, as well 
 as thofe in the Eaft Indies, were originally put 
 under the government of an exclufive company. 
 The progrefs of fome of them, therefore, though 
 it has been confiderable in comparifon with that 
 of almoft any country that has been long peopled 
 and eftabliflied, has been languid and flow in 
 comparifon with that of the greater part of new 
 colonies. The colony of Surinam, though very 
 confiderable, is fl:ill inferior to the greater part 
 of the fugar colonies of the other European na- 
 tions. The colony of Nova Belgia, now divided 
 into the two provinces of New York and New 
 
 Jerfey,
 
 3^8 THE NATURE AND CAUSES OF 
 
 BOOK Jerfey, would probably have foon become tofi'i 
 IV. fiderable too, even though it had remained 
 under the government of the Dutch. The plenty 
 and cheapnefs of good land are fuch powerful 
 caufes of profperity, that the very worft: govern- 
 ment is fcarce capable of checking altogether the 
 efficacy of their operation. The great dillance 
 too from the mother country would enable the 
 colonilts to evade m.ore or lefs, by fmuggling, 
 the monopoly which the company enjoyed againfl 
 them. At prefent the company allows all Dutch 
 fhips to trade to Surinam upon paying two and a 
 half per cent, upon the value of their cargo for 
 a licence ; and only referves to itfelf exclufively 
 the direcl trade from Africa to America, which 
 confids almoft entirely in the flave trade. This 
 relaxation in the exclufive privileges of the com- 
 pany, is probably the principal caufe of that 
 degree of profperity which that colony at prefent 
 enjoys. Cura9oa and Euftatia, the two principal 
 ifiands belonging to the Dutch, are free ports 
 open to the fliips of all nations ; and this free« 
 dom, in the midft of better colonies whofe ports 
 are open to thofe of one nation only, has been 
 the great caufe of the profperity of thofe two bar- 
 ren ifiands. 
 
 The French colony of Canada was, during 
 the greater part of the lafl century, and fome 
 part of the prefent, under the government of an 
 exclufive company. Under fo favourable an 
 adminiflration its progrefs was neceffarily very 
 flow in comparifon with that of other new colo- 
 nies f but it became much more rapid when this 
 
 company
 
 THE WEALTH OF NATIONS. 369 
 
 company was diflbived after the fall of what Is c h a r. 
 called the Miffiffippi fcheme. When the EngliOi vii. 
 got pofleirion of this country, they found in it '— ^''■'''■^• 
 near double the number of inhabitants which fa- 
 ther Charlevoix had affigned to it between twenty 
 and thirty years before. That jefuit had tra- 
 velled over the whole country, and had no incli- 
 nation to reprefent it as lefs confiderable than it 
 really was. 
 
 The French colony of St. Domingo was efla- 
 bliflied by pirates and free-booters, who, for a 
 long time, neither required the protection, nor 
 acknowledged the authority of France ; and 
 when that race of banditti became fo far citizens 
 as to acknowledge this authority, it was for a 
 long time necelfary to exercife it with very great 
 gentlenefs. During this period the population 
 and improvement of this colony increafed very 
 fail. Even the oppreilion of the exclufive com- 
 pany, to which it was for fome time fubjeded, 
 with all the other colonies of France, though 
 it no doubt retarded, had not been able to flop 
 its progrefs altogether. The courfe of its pro- 
 fperity returned as foon as it was relieved from 
 that oppreflion. It is now the mod important 
 of the fugar colonies of the Weft Indies, and its 
 produce is faid to be greater than that of all the 
 Englifh fugar colonies put together. The other 
 fugar colonies of France are in general all very 
 thriving. 
 
 But there are no colonies of which the pro- 
 grefs has been more rapid than that of the Englifh 
 in North America, 
 
 VOL. II. B B Plenty
 
 37© THE NATURE AND CAUSES OF 
 
 Plenty of good land, and liberty to manage 
 their own affairs their own way, feem to be the 
 two great caufes of the profperity of all new 
 colonies. 
 
 In the plenty of good land the Englifh colo- 
 nies of North America, though, no doubt, very 
 abundantly provided, are, however, inferior to 
 thofe of the Spaniards and Portugueze, and not 
 fuperior to fome of thofe poffeffed by the I rench 
 before the late war. But the political inftitu- 
 tions of the Englifh colonies have been more fa- 
 vourable to the improvement and cultivation of 
 this land, than thofe of any of the other three 
 nations. 
 
 First, the engrofling of uncultivated land, 
 though it has by no means been prevented alto- 
 gether, has been more reftrained in the Englifh 
 colonies than in any other. The colony law 
 which impofes upon every proprietor the obliga- 
 tion of improving and cultivating, within a li- 
 mited time, a certain proportion of his lands, 
 and which, in cafe of failure, declares thofe neg- 
 leded lands grantable to any other perfon j though 
 it has not, perhaps, been very ftriftly executed, 
 bas, however, had fome effed. 
 
 Secondly, in Pennfylvania there is no right 
 of primogeniture, and lands, like moveables, 
 are divided equally among all the children 
 of the family. In three of the provinces of 
 New England the oldeft has only a double 
 ihare, as in the Mofaical law. Though in 
 thofe provinces, therefore, too great a quan- 
 tity of lacd fbouid fometimes be engroffed by a 
 
 particular
 
 THE WEALTH OF NATIONS; 57' 
 
 particular individual, it is likely, in the courfe chap. 
 of a generation or two, to be fufficiently divided '^^^' 
 again. In the other Englifh colonies, indeed, ^^^ 
 the right of primogeniture takes place, as in the 
 law of England. But in all the Englifh colonies 
 the tenure of the lands, which are all held by 
 free focage, facilitates alienation, and the grantee 
 of any extenfive tracl of land, generally finds it 
 for his intereft to alienate, as faft: as he can, the 
 greater part of it, referving only a fmall quit- 
 rent. In the Spanifti and Portugueze colonies, 
 what is called the right of Majorazzo * takes 
 place in the fucceflion of all thofe great eftates to 
 which any title of honour is annexed. Sach 
 eftates go all to one perfon, and are in effeft en- 
 tailed and unalienable. The French colonies, 
 indeed, are fubjed to the cuftom of Paris, which, 
 in the inheritance of land, is much more favour- 
 able to the younger children than the law of 
 England. But, in the French colonies, if any 
 pare of an eftate, held by the noble tenure of 
 chivalry and homage, is alienated, it is, for a li- 
 mited time, fubjedt to the right of redemption, 
 either by the heir of the fuperior or by the heir 
 of the family j and all the largefl: eftates of the 
 country are held by fuch noble tenures, which 
 neceffarily embarrafs alienation. But, in a new 
 colony, a great uncultivated eftate is likely to be 
 much more fpeedily divided by alienation than 
 by fucceflion. The plenty and cheapnefs of 
 good land, it has already been obferved, are the 
 principal caufes of the rapid profperity of new 
 
 * Jus Majoratus, 
 
 jj B 2 colonies.
 
 
 THE NATURE AND CAUSES OF 
 
 colonies. The engroffing of land, in efFe6l, de- 
 ftroys this plenty and cheapnefs. The engroffing 
 of uncultivated land, befides, is the greateft ob- 
 ilrudion to its improvement. But the labour 
 that is employed in the improvement and culti- 
 vation of land affords the greatefl: and mod valu- 
 able produce to the fociety. The produce of la- 
 bour, in this cafe, pays not only its own wages 
 and the profit of the ftock which employs it, but 
 the rent of the land too upon which it is em- 
 ployed. The labour of the Englifli colonifts, 
 therefore, being more employed in the improve- 
 ment and cultivation of land, is likely to afford 
 a greater and more valuable produce, than that 
 of any of the other three nations, which, by the 
 engroffing of land, is more or lefs diverted to- 
 wards other employments. 
 
 Thirdly, the labour of the Englifli colonifls 
 Is not only likely to afford a greater and more 
 valuable produce, but, in confequence of the 
 moderation of their taxes, a greater proportion of 
 this produce belongs to ihemfelves, which they 
 may (lore up and employ in putting into mo- 
 tion a iliil greater quantity of labour. The 
 Engliffi colbnifts have never yet contributed ^ny 
 thing towards the defence of the mother coun- 
 try, or towards the fupport of its civil govern- 
 ment. They themfclves, on the contrary, have 
 hitherto been defended alaiofi: entirely at the 
 expence of the mother country. But the ex- 
 pence of fleets and armies is out ef all propor- 
 tion greater than the neceffary expence of civil 
 government. The expence of their own civil 
 
 government
 
 THE WEALTH OF NATIONS. 373 
 
 government has always been very moderate. It c h a p. 
 has generally been confined to what was need- vii. 
 fary for paying competent lalaries to the gover- ' ^^ 
 nor, to the judges, and to fome other oflicers ot" 
 police, and for maintaining a few of the mofl 
 ufeful pubHc works. The expence of the civil 
 ellabUlhnient of MaOachufett's Bav, before the 
 commencement of the prefent diil urban ces, ufed 
 to be but about 18,000/. a year. That of New 
 Hampihire and Rhode Ifland ':;,5oo/. each. 
 That of Connecticut 4,000/. That of New 
 York and Pcnnfylvania, 4,500 /. each. That of 
 New Jerfey 1,200/. That of Virginia and South 
 CaroUna 8,000 /. each. The civil eflabliihments 
 of Nova Scotia and Georgia are panly fupporced 
 by an annual grant of parliament. But Nova 
 Scotia pays, befides, about 7,000 /. a year towards 
 the public expences of the colony ; and Georgia 
 about 2,500/. a year. All the different civil 
 edablifhments in North -America, in fhort, ex- 
 clufive of thofe of Maryland and North Caro- 
 lina, of which no exact account has been got, 
 did not, before the commencem-ent of the prefent 
 dillurbances, coft the inhabitants above 64,700/. 
 a year ; an ever-memorable example at how 
 fmall an expence three millions of people may 
 not only be governed, but w^ell governed, fhe 
 mod important part of the expence of govern- 
 ment, indeed, that of defence and proiec'tion, 
 has conftantly fallen upon the mother country. 
 The ceremonial too of the civil jiovernment in 
 the colonies, upon the reception of a new go- 
 s'crnor, upon the opening of a new allembly, kc. 
 
 .a 7. th(ni;Th
 
 374 THE NATURE AND CAUSES OP 
 
 BOOK though fufficiently decent, is not accompanied 
 i"^* with any expenfive pomp or parade. Their ec- 
 clefiaftical government is conduced upon a plan 
 equally frugal. Tithes are unknown among 
 them ; and their clergy, who are far from being 
 numerous, are maintained either by moderate 
 ftipends, or by the voluntary contributions of the 
 people. The power of Spain and Portugal, on 
 the contrary, derives fome fupport from the taxes 
 levied upon their colonies. France, indeed, has 
 never drawn any confiderable revenue from its 
 colonies, the taxes which it levies upon them 
 being generally fpent among them. But the 
 colony government of all thefe three nations is 
 conducted upon a much more expenfive plan, and 
 is accomp-inied with a much more expenfive cere- 
 monial. The furas fpent upon the reception of a 
 new viceroy of Peru, for example, have fre- 
 quently been enormous. Such ceremonials are 
 not only real taxes paid by the rich colonifls 
 upon thofe particular occafions, but they ferve to 
 introduce among them the habit of vanity and 
 expence upon all other occafions. They are not 
 only very grievous occafional taxes, but they 
 contribute to eflabllih perpetual- taxes of the 
 fame kind dill more grievous ; the ruinous taxes 
 of private luxury and extravagance. In the co- 
 lonies of all thofe three nations too, the ecclefiaf- 
 tical government is extremely opprefTive. Tithes 
 take place in all of them, and are levied with the 
 utmoft rigour in thofe of Spain and Portugal. 
 All of them befides are oppreffed with a nume- 
 rous race of mendicant friars^ whofe beggary 
 
 being ,
 
 THE WEALTH OF NATIONS. 375 
 
 being not only Hcenfed, but confecrated by reli- chap. 
 gion, is a mod grievous tax upon the poor vii. 
 people, who are mod carefully taught that it is ^*^ 
 a duty to give, and a very great fin to refufe 
 them their charity. Over and above all this, the 
 clergy are, in all of them, the greateft engroiTers 
 of land. 
 
 Fourthly, in the dlfpofal of their furplus 
 produce, or of what is over and above their own 
 confumption, the Englifh colonies have been 
 more favoured, and have been allowed a more 
 extenfive market, than thofe of any other Euro- 
 pean nation. Every European nation has en- 
 deavoured more or lefs to monopolize to itfelf 
 the commerce of its colonies, and, upon that ac- 
 count, has prohibited the (hips of foreign na- 
 tions from trading to them, and has prohibited 
 them from importing European goods from any 
 foreign nation. But the manner in which this 
 monopoly has been exercifed in different nations 
 has been very different. 
 
 Some nations have given up the whole com- 
 merce of their colonies to an exclufive company, 
 of whom the colonies were obliged to buy all 
 fuch European goods as they wanted, and to 
 whom they v/ere obliged to fell the whole of 
 their own furplus produce. It was the intereft 
 of the company, therefore, not only to fell the 
 former as dear, and to buy the latter as cheap as 
 pofiible, but to buy no more of the latter, even 
 at this low price, than what they could difpofe of 
 for a very high price in Europe. It was their 
 interefl not only to degrade in all cafes the va- 
 
 B B 4 lue
 
 3/6 THE NATURE AND CAUSES OP 
 
 BOOK lue of the furplus produce of the colony, but in 
 ^^^' many cafes to difcourage and keep down the na- 
 
 "*^'' turai increafe of its quantity. Of all the ex- 
 pedients that can well be contrived to ftunt the 
 natural growth of a new colony, that of an ex- 
 clufive company is undoubtedly the moft ef- 
 fefluaL This, however, has been the policy of 
 Holland, though their company, in the courfe of 
 the prefent century, has given up in many re- 
 Jpeds the exertion of their exclufive privilege. 
 This too was the policy of Denmark till the 
 reign of the late king. It has occafionally been 
 the policy of France, and of late, fmce 1755, 
 alter it had been abandoned by all other nations, 
 on account of its abfurdity, it has become the 
 policy of Portugal with regard at lead to two of 
 the principal provinces of Brazil, Fernambuco and 
 Marannon. 
 
 Other nations, without edablifhing an exclu- 
 five company, have confined the v/hole com- 
 merce of their colonies to a particular port of 
 the mother country, from whence no fhip was 
 allowed to fail, but either in a fleet and at a par- 
 ticular feafon, or, if fingle, in confequence of a 
 particular licence, which in mod cafes was very 
 well paid for. This policy opened, indeed, the 
 trade of the colonies to all the natives of the 
 mother country, provided they traded from the 
 proper port, at the proper feafon, and in the 
 proper velTels. But as all the different mer- 
 chants, who joined their flocks in order to fit 
 out thofe licenfed veffels, would find it for their 
 intereft to acl in concert, the trade which wa^ 
 
 carried
 
 THE WEALTH OF NATIONS. 3-7 
 
 carried on in this manner would neceflarily be chap. 
 conducted very nearly upon the fame principles vii. 
 as that of an exclufive company. The profit of ' "'""^ 
 thofe merchants would be almolt equally exorbi- 
 tant and opprellive. The colonies would be ill 
 fupplied, and would be obliged both to buy very 
 dear, and to fell very cheiip. This, however, 
 till within thefe few years, had always been the 
 policy of Spain, and the price of all European 
 goods, accordingly, is faid to have been enor- 
 mous in the Spanifh Weft Indies. At Qriito, 
 we are told by Ulloa, a pound of iron fold for 
 about four and fix-pence, and a pound of fteel 
 for about fix and nine-pence fterling. But it is 
 chiefly in order to purchafe European goods, 
 that the colonies part with their own produce. 
 The more, therefore, they pay for the one, the 
 lefs they really get for the other, and the dear- 
 nefs of the one is the fame thing with the cheap- 
 nefs of the other. The policy of Portugal is in 
 this refped the fame as the ancient policy of Spain, 
 with regard to all its colonies, except Fernam- 
 buco and Marannon, and with regard to thefe it has 
 lately adopted a ftill worfe. 
 
 Other nations leave the trade of their colo- 
 nies free to all their fubjecls, vtho may carry it on 
 from all the difierent ports of the mother coun- 
 try, and who have occafion for no other licence 
 than the common difpatches of the cuftomhoufe. 
 In this cafe the number and dilperfed fituariori 
 of the different traders renders it impoflible for 
 them to enter into any general combination, and 
 their competition is fufficient to hinder them 
 
 I from
 
 573 THE NATURE AND CAUSES OF 
 
 BOOK from making verj^ exorbitant profits. Under fo 
 IV. liberal a policy the colonies are enabled both ta 
 "^^ fell their own produce and to buy the goods of 
 Europe at a reafonable price. But fince the 
 diflblution of the Plymouth company, v/hen our 
 colonies were but in their infancy, this has always 
 been the policy of England. It has generally 
 too been that of France, and has been uniformly 
 fo fmce the diffolution of what, in England, is 
 commonly called their MifTiffippi company. The 
 profits of the trade, therefore, which France and 
 England carry on with their colonies, though no 
 doubt fomewhat higher than if the competition 
 were free to all other nations, are, however, by no 
 means exorbitant j and the price of European 
 goods accordingly is not extravagantly high in 
 the greater pa.t of the colonies of either of thofe 
 nations. 
 
 In the exportation of their own furplus pro- 
 duce too, it is only with regard to certain com^ 
 modities that the colonies of Great Britain are 
 confined to the market of the mother country^ 
 Thefe commodities having been enumerated in the 
 a6: of navigation and m fome other fubfequent 
 2i£tt, have upon that account been called enwne- 
 rated commadiiiej. The reft are called non-enume- 
 rated ; and rnay be exported direflly to other 
 countries, provided ix is in Britifh or Plantation 
 Ihips, of which the owners and three-fourths of 
 the mariners are Britifh fubjects. 
 
 Among- the non-enumerated "commodities are 
 {ome of the moft important produdions of Ame-. 
 
 1 3 ric4
 
 THE WEALTH OF NATIONS. 379 
 
 tica and the Weft Indies ; grain of all forts, lum- chap, 
 ber, fait provifions, fifh, fugar, and rum. vii. 
 
 Grain is naturally the firft and principal ob- 
 ject of the culture of all new colonies. By al- 
 lowing them a very extenfive market for it, the 
 law encourages them to extend this culture much 
 beyond the confumptlon of a thinly inhabited 
 country, and thus to provide beforehand an ample 
 fubfiftence for a continually increafing popu- 
 lation. 
 
 In a country quite covered with wood, where 
 timber confequently is of little or no value, the 
 expence of clearing the ground is the principal 
 obftacle to improvement. By allowing the co- 
 lonies a very extenfive market for their lumber, 
 the law endeavours to facilitate improvement by 
 raifing the price of a commodity which would 
 otherwife be of little value, and thereby enabling 
 them to make fome profit of what would other- 
 wife be mere expence. 
 
 In a country neither half-peopled nor half- 
 cultivated, cattle naturally multiply beyond the 
 confumption of the inhabitants, and are often 
 upon that account of little or no value. But it 
 is neceffary, it has already been fiiewn, that the 
 price of cattle Ihould bear a certain proportion 
 to that of corn, before the greater part of the 
 lands of any country can be improved. By al- 
 lowing to American cattle, in all (hapes, dead 
 and alive, a very extenfive market, the law en- 
 deavours to raife the value of a commodity of 
 which the high price is fo very effential to im- 
 provement. The good effects of this liberty, 
 
 however.
 
 380 THE NATURE AND CAUSES OF 
 
 BOOK however, mud be fomewhat diminiihcd by the 
 IV. 4th of George III. c. 15. which puts hides and 
 
 ' ■•-**" Ikins among the enumerated commodities, and 
 
 thereby tends to reduce the value of American 
 
 cattle. 
 
 To increafe the (hipping and naval power of 
 Great Britain, by the extenilon of the fiiheries of 
 our colonies, is an objed which the legiflature 
 feems to have had almoli conftantly in view. 
 Thofe fifheries, upon this account, have had all 
 the encouragement which freedom can give 
 them, and they have flourifhed accordingly. 
 The New England fifliery in particular was, be- 
 fore the late difturbances, one of the moft im- 
 portant, perhaps, in the world. The whale- 
 fifhery, which, notwithftanding an extravagant 
 bounty, is in Great Britain carried on to To little 
 purpofe, that in the opinion of many people 
 (which I do not however pretend to warrant) 
 the whole produce does not much exceed the 
 value of the bounties which are annually paid for 
 it, is in New England carried on without any 
 • bounty to a very great extent. Fifh is one of 
 the principal articles with which the North 
 Americans trade to Spain, Portugal, and the 
 Mediterranean. 
 
 Sugar was originally an enumerated commo- 
 dity which could be exported only to Great Bri- 
 tain. But in 1 73 1, upon a reprefentation of the 
 fugar-planters, its exportation was permitted to 
 all parts of the world. The reftriclions, how- 
 ever, with which this liberty was granted, joined 
 to the high price of fugar in Great Britain, have 
 
 rendered
 
 THE WEALTH OF NATIONS. 381 
 
 rendered it, in a great meafure, inefFeclual. c 11 a p. 
 Great Britain and her colonies ftill continue to vji. 
 be ainioft the fole market for all the fugar pro- ' ""^ 
 duced in the BviiiOi plantations. Their con- 
 fumption increafes (o faft, that, though in confe- 
 qiience of the increafing improvement of Jamaica, 
 as well as of the Ceded Iilands, the importation of 
 fugar has increafed very greatly within thefe 
 twenty years, the exportation to foreign countries 
 is faid to be not much greater than before. 
 
 Rum is a very important article in the trade 
 which the Americans carry on to the coaft of 
 Africa, from which they bring back negroe Haves 
 in return. 
 
 If the whole furplus produce of America in 
 grain of all forts, in fait provifions, and in fifh, 
 had been put into the enumeration, and thereby 
 forced into the market of Great Britain, it would 
 have interfered too much with the produce of the 
 induflry of our own people. It was probably 
 not fo much from any regard to the iutereft of 
 America, as from a jealoufy of this interference^ 
 that thofe important commodities have not only 
 been kept out of the enumeration, but that the 
 importation into Great Britain of all grain, ex- 
 cept rice, and of all fait provifions, has, in the or- 
 dinary (late of the law, been prohibiced. 
 
 The non-enumerated commodities could ori- 
 ginally be exported to ail parts of the world. 
 Lumber and rice, having been once put into the 
 enumeration, when they were afterwards taken 
 out of it, were confined, as to the Europenn 
 market, to the countries that lie fouth of Cape 
 
 Finiderre.
 
 38« *rHE NATURE AND CAUSES OF 
 
 BOOK Finlfterre. By the 6th of George III. c. 52. all 
 IV, non-enumerated commodities were fubjeded to 
 the like rellridion. The parts of Europe which lie 
 fouth of Cape Finifterre, are not manufaduring 
 countries, and we were lefs jealous of the colony 
 ihips carrying home from them any manufactures 
 which could inteifere with our own. 
 
 The enumerated commodities are of two forts : 
 firft, fuch as are either the peculiar produce of 
 America, or as cannot be produced, or at leaft 
 are not produced, in the mother country. Of 
 this kind are, melafles, coffee, cocoa-nuts, to- 
 bacco, pimento, ginger, whale-fins, raw filk, 
 cotton-Vv'ool, beaver, and other peltry of Ame- 
 rica, indigo, fuftic, and other dying woods : 
 fecondly, fuch as are not the peculiar produce of 
 America, but which are and may be produced in 
 the mother country, though not in fuch quan- 
 tities as to fupply the greater part of her demand, 
 which is principally fupplied from foreign coun- 
 tries. Of this kind are all naval ftores, mafts, 
 yards, and bowfprits, tar, pitch, and turpentine, 
 pig and bar iron, copper ore, hides and fkins, pot 
 and pearl afhes. The largeft importation of 
 commodities of the firft kind could not difcourage 
 the growth, or interfere with the fale, of any part 
 of the produce of the mother country. By con- 
 fining them to the home market, our merchants, 
 it was expeded, would not only be enabled to 
 buy them cheaper in the Plantations, and con- 
 fequently to fell them v/ith a better profit at 
 home, but to eftablifh between the Plantations 
 and foreign countries an advantageous carrying 
 
 trade.
 
 THE WEALTH OF NATIONS. 3^5 
 
 trade, of which Great Britain was neceflarlly to chap. 
 be the center or emporium, as the European vu. 
 country into which thofe commodities were firfl 
 to be imported. The importation of commo- 
 dities of the fecond kind might be fo managed 
 too, it was fuppofed, as to interfere, not with 
 the fale of thofe of the fame kind which were 
 produced at home, but with that of thofe which 
 were imported from foreign countries ; becaufe, 
 by means of proper duties, they might be ren- 
 dered always fomewhat dearer than the former, 
 and yet a good deal cheaper than the latter. 
 By confining fuch commodities to the home 
 market, therefore. It was propofed to difcourage 
 the produce, not of Great Britain, but of fome 
 foreign countries with which the balance of trade 
 was believed to be unfavourable to Great Bri- 
 tain. 
 
 The prohibition of exporting from the co- 
 lonies, to any other country but Great Britain, 
 mads, yards, and bowfprits, tar, pitch, and tur- 
 pentine, naturally tended to lower the price of 
 timber in the colonies, and confequently to in- 
 creafe the expence of clearing their lands, the 
 principal obftacle to their improvement. But 
 about the beginning of the prefent century, in 
 1703, the pitch and tar company of Sweden 
 endeavoured to raife the price of their commo- 
 dities to Great Britain, by prohibiting their ex- 
 portation, except In their own fliips, at their 
 own price, and in fuch quantities as they thought 
 proper. In order to counteract this notable 
 piece of mercantile policy, and to render herfelf
 
 384 THE NATURE AND CAUSES OF 
 
 BOOK as much as poffible independent, not only of 
 ^V" Sweden, but of all the other northern powers, 
 "^"^ Great Britain gave a bounty upon the importa- 
 tion of naval (tores from America, and the efled 
 of thj,s bounty was to raife the price of timber in 
 America, much more than the confinement to 
 the home market could lower it ; and as both 
 regulations were enafted at the fame time, their 
 joint eftecl: was rather to encourage than to dif- 
 coujage the clearing of land in America. 
 ' Though pig and bar iron too have been put 
 among the enumerated commodities, yet as, 
 when imported from America, they are exempted 
 from confiderable duties to which they are fub- 
 jeft when imported from any other country, the 
 one part of the regulation contributes more to 
 encourage the eredion of furnaces in America, 
 than the other to diicourage it. There is no 
 manufaflure which occafions fo great a confump- 
 tion of wood as a furnace, or which can contri- 
 bute fo much to the clearing of a country over- 
 grown vi'ith it. 
 
 The tendency of fome of thefe regulations to 
 raife the value of timber in America, and there- 
 by to facilitate the clearing of the land, was 
 neither, perhaps, intended nor underflood by 
 the legiflature. Though their beneficial effedts, 
 however, have been in this refped accidental, 
 they have not upon that account been lefs real. 
 
 The mod perfed freedom of trade is permitted 
 between the Britifti colonies of America and the 
 Weft Indies, both in the enumerated and in the 
 non- enumerated commodities. Thofe colonies are 
 
 now
 
 THE V/EALTH OF NATIONS. 385 
 
 now become fo populous and thriving, that each chap. 
 of them finds in fome of the others a great and vii. 
 extenfive market for every part of its produce. 
 All of them taken together, they make a great 
 internal market for the produce of one another. 
 
 The liberality of England, however, towards 
 the trade of her colonies, has been confined chiefly 
 to what concerns the market for their produce, 
 either in its rude ftate, or in what may be called 
 the very firil; {lage of manufadure. The more 
 advanced or more refined manufaftures even of 
 the colony produce, the merchants and manu- 
 facturers of Great Britain chufe to referve to 
 themfelves, and have prevailed upon the legifla- 
 ture to prevent their eltabiifhment in the colo- 
 nies, fometimes by high duties, and fometimes by 
 abfolute prohibitions. 
 
 While, for example, Mulkovado fugars from 
 the Britifh plantations, pay upon importation 
 only 6 s. 4 J. the hundred weight ; white fugars 
 pay I /. I J. id.; and refined, either double or 
 fmgle, in loaves 4/. 2 s. ^^% d. When thofe 
 high duties were impofed, Great Britain was 
 the fole, and jfhe ftill continues to be the prin- 
 cipal market to which the fugars of the Britifh 
 colonies could be exported. They amounted, 
 therefore, to a prohibition, at firfl of claying 
 or refining fugar for any foreign market, and 
 at prefent of claying or refining it for the market, 
 which takes off, perhaps, more than nine-tenths 
 of the whole produce. The manufacture of clay- 
 ing or refining fugar accordingly, though it has 
 flourlflied in all tht^ fugar colonics of France, has 
 
 VOL. n. c c beea
 
 386 THE NATURE AND CAUSES O^ 
 
 BOOK been little cultivated in any of thofe of England^ 
 IV. except for the market of the colonies themfelves. 
 While Grenada was in the hands of the French, 
 there was a refinery of..fugar, by claying at 
 lead, upon almoft every plantaiion. Since it fell 
 into thofe of the Engllfn, almofh all works of 
 this kind have been given up, and there are at 
 prefenr, 06lober 1773, ^ ^"^ aifured, not above 
 two or three remaining in the illand. At pre- 
 sent, how.ever, by an indulgence of the cuftom- 
 houfe, clayed or refined fugar, if reduced from 
 loaves into powder, is commonly imported as 
 Muflcovado. 
 
 While Great Britain encourages in America 
 the manufadures of pig and bar iron, by ex- 
 empting them from duties to which the like 
 commodities are fubjeft when imported from any 
 other country, fhe impofes an abfolute prohibi- 
 tion upon the ere£lion of fleel furnaces and flit- 
 mills in any of her American plantations. She 
 will not fuffer her colonies to work in thofe more 
 refined manufadures even for their own con- 
 fumption; but infills upon their purchafing of 
 her merchants and manufa£lurers all goods of 
 this kind which they have occafion for. 
 
