In a country which has neither foreign commerce nor any of the finer

manufactures, a great proprietor, having nothing for which he can exchange

the greater part of the produce of his lands which is over and above the

maintenance of the cultivators, consumes the whole in rustic hospitality

at home. If this surplus produce is sufficient to maintain a hundred or a

thousand men, he can make use of it in no other way than by maintaining a

hundred or a thousand men. He is at all times, therefore, surrounded with

a multitude of retainers and dependants, who, having no equivalent to give

in return for their maintenance, but being fed entirely by his bounty,

must obey him, for the same reason that soldiers must obey the prince who

pays them. Before the extension of commerce and manufactures in Europe,

the hospitality of the rich and the great, from the sovereign down to the

smallest baron, exceeded every thing which, in the present times, we can

easily form a notion of Westminster-hall was the dining-room of William

Rufus, and might frequently, perhaps, not be too large for his company. It

was reckoned a piece of magnificence in Thomas Becket, that he strewed the

floor of his hall with clean hay or rushes in the season, in order that

the knights and squires, who could not get seats, might not spoil their

fine clothes when they sat down on the floor to eat their dinner. The

great Earl of Warwick is said to have entertained every day, at his

different manors, 30,000 people; and though the number here may have been

exaggerated, it must, however, have been very great to admit of such

exaggeration. A hospitality nearly of the same kind was exercised not many

years ago in many different parts of the Highlands of Scotland. It seems

to be common in all nations to whom commerce and manufactures are little

known. I have seen, says Doctor Pocock, an Arabian chief dine in the

streets of a town where he had come to sell his cattle, and invite all

passengers, even common beggars, to sit down with him and partake of his

banquet.

The occupiers of land were in every respect as dependent upon the great

proprietor as his retainers. Even such of them as were not in a state of

villanage, were tenants at will, who paid a rent in no respect equivalent

to the subsistence which the land afforded them. A crown, half a crown, a

sheep, a lamb, was some years ago, in the Highlands of Scotland, a common

rent for lands which maintained a family. In some places it is so at this

day; nor will money at present purchase a greater quantity of commodities

there than in other places. In a country where the surplus produce of a

large estate must be consumed upon the estate itself, it will frequently

be more convenient for the proprietor, that part of it be consumed at a

distance from his own house, provided they who consume it are as dependent

upon him as either his retainers or his menial servants. He is thereby

saved from the embarrassment of either too large a company, or too large a

family. A tenant at will, who possesses land sufficient to maintain his

family for little more than a quit-rent, is as dependent upon the

proprietor as any servant or retainer whatever, and must obey him with as

little reserve. Such a proprietor, as he feeds his servants and retainers

at his own house, so he feeds his tenants at their houses. The subsistence

of both is derived from his bounty, and its continuance depends upon his

good pleasure.

Upon the authority which the great proprietors necessarily had, in such a

state of things, over their tenants and retainers, was founded the power

of the ancient barons. They necessarily became the judges in peace, and

the leaders in war, of all who dwelt upon their estates. They could

maintain order, and execute the law, within their respective demesnes,

because each of them could there turn the whole force of all the

inhabitants against the injustice of anyone. No other person had

sufficient authority to do this. The king, in particular, had not. In

those ancient times, he was little more than the greatest proprietor in

his dominions, to whom, for the sake of common defence against their

common enemies, the other great proprietors paid certain respects. To have

enforced payment of a small debt within the lands of a great proprietor,

where all the inhabitants were armed, and accustomed to stand by one

another, would have cost the king, had he attempted it by his own

authority, almost the same effort as to extinguish a civil war. He was,

therefore, obliged to abandon the administration of justice, through the

greater part of the country, to those who were capable of administering

it; and, for the same reason, to leave the command of the country militia

to those whom that militia would obey.

It is a mistake to imagine that those territorial jurisdictions took their

origin from the feudal law. Not only the highest jurisdictions, both civil

and criminal, but the power of levying troops, of coining money, and even

that of making bye-laws for the government of their own people, were all

rights possessed allodially by the great proprietors of land, several

centuries before even the name of the feudal law was known in Europe. The

authority and jurisdiction of the Saxon lords in England appear to have

been as great before the Conquest as that of any of the Norman lords after

it. But the feudal law is not supposed to have become the common law of

England till after the Conquest. That the most extensive authority and

jurisdictions were possessed by the great lords in France allodially, long

before the feudal law was introduced into that country, is a matter of

fact that admits of no doubt. That authority, and those jurisdictions, all

necessarily flowed from the state of property and manners just now

described. Without remounting to the remote antiquities of either the

French or English monarchies, we may find, in much later times, many

proofs that such effects must always flow from such causes. It is not

thirty years ago since Mr Cameron of Lochiel, a gentleman of Lochaber in

Scotland, without any legal warrant whatever, not being what was then

called a lord of regality, nor even a tenant in chief, but a vassal of the

Duke of Argyll, and with out being so much as a justice of peace, used,

notwithstanding, to exercise the highest criminal jurisdictions over his

own people. He is said to have done so with great equity, though without

any of the formalities of justice; and it is not improbable that the state

of that part of the country at that time made it necessary for him to

assume this authority, in order to maintain the public peace. That

gentleman, whose rent never exceeded £500 a-year, carried, in 1745, 800 of

his own people into the rebellion with him.

The introduction of the feudal law, so far from extending, may be regarded

as an attempt to moderate, the authority of the great allodial lords. It

established a regular subordination, accompanied with a long train of

services and duties, from the king down to the smallest proprietor. During

the minority of the proprietor, the rent, together with the management of

his lands, fell into the hands of his immediate superior; and,

consequently, those of all great proprietors into the hands of the king,

who was charged with the maintenance and education of the pupil, and who,

from his authority as guardian, was supposed to have a right of disposing

of him in marriage, provided it was in a manner not unsuitable to his

rank. But though this institution necessarily tended to strengthen the

authority of the king, and to weaken that of the great proprietors, it

could not do either sufficiently for establishing order and good

government among the inhabitants of the country; because it could not

alter sufficiently that state of property and manners from which the

disorders arose. The authority of government still continued to be, as

before, too weak in the head, and too strong in the inferior members; and

the excessive strength of the inferior members was the cause of the

weakness of the head. After the institution of feudal subordination, the

king was as incapable of restraining the violence of the great lords as

before. They still continued to make war according to their own

discretion, almost continually upon one another, and very frequently upon

the king; and the open country still continued to be a scene of violence,

rapine, and disorder.

But what all the violence of the feudal institutions could never have

effected, the silent and insensible operation of foreign commerce and

manufactures gradually brought about. These gradually furnished the great

proprietors with something for which they could exchange the whole surplus

produce of their lands, and which they could consume themselves, without

sharing it either with tenants or retainers. All for ourselves, and

nothing for other people, seems, in every age of the world, to have been

the vile maxim of the masters of mankind. As soon, therefore, as they

could find a method of consuming the whole value of their rents

themselves, they had no disposition to share them with any other persons.

For a pair of diamond buckles, perhaps, or for something as frivolous and

useless, they exchanged the maintenance, or, what is the same thing, the

price of the maintenance of 1000 men for a year, and with it the whole

weight and authority which it could give them. The buckles, however, were

to be all their own, and no other human creature was to have any share of

them; whereas, in the more ancient method of expense, they must have

shared with at least 1000 people. With the judges that were to determine

the preference, this difference was perfectly decisive; and thus, for the

gratification of the most childish, the meanest, and the most sordid of

all vanities they gradually bartered their whole power and authority.

