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The Wealth of Nations - Part 3
The farmer will not be able to cultivate
much better: the landlord will not be able to live much^® better.
In the purchase of foreign commodities this enhancement in the
price of corn may give them some little advantage. In that of
home-made commodities it can give them none at all. And almost
the whole expence of the farmer, and the far greater part even of
that of the landlord, is in home-made commodities.^'^
That degradation in the value of silver which is the effect 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 consequence to any particular country. The
“Almost” is not in eds. i and 2
Eds. I and 2 do not contain “home-made ”
Eds. I and 2 read “in the smallest degree.”
Neither “much” is in eds. i and 2.
This and the two preceding sentences from “in the purchase” appear first
in Additions and Corrections (which reads “of even” instead of “even of”)
and ed. 3
of all rude
produce,
and of
almost all
manufac-
tures.
So farm-
ers and
landlords
are not
benefited
by the in-
creased
price due
to the
bounty,
A world-
wide
degrada-
tion of the
value of
silver is
of little
conse-
quence,
but degra-
dation
confined
to one
country
discour-
ages the
industry
of that
country.
In Spain
and Por-
ugal gold
and silver
are natur-
ally
cheaper
than in
the rest
of
Europe,
but by
the hind-
rances to
exporta-
tion they
are made
still
cheaper.
47S THE WEALTH OF NATIONS
consequent rise of all money prices, though it does not make those
who receive them really richer, does not make them really poorer.
A service of plate becomes really cheaper, and every thing else
remains precisely of the same real value as before.
But that degradation in the value of silver which, being the effect
either of the peculiar situation, or of the political institutions of a
particular country, takes place only in that country, is a matter of
very great consequence, which, far from tending to make any body
really richer, tends to make every body really poorer. The rise in
the money price of all commodities, which is in this case peculiar
to that country, tends to discourage more or less every sort of in-
dustry which is carried on within it, and to enable foreign nations,
by furnishing almost all sorts of goods for a smaller quantity of
silver than its own workmen can afford to do, to undersell them, not
only in the foreign, but even in the home market.
It is the peculiar situation of Spain and Portugal as proprietors
of the mines, to be the distributors of gold and silver to all the
other countries of Europe. Those metals ought naturally, there-
fore, to be somewhat cheaper in Spain and Portugal than in any
other part of Europe. The difference, however, should be no more
than the amount of the freight and insurance; and, on account of
the great value and small bulk of those metals, their freight is no
great matter, and their insurance is the same as that of any other
goods of equal value. Spain and Portugal, therefore, could suffer
very little from their peculiar situation, if they did not aggravate its
disadvantages by their political institutions.
Spain by taxing, and Portugal by prohibiting the exportation of
gold and silver, load that exportation with the expence of smug-
gling, and raise the value of those metals in other countries so
much more above what it is in their own, by the whole amount of
this expence.^® When you dam up a stream of water, as soon as the
dam is full, as much water must run over the dam-head as if there
was no dam at all. The prohibition of exportation cannot detain a
greater quantity of gold and silver in Spain and Portugal 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 silver. When they have
got this quantity the dam is full, and the whole stream which flows
in afterwards must run over. The annual exportation of gold and
“ Spain’s prohibition of exportation of gold and silver had only been abol-
ished at a recent period. The tax was 3 per cent, till 1768, then 4 per cent. See
Raynal, Histoire pklosophique, Amsterdam ed 1773, tom iii , pp. 290, 291.
As to the export of gold from Portugal, see below, p. 513, note 3.
BOUNTIES 479
silver from Spain and Portugal accordingly is, by all accounts, not-
withstanding these restraints, very near equal to the whole annual
importation. As the water, however, must always be deeper behind
the dam-head than before it, so the quantity of gold and silver
which these restraints detain in Spain and Portugal must, in pro-
portion to the annual produce of their land and labour, be greater
than what is to be found in other countries. The higher and
stronger the dam-head, the greater must be the difference in the
depth of water behind and before it. The higher the tax, the higher
the penalties with which the prohibition is guarded, the more vig-
ilant and severe the police which looks after the execution of the
law, the greater must be the difference in the proportion of gold and
silver to the annual produce of the land and labour of Spain and
Portugal, and to that of other countries. It is said accordingly to
be very considerable, and that you frequently find there a profu-
sion of plate in houses, where there is nothing else which would, in
other countries, be thought suitable or correspondent to this sort of
magnificence. The cheapness of gold and silver, or what is the same
thing, the dearness of all commodities, which is the necessary effect
of this redundancy of the precious metals, discourages both the and agri-
agriculture and manufactures of Spain and Portugal, and enables
foreign nations to supply them with many sorts of rude, and with manufac-
almost all sorts of manufactured produce, for a smaller quantity of tures are
gold and silver than what they themselves can either raise or make discour-
them for at home. The tax and prohibition operate in two different aged,
ways. They not only lower very much the value of the precious
metals in Spain and Portugal, but by detaining there a certain
quantity of those metals which would otherwise flow over other
countries, they keep up their value in those other countries some-
what above what it otherwise would be, and thereby give those
countries a double advantage in their commerce with Spain and
Portugal. Open the flood-gates, and there will presently be less
water above, and more below, the dam -head, and it will soon come
to a level in both places. Remove the tax and the prohibition, and
as the quantity of gold and silver will diminish considerably in
Spain and Portugal, so it will increase somewhat in other coun-
tries, and the value of those metals, their proportion to the annual
produce of land and labour, will soon come to a level, or very near
to a level, in all. The loss which Spain and Portugal could sustain
by this exportation of their gold and silver would be altogether nom-
inal and imaginary. The nominal value of their goods, and of the
annual produce of their land and labour, would fall, and would be
expressed or represented by a smaller quantity of silver than be-
48o XHE wealth OF NATIONS
fore: but their real value would be the same as before, and would
be sufficient to maintain, command, and employ, the same quan-
tity of labour. As the nominal value of their goods would fall, the
real value of what remained of their gold and silver would rise, and
a smaller quantity of those metals would answer all the same pur-
poses of commerce and circulation which had employed a greater
quantity before. The gold and silver which would go abroad would
not go abroad for nothing, but would bring back an equal value of
goods of some kind or another. Those goods too would not be all
matters of mere luxury and expence, to be consumed by idle people
who produce nothing in return for their consumption. As the real
wealtih and revenue of idle people would not be augmented by this
extraordinary exportation of gold and silver, so neither would their
consumption be much augmented by it. Those goods would, prob-
ably, the greater part of them, and certainly some part of them,
consist in materials, tools, and provisions, for the employment and
maintenance of industrious people, who would reproduce, with a
profit, the full value of their consumption. A part of the dead stock
of the society would thus be turned into active stock, and would
put into motion a greater quantity of industry than had been em-
ployed before. The annual produce of their land and labour would
immediately be augmented a little, and in a few years would, prob-
ably, be augmented a great deal; their industry being thus relieved
from one of the most oppressive burdens which it at present labours
under.
The corn The bounty upon the exportation of corn necessarily operates
acte fo^the absurd policy of Spain and Portu-
game gab TOatever be the actual state of tillage, it renders our corn
way; somewhat dearer in the home market than it otherwise would be in
that state, and somewhat cheaper in the foreign; and as the aver-
age money price of corn regulates more or less that of all other
commodities, it lowers the value of silver considerably in the one,
and tends to raise it a little in the other. It enables foreigners, the
Dutch in particular, not only to eat our corn cheaper than they
otherwise could do, but sometimes to eat it cheaper than even our
own people can do upon the same occasions; as we are assured by
an excellent authority, that of Sir Matthew Decker.^® It hinders
our own workmen from furnishing their goods for so small a quan-
tity of silver as they otherwise might do; and enables the Dutch to
furnish their^s for a smaller. It tends to render our manufactures
^ Essay on the Carnes of the Decline of the Foreign Trade, consequentl of
the Value of the Lands of Britain, and on the means to restore both, 2nd d ,
1750, pp. 55 , 171
BOUNTIES 48x
somewhat dearer in every market, and their’s somewhat cheaper
than they otherwise would be, and consequently to give their in-
dustry a double advantage over our own.
The bounty, as it raises in the home market, not so 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 silver which it will exchange
for, it discourages our manufactures, without rendering any con-
siderable service either to our farmers or country gentlemen. It
puts, indeed, a little more money into the pockets of both, and it
will perhaps be somewhat difficult to persuade the greater part of
them that this is not rendering them a very considerable service.^^
But if this money sinks in its value, in the quantity of labour, pro-
visions, and home-made commodities of all different kinds which
it is capable of purchasing, as much as it rises in its quantity, the
service will be little more than nominal and imaginary.
There is, perhaps, but one set of men in the whole common-
wealth to whom the bounty either was or could be essentially ser-
viceable.^'’ These were the corn merchants, the exporters and im-
porters of corn. In years of plenty the bounty necessarily occasioned
a greater exportation than would otherwise have taken place; and
by hindering the plenty of one year from relieving the scarcity of
another, it occasioned in years of scarcity a greater importation
than would otherwise have been necessary. It increased the busi-
ness of the corn merchant in both; and in years of scarcity, it not
only enabled him to import a greater quantity, but to sell it for a
better price, and consequently with a greater profit than he could
otherwise have made, if the plenty of one year had not been more
or less hindered from relieving the scarcity of another. It is in this
set of men, accordingly, that I have observed the greatest zeal for
the continuance or renewal of the bounty.
Our country gentlemen, when they imposed the high duties upon
the importation of foreign corn, which in times of moderate plenty
amount to a prohibition, and when they established the bounty,
seem to have imitated the conduct of our manufacturers. By the one
institution, they secured to themselves the monopoly of the home
market, and by the other they endeavoured to prevent that market
from ever being overstocked with their commodity. By both they
^ Eds. I and 2 read “not the real but only the nominal price.”
^ Eds. I and 2 read “the smallest real service.”
Eds I and 2 read “a very real service ”
^ “Home-made” is not in eds i and 2.
Eds. I and 2 read “will be merely nominal.”
Eds. I and 2 read “could be really serviceable.”
it discour
ages
manufac-
tures
without
much
benefiting
farmers
and coun
try
gentle-
men
It is es-
sentially
service-
able only
to the
com mer-
chants.
The coun-
try
gentle-
men
estab-
lished the
duties on
the im-
portation
of corn,
and the
bounty, in
imitation
of the
manufac-
turers,
without
attending
to the es-
sential
difference
between
com and
other
goods.
All the ex-
pedients
482 the wealth of nations
endeavoured to raise its real value, in the same manner as our
manufacturers had, by the like institutions, raised the real value of
many different sorts of manufactured goods. They did not perhaps
attend to the great and essential difference which nature has es-
tablished between corn and almost every other sort of goods. When,
either by the monopoly of the home market, or by a bounty upon
exportation, you enable our woollen or linen manufacturers to sell
their goods for somewhat a better price than they otherwise could
get for them, you raise, not only the nominal, but the real price of
those goods. You render them equivalent to a greater quantity of
labour and subsistence, you increase not only the nominal, but the
real profit, the real wealth and revenue of those manufacturers, and
you enable them either to live better themselves, or to employ a
greater quantity of labour in those particular manufactures. You
really encourage those manufactures, and direct towards them a
greater quantity of the industry of the country, than what would
probably go to them of its own accord. But when by the like insti-
tutions you raise the nominal or money-price* of corn, you do not
raise its real value. You do not increase the real wealth, the real
revenue either of our farmers or country gentlemen. You do not
encourage the growth of com, because you do not enable them to
maintain and employ more labourers in raising it. The nature of
things has stamped upon corn a real value which cannot be altered
by merely altering its money price.^® No bounty upon exportation,
no monopoly of the home market, can raise that value,^^ The freest
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 scanty, in
which labour is commonly maintained in that place. Woollen or
linen cloth are not the regulating commodities by which the real
value of all other commodities must be finally measured and de-
termined; corn is. The real value of every other commodity is final-
ly measured 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 those variations in its average
money price, which sometimes occur from one century to another.
It is the real value of silver which varies with them.
Bounties upon the exportation of any home-made commodity are
liable, first, to that general objection which may be made to all the
^ Eds. I and 2 read real value which no human institution can alter.”
Cp. p. 476.
^ Ed. I reads “raise it.”
BOUNTIES 4S3
different expedients of the mercantile system; the objection of forc-
ing some part of the industry of the country into a channel less ad-
vantageous than that in which it would run of its own accord: and,
secondly, to the particular objection of forcing it, not only into a
channel that is less advantageous, but into one that is actually dis-
advantageous ; the trade which cannot be carried on but by means
of a bounty being necessarily a losing trade. The bounty upon the
exportation of corn is liable to this further objection, that it can in
no respect promote the raising of that particular commodity of
which it was meant to encourage the production. When our country
gentlemen, therefore, demanded the establishment of the bounty,
though they acted in imitation of our merchants and manufactur-
ers, they did not act with that complete comprehension of their
own interest which commonly directs the conduct of those two other
orders of people. They loaded the public revenue with a very con-
siderable expence; they imposed a very heavy tax upon the whole
body of the people; but they did not, in any sensible degree, in-
crease the real value of their own commodity; and by lowering
somewhat the real value of silver, they discouraged, in some de-
gree, the general industry of the country, and, instead of advancing,
retarded more or less the improvement of their own lands, which
necessarily depends upon the general industry of the country.
To encourage the production of any commodity, a bounty upon
production, one should imagine, would have a more direct opera-
tion, than one upon exportation. It would, besides, impose only one
tax upon the people, that which they must contribute in order to
pay the bounty. Instead of raising, it would tend to lower the price
of the commodity in the home market; and thereby, instead of im-
posing a second tax upon the people, it might, at least in part, repay
them for what they had contributed to the first. Bounties upon pro-
duction, however, have been very rarely granted.^^ The prejudices
established by the commercial system have taught us to believe,
that national wealth arises more immediately from exportation than
from production. It has been more favoured accordingly, as the
more immediate means of bringing money into the country. Boun-
ties upon production, it has been said too, have been found by ex-
perience more liable to frauds than those upon exportation. How
far this is true, I know not. That bounties upon exportation have
® Eds. I and 2 read “They loaded the public revenue with a very consid-
erable expence, but they did not in any respect increase.” The alteration is
given in Additions and Corrections.
®In place of this and the two preceding sentences (beginning “It would
besides”) eds. i and 2 read only “It has, however, been more rarely granted.”
The alteration is given in Additions and Corrections.
of the
mercan-
tile sys-
tem force
industry
into less
advanta-
geous
channels:
bounties
on ex-
ports
force it
into ac-
tually dis-
advanta-
geous
channels:
the
bounty on
corn does
not en-
courage
its pro-
duction.
A bounty
on pro-
duction
would be
more ef-
fectual
than one
on ex-
portation
and
would
lower the
price of
the com-
modity,
but such
bounties
have been
rare,
owing to
the inter-
est of
merchants
and
manufac-
turers.
The her-
ring and
whale
fishery
bounties
are in part
given on
produc-
tion.
They are
supposed
to aug-
ment the
number
of sailors
and ships.
484 the wealth of HATION£j
been abused to many fraudulent purposes, is very well known. But
it is not the interest of merchants and manufacturers, the great in-
ventors of all these expedients, that the home market should be
overstocked with their goods, an event which a bounty upon pro-
duction might sometimes occasion. A bounty upon exportation, by
enabling them to send abroad the surplus part, and to keep up the
price of what remains in the home market, effectually prevents this.
Of all the expedients of the mercantile system, accordingly, it is the
one of which they are the fondest. I have known the different un-
dertakers of some particular works agree privately among them-
selves to give a bounty out of their own pockets upon the exporta-
tion of a certain proportion of the goods which they dealt in. This
expedient succeeded so well, that it more than doubled the price of
their goods in the home market, notwithstanding a very consider-
able increase in the produce. The operation of the bounty upon
corn must have been wonderfully different, if it has lowered the
money price of that commodity.
Something like a bounty upon production, however, has been
granted upon some particular occasions. The tonnage bounties
given to the white-herring and whale-fisheries may, perhaps, be
considered as somewhat of this nature.^^ They tend directly, it may
be supposed,®^ to render the goods cheaper in the home market than
they otherwise would be.^^ In other respects their effects, it must be
acknowledged,^^ are the same as those of bounties upon exporta-
tion. By means of them a part of the capital of the country is em-
ployed in bringing goods to market, of which the price does not re-
pay the cost, together with the ordinary profits of stock.
But though the tonnage bounties to those fisheries do not con-
tribute to the opulence of the nation, it may perhaps be thought
that they contribute to its defence,^^ by augmenting the number of
its sailors and shipping. This, it may be alleged, may sometimes be
done by means of such bounties at a much smaller expence, than
by keeping up a great standing navy, if I may use such an expres-
sion,^® in the same way as a standing army.®^
^ Eds. I and 2 read “The encouragements given.”
®^The whale fisheiy bounty under ii Geo III , c. 38, was 40s. per ton for
the first five years, 30s. for the second five years, and 20s. for the third.
^ “It may be supposed” is not in eds. i and 2
Eds. I and 2 read “would be in the actual state of production.”
“It must be acknowledged” is not in eds i and 2.
“Tonnage” is not in eds. i and 2
Eds. I and 2 read “they may perhaps be defended as conducing to its de-
fence ”
Eds. I and 2 read “This may frequently be done.”
Eds I and 2 read “in time of peace” here.
The next four pages, to page 489 line 17? are not in eds. i and 2, which read
BOUNTIES 4^5
Notwithstanding these favourable allegations, however, the fol-
lowing considerations dispose me to believe, that in granting at
least one of these bounties, the legislature has been very grossly
imposed upon.
First, the herring buss bounty seems too large.
From the commencement of the winter fishing 1771 to the end
of the winter fishing 1781, the tonnage bounty upon the herring
buss fishery has been at thirty shillings the ton. During these eleven
years the whole number of barrels caught by the herring buss fish-
ery of Scotland amounted to 373 , 347 - The herrings caught and
cured at sea, are called sea sticks In order to render them what
are called merchantable herrings, it is necessary to repack them
with an additional quantity of salt; and in this case, it is reckoned,
that three barrels of sea sticks, are usually repacked into two bar-
rels of merchantable herrings. The number of barrels of merchant-
able herrings, therefore, caught during these eleven years, will
amount only, according to this account, to 252,2311. During these
eleven years the tonnage bounties paid amounted to 155,463/. ii^.
or to 8^. upon every barrel of sea sticks, and to 12^. 3fc?.
upon every barrel of merchantable herrings.
The salt with which these herrings are cured, is sometimes
Scotch, and sometimes foreign salt; both which are delivered free
of all excise duty to the fish-curers. The excise duty upon Scotch
salt is at present is. 6 d. that upon foreign salt lo^. the bushel, A
barrel of herrings is supposed to require about one bushel and one-
fourth of a bushel foreign salt. Two bushels are the supposed aver-
age of Scotch salt. If the herrings are entered for exportation, no
part of this duty is paid up; if entered for home consumption,
whether the herrings were cured with foreign or with Scotch salt,
only one shilling the barrel is paid up. It was the old Scotch duty
upon a bushel of salt, the quantity which, at a low estimation, had
been supposed necessary for curing a barrel of herrings. In Scot-
land, foreign salt is very little used for any other purpose but the
curing of fish. But from the 5th April 1771, to the 5th April 1782,
in place of them: “Some other bounties may be vindicated perhaps upon the
same principle. It is of importance that the kingdom should depend as little
as possible upon its neighbours for the manufactures necessary for its de-
fence ; and if these cannot otherwise be maintained at home, it is reasonable
that all other branches of industry should be taxed in order to support them.
The bounties upon the importation of naval stores from America, upon British
made sail-cloth, and upon British made gunpowder, may perhaps all three be
vindicated upon this principle. The first is a bounty upon the production of
America, for the use of Great Britain, The two others are bounties upon ex-
portation.” The new paragraphs, with the two preceding paragraphs as
amended, are given in Additions and Corrections.
In Additions and Corrections the term is “seasteeks,” as in the Appendix.
In grant-
ing the
herring
bounties
Parlia-
ment has
been im-
posed on,
since (i)
the her-
ring buss
bounty is
too large,
(2) the
bounty is
not pro-
portioned
to the fish
caught,
(3) the
bounty is
given to
busses,
whereas
the fishery
ought to
be carried
on by
boats,
486 the wealth oe nations
the quantity of foreign salt imported amounted to 936,974 bushels,
at eighty-four pounds the bushel: the quantity of Scotch salt de-
livered from the works to the fish-curers, to no more than 168,226,
at fifty-six pounds the bushel only. It would appear, therefore, that
it is principally foreign salt that is used in the fisheries. Upon every
barrel of herrings exported there is, besides, a bounty of 2s. M. and
more than two-thirds of the buss caught herrings are exported. Put
all these things together, and you will find that, during these eleven
years, every barrel of buss caught herrings, cured with Scotch salt
when exported, has cost government 17L and when entered
for home consumption 145. 3fc?.: and that every barrel cured with
foreign salt, when exported, has cost government iL js. 5|d.; and
when entered for home consumption iL The price of a bar-
rel of good merchantable herrings runs from seventeen and eighteen
to four and five and twenty shillings; about a guinea at an av-
erage."*^
Secondly, the bounty to the white herring fishery is a tonnage
bounty; and is proportioned to the burden of the ship, not to her
diligence or success in the fishery; and it has, I am afraid, been
too common for vessels to fit out for the sole purpose of catching,
not the fish, but the bounty. In the year 1 7 59, when the bounty was
at fifty shillings the ton, the whole buss fishery of Scotland brought
in only four barrels of sea sticks. In that year each barrel of sea
sticks cost government in bounties alone 113^. 15^.; each barrel of
merchantable herrings 159/. 75. 6 d.
Thirdly, the mode of fishing for which this tonnage bounty in the
white herring fishery has been given (by busses or decked vessels
from twenty to eighty tons burthen), seems not so well adapted to
the situation of Scotland as to that of Holland; from the practice of
which country it appears to have been borrowed. Holland lies at a
great distance from the seas to which herrings are known principal-
ly to resort; and can, therefore, carry on that fishery only in decked
vessels, which can carry water and provisions sufficient for a voy-
age to a distant sea. But the Hebrides or western islands, the islands
of Shetland, and the northern and north-western coasts of Scot-
land, the countries in whose neighbourhood the herring fishery is
principally carried on, are everywhere intersected by arms of the
sea, which run up a considerable way into the land, and which, in
the language of the country, are called sea-lochs. It is to these sea-
lochs that the herrings principally resort during the seasons in
which they visit those seas; for the visits of this, and, I am assured,
^ See the accounts at the end of the volume In Additions and Corrections
they are printed in the text.
BOUNTIES 4S7
of many other sorts of fish, are not quite regular and constant. A
boat fishery, therefore, seems to be the mode of fishing best adapt-
ed to the peculiar situation of Scotland: the fishers carrying the
herrings on shore, as fast as they are taken, to be either cured or
consumed fresh. But the great encouragement which a bounty of
thirty shillings the ton gives to the buss fishery, is necessarily a dis-
couragement to the boat fishery; which, having no such bounty,
cannot bring its cured fish to market upon the same terms as the
buss fishery. The boat fishery, accordingly, which, before the estab-
lishment of the buss bounty, was very considerable, and is said to
have employed a number of seamen, not inferior to what the buss
fishery employs at present, is now gone almost entirely to decay. Of
the former extent, however, of this now ruined and abandoned fish-
ery, I must acknowledge, that I cannot pretend to speak with much
precision. As no bounty was paid upon the outfit of the boat-fishery,
no account was talcen of it by the officers of the customs or salt
duties.
Fourthly, in many parts of Scotland, during certain seasons of
the year, herrings malce no inconsiderable 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-subjects, whose circumstances are by no
means affluent. But the herring buss bounty contributes to no such
good purpose. It has ruined the boat fishery, which is, by far, the
best adapted for the supply of the home market, and the addi-
tional bounty of 2^. M. the barrel upon exportation, carries the
greater part, more than two thirds, of the produce of the buss fish-
ery abroad. Between thirty and forty years ago, before the estab-
lishment of the buss bounty, sixteen shillings the barrel, I have been
assured, was the common price of white herrings. Between ten and
fifteen years ago, before the boat fishery was entirely ruined, the
price is said to have run from seventeen to twenty shillings the bar-
rel. For these last five years, it has, at an average, been at twenty-
five shillings the barrel. This high price, however, may have been
owing to the real scarcity of the herrings upon the coast of Scot-
land. I must observe too, that the cask or barrel, which is usually
sold with the herrings, and of which the price is included in all the
foregoing prices, has, since the commencement of the American
war, risen to about double its former price, or from about three
shillings to about six shillings. I must likewise observe, that the
accounts I have received of the prices of former times, have been by
no means quite uniform and consistent; and an old man of great
accuracy and experience has assured me, that more than fifty years
(4) the
bounty
has raised,
or at any
rate not
lowered,
the price
of her-
rings.
Profits in
the busi-
ness have
not been
high.
Bounties
bimanu-
488 XHE WEALTH OP NATIONS
agOj a guinea was the usual price of a barrel of good merchantable
herrings; and this, I imagine, may still be looked upon as the aver-
age price. All accounts, however, I think, agree, that the price has
not been lowered in the home market, in consequence of the buss
bounty.
When the undertakers of fisheries, after such liberal bounties
have been bestowed upon them, continue to sell their commodity at
the same, or even at a higher price than they were accustomed to do
before, it might be expected that their profits should be very great;
and it is not improbable that those of some individuals may have
been so. In general, however, I have every reason to believe, they
have been quite otherwise. The usual effect of such bounties is to
encourage rash undertakers to adventure in a business which they
do not understand, and what they lose by their own negligence and
ignorance, more than compensates all that they can gain by the ut-
most liberality of government. In 1750, by the same act which first
gave the bounty of thirty shillings the ton for the encouragement of
the white herring fishery (the 23 Geo. II. chap. 24.), a joint stock
company was erected, with a capital of five hundred thousand
pounds, to which the subscribers (over and above all other encour-
agements, the tonnage bounty just now mentioned, the exportation
bounty of two shillings and eight pence the barrel, the delivery of
both British and foreign salt duty free) were, during the space of
fourteen years, for every hundred pounds which they subscribed
and paid into the stock of the society, entitled to three pounds a
year, to be paid by the receiver-general of the customs in equal
half-yearly payments. Besides this great company, the residence of
whose governor and directors was to be in London, it was declared
lawful to erect different fishing-chambers in all the different out-
ports of the kingdom, provided a sum not less than ten thousand
pounds was subscribed into the capital of each, to be managed at
its own risk, and for its own profit and loss. The same annuity, and
the same encouragements of all kinds, were given to the trade of
those inferior chambers, to that of the great company. The sub-
scription of the great company was soon filled up, and several dif-
ferent fishing-chambers were erected in the different out-ports of
the kingdom. In spite of all these encouragements, almost all those
different companies, both great and small, lost either the whole, or
the greater part of their capitals; scarce a vestige now remains of
any of them, and the white herring fishery is now entirely, or almost
entirely, carried on by private adventurers.
If any particular manufacture was necessary, indeed, for the
defence of the society, it might not always be prudent to depend
BOUNTIES 489
upon our neighbours for the supply; and if such manufacture could
not otherwise be supported at home, it might not be unreasonable
that all the other branches of industry should be taxed in order to
support it. The bounties upon the exportation of British-made sail-
cloth, and British-made gun-powder, may, perhaps, both be vin-
dicated upon this principle.
But though it can very seldom be reasonable to tax the industry
of the great body of the people, in order to support that of some
particular class of manufacturers; yet in the wantonness of great
prosperity, when the public enjoys a greater revenue than it knows
well what to do with, to give such bounties to favourite manufac-
tures, may, perhaps, be as natural, as to incur any other idle ex-
pence. In public, as well as in private expences, great wealth may,
perhaps, frequently be admitted as an apology for great folly. But
there must surely be something more than ordinary absurdity, in
continuing such profusion in times of general difficulty and dis-
tress.'^^
What is called a bounty is sometimes no more than a drawback,
and consequently is not liable to the same objections as what is
properly a bounty. The bounty, for example, upon refined sugar
exported, may be considered as a drawback of the duties upon the
brown and muscovado sugars from which it is made. The bounty
upon wrought silk exported, a drawback of the duties upon raw and
thrown silk imported. The bounty upon gunpowder exported, a
drawback of the duties upon brimstone and saltpetre imported. In
the language of the customs those allowances only are called draw-
backs, which are given upon goods exported in the same form in
which they are imported. When that form has been so altered by
manufacture of any kind, as to come under a new denomination,
they are called bounties.^®
Premiums given by the public to artists and manufacturers who
excel in their particular occupations, are not liable to the same
objections as bounties. By encouraging extraordinary dexterity and
ingenuity, they serve to keep up the emulation of the workmen
actually employed in those respective occupations, and are not con-
siderable enough to turn towards any one of them a greater share
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 per-
factures
necessary
for the
defence
of the
country
are not
unreason-
able
It is less
absurd to
give
bounties
in times
of pros-
perity
than in
times of
distress
Some al-
lowances
called
bounties
are, prop-
erly
speaking,
draw-
backs.
Prizesto
successful
artists and
manufac-
turers do
not divert
industry
to less
advanta-
geous
channels,
but en-
The ten paragraphs ending here are not in eds. i and 2. See above, p. 484,
note 39,
Eds. I and 2 read “When that form has been altered by manufacture of
any kind, they are called bounties.”
courage
perfec-
tion.
The com
bounty
and corn
laws are
undeserv-
ing of
praise
There are
four
branches
of the
corn
trade:
I The In-
land Deal-
er, whose
interest
is the
same as
that of
the
people,
^;iz.,that
the con-
sumption
should be
propor-
tioned to
the supply
available.
490 the wealth of NATIONS
feet and complete as possible. The expence of premiums, besides, is
very trifling; that of bounties very great. The bounty upon corn
alone has sometimes cost the public in one year more than three
hundred thousand pounds.^^
Bounties are sometimes called premiums, as drawbacks are some-
times called bounties. But we must in all cases attend to the nature
of the thing, without paying any regard to the word.
Digression concerning the Corn Trade and Corn Laws
I CANNOT conclude this chapter concerning bounties, without ob-
serving that the praises which have been bestowed upon the law
which establishes the bounty upon the exportation of corn, and
upon that system of regulations which is connected with it, are
altogether unmerited. A particular examination of the nature of the
corn trade, and of the principal British laws which relate to it, will
sufficiently demonstrate the truth of this assertion. The great im-
portance of this subject must justify the length of the digression.
The trade of the corn merchant is composed of four different
branches, which, though they may sometimes be all carried on by
the same person, are in their own nature four separate and distinct
trades. These are, first, the trade of the inland dealer; secondly,
that of the merchant importer for home consumption; thirdly, that
of the merchant exporter of home produce for foreign consumption;
and, fourthly, that of the merchant carrier, or of the importer of
corn in order to export it again.
I. The interest of the inland dealer, and that of the great body
of the people, how opposite soever they may at first sight appear,
are, even in years of the greatest scarcity, exactly the same. It is his
interest to raise the price of his corn as high as the real scarcity of
the season requires, and it can never be his interest to raise it high-
er. By raising the price he discourages the consumption, and puts
every body more or less, but particularly the inferior ranks of peo-
ple, upon thrift and good management. If, by raising it too high,
he discourages the consumption so much that the supply of the
season is likely to go beyond the consumption of the season, and to
last for some time after the next crop begins to come in, he runs the
hazard, not only of losing a considerable part of his corn by natural
causes, but of being obliged to sell what remains of it for much less
than what he might have had for it several months before. If by
not raising the price high enough he discourages the consumption
"Above, vol. i , p. 199.
^®This heading is not in ed i.
DIGRESSION ON THE CORN TRADE 49i
SO little, that the supply of the season is likely to fall short of the
consumption of the season, he not only loses a part of the profit
which he might otherwise have made, but he exposes the people to
suffer before the end of the season, instead of the hardships of a
dearth, the dreadful horrors of a famine. It is the interest of the
people that their daily, weekly, and monthly consumption, should
be proportioned as exactly as possible to the supply of the season.
The interest of the inland corn dealer is the same. By supplying
them, as nearly as he can judge, in this proportion, he is likely to
sell all his corn for the highest price, and with the greatest profit;
and his knowledge of the state of the crop, and of his daily, weekly,
and monthly sales, enable him to judge, with more or less accur-
acy, how far they really are supplied in this manner. Without in-
tending the interest of the people, he is necessarily led, by a regard
to his own interest, to treat them, even in years of scarcity, pretty
much in the same manner as the prudent master of a vessel is some-
times obliged to treat his crew. When he foresees that provisions are
likely to run short, he puts them upon short allowance. Though
from excess of caution he should sometimes do this without any
real necessity, yet all the inconveniencies which his crew can
thereby suffer are inconsiderable, in comparison of the danger, mis-
ery, and ruin, to which they might sometimes be exposed by a less
provident conduct. Though from excess of avarice, in the same
manner, the inland corn merchant should sometimes raise the price
of his corn somewhat higher than the scarcity of the season re-
quires, yet all the inconveniencies which the people can suffer from
this conduct, which effectually secures them from a famine in the
end of the season, are inconsiderable, in comparison of what they
might have been exposed to by a more liberal way of dealing in the
beginning of it. The corn merchant himself is likely to suffer the
most by this excess of avarice; not only from the indignation which
it generally excites against him, but, though he should escape the
effects of this indignation, from the quantity of corn which it neces-
sarily leaves upon his hands in the end of the season, and which,
if the next season happens to prove favourable, he must always sell
for a much lower price than he might otherwise have had.
Were it possible, indeed, for one great company of merchants to Theinter-
possess themselves of the whole crop of an extensive country, it
might, perhaps, be their interest to deal with it as the Dutch are poiy
said to do with the spicferies of the Moluccas, to destroy or throw might
away a considerable part of it, in order to keep up the price of the
Not a misprint for “enables ” There are two knowledges, one of the state
of the crop and the other of the daily sales.
destroy a
portion of
the crop,
but corn
cannot be
monopo-
lised
where the
trade is
free.
Dearths
are never
occa-
sioned by
combina-
tion, but
always by
scarcity,
and fa-
mines are
always
caused by
492 the wealth of nations
rest.^'^ But it is scarce possible, even by the violence of law, to
establish such an extensive monopoly with regard to corn; and,
wherever the law leaves the trade free, it is of all commodities the
least liable to be engrossed or monopolized by the force of a few
large capitals, which buy up the greater part of it. Not only its
value far exceeds what the capitals of a few private men are cap-
able of purchasing, but supposing they were capable of purchasing
it, the manner in which it is produced renders this purchase alto-
gether impracticable. As in every civilized country it is the com-
modity of which the annual consumption is the greatest, so a great-
er quantity of industry is annually employed in producing corn
than in producing any other commodity. When it first comes from
the ground too, it is necessarily divided among a greater number of
owners than any other commodity; and these owners can never be
collected into one place like a number of independent manufactur-
ers, but are necessarily scattered through all the different corners of
the country. These first owners either immediately supply the con-
sumers in their own neighbourhood, or they supply other inland
dealers who supply those consumers. The inland dealers in corn,
therefore, including both the farmer and the baker, are necessarily
more numerous than the dealers in any other commodity, and their
dispersed situation renders it altogether impossible for them to en-
ter into any general combination. If in a year of scarcity therefore,
any of them should find that he had a good deal more corn upon
hand than, at the current price he could hope to dispose of before
the end of the season, he would never think of keeping up this price
to his own loss, and to the sole benefit of his rivals and competitors,
but would immediately lower it, in order to get rid of his corn be-
fore the new crop began to come in. The same motives, the same
interests, which would thus regulate the conduct of any one dealer,
would regulate that of every other, and oblige them all in general to
sell their corn at a price which, according to the best of their judg-
ment, was most suitable to the scarcity or plenty of the season.
Whoever examines, with attention, lie history of the dearths and
famines which have afflicted any part of Europe, during either the
course of the present or that of the two preceding centuries, of sev-
eral of which we have pretty exact accounts, will find, I believe,
that a dearth never has arisen from any combination among the
inland dealers in corn, nor from any other cause but a real scarcity,
occasioned sometimes, perhaps, and in some particular places, by
the waste of war, but in by far the greatest number of cases, by the
fault of the seasons; and that a famine has never arisen from any
Above, p. 158; below, p. 600.
DIGRESSION ON THE CORN TRADE 493
other cause but the violence of government attempting, by improp-
er means, to remedy the inconveniencies of a dearth.
In an extensive corn country, between all the different parts of
which there is a free commerce and communication, the scarcity oc-
casioned by the most unfavourable seasons can never be so great as
to produce a famine; and the scantiest crop, if managed with fru-
gality and oeconomy, will maintain, through the year, the same
number of people that are commonly fed in a more affluent manner
by one of moderate plenty. The seasons most unfavourable to the
crop are those of excessive drought or excessive rain. But, as corn
grows equally upon high and low lands, upon grounds that are dis-
posed to be too wet, and upon those that are disposed 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 season the crop is a good deal less than in one more prop-
erly tempered, yet in both what is lost in one part of the country is
in some measure compensated by what is gained in the other. In
rice countries, where the crop not only requires a very moist soil,
but where in a certain period of its growing it must be laid under
water, the effects of a drought are much more dismal. Even in such
countries, however, the drought is, perhaps, scarce ever so univer-
sal, as necessarily to occasion a famine, if the government would
allow a free trade. The drought in Bengal, a few years ago, might
probably have occasioned a very great dearth. Some improper regu-
lations, some injudicious restraints imposed by the servants of the
East 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
dearth, orders all the dealers to sell their corn at what it supposes
a reasonable price, it either hinders them from bringing it to mar-
ket, which may sometimes produce a famine even in the beginning
of the season; or if they bring it thither, it enables the people, and
thereby encourages them to consume it so fast, as must necessarily
produce a famine before the end of the season. The unlimited, un-
restrained freedom of the corn trade, as it is the only effectual pre-
ventative of the miseries of a famine, so it is the best palliative of
the inconveniencies of a dearth; for the inconveniencies of a real
scarcity cannot be remedied; they can only be palliated. No trade
deserves more the full protection of the law, and no trade requires
it so much ; because no trade is so much exposed to popular odium.
In years of scarcity, the inferior ranks of people impute their
distress to the avarice of the corn merchant, who becomes the ob-
ject of their hatred and indignation. Instead of making profit upon
the sup-
posed
remedies
for
dearths
applied by
govern-
ment
Scarcities
are never
great
enough
to cause
famine
Govern-
ments
cause
famines
by order-
ing corn
to be sold
at a rea-
sonable
price.
The corn
merchant
is odious
to the
populace,
and this
deters re-
spectable
people
from en-
tering the
trade.
This
popular
odium
was en-
couraged
by legis-
lation.
Many re-
straints
494 THE WEALTH OF NATIONS
such occasions, therefore, he is often in danger of 'being utterly
ruined, and of having his magazines plundered and destroyed by
their violence. It is in years of scarcity, however, when prices are
high, that the corn merchant expects to make his principal profit.
He is generally in contract with some farmers to furnish him for a
certain number of years with a certain quantity of corn at a certain
price. This contract price is settled according to what is supposed to
be the moderate and reasonable, that is, the ordinary or average
price, which, before the late years of scarcity, was commonly about
eight-and-twenty shillings for the quarter of wheat, and for that of
other grain in proportion. In years of scarcity, therefore, the corn
merchant buys a great part of his corn for the ordinary price, and
sells it for a much higher. That this extraordinary profit, however, is
no more than sufficient to put his trade upon a fair level with other
trades, and to compensate the many losses which he sustains upon
other occasions, both from the perishable nature of the commodity
itself, and from the frequent and unforeseen fluctuations of its
price, seems evident enough, from this single circumstance, that
great fortunes are as seldom made in this as in any other trade.
The popular odium, however, which attends it in years of scarcity,
the only years in which it can be very profitable, renders people of
character and fortune averse to enter into it. It is abandoned to an
inferior set of dealers; and millers, bakers, mealmen, and meal fac-
tors, together with a number of wretched hucksters, are almost the
only middle people that, in the home market, come between the
grower and the consumer.
The ancient policy of Europe, instead of discountenancing this
popular odium against a trade so beneficial to the public, seems, or*
the contrary, to have authorised and encouraged it.
By the 5th and 6th of Edward VI. cap. 14. it was enacted. That
whoever should buy any corn or grain with intent to sell it again,
should be reputed an unlawful engrosser, and should, for the first
fault suffer two months imprisonment, and forfeit the value of the
corn; for the second, suffer six months imprisonment, and forfeit
double the value; and for the third, be set in the pillory, suffer im-
prisonment during the king^s pleasure, and forfeit all his goods and
chattels. The ancient policy of most other parts of Europe was no
better than that of England.
Our ancestors seem to have imagined that the people would buy
their com cheaper of the farmer than of the corn merchant, who,
^ “Any corn growing in the fields, or any other corn or grain, butter, cheese,
fish or other dead victuals whatsoever.” But grain was exempted when below
certain prices, e.g., wheat, 6s. 8d. the quarter.
DIGRESSION ON THE CORN TRADE 495
they were afraid, would require, over and above the price which he
paid to the farmer, an exorbitant profit to himself. They endeavour-
ed, therefore, to annihilate his trade altogether. They even endeav-
oured to hinder as much as possible any middle man of any kind
from coming in between the grower and the consumer; and this
was the 'meaning of the many restraints which they imposed upon
the trade of those whom they called kidders or carriers of corn, a
trade which nobody was allowed to exercise without a licence as-
certaining his qualifications as a man of probity and fair dealing.^^
The authority of three justices of the peace was, by the statute of
Edward VI. necesspy, in order to grant this licence. But even this
restraint was afterwards thought insufficient, and by a statute of
Elizabeth,^^ the privilege of granting it was confined to the quarter-
sessions.
The ancient policy of Europe endeavoured in this manner to reg-
ulate agriculture, the great trade of the country, by maxims quite
different from those which it established with regard to manufac-
tures, the great trade of the towns. By leaving the farmer no other
customers but either the consumers or their immediate factors,®^
the kidders and carriers of corn, it endeavoured to force him to ex-
ercise the trade, not only of a farmer, but of a corn merchant or
corn retailer. On the contrary, it in many cases prohibited the man-
ufacturer from exercising the trade of a shopkeeper, or from selling
his own goods by retail. It meant by the one law to promote the
general interest of the country, or to render corn cheap, without,
perhaps, its being well understood how this was to be done. By the
other it meant to promote that of a particular order of men, the
shopkeepers, who would be so much undersold by the manufac-
turer, it was supposed, that their trade would be ruined if he was
allowed to retail at all.
The manufacturer, however, though he had been allowed to keep
a shop, and to sell his own goods by retail, could not have under-
sold the common shopkeeper. Whatever part of his capital he might
have placed in his shop, he must have withdrawn it from his manu-
This and the preceding sentence are misleading. The effect of the provi-
sions quoted in the preceding paragraph would have been to “annihilate alto-
gether” the trade of the corn merchant if they had been left unqualified. To
avoid this consequence S and 6 Ed. VI., c. 14, § 7, provides that badgers,
laders, kidders or carriers may be licensed to buy corn with the intent to sell
it again in certain circumstances. So that the licensing of kidders was a con-
siderable alleviation, not, as the text suggests, an aggravation.
Eliz., c. 12, § 4.
“Ed. I reads “the consumer or his immediate factors.” It should be no-
ticed that under 5 and 6 Edward VI., c. 14, § 7, the kidder might sell in “open
fair or market” as well as to consumers privately.
were im-
posed on
traders.
Endeav-
ours were
made to
force the
farmers to
be retail-
ers,
though
manufac-
turers
were for-
bidden to
be so.
The deal-
er con-
fined to
one
branch of
business
496 THE WEALTH OE NATIONS
facture. In order to carry on his business on a level with that of
other people, as he must have had the profit of a manufacturer on
the one part, so he must have had that of a shopkeeper upon the
other. Let us suppose, for example, that in the particular town
where he lived, ten per cent, was the ordinary profit both of manu-
facturing and shopkeeping stock; he must in this case have charged
upon every piece of his own goods which he sold in his shop, a profit
of twenty per cent. When he carried them from his workhouse to
his shop, he must have valued them at the price for which he could
have sold them to a dealer or shopkeeper, who would have bought
them by wholesale. If he valued them lower, he lost a part of the
profit of his manufacturing capital. When again he sold them from
his shop, unless he got the same price at which a shopkeeper would
have sold them, he lost a part of the profit of his shopkeeping capi-
tal. Though he might appear, therefore, to make a double profit up-
on the same piece of goods, yet as these goods made successively a
part of two distinct capitals, he made but a single profit upon the
whole capital employed about them; and if he made less than this
profit, he was a loser, or did not employ his whole capital with the
same advantage as the greater part of his neighbours.
What the manufacturer was prohibited to do, the farmer was in
some measure enjoined to do; to divide his capital between two dif-
ferent employments; to keep one part of it in his granaries and
stack yard, for supplying the occasional 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 less than the ordinary
profits of farming stock, so he could as little afford to employ the
former for less than the ordinary profits of mercantile stock.
Whether the stock which really carried on the business of the corn
merchant belonged to the person who was called a farmer, or to the
person who was called a corn merchant, an equal profit was in both
cases requisite, in order to indemnify its owner for employing it in
this manner; in order to put his business upon a level with other
trades, and in order to hinder him from having an interest to change
it as soon as possible for some other. The farmer, therefore, who
was thus forced to exercise the trade of a corn merchant, could not
afford to sell his corn cheaper than any other corn merchant would
have been obliged to do in the case of a free competition.
The dealer who can employ his whole stock in one single branch
of business has an advantage of the same kind with the workman
who can employ his whole labour in one single operation. As the
latter acquires a dexterity which enables him, with the same two
hands, to perform a much greater quantity of work; so the former
DIGRESSION ON THE CORN TRADE 497
acquires so easy and ready a method of transacting his business, of
buying and disposing of his goods, that with the same capital he
can transact a much greater quantity of business. As the one can
commonly afford his work a good deal cheaper, so the other can
commonly afford his goods somewhat cheaper than if his stock and
attention were both employed about a greater variety of objects.
The greater part of manufacturers could not afford to retail their
own goods so cheap as a vigilant and active shopkeeper, whose sole
business it was to buy them by wholesale, and to retail them again.
The greater part of farmers could still less afford to retail their own
corn, to supply the inhabitants of a town, at perhaps four or five
miles distance from the greater part of them, so cheap as a vigilant
and active corn merchant, whose sole business it was to purchase
corn by wholesale, to collect it into a great magazine, and to retail
it again.
The law which prohibited the manufacturer from exercising the
trade of a shopkeeper, endeavoured to force this division in the em-
ployment of stock to go on faster than it might otherwise have
done. The law which obliged the farmer to exercise the trade of a
corn merchant, endeavoured to hinder it from going on so fast.
Both laws were evident violations of natural liberty, and therefore
unjust; and they were both too as impolitic as they were unjust. It
is the interest of every society, that things of this kind should never
either be forced or obstructed. The man who employs either his la-
bour or his stock in a greater variety of ways than his situation ren-
ders necessary, can never hurt his neighbour by underselling him.
He may hurt himself, and he generally does so. Jack of all trades
will never be rich, says the proverb. But the law ought always to
trust people with the care of their own interest, as in their local sit-
uations they must generally be able to judge better of it than the
legislator can do. The law, however, which obliged the farmer to ex-
ercise the trade of a corn merchant, was by far the most pernicious
of the two.
It obstructed not only that division in the employment of stock
which is so advantageous to every society, but it obstructed likewise
the improvement and cultivation of the land. By obliging the farmer
to carry on two trades instead of one, it forced him to divide his
capital into two parts, of which one only could be employed in
cultivation. But if he had been at liberty to sell his whole crop to
a corn merchant as fast as he could thresh it out, his whole capital
might have returned immediately to the land, and have been em-
ployed in buying more cattle, and hiring more servants, in order to
improve and cultivate it better. But by being obliged to sell his corn
can sell
cheaper
Laws pre-
venting
the manu-
facturer
from be-
ing a
shopkeep-
er and
compel-
ling the
farmer to
be a corn
merchant
were both
impolitic
and un-
just, but
the latter
was the
most per-
nicioub,
by ob-
structing
the im-
prove-
ment of
land.
Corn mer-
chants
support
che farm-
ers just
as whole-
sale deal-
ers sup-
port the
manufac-
turers.
Wholesale
dealers
allow
manufac-
turers to
devote
their
whole
capital
to manu-
facturing.
So corn
merchants
should al-
low farm-
ers to de-
vote their
whole
capital to
cultiva-
tion.
498 XHE WEALTH OF NATIONS
by retail, he was obliged to keep a great part of his capital in his
granaries and stack yard through the year, and could not, there-
fore, cultivate so well as with the same capital he might otherwise
have done. This law, therefore, necessarily obstructed the improve-
ment of the land, and, instead of tending to render corn cheaper,
must have tended to render it scarcer, and therefore dearer, than
it would otherwise have been.
After the business of the farmer, that of the corn merchant is in
reality the trade which, if properly protected and encouraged,
would contribute the most to the raising of corn. It would support
the trade of the farmer, in the same manner as the trade of the
wholesale dealer supports that of the manufacturer.
The wholesale dealer, by affording a ready market to the manu-
facturer, by taking his goods off his hands as fast as he can make
them, and by sometimes even advancing their price to him before
he has made them, enables him to keep his whole capital, and some-
times even more than his whole capital, constantly employed in
manufacturing, and consequently to manufacture a much greater
quantity of goods than if he was obliged to dispose of them himself
to the immediate consumers, or even to the retailers. As the capital
of the wholesale merchant too is generally sufficient to replace that
of many manufacturers, this intercourse between him and them in-
terests the owner of a large capital to support the owners of a great
number of small ones, and to assist them in those losses and mis-
fortunes which might otherwise prove ruinous to them.
An intercourse of the same kind universally established between
the farmers and the corn merchants, would be attended with effects
equally beneficial to the farmers. They would be enabled to keep
their whole capitals, and even more than their whole capitals, con-
stantly employed in cultivation. In case of any of those accidents,
to which no trade is more liable than theirs, they would find in their
ordinary customer, the wealthy com merchant, a person who had
both an interest to support them, and the ability to do it, and they
would not, as at present, be entirely dependent upon the forbear-
ance of their landlord, or the mercy of his steward. Were it possible,
as perhaps it is not, to establish this intercourse universally, and all
at once, were it possible to turn all at once the whole farming stock
of the kingdom to its proper business, the cultivation of land, with-
drawing it from every other employment into which any part of it
may be at present diverted,^ and were it possible, in order to sup-
port and assist upon occasion the operations of this great stock, to
provide all at once another stock almost equally great, it is not per-
haps very easy to imagine how great, how extensive, and how sud-
DIGRESSION ON THE CORN TRADE 499
den would be the improvement which this change of circumstances
would alone produce upon the whole face of the country.
The statute of Edward VI.j therefore, by prohibiting as much as
possible any middle man from coming in between the grower and
the consumer, endeavoured to annihilate a trade, of which the free
exercise is not only the best palliative of the inconveniencies of a
dearth, but the best preventative of that calamity: after the trade
of the farmer, no trade contributing so much to the growing of corn
as that of the corn merchant.
The rigour of this law was afterwards softened by several subse-
quent statutes, which successively permitted the engrossing of corn
when the price of wheat should not exceed twenty, twenty-four,
thirty-two, and forty shillings the quarter .^2 by i-bg j^th of
Charles 11. c. 7 . the engrossing or buying of corn in order to sell it
again, as long as the price of wheat did not exceed forty-eight shill-
ings the quarter, and that of other grain in proportion, was declared
lawful to all persons not being forestallers, that is, not selling again
in the same market within three months.®^ All the freedom which
the trade of the inland corn dealer has ever yet enjoyed, was be-
stowed upon it by this statute. The statute of the twelfth of the pres-
ent king, which repeals almost all the other ancient laws against en-
grossers and forestallers, does not repeal the restrictions of this par-
ticular statute, which therefore still continue in force.^^
This statute, however, authorises in some measure two very ab-
surd popular prejudices.
First, it supposes that when the price of wheat has risen so high
as forty-eight shillings the quarter, and that of other grain in pro-
portion, corn is IMy to be so engrossed as to hurt the people. But
from what has been already said, it seems evident enough that corn
can at no price be so engrossed by the inland dealers as to hurt the
people: and forty eight shillings the quarter besides, though it may
be considered as a very high price, yet in years of scarcity it is a
price which frequently takes place immediately after harvest, when
scarce any part of the new crop can be sold off, and when it is im-
'^^DiKgent search has hitherto failed to discover these* statutes.
§ 4 incorrectly qiloled. The words are “not forestalling nor selling the
same in the same market within three months.” Under 5 and 6 Ed. VI., c. 14,
a person buying and selling again “in any fair or market holden or kept in the
same place or in any other fair or market within four miles” was a regrator,
while a forestaller was one who bought or contracted to buy things on their
way to market, or made any motion for enhancing the price of such things or
preventing them going to market.
12 Geo. III., c. 71, repeals 5 and 6 Ed. VI., c. 14, but does not mention 15
Car. II., c. 7, which is purely permissive If 15 Car. II., c. 7, remained of any
force in this respect it must have been merely in consequence of the common
law being unfavourable to forestalling.
Accord-
ingly the
statute of
Edward
VI. en-
deavoured
to anni-
hilate a
trade
which is
the best
palliative
and pre-
ventative
of a
dearth.
Its pro-
visions
were
moderat-
ed by
later stat-
utes
down to
IS Car.
II, j c. 7)
which is
absurd, as
it sup-
poses,
(i) that
engrossing
isHkely
to be
hurtful
after a
certain
price has
been
reached,
(2) that
forestall-
ing IS
likely to
be hurtful
after a
certain
price has
been
reached.
The fear
of en-
grossing
and fore-
stalling is
as
ground-
less as
that of
witch-
craft.
500 XHE WEALTH OF NATIONS
possible even for ignorance to suppose that any part of it can be so
engrossed as to hurt the people.
Secondly, it supposes that there is a certain price at which corn is
likely to be forestalled, that is, bought up in order to be sold again
soon after in the same market, so as to hurt the people. But if a
merchant ever buys up corn, either going to a particular market or
in a particular market, in order to sell it again soon after in the
same market, it must be because he judges that the market cannot
be so liberally supplied through the whole season as upon that par-
ticular occasion, and that the price, therefore, must soon rise. If he
judges wrong in this, and if the price does not rise, he not only loses
the whole profit of the stock which he employs in this manner, but
a part of the stock itself, by the expence and loss which necessarily
attend the storing and keeping of corn. He hurts himself, there-
fore, much more essentially than he can hurt even the particular
people whom he may hinder from supplying themselves upon that
particular market day, because they may afterwards supply them-
selves just as cheap upon any other market day. If he judges right,
instead of hurting the great body of the people, he renders them a
most important service. By making them feel the inconveniencies
of a dearth somewhat earlier than they otherwise might do, he pre-
vents their feeling them afterwards so severely as they certainly
would do, if the cheapness of price encouraged them to consume
faster than suited the real scarcity of the season. When the scarcity
is real, the best thing that can be done for the people is to divide
the inconveniencies of it as equally as possible through all the dif-
ferent months, and weeks, and days of the year. The interest of
the corn merchant makes him study to do this as exactly as he can
and as no other person can have either the same interest, or th-
same knowledge, or the same abilities to do it so exactly as he, this
most important operation of commerce ought to be trusted entirely
to him: or, in other words, the corn trade, so far at least as concerns
the supply of the home market, ought to be left perfectly free.
The popular fear of engrossing and forestalling may be compared
to the popular terrors and suspicions of witchcraft. The unfortunate
wretches accused of this latter crime were not more innocent of the
misfortunes imputed to them, than those who have been accused
of the former. The law which put an end to all prosecutions against
witchcraft, which put it out of any man’s power to gratify his own
malice by accusing his neighbour of that imaginary crime, seems ef-
fectually to have put an end to those fears and suspicions, by tak-
ing away the great cause which encouraged and supported them.
“ Eds, I and 2 read “attends.’
DIGRESSION ON THE CORN TRADE 50 i
The law which should restore entire freedom to the inland trade of
corn, would probably prove as effectual to put an end to the popular
fears of engrossing and forestalling.
The 15th of Charles IL c. 7. however, with all its imperfections,
has perhaps contributed more both to the plentiful supply of the
home market, and to the increase of tillage, than any other law in
the statute 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 supply of the home market, and the interest of tillage,
are much more effectually promoted by the inland, than either by
the importation or exportation trade.
The proportion of the average quantity of all sorts of grain im-
ported into Great Britain to that of all sorts of grain consumed, it
has been computed by the author of the tracts upon the corn trade,
does not exceed that of one to five hundred and seventy. For sup-
plying the home market, therefore, the importance of the inland
trade must be to that of the importation trade as five hundred and
seventy to one.^®
The average quantity of all sorts of grain exported from Great
Britain does not, according to the same author, exceed the one-and-
thirtieth part of the annual produce.^’^ For the encouragement of
tillage, therefore, by providing a market for the home produce, the
importance of the inland trade must 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 exactness of either of these computations. I mention
them only in order to show of how much less consequence, in the
opinion of the most judicious and experienced persons, the foreign
trade of corn is than the home trade. The great cheapness of corn
in the years immediately preceding the establishment of the bounty,
may perhaps, with reason, be ascribed in some measure to the oper-
ation of this statute of Charles IL, which had been enacted about
five-and twenty years before, and which had therefore full time to
produce its effect.
A very few words will sufficiently explain all that I have to say
concerning the other three branches of the corn trade.
IL The trade of the merchant importer of foreign corn for home
consumption, evidently contributes to the immediate supply of the
home market, and must so far be immediately beneficial to the
Charles Smith, Three Tracts on the Corn Trade and Corn Laws, 2nd ed.,
1766, p 145. The figures have been already quoted above, p 428
®"“The export is bare one thirty-second part of the consumption, one
thirty-third part of the growth exclusive of seed, one thirty-sixth part of the
growth including the seed.”— p. 144 » quoted above, p. 475.
Still, the
IS
Car II , c
7, is the
best of
the corn
laws, as it
gives the
inland
corn trade
all the
freedom it
possesses
The in-
land
trade is
much
more im-
portant
than the
foreign
ILThe
Importer,
whose
trade ben-
efits the
people
and does
not real-
ly hurt
the farm-
ers and
country
gentle-
men.
The Act
of 22 Car.
n,c.i3,
imposed
very high
duties on
importa-
tion
502 the wealth of nations
great body of the people. It tends, indeed, to lower somewhat the
average money price of corn, but not to diminish its real value, or
the quantity of labour which it is capable of maintaining. If impor-
tation was at all times free, our farmers and country gentlemen
would, probably, one year with another, get less money for their
com than they do at present, when importation is at most times in
effect 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 same as at present, though it might be expressed by a smaller
quantity of silver; and they would neither be disabled nor discour-
aged from cultivating corn as much as they do at present. On the
contrary, as the rise in the real value of silver, in consequence of
lowering the money price of corn, lowers somewhat the money price
of all other commodities, it gives the industry of the country, where
it takes place, some advantage in all foreign markets, and thereby
tends to encourage and increase that industry. But the extent of the
home market for corn must be in proportion to the general industry
of the country where it grows, or to the number of those who pro-
duce something else, and therefore have something else, or what
comes to the same thing, the price of something else, to give in ex-
change for com. But in every country the home market, as it is the
nearest and most convenient, so is it likewise the greatest and most
important market for corn. That rise in the real value of silver,
therefore, which is the effect of lowering the average money price
of corn, tends to enlarge the greatest and most important market
for corn, and thereby to encourage, instead of discouraging, its
growth.
By the 2 2d of Charles 11 . c. 13. the importation of wheat, when-
ever the price in the home market did not exceed fifty-three shill-
ings and four pence the quarter, was subjected to a duty of sixteen
shillings the quarter; and to a duty of eight shillings whenever the
price did not exceed four pounds.^® The former of these two prices
has, for more than a century past, taken place only in times of very
“This was not the first law of its kind. 3 Ed. IV., c. 2, was enacted because
“the labourers and occupiers of husbandry within this realm of England be
daily grievously endamaged by bringing of corn out of other lands and parts
into this realm of England when corn of the growing of this realm is at a low
price,” and forbids importation of wheat when not over 6s. 8d., rye when not
over 4s. and barley when not over 3s, the quarter. This Act was repealed by 21
Jac. I., c. 28, and 15 Car. II., c. 7, imposed a duty of ss. 4d on imported
wheat, 4s. on rye, 2s. 8d. on barley, 2s. on buckwheat, is. 4d. on oats and 4s.
on pease and beans, when the prices at the port of importation did not exceed
for wheat, 48s.; barley and buckwheat, 28s.; oats, 13s. 4d.; rye, pease and
beans, 32s. per quarter.
DIGRESSION ON THE CORN TRADE 503
great scarcity; and the latter has, so far as I know, not taken place
at all. Yet, till wheat had risen above this latter price, it was by this
statute subjected to a very high duty; and, till it had risen above
the former, to a duty which amounted to a prohibition. The impor-
tation of other sorts of grain was restrained at rates, and by duties,
in proportion to the value of the grain, almost equally®® high.®®
Subsequent laws still further increased those duties.
Ed. I reads “restrained by duties proportionably.”
Before the 13th of the present king, the following were the duties payable
upon the importation of the different sorts of grain:
Gyaifi, Duties. Duties. Duties.
Beans to 28s. per qr. 19s. lod. after till 40s. . i6s. 8d. then i2d.
Barley to 28s. 19s. lod. 32s. . i6s. i2d.
Malt is prohibited by the annual Malt-tax Bill.
Oats to 1 6s. 5s. lod. after 9|d.
Pease to 40s. i6s. od. after qfd.
Rye to 36s. 19s. lod. till 40s. . i6s. 8d. then i2d.
Wheat to 44s. 21s. gd. till 535. 4d. . 17s. then 8s.
till 4I. and after that about is. 4d.
Buck wheat to 32s. per qr. to pay i6s.
These different duties were imposed, partly by the 22d of Charles II. in
place of the Old Subsidy, partly by the New Subsidy, by the One-third and
Two-thirds Subsidy, and by the Subsidy 1747. The table of duties in this
note is an exact copy of that in Charles Smith, Three Tracts on the Corn
Trade, 2nd ed., 1766. p, 83. That author professes to have taken the figures
from “Mr. Saxby, in his Book of Rates” {i.e., Henry Saxby, The British C«5-
toms, containing an Historical and Practical Account of each branch of that
Revenue, 1757, pp. 111-114), but besides rounding off Saxby’s fractions of a
penny in an inaccurate and inconsistent manner, he has miscopied the second
duty on barley, the first on pease and the third on wheat. The “Old Subsidy”
consisted of the $ per cent, or is. poundage imposed by 12 Car. II., c. 4, on
the values attributed to the various goods by the “Book of Rates” annexed
to the Act. According to this, imported beans, barley and malt were to be
rated at 26s. 8d. the quarter when the actual price at the place of importa-
tion did not exceed 28s. When the actual price was higher than that they were
to be rated at 5s. the quarter. Oats and pease were to be rated at 4s, the quar-
ter. Rye when not over 36s. was to be rated at 26s. 8d., and when over that
price at 5s. Wheat when not over 44s. was to be rated at 40s., and when over
that price at 6s. 8d.
So under the Old Subsidy: —
Beans, barley and malt at prices up to 28s. were to pay is. 4d., and
when above that price 3d.
Oats and pease to pay 2-4d.
Rye up to 36s. to pay is. 4d., and when above, 3d.
Wheat up to 44s. to pay 2s., and when above, 4d.
The Act 22 Car. II., c. 13, took off these duties and substituted the follow-
ing scheme: —
Beans to 40s. to pay i6s., and above that price, 3d.
Barley and malt to 32s. to pay i6s., and above, 3d.
Oats 1 6s. to pay 55. 4d., and above, 2-4d.
Pease and rye the same as beans.
Wheat to S3S. 4d. to pay i6s., then to 80s. to pay 8s., and above that
price, 4d.
Buckwheat to 32s. to pay i6s.
But 9 and 10 Will. III., c. 23, imposed a “New Subsidy” exactly equal to
the Old, so that duties equal to those of 12 Car. II., c. 4, were superimposed
504
THE WEALTH OF NATIONS
but its
operation
was gen-
erally
suspended
in years
of
scarcity.
Restraint
was neces-
sary on
account
of the
bounty.
III. The
Exporter,
whose
trade in-
directly
contri-
butes to
the plen-
tiful
supply of
the home
market.
The distress which, in years of scarcity, the strict execution of
those laws might have brought upon the people, would probably
have been very great. But, upon such occasions, its execution was
generally suspended by temporary statutes,®^ which permitted, for
a limited time, the importation of foreign corn. The necessity of
these temporary statutes sufficiently demonstrates the impropriety
of this general one.
These restraints upon importation, though prior to the establish-
ment of the bounty, were dictated by the same spirit, by the same
principles, which afterwards enacted that regulation. How hurtful
soever in themselves, these or some other restraints upon importa-
tion became necessary in consequence of that regulation. If, when
wheat was either below forty-eight shillings the quarter, or not
much above it, foreign corn could have been imported either duty
free, or upon paying only a small duty, it might have been exported
again, with the benefit of the bounty, to the great loss of the public
revenue, and to the entire perversion of the institution, of which the
object 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 con-
sumption, certainly does not contribute directly to the plentiful
supply of the home market. It does so, however, indirectly. From
whatever source this supply may be usually drawn, whether from
home growth or from foreign importation, unless more corn is either
usually grown, or usually imported into the country, than what is
usually consumed in it, the supply of the home market can never be
very plentiful. But unless the surplus can, in all ordinary cases, be
on those of 22 Car. IL, c. 13. By 2 and 3 Ann., c. 9, an additional third, and
by 3 and 4 Ann., c. 5, an additional two-thirds of the Old Subsidy were im-
posed, and by 21 Geo. II., c. 2, another amount equal to the Old Subsidy
(“the impost 1747”) was further imposed. So between 1747 and 1773 the
duties were those of 22 Car. II., c. 13, plus three times those of 12 Car. II., c.
4. This gives the following scheme:—
Beans to 28s. pay 20s. and after till 40s. pay i6s. gd. then is.
Barley to 28s. pays 20s. and after till 32s. pays i6s. gd. then is.
Oats to i6s. pay 5s. ii*2d. and then pay 9*6d.
Pease to 40s. pay i6s. 7* 2d. and then pay 9*6d.
Rye to 36s. pays 20s. and after till 40s. pays i6s. gd. then is.
Wheat to 44s. pays 22s. and after till 533. 4d. pays 17s. then gs. till
80s., and after that is. 4d.
Saxby’s figures are slightly less, as they take into account a 5 per cent, dis-
count obtainable on all the subsidies except one. The note appears first in ed. 2.
Eds. I and 2 do not contain “subsequent laws still further increased those
duties, ’ and read “the distress which in years of scarcity the strict execution
of this statute might have brought.”
“ These do not seem to have been numerous. There were cases in 1737 and
1766. See the table in Charles Smith, Three Tracts upon the Corn Trade and
Corn Laws, 2nd ed., pp. 44, 45.
DIGRESSION ON THE CORN TRADE 50$
exported, the growers will be careful never to grow more, and the
importers never to import more, than what the bare consumption of
the home market requires. That market will very seldom be over-
stocked; but it will generally be understocked, the people, whose
business it is to supply it, being generally afraid lest their goods
should be left upon their hands. The prohibition of exportation lim-
its the improvement and cultivation of the country to what the sup-
ply of its own inhabitants requires. The freedom of exportation en-
ables it to extend cultivation for the supply of foreign nations.
By the 12th of Charles II. c. 4. the exportation of corn was per- Liberty
mitted whenever the price of wheat did not exceed forty shillings of ox- ^
the quarter, and that of other grain in proportion.®^ By the 15th of
the same prince,®® this liberty was extended till the price of wheat complete
exceeded forty-eight shillings the quarter; and by the 2 2d,®® to all
higher prices. A poundage, indeed, was to be paid to the king upon
such exportation. But all grain was rated so low in the book of rates,
that this poundage amounted only upon wheat to a shilling, upon
oats to four pence, and upon all other grain to six pence the quar-
ter.®"^ By the ist of William and Mary,®® the act which established
the bounty, this small duty was virtually taken off whenever the
price of wheat did not exceed forty-eight shillings the quarter; and
by the nth and 12th of William III. c. 20. it was expressly 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 inland dealer. By the last of these statutes, corn could be en-
grossed at any price for exportation; but it could not be engrossed
for inland sale, except when the price did not exceed forty-eight
shillings the quarter.®® The interest of the inland dealer, however, it though
has already been shown, can never be opposite to that of the great thein-
Eds. I and 2 read “extend its cultivation,”
Earlier statutes are 15 Hen. VI., c. 2; 20 Hen. VI., c. 6; 23 Hen. VI, c.
6 ; I and 2 P. and M., c. 5 ; 5 Eliz., c. S, § 26; 13 Eliz., c. 13 ; and i Jac., c. 25,
§§ 26, 27. The preamble of the first of these says “by the law it was ordained
that no man might carry nor bring com out of the realm of England without
the King's licence, for cause whereof fpmers and other men which use man-
urement of their land may not sell their com but of a bare price to the great
damage of all the realm.” Exportation was therefore legalised wthout licence
when grain was above certain prices.
"C. 7. "C. 13.
The “Book of Rates” (see above, p, 503, note) rated wheat for export at
20s., oats at 6s. 8d., and other grain at los. the quarter, and the duty was a
shilling in the pound on these values.
I W. and M., c. 12. The bounty was to be given “without taking or re-
quiring anything for custom.”
Because as to inland sale 15 Car. II, c. 7 (above, p 499), remained h
force.
terest of
the ex-
porter
sometimes
differs
from that
of the
people of
his coun-
try.
The bad
policy of
some
great
countries
may
sometimes
render it
necessary
for smaU
countries
to restrain
exporta-
tion.
So6 the wealth of NATIONS
body of the people. That of the merchant exporter may, and in fact
sometimes is. If, while his own country labours under a dearth, a
neighbouring country should be afflicted with a famine, it might be
his interest to carry corn to the latter country in such quantities as
might very much aggravate the calamities of the dearth The plen-
tiful supply of the home market was not the direct object of those
statutes; but, under the pretence of encouraging agriculture, to
raise the money price of corn as high as possible, and thereby to oc-
casion, as much as possible, a constant dearth in the home market.
By the discouragement of importation, the supply of that market,
even in times of great scarcity, was confined to the home growth;
and by the encouragement of exportation, when the price was so
high as forty-eight shillings the quarter, that market was not, even
in times of considerable scarcity, allowed to enjoy the whole of that
growth. The temporary laws, prohibiting for a limited time the ex-
portation of corn, and taking off for a limited time the duties upon
its importation, expedients to which Great Britain has been obliged
so frequently to have recourse,*^® sufficiently demonstrate the im-
propriety of her general system. Had that system been good, she
would not so frequently have been reduced to the necessity of de-
parting from it.
Were all nations to follow the liberal system of free exportation
and free importation, the different states into which a great contin-
ent was divided would so far resemble the different provinces of a
great empire. As among the different provinces of a great empire
the freedom of the inland trade appears, both from reason and ex-
perience, not only the best palliative of a dearth, but the most ef-
fectual preventative of a famine; so would the freedom of the ex-
portation and importation trade be among the different states into
which a great continent was divided. The larger the continent, the
easier the communication through all the different parts of it, both
by land and by water, the less would any one particular part of it
ever be exposed to either of these calamities, the scarcity of any one
country being more likely to be relieved by the plenty of some
other. But very few countries have entirely adopted this liberal sys-
tem. The freedom of the corn trade is almost every where more or
less restrained, and, in many countries, is confined by such absurd
regulations, as frequently aggravate the unavoidable misfortune of a
dearth, into the dreadful calamity of a famine. The demand of such
countries for corn may frequently become so great and so urgent,
™ The Acts prohibiting exportation were much more numerous than the
others. See above, p, 504, note 62, and the table in Charles Smith there re-
ferred to.
DIGRESSION ON THE CORN TRADE So?
that a small state in their neighbourhood, which happened at the
same time to be labouring under some degree of dearth, could not
venture to supply them without exposing itself to the like dreadful
calamity. The very bad policy of one country may thus render it in
some measure dangerous and imprudent to establish what would
otherwise be the best policy in another. The unlimited freedom of
exportation, however, would be much less dangerous in great states,
in which the growth being much greater, the supply could seldom be
much affected by any quantity of corn that was likely to be ex-
ported. In a Swiss canton, or in some of the little states of Italy, it
may, perhaps, sometimes be necessary to restrain the exportation of
corn. In such great countries as France or England it scarce ever
can. To hinder, besides, the farmer from sending his goods at all
times to the best market, is evidently to sacrifice the ordinary laws
of justice to an idea of public utility, to a sort of reasons of state;
an act of legislative authority which ought to be exercised only,
which can be pardoned only in cases of the most urgent necessity.
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.
The laws concerning corn may every where be compared to the The corn
laws concerning religion. The people feel themselves so much inter-
ested in what relates either to their subsistence in this life, or to jawson
their happiness in a life to come, that government must yield to religion,
their prejudices, and, in order to preserve the public tranquillity,
establish that system which they approve of. It is upon this account,
perhaps, that we so seldom find a reasonable system established
with regard to either of those two capital objects.
IV. The trade of the merchant carrier, or of the importer of for- iv. The
eign corn in order to export it again, contributes to the plentiful sup-
ply of the home market. It is not indeed the direct purpose of his
trade to sell his corn there. But he will generally be willing to do so, trade con.
and even for a good deal less money than he might expect in a for-
eign market ; because he saves in this manner the expence of loading plentiful
and unloading, of freight and insurance. The inhabitants of the supply of
country which, by means of the carrying trade, becomes the maga- Market ^
zine and storehouse for the supply of other countries, can very sel-
dom be in want themselves. Though the carrying trade might 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
raise somewhat the real value of silver.