 She prohibits the exportation from one pro- 
 vince to another by water, and even the carriage 
 by land upon horfeback, or in a cart, of hats, of 
 wools and woollen goods, of the produce of 
 America ; a regulation which efieftually prevent* 
 the eftablilhment of any manufacture of fuch 
 commodities for dillant fale, and confines the 
 induflry of her colonills in this way to fuch 
 
 coarf;
 
 THE WEALTH OF NATIONS. 3:87 
 
 coarfe and houfehold manufa6lures, as a private 
 family commonly makes for its own ufe, or for 
 that of fome of its neighbours in the fame pro- 
 vince. 
 
 To prohibit a great people, however, from 
 making all that they can of every part of their 
 own produce, or from employing their flock and 
 induilry in the way that they judge mod advan- 
 tageous to themfelves, is a manifed violation of 
 the moft facred rights of mankind. Unjufl:, 
 however, as fuch prohibitions may be, they have 
 not hitherto been very hurtful to the colonies. 
 Land is ftill fo cheap, and, confeqiiently, labour 
 fo dear among them, that they can import from 
 the mother country almoft all the more refined 
 or more advanced manufaftures cheaper than 
 they could make them for themfelves. Though 
 they had not, therefore, been prohibited from 
 eftablifhing fuch manufadures, yet in their prefent 
 ilate of improvement, a regard to their own in- 
 tereft would, probably, have prevented them from 
 doing fo. In their prefent ftate of improvementj 
 thofe prohibitions, perhaps, without cramping 
 their induftry, or reftraining it from any employ- 
 ment to which it Vv^ould have gone of its own 
 accord, are only impertinent badges of flavery 
 impofed upon them, without any fufficient rea- 
 fon, by the groundlefs jealoufy of the merchants 
 and manufadurers of the mother country. In a 
 more advanced flate they might be really oppref* 
 five and infupportable. 
 
 Great Britain too, as fl^.e confines to her own 
 market fome of the mofl important productions 
 
 c c 2 of
 
 jgS THE NATURE AND CAUSES OF 
 
 BOOK of the colonies, fo in compenfation fhe gives to 
 IV. fome of them an advantage in that market ; 
 *^''^"'~^' fometimes by impofmg higher duties upon the 
 like produ6:ions when imported from other coun- 
 tries, and fometimes by giving bounties upon their 
 importation from the colonies. In the firfl way 
 (he. gives an advantage in the home market 
 to the fugar, tobacco, and iron of her own colo- 
 nies, and in the fecond to their raw filk, to 
 their hemp and flax, to their indigo, to their 
 naval-ftores, and to their building timber. This 
 fecond way of encouraging the colony produce 
 by bounties upon importation, is, fo far as I 
 have been able to learn, peculiar to Great Bri- 
 tain. The firft is not. Portugal does not con- 
 tent herfelf with impofmg higher duties upon 
 the importation of tobacco from any other coun- 
 try, but prohibits it under the feverefl penal- 
 ties. 
 
 With regard to the Importation of goods from 
 Europe, England has likewife dealt more liberally 
 with her colonies than any other nation. 
 
 Gkeat Britain allows a part, almoft always the 
 half, generally a larger portion, and fometimes 
 the whole of the duty which is paid upon the im- 
 portation of foreign goods to be drawn back 
 upon their exportation to any foreign country. 
 No independent foreign country, it was eafy to 
 forefee, would receive them if they came to it 
 loaded with the heavy duties to which almoft all 
 foreign goods are fubjefted on their importation 
 into Great Britain. Unlefs, therefore, fome 
 part of thofe duties was drawn back upon ex- 
 portation.
 
 THE WEALTH OF NATIONS. 389 
 
 portatlon, there was an end of the carrying trade ; chap. 
 a trade fo much favoured by the mercantile ^^^^* 
 fyftem. 
 
 Our colonies, however, are by no means In- 
 dependent foreign countries; and Great Britain 
 having affumed to herfelf the exclufive right of 
 fupplyirig them with all goods from Europe, 
 might have forced them (in the fame manner as 
 other countries have done their colonies) to re- 
 ceive fuch goods loaded with all the fame du- 
 ties which they paid in the mother country. 
 But, on the contrary, till 1763, the fame draw- 
 backs were paid upon the exportation of the 
 greater part of foreign goods to our colonies as 
 to any independent foreign country. In 1763, 
 indeed, by the 4th of Geo. III. c. 15. this 
 indulgence was a good deal debated, and it 
 was ena£led, " That no part of the duty called 
 " the old fubfidy fliould be drawn back for any 
 " goods of the growth, produftion, or manu- 
 " failure of Europe or the Eafl: Indies, which 
 " fnould be exported from this kingdom to any 
 " Britifh colony or plantation in America; 
 " wines, white callicoes, and mullins excepted." 
 Before this law, many different forts of foreign 
 goods might have been bought cheaper in the 
 plantations than In the mother country j and 
 fome may flill. 
 
 Of the greater part of the regulations con- 
 cerning the colony trade, the merchants who 
 carry it on, it mufl: be obferved, have been the 
 principal advifers. We mufl not wonder, there- 
 
 c c 3 fore,
 
 ^.o THE NATITRE AND CAUSES OF 
 
 BOOK fore, if, in the greater part of them, their in- 
 IV. tereft has been more confidered than either that 
 of the colonies or that of the mother country. 
 In their exclufive privilege of fupplying the colo- 
 nies with all the goods which they wanted from 
 Europe, and of purchafmg all fuch parts of their 
 furplus produce as could not interfere with any 
 of the trades which they themfelves carried on at 
 home, the intereft of the colonies was facrificed 
 to the intercft of thofe merchants. In allowing 
 the fame drawbacks upon the re-exportation of 
 the greater part of European and Eaft-India 
 goods, to the colonies, as upon their re-export- 
 ation to any independent country, the interef^: 
 of the mother country was facrificed to it, even 
 according to the mercantile ideas of that inte- 
 reft. It was for the intereft of the merchants 
 to pay as little as poiTible for the foreign goods 
 which they fent to the colonies, and, confe- 
 quently, to get back as much as poffible of the 
 duties which they advanced upon their import- 
 ation into Great Britain. They might 'thereby 
 be enabled to fell in the colonies, either the fame 
 quantity of goods with a greater profit, or a 
 greater quantity with the fame profit, and, con- 
 fequently, to gain fomething either In the one 
 way or the other. It was, likewife, for the in- 
 tereft of the colonies to get all fuch goods as 
 cheap, and in as great abundance as poflible. 
 But this might not always be for the intereft of 
 the mother country. She might frequently 
 fufier both in her revenue, by giving back a 
 
 great
 
 THE WEALTH OF NATIONS. 391 
 
 crreat part of the duties which had been paid upon c h a""?. 
 the importation of fuch goods ; and in her ma- vii. 
 nufadures, by being underfold in the colony mar- """^^""^ 
 ket, in confequence of the eafy terms upon which 
 foreign manufaclures could be carried thither by 
 means of thofe drawbacks. The progrefs of the 
 linen manufacture of Great Britain, it is com- 
 monly laid, has been a good deal retarded by the 
 drawbacks upon the re-exportation of German 
 linen to the American colonies. 
 
 But though the pohcy of Great Britain with 
 regard to the trade of her colonies has been 
 dictated by the fame mercantile fpirit as that of 
 other nations, it has, however, upon the whole, 
 been lefs illiberal and oppreffive than that of any 
 of them. 
 
 In every thing, except their foreign trade, the 
 liberty of the Englifh colonifts to manage their 
 own affairs their own way is ^complete. It is 
 in every refpe6t equal to that of their fellow- 
 citizens at home, and is fecured in the fame 
 manner, by an affembly of the reprefentatives of 
 the people, who claim the fole right, of impofing 
 taxes for the fupport of the colony government. 
 The authority of this alTembly overawes the. 
 executive power, and neither the meaneft nor 
 the mod obnoxious colonlft, as long as he obeys 
 the law, has any thing to fear from the refent- 
 ment, either of the governor, or of any other 
 civil or military officer in the province. The 
 colony affemblies, though, like the houfe of 
 comiUions in England, they are not always a very 
 equal reprefentation of the people, yet they ap- 
 
 c c 4 proacli
 
 39* THE NATURE AND CAUSES OF 
 
 BOOK preach more nearly to that character ; and as the 
 IV. executive power either has not the means to 
 corrupt them, or, on account of the fupport 
 which it receives from the mother country, is 
 not under the neceflity of doing fo, they are per- 
 haps in general more influenced by the inclina- 
 tions of their conltituents. The councils, which 
 in the colony legillatures, correfpond to the 
 houfe of lords in Great Britain, are not com- 
 pofed of an hereditary nobility. In fome of the 
 colonies, as in three of the governments of New 
 England, thofe councils are not appointed by 
 the king, but chofen by the reprefentatives of 
 the people. In none of the Englifti colonies is 
 there any hereditary nobility. In all of them, 
 indeed, as in all other free countries, the de- 
 Jcendant of an old colony family is more re- 
 fpected than an upftart of equal merit and for- 
 tune : but he is only more refpedled, and he has 
 no privileges by which he can be troublefome to 
 his neighbours. Before the commencement of 
 the prefent difturbances, the colony aflemblies 
 had not only the iegiflative, but a part of the 
 executive power. In Connedicut and Rhode 
 Ifland, they elected the governor. In the other 
 colonies they appointed the revenue officers who 
 colledled the taxes impofed by thoie refpedive 
 aflemblies, to whom thofe officers were imme- 
 diately refponfible. There is more equality, 
 therefore, among the Englifli colonifts, than 
 among the inhabitants of the mother country. 
 Their manners are more republican, and their 
 governments, thofe of three of the provinces of
 
 THE WEALTH OF NATIONS. 393 
 
 New England in particular, have hitherto been chap. 
 more republican too. vii. 
 
 The abfolute governments of Spain, Portu- 
 gal, and France, on the contrary, take place in 
 their colonies ; and the difcretionary powers 
 which fuch governments commonly delegate to 
 all their inferior officers are, on account of the 
 great diftance, naturally exercifed there with 
 more than ordinary violence. Under all abfo- 
 lute governments there is more liberty in the 
 capital than in any other part of the country. 
 The fovereign himfelf can never have either 
 interefl: or inclination to pervert the order of 
 juflice, or to opprefs the great body of the 
 people. In the capital his prefence over-awes 
 more or lefs all his inferior officers, who in the 
 remoter provinces, from whence the complaints 
 of the people are lefs likely to reach him, can 
 exercife their tyranny with much more fafety. 
 But the European colonies in America are more 
 remote than, the mod diflant provinces of the 
 greateft empires which had ever been known 
 before. The government of the Englidi colonies 
 is perhaps the only one which, fmce the world 
 began, could give perfed fecurity to the inha- 
 bitants of fo very diflant a province. The ad- 
 miniftration of the French colonies, however, 
 has always been conducted with more gentle- 
 nefs and moderation than that of the Spaniih and 
 Portuguefe. This fuperiority of conduft is fuit- 
 able both to the charader of the French nation, 
 and to what forms the character of every nation, 
 ^he nature of their government, which, though 
 
 arbitrary
 
 394 THE NATURE AND CAUSES OF 
 
 BOOK arbitrary and violent in comparifon with that of 
 IV. Great Britain, is legal and free in comparifon with 
 ' thofe of Spain and Portugal. 
 
 It is in the progrefs of the North American 
 colonies, however, that the fuperiority of the 
 Englijfh policy chiefly appears. The progrefs of 
 the fugar colonies of France has been at leafl 
 equal, perhaps fuperior, to that of the greater 
 part of thofe of England ; and yet the fugar 
 colonies of England enjoy a free government 
 nearly of the fame kind with that which takes 
 pbce in her colonies of North America, But 
 the fugar colonies of France are not difcouraged, 
 like thofe of England, from refining their own 
 fugar ; and, what is of flill greater importance, the 
 genius of their government naturally introduces a 
 better managem.ent of their negro Haves. 
 
 In all European colonies the culture of the 
 fugar-cane is carried on by negro flaves. The 
 conftitution of thofe who have been bora in the 
 temperate climate of Europe, could not, it is fup- 
 pofed, fupport the labour of digging the ground 
 under the burning fun of the Weft Indies ; and 
 the culture of the fugar-cane, as it is managed 
 at prefent, is all hand labour, though, in the 
 opinion of many, the drill plough might be in- 
 troduced into it with great advantage. But, as 
 the profit and fuccefs of the cultivation which 
 is carried on by means of cattle, depend very 
 much upon the good management of thofe cat- 
 tle ; fo the profit and fuccefs of that which is 
 carried on by flaves, muft depend equally upon 
 the good management of thofe flaves j and in the 
 
 4 good
 
 THE WEALTH OF NATIONS. 395 
 
 good management of their ilaves the French chap. 
 planters, I think it is generally allowed, are fu- vii. 
 perior to the Englifti. The law, fo far as it 
 gives fome weak proteftion to the flave againft 
 the violence of his mafter, is likely to be better 
 executed in a colony where the government is 
 in a great meafure arbitrary, than in one where 
 it is altogether free. In every country where the 
 unfortunate law of llavery is edablifhed, the 
 magiftrate, when he proteds the flave, inter- 
 meddles in fome meafure in the management of 
 the private property of the mafter ; and, in a 
 free country, where the mafter is perhaps either 
 a member of the colony aflembly, or an eledor 
 of fuch a member, he dare not do this but with 
 the greateft caution and circumfpeftion. The 
 refpe(5l which he is obliged to pay to the mafter, 
 rendets it more difficult for him to protedt the 
 flave. But in a country where the government 
 is in a great meafure arbitrary, where it is ufual 
 for the magiftrate to intermeddle even in the 
 management of the private property of indi- 
 viduals, and to fend them, perhaps, a lettre de 
 cachet if they do not manage it according to his 
 liking, it is much eafier for him to give fome 
 protection to the flave ; and common humanity 
 naturally difpofcs him to do fo. The protedion 
 of the magiftrate renders the flave lefs con- 
 temptible in the eyes of his mafter, who is 
 thereby induced to confider him with more re- 
 gard, and to treat him with more gentlenefs. 
 Qentle iifage renders the flave not only more 
 faithful, but more intelligent, and therefore, 
 
 upon
 
 396 THE NATURE AND CAUSES OF 
 
 BOOK upon a double account, more ufeful. He ap- 
 IV. proaches more to the condition of a free fervant, 
 and may poflfefs fome degree of integrity and 
 attachment to his mafter's intereft, virtues which 
 frequently belong to free fervants, but which never 
 can belong to a flave, who is treated as flaves 
 commonly are in countries where the m.alter is 
 perfedly free and fecure. 
 
 That the condition of a flave Is better under 
 an arbitrary than under a free government, is, I 
 believe, fupported by the hiftory of all ages and 
 nations. In the Roman hiftory, the firfl time 
 we read of the magiftrate interpofmg to proted: 
 the flave from the violence of his mafter, is 
 under the emperors. When Vedius Pollio, in the 
 prefence of Augufl:us, ordered one of his flaves, 
 who had committed a flight fault, to be cut into 
 pieces, and thrown into his fith-rpond in order to 
 feed his fiflies, the emperor commanded him, with 
 indignation, to emancipate immediately, not only 
 that flave, but all the others that belonged to him. 
 Under the republic no magiftrate could have had 
 authority enough to protedl the flave, much lefs 
 to punifli the mafl:er. 
 
 The fl:ock, it is to be obferved, which has 
 improved the fugar colonies of France, par* 
 ticularly the great colony of St. Domingo, has 
 been raifed almofl; entirely from the gradual im- 
 provement and cultivation of thofe colonies. It 
 has been almofl altogether the produce of the 
 foil and of the induftry of the colonifl:s, or, what 
 comes to the fame thing, the price of that pro- 
 duce gradually accumulated by good manage^ 
 
 15 ment.
 
 THE WEALTH OF NATIONS. 397 
 
 ment, and employed in ralfmg a ftill greater chap, 
 produce. But the ftock which has improved and vii. 
 cultivated the fugar colonies of England has, a 
 great part of it, been fent out from England, 
 and has by no means been altogether the pro- 
 duce of the foil and induftry of the colonifls. 
 The profperity of the Englifh fugar colonies has 
 been, in a great meafure, owing to the great 
 riches of England, of which a part has over- 
 flowed, if one may fay fo, upon thofe colonies. 
 But the profperity of the fugar colonies of France 
 has been entirely owing to the good conduct of 
 the colonifls, which mull therefore have had 
 fome fuperiority over that of the Englifii ; and 
 this fuperiority has been remarked in nothing 
 fo much as in the good management of their 
 flaves. 
 
 Such have been the general outlines of the 
 policy of the different European nations with re- 
 gard to their colonies. 
 
 The policy of Europe, therefore, has very 
 little to boafl: of, either in the original eflablifh- 
 ment, or, fo far as concerns their internal govern- 
 ment, in the fubfequent profperity of the colonies 
 of America. 
 
 Folly and injuflice feem to have been the 
 principles which prefided over and directed the 
 firll projc(5l; of edablifhing thofe colonies ; the 
 folly of hunting after gold and filver mines, and 
 the injuflice of coveting the pofTefTion of a coun- 
 try whofe harmlefs natives, far from havino- ever 
 injured the people of Europe, had received the 
 
 firft
 
 398 THE NATURE AND CAUSES OF 
 
 BOOK firfl: adventurers with every mark of kindnefs and 
 IV. hofpitallty. 
 
 The adventurers, indeed, who formed fome 
 of the later eftablifliments, joined, to the chi- 
 merical projecl of finding gold and filver mines, 
 other motives more reafonablS and more laudable ; 
 but even thefe motives do very Httle honour to the 
 policy of Europe. 
 
 The Englifii puritans, retrained at home, fled 
 for freedom to America, and eftablilhed there 
 the four governments of New England. The 
 Englifli catholics, treated with much greater in- 
 juftice, eftablilhed that of Maryland ; the Qua- 
 kers, that of Pennfylvania. The Portuguefe 
 Jews, perfecuted by the inquifition, ftript of their 
 fortunes, and banifhed to Brazil, introduced, by 
 their example, fome fort of order and induftry 
 among the tranfported felons and ftrumpets, by 
 whom that colony was oHginally peopled, and 
 taught them the culture of the fugar-cane. Upon 
 ail thefe different occafions it was, not the wif- 
 dom and policy, but the diforder and injuftice of 
 the European governments, which peopled and 
 cultivated America. 
 
 In effeauating fome of the mofl; important of 
 thefe eftabli(hments, the different governments 
 of Europe had as little merit as In projeding 
 them. The conqueft of Mexico was the projed^ 
 not of the council of Spain, but of a governor 
 of Cuba ; and it was effeftuated by the fpirit of 
 the bold adventurer to whom it was entrufted, 
 in fpite of every thing which that governor, who 
 
 fooli
 
 THE WEALTH OF NATIONS. 39, 
 
 foon repented of having trufted fuch a perfon, chap* 
 could do to thwart it. The conquerors of Chili vn. 
 and Peru, and of almoft all the other Spanifh 
 fettlements upon the continent of America, car- 
 ried out with them no other publick encourage- 
 ment, but a general permiffion to make fettle- 
 ments and conquefts in the name of the king of 
 Spain. Thofe adventurers were all at the private 
 lifk and expence of the advenmrers. The go- 
 vernment of Spain contributed fcarce any thing 
 to any of them. That of England contributed 
 as little towards effectuating the eflabliihment of 
 fome of its mod important colonies in North 
 America. 
 
 When thofe eflablifiiments were effeduated, 
 and had become fo confiderable as to attract the 
 attention of the mother country, the firlt regu- 
 lations which Ihe made with regard to them. had 
 always in view to fecure to herfelf the monopoly 
 of their commerce ; to confine their market, and 
 to enlarge her own at their expence, and, con- 
 fequently, rather to damp and difcourage, than 
 to quicken and forward the courfe of their pro- 
 fperity. In the different ways in which this mo- 
 nopoly has been exercifed, confifls one of the 
 mofl effential differences in die policy of the dif- 
 ferent European nations with regard to their co- 
 lonies. The befl of them all, that of England, is 
 only fome what lefs illiberal and opprefTive than 
 that of any of the reft. 
 
 In what way, therefore, has the policy of 
 Europe contributed either to the firft eftablifh- 
 ment, or to the prefent grandeur of the colom'es 
 
 of
 
 400 THE NATURE AND CAUSES OF 
 
 BOOK o^ America ? In one way, and in one way only, 
 IV. it has contributed a good deal. Magna virum 
 mater I It bred and formed the men who were 
 capable of atchieving fuch great a6lions, and of 
 laying the foundation of fo great an empire ; and 
 there is no other quarter of the world of which 
 the pohcy is capable of forming, or has ever 
 adually and in fa6: formed fuch men. The co- 
 lonies owe to the policy of Europe the education 
 and great views of their a6live and enterprifmg 
 founders ; and fome of the greateft and moft im- 
 portant of them, fo far as concerns their internal 
 government, owe to it fcarce any thing elfe. 
 
 Part Third. 
 
 Of the Advantages which Europe has derived from 
 the Difcovery of America^ and from that of a 
 Faffage to the Eafi Indies by the Cape of Good 
 Hope. 
 
 S 
 
 ucH are the advantages which the colonies 
 of America have derived from the policy of 
 Europe. 
 
 What are thofe which Europe has derived 
 from the difcovery and colonization of America ? 
 
 TposE advantages may be divided, firft, into 
 the general advantages which Europe, confidered 
 as one great country, has derived from thofe 
 great events ; and, fecondly, into the particular 
 advantages which each colonizing country has 
 derived from the colonies which particularly be- 
 long
 
 THE WEALTH OF NATIONS. 40» 
 
 long to it, in confequence of the authority or chap. 
 dominion which it exercifes over them. vii. 
 
 The general advantages which Europe, con- ^-''^''"■~-'. 
 fidered as one great country, has derived from 
 the difcovery and colonization of America, con- 
 fift, firft, in the increafe of its enjoyments ; and 
 fecondly, in the augmentation of its induftry. 
 
 The furplus produce of America, imported. 
 into Europe, furnifhes the inhabitants of this 
 great continent with a variety of commodities 
 which they could not othervvife have polTefled, 
 fome for convcniency and ufe, fome for pleafure, 
 and fome for ornament, and thereby contributes 
 to increafe their enjoyments. 
 
 The difcovery and colonization of America, 
 it will readily be allowed, have contributed to 
 augment the induftry, firft, of all the countries 
 which trade to it diredly ; fuch as Spain, Por- 
 tugal, France, and England j and fecondly, of 
 all thofe which, without trading to it diredly, 
 fend, through the medium of other countries, 
 goods to it of their own produce ; fuch as Auftrian 
 Flanders, and fome provinces of Germany, which, 
 through the medium of the countries before men- 
 tioned, fend to it a confiderable quantity of 
 linen and other goods. All fuch countries 
 have evidently gained a more extenlive market 
 for their furplus produce, and mufl confe- 
 quently have been encouraged to increafe its 
 quantity. 
 
 But, that thofe great events fhould likewife 
 
 have contributed to encourage the induftry of 
 
 countries, fuch as Hungary and Poland, which 
 
 VOL. 11, D o may
 
 402 THE NATURE AND CAUSES OF 
 
 BOOK may never, perhaps, have fent a fmgle Gommo* 
 IV. dity of their own produce to America, is not, 
 perhaps, ahogether fo evident. That thofe events 
 have done fo, however, cannot be doubted. 
 Some part of the produce of America is con- 
 fumed in Hungary and Poland, and there is 
 fome demand there for the fugar, chocolate, and 
 tobacco, of that new quarter of the world. But 
 thofe commodities mull be purchafed with fome- 
 thing which is either the produce of the induftry 
 of Hungary and Poland, or with fomething 
 which had been purchafed with fome part of that 
 produce. Thofe commodities of America are 
 new values, new equivalents, introduced into 
 Hungary and Poland to be exchanged there for 
 the furplus produce of thofe countries. By being 
 carried thither they create a new and more ex- 
 tenfive market for that furplus produce. They 
 raife its value, and thereby contribute to encou- 
 rage its increafe. Though no part of it may 
 ever be carried to America, it may be carried to 
 other countries which purchafe it with a part of 
 their fhare of the furplus produce of America ; 
 and it may fmd a market by means of the circula- 
 tion of that trade which was originally put into mo- 
 tion by the furplus produce of America. 
 
 Those great events may even have contribu- 
 ted to increafe the enjoyments, and to augment 
 the induflry of countries which, not only never 
 fent any commodities to America, but never 
 received any from it. Even fuch countries may 
 have received a greater abundance of other 
 commodities fron^i countries of which the furplus 
 
 produce
 
 THE WEALTH OF NATIONS. 403 
 
 produce had been augmented by means of the chap, 
 American trade. This greater abundance, as it vii. 
 mufl: necelfarily have increafed their enjoyments, 
 fo it mud likewife have augmented their induf- 
 try. A greater number of new equivalents of 
 fome kind or other mufl have been prefented to 
 them to be exchanged for the furplus produce of 
 that induftry. A more extenfive market muft 
 have been created for that furplus produce, fo as 
 to raife its value, and thereby encourage its in- 
 creafe. The mafs of commodities annually 
 thrown into the great circle of European com- 
 merce, and by its various revolutions annually 
 diftributed amon^T all the different nations com- 
 
 o 
 
 prehended within it, mufl have been augmented 
 by the whole furplus produce of America. A 
 greater fliare of this greater mafs, therefore, is 
 likely to have fallen to each of thofe nations, to 
 have increafed their enjoyments, and augmented 
 their induflry. 
 
 The exclufive trade of the mother countries 
 tends to diminifli, or, at leafl too keep down 
 below what they would otherwife rife to, both the 
 enjoyments and induftry of all thofe nations in 
 general, and of the American colonies in parti- 
 cular. It is a dead weight upon the action of 
 one of the great fprlngs which puts into motion 
 a great part of the bulinefs of mankind. By ren- 
 dering the colony produce dearer in all other 
 countries, it lelTens its confumption, and thereby 
 cramps the induflry of the. colonies, and both the 
 enjoyments and the induflry of all other coun- 
 tries, which both enjoy lefs when they pay more 
 
 p D 2 for
 
 404 
 
 THE NATURE AND CAUSES OF 
 
 BOOK for what they enjoy, and produce lefs when they 
 IV. get lefs for what they produce. By rendering 
 
 '"'■^■'"*~' the produce of all other countries dearer in the 
 colonies, it cramps, in the fame manner, the in- 
 duflry of all other countries, and both the enjo)''- 
 ments and the indullry of the colonies. It is a 
 clog which, for the fuppofed benefit of fome par- 
 ticular countries, embarrafles the pleafures, and 
 encumbers the induftry of all other countries ; 
 but of the colonies more than of any other. It 
 not only excludes, as much as poffible, all other 
 countries from one particular market ; but it 
 confines, as much as pofTible, the colonies to one 
 particular market: and the difierence is very 
 great betweeen ' being excluded from one particu- 
 lar market, when all others are open, and being 
 confined to one particular market, when alt 
 others are fhut up. The furplus produce of the 
 colonies, however, is the original fource of all 
 that increafe of enjoyments and induflry which 
 Europe derives from the difcovery and coloniza- 
 tion of America ; and the exclufive trade of the 
 mother countries tends to render this fource 
 much lefs abundant than it otherwife would be. 
 
 . The particular advantages which each colo- 
 .nizing country derives from the colonies which 
 particularly belong to it, are of tv/o different 
 kinds; firft, thofe common advantages which 
 every empire derives from the provinces fubjed 
 to its dominion; and, fecondly, thofe peculiar 
 advantages whch are fuppofed to refult from 
 provinces of fo very peculiar a nature as the 
 European colonies of America, 
 
 The
 
 THE WEALTH OF NATIONS. 405 
 
 The common advantages which every empire chap. 
 derives from the provinces fubje^t to its dominion, vii. 
 confift, firft, in the military force which they "— ^•''■*-' 
 furnifh for its defence ; and, fecondly, in the ' 
 revenue which they furniOi for the fupport of 
 its civil government. The Roman colonies fur- 
 niflied occafionally both the one and the other. 
 The Greek colonies, fometimes, furnifhed a mi- 
 litary force ; but feldom any revenue. They 
 feldom acknowledged themfelves fubje6t to the 
 dominion of the mother city. They were gene- 
 rally her allies in war, but very feldom her fub- 
 je<^s in peace. 
 
 The European colonies of America have never 
 yet furnifhed any miHtary force for the defence 
 of the mother country. The military force has 
 never yet been fuffident for their own defence; 
 and in the difxerent wars in which the mother 
 countries have been engaged, the defence of 
 their colonies has generally occafioned a very 
 confiderable diftraclion of the military force of 
 thofe countries. In this refpecl, therefore, all 
 the European colonies have, without exception, 
 been a caufe rather of weaknefs than of flrength 
 to their refpeftive mother countries. 
 
 The colonies of Spain and Portugal only have 
 contributed any revenue towards the defence of 
 the mother country, or the fupport of her civil 
 government. The taxes which have been levied 
 upon thofe of other European nations, upon 
 thofe of England in particular, have feldom been 
 equal to the expence laid out upon them in time 
 of peace, and never fufficient to defray that 
 
 D D 3 which
 
 40 6 THE NATURE AND CAUSES OF 
 
 BOOK which they occafioned in time of war. Such 
 IV. colonies, therefore, have been a fource of expence 
 and not of revenue to their refpedive mother 
 countries. 
 
 The advantages of fuch colonies to their re- 
 fpeOive mother countries, confift; altogether in 
 thofe peculiar advantages which are fuppofed to 
 refult from provinces of fo very peculiar a nature 
 as the European colonies of America ; and the 
 es;clufive trade, it is acknowledged, is the fole 
 fource of all thofe peculiar advantages. 
 