In a country where there is no foreign commerce, nor any of the finer

manufactures, a man of £10,000 a-year cannot well employ his revenue in

any other way than in maintaining, perhaps, 1000 families, who are all of

them necessarily at his command. In the present state of Europe, a man of

£10,000 a-year can spend his whole revenue, and he generally does so,

without directly maintaining twenty people, or being able to command more

than ten footmen, not worth the commanding. Indirectly, perhaps, he

maintains as great, or even a greater number of people, than he could have

done by the ancient method of expense. For though the quantity of precious

productions for which he exchanges his whole revenue be very small, the

number of workmen employed in collecting and preparing it must necessarily

have been very great. Its great price generally arises from the wages of

their labour, and the profits of all their immediate employers. By paying

that price, he indirectly pays all those wages and profits, and thus

indirectly contributes to the maintenance of all the workmen and their

employers. He generally contributes, however, but a very small proportion

to that of each; to a very few, perhaps, not a tenth, to many not a

hundredth, and to some not a thousandth, or even a ten thousandth part of

their whole annual maintenance. Though he contributes, therefore, to the

maintenance of them all, they are all more or less independent of him,

because generally they can all be maintained without him.

When the great proprietors of land spend their rents in maintaining their

tenants and retainers, each of them maintains entirely all his own tenants

and all his own retainers. But when they spend them in maintaining

tradesmen and artificers, they may, all of them taken together, perhaps

maintain as great, or, on account of the waste which attends rustic

hospitality, a greater number of people than before. Each of them,

however, taken singly, contributes often but a very small share to the

maintenance of any individual of this greater number. Each tradesman or

artificer derives his subsistence from the employment, not of one, but of

a hundred or a thousand different customers. Though in some measure

obliged to them all, therefore, he is not absolutely dependent upon any

one of them.

The personal expense of the great proprietors having in this manner

gradually increased, it was impossible that the number of their retainers

should not as gradually diminish, till they were at last dismissed

altogether. The same cause gradually led them to dismiss the unnecessary

part of their tenants. Farms were enlarged, and the occupiers of land,

notwithstanding the complaints of depopulation, reduced to the number

necessary for cultivating it, according to the imperfect state of

cultivation and improvement in those times. By the removal of the

unnecessary mouths, and by exacting from the farmer the full value of the

farm, a greater surplus, or, what is the same thing, the price of a

greater surplus, was obtained for the proprietor, which the merchants and

manufacturers soon furnished him with a method of spending upon his own

person, in the same manner as he had done the rest. The cause continuing

to operate, he was desirous to raise his rents above what his lands, in

the actual state of their improvement, could afford. His tenants could

agree to this upon one condition only, that they should be secured in

their possession for such a term of years as might give them time to

recover, with profit, whatever they should lay out in the further

improvement of the land. The expensive vanity of the landlord made him

willing to accept of this condition; and hence the origin of long leases.

Even a tenant at will, who pays the full value of the land, is not

altogether dependent upon the landlord. The pecuniary advantages which

they receive from one another are mutual and equal, and such a tenant will

expose neither his life nor his fortune in the service of the proprietor.

But if he has a lease for a long term of years he is altogether

independent; and his landlord must not expect from him even the most

trifling service, beyond what is either expressly stipulated in the lease,

or imposed upon him by the common and known law of the country.

The tenants having in this manner become independent, and the retainers

being dismissed, the great proprietors were no longer capable of

interrupting the regular execution of justice, or of disturbing the peace

of the country. Having sold their birth-right, not like Esau, for a mess

of pottage in time of hunger and necessity, but, in the wantonness of

plenty, for trinkets and baubles, fitter to be the playthings of children

than the serious pursuits of men, they became as insignificant as any

substantial burgher or tradesmen in a city. A regular government was

established in the country as well as in the city, nobody having

sufficient power to disturb its operations in the one, any more than in

the other.

It does not, perhaps, relate to the present subject, but I cannot help

remarking it, that very old families, such as have possessed some

considerable estate from father to son for many successive generations,

are very rare in commercial countries. In countries which have little

commerce, on the contrary, such as Wales, or the Highlands of Scotland,

they are very common. The Arabian histories seem to be all full of

genealogies; and there is a history written by a Tartar Khan, which has

been translated into several European languages, and which contains scarce

any thing else; a proof that ancient families are very common among those

nations. In countries where a rich man can spend his revenue in no other

way than by maintaining as many people as it can maintain, he is apt to

run out, and his benevolence, it seems, is seldom so violent as to attempt

to maintain more than he can afford. But where he can spend the greatest

revenue upon his own person, he frequently has no bounds to his expense,

because he frequently has no bounds to his vanity, or to his affection for

his own person. In commercial countries, therefore, riches, in spite of

the most violent regulations of law to prevent their dissipation, very

seldom remain long in the same family. Among simple nations, on the

contrary, they frequently do, without any regulations of law; for among

nations of shepherds, such as the Tartars and Arabs, the consumable nature

of their property necessarily renders all such regulations impossible.

A revolution of the greatest importance to the public happiness, was in

this manner brought about by two different orders of people, who had not

the least intention to serve the public. To gratify the most childish

vanity was the sole motive of the great proprietors. The merchants and

artificers, much less ridiculous, acted merely from a view to their own

interest, and in pursuit of their own pedlar principle of turning a penny

wherever a penny was to be got. Neither of them had either knowledge or

foresight of that great revolution which the folly of the one, and the

industry of the other, was gradually bringing about.

It was thus, that, through the greater part of Europe, the commerce and

manufactures of cities, instead of being the effect, have been the cause

and occasion of the improvement and cultivation of the country.

This order, however, being contrary to the natural course of things, is

necessarily both slow and uncertain. Compare the slow progress of those

European countries of which the wealth depends very much upon their

commerce and manufactures, with the rapid advances of our North American

colonies, of which the wealth is founded altogether in agriculture.

Through the greater part of Europe, the number of inhabitants is not

supposed to double in less than five hundred years. In several of our

North American colonies, it is found to double in twenty or

five-and-twenty years. In Europe, the law of primogeniture, and

perpetuities of different kinds, prevent the division of great estates,

and thereby hinder the multiplication of small proprietors. A small

proprietor, however, who knows every part of his little territory, views

it with all the affection which property, especially small property,

naturally inspires, and who upon that account takes pleasure, not only in

cultivating, but in adorning it, is generally of all improvers the most

industrious, the most intelligent, and the most successful. The same

regulations, besides, keep so much land out of the market, that there are

always more capitals to buy than there is land to sell, so that what is

sold always sells at a monopoly price. The rent never pays the interest of

the purchase-money, and is, besides, burdened with repairs and other

occasional charges, to which the interest of money is not liable. To

purchase land, is, everywhere in Europe, a most unprofitable employment of

a small capital. For the sake of the superior security, indeed, a man of

moderate circumstances, when he retires from business, will sometimes

choose to lay out his little capital in land. A man of profession, too

whose revenue is derived from another source often loves to secure his

savings in the same way. But a young man, who, instead of applying to

trade or to some profession, should employ a capital of two or three

thousand pounds in the purchase and cultivation of a small piece of land,

might indeed expect to live very happily and very independently, but must

bid adieu for ever to all hope of either great fortune or great

illustration, which, by a different employment of his stock, he might have

had the same chance of acquiring with other people. Such a person, too,

though he cannot aspire at being a proprietor, will often disdain to be a

farmer. The small quantity of land, therefore, which is brought to market,

and the high price of what is brought thither, prevents a great number of

capitals from being employed in its cultivation and improvement, which

would otherwise have taken that direction. In North America, on the

contrary, fifty or sixty pounds is often found a sufficient stock to begin

a plantation with. The purchase and improvement of uncultivated land is

there the most profitable employment of the smallest as well as of the

greatest capitals, and the most direct road to all the fortune and

illustration which can be required in that country. Such land, indeed, is

in North America to be had almost for nothing, or at a price much below

the value of the natural produce; a thing impossible in Europe, or indeed

in any country where all lands have long been private property. If landed

estates, however, were divided equally among all the children, upon the

death of any proprietor who left a numerous family, the estate would

generally be sold. So much land would come to market, that it could no

longer sell at a monopoly price. The free rent of the land would go no

nearer to pay the interest of the purchase-money, and a small capital

might be employed in purchasing land as profitable as in any other way.