The carr3dng trade was in effect prohibited in Great Britain, British
upon all ordinary occasions, by the high duties upon the importa- lawin ef-
tion of foreign corn, of the greater part of which there was no draw-
hibited
the carry-
ing trade
in corn.
The pros-
perity of
Great
Britain
is not due
to the
corn
bounty,
but to the
security
of enjoy-
ing the
fruits of
labour.
That the
greatest
pros-
perity
has been
subse-
quent
proves
nothing.
Spain and
Portugal
are poorer
than
Great
Britain
because
their bad
policy is
more ef-
fectual,
S08 XHE WEALTH OF NATIONS
back; and upon extraordinary occasions, when a scarcity made
it necessary to suspend those duties by temporary statutes, expor-
tation was always prohibited. By this system of laws, therefore, the
carrying trade was in effect prohibited upon all occasions.
That system of laws, therefore, which is connected with the es-
tablishment of the bounty, seems to deserve no part of the praise
which has been bestowed upon it. The improvement and prosperity
of Great Britain, which has been so often ascribed to those laws,
may very easily be accounted for by other causes. That security
which the laws in Great Britain give to every man that he shall en-
joy the fruits of his own labour, is alone sufficient to make any coun-
try flourish, notwithstanding these and twenty other absurd regu-
lations of commerce; and this security was perfected by the revolu-
tion, much about the same time that the bounty was established.
The natural effort of every individual to better his own condition,
when suffered to exert itself with freedom and security, is so power-
ful a principle, that it is alone, and without any assistance, not only
capable of carrying on the society to wealth and prosperity, but of
surmounting a hundred impertinent obstructions with which the
folly of human laws too often incumbers its operations; though the
effect of these obstructions is always more or less either to encroach
upon its freedom, or to diminish its security. In Great Britain in-
dustry is perfectly secure; and though it is far from being perfectly
free, it is as free or freer than in any other part of Europe.
Though the period of the greatest prosperity and improvement of
Great Britain, has been posterior to that system of laws which is
connected with the bounty, we must not upon that account impute
it to those laws. It has been posterior likewise to the national debt.
But the national debt has most assuredly not been the cause of it.
Though the system of laws which is connected with the bounty,
has exactly the same tendency with the police of Spain and Portu-
gal; to lower somewhat the value of the precious metals in the coun-
try where it takes place; yet Great Britain is certainly one of the
richest countries in Europe, while Spain and Portugal are perhaps
among the most beggarly. This difference of situation, however,
may easily be accounted for from two different causes. First, the
tax in Spain, the prohibition in Portugal of exporting gold and sil-
ver,^^ and the vigilant police which watches over the execution of
those laws, must, in two very poor countries, which between them
import annually upwards of six millions sterling,’^^ operate, not only
^ Ed. I does not contain “of the greater part of which there was no draw-
back.”
According to the argument above, p. 480, ” See above, p. 478.
Above, vol. i , pp. 207-209.
DIGRESSION ON THE CORN TRADE Sog
more directly, but much more forcibly in reducing the value of those
metals there, than the corn laws can do in Great Britain. And, sec-
ondly, this bad policy is not in those countries counter-balanced by
the general liberty and security of the people. Industry is there
neither free nor secure, and the civil and ecclesiastical governments
of both Spain and Portugal, are such as would alone be sufficient to
perpetuate their present state of poverty, even though their regula-
tions of commerce were as wise as the greater part of them are ab-
surd and foolish.
The 13th of the present king, c. 43. seems to have established a
new system with regard to the corn laws, in many respects better
than the ancient one, but in one or two respects perhaps not quite
so good.
By this statute the high duties upon importation for home con-
sumption are taken off so soon as the price of middling wheat rises
to forty-eight shillings the quarter; that of middling rye, pease or
beans, to thirty-two shillings; that of barley to twenty-four shill-
ings; and that of oats to sixteen shillings; and instead of them a
small duty is imposed of only six-pence upon the quarter of wheat,
and upon that of other grain in proportion. With regard to all these
different sorts of grain, but particularly with regard to wheat, the
home market is thus opened to foreign supplies at prices consider-
ably lower than before.*^^
By the same statute the old bounty of five shillings upon the ex-
portation of wheat ceases so soon as the price rises to forty-four
shillings the quarter, instead of forty-eight, the price at which it
ceased before; that of two shillings and six-pence upon the exporta-
tion of barley ceases so soon as the price rises to twenty-two shill-
ings, instead of twenty-four, the price at which it ceased before;
that of two shillings and six-pence upon the exportation of oatmeal
ceases so soon as the price rises to fourteen shillings, instead of fif-
teen, the price at which it ceased before. The bounty upon rye is re-
duced from three shillings and six-pence to three shillings, and it
ceases so soon as the price rises to twenty-eight shillings, instead of
thirty-two, the price at which it ceased before.'^'® If bounties are as
Ed. 1 reads “in one respect.”
Ed. I reads only “By this statute the high duties upon importation for
home consumption are taken off as soon as tiie price of wheat is so high as
forty-eight shillings the quarter, and instead.”
In place of this sentence ed. i reads “The home market is in this manner
not so totally excluded from foreign supplies as it was before.
’®Ed. I reads (from the beginning of the paragraph) “By the same stat-
ute the old bounty of five shillings upon the quarter of wheat ceases when
the price rises so high as forty-four shillings, and upon that of other grain in
proportion. The bounties too upon the coarser sorts of grain are reduced
and not
counter-
acted bj
general
liberty
and se-
curity.
The 13
Geo III..
C.43,
opens the
home
market at
lower
prices
stops the
bounty
earlier,
and ad-
mits corn
lor re-
export
dutyfree;
which are
improve-
ments,
but it
gives a
bounty on
the export
of oats,
and pro-
hibits ex-
portation
of grain
at prices
much too
low.
It is as
good a
law as can
be expect-
ed at
present.
510 THE WEALTH OF NATIONS
improper as I have endeavoured to prove them to be, the sooner
they cease, and the lower they are, so much the better.
The same statute permits, at the lowest prices, the importation of
corn, in order to be exported again, duty free, provided it is in the
meantime lodged in a warehouse under the joint locks of the king
and the importer.'^® This liberty, indeed, extends to no more than
twenty-five of the different ports of Great Britain. They are, how-
ever, the principal ones, and there may not, perhaps, be warehouses
proper for this purpose in the greater part of the others.®^
So far this law seems evidently an improvement upon the ancient
system.
But by the same law a bounty of two shillings the quarter is given
for the exportation of oats whenever the price does not exceed four-
teen shillings. No bounty had ever been given before for the export-
ation of this grain, no more than for that of peas or beans.®^
By the same law too, the exportation of wheat is prohibited so
soon as the price rises to forty-four shillings the quarter; that of
rye so soon as it rises to twenty-eight shillings; that of barley so
soon as it rises to twenty-two shillings; and that of oats so soon as
they rise to fourteen shillings. Those several prices seem all of them
a good deal too low, and there seems to be an impropriety, besides,
in prohibiting exportation altogether at those precise prices at
which that bounty, which was given in order to force it, is with-
drawn.®^ The bounty ought certainly either to have been with-
drawn at a much lower price, or exportation ought to have been al-
lowed at a much higher.
So far, therefore, this law seems to be inferior to the ancient sys-
tem. With all its imperfections, however, we may perhaps say of it
what was said of the laws of Solon, that, though not the best in
itself, it is the best which the interests, prejudices, and temper of
the times would admit of. It may perhaps in due time prepare the
way for a better.®®
somewhat lower than they were before, even at the prices at which they take
place.”
™ Ed. I reads “The same statute permits at all prices the importation of
com in order to be exported again, duty free; provided it is in the meantime
lodged in the king’s warehouse.”
®®Ed I contains an additional sentence, “Some provision is thus made for
the establishment of the carrying trade.”
This paragraph is not in ed. i.
®®Ed. I reads (from the beginning of the paragraph) “But by the same
law exportation is prohibited as soon as the price of wheat rises to forty-four
shillings the quarter, and that of other grain in proportion. The price seems
to be a good deal too low, and there seems to be an impropriety besides in
stopping exportation altogether at the very same price at which that bounty
which was given in order to force it is withdrawn.
These two sentences are not in ed. i.
m
CHAPTER VI
OF TREATIES OF COMMERCE
When a nation binds itself by treaty either to permit the entry of
certain goods from one foreign country which it prohibits from all
others, or to exempt the goods of one country from duties to which
it subjects those of all others, the country, or at least the merchants
and manufacturers of the country, whose commerce is so favoured,
must necessarily derive great advantage from the treaty. Those
merchants and manufacturers enjoy a sort of monopoly in the coun-
try which is so indulgent to them. That country becomes a market
both more extensive and more advantageous for their goods: more
extensive, because the goods of other nations being either excluded
or subjected to heavier duties, it takes off a great quantity of theirs:
more advantageous, because the merchants of the favoured coun-
try, enjoying a sort of monopoly there, will often sell their goods
for a better price than if exposed to the free competition of all other
nations.
Such treaties, however, though they may be advantageous to the
merchants and manufacturers of the favoured, are necessarily dis-
advantageous to those of the favouring country. A monopoly is
thus granted against them to a foreign nation; and they must fre-
quently buy the foreign goods they have occasion for, dearer than
if the free competition of other nations was admitted. That part of
its own produce with which such a nation purchases foreign goods,
must consequently be sold cheaper, because when two things are
exchanged for one another, the cheapness of the one is a necessary
consequence, or rather is the same thing with the dearness of the
other. The exchangeable value of its annual produce, therefore, is
likely to be diminished by every such treaty. This diminution, how-
ever, can scarce amount to any positive loss, but only to a lessen-
ing of the gain which it might otherwise make. Though it sells its
goods cheaper than it otherwise might do, it will not probably sell
them for less than they cost; nor, as in the case of bounties, for a
price which will not replace the capital employed in bringing them
511
Treaties
of com-
merce are
advanta-
geous to
the fa-
voured,
but disad
vanta-
geousto
the fa-
vouring
country.
THE WEALTH OF NATIONS
Treaties
have been
concluded
with the
object of
obtaining
a favour-
able bal-
ance of
trade,
e g., the
Methuen
treaty,
5x^
to market, together with the ^rdinary profits of stock. The trade
could not go on long if it did. Even the favouring country, there-
fore, may still gain by the trade, though less than if there was a
free competition.
Some treaties of commerce, however, have been supposed advan-
tageous upon principles very different from these; and a commer-
cial country has sometimes granted a monopoly of this kind against
itself to certain goods of a foreign nation, because it expected that
in the whole commerce between them, it would annually sell more
than it would buy, and that a balance in gold and silver 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 so much commended.^ The following is a
literal translation ^ of that treaty, which consists of three articles
only.
ART. I
His sacred royal majesty of Portugal promises, both in his own
name, and that of his successors, to admit, for ever hereafter, into
Portugal, the woollen cloths, and the rest of the woollen manufac-
tures of the British, as was accustomed, till they were prohibited by
the law; nevertheless upon this condition:
ART. II
That is to say, that her sacred royal majesty of Great Britain
shall, in her own name, and that of her successors, be obliged, for
ever hereafter, to admit the wines of the growth of Portugal into
Britain: so that at no time, whether there shall be peace or war
between the kingdoms of Britain and France, any thing more shall
be demanded for these wines by the name of custom or duty, or by
whatsoever other title, directly or indirectly, whether they shall be
imported into Great Britain in pipes or hogsheads, or other casks,
than what shall be demanded for the like quantity or measure of
French wine, deducting or abating a third part of the custom or
Eg., in the British Merchant, 1721, Dedication to vol. iii.
®With three small exceptions, “British” for “Britons” and “law” for “laws”
in art. i, and “for” instead of “from” before “the like quantity or measure of
French wine,” the translation is identical with that given in A Collection of
all the Treaties of Peace, Alliance and Commerce between Great Britain and
other Powers from the Revolution in 1688 to the Present Time, 1772, vol. i.,
pp. 61, 62.
TREATIES OF COMMERCE 5^3
duty. But if at any time this deduction or abatement of customs,
which is to be made as aforesaid, shall in any manner be attempted
and prejudiced, it shall be just and lawful for his sacred royal maj-
esty of Portugd, again to prohibit the woollen cloths, and the rest
of the British woollen manufactures.
ART. Ill
The most excellent lords the plenipotentiaries promise and take
upon themselves that their above-named masters shall ratify this
treaty; and within the space of two months the ratifications shall be
exchanged.
By this treaty the crown of Portugal becomes bound to admit
the English woollens upon the same footing as before the prohibi-
tion; that is, not to raise the duties which had been paid before that
time. But it does not become bound to admit them upon any bet-
ter terms than those 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 those of France, the wines most likely
to come into competition with them. So far this treaty, therefore, is
evidently advantageous to Portugal, and disadvantageous to Great
Britain.
It has been celebrated, however, as a masterpiece of the commer-
cial policy of England. Portugal receives annually from the Brazils
a greater quantity of gold than can be employed in its domestic
commerce, whether in the shape of coin or of plate. The surplus 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 must, notwith-
standing any prohibition, be sent abroad, and exchanged for some-
thing for which there is a more advantageous market at home. A
large share of it comes annually to England, in return either for
English goods, or for those of other European nations that receive
their returns through England. Mr. Baretti was informed that the
weekly packet-boat from Lisbon brings, one week with another,
more than fifty thousand pounds in gold to England.^ The sum had
probably been exaggerated. It would amount to more than two mil-
’ Joseph Baretti, Journey from London to Genoa, through England, Portu-
gal, Spain and Prance, 3rd ed., 1170, vol. i., pp. 95 > ?6,
is not so large as in the text above: it is “often from thirty to fifty and
even sixty thousand pounds,” and not “one week with another but almost
every week.” The gold all came in the packet boat because it, p a war vesse ,
was exempt from search. — ^Raynal, Histoire pkilosophique, Amsterdam ed.,
1773, tom. iii., pp. 413^ 414*
which is
evidently
advanta-
geous to
Portugal
and dis-
advanta-
geous to
Great
Britain.
Portugal
sends
much
gold to
England ,
514
at one
time
nearly
the whole
of this
gold was
said to
be on ac-
count of
other
European
nations,
but even
if it were
not so,
the trade
would not
be more
valuable
than an-
other of
equal
magni-
tude.
Most of
the gold
must be
sent
abroad
again and
exchanged
for goods,
and it
would be
better to
buy the
goods
direct
with
home
produce
instead
ofbuymg
gold in
Portugal.
THE WEALTH OP NATIONS
lions six hundred thousand pounds a year, which is more than the
Brazils are supposed to afford.^
Our merchants were some years ago out of humour with the
crown of Portugal. Some privileges which had been granted them,
not by treaty, but by the free grace of that crown, at the solicita-
tion, indeed, it is probable, and in return for much greater favours,
defence and protection, from the crown of Great Britain, had been
either infringed or revoked. The people, therefore, usually most in-
terested in celebrating the Portugal trade, were then rather disposed
to represent it as less advantageous than it had commonly been im-
agined. The far greater part, almost the whole, they pretended, of
this annual importation of gold, was not on account of Great Brit-
ain, but of other European nations; the fruits and wines of Portu-
gal annually imported into Great Britain nearly compensating the
value of the British goods sent thither.
Let us suppose, however, that the whole was on account of Great
Britain, and that it amounted to a still greater sum than Mr. Bar-
etti seems to imagine: this trade would not, upon that account, be
more advantageous than any other in which, for the same value sent
out, we received an equal value of consumable goods in return.
It is but a very small part of this importation which, it can be
supposed, is employed as an annual addition either to the plate or
to the coin of the kingdom. The rest must all be sent abroad and
exchanged for consumable goods of some kind or other. But if those
consumable goods were purchased directly with the produce of Eng-
lish industry, it would be more for the advantage of England, than
first to purchase with that produce the gold of Portugal, and after-
wards to purchase with that gold those consumable goods. A direct
foreign trade of consumption is always more advantageous than a
round-about one; ^ and to bring the same value of foreign goods to
the home market, requires a much smaller capital in the one way ^
than in the other. If a smaller share of its industry, therefore, had
been employed in producing goods fit for the Portugal market, and
a greater in producing those fit for the other markets, where those
consumable 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 use, and the
consumable goods, would, in this way, employ a much smaller capi-
tal than at present. There would be a spare capital, therefore, to be
employed for other purposes, in exciting en additional quantity of
industry, and in raising a greater annual produce.
* Above, vol. i., pp. 208, 209. ® Above, p. 350.
® Ed. I does not contain “way,”
TREATIES OF COMMERCE 5^5
Though Britain were entirely excluded from the Portugal trade,
it could find very little difficulty in procuring all the annual sup-
plies of gold which it wants, either for the purposes of plate, or of
coin, or of foreign trade. Gold, like every other commodity, is al-
ways somewhere or another to be got for its value by those who
have that value to give for it. The annual surplus of gold in Portu-
gal, besides, would still be sent abroad, and though not carried
away by Great Britain, would be carried away by some other na-
tion, which would be glad to sell it again for its price, in the same
manner as Great Britain does at present. In buying gold of Portu-
gal, indeed, we buy it at the first hand; whereas in buying it of any
other nation, except Spain, we should buy it at the second, and
might pay somewhat dearer. This difference, however, would surely
be too insignificant to deserve the public attention.
Almost all our gold, it is said, comes from Portugal. With other
nations the balance of trade is either against us, or not much in our
favour. But we should remember, that the more gold we import
from one country, the less we must necessarily import from all
others. The effectual demand for gold, like that for every other com-
modity, is in every country limited to a certain quantity. If nine-
tenths of this quantity are imported from one country, there re-
mains a tenth only to be imported from all others. The more gold
besides that is annually imported from some particular countries,
over and above what is requisite for plate and for coin, the more
must necessarily be exported to some others; and the more that
most insignificant object of modern policy, the balance of trade, ap-
pears to be in our favour with some particular countries, the more
it must necessarily appear to be against us with many others.
It was upon this silly notion, however, that England could not
subsist without the Portugal trade, that, towards the end of the late
war,"^ France and Spain, without pretending either offence or provo-
cation, required the king of Portugal to exclude all British ships
from his ports, and for the security of this exclusion, to receive into
them French or Spanish garrisons. Had the king of Portugal sub-
mitted to those ignominious terms which his brother-in-law the king
of Spain proposed to him, Britain would have been freed from a
much greater inconveniency than the loss of the Portugal trade, the
burden of supporting a very weak ally, so unprovided of every
thing for his own defence, that the whole power of England, had it
been directed to that single purpose, could scarce perhaps have de-
fended him for another campaign. The loss of the Portugal trade
would, no doubt, have occasioned a considerable embarrassment to
^In 1762.
Britain
would
find little
difficulty
in pro-
curing
pld even
if ex-
cluded
from
trade
with
Portugal.
It is said
that all
our gold
comes
from
Portugal,
but if It
did not
come
from
Portugal
it would
come
from
other
countries.
If the at-
tempt of
France
and Spain
to exclude
British
ships
from Por-
tuguese
ports had
been suc-
cessful, it
would
have been
an advan-
tage to
England.
The great
importa-
tion of
gold and
silver is
for
foreign
trade.
Very little
is re-
quired for
plate and
coin.
New gold
plate is
mostly
made
from old.
New coin
is mostly
made
from old,
as there is
a profit
on melt-
ing good
coin.
516 the wealth of nations
the merchants at that time engaged in it, who might not, perhaps,
have found out, for a year or two, any other equally advantageous
method of employing their capitals; and in this would probably
have consisted all the inconvieniency which England could have
suffered from this notable piece of commercial policy.
The great annual importation of gold and silver is neither for
the purpose of plate nor of coin, but of foreign trade. A round-about
foreign trade of consumption can be carried on more advantageous-
ly by means of these metals than of almost any other goods. As they
are the universal instruments of commerce, they -are more readily
received in return for all commodities than any other goods; and on
account of their small bulk and great value, it costs less to transport
them backward and forward from one place to another than almost
any other sort of merchandize, and they lose less of their value by
being so transported. Of all the commodities, therefore, which are
bought in one foreign country, for no other purpose but to be sold
or exchanged again for some other goods in another, there are none
so convenient as gold and silver. In facilitating all the different
round-about foreign trades of consumption which are carried on in
Great Britain, consists the principal advantage of the Portugal
trade; and though it is not a capital advantage, it is, no doubt, a
considerable one.
That any annual addition which, it can reasonably be supposed,
is made either to the plate or to the coin of the kingdom, could re-
quire but a very small annual importation of gold and silver, seems
evident enough; and though we had no direct trade with Portugal,
this small quantity could always, somewhere or another, be very
easily got.
Though the goldsmiths’ trade be very considerable in Great Brit-
ain, the far greater part of the new plate which they annually sell,
is made from other old plate melted down; so that the addition an-
nually made to the whole plate of the kingdom cannot be very great,
and could require but a very small annual importation.
It is the same case with the coin. Nobody imagines, I believe,
that even the greater part of the annual coinage, amounting, for ten
years together, before the late reformation of the gold coin,® to up-
wards of eight hundred thousand pounds a year in gold,^ was an an-
nual addition to the money before current in the kingdom. In a
country where the expence of the coinage is defrayed by the gov-
ernment, the value of the coin, even when it contains its full stand-
ard weight of gold and silver, can never be much greater than that
of an equal quantity of those metals uncoined; because it requires
® See above, p. 42. ® Above, p. 286, note.
TREATIES OF COMMERCE 5i7
only the trouble of going to the mint, and the delay perhaps of a
few weeks, to procure for any quantity of uncoined gold and silver
an equal quantity of those metals in coin. But, in every country, the
greater part of the current coin is almost always more or less worn,
or otherwise degenerated from its standard. In Great Britain it was,
before the late reformation, a good deal so, the gold being more than
two per cent, and the silver more than eight per cent, below its
standard weight. But if forty-four guineas and a half, containing
their full standard weight, a pound weight of gold, could purchase
very little more than a pound weight of uncoined gold, forty-four
guineas and a half wanting a part of their weight could not purchase
a pound weight, and something was to be added in order to make up
the deficiency. The current price of gold bullion at market, there-
fore, instead of being the same with the mint price, or 46Z. 14.5. 6d.
was then about 47/. 14^, and sometimes about forty-eight pounds.
When the greater part of the coin, however, was in this degenerate
condition, forty-four guineas and a half, fresh from the mint, would
purchase no more goods in the market than any other ordinary
guineas, because when they came into the coffers of the merchant,
being confounded with other money, they could not afterwards be
distinguished without more trouble than the difference was worth.
Like other guineas they were worth no more than 46/. 14^. 6 d. If
thrown into the melting pot, however, they produced, without any
sensible loss, a pound weight of standard gold, which could be sold
at any time for between 47^. 14J. and 48^. either in gold or silver, as
fit for all the purposes 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 so instantaneously, that no precaution of
government could prevent it. The operations of the mint were, upon
this account, somewhat like the web of Penelope; the work that was
done in the day was undone in the night. The mint was employed,
not so much in making daily additions to the coin, as in replacing
the very best part of it which was daily melted down.
Were the private people, who carry their gold and silver to the Aseignoi-
mint, to pay themselves for the coinage, it would add to the value vdue
of those metals in the same manner as the fashion does to that of of coin
plate. Coined gold and silver would be more valuable than un-
coined. The seignorage, if it was not exorbitant, would add to the bullion of
bullion the whole value of the duty; because, the government hav- equal
ing every where the exclusive privilege of coining, no coin can come weight,
to market cheaper than they think proper to afford it. If the duty
was exorbitant indeed, that is, if it was very much above the real
value of the labour and expence requisite for coinage, false coiners,
as in
France.
It dimin-
ishes or
destroys
the profit
obtained
by melt-
ing coin.
si8 the wealth of nations
both at home and abroad, might be encouraged, by the great dif-
ference between the value of bullion and that of coin, to pour in so
great a quantity of counterfeit money as might reduce the value ol
the government money. In France, however, though the seignorage
is eight per cent, no sensible inconveniency of this kind is found to
arise from it. The dangers to which a false coiner is every where ex-
posed, if he lives in the country of which he counterfeits the coin,
and to which his agents or correspondents are exposed if he lives in
a foreign country, are by far too great to be incurred for the sake of
a profit of six or seven per cent.
The seignorage in France raises the value of the coin higher than
in proportion to the quantity of pure gold which it contains. Thus
by the edict of January 1726, the mint price of fine gold of twen-
ty-four carats was fixed at seven hundred and forty iivres nine sous
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, contains twenty-one carats and three-fourths of fine gold, and
two carats one-fourth of alloy. The mark of standard gold, there-
fore, is worth no more than about six hundred and seventy-one
Iivres ten deniers. But in France this mark of standard gold is
coined into thirty Louis-d^ors of twenty-four Iivres each, or into
seven hundred and twenty Iivres. The coinage, therefore, increases
the value of a mark of standard gold bullion, by the difference be-
tween six hundred and seventy-one Iivres ten deniers, and seven
hundred and twenty Iivres; or by forty-eight Iivres nineteen sous
and two deniers.
A seignorage will, in many cases, take away altogether, and will,
in all cases, diminish the profit of melting down the new coin. This
profit always arises from the difference between the quantity of bul-
lion which the common currency ought to contain, and that which
it actually does contain. If this difference is less than the seignorage,
there will be loss instead of profit. If it is equal to the seignorage,
there will neither be profit nor loss. If it is greater than the
See Dictionaire des Monnoies, tom ii. article Seigneurage, p. 489. par M.
Abot de Bazinghen, Conseiller-Commissaire en la Cour des Monnoies a Paris.
Ed. I reads erroneously “tom. i.” The book is Traiti des Monnoies et de la
jurisdiction de la Cour des Monnoies en forme de dictionnaire, par M. Abot de
Bazinghen, Conseiller-Commissaire en la Cour des Monnoies de Paris, 1764,
and the page is not 489, but 589. Gamier, in his edition of the Wealth of Na-
tions, vol. V., p. 234, says the book “n’est gufere qu’une compilation faite sans
soin et sans discernement,” and explains that the mint price mentioned above
remained in force a very short time. It having failed to bring bullion to the
mint, much higher prices were successively offered, and when the Wealth of
Nations was published the seignorage only amounted to about 3 per cent. On
the silver coin it was then about 2 per cent., in place of the 6 per cent, stated
by Bazinghen, p. 590.
TREATIES OE COMMERCE 5^9
seignorage, there will indeed be some profit, but less than if there
was no seignorage. If, before the late reformation of the gold coin,
for example, there had been a seignorage of five per cent, upon the
coinage, there would have been a loss of three per cent, upon the
melting down of the gold coin. If the seignorage had been two per
cent, there would have been neither profit nor loss. If the seignorage
had been one per cent, there would have been a profit, but of one
per cent, only instead of two per cent. Wherever money is received
by tale, therefore, and not by weight, a seignorage is the most ef-
fectual preventative of the melting down of the coin, and, for the
same reason, of its exportation. It is the best and heaviest pieces
that are commonly either melted down or exported; because it is
upon such that the largest profits are made.
The law for the encouragement of the coinage, by rendering it
duty-free, was first 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 replenish their coffers with money, are frequently
obliged to carry bullion to the mint; and it was more for their in-
terest, they probably imagined, that the coinage should be at the ex-
pence of the government, than at their own. It was, probably, out
of complaisance to this great company that the government agreed
to render this law perpetual. Should the custom of weighing gold,
however, come to be disused, as it is very likely to be on account of
its inconveniency; should the gold coin of England come to be re-
ceived by tale, as it was before the late recoinage, this great com-
pany may, perhaps, find that they have upon this, as upon some
other occasions, mistaken their own interest not a little.
Before the late recoinage, when the gold currency of England was
two per cent, below its standard weight, as there was no seignorage,
it was two per cent, below the value of that quantity of standard
gold bullion which it ought to have contained, l^en this great com-
pany, 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 coinage. But if there had been a seignorage of two per cent, upon
the coinage, the common gold currency, though two per cent, below
^ “An act for encouraging of coinage,” 18 Car. II., _c. 5. The preamble says,
“Whereas it is obvious that the plenty of current coins of gold and silver of
this Ungdom is of great advantap to trade and commerce; for the increase
whereof, your Majesty in your princely wisdom and care hath been graciously
pleased to bear out of your revenue half the charge of the coinage of silver
money.”
^ Originally enacted for five years, it was renewed by 25 Car. II., c. 8 , for
seven years, revived for seven years by i Jac. IL, c, 7 j and continued by
various Acts till made perpetual by 9 Geo. III., c. 25.
The abo-
lition of
seignor-
age in
England
was
probably
due to the
bank of
England,
but the
bank
would
have lost
nothing
by a
seignor-
age
whether it
equalled
the depre-
ciation.
exceeded
it,
or fell
short of
it.
Nor
would it
lose if
there
were no
depreda-
tion.
A seignor-
age is paid
by no one,
and could
not have
augment-
ed the ex-
pense of
the bank.
520 XHE WEALTH OE NATIONS
its standard weight, would notwithstanding have been equal in
value to the quantity of standard gold which it ought to have con-
tained; the value of the fashion compensating in this case the dim-
inution of the weight. They would indeed have had the seignorage
to pay, which being two per cent, their loss upon the whole transac-
tion would have been two per cent, exactly the same, but no greater
than it actually was.
If the seignorage had been five per cent, and the gold currency
only two per cent, below its standard weight, the bank would in this
case have gained three per cent, upon the price of the bullion ; but as
they would have had a seignorage of five per cent, to pay upon the
coinage, their loss upon the whole transaction would, in the same
manner, have been exactly two per cent.
If the seignorage had been only one per cent, and the gold cur-
rency two per cent, below its standard weight, the bank would in
this case have lost only one per cent, upon the price of the bullion;
but as they would likewise have had a seignorage of one per cent, to
pay, their loss upon the whole transaction would have been exactly
two per cent, in the same manner as in all other cases.
If there was a reasonable seignorage, while at the same time the
coin contained its full standard weight, as it has done very nearly
since the late re-coinage, whatever the bank might lose by the seign-
orage, they would gain upon the price of the bullion; and whatever
they might gain upon the price of the bullion, they would lose by
the seignorage. They would neither lose nor gain, therefore, upon
the whole transaction, and they would in this, as in all the foregoing
cases, be exactly in the same situation as if there was no seignorage.
When the tax upon a commodity is so moderate as not to encour-
age smuggling, the merchant who 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 last purchaser or con-
sumer. But money is a commodity with regard to which every man
is a merchant. Nobody buys it but in order to sell it again; and with
regard to it there is in ordinary cases no last purchaser or consumer.
When the tax upon coinage, therefore, is so moderate as not to en-
courage false coining, though every body advances the tax, nobody
finally pays it; because every body gets it back in the advanced
value of the coin.
A moderate seignorage, therefore, would not in any case augment
the expence of the bank, or of any other private persons who carry
their bullion to the mint in order to be coined, and the want of a
moderate seignorage does not in any case diminish it. Whether there
is or is not a seignorage, if the currency contains its full standard
TREATIES OF COMMERCE S2i
weight, the coinage costs nothing to any body, and if it is short of
that weight, the coinage must always cost 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 coin-
age, not only incurs some small expence, but loses some small rev-
enue which it might get by a proper duty; and neither the bank nor
any other private persons are in the smallest degree benefited by
this useless piece of public generosity.
The directors of the bank, however, would probably be unwilling
to agree to the imposition of a seignorage upon the authority of a
speculation which promises them no gain, but only pretends to in-
sure them from any loss. In the present state of the gold coin, and
as long as it continues to be received by weight, they certainly
would gain nothing by such a change. But if the custom of weighing
the gold coin should ever go into disuse, as it is very likely to do,
and if the gold coin should ever fall into the same state of degrada-
tion in which it was before the late recoinage, the gain, or more
properly the savings of the bank, in consequence of the imposition
of a seignorage, would probably be very considerable. The bank of
England is the only company which sends any considerable quan-
tity of bullion to the mint, and the burden of the annual coinage
falls entirely, or almost entirely, upon it. If this annual coinage had
nothing to do but to repair the unavoidable losses and necessary
wear and tear of the coin, it could seldom exceed fifty thousand
or at most a hundred thousand pounds. But when the coin is de-
graded below its standard weight, the annual coinage must, besides
this, fill up the large vacuities which exportation and the melting
pot are continually making in the current coin. It was upon this ac-
count that during the ten or twelve years immediately preceding
the late reformation of the gold coin, the annual coinage amounted
at an average to more than eight hundred and fifty thousand
pounds.^^ But if there had been a seignorage of four or five per cent,
upon the gold coin, it would probably, even in the state in which
things then were, have put an effectual stop to the business both of
exportation and of the melting pot. The bank, instead of losing
every year about two and a half per cent, upon the bullion which
was to be coined into more than eight hundred and fifty thousand
pounds, or incurring an annual loss of more than twenty-one thou-
sand two hundred and fifty pounds, would not probably have in-
curred the tenth part of that loss.
The revenue allotted by parliament for defraying the expence of
^®Ed. I reads “tear and wear.” Above, p.
The
govern-
ment loses
and no-
body
gains by
the ab-
sence of
seignor-
age.
Suppos-
ing the
coin
should
again be-
come de-
preciated,
a seignor-
age would
preserve
the bank
from con-
siderable
loss.
The sav-
ing to the
govern-
ment may
be regard-
ed as too
trifling,
but that
of the
bank is
worth
considei-
ation.
522 the wealth of nations
the coinage is but fourteen thousand pounds a year/^ and the real
expence which it costs the government, or the fees of the officers of
the mint, do not upon ordinary occasions, I am assured, exceed the
half of that sum. The saving of so very small a sum, or even the
gaining of another which could not well be much larger, are objects
too inconsiderable, it may be thought, to deserve the serious atten-
tion of government. But the saving of eighteen or twenty thousand
pounds a year in case of an event which is not improbable, which
has frequently happened before, and which is very likely to happen
again, is surely an object which well deserves the serious attention
even of so great a company as the bank of England.
Some of the foregoing reasonings and observations might per-
haps have been more properly placed in those chapters of the first
book which treat of the origin and use of money, and of the differ-
ence between the real and the nominal price of commodities. But as
the law for the encouragement of coinage derives its origin from
those vulgar prejudices which have been introduced by the mercan-
tile system; I judged it more proper to reserve them for this chap-
ter. Nothing could be more agreeable to the spirit of that system
than a sort of bounty upon the production of money, the very thing
which, it supposes, constitutes the wealth of every nation. It is one
of its many admirable expedients for enriching the country.
“ Under 19 Geo. IL, c. 14, § 2, a maximum of £15,000 is prescribed.
CHAPTER VII
OF COLONIES
Part First
Of the Motives for establishing new Colonies
The interest which occasioned the first settlement of the different
European colonies in America and the West Indies, was not alto-
gether so plain and distinct as that which directed the establishment
of those of ancient Greece and Rome.
All the different states of ancient Greece possessed, each of them,
but a very small territory, and when the people in any one of them
multiplied beyond what that territory could easily maintain, a part
of them were sent in quest of a new habitation in some remote and
distant part of the world; the warlike neighbours who surrounded
them on all sides, rendering it difficult for any of them to enlarge
very much its territory at home. The colonies of the Dorians resort-
ed chiefly to Italy and Sicily, which, in the times preceding the foun-
dation of Rome, were inhabited by barbarous and uncivilized na-
tions: those of the lonians and Eolians, the two other great tribes of
the Greeks, to Asia Minor and the islands of the Egean Sea, of which
the inhabitants seem at that time to have been pretty much in the
same state as those of Sicily and Italy. The mother city, though she
considered the colony as a child, at all times entitled to great favour
and assistance, and owing in return much gratitude and respect, yet
considered it as an emancipated child, over whom she pretended to
claim no direct authority or jurisdiction. The colony settled its own
form of government, enacted its own laws, elected its own magis-
trates, and made peace or war with its neighbours as an independent
state, which had no occasion to wait for the approbation or consent
of the mother city. Nothing can be more plain and distinct than the
interest which directed every such establishment.
Rome, like most of the other ancient republics, was originally
founded upon an Agrarian law, which divided the public territory
523
Greek
colonies
were sent
out when
the popu-
lation
grew too
great at
home
The
mother
city
claimed
no au-
thority.
Roman
colonies
524
THE WEALTH OF ^AllOhS
were sent
out to
satisfy th-»
demand
for lands
and to
establish
garrisons
in con-
quered
territo-
ries;
they were
entirely
in a certain proportion among the different citizens who composed
the state. The course of human affairs, by marriage, by succession,
and by alienation, necessarily deranged this original division, and
frequently threw the lands, which had been allotted for the main*
tenance of many different families into the possession of a single
person. To remedy this disorder, for such it was supposed to be, a
law was made, restricting the quantity of land which any citizen
could possess to five hundred jugera, about three hundred and fifty
English acres. This law, however, though we read of its having been
executed upon one or two occasions, was either neglected or evaded,
and the inequality of fortunes went on continually increasing. The
greater part of the citizens had no land, and without it the manners
and customs of those times rendered it difficult for a freeman to
maintain his independency. In the present times, though a poor man
has no land of his own, if he has a little stock, he may either farm
the lands of another, or he may carry on some little retail trade;
and if he has no stock, he may find employment either as a country
labourer, or as an artificer. But, among the ancient Romans, the
lands of the rich were all cultivated by slaves, who wrought under
an overseer, who was likewise a slave; so that a poor freeman had
little chance of being employed either as a farmer or as a labourer.
All trades and manufactures too, even the retail trade, were carried
on by the slaves of the rich for the benefit of their masters, whose
wealth, authority, and protection made it difficult for a poor free-
man to maintain the competition against them. The citizens, there-
fore, who had no land, had scarce any other means of subsistence
but the bounties of the candidates at the annual elections. The
tribunes, when they had a mind to animate the people against the
rich and the great, put them in mind of the ancient division of lands,
and represented that law which restricted this sort of private prop-
erty as the fundamental law of the republic. The people became
clamorous to get land, and the rich and the great, we may believe,
were perfectly determined not to give them any part of theirs. To
satisfy them in some measure, therefore, they frequently proposed
to send out a new colony. But conquering Rome was, even upon
such occasions, under no necessity of turning out her citizens to
seek their fortune, if one may say so, through the wide world, with-
out knowing where they were to settle. She assigned them lands
generally in the conquered provinces of Italy, where, being within
the dominions of the republic, they could never form any inde-
pendent state; but were at best but a sort of corporation, which,
though it had the power of enacting bye-laws for its own govern-
ment, was at all times subject to the correction, jurisdiction, and
MOTIVES FOR NEW COLONIES 5^5
legislative authority of the mother city. The sending out a colony of
this kind, not only gave some satisfaction to the people, but often
established a sort of garrison too in a newly conquered province, of
which the obedience might otherwise have been doubtful. A Roman
colony, therefore, whether we consider the nature of the establish-
ment itself, or the motives for making it, was altogether different
from a Greek one. The words accordingly, which in the original lan-
guages denote those different establishments, have very different
meanings. The Latin word (Colonia) signifies simply a plantation.
The Greek word (axoata), on the contrary, signifies a separation
of dwelling, a departure from home, a going out of the house. But,
though the Roman colonies were in many respects different from
the Greek ones, the interest which prompted to establish them was
equally plain and distinct. Both institutions derived their origin
either from irresistible necessity, or from clear and evident utility.
The establishment of the European colonies in America and the
West Indies arose from no necessity: and though the utility which
has resulted from them has been very great, it is not altogether so
clear and evident. It was not understood at their first establishment,
and was not the motive either of that establishment or of the dis-
coveries which gave occasion to it; and the nature, extent, and lim-
its of that utility are not, perhaps, well understood at this day.
The Venetians, during the fourteenth and fifteenth centuries,
carried on a very advantageous commerce in spiceries, and other
East India goods, which they distributed among the other nations
of Europe. They purchased 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 interest,
assisted by the money of Venice, formed such a connection as gave
the Venetians almost a monopoly of the trade.
The great profits of the Venetians tempted the avidity of the
Portuguese. They had been endeavouring, during the course of the
fifteenth century, to find out by sea a way to the countries from
which the Moors brought them ivory and gold dust across the Des-
art. They discovered the Madeiras, the Canaries, the Azores, the
Cape de Verd islands, the coast of Guinea, that of Loango, Congo,
Angola, and Benguela,^ and finally, the Cape of Good Hope. They
had long wished to share in the profitable traffic of the Venetians,
and this last discovery opened to them a probable prospect of doing
so. In 1497, Vasco de Gama sailed from the port of Lisbon with a
fleet of four ships, and, after a navigation of eleven months, ar-
subject to
the
mother
city.
The
utility of
the Amer-
ican colo-
nies is not
so evi-
dent.
The
Venetians
had a
profitable
trade in
East
India
goods,
which
was
envied by
the Por-
tuguese
and led
them to
discover
the Cape
of Good
Hope
passage,
^ “Chiefly” is not in ed. i.
while
Columbus
endeav-
voured
to reach
the East
Indies by
sailing
west-
wards.
Columbus
mistook
the coun-
tries he
found for
the
Indies,
526 XHE WEALTH OF NATIONS
rived upon the coast of Indostan, and thus completed a course of
discoveries which had been pursued with great steadiness, and with
very little interruption, for near a century together.
Some years before this, while the expectations of Europe were in
suspense about the projects of the Portuguese, of which the success
appeared yet to be doubtful, a Genoese pilot formed the yet more
daring project of sailing to the East Indies by the West. The situa-
tion of those countries was at that time very imperfectly known in
Europe. The few European travellers who had been there had mag-
nified the distance; perhaps through simplicity and ignorance,
what was really very great, appearing almost infinite to those who
could not measure it; or, perhaps, in order to increase somewhat
more the marvellous of their own adventures in visiting regions so
immensely remote from Europe. The longer the way was by the
East, Columbus very justly concluded, the shorter it would be by
the West. He proposed, therefore, to take that way, as both the
shortest and the surest, and he had the good fortune to convince
Isabella of Castile of the probability of his project. He sailed from
the port of Palos in August 1492, near five years before the expedi-
tion of Vasco de Gama set out from Portugal, and, after a voyage
of between two and three months, discovered first some of the small
Bahama or Lucayan islands, and afterwards the great island of St.
Domingo.
But the countries which Columbus discovered, either in this or
in any of his subsequent voyages, had no reseifiblance to those
which he had gone in quest of. Instead of the wealth, cultivation
and populousness of China and Indostan, he found, in St. Do-
mingo, and in all the other parts of the new world which he ever vis-
ited, nothing but a country quite covered with wood, uncultivated,
and inhabited only by some tribes of naked and miserable savages.
He was not very willing, however, to believe that they were not the
same with some of the countries described by Marco Polo, the first
European who had visited, or at least had left behind him any
description of China or the East Indies; and a very slight re-
semblance, such as that which he found between the name of Cibao,
a mountain in St. Domingo, and that of Cipango, mentioned by
Marco Polo, was frequently sufficient to make him return to this
favourite prepossession, though contrary to the clearest evidence.'^
In his letters to Ferdinand and Isabella he called the countries
which he had discovered, the Indies. He entertained no doubt but
that they were the extremity of those which had been described by
* P. F. X. de Charlevoix, Histoire de VIsle Espagnole ou de S. Domingue,
1730, tom. i., p. 99.
MOTIVES FOR NEW COLONIES 52 ?
Marco Polo, and that they were not very distant from the Ganges,
or from the countries which had been conquered by Alexander.
Even when at last convinced that they were different, he still flat-
tered himself that those rich countries were at no great distance,
and in a subsequent voyage, accordingly, went in quest of them
along the coast of Terra Firma, and towards the isthmus of Darien.
In consequence of this mistake of Columbus, the name of the Hence the
Indies has stuck to those unfortunate countries ever since; and E^^and
when it was at last clearly discovered that the new were altogether west ^
different from the old Indies, the former were called the West, in Indies,
contradistinction to the latter, which were called the East Indies.
It was of importance to Columbus, however, that the countries The coun-
which he had discovered, whatever they were, should be repre-
sented to the court of Spain as of very great consequence; an^ in were not
what constitutes the real riches of every country, the animal and ^ich
vegetable productions of the soil, there was at that time nothing
which could well justify such a representation of them.
The Cori, something between a rat and a rabbit, and supposed in animals
by Mr. Buffon ^ to be the same with the Aperea of Brazil, was the
largest viviparous quadruped in St. Domingo. This species seems
never to have been very numerous, and the dogs and cats of the
Spaniards are said to have long ago almost entirely extirpated it,
as well as some other tribes of a still smaller size.^ These, however,
together with a pretty large lizard, called the Ivana or Iguana,®
constituted the principal part of the animal food which the land
afforded.
The vegetable food of the inhabitants, though from their want orvege-
of industry not very abundant, was not altogether so scanty. It
consisted in Indian corn, yams, potatoes, bananes, &c. plants which
were then altogether unknown in Europe, and which have never
since been very much esteemed in it, or supposed to yield a sus-
tenance equal to what is drawn from the common sorts of grain and
pulse, which have been cultivated in this part of the world time out
of mind.
The cotton plant indeed afforded the material of a very impor- pttonbe-
tant manufacture, and was at that time to Europeans undoubtedly then con-
the most valuable of all the vegetable productions of those islands, sidered of
But though in the end of the fifteenth century the muslins and great con-
other cotton goods of the East Indies were much esteemed in every
part of Europe, the cotton manufacture itself was not cultivated in
^ Histoire Naturelle, tom. xv. (1750), pp. 160, 162.
’■* Charlevoix, Btstoire de Vlsle Espagnok, tom. i., pp. 35, 36.
‘ Ibid.,
So Co-
lumbus
relied on
the min-
erals.
The
Council
of Castile
was at-
tracted
by the
gold, Co-
lumbus
proposing
that the
govern-
ment
should
have half
the gold
and silver
dis-
covered.
528 XHE WEALTH OF NATIONS
any part of it. Even this production, therefore, could not at that
time appear in the eyes of Europeans to be of very great conse-
quence.
Finding nothing either in the animals or vegetables of the newly
discovered countries, which could justify a very advantageous rep-
resentation of them, Columbus turned his view towards their min-
erals; and in the richness of the productions of this third kingdom,
he flattered himself, he had found a full compensation for the in-
significancy of those of the other two. The little bits of gold with
which the inhabitants ornamented their dress, and which, he was
informed, they frequently found in the rivulets and torrents that
fell from the mountains, were sufficient to satisfy him that those
mountains abounded with the richest gold mines. St. Domingo,
therefore, was represented as a country abounding with gold, and
upon that account (according to the prejudices not only of the
present times, but of those times), an inexhaustible source of real
wealth to the crown and kingdom of Spain. When Columbus,
upon his return from his first voyage, was introduced with a sort of
triumphal honours to the sovereigns of Castile and Arragon, the
principal productions of the countries which he had discovered
were carried in solemn procession before him. The only valuable
part of them consisted in some little fillets, bracelets, and other
ornaments of gold, and in some bales of cotton. The rest were mere
objects of vulgar wonder and curiosity; some reeds of an extraor-
dinary size, some birds of a very beautiful plumage, and some
stuffed skins of the huge alligator and manati; all of which were
preceded by six or seven of the wretched natives, whose singular
colour and appearance added greatly to the novelty of the shew.
In consequence of the representations of Columbus, the council
of Castile determined to take possession of countries of which the
inhabitants were plainly incapable of defending themselves. The
pious purpose of converting them to Christianity sanctified the in-
justice of the project. But the hope of finding treasures of gold
there, was the sole motive which prompted to undertake it; and to
give this motive the greater weight, it was proposed by Columbus
that the half of all the gold and silver that should be found there
should belong to the crown. This proposal was approved of by the
council.
As long as the whole or the far greater part of the gold, which
the first adventurers imported into Europe, was got by so very
easy a method as the plundering of the defenceless natives, it was
not perhaps very difficult to pay even this heavy tax. But when the
natives were once fairly stript of all that they had, which, in St.
MOTIVES FOR NEW COLONIES
Domingo, and in all the other countries discovered by Columbus, This was
was done completely in six or eight years, and when in order to find
more it had become necessary to dig for it in the mines, there was LaVS
no longer any possibility of paying this tax. The rigorous exaction soonre-
of it, accordingly, first occasioned, it is said, the total abandoning
of the mines of St. Domingo, which have never been wrought since.
It was soon reduced therefore to a third; then to a fifth; after-
wards to a tenth ; and at last to a twentieth part of the gross prod-
uce of the gold mines,"^ The tax upon silver continued for a long
time to be a fifth of the gross produce. It was reduced to a tenth
only in the course of the present century.® But the first adventur-
ers do not appear to have been much interested about silver. Noth-
ing less precious than gold seemed worthy of their attention.
All the other enterprises of the Spaniards in the new world, sub- The sub-
sequent to those of Columbus, seem to have been prompted by the g
same motive. It was the sacred thirst of gold that carried Oieda, eS:er-
Nicuessa, and Vasco Nugnes de Balboa, to the isthmus of Darien, pnses
that carried Cortez to Mexico, and Almagro and Pizzarro to Chile prompted
and Peru. When those adventurers arrived upon any unknown by the
coast, their first enquiry was always if there was any gold to be same
found there; and according to the information which they received
concerning this particular, they determined either to quit the coun-
try or to settle in it.
Of all those expensive and uncertain projects, however, which A prudent
bring bankruptcy upon the greater part of the people who engage in
them, there is none perhaps more perfectly ruinous than the search ^gh to
after new silver and gold mines. It is perhaps the most disadvan- encourage
tageous lottery in the world, or the one in which the gain of those
who draw the prizes bears the least proportion to the loss of those mining,
who draw the blanks: for though the prizes are few and the blanks
many, the common price of a ticket is the whole fortune of a very
rich man. Projects of mining, instead of replacing the capital em-
ployed in them, together with the ordinary profits of stock, com-
monly absorb both capital and profit. They are the projects, there-
fore, to which of all others a prudent law-giver, who desired to in-
crease the capital of his nation, would least chuse to give any extra-
ordinary encouragement, or to turn towards them a greater share of
that capital than what would go to them of its own accord. Such in
reality is the absurd confidence which almost all men have in their
^ Above, p. 170.
® Ed. I (in place of these two sentences) reads, “The tax upon silver, in-
deed, still continues to be a fifth of the gross produce.” Cp. above, p. 169.
but
people
have al-
ways be-
lieved in
an Eldo-
rado.
In this
case ex-
pectations
were to
530 the wealth of nations
own good fortune, that wherever there is the least probability of
success, too great a share of it is apt to go to them of its own accord.
But though the judgment of sober reason and experience con-
cerning such projects has always been extremely unfavourable, that
of human avidity has commonly been quite otherwise. The same
passion which has suggested to so many people the absurd idea of
the philosopher’s stone, has suggested to others the equally absurd
one of immense rich mines of gold and silver. They did not consider
that the value of those metals has, in all ages and nations, arisen
chiefly from their scarcity, and that their scarcity has arisen from
the very small quantities of them which nature has any where de-
posited in one place, from the hard and intractable substances with
which she has almost every where surrounded those small quan-
tities, and consequently from the labour and expence which are
every where necessary in order to penetrate to and get at them.
They flattered themselves that veins of those metals might in many
places be found as large and as abundant as those which are com-
monly found of lead, or copper, or tin, or iron. The dream of Sir
Walter Raleigh concerning the golden city and country of El-
dorado,^ may satisfy us, that even wise men are not always exempt
from such strange delusions. More than a hundred years after the
death of that great man, the Jesuit Gumila was still convinced of
the reality of that wonderful country, and expressed with great
warmth, and I dare to say, with great sincerity, how happy he
should be to carry the light of the gospel to a people who could so
well reward the pious labours of their missionary
In the countries first discovered by the Spaniards, no gold or sil-
ver mines are at present known which are supposed to be worth the
working. The quantities of those metals which the first adventurers
are said to have found there, had probably been very much mag-
® “That mighty, rich and beautiful empire of Guiana, and . . . that great
and golden city which the Spaniards call El Dorado.”— Raleigh^s Works^ ed.
Thomas Birch, 1751, voL ii., p. 141.
Jos. Gumilla, Histoite naturelle civile et $iographique de VOrinoquef
etc., traduite par M. Eidous, 1758, tom. ii., pp. 46, 117, 131, 132, 137, 138,
but the sentiment is apparently attributed to the author who is described on
the title page as “de la compagnie de Jesus, superieur des missions de rOr 4 -
noque,” on the strength of a mistranslation of the French or possibly the
original Spanish. If “Dieu permit” were mistranslated “God permit,” the fol-
lowing passage from pp. 137, 138 would bear out the text “On cherchait une
vallee ou un territoire dont les rochers et les pierres etaient d^or, et les Indiens
pour flatter la cupidity des Espagnols, et les 61 oigner en mSme temps de chez
eux, leur peignaient avec les couleurs les plus vives Tor dont ce pays abondait
pour se d^barrasser plut6t de ces h6tes incommodes, et Dieu permit que les
Espagnols ajoutassent foi k ces rapports, pour quils d^couvrissent un plus
grand nombre de provinces, et que la lumi^re de FEvangile pht sV r6pandre
avec plus de facility.”
PROSPERITY OF NEW COLONIES S3i
nified, as well as the fertility of the mines which were wrought im-
mediately after the first discovery. What those adventurers were re-
ported to have found, however, was sufficient to inflame the avidity
of all their countrymen. Every Spaniard who sailed to America ex-
pected to find an Eldorado. Fortune too did upon this what she has
done upon very few other occasions. She realized in some measure
the extravagant hopes of her votaries, and in the discovery and con-
quest of Mexico and Peru (of which the one happened about thirty,
the other about forty years after the first expedition of Columbus) ,
she presented them with something not very unlike that profusion
of the precious metals which they sought for.
A project of commerce to the East Indies, therefore, gave occa-
sion to the first discovery of the West. A project of conquest gave
occasion to all the establishments of the Spaniards in those newly
discovered countries. The motive which excited them to this con-
quest was a project of gold and silver mines; and a course of acci-
dents, which no human wisdom could foresee, rendered this project
much more successful than the undertakers had any reasonable
grounds for expecting.
The first adventures of all the other nations of Europe, who at-
tempted to make settlements in America, were animated by the like
chimerical views; but they were not equally successful. It was more
than a hundred years after the first settlement of the Brazils, before
any silver, gold, or diamond mines were discovered there. In the
English, French, Dutch, and Danish colonies, none have ever yet
been discovered; at least none that are at present supposed to be
worth the working. The first English settlers in North America,
however, offered a fifth of all the gold and silver which should be
found there to the king, as a motive for granting them their patents.
In the patents to Sir Walter Raleigh, to the London and Plymouth
companies, to the council of Plymouth, &c. this fifth was accord-
ingly reserved to the crown. To the expectation of finding gold and
silver mines, those first settlers too joined that of discovering a
north-west passage to the East Indies. They have hitherto been dis-
appointed in both.
Part Second
Causes 0} the Prosperity of new Colonies
The colony of a civilized nation which takes possession either of a
waste country, or of one so thinly inhabited, that the natives easily
some ex-
tent real-
ised, so
far as the
Spaniards
were con-
cerned,
but the
other na-
tions were
not so
successful.
532
Colonists
takeout
knowl-
edge and
regular
govern-
ment,
land is
plentiful
and
cheap,
wages are
and chil-
dren are
taken care
of and are
profit-
able.
Popula-
tion and
improve-
ment,
which
mean
wealth
and
greatness,
THE WEALTH OF NATIONS
give place to the new settlers, advances more rapidly to wealth and
greatness than any other human society.
The colonists carry out with them a knowledge of agriculture and
of other useful arts, superior to what can grow up of its own accord
in the course of many centuries among savage and barbarous na-
tions. They carry out with them too the habit of subordination,
some notion of the regular government which takes place in their
own country, of the system of laws which supports it, and of a
regular administration of justice; and they naturally establish
something of the same kind in the new settlement. But among sav-
age and barbarous nations, the natural progress of law and govern-
ment is still slower than the natural progress of arts, after law and
government have been so far established, as is necessary for their
protection. Every colonist gets more land than he can possibly cul-
tivate. He has no rent, and scarce any taxes to pay. No landlord
shares with him in its produce, and the share of the sovereign is
commonly but a trifle. He has every motive to render as great as
possible a produce, which is thus to be almost entirely his own. But
his land is commonly so extensive, that with all his own industry,
and with all the industry of other people whom he can get to em-
ploy, he can seldom make it produce the tenth part of what it is
capable of producing. He is eager, therefore, to collect labourers
from all quarters, and to reward them with the most liberal wages.
But those liberal wages, joined to the plenty and cheapness of land,
soon make those labourers leave him, in order to become landlords
themselves, and to reward, with equal liberality, other labourers,
who soon leave them for the same reason that they left their first
master. The liberal reward of labour encourages marriage. The
children, during the tender years of infancy, are well fed and prop-
erly taken care of, and when they are grown up, the value of their
labour greatly overpays their maintenance. When arrived at ma-
turity, the high price of labour, and the low price of land, enable
them to establish themselves in the same manner as their fathers
did before them.
In other countries, rent and profit eat up wages, and the two su-
perior orders of people oppress the inferior one. But in new col-
onies, the interest of the two superior orders obliges them to treat
the inferior one with more generosity and humanity; at least, where
that inferior one is not in a state of slavery. Waste lands of the
greatest natural fertility, are to be had for a trifle. The increase of
revenue which the proprietor, who is always the undertaker, ex-
^^Eds. 1-4 reads “support.”
PROSPERITY OE NEW COLONIES 533
pects from their improvement constitutes his profit; which in these are en-
circumstances is commonly very great. But this great profit cannot couraged
be made without employing the labour of other people in clearing
and cultivating the land; and the disproportion between the great
extent of the land and the small number of the people, which com-
monly takes place in new colonies, makes it difficult for him to get
this labour. He does not, therefore, dispute about wages, but is will-
ing to employ labour at any price. The high wages of labour en-
courage population. The cheapness and plenty of good land encour-
age improvement, and enable the proprietor to pay those high
wages. In those wages consists almost the whole price of the land;
and though they are high, considered as the wages of labour, they
are low, considered as the price of what is so very valuable. What
encourages the progress of population and improvement, encourages
that of real wealth and greatness.
The progress of many of the ancient Greek colonies towards The pro-
wealth and greatness, seems accordingly to have been very rapid.
In the course of a century or two, several of them appear to have colonies
rivalled, and even to have surpassed their mother cities. Syracuse was very
and Agrigentum in Sicily, Tarentum and Locri in Italy, Ephesus
and Miletus in Lesser Asia, appear by all accounts to have been at
least equal to any of the cities of ancient Greece. Though posterior
in their establishment, yet all the arts of refinement, philosophy,
poetry, and eloquence, seem to have been cultivated as early, and
to have been improved as highly in them, as in any part of the mo-
ther country. The schools of the two oldest Greek philosophers,
those of Thales and Pythagoras, were established, it is remarkable,
not in ancient Greece, but the one in an Asiatic, the other in an
Italian colony All those colonies had established themselves in
countries inhabited by savage and barbarous nations, who easily
gave place to the new settlers. They had plenty of good land, and
as they were altogether independent of the mother city, they were
at libel ty to manage their own affairs in the way that they judged
was most suitable to their own interest.
The history of the Roman colonies is by no means so brilliant. That of
Some of them, indeed, such as Florence, have in the course of many
ages, and after the fall of the mother aty, grown up to be consider- njeg
able states. But the progress of no one of them seems ever to have less so.
been very rapid. They were all established in conquered provinces,
which in most cases had been fully inhabited before. The quantity
of land assigned to each colonist was seldom very considerable, and
“ Miletus and Crotona.
The
American
colonies
have had
plenty of
land and
not very
much in-
terference
from their
mother
countries.
The prog-
ress of the
Spanish
colonies,
Mexico
and Peru,
has been
very con-
siderable.
534 the wealth OF NATIONS
as the colony was not independent, they were not always at liberty
to manage their own affairs in the way that they judged was most
suitable to their own interest.
In the plenty of good land, the European colonies established in
America and the West Indies resemble, and even greatly surpass,
those of ancient Greece. In their dependency upon the mother
state, they resemble those of ancient Rome; but their great dis-
tance from Europe has in all of them alleviated more or less the ef-
fects of this dependency. Their situation has placed them less in the
view and less in the power of their mother country. In pursuing
their interest their own way, their conduct has, upon many occa-
sions, been overlooked, either because not known or not understood
in Europe; and upon some occasions it has been fairly suffered and
submitted to, because their distance rendered it difficult to restrain
it. Even the violent and arbitrary government of Spain has, upon
many occasions, been obliged to recall or soften the orders which
had been given for the government of her colonies, for fear of a
general insurrection. The progress of all the European colonies in
wealth, population, and improvement, has accordingly been very
great.
The crown of Spain, by its share of the gold and silver, derived
some revenue from its colonies, from the moment of their first es-
tablishment. It was a revenue too, of a nature to excite in human
avidity the most extravagant expectations of still greater riches.
The Spanish colonies, therefore, from the moment of their first es-
tablishment, attracted very much the attention of their mother
country; while those of the other European nations were for a
long time in a great measure neglected. The former did not, per-
haps, thrive the better in consequence of this attention; nor the
latter the worse in consequence of this neglect. In proportion to the
extent of the country which they in some measure possess, the
Spanish colonies are considered as less populous and thriving than
those of almost any other European nation. The progress even of
the Spanish colonies, however, in population and improvement, has
certainly been very rapid and very great. The city of Lima, founded
since the conquest, is represented by Ulloa, as containing fifty thou-
sand inhabitants near thirty years ago.^^ Quito, which had been
but a miserable hamlet of Indians, is represented by the same au-
thor as in his time equally populous.^® Gemelli Carreri, a pretended
traveller, it is said, indeed, but who seems every where to have writ-
ten upon extreme good information, represents the city of Mexico
“ Ed. I reads “its.” See above, pp. 203, 204.
Juan and Ulloa, Voyage Ustonque^ tom. i , p. 229.
PROSPERITY OF NEW COLONIES 535
as containing a hundred thousand inhabitants; a number which,
in spite of all the exaggerations of the Spanish writers, is, probably,
more than five times greater than what it contained in the time of
Montezuma. These numbers exceed greatly those of Boston, New
York, and Philadelphia, the three greatest cities of the English
colonies. Before the conquest of the Spaniards there were no cat-
tle fit for draught either in Mexico or Peru. The lama was their
only beast of burden, and its strength seems to have been a good
deal inferior to that of a common ass. The plough was unknown
among them. They were ignorant of the use of iron. They had no
coined money, nor any established instrument of commerce of any
kind. Their commerce was carried on by barter. A sort of wooden
spade was their principal instrument of agriculture. Sharp stones
served them for knives and hatchets to cut with; fish bones and the
hard sinews of certain animals served them for needles to sew with;
and these seem to have been their principal instruments of trade.^’’^
In this state of things, it seems impossible, that either of those em-
pires could have been so much improved or so well cultivated as at
present, when they are plentifully furnished with all sorts of Eu-
ropean cattle, and when the use of iron, of the plough, and of many
of the arts of Europe, has been introduced among them. But the
populousness of every country must be in proportion to the degree
of its improvement and cultivation. In spite of the cruel destruc-
tion of the natives which followed the conquest, these two great em-
pires are, probably, more populous now than they ever were be-
fore: and the people are surely very different; for we must ac-
knowledge, I apprehend, the the Spanish creoles are in many re-
spects superior to the ancient Indians.
After the settlements' of the Spaniards, that of the Portugueze in The Por-
Brazil is the oldest of any European nation in America. But as for
a long time after the first discovery, neither gold nor silver mines Brazilis
were found in it, and as it afforded, upon that account, little or no very
revenue to the crown, it was for a long time in a great measure
neglected; and during this state of neglect, 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 got possession of
seven of the fourteen provinces into which it is divided. They ex-
pected soon to conquer the other seven, when Portugal recovered its
independency by the elevation of the family of Braganza to the
throne. The Dutch then, as enemies to the Spaniards, became
^®In Awnsham and John Churchill’s Collection of Voyages and Travels,
1704, vol. iv., p. 508.
Cp. above, pp. 202, 203.
536 the wealth OF NATIONS
friends to the Portugueze, who were likewise the enemies of the
Spaniards. They agreed, therefore, 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 disputing about with such good allies. But the Dutch
Government soon began to oppress the Portugueze colonists, who,
instead of amusing themselves with complaints, took arms against
their new masters, and by their own valour and resolution, with
the connivance, indeed, but without any avowed assistance from
the mother country, drove them out of Brazil. The Dutch, there-
fore, finding it impossible to keep any part of the country to them-
selves, were contented that it should be entirely restored to the
crown of Portugal.^® In this colony there are said to be more than
six hundred thousand people,^^ either Portugueze or descended
from Portugueze, creoles, mulattoes, and a mixed race between
Portugueze and Brazilians. No one colony in America is supposed
to contain so great a number of people of European extraction.
iVhen Towards the end of the fifteenth, and during the greater part of
the sixteenth century, Spain and Portugal were the two great naval
various powers upon the ocean: for though the commerce of Venice ex-
countries tended to every part of Europe, its fleets had scarce ever sailed be-
a^ooting Mediterranean. The Spaniards, in virtue of the first dis-
inAmer- covery, claimed all America as their own; and though they could
not hinder so great a naval power as that of Portugal from settling
in Brazil, such was, at that time, the terror of their name, that the
greater part of the other nations of Europe were afraid to establish
themselves in any other part of that great continent. The French,
who attempted to settle in Florida, were all murdered by the
Spaniards.^^ But the declension of the naval power of this latter
nation, in consequence of the defeat or miscarriage of, what they
called, their Invincible Armada, which happened towards the end
of the sixteenth century, put it out of their power to obstruct any
longer the settlements of the other European nations. In the course
of the seventeenth century, therefore, the English, French, Dutch,
Danes, and Swedes, all the great nations who had any ports upon
the ocean, attempted to make some settlements in the new world.
The The Swedes established themselves in New Jersey; and the num-
Swedish ber of Swedish families still to be found there, sufficiently demon-
New ^ strates, that this colony was very likely to prosper, had it been pro-
Jersey tected by the mother country. But being neglected by Sweden
“Raynal, Histoire philosophique, Amsterdam ed., 1773, tom. iii., pp. 347-.
352.
^^Ihid.j tom, iii., p. 424. ^ Ibid., tom vi , p. 8
PROSPERITY OF NEW COLONIES 537
it was soon swallowed up by the Dutch colony of New York, which
again, in 1674,21 fell under the dominion of the English.
The small islands of St. Thomas and Santa Cruz are the only
countries in the new world that have ever been possessed by the
Danes. These little settlements too were under the government of an
exclusive company, which had the sole right, both of purchasing
the surplus produce of the colonists, and of supplying them with
such goods of other countries as they wanted, and which, therefore,
both in its purchases and sales, had not only the power of oppres-
sing them, but the greatest temptation to do so. The government of
an exclusive company of merchants is, perhaps, the worst of all
governments for any country whatever. It was not, however, able
to stop altogether* the progress of these colonies, though it ren-
dered it more slow and languid. The late king of Denmark dis-
solved this company, and since that time the prosperity of these
colonies has been very great.
The Dutch settlements in the West, as well as those in the East
Indies, were originally put under the government of an exclusive
company. The progress of some of them, therefore, though it has
been considerable, in comparison with that of almost any country
that has been long peopled and established, has been languid and
slow in comparison with that of the greater part of new colonies.
The colony of Surinam, though very considerable, is still inferior to
the greater part of the sugar colonies of the other European nations.
The colony of Nova Belgia, now divided into the two provinces of
New York and New Jersey, would probably have soon become con-
siderable too, even though it had remained under the government
of the Dutch. The plenty and cheapness of good land are such pow-
erful causes of prosperity, that the very worst government is scarce
capable of checking altogether the efficacy of their operation. The
great distance too from the mother country would enable the col-
onists to evade more or less, by smuggling, the monopoly which the
company enjoyed against them. At present the company allows all
Dutch ships to trade to Surinam upon paying two and a half per
cent, upon the value of their cargo for a licence; and only reserves
to itself exclusively the direct trade from Africa to America, which
consists almost entirely in the slave trade. This relaxation in the ex-
clusive privileges of the company, is probably the principal cause
of that degree of prosperity which that colony at present enjoys.
Curagoa and Eustatia, the two principal islands belonging to the
Dutch, are free ports open to the ships of all nations; and this free-
dom, in the midst of better colonies whose ports are open to those
^ A mistake for 1664.
was pros-
pering
when
swal-
lowed up
by New
York.
The
Danish
colonies
of St.
Thomas
and Santa
Cruz have
been very
prosper-
ous since
the exclu-
sive com-
pany was
dissolved.
The
Dutch
colony of
Surinam
is pros-
perous
though
still under
an exclu-
sive com-
pany.
The
French
colony of
Canada
has shown
rapid
progress
since the
dissolu-
tion of
the ex-
clusive
company.
St.Bo-
mingOj in
spite of
various
obstacles,
and the
Other
French
sugar
colonies,
are very
thriving.
But the
progress
of the
English
colonies
has been
the most
rapid.
They
have not
so much
good land
S3S the wealth of nations
of one nation only, has been the great cause of the prosperity of
those two barren islands*
The French colony of Canada was, during the greater part of the
last century, and some part of the present, under the government
of an exclusive company. Under so unfavourable an administration
its progress was necessarily very slow in comparison with that of
other new colonies; but it became much more rapid when this com-
pany was dissolved after the fall of what is called the Mississippi
scheme. When the English got possession of this country, they
found in it near double the number of inhabitants which father
Charlevoix had assigned to it between twenty and thirty years be-
fore.^^ That Jesuit had travelled over the whole country, and had no
inclination to represent it as less considerable than it really was.
The French colony of St. Domingo was established by pirates
and free-booters, who, for a long time, neither required the pro-
tection, nor acknowledged the authority of France; and when
that race of banditti became so far citizens as to acknowledge
this authority, it was for a long time necessary to exercise it with
very great gentleness. During this period the population and im-
provement of this colony increased very fast. Even the oppression
of the exclusive company, to which it was for some time sub-
jected, with all the other colonies of France, though it no doubt re-
tarded, had not been able to stop its progress altogether. The course
of its prosperity returned as soon as it was relieved from that op-
pression. It is now the most important of the sugar colonies of the
West Indies, and its produce is said to be greater than that of all
the English sugar colonies put together. The other sugar colonies of
France are in general all very thriving.
But there are no colonies of which the progress has been more
rapid than that of the English in North America.
Plenty of good land, and liberty to manage their own affairs
their own way, seem to be the two great causes of the prosperity of
all new colonies.
In the plenty of good land the English colonies of North Amer-
ica, though, no doubt, very abundantly provided, are, however, in-
ferior to those of the Spaniards and Portugueze, and not superior
to some of those possessed by the French before the late war. But
the political institutions of the English colonies have been more fa-
F. X. de Charlevoix, Eistoire ei description ginirale de la Nouvelle
France, avec le journal historique d^un voyage dans VAmirique Septentrion-
nale, 1744, tom. ii., p. 390, speaks of a population of 20,000 to 25,000 in 1713.
Raynal says in 1753 and 1758 the population, excluding troops and Indians,
was gipoo—Histoire philosophique, Amsterdam ed., 1773, tom. vi., p. 137.
^ Ed. I reads “the.”
PROSPERITY OF NEW COLONIES 539
vourable to the improvement and cultivation of this land, than
those of any of the other three nations.
First, the engrossing of uncultivated land, though it has by no
means been prevented altogether, has been more restrained in the
English colonies than in any other. The colony law which imposes
upon every proprietor the obligation of improving and cultivating,
within a limited time, a certain proportion of his lands, and which,
in case of failure, declares those neglected lands grantable to any
other person; though it has not, perhaps, been very strictly exe-
cuted, has, however, had some effect.
Secondly, in Pennsylvania there is no right of primogeniture,
and lands, like moveables, are divided equally among all the chil-
dren of the family. In three of the provinces of New England the
oldest has only a double share, as in the Mosaical law. Though in
those provinces, therefore, too great a quantity of land should
sometimes be engrossed by a particular individual, it is likely, in
the course of a generation or two, to be sufficiently divided again.
In the other English colonies, indeed, the right of primogeniture
takes place, as in the law of England. But in all the English col-
onies the tenure of the lands, which are all held by free socage,
facilitates alienation, and the grantee of any extensive tract of land,
generally finds it for his interest to alienate, as fast as he can, the
greater part of it, reserving only a small quit-rent. In the Spanish
and Portugueze colonies, what is called the right of Majorazzo
takes place in the succession of all those great estates to which any
title of honour is annexed. Such estates go all to one person, and
are in effect entailed and unalienable. The French colonies, indeed,
are subject to the custom of Paris, which, in the inheritance of land,
is much more favourable to the younger children than the law of
England. But, in the French colonies, if any part of an estate, held
by the noble tenure of chivalry and homage, is alienated, it is, for
a limited time, subject to the right of redemption, either by the
heir of the superior or by the heir of the family; and all the largest
estates of the country are held by such noble tenures, which neces-
sarily embarrass alienation. But, in a new colony, a great unculti-
vated estate is likely to be much more speedily divided by aliena-
tion than by succession. The plenty and cheapness of good land, it
has already been observed,-® are the principal causes of the rapid
prosperity of new colonies. The engrossing of land, in effect, de-
Eds. I and 2 read “their.”
® Jus Majoratus. Ed. i reads “mayorazzo” in the text and “mayoratus” in
the note.
Above, pp. 532, 533, and cp. p. 92.
as the
Spanish
and Por-
tuguese,
but their
institu-
tions are
more fa-
vourable
to its im-
prove-
ment.
(1) The
engross-
ing of un-
cultivated
land has
been more-
re-
strained.
(2) Pri-
mogeni-
ture and
entails are
less pre-
valent
and
alienation
more fre-
quent.