 In confequence of this exclufive trade, all that 
 part of the furplus produce of the Englifh colo- 
 nies, for example, which confifts in what are 
 called enumerated commodities, can be fent to 
 no other country but England. Other countries 
 niuft afterwards buy it of her. It muft be 
 cheaper therefore in England than it can be in 
 any other country, and mufl contribute more to 
 increafe the enjoyments of England than thofe 
 of any other country. It muft likewife contribute 
 more to encourage her induftry. For all thofe 
 parts of her own furplus produce which Eng- 
 land exchanges for thofe enumerated commodi- 
 ties, file muft get^ a better price than any other 
 countries can get for the like parts of theirs, 
 when they exchange them for the fame com- 
 "rabdities. The manufadures of England, for 
 example, will purchafe a greater quantity of 
 the fugar and tobacco of her own colonies, than 
 the like manufadures of other countries can pur- 
 chafe of that fugar and tobacco. So far, there- 
 fore, as the manufadures of England and thofe 
 
 of
 
 THE WEALTH OF NATIONS. -407 
 
 of other countries are both to be exchanged for c h a p, 
 the fugar and tobacco of the Englifli colonies, vii. 
 this fuperiority of price gives an encouragement ^-^^"'^ 
 to the former, beyond what the latter can m 
 thefe circumflances enjoy. The exclufive trade 
 of the colonies, therefore, as it; dimlnifhes, or, at 
 leaft, keeps down below what they would other- 
 wife rife to, both the enjoyments and the induitry 
 of the countries which do not pofTefs it; fo it gives 
 an evident advantage to the countries which do 
 pollefs it over thofe other countries. 
 
 This advantage, however, will, perhaps, be 
 found to be rather what may be called a rela- 
 tive than an abfolute advantage ; and to give a 
 fuperiority to the country which enjoys it, rather 
 by depreffing the induitry and produce of other 
 countries, than by raifmg thofe of that particular 
 country above what they would naturally rife to in 
 the cafe of a free trade. 
 
 Ti^E tobacco of Maryland and Virginia, for 
 example, by means of the monopoly which Eng- 
 land enjoys of it, certainly comes cheaper to 
 England than It can do to France, to whom 
 England commonly fells a confiderable part of 
 if. But had France and all other European 
 countries, been, at all times, allowed a free trade 
 to Maryland and Virginia, the tobacco of thofe 
 colonies might, by this time, have come cheaper 
 "than It actually does, not only to all thofe other 
 countries, but likewife to England* 'I'he pro- 
 duce of tobacco, in confequence of a market fo 
 much more extenfive than any which it has hi- 
 therto enjoyed, might, and probably would, by 
 
 D D 4 this
 
 408 THE NATURE AND CAUSES OF 
 
 JB o K this time, have been fo much increafed as to re- 
 * duce the profits of a tobacco plantation to their 
 natural level with thofe of a corn plantation, 
 v/hich, it is fuppofed, they are flill fomewhat 
 above. The price of tobacco might, and pro- 
 bably would, by this time, have fallen fomewhat 
 lower than it is at prefent. An equal quantity of 
 the commodities either of England, or of thofe 
 other countries, might have purchafed in Mary- 
 land and Virginia a greater quantity of tobacco 
 ihan it can do at prefent, and, confequently, 
 have been fold there for fo much a better price. 
 So far as that weed, therefore, can, by its cheap- 
 nefs and abundance, increafe the enjoyments or 
 Siu<^ment the induftry either of England or of any 
 other country, it would probably, in the cafe of 
 a free trade, have produced both thefe effefts in 
 Jbmewhat a greater degree than it can do at pre- 
 sent. England, indeed, would not in this cafe 
 Lave had any advantage over other countries. 
 She might have bought the tobacco of her colo- 
 nies fomewhat cheaper, and, confequently, have 
 jbld fome of her own commodities fomewhat 
 dearer than ihe actually does. But fne could 
 neither have bought the one cheaper nor fold the 
 other dearer than any other country might have 
 done. She might, perhaps, have gained an ab- 
 folute, but ihe would certainly have loft a relative 
 advantage. 
 
 In order, however, to obtain this relative ad- 
 vantage in the colony trade, in order to execute 
 the invidious and malignant projeft of excluding 
 as much as poffible other nations from any fhare 
 
 ia
 
 THE WEALTH OF NATIONS. 40^ 
 
 in It, England, there are very probable reafons chap. 
 for believing, has not only facrificed a part of vii. 
 the abfolute advantage which flie, as well as ^— ^'''"*-' 
 every other nation, might have derived from that 
 trade, but has fubjected herfelf both to an abfo- 
 lute and to a relative difadvantage in almofl every 
 other branch of trade. 
 
 When, by the a£l of navigation, England 
 affumed to herfelf the monopoly of the colony 
 trade, the foreign capitals which had before been 
 employed In It were neceflarily withdrawn from 
 it. The Englifh capital, which had before car- 
 ried on but a part of it, was now to carry on the 
 whole. The capitajl which had before fupplied 
 the colonies with but a part of the goods which 
 they wanted from Europe, was now all that was 
 employed to fupply them with the whole. But 
 it could not fupply them with the whole, and the 
 goods with which it did fupply them were necef- 
 farlly fold very dear. The capital which had 
 before bought but a part of the furplus 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 neceflarily bought very 
 cheap. But in an employment of capital in 
 which the merchant fold very dear and bought 
 very cheap, the profit mufl have been very great, 
 and much above the ordinary level of profit in 
 other branches of trade. This fuperiority 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 revulfioa of capital, as it muft have gra- 
 
 14 dually
 
 410 THE NATURE AND CAUSES OF 
 
 BOOK dually increafed the competition of capitals In the 
 Jv. colony trade, fo it mud have gradually diminiflied 
 that competition in all thofe other branches of 
 trade ; as it muit have gradually lowered the 
 profits of the one, fo it mult have gradually raifed 
 thofe of the other, till the profits of all came to 
 a new level, different from and fomewhat higher 
 than that at which they had been before. 
 
 This double effe£l, of drawing capital from 
 all other trades, and of raifmg the rate of profit 
 fomewhat higher than it otherwife would have 
 been in ail trades, was not only produced by this 
 monopoly upon its firft eflablithment, but has con- 
 tinued to be produced by i: f /er fince. 
 
 First, this monopoly has been continually 
 drawing capital from all other trades to be em- 
 ployed in that of the colonies. 
 
 Though the wealth of Great Britain has In- 
 creafed very much fince the eftablifhment of the 
 ait of navigation, it certainly has not increafed 
 in the fame proportion as that of the colonies. 
 Bat the foreign trade of every country naturally 
 increafes in proportion to its wealth, its furplus 
 produce in proportion to its whole produce ; and 
 Great Britain having engrofled to herfelf almoft 
 the whole of what may be called the foreign 
 trade of the colonies, and her capital not having 
 increafed in the lame proportion as the extent of 
 that trade, flie could not carry It on without 
 continually withdrawing from other branches of 
 trade fome part of the capital which had before 
 been employed in them, as well as withholding 
 from them a great deal more which would other- 
 \\nt have ggrjtc to ihcin. Since the eflablilhment 
 
 of
 
 . THE V/EALTH OF NATIONS. 411 
 
 of the acl of navigation, accordingly, the colony c h a f. 
 trade has been continually increaling, while many vii. 
 other branches of foreign trade, particularly of 
 that to other parts of Europe, have been con- 
 tinually decaying.- Our manufaftures for foreign 
 fale, inflead of being fuited, as before the aO: of 
 navigation, to the neighbouring market of Eu- 
 rope, or to the more didant one of the countries 
 which lie round the Mediterranean fea, have, the 
 greater part of them, been accomm.odated to the 
 ftill more dillant one of the colonies, to the 
 market in which they have the monopoly, rather 
 than to that in which they have many competi- 
 tors. The caufes of decay in other branches of 
 foreign trade, which, by Sir Matthew Decker and 
 other writers, have been fought for in the excefs 
 and improper mode of taxation, in the high price 
 of labour, in the increafe of luxury, &c. may 
 all be found in the over-growth of the colony 
 trade. The mercantile capital of Great Britain, 
 though very great, yet not being infinite ; and 
 though greatly increafed fince the ad of naviga- 
 tion, yet not being increafed in the fame propor- 
 tion as the colony trade, that trade could not 
 pollibly be carried on without withdrawing fome 
 part of that capital from other branches of trade, 
 nor confequently without fome decay of thofe 
 other branches. 
 
 England, it mufl be obferved, was a great 
 trading country, her mercantile capital was very 
 great and hkely to become flill greater and 
 greater every day, not only before the act of na- 
 vigation had edabliihed the monopoly of the 
 
 colony
 
 412 THE NATURE AND CAUSES OF 
 
 BOOK colony trade, but before that trade was very con- 
 IV, fiderable. In the Dutch war, during the go- 
 vernment of Cromwel, her navy was fuperior to 
 that of Holland ; and in that which broke out 
 in the beginning of the reign of Charles II. it 
 was at lead equal, perhaps fuperior, to the united 
 navies of France and Holland. Its fuperiority, 
 perhaps, would fcarce appear greater in the pre- 
 fent times ; at lealt if the Dutch navy was to 
 bear the fame proportion to the Dutch com- 
 merce now which it did then. But this great 
 naval pov/er could not, in either of thofe wars, 
 be owing to the acl of navigation. During the 
 lirll of them the plan of that acl had been but 
 jull formed, and though before the breaking out 
 of the fecond it had been fully enafted by legal 
 authority ; yet no part of it could have had time 
 to produce any confiderable eftecl, and leaft of 
 all that part which eftabliflied the exclufive trade 
 to the colonies. Both the colonies and their 
 trade were inconfiderable then in comparifon of 
 what they now are. I'he ifland of Jamaica was 
 an unwholelome defert, little inhabited, and lefs 
 cultivated. New York and New Jerfey were in 
 the poifeffion of the Dutch : the half of Sr. 
 ChriR'opher*s in that of the French. The ifland 
 of Antigua, the two Carolina^, Pennfylvania, 
 Georgia, and Nova Scotia, were not planted. 
 Virginia, Pvlaryland, and New England were 
 planted j and though they were very thriving 
 colonies, yet there was not, perhaps, at that 
 time, either in Europe or America, a fingle perfon 
 who forefaw or even fufpeCted the rapid progrefs 
 
 which
 
 THE WEALTH OF NATIONS. 413 
 
 t\'!iich they have fince made In wealth, popnia- chap. 
 tion, and improvement. The ifland of Barbadoes, vii. 
 in (hort, was the only Britifh colony of any con- '^"^■'"°'*^ 
 fequence of which the condition at that time 
 bore any refemblance to what it is at prefent. 
 The trade of the colonies, of which England, 
 even for fome time after the aft of navigation, 
 enjoyed but a part (for the atl of navigation was 
 not very Ifriftly executed till feveral years after 
 it was enadled), could not „at that time be the 
 caufe of the great trade of England, nor of the 
 great naval power which was fupported by that 
 trade. The trade which at that time fupported 
 that great naval power v/as the trade of Europe, 
 and of the countries which lie round the Medi- 
 terranean fea. But the fiiare which Great Bri- 
 tain at prefent enjoys of that trade could not fup- 
 port any fuch great naval power. Had the 
 growing trade of the colonies been left free to all 
 nations, whatever fhare of it might have fallen 
 to Great Britain, and a very confiderable fhare 
 would probably have fallen to her, mufl have 
 been all an addition to this great trade of which 
 flie was before in pofTeflion. In confequence of 
 the monopoly, the increafe of the colony trade has 
 not fo much occafioned an addition to the trade 
 which Great Britain had before, as a total change 
 in its diredion. 
 
 Secondly, this monopoly has necefiarily con- 
 tributed to keep up the rate of profit in all 
 the different branches of Britifh trade higher than 
 it naturally would have been, had all nations 
 been allowed a free trade to the Britifh colonies. 
 
 Thp.
 
 4H 
 
 THE NATURE AND CAUSES OF 
 
 BOOK The monopoly of the colony trade, as It ne- 
 IV. ceflarily drew towards that trade a greater pro- 
 portion of the capital of Great Britain than what 
 would have gone to it of its own accord ; fo by 
 ihe expuliion of all foreiga ca|:dtals it neceffarily 
 reduced the whole quanti^ t)! capital employed 
 in fhat trade below what it liituraily would have 
 been m the cafe of a free trade. But, by leffen- 
 ing the competition of capitals in that branch of 
 trade, it necefi'arily raifed the rate of profit in 
 that branch. By leffening too the competition 
 of Britifh capitals in all other branches of trade, 
 it neceffarily raifed th-e rate of Britifli profit in 
 all thofe other branches.. Whatever may have 
 been, at any particular period, fince the efla- 
 blifhment of the a£l of navigation, the ilate or 
 extent of the mercantile capital of Great Britain, 
 the monopoly of the colony trade muft, during 
 the continuance of that ftate, have raifed the or- 
 dinary rate of Britifli profit higher than it other- 
 wife would have been both in that and in all the 
 other branches of Britifn trade. If, fince the ef- 
 tablifliment of the ad of navigation, the ordinary 
 rate of Britifli profit has fallen confiderably, as it 
 certainly has, it muft: have fallen fiill lower, had 
 not the monopoly eftabhilied by that aft contri- 
 buted to keep it up. 
 
 But whatever raifes in any country the ordi- 
 nary rate of profit higher than it other wife vvould 
 be, necefi'arily fubjefts that country both to an 
 abfolute and to a relative difad vantage in every 
 branch of trade of which fae has not the mono- 
 poly. 
 
 13 Ir
 
 THE WEALTH OF NATIONS. - 415 
 
 It fubjeOs her to an abfolute difadvantage : 
 becaufe in fuch branches of trade her merchants 
 cannot get this greater profit, without felling 
 dearer than they othervvife would do both the 
 goods of foreign countries which they import 
 kito their own, and the goods of their own coun- 
 try which they export to foreign countries. Their 
 own country mufl both buy dearer and fell dearer ; 
 mufl: both buy lefs and fell lefs ; mud both enjoy 
 lefs and produce lefs, than (he otherwife would do. 
 
 It fabjecls her to a relative difadvantage ; be- 
 caufe in fuch branches of trade it fets other coun- 
 tries which are not fubje6t to the fame abfolute 
 difadvantage, either more above her or lefs below 
 her than they otherwife would be. It enables 
 them both to enjoy more and to produce more in 
 proportion to what fhe enjoys and produces. It 
 lenders their fuperiority greater or their inferi- 
 ority lefs than it otherwife would be. By raifmg 
 the price of her produce above what it otherwife 
 would be, it enables the merchants of other 
 countries to underfell her in foreign markets, and 
 thereby to juflle her out of almofl all thofe branches 
 of trade, of which (he has not the monopoly. 
 
 Our merchants frequently complain of the 
 high wages of Britifh labour as the caufe of their 
 manufactures being undcrfold in foreign markets ; 
 but they are fdent about the high profits of (lock. 
 They complain of the extravagant gain of other 
 people ; but they fay nothing of their own. The 
 high profits of Britifli flock, however, may con- 
 tribute towards raifing the price of Britifli manu- 
 factures in many cafes as much, and in fome per- 
 haps more, than the high wages of Britifli labour. 
 
 It
 
 i4i6 THE NATURE AND CAUSES OF 
 
 U o o K It is in this manner that the capital of Great 
 IV. Britain, one may juftly fay, has partly been 
 ^*'''*"' drawn and partly been driven from the greater 
 part of the different branches of trade of which 
 Ihe has not. the monopoly; from the trade of Eu- 
 rope in particular, and from that of the countries 
 which lie round the Mediterranean fea. 
 
 It has partly been drawn from thofe branches 
 of trade ; by the attraclion of fuperior profit in 
 the colony trade in confequence of the continual 
 increafe of that trade, and of the continual infuf- 
 ficiency 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, efta- 
 blifhed in Great Britain, gives to other countrieSp 
 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 thofe other branches a part of the 
 Britifh capital which would othervvife have been 
 employed in them, fo 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 thofe other branches of 
 trade it has diminifhed the competition of Britifh 
 capitals, and thereby raifed the rate of Britifh 
 profit higher than it otherwife would have been. 
 On the contrary, it has increafed the competi- 
 tion of foreign capitals, and thereby funk the 
 rate of foreign profit lower than it otherwife 
 would have been. Both in the one way and in 
 the other it mud evidently have fubje(^ed Great 
 
 Britain
 
 -THE WEALTH OR NATIONS^ 417 
 
 Britain to a relative difadvantage in all thofe other chap. 
 branches of trade. vii. 
 
 The colony trade, however, it may perhaps be 
 faid, 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 otherwife have 
 gone to ir, has turned that capital into an employ- 
 ment more advantageous to the country than any 
 other which it could have found. 
 
 The mofl: advantageous employment of any 
 capital to the country to which it belongs, is 
 that which maintains there the greateft quantity 
 of produclive labour, and increafes the mofl the 
 annual produce of the land and labour of that 
 country. But the quantity of produ6live labour 
 which any capital employed in the foreign trade 
 of confumption can .maintain, is exa6lly in pro- 
 portion, it has been fhewn in the fecond book, 
 to the frequency of its returns. A capital of a 
 thoufand pounds, for example, employed in a 
 foreign trade of confumption, of which the re- 
 turns are made regularly once in the year, can 
 keep in conflant employment, in the country to 
 which it belongs, a quantity of produdlivc la- 
 bour equal to what a thoufand pounds can 
 maintain there for a year. If the returns are 
 made twice or thrice in the year, it can keep in 
 conftant employment a quantity of produ6live 
 labour equal to what two or three thoufand 
 pounds can maintain there for a year. A foreign 
 trade of confumption carried on with a neigh- 
 bouring, is, upon this account, in general, more 
 
 VOL, iJ. E E advan-.
 
 4i3 THE NATURE AND CAUSES OF 
 
 BOOK advantageous than one carried on with a diflant 
 IV. country ; and for the fame reafon a direft foreign 
 ''"'^■''^'^ trade of confumption, as it has likewife been 
 fhewn in the fecond book, is in general more ad- 
 vantageous than a round-about one. 
 
 But the monopoly of the colony trade, fo far 
 as it has operated upon the employment of the 
 capital of Great Britain, has in all cafes forced 
 fome part of it from a foreign trade of confump- 
 tion carried on with a neighbouring, to one car- 
 ried on with a more diftant country, and in many 
 cafes from a dired foreign trade of confumption 
 to a round-about one. 
 
 First, the monopoly of the colony trade has 
 in all cafes forced fome part of the capital of 
 Great Britain from a foreign trade of confumption 
 carried on with a neighbouring, to one carried on 
 with a more diftant country. 
 
 It has, in all cafes, forced fome part of that 
 capital from the trade with Europe, and with the 
 countries which lie round the Mediterranean feaj 
 to that with the more diftant regions of America, 
 and the Weft Indies, from which the returns are 
 neceffarily lefs frequent, not only on account of 
 the greater diftance, but on account of the pecu- 
 liar circumftances of thofe countries. New cO' 
 lonies, it has already been obferved, are always 
 imderftocked. Their capital is always much 
 lefs than what they could employ with great pro- 
 fit and advantage in the improvement and culti- 
 vation of their land. They have a conftant de- 
 mand, therefore, for more capital than they have 
 of their own ; and, in order to fupply the defi- 
 ciency
 
 THE WEALTH OF NATIONS. 479 
 
 ciency of their own, they endeavour to borrow as chap. 
 much as they can of the mother country, to vii. 
 whom they are, therefore, always in debt. The 
 mod common way in which the colonifts con* 
 traft this debt, is not by borrowing upon bond 
 of the rich people of the mother country, though 
 they fometimes do this too, but by running as 
 much in arrear to their correfpondents, who fup- 
 ply them with goods from Europe, as thofe cor- 
 refpondents will allow them. Their annual re- 
 turns frequently do not amount to more than a 
 third, and fometimes not to fo great a proportion 
 of what they owe. The whole capital, therefore, 
 which their correfpondents advance to rhem is 
 feldom returned to Britain in lefs than three, and 
 fometimes not in lefs than four or five years. But 
 a Britifli capital of a thoufand pounds, for ex- 
 ample, which is returned to Great Britain only 
 once in five years, can keep in conftant employ- 
 ment only one-fifth part of the Britifh induftry 
 which it could maintain if the whole was re- 
 turned once in the year ; and, inftead of the 
 quantity of induftry which a thoufand pounds 
 could maintain for a year, can keep in conftant 
 employment the quantity only which two hun- 
 dred pounds can maintain for a year. The 
 planter, no doubt, by the high price which he 
 pays for the goods from Europe, by the intereft 
 upon the bills which he grants at diflant dates, 
 and by the commifFion upon the renewal of thofe 
 which he grants at near dates, makes up, and 
 probably more than makes up, all the lofs which 
 his correfpondent can fuftain by this delay. But, 
 
 E E 2 though
 
 420 THE NATURE AND CAUSES OF 
 
 BOOK though he may make up the lofs of his corrc- 
 VI. fpondent, he cannot make up that of Great Bri- 
 tain. In a trade of which the returns are very 
 diftant, the profit of the merchant may be as 
 great or greater than in ane in which they are 
 very frequent and near ; but the advantage of the 
 country in which he refides, the quantity of pro- 
 dudive labour conftantly maintained there, the 
 annual produce of the land and labour mud al- 
 ways be much lefs. That the returns of the 
 trade to America, and ftill more thofe of that to 
 the Weft Indies, are, in general, not only more 
 diftant, but more irregular, and more uncertain 
 too, than thofe of the trade to any part of Eu- 
 rope, or even of the countries which lie round 
 the Mediterranean fea, will readily be allowed, 1 
 imagine, by every body who has any experience 
 of thofe different branches of trade. 
 
 Secondly, the monopoly of the colony trade 
 has, in many cafes, forced fome part of the capi^ 
 tal of Great Britain from a direft foreign trade of 
 confumption, into a round-about one. 
 
 Among the enumerated commodities which 
 can be fent to no other marker but. Great Bri« 
 tain, there are feveral of which the quantity 
 exceeds very much the confumption or Great 
 Britain, and of which a parr, therefore, mud be 
 exported to other countries. But this cannot be 
 done without forcing fome part of the capital o-f 
 Great Britain into a rcind-about foreign trade 
 of confumption. Maryland and Virginia, for ex- 
 ample, fend annually to Great Britain upwards 
 of ninety-fix thoufand hoglheads of tobacco, and 
 
 the
 
 THE WEALTH OF NATIONS. 42 1 
 
 the confumption of Great Britain is faid not to c h a p. 
 exceed fourteen thouiand. Upwards of eighty- '^''^r* 
 two thoufand hogfheads, therefore, mull be ex- 
 ported to other countries, to France, to Holland, 
 and to the countries which lie round the Baltic 
 and Mediterranean feas. But, that part of the 
 capital of Great Britain which brings thofe 
 eighty-two thoufand hoglheads to Great Britain, 
 which re-exports them from thence to thofe 
 other countries, and which brings back from 
 thofe other countries to Great Britain either 
 goods or money in return, is employed in a 
 round-about foreign trade of confumption ; and 
 is neceflarly forced into this employment in or- 
 der to difpofe of this great furplus. If we would 
 compute in how many years the whole of this 
 capital is likely to come back to Great Britain, 
 we muft add to the diflance of the American re- 
 turns that of the returns from thofe other coun- 
 tries. If, in the dire£l foreign trade of con- 
 fiimption which we carry on with America, the 
 whole capital employed frequently does not 
 come back in lefs than three or four years ; the 
 whole capital employed in this round-about one 
 is not likely to come back in lefs than four or 
 five. If the one can keep in conftant employ- 
 ment but a third or a fourth part of the domef- 
 tic induftry which could be maintained by a 
 capital returned once in the year, the other can 
 keep in conftant employment but a fourth or a 
 jfifth part of that induftry. At fome of the out- 
 ports a credit is commonly given to thofe fo- 
 reign correfpondents to whom they export their 
 
 E E 3 tobacco.
 
 422 THE NATURE AND CAUSES OF 
 
 tobacco. At the port of London, indeed, it is 
 commonly fold for ready money. The rule is. 
 Weigh and pay. At the port of London, there- 
 fore, the final returns of the whole round-about 
 trade are more diftant than the returns from 
 America by the time only which the goods 
 may lie unfold in the warehoufe ; where, how- 
 ever, they may fometimes lie long enough. But, 
 had not the colonies been confined to the market 
 of Great Britain for the fale of their tobacco, 
 very little more of it would probably have come 
 to us than what was necelTary for the home con- 
 fumption. The goods which Great Britain pur- 
 chafes at prefent for her own confumption with 
 the great f-arplus of tobacco which fhe exports to 
 other countries, fhe would, in this cafe, probably 
 have purchafed with the immediate produce of 
 her own induftry, or with fome part of her own 
 manufaclures. That produce, thofe manufac- 
 tures, inftead of being almoil entirely fuited to 
 one great market, as a prefent, would probably 
 Lave been fitted to a great number of fmaller 
 markets. Inflead of one great round-about fo- 
 reign trade of confumption. Great Britain would 
 probably have carried on a great number of 
 fmall direft foreign trades of the fame kind. On 
 account of the frequency of the returns, a part, 
 and probably but a fmall part, perhaps not 
 above a third or a fourth, of the capital which at 
 prefent carries on this great round-about trade, 
 might have been fufficient to carry on all thofe 
 fmall diredl ones, might have kept in conilant 
 employment an equal quantity of Briiifh induf- 
 try,
 
 THE WEALTH OF NATIONS; 423 
 
 try, and have equally fupported the annual pro- chap, 
 duce of the land and labour of Great Britain. vii. 
 All the purpofes of this trade being, in this man- 
 ner, anfwered by a much fmaller capital, there 
 would have been a large fpare capital to apply to 
 other purpofes ; to Improve the lands, to in- 
 creafe the manufadures, and to extend the com- 
 merce of Great Britain; to come into competi- 
 tion at leafl: with the other Britifh capitals em- 
 ployed in all thofe different ways, to reduce the 
 rate of profit in them all, and thereby to give to 
 Great Britain, in all of them a fuperiority over 
 other countries, flill greater than what fhe at pre- 
 fent enjoys. 
 
 The monopoly of the colony trade too has 
 forced fome part of the capital of Great Britaia 
 from all foreign trade of confumption to a carry- 
 ing trade ; and, confequently, from fupporting 
 more or lefs the induftry of Great Britain, to be 
 employed altogether in fupporting partly that of 
 the colonies, and partly that of fome other coun- 
 tries. 
 
 The goods, for example, which are annually 
 purchafed with the great furplus of ^ eighty-two 
 thoufand hogfheads of tobacco annually re- 
 exported from Great Britain, are not all con- 
 fumed in Great Britain. Part of them, linen 
 from Germany and Holland, for example, is re- 
 turned to the colonies for their particular con- 
 fumption. But, that part of the capital of Great 
 Britain, which buys the tobacco with which this 
 linen is afterwards bought, is neceffarily with- 
 4r*iwn from fupporting the induftry of Great 
 
 ii i^ 4 Britain,
 
 4J4 THE NATURE AND CAUSES OF 
 
 s o o K Britain, to be employed altogether in fupport- 
 IV ing, partly that of the colonies, and partly that 
 of the particular countries who pay for this 
 tobacco with the produce of their own in- 
 duilry. 
 
 The monopoly of the colony trade befides, by 
 forcing towards it a much greater proportion of 
 the capital of Great Britain than what would na- 
 turally have gone to it, feems to have broken 
 altogether that natural balance which would 
 otherwife have taken place among all the differ- 
 ent branches of Britifh induftry. The induftry 
 cf Great Britain, inftead of being accommodated 
 to a great number of fmall markets, has been 
 principally fuited to one great market. Her 
 commerce, inftead of running in a great number 
 of fmall channels, has been taught to run prin- 
 cipally in one great channel. But the whole 
 fyftem of her induftry and commerce has thereby 
 been rendered lefs fecure ; the whole ftate of her 
 body politick lefs healthful, than it otherwife 
 would have been. In her prefent condition. 
 Great Britain refembles one of thofe unwhole- 
 fome bodies in which fome of the vital parts are 
 overgrown, and which, upon that account, are 
 liable to many dangerous diforders fparce inci- 
 dent to thofe in which all the parts are more 
 pr(t3>erly proportioned. A fmall ftop in that 
 great blood-veffel, which has been artificially 
 fwelled beyond its natural dimenfions, and 
 through which an unnatural proportion of the 
 induftry and commerce of the country has been 
 forced to circulate, is very likely to bring on 
 
 14 the
 
 THE WEALTH OF NATIONS. 425 
 
 the moll dangerous diforders upon the whole chap, 
 body politick. The e>:pettation of a rupture vii. 
 with the colonies, accordingly, ha-s firuck the 
 people of Great Britain with more terror than 
 they ever felt for a Spanlfh armada, or a French 
 invafion. It was this terror, whether well or ill 
 grounded, which rendered the repeal of the 
 ftamp act, among the merchants at lead, a po- 
 pular meafure. In the total exciufion from the 
 colony market, was it to lad only for a few 
 years, the greater part of our merchants ufed to 
 fancy that they forefaw an entire flop to their 
 trade ; the greater part of our mafter manu- 
 fafturers, the entire ruin of their bufinefs ; and 
 the greater part of our workmen, an end of their 
 employment. A rupture with any of our neigh- 
 bours upon the continent, though likely too to 
 occafion fome flop or interruption in the em- 
 ployments of fome of all thefe dilFerent orders of 
 people, is forefeen, however, without any fuch 
 general emotion. The blood of which the cir- 
 culation is flopt in fome of the fmaller vefTels, 
 eafily difgorges itfelf into the greater, without 
 occalioning any dangerous diforder ; but, when 
 it is flopt in any of the greater vefTels, convul- 
 fions, apoplexy, or death, are the immediate and 
 unavoidable confequences. If but one of thofe 
 overgrown manufactures, which by means either 
 of bounties or of the monopoly of the home and 
 colony markets, have been artificially raifed up 
 to an unnatural height, finds fome fmall flop or 
 interruption in its employment, it frequently oc- 
 cafions a mutiny and diforder alarming to go- 
 vernment,
 
 426 THE NATURE AND CAUSES OF 
 
 BOOK vernment, and embarraffing even to the delibe- 
 iv. rations of the legiflature. How great, therefore, 
 would be the diforder and confufion, it was 
 thought, v/hich muft necelTarily be occafioned 
 by a fudden and entire (top in the employment of 
 fo great a proportion of our principal manufac- 
 turers ? 
 