England, on account of the natural fertility of the soil, of the great

extent of the sea-coast in proportion to that of the whole country, and of

the many navigable rivers which run through it, and afford the conveniency

of water carriage to some of the most inland parts of it, is perhaps as

well fitted by nature as any large country in Europe to be the seat of

foreign commerce, of manufactures for distant sale, and of all the

improvements which these can occasion. From the beginning of the reign of

Elizabeth, too, the English legislature has been peculiarly attentive to

the interest of commerce and manufactures, and in reality there is no

country in Europe, Holland itself not excepted, of which the law is, upon

the whole, more favourable to this sort of industry. Commerce and

manufactures have accordingly been continually advancing during all this

period. The cultivation and improvement of the country has, no doubt, been

gradually advancing too; but it seems to have followed slowly, and at a

distance, the more rapid progress of commerce and manufactures. The

greater part of the country must probably have been cultivated before the

reign of Elizabeth; and a very great part of it still remains

uncultivated, and the cultivation of the far greater part much inferior to

what it might be, The law of England, however, favours agriculture, not

only indirectly, by the protection of commerce, but by several direct

encouragements. Except in times of scarcity, the exportation of corn is

not only free, but encouraged by a bounty. In times of moderate plenty,

the importation of foreign corn is loaded with duties that amount to a

prohibition. The importation of live cattle, except from Ireland, is

prohibited at all times; and it is but of late that it was permitted from

thence. Those who cultivate the land, therefore, have a monopoly against

their countrymen for the two greatest and most important articles of land

produce, bread and butcher’s meat. These encouragements, although at

bottom, perhaps, as I shall endeavour to show hereafter, altogether

illusory, sufficiently demonstrate at least the good intention of the

legislature to favour agriculture. But what is of much more importance

than all of them, the yeomanry of England are rendered as secure, as

independent, and as respectable, as law can make them. No country,

therefore, which the right of primogeniture takes place, which pays

tithes, and where perpetuities, though contrary to the spirit of the law,

are admitted in some cases, can give more encouragement to agriculture

than England. Such, however, notwithstanding, is the state of its

cultivation. What would it have been, had the law given no direct

encouragement to agriculture besides what arises indirectly from the

progress of commerce, and had left the yeomanry in the same condition as

in most other countries of Europe? It is now more than two hundred years

since the beginning of the reign of Elizabeth, a period as long as the

course of human prosperity usually endures.

France seems to have had a considerable share of foreign commerce, near a

century before England was distinguished as a commercial country. The

marine of France was considerable, according to the notions of the times,

before the expedition of Charles VIII. to Naples. The cultivation and

improvement of France, however, is, upon the whole, inferior to that of

England. The law of the country has never given the same direct

encouragement to agriculture.

The foreign commerce of Spain and Portugal to the other parts of Europe,

though chiefly carried on in foreign ships, is very considerable. That to

their colonies is carried on in their own, and is much greater, on account

of the great riches and extent of those colonies. But it has never

introduced any considerable manufactures for distant sale into either of

those countries, and the greater part of both still remains uncultivated.

The foreign commerce of Portugal is of older standing than that of any

great country in Europe, except Italy.

Italy is the only great country of Europe which seems to have been

cultivated and improved in every part, by means of foreign commerce and

manufactures for distant sale. Before the invasion of Charles VIII.,

Italy, according to Guicciardini, was cultivated not less in the most

mountainous and barren parts of the country, than in the plainest and most

fertile. The advantageous situation of the country, and the great number

of independent states which at that time subsisted in it, probably

contributed not a little to this general cultivation. It is not

impossible, too, notwithstanding this general expression of one of the

most judicious and reserved of modern historians, that Italy was not at

that time better cultivated than England is at present.

The capital, however, that is acquired to any country by commerce and

manufactures, is always a very precarious and uncertain possession, till

some part of it has been secured and realized in the cultivation and

improvement of its lands. A merchant, it has been said very properly, is

not necessarily the citizen of any particular country. It is in a great

measure indifferent to him from what place he carries on his trade; and a

very trifling disgust will make him remove his capital, and, together with

it, all the industry which it supports, from one country to another. No

part of it can be said to belong to any particular country, till it has

been spread, as it were, over the face of that country, either in

buildings, or in the lasting improvement of lands. No vestige now remains

of the great wealth said to have been possessed by the greater part of the

Hanse Towns, except in the obscure histories of the thirteenth and

fourteenth centuries. It is even uncertain where some of them were

situated, or to what towns in Europe the Latin names given to some of them

belong. But though the misfortunes of Italy, in the end of the fifteenth

and beginning of the sixteenth centuries, greatly diminished the commerce

and manufactures of the cities of Lombardy and Tuscany, those countries

still continue to be among the most populous and best cultivated in

Europe. The civil wars of Flanders, and the Spanish government which

succeeded them, chased away the great commerce of Antwerp, Ghent, and

Bruges. But Flanders still continues to be one of the richest, best

cultivated, and most populous provinces of Europe. The ordinary

revolutions of war and government easily dry up the sources of that wealth

which arises from commerce only. That which arises from the more solid

improvements of agriculture is much more durable, and cannot be destroyed

but by those more violent convulsions occasioned by the depredations of

hostile and barbarous nations continued for a century or two together;

such as those that happened for some time before and after the fall of the

Roman empire in the western provinces of Europe.

BOOK IV.

OF SYSTEMS OF POLITICAL ECONOMY.

Political economy, considered as a branch of the science of a statesman or

legislator, proposes two distinct objects; first, to provide a plentiful

revenue or subsistence for the people, or, more properly, to enable them

to provide such a revenue or subsistence for themselves; and, secondly, to

supply the state or commonwealth with a revenue sufficient for the public

services. It proposes to enrich both the people and the sovereign.

The different progress of opulence in different ages and nations, has

given occasion to two different systems of political economy, with regard

to enriching the people. The one may be called the system of commerce, the

other that of agriculture. I shall endeavour to explain both as fully and

distinctly as I can, and shall begin with the system of commerce. It is

the modern system, and is best understood in our own country and in our

own times.

CHAPTER I.

OF THE PRINCIPLE OF THE COMMERCIAL OR

MERCANTILE SYSTEM.

That wealth consists in money, or in gold and silver, is a popular notion

which naturally arises from the double function of money, as the

instrument of commerce, and as the measure of value. In consequence of its

being the instrument of commerce, when we have money we can more readily

obtain whatever else we have occasion for, than by means of any other

commodity. The great affair, we always find, is to get money. When that is

obtained, there is no difficulty in making any subsequent purchase. In

consequence of its being the measure of value, we estimate that of all

other commodities by the quantity of money which they will exchange for.

We say of a rich man, that he is worth a great deal, and of a poor man,

that he is worth very little money. A frugal man, or a man eager to be

rich, is said to love money; and a careless, a generous, or a profuse man,

is said to be indifferent about it. To grow rich is to get money; and

wealth and money, in short, are, in common language, considered as in

every respect synonymous.

A rich country, in the same manner as a rich man, is supposed to be a

country abounding in money; and to heap up gold and silver in any country

is supposed to be the readiest way to enrich it. For some time after the

discovery of America, the first inquiry of the Spaniards, when they

arrived upon any unknown coast, used to be, if there was any gold or

silver to be found in the neighbourhood? By the information which they

received, they judged whether it was worth while to make a settlement

there, or if the country was worth the conquering. Plano Carpino, a monk

sent ambassador from the king of France to one of the sons of the famous

Gengis Khan, says, that the Tartars used frequently to ask him, if there

was plenty of sheep and oxen in the kingdom of France? Their inquiry had

the same object with that of the Spaniards. They wanted to know if the

country was rich enough to be worth the conquering. Among the Tartars, as

among all other nations of shepherds, who are generally ignorant of the

use of money, cattle are the instruments of commerce and the measures of

value. Wealth, therefore, according to them, consisted in cattle, as,

according to the Spaniards, it consisted in gold and silver. Of the two,

the Tartar notion, perhaps, was the nearest to the truth.

Mr Locke remarks a distinction between money and other moveable goods. All

other moveable goods, he says, are of so consumable a nature, that the

wealth which consists in them cannot be much depended on; and a nation

which abounds in them one year may, without any exportation, but merely by

their own waste and extravagance, be in great want of them the next.