(3) Taxes
are more
moderate.
540 XHE WEALTH OF NATIONS
stroys this plenty and cheapness.^^ The engrossing of uncultivated
land, besides, is the greatest obstruction to its improvement. But
the labour that is employed in the improvement and cultivation
of land affords the greatest and most viuable produce to the so-
ciety. The produce of labour, in this case,^® pays not only its own
wages, and the profit of the stock which employs it, but the rent
of the land too upon which it is employed. The labour of the English
colonists, therefore, being more employed in the improvement 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
engrossing of land, is more or less diverted towards other employ-
ments.
Thirdly, the labour of the English colonists is not only likely to
afford a greater and more valuable produce, but, in consequence of
the moderation of their taxes, a greater proportion of this produce
belongs to themselves, which they may store up and employ in put-
ting into motion a still greater quantity of labour. The English col-
onists have never yet contributed any thing towards the defence
of the mother country, or towards the support of its civil govern-
ment. They themselves, on the contrary, have hitherto been de-
fended almost entirely at the expence of the mother country. But
the expence of fleets and armies is out of all proportion greater than
the necessary expence of civil government. The expence of their
own civil government has always been very moderate. It has gen-
erally been confined to what was necessary for paying competent
salaries to the governor, to the judges, and to some other offices of
police, and for maintaining a few of the most useful public works.
The expence of the civil establishment of Massachusett^s Bay, be-
fore the commencement of the present disturbances, used to be
but about i8,ooo^. a year. That of New Hampshire and Rhode Is-
land 3,sooZ. each. That of Connecticut 4,000^. That of New York
and Pennsylvania 4,500^. each. That of New Jersey 1,200^. That of
Virginia and South Carolina 8,ooo^. each. The civil establishments
of Nova Scotia and Georgia are partly supported by an annual
grant of parliament. But Nova Scotia pays, besides, about 7,000/.
a year towards the public expence of the colony; and Georgia about
2,500/. a year. All the different civil establishments in North Amer-
^This and the preceding sentence, beginning “The plenty ” are not in ed. i.
®®Ed. I reads “The engrossing, however, of uncultivated land, it has already
been observed, is the greatest obstruction to its improvement and cultivation,
and the labour.”
^ Ed. I reads “Its produce in this case.”
All eds. read “present” here and on p. 532, but “late” on p. 544. See above,
p. 465, note, and below, p. 890.
PROSPERITY OF NEW COLONIES 54 ^
ica, in short, exclusive of those of Maryland and North Carolina,
of which no exact account has been got, did not, before the com-
mencement of the present disturbances, cost the inhabitants above
64,700/. a year; an ever-memorable example at how small an ex-
pence three millions of people may not only be governed, but well
governed. The most important part of the expence of government,
indeed, that of defence and protection, has constantly fallen upon
the mother country. The ceremonial too of the civil government in
the colonies, upon the reception of a new governor, upon the open-
ing of a new assembly, &c. though sufficiently decent, is not ac-
companied with any expensive pomp or parade. Their ecclesiastical
government is conducted upon a plan equally frugal. Tithes are
unknown among them; and their clergy, who are far from being
numerous, are maintained either by moderate stipends, or by the
voluntary contributions of the people. The power of Spain and
Portugal, on the contrary, derives some support from the taxes
levied upon their colonies. France, indeed, has never drawn any
considerable revenue from its colonies, the taxes which it levies up-
on them being generally spent among them. But the colony govern-
ment of all these three nations is conducted upon a much more ex-
pensive plan, and is accompanied with a much more expensive
ceremonial. The sums spent upon the reception of a new viceroy of
Peru, for example, have frequently been enormous.^^ Such cere-
monials are not only real taxes paid by the rich colonists upon those
particular occasions, but they serve to introduce among them the
habit of vanity and expence upon all other occasions. They are not
only very grievous occasional taxes, but they contribute to estab-
lish perpetual taxes of the same kind still more grievous; the ruin-
ous taxes of private luxury and extravagance. In the colonies of
all those three nations too, the ecclesiastical government is ex-
tremely oppressive. Tithes take place in all of them, and are levied
with the utmost rigour in those of Spain and Portugal. All of them
besides are oppressed with a numerous race of mendicant friars,
whose beggary being not only licensed, but consecrated by religion,
is a most grievous tax upon the poor people, who are most carefully
taught that it is a duty to give, and a very great sin to refuse them
their charity. Over and above all this, the clergy are, in all of them,
the greatest engrossers of land.
Fourthly, in the disposal of their surplus produce, or of what is (4) The^
over and above their own consumption, the English colonies have ra e m
The figures are evidently from the “very exact account” quoted below, p.
Juan and Ulloa, Voyage histonque, tom. i., pp. 437-44I5 give a lurid ac-
count of the magnificence of the ceremonial.
nopoly of
the
mother
country
has been
less op-
pressive,
since
there has
been no
exclusive
company
with its
interest to
buy the
produce
of the col-
onies as
cheap as
possible,
nor any
restriction
of com-
merce to
a particu-
lar port
and to
particular
licensed
ships,
542 the wealth of nations
been more favoured, and have been allowed a more extensive mar-
ket, than those of any other European nation. Every European na-
tion has endeavoured more or less to monopolize to itself the com-
merce of its colonies, and, upon that account, has prohibited the
ships of foreign nations 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 exercised in dif-
ferent nations has been very different.
Some nations have given up the whole commerce of their col-
onies to an exclusive company, of whom the colonies were obliged
to buy all such European goods as they wanted, and to whom they
were obliged to sell the whole of their own surplus produce. It was
the interest of the company, therefore, not only to sell the former
as dear, and to buy the latter as cheap as possible, but to buy no
more of the latter, even at this low price, than what they could dis-
pose of for a very high price in Europe. It was their interest, not
only to degrade in all cases the value of the surplus produce of the
colony, but in many cases to discourage and keep down the natural
increase of its quantity. Of all the expedients that can well be con-
trived to stunt the natural growth of a new colony, that of an ex-
clusive company is undoubtedly the most effectual. This, however,
has been the policy of Holland, though their company, in the course
of the present century, has given up in many respects the exertion
of their exclusive privilege. This too was the policy of Denmark
till the reign of the late king. It has occasionally been the policy of
France, and of late, since 1755, after it had been abandoned by all
other nations, on account of its absurdity, it has become the policy
of Portugal with regard at least to two of the principal provinces of
Brazil, Pernambuco and Marannon.®®
Other nations, without establishing an exclusive company, have
confined the whole commerce of their colonies to a particular port
of the mother country, from whence no ship was allowed to sail,
but either in a fleet and at a particular season, or, if single, in con-
sequence of a particular licence, which in most cases 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 season, and in the proper vessels. But as
all the different merchants, who joined their stocks in order to fit
out those licensed vessels, would find it for their interest to act in
concert, the trade which was carried on in this manner would neces-
sarily be conducted very nearly upon the same principles as that of
®®Maranon in 1755 and Pernambuco four years later.— Raynal, Histoire
pklosophique, Amsterdam ed., 1773, tom. iii., p. 403.
PROSPERITY OF NEW COLONIES 543
an exclusive company. The profit of those merchants would be al-
most equally exorbitant and oppressive. The colonies would be ill
supplied, and would be obliged both to buy very dear, and to sell
very cheap. This, however, till within these few years, had al-
ways been the policy of Spain, and the price of all European goods,
accordingly, is said to have been enormous in the Spanish West
Indies. At Quito, we are told by Ulloa, a pound of iron sold for
about four and six-pence, and a pound of steel for about six and
nine-pence sterling.^® But it is chiefly in order to purchase Euro-
pean goods, that the colonies part with their own produce. The
more, therefore, they pay for the one, the less they really get for
the other, and the dearness of the one is the same thing with the
cheapness of the other. The policy of Portugal is in this respect the
same as the ancient policy of Spain, with regard to all its colonies,
except Pernambuco and Marannon, and with regard to these it has
lately adopted a still worse.
Other nations leave the trade of their colonies free to all their
subjects, who may carry it on from all the different ports of the
mother country, and who have occasion for no other licence than
the common dispatches of the customhouse. In this case the num-
ber and dispersed situation of the different traders renders it im-
possible for them to enter into any general combination, and their
competition is sufficient to hinder them from making very ex-
orbitant profits. Under so liberal a policy the colonies are enabled
both to sell their own produce and to buy the goods of Europe at a
reasonable price. But since the dissolution of the Plymouth com-
pany, when 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 so since the dissolution of what, in Eng-
land, is commonly called their Mississippi company. The profits of
the trade, therefore, which France and England carry on with their
colonies, though no doubt somewhat higher than if the competition
was free to all other nations, are, however, by no means exorbitant;
and the price of European goods accordingly is not extravagantly
high in the greater part of the colonies of either of those nations.
In the exportation of their own surplus produce too, it is only
with regard to certain commodities that the colonies of Great Brit-
ain are confined to the market of the mother country. These com-
modities having been enumerated in the act of navigation and in
Ed. I reads “This, however, has.” ®®Ed. i reads “said to be.”
®®Iron sometimes at loo ecus the quintal and steel at 150. — Juan and Ul-
loa, Voyage historique, tom. i., p. 252.
Ed. I reads “the same as that of Spain ”
but free
dom for
every
subject tc
trade
with
every
port in
the
mother
country,
and free-
dom to
export
every-
thing but
the enu-
merated
commodi-
ties to
other
places be-
sides the
mother
country.
Some
most im-
portant
produc-
tions are
not enu-
merated,
as grain,
timber,
cattle,
fish,
544 THE WEALTH OF NATIONS
some other subsequent acts, have upon that account been called
enumerated commodities?^ The rest are called non-enumerated;
and may be exported directly to other countries, provided it is in
British or Plantation ships, of which the owners and three-fourths
of the mariners are British subjects.
Among the non-enumerated commodities are some of the most
important productions of America and the West Indies; grain of all
sorts, lumber, salt provisions, fish, sugar, and rum.
Grain is naturally the first and principal object of the culture of
all new colonies. By allowing them a very extensive market for it,
the law encourages them to extend this culture much beyond the
consumption of a thinly inhabited country, and thus to provide be-
forehand an ample subsistence for a continually increasing popula-
tion.
In a country quite covered with wood, where timber conse-
quently is of little or no value, the expence of clearing the ground
is the principal obstacle to improvement. By allowing the colonies
a very extensive market for their lumber, the law endeavours to
facilitate improvement by raising the price of a commodity which
would otherwise be of little value, and thereby enabling them to
make some profit of what would otherwise be mere expence.
In a country neither half-peopled nor half cultivated, cattle
naturally multiply beyond the consumption of the inhabitants, and
are often upon that account of little or no value. But it is necessary,
it has already been shewn,^^ that the price of cattle should bear a
certain proportion to that of corn before the greater part of the
lands of any country can be improved. By allowing to American
cattle, in all shapes, dead and alive, a very extensive market, the
law endeavours to raise the value of a commodity of which the high
price is so very essential to improvement. The good effects of this
liberty, however, must be somewhat diminished by the 4th of
George III. c. 15. which puts hides and skins among the enum-
erated commodities, and thereby tends to reduce the value of Amer-
ican cattle.
To increase the shipping and naval power of Great Britain, by
the extension of the fisheries of our colonies, is an object which the
legislature seems to have had almost constantly in view. Those
fisheries, upon this account, have had all the encouragement which
freedom can give them, and they have flourished accordingly. The
New England fishery in particular was, before the late disturb-
®®The commodities originally enumerated in 12 Car. II., c. 18, § 18, were
sugar, tobacco-cotton-wool, indigo, ginger, fustic and other dyeing woods.
Above, pp. 148, 149, 219-221. " See above, p. 540, note 30.
PROSPERITY OF NEW COLONIES 545
ances, one of the most important, perhaps, in the world. The whale-
fishery which, notwithstanding an extravagant bounty, is in Great
Britain carried on to so little purpose, 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. Fish is one of the principal articles
with which the North Americans trade to Spain, Portugal, and the
Mediterranean.
Sugar was originally an enumerated commodity which could be
exported only to Great Britain. But in 1731, upon a representation
of the sugar-planters, its exportation was permitted to all parts of
the world.*^^ The restrictions,^^ however, with which this liberty
was granted, joined to the high price of sugar in Great Britain,
have rendered it, in a great measure, ineffectual. Great Britain and
her colonies still continue to be almost the sole market for all the
sugar produced in the British plantations. Their consumption in-
creases so fast, that, though in consequence of the increasing im-
provement of Jamaica, as well as of the Ceded Islands,^^ the im-
portation of sugar has increased very greatly within these twenty
years, the exportation to foreign countries is said to be not much
greater than before.
Rum is a very important article in the trade which the Ameri-
cans carry on to the coast of Africa, from which they bring back
negroe slaves in return.
If the whole surplus produce of America in grain of all sorts, in
salt provisions, and in fish, 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 industry of our own
people. It was probably not so much from any regard to the in-
terest of America, as from a jealousy of this interference, that those
important commodities have not only been kept out of the enum-
eration, but that the importation into Great Britain of all grain,
except rice, and of salt provisions, has, in the ordinary state of the
law, been prohibited.
The non-enumerated commodities could originally be exported
to all parts of the world. Lumber and rice, having been once put
There seems to be some mistake here. The true date is apparently 1739,
under the Act 12 Geo. IL, c. 30.
Ships not going to places south of Cape Finisterre were compelled to call
at some port in Great Britain.
Gamier, in his note to this passage, tom. iii., p. 323, points out that the
islands ceded by the peace of Paris in 1763 were only Grenada and the Gren-
adines, but that the term here includes the other islands won during the war,
St. Vincent, Dominica and Tobago, which are mentioned below, p. 895.
sugar,
and rum.
Grain,
meat and
fish
would
have
competed
too
strongly
with Brit-
ish pro-
duce if
forced
into the
British
market.
Originally
non-enu-
merated
commodi-
ties could
be export-
ed to any
part of
the world
Recently
they have
been con-
fined to
countries
south of
Cape
Finisterre.
The enu-
merated
commodi-
ties are
(i) com-
modities
not pro-
duced at
all in the
mother
country,
and (2)
commodi-
ties of
which
only a
small part
of the
supply is
produced
in the
mother
country.
On the
importa-
546 the wealth of nations
into the enumeration, when they were afterwards taken out of it,
were confined, as to the European market, to the countries that
lie south of Cape Finisterre.*^^ By the 6th of George III. c. 52. all
non-enumerated commodities were subjected to the like restriction.
The parts of Europe which lie south of Cape Finisterre, are not
manufacturing countries, and we were less jealous of the colony
ships carrying home from them any manufactures which could
interfere with our own.
The enumerated commodities are of two sorts: first, such as are
either the peculiar produce of America, or as cannot be produced,
or at least are not produced, in the mother country. Of this kind
are, molasses, coffee, cacao-nuts, tobacco, pimento, ginger, whale-
fins, raw silk, cotton-wool, beaver, and other peltry of America,
indigo, fustic, and other dying woods: secondly, such as are not the
peculiar produce of America, but which are and may be produced
in the mother country, though not in such quantities as to supply
the greater part of her demand, which is principally supplied from
foreign countries. Of this kind are all naval stores, masts, yards,
and bowsprits, tar, pitch, and turpentine, pig and bar iron, copper
ore, hides and skins, pot and pearl ashes. The largest importation
of commodities of the first kind could not discourage the growth
or interfere with the sale of any part of the produce of the mother
country. By confining them to the home market, our merchants,
it was expected, would not only be enabled to buy them cheaper in
the Plantations, and consequently to sell them with a better profit
at home, but to establish between the Plantations and foreign coun-
tries an advantageous carrying trade, of which Great Britain was
necessarily to be the center or emporium, as the European country
into which those commodities were first to be imported. The im-
portation of commodities of the second kind might be so managed
too, it was supposed, as to interfere, not with the sale of those of
the same kind which were produced at home, but with that of those
which were imported from foreign countries; because, by means of
proper duties, they might be rendered always somewhat dearer
than the former, and yet^a good deal cheaper than the latter. By
confining such commodities to the home market, therefore, it was
proposed to discourage the produce, not of Great Britain, but of
some foreign countries with which the balance of trade was believed
to be unfavourable to Great Britain.
The prohibition of exporting from the colonies, to any other
cpuntry but Great Britain, masts, yards, and bowsprits, tar, pitch,
I
Rice was put in by 3 and 4 Ann, c. 5, and taken out by 3 Geo. II , c. 28 ;
timber was taken out by 3 Geo. III., c. 45.
PROSPERITY OF NEW COLONIES 547
and turpentine, naturally tended to lower the price of timber in the
colonies, and consequently to increase the expence of clearing their
lands, the principal obstacle to their improvement. But about the
beginning of the present century, in 1703, the pitch and tar com-
pany of Sweden endeavoured to raise the price of their commodi-
ties to Great Britain, by prohibiting their exportation, except in
their own ships, at their own price, and in such quantities as they
thought proper In order to counteract this notable piece of mer-
cantile policy, and to render herself as much as possible independ-
ent, not only of Sweden, but of all the other northern powers,
Great Britain gave a bounty upon the importation of naval stores
from America^® and the effect of this bounty was to raise the
price of timber in America, much more than the confinement to the
home market could lower it; and as both regulations were enacted
at the same time, their joint effect was rather to encourage than to
discourage the clearing of land in America.
Though pig and bar iron too have been put among the enumer-
ated commodities, yet as, when imported from America, they are
exempted from considerable duties to which they are subject when
imported from any other country, the one part of the regulation
contributes more to encourage the erection of furnaces in America,
than the other to discourage it. There is no manufacture which oc-
casions so great a consumption of wood as a furnace, or which can
contribute so much to the clearing of a country over-grown with it.
The tendency of some of these regulations to raise the value of
timber in America, and thereby to faciliate the clearing of the land,
was neither, perhaps, intended nor understood by the legislature.
Though their beneficial effects, however, have been in this respect
accidental, they have not upon that account been less real.
The most perfect freedom of trade is permitted between the Brit-
ish colonies of America and the West Indies, both in the enumer-
ated and in the non-enumerated commodities. Those colonies are
now become so populous and thriving, that each of them finds in
some of the others a great and extensive 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 col-
onies has been confined chiefly to what concerns the market for
their produce, either in its rude state, or in what may be called the
very first stage of manufacture. The more advanced or more re-
^ Anderson, Commerce, a.d. 1703
Details arc given below, pp. 609, 610, in a chapter not contained in eds.
I and 2.
23 Geo. IL, c. 29.
tion of
naval
stores to
Great
Britain a
bounty
was given.
American
pig iron is
exempt
from
duty.
These
regula-
tions have
raised the
value of
timber
and thus
helped to
clear the
country.
Freedom
of trade
prevails
between
the Brit-
ish Amer-
ican colo-
nies and
the Brit-
ish West
Indies.
British
liberality
does not
extend to
refined
manufac-
tures.
Manufac-
tured
sugar is
subject to
heavy
duty.
Steel fur-
naces and
slit-mills
may not
be erected
in the
colonies.
Hats,
wools
and wool-
len goods
produced
in Amer-
ica may
not be
54S the wealth of nations
fined manufactures even of the colony produce, the merchants and
manufactures of Great Britain chuse to reserve to themselves, and
have prevailed upon the legislature to prevent their establishment
in the colonies, sometimes by high duties, and sometimes by abso-
lute prohibitions.
While, for example, Muskovado sugars from the British planta-
tions, pay upon importation only 6 s. ^d. the hundred weight; white
sugars pay il. is. id.\ and refined, either double or single, in loaves
4^. 2^. 5^^. When those high duties were imposed. Great Britain
was the sole, and she still continues to be the principal market to
which the sugars of the British colonies could be exported. They
amounted, therefore, to a prohibition, at first of claying or refining
sugar for any foreign market, and at present of claying or refining
it for the market, which takes off, perhaps, more than nine-tenths
of the whole produce. The manufacture of claying or refining su-
gar accordingly, though it has flourished in all the sugar colonies
of France, has been little cultivated in any of those of England,
except for the market of the colonies themselves. While Grenada
was in the hands of the French, there was a refinery of sugar, by
claying at least, upon almost every plantation. Since it fell into
those of the English, almost all works of this kind have been given
up, and there are at present, October 1773 , 1 am assured, not above
two or three remaining in the island. At present, however, by an
indulgence of the custom-house, clayed or refined sugar, if reduced
from loaves into powder, is commonly imported as Muskovado.
While Great Britain encourages in America the manufactures of
pig and bar iron, by exempting them from duties to which the like
commodities are subject when imported from any other country,
she imposes an absolute prohibition upon the erection of steel fur-
naces and slit-mills in any of her American plantations.^^ She will
not suffer her colonists to work in those more refined manufactures
even for their own consumption; but insists upon their purchasing
of her merchants and manufacturers all goods of this kind which
they have occasion for.
She prohibits the exportation from one province to another by
water, and even the carriage by land upon horseback or in a cart,
of hats, of wools and woollen goods, of the produce of America;
a regulation which effectually prevents the establishment of any
manufacture of such commodities for distant sale, and confines the
industry of her colonists in this way to such coarse and household
^ 23 Geo. II,, c. 29. Anderson, Commerce j a.d. 1750.
“Hats under 5 Geo. IL, c. 22; wools under 10 and ii W. III., c. 10. See
Anderson, Commerce^ a.d. 1732 and 1699.
PROSPERITY OF NEW COLONIES 549
manufactures, as a private family commonly makes for its own
use, or for that of some of its neighbours in the same province.
To prohibit a great people, however, from making all that they
can of every part of their own produce, or from employing their
stock and industry in the way that they judge most advantageous
to themselves, is a manifest violation of the most sacred rights of
mankind. Unjust, however, as such prohibitions may be, they have
not hitherto been very hurtful to the colonies. Land is still so cheap,
and, consequently, labour so dear among them, that they can im-
port from the mother country, almost all the more refined or more
advanced manufactures cheaper than they could make them for
themselves. Though they had not, therefore, been prohibited from
establishing such manufactures, yet in their present state of im-
provement, a regard to their own interest would, probably, have
prevented them from doing so. In their present state of improve-
ment, those prohibitions, perhaps, without cramping their industry,
or restraining it from any employment to which it would have gone
of its own accord, are only impertinent badges of slavery imposed
upon them, without any sufficient reason, by the groundless jeal-
ousy of the merchants and manufacturers of the mother country.
In a more advanced state they might be really oppressive and in-
supportable.
Great Britain too, as she confines to her own market some of the
most important productions of the colonies, so in compensation she
gives to some of them an advantage in that market; sometimes by
imposing higher duties upon the like productions when imported
from other countries, and sometimes by giving bounties upon their
importation from the colonies. In the first way she gives an ad-
vantage in the home-market to the sugar, tobacco, and iron of her
own colonies, and in the second to their raw silk, to their hemp and
flax, to their indigo, to their naval-stores, and to their building-tim-
ber.^^ This second way of encouraging the colony produce by boun-
ties upon importation, is, so far as I have been able to learn, pecu-
liar to Great Britain. The first is not. Portugal does not content her-
self with imposing higher duties upon the importation of tobacco
from any other country, but prohibits it under the severest penal-
ties.
With regard to the importation of goods from Europe, England
has likewise dealt more liberally with her colonies than any other
nation.
Great Britain allows a part, almost always the half, generally a
Details are given below, pp. 609-612, in a chapter which was not in eds.
I and 2.
carried in
bulk from
province
to pro-
vince.
Such pro-
hibitions,
though a
violation
of sacred
rights,
have not
as yet
been very
hurtful.
The im-
portation
into '
Great
Britain of
various
colonial
produc-
tions is
encour-
aged
either by
abate-
ment of
duties or
by
bounties.
In regard
to im-
ports
from
Europe
the Brit-
ish colo-
nies have
had more
liberal
treatment
than
those of
other
countries,
draw-
backs be-
ing al-
lowed,
owing to
the advice
of inter-
ested
mer-
chants.
550 THE WEALTH OF NATIONS
larger portion, and sometimes the whole of the duty which is paid
upon the importation of foreign goods, to be drawn back upon
their exportation to any foreign country.®^ No independent foreign
country, it was easy to foresee, would receive them if they came to
it loaded with the heavy duties to which almost all foreign goods
are subjected on their importation into Great Britain. Unless,
therefore, some part of those duties was drawn back upon exporta-
tion, there was an end of the carrying trade; a trade so much fa-
voured by the mercantile system.
Our colonies, however, are by no means independent foreign
countries; and Great Britain having assumed to herself the exclu-
sive right of supplying them with all goods from Europe, might
have forced them (in the same manner as other countries have done
their colonies) to receive such goods, loaded with all the same du-
ties which they paid in the mother country. But, on the contrary,
till 1763, the same drawbacks were paid upon the exportation of
the greater part of foreign goods to our colonies as to any independ-
ent foreign country. In 1763, indeed, by the 4th of Geo. III. c. 15.
this indulgence was a good deal abated, and it was enacted, “That
no part of the duty called the old subsidy should be drawn back
for any goods of the growth, production, or manufacture of Eu-
rope or the East Indies, which should be exported from this king-
dom to any British colony or plantation in America; wines, white
callicoes and muslins excepted.” Before this law, many different
sorts of foreign goods might have been bought cheaper in the plan-
tations than in the mother country; and some may still.
Of the greater part of the regulations concerning the colony
trade, the merchants who carry it on, it must be observed, have
been the principal advisers. We must not wonder, therefore, if, in
the greater part of them, their interest has been more considered
than either that of the colonies or that of the mother country. In
their exclusive privilege of supplying the colonies with all the goods
which they wanted from Europe, and of purchasing all such parts
of their surplus produce as could not interfere with any of the
trades which they themselves carried on at home, the interest of
the colonies was sacrificed to the interest of those merchants. In
allowing the same drawbacks upon the re-exportation of the greater
part of European and East India goods to the colonies, as upon
their re-exportation to any independent country, the interest of the
mother country was sacrificed to it, even according to the mercan-
“ Above, pp. 466-470
The quotation is not quite verbatim. The provision is referred to above,
p. 470, where, however, see note.
PROSPERITY OF NEW COLONIES 55i
tile ideas of that interest. It was for the interest of the merchants
to pay as little as possible for the foreign goods which they sent to
the colonies, and consequently, to get back as much as possible of
the duties which they advanced upon their importation into Great
Britain. They might thereby be enabled to sell in the colonies,
either the same quantity of goods with a greater profit, or a greater
quantity with the same profit, and, consequently, to gain some-
thing either in the one way or the other. It was, likewise, for the
interest of the colonies to get all such goods as cheap and in as
great abundance as possible. But this might not always be for the
interest of the mother country. She might frequently suffer both in
her revenue, by giving back a great part of the duties which had
been paid upon the importation of such goods; and m her manufac-
tures, by being undersold in the colony market, in consequence of
the easy terms upon which foreign manufactures could be carried
thither by means of those drawbacks. The progress of the linen
manufacture of Great Britain, it is commonly said, has been a good
deal retarded by the drawbacks upon the re-exportation of Ger-
man linen to the American colonies.
But though the policy of Great Britain with regard to the trade
of her colonies has been dictated by the same mercantile spirit as
that of other nations, it has, however, upon the whole, been less
illiberal and oppressive than that of any of them.
In every thing, except their foreign trade, the liberty of the Eng-
lish colonists to manage their own affairs their own way is com-
plete. It is in every respect equal to that of their fellow-citizens at
home, and is secured in the same manner, by an assembly of the
representatives of the people, who claim the sole right of imposing
taxes for the support of the colony government. The authority of
this assembly over-awes the executive power, and neither the mean-
est nor the most obnoxious colonist, as long as he obeys the law,
has any thing to fear from the resentment, either of the governor,
or of any other civil or military officer in the province. The colony
assemblies, though like the house of commons in England, they
are not always a very equal representation of the people, yet they
approach more nearly to that character; and^® as the executive
power either has not the means to corrupt them, or, on account of
the support which it receives from the mother country, is not under
the necessity of doing so, they are perhaps in general more influ-
enced by the inclinations of their constituents. The councils, which,
in the colony legislatures, correspond to the house of lords in
®*Ed. I does not contain the words “they approach more nearly to that
character; and.”
Except in
regard to
foreign
trade the
English
colonies
have
complete
liberty.
552
The abso-
lute gov-
ernments
of Spain,
of Portu-
gal, and
in a less
degree of
France,
are even
more vio-
lent in the
colonies
than at
home.
THE WEALTH OF NATIONS
Great Britain, are not composed of an hereditary nobility. In some
of the colonies, as in three of the governments of New England,
those councils are not appointed by the king, but chosen by the rep-
resentatives of the people. In none of the English colonies is there
any hereditary nobility. In all of them, indeed, as in all other free
countries, the descendant of an old colony family is more respected
than an upstart of equal merit and fortune: but he is only more
respected, and he has no privileges by which he can be trouble-
some to his neighbours. Before the commencement of the present
disturbances, the colony assemblies had not only the legislative,
but a part of the executive power. In Connecticut and Rhode Is-
land, they elected the governor.^^ In the other colonies they ap-
pointed the revenue officers who collected the taxes imposed by
those respective assemblies, to whom those officers were immedi-
ately responsible. There is more equality, therefore, among the
English colonists than among the inhabitants of the mother coun-
try. Their manners are more republican, and their governments,
those of three of the provinces of New England in particular, have
hitherto been more republican too.
The absolute governments of Spain, Portugal, and France, on
the contrary, take place in their colonies; and the discretionary
powers which such governments commonly delegate to all their in-
jEerior officers are, on account of the great distance, naturally exer-
cised there with more than ordinary violence. Under all absolute
governments there is more liberty in the capital than in any other
part of the country. The sovereign himself can never have either
interest or inclination to pervert the order of justice, or to oppress
the great body of the people. In the capital his presence over-awes
more or less all his inferior officers, who in the remoter provinces,
from whence the complaints of the people are less likely to reach
him, can exercise their tyranny with much more safety. But the
European colonies in America are more remote than the most dis-
tant provinces of the greatest empires which had ever been known
before. The government of the English colonies is perhaps the only
one which, sincelhe world began, could give perfect security to the
inhabitants of so very distant a province. The administration of
the French colonies, however, has always been conducted with more
gentleness and moderation than that of the Spanish and Portu-
guese. This superiority of conduct is suitable both to the character
“The Board of Trade and Plantations, in a report to the House of Com-
mons in 1732, insisted on this democratic character of the government of some
of the colonies, and mentioned the election of governor by Connecticut and
Rhode Island: the report is quoted in Anderson, Commerce, a.d. 1732.
PROSPERITY OF NEW COLONIES 553
of the French nation, and to what forms the character of every na-
tion, the nature of their government, which, though arbitrary and
violent in comparison with that of Great Britain, is legal and free
in comparison with those of Spain and Portugal.
It is in the progress of the North American colonies, however,
that the superiority of the English policy chiefly appears. The
progress of the sugar colonies of France has been at least equal,
perhaps superior, to that of the greater part of those of England;
and yet the sugar colonies of England enjoy a free government
nearly of the same kind with that which takes place in her colonies
of North America. But the sugar colonies of France are not dis-
couraged, like those of England, from refining their own sugar;
and, what is of still greater importance, the genius of their govern-
ment naturally introduces a better management of their negro
slaves.
In all European colonies the culture of the sugar-cane is carried
on by negro slaves. The constitution of those who have been born
in the temperate climate of Europe could not, it is supposed, sup-
port the labour of digging the ground under the burning sun of the
West Indies; and the culture of the sugar-cane, as it is managed at
present, is all hand labour, though, in the opinion of many, the drill
plough might be introduced into it with great advantage. But, as
the profit and success of the cultivation which is carried on by
means of cattle, depend very much upon the good management of
those cattle; so the profit and-success of that which is carried on by
slaves, must depend equally upon the good management of those
slaves; and in the good management of their slaves the French
planters, I think it is generally allowed, are superior to the English.
The law, so far as it gives some weak protection to the slave against
the violence of his master, is likely to be better executed in a colony
where the government is in a great measure arbitrary, than in one
where it is altogether free. In every country where the unfortunate
law of slavery is established, the magistrate, when he protects the
slave, intermeddles in some measure in the management of the
private property of the master; and, in a free country, where the
master is perhaps either a member of the colony assembly, or an
elector of such a member, he dare not do this but with the greatest
caution and circumspection. The respect which he is obliged to pay
to the master, renders it more difficult for him to protect the slave.
But in a country where the government is in a great measure arbi-
trary, where it is usual for the magistrate to intermeddle even in
the management of the private property of individuals, and to send
them, perhaps, a lettre de cachet if they do not manage it according
The sugar
colonies
of France
are more
prosper-
ous than
the Eng-
lish be-
cause they
are not
discour-
aged from
refining,
and slaves
are better
managed,
absolute
govern-
ment be-
ing more
favour-
able to
the slaves
than re-
publican,
as may be
seen in
Roman
history.
The su-
periority
of the
French
sugar
colonies is
the more
remark-
able inas-
much as
they have
accumu-
lated their
own
stock.
554 THE WEALTH OF NATIONS
to his liking, it is much easier for him to give some protection to the
slave; and common humanity naturally disposes him to do so. The
protection of the magistrate renders the slave less contemptible in
the eyes of his master, who is thereby induced to consider him with
more regard, and to treat him with more gentleness. Gentle usage
renders the slave not only more faithful, but more intelligent, and
therefore, upon a double account, more useful. He approaches more
to the condition of a free servant, and may possess some degree of
integrity and attachment to his master’s interest, virtues which fre-
quently belong to free servants, but which never can belong to a
slave, who is treated as slaves commonly are in countries where the
master is perfectly free and secure.
That the condition of a slave is better under an arbitrary than
under a free government, is, I believe, supported by the history of
all ages and nations. In the Roman history, the first time we read
of the magistrate interposing to protect the slave from the violence
of his master, is under the emperors. When Vedius Pollio, in the
presence of Augustus, ordered one of his slaves, who had commit-
ted a slight fault, to be cut into pieces and thrown into his fish-pond
in order to feed his fishes, the emperor commanded him, with indig-
nation, to emancipate immediately, not only that slave, but all the
others that belonged to him.^'’^ Under the republic no magistrate
could have had authority enough to protect the slave, much less to
punish the master.
The stock, it is to be observed, which has improved the sugar
colonies of France, particularly the great colony of St. Domingo,
has been raised almost entirely from the gradual improvement and
cultivation of those colonies. It has been almost altogether the pro-
duce of the soil and of the industry of the colonists, or, what
comes to the same thing, the price of that produce gradually accu-
mulated by good management, and employed in raising a still
greater produce. But the stock which has improved and cultivated
the sugar colonies of England has, a great part of it, been sent out
from England, and has by no means been altogether the produce of
the soil and industry of the colonists.''*'^ The prosperity of the Eng-
^ “ The story is told in the same way in Lectures, p. 97, but Seneca, De ira,
lib. iii., cap. 40, and Dio Cassius, Hist., lib. liv., cap. 23, say, not that Augustus
ordered all the slaves to be emancipated, but that he ordered all the goblets
on the table to be broken. Seneca says the offending slave was emancipated.
Dio does not mention emancipation.
“ Ed. I reads “and ihdustry.”
“’^The West India merchants and planters asserted, in 1775, that there was
capital worth £60,000,000 in the sugar colonies and that half of this belonged
to residents in Great Britain.— See the Continuation of Anderson’s Commerce,
A.D. 1775.
PROSPERITY OF NEW COLONIES 555
lish sugar colonies has been, in a great measure, owing to the great
riches of England, of which a part has overflowed, if one may say
so, upon those colonies. But the prosperity of the sugar colonies of
France has been entirely owing to the good conduct of the colonists,
which must therefore have had some superiority over that of the
English; and this superiority has been remarked in nothing so
much as in the good management of their slaves.
Such have been the general outlines of the policy of the different
European nations with regard to their colonies.
The policy of Europe, therefore, has very little to boast of,
either in the original establishment, or, so far as concerns their in-
ternal government,®® in the subsequent prosperity of the colonies
of America.
Folly and injustice seem to have been the principles which pre-
sided over and directed the first project of establishing those col-
onies; the folly of hunting after gold and silver mines, and the in-
justice of coveting the possession of a country whose harmless na-
tives, far from having ever injured the people of Europe, had re-
ceived the first adventurers with every mark of kindness and hos-
pitality.
The adventurers, indeed, who formed some of the latter estab-
lishments, joined, to the chimerical project of finding gold and sil-
ver mines, other motives more reasonable and more laudable; but
even these motives do very little honour to the policy of Europe.
The English puritans, restrained at home, fled for freedom to
America, and established there the four governments of New Eng-
land. The English catholics, treated with much greater injustice,®®
established that of Maryland; the Quakers, that of Pennsylvania.
The Portugueze Jews, persecuted by the inquisition, stript of their
fortunes, and banished to Brazil, introduced, by their example,
some sort of order and industry among the transported felons and
strumpets, by whom that colony was originally peopled, and taught
them the culture of the sugar-cane.®^ Upon all these different oc-
casions it was, not the wisdom and policy, but the disorder and in-
justice of the European governments, which peopled and cultivated
America.
In effectuating some of the most important of these establish-
ments, the different governments of Europe had as little merit as
in projecting them. The conquest of Mexico was the project, not of
^ Eds. I and 2 do not contain the words “so far as concerns their internal
government.”
“ Ed. I reads “persecuted.” Ed. i reads “with equal injustice ”
“^Raynal, Histoire philosophique, Amsterdam ed., 1773, tom. iii., pp. 323,
324, 326, 327. Justamond’s English trans., vol. ii., p. 442.
The
policy of
Europe
has done
nothing
for the
prosperity
of the
colonies.
Folly and
injustice
directed
the first
project.
The more
respect-
able ad-
venturers
of later
times
were sent
out by
the dis-
order and
injustice
of Euro-
pean gov-
ernments.
To the ac-
tual
establish-
ment of
the colo-
nies the
govern-
ments of
Europe
contribut-
ed little,
and dis-
couraged
rather
than en-
couraged
them
after they
were
estab-
lished.
Europe
has done
nothing
except
provide
the men
who
founded
the colo-
nies.
556 XHE WEALTH OF NATIONS
the council of Spain, but of a governor of Cuba; and it was ef-
fectuated by the spirit of the bold adventurer to whom it was en-
trusted, in spite of every thing which that governor, who soon re-
pented of having trusted such a person, could do to thwart it. The
conquerors of Chili and Peru, and of almost all the other Spanish
settlements upon the continent of America, carried out with them
no other public encouragement, but a general permission to make
settlements and conquests in the name of the king of Spain. Those
adventures were all at the private risk and expence of the adventur-
ers. The government of Spain contributed scarce any thing to any
of them. That of England contributed as little towards effectuating
the establishment of some of its most important colonies in North
America.
When those establishments were effectuated, and had become so
considerable as to attract the attention of the mother country, the
first regulations which she made with regard to them had always in
view to secure to herself the monopoly of their commerce; to con-
fine their market, and to enlarge her own at their expence, and,
consequently, rather to damp and discourage, than to quicken and
forward the course of their prosperity. In the different ways in
which this monopoly has been exercised, consists one of the most
essential differences in the policy of the different European nations
with regard to their colonies. The best of them all, that of England,
is only somewhat less illiberal and oppressive than that of any of
the rest.
In what way, therefore, has the policy of Europe contributed
either to the first establishment, or to the present grandeur of the
colonies of America? In one way, and in one way only, it has con-
tributed a good deal. Magna virum Mater! It bred and formed
the men who were capable of atchieving such great actions, and of
laying the foundation of so great an empire; and there is no other
quarter of the world of which the policy is capable of forming, or
has ever actually and in fact formed such men. The colonies owe
to the policy of Europe the education and great views of their ac-
tive and enterprising founders; and some of the greatest and most
important of them, so far as concerns their internal government,^^
owe to it scarce any thing else.
“Velasquez. “Cortez.
"'“Salve magna parens frugum, Saturnia tellus, Magna virum.”--VirgiI,
ii., 173-174.
® Eds. I and 2 do not contain the words “so far as concerns their internal
government.” Cp. above, p. 555, note 58.
AMERICA AND EAST INDIES 557
Part Third
Of the Advantages which Europe has derived from the Discovery
of America f and from that of a Passage to the East Indies by
the Cape of Good Hope
Such are the advantages which the colonies of America have de-
rived from the policy of Europe,
What are those which Europe has derived from the discovery and
colonization of America?
Those advantages may be divided, first, into the general ad-
vantages which Europe, considered as one great country, has de-
rived from those great events; and, secondly, into the particular
advantages which each colonizing country has derived from the
colonies which particularly belong to it, in consequence of the au-
thority or dominion which it exercises over them.
The general advantages which Europe, considered as one great
country, has derived from the discovery and colonization of Amer-
ica, consists, first, in the increase of its enjoyments; and secondly,
in the augmentation of its industry.
The surplus produce of America, imported into Europe, furn-
ishes the inhabitants of this great continent with a variety of com-
modities which they could not otherwise have possessed, some for
conveniency and use, some for pleasure, and some for ornament,
and thereby contributes to increase their enjoyments.
The discovery and colonization of America, it will readily be al-
lowed, have contributed to augment the industry, first, of all the
countries which trade to it directly; such as Spain, Portugal,
France, and England; and, secondly, of all those which, without
trading to it directly, send, through the medium of other countries,
goods to it of their own produce; such as Austrian Flanders, and
some provinces of Germany, which, through the medium of the
countries before mentioned, send to it a considerable quantity of
linen and other goods. All such countries have evidently gained a
more extensive market for their surplus produce, and must con-
sequently have been encouraged to increase its quantity.
But, that those great events should likewise have contributed to
encourage the industry of countries, such as Hungary and Poland,
which may never, perhaps, have sent a single commodity of their
own produce to America, is not, perhaps, altogether so evident.
That those events have doiH^ so, however, cannot be doubted.
The ad-
vantages
derived
by
Europe
from
America
are (i)
the ad-
vantages
of Europe
in general,
and ( 2 )
the ad-
vantages
of the
particular
countries
which
have colo-
nies.
(i) The
general
advan-
tages to
Europe
are,
(a) an in-
crease of
enjoy-
ments,
(&) an
aug-
mentation
of indus-
try not
only in
the coun-
tries
which
trade
with
America
directly,
but also
in other
countries
which do
not send
their pro-
duce to
America,
or even
receive
any pro-
duce from
America.
The ex-
clusive
trade of
the
mother
countries
reduces
the en-
joyments
and in-
5S8 THE WEALTH OF NATIONS
Some part of the produce of America is consumed in Hungary and
Poland, and there is some demand there for the sugar, chocolate,
and tobacco, of that new quarter of the world. But those commodi-
ties must be purchased with something which is either the produce
of the industry of Hungary and Poland, or with something which
had been pur(±ased with some part of that produce. Those com-
modities of America are new values, new equivalents, introduced
into Hungary and Poland to be exchanged there for the surplus
produce of those countries. By being carried thither they create a
new and more extensive market for that surplus produce. They
raise its value, and thereby contribute to encourage its increase.
Though no part of it may ever be carried to America, it may be
carried to other countries which purchase it with a part of their
share of the surplus produce of America; and it may find a market
by means of the circulation of that trade which was originally put
into motion by the surplus produce of America.
Those great events may even have contributed to increase the
enjoyments, and to augment the industry of countries which, not
only never sent any commodities to America, but never received
any from it. Even such countries may have received a greater
abundance of other commodities from countries of which the sur-
plus produce had been augmented by means of the American trade.
This greater abundance, as it must necessarily have increased their
enjoyments, so it must likewise have augmented their industry. A
greater number of new equivalents of some kind or other must have
been presented to them to be exchanged for the surplus produce of
that industry. A more extensive market must have been created for
that surplus produce, so as to raise its value, and thereby encour-
age its increase. The mass of commodities annually thrown into the
great circle of European commerce, and by its various revolutions
annually distributed among all the different nations comprehended
within it, must have been augmented by the whole surplus produce
of America. A greater share of this greater mass, therefore, is likely
to have fallen to each of those nations, to have increased their en-
joyments, and augmented their industry.
The exclusive trade of the mother countries tends to diminish,
or, at least, to keep down below what they would otherwise rise to,
both the enjoymei^ts and industry of all those nations in general,
and of the American colonies in particular. It is a dead weight up-
on the action of one of the great springs which puts into motion a
great part of the business of mankind. By rendering the colony
produce dearer in all other countries, it lessens its consumption,
and thereby cramps the industry of the colonies, and both the en-
AMERICA AND EAST INDIES 559
jo3nnents and the industry of all other countries, which both enjoy
less when they pay more for what they enjoy, and produce less
when they get less for what they produce. By rendering the prod-
uce of all other countries dearer in the colonies, it cramps, in the
same manner, the industry of all other countries, and both the en-
joyments and the industry of the colonies. It is a clog which, for
the supposed benefit of some particular countries, embarrasses the
pleasures, and encumbers the industry of all other countries; but
of the colonies more than of any other. It not only excludes, as
much as possible, all other countries from one particular market;
but it confines, as much as possible, the colonies to one particular
market: and the difference is very great between being excluded
from one particular market, when all others are open, and being
confined to one particular market, when all others are shut up.
The surplus produce of the colonies, however, is the original source
of all that increase of enjoyments and industry which Europe de-
rives from the discovery and colonization of America; and the ex-
clusive trade of the mother countries tends to render this source
much less abundant than it otherwise would be.
The particular advantages which each colonizing country de-
rives from the colonies which particularly belong to it, are of two
different kinds; first, those common advantages which every em-
pire derives from the provinces subject to its dominion; and, sec-
ondly, those peculiar advantages which are supposed to result from
provinces of so very peculiar a nature as the European colonies of
America.
The common advantages which every empire derives from the
provinces subject to its dominion, consist, first, in the military
force which they furnish for its defence; and, secondly, in the rev-
enue which they furnish for the support of its civil government.
The Roman colonies furnished occasionally both the one and the
other. The Greek colonies, sometimes, furnished a military force;
but seldom any revenue.®'^ They seldom acknowledged themselves
subject to the dominion of the mother city. They were generally
her allies in war, but very seldom her subjects in peace.
The European colonies of America have never yet furnished any
military force for the defence of the mother country. Their military
force has never yet been sufficient for their own defence; and in the
different wars in which the mother countries have been engaged,
“Not” appeals first in ed. 3 and seems to have been inserted in error The
other countries are only excluded from a particular market, but the colonies
are confined to one
There is an example of revenue being furnished in Xenophon, Anahit V.,
V., 7, 10.
dustry of
aU
Europe
and
America,
especially
the latter.
(3) The
particular
advan-
tages of
the colo-
nising
countries
are (a)
the com-
mon ad-
vantages
derived
from
provinces,
(h) the
peculiar
advan-
tages
derived
from
provinces
in
America:
(a) the
common
advan-
tagesare
contribu-
tions of
military
forces and
revenue,
but none
of the
colonies
have ever
furnished
military
force,
and the
colonies
of Spain
and Por-
tugal
alone
have con-
tributed
revenue.
(6) the
exclusive
trade is
the sole
peculiar
advan-
tage.
The ex-
clusive
trade of
each
country is
a disad-
vantage
to the
other
countries,
560 XHE WEALTH OF NATIONS
the defence of their colonies has generally occasioned a very con-
siderable distraction of the military force of those countries. In
this respect, therefore, all the European colonies have, without ex-
ception, been a cause rather of weakness than of strength to their
respective mother countries.
The colonies of Spain and Portugal only have contributed any
revenue towards the defence of the mother country, or the support
of her civil government.®® The taxes which have been levied upon
those of other European nations, upon those of England in par-
ticular, have seldom been equal to the expence laid out upon them
in time of peace, and never sufficient to defray that which they oc-
casioned in time of war. Such colonies, therefore, have been a
source of expence and not of revenue to their respective mother
countries.
The advantages of such colonies to their respective mother coun-
tries, consist altogether in those peculiar advantages which are sup-
posed to result from provinces of so very peculiar a nature as the
European colonies of America; and the exclusive trade, it is ac-
knowledged, is the sole source of all those peculiar advantages.
In consequence of this exclusive trade, all that part of the surplus
produce of the English colonies, for example, which consists in what
are called enumerated commodities,®® can be sent to no other coun-
try but England, Other countries must afterwards buy it of her. It
must be cheaper therefore in England than it can be in any other
country, and must contribute more to increase the enjoyments of
England than those of any other country. It must likewise con-
tribute more to encourage her industry. For all those parts of her
own surplus produce which England exchanges for those enumer-
ated commodities, she must get a better price than any other coun-
tries can get for the like parts of theirs, when they exchange them
for the same commodities. The manufactures of England, for ex-
ample, will purchase a greater quantity of the sugar and tobacco of
her own colonies, than the like manufactures of other countries can
purchase of that sugar and tobacco. So far, therefore, as the manu-
factures of England and those of other countries are both to be ex-
changed for the sugar and tobacco of the English colonies, this su-
periority of price gives an encouragement to the former, beyond
what the latter can in these circumstances enjoy. The exclusive
trade of the colonies, therefore, as it diminishes, or, at least, keeps
down below what they would otherwise rise to, both the enjoyments
and the industry of the countries which do not possess it; so it gives
Above, p. 541.
Above, p. 544.
AMERICA AND EAST INDIES 56 i
an evident advantage to the countries which do possess it over those
other countries.
This advantage, however, will, perhaps, be found to be rather rather
what may be called a relative than an absolute advantage; and to advantage
give a superiority to the country which enjoys it, rather by depress- to that
ing the industry and produce of other countries, than by raising country,
those of that particular country above what they would naturally
rise to in the case of a free trade.
The tobacco of Maryland and Virginia, for example, by means of e,i,, Eng-
the monopoly which England enjoys of it, certainly comes cheaper
to England than it can do to France, to whom England commonly cheaper
sells a considerable part of it. But had France, and all other Euro- than
pean countries been, at all times, allowed a free trade to Maryland but n^t
and Virginia, the tobacco of those colonies might, by this time, have cheaper
come cheaper than it actually does, not only to all those other coun-
tries, but likewise to England. The produce of tobacco, in conse- ^
quence of a market so much more Extensive than any which it has were no
hitherto enjoyed, might, and probably would, by this time, have
been so much increased as to reduce the profits of a tobacco planta-
tion to their natural level with those of a corn plantation, which, it
is supposed, they are still somewhat ahoveP The price of tobacco
might, and probably would, by this time, have fallen somewhat
lower than it is at present. An equal quantity of the commodities
either of England, or of those other countries, might have pur-
chased in Maryland and Virginia a greater quantity of tobacco than
it can do at present, and, consequently, have been sold there for so
much a better price. So far as that weed, therefore, can, by its
cheapness and abundance, increase the enjoyments or augment the
industry either of England or of any other country, it would, prob-
ably, in the case of a free trade, have produced both these effects in
somewhat a greater degree than it can do at present. England, in-
deed, would not in this case have had any advantage over other
countries. She might have bought the tobacco of her colonies some-
what cheaper, and, consequently, have sold some of her own com-
modities somewhat dearer than she actually does. But she could
neither have bought the one cheaper nor sold the other dearer than
any other country might have done. She might, perhaps, have
gained an absolute, but she would certainly have lost a relative ad-
vantage.
In order, however, to obtain this relative advantage in the colony To sub-
trade, in order to execute the invidious and malignant project of ex-
eluding as much as possible other nations from any share in it, Eng- to this
Above, p. 157.
disad-
vantage
England
has made
two sac-
rifices.
The with-
drawal of
foreign
capital
from the
colony
trade
raised
profits in
it and
drew
capital
fiom ,
other
British
trades
and
thereby
raised
profits in
them,
and con-
tinues to
do so
The col-
ony trade
has in-
creased
faster
than the
whole
British
capital,
562 the wealth of nations
land, there are very probable reasons for believing, has not only sac-
rificed a part of the absolute advantage which she, as well as every
other nation, might have derived from that trade, but has subjected
herself both to an absolute and to a relative disadvantage in almost
every other branch of trade.
When, by the act of navigation,^^ England assumed to herself the
monopoly of the colony trade, the foreign capitals which had before
been employed in it were necessarily withdrawn from it. The Eng-
lish capital, which had before carried on but a part of it, was now to
carry on the whole. The capital which had before supplied the col-
onies with but a part of the goods which they wanted from Europe,
was now all that was employed to supply them with the whole. But
it could not supply them with the whole, and the goods with which
it did supply them were necessarily sold very dear. The capital
which had before bought but a part of the surplus produce of the
colonies, was now all that was employed to buy the whole. But it
could not buy the whole at any thing near the old price, and, there-
fore, whatever it did buy it necessarily bought very cheap. But in
an employment of capital in which the merchant sold very dear and
bought very cheap, the profit must have been very great, and much
above the ordinary level of profit in other branches of trade. This
superiority of profit in the colony trade could not fail to draw from
other branches of trade a part of the capital which had before been
employed in them. But this revulsion of capital, as it must have
gradually increased the competition of capitals in the colony trade,
so it must have gradually diminished that competition in all those
other branches of trade ; as it must have gradually lowered the prof-
its of the one, so it must have gradually raised those of the other,
till the profits of all came to a new level, different from and some-
what higher than that at which they had been before.
This double effect, of drawing capital from all other trades, and
of raising the rate of profit somewhat higher than it otherwise would
have been in all trades, was not only produced by this monopoly
upon its first establishment, but has continued to be produced by it
ever since.
First, this monopoly has been continually drawing capital from
all other trades to be employed in that of the colonies.
Though the wealth of Great Britain has increased very much
since the establishment of the act of navigation, it certainly has not
increased in the same proportion as that of the colonies. But the for-
eign trade of every country naturally increases in proportion to its
wealth, its surplus produce in proportion to its whole produce; and
Above, pp. 429-431
AMERICA AND EAST INDIES 563
Great Britain having engrossed to herself almost the whole of what
may be called the foreign trade of the colonies, and her capital not
having increased in the same proportion as the extent of that trade,
she could not carry it on without continually withdrawing from
other branches of trade some part of the capital which had before
been employed in them, as well as withholding from them a great
deal more which would otherwise have gone to them. Since the es-
tablishment of the act of navigation, accordingly, the colony trade
has been continually increasing, while many other branches of for-
eign trade, particularly of that to other parts of Europe, have been
continually decaying. Our manufactures for foreign sale, instead of
being suited, as before the act of navigation, to the neighbouring
market of Europe, or to the more distant one of the countries which
lie round the Mediterranean sea, have, the greater part of them,
been accommodated to the still more distant one of the colonies, to
the market in which they have the monopoly, rather than to that in
which they have many competitors. The causes of decay in other
branches of foreign trade, which, by Sir Matthew Decker, and
other writers, have been sought for in the excess and improper mode
of taxation, in the high price of labour, in the increase of luxury,
&c. may all be found in the over-growth of the colony trade. The
mercantile capital of Great Britain, though very great, yet not be-
ing infinite; and though greatly increased since the act of naviga-
tion, yet not being increased in the same proportion as the colony
trade, that trade could not possibly be carried on without withdraw-
ing some part of that capital from other branches of trade, nor con-
sequently without some decay of those other branches.
England, it must be observed, was a great trading country, her
mercantile capital was very great and likely to become still greater
and greater every day, not only before the act of navigation had es-
tablished the monopoly of the colony trade, but before that trade
was very considerable. In the Dutch war, during the government
of Cromwel, her navy was superior to that of Holland; and in that
which broke out in the beginning of the reign of Charles IL it was
at least equal, perhaps superior, to the united navies of France and
Holland. Its superiority, perhaps, would scarce appear greater in
the present times; at least if the Dutch navy was to bear the same
proportion to the Dutch commerce now which it did then. But this
great naval power could not, in either of those wars, be owing to the
act of navigation. During the first of them the plan of that act had
Essay on the Causes of the Decline of the Foreign Trade, consequently of
the Value of the Lands of Britain and on the means to restore both, 2nd ed,,
1750, pp. 28-36, et passim.
and the
colonial
monopoly
has
merely
changed
the direc-
tion of
British
trade.
The mo-
nopoly
has kept
the rate
of profit
in British
trade
higher
than it
naturally
would
have
been,
564 THE WEALTH OF NATIONS
been but just formed; and though before the breaking out of the
second it had been fully enacted by legal authority; yet no part of
it could have had time to produce any considerable effect, and least
of all that part which established the exclusive trade to the colonies.
Both the colonies and their trade were inconsiderable then in com-
parison of what they are now. The island of Jamaica was an un-
wholesome desert, little inhabited, and less cultivated. New York
and New Jersey were in the possession of the Dutch: the half of St.
Christopher’s in that of the French. The island of Antigua, the two
Carolinas, Pensylvania, Georgia, and Nova Scotia, were not plant-
ed. Virginia, Maryland, and New England were planted; and
though they were very thriving colonies, yet there was not, perhaps,
at that time, either in Europe or America, a single person who fore-
saw or even suspected the rapid progress which they have since made
in wealth, population and improvement. The island of Barbadoes,
in short, was the only British colony of any consequence of which
the condition at that time bore any resemblance to what it is at pres-
ent. The trade of the colonies, of which England, even for some lime
after the act of navigation, enjoyed but a part (for the act of navi-
gation was not very strictly executed till several years after it was
enacted), could not at that time be the cause of the great trade of
England, nor of the great naval power which was supported by that
trade. The trade which at that time supported that great naval pow-
er was the trade of Europe, and of the countries which lie round the
Mediterranean sea. But the share which Great Britain at present
enjoys of that trade could not support any such great naval power.
Had the growing trade of the colonies been left free to all nations,
whatever share of it might have fallen to Great Britain, and a very
considerable share would probably have fallen to her, must have
been all an addition to this great trade of which she was before in
possession. In consequence of the monopoly, the increase of the col-
ony trade has not so much occasioned an addition to the trade which
Great Britain had before, as a total change in its direction.
Secondly, this monopoly has necessarily contributed to keep up
the rate of profit in all the different branches of British trade higher
than it naturally would have been, had all nations been allowed a
free trade to the* British colonies.
The monopoly of the colony trade, as it necessarily drew towards
that trade a greater proportion of the capital of Great Britain than
what would have gone to it of its own accord ; so by the expulsion of
all foreign capitals it necessarily reduced the whole quantity of
capital employed in that trade below what it naturally would have
been in the case of a free trade. But, by lessening the competition of
AMERICA AND EAST INDIES S^S
capitals in that branch of trade, it necessarily raised the rate of
profit in that branch. By lessening too the competition of British
capitals in all other branches of trade, it necessarily raised the rate
of British profit in all those other branches. Whatever may have
been, at any particular period, since the establishment of the act of
navigation, the state or extent of the mercantile capital of Great
Britain, the monopoly of the colony trade must, during the contin-
uance of that state, have raised the ordinary rate of British profit
higher than it otherwise would have been both in that and in all the
other branches of British trade. If, since the establishment of the
act of navigation, the ordinary rate of British profit has fallen con-
siderably, as it certainly has, it must have fallen still lower, had not
the monopoly established by that act contributed to keep it up.
But whatever raises in any country the ordinary rate of profit
higher than it otherwise would be, necessarily subjects that country
both to an absolute and to a relative disadvantage in every branch
of trade of which she has not the monopoly.
It subjects her to an absolute disadvantage: because in such
branches of trade her merchants cannot get this greater profit, with-
out selling dearer than they otherwise would do both the goods of
foreign countries which they import into their own, and the goods
of their own country which they export to foreign countries. Their
own country must both buy dearer and sell dearer; must both buy
less and sell less; must both enjoy less and produce less, than she
otherwise would do.
It subjects her to a relative disadvantage; because in such
branches of trade it sets other countries which are not subject to the
same absolute disadvantage, either more above her or less below her
than they otherwise would he. It enables them both to enjoy more
and to produce more in proportion to what she enjoys and produces.
It renders their superiority greater or their inferiority less than it
otherwise would be. By raising the price of her produce above what
it otherwise would be, it enables the merchants of other countries to
undersell her in foreign markets, and thereby to justle her out of al-
most all those branches of trade, of which she has not the monopoly.
Our merchants frequently complain of the high wages of British
labour as the cause of their manufactures being undersold in foreign
markets; but they are silent about the high profits of stock. They
complain of the extravagant gain of other people; but they say
nothing of their own. The high profits of British stock, however,
may contribute towards raising the price of British manufactures in
and this
puts the
country
at a dis-
advantage
in the
trades of
which she
has no
monop-
oly,
making
her buy
less and
sell less,
and en-
abling
other
countries
to under-
sell her in
foreign
markets.
High pro-
fits raise
the price
of manu-
factures
more than
high
wages.
^®Ed. I reads “rate of the profit.’
So British
capital
has been
taken
from
European
and
Mediter-
ranean
trade,
partly
attracted
by high
profit in
the
colony
trade,
partly
driven
out by
foreign
compe-
tition.
Whfie
raising
British
profit, the
monopoly
has low-
ered
foreign
profits.
The
colony
trade is
supposed
to be
more ad-
vanta-
geous
than
others,
but trade
with a
neigh-
bouring
S66 XHE WEALTH OF NATIONS
many cases as much, and in some perhaps more, than the high
wages of British labour.'^^
It is in this manner that the capital of Great Britain, one may
justly say, has partly been drawn and partly been driven from the
greater part of the different branches of trade of which she has not
the monopoly; from the trade of Europe in particular, and from
that of the countries which lie round the Mediterranean sea.
It has partly been drawn from those branches of trade; by the at-
traction of superior profit in the colony trade in consequence of the
continual increase of that trade, and of the continual insufficiency
of the capital which had carried it on one year to carry it on the
next.
It has partly been driven from them; by the advantage which the
high rate of profit, established in Great Britain, gives to other coun-
tries, in all the different branches of trade of which Great Britain
has not the monopoly.
As the monopoly of the colony trade has drawn from those other
branches a part of the British capital which would otherwise have
been employed in them, so it has forced into them many foreign
capitals which would never have gone to them, had they not been
expelled from the colony trade. In those other branches of trade it
has diminished the competition of British capitals, and thereby
raised the rate of British profit higher than it otherwise would have
been. On the contrary, it has increased the competition of foreign
capitals, and thereby sunk the rate of foreign profit lower than it
otherwise would have been. Both in the one way and in the other it
must evidently have subjected Great Britain to a relative disadvan-
tage in all those other branches of trade.
The colony trade, however, it may perhaps be said, is more ad-
vantageous to Great Britain than any other; and the monopoly, by
forcing into that trade a greater proportion of the capital of Great
Britain than what would otherwise have gone to it, has turned that
capital into an employment more advantageous to the country than
any other which it could have found.
The most advantageous emplo3nnent of any capital to the coun-
try to which it belongs, is that which maintains there the greatest
quantity of productive labour, and increases the most the annual
produce of the land and labour of that country. But the quantity of
productive labour which any capital employed in the foreign trade
of consumption can maintain, is exactly in proportion, it has been
^*This passage is much the same as that which appears above, p. 98; but
this is the original, as the other was not in ed. i.
AMERICA AND EAST INDIES 5^7
shewn in the second book,'^® to the frequency of its returns. A capi-
tal of a thousand pounds, for example, employed in a foreign trade
of consumption, of which the returns are made regularly once in the
year, can keep in constant employment, in the country to which it
belongs, a quantity of productive labour equal to what a thousand
pounds can maintain there for a year. If the returns are made twice
or thrice in the year, it can keep in constant employment a quantity
of productive labour equal to what two or three thousand pounds
can maintain there for a year. A foreign trade of consumption car-
ried on with a neighbouring,*^® is, upon this account, in general, more
advantageous than one carried on with a distant country; and for
the same reason a direct foreign trade of consumption, as it has like-
wise been shewn in the second book,^*^ is in general more advan-
tageous than a round-about one.
But the monopoly of the colony trade, so far as it has operated
upon the employment of the capital of Great Britain, has in all
cases forced some part of it from a foreign trade of consumption
carried on with a neighbouring,^® to one carried on with a more dis-
tant country, and in many cases from a direct foreign trade of con-
sumption to a round-about one.
First, the monopoly of the colony trade has in all cases forced
some part of the capital of Great Britain from a foreign trade of
consumption carried on with a neighbouring, to one carried on with
a more distant country.
It has, in all cases, forced some part of that capital from the trade
with Europe, and with the countries which lie round the Mediter-
ranean sea, to that with the more distant regions of America and
the West Indies, from which the returns are necessarily less fre-
quent, not only on account of the greater distance, but on account
of the peculiar circumstances of those countries. New colonies, it
has already been observed, are always understocked. Their capital
is always much less than what they could employ with great profit
and advantage in the improvement and cultivation of their land.
They have a constant demand, therefore, for more capital than they
have of their own; and, in order to supply the deficiency of their
own, they endeavour to borrow as much as they can of the mother
country, to whom they are, therefore, always in debt. The most
common way in which the colonists contract this debt, is not by
borrowing upon bond of the rich people of the mother country,
though they sometimes do this too, but by running as much in ar-
rear to their correspondents, who supply them with goods from Eur-
™ Above, vol. i,, p. 349. ” Ed. i reads “with a neighbouring country.”
Above, vol i., p. 350. ™ Ed. i reads “with a neighbouring country.”
country is
more ad-
vanta-
geous
than with
a distant
one, and
a direct
trade is
more ad-
vanta-
geous
than a
round-
about,
while the
monopo-
ly has
forced
capital
into (i) a
distant
and (2) a
round-
about
trade.
(i) The
trade
with
America
and the
West
Indiesis
distant
and the
returns
peculiarly
infre-
quent.
(2) It is
also large*-
lya
round-
about
trade.
568 XHE WEALTH OF NATIONS
ope, as those correspondents will allow them. Their annual returns
frequently do not amount to more than a third, and sometimes not
to so great a proportion of what they owe. The whole capital, there-
fore, which their correspondents advance to them is seldom re-
turned to Britain in less than three, and sometimes not in less than
four or five years. But a British capital of a thousand pounds, for
example, which is returned to Great Britain only once in five years,
can keep in constant employment only one-fifth part of the British
industry which it could maintain if the whole was returned once in
the year; and, instead of the quantity of industry which a thousand
pounds could maintain for a year, can keep in constant employ-
ment the quantity only which two hundred pounds can maintain
for a year. The planter, no doubt, by the high price which he pays
for the goods from Europe, by the interest upon the bills which he
grants at distant dates, and by the commission upon the renewal of
those which he grants at near dates, makes up, and probably more
than makes up, all the loss which his correspondent can sustain by
this delay. But, though he may make up the loss of his correspon-
dent, he cannot make up that of Great Britain. In a trade of which
the returns are very distant, the profit of the merchant may be as
great or greater than in one in which they are very frequent and
near; but the advantage of the country in which he resides, the
quantity of productive labour constantly maintained there, the an-
nual produce of the land and labour must always be much less. That
the returns of the trade to America, and still more those of that to
the West Indies, are, in general, not only more distant, but more
irregular, and more uncertain too, than those of the trade to any
part of Europe, or even of the countries which lie round the Medi-
terranean sea, will readily be allowed, I imagine, by every body who
has any experience of those different branches of trade.
Secondly, the monopoly of the colony trade has, in many cases,
forced some part of the capital of Great Britain from a direct for-^
eign trade of consumption, into a round-about one.
Among the enumerated commodities which can be sent to no
other market but Great Britain, there are several of which the quan-
tity exceeds very much the consumption of Great Britain, and of
which a part, therefore, must be exported to other countries. But
this cannot be done without forcing some part of the capital of
Great Britain into a round-about foreign trade of consumption.
Maryland and Virginia, for example, send annually to Great Britain
upwards of ninety-six thousand hogsheads of tobacco, and the con-
sumption of Great Britain is said not to exceed fourteen thou-
AMERICA AND EAST INDIES 5^9
JandJ^ Upwards of eighty-two thousand hogsheads, therefore, must
oe exported to other countries, to France, to Holland, and to the
countries which lie round the Baltic and Mediterranean seas. But,
that part of the capital of Great Britain which brings those eighty-
two thousand hogsheads to Great Britain, which re-exports them
from thence to those other countries, and which brings back from
those other countries to Great Britain either goods or money in re-
turn, is employed in a round-about foreign trade of consumption;
and is necessarily forced into this employment in order to dispose of
this great surplus. If we would compute in how many years the
whole of this capital is likely to come back to Great Britain, we
must add to the distance of the American returns that of the returns
from those other countries. If, in the direct foreign trade of con-
sumption which we carry on with America, the whole capital em-
ployed frequently does not come back in less than three or four
years; the whole capital employed in this round-about one is not
likely to come back in less than four or five. If the one can keep in
constant employment but a third or a fourth part of the domestic
industry which could be maintained by a capital returned once in
the year, the other can keep in constant employment but a fourth or
a fifth part of that industry. At some of the outports a credit is com-
monly given to those foreign correspondents to whom they export
their tobacco. At the port of London, indeed, it is commonly sold
for ready money. The rule is, Weigh and fay. At the port of Lon-
don, therefore, the final returns of the whole round-about trade are
more distant than the returns from America by the time only which
the goods may lie unsold in the warehouse; where, however, they
may sometimes lie long enough.®^ But, had not the colonies been
confined to the market of Great Britain for the sale of their tobacco,
very little more of it would probably have come to us than what was
necessary for the home consumption. The goods which Great Brit-
ain purchases at present for her own consumption with the great
surplus of tobacco which she exports to other countries, she would,
in this case, probably have purchased with the immediate produce
of her own industry, or with some part of her own manufactures.
That produce, those manufactures, instead of being almost entirely
suited to one great market, as at present, would probably have been
fitted to a great number of smaller markets. Instead of one great
round-about foreign trade of consumption. Great Britain would
These figures are given above, pp. 353, 467.
These four sentences beginning with “At some of the outports” are not in
ed. I.
570
The mo-
nopoly
has also
forced
part of
the capi-
tal of
Great
Britain
into a
carrying
trade,
and
makes her
whole in-
dustry
and com-
merce
less secure
owing to
its being
driven
into one
channel
THE WEALTH OF NATIONS
probably have carried on a great number of small direct foreign
trades of the same kind. On account of the frequency of the returns,,
a part, and probably but a small part; perhaps not above a third or
a fourth, of the capital which at present carries on this great round-
about trade, might have been sufficient to carry on all those small
direct ones, might have kept in constant employment an equal
quantity of British industry, and have equally supported the an-
nual produce of the land and labour of Great Britain. All the pur-
poses of this trade being, in this manner, answered by a much
smaller capital, there would have been a large spare capital to ap-
ply to other purposes; to improve the lands, to increase the manu-
factures, and to extend the commerce of Great Britain; to come
into competition at least with the other British capitals employed in
all those different ways, to reduce the rate of profit in them all, and
thereby to give to Great Britain, in all of them, a superiority over
other countries still greater than what she at present enjoys.^^
The monopoly of the colony trade too has forced some part of
the capital of Great Britain from all foreign trade of consumption
to a carrying trade; and, consequently, from supporting more or
less the industry of Great Britain, to be employed altogether in
supporting partly that of the colonies, and partly that of some
other countries.
The goods, for example, which are annually purchased with the
great surplus of eighty-two thousand hogsheads of tobacco annual-
ly re-exported from Great Britain, are not all consumed in Great
Britain. Part of them, linen from Germany and Holland, for ex-
ample, is returned to &e colonies for their particular consumption.
But, that part of the capital of Great Britain which buys the to-
bacco with which this linen is afterwards bought, is necessarily
withdrawn from supporting the industry of Great Britain, to be
employed altogether in supporting, partly that of the colonies,
and partly that of the particular countries who pay for this tobac-
co with the produce of their own industry.
The monopoly of the colony trade besides, by forcing towards it
a much greater proportion of the capital of Great Britain than
what would naturally have gone to it, seems to have broken alto-
gether that natural balance which would otherwise have taken
place among all the different branches of British industry. The in-
dustry of Great Britain, instead of being accommodated to a great
number of small markets, has been principally suited to one great
market. Her commerce, instead of running in a great number of
small channels, has been taught to run principally in one great
^ Ed. I reads “possesses.”
AMERICA AND EAST INDIES 57i
channel. But the whole system of her industry and commerce has
thereby been rendered less secure; the whole state of her body pol-
itic less healthful, than it otherwise would have been. In her present
condition, Great Britain resembles one of those unwholesome
bodies in which some of the vital parts are overgrown, and which,
upon that account, are liable to many dangerous disorders scarce
incident to those in which all the parts are more properly propor-
tioned. A small stop in that great blood-vessel, which has been arti-
ficially swelled beyond its natural dimensions, and through which
an unnatural proportion of the industry and commerce of the coun-
try has been forced to circulate, is very likely to bring on the most
dangerous disorders upon the whole body politic. The expectation
of a rupture with the colonies, accordingly, has struck the people of
Great Britain with more terror than they ever felt for a Spanish
armada, or a French invasion. It was this terror, whether well or ill
grounded, which rendered the repeal of the stamp act,®^ among the
merchants at least, a popular measure. In the total exclusion from
the colony market, was it to last only for a few years, the greater
part of our merchants used to fancy that they foresaw an entire
stop to their trade; the greater part of our master manufacturers,
the entire ruin of their business; and the greater part of our work-
men, an end of their employment. A rupture with any of our neigh-
bours upon the continent, though likely too to occasion some stop
or interruption in the employments of some of all these different
orders of people, is foreseen, however, without any such general
emotion. The blood, of which the circulation is stopt in some of the
smaller vessels, easily disgorges itself into the greater, without oc-
casioning any dangerous disorder; but, when it is stopt in any of
the greater vessels, convulsions, apoplexy, or death, are the im-
mediate and unavoidable consequences. If but one of those over-
grown manufactures, which by means either of bounties or of the
monopoly of the home and colony markets, have been artificially
raised up to an unnatural height, finds some small stop or interrup-
tion in its employment, it frequently occasions a mutiny and dis-
order alarming to government, and embarrassing even to the de-
liberations of the legislature. How great, therefore, would be the
disorder and confusion, it was thought, which must necessarily be
occasioned by a sudden and entire stop in the employment of so
great a proportion of our principal manufacturers?