 Some moderate and gradual relaxation of the 
 laws which give to Great Britain the exclufive 
 trade to the colonies, till it is rendered in a great 
 meafure free, feeras 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 fome part of her capital from 
 this overgrown employment, and to turn it, 
 though vj'ith lefs profit, towards other employ- 
 ments ; and which, by gradually diminilliing 
 one branch of her induflry and gradually increaf- 
 ing all the reft, can by degrees reftore all the 
 different branches of it to that natural, healthful, 
 and proper proportion which perfe6t hberty ne- 
 ceflarily eftabliilies, and which perfeft hberty can 
 alone preferve. To open the colony trade all at 
 once to all nations, might not only occafion fome 
 tranfitory inconveniency, but a great permanent 
 lofs to the greater part of thofe whofe induftry 
 or capital is at prefent engaged in it. The fud- 
 den lofs of the employment even of the fhips 
 which import the eighty- two thoufand hogf- 
 heads of tobacco, which are over and above the 
 confumption of Great Britain, might alone be 
 felt very fenfibly. Such are the unfortunate ef- 
 fefts of all the regulations of the mercantile 
 
 fyftem I
 
 THE WEALTH QF NATIONS. 427 
 
 fydem ! They not only Introduce very danger- chap, 
 ous diforders into the (late of the body politic, vii. 
 but diforders which it is often difficult to re- 
 medy, without occafioning, for a time at leaft, 
 ftill greater diforders. In what manner, there- 
 fore, the colony trade ought gradually to be 
 opened ; what are the reftraints which ought firft, 
 and what are thofe which ought lail to be taken 
 away ; or in what manner the natural fyfteni of 
 perfeft liberty and juflice ought gradually to be 
 reftored, we mufl leave to the wifdom of future 
 ilatefmen and legiflators to determine. 
 
 Five different events, unforefeen and unthought 
 of, have very fortunately concurred to hinder 
 Great Britain from feeling, fo fenfibly as it was 
 generally expelled (he would, the total exclu- 
 fion which has now taken place for more than 
 a year (from the firft of December 1774) from 
 a very important branch of the colony trade, 
 that of the twelve affociated provinces of North 
 America. Firft, thofe colonies, in preparing 
 themfelves for their non-importation agree- 
 ment, drained Great Britain completely of all 
 the commodities which were fit for their mar- 
 ket : fecondly, the extraordinary demand of the 
 Spanifti Flota has, this year, drained Germany 
 and the North of many commodities, linen in 
 particular, which ufed to come into compe- 
 tition, even in the Britifti market, with the ma- 
 nufaftures of Great Britain ; thirdly, the peace 
 between Ruflia and Turkey has occafioned an 
 extraordinary demand from the Turkey market, 
 which during the diflrefs of the country, and 
 
 while
 
 428 THE NATURE AND CAUSES OF 
 
 BOOK while a Ruffiau fleet was cruizing in the Archi- 
 -V. peiago, had been very poorly lupplied : fourthly, 
 the demand of the North of Europe for the manu- 
 fadures of Great Britain has been increafmg 
 from year to year for fome time paft : and, 
 fifthly, the late partition and confequenu'al pa- 
 cification of Poland, by opening the market of 
 that great country, have this year added an ex- 
 traordinary demand from thence to the increafing 
 demand of the North. Thefe events are ail, ex- 
 cept the fourth, in their nature tranfitory and 
 accidental, and the exclufion from fo important 
 a branch of the colony trade, if unfortunately it 
 ihould continue much longer, may flill occafion 
 fome degree of diftrefs. This dhirefs, however, 
 as it will come on gradually, will be felt much 
 lefs feverely than if it had come on all at once ; 
 and, in the mean time, the induflry and capital 
 of the country may find a new employment and 
 direclion, fo as to prevent this diflrefs from ever 
 tifing to any confiderable height. 
 
 The monopoly of the colony trade, therefore, 
 fo far as it has turned towards that trade a greater 
 proportion of the capital of Great Britain than 
 what would otherwife have gone to it, has in all 
 cafes turned it, from a foreign trade of con- 
 fumption with a neighbouring, into one with a 
 more diiiant country ; in many cafes, from a 
 dired: foreign trade of confumption into a 
 round-about one ; and in fome cafes, from ail 
 foreign trade of confumption, into a carrying 
 trade. It has in all cafes, therefore, turned if, 
 from a direflion in which it would have main- 
 tained
 
 THE WEALTH OF NATIONS. 4^9 
 
 tatnei a greater quantity of produ6live labour, chap. 
 into one in which it can maintain a much fmaller ^^^' 
 quantity. By fuiting, belides, to one particular 
 market only, fo great a part of the induflry and 
 commerce of Great Britain, it has rendered the 
 whole ftate of that induflry and commerce more 
 precarious and leis fecure, than if their produce 
 irad been accommodated to a greater variety of 
 markets. 
 
 We mure carefully diftlnguiOi between the 
 effeds of the colony trade and thofe of the mono- 
 poly of that trade. The former are always and 
 neceifarily beneficial ; the latter always and ne- 
 ceflarily hurtful. But the former are fo bene- 
 ficial, that the colony trade, though fubjed to a 
 monopoly, and notwithftanding the hurtful effeds 
 of that monopoly, is flill upon the whole bene- 
 ficial, and greatly beneficial, though a good deal 
 lefs fo than it otherwife would be. 
 
 The etfed of the colony trade in its natural 
 and free (late, is to open a great though diftant 
 market for fuch parts of the produce of Britifli 
 induitry as may exceed the demand of the markets 
 nearer home, of thofe of Europe, and of the 
 countries which lie round the Mediterranean fea. 
 In its natural and free fiate, the colony trade, 
 without drawing from thofe markets any' part of 
 the produce which had ever been fent to them, 
 encourages Great Britain to increafe the furplus 
 continually, by continually prefenting new equi- 
 valents to be exchanged for it. In its natural 
 and free flate the colony trade tends to increafe 
 the quantity of productive labour in Great 
 
 Britain,
 
 433 THE NATURE AND CAUSES OF 
 
 BOOK Britain, but without altering In any refpe£l the 
 IV. direftion of that which had been employed there 
 before. In the natural and free ftate of the 
 colony trade, the competition of all other nations 
 would hinder the rate of profit from rifing 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 fay fo, a new produce 
 for its own fupply ; and that new produce would 
 conflitute a new capital for carrying on the new 
 employment, which in the fame 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 raifmg 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 
 ihare of the colony trade beyond what it other- 
 wife would be, is the avowed purpofe of the 
 monopoly. If our (hare of that trade were to 
 be no greater with, than it would have been 
 without the monopoly, there could have been 
 no reafon for eftablifhing the monopoly. But 
 whatever forces into a branch of trade of which 
 the returns are flower and more diftant than thofc 
 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, 
 ftecefiarily renders the whole quantity of pro- 
 duftive labour annually maintained there, the 
 if^'hole annual produce of the land and labour of 
 
 1 3 that
 
 THE WEALTH OF NATIONS, 431 
 
 that country, lefs than they otherwife would be. c h a p. 
 It keeps down the revenue of the inhabitants of vii. 
 that country, below what it would naturally rife 
 to, and thereby diminiflies their power of ac- 
 cumulation. It not only hinders, at all times, 
 their capital from maintaining fo great a quan- 
 tity of produ6live labour as it would otherwife 
 maintain, but it hinders it from increafmg fo 
 fall as it would otherwife increafe, and confe- 
 quently from maintaining a flill greater quantity 
 of productive labour. 
 
 The natural good eiFe6ls of the colony trade, 
 however, more than counterbalance to Great 
 Britain the bad efFcfls of the monopoly, fo that, 
 monopoly and altogether, that trade, even as it 
 is carried on at prefent, 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 loft by the monopoly. 
 The new produce and the new capital which has 
 been created, if one may fay fo, by the colony 
 trade, maintain in Great Britain a greater quan- 
 tity of produftive labour than what can have 
 been thrown out of employment by the revulfion 
 of capital from other trades of which the returns 
 are more frequent. If the colony trade, however, 
 even as it is carried on at prefent, is advan- 
 tageous to Great Britain, it is not by means of the 
 monopoly, but in fpite of the monopoly. 
 
 It is rather for the manufaftured than for the 
 rude produce of Europe, that the colony trade 
 
 opens
 
 j2 THE NATURE AND CAUSES OF 
 
 BOOK ©pens a new market. Agriculture is the proper 
 IV. bufmefs of all new colonies j a bufinefs which 
 
 >^- ' the cheapnefs of land renders more advantageous 
 
 than any other. They abound, therefore, in the 
 rude produce of land, and inftead of importing 
 it from other countries, they have generally a 
 large furplus to export. In new colonies, agri- 
 culture either draws hands from all other em- 
 ployments, or keeps them from going to any 
 other employment. There are few hands to 
 fpare for the necelTary, and none for the orna- 
 mental manufaftures. The greater part of the 
 manufactures of both kinds, they find it cheaper 
 to purchafe of other countries than to make for 
 themfelves. It is chiefly by encouraging the 
 manufaftures of Europe, that the colony trade 
 indiredly encourages its agriculture. The ma- 
 nufaflurers of Europe, to whom that trade gives 
 employment, conftitute a new market for the 
 produce of the land ; and the mod advantageous 
 of all markets : the home market for the corn 
 and cattle, for the bread and butchers'-meat of 
 Europe, is thus greatly extended by means of the 
 trade to America. 
 
 But that the monopoly of the trade of popu- 
 lous and thriving colonies is not alone fufficient 
 to eflablifli, or even to maintain manufadures in 
 any country, the examples of Spain and Portugal 
 fufficiently demonftiate. Spain and Portugal were 
 manufacluring countries before they had any con- 
 fiderable colonies. Since they had the richefl and 
 moft fertile in the world, they have both ceafed 
 to be fo. 
 
 In
 
 THE WEALTH OF NATIONS. 433 
 
 In Spain and Portugal the bad efFecls of the c h a p. 
 monopoly, aggravated by other caufes, have, vii. 
 perhaps, nearly overbalanced the natural good 
 effefts of the colony trade. Thefe caufes feem 
 to be other monopolies of different kinds ; the 
 degradation of the value of gold and filver below 
 what it is in moft other countries ; the exclufion 
 from foreign markets by improper taxes upon 
 exportation, and the narrowing of the home 
 market, by flill more improper taxes upon the 
 tranfportation of goods from one part of the 
 country to another j but above all, that irregu- 
 lar and partial adminiftration of juftice, which 
 often protects the rich and powerful debtor from 
 the purfuit of his injured creditor, and which 
 makes the induflrious part of the nation afraid 
 to prepare goods for the confumption of thofe 
 haughty and great men, to whom they dare not 
 refufe to fell upon credit, and from whom they 
 are altogether uncertain of repayment. 
 
 In England, on the contrary, the natural 
 good effeds of the colony trade, affifted by other 
 caufes, have in a great meafure conquered the 
 bad effects of the monopoly. Thefe caufes feem 
 to be, the general liberty of trade, which, not- 
 withflanding fome reftraints, is at leaft equal, 
 perhaps fuperior, to what it is in any other 
 country ; the liberty of exporting, duty free, 
 almofl all forts of goods which are the produce 
 of domeflic induftry, to almofl any foreign coun- 
 try ; and what, perhaps, is of (till greater im- 
 portance, the unbounded liberty of tranfporting 
 them from any one part of our own country 
 
 VOL. II. F F to
 
 434 THE NATURE AND CAUSES OF 
 
 BOOK to any other, without behig obliged to give any 
 IV. account to any public office, without being liable 
 to queftion or examination of any kind ; but 
 above all, that equal and impartial adminiftra- 
 tion of juflice which renders the rights of the 
 meaneft Britilh fubjeft refpeclable to the greateft, 
 and which, by fecuring to every man the fruits 
 of his own induflry, gives the greatefl and mofl 
 effedual encouragement to every fort of in- 
 dulhy. 
 
 Ii« the manufactures of Great Britain, how- 
 ever, 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 
 fpite of the monopoly. The effect of the mono- 
 poly has been, not to augment the quantity, but 
 to alter the quality and fhape of a part of the 
 manufactures of Great Britain, and to accom- 
 modate to a market, from which the returns are 
 flow and diltant, what would otherwife have been 
 accommodated to one from which the returns 
 are frequent and near. Its effect has confe- 
 quently been to turn a part of the capital of 
 Great Britain from an employment in which it 
 would have maintained a greater quantity of 
 manufafturing induflry, to one in which it 
 maintains a much fmaller, and thereby to di- 
 minifli, inftead of increafing, the whole quantity 
 of manufacturing induflry maintained in Great 
 Britain. 
 
 The monopoly of the colony trade, therefore, 
 like all the other mean and malignant expedients 
 of the mercantile fyflem, depreffes the induflry 
 
 of
 
 THE WEALTH OF NATIONS. 435 
 
 of all other countries, but chiefly that of the c h a p. 
 colonies, without in the leafl: increafing, but on vii. 
 the contrary diminifhing, that of the country in 
 whofe favour it is eflablilhed. 
 
 The monopoly hinders the capital of that 
 country, whatever may at any particular time be 
 the extent of that capital, from maintaining fo 
 great a quantity of productive labour as it would 
 otherwife maintain, and from affording fo great 
 a revenue to the induftrious inhabitants as it 
 would otherwife afford. But as capital can be 
 increafed only by favings from revenue, the mo- 
 nopoly, by hindering it from affording fo great 
 a revenue as it would otherwife afford, neceffarily 
 hinders it from increafing fo fafl as it would 
 otherwife increafe, and confequently from main- 
 taining a ftill greater quantity of produiflive 
 labour, and affording a ftill greater revenue to 
 the induftrious inhabitants of that country. One 
 great original fource of revenue, therefore, the 
 wages of labour, the monopoly mufl neceffarily 
 have rendered at all times lefs abundant than ii: 
 otherwife would have been. 
 
 By raifing the rate of mercantile profit, the 
 monopoly difcourages the improvement of land. 
 The profit of improvement depends upon the 
 difference between what the land adually pro- 
 duces, and what, by the application of a certain 
 capital, it can be made to produce. If this 
 difference affords a greater profit than what can 
 be drawn from an equal capital in any mercantile 
 employment, the improvement of land will draw 
 capital from all mercantile employments. If 
 
 F F 2 the
 
 435 THE NATURE AND CAUSES OP 
 
 BOOK the profit is lefs, rxiercantlle employments will 
 IV. draw capital from the improvement of land. 
 Whatever therefore raifes the rate of mercantile 
 profit, either leffens the fuperiority or increafes 
 the inferiority of the profit of improvement ; and 
 in the one cafe hinders capital from going to im- 
 provement, and in the other draws capital from 
 it. But by difcotiraging improvement, the mo- 
 nopoly necelfarily retards the natural increafe of 
 another great original fource of revenue, the rent 
 of land. By raifmg the rate of profit too, the 
 monopoly necellarily keeps up the market rate 
 of intereft higher than it oiherwife would be. 
 But the price of land in proportion to the rent 
 which it affords, the number of years' purchafe 
 which is commonly paid for it, neceflarily falls 
 as the rate of intered rifes, and rifes as the rate 
 of intereft falls. The monopoly, "therefore, hurts 
 the intereft of the landlord two different ways, 
 by retarding the natural increafe, firft, of his 
 rent, and, fecondly, of the price which he would 
 get for his land in proportion to the rent which 
 it affords. 
 
 The. monopoly, indeed, raifes the rate of mer- 
 cantile profit, and thereby augments fomewhat 
 the gain of our merchants. But as it obftrufts 
 the natural increafe of capital, it tends rather to 
 diminifh than to increafe the fum total of the 
 revenue which the inhabitants of the country 
 derive from the profits of ftock j a fmall profit 
 upon a great capital generally affording a greater 
 revenue than a great profit upon a fmall one. 
 The monopoly raifes the rate of profit, but it 
 
 hinders
 
 THE WEALTH OF NATIONS. 457 
 
 hinders the fum of profit from rifing fo high as it c n a r. 
 otherwife would do. vn. 
 
 All the original fources of revenue, the wages ^"^ 
 of labour, the rent of land, and the profits of 
 flock, the monopoly renders much lefs abundant 
 than they otherwife would be. To promote the 
 little interefl: of one little order of men in one 
 country, it hurts the intereft of all other orders 
 £)f men in that coiantry, and of all the men in all 
 other countries.. 
 
 It is folely by raifing the ordinary rate of profit 
 that the monopoly either has proved or could 
 prove advantageous to any one particular order 
 of men. But befides all the bad effe6ls to the 
 country in general, which have already been men. 
 tioned as neceflarily refulcing from a high rate of 
 profit ; there is one more fatal, perhaps, than 
 all thefe put together, but which, if we may 
 judge from experience, is infeparably conne(9:ed 
 with it. The high rate of profit feems every 
 where to dellroy that parfimony which in other 
 circumflaaces is natural to the character of the 
 merchant. When profits are high, that fober 
 virtue feems to be fuperfluous, and expenfive 
 luxury to fuit better the affluence of his fituation. 
 But the owners of the great mercantile capitals 
 are neceflarily the leaders and condudors of the 
 whole induftry of every nation, and their example 
 has a much greater influence upon the manners 
 of the whole induftrious part of it than that of 
 any other order of men. If his employer is at- 
 tentive and parfimonious, the workman is very 
 likely to be lb too j but if the malter is diflblute 
 
 F r 3 and
 
 43S THE NATURE AND CAUSES OF 
 
 BOOK and diforderly, the fervant who (hapes his work 
 IV. according to the pattern which his mafter pre- 
 fcribes to him, will fhape his Hfe too according 
 to the example which he fets him. Accumula- 
 tion is thus prevented in the hands of all thofe 
 who are naturally the mod difpofed to accumu- 
 late ; and the funds deftined for the maintenance 
 of productive labour receive no augmentation 
 from the revenue of thofe who ought naturally 
 to augment them the mod. The capital of the 
 country, inflead of increafing, gradually dwindles 
 away, and the quantity of produftive labour 
 maintained in it grows every day lefs and lefs. 
 Have the exorbitant profits of the merchants of 
 Cadiz and Lifbon augmented the capital of 
 Spain and Portugal ? Have they alleviated the 
 poverty, have they promoted the induftry of thofe 
 two beggarly countries ? Such has been the 
 tone of mercantile expence in thofe two trading 
 cities, that thofe exorbitant profits, far from aug- 
 menting the general capital of the country, feem 
 fcarce to have been fufBcient to keep up the 
 capitals upon which they were made. Foreign 
 capitals ar^ every day intruding themfelves, if I 
 may fay fo, more and more into the trade of 
 Cadiz and Lifbon. It is to expel thofe foreign 
 capitals from a trade which their own grows 
 every day more and more infufficient for carrying 
 on, that the Spaniards and Portuguefe endea- 
 vour every day to flraiten more and more the gall- 
 ing bands of their abfurd monopoly. Compare 
 the mercantile manners of Cadiz and Lifbon 
 with thoib of Amflerdam, and you will be len- 
 
 fible
 
 THE WEALTH OF NATIONS. 439 
 
 fible how differently the condu6l and chara<fter of c'h a p. 
 merchants are alFedled by the high and by the J^^^ 
 low profits of flock. The merchants of London, 
 mdeed, have not yet generally become fuch mag- 
 nificent lords as thofe of Cadiz and Lifbon ; 
 but neither are they in general fuch attentive and 
 parfimonious burghers as thofe of Amfterdam. 
 They are fuppofed, however, many of them, to 
 be a good deal richer than the greater part of the 
 former, and not quite fo rich as many of the lat- 
 ter. But the rate of their profit is commonly much 
 lower than that of the former, and a good deal 
 higher than that of the latter. Light come light 
 go, fays the proverb ; and the ordinary tone of 
 expence feems every where to be regulated, not fo 
 much according to the real ability of fpending, as 
 to the- fuppofed facility of getting money to fpend. 
 
 It is thus that the fmgle advantage which the 
 monopoly procures to a fmgle order of men, is in 
 many difierent ways hurtful to the general interefl 
 of the country. 
 
 To found a great empire for the fole purpofe 
 of raifing up a people of cuftomers, may at firft 
 fight appear a projed fit only for a nation of 
 fhopkeepers. It is, however, a project altoge- 
 ther unfit for a nation of fiiopkeepers ; but ex- 
 tremely fit for a nation whofe government is in- 
 fluenced by fliopkeepers. Such ftatefmen, and 
 fuch flatefmen only, are capable of fancying 
 that they will find fome advantage in employing 
 the blood and treafure of their fellow-citizens, 
 to found and maintain fuch an empire. Say 
 to a fliopkeeper, Buy me a good eflate, and I 
 ihall always buy my clothes at your fliop, even 
 
 F F 4 though
 
 440 THE NATURE AND CAUSES OF 
 
 BOOK though I ihould pay fomewhat dearer than what 
 IV. I can have them for at other (hops ; and you 
 will not find him very forward to embrace your 
 propofal. But ihould any other perfon buy you 
 fuch an eftate, the {liopkeeper will be much 
 obliged to your benefactor if he would enjoin 
 you to buy all your clothes at his fhop. Eng- 
 land purchafed them from fome of her fubjecls, who 
 found ihemfelves uneafy at home, a great eflate 
 in a diflant country. The price, indeed, was 
 very fmall, and inftead of thirty years* purchafe, 
 the ordinary price of land in the prefent times, 
 it amounted to little more than the expence of 
 the different equipments which made the firft 
 difcovery, reconnoitred the coafl, and took a 
 fictitious pofTefTion of the country. The land 
 was good and of great extent, and the cultiva- 
 tors having plenty of good ground to work upon, 
 and being for fome time at liberty to fell their 
 produce where they pleafed, became in the courfe 
 of little more than thirty or forty years (between 
 3620 and 1660) fo numerous and thriving a 
 people, that the fhopkeepers and other traders 
 of England wiihed to fecure to themfelves 
 the monopoly of their cuflom. Without pre- 
 tending, theirefore, that they had paid any part, 
 either of the original purchafe-money, or of the 
 fubfequent expence of improvement, they peti- 
 tioned the parliament that the cultivators of 
 America might for the future be confined to their 
 fhop J firfl:, for buying all the goods which they 
 wanted from Europe ; and, fecondly, for felling 
 all fuch parts of their own produce as thofe 
 traders might find it convenient to buy. For 
 
 they
 
 THE WEALTH OF NATIONS.- 441 
 
 they did not find it convenient to buy every part chap. 
 of it. Some parts of it imported into England vii. 
 might have interfered vvith fome of the trades 
 which they themfelves carried on at home. Thofe 
 particular parts of it, therefore, they were will- 
 ing that the colonics Ihould fell where they 
 could ; the farther off the better ; and upon that 
 account propofed that their market fhould be 
 confined to the countries foiith of Cape Finifterre. 
 A claufe in the famous ad of navigation ella- 
 blifhed this truly (hopkeeper propofal into a 
 law. 
 
 The maintenance of this monopoly has hither- 
 to been the principal, or more properly, perhaps, 
 the fole end and purpofe of the dominion which 
 Great Britain aflumes over her colonies. In the 
 exclufive trade, Is is fuppofed, conlifls the great 
 advantage of provinces, which have never yet 
 afforded either revenue or military force for the 
 fiipport of the civil government, or the defence 
 of the mother country. The monopoly is the 
 principal badge of their dependency, and it is 
 the fole fruit which has hitherto been gathered 
 from that dependency. Whatever expence Great 
 Britain has hitherto laid out in maintaining this 
 dependency, has really been laid out in order to 
 fupport this monopoly. The expence of the 
 ordinary peace eliablifiiment of the colonies 
 amounted, before the commencement of the pre- 
 fent difturbances, to the pay of twenty regi^ 
 ments of foot ; to the expence of the artillery, 
 {lores, and extraordinary provifions with which 
 It was necellary to fupply them ; and to the ex- 
 pence
 
 442 THE NATURE AND CAUSES OF 
 
 BOOK pence of a very confiderable naval force which 
 IV. was conflantly kept up in order to guard, from 
 '""'' the fmuggling veflels of other nations, the im- 
 menfe coaft of North America, and that of our 
 Weft Indian Iflands. The whole expence of this 
 peace eftablifhment was a charge upon the re- 
 venue of Great Britain, and was, at the fame 
 time, the fmalleft part of what the dominion of 
 the colonies has coft the mother country. If we 
 would know the amount of the whole, we muft 
 add to the annual expence of this peace eftablifh- 
 ment the intereft of the fums which, in confe- 
 quence of her confidering her colonies as pro- 
 vinces fubjeft to her dominion, Great Britain 
 has upon different occafions laid out upon their 
 defence. We muft add to it, in particular, the 
 whole expence of the late war, and a great part 
 of that of the war which preceded it. The late 
 war was altogether a colony quarrel, and the 
 whole expence of it, in whatever part of the 
 world it might have been laid out, whether in 
 Germany or the Eaft Indies, ought juftly to be 
 ftated to the account of the colonies. It amount- 
 ed to more than ninety millions fterling, includ- 
 ing not only the new debt which was contracted, 
 but the two (hillings in the pound additional land 
 tax, and the fums which were every year borrow- 
 ed from the finking fund. The Spanifh war 
 which began in 1739, was principally a colony 
 quarrel. Its principal objeft was to prevent the 
 fearch of the colony fhips which carried on a 
 contraband trade with the Spanifh main. This 
 whole expence is, in reality, a bounty which has 
 
 been
 
 THE WEALTH OF NATIONS. 443 
 
 been given in order to fupport a monopoly, c h a p. 
 The pretended purpofe of it was to en-courage vii. 
 the manufaftures, and to increafe the commerce 
 of Great Britain. But its real effect has been to 
 raife the rate of mercantile profit, and to enable 
 our merchants to turn into a branch of trade, of 
 which the returns are more flow and diftant than 
 thofe of the greater part of other trades, a greater 
 proportion of their capital than they othervvife 
 would have done; two events which, if a bounty 
 could have prevented, it might perhaps have 
 been very well worth while to give fuch a bounty. 
 Under the prefent fyllem of management, 
 therefore. Great Britain derives nothing but lofs 
 from the dominion which fhe aifumes over her 
 colonies. 
 
 To propofe that Great Britain fhould volun- 
 tarily give up all authority over her colonies, 
 and leave them to eleft their own magiftrates, 
 to ena(5l their own laws, and to make peace and 
 war, as they might think proper, would be to 
 propofe fuch a meafure as never was, and never 
 will be adopted by any nation in the world. 
 No nation ever voluntarily gave up the domi- 
 nion of any province, how troublefome foever It 
 might be to govern it, and how fmall foever the 
 revenue which it afforded might be in propor- 
 tion to the expence which it occafioned. Such 
 facrifices, though they might frequently be agree- 
 able to the intereft, are always mortifying to the 
 pride of every nation, and, what is perhaps of Hill 
 greater confequence, they are always contrary to 
 the private interefl: of the governing part of it, 
 
 who
 
 444 THE NATURE AND CAUSES OF 
 
 BOOK who would thereby be deprived of the difpofal of 
 ^'^' many places of truft and profit, of many oppor- 
 
 ^"^ tunities of acquiring wealth and diflindion, 
 which the poifeflion of the mod turbulent, and, 
 to the great body of the people, the moft unpro- 
 fitable province feldom fails to afford. The moil 
 vifionary enthufiails would fcarce be capable of 
 propofmg fuch a meafure, with any ferious hopes 
 at lead of its ever being adopted. If it was 
 adopted, however. Great Britain would not only 
 be immediately freed from the whole annual ex- 
 pence of the peace eflablifiiment of the colonies, 
 but might fettle with them fuch a treaty of com- 
 merce as would effedually fecure to her a free 
 trade, more advantageous to the great body of 
 the people, though lefs fo to the merchants, 
 than the monopoly which fhe at prefent enjoys. 
 By thus parting good friends, the natural affec- 
 tion of the colonies to the mother country, which 
 perhaps, our late diifenfions have well nigh ex- 
 tinguifhed, would quickly revive. It might dif- 
 pofe them not only to refpect, for whole cen- 
 turies together, that treaty of commerce which 
 they had concluded with us at parting, but to 
 favour us in war as well as in trade, and, inltead 
 of turbulent and fa<5\ious fubjects, to become our 
 moft faithful, affectionate, and generous allies ; 
 and the fame fort of parental affection on the one 
 fide, and filial refpe€t on the other, might re- 
 vive between Great Britain and her colonies, 
 which ufed to fubfift between thofe of ancient 
 Greece and the mother city from which they de- 
 Icended.
 
 THE WEALTH OF NATIONS^ 4 15 
 
 In order to render any province advantageous chap. 
 to the empire to u^hich it belongs, it ought to vii. 
 afford, in time of peace, a revenue to the pubHc 
 fufficient not only for defraying the vt^hole ex- 
 pence of its own peace eftablifhment, but for 
 contributing its proportion to the fupport of the 
 general government of the empire. Every pro- 
 vince neceflfarily contributes, more or lefs, to 
 increafe the expence of that general government. 
 If any particular province, therefore, does not 
 contribute its fhare towards defraying this ex- 
 pence, an unequal burden muft be thrown upon 
 fome other part of the empire. The extraor- 
 dinary revenue too which every province affords 
 to the public in time of war, ought, from 
 parity of reafon, to bear the fame proportion to 
 the extraordinary revenue of the whole empire 
 which its ordinary revenue does in time of peace. 
 That neither the ordinary nor extraordinary re- 
 venue which Great Britain derives from her co- 
 lonies, bears this proportion to the whole re- 
 venue of the Britifh empire, will readily be al- 
 lowed. The monopoly, it has been fuppofed, 
 indeed, by increafmg the private revenue of the 
 people of Great Britain, and thereby enabling 
 them to pay greater taxes, compenfates the de- 
 ficiency of the public revenue of the colonies. 
 But this monopoly, I have endeavoured to fhow, 
 though a very grievous tax upon the colonies, 
 and though it may increafe the revenue of a par- 
 ticular order of men in Great Britain, diminifhes 
 inftead of increafmg tJiat of the great body of the 
 people; and confequently diminiihes inftead of 
 
 increafing
 
 ^46 THE NATURE AND CAUSES OF 
 
 BOOK mcreafmg the ability of the great body of the 
 JV. people to pay taxes. The men too whofe revenue 
 
 ^"'^^^ ~' the monopoly increafes, conflitute a particular 
 order, which it is both abfolutely impoflible to 
 tax beyond the proportion of other orders, and 
 extremely impolitic even to attempt to tax be- 
 yond that proportion, as I fhail endeavour to 
 ihew in the following book. No particular re- 
 fource, therefore, can be drawn from this parti- 
 cular order. 
 