Money, on the contrary, is a steady friend, which, though it may travel

about from hand to hand, yet if it can be kept from going out of the

country, is not very liable to be wasted and consumed. Gold and silver,

therefore, are, according to him, the must solid and substantial part of

the moveable wealth of a nation; and to multiply those metals ought, he

thinks, upon that account, to be the great object of its political

economy.

Others admit, that if a nation could be separated from all the world, it

would be of no consequence how much or how little money circulated in it.

The consumable goods, which were circulated by means of this money, would

only be exchanged for a greater or a smaller number of pieces; but the

real wealth or poverty of the country, they allow, would depend altogether

upon the abundance or scarcity of those consumable goods. But it is

otherwise, they think, with countries which have connections with foreign

nations, and which are obliged to carry on foreign wars, and to maintain

fleets and armies in distant countries. This, they say, cannot be done,

but by sending abroad money to pay them with; and a nation cannot send

much money abroad, unless it has a good deal at home. Every such nation,

therefore, must endeavour, in time of peace, to accumulate gold and

silver, that when occasion requires, it may have wherewithal to carry on

foreign wars.

In consequence of those popular notions, all the different nations of

Europe have studied, though to little purpose, every possible means of

accumulating gold and silver in their respective countries. Spain and

Portugal, the proprietors of the principal mines which supply Europe with

those metals, have either prohibited their exportation under the severest

penalties, or subjected it to a considerable duty. The like prohibition

seems anciently to have made a part of the policy of most other European

nations. It is even to be found, where we should least of all expect to

find it, in some old Scotch acts of Parliament, which forbid, under heavy

penalties, the carrying gold or silver forth of the kingdom. The like

policy anciently took place both in France and England.

When those countries became commercial, the merchants found this

prohibition, upon many occasions, extremely inconvenient. They could

frequently buy more advantageously with gold and silver, than with any

other commodity, the foreign goods which they wanted, either to import

into their own, or to carry to some other foreign country. They

remonstrated, therefore, against this prohibition as hurtful to trade.

They represented, first, that the exportation of gold and silver, in order

to purchase foreign goods, did not always diminish the quantity of those

metals in the kingdom; that, on the contrary, it might frequently increase

the quantity; because, if the consumption of foreign goods was not thereby

increased in the country, those goods might be re-exported to foreign

countries, and being there sold for a large profit, might bring back much

more treasure than was originally sent out to purchase them. Mr Mun

compares this operation of foreign trade to the seed-time and harvest of

agriculture. “If we only behold,” says he, “the actions of the husbandman

in the seed time, when he casteth away much good corn into the ground, we

shall account him rather a madman than a husbandman. But when we consider

his labours in the harvest, which is the end of his endeavours, we shall

find the worth and plentiful increase of his actions.”

They represented, secondly, that this prohibition could not hinder the

exportation of gold and silver, which, on account of the smallness of

their bulk in proportion to their value, could easily be smuggled abroad.

That this exportation could only be prevented by a proper attention to

what they called the balance of trade. That when the country exported to a

greater value than it imported, a balance became due to it from foreign

nations, which was necessarily paid to it in gold and silver, and thereby

increased the quantity of those metals in the kingdom. But that when it

imported to a greater value than it exported, a contrary balance became

due to foreign nations, which was necessarily paid to them in the same

manner, and thereby diminished that quantity: that in this case, to

prohibit the exportation of those metals, could not prevent it, but only,

by making it more dangerous, render it more expensive: that the exchange

was thereby turned more against the country which owed the balance, than

it otherwise might have been; the merchant who purchased a bill upon the

foreign country being obliged to pay the banker who sold it, not only for

the natural risk, trouble, and expense of sending the money thither, but

for the extraordinary risk arising from the prohibition; but that the more

the exchange was against any country, the more the balance of trade became

necessarily against it; the money of that country becoming necessarily of

so much less value, in comparison with that of the country to which the

balance was due. That if the exchange between England and Holland, for

example, was five per cent. against England, it would require 105 ounces

of silver in England to purchase a bill for 100 ounces of silver in

Holland: that 105 ounces of silver in England, therefore, would be worth

only 100 ounces of silver in Holland, and would purchase only a

proportionable quantity of Dutch goods; but that 100 ounces of silver in

Holland, on the contrary, would be worth 105 ounces in England, and would

purchase a proportionable quantity of English goods; that the English

goods which were sold to Holland would be sold so much cheaper, and the

Dutch goods which were sold to England so much dearer, by the difference

of the exchange: that the one would draw so much less Dutch money to

England, and the other so much more English money to Holland, as this

difference amounted to: and that the balance of trade, therefore, would

necessarily be so much more against England, and would require a greater

balance of gold and silver to be exported to Holland.

Those arguments were partly solid and partly sophistical. They were solid,

so far as they asserted that the exportation of gold and silver in trade

might frequently be advantageous to the country. They were solid, too, in

asserting that no prohibition could prevent their exportation, when

private people found any advantage in exporting them. But they were

sophistical, in supposing, that either to preserve or to augment the

quantity of those metals required more the attention of government, than

to preserve or to augment the quantity of any other useful commodities,

which the freedom of trade, without any such attention, never fails to

supply in the proper quantity. They were sophistical, too, perhaps, in

asserting that the high price of exchange necessarily increased what they

called the unfavourable balance of trade, or occasioned the exportation of

a greater quantity of gold and silver. That high price, indeed, was

extremely disadvantageous to the merchants who had any money to pay in

foreign countries. They paid so much dearer for the bills which their

bankers granted them upon those countries. But though the risk arising

from the prohibition might occasion some extraordinary expense to the

bankers, it would not necessarily carry any more money out of the country.

This expense would generally be all laid out in the country, in smuggling

the money out of it, and could seldom occasion the exportation of a single

sixpence beyond the precise sum drawn for. The high price of exchange,

too, would naturally dispose the merchants to endeavour to make their

exports nearly balance their imports, in order that they might have this

high exchange to pay upon as small a sum as possible. The high price of

exchange, besides, must necessarily have operated as a tax, in raising the

price of foreign goods, and thereby diminishing their consumption. It

would tend, therefore, not to increase, but to diminish, what they called

the unfavourable balance of trade, and consequently the exportation of

gold and silver.

Such as they were, however, those arguments convinced the people to whom

they were addressed. They were addressed by merchants to parliaments and

to the councils of princes, to nobles, and to country gentlemen; by those

who were supposed to understand trade, to those who were conscious to them

selves that they knew nothing about the matter. That foreign trade

enriched the country, experience demonstrated to the nobles and country

gentlemen, as well as to the merchants; but how, or in what manner, none

of them well knew. The merchants knew perfectly in what manner it enriched

themselves, it was their business to know it. But to know in what manner

it enriched the country, was no part of their business. The subject never

came into their consideration, but when they had occasion to apply to

their country for some change in the laws relating to foreign trade. It

then became necessary to say something about the beneficial effects of

foreign trade, and the manner in which those effects were obstructed by

the laws as they then stood. To the judges who were to decide the

business, it appeared a most satisfactory account of the matter, when they

were told that foreign trade brought money into the country, but that the

laws in question hindered it from bringing so much as it otherwise would

do. Those arguments, therefore, produced the wished-for effect. The

prohibition of exporting gold and silver was, in France and England,

confined to the coin of those respective countries. The exportation of

foreign coin and of bullion was made free. In Holland, and in some other

places, this liberty was extended even to the coin of the country. The

attention of government was turned away from guarding against the

exportation of gold and silver, to watch over the balance of trade, as the

only cause which could occasion any augmentation or diminution of those

metals. From one fruitless care, it was turned away to another care much

more intricate, much more embarrassing, and just equally fruitless. The

title of Mun’s book, England’s Treasure in Foreign Trade, became a

fundamental maxim in the political economy, not of England only, but of

all other commercial countries. The inland or home trade, the most

important of all, the trade in which an equal capital affords the greatest

revenue, and creates the greatest employment to the people of the country,

was considered as subsidiary only to foreign trade. It neither brought

money into the country, it was said, nor carried any out of it. The

country, therefore, could never become either richer or poorer by means of

it, except so far as its prosperity or decay might indirectly influence

the state of foreign trade.