Some moderate and gradual relaxation of the laws which give to The
Great Britain the exclusive trade to the colonies, till it is rendered
in a great measure free, seems to be the only expedient which can, in
Ed. I places “a popular measure” here
monopoly
is desir-
able.
The pres-
ent ex-
clusion
from the
trade
with the
twelve
provinces
would
have been
more se-
verely felt
but for
five tran-
sitory
572 the wealth oe nations
all future times, deliver her from this danger, which can enable
her or even force her to withdraw some part of her capital from this
overgrown employment, and to turn it, though with less profit, to-
wards other employments; and which, by gradually diminishing
one branch of her industry and gradually increasing all the rest,
can by degrees restore all the different branches of it to that natu-
ral, healthful, and proper proportion which perfect liberty neces-
sarily establishes, and which perfect liberty can alone preserve. To
open the colony trade all at once to all nations, might not only oc-
casion some transitory inconveniency, but a great permanent loss
to the greater part of those whose industry or capital is at present
engaged in it. The sudden loss of the employment even of the ships
which import the eighty-two thousand hogsheads of tobacco, which
are over and above the consumption of Great Britain, might alone
be felt very sensibly. Such are the unfortunate effects of all the reg-
ulations of the mercantile system! They not only introduce very
dangerous disorders into the state of the body politic, but disorders
which it is often difficult to remedy, without occasioning, for a time
at least, still greater disorders. In what manner, therefore, the col-
ony trade ought gradually to be opened; what are the restraints
which ought first, and what are those which ought last to be taken
away; or in what manner the natural system of perfect liberty and
justice ought gradually to be restored, we must leave to the wisdom
of future statesmen and legislators to determine.
Five different events, unforeseen and unthought of, have very
fortunately concurred to hinder Great Britain from feeling, so sen-
sibly as it was generally expected she would, the total exclusion
which has now taken place for more than a year (from the first of
December, 1774) from a very important branch of the colon}
trade, that of the twelve associated provinces of North America
First, those colonies, in preparing themselves for their non-impor
tation agreement, drained Great Britain completely of all the com
modities which were fit for their market: secondly, the extraor
dinary demand of the Spanish Flota has, this year, drained Ger-
many and the North of many commodities, linen in particular
Ed. I does not contain “in all future limes.”
The date at which the non-importation agreement began to operate.
^ “For the greater security of the valuable cargoes sent to America, as weL
as for the more easy prevention of fraud, the commerce of Spain with its
colonies is carried on by fleets which sail under strong convoys. These fleets,
consisting of two squadrons, one distinguished by the name of the ‘Galeons,’
the other by that of the ‘Flota, ^ are equipped annually. Formerly they took
their departure from Seville; but as the port of Cadiz has been found more
commodious, they have sailed from it since the year i72o.”~-W. Robertson,
History of America, bk. viii.; in Works, 1825, vol. vii., p. 372.
AMERICA AND EAST INDIES 573
which used to come into competition, even in the Dritish market,
with the manufactures of Great Britain: thirdly, the peace between
Russia and Turkey,^® has occasioned an extraordinary demand
from the Turkey market, which, during the distress of the country,
and while a Russian fleet was cruizing in the Archipelago, had been
very poorly supplied: fourthly, the demand of the North of Europe
for the manufactures of Great Britain, has been increasing from
year to year for some time past: and, fifthly, the late partition
and consequential pacification of Poland, by opening the market of
that great country, have this year added an extraordinary demand
from thence to the increasing demand of the North. These events
are all, except the fourth, in their nature transitory and accidental,
and the exclusion from so important a branch of the colony trade, if
unfortunately it should continue much longer, may still occasion
some degree of distress. This distress, however, as it will come on
gradually, will be felt much less severely than if it had come on all
at once; and, in the mean time, the industry and capital of the
country may find a new employment and direction, so as to prevent
this distress from ever rising to any considerable height.
The monopoly of the colony trade, therefore, so far as it has
turned towards that trade a greater proportion of the capital of
Great Britain than what would otherwise have gone to it, has in all
cases turned it, from a foreign trade of consumption with a neigh-
bouring, into one with a more distant country; in many cases, from
a direct foreign trade of consumption, into a round-about one; and
in some cases, from all foreign trade of consumption, into a carrying
trade. It has in all cases, therefore, turned it, from a direction in
which it would have maintained a greater quantity of productive
labour, into one, in which it can maintain a much smaller quantity.
By suiting, besides, to one particular market only, so great a part of
the industry and commerce of Great Britain, it has rendered the
whole state of that industry and commerce more precarious and less
secure, than if their produce had been accommodated to a greater
variety of markets.
We must carefully distinguish between the effects of the colony
trade and those of the monopoly of that trade. The former are al-
ways and necessarily beneficial; the latter always and necessarily
hurtful. But the former are so beneficial, that the colony trade,
though subject to a monopoly, and notwithstanding the hurtful ef-
fects of that monopoly, is still upon the whole beneficial, and greatly
beneficial; though a good deal less so than it otherwise would be.
'’“By the treaty of Kainardji, 1774. In 1773.
Ed. I reads “prevent it.*’
circun.-
stances.
The mo-
nopoly is
bad,
but the
trade it^
self is
good.
The trade
In its
natural
state in-
creases
the pro-
ductive
labour of
Great
Britain.
The mo-
nopoly
dimin-
ishes it.
The nat-
ural good
574 THE WEALTH OF NATIONS
The effect of the colony trade in its natural and free state, is to
open a great, though distant market for such parts of the produce of
British industry as may exceed the demand of the markets nearer
home, of those of Europe, and of the countries which lie round the
Mediterranean sea. In its natural and free state, the colony trade,
without drawing from those markets any part of the produce which
had ever been sent to them, encourages Great Britain to increase the
surplus continually, by continually presenting new equivalents to
be exchanged for it. In its natural and free state, the colony trade
tends to increase the quantity of productive labour in Great Brit-
ain, but without altering in any respect the direction of that which
had been employed there before. In the natural and free state of the
colony trade, the competition of all other nations would hinder the
rate of profit from rising above the common level either in the new
market, or in the new employment. The new market, without draw-
ing any thing from the old one, would create, if one may say so, a
new produce for its own supply; and that new produce would con-
stitute a new capital for carrying on the new employment, which in
the same manner would draw nothing from the old one.
The monopoly of the colony trade, on the contrary, by excluding
the competition of other nations, and thereby raising the rate of
profit both in the new market and in the new employment, draws
produce from the old market and capital from the old employment.
To augment our share of the colony trade beyond what it otherwise
would be, is the avowed purpose of the monopoly. If our share of
that trade were to be no greater with, than it would have been with-
out the monopoly, there could have been no reason for establish-
ing the monopoly. But whatever forces into a branch of trade of
which the returns are slower and more distant than 'those of the
greater part of other trades, a greater proportion of the capital of
any country, than what of its own accord would go to that branch,
necessarily renders the whole quantity of productive labour an-
nually maintained there, the whole annual produce of the land and
labour of that country, less than they otherwise would be. It keeps
down the revenue of the inhabitants of that country, below what it
would naturally rise to, and thereby diminishes their power of ac-
cumulation. It not only hinders, at all times, their capital from
maintaining so great a quantity of productive labour as it would
otherwise maintain, but it hinders it from increasing so fast as it
would otherwise increase, and consequently from maintaining a still
greater quantity of productive labour.
The natural good effects of the colony trade, however, more than
counterbalance to Great Britain the bad effects of the monopoly, so
AMERICA AND EAST INDIES 575
that, monopoly and all together, that trade, even as it is carried on
at present, is not only advantageous, but greatly advantageous.
The new market and the new employment^® which are opened by
the colony trade, are of much greater extent than that portion of the
old market and of the old employment which is lost by the monop-
oly. The new produce and the new capital which has been created,
if one may say so, by the colony trade, maintain in Great Britain a
greater quantity of productive labour, than what can have been
thrown out of employment by the revulsion of capital from other
trades of which the returns are more frequent. If the colony trade,
however, even as it is carried on at present, is advantageous to
Great Britain, it is not by means of the monopoly, but in spite of
the monopoly.
It is rather for the manufactured than for the rude produce of
Europe, that the colony trade opens a new market. Agriculture is
the proper business of all new colonies; a business which the cheap-
ness of land renders more advantageous than any other. They
abound, therefore, in the rude produce of land, and instead of im-
porting it from other countries, they have generally a large surplus
to export. In new colonies, agriculture either draws hands from all
other employments, or keeps them from going to any other employ-
ment. There are few hands to spare for the necessary, and none for
the ornamental manufactures. The greater part of the manufactures
of both kinds, they find it cheaper to purchase of other countries
than to make for themselves. It is chiefly by encouraging the manu-
factures of Europe, that the colony trade indirectly encourages its
agriculture. The manufacturers of Europe, to whom that trade
gives employment, constitute a new market for the produce of the
land; and the most advantageous of all markets; the home market
for the corn and cattle, for the bread and butcher’s-meat of Eur-
ope; is thus greatly extended by means of the trade to America.
But that the monopoly of the trade of populous and thriving col-
onies is not alone sufficient to establish, or even to maintain manu-
factures in any country, the examples of Spain and Portugal suf-
ficiently demonstrate. Spain and Portugal were manufacturing
countries before they had any considerable colonies. Since they had
the richest and most fertile in the world, they have both ceased to
be so.
In Spain and Portugal, the bad effects of the monopoly, aggra-
vated by other causes, have, perhaps, nearly overbalanced the
natural good effects of the colony trade. These causes seem to be,
Eds I and 2 read “and employment.”
Ed I reads “have entirely conquered.”
effects of
the trade
more than
counter-
balance
the bad
effects of
the mo-
nopoly.
The colo-
nies offer
a market
for the
manufac^
tured
rather
than the
rude pro-
duce of
Europe,
but the
monopoly
has not
main-
tained
the
manufac-
tures of
Spain and
Portugal,
where the
bad ef-
fects of
the mo-
nopoly
have
nearly
over-
balanced
the good
effects of
the trade.
In Eng-
land the
good ef-
fects of
the trade
have
greatly
counter-
acted the
bad ef-
fects of
the mo-
nopoly.
The trade
has bene-
fited Brit-
ish
manufac-
tures in
spite of
the mo-
nopoly,
not in
conse-
quence of
it.
576 XHE WEALTH OF NATIONS
Other monopolies of different kinds; the degradation of the value of
gold and silver below what it is in most other countries; the exclu-
sion from foreign markets by improper taxes upon exportation, and
the narrowing of the home market, by still more improper taxes
upon the transportation of goods from one part of the country to
another; but above all, that irregular and partial administration of
justice, which often protects the rich and powerful debtor from the
pursuit of his injured creditor, and which makes the industrious
part of the nation afraid to prepare goods for the consumption of
those haughty and great men, to whom they dare not refuse to sell
upon credit, and from whom they are altogether uncertain of re-
payment.
In England, on the contrary, the natural good effects of the col-
ony trade, assisted by other causes, have in a great measure con-
quered the bad effects of the monopoly. These causes seem to be,
the general liberty of trade, which, notwithstanding some restraints,
is at least equal, perhaps superior, to what it is in any other coun-
try; the liberty of exporting, duty free, almost all sorts of goods
which are the produce of domestic industry, to almost any foreign
country; and what, perhaps, is of still greater importance, the un-
bounded liberty of transporting them from any one part of our own
country to any other, without being obliged to give any account to
any public office, without being liable to question or examination of
any kind; but above all, that equal and impartial administration of
justice which renders the rights of the meanest British subject re-
spectable to the greatest, and which, by securing to every man the
fruits of his own industry, gives the greatest and most effectual en-
couragement to every sort of industry.
If the manufactures of Great Britain, however, have been ad-
vanced, as they certainly have, by the colony trade, it has not been
by means of the monopoly of that trade, but in spite of the monop-
oly. The effect of the monopoly has been, not to augment the quan-
tity, but to alter the quality and shape of a part of the manufactures
of Great Britain, and to accommodate to a market, from which the
returns are slow and distant, what would otherwise have been ac-
commodated to one from which the returns are frequent and near.
Its effect has consequently been to turn a part of the capital of
Great Britain from an employment in which it would have main-
tained a greater quantity of manufacturing industry, to one in
which it maintains a much smaller, and thereby to diminish, in-
stead of increasing, the whole quantity of manufacturing industry
maintained in Great Britain.
The monopoly of the colony trade, therefore, like all the other
577
AMERICA AND EAST INDIES
mean and malignant expedients of the mercantile system, depresses
the industry of all other countries, but chiefly that of the colonies,
without in the least increasing, but on the contrary diminishing,
that of the country in whose favour it is established.
The monopoly hinders the capital of that country, whatever may
at any particular time be the extent of that capital, from" maintain-
ing so great a quantity of productive labour as it would otherwise
maintain, and from affording so great a revenue to the industrious
inhabitants as it would otherwise afford. But as capital can be in-
creased only by savings from revenue, the monopoly, by hindering
it from affording so great a revenue as it would otherwise afford,
necessarily hinders it from increasing so fast as it would otherwise
increase, and consequently from maintaining a still greater quantity
of productive labour, and affording a still greater revenue to the in-
dustrious inhabitants of that country. One great original source of
revenue, therefore, the wages of labour, the monopoly must neces-
sarily have rendered at all times less abundant than it otherwise
would have been.
By raising the rate of mercantile profit, the monopoly discourages
the improvement of land. The profit of improvement depends upon
the difference between what the land actually produces, 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 emplo3mients. If the
profit is less, mercantile employments will draw capital from the
improvement of land. Whatever therefore raises the rate of mer-
cantile profit, either lessens the superiority or increases the inferior-
ity of the profit of improvement; and in the one case hinders capital
from going to improvement, and in the other draws capital from it.
But by discouraging improvement, the monopoly necessarily re-
tards the natural increase of another great original source of rev-
enue, the rent of land. By raising the rate of profit too, the monop-
oly necessarily keeps up the market rate of interest higher than it
otherwise would be. But the price of land in proportion to the rent
which it affords, the number of years purchase which is commonly
paid for it, necessarily falls as the rate of interest rises, and rises as
the rate of interest falls. The monopoly, therefore, hurts the interest
of the landlord two different ways, by retarding the natural in-
crease, first, of his rent, and secondly, of the price which he would
get for his land in proportion to the rent which it affords.
The monopoly, indeed, raises the rate of mercantile profit, and
thereby augments somewhat the gain of our merchants. But as it
The mo-
nopoly
reduces
wages in
the
mother
country,
raises
profits,
and there-
by tends
to lower
rents and
the price
of land.
It re-
duces the
absolute
amount
of profit,
thus ren-
dering all
the origi-
nal
sources of
revenue
less abun-
dant
More
fatal still,
It de-
stroys
parsi-
mony.
578 the wealth of nations
obstructs the natural increase of capital, it tends rather to diminish
than to increase the sum total of the revenue which the inhabitants
of the country derive from the profits of stock; a small profit upon
a great capital generally affording a greater revenue than a great
profit upon a small one. The monopoly raises the rate of profit, but
it hinders the sum of profit from rising so high as it otherwise would
do.
All the original sources of revenue, the wages of labour, the rent
of land, and the profits of stock, the monopoly renders much less
abundant than they otherwise would be. To promote the little in-
terest of one little order of men in one country, it hurts the interest
of all other orders of men in that country, and of all men in all other
countries.
It is solely by raising the ordinary rate of profit that the monop-
oly either has proved or could prove advantageous to any one par-
ticular order of men. But besides all the bad effects to the country
in general, which have already been mentioned as necessarily re-
sulting from a high rate of profit; there is one more fatal, perhaps,
than all these put together, but which, if we may judge from ex-
perience, is inseparably connected with it. The high rate of profit
seems every where to destroy that parsimony which in other cir-
cumstances is natural to the character of the merchant. When prof-
its are high, that sober virtue seems to be superfluous, and expensive
luxury to suit better the affluence of his situation. But the owners
of the great mercantile capitals are necessarily the leaders and con-
ductors of the whole industry of every nation, and their example
has a much greater influence upon the manners of the whole indus-
trious part of it than that of any other order of men. If his employer
is attentive and parsimonious, the workman is very likely to be so
too; but if the master is dissolute and disorderly, the servant who
shapes his work according to the pattern which his master pre-
scribes to him, will shape his life too according to the example which
he sets him. Accumulation is thus prevented in the hands of all those
who are naturally the most disposed to accumulate; and the funds
destined for the maintenance of productive labour receive no aug-
mentation from the revenue of those who ought naturally to aug-
ment them the most. The capital of the country, instead of increas-
ing, gradually dwindles away, and the quantity of productive la-
bour maintained in it grows every day less and less. Have the exor-
bitant profits of the merchants of Cadiz and Lisbon augmented the
capital of Spain and Portugal? Have they alleviated the poverty,
have they promoted the industry of those two beggarly countries?
Such has been the tone of mercantile expence in those two trading
579
AMERICA AND EAST INDIES
cities, that those exorbitant profits, far from augmenting the general
capital of the country, seem scarce to have been sufficient to keep up
the capitals upon which they were made. Foreign capitals are every
day intruding themselves, if I may say so, more and more into the
trade of Cadiz and Lisbon. It is to expel those foreign capitals from
a trade which their own grows every day more and more insuf-
ficient for carrying on, that the Spaniards and Portuguese endeav-
our every day to straiten more and more the galling bands of their
absurd monopoly. Compare the mercantile manners of Cadiz and
Lisbon with those of Amsterdam, and you will be sensible how dif-
ferently the conduct and character of merchants are affected by the
high and by the low profits of stock. The merchants of London, in-
deed, have not yet generally become such magnificent lords as those
of Cadiz and Lisbon; but neither are they in general such attentive
and parsimonious burghers as those of Amsterdam. They are sup-
posed, however, many of them, to be a good deal richer than the
greater part of the former, and not quite so 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, says the proverb; and the ordinary tone of expence
seems every where to be regulated, not so much according to the
real ability of spending as to the supposed facility of getting money
to spend.
It is thus that the single advantage which the monopoly procures
to a single order of men, is in many different ways hurtful to the
general interest of the country.
To found a great empire for the sole purpose of raising up a peo- xhe
pie of customers, may at first sight appear a project fit only for a policy of
nation of shopkeepers. It is, however, a project altogether unfit for ^p“y'jg
a nation of shopkeepers; but extremely fit for a nation whose gov- a policy
ernment is influenced by shopkeepers. Such statesmen, and such of siiop-
statesmen only,*’^ are capable of fancying that they will find some
advantage in employing the blood and treasure of their fellow-
citizens, to found and maintain such an empire. Say to a shop-
keeper, Buy me a good estate, and I shall always buy my clothes at
your shop, even though I should pay somewhat dearer than what I
can have them for at other shops; and you will not find him very
forward to embrace your proposal. But should any other person buy
you such an estate, the shopkeeper would be much obliged to your
®^Ed 1 reads “own capital ”
®®Ed I reads “extremely fit for a nation that is governed by shopkeepers.
Such sovereigns and such sovereigns only ”
®®Ed. I leads “their subjects, to found and to maintain ”
The ex-
penditure
of Great
Britain
on the
colonies
has all
been laid
out to
siq>port
the mo-
nopoly,
and is
enormous.
580 XHE WEALTH OF NATIONS
benefactor if he would enjoin you to buy all your clothes at his shop.
England purchased for some of her subjects, who found themselves
uneasy at home, a great estate in a distant country. The price, in-
deed, was very small, and instead of thirty years purchase, the or-
dinary price of land in the present times, it amounted to little more
than the expence of the different equipments which made the first
discovery, reconnoitred the coast, and took a fictitious possession of
the country. The land was good and of great extent, and the culti-
vators having plenty of good ground to work upon, and being for
some time at liberty to sell their produce where they pleased, be-
came in the course of little more than thirty or forty years (between
1620 and 1660) so numerous and thriving a people, that the shop-
keepers and other traders of England wished to secure to themselves
the monopoly of their custom. Without pretending, therefore, that
they had paid any part, either of the original purchase-money, or of
the subsequent expence of improvement, they petitioned the parlia-
ment that the cultivators of America might for the future be con-
fined to their shop; first, for buying all the goods which they want-
ed from Europe; and, secondly, for selling all such parts of their
own produce as those traders might find it convenient to buy. For
they did not find it convenient to buy every part of it. Some parts
of it imported into England might have interfered with some of the
trades which they themselves carried on at home. Those particular
parts of it, therefore, they were willing that the colonists should sell
where they could; the farther off the better; and upon that account
proposed that their market should be confined to the countries
south of Cape Finisterre. A clause in the famous act of navigation
established this truly shopkeeper proposal into a law.
The maintenance of this monopoly has hitherto been the princi-
pal, or more properly perhaps the sole end and purpose of the do-
minion which Great Britain assumes over her colonies. In the ex-
clusive trade, it is supposed, consists the great advantage of prov-
inces, which have never yet afforded either revenue or military force
for the support of the civil government, or the defence of the mother
country. The monopoly is the principal badge of their dependency,
and it is the sole 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
support this monopoly. The expence of the ordinary peace estab-
lishment of the colonies amounted, before the commencement of the
present disturbances, to the pay of twenty regiments of foot; to the
expence of the artillery, stores, and extraordinary provisions with
AMERICA AND EAST INDIES 58i
which it was necessary to supply them; and to the expence of a
very considerable naval force which was constantly kept up, in or-
der to guard, from the smuggling vessels of other nations, the im-
mense coast of North America, and that of our West Indian islands.
The whole expence Of this peace establishment was a charge upon
the revenue of Great Britain, and was, at the same time, the small-
est part of what the dominion of the colonies has cost the mother
country. If we would know the amount of the whole, we must add
to the annual expence of this peace establishment the interest of the
sums which, in consequence of her considering her colonies as prov-
inces subject to her dominion, Great Britain has upon different oc-
casions laid out upon their defence. We must add to it, in particular,
the whole expence of the late war, and a great part of that of the
war which preceded The late war was altogether a colony quar-
rel, and the whole expence of it, in whatever part of the world it
may have been laid out, whether in Germany or the East Indies,
ought justly to be stated to the account of the colonies. It amounted
to more than ninety millions sterling, including not only the new
debt which was contracted, but the two shillings in the pound addi-
tional land tax, and the sums which were every year borrowed from
the sinking fund. The Spanish war which began in 1739, was prin-
cipally a colony quarrel. Its principal object was to prevent the
search of the colony ships which carried on a contraband trade with
the Spanish main. This whole expence is, in reality, a bounty which
has been given in order to support a monopoly. The pretended pur-
pose of it was to encourage the manufactures, and to increase the
commerce of Great Britain. But its real effect has been to raise the
rate of mercantile profit, and to enable our merchants to turn into a
branch of trade, of which the returns are more slow and distant than
those of the greater part of other trades, a greater proportion of
their capital than they otherwise would have done; two events
which if a bounty could have prevented, it might perhaps have been
very well worth while to give such a bounty.
Under the present system.of management, therefore. Great Brit-
ain derives nothing but loss from the dominion which she assumes
over her colonies.
To propose that Great Britain should voluntarily give up all au- A volun-
thority over her colonies, and leave them to elect their own magis-
trates, to enact their own laws, and to make peace and war as they be
might think proper, would be to propose such a measure as never veryad-
Ed. I reads “is” here and in the next line.
Ed. I reads “and a great part of that which preceded it.”
vanta-
geous.
The colo-
nies do
not fur-
nish near-
ly suffi-
cient re-
venue to
make
them ad-
vanta-
geous.
5S2 the wealth of nations
was, and never will be adopted, by any nation in the world. No na-
tion ever voluntarily gave up the dominion of any province, how
troublesome soever it might be to govern it, and how small soever
the revenue which it afforded might be in proportion to the expence
which it occasioned. Such sacrifices, though they might frequently
be agreeable to the interest, are always mortifying to the pride of
every nation, and what is perhaps of still greater consequence, they
are always contrary to the private interest of the governing part of
it, who would thereby be deprived of the disposal of many places of
trust and profit, of many opportunities of acquiring wealth and dis-
tinction, which the possession of the most turbulent, and, to the
great body of the people, the most unprofitable province seldom
fails to afford. The most visionary enthusiast would scarce be cap-
able of proposing such a measure, with any serious hopes at least of
its ever being adopted. If it was adopted, however. Great Britain
would not only be immediately freed from the whole annual expence
of the peace establishment of the colonies, but might settle with
them such a treaty of commerce as would effectually secure to her a
free trade, more advantageous to the great body of the people,
though less so to the merchants, than the monopoly which she at
present enjoys. By thus parting good friends, the natural affection
of the colonies to the mother country, which, perhaps, our late dis-
sensions have well nigh extinguished, would quickly revive. It might
dispose them not only to respect, for whole centuries 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, instead of turbulent
and factious subjects, to become our most faithful, affectionate, and
generous allies; and the same sort of parental affection on the one
side, and filial respect on the other, might revive between Great
Britain and her colonies, which used to subsist between those of an-
cient Greece and the mother city from which they descended.
In order to render any province advantageous to the empire to
which it belongs, it ought to afford, in time of peace, a revenue to
the public sufficient not only for defraying the whole expence of its
own peace establishment, but for contributing its proportion to the
support of the general government of the empire. Every province
necessarily contributes, more or less, to increase the expence of that
general government. If any particular province, therefore, does not
contribute its share towards defraying this expence, an unequal bur-
den must be thrown upon some other part of the empire. The extra-
ordinary revenue too which every province affords to the public in
time of war, ought, from parity of reason, to bear the same propor-
tion to the extraordinary revenue of the whole empire which its or-
AMERICA AND EAST INDIES
dinary revenue does in time of peace. That neither the ordinary nor
extraordinary revenue which Great Britain derives from her col-
onies, bears this proportion to the whole revenue of the British em-
pire, will readily be allowed. The monopoly, it has been supposed,
indeed, by increasing the private revenue of the people of Great
Britain, and thereby enabling them to pay greater taxes, compen-
sates the deficiency of the public revenue of the colonies. But this
monopoly, I have endeavoured to show, though a very grievous tax
upon the colonies, and though it may increase the revenue of a par-
ticular order of men in Great Britain, diminishes instead of increas-
ing that of the great body of the people; and consequently dimin-
ishes instead of increasing the ability of the great body of the people
to pay taxes. The men too whose revenue the monopoly increases,
constitute a particular order, which it is both absolutely impossible
to tax beyond the proportion of other orders, and extremely im-
politic even to attempt to tax beyond that proportion, as I shall en-
deavour to shew in the following book.^® No particular resource,
therefore, can be drawn from this particular order.
The colonies may be taxed either by their own assemblies, or by
the parliament of Great Britain.
That the colony assemblies can ever be so managed as to levy The colo-
upon their constituents a public revenue sufficient, not only to main-
tain at all times their own civil and military establishment, but to will never
pay their proper proportion of the expence of the general govern- vote
ment of the British empire, seems not very probable. It was a long
time before even the parliament of England, though placed imme-
diately under the eye of the sovereign, could be brought under such
a system of management, or could be rendered sufficiently liberal in
their grants for supporting the civil and military establishments
even of their own country. It was only by distributing among the
particular members of parliament, a great part either of the offices,
or of the disposal of the offices arising from this civil and military
establishment, that such a system of management could be estab-
lished even with regard to the parliament of England. But the dis-
tance of the colony assemblies from the eye of the sovereign, their
number, their dispersed situation, and their various constitutions,
would render it very difficult to manage them in the same manner,
even though the sovereign had the same means of doing it; and
those means are wanting. It would be absolutely impossible to dis-
tribute among all the leading members of all the colony assemblies
such a share, either of the offices or of the disposal of the offices aris-
ing from the general government of the British empire, as to dispose
Below, p. 800.
S84
THE WEALTH OF NATIONS
and have
no
knowl-
edge of
what is
required.
It has
been pro-
posed
that par-
liament
should
tax the
colonies
by requi-
sition,
them to give up their popularity at home, and to tax their constit-
uents for the support of that general government, of which almost
the whole emoluments were to be divided among people who were
strangers to them. The unavoidable ignorance of administration,
besides, concerning the relative importance of the different mem-
bers of those different assemblies, the offences which must frequent-
ly be given, the blunders which must constantly be committed in at-
tempting to manage them in this manner, seems to render such a
system of management altogether impracticable with regard to
them.
The colony assemblies, besides, cannot be supposed the proper
judges of what is necessary for the defence and support of the whole
empire. The care of that defence and support is not entrusted to
them. It is not their business, and they have no regular means of in-
formation concerning it. The assembly of a province, like the vestry
of a parish, may judge very properly concerning the affairs of its
own particular district; but can have no proper means of judging
concerning those of the whole empire. It cannot even judge prop-
erly concerning the proportion which its own province bears to the
whole empire; or concerning the relative degree of its wealth and
importance, compared with the other provinces; because those
other provinces are not under the inspection and superintendency
of the assembly of a particular province. What is necessary for the
defence and support of the whole empire, and in what proportion
each part ought to contribute, can be judged of only by that assem-
bly which inspects and superintends the affairs of the whole empire.
It has been proposed, accordingly, that the colonies should be
taxed by requisition, the parliament of Great Britain determining
the sum which each colony ought to pay, and the provincial assem-
bly assessing and levying it in the way that suited best the circum-
stances of the province. What concerned the whole empire would
in this way be determined by the assembly which inspects and su-
perintends the affairs of the whole empire; and the provincial
affairs of each colony might still be regulated by its own assembly.
Though the colonies should in this case have no representatives in
the British parliament, yet, if we may judge by experience, there is
no probability that the parliamentary requisition would be unrea-
sonable. The parliament of England has not upon any occasion
shown the smallest disposition to overburden those parts of the em-
pire which are not represented in parliament. The islands of Guern-
sey and Jersey, without any means of resisting the authority of
parliament, are more lightly taxed than any part of Great Britain.
Ed. I reads “seem
AMERICA AND EAST INDIES
Parliament in attempting to exercise its supposed right, whether
well or ill grounded, of taxing the colonies, has never hitherto de-
manded of them any thing which even approached to a just propor-
tion to what was paid by their fellow-subjects at home. If the con-
tribution of the colonies, besides, was to rise or fall in proportion to
the rise or fall of the land tax, parliament could not tax them with-
out taxing at the same time its own constituents, and the colonies
might in this case be considered as virtually represented in parlia-
ment.
Examples are not wanting of empires in which all the different
provinces are not taxed, if I may be allowed the expression, in one
mass; but in which the sovereign regulates the sum which each pro-
vince ought to pay, and in some provinces assesses and levies it as
he thinks proper; while in others, he leaves it to be assessed and
levied as the respective states of each province shall determine. In
some provinces of France, the king not only imposes what taxes he
thinks proper, but assesses and levies them in the way he thinks
proper. From others he demands a certain sum, but leaves it to the
states of each province to assess and levy that sum as they think
proper. According to the scheme of taxing by requisition, the
parliament of Great Britain would stand nearly in the same situa-
tion towards the colony assemblies, as the king of France does to-
wards the states of those provinces which still enjoy the privilege
of having states of their own, the provinces of France which are
supposed to be the best governed.
But though, according to this scheme, the colonies could have no
just reason to fear that their share of the public burdens should
ever exceed the proper proportion to that of their fellow-citizens at
home; Great Britain might have just reason to fear that it never
would amount to that proper proportion. The parliament of Great
Britain has not for some time past had the same established author-
ity in the colonies, which the French king has in those provinces of
France which still enjoy the privilege of having states of their own.
The colony assemblies, if they were not very favourably disposed
(and unless more skilfully managed than they ever have been
hitherto, they are not very likely to be so), might still find many
pretences for evading or rejecting the most reasonable requisitions
of parliament. A French war breaks out, we shall suppose; ten
millions must immediately be raised, in order to defend the seat of
the empire. This sum must be borrowed upon the credit of some
parliamentary fund mortgaged for pa5n[ng the interest. Part of this
fund parliament proposes to raise by a tax to be levied in Great
Britain, and part of it by a requisition to all the different colony
as the
King of
France
taxes
some of
his pro-
vinces,
hut par-
liament
has not
sufficient
authority,
and re-
sistance
breaks
out.
$86 the wealth of NATIONS
assemblies of America and the West Indies. Would people readily
advance their money upon the credit of a fund, which partly de-
pended upon the good humour of all those assemblies, far distant
from the seat of the war, and sometimes, perhaps, thinking them-
selves not much concerned in the event of it? Upon such a fund no
more money would probably be advanced than what the tax to be
levied in Great Britain might be supposed to answer 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 Britain;
upon a part of the empire, and not upon the whole empire. Great
Britain is, perhaps, since the world began, the only state which, as
it has extended its empire, has only increased its expence without
once augmenting its resources. Other states have generally disbur-
dened themselves upon their subjett and subordinate provinces of
the most considerable part of the expence of defending the empire.
Great Britain has hitherto suffered her subject and subordinate
provinces to disburden themselves upon her of almost this whole
expence. In order to put Great Britain upon a footing of equality
with her own colonies, which the law has hitherto supposed to be
subject and subordinate, it seems necessary, upon the scheme of
taxing them by parliamentary requisition, that parliament should
have some means of rendering its requisitions immediately effect-
ual, in case the colony assemblies should attempt to evade or reject
them; and what those means are, it is not very easy to conceive,
and it has not yet been explained.
Should the parliament of Great Britain, at the same time, be
ever fully established in the right of taxing the colonies, even inde-
pendent of the consent of their own assemblies, the importance of
those assemblies would from that moment be at an end, and with it,
that of all the leading men of British America. Men desire to have
some share in the management of public affairs chiefly on account
of the importance which it gives them. Upon the power which the
greater part of the leading men, the natural aristocracy of every
country, have of preserving or defending their respective impor-
tance, depends the stability and duration of every system of free
government. In the attacks which those leading men are contin-
ually making upon the importance of one another, and in the de-
fence of their own, consists the whole play of domestic faction and
ambition. The leading men of America, like those of all other
countries, desire to preserve their own importance. They feel, or
imagine, that if their assemblies, which they are fond of calling
parliaments, and of considering as equal in authority to the parlia-
ment of Great Britain, should be so far degraded as to become the
AMERICA AND EAST INDIES 5^7
humble ministers and executive officers of that parliament, the
greater part of their own importance would be at an end. They have
rejected, therefore, the proposal of being taxed by parliamentary
requisition, and like other ambitious and high-spirited men, have
rather chosen to draw the sword in defence of their own importance.
Towards the declension of the Roman republic, the allies of Repre-
Rome, who had borne the principal burden of defending the state ?entation
and extending the empire, demanded to be admitted to all the priv- men^in '
ileges of Roman citizens. Upon being refused, the social war broke propor-
out. During the course of that war Rome granted those privileges
to the greater part of them, one by one, and in proportion as they should be
detached themselves from the general confederacy. The parliament offered,
of Great Britain insists upon taxing the colonies; and they refuse
to be taxed by a parliament in which they are not represented. If to
each colony, which should detach itself from the general confeder-
acy, Great Britain should allow such a number of representatives as
suited the proportion of what it contributed to the public revenue
of the empire, in consequence of its being subjected to the same
taxes, and in compensation admitted to the same freedom of trade
with its fellow-subjects at home; the number of its representatives
to be augmented as the proportion of its contribution might after-
wards augment; a new method of acquiring importance, a new and
more dazzling object of ambition would be presented to the leading
men of each colony. Instead of piddling for the little prizes which
are to be found in what may be called the paltry raffle of colony
faction; they might then hope, from the presumption which men
naturally have in their own ability and good fortune, to draw some
of the great prizes which sometimes come from the wheel of the
great state lottery of British politics. Unless this or some other Otherwise
' method is fallen upon, and there seems to be none more obvious
than this, of preserving the importance and of gratifying the ambi- to expect
tion of the leading men of America, it is not very probable that they submis-
will ever voluntarily submit to us; and we ought to consider that ’
the blood which must be shed in forcing them to do so, is, every
drop of it, the blood either of those who are, or of those whom we
wish to have for our fellow-citizens. They are very weak who flat-
ter themselves that, in the state to which things have come, our col-
onies will be easily conquered by force alone. The persons who now
govern the resolutions of what they call their continental congress,
feel in themselves at this moment a degree of importance which,
perhaps the greatest subjects in Europe scarce feel. From shop-
keepers, tradesmen, and attornies, they are become statesmen and
legislators, and are employed in contriving a new form of gov-
and re-
sistance
will be as
obstinate
as that of
Paris.
The dis-
covery of
represen-
tation
S8S XHE WEALTH OF NATIONS
eminent for an extensive empire, which, they flatter themselves,
will become, and which, indeed, seems very likely to become, one of
the greatest and most formidable that ever was in the world. Five
hundred different people, perhaps, who in different ways act imme-
diately under the continental congress; and five hundred thousand,
perhaps, who act under those five hundred, all feel in the same
manner a proportionable rise in their own importance. Almost
every individual of the governing party in America, fills, at present
in his own fancy, a station superior, not only to what he had ever
filled before, but to what he had ever expected to fill; and unless
some new object of ambition is presented either to him or to his
leaders, if he has the ordinary spirit of a man, he will die in defence
of that station.
It is a remark of the president Henaut, that we now read with
pleasure the account of many little transactions of the Ligue, which
when they happened were not perhaps considered as very important
pieces of news. But every man then, says he, fancied himself of
some importance; and the innumerable memoirs which have come
down to us from those times were, the greater part of them, written
by people who took pleasure in recording and magnifying events in
which, they flattered themselves, they had been considerable
actors.^® How obstinately the city of Paris upon that occasion de-
fended itself, what a dreadful famine it supported rather than sub-
mit to the best and afterwards the most beloved of all the French
kings, is well known. The greater part of the citizens, or those who
governed the greater part of them, fought in defence of their own
importance, which they foresaw was to be at an end whenever the
ancient government should be re-established. Our colonies, unless
they can be induced to consent to a union, are very likely to defend
themselves against the best of all mother countries, as obstinately
as the city of Paris did against one of the best of kings.
The idea of representation was unknown in ancient times. When
the people of one state were admitted to the right of citizenship in
another, they had no other means of exercising that right but by
®®“Aucun des regnes precedents n’a fourni plus de volumes, plus d’anec-
dotes, plus d’estampes, plus de pikes fugitives, etc. II y a dans tout cela bien
des choses inutiles; mais comme Henri III, vivait au milieu dc son peuple,
aucun detail des actions de sa vie n’a echappe a la curiosit6; et comme Paris
etait le th6S,tre des principaux evenements de la ligue, les bourgeois qui y
avaient la plus grande part, conservaient soigneusement les moindres faits qui
se passaient sous leurs yeux; tout ce qu’ils voyaient leur paraissait grand,
parce qu’ils y participaient, et nous sommes curieux, sur parole, de faits dont
la plupart ne faisaient peut-etre pas alors une grande nouvelle dans le monde.”
— C. J. F. Hkault, Nouvel Abrigi chronologique de Vhistoire de France, nouv.
ed., 1768, p. 473, A.D. 1589.
“ Eds. 4 and 5 erroneously insert “to” here.
AMERICA AND EAST INDIES 5^9
coming in a body to vote and deliberate with the people of that
other state. The admission of the greater part of the inhabitants of
Italy to the privileges of Roman citizens, completely ruined the
Roman republic. It was no longer possible to distinguish 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
assemblies of the people, could drive out the real citizens, and de-
cide upon the affairs of the republic as if they themselves had been
such. But though America were^^® to send fifty new representatives
to parliament, the door-keeper of the house of commons could
not find any great difficulty in distinguishing between who was and
who was not a member. Though the Roman constitution, therefore,
was necessarily ruined by the union of Rome with the allied states
of Italy, there is not the least probability that the British constitu-
tion would be hurt by the union of Great Britain with her colonies.
That constitution, on the contrary, would be completed by it, and
seems to be imperfect without it. The assembly which deliberates
and decides concerning the affairs of every part of the empire, in
order to be properly informed, ought certainly to have representa-
tives from every part of it. That this union, however, could be eas-
ily effectuated, or that difficulties and great difficulties might not
occur in the execution, I do not pretend. I have yet heard of none,
however, which appear insurmountable. The principal perhaps
arise, not from the nature of things, but from tie prejudices and
opinions of the people both on this and on the other side of the
Atlantic.
We, on this side the water, are afraid lest the multitude of Ameri-
can representatives should overturn the balance of the constitution,
and increase 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 representatives were to be in proportion to the pro-
duce of American taxation, the number of people to be managed
would increase exactly 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 constitu-
tion would, after the union, stand exactly in the same degree of rel-
ative force with regard to one another as they had done before.
The people on the other side of the water are afraid lest their
distance from the seat of government might expose them to many
oppressions. But their representatives in parliament, of which the
number ought from the first to be considerable, would easily be
able to protect them from all oppression. The distance could not
^°®Eds. 1-3 read “was.” ^“^Eds. 1-3 read “was.”
makes the
case dif-
ferent
from that
of Rome
and
Italy.
The
American
repre-
sentatives
could be
managed.
The
Ameri-
cans
would
not be
oppressed.
The dis-
covery of
America
and the
Cape pas-
sage are
the great-
est events
in his-
tory: the
misfor-
tunes of
the na-
tives of
the East
and West
Indies
maybe
tempo-
rary, so
the re-
sults may
be bene-
ficial to
all.
590 THE WEALTH OF NATIONS
much weaken the dependency of the representatives upon the con-
stituent, and the former would still feel that he owed his seat in
parliament, and all the consequence which he derived from it, to
the good-will of the latter. It would be the interest of the former,
therefore, to cultivate that good-will by complaining, with all the
authority of a member of the legislature, of every outrage which
any civil or military officer might be guilty of in those remote parts
of the empire. The distance of America from the seat of govern-
ment, besides, the natives of that country might flatter them-
selves, with some appearance of reason too, would not be of very
long continuance. Such has hitherto been the rapid progress of that
country in wealth, population and improvement, that in the course
of little more than a century, perhaps, the produce of American
might exceed that of British taxation. The seat of the empire would
then naturally remove itself to that part of the empire which con-
tributed most to the general defence and support of the whole.
The discovery of America, and that of a passage to the East In-
dies by the Cape of Good Hope, are the two greatest and most im-
portant events recorded in the history of mankind.^^^ Their conse-
quences have already been very great: but, in the short period of
between two and three centuries which has elapsed since these dis-
coveries were made, it is impossible that the whole extent of their
consequences can have been seen. What benefits, or what misfor-
tunes to mankind may hereafter result from those great events, no
human wisdom can foresee. By uniting, in some measure, the most
distant parts of the world, by enabling them to relieve one another’s
wants, to increase one another’s enjoyments, and to encourage one
another’s industry, their general tendency would seem to be bene-
ficial. To the natives, however, both of the East and West Indies,
all the commercial benefits which can have resulted from those
events have been sunk and lost in the dreadful misfortunes which
they have occasioned. These misfortunes, however, seem to have
arisen rather from accident than from any thing in the nature of
those events themselves. At the particular time when these dis-
coveries were made, the superiority of force happened to be so great
on the side of the Europeans, that they were enabled to commit
with impunity every sort of injustice in those remote countries.
^ Ed. I reads “nations.”
“®Raynal begins Im ffistoire pUlosophique with the words “II n^y a point
eu d’ev 6 neinent aussi interessant pour I’espece humaine en general et pour
les peuples de I’Europe en particulier, que la decouverte du nouveau monde
et le passage aux Indes par le Cap de Bonne-Esperance. Alors a commence
une revolution dans le commerce, dans la puissance des nations, dans les
mceurs, Tindustrie et le gouvernement de tous les peuples ”
AMERICA AND EAST INDIES 59^
Hereafter, perhaps, the natives of those countries may grow strong-
er, or those of Europe may grow weaker, and the inhabitants of all
the different quarters of the world may arrive at that equality of
courage and force which, by inspiring mutual fear, can alone over-
awe the injustice of independent nations into some sort of respect
for the rights of one another. But nothing seems more likely to es-
tablish this equality of force than that mutual communication of
knowledge and of all sorts of improvements which an extensive
commerce from all countries to all countries naturally, or rather
necessarily, carries along with it.
In the mean time one of the principal effects of those discoveries
has been to raise the mercantile system to a degree of splendour
and glory which it could never otherwise have attained to. It is the
object of that system to enrich a great nation rather by trade and
manufactures than by the improvement and cultivation of land,
rather by the industry of the towns than by that of the country.
But, in consequence of those discoveries, the commercial towns of
Europe, instead of being the manufacturers and carriers for but a
very small part of the world (that part of Europe which is washed
by the Atlantic ocean, and the countries which lie round the Baltic
and Mediterranean seas), have now become the manufacturers for
the numerous and thriving cultivators of America, and the carriers,
and in some respects the manufacturers too, for almost all the dif-
ferent nations of Asia, Africa, and America. Two new worlds have
been opened to their industry, each of them much greater and more
extensive than the old one, and the market of one of them growing
still greater and greater every day.
The countries which possess the colonies of America, and which
trade directly to the East Indies, enjoy, indeed, the whole shew and
splendour of this great commerce. Other countries, however, not-
withstanding all the invidious restraints by which it is meant to ex-
clude them, frequently enjoy a greater share of the real benefit of
it. The colonies of Spain and Portugal, for example, give more real
encouragement to the industry of other countries that to that of
Spain and Portugal. In the single article of linen alone the con-
sumption of those colonies amounts, it is said, but I do not pretend
to warrant the quantity, to more than three millions sterling a year.
But this great consumption is almost entirely supplied by France,
Flanders, Holland, and Germany. Spain and Portugal furnish but
a small part of it. The capital which supplies the colonies with this
great quantity of linen is annually distributed among, and fur-
nishes a revenue to the inhabitants of those other countries. The
profits of it only are spent in Spain and Portugal, where they help
Mean-
time the
discovery
has ex-
alted the
mercan-
tile sys-
tem.
The coun-
tries
which
possess
America
and trade
to the
East
Indies
appear to
get all the
advan-
tage, but
this is not
the case.
The mo-
nopoly
regula-
tions
sometimes
harm the
country
which
establish-
es them
more than
others.
The
mother
countries
have en-
grossed
only the
expense
andin-
conve-
niencies
of pos-
sessing
colonies.
592 the wealth of nations
to support the sumptuous profusion of the merchants of Cadiz and
Lisbon.
Even the regulations by which each nation endeavours to secure
to itself the exclusive trade of its own colonies, are frequently more
hurtful to the countries in favour of which they are established
than to those against which they are established. The unjust op-
pression of the industry of other countries falls back, if I may say
so, upon the heads of the oppressors, and crushes their industry
more than it does that of those other countries. By those regula-
tions, for example, the merchant of Hamburgh must send the linen
which he destines for the American market to London, and he must
bring back from thence the tobacco which he destines for the Ger-
man market; because he can neither send the one directly to Am-
erica, nor bring back the other directly from thence. By this
restraint he is probably obliged to sell the one somewhat cheaper,
and to buy the other somewhat dearer than he otherwise might have
done; and his profits are probably somewhat abridged by means of
it. In this trade, however, between Hamburgh and London, he cer-
tainly receives the returns of his capital much more quickly than
he could possibly have done in the direct trade to America, even
though we should suppose, what is by no means the case, that the
payments of America were as punctual as those of London. In the
trade, therefore, to which those regulations confine the merchant
of Hamburgh, his capital can keep in constant employment a much
greater quantity of German industry than it possibly could have
done in the trade from which he is excluded. Though the one em-
ployment, therefore, may to him perhaps be less profitable than
the other, it cannot be less advantageous to his country. It is quite
otherwise with the emplo5mient into which the monopoly naturally
attracts, if I may say so, the capital of the London merchant. That
employment may, perhaps, be more profitable to him than the
greater part of other employments, but, on account of the slowness
of the returns, it cannot be more advantageous to his country.
After all the unjust attempts, therefore, of every country in
Europe to engross to itself the whole advantage of the trade of its
own colonies, no country has yet been able to engross to itself any
thing but the expence of supporting in time of peace and of de-
fending in time of war the oppressive authority which it assumes
over them. The inconveniencies resulting from the possession of its
colonies, every country has engrossed to itself completely. The ad-
vantages resulting from their trade it has been obliged to share
with many other countries.
At first sight, no doubt, the monopoly of the great commerce of
AMERICA AND EAST INDIES 593
America, naturally seems to be an acquisition of the highest value.
To the undiscerning eye of giddy ambition, it naturally presents it-
self amidst the confused scramble of politics and war, as a very
dazzling object to fight for. The dazzling splendour of the object,
however, the immense greatness of the commerce, is the very qual-
ity which renders the monopoly of it hurtful, or which makes one
emplo3mient, in its own nature necessarily less advantageous to the
country than the greater part of other employments, absorb a much
greater proportion of the capital of the country than what would
otherwise have gone to it.
The mercantile stock of every country, it has been shewn in the
second book,^®^ naturally seeks, if one may say so, the employ-
ment most advantageous to that country. If it is employed in the
carrying trade, the country to which it belongs becomes the em-
porium of the goods of all the countries whose trade that stock
carries on. But the owner of that stock necessarily wishes to dispose
of as great a part of those goods as he can at home. He thereby
saves himself the trouble, risk, and expence of exportation, and he
will upon that account be glad to sell them at home, not only for a
much smaller price, but with somewhat a smaller profit than he
might expect to make by sending them abroad. He naturally, there-
fore, endeavours as much as he can to turn his carrying trade into a
foreign trade of consumption. If his stock again is employed in a
foreign trade of consumption, he will, for the same reason, be glad
to dispose of at home as great a part as he can of the home goods,
which he collects in order to export to some foreign market, and he
will thus endeavour, as much as he can, to turn his foreign trade of
consumption into a home trade. The mercantile stock of every
country naturally courts in this manner the near, and shuns the dis-
tant employment; naturally courts the employment in which the
returns are frequent, and shuns that in which they are distant and
slow; naturally courts the employment in which it can maintain the
greatest quantity of productive labour in the country to which it
belongs, or in which its owner resides, and shuns that in which it
can maintain there the smallest quantity. It naturally courts the
employment which in ordinary cases is most advantageous, and
shuns that which in ordinary cases is least advantageous to that
country.
But if in any of those distant employments, which in ordinary
cases are less advantageous to the country, the profit should hap-
pen to rise somewhat higher than what is sufficient to balance the
natural preference which is given to nearer employments, this
Above, pp. 34I-3SS-
The mo-
nopoly of
American
trade is a
darling
object.
The stock
of a
country
naturally
seeks the
employ-
ment
most ad'
vanta-
geous to
the coun-
try,
preferring
the near
to the
more dis-
tant em-
ploy-
ments,
unless
profits are
higher in
the more
distant,
594
which in-
dicates
that the
more dis-
tant em-
ployment
is neces-
sary.
If too
much
goes to
any em-
ployment,
profit
falls in
that em-
ployment
and the
proper
distribu-
THE WEALTH OF NATIONS
superiority of profit will draw stock from those nearer employ-
ments, till the profits of all return to their proper level. This super-
iority of profit, however, is a proof that, in the actual circumstances
of the society, those distant emplo5anents are somewhat under-
stocked in proportion to other employments, and that the stock of
the society is not distributed in the properest manner among all the
different employments carried on in it. It is a proof that something
is either bought cheaper or sold dearer than it ought to be, and that
some particular class of citizens is more or less oppressed either by
paying more or by getting less than what is suitable to that equal-
ity, which ought to take place, and which naturally does take place
among all the different classes of them. Though the same capital
never will maintain the same quantity of productive labour in a
distant as in a near employment, yet a distant employment may be
as necessary for the welfare of the society as a near one; the goods
which the distant employment deals in being necessary, perhaps,
for carrying on many of the nearer employments. But if the profits
of those who deal in such goods are above their proper level, those
goods will be sold dearer than they ought to be, or somewhat above
their natural price, and all those engaged in the nearer employ-
ments will be more or less oppressed by this high price. Their in-
terest, therefore, in this case requires that some stock should be
withdrawn from those nearer employments, and turned towards
that distant one, in order to reduce its profits to their proper
level, and the price of the goods which it deals in to their natural
price. In this extraordinary case, the public interest requires that
some stock should be withdrawn from those employments which
in ordinary cases are more advantageous, and turned towards one
which in ordinary cases is less advantageous to the public: and in
this extraordinary case, the natural interests and inclinations of
men coincide as exactly with the public interest as in all other or-
dinary cases, and lead them to withdraw stock from the near, and
to turn it towards the distant employment.
It is thus that the private interests and passions of individuals
naturally dispose them to turn their stock towards the employ-
nients which in ordinary cases are most advantageous to the so-
ciety. But if from this natural preference they should turn too
much of it towards those employments, the fall of profit in them
and the rise of it in all others immediately dispose them to alter
this faulty distribution. Without any intervention of law, there-
fore, the private interests and passions of men naturally lead them
to divide and distribute the stock of every society, among all the
Ed. I reads “distant employment.”
AMERICA AND EAST INDIES 595
different employments carried on in it, as nearly as possible in the
proportion which is most agreeable to the interest of the whole
society.
All the different regulations of the mercantile system, necessar-
ily derange more or less this natural and most advantageous dis-
tribution of stock. But those which concern the trade to America
and the East Indies derange it perhaps more than any other; be-
cause the trade to those two great continents absorbs a greater
quantity of stock than any two other branches of trade. The regu-
lations, however, by which this derangement is effected in those
two different branches of trade are not altogether the same. Mon-
opoly is the great engine of both; but it is a different sort of mon-
opoly. Monopoly of one kind or another, indeed, seems to be the
sole engine of the mercantile system.
In the trade to America every nation endeavours to engross as
much as possible the whole market of its own colonies, by fairly
excluding all other nations from any direct trade to them. During
the greater part of the sixteenth century, the Portugueze endeav-
oured to manage the trade to the East Indies in the same manner,
by claiming the sole right of sailing in the Indian seas, on account of
the merit of having first found out the road to them. The Dutch
still continue to exclude all other European nations from any di-
rect trade to their spice islands. Monopolies of this kind are evi-
dently established against all other European nations, who are
thereby not only excluded from a trade to which it might be con-
venient for them to turn some part of their stock, but are obliged
to buy the goods which that trade deals in somewhat dearer, than
if they could import them themselves directly from the countries
which produce them.
But since the fall of the power of Portugal, no European nation
has claimed the exclusive right of sailing in the Indian seas, of
which the principal ports are now open to the ships of all Euro-
pean nations. Except in Portugal,’^^’’ however, and within these
few years in France,^ the trade to the East Indies has in every
European country been subjected to an exclusive company. Mon-
opolies of this kind are properly established against the very na-
tion which erects them. The greater part of that nation are thereby
not only excluded from a trade to which it might be convenient
for them to turn some part of their stock, but are obliged to buy
the goods which that trade deals in, somewhat dearer than if it
See below, p. 598.
'^^’’The monopoly of the French East India Company was abolished in 1769.
—See the Continuation of Anderson’s Commerce, 1801, vol. iv., p. 128.
tion is
soon re-
stored.
The mer-
cantile
system
disturbs
this dis-
tribution,
especially
in regard
to Amer-
ican and
Indian
trade.
The Por-
tuguese
attempted
at first to
exclude
all other
nations
from
trading in
the In-
dian Seas,
and the
Dutch
still ex-
clude all
other na-
tions
from
trade
with the *
Spice
Islands.
Now the
principal
ports arc
open, but
each
country
has estab-
lished an
exclusive
company.
Monopo-
lies of the
American
kind al-
ways at-
tract, but
monopo-
lies of ex-
clusive
com-
panies
some-
times at-
tract,
some-
times
repel
stock.
In poor
countries
they at-
tract,
in rich
they
repel.
596 the wealth of nations
was open and free to all their countrymen. Since the establishment
of the English East India company, for example, the other inhabi-
tants of England, over and above being excluded from the trade,
must have paid in the price of the East India goods which they
have consumed, not only for all the extraordinary profits which the
company may have made upon those goods in consequence of their
monopoly, but for all the extraordinary waste which the fraud and
abuse, inseparable from the management of the affairs of so great a
company, must necessarily have occasioned. The absurdity of this
second kind of monopoly, therefore, is much more manifest than
that of the first.
Both these kinds of monopolies derange more or less the natural
distribution of the stock of the society: but they do not always de-
range it in the same way.
Monopolies of the first kind always attract to the particular
trade in which they are established, a greater proportion of the
stock of the society than what would go to that trade of its own
accord.
Monopolies of the second kind may sometimes attract stock to-
wards the particular trade in which they are established, and some-
times repel it from that trade according to different circumstances.
In poor countries they naturally attract towards that trade more
stock than would otherwise go to it. In rich countries they natu-
rally repel from it a good deal of stock which would otherwise go
to it.
Such poor countries as Sweden and Denmark, for example,
would probably have never sent a single ship to the East Indies,
had not the trade been subjected to an exclusive company. The es-
tablishment of such a company necessarily encourages adventur-
ers. Their monopoly secures them against all competitors in the
home market, and they have the same chance for foreign markets
with the traders of other nations. Their monopoly shows them the
certainty of a great profit upon a considerable quantity of goods,
and the chance of a considerable profit upon a great quantity.
Without such extraordinary encouragement, the poor traders of
such poor countries would probably never have thought of hazard-
ing their small capitals in so very distant and uncertain an adven-
ture as the trade to the East Indies must naturally have appeared
to them.
Such a rich country as Holland, on the contrary, would prob-
ably, in the case of a free trade, send many more ships to the East
Indies than it actually does. The limited stock of the Dutch East
AMERICA AND EAST INDIES 597
India company probably repels from that trade many great mer-
cantile capitals which would otherwise go to it. The mercantile
capital of Holland is so great that it is, as it were, continually over-
flowing, sometimes into the public funds of foreign countries, some-
times into loans to private traders and adventurers of foreign coun-
tries, sometimes into the most roundabout foreign trades of con-
sumption, and sometimes into the carrying trade. All near employ-
ments 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 necessarily flows towards the most dis-
tant employments. The trade to the East Indies, if it were alto-
gether free, would probably absorb the greater part of this re-
dundant capital. The East Indies offer a market both for the
manufactures of Europe and for the gold and silver as well as for
several other productions of America, greater and more extensive
than both Europe and America put together.
Every derangement of the natural distribution of stock is neces-
sarily hurtful to the society in which it takes place; whether it be
by repelling from a particular trade the stock which would other-
wise go to it, or by attracting towards a particular trade that which
would not otherwise come to it. If, without any exclusive com-
pany, the trade of Holland to the East Indies would be greater than
it actually is, that country must suffer a considerable loss by part
of its capital being excluded from the employment most convenient
for that part. And in the same manner, if, without an exclusive
company, the trade of Sweden and Denmark to the East Indies
would be less than it actually is, or, what perhaps is more probable,
would not exist at all, those two countries must likewise suffer a
considerable loss by part of their capital being drawn into an em-
ployment which must be more or less unsuitable to their present
circumstances. Better for them, perhaps, in their present circum-
stances, to buy East India goods of other nations, even though they
should pay somewhat dearer, than to turn so great a part of their
small capital to so very distant a trade, in which the returns are so
very slow, in which that capital can maintain so small a quantity of
productive labour at home, where productive labour is so much
wanted, where so little is done, and where so much is to do.
Though without an exclusive company, therefore, a particular
country should not be able to carry on any direct trade to the East
Indies, it will not from thence follow that such a company ought to
’^^Raynal, Histoire philoi^ophique, ed. Amsterdam, 1773, tom. p. 203,
gives the original capital as 6,459,840 florins.
Eds. 1-3 read *‘if it was.”
Both ef-
fects are
hurtful,
A country
which
cannot
trade to
the East
Indies
without
an exclu-
sive com-
pany
should
not trade
there.
The idea
that the
large
capital of
a com-
pany is
necessary
is falla-
cious.
59S THE WEALTH OF NATIONS
be established there, but only that such a country ought not in these
circumstances to trade directly to the East Indies. That such com-
panies are not in general necessary for carrying on the East India
trade, is sufficiently demonstrated by the experience of the Portu-
gueze, who enjoyed almost the whole of it for more than a century
together without any exclusive company.
No private merchant, it has been said, could well have capital
sufficient to maintain factors and agents in the different ports of the
East Indies, in order to provide goods for the ships which he might
occasionally send thither; and yet, unless he was able to do this,
the difificulty of finding a cargo might frequently make his ships
lose the season for returning, and the expence of so long a delay
would not only eat up the whole profit of the adventure, but fre-
quently occasion a very considerable loss. This argument, how-
ever, if it proved any thing at all, would prove that no one great
branch of trade could be carried on without an exclusive company,
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
sufficient, for carrying on all the subordinate branches which must
be carried on, in order to carry on the principal one.^^^ But when a
nation is ripe for any great branch of trade, some merchants natu-
rally turn their capitals towards the principal, and some towards
the subordinate branches of it; and though all the different
branches of it are in this manner carried on, yet it very seldom
happens that they are all carried on by the capital of one private
merchant. If a nation, therefore, is ripe for the East India trade, a
certain portion of its capital will naturally divide itself among all
the different branches of that trade. Some of its merchants will
find it for their interest to reside in the East Indies, and to employ
their capitals there in providing goods for the ships which are to
be sent out by other merchants who reside in Europe. The settle-
ments which different European nations have obtained in the East
Indies, if they were taken from the exclusive companies to which
they at present belong, and put under the immediate protection of
the sovereign, would render this residence both safe and easy, at
least to the merchants of the particular nations to whom those set-
tlements belong. If at any particular time that part of the capital
of any country which of its own accord tended and inclined, if I
may say so, towards the East India trade, was not sufficient for
carrying on all those 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 some time, even at a
Ed. I reads “the principal branch.’^
AMERICA AND EAST INDIES 599
higher price, from other European nations, the East India goods it
had occasion for, than to import them itself directly from the East
Indies. What it might lose by the high price of those goods could
seldom be equal to the loss which it would sustain by the distrac-
tion of a large portion of its capital from other employments more
necessary, or more useful, or more suitable to its circumstances and
situation, than a direct trade to the East Indies.
Though the Europeans possess many considerable settlements
both upon the coast of Africa and in the East Indies, they have not
yet established in either of those countries such numerous and
thriving colonies as those in the islands and continent of Amer-
ica. Africa, however, as well as several of the countries compre-
hended under the general name of the East Indies, are inhabited
by barbarous nations. But those nations were by no means so weak
and defenceless as the miserable and helpless Americans; and in
proportion to the natural fertility of the countries which they in-
habited, they were besides much more populous. The most bar-
barous nations either of Africa or of the East Indies were shep-
herds; even the Hottentots were so.^^^ But the natives of every
part of America, except Mexico and Peru, were only hunters; and
the difference is very great between the number of shepherds and
that of hunters whom the same extent of equally fertile territory
can maintain. In Africa and the East Indies, therefore, it was more
difficult to displace the natives, and to extend the European plan-
tations over the greater part of the lands of the original inhabi-
tants. The genius of exclusive companies, besides, is unfavourable,
it has already been observed,^ to the growth of new colonies, and
has probably been the principal cause of the little progress which
they have made- in the East Indies. The Portugueze carried on the
trade both to Africa and the East Indies without any exclusive
companies, and their settlements at Congo, Angola, and Benguela
on the coast of Africa, and at Goa in the East Indies, though much
depressed by superstition and every sort of bad government, yet
bear some faint resemblance to the colonies of America, and are
partly inhabited by Portugueze who have been established there
for several generations. The Dutch settlements at the Cape of
Good Hope and at Batavia, are at present the most considerable
colonies which the Europeans have established either in Africa or
in the East Indies, and both these settlements are peculiarly
fortunate in their situation. The Cape of Good Hope was inhabited
by a race of people almost as barbarous and quite as incapable of
There are
not nu-
merous
and thriv-
ing colo-
nies in
Africa
and the
East
Indies,
as in
America.
“^Raynal, Hhtoire philosophique, ijjir tom. i., p. jyS.
Above, pp. 541, 542. “*Ed. i reads “those.’
The
Dutch ex-
clusive
company
destroys
spices and
nutmeg
trees,
600 XHE WEALTH OF NATIONS
defending themselves as the natives of America. It is besides the
half-way house, if one may say so, between Europe and the East
Indies, at which almost every European ship makes some stay both
in going and returning. The supplying of those ships with every
sort of fresh provisions, with fruit and sometimes with wine, af-
fords alone a very extensive market for the surplus produce of the
colonists. What the Cape of Good Hope is between Europe and
every part of the East Indies, Batavia is between the principal
countries of the East Indies. It lies upon the most frequented road
from Indostan to China and Japan, and is nearly about mid-way
upon that road. Almost all the ships too that sail 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
East Indies; not only of that part of it which is carried on by Eu-
ropeans, but of that which is carried on by the native Indians; and
vessels navigated by the inhabitants of China and Japan, of Ton-
quin, Malacca, Cochin-China, and the island of Celebes, are fre-
quently to be seen in its port. Such advantageous situations have
enabled those two colonies to surmount all the obstacles which the
oppressive genius of an exclusive company may have occasionally
opposed to their growth. They have enabled Batavia to surmount
the additional disadvantage of perhaps the most unwholesome cli-
mate in the world.
The English and Dutch companies, though they have established
no considerable colonies, except the two above mentioned, have
both made considerable conquests in the East Indies. But in the
manner in which they both govern their new subjects, the natural
genius of an exclusive company has shown itself most distinctly.
In the spice islands the Dutch are said to^^^ burn all the spiceries
which a fertile season produces beyond what they expect to dispose
of in Europe with such a profit as they think sufficient. In the is-
lands where they have no settlements, they give a premium to
those who collect the young blossoms and green leaves of the clove
and nutmeg trees which naturally grow there, but which this sav-
age policy has now, it is said, almost completely extirpated.
Even in the islands where they have settlements they have very
much reduced, it is said, the number of those trees. If the produce
even of their own islands was much greater than what suited their
market, the natives, they suspect, might find means to convey
some part of it to other nations; and the best way, they imagine,
^^^Ed. I does not contain “are said to.” The statement has already been
twice made, pp. 158, 491,
^^®Ed. I reads “barbarous.”
AMERICA AND EAST INDIES
to secure their own monopoly, is to take care that no more shall
grow than what they themselves carry to market. By different arts
of oppression they have reduced the population of several of the
Moluccas nearly to the number which is sufficient to supply with
fresh provisions and other necessaries of life their own insignificant
garrisons, and such of their ships as occasionally come there for a
cargo of spices. Under the government even of the Portugueze,
however, those islands are said to have been tolerably well inhab-
ited. The English company have not yet had time to establish in
Bengal so perfectly destructive a system. The plan of their gov-
ernment, however, has had exactly the same tendency. It has not
been uncommon, I am well assured, for the chief, that is, the first
clerk of a factory, to order a peasant to plough up a rich field of
poppies, and sow it with rice or some other grain. The pretence
was, to prevent a scarcity of provisions; but the real reason, to give
the chief an opportunity of selling at a better price a large quan-
tity of opium, which he happened then to have upon hand. Upon
other occasions the order has been reversed; and a rich field of
rice or other grain has been ploughed up, in order to make room
for a plantation of poppies; when the chief foresaw that extra-
ordinary profit was likely to be made by opium. The servants of the
company have upon several occasions attempted to establish in
their own favour the monopoly of some of the most important
branches, not only of the foreign, but of the inland trade of the
country. Had they been allowed to go on, it is impossible that they
should not at some time or another have attempted to restrain the
production of the particular articles of which they had thus usurped
the monopoly, not only to the quantity which they themselves
could purchase, but to that which they could expect to sell with
such a profit as they might think sufficient. In the course of a cen-
tury or two, the policy of the English company would in this man-
ner have probably proved as completely destructive as that of the
Dutch.
Nothing, however, can be more directly contrary to the real in-
terest of those companies, considered as the sovereigns of the coun-
tries which they have conquered, than this destructive plan. In
almost all countries the revenue of the sovereign is drawn from
that of the people. The greater the revenue of the people, there-
fore, the greater the annual produce of their land and labour, the
more they can afford to the sovereign. It is his interest, therefore,
to increase as much as possible that annual produce. But if this is
the interest of every sovereign, it is peculiarly so of one whose
revenue, like that of the sovereign of Bengal, arises chiefly from a
and has
reduced
the popu-
lation of
the Mo-
luccas
The Eng-
lish com-
pany has
the same
tendency
This
destruct-
ive system
is con-
trary to
their in-
terest as
sover-
eigns,
but they
prefer the
transitory
profits of
the mono-
polist
merchant
to the
perma-
nent re-
venue of
the sover-
eign.
602 XHE WEALTH OF NATIONS
land-rent. That rent must necessarily be in proportion to the quan-
tity and value of the produce, and both the one and the other must
depend upon the extent of the market. The quantity will always be
suited with more or less exactness to the consumption of those who
can afford to pay for it, and the price which they will pay will al-
ways be in proportion to the eagerness of their competition. It is the
interest of such a sovereign, therefore, to open the most extensive
market for the produce of his country, to allow the most perfect
freedom of commerce, in order to increase as much as possible the
number and the competition of buyers; and upon this account to
abolish, not only all monopolies, but all restraints upon the trans-
portation of the home produce from one part of the country to an-
other, upon its exportation to foreign countries, or upon the impor-
tation of goods of any kind for which it can be exchanged. He is in
this manner most likely to increase both the quantity and value of
that produce, and consequently of his own share of it, or of his own
revenue.
But a company of merchants are, it seems, incapable of consider-
ing themselves as sovereigns, even after they have become such.
Trade, or buying in order to sell again, they still consider as
their principal business, and by a strange absurdity, regard the
character of the sovereign as but an appendix to that of the mer-
chant, as something which ought to be made subservient to it, or by
means of which they may be enabled to buy cheaper in India, and
thereby to sell with a better profit in Europe. They endeavour for
this purpose to keep out as much as possible all competitors from
the market of the countries which are subject to their government,
and consequently to reduce, at least, some part of the surplus prod-
uce of those countries to what is barely sufficient for supplying their
own demand, or to what they can expect to sell in Europe with such
a profit as they may think reasonable. Their mercantile habits draw
them in this manner, almost necessarily, though perhaps insensibly,
to prefer upon all ordinary occasions the little and transitory profit
of the monopolist to the great and permanent revenue of the sover-
eign, and would gradually lead them to treat the countries subject
to their government nearly as the Dutch treat the Moluccas. It is
the interest of the East India company considered as sovereigns,
that the European goods which are carried to their Indian domin-
ions, should be sold there as cheap as possible; and that the Indian
goods which are brought from thence should bring there as good a
price, or should be sold there as dear as possible. But the reverse of
this is their interest as merchants. As sovereigns, their interest is
“®Ed. I reads “the.”
AMERICA AND EAST INDIES ^^3
exactly the same with that of the country which they govern. As
merchants, their interest is directly opposite to that interest,^^'^
But if the genius of such a government, even as to what concerns
its direction in Europe, is in this manner essentially and perhaps in-
curably faulty, that of its administration in India is still more so.
That administration is necessarily composed of a council of mer-
chants, a profession no doubt extremely respectable, but which in
no country in the world carries along with it that sort of authority
which naturally over-awes the people, and without force commands
their willing obedience. Such a council can command obedience only
by the military force with which they are accompanied, and their
government is therefore necessarily military and despotical. Their
proper business, however, is that of merchants. It is to sell, upon
their masters’ account, the European goods consigned to them, and
to buy in return Indian goods for the European market. It is to sell
the one as dear and to buy the other as cheap as possible, and conse-
quently to exclude as much as possible all rivals from the particular
market where they keep their shop. The genius of the administra-
tion, therefore, so far as concerns the trade of the company, is the
same as that of the direction. It tends to make government subser-
vient to the interest of monopoly, and consequently to stunt the
natural growth of some parts at least of the surplus produce of the
country to what is barely suf&cient for answering the demand of
the company.
All the members of the administration, besides, trade more or less
upon their own account, and it is in vain to prohibit them from do-
ing so. Nothing can be more completely foolish than to expect that
the clerks of a great counting-house at ten thousand miles distance,
and consequently almost quite out of sight, should, upon a simple
order from their masters, give up at once doing any sort of business
upon their own account, abandon for ever all hopes of malcing a
fortune, of which they have the means in their hands, and content
themselves with the moderate salaries which those masters allow
them, and which, moderate as they are, can seldom be augmented,
being commonly as large as the real profits of the company trade
can afford. In such circumstances, to prohibit the servants of the
company from trading upon their own account, can have scarce any
other effect than to enable the superior servants, under pretence of
executing their masters order, to oppress such of the inferior ones as
have had the misfortune to fall under their displeasure. The ser-
vants naturally endeavour to establish the same monopoly in fa-
vour of their own private trade as of the public trade of the com-
Ed. I does not contain these four sentences beginning “It is the interest.”
The ad-
ministra-
tion in
India
thinks
only of
buying
cheap and
selling
dear,
its mem-
bers trade
on their
own ac-
count ami
cannot b(‘
prevented
from do-
ing so,
and this
private
trade is
more ex-
tensive
and
harmful
than the
public
trade of
the com-
pany,
The in-
terest of
the ser-
vants is
not, like
the real
interest
of the
604 the wealth of nations
pany. If they are suffered to act as they could wish, they will estab-
lish this monopoly openly and directly, by fairly prohibiting all
other people from trading in the articles in which they chuse to
deal; and this, perhaps, is the best and least oppressive way of es-
tablishing it. But if by an order from Europe they are prohibited
from doing this, they will, notwithstanding, endeavour to establish
a monopoly of the same kind, secretly and indirectly, in a way that
is much more destructive to the country. They will employ the
whole authority of government, and pervert the administration of
justice, in order to harass and ruin those who interfere with them in
any branch of commerce which, by means of agents, either con-
cealed, or at least not publicly avowed, they may chuse to carry on.