 The colonies may be taxed either by their own 
 aflemblies, or by the parliament of Great Britain. 
 
 That the colony aflemblies can never be fo 
 managed as to levy upon their conftituents a 
 public revenue fufficient, not only to maintain at 
 all times their own civil and military eftablifhment, 
 but to pay their proper proportion of the expence 
 of the general government of the Britifh empire, 
 feems not very probable. It was a long time 
 before even the parliament of England, though 
 placed immediately under the eye of the fo- 
 vereign, could be brought under fuch a fyflem 
 of management, or could be rendered fufficiently 
 liberal in thieir grants for fupporting the civil 
 and military eftabhfhments even of their own 
 country. It was only by diflributing aniong the 
 particular members of parliment, a great part 
 either of the offices, or of the difpofal of the 
 offices arifnig from this civil and military efta- 
 blifhment, that fuch a fyffem of management 
 could be eflablillied even with regard to the par- 
 liament of England. But the diflance of the 
 colony aflemblies from the eye of the fovereign, 
 
 8 their
 
 THE WEALTH OF NATIONS. 447 
 
 their number, their difperfed fituation, and their c h a[p» 
 various conftitutions, would render it very diffi- "^^^* 
 cult to manage them in the fame manner, even 
 though the fovereign had the fame means of do- 
 ing it ; and thofe means are wanting. It would 
 be abfolutely impoffible to diftribute among all 
 the leading members of all the colony alTem* 
 blies fuch a (hare, either of the offices or of the 
 difpofal of the offices arifmg from the general 
 government of the Britifh Empire, as to difpofe 
 them to give up their popularity at home, and to 
 tax their conftituents for the fupport of that ge- 
 neral government, of which almofi: the whole 
 emoluments were to be divided among people 
 who were flrangers to them. The unavoidable 
 ignorance of adminiftration, befides, concerning 
 the relative importance of the different members 
 of thofe different affemblies, the offences which 
 muff frequently be given, the blunders which 
 muff conflantly be committed in attempting to 
 manage them in this manner, feems to render 
 fuch a fyflem of management altogether imprac- 
 ticable with regard to them. 
 
 The colony affemblies, befides, cannot be 
 fuppofed the proper judges of what is neceffary 
 for the defence and fupport of the whole empire. 
 The care of that defence and fupport is not en- 
 trufted to them. It is not their bufmefs, and 
 they have no regular means of information con- 
 cerning it. The affembly of a province, like 
 the vertry of a pariffj, may judge very properly 
 concerning the affairs of its own particular dif- 
 trift J but can have no proper means of judging 
 
 concerning
 
 448 THE NATURE AND CAUSES OF 
 
 BOOK concerning thofe of the whole empire. It can* 
 IV. not even judge properly concerning the propor- 
 tion which its own province bears to the whole 
 empire ; or concerning the relative degree of its 
 wealth and importance, compared with the other 
 provinces ; becaufe thofe other provinces are not 
 under the infpedion and fuperintendency of the 
 affembly of a particular province. What is ne- 
 ceflary for the defence and fufport of the whole 
 empire, and in what proportion each part ought 
 to contribute, can be judged of only by that af- 
 fembly which infpeds and fuperintends the af- 
 fairs of the whole empire. 
 
 It has been propofed, accordingly, that the 
 colonies fhould be taxed by requlfition^ the par* 
 liament of Great Britain determining the fum 
 which each colony ought to pay, and the pro* 
 vincial affembly affeffmg and levying it in the 
 wav that fulted beft the circumdances of the 
 province. What concerned the whole empire 
 would in this way be determined by the affembly 
 which infpeds and fuperintends the affairs of the 
 whole empire ; and the provincial affairs of each 
 colony might ffill be regulated by its own af- 
 fembly. Though the colonies (hould in this 
 cafe have no reprefentatives in the Britifir parlia- 
 ment, yet, if we may judge by experience, there 
 is no probability that the parliamentary requi- 
 fition would be unreafonable. The parliament 
 of England has not upon any occafion fliown the 
 fmalleft difpofition to overburden thofe parts of 
 the empire which are not reprefented in parlia- 
 ment. The illands of Guernfey and Jerfey, 
 
 I c without
 
 THE WEALTH OF NATIONS. 449 
 
 without any means of refifling the authority of chap. 
 parliament, are more lightly taxed than any part vii. 
 of Great Britain. Parliament in attempting to "''^^ 
 exercife its fuppofed right, whether well or ill 
 grounded, of taxing the colonies, has never 
 hitherto demanded of them any thing which 
 even approached to a jufl proportion to what 
 was paid by their fellow-fubjeds at home. If 
 the contribution of the colonies, befides, was to 
 rife or fall in proportion to the rife or fall of the 
 land tax, parliament could not tax them with- 
 out taxing at the fame time its own conftituents, 
 and the colonies might in this cafe be confidered 
 as virtually reprefented in parliament. 
 
 Examples are not wanting of empires in 
 which all the different provinces are not taxed, if 
 I may be allowed the expreffion, in one mafs 5 
 but in which the fovereign regulates the fum 
 which each province ought to pay, and in fome 
 provinces affeffes and levies it as he thinks pro- 
 per ; while in others, he leaves it to be affeiTed 
 and levied as the refpe«5live flates of each pro- 
 vince fhall determine. In fome provinces of 
 France, the king not only impofes what taxes he 
 thinks proper, but affeffes and levies them in the 
 way he thinks proper. From others he demands 
 a certain fum, but leaves it to the dates of each 
 province to affefs and levy that fum as they 
 think proper* According to the fcheme of tax* 
 ing by requifition, the parliament of Great Bri- 
 tain would ftand nearly in the fame fituation to- 
 wards the colony affemblies, as the king of 
 France does towards the dates of thofe province* 
 
 VOL. II. . G G which
 
 45© THE NATURE AND CAUSES OF 
 
 BOOK which fllU enjoy the privilege of having 'dates of 
 IV. their own, the provinces of France which are 
 " ' fuppofed to be the bed governed. 
 
 But though, according to this fcheme, the 
 colonies could have no juft realbn to fear that 
 their (hare of the public burdens fhould ever 
 exceed the proper proportion to that of their fel- 
 low-citizens at home ; Great Britain might have 
 juft reafon to fear that it never would amount to 
 that proper proportion. The parliament of 
 Great Britain has not for fome time pafl had the 
 fame eftablifhed authority in the colonies which 
 the French king has in thofe provinces of 
 France which flill enjoy the privilege of having 
 ftates of their own. The colony aflemblies, if 
 they were not very favourably difpofed (and un- 
 lefs more Ikilfully managed than they ever have 
 been hitherto, they are not very likely to be fo)^ 
 might (fill find many pretences for evading or 
 rejeding the moft reafonable requifitlons of par- 
 liament. A French war breaks out, we fhall 
 flippofe ; ten millions muft immediately be 
 raifed. In order to defend the feat of the empire. 
 This fum mufl: be borrowed upon the credit of 
 fome parliamentary fund mortgaged for paying 
 the intereft. Part of this fund parliament pro- 
 pofes to raife by a tax to be levied in Great Bri- 
 tain, and part of it, by a requifition to all the 
 dift'erent colonv aflemblies of America and the 
 Weft Indies. Would people readily advance 
 their money upon the credit of a fund, which 
 partly depended upon the good humour of all 
 thofe aflfemblies, far diftant from the feat of the 
 
 war.
 
 THE V/EALTH OF NATIONS. 451 
 
 v/ar, and fometimes, perhaps, thinking them- chap. 
 felves not much concerned in the event of it ? vii. 
 Upon fuch a fund no more money would pro- ^-"^'"'^ 
 bably be advanced than what the tax to be levied 
 in Great Britain might be fuppofed to anfwer 
 for. The whole burden of the debt contracted 
 on account of the war would in this manner fall, 
 as it always has done hitherto, upon Great Bri- 
 tain ; upon a part of the empire, and not upon 
 the whole empire. Great Britain is, perhaps, 
 fmce the world began, the only ftate which, as 
 it has extended its empire, has only increafed its 
 expence without once augmenting its refources. 
 Other ftates have generally difburdened them- 
 felves, upon their fubjedl and fubordinate pro- 
 vinces, of the mod confiderable part of the ex- 
 pence of defending the empire. Great Britain 
 has hitherto fuffered her fubje£t and fubordinate 
 provinces to difburden themfelves upon her of 
 almoft this whole expence. In order to put 
 Great Britain upon a footing of equality with 
 her own colonies, which the law has hitherto 
 fuppofed to be fubje£t and fubordinate, it feems 
 neceffiiry, upon the fcheme of taxing them by 
 parhamentary requifition, that parliament fhould 
 have forae means of rendering its requifitions im- 
 mediately effectual, in cafe the colony afiemblies 
 fhould attempt to evade or rejedl them ; and 
 what thofe means are, it is not very eafy to con- 
 ceive, and it has not yet been explained. 
 
 Should the parliament of Great Britain, at 
 the fame time, be ever fully eilablifhed in the 
 right of taxing the colonies, even independent of 
 
 G G 2 the
 
 452 THE NATURE AND CAUSES OF 
 
 BOOK the confeiit of their own afll'mblies, the im- 
 IV. portance of thofe alTemblles would from that 
 
 *"***"' ~^' moment be at an end, and with it, that of all the 
 leading men of Britifli America. Men defire to 
 have fome (hare in the management of public 
 affairs, chiefly on accomit of the importance 
 which it gives them. Upon the power which the 
 greater part of the leading men, the natural arif- 
 tocracy of every country, have of preferving or 
 defending their refpedive importance, depends 
 the (lability and duration of every fyftem of free 
 government. In the attacks which thofe lead- 
 ing men are continually making upon the im- 
 portance of one another, and in the defence of 
 their own, confuls the whole play of domeftic 
 faction and ambition. The leading men of 
 America, like thofe of all other countries, defire 
 to preferve their own importance. They feel, or 
 imagine, that if their aflemblies, which they are 
 fond of calling parliaments, and of confidering 
 as equal in authority to the parliament of Great 
 Britain, (hould be fo far degraded as to become 
 the humble miniders and executive officers of 
 that parliament, the greater part of their own 
 importance would be at an end. They have re- 
 jected, therefore, the propofal of being taxed by 
 parliamentary requifition, and like other ambi- 
 tious and high-fpirlted men, have rather chofeu 
 to draw the fword in defence of their own im- 
 portance. 
 
 Tow^ARDs the declenfion of the Roman re- 
 public, the allies of Rome, who had borne the 
 principal burden of defending the ftate and ex- 
 
 tendingr
 
 THE WEALTH OF NATIONS. 4SS 
 
 rending the empire, demanded to be admitted to c h a p. 
 all the privileges of Roman citizens. Upon vii. 
 being refufed, the focial war broke out. During "^ 
 the courfe of that war Rome granted thoie 
 privileges to the greater part of them, one by 
 one, and in proportion as they detached them- 
 felves from the general confederacy. The par- 
 liament of Great Britain infifts upon taxing the 
 colonies ; and they refufe to be taxed by a par- 
 liament in which they are not reprefented. If 
 to each colony, which ihould detach itfelf from 
 the general confederacy. Great Britain fhould 
 allow fuch a number of reprefentatives as fuited 
 the propOition of what it contributed to the 
 public revenue of the empire, in confequence 
 of its being fubjecled to the fame taxes, and in 
 compenfation admitted to the fame freedom of 
 trade with its fellow-fubjefts at home ; the 
 number of its reprefentatives to be augmented 
 as the proportion of its contribution might 
 afterwards augment ; a new method of acquir- 
 ing importance, a new and more dazzling objeft 
 of ambition, would be prefented to the leading 
 men of each colony. Inftead of piddling for the 
 little prizes which are to be found in what may 
 be called the paltry raffle of colony faflion ; they 
 might then hope from the prefumption which 
 men naturally have in their own ability and 
 good fortune, to draw fome of the great prizes 
 which fometimes come from the wheel of the 
 great (late lottery of Britifh politics. Unlefs 
 this or fome other method is fallen upon, and 
 there feenis to be none more obvious than this, of 
 
 G o 3 preferving
 
 4J4 THE NATURE AND CAUSES OF 
 
 BOOK preferving the importance and of gratifying the 
 iv, ambition of the leading men of America, it is 
 ^"^ not very probable that they will ever voluntarily 
 fubmit to us ; and we ought to confider that the 
 blood which mud be fhed in forcing them to do 
 fo, is, every drop of it, the blood either of thofe 
 who are, or of thofe whom we wifh to have for 
 our fellow-citizens. They are very weak who flatter 
 themfelves that, in the ftate to which things have 
 come, our colonies will be eafily conquered by 
 force alone. The perfons who now govern the 
 refolutions of what they call their continental 
 congrefs, feel in themfelves at this moment a 
 degree of importance which, perhaps, the greatefl 
 fubjedls in Europe fcarce feel. From fhop- 
 keepers, tradefmen, and attornies, they are be- 
 come ftatefmen and legiflators, and are em- 
 ployed in contriving a new form of government 
 for an extenfive empire, which, they flatter them- 
 felves, will become, and which, indeed, feems 
 very likely to become, one of the greateil and 
 mofl: formidable that ever was in the world. 
 Five hundred different people, perhaps, who in 
 different ways a£l immediately under the con- 
 tinental congrefs ; and five hundred thoufand, 
 perhaps, who act under thofe five hundred, all 
 feel in the fame manner a proportionable rife in 
 their own importance. Almofl every individual 
 of the governing party in America, fills, at pre- 
 fent, in his own fancy, a ftation fuperior, not only 
 to what he had ever filled before, but to what he 
 had ever expefted to fill ; and unlefs fome new 
 objed: of ambition is prefented either to him or 
 
 to
 
 THE WEALTH OF NATIONS. 455 
 
 to his leaders, if he has the ordinary fpirit of a chap* 
 man, he will die in defence of that ftation. vii. 
 
 It is a remark of the prefident Henaut, that we 
 now read with pleafure the account of many 
 h'ttle tranfaclions of the Ligue, which when they 
 happened were not perhaps confidered as very 
 important pieces of news. But every man then, 
 fays he, fancied himfelf of fome importance; 
 and the innumerable memoirs which have come 
 down to us from thofe times, were, the greater 
 part of them, written by people who took plea- 
 fure in recording and magnifying events in 
 which they flattered themfelves, they had been 
 confiderable adlors. How obflinately the city 
 of Paris upon that occafion defended itfelf, 
 what a dreadful famine it fupported rather than 
 fubmit to the bed and afterwards to the mod be- 
 loved of all the French kings, is well known. 
 The greater part of the citizens, or thofe who 
 governed the greater part of them, fought in de- 
 fence of their own importance, which they fore- 
 faw was to be at an end whenever the ancient 
 government fhould be re-eftabliflied. Our co- 
 lonies, unlefs they can be induced to confent to 
 a union, are very likely to defend themfelves 
 againft the bed of all mother countries, as obfli- 
 nately as the city of Paris did againft one of the 
 beft of kings. 
 
 The idea of reprefentation was unknown in 
 ancient times. When the people ot one ftate 
 were admitted to the right of citizenfliip in an- 
 other, they had no other means of exercifmg that 
 right but by coming in a body to vote and deli- 
 
 G G 4 berate
 
 456 THE NATURE AND CAUSES OF 
 
 BOOK berate with the people of that other (late. The 
 i^'« ' adrniflion of the greater part of the inhabitants of 
 
 *"*^'~*" Italy to the privileges of Roman citizens, com- 
 pletely ruined the Roman Republic. It was no 
 longer pofiible to diftinguifn between who was 
 and who was not a Roman citizen. No tribe 
 could know its own members. A rabble of any 
 kind could be introduced into the aflemblies of 
 the people, could drive out the real citizens, and 
 decide upon the affairs of the republic as if they 
 themfelves had been fuch. But though America 
 were to fend fifty or fixty new reprefentatives to 
 parliament, the door-keeper of the houfe of 
 commons could not find any great difficulty in 
 diflinguifhing between who was and who was not 
 a member. Though the Roman conltitution, 
 therefore, was neceffarily ruined by the union of 
 Rome with the allied ffates of Italy, there is not 
 the leaft probability that the Britifh conftitution 
 would be hurt by the union of Great Britain with 
 her colonies. That conftitution, on the con- 
 trary, would be completed by it, and feems to 
 be imperfect without it. The aflembly which 
 deliberates and decides concerning the affairs of 
 every part of the empire, in order to be properly 
 informed, ought certainly to have reprefentatives 
 from every part of it. That this union, how- 
 ever, could be eafily effeduated, or that difficul- 
 ties and great difficulties might not occur in the 
 execution, I do not pretend. I have yet heard 
 of none, however, which appear infurmountable. 
 The principal, perhaps, arife not from the nature 
 of things, but from the prejudices and opinions
 
 THE WEALTH OF NATIONS. 457 
 
 of the people both on this and on the other fide c h a p. 
 of the Atlantic. yii. 
 
 We on this fide the water are afraid left the ^— ~-"— ' 
 multitude of American reprefentatives fhoulJ 
 overturn the balance of the conftitution, and in- 
 creafe too much either the influence of the crown 
 on the one hand, or the force of the democracy 
 on the other. But if the number of American 
 reprefentatives were to be in proportion to the 
 produce of American taxation, the number of 
 people to be managed would increafe exadlv in 
 proportion to the means of managing them ; 
 and the means of managing to the number of 
 people to be managed. The monarchical and 
 democratical parts of the conftitution would, 
 after the union, fl:and exacllv in the fame decree 
 of relative force with regard to one another as 
 they had done before. 
 
 The people on the other fide of the water are 
 afraid lefi: their difiance from the feat of govern- 
 ment might expofe them to many oppreflions. 
 But their reprefentatives in parliament, of which 
 the number ought from the firfl: to be confider- 
 able, would eafily be able to protect them from 
 all oppreffion. The diftance could not much 
 weaken the dependency of the reprefentative 
 upon the confiituent, and the former would ftill 
 feel that he owed his feat in parliament, and all 
 the confequcnce which he derived from it, to the 
 good-will of the latter. It would be the interefl: 
 of the former, therefore, to cultivate that good- 
 will by complaining, with all the authority of a 
 jnember of the legiflnture, of every outrage which 
 
 any
 
 45S THE NATURE AND CAUSES OF 
 
 any civil or military officer might be guilty of in 
 thofe remote parts of the empire. The diftance 
 of America from the feat of government, befides, 
 the natives of that country might flatter them- 
 felves, with fome appearance of reafon too, 
 would not be of very long continuance. Such 
 has hitherto been the rapid progrefs of that coun- 
 try in wealth, population, and improvement, that 
 in the courfe of little more than a century, per- 
 haps, the produce of the American might exceed 
 that of Britifli taxation. The feat of the empire 
 would then naturally remove itfelf to that part 
 of the empire which contributed mofl to the ge- 
 neral defence and fupport of the whole. 
 
 The difcovery of America and that of a 
 paffage to the Eaft Indies by the Cape of Good 
 Hope, are the two greateft and mofl important 
 events recorded in the hiflory of mankind. 
 Their confequences have already been very great : 
 but, in the fhort period of between tv/o and 
 three centuries which has elapfed fince thefe dif- 
 coveries were made, it is impoflible that the 
 whole extent of their confequences can have been 
 feen. What benefits, or what misfortunes to 
 mankind may hereafter refult from thofe great 
 events, no human wifdom can forefee. By 
 uniting, in fome meafure, the mofl diftant parts 
 of the world, by enabling them to relieve one 
 another's wants, to increafe one another's enjoy- 
 ments, and to encourage one another's induftry, 
 their general tendency would feem to be bene- 
 ficial. To the natives, however, both of the 
 Eail and Weft Indies, all the commercial bene- 
 fits
 
 THE WEALTH OF NATIONS. 
 
 fits which can have refulted from thofe events 
 have been funk and loft in the dreadful misfor- 
 tunes which they have occafioned. Thefe mif- 
 fortunes, however, feem to have arifen rather 
 from accident than from any thing in the nature 
 of thofe events themfelves. At the particular 
 time when thefe difcoveries were made, the fu- 
 periority of force happened to be fo great on the 
 fide of the Europeans that they were enabled to 
 commit with impunity every fort of injuftice in 
 thofe remote countries. Hereafter, perhaps, the 
 natives of thofe countries may grow ftronger, or 
 thofe of Europe may grow weaker, and the in- 
 habitants of all the different quarters of the 
 world may arrive at that equality of courage and 
 force which, by infpiring mutual fear, can alone 
 overawe the injuftice of independent nations into 
 fome fort of refpefl for the rights of one another* 
 But nothing feems more likely to eftablifli this 
 equality of force than that mutual communica- 
 tion of knowledge and of all forts of improve- 
 ments which an extenfive commerce from all 
 countries to all countries naturally, or rather ne- 
 ceflarily, carries along with it. 
 
 In the mean time one of the principal efteds 
 of thofe difcoveries has been to raife the mer- 
 cantile fyftem to a degree of fplendour and glory 
 which it could never otherwife have attained to. 
 It is the obje£l of that fyftem to enrich a great 
 nation rather by trade and manufadlures than by 
 the improvement and cultivation of land, rather 
 by the induftry of the towns than by that of the 
 country. But in confequence of thofe dif- 
 coveries. 
 
 459
 
 46o THE NATURE AND CAUSES OF 
 
 BOOK coverles, the commercial towns of Europe, in- 
 IV. ftead of being the manufa£lurers and carriers for 
 
 ""•"^""^ but a very fmall part of the world (that part of 
 Europe which is wafhed by the Atlantic ocean, 
 and the countries which He round the Baltic and 
 Mediterranean feas}, have now become the manu- 
 fadlurers for the numerous and thriving culti- 
 vators of America, and the carriers, and in 
 fome refpefts the manufadturers too, for almofl 
 all the different nations of Afia, Africa, and 
 America. Two new worlds have been opened 
 ^ to their induflry, each of them much greater 
 and more extenfive than the old one, and the 
 market of one of them growing flill greater and 
 greater every day. 
 
 The countries which poflefs the colonies of 
 America, and which trade diredlly to the Eaft 
 Indies, enjoy, indeed, the whole fhew and fplen- 
 dour of this great commerce. Other countries, 
 however, notwithflanding all the invidious re- 
 flraints by which it is meant to exclude them, 
 frequently enjoy a greater fhare of the real 
 benefit of it. The colonies of Spain and Portu- 
 gal, for example, give more real encouragement 
 to the induflry of other countries than to that of 
 Spain and Portugal. In the fmgle article of 
 linen alone the confumption of thofe colonies 
 amounts, it is faid, but I do not pretend to 
 warrant the quantity, to more than three mil- 
 lions fterling a year. But this great confumption 
 is almofl: entirely fupplied by France, Flanders, 
 Holland, and Germany. Spain and Portugal 
 furnifii but a fmall part of it. The capital 
 
 which
 
 THE WEALTH OF NATIOx\S. 461 
 
 which fuppHes the colonies with this great quan- chap. 
 tity of hnen Is annually diflributed among, and ^^^^- 
 furnlfhes a revenue to the inhabitants of thofe ^"'^" 
 other countries. The profits of it only are fpent 
 in Spain and Portugal, where they help to fup- 
 port the fumptuous profufion of the merchants of 
 Cadiz and Lifbon. 
 
 Even the regulations by which each nation 
 endeavours to fecure to itfelf the exclufive trade 
 of its own colonies, are frequently more hurtful 
 to the countries in favour of which they are 
 eftablifhed, than to thofe againft which they are 
 eflablifhed. The unjuft oppreffion of the in- 
 duftry of other countries falls back, if I may fay 
 fo, upon the heads of the oppreflbrs, and crufhes 
 their induftry more than it does that of thofe 
 other countries. By thofe regulations, for ex- 
 ample, the merchant of Hamburgh mufl fend 
 the linen which he deflines for the American 
 market to London, and he mud bring back 
 from thence the tobacco which he deftines for 
 the German market ; becaufe he can neither fend 
 the one diredly to America, nor bring back the 
 other direftly from thence. By this reftraint he 
 is probably obliged to fell the one fomewhat 
 cheaper, and to buy the other fomewhat dearer 
 than he otherwife might have done ; and his 
 profits are probably fomewhat abridged by means 
 of it. In this trade, however, bctv/een Ham- 
 burgh and London, he certainly receives the 
 returns of his capital much more quickly than 
 he could poflibly have done in the direct trade 
 to America, even though we fhould fuppofe, 
 
 what
 
 462 THE NATURE AND CAUSES OP 
 
 BOOK what Is by no means the cafe, that the payments 
 IV. of America were as punclual as thofe of London. 
 In the trade, therefore, to which thofe regu- 
 lations confine the merchant of Hamburgh, his 
 capital can keep in conftant employment a much 
 greater quantity of German induflry than it 
 pofhbly could have done in the trade from which 
 he is excluded. Though the one employment, 
 therefore, may to him perhaps be lefs profitable 
 than the other. It cannot be lefs advantageous 
 to his country. It Is quite ' otherwife with the 
 employment into which the monopoly natarally 
 attracts, if I may fay fo, the capital of the Lon- 
 don merchant. That employment may, perhaps, 
 be more profitable to him than the greater part 
 of other employments, but on account of the flow- 
 nefs of the returns, it cannot be more advanta- 
 geous to his country. 
 
 After all the unjufl attempts, therefore, of 
 every country in Europe to engrofs to itfelf the 
 whole advantage of the trade of its own colonies, 
 no country has yet been able to engrofs to itfelf 
 any thing but the expence of fupporting in time 
 of peace, and of defending in time of war, the 
 opprefTive authority which it aflumes over ihem. 
 The inconveniencies refulting from the poifelTion 
 of Its colonies, every country has engroffed to itfelf 
 completely. The advantages refulting from their 
 trade it has been obliged to Ihare with many other 
 countries. 
 
 At firfl fight, no doubt, the monopoly of the 
 great commerce of America naturally feems to 
 be an acquifition of the higheft value. To the 
 
 undif-
 
 tTHE WEALTH OF NATIONS. 463 
 
 undlfcerning eye of giddy ambition, it naturally chap. 
 prefents itfelf, amidft the confufed fcramble of vii. 
 politicks and war, as a very dazzling objeft to ' ^^^^ 
 fight for. The dazzling fplendour of the objed:, 
 however, the immenfe greatnefs of the commerce, 
 is the very quality which renders the monopoly 
 of it hurtful, or which makes one employment, 
 in its own nature neceffarily lefs advantageous to 
 the country than the greater part of other em- 
 ployments, abforb a much greater proportion of 
 the capital of the country than what v/ould other- 
 wife have gone to it» 
 
 The mercantile flock of every country, it has 
 been fhewn in the fecond book, naturally feeks, 
 if one may fay fo, the employment mod advan- 
 tageous 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 whofe trade that flock carries on. But 
 the owner of that flock neceffarily wifhes to dif- 
 pofe of as great a part of thofe goods as he can 
 at home. He thereby faves himfelf the trouble, 
 rifk, and expence, of exportation, and he will 
 upon that account be glad to fell them at home, 
 not only for a much fmaller price, but vv^ith 
 fomewhat a fmaller profit than he might expe£t 
 to make by fending them abroad. He naturally, 
 therefore, endeavours as much as he can to turn 
 'his carrying trade into a foreign trade of con- 
 fumption. If his ftock again is employed in a 
 foreign trade of confumption, he will, for the 
 fame reafon, be glad to difpofe of at home as 
 great a part as he can of the home goods, which 
 
 1 5 he
 
 4^4 THE NATURE AND CAUSES OF 
 
 BOOK he colleds in order to export to fome foreign 
 IV. market, and he will thus endeavour, as much as 
 
 ''"''^^~*^ he can, to turn his foreign trade of confumption 
 into a home trade. The mercantile flock of 
 every country naturally courts in this manner the 
 near, and fliuns the diftant employment ; na- 
 turally courts the employment in which the re- 
 turns are frequent, and ihuns that in which they 
 are dillant and flov/ ; naturally courts the em- 
 ployment in which it can maintain the greateft 
 quantity of produdive labour in the country to 
 which it belongs, or in which its owner refides, 
 and fhuns that in which it can maintain there the 
 fmalleft quantity. It naturally courts the employ- 
 ment which in ordinary cafes is moft advantageous, 
 and fhuns that which in ordinary cafes is leaft ad- 
 vantageous to that country. 
 