A country that has no mines of its own, must undoubtedly draw its gold and

silver from foreign countries, in the same manner as one that has no

vineyards of its own must draw its wines. It does not seem necessary,

however, that the attention of government should be more turned towards

the one than towards the other object. A country that has wherewithal to

buy wine, will always get the wine which it has occasion for; and a

country that has wherewithal to buy gold and silver, will never be in want

of those metals. They are to be bought for a certain price, like all other

commodities; and as they are the price of all other commodities, so all

other commodities are the price of those metals. We trust, with perfect

security, that the freedom of trade, without any attention of government,

will always supply us with the wine which we have occasion for; and we may

trust, with equal security, that it will always supply us with all the

gold and silver which we can afford to purchase or to employ, either in

circulating our commodities or in other uses.

The quantity of every commodity which human industry can either purchase

or produce, naturally regulates itself in every country according to the

effectual demand, or according to the demand of those who are willing to

pay the whole rent, labour, and profits, which must be paid in order to

prepare and bring it to market. But no commodities regulate themselves

more easily or more exactly, according to this effectual demand, than gold

and silver; because, on account of the small bulk and great value of those

metals, no commodities can be more easily transported from one place to

another; from the places where they are cheap, to those where they are

dear; from the places where they exceed, to those where they fall short of

this effectual demand. If there were in England, for example, an effectual

demand for an additional quantity of gold, a packet-boat could bring from

Lisbon, or from wherever else it was to be had, fifty tons of gold, which

could be coined into more than five millions of guineas. But if there were

an effectual demand for grain to the same value, to import it would

require, at five guineas a-ton, a million of tons of shipping, or a

thousand ships of a thousand tons each. The navy of England would not be

sufficient.

When the quantity of gold and silver imported into any country exceeds the

effectual demand, no vigilance of government can prevent their

exportation. All the sanguinary laws of Spain and Portugal are not able to

keep their gold and silver at home. The continual importations from Peru

and Brazil exceed the effectual demand of those countries, and sink the

price of those metals there below that in the neighbouring countries. If,

on the contrary, in any particular country, their quantity fell short of

the effectual demand, so as to raise their price above that of the

neighbouring countries, the government would have no occasion to take any

pains to import them. If it were even to take pains to prevent their

importation, it would not be able to effectuate it. Those metals, when the

Spartans had got wherewithal to purchase them, broke through all the

barriers which the laws of Lycurgus opposed to their entrance into

Lacedaemon. All the sanguinary laws of the customs are not able to prevent

the importation of the teas of the Dutch and Gottenburg East India

companies; because somewhat cheaper than those of the British company. A

pound of tea, however, is about a hundred times the bulk of one of the

highest prices, sixteen shillings, that is commonly paid for it in silver,

and more than two thousand times the bulk of the same price in gold, and,

consequently, just so many times more difficult to smuggle.

It is partly owing to the easy transportation of gold and silver, from the

places where they abound to those where they are wanted, that the price of

those metals does not fluctuate continually, like that of the greater part

of other commodities, which are hindered by their bulk from shifting their

situation, when the market happens to be either over or under-stocked with

them. The price of those metals, indeed, is not altogether exempted from

variation; but the changes to which it is liable are generally slow,

gradual, and uniform. In Europe, for example, it is supposed, without much

foundation, perhaps, that during the course of the present and preceding

century, they have been constantly, but gradually, sinking in their value,

on account of the continual importations from the Spanish West Indies. But

to make any sudden change in the price of gold and silver, so as to raise

or lower at once, sensibly and remarkably, the money price of all other

commodities, requires such a revolution in commerce as that occasioned by

the discovery of America.

If, not withstanding all this, gold and silver should at any time fall

short in a country which has wherewithal to purchase them, there are more

expedients for supplying their place, than that of almost any other

commodity. If the materials of manufacture are wanted, industry must stop.

If provisions are wanted, the people must starve. But if money is wanted,

barter will supply its place, though with a good deal of inconveniency.

Buying and selling upon credit, and the different dealers compensating

their credits with one another, once a-month, or once a-year, will supply

it with less inconveniency. A well-regulated paper-money will supply it

not only without any inconveniency, but, in some cases, with some

advantages. Upon every account, therefore, the attention of government

never was so unnecessarily employed, as when directed to watch over the

preservation or increase of the quantity of money in any country.

No complaint, however, is more common than that of a scarcity of money.

Money, like wine, must always be scarce with those who have neither

wherewithal to buy it, nor credit to borrow it. Those who have either,

will seldom be in want either of the money, or of the wine which they have

occasion for. This complaint, however, of the scarcity of money, is not

always confined to improvident spendthrifts. It is sometimes general

through a whole mercantile town and the country in its neighbourhood.

Over-trading is the common cause of it. Sober men, whose projects have

been disproportioned to their capitals, are as likely to have neither

wherewithal to buy money, nor credit to borrow it, as prodigals, whose

expense has been disproportioned to their revenue. Before their projects

can be brought to bear, their stock is gone, and their credit with it.

They run about everywhere to borrow money, and everybody tells them that

they have none to lend. Even such general complaints of the scarcity of

money do not always prove that the usual number of gold and silver pieces

are not circulating in the country, but that many people want those pieces

who have nothing to give for them. When the profits of trade happen to be

greater than ordinary over-trading becomes a general error, both among

great and small dealers. They do not always send more money abroad than

usual, but they buy upon credit, both at home and abroad, an unusual

quantity of goods, which they send to some distant market, in hopes that

the returns will come in before the demand for payment. The demand comes

before the returns, and they have nothing at hand with which they can

either purchase money or give solid security for borrowing. It is not any

scarcity of gold and silver, but the difficulty which such people find in

borrowing, and which their creditor find in getting payment, that

occasions the general complaint of the scarcity of money.

It would be too ridiculous to go about seriously to prove, that wealth

does not consist in money, or in gold and silver; but in what money

purchases, and is valuable only for purchasing. Money, no doubt, makes

always a part of the national capital; but it has already been shown that

it generally makes but a small part, and always the most unprofitable part

of it.

It is not because wealth consists more essentially in money than in goods,

that the merchant finds it generally more easy to buy goods with money,

than to buy money with goods; but because money is the known and

established instrument of commerce, for which every thing is readily given

in exchange, but which is not always with equal readiness to be got in

exchange for every thing. The greater part of goods, besides, are more

perishable than money, and he may frequently sustain a much greater loss

by keeping them. When his goods are upon hand, too, he is more liable to

such demands for money as he may not be able to answer, than when he has

got their price in his coffers. Over and above all this, his profit arises

more directly from selling than from buying; and he is, upon all these

accounts, generally much more anxious to exchange his goods for money than

his money for goods. But though a particular merchant, with abundance of

goods in his warehouse, may sometimes be ruined by not being able to sell

them in time, a nation or country is not liable to the same accident, The

whole capital of a merchant frequently consists in perishable goods

destined for purchasing money. But it is but a very small part of the

annual produce of the land and labour of a country, which can ever be

destined for purchasing gold and silver from their neighbours. The far

greater part is circulated and consumed among themselves; and even of the

surplus which is sent abroad, the greater part is generally destined for

the purchase of other foreign goods. Though gold and silver, therefore,

could not be had in exchange for the goods destined to purchase them, the

nation would not be ruined. It might, indeed, suffer some loss and

inconveniency, and be forced upon some of those expedients which are

necessary for supplying the place of money. The annual produce of its land

and labour, however, would be the same, or very nearly the same as usual;

because the same, or very nearly the same consumable capital would be

employed in maintaining it. And though goods do not always draw money so

readily as money draws goods, in the long-run they draw it more

necessarily than even it draws them. Goods can serve many other purposes

besides purchasing money, but money can serve no other purpose besides

purchasing goods. Money, therefore, necessarily runs after goods, but

goods do not always or necessarily run after money. The man who buys, does

not always mean to sell again, but frequently to use or to consume;

whereas he who sells always means to buy again. The one may frequently

have done the whole, but the other can never have done more than the one

half of his business. It is not for its own sake that men desire money,

but for the sake of what they can purchase with it.