But the private trade of the servants will naturally extend to a
much greater variety of articles than the public trade of the com-
pany. The public trade of the company extends no further than
the trade with Europe, and comprehends a part only of the foreign
trade of the country. But the private trade of the servants may ex-
tend to all the different branches both of its inland and foreign
trade. The monopoly of the company can tend only to stunt the
natural growth of that part of the surplus produce which, in the
case of a free trade, would be exported to Europe. That of the ser-
vants tends to stunt the natural growth of every part of the produce
in which they chuse to deal, of what is destined for home consump-
tion, as well as of what is destined for exportation; and consequent-
ly to degrade the cultivation of the whole country, and to reduce
the number of its inhabitants. It tends to reduce the quantity of
every sort of produce, even that of the necessaries of life, whenever
the servants of the company chuse to deal in them, to what those
servants can both afford to buy and expect to sell with such a profit
as pleases them.^^®
From the nature of their situation too the servants must be more
disposed to support with rigorous severity their own interest
against that of the country which they govern, than their masters
can be to support theirs. The country belongs to their masters, who
cannot avoid having some regard for the interest of what belongs
to them. But it does not belong to the servants. The real interest of
Smith had in his library (see Bonar’s Catalogue, p. 15) William Bolts,
Considerations on India Affdrs, particularly respecting the present Uate of
Bengal and its Dependencies, ed. 1772. Pt, i., ch. xiv,, of this is “On the general
modern trade of the English in Bengal; on the oppressions and monopolies
which have been the causes of the decline of trade, the decrease of the rev-
enues, and the present ruinous condition of affairs in Bengal.” At p. 215 we find
“the servants of the Company . . . directly or indirectly monopolise what-
ever branches they please of the internal trade of those countries,”
AMERICA AND EAST INDIES
their masters, if they were capable of understanding it, is the same company,
with that of the country, and it is from ignorance chiefly, and
the meanness of mercantile prejudice, that they ever oppress it. But of the
the real interest of the servants is by no means the same with that county,
of the country, and the most perfect information would not neces-
sarily put an end to their oppressions. The regulations accordingly
which have been sent out from Europe, though they have been fre-
quently weak, have upon most occasions been well-meaning.^^^
More intelligence and perhaps less good-meaning has sometimes
appeared in those established by the servants in India. It is a very
singular government in which every member of the administration
wishes to get out of the country, and consequently to have done
with the government, as soon as he can, and to whose interest, the
day after he has left it and carried his whole fortune with him, it is
perfectly indifferent though the whole country was swallowed
up by an earthquake.
I mean not, however, by any thing which I have here said, to The evils
throw any odious imputation upon the general character of the ser-
vants of the East India company, and much less upon that of any system,
particular persons. It is the system of government, the situation in
The interest of every proprietor of India Stock, however, is by no means
the same with that of the country in the government of which his vole gives
him some influence. See Book V. Chap. i. Pait 3d. This note appears first in
ed. 3 ; ed. 2 has the following note: “This would be exactly true if those mas-
ters never had any other interest but that which belongs to them as Pro-
prietors of India stock. But they frequently have another of much greater
importance. Frequently a man of great, sometimes even a man of moderate
lortune, is willing to give thirteen or fourteen hundred pounds (the present
price of a thousand pounds share in India stock) merely for the influence
which he expects to acquire by a vote in the Court of Proprietors. It gives
him a share, though not in the plunder, yet in the appointment of the plun-
derers of India; the Directors, though they make those appointments, being
necessarily more or less under the influence of the Court of Proprietors, which
not only elects them, but sometimes over-rules their appointments A man of
great or even a man of moderate fortune, provided he can enfoy this influence
for a few years, and thereby get a certain number of his friends appointed to
employments in India, frequently cares little about the dividend which he
can expect from so small a capital, or even about the improvement or loss of
the capital itself upon which his vote is founded. About the prosperity or
ruin of the great empire, in the government of which that vote gives him a
share, he seldom cures at all. No other sovereigns ever were, or from the na-
ture of things ever could be, so perfectly indifferent about the happiness or
misery of their subjects, the improvement or waste of their dominions, the
glory or disgrace of their administration, as, from irresistible moral causes,
the greater part of the Proprietors of such a mercantile Company are, and
necessarily must be.’' This matter with some slight alterations reappears in
the portion of hi v , chap, i., part iii , art. ist, which was added in ed 3 b{ -
low, p 7)0
Ed. I reads “ignorance only.”
Ed. j reads “have commonly been well meaning.”
'"Ed. T reads “if.”
the char-
acter of
the men
who ad-
minister
it.
Exclusive
com-
panies are
nuisances.
606 the wealth of nations
which they are placed, that I mean to censure; not the charac-
ter of those who have acted in it. They acted as their situation nat-
urally directed, and they who have clamoured the loudest against
them would, probably, not have acted better themselves. In war
and negociation, the councils of Madras and Calcutta have upon
several occasions conducted themselves with a resolution and de-
cisive wisdom which would have done honour to the senate of
Rome in the best days of that republic. The members of those
councils, however, had been bred to professions very different from
war and politics. But their situation alone, without education, ex-
perience, or even example, seems to have formed in them all at once
the great qualities which it required, and to have inspired them
both with abilities and virtues which they themselves could not
well know that they possessed. If upon some occasions, therefore, it
has animated them to actions of magnanimity which could not well
have been expected from them, we should not wonder if upon
others it has prompted them to exploits of somewhat a different
nature.
Such exclusive companies, therefore, are nuisances in every re-
spect; always more or less inconvenient to the countries in which
they are established, and destructive to those which have the mis-
fortune to fall under their government.
^Eds. I and 2 read “were.”
CHAPTER VIII
CONCLUSION OF THE MERCANTILE SYSTEM ^
Though the encouragement of exportation, and the discourage-
ment of importation, are the two great engines by which the mer-
cantile system proposes to enrich every country, yet with regard to
some particular commodities, it seems to follow an opposite plan:
to discourage exportation and to encourage importation. Its ulti-
mate object, however, it pretends, is always the same, to enrich the
country by an advantageous balance of trade. It discourages the
exportation of the materials of manufacture, and of the instruments
of trade, in order to give our own workmen an advantage, and to
enable them to undersell those of other nations in all foreign mar-
kets: and by restraining, in this manner, the exportation of a few
commodities, of no great price, it proposes to occasion a much
greater and more valuable exportation of others. It encourages the
importation 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 manufac-
tured commodities. I do not observe, at least in our Statute Book,
any encouragement given to the importation of the instruments of
trade. When manufactures have advanced to a certain pitch of
greatness, the fabrication of the instruments of trade becomes itself
the object of a great number of very important manufactures. To
give any particular encouragement to the importation of such in-
struments, would interfere too much with the interest of those man-
ufactures. Such importation, therefore, instead of being encour-
aged, has frequently been prohibited. Thus the importation of wool
cards, except from Ireland, or when brought in as wreck or prize
goods, was prohibited by the 3d of Edward IV.; - which prohibi-
tion was renewed by the 39th of Elizabeth,'"* and has been contin-
ued and rendered perpetual by subsequent laws.'^
The importation of the materials of manufacture has sometimes
^This chapter appears first in Additions and Corrections and ed. 3.
^ C 4 “ C 14 ^3 Car. I., c. 4; 13 and 14 Car. 11 , c. 19.
The mer-
cantile
system
discoui-
ages the
exportar
tion of
materials
of manu-
facture
and in-
struments
of trade.
It encour-
ages the
importa-
tion ol
materials
though
not of in-
struments
of trade.
Various
materials
are ex-
empt
from
customs
duties.
Yarn,
though a
manufac-
tured
article is
free from
duty,
608 XHE WEALTH OF NATIONS
been encouraged by an exemption from the duties to which other
goods are subject, and sometimes by bounties.
The importation of sheep’s wool from several different coun-
tries,^ of cotton wool from dl countries,® of undressed flax,'^ of the
greater part of d3dng drugs,® of the greater part of undressed hides
from Ireland or the British colonies,® of seal skins from the British
Greenland fishery,^® of pig and bar iron from the British colonies,
as well as of several other materials of manufacture, has been en-
couraged by an exemption from all duties, if properly entered at
the customhouse. The private interest of our merchants and manu-
factures may, perhaps, have extorted from the legislature these ex-
emptions, as well as the greater part of our other commercial regu-
lations. They are, however, perfectly just and reasonable, and if,
consistently with the necessities of the state, they could be extend-
ed to all the other materials of manufacture, the public would cer-
tainly be a gainer.
The avidity of our great manufacturers, however, has in some
cases extended these exemptions a good deal beyond what can just-
ly be considered as the rude materials of their work. By the 24
Geo. 11 . chap. 46. a small duty of only one penny the pound was
imposed upon the importation of foreign brown linen yarn, instead
of much higher duties to which it had been subjected before, viz. of
sixpence the pound upon sail yarn, of one shilling the pound upon
all French and Dutch yarn, and of two pounds thirteen shillings
and fourpence upon the hundred weight of all spruce or Muscovia
yarn.^^ But our manufacturers were not long satisfied with this re-
duction. By the 29th of the same king, chap. 15. the same law
which gave a bounty upon the exportation of British and Irish
linen of which the price did not exceed eighteen pence the yard,
even this small duty upon the importation of brown linen yarn was
taken away. In the different operations, however, which are nec-
essary for the preparation of linen yarn, a good deal more indus-
try is employed, than in the subsequent operation of preparing
linen cloth from linen yarn. To say nothing of the industry of the
flax-growers and flax-dressers, three or four spinners, at least, are
°Froni Ireland, 12 Geo. II., c. 21; 26 Geo. II., c. 8. Spanish wool for cloth-
ing and Spanish felt wool.—Saxby, British Customs, p. 263.
Geo. IIL, c. 32, § 20. ^4 Geo. II., c. 27.
® 8 Geo. I., c. 15, § 10 ; see below, p. 621.
Geo. III., c. 39, § I, continued by 14 Geo. III., c. 86, § ii, and 21 Geo.
III., c. 29, § 3.
Geo. III., c. 31, § 10. “Above, p. 547.
“ Smith has here inadvertently given the rates at which the articles were
valued in the “Book of Rates,” 12 Car. II., c. 4, instead of the duties, which
would be 20 per cent, on the rates. See below, pp. 830-831.
CONCLUSION OF MERCANTILE SYSTEM ^^9
necessary, in order to keep one weaver in constant employment;
and more than four-fifths of the whole quantity of labour, neces-
sary for the preparation of linen cloth, is employed in that of linen
yarn; but our spinners are poor people, women commonly, scat-
tered about in all different parts of the country, without support or
protection. It is not by the sale of their work, but by that of the
complete work of the weavers, that our great master manufac-
turers make their profits. As it is their interest to sell the complete
manufacture as dear, so it is to buy the materials as cheap as possi-
ble. By extorting from the legislature bounties upon the exporta-
tion of their own linen, high duties upon the importation of all for-
eign linen, and a total prohibition of the home consumption of some
sorts of French linen,^^ they endeavour to sell their own goods as
dear as possible. 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 spinners as cheap as possible. They are as intent to keep down
the wages of their own weavers, as the earnings of the poor spin-
ners, and it is by no means for the benefit of the workman, that
they endeavour either to raise the price of the complete work, or to
lower that of the rude materials. It is the industry which is carried
on for the benefit of the rich and the powerful, that is principally
encouraged by our mercantile system. That which is carried on for
the benefit of the poor and the indigent, is too often, either neg-
lected, or oppressed.
Both the bounty upon the exportation of linen, and the exemp-
tion from duty upon the importation of foreign yarn, which were
granted only for fifteen years, but continued by two different pro-
longations,’'-^ expire with the end of the session of parliament which
shall immediately follow the 24th of June 1786.
The encouragement given to the importation of the materials of
manufacture by bounties, has been principally confined to such as
were imported from our American plantations.
The first bounties of this kind were those granted, about the be-
ginning of the present century, upon the importation of naval
stores from America.'"' Under this denomination were compre-
hended timber fit for masts, yards, and bowsprits; hemp; tar,
pitch, and turpentine. The bounty, however, of one pound the ton
upon masting-timber, and that of six pounds the ton upon hemp,
were extended to such as should be imported into England from
because
the spin-
ners are
poor, un-
protected
people,
and the
master
weavers
are rich
and
powerful.
This ex-
emption
and also
the
bounty on
the ex-
portation
of linen
are given
by a tem-
porary
law.
Bounties
on im-
ported
materials
have been
chiefly
Above, p. 440.
10 Geo. Ill, c. 38, and 19 Geo. III., c. 27.
”3 and 4 Ann, c. 10.— Anderson, Commerce^ a.d. 1703.
given to
American
produce,
such as
naval
stores,
colonial
indigo,
colonial
hemp or
undressed
flax,
6io the wealth of NATIONS
Scotland.^® Both these bounties continued without any variation,
at the same rate, till they were severally allowed to expire; that
upon hemp on the ist of January 1741, and that upon masting-
timber at the end of the session of parliament immediately follow-
ing the 24th June 1781.
The bounties upon the importation of tar, pitch, and turpentine
underwent, during their continuance, several alterations. Origi-
nally that upon tar was four pounds the ton; that upon pitch the
same; and that upon turpentine, three pounds the ton. The bounty
of four pounds the ton upon tar was afterwards confined to such as
had been prepared in a particular manner; that upon other good,
clean, and merchantable tar was reduced to two pounds four shil-
lings the ton. The bounty upon pitch was likewise reduced to one
pound; and that upon turpentine to one pound ten shillings the
ton.^'^
The second bounty upon the importation of any of the mate-
rials of manufacture, according to the order of time, was that grant-
ed by the 2 1 Geo. II. chap. 30. upon the importation of indigo from
the British plantations. When the plantation indigo was worth
three-fourths of the price of the best French indigo, it was by this
act entitled to a bounty of sixpence the pound. This bounty, which,
like most others, was granted only for a limited time, was contin-
ued by several prolongations, but was reduced to four pence the
pound.^® It was allowed to expire with the end of the session of
parliament which followed the 25th March 1781.
The third bounty of this kind was that granted (much about
the time that we were beginning sometimes to court and sometimes
to quarrel with our American colonies) by the 4 Geo. III. chap. 26.
upon the importation of hemp, or undressed flax, from the British
plantations. This bounty was granted for twenty-one years, from
the 24th June 1764, to the 24th June 1785. For the first seven
years it was to be at the rate of eight pounds the ton, for the sec-
ond at six pounds, and for the third at four pounds. It was not ex-
tended to Scotland, of which the climate (although hemp is some-
times raised there, in small quantities and of an inferior quality)
is not very fit for that produce. Such a bounty upon the importa-
tion of Scotch flax into England would have been too great a dis-
couragement to the native produce of the southern part of the
united kingdom.
“ Masting-timber (and also tar, pitch and rosin), under 12 Ann, st i, c. 9,
and masting-timber only under 2 Geo. II , c. 35, § 12. The encouragement of
the growth of hemp in Scotland is mentioned in the preamble of 8 Geo. I , c.
12, and is presumably to be read into the enacting portion.
" 8 Geo. I., c. 12 ; 2 Geo. H , c. 35 , §§ 3, n- “3 Geo. IH., e. 25.
CONCLUSION OF MERCANTILE SYSTEM
The fourth bounty of this kind, was that granted by the 5 Geo.
III. chap. 45. upon the importation of wood from America. It was
granted for nine years, from the ist January 1766, to the ist Jan-
uary 1775. During the first three years, it was to be for every hun-
dred and twenty good deals, at the rate of one pound; and for
every load containing fifty cubic feet of other squared timber at
the rate of twelve shillings. For the second three years, it was for
deals to be at the rate of fifteen shillings, and for other squared
timber, at the rate of eight shillings; and for the third three years,
it was for deals, to be at the rate of ten shillings, and for other
squared timber, at the rate of five shillings.
The fifth bounty of this kind, was that granted by the 9 Geo. III.
chap. 38. upon the importation of raw silk from the British plan-
tations. It was granted for twenty-one years, from the ist January
1770, to the ist January 1791. For the first seven years it was to be
at the rate of twenty-five pounds for every hundred pounds value;
for the second, at twenty pounds; and for the third at fifteen
pounds. The management of the silk-worm, and the preparation of
silk, requires so much hand labour; and labour is so very dear in
America, that even this great bounty, I have been informed, was
not likely to produce any considerable effect.
The sixth bounty of this kind, was that granted by ii Geo. III.
chap. so. for the importation of pipe, hogshead, and barrel staves
and heading from the British plantations. It was granted for nine
years, from ist January 1772, to the ist January 1781. For the
first three years, it was for a certain quantity of each, to be at the
rate of six pounds; for the second three years, at four pounds; and
for the third three years, at two pounds.
The seventh and last bounty of this kind, was that granted by
the 19 Geo. III. chap, 37. upon the importation of hemp from Ire-
land. It was granted in the same manner as that for the importation
of hemp and undressed flax from America, for twenty-one years,
from the,24th June 1779, to the 24th June 1800. This term is di-
vided, likewise, into three periods of seven years each; and in each
of those periods, the rate of the Irish bounty is the same with that
of the American. It docs not, however, like the American bounty,
extend to the importation of undressed flax. It would have been too
great a discouragement to the cultivation of that plant in Great
Britain. When this last bounty was granted, the British and Irish
legislatures were not in much better humour with one another, than
the British and American had been before. But this boon to Ireland,
American
wood,
colonial
law silk,
colonial
barrel
staves,
Irish
hemp
^‘‘Additions and Corrections omits “that
-’“The third bounty
6I2
THE WEALTH OF NATIONS
These
commodi-
ties were
subject to
duties
when
coming
from
foreign
countries.
It was
alleged
that the
interest of
the col-
onies and
of the
mother
country
was the
same.
The ex-
portation
of wool
and live
sheep is
forbidden
under
heavy
penalties,
atone
time mu-
tilation
and
death,
it is to be hoped, has been granted under more fortunate auspices,
than all those to America.
The same commodities upon which we thus gave bounties, when
imported from America, were subjected to considerable duties when
imported from any other country. The interest of our American col-
onies was regarded as the same with that of the mother country.
Their wealth was considered as our wealth. Whatever money was
sent out to them, it was said, came 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 respect, and it was an expence laid out upon the improvement
of our own property, and for the profitable employment of our own
people. It is unnecessary, I apprehend, at present to say any thing
further, in order to expose the folly of a system, which fatal experi-
ence has now sufficiently exposed. Had our American colonies really
been a part of Great Britain, those bounties might have been con-
sidered as bounties upon production, and would still have been
liable to all the objections to which such bounties are liable, but to
no other.
The exportation of the materials of manufacture is sometimes
discouraged by absolute prohibitions, and sometimes by high duties.
Our woollen manufacturers have been more successful than any
other class of workmen, in persuading the legislature that the pros-
perity of the nation depended upon the success and extension of
their particular business. They have not only obtained a monopoly
against the consumers by an absolute prohibition of importing
woollen cloths from any foreign country; but they have likewise ob-
tained another monopoly against the sheep farmers and growers of
wool, by a similar prohibition of the exportation of live sheep and
wool. The severity of many of the laws which have been enacted for
the security of the revenue is very justly complained of, as imposing
heavy penalties upon actions which, antecedent to the statutes that
declared them to be crimes, had always been understood tojbe inno-
cent. But the cruellest of our revenue laws, I will venture to affirm,
are mild and gentle, in comparison of some of those which the
clamour of our merchants and manufacturers has extorted from the
legislature, for the support of their own absurd and oppressive mo-
nopolies. Like the laws of Draco, these laws may be said to be all
written in blood.
By the 8th of Elizabeth, chap. 3. the exporter of sheep, lambs or
rams, was for the first offence to forfeit all his goods for ever, to suf-
fer a year's imprisonment, and then to have his left hand cut off in
a market town upon a market day, to be there nailed up; and for the
CONCLUSION OF MERCANTILE SYSTEM ^^3
second offence to be adjudged a felon, and to suffer death accord-
ingly. To prevent the breed of our sheep from being propagated in
foreign countries, seems to have been the object of this law. By the
13th and 14th of Charles 11 . chap. 18. the exportation of wool was
made felony, and the exporter subjected to the same penalties and
forfeitures as a felon.
For the honour of the national humanity, it is to be hoped that
neither of these statutes were ever executed. The first of them,
however, so far as I know, has never been directly repealed, and
Serjeant Hawkins seems to consider it as still in force.^^ It may
however, perhaps, be considered as virtually repealed by the 12 th
of Charles II. chap. 32. sect. 3, which, without expressly taking
away the penalties imposed by former statutes, imposes a new
penalty, viz. That of twenty shillings for every sheep exported, or
attempted to be exported, together with the forfeiture of the sheep
and of the owner’s share of the ship. The second of them was ex-
pressly repealed by the 7th and 8th of William III. chap. 28. sect.
4. By which it is declared that, ^Whereas the statute of the 13th
and 14th of King Charles II. made against the exportation of wool,
among other things in the said act mentioned, doth enact the same
to be deemed felony; by the severity of which penalty the prosecu-
tion of offenders hath not been so effectually put in execution: Be
it, therefore, enacted by the authority foresaid, that so much of the
said act, which relates to the making the said offence felony, be
repealed and made void.”
The penalties, however, which are either imposed by this mild-
er statute, or which, though imposed by former statutes, are not
repealed by this one, are still sufficiently severe. Besides the for-
feiture of the goods, the exporter incurs the penalty of three shill-
ings for every pound weight of wool either exported or attempted
to be exported, that is about four or five times the value. Any mer-
chant or other person convicted of this offence is disabled from re-
quiring any debt or account belonging to him from any factor or
other person.^*'^ Let his fortune be what it will, whether he is, or is
not able to pay those heavy penalties, the law means to ruin him
completely. But as the morals of the great body of the people are
not yet so corrupt as those of the contrivers of this statute, I have
not heard that any advantage has ever been taken of this clause.
If the person convicted of this offence is not able to pay the pen-
^ William Hawkins, Treatise of the Pleas of the Crown, 4th ed., 1762, bk. i.,
chap. 52.
^ So far from doing so, it expressly provides that any greater penalties al-
ready prescribed shall remain in force.
“ 12 Car. 11 , c. 32.
but now
twenty
shillings
for every
sheep
with for-
feiture of
the sheep
and the
owner’s
share in
the ship.
and
three shil-
lings for
every
pound of
wool,
with
other
pains and
penalties.
To pre-
vent clan-
destine
exporta-
tion the
inland
commerce
of wool is
much
hampered
by re-
strictions.
especially
in Kent
and Sus-
sex,
614 THE WEALTH OF NATIONS
alties within three months after judgment, he is to be transported
for seven years, and if he returns before the expiration of that
term, he is liable to the pains of felony, without benefit of clergy
The owner of the ship knowing this offence forfeits all his interest
in the ship and furniture. The master and mariners knowing this
offence forfeit all their goods and chattels, and suffer three months
imprisonment. By a subsequent statute the master suffers six
months imprisonment.^^
In order to prevent exportation, the whole inland commerce of
wool is laid under very burdensome and oppressive restrictions. It
cannot be packed in any box, barrel, cask, case, chest, or any other
package, but only in packs of leather or pack-cloth, on which must
be marked on the outside the words wool or yarn, in large letters
not less than three inches long, on pain of forfeiting the same and
the package, and three shillings for every pound weight, to be paid
by the owner or packer It cannot be loaden on any horse or cart,
or carried by land within five miles of the coast, but between sun-
rising and sun-setting, on pain of forfeiting the same, the horses
and carriages.^^ The hundred next adjoining to the sea coast, 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 costs, to
be sued for within the year. The execution to be against any two of
the inhabitants, whom the sessions must reimburse, by an assess-
ment on the other inhabitants, as in the cases of robbery. And if
any person compounds with the hundred for less than this penalty,
he is to be imprisoned for five years; and any other person may
prosecute. These regulations take place through the whole king-
dom.^®
But in the particular counties of Kent and Sussex the restrictions
are still more troublesome. Every owner of wool within ten miles of
the sea-coast must give an account in writing, three days after
shearing, to the next officer of the customs, of the number of his
fleeces, and of the places where they are lodged. And before he re-
Geo. I, c. II, § 6.
Presumably the reference is to 10 and ii W. III., c 10, § 18, but this ap-
plies to the commander of a king’s ship conniving at the offence, not to the
master of the offending vessel.
12 Geo. IL, c. 21, 1 10.
^ 13 and 14 Car. II., c. 18, § 9, forbade removal of wool in any part of the
country between 8 p.m. and 4 a.m. from March to September, and s p.m.
and 7 A.M. from October to February. 7 and 8 W. Ill, c. 28, § 8, taking no
notice of this, enacted the provision quoted in the text. The provision of 13
and 14 Car. II., c. 18, was repealed by 20 Geo. III., c. 55, which takes no
notice of 7 and 8 W. III., c. 28.
All these provisions are from 7 and 8 W. III., c. 28.
CONCLUSION OF MERCANTILE SYSTEM
moves any part of them he must give the like notice of the num-
ber and weight of the fleeces, and of the name and abode of the
person to whom they are sold, and of the place to which it is in-
tended they should be carried. No person within fifteen miles of
the sea, in the said counties, can buy any wool, before he enters
into bond to the king, that no part of the wool which he shall so
buy shall be sold by him to any other person within fifteen miles
of the sea. If any wool is found carrying towards the sea-side in the
said counties, unless it has been entered and security given as
aforesaid, it is forfeited, and the offender also forfeits three shill-
ings for every pound weight. If any person lays any wool, not en-
tered as aforesaid, within fifteen miles of the sea, it must be seized
and forfeited; and if, after such seizure, any person shall claim the
same, he must give security to the Exchequer, that if he is cast up-
on trial he shall pay treble costs, besides all other penalties.-^
When such restrictions are imposed upon the inland trade, the
coasting trade, we may believe, cannot be left very free. Every
owner of wool who carrieth or causeth to be carried any wool to any
port or place on the sea-coast, in order to be from thence trans-
ported by sea to any other place or port on the coast, must first
cause an entry thereof to be made at the port from whence it is
intended to be conveyed, containing the weight, marks, and num-
ber of the packages before he brings the same within five miles of
that port: on pain of forfeiting the same, and also the horses, carts,
and other carriages; and also of suffering and forfeiting, as by the
other laws in force against the exportation of wool. This law, how-
ever, (i Will. III. chap. 32.) is so very indulgent as to declare, that
“this shall not hinder any person from carrying his wool home from
the place of shearing, though it be within five miles of the sea, pro-
vided that in ten days after shearing, and before he remove the
wool, he do under his hand certify to the next officer of the cus-
toms, the true number of fleeces, and where it is housed; and do
not remove the same, without certifying to such officer, under his
hand, his intention so to do, three days before.^’ Bond must be
given that the wool to be carried coastways is to be landed at the
particular port for which it is entered outwards; and if any part of
it is landed without the presence of an officer, not only the for-
feiture of the wool is incurred as in other goods, but the usual ad-
ditional penalty of three shillings for every pound weight is like-
wise incurred.
Our woollen manufacturers, in order to justify their demand of
such extraordinary restrictions and regulations, confidently as-
9 and 10 W. Ill, c. 40. The quotation is not verbatim.
and so
also is
the coast-
ing trade.
The
manufac-
turers
alleged
that Eng-
lish wool
was su-
perior to
all others,
which is
entirely
false.
These
regula-
tions have
depressed
the price
of wool,
as was
desired,
but this
has not
much re-
duced the
quantity
of wool
grown.
6i6 XHE WEALTH OE NATIONS
serted, that English wool was of a peculiar quality, superior to that
of any other country; that the wool of other countries could not,
without some mixture of it, be wrought up into any tolerable manu-
facture; that fine cloth could not be made without it; that Eng-
land, therefore, if the exportation of it could be totally prevented,
could monopolize to herself almost the whole woollen trade of the
world; and thus, having no rivals, could sell at what price she
pleased, and in a short time acquire the most incredible degree of
wealth by the most advantageous balance of trade. This doctrine,
like most other doctrines which are confidently asserted by any
considerable number of people, was, and still continues to be, most
implicitly believed by a much greater number; by almost all those
who are either unacquainted with the woollen trade, or who have
not made particular enquiries. It is, however, so perfectly false,
that English wool is in any respect necessary for the making of
fine cloth, that it is altogether unfit for it. Fine cloth is made alto-
gether of Spanish wool. English wool cannot be even so mixed with
Spanish wool as to enter into the composition without spoiling and
degrading, in some degree, the fabric of the cloth.®^
It has been shown in the foregoing part of this work,®^ that the
effect of these regulations has been to depress the price of English
wool, not only below what it naturally would be in the present
times, but very much below what it actually was in the time of
Edward III, The price of Scots wool, when in consequence of the
union it became subject to the same regulations, is said to have
fallen about one half. It is observed by the very accurate and in-
telligent author of the Memoirs of Wool, the Reverend Mr. John
Smith, that the price of the best English wool in England is gen-
erally below what wool of a very inferior quality commonly sells
for in the market of Amsterdam.®^ Tb depress the price of this com-
modity below what may be called its natural and proper price, was
the avowed purpose of those regulations; and there seems to be no
doubt of their having produced the effect that was expected from
them.
This reduction of price, it may perhaps be thought, by discour-
aging the growing of wool, must have reduced very much the an-
nual produce of that commodity, though not below what it form-
erly was, yet below what, in the present state of things, it probably
would have been, had it, in consequence of an open and free mar-
“It is well known that the real very superfine cloth everywhere must be
entirely of Spanish wool.”— Anderson, Commerce, a d. 1669.
Above, ^pp 230, 231.
^Chronkon Rusticnm-Commerciale; or Memoirs of Wool, etc., 1767, vol.
ii., p 418, note.
CONCLUSION OF MERCANTILE SYSTEM 617
ket, been allowed to rise to the natural and proper price. I am,
however, disposed to believe, that the quantity of the annual prod-
uce cannot have been much, though it may perhaps have been a
little, affected by these regulations. The growing of wool is not the
chief purpose for which the sheep farmer employs his industry and
stock. He expects his profit, not so much from the price of the
fleece, as from that of the carcase; and the average or ordinary
price of the latter, must even, in many cases, make up to him what-
ever deficiency there may be in the average or ordinary price of
the former. It has been observed in the foregoing part of this work,
that ^^Whatever regulations tend to sink the price, either of wool or
of raw hides, below what it naturally would be, must, in an im-
proved and cultivated country, have some tendency to raise the
price of butchers meat. The price both of the great and small cattle
which are fed on improved and cultivated land, must be sufficient
to pay the rent which the landlord, and the profit which the farmer
has reason to expect from improved and cultivated land. If it is not,
they will soon cease to feed them. Whatever part of this price,
therefore, is not paid by the wool and the hide, must be paid by the
carcase. The less there is paid for the one, the more must be paid
for the other. In what manner this price is to be divided upon the
different parts of the beast, is indifferent to the landlords and farm-
ers, provided it is all paid to them. In an improved and cultivated
country, therefore, their interest as landlords and farmers cannot
be much affected by such regulations, though their interest as con-
sumers may, by the rise in the price of provisions.’’ According to
this reasoning, therefore, this degradation in the price of wool is
not likely, in an improved and cultivated country, to occasion any
diminution in the annual produce of that commodity; except so
far as, by raising the price of mutton, it may somewhat diminish
the demand for, and consequently the production of, that particu-
lar species of butchers meat. Its effect, however, even in this way,
it is probable, is not very considerable.
But though its effect upon the quantity of the annual produce nor its
may not have been very considerable, its effect upon the quality, it
may perhaps be thought, must necessarily have been very great.
The degradation in the quality of English wool, if not below what
it was in former times, yet below what it naturally would have been
in the present state of improvement and cultivation, must have
been, it may perhaps be supposed, very nearly in proportion to the
degradation of price. As the quality depends upon the breed, upon
the pasture, and upon the management and cleanliness of the
“ Above, p 23 V
so that
the grow-
ers of
wool
have been
less hurt
than
might
have been
expected.
Though
prohibi-
tion of
exporta-
tion can-
not be
justified,
a duty on
the ex-
portation
of wool
might
furnish
revenue
with little
incon-
venience.
THE WEALTH OF NATIONS
sheep, during the whole progress of the growth of the fleece, the at-
tention to these circumstances, it may naturally enough be im-
agined, can never be greater than in proportion to the recompence
which the price of the fleece is likely to make for the labour and ex-
pence which that attention requires. It happens, however, that the
goodness of the fleece depends, in a great measure, upon the health,
growth, and bulk of the animal; the same attention which is nec-
essary for the improvement of the carcase, is, in some respects,
sufficient for that of the fleece. Notwithstanding the degradation of
price, English wool is said to have been improved considerably dur-
ing the course even of the present century. The improvement might
perhaps have been greater if the price had been better; but the
lowness of price, though it may have obstructed, yet certainly it
has not altogether prevented that improvement.
The violence of these regulations, therefore, seems to have af-
fected neither the quantity nor the quality of the annual produce of
wool so much as it might have been expected to do (though I think
it probable that it may have affected the latter a good deal more
than the former) ; and the interest of the growers of wool, though
it must have been hurt in some degree, seems, upon the whole, to
have been much less hurt than could well have been imagined.
These considerations, however, will not justify the absolute pro-
hibition of the exportation of wool.®^ But they will fully justify the
imposition of a considerable tax upon that exportation.
To hurt in any degree the interest of any one order of citizens,
for no other purpose but to promote that of some other, is evi-
dently contrary to that justice and equality of treatment which the
sovereign owes to all the different orders of his subjects. But the
prohibition certainly hurts, in some degree, the interest of the
growers of wool, for no other purpose but to promote that of the
manufacturers.
Every different order of citizens is bound to contribute to the
support of the sovereign or commonwealth. A tax of five, or even of
ten shillings upon the exportation of every tod of wool, would pro-
duce a very considerable revenue to the sovereign. It would hurt
the interest of the growers somewhat less than the prohibition, be-
cause it would not probably lower the price of wool quite so much.
It would afford a sufficient advantage to the manufacturer, be-
cause, though he might not buy his wool altogether so cheap as
under the prohibition, he would still buy it, at least, five or ten
shillings cheaper than any foreign manufacturer could buy it, be-
sides saving the freight and insurance, which the other would be
“ Additions and Corrections reads “the wool.”
CONCLUSION OF MERCANTILE SYSTEM ^^9
obliged to pay. It is scarce possible to devise a tax which could pro-
duce any considerable revenue to the sovereign, and at the same
time occasion so little inconveniency to any body.
The prohibition, notwithstanding all the penalties which guard
it, does not prevent the exportation of wool. It is exported, it is
well known, in great quantities. The great difference between the
price in the home and that in the foreign market, presents such a
temptation to smuggling, that all the rigour of the law cannot pre-
vent it. This illegal exportation is advantageous to nobody but the
smuggler. A legal exportation subject to a tax, by affording a rev-
enue to the sovereign, and thereby saving the imposition of some
other, perhaps, more burdensome and inconvenient taxes, might
prove advantageous to all the different subjects of the state.
The exportation of fuller’s earth, or fuller’s clay, supposed to be
necessary for preparing and cleansing the woollen manufactures,
has been subjected to nearly the same penalties as the exportation
of wool.’^^' Even tobacco-pipe clay, though acknowledged to be dif-
ferent from fuller’s clay, yet, on account of their resemblance, and
because fuller’s clay might sometimes be exported as tobacco-pipe
clay, has been laid under the same prohibitions and penalties.®'
By the 13th and 14th of Charles II. chap. 7. the exportation, not
only of raw hides, but of tanned leather, except in the shape of
boots, shoes, or slippers, was prohibited; and the law gave a
monopoly to our boot-makers and shoe-makers, not only against
our graziers, but against our tanners. By subsequent statutes, our
tanners have got themselves exempted from this monopoly, upon
paying a small tax of only one shilling on the hundred weight of
tanned leather, weighing one hundred and twelve pounds.®^ They
have obtained likewise the drawback of two-thirds of the excise
duties imposed upon their commodity, even when exported without
further manufacture. All manufactures of leather may be exported
duty free; and the exporter is besides entitled to the drawback of
*“12 Car. IL, €.32; 13 and 14 Car. II., c. 18.
13 and 14 Car. II., c. 18, § 8. The preamble to the clause alleges that
“great quantities of fuller’s earth or fulling clay are daily carried and exported
under the colour of tobacco-pipe clay.”
^ The preamble says that “nowithstanding the many good laws before this
time made and still in force, prohibiting the exportation of leather ... by
the cunning and subtlety of some persons and the neglect of others to take
care thereof; there are such quantities of leather daily exported to foreign
parts that the price of leather is grown to those excessive rates that many
artificers working leather cannot furnish themselves with sufficient store
thereof for the carrying on of their trades, and the poor sort of people are
not able to buy those things made of leather which of necessity they must
make use of.”
20 Car. IL, c. s ; 9 Ann., c. 6, § 4,
The ex-
portation
of fuller’s
earth has
been sub-
jected to
the same
penalties
as the ex-
portation
of wool.
The ex-
portation
of raw
hides
is forbid-
den,
horns,
woollen
yarn and
worsted,
white
cloths,
watch
cases, etc.,
also
some
metals.
620 the wealth of nations
the whole duties of excise.^^ Our graziers still continue subject to
the old monopoly. Graziers separated from one another, and dis-
persed through all the different corners of the country, cannot,
without great difficulty, combine together for the purpose either of
imposing monopolies upon their fellow-citizens, or of exempting
themselves from such as may have been imposed upon them by
other people.*^^ Manufacturers of all kinds, collected together in
numerous bodies in all great cities, easily can. Even the horns of
cattle are prohibited to be exported; and the two insignificant
trades of the horner and comb-maker enjoy, in this respect, a
monopoly against the graziers.
Restraints, either by prohibitions or by taxes, upon the exporta-
tion of goods which are partially, but not completely manufac-
tured, are not peculiar to the manufacture of leather. As long as
any thing remains to be done, in order to fit any commodity for
immediate use and consumption, our manufacturers think that they
themselves ought to have the doing of it. Woollen yarn and worsted
are prohibited to be exported under the same penalties as wool.'^'^
Even white cloths are subject to a duty upon exportation, and
our dyers have so far obtained a monopoly against our clothiers.
Our clothiers would probably have been able to defend themselves
against it, but it happens that the greater part of our principal
clothiers are themselves likewise dyers. Watch-cases, clock-cases,
and dial-plates for clocks and watches, have been prohibited to be
exported.^® Our clock-makers and watch-makers are, it seems, un-
willing that the price of this sort of workmanship should be raised
upon them by the competition of foreigners.
By some old statutes 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 those metals; in the exportation of which, a considerable part of
the trade of the kingdom in those days consisted. For the encour-
agement of the mining trade, the sth of William and Mary, chap.
17. exempted from this prohibition, iron, copper, and mundic
metal made from British ore. The exportation of all sorts of cop-
"9 Ann., c. II, § 39, explained by 10 Ann., c. 26, § 6, and 12 Ann., st. 2,
c. 9, § 64. Above, p. 126.
Except under certain conditions by 4 Ed. IV., c. 8; wholly by 7 Jac. I.,
c. 14, § 4.
Under 13 and 14 Car. II., c. 18, and 7 and 8 W. III., c. 28 ; above, pp. 612,
613.
^*(See below, next page.
9 and 10 W. III., c. 28, professedly to prevent frauds.
“The preamble to the Act next quoted in the text mentions 28 Ed. III.,
c. 5 (iron) ; 33 Hen. VIII., c. 7 (brass, copper, etc.), and 2 and 3 Ed. VI., c.
37 (bell-metal, etc.).
CONCLUSION OF MERCANTILE SYSTEM 621
pc:r bars, foreign as well as British, was afterwards permitted by the
9th and loth of William III. chap. 26.*^'^ The exportation of un-
manufactured brass, of what is called gun-metal, bell-metal, and
shroff-metal, still continues to be prohibited. Brass manufactures
of all sorts may be exported duty free.^^
The exportation of the materials of manufacture, where it is not
altogether prohibited, is in many cases subjected to considerable
duties.
By the 8th George I. chap. 15., the exportation of all goods, the
produce or manufacture of Great Britain, upon which any duties
had been imposed by former statutes, was rendered duty free. The
following goods, however, were excepted: Alum, lead, lead ore, tin,
tanned leather, copperas, coals, wool cards, white woollen cloths,
lapis calaminaris, skins of all sorts, glue, coney hair or wool, hare’s
wool, hair of all sorts, horses, and litharge of lead. If you except
horses, all these are either materials of manufacture, or incomplete
manufactures (which may be considered as materials for still fur-
ther manufacture), or instruments of trade. This statute leaves
them subject to all the old duties which had ever been imposed
upon them, the old subsidy and one per cent, outwards.^^
By the same statute a great number of foreign drugs for dyers’
use, are exempted from all duties upon importation. Each of them,
however, is afterwards subjected to a certain duty, not indeed a
very heavy one, upon exportation.®^ Our dyers, it sisems, while they
thought it for their interest to encourage the importation of those
drugs, by an exemption from all duties, thought it likewise for their
interest to throw some small discouragement upon their exporta-
tion. The avidity however, which suggested this notable piece of
mercantile ingenuity, most probably disappointed itself of its ob-
ject, It necessarily taught the importers to be more careful than
they might otherwise have been, that their importation should not
exceed what was necessary for the supply of the home market. The
home market was at all times likely to be more scantily supplied;
the commodities were at all times likely to be somewhat dearer
there than they would have been, had the exportation been render-
ed as free as the importation.
This Act is not printed in the ordinary collections, but the provision re-
ferred to is in Pickering’s index, s.v. Copper, and the clause is recited in a
renewing Act, 12 Ann., st. i, c. 18.
Under the general Act, 8 Geo. L, c. 15, mentioned immediately below.
^ 12 Car. II., c. 4, § 2, and 14 Car. II., c. ii, § 35. The 1 per cent was due
on goods exported to ports in the Mediterranean beyond Malaga, unless the
ship had sixteen guns and other warlike equipment. See Saxby, British Cus-
toms, pp. 48, 51.
Sixpence in the pound on the values at which they arc rated in the Act.
On vari-
ous other
materials
of manu-
facture
consider-
able ex-
port
duties are
imposed.
622
THE WEALTH OF NATIONS
Gum By the above-mentioned statute, gum senega, or gum arabic,
being among the enumerated dying drugs, might be imported duty
pecdiar free. They were subjected, indeed, to a small poundage duty,
li7';tory amounting only to three pence in the hundred weight upon their re-
subject to exportation. France enjoyed, at that time, an exclusive trade to the
a large country most productive of those drugs, that which lies in the
export neighbourhood of the Senegal; and the British market could not
^ be easily supplied by the immediate importation of them from the
place of growth. By the 25th Geo. therefore, gum senega was
allowed to be imported (contrary to the general dispositions of the
act of navigation), from any part of Europe. As the law, however,
did not mean to encourage this species of trade, so contrary to the
general principles of the mercantile policy of England, it imposed a
duty of ten shillings the hundred weight upon such importation,
and no part of this duty was to be afterwards drawn back upon its
exportation. The successful war which began in 1755 gave Great
Britain the same exclusive trade to those countries which France
had enjoyed before.®^ Our manufacturers, as soon as the peace was
made, endeavoured to avail themselves of this advantage, and to
establish a monopoly in their own favour, both against the growers,
and against the importers of this commodity. By the Sth Geo. III.
therefore, chap. 37. the exportation of gum senega from his maj-
esty’s dominions in Africa was confined to Great Britain, and was
subjected to all the same restrictions, regulations, forfeitures and
penalties, as that of the enumerated commodities of the British
colonies in America and the West Indies. Its importation, indeed,
was subjected to a small duty of six-pence the hundred weight, but
its re-exportation was subjected to the enormous duty of one pound
ten shillings the hundred weight. It was the intention of our man-
ufacturers that the whole produce of those countries should be im-
ported into Great Britain, and in order that they themselves might
be enabled to buy it at their own price, that no part of it should be
exported again, but at such an expence as would sufficiently dis
courage that exportation. Their avidity, however, upon this, as
well as upon many other occasions, disappointed itself of its ob-
ject. This enormous duty presented such a temptation to smug-
gling, that great quantities of this commodity were clandestinely
exported, probably to all the manufacturing 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 shillings the hundred weight.
In the book of rates, according to which the old subsidy was lev-
33 . Anderson, Commerce, a.d. 1758. ‘’'*As is stated in the preamble.
CONCLUSION OF MERCANTILE SYSTEM 623
ied, beaver skins were estimated at six shillings and eight-pence
a-piece, and the different subsidies and imposts, which before the
year 1722 had been laid upon their importation, amounted to one-
fifth part of the rate, or to sixteen-pence upon each skin; all of
which, except half the old subsidy, amounting only to two-pence,
was drawn back upon exportation.®^ This duty upon the importa-
tion of so important a material of manufacture had been thought
too high, and, in the year 1722, the rate was reduced to two shill-
ings and six-pence, which reduced the duty upon importation to
six-pence, and of this only one half was to be drawn back upon ex-
portation.®® The same successful war put the country most pro-
ductive of beaver under the dominion of Great Britain, and beaver
skins being among the enumerated commodities, their exportation
from America was consequently confined to the market of Great
Britain. Our manufacturers soon bethought themselves of the
advantage which they might make of this circumstance, and in the
year 1764,®® the duty upon the importation of beaver-skin was re-
duced to one penny, but the duty upon exportation was raised to
seven-pence each skin, without any drawback of the duty upon
importation. By the same law, a duty of eighteen pence the pound
was imposed upon the exportation of beaver-wool or wombs, with-
out making any alteration in the duty upon the importation of that
commodity, which when imported by British and in British ship-
ping, amounted at that time to between four-pence and five-pence
the piece.
Coals may be considered both as a material of manufacture and
as an instrument of trade. Heavy duties, accordingly, have been
imposed upon their exportation, amounting at present (1783) to
more than five shillings the ton, or to more than fifteen shillings the
chaldron, Newcastle measure; which is in most cases more than the
original value of the commodity at the coal pit, or even at the ship-
ping port for exportation.
The exportation, however, of the instruments of trade, properly
so called, is commonly restrained, not by high duties, but by ab-
solute prohibitions. Thus by the 7th and 8th of William III. chap.
20. sect. 8. the exportation of frames or engines for knitting gloves
or stockings is prohibited under the penalty, not only of the for-
feiture of such frames or engines, so exported, or attempted to be
exported, but of forty pounds, one half to the king, the other to the
®‘Thc facts are given in the preamble to 8 Geo, L, c. 15, § 13. The old sub-
sidy, the new, the one-third and the two-third subsidies account for is., and
the additional impost for ^d.
“ See above, p. 467. Geo. L, c. 13. The year should be 1721.
the hatters. ®*4 Geo. III., c. 9.
beaver
skins ex-
ported are
charged
seven
pence.
and coals
five shil-
lings a
ton.
The ex-
portation
of the in-
struments
of trade is
common-
ly pro-
hibited.
Similarly
it is a
grave of-
fence to
entice an
artificer
abroad,
and the
artificer
who exer-
cises or
teaches
his trade
abroad
maybe
ordered to
return.
624 THE WEALTH OF NATIONS
person who shall inform or sue for the same. In the same manner by
the 14th Geo. III. chap. 71. the exportation to foreign parts, of any
utensils made use of in the cotton, linen, woollen and silk manu-
factures, is prohibited under the penalty, not only of the forfeiture
of such utensils, but of two hundred pounds, to be paid by the per-
son who shall offend in this manner, and likewise of two hundred
pounds to be paid by the master of the ship who shall knowingly
suffer such utensils to be loaded on board his ship.
When such heavy penalties were imposed upon the exportation
of the dead instruments of trade, it could not well be expected that
the living instrument, the artificer, should be allowed to go free.
Accordingly, by the 5 Geo. I. chap. 27. the person who shall be con-
victed of enticing any artificer of, or in any of the manufactures of
Great Britain, to go into any foreign parts, in order to practise or
teach his trade, is liable for the first offence to be fined in any sum
not exceeding one hundred pounds, and to three months imprison-
ment, and until the fine shall be paid; and for the second offence,
to be fined in any sum at the discretion of the court, and to impris-
onment for twelve months, and until the fine shall be paid. By the
23 Geo. II. chap. 13. this penalty is increased for the first offence
to five hundred pounds for every artificer so enticed, and to twelve
months imprisonment, and until the fine shall be paid; and for the
second offence, to one thousand pounds, and to two years imprison-
ment, and until the fine shall be paid.
By the former of those two statutes, upon proof that any person
has been enticing any artificer, or that any artificer has promised
or contracted to go into foreign parts for the purposes aforesaid,
such artificer may be obliged to give security at the discretion of
the court, that he shall not go beyond the seas, and may be com-
mitted to prison until he give such security.
If any artificer has gone beyond the seas, and is exercising or
teaching his trade in any foreign country, upon warning being given
to him by any of his majesty’s ministers or consuls abroad, or by
one of his majesty’s secretaries of state for the time being, if he does
not, within six months after such warning, return into this realm,
and from thenceforth abide and inhabit continually within the
same, he is from thenceforth declared incapable of taking any leg-
acy devised to him within this kingdom, or of being executor or
administrator to any person, or of taking any lands within this
kingdom by descent, devise, or purchase. He likewise forfeits to the
king, all his lands, goods and chattels, is declared an alien in every
respect, and is put out of the king’s protection.^®
Under the same statute, 5 Geo. I, c. 27.
CONCLUSION OF MERCANTILE SYSTEM <^25
It is unnecessary, I imagine, to observe, how contrary such regu-
lations are to the boasted liberty of the subject, of which we affect
to be so very jealous; but which, in this case, is so plainly sacrificed
to the futile interests of our merchants and manufacturers.
The laudable motive of all these regulations, is to extend our own
manufactures, not by their own improvement, but by the depres-
sion of those of all our neighbours, and by putting an end, as much
as possible, to the troublesome competition of such odious and dis-
agreeable rivals. Our master manufacturers think it reasonable,
that they themselves should have the monopoly of the ingenuity of
all their countrymen. Though by restraining, in some trades, the
number of apprentices which can be employed at one time, and by
imposing the necessity of a long apprenticeship in all trades, they
endeavour, all of them, to confine the knowledge of their respec-
tive employments to as small a number as possible; they are un-
willing, however, that any part of this small number should go
abroad to instruct foreigners.
Consumption is the sole end and purpose of all production; and
the interest of the producer ought to be attended to, only so far as
it may be necessary for promoting that of the consumer. The max-
im is so perfectly self-evident, that it would be absurd to attempt
to prove it. But in the mercantile system, the interest of the con-
sumer is almost constantly sacrificed to that of the producer; and
it seems to consider production, and not consumption, as the ulti-
mate end and object of all industry and commerce.
In the restraints upon the importation of all foreign commodi-
ties which can come into competition with those of our own growth,
or manufacture, the interest of the home-consumer is evidently sac-
rificed to that of the producer. It is altogether for the benefit of the
latter, that the former is obliged to pay that enhancement of price
which this monopoly almost always occasions.
It is altogether for the benefit of the producer that bounties are
granted upon the exportation of some of his productions. The
home-consumer is obliged to pay, first, the tax which is necessary
for paying the bounty, and secondly, the still greater tax which nec-
essarily arises from the enhancement of the price of the commodity
in the home market.
By the famous treaty of commerce with Portugal, the con-
sumer is prevented by high duties from purchasing of a neighbour-
ing country, a commodity which our own climate does not produce,
but is obliged to purchase it of a distant country, though it is
acknowledged, that the commodity of the distant country is of a
""Above, p. S12.
The ob-
ject is to
depress
the manu-
factures
of our
neigh-
bours.
The mer-
cantile
system
absurdly
considers
produc-
tion and
not con-
sumption
to be the
end of in-
dustry
and com-
merce.
Restraints
on impor-
tation of
compet-
ing com-
modities
sacrifice
the inter-
est of the
consumer
to the
producer,
and so do
bounties
on expor-
tation
626
and the
provisions
of the
Methuen
treaty,
but the
most ex-
travagant
case of all
is that of
the man-
agement
of the
American
and West
Indian
colonies.
The con-
trivers of
the whole
mercan-
tile sys-
tem are
the pro-
ducers
and
especially
the mer-
chants
and
manufac-
turers.
THE WEALTH OE NATIONS
worse quality than that of the near one. The home-consumer is
obliged to submit to this inconveniency, in order that the producer
may import into the distant country some of his productions upon
more advantageous terms than he would otherwise have been al-
lowed to do. The consumer, too, is obliged to pay, whatever en-
hancement in the price of those very productions, this forced ex-
portation may occasion in the home market.
But in the system of laws which has been established for the
management of our American and West Indian colonies, the in-
terest of the home-consumer has been sacrificed to that of the pro-
ducer with a more extravagant profusion than in all our other com-
mercial regulations. A great empire has been established for the
sole purpose of raising up a nation of customers who should be
obliged to buy from the shops of our different producers, all the
goods with which these could supply them. For the sake of that lit-
tle enhancement of price which this monopoly might afford our pro-
ducers, the home-consumers have been burdened with the whole
expence of maintaining and defending that empire. For this pur-
pose, and for this purpose only, in the two last wars, more than two
hundred millions have been spent, and a new debt of more than a
hundred and seventy millions has been contracted over and above
all that had been expended for the same purpose in former wars.
The interest of this debt alone is not only greater than the whole
extraordinary profit, which, it ever could be pretended, was made
by the monopoly of the colony trade, but than the whole value of
that trade, or than the whole value of the goods, which at an aver-
age have been annually exported to the colonies.
It cannot be very difficult to determine who have been the con-
trivers of this whole mercantile system; not the consumers, we may
believe, whose interest has been entirely neglected; but the pro-
ducers, whose interest has been so carefully attended to; and
among this latter class our merchants and manufacturers have been
by far the principal architects. In the mercantile regulations, which
have been taken notice of in this chapter, the interest of our man-
ufacturers has been most peculiarly attended to; and the interest,
not so much of the consumers, as that of some other sets of pro*'
ducers, has been sacrificed to it.^'^
^ This chapter appears first in Additions and Corrections and ed, 3, and is
doubtless largely due to Smith’s appointment in 1778 to the Commissioner-
ship of Customs (Rae Life of Adam Smith, p. 320). He had in his library W.
Sims and R. Frewin, The Rates of Merchandise, 1782 (see Bonar, Catalogue,
p. 27), and probably had access to earlier works such as Saxby’s British Cus>
toms, 1757, which give the duties, etc., at earlier periods as well as reference^
to the Acts of Parliament regulating them.
CHAPTER IX
OF THE AGRICULTURAL SYSTEMS, OR OF THOSE SYSTEMS OF POLI-
TICAL OECONOMY, WHICH REPRESENT THE PRODUCE OF LAND AS
EITHER THE SOLE OR THE PRINCIPAL SOURCE OF THE REVENUE
AND WEALTH OF EVERY COUNTRY
The agricultural systems of political oeconomy will not require so
long an explanation as that which I have thought it necessary to
bestow upon the mercantile or commercial system.
That system which represents the produce of land as the sole
source of the revenue and wealth of every country has, so far as I
know, never been adopted by any nation, and it at present exists
only in the speculations of a few men of great learning and ingenu-
ity in France.^ It would not, surely, be worth while to examine at
great length the errors of a system which never has done, and prob-
ably never will do any harm in any part of the world. I shall en-
deavour to explain, however, as distinctly as I can, the great out-
lines of this very ingenious system.
Mr. Colbert, the famous minister of Lewis XIV. was a man of
probity, of great industry and knowledge of detail; of great expe-
rience and acuteness in the examination of public accounts, and of
abilities, in short, every way fitted for introducing method and good
order into the collection and expenditure of the public revenue.
That minister had unfortunately embraced all the prejudices of the
mercantile system, in its nature and essence a system of restraint
and regulation, and such as could scarce fail - to be agreeable to a
laborious and plodding man of business, who had been accustomed
to regulate the different departments of public offices, and to es-
tablish the necessary checks and controuls for confining each to its
proper sphere. The industry and commerce of a great country he
endeavoured to regulate upon the same model as the departments
of a public office; and instead of allowing every man to pursue his
^Thc ^Iconomistcs or Physiocrats. Quesnay, Mirabeau and Mercicr de la
Riviere are mentioned below, pp. 637, 643.
“ Ed. I places a full stop at “mercantile system” and continues “That sys-
tem, in its nature and essence a system of restraint and regulation, could
scarce fail.”
627
The agri'
cultural
systems
will re-
quire less
lengthy
explana-
tion than
the mer-
cantile
system.
Colbert
adopted
the mer-
cantile
system
and fa-
voured
town in-
dustry,
with the
result
that the
French
philoso-
phers who
support
the agri-
cultural
system
under-
value
town in-
dustry.
There are
three
classes in
their sys-
tem: (i)
proprie-
628 XHE WEALTH OF NATIOKS
own interest his own way, upon the liberal plan of equality, liberty
and justice, he bestowed upon certain branches of industry extraor-
dinary privileges, while he laid others under as extraordinary re-
straints. He was not only disposed, like other European ministers,
to encourage more the industry of the towns than that of the coun-
try; but, in order to support the industry of the towns, he was will-
ing even to depress and keep down that of the country. In order to
render provisions cheap to the inhabitants of the towns, and there-
by to encourage manufactures and foreign commerce, he prohibited
altogether the exportation of corn, and thus excluded the inhabi-
tants of the country from every foreign market for by far the most
important part of the produce of their industry. This prohibition,
joined to the restraints imposed by the ancient provincial laws of
France upon the transportation of corn from one province to an-
other, and to the arbitrary and degrading taxes which are levied up-
on the cultivators in almost all the provinces, discouraged and kept
down the agriculture of that country very much below the state to
which it would naturally have risen in so very fertile a soil and so
very happy a climate. This state of discouragement and depression
was felt more or less in every different part of the country, and
many different inquiries were set on foot concerning the causes of
it. One of those causes appeared to be the preference given, by the
institutions of Mr. Colbert, to the industry of the towns above that
of the country.
If the rod be bent too much one way, says the proverb, in order
to make it straight you must bend it as much the other. The French
philosophers, who have proposed the system which represents ag-
riculture as the sole source of the revenue and wealth of every
country, seem to have adopted this proverbial maxim; and as in
the plan of Mr. Colbert the industry of the towns was certainly
over-valued in comparison with that of the country; so in their
system it seems to be as certainly under-valued.
The different orders of people who have ever been supposed to
contribute in any respect towards the annual produce of the land
and labour of the country, they divide into three classes. The first
is the class of the proprietors of land. The second is the class of the
cultivators, of farmers and country labourers, whom they honour
with the peculiar appellation of the productive class. The third is
the class of artificers, manufacturers and merchants, whom they en-
deavour to degrade by the humiliating appellation ^ of the barren
or unproductive class.
“But, see below, p. 633, where the usefulness of the class is said to be
admitted. In his exposition of physiocratic doctrine, Smith docs not appear to
AGRICULTURAL SYSTEMS 629
The class of proprietors contributes to the annual produce by the
expence which they may occasionally lay out upon the improve-
ment of the land, upon the buildings, drains, enclosures and other
ameliorations, which they may either make or maintain upon it,
and by means of which the cultivators are enabled, with the same
capital, to raise a greater produce, and consequently to pay a great-
er rent. This advanced rent may be considered as the interest or
profit due to the proprietor upon the expence or capital which he
thus employs in the improvement of his land. Such expences are in
this system called ground expences (depenses foncieres).
The cultivators or farmers contribute to the annual produce by
what are in this system called the original and annual expences (de-
penses primitives et depenses annuelles) which they lay out upon
the cultivation of the land. The original expences consist in the in-
struments of husbandry, in the stock of cattle, in the seed, and in
the maintenance of the farmer’s family, servants and cattle, during
at least a great part of the first year of his occupancy, or till he can
receive some return from the land. The annual expences consist in
the seed, in the wear and tear^ of the instruments of husbandry,
and in the annual maintenance of the farmer’s servants and cattle,
and of his family too, so far as any part of them can be considered
as servants employed in cultivation. That part of the produce of the
land which remains to him after paying the rent, ought to be suffi-
cient, first, to replace to him within a reasonable time, at least dur-
ing the term of his occupancy, the whole of his original expences,
together with the ordinary profits of stock; and, secondly, to re-
place to him annually the whole of his annual expences, together
likewise with the ordinary profits of stock. Those two sorts of ex-
pences are two capitals which the farmer employs in cultivation;
and unless they are regularly restored to him, together with a rea-
sonable profit, he cannot carry on his employment upon a level with
other employments; but, from a regard to his own interest, must
desert it as soon as possible, and seek some other That part of the
produce of the land which is thus necessary for enabling the farmer
to continue his business, ought to be considered as a fund sacred to
cultivation, which if the landlord violates, he necessarily reduces ”
follow any particular book closely. His library contained Du Font’s PhysiO’
cratie, ou coiistitukon mturelle du gouvernement le plus amntageux au
genre kumain, 1768 (see Bonar, Catalogue^ p. 92), and he refers lower down
to La Riviere, Vordre naturel et essentiel des sociiUs politiques, 1767, but he
probably relied largely on his recollection of conversations in Paris; see Rae,
Life of Adam Smith, pp. 215-222.
'^Ed. I reads “tear and wear.”
® Ed. I reads “some other employment.” ® Ed. i reads “degrades.”
tors, (2)
cultiva-
tors, and
(3) arti-
ficers,
manufac-
turers and
mer-
chants.
Proprie-
tors con-
tribute to
produc-
tion by
expenses
on im-
prove-
ment of
land,
cultivat-
ors, by
original
and an-
nual ex-
penses of
cultiva-
tion.
These ex-
penses
should be
free from
all taxa-
tion.
All other
expenses
and
orders of
people
are un-
produc-
tive,
artificers
and
manufac-
turers in
particu-
lar, and
the ex-
pense of
employ-
ing them:
630 THE WEALTH OF NATIONS
the produce of his own land, and in a few years not only disables
the farmer from paying this racked rent, but from paying the rea-
sonable rent which he might otherwise have got for his land. The
rent which properly belongs to the landlord, is no more than the
neat produce which remains after paying in the completest manner
all the necessary expences which must be previously laid out in or-
der to raise the gross, or the whole produce. It is because the labour
of the cultivators, over and above paying completely all those nec-
essary expences, affords a neat produce of this kind, that this class
of people are in this system peculiarly distinguished by the honour-
able appellation of the productive class. Their original and annual
expences are for the same reason called, in this system, productive
expences, because, over and above replacing their own value, they
occasion the annual reproduction of this neat produce.
The ground expences, as they are called, or what the landlord
lays out upon the improvement of his land, are in this system too
honoured with the appellation of productive expences. Till the
whole of those expences, together with the ordinary profits of stock,
have been completely repaid to him by the advanced rent which he
gets from his land, that advanced rent ought to be regarded as sa-
cred and inviolable, both by the church and by the king; ought to
be subject neither to tithe nor to taxation. If it is otherwise, by
discouraging the improvement of land, the church discourages the
future increase of her own tithes, and the king the future increase
of his own taxes. As in a well-ordered stale of things, therefore,
those ground expences, over and above reproducing in the complet-
est manner their own value, occasion likewise after a certain time a
reproduction of a neat produce, they are in this system considered
as productive expences.
The ground expences of the landlord, however, together with the
original and the annual expences of the farmer, are the only three
sorts of expences which in this system are considered as productive.
All other e,xpences and all other orders of people, even those who in
the common apprehensions of men are regarded as the most pro-
ductive, are in this account of things represented as altogether bar-
ren and unproductive.
Artificers and manufacturers, in particular, whose industry, in
the common apprehensions of men, increases so much the value of
the rude produce of land, are in this system represented as a class
of people altogether barren and unproductive. Their labour, it is
said, replaces only the stock which employs them, together with its
ordinary profits. That stock consists in the materials, tools, and
wages, advanced to them by their employer; and is the fund des-
AGRICULTURAL SYSTEMS ^31
tined for their employment and maintenance. Its profits are the
fund destined for the maintenance of their employer. Their em-
ployer, as he advances to them the stock of materials, tools and
wages necessary for their employment, so he advances to himself
what is necessary for his own maintenance, and this maintenance
he generally proportions to the profit which he expects to make by
the price of their work. Unless its price repays to him the mainte-
nance which he advances to himself, as well as the materials, tools
and wages which he advances to his workmen, it evidently does not
repay to him the whole expence which he lays out upon it. The
profits of manufacturing stock, therefore, are not, like the rent of
land, a neat produce which remains after completely repaying the
whole expence which must be laid out in order to obtain them. The
stock of the farmer yields him a profit as well as that of the master
manufacturer; and it yields a rent likewise to another person,
which that of the master manufacturer does not. The expence,
therefore, laid out in employing and maintaining artificers and
manufacturers, does no more than continue, if one may say so, the
existence of its own value, and does not produce any new value. It
is therefore altogether a barren and unproductive expence. The ex-
pence, on the contrary, laid out in employing farmers and country
labourers, over and above continuing the existence of its own value,
produces a new value, the rent of the landlord. It is therefore a pro-
ductive expence.
Mercantile stock is equally barren and unproductive with manu- mercan-
facturing stock. It only continues the existence of its own value, ^
without producing any new value. Its profits are only the repay-
ment of the maintenance which its employer advances to himself
during the time that he employs it, or till he receives the returns of
it. They are only the repayment of a part of the expence which
must be laid out in employing it.
The labour of artificers and manufacturers never adds any thing The la-
to the value of the whole annual amount of the rude produce of the hour of
land. It adds indeed greatly to the value of some particular parts of
it. But the consumption which in the mean time it occasions of other manufac-
parts, is precisely equal to the value which it adds to those parts;
so that the value of the whole amount is not, at any one moment of nothing
time, in the least augmented by it. The person who works the lace to the
of a pair of fine ruffles, for example, will sometimes raise the value
of perhaps a pennyworth of flax to thirty pounds sterling. But nualpro-
though at first sight he appears thereby to multiply the value of a duce.
part of the rude produce about seven thousand two hundred times,
'^Ed. I reads ‘‘repay him.”
Artificers,
manufac-
turers and
mer-
chants
can aug-
ment re-
venue
only by
privation.
632 the wealth of nations
he in reality adds nothing to the value of the whole annual amount
of the rude produce. The working of that lace costs him perhaps
two years labour. The thirty pounds which he gets for it when it is
finished, is no more than the repayment of the subsistence which
he advances to himself during the two years that he is employed
about it. The value which, by every day’s, month’s, or year’s la-
bour, he adds to the flax, does no more than replace the value of
his own consumption during that day, month, or year. At no mo-
ment of time, therefore, does he add any thing to the value of the
whole annual amount of the rude produce of the land: the portion
of that produce which he is continually consuming, being always
equal to the value which he is continually producing. The extreme
poverty of the greater part of the persons employed in this expen-
sive, though trifling manufacture, may satisfy us that the price of
their work does not in ordinary cases exceed the value of their sub-
sistence. It is otherwise with the work of farmers and country la-
bourers. The rent of the landlord is a value, which, in ordinary
cases, it is continually producing, over and above replacing, in the
most complete manner, the whole consumption, the whole expence
laid out upon the employment and maintenance both of the work-
men and of their employer.
Artificers, manufacturers and merchants, can augment the reve-
nue and wealth of their society, by parsimony only; or, as it is ex-
pressed in this system, by privation, that is, by depriving them-
selves of a part of the funds destined for their own subsistence.
They annually reproduce nothing but those funds. Unless, there-
fore, they annually save some part of them, unless they annually
deprive themselves of the enjoyment of some part of them, the rev-
enue and wealth of their society can never be in the smallest degree
augmented by means of their industry. Farmers and country la-
bourers, on the contrary, may enjoy completely the whole funds
destined for their own subsistence, and yet augment at the same
time the revenue and wealth of their society. Over and above what
is destined ® for their own subsistence, their industry annually af-
fords a neat produce, of which the augmentation necessarily aug-
ments the revenue and wealth of their society. Nations, therefore,
which, like France or England, consist in a great measure of pro-
prietors and cultivators, can be enriched by industry and enjoy-
ment. Nations, on the contrary, which, like Holland and Ham-
burgh, are composed chiefly of merchants, artificers and manufac-
turers, can grow rich only through parsimony and privation. As
®Ed. I reads “above the funds destined.”
AGRICULTURAL SYSTEMS ^33
the interest of nations so differently circumstanced, is very differ-
ent, so is likewise the common character of the people. In those of
the former kind, liberality, frankness, and good fellowship, natur-
ally make a part of that common character. In the latter, narrow-
ness, meanness, and a selfish disposition, averse to all social pleas-
ure and enjoyment.
The unproductive class, that of merchants, artificers and manu-
facturers, is maintained and employed altogether at the expence of
the two other classes, of that of proprietors, and of that of cultiva-
tors. They furnish it both with the materials of its work and^with
the fund of its subsistence, with the corn and cattle which it con-
sumes while it is employed about that work. The proprietors and
' cultivators finally pay both the wages of all the workmen of the
unproductive class, and the profits of all their employers. Those
workmen and their employers are properly the servants of the pro-
prietors and cultivators. They are only servants who work with-
out doors, as menial servants work within. Both the one and the
other, however, are equally maintained at the expence of the same
masters. The labour of both is equally unproductive. It adds noth-
ing to the value of the sum total of the rude produce of the land.
Instead of increasing the value of that sum total, it is a charge and
expence which must be paid out of it.
The unproductive class, however, is not only useful, but greatly
useful to the other two classes. By means of the industry of mer-
chants, artificers and manufacturers, the proprietors and cultiva-
tors can purchase both the foreign goods and the manufactured
produce of their own country which they have occasion for, with
the produce of a much smaller quantity of their own labour, than
what they would be obliged to employ, if they were to attempt, in
an awkward and unskilful manner, either to import the one, or to
make the other for their own use. By means of the unproductive
class, the cultivators are delivered from many cares which would
otherwise distract their attention from the cultivation of land. The
superiority of produce, which, in consequence of this undivided at-
tention, they are enabled to raise, is fully sufficient to pay the
whole expence which the maintenance and employment of the un-
productive class costs either the proprietors, or themselves. The in-
dustry of merchants, artificers and manufacturers, though in its
own nature altogether unproductive, yet contributes in this manner
indirectly to increase the produce of the land. It increases the pro-
ductive powers of productive labour, by leaving it at liberty to con-
fine itself to its proper employment, the cultivation of land; and
The un-
produc-
tive class
is main-
tained at
the ex-
pense of
the other
two,
but is use-,
ful to
them,
and it is
not their
interest
to dis-
courage
its indus-
try;
nor is it
ever the
interest of
the un-
produc-
tive class
to oppress
the
others.
Mercan-
tile states
similarly
are main-
tained at
the ex-
pense of
landed
states,
but are
greatly
useful to
them,
and it is
not the
interest of
landed
nations to
discour-
age their
industry
634 THE WEALTH OF NATIONS
the plough goes frequently the easier and the better by means of
the labour of the man whose business is most remote from the
plough.
It can never be the interest of the proprietors and cultivators to
restrain or to discourage in any respect the industry of merchants,
artificers and manufacturers. The greater the liberty which this
unproductive class enjoys, the greater will be the competition in
all the different trades which compose it, and the cheaper will the
other two classes be supplied, both with foreign goods and with the
manufactured produce of their own country.
It can never be the interest of the unproductive class to oppress
the other two classes. It is the surplus produce of the land, or what
remains after deducting the maintenance, first, of the cultivators,
and afterwards, of the proprietors, that maintains and employs the
unproductive class. The greater this surplus, the greater must like-
wise be the maintenance and employment of that class.^ The estab-
lishment of perfect justice, of perfect liberty, and of perfect equal-
ity, is the very simple secret which most effectually secures the
highest degree of prosperity to all the three classes.
The merchants, artificers and manufacturers of those mercantile
states which, like Holland and Hamburgh, consist chiefly of this
unproductive class, are in the same manner maintained and em-
ployed altogether at the expence of the proprietors and cultivators
of land. The only difference is, that those proprietors and cultiva-
tors are, the greater part of them, placed at a most inconvenient
distance from the merchants, artificers and manufacturers whom
they supply with the materials of their work and the fund of their
subsistence, are the inhabitants of other countries, and the sub-
jects of other governments.
Such mercantile states, however, are not only useful, but greatly
useful to the inhabitants of those other countries. They fill up, in
some measure, a very important void, and supply the place of the
merchants, artificers and manufacturers, whom the inhabitants of
those countries ought to find at home, but whom, from some defect
in their policy, they do not find at home.
It can never be the interest of those landed nations, if I may call
them so, to discourage or distress the industry of such mercantile
states, by imposing high duties upon their trade, or upon the com-
modities which they furnish. Such duties, by rendering those com-
modities dearer, could serve only to sink the real value of the sur-
plus produce of their own land, with which, or, what comes to the
®Ed. I reads “the greater must likewise be its maintenance and employ-
ment.”
AGRICULTURAL SYSTEMS ^35
same thing, with the price of which, those commodities are pur-
chased. Such duties could serve only to discourage the increase of
that surplus produce, and consequently the improvement and cul-
tivation of their own land. The most effectual expedient, on the
contrary, for raising the value of that surplus produce, for encour-
aging its increase, and consequently the improvement and cultiva-
tion of their own land, would be to allow the most perfect freedom
to the trade of all such mercantile nations.
This perfect freedom of trade would even be the most effectual
expedient for supplying them, in due time, with all the artificers,
manufacturers and merchants, whom they wanted at home, and for
filling up in the properest and most advantageous manner that very
important void which they felt there.
The continual increase of the surplus produce of their land,
would, in due lime, create a greater capital than what could be em-
ployed with the ordinary rate of profit in the improvement and
cultivation of land; and the surplus part of it would naturally turn
itself to the employment of artificers and manufacturers at home.