 But if in any one of thofe diflant employments, 
 which in ordinary cafes are lefs advantageous to 
 the country, the profit fhould happen to rife 
 lomewhat higher that what is fuflicient to ba- 
 lance the natural preference which is given to 
 nearer employments, this fuperiority of profit 
 will draw flock from thofe nearer employments, 
 till the profits of all return to their proper level. 
 This fuperiority of profit, however, is a proof 
 that in the aftual circumflances of the fociety, 
 thofe diflant employments are fomewhat under- 
 flocked in proportion to other employments, and 
 that the flock of the fociety is not diflributed in 
 the properefl manner among all the different 
 employments carried on in it. It is a proof that 
 fomething is either bought cheaper or fold dearer 
 
 8 than
 
 THE WEALTH OF NATIONS. 465 
 
 than It ought to be, and that feme particular chap. 
 clafs of citizens is more or lefs opprefled either vii. 
 by paying more or by getting lefs than what is 
 fuitable to that equality, which ought to take 
 place, ancl which naturally does take place 
 among all the different claffes [of them. Though 
 the fame capital never will maintain the fame 
 quantity of productive labour in a didant as in a 
 near employment, yet a diftant employment may 
 be as neceffary for the welfare of the fociety as a 
 near one ; the goods which the diftant employ- 
 ment deals in being neceflary, perhaps, for car- 
 rying on many of the nearer employments. But 
 if the profits of thofe who deal in fuch goods are 
 above their proper level, thofe goods will be fold 
 dearer than they ought to be, or fomewhat above 
 their natural price, and all thofe engaged in the 
 nearer employments will be more or lefs op- 
 preffed by this high price. Their intereft, there- 
 fore, in this cafe, requires that fome ftock flrould 
 be withdrawn from thofe nearer employments, 
 and turned towards that diftant 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 cafe, the 
 public intereft requires that fome ftock fliould 
 be withdrawn from thofe employments which in 
 ordinary cafes are more advantageous, and turned 
 towards one which in ordinary cafes is lefs ad- 
 vantageous to the public : and in this extraordi- 
 nary cafe, the natural interefts and inclinations of 
 men coincide as exactly with the public intereft 
 as in all other ordinary cafes, and lead them to 
 VOL II. i-i H with-
 
 466 THE NATURE AND CAUSES OF 
 
 BOOK withdraw flock from the near, and to turn It to- 
 IV. wards the diflant employment. 
 
 It is thus that the private interefls and paffions 
 of individuals naturally difpofe them to turn 
 their flock towards the employments which in 
 ordinary cafes are mofl advantageous to the fo- 
 ciety. But if from this natural preference they 
 fhould turn too much of it towards thofe em- 
 ployments, the fall of profit in them and the 
 rife of it in all others immediately difpofe them 
 to alter this faulty diflribution. Without any 
 intervention of law, therefore, the private inte- 
 refls and paffions of men naturally lead them to 
 divide and diflribute the flock of every fociety, 
 among all the different employments carried on 
 in it, as nearly as poflible in the proportion 
 which is mofl agreeable to the interefl of the 
 whole fociety. 
 
 Ai.L the different regulations of the mercan- 
 tile fyflem neceffarily derange more or lefs this 
 natural and mofl advantageous diflribution of 
 flock. But thofe which concern the trade to 
 America and the Eafl Indies derange it perhaps 
 more than any other j becaufe the trade to thofe 
 two great continents abforbs a greater quantity of 
 flock than any two other hrnches of trade. 
 The regulations, hcwcver, by which this de- 
 rangement is effefted in thofe two different 
 branches of trade are not altogether the fame. 
 Monopoly is the great engine of both ; but it is 
 a different fort of monopoly. Monopoly of one 
 kind or another, indeed, feems ^to be the fole 
 engine of the mercantile fyflem. 
 
 In.
 
 THE WEALTH OF NATIONS. 4^7 
 
 In the trade to America every nation en- chap, 
 deavours to engrofs as much as poffible the whole vii. 
 market of its own colonies, by fairly excluding "^"^ 
 all other nations from any direft trade to them. 
 During the greater part of the fixteenth century, 
 the Portugueze endeavoured to manage the trade 
 to the Eaft Indies in the fame manner, by 
 claiming the fole right of faihng in the Indian 
 feas, on account of the merit of having firft 
 found out the road to them. The Dutch ftill 
 continue to exclude all other European nations 
 from any direft trade to their fpice iflands. Mo- 
 nopolies of this kind are evidently eftablifhed 
 againft all other European nations, who are 
 thereby not only excluded from a trade to which 
 it might be convenient for them to turn fome 
 part of their flock, but are obliged to buy the 
 goods which that trade deals in, fomewhat dearer 
 than if they could import them themfelves direclly 
 from the countries which produce them. 
 
 But fmce the fall of the power of Portugal, 
 no European nation has claimed the exclufive 
 right of failing in the Indian feas, of which the 
 principal ports are now open to the lliips of all 
 European nations. Except in Portugal, how- 
 ever, and within thefe few years in France, the 
 trade to the Eaft Indies has in every European 
 country been fubjeded to an exclufive company. 
 Monopolies of this kind are properly eftablifhed 
 againft the very nation which ereds them. The 
 greater part of that nation are thereby not only 
 excluded from a trade to which it might be con- 
 
 H H 2 venient
 
 46S THE NATURE AND CAUSES OF 
 
 BOOK venient for them to turn fome part cf their flock, 
 i^' but are obliged to buy th- goods which that 
 trade deals in, fomewhat dearer than if it was 
 open and free to all their countrymen. Since 
 the eftablifiiment of the EngHfli Eafl: India com- 
 pany, for example, the other inhabitants of 
 England, over and above being excluded from 
 the trade, mull have paid in the price of the Eaft 
 India goods which they have confumed, not 
 only for all the extraordinary profits which the 
 company may have made upon thofe goods in 
 confequence of their monopoly, but for all the 
 extraordinary wade which the fraud and abufe, 
 infeparable from the management of the affairs 
 of fo great a company, muft neceflarily have 
 occafioned. The abfurdity of this fecond kind of 
 monopoly, therefore, is much more manifefi than 
 that of the firfl. 
 
 Both fhefe kinds of monopolies derange more 
 or lefs the natural didribution of the flock of the 
 fociety : but they do not always derange it in the 
 fame way. 
 
 Monopolies of the firfl kind always attract 
 to the particular trade in which they are efla- 
 bliflied, a greater proportion of the flock of the 
 fociety than vv^hat would go to that trade of its 
 own accord. 
 
 Monopolies of the fecond kind may fome- 
 
 times attract ftock towards the particular trade 
 
 '*' in which they are eflablifhed, and fometimes 
 
 repel it from that trade according to different 
 
 circumlfances. In poor countries they naturally 
 
 attva^
 
 THE WEALTH OF NATIONS. 469 
 
 attract towards that trade more (lock than would chap. 
 otherwife go to it. In rich countries they na- ' '^'^i* 
 turally repel from it a good deal of ftock which ^""^ 
 would otherwife go to it. 
 
 Such poor countries as Sweden and Denmark, 
 for example, would probably have never fent a 
 fmgle fhip to the Eafl Indies, had not the trade 
 been fubjected to an exclufive company. The 
 eftabliOiment of fuch a company necefiarily en- 
 courages adventurers. Their monopoly fecures 
 them againfl all competitors in the home market, 
 and they have the fame chance for foreign mar- 
 kets with the traders of other nations. Their 
 monopoly fliows them the certainty of a great 
 profit upon a confiderable quantity of goods, 
 and the chance of a confiderable profit upon a 
 great quantity. Without fuch extraordinary en- 
 couragement, the poor traders of fuch poor 
 countries would probably never have thought of 
 hazarding their fmall capitals in fo very didant 
 and uncertain an adventure as the trade to 
 the Eafl Indies mud naturally have appeared to 
 them. 
 
 Such a rich country as Holland, on the con- 
 trary, would probably, in the cafe of a free 
 trade, fend many more iliips to the Ea(t Indies 
 than it adlually does. The limited flock of the 
 Dutch Eafl India company probably repels from 
 that trade many great mercantile capitals which 
 would otherwife go to it. The mercantile capital 
 of Holland is fo great that it is, as it were, con- 
 tinually overflowing, fometimes into the public 
 funds of foreign countries, fometimes into loans 
 
 H H 3 to
 
 470 THE NATURE AND CAUSES OF 
 
 BOOK to private traders and adventurers of foreign 
 IV. countries, fometimes into the mod round-about 
 foreign trades of confumption, and fometimes into 
 the carrying trade. All near employments being 
 completely filled up, all the capital which can 
 be placed in them with any tolerable profit being 
 already placed in them, the capital of Holland 
 neceffarily flows towards the mofl dlftant employ- 
 ments. The trade to the Eafl: Indies, if it were 
 altogether free, would probably abforb the greater 
 part of this redundant capital. The Eaft Indies 
 offer a market both for the manufaflures of 
 Europe and for the gold and filver as well as for 
 feveral other productions of America, greater and 
 more extenfive than both Europe and America 
 put together. 
 
 Every derangement of the natural diftribu- 
 tion of (lock is neceflarily hurtful to the fociety 
 in which it takes place ; whether it be by re- 
 pelling from a particular trade the (lock which 
 would otherwife go to it, or by attracting to- 
 wards a particular trade that which would not 
 otherwife come to it. If, without any exclufive 
 company, the trade of Holland to the Eaft Indies 
 would be greater than it adually is, that country 
 muft fuffer a confiderable lofs by part of its ca- 
 pital being excluded from the employment moft 
 convenient for that part. And in the fame 
 manner, if, without an exclufive company, the 
 trade of Sweden and Denmark to the Eafl: Indies 
 would be lefs than it actually is, or, what per- 
 haps is more probable, would not exift at all, 
 thofe two countries muft likewife fuffer a con- 
 fiderable
 
 THE WEALTH OF NATIONS. 471 
 
 fiderable lofs by part of their capital being chap. 
 drawn into an employment which mud be more ^ii. 
 or lefs unfuitable to their prefent circumftances. 
 Better for them, perhaps, in their prefent cir- 
 cumftances, to buy Eaft India goods of other 
 nations, even though they (hould pay fomewhat 
 dearer, than to turn fo great a part of their fmall 
 capital to fo very diftant a trade, in which the 
 returns are fo very flow, in which that capital 
 can maintain fo fmall a quantity of productive 
 labour at home, where productive labour is fo 
 much wanted, where fo little is done, and where 
 fo much is to do. 
 
 Though without an exclufive company, there- 
 fore, a particular country fhould not be able to 
 carry on any direct trade to the Eaft Indies, it 
 will not from thence follow that fuch a company 
 ought to be eflablilhed there, but only that fuch 
 ^ country ought not in thefe circum fiances to 
 trade direftly to the Eaft Indies. That fuch 
 companies are not in general neceffary for carry- 
 ing on the Eaft India trade, is fufficiently demon- 
 ftrated by the experience of the Portugueze, who 
 enjoyed ahnoft the whole of it for more than a 
 century together without any exclufive company. 
 
 No private merchant, it has been faid, could 
 well have capital fufficient to maintain fa6lors 
 and agents in the different ports of the Eaft 
 Indies, in order to provide goods for the fhips 
 which he might occafionally fend thither ; and 
 yet, unlefs he was able to do this, the difficulty 
 of finding a cargo might frequently make his 
 ^ips lofe the feafon for returning, and the ex- 
 
 H H 4 pence
 
 472 THE NATURE AND CAUSES OF 
 
 BOOK pence of fo long a delay would not only eat up 
 IV. the whole profit of the adventure, but frequently 
 
 '""^''''''^ occafion a very confiderable lofs. This argu- 
 ment, however, if it proved any thing at all, 
 would prove that no one great branch of trade 
 could be carried on without an exclufive com- 
 pany, which is contrary to the experience of all 
 nations. There is no great branch of trade 
 in which the capital of any one private merchant 
 is fufficient for carrying on all the fubordinate 
 branches which muft be carried on, in order to 
 carry on the principal one. But when a nation 
 is ripe for any great branch of trade, fome mer- 
 chants naturally turn their capitals towards the 
 principal, and fome towards the fubordinate 
 branches of it ; and though all the different 
 branches of it are in this manner carried on, yet 
 it very feldom happens that they are all carried 
 on by the capital of one private merchant. If a 
 nation, therefore, is ripe for the Eaft India trade, 
 a certain portion of its capital will naturally di- 
 vide itfelf among all the different branches of 
 that trade. Some of its merchants will find it 
 for their interell to refide in the Eaft Indies, and 
 to employ then capitals there in providing goods 
 for the fliips v.^hich are to be fent out by other 
 merchants who refide in Europe. The fettle- 
 ments which different European nations have 
 obtained in the Eaft Indies, if they were taken 
 from the exclufive companies to which they at 
 prefent belong, and put under the im.mediate 
 protedion of the fovereign, would render this re- 
 fidence both fafe and eafy, at leaft to the mer- 
 chants
 
 " THE WEALTH CF NATIONS. 473 
 
 chants of the particular nations to whom thofe chap. 
 fettlements belong. If at any particukr time vii. 
 that part of the capital of any country which of 
 its own accord tended and inclined, if I may fay 
 fo, towards the Eaft India trade, was not fuffi- 
 cient for carrying on all thofe different branches 
 of it, it would be a proof that, at that particular 
 time, that country was not ripe for that trade, 
 and that it would do better to buy for fome 
 time, even at a higher price, from other Eu- 
 ropean nations, the Eaft India goods it had oc- 
 cafion for, than to import them itfelf diredly 
 from the Eaft Indies. V\/'hat it might lofe by 
 the high price of thofe goods could feldom be 
 equal to the iofs which it would fuRain by the 
 diftraclion of a large portion of its capital from 
 other employments more neceffary or more ufe- 
 ful, or more fuitable to its circumftances and 
 fitualion, than a dired trade to the Eaft Indies. 
 
 Though the Europeans poflefs many con- 
 fiderable fettlements both upon the coaft of 
 Africa and in the Eaft Indies, they have not 
 yet eftabliflied in either of thofe countries fuch 
 numerous and thriving colonies as thofe in the 
 iflands and continent of America. Africa, how- 
 ever, as well as feveral of the countries compre- 
 hended under the general name of the Eaft In- 
 dies, are inhabited by barbarous nations. But 
 thofe nations were by no means fo weak and 
 defencelefs as the miferable and helplefs Ameri- 
 cans ; and in proportion to the natural fertility 
 of the countries which they inhabited, they were 
 bclides much more populous. The moft barba- 
 rous
 
 474 THE NATURE AND CAUSES OF 
 
 BOOK rous nations either of Africa or of the Eafi: 
 IV, Indies were fhepherds ; even the Hottentots 
 were fo* But the natives of every part of Ame- 
 rica, except Mexico and Peru, were only hunt- 
 ers ; and the difference is very great between the 
 number of fhepherds and that of hunters whom 
 the fame extent of equally fertile territory can 
 maintain. In Africa and the Eafl: Indies, there- 
 fore, it was more difficult to difplace the natives, 
 and to extend the European plantations over the 
 greater part of the lands of the original inhabit- 
 ants. The genius of exclufive companies, be- 
 fides, is unfavourable, it has already been ob- 
 ferved, to the growth of new colonies, and has 
 probably been the principal caufe of the little 
 progrels which they have made In the Eafl In- 
 dies. The Portugueze carried on the trade both 
 to Africa and the Eafl Indies without any exclu^ 
 five companies, and their fettlements at Congo, 
 Angola, and Benguela on the coafl of Africa, 
 and at Goa in the Eafc Indies, though much 
 depreifed by fuperflltion and every fort of bad 
 government, yet bear fome faint refemblance to 
 the colonies of America, and are partly inhabited 
 by Portugueze who have been eflablifhed there 
 for feveral generations. The Dutch fettlements 
 at the Cape of Good Hope and at Batavia, are 
 at prefent the moft confiderable colonies which 
 the Europeans have eflablifhed either in Africa 
 or in the Eafl Indies, and both thefe fettlements 
 are peculiarly fortunate in their fituatlon. The 
 Cape of Good Hope] was inhabited by a race of 
 people almofl as barbarous and quite as inca? 
 
 pable
 
 THE WEALTH OF NATIONS. 475 
 
 pable of defending themfelves as the natives of c h a p. 
 America. It is befides the half-way houfe, if vii. 
 one may fay fo, between Europe and the Eafl: 
 Indies, at which almoft every European (hip 
 makes fome (lay both in going and returning. 
 The fupplying of thofe Ihips with every fort of 
 frefii provifions, with fruit and fometimes with 
 wine, affords alone a very extenfive market for 
 the furplus produce of the colonifts. What the 
 Cape of Good Hope is between Europe and 
 every part of the Eaft Indies, Batavia is between 
 the principal countries of the Eafl Indies. It 
 lies upon the mod frequented road from Indof- 
 tan to China and Japan, and is nearly about 
 mid-way upon that road. Almoft all the Ihips 
 too that fail between Europe and China touch at 
 Batavia ; and it is, over and above all this, the 
 center and principal mart of what is called the 
 country trade of the Eaft Indies ; not only of 
 that part of it which is carried on by Europeans, 
 but of that which is carried on by the native In- 
 dians ; and veffels navigated by the inhabitants 
 of China and Japan, of Tonquin, Malacca, 
 Cochln-China, and the ifland of Celebes, are 
 frequently to be feen in its port. Such advan- 
 tageous fituations have enabled thofe two colo- 
 nies to furmount all the obftacles which the 
 oppreflive genius of an exclufive company may 
 have occafionally oppofed to their growth. They 
 have enabled Batavia to furmount the additional 
 difadvantage of perhaps the molt unwholefome 
 climate in the world. 
 
 The
 
 476 THE NATURE AND CAUSES OF 
 
 Tfie Englifli and Dutch companies, though 
 they have eftabHfhed no confiderable colonies, 
 except the two above mentioned, have both 
 made confiderable conquefts in the Eaft Indies. 
 But in the manner in which they both govern 
 their new fubje^ls, the natural genius of an ex- 
 clufive company has (hown itfelf mofl diftindly. 
 In the fpice illands the Dutch are faid to burn all 
 the fpiceries which a fertile feafon produces be- 
 yond what they expect to difpofe of in Eu- 
 rope with fuch a , profit as they think fufficient. 
 In the illands where they have no fettlements, 
 they give a premium to thofe -who collect the 
 young bloflbms and green leaves of the clove 
 and nutmeg trees which naturally grow there, 
 but which this favage policy has now, it is faid, 
 alrnoft completely extirpated. Even in the 
 illands where they have fettlements they have 
 very much reduced, it is faid, the number of 
 thofe trees. If the produce even of their own 
 iflands was much greater than what fuited their 
 market, the natives, they fufpeft, might find 
 means to convey fome part of it to other na- 
 tions ; and the beft'way, they imagine, to fecure 
 their own monopoly, is to take care that no 
 more lliail grow than what they themfelves carry 
 to market. By different arts of oppreiTion they 
 have reduced the population of feveral of the 
 Moluccas nearly to the number which is fuffi- 
 cient to fupply with frefh provifions and other 
 neceifaries of life their ov/n infignificant garri- 
 fons, and fuch of their lliips as occafionally come 
 
 there 
 1
 
 THE WEALTH OF NATIONS. 
 
 477 
 
 there for a cargo of fpices. Under the govern- chap. 
 ment even of the Portugueze, however, thofe vii. 
 iflands are faid to have been tolerably well inha- 
 bited. The Englifh company have not yet had 
 time to eftablifh in Bengal fo perfectly deftructive 
 a fyftem. The plan of their government, how- 
 ever, has had exactly the fame tendency. It has 
 not been uncommon, I am well allured, for the 
 chief, that is, the firll clerk of a faftory, to order 
 a peafant to plough up a rich field of poppies, 
 and fow it with rice or fome other grain. The 
 pretence was, to prevent a fcarcity of provifions ; 
 but the real reafon, to give the chief an oppor- 
 tunity of felling at a better price a large quan- 
 tity of opium which he happened then to have 
 upon hand. Upon other occafions the order has 
 been reverfed ; and a rich field of rice or other 
 grain has been ploughed up, in order to make 
 room for a plantation of popples; when the 
 chief forefaw that extraordinary profit was likely 
 to be made by opium. The fervants of the 
 company have upon feveral occafions attempted 
 to ellablifh in their own favour tlie monopoly of 
 fome of the mod important branches, not only 
 of the foreign, but of the inland trade of the 
 country. Had they been allowed to go on, it 
 is impofTible that they fliould not at fome time 
 or another have attempted to reftrain the pro- 
 duftion of the particular articles of which they 
 had thus ufurped the monopoly, not only to the 
 quanuty which they themfelves could purchafe, 
 but to that which they could expect to fell with 
 fuch a profit as they might think fufficient. In 
 
 I the
 
 ^78 THE NATURE AND CAUSES OF 
 
 BOOK the courfe of a century or two, the policy of tbe 
 IV. Englifti company would in this manner have pro- 
 bably proved as completely deftruclive as that of 
 the Dutch. 
 
 Nothing, however, can be more direftly 
 contrary to the real intereft of thofe companies, 
 confidered as the fovereigns of the countries 
 which they have conquered, than this deftruftive 
 plan. In almoft all countries the revenue of the 
 fovereign 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 fove- 
 reign. It is his intereft, therefore, to increafe as 
 much as pofTible that annual produce. But if 
 this is the intereft of evciy fovereign, it is pecu- 
 liarly fo of one whofe revenue, like that of the 
 fovereign of Bengal, arifes chiefly from a land- 
 rent. That rent muft necefiarily be in propor- 
 tion to the quantity and value of the produce, 
 and both the one and the other muft depend 
 upon the extent of the market. The quantity 
 will always be iuited with more or lefs exadnefs 
 to the confumption of thofe who can afford to 
 pay for it, and the price which they will pay will 
 always be in proportion to the eagernefs of their 
 competition. It is the intereft of fuch a fove- 
 reign, therefore, to open the moft extenfive 
 market for the produce of his country, to allow 
 the moft perfect freedom of commerce, in order 
 to increafe as much as polTible the number and 
 the competition of buyers ; and upon this ac- 
 count to abolilh, not only all monopolies, but 
 
 all
 
 THE WEALTH OF NATIONS. 47^ 
 
 all reftraints upon the tranfportatlon of the c h a f. 
 home produce from one part of the country to vii. 
 another, upon its exportation to foreign coun- 
 tries, or upon the importation of goods of any- 
 kind for which it can be exchanged. He is in 
 this manner mod likely to increafe both the 
 quantity and value of that produce, and confe- 
 quently of his own fiiare of it, or of his own 
 revenue. 
 
 But a company of merchants are, it feems, 
 incapable of confidering themfelves as fove- 
 reigns, even after they have become fuch. 
 Trade, or buying in order to fell again, they 
 ftill confider as their principal bufinefs, and by a 
 flrange abfurdity, regard the charader of the fove- 
 reign, as but an appendix to that of the mer- 
 chant, as fomething which ought to be made 
 fubfervient to it, or by means of which they 
 may be enabled to buy cheaper in India, and 
 thereby to fell with a better profit in Europe. 
 They endeavour for this purpofe to keep out as 
 much as poffible all competitors from the mar- 
 ket of the countries which are fubjeft to their 
 government, and confequently to reduce, at 
 lead, fome part of the furplus produce of thofe 
 countries to what is barely fufficient for fupply- 
 ing their own demand, or to what they can ex- 
 ped to fell in Europe with fuch a profit as they 
 may think reafonable. Their mercantile habits 
 draw them in this manner, almofl: neceiTarily, 
 though perhaps infenfibly, to prefer upon all ordi- 
 nary occafions the little and tranfitory profit of 
 the monopolift to the great and permanent re- 
 
 15 venue
 
 4go tHE NATURE AND CAUSES .OF 
 
 BOOK venue of the fovereign, and would gradually 
 i"*^' lead them to treat the countries fubjedl to their 
 ^"^ government, nearly as the Dutch treat the Mo- 
 luccas. It is the intereft of the Eaft India com- 
 pany, confidered as fovereigns, that the Euro- 
 pean goods which are carried ro their Indian 
 dominions (hould be fold there as cheap as pof- 
 fible ; and that the Indian goods which are 
 brought from thence fliould bring there as good 
 a price, or fhould be fold there as dear as pof- 
 fible. But the reverfe of this is their interefl as 
 merchants. As fovereigns, their interefl is ex- 
 aftly the fame with that of the country which 
 they govern. As merchants, their interefl: is 
 directly oppofite to that interefl:. 
 
 But if the genius of fuch a government, even 
 as to what concerns its direction in Europe, is in 
 this manner eflentially and perhaps incurably 
 faulty, that of its adminiflration in India is ftill 
 more fo. Tftat adminiftration is neceffarily 
 ^ compcfed of a council of merchants, a profeiiion 
 no doubt extremely refpeclabie, but which in no 
 country in the world carries along with it than 
 fort of authority which naturally over-awes the 
 people, and without force commands their willing 
 obedience. Such a council can command obe- 
 dience only by the miiitary force with which 
 they are accompanied, and their government is 
 therefore neceffarily military and defpotical. 
 Their proper bufmefs, however, is that of mer- 
 chants. It is to fell, upon their mafters' ac- 
 count, the European goods configned to them, 
 and to buy in return Indian goods for the 
 
 European
 
 THE WEALTH OF NATIONS. 481 
 
 European market. It is to fell the one as dear c H a p, 
 and to buy the other as cheap as poffible, and vii. 
 confequently to exclude as much as poffible all '"""^ 
 rivals from the particular market where they 
 keep their fhop. The genius of the adminiftra- 
 tion, therefore, fo far as concerns the trade of 
 the company, is the fame as that of the diredion. 
 It tends to make government fubfervienf to the 
 intereft: of monopoly, and confequently to ftunt 
 the natural growth of fome parts at lead of the 
 furplus produce of the country to what is barely 
 fufficient for anfwering the demand of the com- 
 pany. 
 
 All the members of the adminiftration, be- 
 fides, trade more or lefs upon their own account, 
 and it is in vain to prohibit them from doing fo. 
 Nothing can be more completely fooHlh than to 
 expe(5l that the clerks of a great counting-houfe 
 at ten thoufand miles diflance, and confequently 
 almoft quite out of fight, fliould, upon a fimple 
 order from their mailers, give up at once doing 
 any fort of bufmefs upon their own accountji 
 abandon for ever all hopes of making a fortune, 
 of which they have the means in their hands, 
 and content themfelves with the moderate falaries 
 which thofe m.afters allow them, and which, 
 moderate as they are, can feldom be augmented j 
 being commonly as large as the real profits of 
 the company trade can afford. In fuch circum-i 
 ftances, to prohibit the fervants of the company'- 
 from trading upon their own account, can have 
 fcarce any other effect than to enable the fupe- 
 rior fervants, under pretence of executing their 
 mailers* order, to opprefs fuch of the inferior ones, 
 
 VOL. II, 1 I as
 
 4S2 THE NATURE AND CAUSES OF 
 
 BOOK as have had the misfortune to fall under their dif- 
 IV. pleafure. The fervants naturally endeavour to efta- 
 
 ^-^"^^-"^ ]^\{(li the fame monopoly in favour of their own 
 private trade as of the public trade of the com- 
 pany. If they are fuffered to ad as they could 
 wiih, they will eftablifn this monopoly openly 
 and diredly, by fairly prohibiting all other people 
 from trading in the articles in which they chufe 
 to deal J and this, perhaps, is the befl and lead 
 oppreffive way of eftablifliing it. But if by an 
 order from Europe they are prohibited from do- 
 ing this, they will, notwithftanding, endeavour 
 to eftablifh a monopoly of the fame kind, fecretly 
 and indireclly in a way that is much more de- 
 flru6live to the country. They will employ 
 the whole authority of government, .and pervert 
 the adminiftration of juftice, in order to harafs 
 and ruin thofe who interfere with them in any 
 branch of commerce which, by means of agents, 
 either concealed, or at lead not publicly avowed, 
 they may chufe to carry on. But the private 
 trade of the fervants 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 fervants may extend to all the dif- 
 ferent branches both of its inland and foreign 
 trade. The monopoly of the company can tend 
 only to Hunt the natural growth of that part of 
 the furplus produce which, in the cafe of a free 
 trade, would be exported to Europe. That of 
 the fervants tends to ftunt the natural growth of 
 
 every
 
 THE WEALTH OF NATIONS. 4^3 
 
 every part of the produce in which they chufe to chap. 
 deal, of what is deftined for home confumption, vii^ 
 as well as of what is deftined for exportation ; and 
 confequently to degrade the cultivation of the 
 whole country, and to reduce the number of its 
 inhabitants. It tends to reduce the quantity of 
 every fort of produce, even that of the neceflaries 
 of life, whenever the fervants of the company 
 chufe to deal in them, to what thofe fervants 
 can both afford to buy and expert to fell with 
 fuch a profit as pleafes them. 
 
 From the nature of their fituation too the fer- 
 vants mufl be more difpofed to fupport with 
 rigorous feverity their own interefl againfl that 
 of the country which they govern, than their 
 mafters can be to fupport theirs. The country 
 belongs to their mafters, who cannot avoid hav- 
 ing fome regard for the interefl of what belongs 
 to them. But it does not belong to the fervants. 
 The real interefl of their maflers, if they were 
 capable of underflanding it, is the fame with that 
 of the country *j and it is from ignorance chiefly, 
 and the meannefs of mercantile prejudice, that 
 they ever opprefs it. But the real interefl of the 
 fervants is by no means the fame with that of the 
 country, and the moft perfect information would 
 not neceffarily put an end to their opprefTions. 
 The regulations accordingly which have been 
 fent out from Europe, though they have been fre- 
 quently weak, have upon moft occafions been 
 
 * The interefl; of every proprietor of India flock, however, 
 is by no means the fame with that of the country in the go- 
 vernment of which his vote gives him fome influence. See 
 Book V. Chap. i. Part 3d. 
 
 112 well-
 
 4H THE NATURE AND CAUSES OF 
 
 BOOK well-meaning. More intelligence and perhaps 
 iv. lei's good-meaning has fometimes appeared in 
 thofe eftablilhed by the fervants in India. It is 
 a very fmgular government in which every mem- 
 ber of the adminlflration wiflies to get out of the 
 country, and confequently to have done with 
 the government, as foon as he can, and to whofe 
 intereft, the day after he has left it and carried 
 fiis whole fortune with him, it is perfedly indif- 
 ferent though the whole country was fwallowed 
 up by an earthquake. 
 