Consumable commodities, it is said, are soon destroyed; whereas gold and

silver are of a more durable nature, and were it not for this continual

exportation, might be accumulated for ages together, to the incredible

augmentation of the real wealth of the country. Nothing, therefore, it is

pretended, can be more disadvantageous to any country, than the trade

which consists in the exchange of such lasting for such perishable

commodities. We do not, however, reckon that trade disadvantageous, which

consists in the exchange of the hardware of England for the wines of

France, and yet hardware is a very durable commodity, and were it not for

this continual exportation, might too be accumulated for ages together, to

the incredible augmentation of the pots and pans of the country. But it

readily occurs, that the number of such utensils is in every country

necessarily limited by the use which there is for them; that it would be

absurd to have more pots and pans than were necessary for cooking the

victuals usually consumed there; and that, if the quantity of victuals

were to increase, the number of pots and pans would readily increase along

with it; a part of the increased quantity of victuals being employed in

purchasing them, or in maintaining an additional number of workmen whose

business it was to make them. It should as readily occur, that the

quantity of gold and silver is, in every country, limited by the use which

there is for those metals; that their use consists in circulating

commodities, as coin, and in affording a species of household furniture,

as plate; that the quantity of coin in every country is regulated by the

value of the commodities which are to be circulated by it; increase that

value, and immediately a part of it will be sent abroad to purchase,

wherever it is to be had, the additional quantity of coin requisite for

circulating them: that the quantity of plate is regulated by the number

and wealth of those private families who choose to indulge themselves in

that sort of magnificence; increase the number and wealth of such

families, and a part of this increased wealth will most probably be

employed in purchasing, wherever it is to be found, an additional quantity

of plate; that to attempt to increase the wealth of any country, either by

introducing or by detaining in it an unnecessary quantity of gold and

silver, is as absurd as it would be to attempt to increase the good cheer

of private families, by obliging them to keep an unnecessary number of

kitchen utensils. As the expense of purchasing those unnecessary utensils

would diminish, instead of increasing, either the quantity or goodness of

the family provisions; so the expense of purchasing an unnecessary

quantity of gold and silver must, in every country, as necessarily

diminish the wealth which feeds, clothes, and lodges, which maintains and

employs the people. Gold and silver, whether in the shape of coin or of

plate, are utensils, it must be remembered, as much as the furniture of

the kitchen. Increase the use of them, increase the consumable commodities

which are to be circulated, managed, and prepared by means of them, and

you will infallibly increase the quantity; but if you attempt by

extraordinary means to increase the quantity, you will as infallibly

diminish the use, and even the quantity too, which in those metals can

never be greater than what the use requires. Were they ever to be

accumulated beyond this quantity, their transportation is so easy, and the

loss which attends their lying idle and unemployed so great, that no law

could prevent their being immediately sent out of the country.

It is not always necessary to accumulate gold and silver, in order to

enable a country to carry on foreign wars, and to maintain fleets and

armies in distant countries. Fleets and armies are maintained, not with

gold and silver, but with consumable goods. The nation which, from the

annual produce of its domestic industry, from the annual revenue arising

out of its lands, and labour, and consumable stock, has wherewithal to

purchase those consumable goods in distant countries, can maintain foreign

wars there.

A nation may purchase the pay and provisions of an army in a distant

country three different ways; by sending abroad either, first, some part

of its accumulated gold and silver; or, secondly, some part of the annual

produce of its manufactures; or, last of all, some part of its annual rude

produce.

The gold and silver which can properly be considered as accumulated, or

stored up in any country, may be distinguished into three parts; first,

the circulating money; secondly, the plate of private families; and, last

of all, the money which may have been collected by many years parsimony,

and laid up in the treasury of the prince.

It can seldom happen that much can be spared from the circulating money of

the country; because in that there can seldom be much redundancy. The

value of goods annually bought and sold in any country requires a certain

quantity of money to circulate and distribute them to their proper

consumers, and can give employment to no more. The channel of circulation

necessarily draws to itself a sum sufficient to fill it, and never admits

any more. Something, however, is generally withdrawn from this channel in

the case of foreign war. By the great number of people who are maintained

abroad, fewer are maintained at home. Fewer goods are circulated there,

and less money becomes necessary to circulate them. An extraordinary

quantity of paper money of some sort or other, too, such as exchequer

notes, navy bills, and bank bills, in England, is generally issued upon

such occasions, and, by supplying the place of circulating gold and

silver, gives an opportunity of sending a greater quantity of it abroad.

All this, however, could afford but a poor resource for maintaining a

foreign war, of great expense, and several years duration.

The melting down of the plate of private families has, upon every

occasion, been found a still more insignificant one. The French, in the

beginning of the last war, did not derive so much advantage from this

expedient as to compensate the loss of the fashion.

The accumulated treasures of the prince have in former times afforded a

much greater and more lasting resource. In the present times, if you

except the king of Prussia, to accumulate treasure seems to be no part of

the policy of European princes.

The funds which maintained the foreign wars of the present century, the

most expensive perhaps which history records, seem to have had little

dependency upon the exportation either of the circulating money, or of the

plate of private families, or of the treasure of the prince. The last

French war cost Great Britain upwards of £90,000,000, including not only

the £75,000,000 of new debt that was contracted, but the additional 2s. in

the pound land-tax, and what was annually borrowed of the sinking fund.

More than two-thirds of this expense were laid out in distant countries;

in Germany, Portugal, America, in the ports of the Mediterranean, in the

East and West Indies. The kings of England had no accumulated treasure. We

never heard of any extraordinary quantity of plate being melted down. The

circulating gold and silver of the country had not been supposed to exceed

£18,000,000. Since the late recoinage of the gold, however, it is believed

to have been a good deal under-rated. Let us suppose, therefore, according

to the most exaggerated computation which I remember to have either seen

or heard of, that, gold and silver together, it amounted to £30,000,000.

Had the war been carried on by means of our money, the whole of it must,

even according to this computation, have been sent out and returned again,

at least twice in a period of between six and seven years. Should this be

supposed, it would afford the most decisive argument, to demonstrate how

unnecessary it is for government to watch over the preservation of money,

since, upon this supposition, the whole money of the country must have

gone from it, and returned to it again, two different times in so short a

period, without any body’s knowing any thing of the matter. The channel of

circulation, however, never appeared more empty than usual during any part

of this period. Few people wanted money who had wherewithal to pay for it.

The profits of foreign trade, indeed, were greater than usual during the

whole war, but especially towards the end of it. This occasioned, what it

always occasions, a general over-trading in all the ports of Great

Britain; and this again occasioned the usual complaint of the scarcity of

money, which always follows over-trading. Many people wanted it, who had

neither wherewithal to buy it, nor credit to borrow it; and because the

debtors found it difficult to borrow, the creditors found it difficult to

get payment. Gold and silver, however, were generally to be had for their

value, by those who had that value to give for them.

The enormous expense of the late war, therefore, must have been chiefly

defrayed, not by the exportation of gold and silver, but by that of

British commodities of some kind or other. When the government, or those

who acted under them, contracted with a merchant for a remittance to some

foreign country, he would naturally endeavour to pay his foreign

correspondent, upon whom he granted a bill, by sending abroad rather

commodities than gold and silver. If the commodities of Great Britain were

not in demand in that country, he would endeavour to send them to some

other country in which he could purchase a bill upon that country. The

transportation of commodities, when properly suited to the market, is

always attended with a considerable profit; whereas that of gold and

silver is scarce ever attended with any. When those metals are sent abroad

in order to purchase foreign commodities, the merchant’s profit arises,

not from the purchase, but from the sale of the returns. But when they are

sent abroad merely to pay a debt, he gets no returns, and consequently no

profit. He naturally, therefore, exerts his invention to find out a way of

paying his foreign debts, rather by the exportation of commodities, than

by that of gold and silver. The great quantity of British goods, exported

during the course of the late war, without bringing back any returns, is

accordingly remarked by the author of the Present State of the Nation.