But those artificers and manufacturers, finding at home both the
materials of their work and tlie fund of their subsistence, might
immediately, even with much less art and skill, be able to work as
cheap as the like artificers and manufacturers of such mercantile
states, who had both to bring from a great distance. Even though,
from want of art and skill, they might not for some time be able to
work as cheap, yet, finding a market at home, they might be able
to sell their work there as cheap as that of the artificers and manu-
facturers of such mercantile states, which could not be brought to
that market but from so great a distance; and as their art and skill
improved, they would soon be able to sell it cheaper. The artificers
and manufacturers of such mercantile states, therefore, would im-
mediately be rivalled in the market of those landed nations, and
soon after undersold and justled out of it altogether. The cheapness
of the manufactures of those landed nations, in consequence of the
gradual improvements of art and skill, would, in due time, extend
their sale beyond the home market, and carry them to many for-
eign markets, from which they would be in the same manner grad-
ually justle out many of the manufactures of such mercantile na-
tions.
This continual increase both of the rude and manufactured prod-
uce of those landed nations would in due time create a greater capi-
tal than could, with the ordinary rate of profit, be employed either
in agriculture or in manufactures. The surplus of this capital would
Misprinted “greater” in cd. 5-
by high
duties.
Freedom
of trade
would in
due time
supply ar-
tificers,
etc., at
home,
in conse-
quence of
the in-
crease of
their
capital,
which
would
first em-
ploy
manufac-
turers,
and after-
wards
overflow
into
foreign
trade.
Freedom
of trade
therefore
is best for
introduc-
ing
manufac-
tures and
foreign
trade.
High
duties and
prohibi-
tions sink
the value
of agri-
cultural
produce,
raise mer-
cantile
and
manufac-
turing
[profit,
636 the wealth of nations
naturally turn itself to foreign trade, and be employed in export-
ing, to foreign countries, such parts of the rude and manufactured
produce of its own country, as exceeded the demand of the home
market. In the exportation of the produce of their own country,
the merchants of a landed nation would have an advantage of the
same kind over those of mercantile nations, which its artificers and
manufacturers had over the artificers and manufacturers of such
nations; the advantage of finding at home that cargo, and those
stores and provisions, which the others were obliged to seek for at
a distance. With inferior art and skill in navigation, therefore, they
would be able to sell that cargo as cheap in foreign markets as the
merchants of such mercantile nations; and with equal art and skill
they would be able to sell it cheaper. They would soon, therefore,
rival those mercantile nations in this branch of foreign trade,
and in due time would justle them out of it altogether.
According to this liberal and generous system, therefore, the
most advantageous method in which a landed nation can raise up
artificers, manufacturers and merchants of its own, is to grant the
most perfect freedom of trade to the artificers, manufacturers and
merchants of all other nations. It thereby raises the value of the
surplus produce of its own land, of which the continual increase
gradually establishes a fund, which in due time necessarily raises
up all the artificers, manufacturers and merchants whom it has oc-
casion for.
When a landed nation, on the contrary, oppresses either by high
duties or by prohibitions the trade of foreign nations, it necessarily
hurts its own interest in two different ways. First, by raising the
price of all foreign goods and of all sorts of manufactures, it neces-
sarily sinks the real value of the surplus produce of its own land,
with which, or, what comes to the same thing, with the price of
which, it purchases those foreign goods and manufactures. Second-
ly, by giving a sort of monopoly of the home market to its own
merchants, artificers and manufacturers, it raises the rate of mer-
cantile and manufacturing profit in proportion to that of agricul-
tural profit, and consequently either draws from agriculture a part
of the capital which had before been employed in it, or hinders
from going to it a part of what would otherwise have gone to it.
This policy, therefore, discourages agriculture in two different
ways; first, by sinking the real value of its produce, and thereby
lowering the rate of its profit; and, secondly, by raising the rate of
profit in all other employments. Agriculture is rendered less ad-
vantageous, and trade and manufactures more advantageous than
“ Ed. I reads “of their foreign trade.”
AGRICULTURAL SYSTEMS 637
they otherwise would be; and every man is tempted by his own in-
terest to turn, as much as he can, both his capital and his industry
from the former to the latter emplo3niients.
Though, by this oppressive policy, a landed nation should be
able to raise up artificers, manufacturers and merchants of its own,
somewhat sooner than it could do by the freedom of trade; a mat-
ter, however, which is not a little doubtful; yet it would raise them
up, if one may say so, prematurely, and before it was perfectly ripe
for them. By raising up too hastily one species of industry, it would
depress another more valuable species of industry. By raising up
too hastily a species of industry which only replaces the stock which
employs it, together with the ordinary profit, it would depress a
species of industry which, over and above replacing that stock with
its profit, affords likewise a neat produce, a free rent to the landlord.
It would depress productive labour, by encouraging too hastily that
labour which is altogether barren and unproductive.
In what manner, according to this system, the sum total of the
annual produce of the land is distributed among the three classes
above mentioned, and in what manner the labour of the unproduc-
tive class does no more than replace the value of its own consump-
tion, without increasing in any respect the value of that sum total,
is represented by Mr. Quesnai, the very ingenious and profound
author of this system, in some arithmetical formularies. The first of
these formularies, which by way of eminence he peculiarly distin-
guishes by the name of the (Economical Table, represents the
manner in which he supposes this distribution takes place, in a state
of the most perfect liberty, and therefore of the highest prosperity;
in a state where the annual produce is such as to afford the greatest
possible neat produce, and where each class enjoys its proper share
of the whole annual produce. Some subsequent formularies repre-
sent the manner, in which, he supposes, this distribution is made in
different states of restraint and regulation; in which, either the
class of proprietors, or the barren and unproductive class, is more
favoured than the class of cultivators, and in which, either the one
or the other encroaches more or less upon the share which ought
properly to belong to this productive class. Every such encroach-
ment, every violation of that natural distribution, which the most
perfect liberty would establish, must, according to this system,
necessarily degrade more or less, from one year to another, the
value and sum total of the annual produce, and must necessarily
occasion a gradual declension in the real wealth and revenue of the
^®See Francois Quesnay, Tableau CEconomique, 1758, reproduced in fac-
simile for the British Economic Association, 1894.
and could
only raise
up manu-
facturers
and mei -
chants
pre-
maturely.
The dis-
tribution
of the
produce
of land is
represent-
ed in the
Economi-
cal Table.
Nations
can pros-
per in
spite of
hurtful
regula-
tions.
The sys-
tem is
638 THE WEALTH OF NATIONS
society; a declension of which the progress must be quicker or slow-
er, according to the degree of this encroachment, according as that
natural distribution, which the most perfect liberty would establish,
is more or less violated. Those subsequent formularies represent the
different degrees of declension, which, according to this system, cor-
respond to the different degrees in which this natural distribution
of things is violated.
Some speculative physicians seem to have imagined that the
health of the human body could be preserved only by a certain pre-
cise regimen of diet and exercise, of which every, the smallest,
violation necessarily occasioned some degree of disease or disorder
proportioned to the degree of the violation. Experience, however,
would seem to show, that the human body frequently preserves, to
all appearance at least,^^ the most perfect state of health under a
vast variety of different regimens; even under some which are gen-
erally believed to be very far from being perfectly wholesome. But
the healthful state of the human body, it would seem, contains in
itself some unknown principle of preservation, capable either of
preventing or of correcting, in many respects, the bad effects even
of a very faulty regimen. Mr. Quesnai, who was himself a physi-
cian, and a very speculative physician, seems to have entertained a
notion of the same kind concerning the political body, and to have
imagined that it would thrive and prosper only under a certain pre-
cise regimen, the exact regimen of perfect liberty and perfect jus-
tice. He seems not to have considered that in the political body, the
natural effort which every man is continually making to better his
own condition, is a principle of preservation capable of preventing
and correcting, in many respects, the bad effects of a political
(economy, in some degree both partial and oppressive. Such a po-
litical ceconomy, though it no doubt retards more or less, is not al-
ways capable of stopping altogether the natural progress of a na-
tion towards wealth and prosperity, and still less of making it go
backwards. If a nation could not prosper without the enjoyment of
perfect liberty and perfect justice, there is not in the world a na-
tion which could ever have prospered. In the political body, how-
ever, the wisdom of nature has fortunately made ample provision
for remedying many of the bad effects of the folly and injustice of
man; in the same manner as it has done in the natural body, for
remedying those of his sloth and intemperance.
The capital error of this system, however, seems to lie in its
representing the class of artificers, manufacturers and merchants, as
Ed. I reads “at least to all appearance,”
AGRICULTURAL SYSTEMS ^39
altogether barren and unproductive. The following observations
may serve to show the impropriety of this representation.
First, this class, it is acknowledged, reproduces annually the
value of its own annual consumption, and continues, at least, the
existence of the stock or capital which maintains and employs it.
But upon this account alone the denomination of barren or unpro-
ductive should seem to be very improperly applied to it. We should
not call a marriage barren or unproductive, though it produced only
a son and a daughter, to replace the father and mother, and though
it did not increase the number of the human species, but only con-
tinued it as it was before. Farmers and country labourers, indeed,
over and above the stock which maintains and employs them, re-
produce annually a neat produce, a free rent to the landlord. As a
marriage which affords three children is certainly more productive
than one which affords only two; so the labour of farmers and
country labourers is certainly more productive than that of mer-
chants, artificers and manufacturers. The superior produce of the
one class, however, does not render the other barren or unpro-
ductive.
Secondly, it seems, upon this account, altogether improper to
consider artificers, manufacturers and merchants, in the same light
as menial servants. The labour of menial servants does not continue
the existence of the fund which maintains and employs them. Their
maintenance and employment is altogether at the expence of their
masters, and the work which they perform is not of a nature to re-
pay that expence. That work consists in services which perish gen-
erally in the very instant of their performance, and does not fix or
realize itself in any vendible commodity which can replace the value
of their wages and maintenance. The labour, on the contrary, of
artificers, manufacturers and merchants, naturally does fix and
realize itself in some such vendible commodity. It is upon this ac-
count that, in the chapter in which I treat of productive and un-
productive labour, I have classed artificers, manufacturers and
merchants, among the productive labourers, and menial servants
among the barren or unproductive.
Thirdly, it seems, upon every supposition, improper to say, that
the labour of artificers, manufacturers and merchants, does not in-
crease the real revenue of the society. Though we should suppose,
for example, as it seems to be supposed in this system, that the
value of the daily, monthly, and yearly consumption of this class
was exactly equal to that of its daily, monthly, and yearly produc-
^^Bk. ii., ch. iii., pp. 314-332.
wrong in
represent-
ing arti-
ficers, etc ,
as unpro-
ductive,
since,
(i) they
reproduce
at least
their an-
nual con-
sumption
and con-
tinue the
capital
which
employs
them,
(2) they
are not
like me-
nial ser-
vants,
(3) their
labour in-
creases
the real
revenue
of the
society,
640 the wealth OF NATIONS
tion ; yet it would not from thence follow that its labour added noth-
ing to the real revenue, to the leal value of the annual produce of
the land and labour of the society. An artificer, for example, who,
in the first six months after harvest, executes ten pounds worth of
work, though he should in the same time consume ten pounds worth
of corn and other necessaries, yet really adds the value of ten
pounds to the annual produce of the land and labour of the society.
While he has been consuming a half yearly revenue of ten pounds
worth of corn and other necessaries, he has produced an equal value
of work capable of purchasing, either to himself or to some other
person, an equal half yearly revenue. The value, therefore, of what
has been consumed and produced during these six months is equal,
not to ten, but to twenty pounds. It is possible, indeed, that no more
than ten pounds worth of this value, may ever have existed at any
one moment of time. But if the ten pounds worth of corn and other
necessaries, which were consumed by the artificer, had been con-
sumed by a soldier or by a menial servant, the value of that part
of the annual produce which existed at the end of the six months,
would have been ten pounds less than it actually is in consequence
of the labour of the artificer. Though the value of what the arti-
ficer produces, therefore, should not at any one moment of time be
supposed greater than the value he consumes, yet at every moment
of time the actually existing value of goods in the market is, in
consequence of what he produces, greater than it otherwise would
be.
When the patrons of this system assert, that the consumption of
artificers, manufacturers and merchants, is equal to the value of
what they produce, they probably mean no more than that their
revenue, or the fund destined for their consumption, is equal to it.
But if they had expressed themselves more accurately, and only
asserted, that the revenue of this class was equal to the value of
what they produced, it might readily have occurred to the reader,
that what would naturally be saved out of this revenue, must neces-
sarily increase more or less the real wealth of the society. In order,
therefore, to make out something like an argument, it was neces-
sary that they should express themselves as they have done; and
this argument, even supposing things actually were as it seems to
presume them to be, turns out to be a very inconclusive one.
u) for Fourthly, farmers and country labourers can no more augment,
without parsimony, the real revenue, the annual produce of the
nual pro labour of their society, than artificers, manufacturers and
ducepar- merchants. The annual produce of the land and labour of any so-
simonyis augmented only in two ways; either, first, by some
AGRICULTURAL SYSTEMS ^41
improvement in the productive powers of the useful labour actually
maintained within it; or, secondly, by some increase in the quan-
tity of that labour.
The improvement in the productive powers of useful labour de-
pends, first, upon the improvement in the ability of the workman :
and, secondly, upon that of the machinery with which he works.
But the labour of artificers and manufacturers, as it is capable of
being more subdivided, and the labour of each workman reduced to
a greater simplicity of operation, than that of farmers and country
labourers, so it is likewise capable of both these sorts of improve-
ment in a much higher degree.^^ In this respect, therefore, the class
of cultivators can have no sort of advantage over that of artificers
and manufacturers.
The increase in the quantity of useful labour actually employed
within any society, must depend altogether upon the increase of
the capital which employs it; and the increase of that capital again
must be exactly equal to the amount of the savings from the reve-
nue, either of the particular persons who manage and direct the
employment of that capital, or of some other persons who lend it
to them. If merchants, artificers and manufacturers are, as this
system seems to suppose, naturally more inclined to parsimony and
saving than proprietors and cultivators, they are, so far, more like-
ly to augment the quantity of useful labour employed within their
society, and consequently to increase its real revenue, the annual
produce of its land and labour.
Fifthly and lastly, though the revenue of the inhabitants of every
country was supposed to consist altogether, as this system seems to
suppose, in the quantity of subsistence which their industry could
procure to them; yet even upon this supposition, the revenue of a
trading and manufacturing country must, other things being equal,
always be much greater than that of one without trade or manufac-
tures. By means of trade and manufactures, a greater quantity of
subsistence can be annually imported into a particular country than
what its own lands, in the actual state of their cultivation, could
afford. The inhabitants of a town, though they frequently possess
no lands of their own, yet draw to themselves by their industry such
a quantity of the rude produce of the lands of other people as sup-
plies them, not only with the materials of their work, but with the
fund of their subsistence. What a town always is with regard to the
country in its neighbourhood, one independent state or country may
frequently be with regard to other independent states or countries.
It is thus that Holland draws a great part of its subsistence from
“ See Book I. Chap I pp 5, 6
just as
much re-
quired
from
farmers
as from
them,
and ( 5 )
trade and
manufac-
tures can
procure
that sub-
sistence
which the
system re-
gards as
the only
revenue.
In spite of
its errors
’^ne sys-
tem has
been
valuable.
642 the wealth of nations
other countries; live cattle from Holstein and Jutland, and corn
from almost all the different countries of Europe. A small quantity
of manufactured produce purchases a great quantity of rude pro-
duce. A trading and manufacturing country, therefore, naturally
purchases with a small part of its manufactured produce a great
part of the rude produce of other countries; while, on the contrary,
a country without trade and manufactures is generally obliged to
purchase, at the expence of a great part of its rude produce, a very
small part of the manufactured produce of other countries. The
on6 exports what can subsist and accommodate but a very few, and
imports the subsistence and accommodation of a great number.
The other exports the accommodation and subsistence of a great
number, and imports that of a very few only. The inhabitants of
the one must always enjoy a much greater quantity of subsistence
than what their own lands, in the actual state of their cultivation,
could afford. The inhabitants of the other must always enjoy a
much smaller quantity.
This system, however, with all its imperfections, is, perhaps, the
nearest approximation to the truth that has yet been published
upon the subject of political oeconomy, and is upon that account
well worth the consideration of every man who wishes to examine
with attention the principles of that very important science. Though
in representing the labour which is employed upon land as the only
productive labour, the notions which it inculcates are perhaps too
narrow and confined; yet in representing the wealth of nations as
consisting, not in the unconsumable riches of money, but in the
consumable goods annually reproduced by the labour of the so-
ciety; and in representing perfect liberty as the only effectual ex-
pedient for rendering this annual reproduction the greatest possible,
its doctrine seems to be in every respect as just as it is generous and
liberal. Its followers are very numerous; and as men are fond of
paradoxes, and of appearing to understand what surpasses the com-
prehension of ordinary people, the paradox which it maintains,
concerning the unproductive nature of manufacturing labour, has
not perhaps contributed a little to increase the number of its ad-
mirers. They have for some years past made a pretty considerable
sect, distinguished in the French republic of letters by the name of.
The (Economists. Their works have certainly been of some service
to their country; not only by bringing into general discussion, many
subjects which had never been well examined before, but by in-
fluencing in some measure the public administration in favour of
agriculture. It has been in consequence of their representations,
accordingly, that the agriculture of France has been delivered from
AGRICULTURAL SYSTEMS 643
several of the oppressions which it before laboured under. The term
during which such a lease can be granted, as will be valid against
every future purchaser or proprietor of the land, has been pro^
longed from nine to twenty-seven years.^® The ancient provincial
restraints upon the transportation of corn from one province of the
kingdom to another, have been entirely taken away, and the liberty
of exporting it to all foreign countries, has been established as the
common law of the kingdom in all ordinary cases.^'^ This sect, in
their works, which are very numerous, and which treat not only of
what is properly called Political (Economy, or of the nature and
causes of the wealth of nations, but of every other branch of the
system of civil government, all follow implicitly, and without any
sensible variation, the doctrine of Mr. Quesnai. There is upon this
account little variety in the greater part of their works. The most
distinct and best connected account of this doctrine is to be found
in a little book written by Mr. Mercier de la Riviere, sometime In-
tendant of Martinico, intitled. The natural and essential Order of
Political Societies.^® The admiration of this whole sect for their
master, who was himself a man of the greatest modesty and sim-
plicity, is not inferior to that of any of the ancient philosophers for
the founders of their respective systems. ^'There have been, since
the world began,’’ says a very diligent and respectable author, the
Marquis de Mirabeau, “three great inventions which have prin-
cipally given stability to political societies, independent of many
other inventions which have enriched and adorned them. The first,
is the invention of writing, which alone gives human nature the
power of transmitting, without alteration, its laws, its contracts, its
annals, and its discoveries. The second, is the invention of money,
which binds together all the relations between civilized societies.
The third, is the GEconomical Table, the result of the other two,
which completes them both by perfecting their object; the great
discovery of our age, but of which our posterity will reap the
benefit.”
“Above, p. 369. Above, pp. 198, 474.
Uordre naturel et essentiel des societes pohtiques, 1767, a quarto of 511
pages, seems, as G. Schelle {Du Pont de Nemours et recole physiocratiquCf
1888, p. 46, note) remarks, not entitled to be called a “little book,” but
Smith may have been thinking of the edition in two vols., lamo, 1767,
nominally printed “a Londres chez Jean Nourse, libraire.”
i 9 «Trois grandes inventions principales ont fonde stablement les societes,
ind^pendamment de tant d’autres qui les ont ensuite dotees et d6corees. Ces
trois sont, i® L’invention de Tecriture, qui seule donne a Thumanite le pouvoir
de transmettre, sans alteration, ses lois, ses pactes, ses annales et ses decou-
vertes. 2® Celle de la monnaie, qui lie tous les rapports entre les societes pol-
icies. La troisieme enfin, qui est due a notre age, et dont nos neveux profit-
gront, est un derive des deux autre^ et les complette egalement en perfec-
Some na-
tions have
favoured
agricul-
ture.
China, for
example.
China is
Itself of
very great
extent,
but more
foreign
trade
would be
advanta-
geous to
it.
644 THE WEALTH OF NATIONS
As the political ceconomy of the nations of modern Europe, has
been more favourable to manufactures and foreign trade, the in-
dustry of the towns, than to agriculture, the industry of the coun-
try; so that of other nations has followed a different plan, and has
been more favourable to agriculture than to manufactures and for-
eign trade.
The policy of China favours agriculture more than all other em-
ployments. 2 ° In China, the condition of a labourer is said to be as
much superior to that of an artificer; as in most parts of Europe,
that of an artificer is to that of a labourer. In China, the great am-
bition of every man is to get possession of some little bit of land,
either in property or in lease ; and leases are there said to be granted
upon very moderate terms, and to be sufficiently secured to the
lessees. The Chinese have little respect for foreign trade. Your beg-
garly commerce! was the language in which the Mandarins of Pe-
kin used to talk to Mr. de Lange,^^ the Russian envoy, concerning
it.22 Except with Japan, the Chinese carry on, themselves, and in
their own bottoms, little or no foreign trade; and it is only into one
or two ports of their kingdom that they even admit the ships of for-
eign nations. Foreign trade, therefore, is, in China, every way con-
fined within a much narrower circle than that to which it would
naturally extend itself, if more freedom was allowed to it, either in
their own ships, or in those of foreign nations.
Manufactures, as in a small bulk they frequently contain a great
value, and can upon that account be transported at less expence
from one country to another than most parts of rude produce,
are, in almost all countries, the principal support of foreign trade.
In countries, besides, less extensive and less favourably circum-
stanced for interior commerce than China, they generally require
the support of foreign trade. Without an extensive foreign market,
they could not well flourish, either in countries so moderately ex-
tensive as to afford but a narrow home market; or in countries
tionnant leur objet: c^est la d^couverte du Tableau economique, qui deven-
ant desormais le truchement universel, embrasse, et accorde toutes les por-
tions ou quotites correlatives, qui doivent entrer dans tous les calculs g6n-
eraux de Tordre konQmqxLQ”^Philosophie Rurale ou iconomie ginirale et
politique de V agriculture) pour servir de suite d VAmi des Hommes, Amster-
dam, 1766, tom. L, pp. 52, S3.
“ Du Halde, Description Giographique, etc,, de la Chine, tom. ii., p. 64.
^ Ed. I reads “Mr. Langlet.”
®*See the Journal of Mr. De Lange in Bell’s Travels, vol. ii. p. 258, 276
and 293. Travels from St. Petersburg in Russia to Diverse Parts of Asia, by
John Bell of Antermony, Glasgow, 1763. The mandarins requested the Rus-
sians to cease “from importuning the council about their beggarly commerce,”
p. 293. Smith was a subscriber to this book. The note is not in ed. i.
“Ed. I reads “sorts.”
AGRICULTURAL SYSTEMS ^45
where the communication between one province and another was so
difficult, as to render it impossible for the goods of any particular
place to enjoy the whole of that home market which the country
could afford. The perfection of manufacturing industry, it must be
remembered, depends altogether upon the division of labour; and
the degree to which the division of labour can be introduced into
any manufacture, is necessarily regulated, it has already been
shown, by the extent of the market. But the great extent of the
empire of China, the vast multitude of its inhabitants, the variety
of climate, and consequently of productions in its different prov-
inces, and the easy communication by means of water carriage be-
tween the greater part of them, render the home market of that
country of so great extent, as to be alone sufficient to support very
great manufactures, and to admit of very considerable subdivisions
of labour. The home market of China is, perhaps, in extent, not
much inferior to the market of all the different countries of Europe
put together.^® A more extensive foreign trade, however, which to
this great home market added the foreign market of all the rest of
the world; especially if any considerable part of this trade was car-
ried on in Chinese ships; could scarce fail to increase very much the
manufactures of China, and to improve very much the productive
powers of its manufacturing industry. By a more extensive naviga-
tion, the Chinese would naturally learn the art of using and con-
structing themselves all the different machines made use of in
other countries, as well as the other unorovements of art and in-
dustry which are practised in all the different parts of the world.
Upon their present plan they have little opportunity of improving
themselves by the example of any other nation; except that of the
Japanese.
The policy of ancient Egypt too, and that of the Gentoo govern-
ment of Indostan, seem to have favoured agriculture more than all
other employments.
Both in ancient Eg)rpt and^"^ Indostan, the whole body of the
people was divided into different casts or tribes, each of which was
confined, from father to son, to a particular employment or class of
employments. The son of a priest was necessarily a priest; the son
of a soldier, a soldier; the son of a labourer, a labourer; the son of
a weaver, a weaver; the son of a taylor, a taylor; &c. In both coun-
tries, the cast of the priests held the highest rank, and that of the
Above, pp. 17-23.
^Quesnay went further than this: “L’historien dit que le commerce qui
se fit dans I’int^rieur de la Chine est si grand que celui de TEurope ne peut
pas lui etre compare.”— Oewvrej, ed. Oncken, 1888, p. 603.
Ed. I reads “as well as all the other.” ^ Ed. i reads “and in ”
Egypt
and the
Gentoo
govern-
ment of
Indostan
favoured
agricul-
ture.
The
people
were di-
vided into
castes in
these
countries.
Irrigation
was at-
tended to
there.
Egypt
and India
were de-
pendent
on other
nations
for
foreign
trade
646 the wealth of nations
soldiers the next; and in both countries, the cast of the farmers and
labourers was superior to the casts of merchants and manufacturers.
The government of both countries was particularly attentive to
the interest of agriculture. The works constructed by the ancient
sovereigns of Eg5T)t for the proper distribution of the waters of the
Nile were famous in antiquity; and the ruined remains of some of
them are still the admiration of travellers. Those of the same kind
which were constructed by the ancient sovereigns of Indostan, for
the proper distribution of the waters of the Ganges as well as of
many other rivers, though they have been less celebrated, seem to
have been equally great. Both countries, accordingly, though sub-
ject occasionally to dearths, have been famous for their great fer-
tility. Though both were extremely populous, yet, in years of
moderate plenty, they were both able to export great quantities of
grain to their neighbours.
The ancient Egyptians had a superstitious aversion to the sea;
and as the Gentoo religion does not permit its followers to light a
fire, nor consequently to dress any victuals upon the water, it in
effect prohibits them from all distant sea voyages. Both the Egyp-
tians and Indians must have depended almost altogether upon the
navigation of other nations for the exportation of their surplus pro-
duce; and this dependency, as it must have confined the market, so
it must have discouraged the increase of this surplus produce. It
must have discouraged too the increase of the manufactured pro-
duce more than that of the rude produce. Manufactures require a
much more extensive market than the most important parts of the
rude produce of the land. A single shoemaker will make more than
three hundred pairs of shoes in the year; and his own family will
not perhaps wear out six pairs. Unless therefore he has the custom
of at least fifty such families as his own, he cannot dispose of the
whole produce of his own labour. The most numerous class of arti-
ficers will seldom, in a large country, make more than one in fifty
or one in a hundred of the whole number of families contained in it.
But in such large countries as France and England, the number of
people employed in agriculture has by some authors been computed
at a half, by others at a third, and by no author that I know of, at
less than a fifth of the whole inhabitants of the country. But as the
produce of the agriculture of both France and England is, the far
greater part of it, consumed at home, each person employed in it
must, according to these computations, require little more than
the custom of one, two, or, at most, of four such families as hL
own, in order to dispose of the whole produce of his own labour.
“ Ed I does not contain “of ”
AGRICULTURAL SYSTEMS ^47
Agriculture, therefore, can support itself under the discouragement
of a confined market, much better than manufactures. In both an-
cient Egypt and Indostan, indeed, the confinement of the foreign
market was in some measure compensated by the conveniency of
many inland navigations, which opened, in the most advantageous
manner, the whole extent of the home market to every part of the
produce of every different district of those countries. The great ex-
tent of Indostan too rendered the home market of that country
very great, and sufficient to support a great variety of manufac-
tures. But the small extent of ancient Egypt, which was never equal
to England, must at all times have rendered the home market of
that country too narrow for supporting any great variety of manu-
factures. Bengal, accordingly, the province of Indostan which com-
monly exports the greatest quantity of rice,* has always been more
remarkable for the exportation of a great variety of manufactures,
than for that of its grain. Ancient Egypt, on the contrary, though it
exported some manufactures, fine linen in particular, as well as
some other goods, was always most distinguished for its great ex-
portation of grain. It was long the granary of the Roman empire.
The sovereigns of China, of ancient Egypt, and of the different
kingdoms into which Indostan has at different times been divided,
have always derived the whole, or by far the most considerable part,
of their revenue from some sort of land-tax or land-rent. This land-
tax or land-rent, like the tithe in Europe, consisted in a certain
proportion, a fifth, it is said, of the produce of the land, which was
either delivered in kind, or paid in money, according to a certain
valuation, and which therefore varied from year to year according
to all the variations of the produce. It was natural therefore, that
the sovereigns of those countries should be particularly attentive to
the interests of agriculture, upon the prosperity or declension of
which immediately depended the yearly increase or diminution of
their own revenue.^®
The policy of the ancient republics of Greece, and that of Rome,
though it honoured agriculture more than manufactures or foreign
trade, yet seems rather to have discouraged the latter employ-
ments, than to have given any direct or intentional encouragement
to the former. In several of the ancient states of Greece, foreign
trade was prohibited altogether; and in several others the employ-
ments of artificers and manufacturers were considered as hurtful
to the strength and agility of the human body, as rendering it in-
capable of those habits which th^ir military and gymnastic exer-
cises endeavoured to form in it, and as thereby disqu^ifying it more
^ Below, p. 789
The land
tax gave
eastern
sovereigns
a parti-
cular in-
terest in
agricul-
ture
Ancient
Greece
and Rome
discour-
aged
manufac-
tures and
foreign
trade, and
carried on
manufac-
tures only
by slave
labour,
which is
expensive.
M the wealth of nations
or less for undergoing the fatigues and encountering the dangers
of war. Such occupations were considered as fit only for slaves, and
the free citizens of the state were prohibited from exercising them.^^
Even in those states where no such prohibition took place, as in
Rome and Athens, the great body of the people were in effect ex-
cluded from all the trades which are now commonly exercised by
the lower sort of the inhabitants of towns. Such trades were, at
Athens and Rome, all occupied by the slaves of the rich, who exer-
cised them for the benefit of their masters, whose wealth, power,
and protection, made it almost impossible for a poor freeman to find
a market for his work, when it came into competition with that of
the slaves of the rich. Slaves, however, are very seldom inventive;
and all the most important improvements, either in machinery, or
in the^^ arrangement -and distribution of work, which facilitate
and abridge labour, have been the discoveries of freemen. Should a
slave propose any improvement of this kind, his master would be
very apt to consider the proposal as the suggestion of laziness, and
of a desire to save his own labour at the master’s expence. The poor
slave, instead of reward, would probably meet with much abuse,
perhaps with some punishment. In the manufactures carried on by
slaves, therefore, more labour must generally have been employed
to execute the same quantity of work, than in those carried on by
freemen. The work of the former must, upon that account, general-
ly have been dearer than that of the latter. The Hungarian mines,
it is remarked by Mr. Montesquieu, though not richer,^® have al-
ways been wrought with less expence, and therefore with more
profit, than the Turkish mines in their neighbourhood. The Turkish
mines are wrought by slaves; and the arms of those slaves are the
only machines which the Turks have ever thought of employing.
The Hungarian mines are wrought by freemen, who employ a great
deal of machinery, by which they facilitate and abridge their own
labour.^^ From the very little that is known about the price of
manufactures in the times of the Greeks and Romans, it would ap-
pear that those of the finer sort were excessively dear. Silk sold for
its weight in gold. It was not, indeed, in those times a European
manufacture; and as it was all brought from the East Indies, the
distance of the carriage may in some measure account for the great-
ness of the price. The price, however, which a lady, it is said, would
sometimes pay for a piece of very fine linen, seems to have been
equally extravagant; and as linen was always either a European,
“ Ed. I reads “from.” Montesquieu, Esprit des lois, liv. iv., chap. 8.
“ Ed. I reads “that.” " Ed. i reads “more rich.”
Lectures f p. 231; Montesquieu, Esprit des lois, liv. xv., chap. 8.
AGRICULTURAL SYSTEMS 649
or, at farthest, an Egyptian manufacture, this high price can be
accounted for only by the great expence of the labour which must
have been employed about it, and the expence of this labour again
could arise from nothing but the awkwardness of the machinery
which it made use of. The price of fine woollens too, though not
quite so extravagant, seems however to have been much above that
of the present times. Some cloths, we are told by Pliny, dyed in a
particular manner, cost a hundred denarii, or three pounds six shil-
lings and eight pence the pound weight.®^ Others dyed in another
manner cost a thousand denarii the pound weight, or thirty-three
pounds six shillings and eight pence. The Roman pound, it must be
remembered, contained only twelve of our avoirdupois ounces. This
high price, indeed, seems to have been principally owing to the dye.
But had not the cloths themselves been much dearer than any
which are made in the present times, so very expensive a dye would
not probably have been bestowed upon them. The disproportion
would have been too great between tie value of the accessory and
that of the principal. The price mentioned by the same author of
some Triclinaria, a sort of woollen pillows or cushions made use of
to lean upon as they reclined upon &eir couches at table, passes all
credibility; some of them being said to have cost more than thirty
thousand, others more than three hundred thousand pounds. This
high price too is not said to have arisen from the dye. In the dress
of the people of fashion of both sexes, there seems to have been
much less variety, it is observed by Dr. Arbuthnot, in ancient than
in modern times; and the very little variety which we find in
that of the ancient statues confirms his observation. He infers from
this, that their dress must upon the whole have been cheaper than
ours: but the conclusion does not seem to follow. When the expence
of fashionable dress is very great, the variety must be very small.
But when, by the improvements in the productive powers of manu-
facturing art and industry, the expence of any one dress comes to
be very moderate, the variety will naturally be very great. The
rich not being able to distinguish themselves by the expence of any
one dress, will naturally endeavour to do so by the multitude and
variety of their dresses.
The greatest and most important branch of the commerce of Every-
every nation, it has already been observed,®® is that which is car-
ried on between the inhabitants of the town and those of the coun- raises the
«*Plin. [R.iV'.l 1 . ix. c. 39.
®®Plin. [B'.iV.] 1 . viii. c. 48. Neither this nor the preceding notes is in ed. i.
John Arbuthnot, Tables of Ancient Coins, Weights and Measures, 2nd
ed., 1754 , PP- 142-145-
Above, p. 356.
price of
manufac-
tures dis-
courages
agricul-
ture,
and this is
done by
systems
which
restrain
manufac-
tures and
foreign
trade.
So all sys-
tems of
encour-
agements
and re-
straints
retard the
progress
of so-
ciety.
650 the wealth of nations
try. The inhabitants of the town draw from the country the rude
produce which constitutes both the materials of their work and
the fund of their subsistence; and they pay for this rude produce
by sending back to the country a certain portion of it manufactured
and prepared for immediate use. The trade which is carried on be-
tween those two different sets of people, consists ultimately in a
certain quantity of rude produce exchanged for a certain quantity
of manufactured produce. The dearer the latter, therefore, the
cheaper the former; and whatever tends in any country to raise the
price of manufactured produce, tends to lower that of the rude
produce of the land, and thereby to discourage agriculture. The
smaller the quantity of manufactured produce which any given
quantity of rude produce, or, which comes to the same thing, which
the price of any given quantity of rude produce is capable of pur-
chasing, the smaller the exchangeable value of that given quan-
tity of rude produce; the smaller the encouragement which either
the landlord has to increase its quantity by improving, or the farm-
er by cultivating the land. Whatever, besides, tends to diminish in
any country the number of artificers and manufacturers, tends to
diminish the home market, the most important of all markets for
the rude produce of the land, and thereby still further to discourage
agriculture.
Those systems, therefore, which preferring agriculture to all
other employments, in order to promote it, impose restraints upon
manufactures and foreign trade, act contrary to the very end which
they propose, and indirectly discourage that very species of indus-
try which they mean to promote. They are so far, perhaps, more
inconsistent than even the mercantile system. That system, by en-
couraging manufactures and foreign trade more than agriculture,
turns a certain portion of the capital of the society from supporting
a more advantageous, to support a less advantageous species of in-
dustry. But still it really and in the end encourages that species of
industry which it means to promote. Those agricultural systems,
on the contrary, really and in the end discourage their own favour-
ite species of industry.
It is thus that every system which endeavours, either, by extra-
ordinary encouragements, to draw towards a particular species of
industry a greater share of the capital of the society than what
would naturally go to it; or, by extraordinary restraints, to force
from a particular species of industry some share of the capital
which would otherwise be employed in it; is in reality subversive of
^ Ed. I reads “real value.”
AGRICULTUIiAL SYSTEMS
the great purpose which it means to promote. It retards, instead of
accelerating, the progress of the society towards real wealth and
greatness; and diminishes, instead of increasing, the real value of
the annual produce of its land and labour.
All systems either of preference or of restraint, therefore, being
thus completely taken away, the obvious and simple system of nat-
ural liberty establishes itself of its own accord. Every man, as long
as he does not violate the laws of justice, is left perfectly free to
pursue his own interest his own way, and to bring both his industry
and capital into competition with those of any other man, or order
of men. The sovereign is completely discharged from a duty, in the
attempting to perform which he must always be exposed to innu-
merable delusions, and for the proper performance of which no
human wisdom or knowledge could ever be sufficient; the duty of
superintending the industry of private people, and of directing it
towards the employments most suitable to the interest of the so-
ciety. According to the system of natural liberty, the sovereign has
only three duties to attend to; three duties of great importance, in-
deed, but plain and intelligible to common understandings: first,
the duty of protecting the society from the violence and invasion of
other independent societies; secondly, the duty of protecting, as far
as possible, every member of the society from the injustice or
oppression of every other member of it, or the duty of establishing
an exact administration of justice; and, thirdly, the duty of erect-
ing and maintaining certain public works and certain public insti-
tutions, which it can never be for the interest of any individual, or
small number of individuals, to erect and maintain; because the
profit could never repay the expence to any individual or small
number of individuals, though it may frequently do much more
than repay it to a great society.
The proper performance of those several duties of the sovereign
necessarily supposes a certain expence; and this expence again
necessarily requires a certain revenue to support it. In the follow-
ing book, therefore, I shall endeavour to explain; first, what are
the necessary expences of the sovereign or commonwealth; and
which of those expences ought to be defrayed by the general con-
tribution of the whole society; and which of them, by that of some
particular part only, or of some particular members of the society:
secondly, what are the different methods in which the whole society
may be made to contribute towards defraying the expences incum-
bent on the whole society, and what are the principal advantages
and inconveniences of each of those methods: and, thirdly, what
Thes>s-
temof
natural
liberty
leaves the
sovereign
only three
duties:
(i) the
defence of
the coun-
tr>’; (2)
the ad-
ministra-
tion of
justice,
and (3)
the
mainte-
nance of
certain
public
works.
The next
book will
treat of
the neces-
sary ex-
penses of
the sove-
reign, the
methods
of con-
tribution
towards
the ex-
penses of
the whole
society,
and the
THE WEALTH OF NATIONS
causes
and ef-
fects of
public
debts.
652
are the reasons and causes which have induced almost all modern
governments to mortgage some part of this revenue, or to contract
debts, and what have been the effects of those debts upon the real
wealth, the annual produce of the land and labour of the society.
The following book, therefore, will naturally be divided into three
chapters.
BOOK V
Of the Revenue of the Sovereign or Commonwealth
CHAPTER I
OF THE EXPENCES OF THE SOVEREIGN OR COMMONWEALTH
Part I
Of the Expence of Defence
The first duty of the sovereign, that of protecting the society from
the violence and invasion of other independent societies, can be
performed only by means of a military force. But the expence both
of preparing this military force in time of peace, and of employing
it in time of war, is very different in the different states of society,
in the different periods .of improvement.
Among nations of hunters, the lowest and rudest state of society,
such as we find it among the native tribes of North America, every
man is a warrior as well as a hunter. When he goes to war, either to
defend his society, or to revenge the injuries which have been done
to it by other societies, he maintains himself by his own labour, in
the same manner as when he lives at home. His society, for in this
state of things there is properly neither sovereign nor common-
wealth, is at no sort of expence, either to prepare him for the field,
or to maintain him while he is in it.^
Among nations of shepherds, a more advanced state of society,
such as we find it among the Tartars and Arabs, every man is, in
the same manner, a warrior. Such nations have commonly no fixed
habitation, but live, either in tents, or in a sort of covered waggons
which are easily transported from place to place. The whole tribe
or nation changes its situation according to the different seasons of
The ex-
pense of a
military
force is
different
at differ-
ent
periods.
Among
hunters it
costs
nothing.
When
shepherds
go to war
the whole
nation
moves
with its
property
Lectures^ p. 14.
653
THE WEALTH OF NATIONS
and the
sovereign
is at no
expense
Shepherds
are far
more
formid-
able than
hunters
6S4
the year, as well as according to other accidents. When its herds and
flocks have consumed the forage of one part of the country, it re-
moves to another, and from that to a third. In the dry season, it
comes down to the banks of the rivers, in the wet season it retires
to the upper country. When such a nation goes to war, the war-
riors will not trust their herds and flocks to the feeble defence of
their old men, their women and children, and their old men, their
women and children, will not be left behind without defence and
without subsistence. The whole nation, besides, being accustomed
to a wandering life, even in time of peace, easily takes the field in
time of war Whether it marches as an army, or moves about as a
company of herdsmen, the way of life is nearly the same, though
the object proposed by it be^ very different. They all go to war
together, therefore, and every one does as well as he can. Among
the Tartars, even the women have been frequently known to en-
gage in battle. If they conquer, whatever belongs to the hostile tribe
is the recompence of the victory. But if they are vanquished, all is
lost, and not only their herds and flocks, but their women and chil-
dren, become the booty of the conqueror. Even the greater part of
those who survive the action are obliged to submit to him for the
sake of immediate subsistence. The rest are commonly dissipated
and dispersed in the desart.
The ordinary life, the ordinary exercises of a Tartar or Arab,
prepare him sufficiently for war. Running, wrestling, cudgel-play-
ing, throwing the javelin, drawing the bow, &g. are the common
pastimes of those who live in the open air, and are all of them the
images of war. When a Tartar or Arab actually goes to war, he is
maintained, by his own herds and flocks which he carries with him,
in the same manner as in peace. His chief or sovereign, for those
nations have all chiefs or sovereigns, is at no sort of expence in
preparing him for the field; and when he is in it, the chance of
plunder is the only pay which he either expects or requires.
An army of hunters can seldom exceed two or three hundred
men. The precarious subsistence which the chace affords could sel-
dom allow a greater number to keep together for any considerable
time. An army of shepherds, on the contrary, may sometimes
amount to two or three hundred thousand. As long as^nothing stops
their progress, as long as they can go on from one district, of which
they have consumed the forage, to another which is yet entire ; there
seems to be scarce any limit to the number who can march on to-
gether. A nation of hunters can never be formidable to the civ-
ilized nations in their neighbourhood. A nation of shepherds may.
^Ed I reads “is”
EXPENSE OF DEFENCE ^55
Nothing can be more contemptible than an Indian war in North
America. Nothing, on the contrary, can be more dreadful than a
Tartar invasion has frequently been in Asia. The judgment of
Thucydides,^ that both Europe and Asia could not resist the
Scythians united, has been verified by the experience of all ages.
The inhabitants of the extensive, but defenceless plains of Scythia
or Tartary, have been frequently united under the dominion of the
chief of some conquering horde or clan, and the havoc and devasta-
tion of Asia have always signalized their union. The inhabitants of
the inhospitable deserts of Arabia, the other great nation of shep-
herds, have never been united but once; under Mahomet and his
immediate s uccessors.^ Their union, which was more the effect of
religious enthusiasm than of conquest, was signalized in the same
manner. If the hunting nations of America should ever become
shepherds, their neighbourhood would be much more dangerous to
^European colonies than it is at present.
In a yet more advanced state of society, among those nations of
husbandmen who have little foreign commerce, and no other man-
ufactures but those coarse and houshold ones which almost every
private family prepares for its own use, every man, in the same
manner, either is a warrior, or easily becomes such. They who live
by agriculture generally pass the whole day in the open air, ex-
posed to all the inclemencies of the seasons. The hardiness of their
ordinary life prepares them for the fatigues of war, to some of
which their necessary occupations bear a great ^ analogy. The
necessary occupation of a ditcher prepares him to work in the
trenches, and to fortify a camp as well as to enclose a field. The
ordinary pastimes of such husbandmen are the same as those of
shepherds, and are in the same manner the images of war. But as
husbandmen have less leisure than shepherds, they are not so fre-
quently employed in those pastimes. They are soldiers, but soldiers
not quite so much masters of their exercise. Such as they are, how-
ever, it seldom costs the sovereign or commonwealth any expence
^to prepare them for the field.
♦ f Agriculture, even in its rudest and lowest state, supposes a set-
^tlement; some sort of fixed habitation which cannot be abandoned
without great loss. When a nation o f mere hu^bg^ilhnen, tbetefoye,
g oes to war, th e wh i ^^ take the field together. Xh^
o ld men^ the.women^ ^^anachiM^^ at least, must remain at home to
®What Thucydides says (ii, 97) is that no European or Asiatic nation
could resist the Scythians if they were united Ed i reads here and on
next page ^‘Thuadides”
^Lectures, pp 20, 21 ®Ed i reads “a good deal of”
Husband-
men with
little com-
merce and
only
household
manufac-
tures are
easily
conveited
into
soldiers,
and it sel-
dom costs
the sover-
eign any-
thing to
prepare
them for
the field,
01 to
maintain
them
when
they have
taken the
field
Later it
becomes
necessary
to pay
those who
take the
field,
since arti-
ficers and
manufac-
turers
must be
mam-
tainedby
the public
when
656 the wealth of nations
take care of the habitation. All the men of the military age, how-
ever, may take the field, and, in small nations of this kind, have
frequently done so. In every nation the men of the military age are
supposed to amount to about a fourth or a fifth ® part of the whole
body of the people. If the campaign too should begin after seed-
time, and end before harvest, both the husbandman and his prin-
cipal labourers can be spared from the farm without much loss. He
trusts that the work which must be done in the mean time can be
well enough executed by the old men, the women and the children.
He is not unwilling, therefore, to serve without pay during a short
campaign, and it frequently costs the sovereign or commonwealth
as little to maintain him in the field as to prepare him for it. The
citizens of all the different states of ancient Greece seem to have
served in this manner till after the second Persian war; and the
people of Peloponesus till after the Peloponesian war. The Pelopon-
esians, Thucydides observes, generally left the field in the summer,
and returned home to reap the harvest.® The Roman people under
their kings, and during the first ages of the republic, served in the
same manner.^ It was not till the siege of Veii, that they, who staid
at home, began to contribute something towards maintaining those
who went to war.^^ In the European monarchies, which were
founded upon the ruins of the Roman empire, both before and for
some time after the establishment of what is properly called the
feudal law, the great lords, with all their immediate dependents,
used to serve the crown at their own expence. In the field, in the
same manner as at home, they maintained themselves by their own
revenue, and not by any stipend or pay which they received from
the king upon that particular occasion.
In a more advanced state of society, two different causes con-
tribute to render it altogether impossible that they, who take the
field, should maintain themselves at their own expence. Those two
causes are, the progress of manufactures, and the improvement in
the art of war.
Though a husbandman should be employed in an expedition, pro-
vided it begins after seed-time and ends before harvest, the inter-
ruption of his business will not always occasion any considerable
diminution of his revenue. Without the intervention of his labour,
nature does herself the greater part of the work which remains to
be done. But the moment that an artificer, a smith, a carpenter, or a
weaver, for example, quits his workhouse, the sole source of his
revenue is completely dried up. Nature does nothing for^hinqi, he
® Ed I reads “or fifth ” Ed i reads “so short a ” ® VII , 27
® Livy, V., 2. ^ Livy, iv , 59 ad fin
EXPENSE OF DEFENCE ^57
does all for himself. When he takes the field, therefore, in defence
of the public, as he has no revenue to maintain himself, he must
necessarily be maintained by the public. But in a country of which
a greater part of the inhabitants are artificers and manufacturers, a
great part of the people who go to war must be drawn from those
classes, and must therefore be maintained by the public as long as
they are employed in its service.
When the art of war too has gradually grown up to be a very in-
tricate and complicated science, when the event of war ceases to be
determined, as in the first ages of society, by a single irregular skir-
mish or battle, but when the contest is generally spun out through
several different campaigns, each of which lasts during the greater
part of the year; it becomes universally necessary that the public
should maintain those who serve the public in war, at least while
they are employed in that service. Whatever in time of peace might
be the ordinary occupation of those who go to war, so very tedious
and expensive a service would otherwise be by far too heavy a bur-
den upon them. After the second Persian war, accordingly, the
armies of Athens seem to have been generally composed of mer-
cenary troops; consisting, indeed, partly of citizens, but partly too
of foreigners; and all of them equally hired and paid at the expence
of the state. From the time of the siege of Veii, the armies of Rome
received pay for their service during the time which they remained
in the field.^^ Under the feudal governments the military service
both of the great lords and of their immediate dependents was,
after a certain period, universally exchanged for a payment in
money, which was employed to maintain those who served in their
stead.
The number of those who can go to war, in proportion to the
whole number of the people, is necessarily much smaller in a civ-
ilized, than in a rude state of society. In a civilized society, as the
soldiers are maintained altogether by the labour of those who are^
not soldiers, the number of the former £a|mq^ exceed what the ^
latter can maintain, over and above maintaining, in a manner suit-
able to their respective stations, both themselves and the other
officers of government, and law, whom they are obliged to main-^
tain, lu the little agrarian states of ancient Greece^, a fqurth or a
fiftlUiartof the whole^body g£ the people considered themselves as
sold iers^ would sometimes, it is said, take the field. Among the
civilized nations of modern Europe, it is commonly computed, that
not more than one hundredth part of the inhabitants of any coun-
^ Above, p. 656. “ Ed. i reads “never can ”
away
from
their
work,
and the
greater
length of
cam-
paigns
makes
service
without
pay too
heavy a
burden
even for
husband-
men
The pos-
sible pro-
portion
of soldiers
to the rest
of the
popula-
tion is
much
smaller in
civilised
htifnes.
The ex-
pense of
preparing
the f
Soldiers
were not
a distinct
class in
Greece
and
Rome,
norat
first in
feudal
times.
But as
war be-
comes
more
compli-
cated,
division
of labour
becomes
658 the wealth of nations
try can be-employed as soldiers, without ruin to the country which
pays the expence of their service.^®
The expence of preparing the army for the field seems not to
have become considerable in any nation, till long after that of
maintaining it in the field had devolved entirely upon the sovereign
f ir commonwealth. In all the different republics of ancient Greece,
0 learn his military exercises, was a necessary part of education
imposed by the state upon every free citizen. In every city there
seems to have been a public field, in which, under the protection of
the public magistrate, the young people were taught their different
exercises by different masters. In this very simple institution, con-
sisted the whole expence which any Grecian state seems ever to
have been at, in preparing its citizens for war. In ancient Rome the
exercises of the Campus Martius answered the same purpose with
those of the Gymnasium in ancient Greece. Under the feudal gov-
ernments, the many public ordinances that the citizens of every
district should practise archery as well as several other military
exercises, were intended for promoting the same purpose, but do
not seem to have promoted it so well. Either from want of interest
in the officers entrusted with the execution of those ordinances, or
from some other cause, they appear to have been universally ne-
glected; and in the progress of all those governments, military
exercises seem to have gone gradually into disuse among the great
body of the people.
In the republics of ancient Greece and Rome, during the whole
period of their existence, and under the feudal governments for a
considerable time after their first establishment, the trade of a
soldier was not a separate, distinct trade, which constituted the sole
or principal occupation of a particular class of citizens, j^ery sub-
ject o^^state, whatever might be the ordinary trade or occu-
^tion by which he gained his livelihood, fonsid^redjiims^lf, ugon
all ordinar y^ occasions, as fit likewise to exerc ise*Se trade ofT
soldier, and upon many extraordinary occasions as bou nd t Q"exer-
^ The art of war, however, as it is certainly the noblest of all arts,
y so in the progress of improvement it necessarily becomes one of
the most complicated among them. The state of the mechanical, as
well as of some other arts, with which it is necessarily connected,
determines the degree of perfection to which it is capable of being
carried at any particular time. But in order to carry it to this de-
gree of perfection, it is necessary that it should become the sole or
Ed I reads ‘‘at whose expence they are employed ” Repeated all but ver-
batim belowp4j^ 729 “ ^
E^XPENSE OF DEFENCE ^59
principal occupation of a particular class of citizens, and the divi-
sion of labour is as necessary for the improvement of this, as of
every other art. Into other arts the division of labour is naturally
introduced by the prudence of individuals, who find that they pro-
mote their private interest better by confining themselves to a
particular trade, than by exercising a great number. But it is the
wisdom of the state only which can render the trade of a soldier a
particular trade separate and distinct from all others. A private
citizen who, in time of profound peace, and without any particular
encouragement from the public, should spend the greater part of
his time in military exercises, might, no doubt, both improve him-
self very much in them, and amuse himself very well; but he cer-
tainly would not promote his own interest. It is the wisdom of the
state only which can render it for his interest to give up the greater
part of his time to this peculiar occupation: and states have not
always had this wisdom, even when their circumstances had be-
come such, that the preservation of their existence required that
they should have it.
A shepherd has a great deal of leisure; a husbandman, in the
rude state of husbandry, has some; an artificer or manufacturer has '
none at all. The first may, without any loss, employ a great deal of
his time in martial exercises; the second may employ some part of
it; but the last cannot employ a single hour in them without some
loss, and his attention to his own interest naturally leads him to
neglect them altogether. Those improvements in husbandry too,
which the progress of arts and manufactures necessarily intro-
duces, leave the husbandman as little leisure as the artificer. Mili-
tary exercises come to be as much neglected by the inhabitants of
the country as by those of the town, and the great body of the
people becomes altogether unwarlike. That wealth, at the same
t^e, which always follows the improvements of agriculture and
manufactures, and which in reality is no more than the accumu-
l^d produce of those improvements, provokes the invasion of all
their neijgljibours. J^^.'^^^Ithy
ijationJ^of^ jpy^iopT^eJnos^^ to be attacked; and unless
the state takes some new measures for the public defence, the nat-
ural habits of the people render them altogether incapable of de-
fending themselves.
In these circumstances, there seem to be but two methods, by
which the state can make any tolerable provision for the public
defence.
It may either, first, by means of a very rigorous police, and in
spite of the whole bent of the interest, genius and inclinations of
necessary
to carry
the art to
perfec-
tion
As society
advances
the people
become
unwar-
like
There are
only two
methods
of pro-
viding for
defence,
(i) to en-
force
military
exercises
and ser-
vice,
or (2^ to
make the
trade of
the soldier
a separate
one
in other
words the
establish-
ment of a
militia or
a standing
army.
Militias
were an-
ciently
only exer-
cised and
not regi-
mented.
Fire-arms
brought
about the
change by
making
660 the wealth of nations
the people, enforce the practice of military exercises, and oblige
either all the citizens of the military age, or a certain number of
. them, to join in some measure the trade of a soldier to whatever
other trade or profession they may happen to carry on.
Or secondly, by maintaining and employing a certain number of
citizens in the constant practice of military exercises, it may ren-
der the trade of a soldier a particular trade, separate and distinct
from all others.
If the state has recourse to the first of those two expedients, its
military force is said to consist in a militia; if to the second, it is
said to consist in a standing army. The practice of miltary exer-
cises is the sole or principal occupation of the soldiers of a stand-
ing army, and the maintenance or pay which the state affords them
is the principal and ordinary fund of their subsistence. The practice
of military exercises is only the occasional occupation of the sol-
diers of a militia, and they derive the principal and ordinary fund
of their subsistence from some other occupation. In a militia, the
character of the labourer, artificer, or tradesman, predominates
over that of the soldier: in a standing army, that of the soldier pre-
dominates over every other character; and in this distinction seems
to consist the essential difference between those two different species
of military force.
Militias have been of several different kinds. In some countries
the citizens destined for defending the state, seem to have been
exercised only, without being, if I may say so, regimented; that is,
without being divided into separate and distinct bodies of troops,
each of which performed its exercises under its own proper and
permanent officers. In the republics of ancient Greece and Rome,
each citizen, as long as he remained at home, seems to have prac-
tised his exercises either separately and independently, or with such
of his equals as he liked best; and not to have been attached to
any particular body of troops till he was actually called upon to
take the field. In other countries, the militia has not only been exer-
cised, but regimented. In England, in Switzerland, and, I believe, in
every other country of modern Europe, where any imperfect mili-
tary force of this kind has been established, every militia-man is,
even in time of peace, attached to a particular body of troops,
which performs its exercises under its own proper and permanent
officers.
Before the invention of fire-arms, that army was superior in
which the soldiers had, each individually, the greatest skill and
dexterity in the use of their arms. Strength and agility of body
were of the highest consequence, and commonly determined the
66i
EXPENSE OF DEFENCE
fate of battles. But this skill and dexterity in the use of their arms,
could be acquired only, in the same manner as fencing is^^ at
present, by practising, not in great bodies, but each man separately,
in a particular school, under a particular master, or with his own
particular equals and companions. Since the invention of fire-arms,
strength and agility of body, or even extraordinary dexterity and
skill in the use of arms, though they are far from being of no con-
sequence, are, however, of less consequence. The nature of the
weapon, though it by no means puts the awkward upon a level with
the skilful, puts him more nearly so than he ever was before. All
the dexterity and skill, it is supposed, which are necessary for using
it, can be well enough acquired by practising in great bodies.
Regulari ty, .jQr j d er, and prompt obedience to command, are quali-
ties which, in modern armies, are of more importance towards de-
termining the fate of battles, than the dexterity and skill of the
soldiers in the use of their arms. But the noise of fire-arms, the
smoke, and the invisible death to which every man feels himself
every moment exposed, as soon as he comes within cannon-shot, and
frequently a long time before the battle can be well said to be en-
gaged, must render it very difficult to maintain any considerable
degree of this regularity, order, and prompt obedience, even in the
beginning of a modern battle. In an ancient battle there was no
noise but what arose from the human voice; there was no smoke,
there was no invisible cause of wounds or death. Every man, till
some mortal weapon actually did approach him, saw clearly that no
such weapon was near him. In these circumstances, and among
troops who had some confidence in their own skill and dexterity in
the use of their arms, it must have been a good deal less difficult to
preserve some degree of regularity and order, not only in the be-
ginning, but through the whole progress of an ancient battle, and
till one of the two armies was fairly defeated. But the habits of reg-
ularity, order, and prompt obedience to command, can be acquired
only by troops which are exercised in great bodies.
A militia, however, in whatever manner it may be either dis-
ciplined or exercised, must always be much inferior to a well-
disciplined and well-exercised standing army.
The soldiers, who are exercised only once a week, or once a
month, can never be so expert in the use of their arms, as those
who are exercised every day, or every other day; and though this
circumstance may not be of so much consequence in modern, as it
was in ancient times, yet the .acknowledged superiority of the Prus-
sian troops, owing, it is said, very much to their superior expertness
“ Ed. I reads “is acquired.”
dexterity
less im-
portant.
and disci-
pline
much
more so
A militia
is always,
inferior t^
a standing
army,
being less
expert,
and less
well dis-
ciplined.
The best
militias
are those
which go
to war
under the
chieftains
who rule
m time of
peace.
A militia
kept long
lough in
the field
becomes a
landing
rmy.
662 the wealth of nations
in their exercise, may satisfy us that it is, even at this day, of very
considerable consequence.
The soldiers, who are bound to obey their officer only once a
week or once a month, and who are at all other times at liberty to
manage their own affairs their own way, without being in any re-
spect accountable to him, can never be under the same awe in his
presence, can never have the same disposition to ready obedience,
with those whose whole life and conduct are every day directed by
him, and who every day even rise and go to bed, or at least retire to
their quarters, according to his orders. In what is called discipline,
or in the habit of ready obedience, a militia must always be still
more inferior to a standing army, than it may sometimes be in
what is called the manual exercise, or in the management and use
of its arms. But in modern war the habit of ready and instant obed-
ience is of much greater consequence than a considerable super-
iority in the management of arms.
Those militias which, like the Tartar or Arab militia, go to war
under the same chieftains whom they are accustomed to obey in
peace, are by far the best. In respect for their officers, in the habit
of ready obedience, they approach nearest to standing armies. The
highland militia, when it served under its own chieftains, had some
advantage of the same kind. As the highlanders, however, were not
wandering, but stationary shepherds, as they had all a fixed habita-
tion, and were not, in peaceable times,'*accustomed to follow their
chieftain from place to place; so in time of war they were less will-
ing to follow him to any considerable distance, or to continue for
any long time in the field. When they had acquired any booty they
were eager to return home, and his authority was seldom sufficient
to detain them. In point of obedience they were always much in-
ferior to what is reported of the Tartars and Arabs. As the high-
landers too, from their stationary life, spend less of their time in
the open air, they were always less accustomed to military exercises,
and were less expert in the use of their arms than the Tartars and
Arabs are said to be.
A militia of any kind, it must be observed, however, which has
served for several successive campaigns in the field, becomes in
every respect a standing army. The soldiers are every day exercised
in the use of their arms, and, being constantly under the command
of their officers, are habituated to the same prompt obedience which
takes place in standing armies. What they were before they took
the field, is of little importance. They necessarily become in every
respect a standing army, after they have passed a few campaigns
in it. Should the war in America drag out through another cam-
EXPENSE OF DEFENCE 663
paign,^" the American militia may become in every respect a match
for that standing army, of which the valour appeared, in the last
war,^® at least not inferior to that of the hardiest veterans of France
and Spain.
This distinction being well understood, the history of all ages, it
will be found, bears testimony to the irresistible superiority which a
well-regulated standing army has over a militia.
One of the first standing armies of which we have any distinct
account, in any well authenticated history, is that of Philip of
Macedon. His frequent wars with the Thracians, Illyrians, Thessa-
lians, and some of the Greek cities in the neighbourhood of Mace-
don, gradually formed his troops, which in the beginning were
probably militia, to the exact discipline of a standing army. When
he was at peace, which he was very seldom, and never for any long
time together, he was careful not to disband that army. It van-
quished and subdued, after a long and violent struggle, indeed, the
gallant and well exercised militias of the principal republics of
ancient Greece; and afterwards, with very little struggle, the
effeminate and ill-exercised militia of the great Persian empire.
The fall of the Greek republics and of the Persian empire, was the
effect of the irresistible superiority which a standing army has over
every sort of militia. It is the first great revolution in the affairs of
mankind, of which history has preserved any distinct or circum-
stantial account.
The fall of Carthage, and the consequent elevation of Rome, is
the second. All the varieties of the fortune of those two famous
republics may very well be accounted for from the same cause.
From the end of the first to the beginning of the second Cartha-
ginian war, the armies of Carthage were continually in the field,
and employed under three great generals, who succeeded one an-
other in the command; Amilcar, his son-in-law Asdrubal, and his
son Annibal; first in chastising their own rebellious slaves, after-
wards in subduing the revolted nations of Africa, and, lastly, in
conquering the great kingdom of Spain. The army which Annibal
led from Spain into Italy must necessarily, in those different wars,
have been gradually formed to the exact discipline of a standing
army. The Romans, in the mean time, though they had not been
altogether at peace, yet they had not, during this period, been en-
gaged in any war of very great consequence; and their military
“As ed. I was published at the beginning of March, 1776, this must have
been written less than a year after the outbreak of the war, which lasted eight
years.
“The Seven Years’ War, 1756-1763. Ed. i reads “of which in the last war
the valour appeared.”
History
shows the
superior-
ity of the
standing
army
That of
Macedon
defeated
the Greek
militias.
In the
wars of
Carthage
and Rome
standing
armies
defeated
militias.
The Car-
thaginian
standing
army de-
feated the
Roman
militia in
Italy
and
Spam
When the
Roman
militias
became a
standing
army they
defeated
the Car-
thaginian
standing
army m
Italy
and the
Cartha-
ginian
militia in
Spain,
and both
standmg
army and
militia in
Africa.
Thence-
forward
the
Roman
republic
had
standing
armies,
which
found
little re-
sistance
except
from the
standmg
army of
Macedon
664 THE WEALTH OF NATIONS
discipline, it is generally said, was a good deal relaxed. The Roman
aimies which Annibal encountered at Trebia, Thrasymenus and
Cannae, were militia opposed to a standing army. This circum-
stance, it is probable, contributed more than any other to deter-
mine the fate of those battles.
The standing army which Annibal left behind him in Spain, had
the like superiority over the militia which the Romans sent to op-
pose it, and in a few years, under the command of his brother, the
younger Asdrubal, expelled them almost entirely from that country.
Annibal was ill supplied from home. The Roman militia, being
continually in the field, became in the progress of the war a well
disciplined and well exercised standing army; and the superiority
of Annibal grew every day less and less. Asdrubal judged it neces-
sary to lead the whole, or almost the whole of the standing army
which he commanded in Spain, to the assistance of his brother in
Italy. In this march he is said to have been misled by his guides;
and in a country which he did not know, was surprized and at-
tacked by another standing army, in every respect equal or su-
perior to his own, and was entirely defeated.
When Asdrubal had left Spam, the great Scipio found nothing to
oppose him but a militia inferior to his own. He conquered and
subdued that militia, and, in the course of the war, his own militia
necessarily became a well-disciplined and well-exercised standing
army. That standing army was afterwards carried to Africa, where
it found nothing but a militia to oppose it. In order to defend Car-
thage it became necessary to recall the standing army of Annibal.
The disheartened and frequently defeated African militia joined it,
and, at the battle of Zama, composed the greater part of the troops
of Annibal. The event of that day determined the fate of the two
rival republics.
From the end of the second Carthaginian war till the fall of the
Roman republic, the armies of Rome were in every respect standing
armies. The standing army of Macedon made some resistance to
their arms. In the height of their grandeur, it cost them two great
wars, and three great battles, to subdue that little kingdom; of
which the conquest would probably have been still more difficult,
had it not been for the cowardice of its last king. The militias of all
the civilized nations of the ancient world, of Greece, of Syria, and
of Egypt, made but a feeble resistance to the standing armies of
Rome. The militias of some barbarous nations defended themselves
much better. The Scythian or Tartar militia, which Mithridates
drew from the countries north of the Euxine and Caspian seas,
''“This” is probably a misprint for “his,” the reading of eds 1-3
EXPENSE OF DEFENCE 665
were the most formidable enemies whom^^ the Romans had to en-
counter after the second Carthaginian war. The Parthian and Ger-
man militias too were always respectable, and, upon several occa-
sions, gained very considerable advantages over the Roman armies.
In general, however, and when the Roman armies were well com-
manded, they appear to have been very much superior; and if the
Romans did not pursue the final conquest either of Parthia or Ger-
many, it was probably because they judged, that it was not worth
while to add those two barbarous countries to an empire which was
already too large. The ancient Parthians appear to have been a
nation of Scythian or Tartar extraction, and to have always re-
tained a good deal of the manners of their ancestors. The ancient
Germans were, like the Scythians or Tartars, a nation of wandering
shepherds, who went to war under the same chiefs whom they were
accustomed to follow in peace. Their militia was exactly of the same
kind with that of the Scythians or Tartars, from whom too they
were probably descended.
Many different causes contributed to relax the discipline of the
Roman armies. Its extreme severity was, perhaps, one of those
causes. In the days of their grandeur, when no enemy appeared
capable of opposing them, their heavy armour was laid aside as
unnecessarily burdensome, their laborious exercises were neglected
as unnecessarily toilsome. Under the Roman emperors besides, the
standing armies of Rome, those particularly which guarded the
German and Pannonian frontiers, became dangerous to their mas-
ters, against whom they used frequently to set up their own gen-
erals. In order to render them less formidable, according to some
authors, Dioclesian, according to others, Constantine, first with-
drew them from the frontier, where they had always before been en-
camped in great bodies, generally of two or three legions each, and
dispersed them in small bodies through the different provincial
towns, from whence they were scarce ever removed, but when it
became necessary to repel an invasion. Small bodies of soldiers
quartered in trading and manufacturing towns, and seldom re-
moved from those quarters, became themselves tradesmen, arti-
ficers, and manufacturers. The civil came to predominate over the
military character; and the standing armies of Rome gradually de-
generated into a corrupt, neglected, and undisciplined militia, in-
capable of resisting the attack of the German and Scythian militias,
which soon afterwards invaded the western empire. It was only by
hiring the militia of some of those nations to oppose to that of
others, that the emperors were for some time able to defend them-
'®Ed I reads “which”
Under the
emperors
these
armies de-
generated
into
mihtias
Militias
were
gradually
super-
seded by
standing
armies in
Western
Europe.
A stand-
ing army
does not
lose its
valour in
time of
peace,
666 XHE WEALTH OF NATIONS
selves. The fall of the western empire is the third great revolution
in the affairs of mankind, of which ancient history has preserved
any distinct or circumstantial account. It was brought about by
the irresistible superiority which the militia of a barbarous, has
over that of a civilized nation; which the militia of a nation of
shepherds, has over that of a nation of husbandmen, artificers, and
manufacturers. The victories which have been gained by militias
have generally been, not over standing armies, but over other mili-
tias in exercise and discipline inferior to themselves. Such were the
victories which the Greek militia gained over that of the Persian
empire; and such too were those which in later times the Swiss
militia gained over that of the Austrians and Burgundians.
The military force of the German and Scythian nations who
established themselves upon the ruins of the western empire, con-
tinued for some time to be of the same kind in their new settle-
ments, as it had been in their original country. It was a militia of
shepherds and husbandmen, which, in time of war, took the field
under the command of the same chieftains whom it was accustomed
to obey in peace. It was, therefore, tolerably well exercised, and tol-
erably well disciplined. As arts and industry advanced, however,
the authority of the chieftains gradually decayed, and the great
body of the people had less time to spare for military exercises.
Both the discipline and the exercise of the feudal militia, therefore,
went gradually to ruin, and standing armies were gradually intro-
duced to supply the place of it. When the expedient of a standing
army, besides, had once been adopted by one civilized nation, it
became necessary that all its neighbours should follow the example.
They soon found that their safety depended upon their doing so,
and that their own militia was altogether incapable of resisting the
attack of such an army.
The soldiers of a standing army, though they may never have
seen an enemy, yet have frequently appeared to possess all the
courage of veteran troops, and the very moment that they took the
field to have been fit to face the hardiest and most experienced vet-
erans. In 1756, when the Russian army marched into Poland, the
valour of the Russian soldiers did not appear inferior to that of
the Prussians, at that time supposed to be the hardiest and most
experienced veterans in Europe. The Russian empire, however, had
enjoyed a profound peace for near twenty years before, and could
at that time have very few soldiers who had ever seen an enemy.
When the Spanish war broke out in 1739, England had enjoyed a
profound peace for about eight and twenty years. The valour of
her soldiers, however, far from being corrupted by that long peace,
EXPENSE OE DEFENCE 667
was never more distinguished than in the attempt upon Carthagena,
the first unfortunate exploit of that unfortunate war. In a long
peace the generals, perhaps, may sometimes forget their skill; but,
where a well-regulated standing army has been kept up, the sol-
diers seem never to forget their valour.
When a civilized nation depends for its defence upon a militia, it
is at all times exposed to be conquered by any barbarous nation
which happens to be in its neighbourhood. The frequent conquests
of all the civilized countries in Asia by the Tartars, sufficiently dem-
onstrates^® the natural superiority, which the militia of a barbar-
ous, has over that of a civilized nation. A well-regulated standing
army is superior to every militia. Such an army, as it can best be
maintained by an opulent and civilized nation, so it can alone de-
fend such a nation against the invasion of a poor and barbarous
neighbour. It is only by means of a standing army, therefore, that
the civilization of any country can be perpetuated, or even pre-
served for any considerable time.
As it is only by means of a well-regulated standing army that a
civilized country can be defended; so it is only by means of it, that
a barbarous country can be suddenly and tolerably civilized. A
standing army establishes, with an irresistible force, the law of the
sovereign through the remotest provinces of the empire, and main-
tains some degree of regular government in countries which could
not otherwise admit of any. Whoever examines, with attention, the
improvements which Peter the Great introduced into the Russian
empire, will find that they almost aU resolve themselves into the
establishment of a well-regulated standing army. It is the instru-
ment which executes and maintains all his other regulations. That
degree of order and internal peace, which that empire has ever
since enjoyed, is altogether owing to the influence of that army.
Men of republican principles have been jealous of a standing
army as dangerous to liberty. It certainly is so, wherever the in-
terest of the general and that of the principal officers are not neces-
sarily connected with the support of the constitution of the state.
The standing army of Caesar destroyed the Roman republic. The
standing army of Cromwel turned the long parliament out of
doors.^® But where the sovereign is himself the general, and the
principal nobility and gentry of the country the chief officers of
the army; where the military force is placed under the command of
those who have the greatest interest in the support of the civil au-
Almost certainly a misprint for “demonstrate,” the reading of ed. i.
^Lectures, p. 29. “Cromwel,” which is Hume^s spelling, appears first in ed.
4 here, but above, p. 563, it is so spelt in all editions.
and is the
only safe-
guard of a
civilised
nation,
also the
only
means of
civilising
a barbar-
ous one.
It is not
unfavour-
able to
liberty.
668
Defence
thus
grows
more ex-
pensive.
Fire-arms
enhance
the ex-
pense,
THE WEALTH OF NATIONS
thority, because they have themselves the greatest share of that
authority, a standing army can never be dangerous to liberty. On
the contrary, it may in some cases be favourable to liberty The
security which it gives to the sovereign renders unnecessary that
troublesome jealousy, which, in some modern republics, seems to
watch over the minutest actions, and to be at all times ready to
disturb the peace of every citizen. Where the security of the magis-
trate, though supported by the principal people of the country, is
endangered by every popular discontent; where a small tumult is
capable of bringing about in a few hours a great revolution, the
whole authority of government must be employed to suppress and
punish every murmur and complaint against it. To a sovereign, on
the contrary, who feels himself supported, not only by the natural
aristocracy of the country, but by a well-regulated standing army,
the rudest, the most groundless, and the most licentious remon-
strances can give little disturbance. He can safely pardon or neglect
them, and his consciousness of his own superiority naturally dis-
poses him to do so. That degree of liberty which approaches to
licentiousness can be tolerated only in countries where the sovereign
is secured by a well-regulated standing army. It is in such countries
only, that the public safety does not require, that the sovereign
should be trusted with any discretionary power, for suppressing
even the impertinent wantonness of this licentious liberty.