 I MEAN not, however, by any thing which I 
 have here faid, to throw any odious imputatioil 
 upon the general charader of the fervants of 
 the Eaft India company, and much lefs upon 
 that of any particular perfons. It is the fyftem 
 of government, the fituation in which they are 
 placed, that I mean to cenfure; not the cha- 
 rafter of thofe who have a6ted in it. They z^ed 
 as their fituation ftaturally directed, and they 
 who have clamoured the loudeft againft them 
 would, probably, not have a£led better themfelves. 
 In war and negociation, the councils of Madras 
 and Calcutta have upon feveral occafions con- 
 ducted themfelves with a refolution and decifive 
 wifdom which v/ould have done honour to the 
 fenate of Rome in the befl days of that republic. 
 The members of thofe councils, however, had 
 been bred to profeffions very different from war 
 and pohtics. But their fituation alone, without 
 education, experience, or even example, feems 
 to have formed in them all at once the great 
 qualities which it required, and to have infpired 
 them both with abilities and virtues which they 
 
 themfelve;?
 
 THE WEALTH OF NATIONS. 485 
 
 themfelves could not well know that they pof- chap. 
 fefled. If upon fome occafions, therefore, it has vii. 
 animated them to adlions of magnanimity which ^'-"— ^ 
 could not well have been expelled from them, we 
 fliould not wonder if upon others it has prompted 
 them to exploits of fomewhat a different nature. 
 
 Such exclufive companies, therefore, are nui- 
 fances in every refpect ; always more or lefs in- 
 convenient to the countries in which they are 
 eftabliflied, and deftruftive to thofe which have 
 the misfortune to fall under their government. 
 
 CHAP. VIII. 
 
 Conchifion of the Mercantile Syflem. 
 
 nPHouGH the encouragement of exportation, 
 and the difcouragement of importation, 
 are the two great engines by which the mer- 
 cantile fyftem propofes to enrich every coun- 
 try, yet with regard to fome particular commo- 
 dities, it feems to follow an oppofite plan : to 
 difcourage exportation and to encourage import- 
 ation. Its ultimate objc6l, however, it pre- 
 tends, is always the fame, to enrich the country 
 by an advantageous balance of trade. It dif- 
 courages the exportation of the materials of ma- 
 nufadure, and of the inflruments of trade, in 
 order to give our own workmen an advantage, 
 and to enable them to underfell thofe of other 
 nations in all foreign markets : and by reftrain- 
 
 I I 3 ing,
 
 485 THE NATURE AND CAUSES OF 
 
 BOOK ing, in this manner, the exportation of a few 
 IV. commodities, of no great price, it propofes to 
 occafion a much greater and more valuable ex- 
 portation of others. It encourages the import- 
 ation of the materials of manufacture, in order 
 that our own people may be enabled to work 
 them up more cheaply, and thereby prevent a 
 greater and more valuable importation of the 
 ujanufadured commodities. I do not obferve, 
 at leafl in our Statute Book, any encouragement 
 given to the importation of the inflruments of 
 trade. When manufadures have advanced to a 
 certain pitch of greatnefs, the fabrication of the 
 inflruments of trade becomes itfelf the objed of 
 a great number of very important manufadures. 
 To give any particular encouragement to the 
 importation of fuch inflruments, would interfere 
 too much with the intereit of thofe manufadures. 
 Such importation, therefore, inflead of being en- 
 couraged, has frequently been prohibited. Thus 
 the importation of v^^ool cards, except from Ire- 
 land, or when brought in as wreck or prize goods, 
 was prohibited by the 3d of Edward IV. ; which 
 prohibition was renewed by the 39th of Elizabeth, 
 and has been continued and rendered perpetual 
 by fubfequent laws. 
 
 The importation of the materials of manufac- 
 ture has fometimes been encouraged by an ex- 
 emption from the duties to which other goods 
 jire fubjeft, and fometimes by bounties. 
 
 Thji importation of flieep's wool from feveral 
 different countries, of cotton wool from all coun» 
 tries, of undreiTed liaxj of the greater part of 
 
 dying
 
 THE WEALTH OF NATIONS. 487 
 
 dying drugs, of the greater part of undrefled chap. 
 
 hides from Ireland or the Britifh colonies, of feal yii-i* 
 
 {kins from the Britifh Greenland filhery, of pig 
 
 and bar iron from the Britifii colonies, as well 
 
 as of feveral other materials of manufaclure, has 
 
 been encouraged by an exemption from all 
 
 duties, if properly entered at the cuftom-houfe. 
 
 The private intereft of our merchants and manu- 
 
 fadurers may, perhaps, have extorted from the 
 
 legiilature thele exemptions, as well as the greater 
 
 part of our other commercial regulations. They 
 
 are, however, perfedly juft and reafonable, and 
 
 if, confidently with the neceffities of the ftate, 
 
 they could be extended to all the other materials 
 
 of manufadure, the public would certainly be a 
 
 gainer. 
 
 The avidity of our great manufa£lurers, how- 
 ever, has in fome cafes extended thefe exemp- 
 tions a good deal beyond what can juflly be 
 confidered as the rude materials of their work. 
 By the 24 Geo. II. chap. 46. a fmall duty of 
 only one penny the pound was impofed upon the 
 importation of foreign brown linen yarn, inftead 
 of much higher duties to which it had been fub- 
 jeded before, viz. of fixpence the pound upon 
 fail yarn, of one fhilling the pound upon all 
 French and Dutch yarn, and of two pounds 
 thirteen fliillings aud fourpence upon the hun- 
 dred weight of all fpruce or Mufcovia yarn. But 
 our manufacturers were not long fatisfied with 
 this redudlion. By the 29th of the fame king, 
 chap. 15. the fame law which gave a bounty upon 
 the exportation of Britifh and Irifli linen of 
 
 I I 4 which
 
 4?S THE NATURE AND CAUSES OF 
 
 BOOK which the price did not exceed eighteen pence the 
 IV. yard, even this finall duty upon the importation 
 "^ of brown linen yarn was taken away. In the 
 different operations, however, which are necef- 
 fary for the preparation of linen yarn, a good 
 deal more induftry is employed, than in the fub- 
 fequent operation of preparing linen cloth from 
 linen yarn. To fay nothing of the induftry of 
 the flas-growers and flax-dreflers, three or four 
 fpinners, at leaft, are neceflary, in order to keep 
 one weaver in conftant employment ; and more 
 than four-fifths of the whole quantity of labour, 
 neceffary for the preparation of linen cloth, is 
 employed in that of linen yarn ; but our fpinners 
 are poor people, women commonly fcattered 
 about in all different parts of the country, with- 
 out fupport or protection. It is not by the fale 
 of their work, but by that of the complete work 
 of the weavers, that our great mafter manu- 
 fadurers make their profits. As it is their in- 
 terefl to fell the complete manufacture as dear, 
 fo is it to buy the materials as cheap as pof- 
 fible. By extorting from the Icgifiature bounties 
 upon the exportation of their own linen, high 
 duties upon the importation of all foreign linen, 
 and a total prohibition of the home confumption 
 of fome forts of French hnen, thev endeavour 
 to fell their own goods as dear as poffible. By 
 encouraging the importation of foreign linen 
 yarn, and thereby bringing it into competition 
 with that which is made by our own people, 
 they endeavour to buy the work of the poor 
 fpinners as cheap as poffible. They are as in- 
 tent
 
 THE WEALTH OF NATIONS. 489 
 
 tent to keep down the wages of their own weaver?, chap. 
 as the earnings of the poor fpinners, and it is viir. 
 by no means for the benefit of the workman, that '"^^''""^ 
 ihey endeavour either to raife the price of the 
 complete work, or to lower that of the rude ma- 
 terials. It is the induftry which is carried on for 
 the benefit of the rich and the powerful, that is 
 principally encouraged by our mercantile fyftem. 
 That which is carried on for the benefit of the 
 poor and the indigent, is too often either ne- 
 giefted or opprelTed. 
 
 Both the bounty upon the exportation of 
 linen and the exemption from the duty upon the 
 importation of foreign yarn, v/hich were grant- 
 ed only for fifteen years, but continued by two 
 different prolongations, expire with the end of the 
 feffion of parliament v/hich (hall immediately fol- 
 low the 24th of June 1786. 
 
 The encouragement given to the importation 
 of the materials of manufacture by bounties, has 
 been principally confined to fuch as were imported 
 from our Am.erican plantations. 
 
 The firft bounties of this kind were thofe 
 granted about the beginning of the prefent cen- 
 tury, upon the importation of naval (lores from 
 America. Under this denomination were com- 
 prehended timber fit for mails, yards, and bovv- 
 fprits; hemp, tar, pitch, and turpentine. The 
 bounty, hovi^ever, of one pound the ton upon 
 mailing-timber, and that of fix pounds the ton 
 upon hemp, were extended to fuch as fhould be 
 imported into England from Scotland. Both 
 thefc bounties continued without any variation, 
 
 8 at
 
 49© THE NATURE AND CAUSES OF 
 
 BOOK at the fame rate, till they were feverally allowed 
 
 i^'^' to expire; that upon hemp on the ifl of January 
 
 """'^ 1 74 1 5 and that upon mailing timber at the end of 
 
 the feliion of parliament immediately following 
 
 the 24th June 1781. 
 
 The bounties upon the importation of tar, 
 pitch, and turpentine, underwent, during their 
 continuance, feveral alterations. Originally that 
 upon tar was four pounds the ton ; that upon 
 pitch the fame ; and that upon turpentine, three 
 pounds the ton. The bounty of four pounds 
 the ton upon tar was afterwards confined to fuch 
 as had been prepared in a particular manner ; 
 that upon other good, clean, and merchantable 
 tar was reduced to two pounds four fhillings the 
 ton. The bounty upon pitch was likewife re- 
 duced to one pound ; and that upon turpentine 
 to one pound ten fhillings the ton. 
 
 The fecond bounty upon the importation of any 
 of the materials of manufadure, according to the 
 order of time, was that granted by the 21 Geo. II. 
 chap. 30. upon the importation of Indigo from 
 the Britilh plantations. When the plantation in- 
 digo was worth three-fourths of the price of the 
 beft French indigo, it was by this acl entitled to a 
 bounty of fixpence the pound. This bounty, 
 which, like mod others, was granted only for a 
 limited time, was continued by feveral prolonga- 
 tions, but was reduced to fourpence the pound. It 
 was allowed to expire with the end of the feffion of 
 parliament which followed the 25th March 1781. 
 
 The third bounty of this kind was that grant- 
 ed (much about the time that we were beginning 
 
 s fome-
 
 THE WEALTH OF NATIONS. 491 
 
 fometlmes to court and fometimes to quarrel chap, 
 with our American colonies) by the 4 Geo. III. viii. 
 chap, 26. upon the importation of hemp, or un- 
 dreffed flax, from the Britifh plantations. This 
 bounty was granted for twenty-one years, from 
 the 24th June 1764, to the 24th June 1785. 
 For the firft feven years it was to be at the rate 
 of eight pounds the ton, for the fecond at fix 
 pounds, and for the third at four pounds. It 
 was not extended to Scotland, of which the 
 climate (although hemp is fometimes raifed there, 
 in fmall quantities and of an inferior quality) is 
 not very fit for that produce. Such a bounty 
 upon the importation of Scotch flax into England 
 would have been too great a difcouragement to the 
 native produce of the fouthern part of the united 
 kingdom. 
 
 The fourth bounty of this kind, was that 
 granted by the 5 Geo. III. chap. 45. upon the 
 importation of wood from i\.merica. It was 
 granted for nine years, from the ifl: January 
 1766, to the ifl: January 1775. During the 
 firft three years, it was to be for every hundred 
 and twenty good deals, at the rate of one pound ; 
 and for every load containing fifty cubic feet of 
 other fquared timber, at the rate of twelve fiiillings. 
 For the fecond three years, it was for deals, 
 to be at the rate of fifteen fliillings, and 
 for other fquared timber, at the rate of eight 
 {hillings ; and for the third three years, it was 
 for deals, to be at the rate of ten fliillings, and 
 for other fquared timber, at the rate of five 
 ihillin^s. 
 
 The
 
 4S2 THE NATURE AND CAUSES OF 
 
 The fifth bounty of this kind, was that granted 
 by the 9 Geo. III. chap. 38. upon the import- 
 ation of raw filk from the Britifn plantations. 
 It was granted for twenty-one years^ from the ift 
 January 1770, to the ifl January 1791. For 
 the fird feven years it was to be at the rate of 
 twenty-five pounds for every hundred pounds 
 value ; for the fecond, at twenty pounds ; and 
 for the third, at fifteen pounds. The manage- 
 ment of the filk-worm, and the preparation of filk, 
 requires fo much hand labour, and labour is fo 
 very dear in America, that even this great bounty, 
 I have been informed, was not likely to produce 
 any confiderable effect. 
 
 The fixth bounty of this kind, was that 
 granted by 11 Geo. III. chap, 50. for the im- 
 portation of pipe, hogfheads, and barrel ftaves 
 and heading from the Brhifh plantations. It 
 was granted for nine years, from ifl January 
 1772, to the ifl January 1781. For the iirfl 
 three years, it was for a certain quantity of each, 
 to be at the rate of fix pounds ; for the fecond 
 three years, at four pounds j and for the third 
 three years, at two pounds. 
 
 The feventh and lafl bounty of this kind, 
 was that granted by the 19 Geo. III. chap. 37, 
 upon the importation of hemp from Ireland. 
 It was granted in the fame manner as that for 
 the importation of hemp and undrefTed flax from 
 America, for twenty-one years, from the 24th 
 June 1779, to the 24th June 1800. This term 
 is divided, likewife, into three periods of feven 
 years eachj and in each of thofe periods the 
 
 rate
 
 THE WEALTH OF NATIONS. 493 
 
 rate of the Irifh bounty Is the fame with that 
 of the American. It does not, however, like 
 the American bounty, extend to the importation 
 of undrefled flax. It would have been too great 
 a difcouragement to the cultivation of that plant 
 in Great Britain. When this lafl: bounty v/as 
 granted, the Britifh and Irifli legiflatures were 
 not in much better humour with one another, 
 than the Britifh and American had been before. 
 But this boon to Ireland, it is to be hoped, has 
 been granted under more fortunate aufpices, than 
 all thofe to America. 
 
 The fame commodities upon which we thus 
 gave bounties, when imported from America, 
 were fubjefted to confiderable duties when im- 
 ported from any other country. The intereil of 
 our American colonies was regarded as the fame 
 with that of the mother country. Their v/ealth 
 was confidered as our v/ealth. Whatever money 
 was fent out to them, it was faid, Cc.me all back 
 to us by the balance of trade, and we could 
 never become a farthing the poorer by any ex- 
 pence which we could lay out upon them. They 
 were our own in every refpeft, and it was an ex- 
 pence laid out upon the improvement of our 
 own property, and for the profitable employment 
 of our own people. It is unnecefiary, 1 appre- 
 hend, at prefent to fay any thing further, in 
 order to expofe the folly of a fyflem, which fatal 
 experience has now fufEcientiy expofed. Had 
 our American colonies really been a part of Great 
 Britain, thofe bounties might have been con- 
 fidered as bounties upon produdion, and would 
 
 {till
 
 ^94- THE NATURE AND CAUSES OF 
 
 BOOK fllll have been liable to all the obje£lions to which 
 iv. fuch bounties are liable, but to no other. 
 
 The exportation of the materials of manufac- 
 ture is fometiities difcouraged by abfolute prohibi- 
 tions, and fometimes by high duties. 
 
 Our woollen manufadlurers have been more 
 fuccefsful than any other clafs of workmen, in 
 perfuading the legiflature that the profperity of the 
 Ration depended upon the fuccefs and extenfion of 
 their particular bufinefs. They have not only ob- 
 tained a monopoly againft the confumers by an 
 abfolute prohibition of importing woollen cloths 
 from any foreign country ; but they have likewife 
 obtained another monopoly againft the Iheep 
 farmers and growers of wool, by a fimilar prohibi- 
 tion of the exportation of live fheep and wool. 
 The feverity of many of the laws which have been 
 enacled for the fecurity of the revenue is very juftly 
 complained of, as impofing heavy penalties upon 
 adions which, antecedent to the flatutes that de- 
 clared them to be crimes, had ahvavs been under- 
 flood to be innocent. But the cruelleft of our re- 
 venue laws, I will venture to affirm, are mild and 
 gentle, in comparifon of fome of thofe which the 
 clamour of our merchants and manufadurers has 
 extorted from the legiflature for the fupport of 
 their own abfurd and oppreffive monopolies. Like 
 the laws of Draco, thefe laws may be faid to be 
 all written in blood. 
 
 By the 8ih of Elizabeth, chap. 3. the exporter 
 of fheep, lambs, or rams, was for the firft offence 
 to forfeit all his goods for ever, to fuffer a year's 
 imprifonment, and then to have his left hand cut 
 
 ofF
 
 iTHE WEALTH OF NATIONS. 49J 
 
 off in a market town upon a market day, to be chap. 
 there nailed up ; and for the fecond offence to be vni. 
 adjudged a felon, and to fuffer death accordingly. 
 To prevent the breed of our flieep from being pro- 
 pagated in foreign countries, feems to have been 
 the objed of this law. By the 13th and 14th of 
 Charles II. chap. 18. the exportation of wool was 
 made felony, and the exporter fubjeded to the 
 fame penalties and forfeitures as a felon. 
 
 For the honour of the national humanity, it 
 is to be hoped that neither of thefe ftatutes were 
 ever executed. The firfl of them, however, fo 
 far as I know, has never been directly repealed, 
 and Serjeant Hawkins feems to confider it as 
 ftill in force. It may however, perhaps, be 
 confidered as virtually repealed by the 12th of 
 Charles II. chap. 32. fed. 3. which, without 
 exprefsly taking away the penalties impofed by 
 former ftatutes, impofes a new penalty, viz. 
 That of twenty fhillings for every fheep ex- 
 ported, or attempted to be exported, together 
 with the forfeiture of the fheep and of the owner's 
 jfhare of the fheep. The fecond of them was ex- 
 prefsly repealed by the 7th and 8th of William III, 
 chap. 2S. fed. 4. by which it is declared that. 
 Whereas the ftatute of the 13th and 14th of 
 King Charles II. made againft the exportation 
 of wool, among other things in the faid .ad 
 ** mentioned, doth enad the fame to be deemed 
 felony ; by the feverity of which penalty the 
 profecution of offenders hath not been fo ef- 
 fedually put in execution : Be it, therefore, 
 " enaded by the authority aforefaid, that fo 
 
 " much 
 
 a 
 a 

 
 4g6 THE NATURE AND CAUSES OF 
 
 " much of the fald a£l, which relates to the 
 " making the faid offence felony, be repealed and 
 " made void.'* 
 
 The penalties, however, which are either im- 
 pofed by this milder ftatute, or v/hich, though 
 impofed by former flatutes, are not repealed by 
 this one, are ftiil fufficiently fevere. Befides the 
 forfeiture of the goods, the exporter incurs the 
 penalty of three (liillings for every pound weight of 
 wool either exported or attempted to be ex- 
 ported, that is about four , or five times the 
 value. Any merchant or other perfon convicted 
 of this offence is difabled from requiring any 
 debt or account belonging to him from any 
 fa^lor or other perfon. Let his fortune be what 
 it will, whether he is or is not able to pay thofe 
 heavy penalties, the law means to ruin him com- 
 pletely. But as the morals of the great body 
 of the people are not yet fo corrupt as thofe of 
 the contrivers of this llatute, I have not heard 
 that any advantage has ever been taken of this 
 claufe. If the perfon convidled of this offence 
 is not able to pay the penalties within three 
 months after judgment, he is to be tranfported 
 for feven years, and if he returns before the ex- 
 piration of that term, he is hable to the pains of 
 felony, without benefit of clergy. The owner 
 of the fiiip knowing this offence forfeits all his 
 interefl in the (IVip and furniture. The mafter 
 and mariners knowing this offence forfeit all 
 their goods and chattels, and fuffer three months'' 
 imprifonment. By a fubfequent flatute the mafter 
 fuffers fix months' imprifonment. 
 
 In
 
 THE WEALTH OF NATIONS. 497 
 
 In order to prevent exportation, the whole 
 inland commerce of wool is laid under very bur- 
 denfome and oppreflive reftrictions. It cannot 
 be packed in any box, barrel, calk, cafe, cheft, 
 or any other package, but only in packs of 
 leather or pack cloth, on which muft be marked 
 on the outfide the words wool or yarn, in large 
 letters not lefs than three inches long, on pain 
 of forfeiting the fame and the package, and three 
 fhillings for every pound weight, to be paid by 
 the owner or packer. It cannot be loaden on 
 any horfe or cart, or carried by land within five 
 miles of the coaft, but between fun-rifing and 
 fun-fetting on pain of forfeiting the fame, the 
 horfes and carriages. The hundred next adjoin- 
 ing to the fea-coafl, out of or through which the 
 wool is carried or exported, forfeits twenty pounds, 
 if the wool is under the value of ten pounds ; 
 and if of greater value, then treble that value, 
 together with treble cods, to be fued for within 
 the year. The execution to be againft any two 
 of the inhabitants, whom the feflions mud: re- 
 imburfe, by an affeirment on the other inha- 
 bitants, as in the cafes of robbery. And if any 
 perfon compounds with the hundred for lefs than 
 this penalty, he is to he imprifoned for five 
 years ; and any other perfon may profecute. 
 Thefe regulations take place through the whole 
 kingdom. 
 
 But in the particular counties of Kent and 
 Suflex the reftrictions are ftill more troubleforae. 
 Every owner of wool within ten miles of the fea- 
 coaft muft give an account in writing, three days 
 
 VOL. II. K K sifter
 
 498 THE NATURE AND CAUSES OF 
 
 BOOK after fiiearlng, to the next officer of the cuftoms, 
 ^^- of the number of his fleeces, and of the places 
 where they are lodged. And before he removes 
 any part of them he mud give the like notice of 
 the number and weight of the fleeces, and of the 
 name and abode of the perfon to whom they are 
 fold, and of the place to which it is intended 
 they fliould be carried. No perfon within fifteen 
 miles of the fea in the faid counties, can buy 
 any wool, before he enters into bond to the 
 king, that no part of the wool which he fhall fo 
 buy (hall be fold by him to any other perfon 
 within fifteen miles of the fea. If any wool is 
 found carrying tow-ards the fea-fide in the faid 
 counties, unlefs it has been entered and fecurity 
 given as aforefaid, it is forfeited, and the 
 offender alfo forfeits three fljillings for every 
 pound weight. If any perfon lay any wool, not 
 entered as aforefaid, within fifteen miles of the 
 fea, it muft be feized and forfeited, and if after 
 fuch feizure, any perfon fhall claim the fame, he 
 muft give fecurity to the exchequer, that if he 
 is caft upon trial he fhall pay treble coils, befldes 
 all other penalties. 
 
 When fuch reftri6lions are impofed upon the 
 inland trade, the coafting trade, we may believe, 
 cannot be left very free. Every owner of wool 
 who carrieth, or caufeth to be carried, any wool 
 to any port or place on the fea-coaft, in order to 
 be from thence tranfported by fea to any other 
 place or port on the coaft, muft firft caufe an 
 entry thereof to be made at the port from whence 
 it is intended to be conveyed, containing the 
 
 weight.
 
 THE WEALTH OF NATFONS. "499 
 
 weight, marks, and number of the packages, chap. 
 before he brings the fame within five miles of viii. 
 thjit port; on pain of forfeiting the fame, and alfo 
 the horfes, carts, and other carriages; and alfo 
 of fuffering and forfeiting, as by the other laws 
 in force againft the exportation of wool. This 
 law, however, (i Will. III. chap. 32.) is fo 
 very indulgent as to declare, that " this fhall not 
 hinder any perfon from carrying his wool 
 home from the place of fliearing, though it be 
 within five miles of the fea, provided that in 
 ten days after fhearing, and before he remove 
 the wool, he do under his hand certify to the 
 " next officer of the cuftoms, the true number 
 of fleeces, and where it is houfed ; and do not 
 remove the fame, without certifying to fuch 
 *' officer, under his hand, his intention fo to do, 
 ** three days before.*' Bond mufl be given that 
 the wool to be carried coafl-ways is to be landed 
 at the particular port for which it is entered out- 
 wards ; and if any part of it is landed without the 
 prefence of an officer, not only the forfeiture of 
 the wool is incurred as in other goods, but the 
 ufual additional penalty of three fliillings for every 
 pound weight is likewife incurred. 
 
 Our woollen manufacturers, in order to juffify 
 their demand of fuch extraordinary reftriclions 
 and regulations, confidently afferted, that Englifh 
 wool was of a peculiar quality, fuperior to that 
 of any other country ; that the wo<:l of othef 
 countries could not, without fome mixture of it, 
 be wrought up into any tolerable manufadure ; 
 that fine cloth could not be made without it ; 
 
 K K 2 that 
 
 (C 
 C( 
 
 (( 

 
 500 THE NATURE AND CAUSES OF 
 
 BOOK that England, therefore, if the exportation of it 
 IV. could be totally prevented, could monopolize to 
 herfelf almoft the whole woollen trade of the 
 world ; and thus, having no rivals, could fell at 
 what price fhe pleafed, and in a fhort time ac- 
 quire the mod incredible degree of wealth by 
 the mod advantageous balance of trade. This 
 doftrine, like mod other doftrines which are 
 confidently alferted by any confiderable number 
 of people, was, and (till continues to be, molt im- 
 phcitly believed by a much greater number; by 
 almofl all thofe who are either unacquainted 
 with the woollen trade, or who have not made 
 particular enquiries. It is, however, fo perfedly 
 falfe, that Engli(h v/ool is in any refped necef- 
 fary for the making of fine cloth, that it is alto- 
 gether unfit for it. Fine cloth is made altogether 
 of Spanilh wool. Englilh wool cannot be even 
 fo mixed with Spanilh wool as to enter into the 
 compofition v/ithout fpoiling and degrading, in 
 fome degree, the fabric of the cloth. 
 
 It has been fhewn in the foregoing part of 
 this work, that the effect of thefe regulations has 
 been to deprefs the price of Enghfh wool, not 
 only below what it naturally would be in the pre- 
 fent times, but very much below what it actually 
 was in the time of Edward III. The price of 
 Scots wool, when in confequence of the union 
 it became fubjed to the fame regulations, is faid 
 to have fallen about one half. It is obferved by 
 the very accurate and intelligent author of the 
 Memoirs of Wool, the Reverend Mr. John 
 Smith, that the price of the bed Englidi wool in 
 
 England
 
 THE WEALTH OF NATIONS. 501 
 
 England is generally below what wool of a very chap. 
 inferior quality commonly fells for in the market ^iii. 
 of Amflerdam. To deprefs the price of this 
 commodity below what may be called its natural 
 and proper price, was the avowed purpofe of thofe 
 regulation^ ; and there feems to be no doubt of 
 their having produced the eft'e£l that was expeded 
 from them. 
 
 This reduclion of price, it may perhaps be 
 thought, by difcouraging the growing of wool, 
 muft have reduced very much the annual pro- 
 duce of that commodity, though not below what 
 it formerly was, yet below what, in the prefent 
 ifate of things, it would probably have been, 
 had it, in confequence of an open and free mar- 
 ket, been allowed to rife to the natural and pro- 
 per price. I am, however, difpofed to believe, 
 that the quantity of the annual produce cannot 
 have been much, though it may perhaps have 
 been a little, affefted by thefe regulations. The 
 growing of wool is not the chief purpofe for 
 which the fl:ieep farmer employs his induflry and 
 flock. He expefls his profit, not fo much from, 
 the price of the fleece, as from, that of the car- 
 cafe ; and the average or ordinary price of the 
 latter, muff even, in many cafes, make up to 
 him whatever deficiency there may be in the 
 average or ordinary price of the former. It has 
 been observed in the foregoing part ot this work, 
 that, " Whatever regulations tend to fmk the 
 " price, either of wool or of raw hides, below 
 " what it naturally would be, mud, in an im- 
 ** proved and cultiva»^ed country, have fome 
 
 K K 3 " tendency
 
 502- THE NATURE AND CAUSES OF 
 
 BOOK *' tendency to raife the price of butcher's-meaf. 
 IV. «' The price both of the great and faiall cattle 
 " which are fed on improved and cultivated 
 " land, mufi: be fufHcient to pay the rent v.'hich 
 " the landlord, and the profit which the farmer, 
 *' has reafon to expeft from improved and cul- 
 '^ tivated land. If it is not, they will foon ceafe 
 *' to feed them. "Whatever part of this price, 
 " therefore, is not paid by the wool and the 
 " hide, muft be paid by the carcafe. The lefs 
 " there is paid for the one, the more muft be 
 *' paid for the other. In what manner this 
 <' price is to be divided upon the different parts 
 " of the beaft, is indifferent to the landlords and 
 " farmers, provided it is all paid to them. In 
 " an improved and cultivated country, there- 
 *' fore, their intereft as landlords and farmers 
 *' cannot be much affeded by fuch regulations, 
 " though their intereft as confumers may, by 
 *' the rife in the price of provifions." Accord- 
 ing to this reafoning, therefore, this degradation 
 in the price of wool is not likely, in an improved 
 and cultivated country, to occafion any diminu- 
 tion in the annual produce of that commodity ; 
 except fo far as, by raifmg the price of mutton, 
 it may fomewhat diminifti the demand for, and 
 confequently the produdlion of, that particular 
 fpecies of butcher's-meat. Its effeft, however, 
 even in this way, it is probable, is not very con- 
 fid er able. 
 