Besides the three sorts of gold and silver above mentioned, there is in

all great commercial countries a good deal of bullion alternately imported

and exported, for the purposes of foreign trade. This bullion, as it

circulates among different commercial countries, in the same manner as the

national coin circulates in every country, may be considered as the money

of the great mercantile republic. The national coin receives its movement

and direction from the commodities circulated within the precincts of each

particular country; the money in the mercantile republic, from those

circulated between different countries. Both are employed in facilitating

exchanges, the one between different individuals of the same, the other

between those of different nations. Part of this money of the great

mercantile republic may have been, and probably was, employed in carrying

on the late war. In time of a general war, it is natural to suppose that a

movement and direction should be impressed upon it, different from what it

usually follows in profound peace, that it should circulate more about the

seat of the war, and be more employed in purchasing there, and in the

neighbouring countries, the pay and provisions of the different armies.

But whatever part of this money of the mercantile republic Great Britain

may have annually employed in this manner, it must have been annually

purchased, either with British commodities, or with something else that

had been purchased with them; which still brings us back to commodities,

to the annual produce of the land and labour of the country, as the

ultimate resources which enabled us to carry on the war. It is natural,

indeed, to suppose, that so great an annual expense must have been

defrayed from a great annual produce. The expense of 1761, for example,

amounted to more than £19,000,000. No accumulation could have supported so

great an annual profusion. There is no annual produce, even of gold and

silver, which could have supported it. The whole gold and silver annually

imported into both Spain and Portugal, according to the best accounts,

does not commonly much exceed £6,000,000 sterling, which, in some years,

would scarce have paid four months expense of the late war.

The commodities most proper for being transported to distant countries, in

order to purchase there either the pay and provisions of an army, or some

part of the money of the mercantile republic to be employed in purchasing

them, seem to be the finer and more improved manufactures; such as contain

a great value in a small bulk, and can therefore be exported to a great

distance at little expense. A country whose industry produces a great

annual surplus of such manufactures, which are usually exported to foreign

countries, may carry on for many years a very expensive foreign war,

without either exporting any considerable quantity of gold and silver, or

even having any such quantity to export. A considerable part of the annual

surplus of its manufactures must, indeed, in this case, be exported

without bringing back any returns to the country, though it does to the

merchant; the government purchasing of the merchant his bills upon foreign

countries, in order to purchase there the pay and provisions of an army.

Some part of this surplus, however, may still continue to bring back a

return. The manufacturers during; the war will have a double demand upon

them, and be called upon first to work up goods to be sent abroad, for

paying the bills drawn upon foreign countries for the pay and provisions

of the army: and, secondly, to work up such as are necessary for

purchasing the common returns that had usually been consumed in the

country. In the midst of the most destructive foreign war, therefore, the

greater part of manufactures may frequently flourish greatly; and, on the

contrary, they may decline on the return of peace. They may flourish

amidst the ruin of their country, and begin to decay upon the return of

its prosperity. The different state of many different branches of the

British manufactures during the late war, and for some time after the

peace, may serve as an illustration of what has been just now said.

No foreign war, of great expense or duration, could conveniently be

carried on by the exportation of the rude produce of the soil. The expense

of sending such a quantity of it into a foreign country as might purchase

the pay and provisions of an army would be too great. Few countries, too,

produce much more rude produce than what is sufficient for the subsistence

of their own inhabitants. To send abroad any great quantity of it,

therefore, would be to send abroad a part of the necessary subsistence of

the people. It is otherwise with the exportation of manufactures. The

maintenance of the people employed in them is kept at home, and only the

surplus part of their work is exported. Mr Hume frequently takes notice of

the inability of the ancient kings of England to carry on, without

interruption, any foreign war of long duration. The English in those days

had nothing wherewithal to purchase the pay and provisions of their armies

in foreign countries, but either the rude produce of the soil, of which no

considerable part could be spared from the home consumption, or a few

manufactures of the coarsest kind, of which, as well as of the rude

produce, the transportation was too expensive. This inability did not

arise from the want of money, but of the finer and more improved

manufactures. Buying and selling was transacted by means of money in

England then as well as now. The quantity of circulating money must have

borne the same proportion, to the number and value of purchases and sales

usually transacted at that time, which it does to those transacted at

present; or, rather, it must have borne a greater proportion, because

there was then no paper, which now occupies a great part of the employment

of gold and silver. Among nations to whom commerce and manufactures are

little known, the sovereign, upon extraordinary occasions, can seldom draw

any considerable aid from his subjects, for reasons which shall be

explained hereafter. It is in such countries, therefore, that he generally

endeavours to accumulate a treasure, as the only resource against such

emergencies. Independent of this necessity, he is, in such a situation,

naturally disposed to the parsimony requisite for accumulation. In that

simple state, the expense even of a sovereign is not directed by the

vanity which delights in the gaudy finery of a court, but is employed in

bounty to his tenants, and hospitality to his retainers. But bounty and

hospitality very seldom lead to extravagance; though vanity almost always

does. Every Tartar chief, accordingly, has a treasure. The treasures of

Mazepa, chief of the Cossacks in the Ukraine, the famous ally of Charles

XII., are said to have been very great. The French kings of the

Merovingian race had all treasures. When they divided their kingdom among

their different children, they divided their treasures too. The Saxon

princes, and the first kings after the Conquest, seem likewise to have

accumulated treasures. The first exploit of every new reign was commonly

to seize the treasure of the preceding king, as the most essential measure

for securing the succession. The sovereigns of improved and commercial

countries are not under the same necessity of accumulating treasures,

because they can generally draw from their subjects extraordinary aids

upon extraordinary occasions. They are likewise less disposed to do so.

They naturally, perhaps necessarily, follow the mode of the times; and

their expense comes to be regulated by the same extravagant vanity which

directs that of all the other great proprietors in their dominions. The

insignificant pageantry of their court becomes every day more brilliant;

and the expense of it not only prevents accumulation, but frequently

encroaches upon the funds destined for more necessary expenses. What

Dercyllidas said of the court of Persia, may be applied to that of several

European princes, that he saw there much splendour, but little strength,

and many servants, but few soldiers.

The importation of gold and silver is not the principal, much less the

sole benefit, which a nation derives from its foreign trade. Between

whatever places foreign trade is carried on, they all of them derive two

distinct benefits from it. It carries out that surplus part of the produce

of their land and labour for which there is no demand among them, and

brings back in return for it something else for which there is a demand.

It gives a value to their superfluities, by exchanging them for something

else, which may satisfy a part of their wants and increase their

enjoyments. By means of it, the narrowness of the home market does not

hinder the division of labour in any particular branch of art or

manufacture from being carried to the highest perfection. By opening a

more extensive market for whatever part of the produce of their labour may

exceed the home consumption, it encourages them to improve its productive

power, and to augment its annual produce to the utmost, and thereby to

increase the real revenue and wealth of the society. These great and

important services foreign trade is continually occupied in performing to

all the different countries between which it is carried on. They all

derive great benefit from it, though that in which the merchant resides

generally derives the greatest, as he is generally more employed in

supplying the wants, and carrying out the superfluities of his own, than

of any other particular country. To import the gold and silver which may

be wanted into the countries which have no mines, is, no doubt a part of

the business of foreign commerce. It is, however, a most insignificant

part of it. A country which carried on foreign trade merely upon this

account, could scarce have occasion to freight a ship in a century.