The first duty of the sovereign, therefore, that of defending the
society from the violence and injustice of other independent socie-
ties, grows gradually more and more expensive, as the society ad-
vances in civilization. The military force of the society, which
originally cost the sovereign no expence either in time of peace or
in time of war, must, in the progress of improvement, first be main-
tained by him in time of war, and afterwards even in time of peace.
The great change introduced into the art of war by the inven-
tion of fire-arms, has enhanced still further both the expence of
exercising and disciplining any particular number of soldiers in
time of peace, and that of employing them in time of war. Both
their arms and their ammunition are become more expensive. A
musquet is a more expensive machine than a javelin or a bow and
arrows; a cannon or a mortar than a balista or a catapulta. The
powder, which is spent in a modem review, is lost irrecoverably,
and occasions a very considerable expence. The javelins and arrows
which were thrown or shot in an ancient one, could easily be picked
up again, and were besides of very little value. The cannon and
the mortar are, not only much dearer, but much heavier machines
^Lectures, p. 263.
EXPENSE OF JUSTICE 669
than the balista or catapulta, and require a greater expence, not
only to prepare them for the field, but to carry them to it. As the
superiority of the modern artillery too, over that of the ancients is
very great; it has become much more difficult, and consequently
much more expensive, to fortify a town so as to resist even for a
few weeks the attack of that superior artillery. In modern times
many different causes contribute to render the defence of the so-
ciety more expensive. The unavoidable effects of the natural pro-
gress of improvement have, in this respect, been a good deal en-
hanced by a great revolution in the art of war, to which a mere
accident, the invention of gunpowder, seems to have given occasion.
In modern war the great expence of fire-arms gives an evident
advantage to the nation which can best afford that expence; and
consequently, to an opulent and civilized, over a poor and barbar-
ous nation. In ancient times the opulent and civilized found it dif-
ficult to defend themselves against the poor and barbarous nations.
In modern times the poor and barbarous find it difficult to defend
themselves against the opulent and civilized. The invention of fire-
arms, an invention which at first sight appears to be so pernicious,
is certainly favourable both to the permanency and to the extension
of civilization.^^
Part II
Of the Expence of Justice
The second duty of the sovereign, that of protecting, as far as pos-
sible, every member of the society from the injustice or oppression
of every other member of it, or the duty of establishing an exact
administration of justice requires two very different degrees of ex-
pence in the different periods of society.
Among nations of hunters, as there is scarce any property, or at
least none that exceeds the value of two or three days labour; so
there is seldom any established magistrate or any regular adminis-
tration of justice. Men who have no property can injure one an-
other only in their persons or reputations. But when one man kills,
wounds, beats, or defames another, though he to whom the injury
“Hume, History, ed. of 1773, vol. ii., p. 432, says the “furious engine,” ar-
tillery, “though it seemed contrived for the destruction of mankind and the
overthrow of empires, has in the issue rendered battles less bloody, and has
given greater stability to civil societies,” but his reasons are somewhat differ-
ent from those in the text above. This part of the chapter is evidently adapted
from Part iv. “Of Arms” in the Lectures, pp. 260-264, and the dissertation on
the rise, progress and fall of militarism in Part i., pp. 26-34.
and so
give an
advan-
tage to
rich
nations,
which is
favour-
able to
civilisa-
tion.
The ex-
pense of
justice is
different
at differ-
ent
periods.
Civil gov-
ernment
was first
rendered
necessary
by the
introduc-
tion of
property
Property
strength-
ens the
causes of
subordi-
nation.
There are
four
causes of
subordi-
nation,
670 THE WEALTH OF NATIONS
is done suffers, he who does it receives no benefit. It is otherwise
with the injuries to property. The benefit of the person who does
the injury is often equal to the loss of him who suffers it. Envy,
malice, or resentment, are the only passions which can prompt one
man to injure another in his person or reputation. But the greater
part of men are not very frequently under the influence of those
passions ; and the very worst men are so only occasionally. As their
gratification too, how agreeable soever it may be to certain char-
acters, is not attended with any real or permanent advantage, it is
in the greater part of men commonly restrained by prudential con-
siderations. Men may live together in society with some tolerable
degree of security, though there is no civil magistrate to protect
them from the injustice of those passions. But avarice and ambition
in the rich, in the poor the hatred of labour and the love of present
ease and enjoyment, are the passions which prompt to invade prop-
erty, passions much more steady in their operation, and much more
universal in their influence. Wherever there is great property, there
is great inequality. For one very rich man, there must be at least
five hundred poor, and the affluence of the few supposes the in-
digence of the many. The affluence of the rich excites the indigna-
tion of the poor, who are often both driven by want, and prompted
by envy, to invade his possessions. It is only under the shelter of
the civil magistrate that the owner of that valuable property, which
is acquired by the labour of many years, or perhaps of many suc-
cessive generations, can sleep a single night in security. He is at all
times surrounded by unknown enemies, whom, though he never
provoked, he can never appease, and from whose injustice he can
be protected only by the powerful arm of the civil magistrate con-
tinually held up to chastise it. The acquisition of valuable and
extensive property, therefore, necessarily requires the establish-
ment of civil government. Where there is no property, or at least
none that exceeds the value of two or three days labour, civil gov-
ernment is not so necessary.
Civil government supposed a certain subordination. But as the
necessity of civil government gradually grows up with the acquisi-
tion of valuable property, so the principal causes which naturally
introduce subordination gradually grow up with the growth of that
valuable property.
The causes or circumstances which naturally introduce subordin-
ation, or which naturally, and antecedent to any civil institution,
give some men some superiority over the greater part of theit
brethren, seem to be four in number.
^ Ed I reads “or.”
EXPENSE OF JUSTICE
The first of those causes or circumstances is the superiority of (i) supe>
personal qualifications, of strength, beauty, and agility of body; of
wisdom, and virtue, of prudence, justice, fortitude, and moderation qualifica-
of mind. The qualifications of the body, unless supported by those
of the mind, can give little authority in any period of society. He is
a very strong man, who, by mere strength of body, can force two
weak ones to obey him. The qualifications of the mind can alone
give very great authority. They are, however, invisible qualities;
always disputable, and generally disputed. No society, whether bar-
barous or civilized, has ever found it convenient to settle the rules
of precedency of rank and subordination, according to those in-
visible qualities; but according to something that is more plain and
palpable.
The second of those causes or circumstances is the superiority of (2) supe-
age. An old man, provided his age is not so far advanced as to give
suspicion of dotage, is every where more respected than a young
man of equal rank, fortune, and abilities. Among nations of hunt-
ers, such as the native tribes of North America, age is the sole
foundation of rank and precedency. Among them, father is the
appellation of a superior; brother, of an equal; and son, of an
inferior. In the most opulent and civilized nations, age regulates
rank among those who are in every other respect equ^l, and among
whom, therefore, there is nothing else to regulate it. Among brothers
and among sisters, the eldest always take place; and in the suc-
cession of the paternal estate every thing which cannot be divided,
but must go entire to one person, such as a title of honour, is in
most cases given to the eldest. Age is a plain and palpable quality
which admits of no dispute.
The third of those causes or circumstances is the superiority of (3) supe-
fortune. The authority of riches, however, though great in every
age of society, is perhaps greatest in the rudest age of society which
admits of any considerable inequality of fortune. A Tartar chief,
the increase of whose herds and flocks is sufficient to maintain a
thousand men, cannot well employ that increase in any other way
than in maintaining a thousand men. The rude state of his society
does not afford him any manufactured produce, any trinkets or
baubles of any kind, for which he can exchange that part of his
rude produce which is over and above his own consumption. The
thousand men whom he thus maintains, depending entirely upon
him for their subsistence, must both obey his orders in war, and
submit to his jurisdiction in peace. He is necessarily both their
general and their judge, and his chieftainship is the necessary effect
of the superiority of his fortune. In an opulent and civilized so-
THE WEALTH OF NATIONS
and (4)
superior-
ity of
birth.
672
ciety a man may possess a much greater fortune, and yet not be able
to command a dozen of people. Though the produce of his estate
may be sufficient to maintain, and may perhaps actually maintain,
more than a thousand people, yet as those people pay for every
thing which they get from him, as he gives scarce any thing to any
body but in exchange for an equivalent, there is scarce any body
who considers himself as entirely dependent upon him, and his
authority extends only over a few menial servants. The authority
of fortune, however, is very great even in an opulent and civilized
society. That it is much greater than that, either of age, or of per-
sonal qualities, has been the constant complaint of every period of
society which admitted of any considerable inequality of fortune.
The first period of society, that of hunters, admits of no such in-
equality. Universal poverty establishes there universal equality,
and the superiority, either of age, or of personal qualities, are the
feeble, but the sole foundations of authority and subordination.
There is therefore little or no authority or subordination in this
period of society. The second period of society, that of shepherds,
admits of very great inequalities of fortune, and there is no period
in which the superiority of fortune gives so great authority to those
who possess it. There is no period accordingly in which authority
and subordination are more perfectly established. The authority of
an Arabian scherif is very great; that of a Tartar khan altogether
despotical.
The fourth of those causes or circumstances is the superiority of
birth. Superiority of birth supposes an ancient superiority of for-
tune in ffie family of the person who claims it. All families are
equally ancient; and the ancestors of the prince, though they may
be better known, cannot well be more numerous than those of the
beggar. Antiquity of family means every where the antiquity either
of wealth, or of that greatness which is commonly either founded
upon wealth, or accompanied with it. Upstart greatness is every
where less respected than ancient greatness.^® The hatred of usurp-
ers, the love of the family of an ancient monarch, are, in a great
measure, founded upon the contempt which men naturally have for
the former, and upon their veneration for the latter. As a military
officer submits without reluctance to the authority of a superior by
whom he has always been commanded, but cannot bear that his
inferior should be set over his head; so men easily submit to a fam-
ily to whom they and their ancestors have always submitted; but
are fired with indignation when another family, in whom they had
Misprinted “their” in eds. 4 and 5.
Lectures, p. 10.
EXPENSE OF JUSTICE 673
never acknowledged any such superiority, assumes a dominion over
them.
The distinction of birth, being subsequent to the inequality of
fortune, can have no place in nations of hunters, among whom all
men, being equal in fortune, must likewise be very nearly equal in
birth. The son of a wise and brave man may, indeed, even among
them, be somewhat more respected than a man of equal merit who
has the misfortune to be the son of a fool or a coward. The differ-
ence, however, will not be very great; and there never was, I be-
lieve, a great family in the world whose illustration was entirely de-
iived from the inheritance of wisdom and virtue.
The distinction of birth not only may, but always does take
place among nations of shepherds. Such nations are always stran-
gers to every sort of luxury, and great wealth can scarce ever be
dissipated among them by improvident profusion. There are no
nations accordingly who abound more in families revered and hon-
oured on account of their descent from a long race of great and
illustrious ancestors; because there are no nations among whom
wealth is likely to continue longer in the same families.
Birth and fortune are evidently the two circumstances which
principally set one man above another. They are the two great
sources of personal distinction, and are therefore the principal
causes which naturally establish authority and subordination
among men. Among nations of shepherds both those causes operate
with their full force. The great shepherd or herdsman, respected on
account of his great wealth, and of the great number of those who
depend upon him for subsistence, and revered on account of the
nobleness of his birth, and of the immemorial antiquity of his
illustrious family, has a natural authority over all the inferior shep-
herds or herdsmen of his horde or clan. He can command the united
force of a greater number of people than any of them. His military
power is greater than that of any of them. In time of war they are
all of them naturally disposed to muster themselves under his ban-
ner, ratheij than under that of any other person, and his birth and
fortune thus naturally procure to him some sort of executive power.
By commanding too the united force of a greater number of people
than any of them, he is best able to compel any one of them who
may have injured another to compensate the wrong. He is the per-
son, therefore, to whom all those who are too weak to defend them-
selves naturally look up for protection. It is to him that they natur-
ally complain of the injuries which they imagine have been done to
them, and his interposition in such cases is more easily submitted
to, even by the person complained of, than that of any other person
The dis-
tinction
of birth
is not
present
among
hunters,
but al-
ways
among
shep-
herds
Distinc-
tions of
birth and
fortune
are both
most
powerful
among
shep-
herds.
Among
shep-
herds in-
equality
of fortune
arises and
intro-
duces civil
govern-
ment,
but the
judicial
authority
was long
a source
of reve-
nue
rather
than ex-
pense,
6/4 the wealth of NATIONS
would be. His birth and fortune thus naturally procure him some
sort of judicial authority.
It is in the age of shepherds, in the second period of society, that
the inequality of fortune first begins to take place, and introduces
among men a degree of authority and subordination which could
not possibly exist before. It thereby introduces some degree of that
civil government which is indispensably necessary for its own pres-
ervation: and it seems to do this naturally, and even independent
of the consideration of that necessity. The consideration of that ne-
cessity comes no doubt afterwards to contribute very much to
maintain and secure that authority and subordination. The rich, in
particular, are necessarily interested to support that order of things,
which can alone secure them in the possession of their own advan-
tages. Men of inferior wealth combine to defend those of superior
wealth in the possession of their property, in order that men of su-
perior wealth may combine to defend them in the possession of
theirs. All the inferior shepherds and herdsmen feel that the secu-
rity of their own herds and flocks depends upon the security of
those of the great shepherd or herdsman; that the maintenance of
their lesser authority depends upon that of his greater authority,
and that upon their subordination to him depends his power of
keeping their inferiors in subordination to them. They constitute a
sort of little nobility, who feel themselves interested to defend the
property and to support the authority of their own little sovereign,
in order that he may be able to defend their property and to sup-
port their authority. Civil government, so far as it is instituted for
the security of property, is in reality instituted for the defence of
the rich against the poor, or of those who have some property
against those who have none at all.^®
The judicial authority of such a sovereign, however, far from be-
ing a cause of expence, was for a long time a source of revenue to
him. The persons who applied to him for justice were always will-
ing to pay for it, and a present never failed to accompany a petition.
After the authority of the sovereign too was thoroughly established,
the person found guilty, over and above the satisfaction which he
was obliged to make to the party, was likewise forced to pay an
amercement to the sovereign. He had given trouble, he had disturb-
ed, he had broke the peace of his lord the king, and for those of-
fences an amercement was thought due. In the Tartar governments
^Lectures, p. 15 “Till there be property there can be no government, the
very end of which is to secure wealth and to defend the rich from the poor”
Cp Locke, Civil Government, § 94, “government has no other end but the
preservation of property ”
EXPENSE OF JUSTICE 675
of Asia, in the governments of Europe which were founded by the
German and Scythian nations who overturned the Roman empire,
the administration of justice was a considerable source of revenue,
both to the sovereign, and to all the lesser chiefs or lords who exer-
cised under him any particular jurisdiction, either over some par-
ticular tribe or clan, or over some particular territory or district.
Originally both the sovereign and the inferior chiefs used to exer-
cise this jurisdiction in their own persons. Afterwards they univer-
sally found it convenient to delegate it to some substitute, bailiff, or
judge. This substitute, however, was still obliged to account to his
principal or constituent for the profits of the jurisdiction. Whoever
reads the instructions which were given to the judges of the cir-
cuit in the time of Henry IL will see clearly that those judges were
a sort of itinerant factors, sent round the country for the purpose of
levying certain branches of the king’s revenue. In those days the
administration of justice, not only afforded a certain revenue to the
sovereign, but to procure this revenue seems to have been one of the
principal advantages which he proposed to obtain by the adminis-
tration of justice.
This scheme of making the administration of justice subservient which
to the purposes of revenue, could scarce fail to be productive of sev- Produced
eral very gross abuses. The person, who applied for justice with a abuses,
large present in his hand, was likely to get something more than jus-
tice; while he, who applied for it with a small one, was likely to get
something less. Justice too might frequently be delayed, in order
that this present might be repeated. The amercement, besides, of
the person complained of, might frequently suggest a very strong
reason for finding him in the wrong, even when he had not really
been so. That such abuses were far from being uncommon, the an-
cient history of every country in Europe bears witness.
When the sovereign or chief exercised his judicial authority in his whether
own person, how much soever he might abuse it, it must have been thesover-
scarce possible to get any redress; because there could seldom be excised
any body powerful enough to call him to account. When he exercised the judi-
it by a bailiff, indeed, redress might sometimes be had. If it was for thori^ty in
his own benefit only, that the bailiff had been guilty of any act of person or
injustice, the sovereign himself might not always be unwilling to by
punish him, or to oblige him to repair the wrong. But if it was for
the benefit of his sovereign, if it was in order to make court to the
person who appointed him and who might prefer him, that he had
^ They are to be found in Tyrrell’s History of England General History of
England, both Ecclesiastical and Ctvil, by James Tyrrell, vol. ii , 1700, pp
576-579 The king is Richard I , not Henry II
These
abuses
could not
be reme-
died so
long as
the
sovereign
depended
only on
land re-
venue and
court
fees,
676 the wealth of nations
committed any act of oppression, redress would upon most occa^
sions be as impossible as if the sovereign had committed it himself.
In all barbarous governments, accordingly, in all those ancient gov-
ernments of Europe in particular, which were founded upon the
ruins of the Roman empire, the administration of justice appears
for a long time to have been extremely corrupt; far from being
quite equal and impartial even under the best monarchs, and alto-
gether profligate under the worst.
Among nations of shepherds, where the sovereign or chief is only
the greatest shepherd or herdsman of the horde or clan, he is main-
tained in the same manner as any of his vassals or subjects, by the
increase of his own herds or flocks. Among those nations of hus-
bandmen who are but just come out of the shepherd state, and who
are not much advanced beyond that state; such as the Greek tribes
appear to have been about the time of the Trojan war, and our
German and Scythian ancestors when they first settled upon the
ruins of the western empire; the sovereign or chief is, in the same
manner, only the greatest landlord of the country, and is maintain-
ed, in the same manner as any other landlord, by a revenue derived
from his own private estate, or from what, in modern Europe, was
called the demesne of the crown. His subjects, upon ordinary occa-
sions, contribute nothing to his support, except when, in order to
protect them from the oppression of some of their fellow-subjects,
they stand in need of his authority.^® The presents which they make
him upon such occasions, constitute the whole ordinary revenue, the
whole of the emoluments which, except perhaps upon some very
extraordinary emergencies, he derives from his dominion over them.
When Agamemnon, in Homer, offers to Achilles for his friendship
the sovereignty of seven Greek cities, the sole advantage which he
mentions as likely to be derived from it, was, that the people would
honour him with presents.^® As long as such presents, as long as the
emoluments of justice, or what may be called the fees of court, con-
stituted in this manner the whole ordinary revenue which the sover-
eign derived from his sovereignty, it could not well be expected, it
could not even decently be proposed, that he should give them up
altogether. It might, and it frequently was proposed, that he should
regulate and ascertain them. But after they had been so regulated
and ascertained, how to hinder a person who was all-powerful from
extending them beyond those regulations, was still very difficult,
Ed. I reads ^‘except when they stand in need of the interposition of his
authority in order to protect them from the oppression of some of their fellow
subjects.”
^ Iliad, ix., 149-156, but the presents are not the “sole advantage” men-
tioned.
EXPENSE OF JUSTICE 677
not to say impossible. During the continuance of this state of
things, therefore, the corruption of justice, naturally resulting from
the arbitrary and uncertain nature of those presents, scarce ad-
mitted of any effectual remedy.
But when from different causes, chiefly from the continually in-
creasing expence of defending the nation against the invasion of
other nations, the private estate of the sovereign had become alto-
gether insufficient for defraying the expence of the sovereignty; and
when it had become necessary that the people should, for their own
security, contribute towards this expence by taxes of different kinds,
it seems to have been very commonly stipulated, that no present for
the administration of justice should, under any pretence, be accept-
ed either by the sovereign, or by his bailiffs and substitutes, the
judges. Those presents, it seems to have been supposed, could more
easily be abolished altogether, than effectually regulated and ascer-
tained. Fixed salaries were appointed to the judges, which were sup-
posed to compensate to them the loss of whatever might have been
their share of the ancient emoluments of justice; as the taxes more
than compensated to the sovereign the loss of his. Justice was then
said to be administered gratis.
Justice, however, never was in reality administered gratis in any
country. Lawyers and attornies, at least, must always be paid by
the parties; and, if they were not, they would perform their duty
still worse than they actually perform it. The fees annually paid to
lawyers and attornies amount, in every court, to a much greater
sum than the salaries of the judges. The circumstance of those sal-
aries being paid by the crown, can no-where much diminish the
necessary expence of a law-suit. But it was not so much to diminish
the expence, as to prevent the corruption of justice, that the judges
were prohibited from receiving any present or fee from the parties.
The office of judge is in itself so very honourable, that men are
willing to accept of it, though accompanied with very small emolu-
ments. The inferior office of justice of peace, though attended with
a good deal of trouble, and in most cases with no emoluments at
all, is an object of ambition to the greater part of our country gen-
tlemen. The salaries of all the different judges, high and low, to-
gether with the whole expence of the administration and execution
of justice, even where it is not managed with very good ceconomy,
makes, in any civilized country, but a very inconsiderable part of
the whole expence of government.
The whole expence of justice too might easily be defrayed by the
fees of court; and, without exposing the administration of justice to
any real hazard of corruption, the public revenue might thus be en-
but when
taxes be-
came ne-
cessary,
the
people
stipulated
that no
presents
should be
taken by
judges.
Justice is
never ad-
minis-
tered
gratis.
The sala-
ries of
judges are
a small
part of
the ex-
pense of
civilised
govern-
ment,
and might
be de-
frayed by
fees of
court.
67S the wealth of nations
tirely discharged from a certain, though, perhaps, but a small in-
cumbrance. It is difficult to regulate the fees of court effectually,
where a person so powerful as the sovereign is to share in them, and
to derive any considerable part of his revenue from them. It is very
easy, where the judge is the principal person who can reap any bene-
fit from them. The law can very easily oblige the judge to respect
the regulation, though it might not always be able to make the sov-
ereign respect it. Where the fees of court are precisely regulated
and ascertained, where they are paid all at once, at a certain period
of every process, into the hands of a cashier or receiver, to be by
him distributed in certain known proportions among the different
judges after the process is decided, and not till it is decided, there
seems to be no more danger of corruption than where such fees are
prohibited altogether. Those fees, without occasioning any consider-
able increase in the expence of a law-suit, might be rendered fully
sufficient for defraying the whole expence of justice. By not being
paid to the judges till the process was determined, they might be
some incitement to the diligence of the court in examining and de-
ciding it. In courts which consisted of a considerable number of
judges, by proportioning the share of each judge to the number of
hours and days which he had employed in examining the process,
either in the court or in a committee by order of the court, those
fees might give some encouragement to the diligence of each par-
ticular judge. Public services are never better performed than when
their reward comes only in consequence of their being performed,
and is proportioned to the diligence employed in performing them.
In the different parliaments of France, the fees of court (called
Epices and vacations) constitute the far greater part of the emol-
uments of the judges. After all deductions are made, the neat sal-
ary paid by the crown to a counsellor or judge in the parliament of
Toulouse, in rank and dignity the second parliament of the king-
dom, amounts only to a hundred and fifty livres, about six pounds
eleven shillings sterling a year. About seven years ago that sum
was in the same place the ordinary yearly wages of a common foot-
man. The distribution of those Epices too is according to the dili-
gence of the judges. A diligent judge gains a comfortable, though
moderate, revenue by his office: An idle one gets little more than
his salary. Those parliaments are perhaps, in many respects, not
very convenient courts of justice; but they have never been ac-
cused; they seem never even to have been suspected of corruption.
The extraordinary accent here and seven lines lower down appears first in
ed. 2.
"•Smith was in Toulouse from February or March, 1764, to August, 1765.
— ^Rae, Life of Adam Smithy pp. 174, 175, 188.
EXPENSE OE JUSTICE 679
The fees of court seem originally to have been the principal sup-
port of the different courts of justice in England. Each court en-
deavoured to draw to itself as much business as it could, and was,
upon that account, willing to take cognizance of many suits which
were not originally intended to fall under its jurisdiction. The court
of king’s bench, instituted for the trial of criminal causes only, took
cognizance of civil suits; the plaintiff pretending that the defend-
ant, in not doing him justice, had been guilty of some trespass or
misdemeanor. The court of exchequer, instituted for the levying of
the king’s revenue, and for enforcing the payment of such debts
only as were due to the king, took cognizance of all other contract
debts; the plaintiff alleging that he could not pay the king, because
the defendant would not pay him. In consequence of such fictions
it came, in many cases, to depend altogether upon the parties be-
fore what court they would chuse to have their cause tried; and
each court endeavoured, by superior dispatch and impartiality, to
draw to itself as many causes as it could. The present admirable
constitution of the courts of justice in England was, perhaps, origi-
nally in a great measure, formed by this emulation, which anciently
took place between their respective judges; each judge endeavour-
ing to give, in his own court, the speediest and most effectual rem-
edy, which the law would admit, for every sort of injustice. Origi-
nally the courts of law gave damages only for breach of contract.
The court of chancery, as a court of conscience, first took upon it
to enforce the specific performance of agreements. When the breach
of contract consisted in the non-pa3mient of money, the damage
sustained could be compensated in no other way than by ordering
pa3nnent, which was equivalent to a specific performance of the
agreement. In such cases, therefore, the remedy of the courts of
law was sufficient. It was not so in others. When the tenant sued
his lord for having unjustly outed him of his lease, the damages
which he recovered were by no means equivalent to the possession
of the land. Such causes, therefore, for some time, went all to the
court of chancery, to the no small loss of the courts of law. It was
to draw back such causes to themselves that the courts of law are
said to have invented the artificial and fictitious writ of ejectment,
the most effectual remedy for an unjust outer or dispossession of
land.®^
A stamp-duty upon the law proceedings of each particular court,
to be levied by that court, and applied towards the maintenance of
the judges and other officers belonging to it, might, in the same
manner, afford a revenue sufficient for defraying the expence of the
Lectures, p, 49. Above, p. 368.
The Eng-
lish courts
were orig-
inally
main-
tained by
fees, and
this led to
their en-
croach-
ments.
Courts
might be
main-
tained by
a stamp
duty on
proceed-
ings be-
fore them,
but this
would
tempt
them to
multiply
such pro-
ceedings.
Another
way of
securing
independ-
ence
would be
to endow
the courts
with a
revenue
from
property.
The sep-
aration of
the judi-
cial from
the execu-
tive
power is
due to the
increase
of execu-
tive busi-
ness.
bbo XHE WEALTH OF NATIONS
administration of justice, without bringing any burden upon the
general revenue of the society. The judges indeed might, in this
case, be under the temptation of multiplying unnecessarily the pro-
ceedings upon every cause, in order to increase, as much as possible,
the produce of such a stamp-duty. It has been the custom in mod-
ern Europe to regulate, upon most occasions, the payment of the
attornies and clerks of court, according to the number of pages
which they had occasion to write; the court, however, requiring
that each page should contain so many lines, and each line so many
words. In order to increase their payment, the attornies and clerks
have contrived to multiply words beyond all necessity, to the cor-
ruption of the law language of, I believe, every court of justice in
Europe, A like temptation might perhaps occasion a like corruption
in the form of law proceedings.
But whether the administration of justice be so contrived as to
defray its own expence, or whether the judges be maintained by
fixed salaries paid to them from some other fund, it does not seem
necessary that the person or persons entrusted with the executive
power should be charged with the management of that fund, or
with the payment of those salaries. That fund might arise from the
rent of landed estates, the management of each estate being en-
trusted to the particular court which was to be maintained by it.
That fund might arise even from the interest of a sum of money,
the lending out of which might, in the same manner, be entrusted
to the court which was to be maintained by it. A part, though in-
deed but a small part, of the salary of the judges of the court of ses-
sion in Scotland, arises from the interest of a sum of money. The
necessary instability of such a fund seems, however, to render it an
improper one for the maintenance of an institution which ought to
last for ever.
The separation of the judicial from the executive power seems
originally to have arisen from the increasing business of the society,
in consequence of its increasing improvement. The admnistration
of justice became so laborious and so complicated a duty as to re-
quire the undivided attention of the persons to whom it was en-
trusted. The person entrusted with the executive power, not having
leisure to attend to the decision of private causes himself, a deputy
was appointed to decide them in his stead. In the progress of the
Roman greatness, the consul was too much occupied with the poli-
tical affairs of the state, to attend to the administration of justice.
A prsetor, therefore, was appointed to administer it in his stead. In
the progress of the European monarchies which were founded upon
the ruins of the Roman empire, the sovereigns and the great lords
EXPENSE OP PUBLIC WORKS 681
came universally to consider the administration of justice as an of-
fice, both too laborious and too ignoble for them to execute in their
own persons. They universally, therefore, discharged themselves of
it by appointing a deputy, bailiff, or judge.
When the judicial is united to the executive power, it is scarce
possible that justice should not frequently be sacrificed to, what is
vulgarly called, politics. The persons entrusted with the great in-
terests of the state may, even without any corrupt views, sometimes
imagine it necessary to sacrifice to those interests the rights of a
private man. But upon the impartial administration of justice de-
pends the liberty of every individual, the sense which he has of his
own security. In order to make every individual feel himself per-
fectly secure in the possession of every right which belongs to him,
it is not only necessary that the judicial should be separated from
the executive power, but that it should be rendered as much as pos-
sible independent of that power. The judge should not be liable to
be removed from his office according to the caprice of that power.
The regular payment of his salary should not depend upon the
good-will, or even upon the good oeconomy of that power.
Part III
Of the Expence of public Works and public Institutions
The third and last duty of the sovereign or commonwealth is that
of erecting and maintaining those public institutions and those pub-
lic works, which, though they may be in the highest degree advan-
tageous to a great society, are, however, of such a nature, that the
profit could never repay the expence to any individual or small
number of individuals, and which it therefore cannot be expected
that any individual or small number of individuals should erect or
maintain. The performance of this duty requires too very different
degrees of expence in the different periods of society.
After the public institutions and public works necessary for the
defence of the society, and for the administration of justice, both
of which have already been mentioned, the other works and institu-
tions of this kind are chiefly those for facilitating the commerce of
the society, and those for promoting the instruction of the people.
The institutions for instruction are of two kinds; those for the edu-
cation of the youth, and those for the instruction of people of all
ages. The consideration of the manner in which the expence of
those different sorts of public works and institutions may be most
The judi-
cial
should be
not only
separate
but in-
dependent
of the
executive
power.
The third
duty of
the sover-
eign is
the erec-
tion and
mainte-
nance of
those
public
works
and in-
stitutions
which are
useful but
not cap-
able of
bringing
in a profit
to indi-
viduals.
These are
chiefly in-
stitutions
for facOi-
tating
commerce
and pro-
moting
instruc-
tion.
The ex-
pense of
such in-
stitutions
increases.
The ex-
pense
need not
be de-
frayed
from the
genera]
public
revenue,
but may
be raised
by toUs
and other
particular
charges.
682 the wealth of nations
properly defrayed, will divide this third part of the present chapter
into three different articles.
Article I
Of the public Works and Institutions for facilitating the Commerce
of the Society
And, first, of those which are necessary for facilitating Commerce
in general
That the erection and maintenance of the public works which
facilitate the commerce of any country, such as good roads, bridges,
navigable canals, harbours, &c. must require very different degrees
of expence in the different periods of society, is evident without
any proof. The expence of making and maintaining the public roads
of any country must evidently increase with the annual produce of
the land and labour of that country, or with the quantity and
weight of the goods which it becomes necessary to fetch and carry
upon those roads. The strength of a bridge must be suited to the
number and weight of the carriages, which are likely to pass over
it. The depth and the supply of water for a navigable canal must
be proportioned to the number and tunnage of the lighters, which
are likely to carry goods upon it; the extent of a harbour to the
number of the shipping which are likely to take shelter in it.
It does not seem necessary that the expence of those public works
should be defrayed from that public revenue, as it is commonly
called, of which the collection and application are in most coun-
tries assigned to the executive power. The greater part of such pub-
lic works may easily be so managed, as to afford a particular rev-
enue sufficient for defraying their own expence, without bringing
any burden upon the general revenue of the society.
A highway, a bridge, a navigable canal, for example, may in
most cases be both made and maintained by a small toll upon the
carriages which make use of them: a harbour, by a moderate port-
duty upon the tunnage of the shippmg which load or unload in it.
The coinage, another institution for facilitating commerce, in many
countries, not only defrays its own expence, but affords a small rev-
enue or seignorage to the sovereign. The post-office, another institu-
tion for the same purpose, over and above defraying its own ex-
pence, affords in almost all countries a very considerable revenue
to the sovereign.
These two lines are not in eds. i and 2. See below, p. 690, note 45.
“ Eds. 1-4 read “is”; cp. below, p. 716, note no.
COMMERCIAL INSTITUTIONS
When the carriages which pass over a highway or a bridge, and
the lighters which sail upon a navigable canal, pay toll in propor-
tion to their weight or their tunnage, they pay for the maintenance
of those public works exactly in proportion to the wear and tear
which they occasion of them. It seems scarce possible to invent a
more equitable way of maintaining such works. This tax or toll too,
though it is advanced by the carrier, is finally paid by the consumer,
to whom it must always be charged in the price of the goods. As
the expence of carriage, however, is very much reduced by means
of such public works, the goods, notwithstanding the toll, come
cheaper to the consumer than they could otherwise have done; their
price not being so much raised by the toll, as it is lowered by the
cheapness of the carriage. The person who finally pays this tax,
therefore, gains by the application, more than he loses by the pay-
ment of it. His payment is exactly in proportion to his gain. It is in
reality no more than a part of that gain which he is obliged to give
up in order to get the rest. It seems impossible to imagine a more
equitable method of raising a tax.
When the toll upon carriages of luxury, upon coaches, post-
chaises, &c. is made somewhat higher in proportion to their weight,
than upon carriages of necessary use, such as carts, waggons, &c.
the indolence and vanity of the rich is made to contribute in a very
easy manner to the relief of the poor, by rendering cheaper the
transportation of heavy goods to all the different parts of the coun-
try.
When high roads, bridges, canals, &c. are in this manner made
and supported by the commerce which is carried on by means of
them, they can be made only where that commerce requires them,
and consequently where it is proper to make them. Their expence
too, their grandeur and magnificence, must be suited to what that
commerce can afford to pay. They must be made consequently as
it is proper to make them. A magnificent high road cannot be made
through a desart country where there is little or no commerce, or
merely because it happens to lead to the country villa of the in-
tendant of the province, or to that of some great lord to whom the
intendant finds it convenient to make his court. A great bridge can-
not be thrown over a river at a place where nobody passes, or mere-
ly to embellish the view from the windows of a neighbouring pal-
ace: things which sometimes happen, in countries where works of
this kind are carried on by any other revenue than that which they
themselves are capable of affording.
In several different parts of Europe the toll or lock-duty upon a
® Ed. I reads “tear and wear.”
Tolls ac-
cording
to weight
of car-
nages and
capacity
of boats
are very
equitable.
If the
tolls are
higher on
carriages
of luxury,
the rich
contri-
bute in an
easy man-
ner to the
relief of
the poor.
Roads
and
canals,
etc., thus
paid for
cannot be
made ex-
cept
where
they are
wanted.
Canals
are better
in the
hands of
private
persons
than of
commis-
sioners.
But tolls
on a high
road can-
not safely
be made
private
property
and must
be com-
mitted to
trustees.
The pre-
valence
of com-
plaints
against
British
turnpike
tolls is
not re-
markable.
6S4 THE WEALTH OF NATIONS
canal is the property of private persons, whose private interest
obliges them to keep up the canal. If it is not kept in tolerable order,
the navigation necessarily ceases altogether, and along with it the
whole profit which they can make by the tolls. If those tolls were
put under the management of commissioners, who had themselves
no interest in them, they might be less attentive to the mainte-
nance of the works which produced them. The canal of Languedoc
cost the king of France and the province upwards of thirteen mil-
lions of livres, which (at twenty-eight livres the mark of silver, the
value of French money in the end of the last century) amounted to
upwards of nine hundred thousand pounds sterling. When that
great work was finished, the most likely method, it was found, of
keeping it in constant repair was to make a present of the tolls to
Riquet the engineer, who planned and conducted the work. Those
tolls constitute at present a very large estate to the different
branches of the family of that gentleman, who have, therefore, a
great interest to keep the work in constant repair. But had those
tolls been put under the management of commissioners, who had no
such interest, they might perhaps have been dissipated in orna-
mental and unnecessary expences, while the most essential parts of
the work were allowed to go to ruin.
The tolls for the maintenance of a high road, cannot with any
safety be made the property of private persons. A high road, though
entirely neglected, does not become altogether impassable, though
a canal does. The proprietors of the tolls upon a high road, there-
fore, might neglect altogether the repair of the road, and yet con-
tinue to levy very nearly the same tolls. It is proper, therefore, that
the tolls for the maintenance of such work should be put under the
management of commissioners or trustees.
In Great Britain, the abuses which the trustees have committed
in the management of those tolls, have in many cases been very
justly complained of. At many turnpikes, it has been said, the
money levied is more than double of what is necessary for execut-
ing, in the completest manner, the work which is often executed in a
very slovenly manner, and sometimes not executed at all. The sys-
tem of repairing the high roads by tolls of this kind, it must be ob-
served, is not of very long standing. We should not wonder, there-
fore, if it has not yet been brought to that degree of perfection
of which it seems capable.^® If mean and improper persons are fre-
quently appointed trustees; and if proper courts of inspection and
account have not yet been established for controlling their conduct,
and for reducing the tolls to what is barely sufficent for executing
Ed. I reads “seems to be capable.”
COMMERCIAL INSTITUTIONS 685
the work to be done by them; the recency of the institution both
accounts and apologizes for those defects, of which, by the wisdom
of parliament, the greater part may in due time be gradually rem-
edied.
The money levied at the different turnpikes in Great Britain is
supposed to exceed so much what is necessary for repairing the
roads, that the savings, which, with proper ceconomy, might be
made from it, have been considered, even by some ministers, as a
very great resource which might at some time or another be applied
to the exigencies of the state. Government, it has been said, by tak-
ing the management of the turnpikes into its own hands, and by
employing the soldiers, who would work for a very small addition
to their pay, could keep the roads in good order at a much less ex-
pence than it can be done by trustees, who have no other workmen
to employ, but such as derive their whole subsistence from their
wages. A great revenue, half a million, perhaps,®*^ it has been pre-
tended, might in this manner be gained without laying any new
burden upon the people; and the turnpike roads might be made to
contribute to the general expence of the state, in the same manner
as the post-office does at present.
That a considerable revenue might be gained in this manner, I
have no doubt, though probably not near so much, as the projec-
tors of this plan have supposed The plan itself, however, seems
liable to several very important objections.
First, if the tolls which are levied at the turnpikes should ever be
considered as one of the resources for supplying the exigencies of
the state, they would certainly be augmented as those exigencies
were supposed to require. According to the policy of Great Britain,
therefore, they would probably be augmented very fast. The facil-
ity with which a great revenue could be drawn from them, would
probably encourage administration to recur very frequently to this
resource. Though it may, perhaps, be more than doubtful, whether
half a million could by any ceconomy be saved out of the present
tolls, it can scarce be doubted but that a million might be saved out
of them, if they were doubled; and perhaps two millions, if they
were tripled.^® This great revenue too migM be levied without the
appointment of a single new officer to collect and receive it. But the
^ Since publishing the two first editions of this book, I have got good rea-
sons to believe that all the turnpike tolls levied in Great Britain do not pro-
duce a neat revenue that amounts to half a million ; a sum which, under the
management of Government, would not be sufficient to keep in repair five of
the principal roads in the kingdom. This and the next note appear first in ed. 3.
I have now good reasons to believe that all these conjectural sums are by
much too large.
It has
been pro-
posed
that the
govern-
ment
should
manage
the turn-
pikes and
make a
revenue
from
them.
This plan
is open to
the fol-
lowing
objec-
tions,
(i) the
tolls
would be
raised and
become a
great en-
cum-
brance
to com-
merce,
(2) a tax
on car>
riagesin
propor-
tion to
weight
falls prin-
cipally
on the
poor,
and (3)
the roads
would be
neglect-
er'
High
roads are
under the
executive
in France,
686 the wealth OF NATIONS
turnpike tolls being continually augmented in this manner, instead
of facilitating the inland commerce of the country, as at present,
would soon become a very great incumbrance upon it. The expence
of transporting all heavy goods from one part of the country to an
other would soon be so much increased, the market for all such
goods, consequently, would soon be so much narrowed, that their
production would be in a great measure discouraged, and the most
important branches of the domestic industry of the country an-
nihilated altogether.
Secondly, a tax upon carriages in proportion to their weight,
though a very equal tax when applied to the sole purpose of repair-
ing the roads, is a very unequal one, when applied to any other pur-
pose, or to supply the common exigencies of the state. When it is
applied to the sole purpose above mentioned, each carriage is sup-
posed to pay exactly for the wear and tear which that carriage
occasions of the roads. But when it is applied to any other purpose
each carriage is supposed to pay for more than that wear and tear,
and contributes to the supply of some other exigency of the state.
But as the turnpike toll raises the price of goods in proportion to
their weight, and not to their value, it is chiefly paid by the con-
sumers of coarse and bulky, not by those of precious and light com-
modities. Whatever exigency of the state therefore this tax might
be intended to supply, that exigency would be chiefly supplied at
the expence of the poor, not of the rich; at the expence of those
who are least able to supply it, not of those who are most able.
Thirdly, if government should at any time neglect the reparation
of the high roads, it would be still more difficult, than it is at pres-
ent, to compel the proper application of any part of the turnpike
tolls. A large revenue might thus be levied upon the people, with-
out any part of it being applied to the only purpose to which a rev-
enue levied in this manner ought ever to be applied. If the mean-
ness and poverty of the trustees of turnpike roads render it some-
times difficult at present to oblige them to repair their wrong; their
wealth and greatness would render it ten times more so in the case
which is here supposed.
In France, the funds destined for the reparation of the high roads
are under the immediate direction of the executive power. Those
funds consist, partly in a certain number of days’ labour which
the country people are in most parts of Europe obliged to give to the
reparation of the highways; and partly in such a portion of the
“ Ed. I reads here and two lines lower down “tear and wear.”
" Ed. I reads “partly in the six days* labour.”
COMMERCIAL INSTITUTIONS 687
general revenue of the state as the king chuses to spare from his
other expences.
By the ancient law of France, as well as by that of most other
parts of Europe, the labour of the country people was under the
direction of a local or provincial magistracy, which had no immedi-
ate dependency upon the king’s council. But by the present prac-
tice both the labour of the country people, and whatever other fund
the king may chuse to assign for the reparation of the high roads
in any particular province or generality, are entirely under the
management of the intendant; an officer who is appointed and re-
moved by the king’s council, who receives his orders from it, and is
in constant correspondence with it. In the progress of despotism the
authority of the executive power gradually absorbs that of every
other power in the state, and assumes to itself the management of
every branch of revenue which is destined for any public purpose.
In France, however, the great post-roads, the roads which make
the communication between the principal towns of the kingdom,
are in general kept in good order; and in some provinces are even
a good deal superior to the greater part of the turnpike roads of
England. But what we call the cross-roads, that is, the far greater
part of the roads in the country, are entirely neglected, and are in
many places absolutely impassable for any heavy carriage. In
some places it is even dangerous to travel on horseback, and mules
are the only conveyance which can safely be trusted. The proud
minister of an ostentatious court may frequently take pleasure in
executing a work of splendour and magnificence, such as a great
highway, which is frequently seen by the principal nobility, whose
applauses not only flatter his vanity, but even contribute to support
his interest at court. But to execute a great number of little works,
in which nothing that can be done can make any great appearance,
or excite the smallest degree of admiration in any traveller, and
which, in short, have nothing to recommend them but their ex-
treme utility, is a business whidi appears m every respect too mean
and paultry to merit the attention of so great a magistrate. Under
such an administration, therefore, such works are almost always en-
tirely neglected.
In China, and in several other governments of Asia, the execu-
tive power charges itself both with the reparation of the high roads,
and with the maintenance of the navigable canals. In the instruc-
tions which are given to the governor of each province, those ob-
Here and in the next sentence for “the labour of the country people,” ed.
I reads “the six days’ labour.”
and great
post roads
are gen-
erally
good, but
all the
rest en-
tirely
neglected.
The ex-
ecutive in
China
and other
parts of
Asia
maintains
both high
roads and
canals,
it is said,
in good
condition,
but this
would not
be the
casein
Europe.
688 XHE WEALTH OE NATIONS
jects, it is said, are constantly recommended to him, and the judg-
ment which the court forms of his conduct is very much regulated
by the attention which he appears to have paid to this part of his
instructions. This branch of public police accordingly is said to be
very much attended to in all those countries, but particularly in
China, where the high roads, and still more the navigable canals, it
is pretended, exceed very much every thing of the same kind which
is known in Europe. The accounts of those works, however, which
have been transmitted to Europe, have generally been drawn up by
weak and wondering travellers; frequently by stupid and lying mis-
sionaries. If they had been examined by more intelligent eyes, and
if the accounts of them had been reported by more faithful wit-
nesses, they would not, perhaps, appear to be so wonderful. The ac-
count which Bernier gives of some works of this kind in Indostan,
falls very much short of what had been reported of them by other
travellers, more disposed to the marvellous than he was.^^ It may
too, perhaps, be in those countries, as it is in France, where the
great roads, the great communications which are likely to be the
subjects of conversation at the court and in the capital, are at-
tended to, and all the rest neglected. In China, besides, in Indo-
stan, and in several other governments of Asia, the revenue of the
sovereign arises almost altogether from a land-tax or land-rent,
which rises or falls with the rise and fall of the annual produce
of the land. The great interest of the sovereign, therefore, his rev-
enue, is in such countries necessarily and immediately connected
with the cultivation of the land, with the greatness of its produce,
and with the value of its produce. But in order to render that pro-
duce both as great and as valuable as possible, it is necessary to
procure to it as extensive a market as possible, and consequently to
establish the freest, the easiest, and the least expensive communica-
tion between all the different parts of the country; which can be
done only by means of the best roads and the best navigable ca-
nals. But the revenue of the sovereign does not, in any part of Eu-
rope, arise chiefly from a land-tax or land-rent. In all the great
kingdoms of Europe, perhaps, the greater part of it may ultimately
depend upon the produce of the land: But that dependency is nei-
ther so immediate, nor so evident. In Europe, therefore, the sover*
Voyages de Frangois Bernier ^ Amsterdam, 1710, can scarcely be said te
discredit the ordinary eulogy of Indian roads and canals by an account of any
particular works, but it does so by not mentioning them in places where it
would be natural to do so if they had existed or been remarkable. See tom. ii.,
p. 249, “les grandes rivieres qui en ces quartiers n’ont ordinairement point de
ponts.”
'®Ed. I reads “or.”
COMMERCIAL INSTITUTIONS ^^9
eign does not feel himself so directly called upon to promote the
increase, both in quantity and value, of the produce of the land, or,
by maintaining good roads and canals, to provide the most exten-
sive market for that produce. Though it should be true, therefore,
what I apprehend is not a little doubtful, that in some parts of Asia
this department of the public police is very properly managed by
the executive power, there is not the least probability that, during
the present state of things, it could be tolerably managed by that
power in any part of Europe.
Even those public works which are of such a nature that they Public
cannot afford any revenue for maintaining themselves, but of which
the conveniency is nearly confined to some particular place or dis- nature
trict, are always better maintained by a local or provincial rev- should be
enue, under the management of a local and provincial administra- ^^g^by
tion, than by the general revenue of the state, of which the execu- local
tive power must always have the management. Were the streets of revenue.
London to be lighted and paved at the expence of the treasury, is
there any probability that they would be so well lighted and paved
as they are at present, or even at so small an expence? The ex-
pence, besides, instead of being raised by a local tax upon the in-
habitants of each particular street, parish, or district in London,
would, in this case, be defrayed out of the general revenue of the
state, and would consequently be raised by a tax upon all the in-
habitants of the kingdom, of whom the greater part derive no sort
of benefit from the lighting and paving of the streets of London.
The abuses which sometimes creep into the local and provincial The
administration of a local and provincial revenue, how enormous so-
ever they may appear, are in reality, however, almost always very ministra-
trifling, in comparison of those which commonly take place in the tion are
administration and expenditure of the revenue of a great empire, g^^pared
They are, besides, much more easily corrected. Under the- local or with
provincial administration of the justices of the peace in Great those of
Britain, the six days labour which the country people are obliged to uunfetra-
give to the reparation of the highways, is not always perhaps very tion of
judiciously applied, but it is scarce ever exacted with any circum-
stance of cruelty or oppression. In France, under the administra- venue."
tion of the intendants, the application is not always more judicious,
and the exaction is frequently the most cruel and oppressive. Such
Corvees, as they are called, make one of the principal instruments
of tyranny by which those officers chastise any parish or com-
muneaute which has had the misfortune to fall under their dis-
pleasure.**^
I reads “tyranny by which the intendant chastises any parish or
communaute which has had the misfortune to fall under his displeasure.”
Some
particular
institu-
tions are
required
to facili-
tate par-
ticular
branches
of com-
merce, as
trade
with bar-
barous
nations
requires
forts, and
trade
with
other na-
tions re-
quires
ambassa-
dors.
690 xhe wealth of nations
Of the Public Works and Institutions which are necessary for facili-
tating particular Branches of Commerce
The object of the {)ublic works and institutions above mentioned
is to facilitate commerce in general. But in order to facilitate some
particular branches of it, particular institutions are necessary,
which again require a particular and extraordinary expence.
Some particular branches of commerce, which are carried on
with barbarous and uncivilized nations, require extraordinary pro-
tection. An ordinary store or counting-house could give little secur-
ity to the goods of the merchants who trade to the western coast of
Africa. To defend them from the barbarous natives, it is necessary
that the place where they are deposited, should be, in some meas-
ure, fortified. The disorders in the government of Indostan have
been supposed to render a like precaution necessary even among
that mild and gentle people; and it was under pretence of securing
their persons and property from violence, that both the English and
French East India Companies were allowed to erect the first forts
which they possessed in that country. Among other nations, whose
vigorous government will suffer no strangers to possess any forti-
fied place within their territory, it may be necessary to maintain
some ambassador, minister, or consul, who may both decide, ac-
cording to their own customs, the differences arising among his own
countrymen; and, in their disputes with the natives, may, by means
of his public character, interfere with more authority, and afford
them a more powerful protection, than they could expect from any
private man. The interests of commerce have frequently made it
necessary to maintain ministers in foreign countries, where the pur-
poses, either of war or alliance, would not have required any. The
commerce of the Turkey Company first occasioned the establish-
ment of an ordinary ambassador at Constantinople.^® The first
English embassies to Russia arose altogether from commercial in-
terests.^'^ The constant interference which those interests neces-
sarily occasioned between the subjects of the different states of Eu-
rope, has probably introduced the custom of keeping, in all neigh-
bouring countries, ambassadors or ministers constantly resident
even in the time of peace. This custom, unknown to ancient times,
seems not to be older than the end of the fifteenth or beginning of
the sixteenth century; that is, than the time when commerce first
This section (ending on p. 716) appears first in Additions and Corrections
and ed. 3.
Anderson, Commerce, a.d. 1606. " lUd., a.d. 1620, and cp. a.d. 1623.
PARTICULAR BRANCHES OF COMMERCE 691
began to extend itself to the greater part of the nations of Europe,
and when they first began to attend to its interests.
It seems not unreasonable, that the extraordinary expence, which
the protection of any particular branch of commerce may occa-
sion, should be defrayed by a moderate tax upon that particular
branch; by a moderate fine, for example, to be paid by the traders
when they first enter into it, or, what is more equal, by a particular
duty of so much per cent, upon the goods which they either import
into, or export out of, the particular countries with which it is car-
ried on. The protection of trade in general, from pirates and free-
booters, is said to have given occasion to the first institution of the
duties of customs. But, if it was thought reasonable to lay a gen-
eral tax upon trade, in order to defray the expence of protecting
trade in general, it should seem equally reasonable to lay a particu-
lar tax upon a particular branch of trade, in order to defray the
extraordinary expence of protecting that branch.
The protection of trade in general has always been considered as
essential to the defence of the commonwealth, and, upon that ac-
count, a necessary part of the duty of the executive power. The col-
lection and application of the general duties of customs, therefore,
have always been left to that power. But the protection of any par-
ticular branch of trade is a part of the general protection of trade;
a part, therefore, of the duty of that power; and if nations always
acted consistently, the particular duties levied for the purposes of
such particular protection, should always have been left equally to
its disposal. But in this respect, as well as in many others, nations
have not always acted consistently; and in the greater part of the
commercial states of Europe, particular companies of merchants
have had the address to persuade the legislature to entrust to them
the performance of this part of the duty of the sovereign, together
with all the powers which are necessarily connected with it.
These companies, though they may, perhaps, have been useful
for the first introduction of some branches of commerce, by making,
at their own expence, an experiment which the state might not
think it prudent to make, have in the long-run proved, universally,
either burdensome or useless, and have either mismanaged or con-
fined the trade.
When those companies do not trade upon a joint stock, but are
obliged to admit any person, properly qualified, upon paying a
certain fine, and agreeing to submit to the regulations of the com-
pany, each member trading upon his own stock, and at his own
risk, they are called regulated companies. When they trade upon a
Branches
of com-
merce
which re-
quire ex-
traordi-
nary ex-
pense for
their pro-
tection
may rea-
sonably
bear a
particular
tax.
The pro-
ceeds of
such taxes
should
be at the
disposal
of the
execu-
tive, but
have
often
been
given to
com-
panies of
mer-
chants,
which
have al-
ways
proved
in the
long run
burden-
some or
useless.
They are
either
regulated
or joint
stock
com-
panies.
Regulat-
ed com-
panies
are like
corpora-
tions of
trades
and act
like them,
There are
five exist-
ing regu-
lated
com-
panies,
of which
the Ham-
burg,
Russian
692 the wealth of nations
joint stock, each member sharing in the common profit or loss in
proportion to his share in this stock, they are called joint stock
companies.^® Such companies, whether regulated or joint stock,
sometimes have, and sometimes have not, exclusive priviliges.
Regulated companies resemble, in every respect, the corpora-
tions of trades, so common in the cities and towns of all the differ-
ent countries of Europe; and are a sort of enlarged monopolies of
the same kind. As no inhabitant of a town can exercise an incorpo-
rated trade, without first obtaining his freedom in the corporation,
so in most cases no subject of the state can lawfully carry on any
branch of foreign trade, for which a regulated company is estab-
lished, without first becoming a member of that company. The
monopoly is more or less strict according as the terms of admission
are more or less difficult; and according as the directors of the com-
pany have more or less authority, or have it more or less in their
power to manage in such a manner as to confine the greater part of
the trade to themselves and their particular friends. In the most an-
cient regulated companies the privileges of apprenticeship were the
same as in other corporations; and entitled the person who had
served his time to a member of the company, to become himself a
member, either without papng any fine, or upon paying a much
smaller one than what was exacted of other people. The usual cor-
poration spirit, wherever the law does not restrain it, prevails in all
regulated companies. When they have been allowed to act accord-
ing to their natural genius, they have always, in order to confine the
competition to as small a number of persons as possible, endeav-
oured to subject the trade to many burdensome regulations. When
the law has restrained them from doing this, they have become al-
together useless and insignificant.
The regulated companies for foreign commerce, which at present
subsist in Great Britain, are, the ancient merchant adventurers
company now commonly called the Hamburgh Company, the
Russia Company, the Eastland Company, the Turkey Company,
and the African Company.
The terms of admission into the Hamburgh Company, are now
said to be quite easy; and the directors either have it not in their
power to subject the trade to any burdensome restraint or regu-
“Sir Josiah Child, New Discourse of Trade, etc., chap, iii., divides com-
panies into those in joint stock and those “who trade not by a joint stock, but
only are under a government and regulation.”
^ The company or society of the Merchant Adventurers of England.
“Additions and Corrections reads “Russian,” probably a misprint, though
“Russian,” which is incorrect, appears on the next page.
“ Eds. 1-3 read “restraints.”
PARTICULAR BRANCHES OF COMMERCE ^93
lations, or, at least, have not of late exercised that power. It has
not always been so. About the middle of the last century, the fine
for admission was fifty, and at one time one hundred pounds,®^ and
the conduct of the company was said to be extremely oppressive. In
1643, ^^645, and in 1661, the clothiers and free traders of the
West of England complained of them to parliament, as of monopo-
lists who confined the trade and oppressed the manufactures of the
country.®^ Though those complaints produced no act of parliament,
they had probably intimidated the company so far, as to oblige
them to reform their conduct. Since that time, at least, there
have been no complaints against them. By the loth and nth of
William III. c. 6.^® the fine for admission into the Russian Com-
pany was reduced to five pounds; and by the 2Sth. of Charles 11. c.
7. that for admission into the Eastland Company, to forty shillings,
while, at the same time, Sweden, Denmark and Norway, all the
countries on the north side of the Baltic, were exempted from their
exclusive charter.^® The conduct of those companies had probably
given occasion to those two acts of parliament. Before that time,
Sir Josiah Child had represented both these and the Hamburgh
Company as extremely oppressive, and imputed to their bad man-
agement the low state of the trade, which we at that time carried on
to the countries comprehended within their respective charters.^^
But though such companies may not, in the present times, be very
oppressive, they are certainly altogether useless. To be merely use-
less, indeed, is perhaps the highest eulogy which can every justly be
bestowed upon a regulated company; and all the three companies
above mentioned seem, in their present state, to deserve this
eulogy.
The fine for admission into the Turkey Company, was formerly
twenty-five pounds for all persons under twenty-six years of age,
and fifty pounds for all persons above that age. Nobody but mere
merchants could be admitted; a restriction which excluded all
Anderson, Commerce, a.d. 1643: the fine was doubled in that year, being
raised to £ioo for Londoners and £50 for others.
“Anderson, Commerce, a.d. 1661, under which the other two years are also
mentioned.
Additions and Corrections and eds. 3 and 4 read “has.” Smith very prob-
ably wrote “there has been no complaint.”
“ The preamble recites the history of the company.
“Anderson, Commerce, a.d. 1672.
New Discourse of Trade, chap, iii., quoted by Anderson, Commerce, a.d.
1672. This part of the book was not published till long after 1672, but seems
to have been written before the closing of the Exchequer in that year.
and East-
land
Com-
panies are
merely
useless.
The Tur-
key Com-
pany is an
oppres-
sive mo-
nopoly.
^94 the wealth of NATIONS
shop-keepers and retailers.^^ By a bye-law, no British manufac-
tures could be exported to Turkey but in the general ships of the
company; and as those ships sailed always from the port of Lon-
don, this restriction confined the trade to that expensive port,
and the traders, to those who lived in London and in its neighbour-
hood. By another bye-law, no person living within twenty miles of
London, and not free of the city, could be admitted a member; an-
other restriction, which, joined to the foregoing, necessarily ex-
cluded all but the freemen of London.^® As the time for the loading
and sailing of those general ships depended altogether upon the di-
rectors, they could easily fill them with their own goods and those
of their particular friends, to the exclusion of others, who, they
might pretend, had made their proposals too late. In this state of
things, therefore, this company was in every respect a strict and op-
pressive monopoly. Those abuses gave occasion to the act of the
26th of George II. c. 18. reducing the fine for admission to twenty
pounds for all persons, without any distinction of ages, or any re-
striction, either to mere merchants, or to the freemfen of London;
and granting to all such persons the liberty of exporting, from all
the ports of Great Britain to any port in Turkey, all British goods
of which the exportation was not prohibited; and of importing
from thence all Turkish goods, of which the importation was not
prohibited, upon paying both the general duties of customs, and the
particular duties assessed for defraying the necessary expences of
the company; and submitting, at the same time, to the lawful au-
thority of the British ambassador and consuls resident in Turkey,
and to the bye-laws of the company duly enacted. To prevent any
oppression by those bye-laws, it was by the same act ordained, that
if any seven members of the company conceived themselves ag-
grieved by any bye-law which should be enacted after the passing
of this act, they might appeal to the Board of Trade and Planta-
tions (to the authority of which, a committee of the privy council
has now succeeded), provided such appeal was brought within
twelve months after the bye-law was enacted ; and that if any seven
members conceived themselves aggrieved by any bye-law which
had been enacted before the passing of this act, they might bring a
like appeal, provided it was within twelve months after the day on
which this act was to take place. The experience of one year, how-
ever, may not always be sufficient to discover to all the members of
a great company the pernicious tendency of a particular bye-law;
® Anderson, Commerce, a.d. 1605, 1643, 1753.
Additions and Corrections reads “extensive.”
®°See the preamble to 26 Geo. IL, c. 18.— -Anderson, Commerce, a.d. 1753.
PARTICULAR BRANCHES OF COMMERCE 695
and if several of them should afterwards discover it, neither the
Board of Trade, nor the committee of council, can afford them any
redress. The object, besides, of the greater part of the bye-laws of
all regulated companies, as well as of all other corporations, is not
so much to oppress those who are already members, as to discour-
age others from becoming so; which may be done, not only by a
high fine, but by many other contrivances. The constant view of
such companies is always to raise the rate of their own profit as
high as they can; to keep the market, both for the goods which they
export, and for those which they import, as much understocked as
they can: which can be done only by restraining the competition,
or by discouraging new adventurers from entering into the trade. A
fine even of twenty pounds, besides, though it may not, perhaps, be
sufficient to discourage any man from entering into the Turkey
trade, with an intention to continue in it, may be enough to dis-
courage a speculative merchant from hazarding a single adventure
in it. In all trades, the regular established traders, even though not
incorporated, naturally combine to raise profits, which are no-way
so likely to be kept, at all times, down to their proper level, as by
the occasional competition of speculative adventurers. The Turkey
trade, though in some measure laid open by this act of parliament,
is still considered by many people as very far from being altogether
free. The Turkey Company contribute to maintain an ambassador
and two or three consuls, who, like other public ministers, ought to
be maintained altogether by the state, and the trade laid open to all
his majesty’s subjects. The different taxes levied by the company,
for this and other corporation purposes, might afford a revenue
much more than sufficient to enable the state to maintain such min-
isters.
Regulated companies, it was observed by Sir Josiah Child,
though they had frequently supported public ministers, had never
maintained any forts or garrisons in the countries to which they
traded; whereas joint stock companies frequently had.®^ And in
reality the former seem to be much more unfit for this sort of ser-
vice than the latter. First, the directors of a regulated company
have no particular interest in the prosperity of the general trade of
the company, for the sake of which, such forts and garrisons are
maintained. The decay of that general trade may even frequently
contribute to the advantage of their own private trade; as by di-
minishing the number of their competitors, it may enable them
both to buy cheaper, and to sell dearer. The directors of a joint
stock company, on the contrary, having only their share m the
^ New Discourse of Trader chap. iii.
Regulat-
ed com-
panies
are more
unfit to
maintain
forts than
joint
stock
com-
panies,
but the
African
company
was
charged
with this
duty.
The
statute
establish-
ing the
company
endeav-
voured
ineffectu-
ally to re-
696 XHE WEALTH OF NATIONS
profits which are made upon the common stock committed to their
management, have no private trade of their own, of which the in-
terest can be separated from that of the general trade of the com-
pany. Their private interest is connected with the prosperity of the
general trade of the company; and with the maintenance of the
forts and garrisons which are necessary for its defence. They are
more likely, therefore, to have that continual and careful attention
which that maintenance necessarily requires. Secondly, The direc-
tors of a joint stock company have always the management of a
large capital, the joint stock of the company, a part of which they
may frequently employ, with propriety, in building, repairing, and
maintaining such necessary forts and garrisons. But the directors
of a regulated company, having the management of no common
capital, have no other fund to employ in this way, but the casual
revenue arising from the admission fines, and from the corporation
duties, imposed upon the trade of the company. Though they had
the same interest, therefore, to attend to the maintenance of such
forts and garrisons, they can seldom have the same ability to ren-
der that attention effectual. The maintenance of a public minister
requiring scarce any attention, and but a moderate and limited ex-
pence, is a business much more suitable both to the temper and
abilities of a regulated company.
Long after the time of Sir Josiah Child, however, in 1750, a
regulated company was established, the present company of mer-
chants trading to Africa, which was expressly charged at first with
the maintenance of all the British forts and garrisons that lie be-
tween Cape Blanc and the Cape of Good Hope, and afterwards
with that of those only which lie between Cape Rouge and the Cape
of Good Hope. The act which establishes this company (the 23d of
George II. c. 31.) seems to have had two distinct objects in view;
first, to restrain effectually the oppressive and monopolizing spirit
which is natural to the directors of a regulated company; and sec-
ondly, to force them, as much as possible, to give an attention,
which is not natural to them, towards the maintenance of forts and
garrisons.®^
For the first of these purposes, the fine for admission is limited
to forty shillings. The company is prohibited from trading in their
corporate capacity, or upon a joint stock; from borrowing money
upon common seal, or from laying any restraints upon the trade
which may be carried on freely from all places, and by all persons
being British subjects, and paying the fine. The government is in
a committee of nine persons who meet at London, but who are
Below, p. 701.
PARTICULAR BRANCHES OF COMMERCE 697
chosen annually by the freemen of the company at London, Bristol strain the
and Liverpool; three from each place. No committee-man can be
continued in office for more than three years together. Any com- poly,
mittee-man might be removed by the Board of Trade and Planta-
tions; now by a committee of council, after being heard in his own
defence. The committee are forbid to export negroes from Africa,
or to import any African goods into Great Britain. But as they are
charged with the maintenance of forts and garrisons, they may, for
that purpose, export from Great Britain to Africa, goods and stores
of different kinds. Out of the monies which they shall receive from
the company, they are allowed a sum not exceeding eight hundred
pounds for the salaries of their clerks and agents at London, Bristol
and Liverpool, the house-rent of their office at London, and all
other expences of management, commission and agency in Eng-
land. What remains of this sum, after defra5dng these different ex-
pences, they may divide among themselves, as compensation for
their trouble, in what manner they think proper. By this constitu-
tion, it might have been expected, that the spirit of monopoly
would have been effectually restrained, and the first of these pur-
poses sufficiently answered. It would seem, however, that it had
not. Though by the 4th of George III. c. 20. the fort of Senegal,
with all its dependencies, had been vested in the company of mer-
chants trading to Africa, yet in the year following (by the sth of
George III. c. 44.), not only Senegal and its dependencies, but the
whole coast from the port of SaUee, in south Barbary, to Cape
Rouge, was exempted from the jurisdiction of that company, was
vested in the crown, and the trade to it declared free to all his
majesty’s subjects. The company had been suspected of restraining
the trade, and of establishing some sort of improper monopoly. It
is not, however, very easy to conceive how, under the regulations of
the 23d George II. they could do so. In the printed debates of the
House of Commons, not always the most authentic records of truth,
I observe, however, that they have been accused of this. The mem-
bers of the committee of nine being all merchants, and the gover-
nors and factors in their different forts and settlements being all de-
pendent upon them, it is not unlikely that the latter might have
given peculiar attention to the consignments and commissions of
the former, which would establish a real monopoly.
For the second of these purposes, the maintenance of the forts and Par-
and garrisons, an annual sum has been allotted to them by parlia- liament
ment, generally about 13,000^. For the proper application of this £13^3^00 a
sum, the committee is obliged to account annually to the Cursitor year to
Additions and Corrections reads “all the other.”
698 XHE WEALTH OF NATIONS
the com- Baron of Exchequer; which account is afterwards to be laid before
tos parliament. But parliament, which gives so little attention to the
which application of millions, is not likely to give much to that of 13,000/.
sum they a-year; and the Cursitor Baron of Exchequer, from his profession
misapply. education, is not likely to be profoundly skilled in the proper
expence of forts and garrisons. The captains of his majesty’s navy,
indeed, or any other commissioned officers, appointed by the Board
of Admiralty, may enquire into the condition of the forts and gar-
risons, and report their observations to that board. But that board
seems to have no direct jurisdiction over the committee, nor any
authority to correct those whose conduct it may thus enquire into;
and the captains of his majesty’s navy, besides, are not supposed
to be always deeply learned in the science of fortification. Removal
from an office, which can be enjoyed only for the term of three
years, and of which the lawful emoluments, even during that term,
are so very small, seems to be the utmost punishment to which any
committee-man is liable, for any fault, except direct malversation,
or embezzlement, either of the public money, or of that of the com-
pany; and the fear of that punishment can never be a motive of
sufficient weight to force a continual and careful attention to a
business, to which he has no other interest to attend. The commit-
tee are accused of having sent out bricks and stones from England
for the reparation of Cape Coast Castle on the coast of Guinea, a
business for which parliament had several times granted an extra-
ordinary sum of money. These bricks and stones too, which had
thus been sent upon so long a voyage, were said to have been of so
bad a quality, that it was necessary to rebuild from the foundation
the walls which had been repaired with them. The forts and gar-
risons which lie north of Cape Rouge, are not only maintained at
the expence of the state, but are under the immediate government
of the executive power; and why those which lie south of that
Cape, and which too are, in part at least, maintained at the ex-
pence of the state, should be under a different government, it seems
not very easy even to imagine a good reason. The protection of the
Mediterranean trade was the original purpose or pretence of the
garrisons of Gibraltar and Minorca, and the maintenance and gov-
ernment of those garrisons has always been, very properly, com-
mitted, not to the Turkey Company, but to the executive power. In
the extent of its dominion consists, in a great measure, the pride
and dignity of that power; and it is not very likely to fail in atten-
tion to what is necessary for the defence of that dominion. The
garrisons at Gibraltar and Minorca, accordingly, have never been
neglected; though Minorca has been twice taken, and is now prob-
PARTICULAR BRANCHES OF COMMERCE ^99
ably lost for ever, that disaster was never even imputed to any ne-
glect in the executive power. I would not, however, be understood
to insinuate, that either of those expensive garrisons was ever, even
in the smallest degree, necessary for the purpose for which they
were originally dismembered from the Spanish monarchy. That
dismemberment, perhaps, never served any real purpose than to
alienate from England her natural ally the King of Spain, and to
unite the two principal branches of the house of Bourbon in a much
stricter and more permanent alliance than the ties of blood could
ever have united them.
Joint stock companies, established either by royal charter or by
act of parliament, differ in several respects, not only from regu-
lated companies, but from private copartneries.
First, In a private copartnery, no partner, without the consent of
the company, can transfer his share to another person, or introduce
a new member into the company. Each member, however, may, up-
on proper warning, withdraw from the copartnery, and demand
payment from them of his share of the common stock. In a joint
stock company, on the contrary, no member can demand payment
of his share from the company; but each member can, without their
consent, transfer his share to another person, and thereby introduce
a new member. The value of a share in a joint stock is always the
price which it will bring in the market; and this may be either
greater or less, in any proportion, than the sum which its owner
stands credited for in the stock of the company.
Secondly, In a private copartnery, each partner is bound for the
debts contracted by the company to the whole extent of his for-
tune. In a joint stock company, on the contrary, each partner is
bound only to the extent of his share.®^
The trade of a joint stock company is always managed by a
court of directors. This court, indeed, is frequently subject, in many
respects, to the controul of a general court of proprietors. But the
greater part of those proprietors seldom pretend to understand any
thing of the business of the company; and when the spirit of fac-
tion happens not to prevail among them, give themselves no trouble
about it, but receive contentedly such half yearly or yearly divi-
dend, as the directors think proper to make to them. This total ex-
emption from trouble and from risk, beyond a limited sum, en-
courages many people to become adventurers in joint stock com-
panies, who would, upon no account, hazard their fortunes in any
private copartnery. Such companies, therefore, commonly draw to
A joint-stock company here is an incorporated or chartered company. The
common application of the term to other companies is later.
Joint
stock
com-
panies
differ
from pri-
vate part-
nerships:
(i) with-
drawals
are by
sale of
shares;
( 2 ) lia-
bility is
limited to
the share
held.
Such
com-
panies are
managed
by direct-
ors, who
are negli-
gent and
profuse
Some
have and
some
have not
exclusive
privileges.
The
Royal
African
Company,
having
lost exclu-
700 XHE WEALTH OF NATIONS
themselves much greater stocks than any private copartnery can
boast of. The trading stock of the South Sea Company, at one time,
amounted to upwards of thirty-three millions eight hundred thou-
sand pounds.®'^ The dividend capital of the Bank of England
amounts, at present, to ten millions seven hundred and eighty thou-
sand pounds.^® The directors of such companies, however, being
the managers rather of other people’s money than of their own, it
cannot well be expected, that they should watch over it with the
same anxious vigilance with which the partners in a private co-
partnery frequently watch over their own. Like the stewards of a
rich man, they are apt to consider attention to small matters as not
for their master’s honour, and very easily give themselves a dispen-
sation from having it. Negligence and profusion, therefore, must
always prevail, more or less, in the management of the affairs of
such a company. It is upon this account that joint stock companies
for foreign trade have seldom been able to maintain the competi-
tion against private adventurers. They have, accordingly, very sel-
dom succeeded without an exclusive privilege; and frequently have
not succeeded with one. Without an exclusive privilege they have
commonly mismanaged the trade. With an exclusive privilege they
have both mismanaged and confined it.
The Royal African Company, the predecessors of the present
African Company, had an exclusive privilege by charter; but as
that charter had not been confirmed by act of parliament, the
trade, in consequence of the declaration of rights, was, soon after
the revolution, laid open to all his majesty’s subjects.®^ The Hud-
son’s Bay Company are, as to their legal rights, in the same situa-
tion as the Royal African Company.^® Their exclusive charter has
not been confirmed by act of parliament. The South Sea Company,
as long as they continued to be a trading company, had an exclu-
sive privilege confirmed by act of parliament; as have likewise the
present United Company of Merchants trading to the East In-
dies.