 But though its effeft upon the quantity of the 
 annual produce may not have been very con- 
 fiderable, its effe£t upon the quality, it may 
 
 perhaps
 
 THE WEALTH OF NATIONS. 5°? 
 
 perhaps be thought, muft neceflarily have been chap, 
 very great. The degradation in the quality of viii. 
 EngHfh vv^ool, if not below what it was in former 
 times, yet below what it naturally would have 
 been in the prefent ftate of improvement and 
 cultivation, muft have been, it may perhaps be 
 fuppofed, very nearly in proportion to the de- 
 gradation of price. As the quality depends upon 
 the breed, upon the padure, and upon the ma- 
 nagement and cleanlinefs of the fheep, during 
 the whole progrefs of the growth of the fleece, 
 the attention to thefe circumdances, it may na- 
 turally enough be imagined, can never be 
 greater than in proportion to the recompence 
 which the price of the fleece is likely to make 
 for the labour and expence which that attention 
 requires. It happens, however, that the good- 
 nefs of the fleece depends, in -a great meafure, 
 upon the health, growth, and bulk of the ani- 
 mal ; the fame attention which is neceffary for 
 the improvement of the carcafe, is, in fome re- 
 fpects, fufficient for that of the fleece. Not- 
 with (landing the degradation of price, Englifh 
 wool is faid to have been improved confiderably 
 during the courfe even of the prefent century. 
 The improvement might perhaps have been 
 greater if the price had been better ; but the 
 lownefs of price, though it may have obftruded, 
 yet certainly it has not altogether prevented that 
 improvement. 
 
 The violence of thefe regulations, therefore, 
 fpems to have aflecled neither the quantity nor 
 the quality of the annual produce of wool fo 
 
 K K 4. ■ much
 
 504 THE NATURE AND CAUSES OF 
 
 BOOK much as it might have been expeded to do 
 IV. (though I think it probable that it may have af- 
 fefted the latter a good deal more than the for- 
 mer) ; and the intereft of the growers of wool, 
 though it mud have been hurt in fome degree, 
 feems, upon the whole, to have been much lefs 
 hurt than could well have been imagined. 
 
 These confiderations, however, will not juftify 
 the abfolute prohibition of the exportation of 
 wool. But they will fully juftify the impofition of 
 a confiderable tax upon that exportation. 
 
 To hurt in any degree the intereft of any one 
 order of citizens, for no other purpofe but to 
 promote that of fome other, is evidently contrary 
 to that juflice and equality of treatment which 
 the fovereign owes to all the different orders of 
 his fubjedls. But the prohibition certainly hurts, 
 in fome degree, the intereft of the growers of 
 wool, for no other purpofe but to promote that of 
 the manufaclurers. 
 
 Every different order of citizens is bound to 
 contribute to the fupport of the fovereign or 
 commonwealth. A tax of five, or even of ten 
 {hillings upon the exportation of every tod of 
 wool, would produce a very confiderable revenue 
 to the fovereign. It would hurt the intereft of 
 the growers fomewhat lefs than the prohibition, 
 becaufe it would not probably lower the price 
 of wool quite fo much. It would afford a fuf- 
 ficient advantage to the manufafturer, becaufe, 
 though he might not buy his wool altogether fo 
 cheap as under the prohibition, he would ftill 
 buy it, at leaft, five or ten fiiillings cheaper than 
 
 any
 
 THE WEALTH OF NATIONS. 5-05 
 
 any foreign manufadurer could buy it, befides chap. 
 faving the freight and infurance, which .he viii. 
 other would be obliged to pay. It is Icarce '^^^'"^ 
 poffible to devife a tax which could produce any 
 confiderable revenue to the fovereign, and at the 
 fame time occafion fo little inconveniency to any 
 body. 
 
 The prohibition, notwithflanding all the pe- 
 nalties which guard it, does not prevent the 
 exportation of wool. It is exported, it is well 
 known, in great quantities. The great differ- 
 ence between the price in the home and that in 
 the foreign market, prefents fuch a temptation 
 to fmuggling, that all the rigour of the law can- 
 not prevent it. This illegal exportation is ad- 
 vantageous to nobody but the fmuggler. A legal 
 exportation fubje6t to a tax, by affording a reve- 
 nue to the fovereign, and thereby faving the 
 impofuion of fome other, perhaps, more burden- 
 fome and inconvenient taxes, might prove advan- 
 tageous to all the different fubjeds of the 
 ftate. 
 
 The exportation of fuller's earth, or fuller's 
 clay, fuppofed to be neceflary for preparing and 
 cleanfing the woollen manufaftures, has been 
 fubje^led to nearly the fame penalties as the ex- 
 portation of woof Even tobacco-pipe clay, 
 though acknowledged to be different from ful- 
 ler's clay, yet, on account of their refemblance, 
 and becaufe fuller's clay might fometimes be ex- 
 ported as tobacco-pipe clay, has been laid under 
 the fame prohibitions and penalties. 
 
 By
 
 5o6 THE NATURE AND CAUSES OF 
 
 s. o o K Br the 13th and 14th of Charles 11. chap. 7, 
 iv» the exporration, not only of raw hides, but of 
 '^ ' tanned leather, except in the fhape of boots, 
 fhoes, or flippers, was prohibited ; and the law 
 gave a monopoly to our boot-makers and fhoe- 
 inakers, not only againll our graziers, but againft 
 ©ur tanners. By fubfequent flatutes, our tanners 
 have got themfelves exempted from this mono- 
 poly, upon paying a fmall tax of only one fliil- 
 iing on the hundred weight of tanned leather, 
 weighing one hundred and twelve pounds. They 
 have obtained likevvife the drawback of two- 
 thirds of the excife duties impofed upon their 
 commodity, even when exported without further 
 , Mianufa6lure. All manufatlures of leather may 
 be exported duty free ; and the exporter is be- 
 fides entitled to the drawback of the whole du- 
 ties of excife. Our graziers flill continue fub- 
 jed to the old monopoly. Graziers, feparated 
 from one another, and difperfed through all the 
 different comers of the country, cannot, with- 
 out great difficulty, combine together for the 
 purpofe either of impoiing monopolies upon 
 their fellow-citizens, or of exempting themfelves 
 from fuch as may have been impofed upon 
 them by other people. Manufacturers of all 
 kinds, collefted together in numerous bodies in 
 3II great cities, eafily can. Even the horns of 
 cattle are prohibited to be exported ; and the 
 two infignihcant trades of the horner and comb- 
 maker enjoy, in this refped, a monopoly againll 
 the graziers. 
 
 Restraints^
 
 THE WEALTH OF NATIONS. 
 
 507 
 
 Restraints, either by prohibitions or by c h a p# 
 taxes, upon the exportation of goods which are "^n^* 
 partially, but not completely manufactured, are '"""^''"^^ 
 not peculiar to the manufadure of leather. As 
 long as any thing remains to be done, in order 
 to fit any commodity for immediate ufe and coii- 
 fumption, oar manufa6i:urers think that they 
 themfelves ought to have the doing of it. Wool- 
 len yarn and worded are prohibited to be ex- 
 ported under the fame penalties as wool. Even 
 white cloths are fubjedl to a duty upon exporta- 
 tion, and our dyers have fo far obtained a mono- 
 poly againll our clothiers. Our clothiers would 
 probably ' have been able to defend themfelves 
 againft it, but it happens that the greater part of 
 our principal clothiers are themfelves likewife 
 dyers. Watch-cafes, clock-cafes, and dial-plates 
 for clocks and watches, have been prohibited to 
 be exported. Our clock-makers and watch- 
 makers are, it feems, unwilling that the price of 
 this fort of workmanlTiip fliould be raifed upon 
 them by the competition of foreigners. 
 
 By fome old llatutes of Edward III., Henry 
 VIII., and Edward VI., the exportation of all 
 metals was prohibited. Lead and tin were alone 
 excepted ; probably on account of the great 
 abundance of thofe metals ; in the exportation of 
 which, a confiderable part of the trade of the 
 kingdom in thofe days confifted. For the en- 
 couragement of the mining trade, the 5th of Wil- 
 liam and Mary, chap. 17. exempted from this 
 prohibition, iron, copper, and mundic metal 
 liiade from Britifh ore. The exportation of all 
 6 forts
 
 5o8 THE NATURE AND CAUSES OF 
 
 BOOK Torts of copper bars, foreign as well as Brltifh, 
 IV. was afterwards permitted by the 9th and loth of 
 William III. chap. 26. The expor[ation of mi- 
 manufadiired brafs, of what is called gun-metal, 
 bell-metal, and fhrolF metal, (till continues to be 
 prohibited. Brafs manufaclures of all forts may- 
 be exported duty free. 
 
 T?iE exportation of the materials of manufac- 
 ture, where it is not altogether prohibited, is in 
 many cafes fubjecled to confiderabte duties. 
 
 By the 8th George I. chap. 15., the exporta- 
 tion of all goods the produce or manufacture of 
 Great Britain, upon which any duties had been 
 impofed by former ftatutes, was rendered duty 
 free. The following goods, however, were ex- 
 cepted : Allum, lead, lead ore, tin, tanned lea- 
 ther, copperas, coals, wool, cards, white wool- 
 len cloths, lapis calaminaris, fkins of all forts, 
 glue, coney hair or wool, hares ' wool, hair ol ail 
 forts, horfes, and htharge of lead. If you ex- 
 cept horfes, all thefe are either materials of ma- 
 nufacture, or incomplete manufaclures (which 
 may be confidered as materials for ftill further 
 manufaclure), or inftruments of trade. This 
 llatute leaves them fubjecl to all the old duties 
 which had ever been impofed upon them, the 
 old fubfidy and one per cent, outvvards. 
 
 By the fame datute a great number of foreign 
 drugs for dyers' ufe, are exempted from all du- 
 ties upon importation. Each of them, how- 
 ever, is afterwards fubjecled to a certain duty, 
 not indeed a very heavy one, upon exportation. 
 Our dyers, it feems, while they thought it for 
 
 1 1 their
 
 THE WEALTH OF NATIONS. 509 
 
 their interefl to encourage the importation of c H a p. 
 thofe drugs, by an exemption from all duties, viu. 
 thought it likevvife for their own interefl: to throw '-*^''~*-^ 
 fome fmall difcouragement upon their export- 
 ation. The avidity, however, which fuggeiled 
 this notable piece of mercantile ingenuity, mod 
 probably difappointed itfelf of its objeft. It 
 neceffarily taught the importers to be more 
 careful than they might otherwife have been, 
 that their importation Ihould not exceed what 
 was neceflary for the fupply of the home 
 market. The home market was at all times 
 likely to be more fcantily fupplied ; the com- 
 modities were at all times likely to be fome- 
 what dearer there than they would have been, 
 had the exportation been rendered as free as the 
 importation. 
 
 By the above-mentioned ftatute, gum fenega 
 or gum arable, being among the enumerated 
 dying drugs, might be imported duty free. They 
 were fubjected, indeed, to a fmall poundage 
 duty amounting only to three-pence in the hun- 
 dred weight upon their re-exportation. France 
 enjoyed, at that time, an exclufive trade to the 
 country mofl: productive of thofe drugs, that 
 which lies in the neighbourhood of the Senegal ; 
 and the Britilh market could not be eafily fup- 
 plied by the immediate importation of them from 
 the place of growth. By the 25th Geo. II., there- 
 fore, gum fenega was allowed to be imported 
 (contrary to the general difpofitions of the a6t 
 of navigation), from any part of Europe. As 
 the law, however, did not mean to encourage 
 
 th)S
 
 5IO THE^ NATURE AND CAUSES G? 
 
 BOOK this fpecles of trade, fo contrary to the general 
 i'^'"' principles of the mercantile policy of England, 
 it impofed a duty of ten (hillings the hundred- 
 weight upon fuch importation, and no part of 
 this duty was to be afterwards drawn back 
 upon its exportation. The fuccefsful war v/hich 
 began in 1755 gave Great Britain the fame ex- 
 clufive trade to thofe countries which France had 
 enjoyed before. Our manufadurers, as foon as 
 the peace was made, endeavoured to avail them- 
 felves of this advantage, and to eftabliih a mo- 
 nopoly in their own favour, both againft the 
 growers, and againfl the importers of this com- 
 modity. By the 5th Geo. III. therefore, chap. 37. 
 the exportation of gum fenega from his majefty's 
 dominions in Africa was confined to Great Bri- 
 tain, and was fubjefted to all the fame reftric- 
 lions, regulations, forfeitures, and penalties as 
 that of the enumerated commodities of the Bri- 
 tifh colonies in America and the Weil Indies. 
 Its importation, indeed, was fubjeded to a fmall 
 duty of fix-pence the hundred weight, but its re- 
 exportation was fubjecled to the enormous duty 
 of one pound ten fhillings the hundred weight. 
 It was the intention of our manufacturers that 
 the whole produce of thofe countries fhould be 
 imported into Great Britain, and, in order that 
 they themfelves might be enabled to buy it at 
 their own price, that no part of it fhould be ex- 
 ported again, but at fuch an expence as would 
 fufficiently difcourage that exportation. Their 
 avidity, however, upon this, as well as upon 
 many other occafions, difappointed itfelf of its- 
 
 objed*
 
 THE WEALTH OF NATIONS. 5:1 
 
 obje6l. This enormous duty prefented filch a 
 temptation to fmuggling, that great quantities 
 of this commodity were clandeftinely exported, 
 probably to all the manufacluring countries of 
 Europe, but particularly to Holland, not only 
 from Great Britain but from Africa. Upon this 
 account, by the 14 Geo. III. chap. 10. this duty 
 upon exportation was reduced to five fhillings the 
 hundred-weight. 
 
 In the book of rates, according to which the 
 old fubfidy was levied, beaver ikins were eflii- 
 mated at fix (hillings and eight-pence a-piece, 
 and the different fubfidies and imports, which 
 before the' year 1722 had been laid upon their im- 
 portation, amounted to one-fifth part of the rate, 
 or to fixteen-pence upon each fKin ; all of which, 
 except half the old fubfidy, amounting only to 
 two pence, was drawn back upon exportation. 
 This duty upon the importation of fo important a 
 material of m-anufa£ture had been thought too 
 high, and, in the year 1722, the rate was. reduced 
 to two {hillings and fix-pence, which reduced the 
 duty upon importation to fixpence, and of this 
 only one half was to be drawn back upon exporta- 
 tion. The fame fuccefsful war put the country 
 mod produdlive of beaver under the dominion of 
 Great Britain, and beaver fkins being among the 
 enumerated commodities, their exportation from 
 America was confequently confined to the market 
 of Great Britain. Our manufaflurers foon be- 
 thought themfelves of the advantage which they 
 might make of this circumftance, and in the year 
 1704, the duty upon the importation of beaver- 
 
 Ikin
 
 512 THE NATURE AND CAUSES OF 
 
 BOOK fkin was reduced to one penny, but the duty 
 IV. upon exportation was raifed to feven-pence each 
 ^""^ fidn, without any drawback of the duty upon im» 
 portation. By the fame law, a duty of eighteen- 
 pence the pound was impofed upon the exporta- 
 tion of beaver-wool or wombs, without making 
 any alteration in the duty upon the importation 
 of that commodity, which, when imported by 
 Britifii and in Britifh fhipping, amounted at that 
 time to between four-pence and five-pence the 
 piece. 
 
 Coals may be confidered both as a material 
 of manufadure, and as an inflrument of trade. 
 Heavy duties, accordingly, have been impofed 
 upon their exportation, amounting at prefent 
 (1783) to more than five fliiilings the ton, or 
 to more than fifteen {l:iiiiings the chaldron, 
 Newcaltle meafure ; which is in mod cafes more 
 than the original value of the commodity at the 
 coal-pit, or even at the fhipping port for export- 
 ation. 
 
 The exportation, however, of the inftruments of 
 trade, properly {o called, is commonly reflrained, 
 not by high duties, but by abfolute prohibitions. 
 Thus by the 7th and 8th of William HI. chap, 20. 
 fed. 8. the exportation of frames or engines for 
 knitting gloves or (lockings is prohibited under 
 the penalty, not only of the forfeiture of fuch 
 frames or engines, fo exported, or attempted to 
 be exported^ but of forty pounds, one half to the 
 king, the other to the perfon who fhall inform 
 or fue for the fame. In the fame manner, by the 
 14 Geo. III. chap. \\. the exportation to foreign 
 
 parts.
 
 THE WEALTH OF NATIONS. 5^3 
 
 parts, of any iitenfils made ufe of In the cotton, chap. 
 linen, woollen, and filk manufa£tures, is prohi- "^^ ^^^ 
 bited under the penalty, not only of the for- 
 feiture of fuch utenfils, but of two hundred 
 pounds to be paid by the perfon who fhall of- 
 fend in this manner, and likewife of two hundred 
 pounds to be paid by the mafter of the Ihip who 
 fhall knowingly fuffer fuch utenfils to be loaded on 
 board his fhip. 
 
 When fuch heavy penalties were Impofed 
 upon the exportation of the dead inftruments of 
 trade, it could not well be expeded that the 
 living Inftrument, the artificer, fhould be allow- 
 ed to go free. Accordingly, by the 5 Geo. I. 
 chap. 27. the perfon who fhall be convicled of 
 enticing any artificer of, or in any of the manu- 
 faftures of Great Britain, to go into any foreign 
 parts, in order to pra£tife or teach his trade, is 
 liable for the fir ft ofJ'ence to be fined in any fum 
 not exceeding one hundred pounds, and to three ' 
 months' imprifonment, and until the fine fhall 
 be paid ; and for the fecond offence, to be fined 
 in any fum at the difcretion of the court, and to 
 imprifonment for twelve months, and until the 
 fine fhall be paid. By the 23 Geo. II. chap. i?. 
 this penalty is increafed for the firfl offence to 
 five hundred pounds for every artificer fo enticed, 
 and to twelve months' imprifonment, and until 
 the fine fliall be paid ; and for the fecond of- 
 fence, to one thoufand pounds, and to two 
 years' imprifonment, and until the fine fhall be 
 paid. 
 
 VOL.. II. L L By
 
 5H 
 
 THE NATURE AND CAUSES OF 
 
 Bvthe former of thofe two ftatutes, upon proof 
 that any perfon has been enticing any arti- 
 ficer, or that any artificer has promifed or con- 
 trafted to go into foreign parts for the purpofes 
 aforefaid, fuch artificer may be obliged to give 
 fecurity at the difcretion of the court, that 
 he Ihall not go beyond the feas, and may be 
 committed to prifon until he give fuch fecu- 
 rity. 
 
 If any artificer has gone beyond the feas, and 
 is exercifing or teaching his trade in any foreign 
 country, upon warning being given to him by 
 any of his majefty's minifters or confuls abroad, 
 or by one of his majefty's fecretaries of ft ate for 
 the time being, if he does not, within fix months 
 after fuch warning, return into this realm, and 
 from thenceforth abide and inhabit continually 
 within the fame, he is from thenceforth declared 
 incapable of taking any legacy devifed to him 
 within this kingdom, or of being executor or 
 adminiftrator to any perfon, or of taking any 
 lands within this kingdom, by defcent, devife, or 
 purchafe. He likewife forfeits to the king all 
 his lands, goods and chattels, is declared an alien 
 in every refpeft, and is put out of the king's 
 protection. 
 
 It is unneceffary, I imagine, to obferve, how 
 contrary fuch regulations are to the boafted li- 
 berty of the fubjeft, of which w^e affe<5l to be fo 
 very jealous ; but which, in this cafe, is fo plainly 
 facrificed to the futile interefts of our merchants 
 and manufadurers. 
 
 15 The
 
 THE WEALTH OF NATIONS; 51 
 
 The laudable motive of all thefe regulations, chap 
 IS to extend our own manufa^lures, not by their vni. 
 own improvement, but by the depreflion of thofe ^'"^'"^ 
 of all our neighbours, and by putting an end, 
 as much as poffible, to the troublefome compe- 
 tition of fuch odious and difagreeable rivals. 
 Our mafter manufacturers think it reafonable, 
 that they themfelves fhould have the monopoly 
 of the ingenuity of all their countrymen. Though 
 by reftraining, in fome trades, the number of ap- 
 prentices, which can be employed at one time, 
 and by impofmg the neceflity of a long appren- 
 ticefliip in all trades, they endeavour, all of 
 them, to confine the knowledge of their refpe6live 
 employments to as fmall a number as poffible; 
 they are unwilling, however, that any part of 
 this fmall number fhould go abroad to inftruCl 
 foreigners. 
 
 Consumption is the fole end and purpofe of 
 all produ6lion ; and the interefl of the producer 
 ought to be attended to, only fo far as it may be 
 neceffary for promoting that of the confumer. 
 
 The maxim is fo perfeftly felf-evident,' that 
 It would be abfurd to attempt to prove it. But in 
 the mercantile fyflem, the intereft of the con- 
 fumer is almod conftantly facrificed to that of 
 the producer ; and it feems to confider produc- 
 tion, and not confumption, as the ultimate end 
 and obje6l of all induftry and commerce. 
 
 In the reflraints upon the importation of all 
 foreign commodities which can come into com- 
 petition with thofe of our own growth, or manu- 
 faQure, the interefl of the home-confumer is 
 
 L L 2 evidently
 
 i6 THE NATURE AND CAUSES OF 
 
 J o o K evidently faerificed to that of the producer. It Is 
 IV. altogether for the benefit of the latter, that the 
 former is obliged to pay that enhancement of price 
 which this monopoly almofl: always occafions. 
 
 It is altogether for the benefit of the producer 
 that bounties are granted upon the exportation 
 of fome of his produftions. The home-confumer 
 is obliged to pay, firft, the tax which is necef- 
 fary for paying the bounty ; and fecondly, the ftill 
 greater tax which neceffarily arifes from the en- 
 hancement of the price of the commodity in the 
 home market. 
 
 By the famous treaty of commerce with Por- 
 tugal, the confumer is prevented by high duties 
 from purchafmg of a neighbouring country, a 
 commodity which our own climate does not 
 produce, but is obliged to purchafe it of a 
 diftant country, though it is acknowledged, that 
 the commodity of the diftant country is of a 
 worfe quality than that of the near one. The 
 home-confumer is obliged to fubmit to this in- 
 convenience, in order that the producer may 
 import into the diftant country fome of his pro- 
 du(5lions upon more advantageous terms than he 
 would otherwife have been allowed to do. The 
 confumer, too, is obliged to pay whatever en- 
 hancement in the price of thofe very produdions, 
 this forced exportation may occafion in the 
 home market. 
 
 But in the fyftem of laws which has been 
 eftablifhed for the management of our American 
 and Weil Indian colonies, the interefl: of the 
 home-confumer has been faerificed to that of 
 
 8 , the
 
 THE WEALTH OF NATIONS. 517 
 
 the producer with a more extravagant profufion chap. 
 than in all our other commercial regulations, viir. 
 A great empire has been eftabliflied for the fole '~^*~'~' 
 purpofe of raifmg up a nation of cuiiomers who 
 fhould be obliged to buy from the fhops of our 
 different producers, all the goods with which 
 thefe could fupply them. For the fake of that 
 little enhancement of price which this monopoly- 
 might afford our producers, the home-con- 
 fumers have been burdened with the whole ex- 
 pence of maintaining and defending that empire. 
 For this purpofe, and for this purpofe only, in 
 the two lafl wars, more than two hundred mil- 
 lions have been fpent, and a new debt of more 
 than a hundred and feventy millions has been 
 contrafted over and above all that had been ex- 
 pended for the fame purpofe in former wars. 
 The interefl of this debt alone is not only greater 
 than the whole extraordinary profit, which, it 
 ever could be pretended, was made by the mo- 
 nopoly of the colony trade, but than the whole 
 value of that trade, or than the whole value of 
 the goods, which at an average have been an- 
 nually' exported to the colonies. 
 
 It cannot be very difficult to determine who 
 have been the contrivers of this whole mercan- 
 tile fyftem ; not the confumers, we may believe, 
 whofe intereft has been entirely neG:le6led ; but 
 the producers, whofe interefl has been fo care- 
 fully attended to ; and among this latter clafs 
 our merchants and manufacturers have been by 
 
 L L 3 far
 
 J, 8 THE NATURE AND CAUSES OF, &c. 
 
 BOOK far the principal architeas. In the mercantile 
 IV. regulations, which have been taken notice of in 
 this chapter, the interefl: of our manufacturers 
 has been mofl: peculiarly attended to ; and the 
 intereft, not fo much of the confumers as that 
 of fome other fets of producers, has been facri? 
 ficed to i^ 
 
 APPEN.
 
 APPENDIX. 
 
 •npHE two following Accounts are fubjoined in 
 order to illuftrate and confirm what is laid 
 in the Fifth Chapter of the Fourth Book, con- 
 eerning the Tonnage Bounty to the White Her- 
 ring Fifliery. The Reader, I beheve, may de- 
 pend upon the Accuracy of both Accounts. 
 
 An Account of Bujfcs jitted out in Scotland for Eleven 
 Tears ^ with the Number of empty Barrels carried 
 out, and the Number of Barrels of Herrings caught ; 
 alfo the Bounty at a Medium on each Barrel of 
 Seajieeks, and on each Barrel when fully packed. 
 
 
 Number 01 
 
 Empty Bairds 
 
 iiarrelsot Her- 
 
 Bounty pai 
 
 'i on the 
 
 
 BulTes, 
 
 cairJed out. 
 
 rings caught. 
 
 Buffc 
 
 •s. 
 
 
 
 
 
 £• 
 
 s. d. 
 
 I77I 
 
 29 
 
 5948 
 
 2832 
 
 2085 
 
 
 
 1772 
 
 168 
 
 41316 
 
 22237 
 
 ^^^55 
 
 7 6 
 
 ^77Z 
 
 190 
 
 42333 
 
 42055 
 
 12510 
 
 8 6 
 
 1774 
 
 248 
 
 59303 
 
 5^3(>5 
 
 16952 
 
 2 6 
 
 ^77S 
 
 zjs 
 
 69144 
 
 52879 
 
 ^93^5 
 
 15 
 
 1776 
 
 294 
 
 76329 
 
 51863 
 
 21290 
 
 7 6 
 
 1777 
 
 240 
 
 62679 
 
 43313 
 
 17592 
 
 2 6 
 
 1778 
 
 220 
 
 5'^39o 
 
 40958 
 
 16316 
 
 2 6' 
 
 1779 
 
 206 
 
 55194 
 
 29367 
 
 15287 
 
 
 
 1780 
 
 181 
 
 48J15 
 
 19885 
 
 13445 
 
 12 6 
 
 1781 
 
 ^Z5 
 
 33992 
 
 1659.':; 
 37^347 
 
 9613 
 
 12 6 
 
 Total 
 
 , 2186 
 
 5509^3 
 
 155463 
 
 11 0] 
 
 Seafteeks
 
 APPENDIX. 
 
 Seafleeks 
 
 378347 
 
 deduded 126115I. 
 
 Bounty at a me- 
 dium for each barrel of 
 feafteeks, ;^. o 8 2^ 
 
 But a barrel of fea- 
 fteeks being only rec- 
 koned two-thirds of a 
 barrel fully packed, 
 one-third is deduded, 
 which brings the boun- 
 ty to Co 12 
 
 
 2522314 
 
 Barrels full ? 
 
 packed, 5 
 
 And if the herrings are exported, 
 there is befides a premium of 
 
 8 
 
 So that the bounty paid by Go- 
 vernment in money for each bar- 
 rel is - - - - * ' £.0 14 iif 
 
 But if to this, the duty of the 
 fait ufually taken credit for as ex- 
 pended in curing each barrel, which 
 at a medium is of foreign, one 
 bufhel and one fourth of a bufliel, 
 at ioj. a bulhel, be added, viz. o 12 6 
 
 The bounty on each barrel would 
 amount to - - . £,i y ^^ 
 
 If
 
 APPENDIX. 
 
 If the herrings are cured with Britifli fait, it will 
 
 {land thus, viz. 
 
 Bounty as before - - ^.01411^ 
 
 — but if to this bounty the duty on 
 two bu/hels of Scots fait at i j. 6 d, 
 per bufhel, fuppofed to be the quan- 
 tity at a medium ufed in curing each 
 barrel, is added, to wit, - -030 
 
 The bounty on each barrel will 
 amount to - - - - ;(^. o 17 ii| 
 
 And, 
 
 When bufs herrings are entered for home-con- 
 fumption in Scotland, and pay the Ihilling a 
 barrel of duty, the bounty ftands thus, to wit, as 
 before - - - - ;C'0 ^^ 3t 
 
 From which the i j. a barrel is 
 to be deduced - - 010 
 
 ;C-o II 3i 
 But to that there is to be added 
 again, the duty of the foreign fait 
 ufed in curing a barrel of herrings, 
 viz. - - - -0126 
 
 So that the premium allowed for 
 each barrel of herrings entered for 
 home-confumption is - - £,' ^ 3 9l 
 
 If
 
 APPENDIX. 
 
 If the herrings are cured with Britifli fait. It 
 will fland as follows, viz. 
 
 Bounty on each' barrel, brought in by the 
 bufles as above, - - ;^. o 12 3f 
 
 From which deduiSl the 1 j. a bar- 
 rel paid at the time they are entered 
 for home confumption - 010 
 
 £'0 II 3'^ 
 But if to the bounty the duty on 
 two bufhels of Scots fait at i /. 6 d. 
 per bufhel, fuppofed to be the quan- 
 tity at a medium ufed in curing 
 each barrel, is added, to wit, 030 
 
 The premium for each barrel en- 
 tered for home-confumption will be ^. o 14 3! 
 
 Though the lofs of duties upon herrings ex- 
 ported, cannot, perhaps, properly be confidered 
 as bounty ; that upon herrings entered for home- 
 confumption certainly may. 
 
 Jn
 
 APPENDIX. 
 
 An Account of the ^antity of Foreign Salt im- 
 ported into Scotland, and of Scots Salt delivered 
 Duty free from the Works there for the Fifhery, 
 from the $th of April 1771 to the ^th of April 
 1782, ijuith a Medium of both for one Tear, 
 
 PERIOD. 
 
 Foreign Salt 
 imported. 
 
 icots b<iit de- 
 livered from 
 the: Works. 
 
 Bufnels. 
 
 BuOiels. 
 
 From the 5th of April"] 
 1 7 7 1 , to the 5th of April \ 
 1782 . J 
 
 Medium for one year 
 
 936974 
 
 168226 
 
 I5179A 
 
 45293^7- 
 
 It is to be obferved that the Bufhel of Foreign 
 Salt weighs 84 lb., that of Britiih Salt ^G lb. only. 
 
 END OF THE SECOND VOLUME. 
 
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