The Royal African Company soon found that they could not
maintain the competition against private adventurers, whom, not-
withstanding the declaration of rights, they continued for some
time to call interlopers, and to persecute as such. In 1698, however,
the private adventurers were subjected to a duty of ten per cent.
Anderson, Commerce, ajd. 1723.
®®It stood at this amount from 1746 to the end of 1781, but was then in-
creased by a call of 8 per cent.— Anderson, Commerce, a.d. 1746, and (Con-
tinuation) A.D. 1781.
Anderson, Commerce, a.d. 1672 and a.d. 1698. ^Ihid., a.d. 1670.
PARTICULAR BRANCHES OF COMMERCE 70i
upon almost all the different branches of their trade, to be em-
ployed by the company in the maintenance of their forts and gar-
risons. But, notwithstanding this heavy tax, the company were
still unable to maintain the competition,^^ Their stock and credit
gradually declined. In 1712, their debts had become so great, that
a particular act of parliament was thought necessary, both for their
security and for that of their creditors. It was enacted, that the res-
olution of two-thirds of these creditors in number and value, should
bind the rest, both with regard to the time which should be allowed
to the company for the payment of their debts; and with regard to
any other agreement which it might be thought proper to make
with them concerning those debts.*^^ In 1730, their affairs were in
so great disorder, that they were altogether incapable of maintain-
ing their forts and garrisons, the sole purpose and pretext of their
institution. From that year, till their final dissolution, the parlia-
ment judged it necessary to allow the annual sum of ten thousand
pounds for that purpose.*^^ In 1732, after having been for many
years losers by the trade of carrying negroes to the West Indies,
they at last resolved to give it up altogether; to sell to the private
traders to America the negroes which they purchased upon the
coast; and to employ their servants in a trade to the inland parts of
Africa for gold dust, elephants teeth, dying drugs, &c. But their
success in this more confined trade was not greater than in their
former extensive one.*^^ Their affairs continued to go gradually to
decline, till at last, being in every respect a bankrupt company,
they were dissolved by act of parliament, and their forts and gar-
risons vested in the present regulated company of merchants trad-
ing to Africa.’’^^ Before the erection of the Royal African Company,
there had been three other joint stock companies successively es-
tablished, one after another, for the African trade.*^^ They were all
equally unsuccessful. They all, however, had exclusive charters,
which, though not confirmed by act of parliament, were in those
days supposed to convey a real exclusive privilege.
The Hudson^s Bay Company, before their misfortunes in the late
war, had been much more fortunate than the Royal African Com-
pany. Their necessary expence is much smaller. The whole number
of people whom they maintain in their different settlements and
^Ibid., A.D. 1698. ™io Ann., c. 27. Anderson, Commerce^ a.d. 1712.
A.D. 1730. The annual grant continued till 1746.
■^"Anderson, Commerce, a.d. 1733.
”23 Geo. II., c. 31; 25 Geo. II., c. 40; Anderson, Commerce, a.d. 1750,
1752; above, p. 696,
Anderson, Commerce, a.d. 1618, 1631 and 1662.
sive privi-
leges,
failed.
The Hud-
son’s Bay
Company
have been
moderate-
ly suc-
cessful,
having in
fact an
exclusive
trade and
a very
small
number
of pro-
prietors.
702 XHE WEALTH OF NATIONS
habitations, which they have honoured with the name of forts, is
said not to exceed a hundred and twenty persons This number,
however, is sufficient to prepare beforehand the cargo of furs and
other goods necessary for loading their ships, which, on account of
the ice, can seldom remain above six or eight weeks in those seas.
This advantage of having a cargo ready prepared, could not for sev-
eral years be acquired by private adventurers, and without it there
seems to be no possibility of trading to Hudson’s Bay. The mod-
erate capital of the company, which, it is said, does not exceed one
hundred and ten thousand pounds,^® may besides be sufficient to
enable them to engross the whole, or almost the whole, trade and
surplus produce of the miserable, though extensive country, com-
prehended within their charter. No private adventurers, accord-
ingly, have ever attempted to trade to that country in competition
with them. This company, therefore, have always enjoyed an ex-
clusive trade in fact, though they may have no right to it in law.
Over and above all this, the moderate capital of this company is
said to be divided among a very small number of proprietors.^^ But
a joint stock company, consisting of a small number of proprietors,
with a moderate capital, approaches very nearly to the nature of a
private copartnery, and may be capable of nearly the same degree
of vigilance and attention. It is not to be wondered at, therefore, if
in consequence of these different advantages, the Hudson’s Bay
Company had, before the late war, been able to carry on their
trade with a considerable degree of success. It does not seem prob-
able, however, that their profits ever approached to what the late
Mr. Dobbs imagined them.'^® A much more sober and judicious
writer, Mr. Anderson, author of The Historical and Chronological
Deduction of Commerce, very justly observes, that upon examining
the accounts which Mr. Dobbs himself has given for several years
together, of their exports and imports, and upon making proper al-
lowances for their extraordinary risk and expence, it does not ap-
pear that their profits deserve to be envied, or that they can much,
if at all, exceed the ordinary profits of trade.'^^
A.D. 1743, quoting Captam Christopher Middleton.
™ Anderson, Commerce: a.d. 1670.
"“Eight or nine private merchants do engross nine-tenth parts of the
company’s stock.” Anderson, Commerce: ad. 1743, quoting from An Ac-
count of the Countries Adjoining to Hudson's Bay . . . with an Abstract of
Captain Middleton's Journal and Observations upon his Behaviour: by Ar-
thur Dobbs, Esq., 1744, p. 58.
“^^In his Account: PP* 3 and 58, he talks of 2,000 per cent., but this, of
course, only refers to the difference between buying and selling prices.
^ ’^Commerce: a.d. 1743, but the examination is not nearly so comprehen-
sive, nor the expression of opinion so ample as is suggested by the text.
PARTICULAR BRANCHES OF COMMERCE 703
The South Sea Company never had any forts or garrisons to
maintain, and therefore were entirely exempted from one great ex-
pence, to which other joint stock companies for foreign trade are
subject. But they had an immense capital dividend among an im-
mense number of proprietors. It was naturally to be expected,
therefore, that folly, negligence, and profusion should prevail in
the whole management of their affairs. The knavery and extrava-
gance of their stock-jobbing projects are sufficiently known, and
the explication of them would be foreign to the present subject.
Their mercantile projects were not much better conducted. The
first trade which they engaged in was that of supplying the Spanish
West Indies with negroes, of which (in consequence of what was
called the Assiento contract granted them by the treaty of Utrecht)
they had the exclusive privilege. But as it was not expected that
much profit could be made by this trade, both the Portugueze and
French companies, who had enjoyed it upon the same terms before
them, having been ruined by it, they were allowed, as compensa-
tion, to send annually a ship of a certain burden to trade directly
to the Spanish West Indies.®*^ Of the ten voyages which this an-
nual ship was allowed to make, they are said to have gained con-
siderably by one, that of the Royal Caroline in 1731, and to have
been losers, more or less, by almost all the rest. Their ill success
was imputed, by their factors and agents, to the extortion and op-
pression of the Spanish government; but was, perhaps, principally
owing to the prolusion and depredations of those very factors and
agents; some of whom are said to have acquired great fortunes even
in one year. In 1734, the company petitioned the king, that they
might be allowed to dispose of the trade and tunnage of their an-
nual ship, on account of the little profit which they made by it, and
to accept of such equivalent as they could obtain from the king pf
Spain.^^
In 1724, this company had undertaken the whale-fishery. Of
this, indeed, they had no monopoly; but as long as they carried it
on, no other British subjects appear to have engaged in it. Of the
eight voyages which their ships made to Greenland, they were
gainers by one, and losers by all the rest. After their eighth and last
voyage, when they had sold their ships, stores, and utensils, they
found that their whole loss, upon this branch, capital and interest
included, amounted to upwards of two hundred and thirty-seven
thousand pounds.®^
Anderson, Commerce, a.d. 1713 ^Ibid., a.d. 1731, 1732 and 1734
^Ibid., A.D. 1724 and 1732. But there was no successful voyage; the com-
pany were “considerable losers in every one” of the eight years.
The
South Sea
Company
failed to
make any
profit by
their an-
nual ship
to the
Spanish
West
Indies,
lost
£237,000
in their
whale
fishery,
and final-
ly ceased
to be a
trading
company.
They had
competi-
tors in
the trade
of the
annual
ship.
704 THE WEALTH OF NATIONS
In 1722, this company petitioned the parliament to be allowed
to divide their immense capital of more than thirty-three millions
eight hundred thousand pounds, the whole of which had been lent
to government, into two equal pants: The one half, or upwards of
sixteen millions nine hundred thousand pounds, to be put upon the
same footing with other government annuities, and not to be sub-
ject to the debts contracted, or losses incurred, by the directors of
the company, in the prosecution of their mercantile projects; the
other half to remain, as before, a trading stock, and to be subject to
those debts and losses. The petition was too reasonable not to be
granted.®® In 1733, they again petitioned the parliament, that
three-fourths of their trading stock might be turned into annuity
stock, and only one-fourth remain as trading stock, or exposed to
the hazards arising from the bad management of their directors.®^
Both their annuity and trading stocks had, by this time, been re-
duced more than two millions each, by several different payments
from government; so that this fourth amounted only to 3,662,784/.
8^. 6rf.®® In 1748, all the demands of the company upon the king of
Spain, in consequence of the Assiento contract, were, by the treaty
of Aix-la-Chapelle, given up for what was supposed an equivalent.
An end was put to their trade with the Spanish West Indies, the re-
mainder of their trading stock was turned into an annuity stock,
and the company ceased in every respect to be a trading com-
pany.®®
It ought to be observed, that in the trade which the South Sea
Company carried on by means of their annual ship, the only trade
by which it ever was expected that they could make any consider-
able profit, they were not without competitors, either in the foreign
or in the home market. At Carthagena, Porto Bello, and La Vera
Cruz, they had to encounter the competition of the Spanish mer-
chants, who brought from Cadiz, to those markets, European
goods, of the same kind with the outward cargo of their ship; and
in England they had to encounter that of the English merchants,
who imported from Cadiz goods of the Spanish West Indies, of the
same kind with the inward cargo. The goods both of the Spanish
and English merchants, indeed, were, perhaps, subject to higher du-
ties. But the loss occasioned by the negligence, profusion, and mal-
versation of the servants of the company, had probably been a tax
much heavier than all those duties. That a joint stock company
should be able to carry on successfully any branch of foreign trade,
9 Geo. L, c. 6. Anderson, Commerce^ a.d. 1723.
®*This was done by 6 Geo. II., c. 28. Ihid., a.d. 1733.
^ lhid,j A.D. 1732 and a.d. 1.733. a.d. 1748 and a.d. 1750.
PARTICULAR BRANCHES OF COMMERCE 70S
when private adventurers can come into any sort of open and fair
competition with them, seems contrary to all experience.
The old English East India Company was established in 1600, The old
by a charter from Queen Elizabeth. In the first twelve voyages
which they fitted out for India, they appear to have traded as a (^orn-
regulated company, with separate stocks, though only in the gen- pany, un-
eral ships of the company. In 1612, they united into a joint stock.®"^ support
Their charter was exclusive, and though not confirmed by act of competi-
parliament, was in those days supposed to convey a real exclusive
privilege. For many years, therefore, they were not much disturbed
by interlopers. Their capital which never exceeded seven hundred
and forty-four thousand pounds,^^ and of which fifty pounds was
a share,®® was not so exorbitant, nor their dealings so extensive, as
to afford either a pretext for gross negligence and profusion, or a
cover to gross malversation. Notwithstanding some extraordinary
losses, occasioned partly by the malice of the Dutch East India
Company, and partly by other accidents, they carried on for many
years a successful trade. But in process of time, when the principles
of liberty were better understood, it became every day more and
more doubtful how far a royal charter, not confirmed by act of
parliament, could convey an exclusive privilege. Upon this question
the decisions of the courts of justice were not uniform, but varied
with the authority of government and the humours of the times.
Interlopers multiplied upon them; and towards the end of the reign
of Charles 11 . through the whole of that of James II. and during
a part of that of William III. reduced them to great distress.®® In
1698, a proposal was made to parliament of advancing two mil-
lions to government at eight per cent, provided the subscribers were
erected into a new East India Company with exclusive privileges.
The old East India Company offered seven hundred thousand
pounds, nearly the amount of their capital, at four per cent, upon
the same conditions. But such was at that time the state of public
credit, that it was more convenient for government to borrow two
millions at eight per cent, than seven hundred thousand pounds at
four. The proposal of the new subscribers was accepted, and a new
East India Company established in consequence. The old East In- was
dia Company, however, had a right to continue their trade till
1701. They had, at the same time, in the name of their treasurer, the pre-
subscribed, very artfully, three hundred and fifteen thousand sent com-
pany,
^ “Until this time the English East India trade was carried on by several
separate stocks, making particular running-voyages; but in this year they
united all into one general joint-capital stock,” Anderson, Commerce, a.d.
1612.
^Ibid., A.D. 1693. ^Ibid., a.d. 1676.
^Ibid,, A.D. 1681 and a.d. 1685.
7o6 XHE wealth OF NATIONS
pounds into the stock of the new. By a negligence in the expression
of the act of parliament, which vested the East India trade in the
subscribers to this loan of two millions, it did not appear evident
that they were all obliged to unite into a joint stock.^^ A few pri-
vate traders, whose subscriptions amounted only to seven thou-
sand two hundred pounds, insisted upon the privilege of trading
separately upon their own stocks and at their own risk.®^ The old
East India Company had a right to a separate trade upon their old
stock till 1701; and they had likewise, both before and after that
period, a right, like that of other private traders, to a separate
trade upon the three hundred and fifteen thousand pounds, which
they ‘had subscribed into the stock of the new company. The com-
petition of the two companies with the private traders, and with
one another, is said to have well nigh ruined both. Upon a subse-
quent occasion, in 1730, when a proposal was made to parliament
for putting the trade under the management of a regulated com-
pany, and thereby laying it in some measure open, the East India
Company, in opposition to this proposal, represented in very strong
terms, what had been, at this time, the miserable effeicts, as they
thought them, of this competition. In India, they said, it raised the
price of goods so high, that they were not worth the buying; and
in England, by overstocking the market, it sunk their price so low,
that no profit could be made by them.^^ That by a more plentiful
supply, to the great advantage and conveniency of the public, it
must have reduced, very much, the price of India goods in the Eng-
lish market, cannot well be doubted; but that it should have raised
very much their price in the India market, seems not very probable,
as all the extraordinary demand which that competition could oc-
casion, must have been but as a drop of water in the immense
ocean of Indian commerce. The increase of demand, besides,
though in the beginning it may sometimes raise the price of goods,
never fails to lower it in the long run. It encourages production, and
thereby increases the competition of the producers, who, in order
to undersell one another, have recourse to new divisions of labour
and new improvements of art, which might never otherwise have
been thought of. The miserable effects of which the company com-
plained, were the cheapness of consumption and the encouragement
given to production, precisely the two effects which it is the great
business of political oeconomy to promote. The competition, how-
ever, of which they gave this doleful account, had not been allowed
to be of long continuance. In 1702, the two companies, were, in
®^The whole of this history is in Anderson, Commerce^ a.d. 1698.
Anderson, Commerce^ a.d. 1701. a.d. 1730.
PARTICULAR BRANCHES OF COMMERCE 7^7
some measure, united by an indenture tripartite, to which the
queen was the third party; and in 1708, they were, by act of par-
liament, perfectly consolidated into one company by their pres-
ent name of the United Company of Merchants trading to the East
Indies. Into this act it was thought worth while to insert a clause,
allowing the separate traders to continue their trade till Michael-
mas 1 71 1, but at the same time empowering the directors, upon
three years notice, to redeem their little capital of seven thousand
two hundred pounds, and thereby to convert the whole stock of the
company into a joint stock. By the same act, the capital of the
company, in consequence of a new loan to government, was aug-
mented from two millions to three millions two hundred thousand
pounds.®^ In 1743, the company advanced another million to gov-
ernment. But this million being raised, not by a call upon the pro-
prietors, but by selling annuities and contracting bond-debts, it
did not augment the stock upon which the proprietors could claim
a dividend. It augmented, however, their trading stock, it being
equally liable with the other three millions two hundred thousand
pounds to the losses sustained, and debts contracted, by the com-
pany in prosecution of their mercantile projects. From 1708, or at
least from 1711, this company, being delivered from all competi-
tors, and fully established in the monopoly of the English com-
merce to the East Indies, carried on a successful trade, and from
their profits made annually a moderate dividend to their proprie-
tors. During the French war which began in 1741, the ambition of
Mr. Dupleix, the French governor of Pondicherry, involved them in
the wars of the Carnatic, and in the politics of the Indian princes.
After many signal successes, and equally signal losses, they at last
lost Madras, at that time their principal settlement in India. It was
restored to them by the treaty of Aix-la-Chapelle; and about this
time the spirit of war and conquest seems to have taken possession
of their servants in India, and never since to have left them. During
the French war which began in 1755, their arms partook of the
general good fortune of those of Great Britain. They defended
Madras, took Pondicherry, recovered Calcutta, and acquired the
revenues of a rich and extensive territory, amounting, it was then
said, to upwards of three millions a-year. They remained for sev-
eral years in quiet possession of this revenue: But in 1767, adminis-
tration laid claim to their territorial acquisitions, and the revenue
®^“This coalition was made on the 22nd of July, 1702, by an indenture
tripartite between the Queen and the said two companies.’ “Anderson,
Commerce^ a.d. 1702.
Ann., c. 17. Anderson, Commerce^ a.d. 1708.
which
with ex-
clusive
privileges
has trad-
ed suc-
cessfully,
but has
con-
quered
large ter-
ritories,
7o8 the wealth OF NATIONS
arising from them, as of right belonging to the crown; and the
company, in compensation for this claim, agreed to pay to govern-
ment four hundred thousand pounds a-year. They had before this
gradually augmented their dividend from about six to ten per
cent.; that is, upon their capital of three millions two hundred
thousand pounds, they had increased it by a hundred and twenty-
eight thousand pounds, or had raised it from one hundred and
ninety-two thousand, to three hundred and twenty thousand
pounds a-year. They were attempting about this time to raise it
still further, to twelve and a half per cent, which would have made
their annual payments to their proprietors equal to what they had
agreed to pay annually to government, or to four hundred thou-
sand pounds a-year. But during the two years in which their agree-
ment with government was to take place, they were restrained from
any further increase of dividend by two successive acts of parlia-
ment,®® of which the object was to enable them to make a speedier
progress in the payment of their debts, which were at this time esti-
mated at upwards of six or seven millions sterling. In 1769, they
renewed their agreement with government for five years more, and
stipulated, that during the course of that period they should be al-
lowed gradually to increase their dividend to twelve and a half per
cent.; never increasing it, however, more than one per cent, in one
year. This increase of dividend, therefore, when it had risen to its
utmost height, could augment their annual payments, to their pro-
prietors and government together, but by six hundred and eight
thousand pounds, beyond what they had been before their late ter-
ritorial acquisitions. What the gross revenue of those territorial ac-
quisitions was supposed to amount to, has already been mentioned;
and by an account brought by the Cruttenden East Indiaman in
1768, the nett revenue, clear of all deductions and military charges,
was stated at two millions forty-eight thousand seven hundred and
forty-seven pounds. They were said at the same time to possess an-
other revenue, arising partly from lands, but chiefly from the cus-
toms established at their different settlements, amounting to four
hundred and thirty-nine thousand pounds. The profits of their
trade too, according to the evidence of their chairman before the
House of Commons, amounted at this time to at least four hundred
thousand pounds a-year; according to that of their accomptant, to
at least five hundred thousand; according to the lowest account, at
least equal to the highest dividend that was to be paid to their pro-
prietors. So great a revenue might certainly have afforded an aug-
mentation of six hundred and eight thousand pounds in their an-
7 Geo. III., c. 49, and 8 Geo. III., c. ii.
PARTICULAR BRANCHES OF COMMERCE 709
nual payments; and at the same time have a large sinking fund suf-
ficient for the speedy reduction of their debts. In 1773, however,
their debts, instead of being reduced, were augmented by an arrear
to the treasury in the pa5mient of the four hundred thousand
pounds, by another to the custom-house for duties unpaid, by a
large debt to the bank for money borrowed, and by a fourth for
bills drawn upon them from India, and wantonly accepted, to the
amount of upwards of twelve hundred thousand pounds. The dis-
tress which these accumulated claims brought upon them, obliged
them not only to reduce all at once their dividend to six per cent,
but to throw themselves upon the mercy of government, and to
supplicate, first, a release from the further pa5nnent of the stipu-
lated four hundred thousand pounds a-year; and, secondly, a loan
of fourteen hundred thousand, to save them from immediate bank-
ruptcy. The great increase of their fortune had, it seems, only
served to furnish their servants with a pretext for greater profusion,
and a cover for greater malversation, than in proportion even to
that increase of fortune. The conduct of their servants in India, and
the general state of their affairs both in India and in Europe, be-
came the subject of a parliamentary inquiry; in consequence of
which several very important alterations were made in the constitu-
tion of their government, both at home and abroad. In India their
principal settlements of Madras, Bombay, and Calcutta, which had
before been altogether independent of one another, were subjected
to a governor-general, assisted by a council of four assessors, par-
liament assuming to itself the first nomination of this governor and
council who were to reside at Calcutta; that city having now be-
come, what Madras was before, the most important of the English
settlements in India. The court of the mayor of Calcutta, originally
instituted for the trial of mercantile causes, which arose in the city
and neighbourhood, had gradually extended its jurisdiction with
the extension of the empire. It was now reduced and confined to
the original purpose of its institution. Instead of it a new supreme
court of judicature was established, consisting of a chief justice and
three judges to be appointed by the crown. In Europe, the qualifica-
tion necessary to entitle a proprietor to vote at their general courts
was raised, from five hundred pounds, the original price of a share
in the stock of the company, to a thousand pounds. In order to
vote upon this qualification too, it was declared necessary that he
should have possessed it, if acquired by his own purchase, and not
by inheritance, for at least one year, instead of six months, the term
requisite before. The court of twenty-four directors had before been
In 1772-3. Additions and Corrections and ed. 3 read “subjects.”
and mis-
managed
them,
so that
Parlia-
ment has
been
obliged
to make
altera-
tions,
710 XHE WEALTH OF NATIONS
chosen annually; but it was now enacted that each director should,
for the future, be chosen for four years; six of them, however, to
go out of office by rotation every year, and not to be capable of be-
ing re-chosen at the election of the six new directors for the ensu-
ing year.®® In consequence of these alterations, the courts, both of
the proprietors and directors, it was expected, would be likely to
act with more dignity and steadiness than they had usually done
before. But it seems impossible, by any alterations, to render those
courts, in any respect, fit to govern, or even to share in the govern-
ment of a great empire; because the greater part of their members
must alwa3?’s have too little interest in the prosperity of that em-
pire, to give any serious attention to what may promote it. Fre-
quently a man of great, sometimes even a man of small fortune, is
willing to purchase a thousand pounds share in India stock, merely
for the influence which he expects to acquire by a vote in the court
of proprietors. It gives him a share, though not in the plunder, yet
in the appointment of the plunderers of India; the court of direc-
tors, though they make that appointment, being necessarily more
or less under the influence of the proprietors, who not only elect
those directors, but sometimes overrule the appointments of their
servants in India. Provided he can enjoy this influence for a few
years, and thereby provide for a certain number of his friends, he
frequently cares little about the dividend; or even about the value
of the stock upon which his vote is founded. About the prosperity
of the great empire, in the government of which that vote gives him
a share, he seldom cares at all. No other sovereigns ever were, or,
from the nature of things, ever could be, so perfectly indifferent
about the happiness or misery of their subjects, the improvement or
waste of their dominions, the glory or disgrace of their administra-
tion; as, from irresistible moral causes, the greater part of the pro-
prietors of such a mercantile company are, and necessarily must be.
This indifference too was more likely to be increased than dimin-
ished by some of the new regulations which were made in conse-
quence of the parliamentary inquiry. By a resolution of the House
of Commons, for example, it was declared, that when the fourteen
hundred thousand pounds lent to the company by government
should be paid, and their bond-debts be reduced to fifteen hundred
thousand pounds, they might then, and not till then, divide eight
per cent, upon their capital ; and that whatever remained of their
revenues and neat profits at home, should be divided into four
parts; three of them to be paid into the exchequer for the use of the
public, and the fourth to be reserved as a fund, either for the further
*^^13 Geo. III., c. 63.
PARTICULAR BRANCHES OF COMMERCE 7 ir
reduction of their bond-debts, or for the discharge of other contin-
gent exigencies, which the company might labour under.®® But if
the company were bad stewards, and bad sovereigns, when the
whole of their nett revenue and profits belonged to themselves,
and were at their own disposal, they were surely not likely to be
better, when three-fourths of them were to belong to other people,
and the other fourth, though to be laid out for the benefit of the
company, yet to be so, under the inspection, and with the approba-
tion, of other people.
It might be more agreeable to the company that their own ser-
vants and dependants should have either the pleasure of wasting, or
the profit of embezzling whatever surplus might remain, after pay-
ing the proposed dividend of eight per cent., than that it should
come into the hands of a set of people with whom those resolutions
could scarce fail to set them, in some measure, at variance. The in-
terest of those servants and dependants might so far predominate in
the court of proprietors, as sometimes to dispose it to support the
authors of depredations which had been committed in direct viola-
tion of its own authority. With the majority of proprietors, the sup-
port even of the authority of their own court might sometimes be a
matter of less consequence, than the support of those who had set
that authority at defiance.
The regulations of 1773, accordingly, did not put an end to the
disorders of the company’s government in India. Notwithstanding
that, during a momentary fit of good conduct, they had at one time
collected, into the treasury of Calcutta, more than three millions
sterling; notwithstanding that they had afterwards extended, either
their dominion, or their depredations over a vast accession of some
of the richest and most fertile countries in India; all was wasted
and destroyed. They found themselves altogether unprepared to
stop or resist the incursion of Hyder Ali; and, in consequence of
those disorders, the company is now (1784) in greater distress than
ever; and, in order to prevent immediate bankruptcy, is once more
reduced to supplicate the assistance of government. Different plans
have been proposed by the different parties in parliament, for the
better management of its affairs. And all those plans seem to agree
in supposing, what was indeed always abundantly evident, that it
is altogether unfit to govern its territorial possessions. Even the
company itself seems to be convinced of its own incapacity so far,
House of Commons Journals, April 27, 1773.
^°®The spelling in other parts of the work is “neat.” The Additions and
Corrections read “nett” both here and five lines above. The discrepancy was
obviously noticed in one case and not in the other.
which are
not likely
to be of
service.
They tend
to en-
courage
waste,
and the
company
is now in
greater
distress
than
ever.
Com-
panies
misuse the
right of
making
peace and
war.
The grant
of a tem-
porary
monopoly
to a
joint
stock
com-
pany may
sometimes
be rea-
sonable,
but a per-
petual
monopoly
creates an
absurd
tax.
712 the wealth of nations
and seems, upon that account, willing to give them up to govern-
ment.
With the right of possessing forts and garrisons in distant and
barbarous countries, is necessarily connected the right of making
peace and war in those countries. The joint stock companies which
have had the one right, have constantly exercised the other, and
have frequently had it expressly conferred upon them. How unjust-
ly, how capriciously, how cruelly they have commonly exercised it,
is too well known from recent experience.
When a company of merchants undertake, at their own risk and
expence, to establish a new trade with some remote and barbarous
nation, it may not be unreasonable to incorporate them into a joint
stock company, and to grant them, in case of their success, a mo-
nopoly of the trade for a certain number of years. It is the easiest
and most natural way in which the state can recompense them for
hazarding a dangerous and expensive experiment, of which the pub-
lic is afterwards to reap the benefit. A temporary monopoly of this
kind may be vindicated upon the same principles upon which a like
monopoly of a new machine is granted to its inventor, and that of a
new book to its author. But upon the expiration of the term, the
monopoly ought certainly to determine; the forts and garrisons, if
it was found necessary to establish any, to be taken into the hands
of government, their value to be paid to the company, and the trade
to be laid open to all the subjects of the state. By a perpetual mo-
nopoly, all the other subjects of the state are taxed very absurdly
in two different ways; first, by the high price of goods, which, in the
case of a free trade, they could buy much cheaper; and, secondly,
by their total exclusion from a branch of business, which it might
be both convenient and profitable for many of them to carry on. It
is for the most worthless of all purposes too that they are taxed in
this manner. It is merely to enable the company to support the neg-
ligence, profusion, and malversation of their own servants, whose
disorderly conduct seldom allows the dividend of the company to
exceed the ordinary rate of profit in trades which are altogether
free, and very frequently makes it fall even a good deal short of that
rate. Without a monopoly, however, a joint stock company, it
would appear from experience, cannot long carry on any branch of
foreign trade. To buy in one market, in order to sell, with profit, in
another, when there are many competitors in both; to watch over,
not only the occasional variations in the demand, but the much
greater and more frequent variations in the competition, or in the
supply which that demand is likely to get from other people, and to
suit with dexterity and judgment both the quantity and quality of
PARTICULAR BRANCHES OF COMMERCE 7 i 3
each assortment of goods to all these circumstances, is a species of
warfare of which the operations are continually changing, and
which can scarce ever be conducted successfully, without such an
unremitting exertion of vigilance and attention, as cannot long be
expected from the directors of a joint stock company. The East In-
dia Company, upon the redemption of their funds, and the expira-
tion of their exclusive privilege, have a right, by act of parliament,
to continue a corporation with a joint stock, and to trade in their
corporate capacity to the East Indies in common with the rest of
their fellow-subjects. But in this situation, the superior vigilance
and attention of private adventurers would, in all probability, soon
make them weary of the trade.
An eminent French author, of great knowledge in matters of po-
litical (economy, the Abbe Morellet, gives a list of fifty-five joint
stock companies for foreign trade, which have been established in
different parts of Europe since the year 1600, and which, according
to him, have all failed from mismanagement, notwithstanding they
had exclusive privileges.^^^ He has been misinformed with regard to
the history of two or three of them, which were not joint stock com-
panies and have not failed. But, in compensation, there have been
several joint stock companies which have failed, and which he has
omitted.
The only trades which it seems possible for a joint stock company
to carry on successfully, without an exclusive privilege, are those, of
which all the (derations are capable of being reduced to what is
called a routine, or to such a uniformity of method as admits of
little or no variation. Of this kind is, first, the banking trade; sec-
ondly, the trade of insurance from fire, and from sea risk and cap-
ture in time of war; thirdly, the trade of making and maintaining a
navigable cut or canal; and, fourthly, the similar trade of bringing
water for the supply of a great city.
Though the principles of the banking trade may appear some-
what abstruse, the practice is capable of being reduced to strict
rules. To depart upon any occasion from those rules, in consequence
of some flattering speculation of extraordinary gain, is almost al-
ways extremely dangerous, and frequently fatal to the banking
company which attempts it. But the constitution of joint stock
companies renders them in general more tenacious of established
rules than any private copartnery. Such companies, therefore, seem
extremely well fitted for this trade. The principal banking compa-
^^^Examen de la reponse de M* [Necker] an Memoire de M, VAhhe
Morellet, sur la Compagnie des Indes: par V auteur du Mimoire, 1769) PP*
35-38.
A list of
fifty-five
com-
panies
with e\-
clusive
privileges
for
foreign
trade
which
have
failed has
been col-
lected by
Abbe
Morellet
Only four
trades
can be
well Gai-
ned on
by a com-
pany with
no exclu-
sive privi-
lege,
namely,
banking,
insurance,
canal and
aqueduct
manage-
ment and
construc-
tion.
A joint
stock
company
ought not
to be
estab-
lished
except for
some pur-
pose of
remark-
able util-
ity, re-
quiring a
larger
capital
than can
be pro-
vided by
a private
partner-
ship.
714 THE WEALTH OF NATIONS
nies in Europe, accordingly, are joint stock companies, many of
which manage their trade very successfully without any exclusive
privilege. The Bank of England has no other exclusive privilege, ex-
cept that no other banking company in England shall consist of
more than six persons.^®- The two banks of Edinburgh are joint
stock companies without any exclusive privilege.
The value of the risk, either from fire, or from loss by sea, or by
capture, though it cannot, perhaps, be calculated very exactly, ad-
mits, however, of such a gross estimation as renders it, in some de-
gree, reducible to strict rule and method. The trade of insurance,
therefore, may be carried on successfully by a joint stock company,
without any exclusive privilege. Neither the London Assurance, nor
the Royal Exchange Assurance companies, have any such pri-
vilege.^®^
When a navigable cut or canal has been once made, the manage-
ment of it becomes quite simple and easy, and is reducible to
strict rule and method. Even the making of it is so, as it may be
contracted for with undertakers at so much a mile, and so much a
lock. The same thing may be said of a canal, an aqueduct, or a great
pipe for bringing water to supply a great city. Such undertakings,
therefore, may be, and accordingly frequently are, very successfully
managed by joint stock companies wthout any exclusive privilege.
To establish a joint stock company, however, for any undertak-
ing, merely because such a company might be capable of managing
it successfully; or to exempt a particular set of dealers from some
of the general laws which take place with regard to all their neigh-
bours, merely because they might be capable of thriving if they had
such an exemption, would certainly not be reasonable. To render
such an establishment perfectly reasonable, with the circumstance
of being reducible to strict rule and method, two other circum-
stances ought to concur. First, it ought to appear with the clearest
evidence, that the undertaking is of greater and more general util-
ity than the greater part of common trades; and secondly, that it
requires a greater capital than can easily be collected into a private
copartnery. If a moderate capital were sufficient, the great util-
ity of the undertaking would not be a sufficient reason for estab-
lishing a joint stock company; because, in this case, the demand
for what it was to produce, would readily and easily be supplied by
Ann., c. 22.
^^At least as against private persons, Anderson, Commerce, aj). 1720.
Eds. 4 and 5 insert “it” here, by a misprint.
Additions and Corrections and ed. 3 read “was.”
PARTICULAR BRANCHES OF COMMERCE 7^5
private adventurers. In the four trades above mentioned, both those
circumstances concur.
The great and general utility of the banking trade when pru- These
dently managed, has been fully explained in the second book of this are
inquiry But a public bank which is to support public credit, and fulfilled
upon particular emergencies to advance to government the whole by bank-
produce of a tax, to the amount, perhaps, of several millions, a year
or two before it comes in, requires a greater capital than can easily
be collected into any private copartnery.
The trade of insurance,gives great security to the fortunes of pri- insurance,
vate people, and by dividing among a great many that loss which
would ruin an individual, makes it fall light and easy upon the
whole society. In order to give this security, however, it is necessary
that the insurers should have a very large capital. Before the estab-
lishment of the two joint stock companies for insurance in London,
a list, it is said, was laid before the attorney-general, of one hundred
and fifty private insurers who had failed in the course of a few
years.
That navigable cuts and canals, and the works which are some- canals
times necessary for supplying a great city with water, are of great
and general utility; while at the same time they frequently require
a greater expence than suits the fortunes of private people, is suf-
ficiently obvious.
Except the four trades above mentioned, I have not been able to but not
recollect any other in which all the three circumstances, requisite
for rendering reasonable the establishment of a joint stock com-
pany, concur. The English copper company of London, the lead
smelting company, the glass grinding company, have not even the
pretext of any great or singular utility in the object which they pur-
sue; nor does the pursuit of that object seem to require any ex-
pence unsuitable to the fortunes of many private men. Whether the
trade which those companies carry on, is reducible to such strict
rule and method as to render it fit for the management of a joint
stock company, or whether they have any reason to boast of their
extraordinary profits, I do not pretend to know. The mine-adven-
turers company has been long ago bankrupt.^®’' A share in the stock
of the British Linen Company of Edinburgh sells, at present, very
much below par, though less so than it did some years ago. The
joint stock companies, which are established for the public-spirited
purpose of promoting some particular manufacture, over and above
Above, pp. 277-284.
Anderson, Commerce, a.d. 1690, 1704, 1710, 1711.
THE WEALTH OF NATIONS
71G
managing their own affairs ill, to the diminution of the general stock
of the society, can in other respects scarce ever fail to do more harm
than good. Notwithstanding the most upright intentions, the un-
avoidable partiality of their directors to particular branches of the
manufacture, of which the undertakers mislead and impose upon
them, is a real discouragement to the rest, and necessarily breaks,
more or less, that natural proportion which would otherwise estab-
lish itself between judicious industry and profit, and which, to the
general industry of the country, is of all encouragements the great-
est and the most effectual.^®®
Article II
Institu-
tions for
education
may also
be made
to furnish
their own
expense,
or may
be en-
dowed.
Have en-
dowments
really
promoted
useful
educa-
tion?
Of the Expence of the Institutions for the Education of Youth
The institutions for the education of the youth may, in the same
manner, furnish a revenue sufficient for defraying their own ex-
pence. The fee or honorary which the scholar pays to the master
naturally constitutes a revenue of this kind.
Even where the reward of the master does not arise altogether
from this natural revenue, it still is not necessary that it should be
derived from that general revenue of the society, of which the col-
lection and application are,^^® in most countries, assigned to the
executive power. Through the greater part of Europe, accordingly,
the endowment of schools and colleges makes either no charge upon
that general revenue, or but a very small one. It every where arises
chiefly from some local or provincial revenue, from the rent of
some landed estate, or from the interest of some sum of money al-
lotted and put under the management of trustees for this particular
purpose, sometimes by the sovereign himself, and sometimes by
some private donor.
Have those public endowments contributed in general to pro-
mote the end of their institution? Have they contributed to en-
courage the diligence, and to improve the abilities of the teachers?
Have they directed the course of education towards objects more
useful, both to the individual and to the public, than those to which
it would naturally have gone of its own accord? It should not seem
very difficult to give at least a probable answer to each of those
questions.
^°® This section, beginning on p. 690, appears first in Additions and Cor-
rections and ed. 3.
To SI* ^ in the first line of the text.
'“Eds. 1-4 read “is.”
EDUCATION OF YOUTH 71 ?
In every profession, the exertion of the greater part of those who
exercise it, is always in proportion to the necessity they are under
of making that exertion. This necessity is greatest with those to
whom the emoluments of their profession are the only source from
which they expect their fortune, or even their ordinary revenue and
subsistence. In order to acquire this fortune, or even to get this
subsistence, they must, in the course of a year,^^^ execute a certain
quantity of work of a known value; and, where the competition is
free, the rivalship of competitors, who are all endeavouring to jus-
tie one another out of employment, obliges every man to endeavour
to execute his work with a certain degree of exactness. The great-
ness of the objects which are to be acquired by success in some
particular professions may, no doubt, sometimes animate the exer-
tion of a few men of extraordinary spirit and ambition. Great ob-
jects, however, are evidently not necessary in order to occasion the
greatest exertions. Rivalship and emulation render excellency, even
in mean professions, an object of ambition, and frequently occa-
sion the very greatest exertions. Great objects, on the contrary,
alone and unsupported by the necessity of application, have seldom
been sufficient to occasion any considerable exertion. In England,
success in the profession of the law leads to some very great ob-
jects of ambition; and yet how few men, born to easy fortunes,
have ever in this country been eminent in that profession?
The endowments of schools and colleges have necessarily dimin-
ished more or less the necessity of application in the teachers. Their
subsistence, so far as it arises from their salaries, is evidently de-
rived from a fund altogether independent of their success and rep-
utation in their particular professions.
. In some universities the salary makes but a part, and frequently
but a small part of the emoluments of the teacher, of which the
greater part arises from the honoraries or fees of his pupils. The
necessity of application, though always more or less diminished, is
not in this case entirely taken away.^^^ Reputation in his profession
is still of some importance to him, and he still has some dependency
upon the affection, gratitude, and favourable report of those who
have attended upon his instructions; and these favourable senti-
ments he is likely to gain in no way so well as by deserving them,
that is, by the abilities and diligence with which he discharges ev-
ery part of his duty.
In other universities the teacher is prohibited from receiving any
^Ed. I reads “the year.”
^Rae, Life of Adam Smithy p. 48, thinks Smith’s salary at Glasgow may
have been about £70 with a house, and his fees near £100.
Exertion
is always
in pro-
portion
to its
necessity.
Endow-
ments
diminiRh
the neces-
sity of
applica-
tion,
which is
not en-
tirely re-
moved
where the
teacher
receives
part of
his
emolu-
ments
from fees,
but is en-
tirely ab-
sent when
his whole
revenue
arises
from en-
dow-
ments.
Members
of a col-
lege or
university
are in-
dulgent
to their
fellow
members.
External
control is
ignorant
and capri-
cious.
718 THE WEALTH OF NATIONS
honorary or fee from his pupils, and his salary constitutes the whole
of the revenue which he derives from his office. His interest is, in
this case, set as directly in opposition to his duty as it is possible to
set it. It is the interest of every man to live as much at his ease as
he can; and if his emoluments are to be precisely the same, whether
he does, or does not perform some very laborious duty, it is certain-
ly his interest, at least as interest is vulgarly understood, either to
neglect it altogether, or, if he is subject to some authority which
will not suffer him to do this, to perform it in as careless and slov-
enly a manner as that authority will permit. If he is naturally ac-
tive and a lover of labour, it is his interest to employ that activity
in any way, from which he can derive some advantage, rather than
in the performance of his duty, from which he can derive none.
If the authority to which he is subject resides in the body cor-
porate, the college, or university, of which he himself is a member,
and in which the greater part of the other members are, like him-
self, persons who either are, or ought to be teachers; they are likely
to make a common cause, to be all very indulgent to one another,
and every man to consent that his neighbour may neglect his duty,
provided he himself is allowed to neglect his own. In the university
of Oxford, the greater part of the public professors have, for these
many years, given up altogether even the pretence of teaching.
If the authority to which he is subject resides, not so much in the
body corporate of which he is a member, as in some other extrane-
ous persons, in the bishop of the diocese for example; in the gov-
ernor of the province; or, perhaps, in some minister of state; it is
not indeed in this case very likely that he will be suffered to neglect
his duty altogether. All that such superiors, however, can force him
to do, is to attend upon his pupils a certain number of hours, th^t
is, to give a certain number of lectures in the week or in the year.
What those lectures shall be, must still depend upon the diligence
of the teacher; and that diligence is likely to be proportioned to the
motives which he has for exerting it. An extraneous jurisdiction of
this kind, besides, is liable to be exercised both ignorantly and ca-
priciously. In its nature it is arbitrary and discretionary, and the
persons who exercise it, neither attending upon the lectures of the
teacher themselves, nor perhaps understanding the sciences which
it is his business to teach, are seldom capable of exercising it with
judgment. From the insolence of office too they are frequently in-
different how they exercise it, and are very apt to censure or de-
prive him of his office wantonly, and without any just cause. The
person subject to such jurisdiction is necessarily degraded by it,
and, instead of being one of the most respectable, is rendered one of
719
EDUCATION OF YOUTH
the meanest and most contemptible persons in the society. It is by
powerful protection only that he can effectually guard himself
against the bad usage to which he is at all times exposed; and this
protection he is most likely to gain, not by ability or diligence in
his profession, but by obsequiousness to the will of his superiors,
and by being ready, at all times, to sacrifice to that will the rights,
the interest, and the honour of the body corporate of which he is a
member. Whoever has attended for any considerable time to the
administration of a French university, must have had occasion to
remark the effects which naturally result from an arbitrary and ex-
traneous jurisdiction of this kind.
Whatever forces a certain number of students to any college or
university, independent of the merit or reputation of the teachers,
tends more or less to diminish the necessity of that merit or repu-
tation.
The privileges of graduates in arts, in law, physic and divin-
ity, when they can be obtained only by residing a certain number
of years in certain universities, necessarily force a certain number
of students to such universities, independent of the merit or repu-
tation of the teachers. The privileges of graduates are a sort of
statutes of apprenticeship, which have contributed to the improve-
ment of education, just as the^^^ other statutes of apprenticeship
have to that of arts and manufactures.
The charitable foundations of scholarships, exhibitions, bursa-
ries, &c. necessarily attach a certain number of students to certain
colleges, independent altogether of the merit of those particular
colleges. Were the students upon such charitable foundations left
free to chuse what college they liked best, such liberty might per-
haps contribute to excite some emulation among different colleges.
A regulation, on the contrary, which prohibited even the independ-
ent members of every particular college from leaving it, and going
to any other, without leave first asked and obtained of that which
they meant to abandon, would tend very much to extinguish that
emulation.
If in each college the tutor or teacher, who was to instruct each
student in all arts and sciences, should not be voluntarily chosen by
the student, but appointed by the head of the college; and if, in
case of neglect, inability, or bad usage, the student should not be
allowed to change him for another, without leave first asked and
obtained; such a regulation would not only tend very much to ex-
tinguish all emulation among the different tutors of the same col-
lege, but to diminish very much in all of them the necessity of dili-
“®Eds. I and 2 read “in physic.” ^‘Ed. i does not contain “the.”
To com-
pel young
men to
attend a
univer-
sity has a
bad ef-
fect on
the
teachers.
The privi-
leges of
gradu-
ates are
thus like
appren-
ticeship.
Scholar-
ships,
regula-
tions
against
migra-
tion,
and as-
signment
of stu-
dents to
particular
tutors are
equally
perni-
cious.
Where
such
regula-
tions pre-
vail a
teacher
may
avoid or
suppress
all visible
signs of
dikppro-
bation on
the part
of his
pupils.
Univer-
sity and
college
discipline
is con-
trived for
the ease
of the
teachers,
and quite
unneces-
sary if the
teachers
are toler-
ably dili-
gent.
720 the wealth of nations
gence and of attention to their respective pupils. Such teachers,
though very well paid by their students, might be as much disposed
to neglect them, as those who are not paid by them at all, or who
have no other recompence but their salary.
If the teacher happens to be a man of sense, it must be an un-
pleasant thing to him to be conscious, while he is lecturing his stu-
dents, that he is either speaking or reading nonsense, or what is
very little better than nonsense. It must too be unpleasant to him
to observe that the greater part of his students desert his lectures;
or perhaps attend upon them with plain enough marks of neglect,
contempt, and derision. If he is obliged, therefore, to give a certain
number of lectures, these motives alone, without any other inter-
est, might dispose him to take some pains to give tolerably good
ones. Several different expedients, however may be fallen upon,
which will effectually blunt the edge of all those incitements to dil-
igence. The teacher, instead of explaining to his pupils himself the
science in which he proposes to instruct them, may read some book
upon it; and if this book is written in a foreign and dead language,
by interpreting it to them into their own; or, what would give him
still less trouble, by making them interpret it to him, and by now
and then making an occasional remark upon it, he may flatter him-
self that he is giving a lecture. The slightest degree of knowledge
and application will enable him to do this, without exposing him-
self to contempt or derision, or saying any thing th^-t is really fool-
ish, absurd, or ridiculous. The discipline of the college, at the same
time, may enable him to force all his pupils to the most regular at-
tendance upon this sham-lecture, and to maintain the most decent
and respectful behaviour during the whole time of the perform-
ance.
The discipline of colleges and universities is in general contrived,
not for the benefit of the students, but for the interest, or more
properly speaking, for the ease of the masters. Its object is, in all
cases, to maintain the authority of the master, and whether he neg-
lects or performs his duty, to oblige the students in all cases to be-
have to him as if he performed it with the greatest diligence and
ability. It seems to presume perfect wisdom and virtue in the one
order, and the greatest weakness and folly in the other. Where the
masters, however, really perform their duty, there are no examples,
I believe, that the greater part of the students ever neglect theirs.
No discipline is ever requisite to force attendance upon lectures
which are really worth the attending, as is well known wherever
any such lectures are given. Force and restraint may, no doubt, be
in some degree requisite in order to oblige children, or very young
EDUCATION OF YOUTH 721
boys, to attend to those parts of education which it is thought nec-
essary for them to acquire during that early period of life; but
after twelve or thirteen years of age, provided the master does his
duty, force or restraint can scarce ever be necessary to carry on any
part of education. Such is the generosity of the greater part of
young men, that, so far from being disposed to neglect or despise
the instructions of their master, provided he shows some serious
intention of being of use to them, they are generally inclined to
pardon a great deal of incorrectness in the performance of his duty,
and sometimes even to conceal from the public a good deal of gross
negligence.
Those parts of education, it is to be observed, for the teaching of
which there are no public institutions, are generally the best taught.
When a young man goes to a fencing or a dancing school, he does
not indeed always learn to fence or to dance very well; but he sel-
dom fails of learning to fence or to dance. The good effects of the
riding school are not commonly so evident. The expence of a riding
school is so great, that in most places it is a public institution. The
three most essential parts of literary education, to read, write, and
account, it still continues to be more common to acquire in private
than in public schools; and it very seldom happens that any body
fails of acquiring them to the degree m which it is necessary to ac-
quire them.
In England the public schools are much less corrupted than the
universities. In the schools the youth are taught, or at least may be
taught, Greek and Latm; that is, every thing which the masters
pretend to teach, or which, it is expected they should teach. In the
universities the youth neither are taught, nor always can find any
proper means of being taught, the sciences, which it is the business
of those incorporated bodies to teach. The reward of the school-
master in most cases depends principally, in some cases almost en-
tirely, upon the fees or honoraries of his scholars. Schools have no
exclusive privileges. In order to obtain the honours of graduation,
it is not necessary that a person should bring a certificate of his
having studied a certain number of years at a public school. If up-
on examination he appears to understand what is taught there, no
questions are asked about the place where he learnt it.
The parts of education which are commonly taught in universi-
ties, it may, perhaps, be said are not very well taught. But had it
not been for those institutions they would not have been commonly
taught at all, and both the individual and the public would have
suffered a good deal from the want of those important parts of ed-
ucation.
I he parts
of educa-
tion that
are not
conducted
by public
institu-
tions are
better
taught.
English
public
schools,
where the
teachers
depend
more
upon fees,
are less
corrupt
than the
universi-
ties.
What the
universi-
ties teach
badly
would
not be
common-
ly taught
at all but
for them.
They
were
originally
instituted
for the
education
of
church-
men in
theology ;
for this
Latin
was
necessary,
but not
Greek or
Hebrew,
which
were in-
troduced
by the
Reforma-
tion.
722 the wealth of nations
The present universities of Europe were originally, the greater
part of them, ecclesiastical corporations; instituted for the educa-
tion of churchmen. They were founded by the authority of the
pope, and were so entirely under his immediate protection, that
their members, whether masters or students, had all of them what
was then called the benefit of clergy, that is, were exempted from
the civil jurisdiction of the countries in which their respective uni-
versities were situated, and were amenable only to the ecclesiastical
tribunals. What was taught in the greater part of those universities
was suitable to the end of their institution, either theology, or
something that was merely preparatory to theology.
When Christianity was first established by law, a corrupted Latin
had become the common language of all the western parts of Eu-
rope. The service of the church accordingly, and the translation of
the Bible which was read in churches, were both in that corrupted
Latin; that is, in the common language of the country. After the
irruption of the barbarous nations who overturned the Roman em-
pire, Latin gradually ceased to be the language of any part of Eu-
rope. But the reverence of the people naturally preserves the es-
tablished forms and ceremonies of religion, long after the circum-
stances which first introduced and rendered them reasonable are no
more. Though Latin, therefore, was no longer understood any
where by the great body of the people, the whole service of the
church still continued to be performed in that language. Two dif-
ferent languages were thus established in Europe, in the same man-
ner as in ancient Egypt; a language of the priests, and a language
of the people; a sacred and a profane; a learned and an unlearned
language. But it was necessary that the priests should understand
something of that sacred and learned language in which they were
to officiate; and the study of the Latin language therefore made,
from the beginning, an essential part of university education.
It was not so with that either of the Greek, or of the Hebrew
language. The infallible decrees of the church had pronounced the
Latin translation of the Bible, commonly called the Latin Vulgate,
to have been equally dictated by divine inspiration, and therefore
of equal authority with the Greek and Hebrew originals. The
knowledge of those two languages, therefore, not being indispen-
sably requisite to a churchman, the study of them did not for a long
time make a necessary part of the common course of university ed-
ucation. There are some Spanish universities, I am assured, in
which the study of the Greek language has never yet made any part
of that course. The first reformers found the Greek text of the new
testament, and even the Hebrew text of the old, more favourable
EDUCATION OF YOUTH 7^3
to their opinions, than the vulgate translation, which, as might
naturally be supposed, had been gradually accommodated to sup-
port the doctrines of the catholic church. They set themselves,
therefore, to expose the many errors of that translation, which the
Roman catholic clergy were thus put under the necessity of defend-
ing or explaining. But this could not well be done without some
knowledge of the original languages, of which the study was there-
fore gradually introduced into the greater part of universities; both
of those which embraced, and of those which rejected, the doctrines
of the reformation. The Greek language was connected with every
part of that classical learning, which, though at first principally
cultivated by catholics and Italians, happened to come into fashion
much about the same time that the doctrines of the reformation
were set on foot. In the greater part of universities, therefore, that
language was taught previous to the study of philosophy, and as
soon as the student had made some progress in the Latin. The He-
brew language having no connection with classical learning, and,
except the holy scriptures, being the language of not a single book
in any esteem, the study of it did not commonly commence till after
that of philosophy, and when the student had entered upon the
study of theology.
Originally the first rudiments both of the Greek and Latin lan-
guages were taught in universities, and in some universities they
still continue to be so.^^^ In others it is expected that the student
should have previously acquired at least the rudiments of one or
both of those languages, of which the study continues to make ev-
ery where a very considerable part of university education.
The ancient Greek philosophy was divided into three great
branches; physics, or natural philosophy; ethics, or moral philos-
ophy; and logic. This general division seems perfectly agreeable to
the nature of things.
The great phenomena of nature, the revolutions of the heavenly
bodies, eclipses, comets; thunder, lightning, and other extraordi-
nary meteors; the generation, the life, growth, and dissolution of
plants and animals; are objects which, as they necessarily excite
the wonder, so they naturally call forth the curiosity, of man-
kind to enquire into their causes. Superstition first attempted to
satisfy this curiosity, by referring all those wonderful appearances
to the immediate agency of the gods. Philosophy afterwards en-
deavoured to account for them, from more familiar causes, or from
such as mankind were better acquainted with, than the agency of
Ed. I reads “and they still continue to be so in some univer'^itie^ ”
“Necessarily” and “naturally” are transposed in ed. i.
Greek
and Latin
continue
to be a
consider-
able part
of uni-
versity
education.
There are
three
branches
of Greek
philoso-
phy,
(i)phys-
icsor
natural
philoso-
phy,
(2) ethics
or moral
philoso-
phy,
and (3)
logic.
724 THE WEALTH OF NATIONS
the gods. As those great phenomena are the first objects of human
curiosity, so the science which pretends to explain them must nat-
urally have been the first branch of philosophy that was cultivated.
The first philosophers, accordingly, of whom history has preserved
any account, appear to have been natural philosophers.
In every age and country of the world men must have attended
to the characters, designs, and actions of one another, and many
reputable rules and maxims for the conduct of human life, must
have been laid down and approved of by common consent. As soon
as writing came into fashion, wise men, or those who fancied them-
selves such, would naturally endeavour to increase the number of
those established and respected maxims, and to express their own
sense of what was either proper or improper conduct, sometimes in
the more artificial form of apologues, like what are called the fables
of uEsop; and sometimes in the more simple one of apophthegms,
or wise sayings, like the Proverbs of Solomon, the verses of Theog-
nis and Phocyllides, and some part of the works of Hesiod. They
might continue in this manner for a long time merely to multiply
the number of those maxims of prudence and morality, without
even attempting to arrange them in any very distinct or methodi-
cal order, much less to connect them together by one or more gen-
eral principles, from which they were all deducible, like effects
from their natural causes. The beauty of a systematical arrange-
ment of different observations connected by a few common princi-
ples, was first seen in the rude essays of those ancient times towards
a system of natural philosophy. Something of the same kind was
afterwards attempted in morals. The maxims of common life were
arranged in some methodical order, and connected together by a
few common principles, in the same manner as they had attempted
to arrange and connect the phenomena of nature. The science which
pretends to investigate and explain those connecting principles, is
what is properly called moral philosophy.
Different authors gave different systems both of natural and
moral philosophy. But the arguments by which they supported
those different systems, far from being always demonstrations,
were frequently at best but very slender probabilities, and some-
times mere sophisms, which had no other foundation but the inac-
curacy and ambiguity of common language. Speculative systems
have in all ages of the world been adopted for reasons too frivolous
to have determined the judgment of any man of common sense, in
a matter of the smallest pecuniary interest. Gross sophistry has
scarce ever had any influence upon the opinions of mankind, ex-
cept in matters of philosophy and speculation; and in these it has
EDUCATION OE YOUTH
7-5
frequently had the greatest. The patrons of each system of natural
and moral philosophy naturally endeavoured to expose the weak-
ness of the arguments adduced to support the systems which were
opposite to their own. In examining those arguments, they were
necessarily led to consider the difference between a probable and a
demonstrative argument, between a fallacious and a conclusive
one; and Logic, or the science of the general principles of good and
bad reasoning, necessarily arose out of the observations which a
scrutiny of this kind gave occasion to. Though in its origin, poste-
rior both to physics and to ethics, it was commonly taught, not in-
deed in all, but in the greater part of the ancient schools of philos-
ophy, previously to either of those sciences. The student, it seems
to have been thought, ought to understand well the difference be-
tween good and bad reasoning, before he was led to reason upon
subjects of so great importance.
This ancient division of philosophy into three parts was in the
greater part of the universities of Europe, changed for another into
five.
In the ancient philosophy, whatever was taught concerning the
nature either of the human mind or of the Deity, made a part of
the system of physics. Those beings, in whatever their essence
might be supposed to consist, were parts of the great system of the
universe, and parts too productive of the most important effects.
Whatever human reason could either conclude, or conjecture, con-
cerning them, made, as it were, two chapters, though no doubt two
very important ones, of the science which pretended to give an ac-
count of the origin and revolutions of the great system of the uni-
verse. But in the universities of Europe, where philosophy was
taught only as subservient to theology, it was natural to dwell
longer upon these two chapters than upon any other of the sci-
ence. They were gradually more and more extended, and were
divided into many inferior chapters, till at last the doctrine of spir-
its, of which so little can be known, came to take up as much room
in the system of philosophy as the doctrine of bodies, of which so
much can be known. The doctrines concerning those two subjects
were considered as making two distinct sciences. What are called
Metaphysics or Pneumatics were set in opposition to Physics, and
were cultivated not only as the more sublime, but, for the pur-
poses of a particular profession, as the more useful science of the
two. The proper subject of experiment and observation, a subject
Ed. I reads “those.” ^ Ed. i reads “Those two chapters were.”
Ed. I reads, “What was called Metaphysics or Pneumatics was set in
opposition to Physics, and was cultivated.”
Philoso-
phy was
after-
wards di-
vided
into five
branches,
Meta-
physics
or pneu-
matics
were add-
ed to
physics,
and gave
rise to
Ontology’.
Moral
philoso-
phy de-
generated
into casu-
istry and
an ascetic
morality,
the order
being (i)
logic, (2)
ontology,
(3) Pneu-
matology,
(4) a de-
based
moral
philoso-
726 the wealth of nations
in which a careful attention is capable of making so many useful
discoveries, was almost entirely neglected. The subject in which,
after a few very simple and almost obvious truths, the most care-
ful attention can discover nothing but obscurity and uncertainty,
and can consequently produce nothing but subtleties and sophisms,
was greatly cultivated.
When those two sciences had thus been set in opposition to one
another, the comparison between them naturally gave birth to a
third, to what was called Ontology, or the science which treated of
the qualities and attributes which were common to both the sub-
jects of the other two sciences. But if subtleties and sophisms com-
posed the greater part of the Metaphysics or Pneumatics of the
schools, they composed the whole of this cobweb science of Ontol-
ogy, which was likewise sometimes called Metaphysics.
Wherein consisted the happiness and perfection of a man, consid-
ered not only as an individual, but as the member of a family, of a
state, and of the great society of mankind, was the object which the
ancient moral philosophy proposed to investigate. In that philos-
ophy the duties of human life were treated of as subservient to the
happiness and perfection of human life. But when moral, as well as
natural philosophy, came to be taught only as subservient to the-
ology, the duties of human life were treated of as chiefly subservient
to the happiness of a life to come. In the ancient philosophy the
perfection of virtue was represented as necessarily productive, to
the person who possessed it, of the most perfect happiness in this
life. In the modern philosophy it was frequently represented as gen-
erally, or rather as almost always inconsistent with any degree of
happiness in this life ; and heaven was to be earned only by penance
and mortification, by the austerities and abasement of a monk; not
by the liberal, generous, and spirited conduct of a man. Casuistry
and an ascetic morality made up, in most cases, the greater part of
the moral philosophy of the schools. By far the most important of
all the different branches of philosophy, became in this manner by
far the most corrupted.
Such, therefore, was the common course of philosophical educa-
tion in the greater part of the universities in Europe. Logic was
taught first: Ontology came in the second place: Pneumatology,
comprehending the doctrine concerning the nature of the human
soul and of the Deity, in the third: In the fourth followed a debased
system of moral philosophy, which was considered as immediately
connected with the doctrines of Pneumatology, with the immortal-
ity of the human soul, and with the rewards and punishments which,
^Ed. I reads “of.”
EDUCATION OF YOUTH m
from the justice of the Deity, were to be expected in a life to come:
A short and superficial system of Physics usually concluded the
course.
The alterations which the universities of Europe thus introduced
into the ancient course of philosophy, were all meant for the educa-
tion of ecclesiastics, and to render it a more proper introduction to
the study of theology. But the additional quantity of subtlety and
sophistry; the casuistry and the ascetic morality which those alter-
ations introduced into it, certainly did not render it more proper
for the education of gentlemen or men of the world, or more likely
either to improve the understanding, or to mend the heart.
This course of philosophy is what still continues to be taught in
the greater part of the universities of Europe; with more or less dili-
gence, according as the constitution of each particular university
happens to render diligence more or less necessary to the teachers.
In some of the richest and best endowed universities, the tutors con-
tent themselves with teaching a few unconnected shreds and parcels
of this corrupted course; and even these they commonly teach very
negligently and superficially.
The improvements which, in modern times, have been made in
several different branches of philosophy, have not, the greater part
of them, been made in universities; though some no doubt have.
The greater part of universities have not even been very forward to
adopt those improvements, after they were made; and several of
those learned societies have chosen to remain, for a long time, the
sanctuaries in which exploded systems and obsolete prejudices
found shelter and protection, after they had been hunted out of
every other corner of the world. In general, the richest and best en-
dowed universities have been tl;e slowest in adopting those improve-
ments, and the most averse to permit any considerable change in
the established plan of education. Those improvements were more
easily introduced into some of the poorer universities, in which the
teachers, depending upon their reputation for the greater part of
their subsistence, were obliged to pay more attention to the current
opinions of the world.^^^
But though the public schools and universities of Europe were
originally intended only for the education of a particular profes-
sion, that of churchmen; and though they were not always very
diligent in instructing their pupils even in the sciences which were
supposed necessary for that profession, yet they gradually drew to
themselves the education of almost all other people, particularly of
almost all gentlemen and men of fortune. No better method, it
“^Above^ p. 717.
phy, (5)
physics.
Univei-
sity edu-
cation
was thus
made less
likely to
produce
men of
the
world.
This
course is
still
taught in
most uni-
versities
with more
or less
diligence.
Few im-
prove-
ments in
philoso-
phy havfr
been
made by
univer-
sities, and
fewest by
the rich-
est uni-
versities
In spite
of all this
the uni-
versities
drew to
them-
selves the
education
of gentle-
men and
men of
fortune,
but in
England
it is be-
coming
more
usual to
send
young
men to
travel
abroad, a
plan so
absurd
that no-
thing but
the ds-
credit of
the uni-
versities
could
have
brought
it into
repute.
In Greece
the state
directed
education
in gym-
nastics
728 the wealth of nations
seems, could be fallen upon of spending, with any advantage, the
long interval between infancy and that period of life at which men
begin to apply in good earnest to the real business of the world, the
business which is to employ them during the remainder of their
days. The greater part of what is taught in schools and universi-
ties, however, does not seem to be the most proper preparation for
that business.
In England, it becomes every day more and more the custom to
send young people to travel in foreign countries immediately upon
their leaving school, and without sending them to any university.
Our young people, it is said, generally return home much improved
by their travels. A young man who goes abroad at seventeen or
eighteen, and returns home at one and twenty, returns three or four
years older than he was when he went abroad; and at that age it is
very difficult not to improve a good deal in three or four years. In
the course of his travels, he generally acquires some knowledge of
one or two foreign languages; a knowledge, however, which is sel-
dom sufficient to enable him either to speak or write them with pro-
priety. In other respects, he commonly returns home more con-
ceited, more unprincipled, more dissipated, and more incapable of
any serious application either to study or to business, than he could
well have become in so short a time, had he lived at home. By
travelling so very young, by spending in the most frivolous dissipa-
tion the most precious years of his life, at a distance from the in-
spection and controul of his parents and relations, every useful hab-
it, which the earlier parts of his education might have had some ten-
dency to form in him, instead of being rivetted and confirmed, is
almost necessarily either weakened or effaced. Nothing but the dis-
credit into which the universities are allowing themselves to fall,
could ever have brought into repute so very absurd a practice as
that of travelling at this early period of life. By sending his son
abroad, a father delivers himself, at least for some time, from so
disagreeable an object as that of a son unemployed, neglected, and
going to ruin before his eyes.
Such have been the effects of some of the modern institutions for
education.
Different plans and different institutions for education seem to
have taken place in other ages and nations.
In the republics of ancient Greece, every free citizen was in-
structed, under the direction of the public magistrate, in gymnastic
exercises and in music. By gymnastic exercises it was intended to
harden his body, to sharpen his courage, and to prepare him for the
fatigues and dangers of war; and as the Greek militia was, by all
EDUCATION OF YOUTH 729
accounts, one of the best that ever was in the world, this part of
their public education must have answered completely the purpose
for which it was intended. By the other part, music, it was proposed,
at least by the philosophers and historians who have given us an
account of those institutions, to humanize the mind, to soften the
temper, and to dispose it for performing all the social and moral
duties both of public and private life.
In ancient Rome the exercises of the Campus Martius answered
the same purpose as those of the Gymnazium in ancient Greece,^--
and they seem to have answered it equally well. But among the
Romans there was nothing which corresponded to the musical edu-
cation of the Greeks. The morals of the Romans, however, both in
private and public life, seem to have been, not only equal, but, upon
the whole, a good deal superior to those of the Greeks. That they
were superior in private life, we have the express testimony of Poly-
bius and of Dionysius of Halicarnassus, two authors well ac-
quainted with both nations; and the whole tenor of the Greek and
Roman history bears witness to the superiority of the public morals
of the Romans. The good temper and moderation of contending fac-
tions seems to be the most essential circumstance in the public mor-
als of a free people. But the factions of the Greeks were almost al-
ways violent and sanguinary; whereas, till the time of the Gracchi,
no blood had ever been shed in any Roman faction; and from the
time of the Gracchi the Roman republic may be considered as in
reality dissolved. Notwithstanding, therefore, the very respectable
authority of Plato,^^® Aristotle, and Polybius, and notwith-
standing the very ingenious reasons by which Mr. Montesquieu en-
deavours to support that authority, it seems probable that the
musical education of the Greeks had no great effect in mending their
morals, since, without any such education, those of the Romans
were upon the whole superior. The respect of those ancient sages for
the institutions of their ancestors, had probably disposed them to
find much political wisdom in what was, perhaps, merely an ancient
custom, continued, without interruption, from the earliest period of
those societies, to the times in which they had arrived at a consider-
able degree of refinement. Music and dancing are the great amuse-
ments of almost all barbarous nations, and the great accomplish-
ments which are supposed to fit any man for entertaining his so-
ciety. It is so at this day among the negroes on the coast of Africa.
^ Repeated all but verbatim from above, p. 658.
vi., $6; xviii., 34. Ant. Rom., ii,, xxiv. to xxvii., esp. xxvi.
Repub., iii., 400-401. Politics, 1340 a. ^ Hist, iv., 20.
^Esprit des lots, liv. iv., chap, viii, where Plato, Aristotle and Polybius
are quoted.
and
music.
The
Romans
had the
Campus
Martius,
resem-
lingthe
gymna-
sium, but
no music.
They
were none
the worse
for its
absence.
730
The
teachers
of mili-
tary exer-
cises and
music
were not
paid or
appointed
by the
state.
Reading,
writing
and arith-
metic
were
taught
privately.
Philo-
sophical
educa-
tion was
indepen-
dent of
the state.
THE WEALTH OF NATIONS
It was so among the ancient Celtes, among the ancient Scandinav-
ians, and, as we may learn from Homer, among the ancient Greeks
in the times preceding the Trojan war.^-^ When the Greek tribes
had formed themselves into little republics, it was natural that the
study of those accomplishments should, for a long time, make a part
of the public and common education of the people.
The masters who instructed the young people either in music or
in military exercises, do not seem to have been paid, or even ap-
pointed by the state, either in Rome or even in Athens, the Greek
republic of whose laws and customs we are the best informed. The
state required that every free citizen should fit himself for defend-
ing it in war, and should, upon that account, learn his military ex-
ercises. But it left him to learn them of such masters as he could
find, and it seems to have advanced nothing for this purpose, but a
public field or place of exercise, in which he should practise and
perform them.
In the early ages both of the Greek and Roman republics, the
other parts of education seem to have consisted in learning to read,
write, and account according to the arithmetic of the times. These
accomplishments the richer citizens seem frequently to have ac-
quired at home, by the assistance of some domestic pedagogue, who
was generally, either a slave, or a freed-man; and the poorer citi-
zens, in the schools of such masters as made a trade of teaching for
hire. Such parts of education, however, were abandoned altogether
to the care of the parents or guardians of each individual. It does
not appear that the state ever assumed any inspection or direction
of them. By a law of Solon, indeed, the children were acquitted from
maintaining those parents in their old age,^®^ who had neglected to
instruct them in some profitable trade or business.^®^
In the progress of refinement, when philosophy and rhetoric came
into fashion, the better sort of people used to send their children to
the schools of philosophers and rhetoricians, in order to be in-
structed in these fashionable sciences. But those schools were not
supported by the public. They were for a long time barely tolerated
by it. The demand for philosophy and rhetoric was for a long time
so small, that the first professed teachers of either could not find
constant employment in any one city, but were obliged to travel
about from place to place. In this manner lived Zeno of Elea, Pro-
tagoras, Gorgias, Hippias, and many others. As the demand in-
Iliad, xiii., 137; xviii, 494, 594; Odyssey, i., 152; viiL, 265; xviii., 304;
xxiii, 134.
Ed. I places “those parents” here.
Plutarch, Life of Solon, quoted by Montesquieu, Esprit des Lois, liv.,
xxvi., ch. V.
EDUCATION OF YOUTH 73^
creased, the schools both of philosophy and rhetoric became sta-
tionary; first in Athens, and afterwards in several other cities. The
state, however, seems never to have encouraged them further than
by assigning to some of them a particular place to teach in, which
was sometimes done too by private donors. The state seems to have
assigned the Academy to Plato, the Lyceum to Aristotle, and the
Portico to Zeno of Citta, the founder of the Stoics. But Epicurus be-
queathed his gardens to his own school. Till about the time of Mar-
cus Antoninus, however, no teacher appears to have had any salary
from the public, or to have had any other emoluments, but what
arose from the honoraries or fees of his scholars. The bounty which
that philosophical emperor, as we learn from Lucian, bestowed
upon one of the teachers of philosophy, probably lasted no long-
er than his own life. There was nothing equivalent to the privileges
of graduation, and to have attended any of those schools was not
necessary, in order to be permitted to practise any particular trade
or profession. If the opinion of their own utility could not draw
scholars to them, the law neither forced any body to go to them, nor
rewarded any body for having gone to them. The teachers had no
jurisdiction over their pupils, nor any other authority besides that
natural authority, which superior virtue and abilities never fail to
procure from young people towards those who are entrusted with
any part of their education.
At Rome, the study of the civil law made a part of the education,
not of the greater part of the citizens, but of some particular fam-
ilies. The young people, however, who wished to acquire knowledge
in the law, had no public school to go to, and had no other method
of studying it, than by frequenting the company of such of their re-
lations and friends, as were supposed to understand it. It is perhaps
worth while to remark, that though the laws of the twelve tables
were, many of them, copied from those of some ancient Greek re-
publics, yet law never seems to have grown up to be a science in any
republic of ancient Greece. In Rome it became a science very early,
and gave a considerable degree of illustration to those citizens who
had the reputation of understanding it. In the republics of ancient
Greece, particularly in Athens, the ordinary courts of justice con-
sisted of numerous, and therefore disorderly, bodies of people, who
frequently decided alfnost at random, or as clamour, faction and
party spirit happened to determine. The ignominy of an unjust de-
cision, when it was to be divided among five hundred, a thousand,
^'^^The words “one of” do not occur in eds. i and 2 . They are perhaps a
misprint for “some of” or a misreading suggested by a failure to understand
that “his own life” is that of Marcus Antoninus. See Lucian, Emuchus, iii.
No public
institu-
tions for
teaching
law exist-
ed at
Rome,
where law
was first
developed
into an
orderly
system.
732
THE WEALTH OF NATIONS
The an-
cient
system
was more
successful
than the
modern,
which
corrupts
public
teaching
and
stifles
private.
or fifteen hundred people (for son^e of their courts were so very nu-
merous), could not fall very heavy upon any individual.