It is not by the importation of gold and silver that the discovery of

America has enriched Europe. By the abundance of the American mines, those

metals have become cheaper. A service of plate can now be purchased for

about a third part of the corn, or a third part of the labour, which it

would have cost in the fifteenth century. With the same annual expense of

labour and commodities, Europe can annually purchase about three times the

quantity of plate which it could have purchased at that time. But when a

commodity comes to be sold for a third part of what bad been its usual

price, not only those who purchased it before can purchase three times

their former quantity, but it is brought down to the level of a much

greater number of purchasers, perhaps to more than ten, perhaps to more

than twenty times the former number. So that there may be in Europe at

present, not only more than three times, but more than twenty or thirty

times the quantity of plate which would have been in it, even in its

present state of improvement, had the discovery of the American mines

never been made. So far Europe has, no doubt, gained a real conveniency,

though surely a very trifling one. The cheapness of gold and silver

renders those metals rather less fit for the purposes of money than they

were before. In order to make the same purchases, we must load ourselves

with a greater quantity of them, and carry about a shilling in our pocket,

where a groat would have done before. It is difficult to say which is most

trifling, this inconveniency, or the opposite conveniency. Neither the one

nor the other could have made any very essential change in the state of

Europe. The discovery of America, however, certainly made a most essential

one. By opening a new and inexhaustible market to all the commodities of

Europe, it gave occasion to new divisions of labour and improvements of

art, which in the narrow circle of the ancient commerce could never have

taken place, for want of a market to take off the greater part of their

produce. The productive powers of labour were improved, and its produce

increased in all the different countries of Europe, and together with it

the real revenue and wealth of the inhabitants. The commodities of Europe

were almost all new to America, and many of those of America were new to

Europe. A new set of exchanges, therefore, began to take place, which had

never been thought of before, and which should naturally have proved as

advantageous to the new, as it certainly did to the old continent. The

savage injustice of the Europeans rendered an event, which ought to have

been beneficial to all, ruinous and destructive to several of those

unfortunate countries.

The discovery of a passage to the East Indies by the Cape of Good Hope,

which happened much about the same time, opened perhaps a still more

extensive range to foreign commerce, than even that of America,

notwithstanding the greater distance. There were but two nations in

America, in any respect, superior to the savages, and these were destroyed

almost as soon as discovered. The rest were mere savages. But the empires

of China, Indostan, Japan, as well as several others in the East Indies,

without having richer mines of gold or silver, were, in every other

respect, much richer, better cultivated, and more advanced in all arts and

manufactures, than either Mexico or Peru, even though we should credit,

what plainly deserves no credit, the exaggerated accounts of the Spanish

writers concerning the ancient state of those empires. But rich and

civilized nations can always exchange to a much greater value with one

another, than with savages and barbarians. Europe, however, has hitherto

derived much less advantage from its commerce with the East Indies, than

from that with America. The Portuguese monopolised the East India trade to

themselves for about a century; and it was only indirectly, and through

them, that the other nations of Europe could either send out or receive

any goods from that country. When the Dutch, in the beginning of the last

century, began to encroach upon them, they vested their whole East India

commerce in an exclusive company. The English, French, Swedes, and Danes,

have all followed their example; so that no great nation of Europe has

ever yet had the benefit of a free commerce to the East Indies. No other

reason need be assigned why it has never been so advantageous as the trade

to America, which, between almost every nation of Europe and its own

colonies, is free to all its subjects. The exclusive privileges of those

East India companies, their great riches, the great favour and protection

which these have procured them from their respective governments, have

excited much envy against them. This envy has frequently represented their

trade as altogether pernicious, on account of the great quantities of

silver which it every year exports from the countries from which it is

carried on. The parties concerned have replied, that their trade by this

continual exportation of silver, might indeed tend to impoverish Europe in

general, but not the particular country from which it was carried on;

because, by the exportation of a part of the returns to other European

countries, it annually brought home a much greater quantity of that metal

than it carried out. Both the objection and the reply are founded in the

popular notion which I have been just now examining. It is therefore

unnecessary to say any thing further about either. By the annual

exportation of silver to the East Indies, plate is probably somewhat

dearer in Europe than it otherwise might have been; and coined silver

probably purchases a larger quantity both of labour and commodities. The

former of these two effects is a very small loss, the latter a very small

advantage; both too insignificant to deserve any part of the public

attention. The trade to the East Indies, by opening a market to the

commodities of Europe, or, what comes nearly to the same thing, to the

gold and silver which is purchased with those commodities, must

necessarily tend to increase the annual production of European

commodities, and consequently the real wealth and revenue of Europe. That

it has hitherto increased them so little, is probably owing to the

restraints which it everywhere labours under.

I thought it necessary, though at the hazard of being tedious, to examine

at full length this popular notion, that wealth consists in money or in

gold and silver. Money, in common language, as I have already observed,

frequently signifies wealth; and this ambiguity of expression has rendered

this popular notion so familiar to us, that even they who are convinced of

its absurdity, are very apt to forget their own principles, and, in the

course of their reasonings, to take it for granted as a certain and

undeniable truth. Some of the best English writers upon commerce set out

with observing, that the wealth of a country consists, not in its gold and

silver only, but in its lands, houses, and consumable goods of all

different kinds. In the course of their reasonings, however, the lands,

houses, and consumable goods, seem to slip out of their memory; and the

strain of their argument frequently supposes that all wealth consists in

gold and silver, and that to multiply those metals is the great object of

national industry and commerce.

The two principles being established, however, that wealth consisted in

gold and silver, and that those metals could be brought into a country

which had no mines, only by the balance of trade, or by exporting to a

greater value than it imported; it necessarily became the great object of

political economy to diminish as much as possible the importation of

foreign goods for home consumption, and to increase as much as possible

the exportation of the produce of domestic industry. Its two great engines

for enriching the country, therefore, were restraints upon importation,

and encouragement to exportation.

The restraints upon importation were of two kinds.

First, restraints upon the importation of such foreign goods for home

consumption as could be produced at home, from whatever country they were

imported.

Secondly, restraints upon the importation of goods of almost all kinds,

from those particular countries with which the balance of trade was

supposed to be disadvantageous.

Those different restraints consisted sometimes in high duties, and

sometimes in absolute prohibitions.

Exportation was encouraged sometimes by drawbacks, sometimes by bounties,

sometimes by advantageous treaties of commerce with foreign states, and

sometimes by the establishment of colonies in distant countries.

Drawbacks were given upon two different occasions. When the home

manufactures were subject to any duty or excise, either the whole or a

part of it was frequently drawn back upon their exportation; and when

foreign goods liable to a duty were imported, in order to be exported

again, either the whole or a part of this duty was sometimes given back

upon such exportation.

Bounties were given for the encouragement, either of some beginning

manufactures, or of such sorts of industry of other kinds as were supposed

to deserve particular favour.

By advantageous treaties of commerce, particular privileges were procured

in some foreign state for the goods and merchants of the country, beyond

what were granted to those of other countries.

By the establishment of colonies in distant countries, not only particular

privileges, but a monopoly was frequently procured for the goods and

merchants of the country which established them.

The two sorts of restraints upon importation above mentioned, together

with these four encouragements to exportation, constitute the six

principal means by which the commercial system proposes to increase the

quantity of gold and silver in any country, by turning the balance of

trade in its favour. I shall consider each of them in a particular

chapter, and, without taking much farther notice of their supposed

tendency to bring money into the country, I shall examine chiefly what are

likely to be the effects of each of them upon the annual produce of its

industry. According as they tend either to increase or diminish the value

of this annual produce, they must evidently tend either to increase or

diminish the real wealth and revenue of the country.

CHAPTER II.

OF RESTRAINTS UPON IMPORTATION FROM

FOREIGN COUNTRIES OF SUCH GOODS AS CAN BE PRODUCED AT HOME.

By restraining, either by high duties, or by absolute prohibitions, the

importation of such goods from foreign countries as can be produced at

home, the monopoly of the home market is more or less secured to the

domestic industry employed in producing them. Thus the prohibition of

importing either live cattle or salt provisions from foreign countries,

secures to the graziers of Great Britain the monopoly of the home market

for butcher’s meat. The high duties upon the importation of corn, which,

in times of moderate plenty, amount to a prohibition, give a like

advantage to the growers of that commodity. The prohibition of the

importation of foreign woollen is equally favourable to the woollen

manufacturers. The silk manufacture, though altogether employed upon

foreign materials, has lately obtained the same advantage. The linen

manufacture has not yet obtained it, but is making great strides towards

it. Many other sorts of manufactures have, in the same manner obtained in

Great Britain, either altogether, or very nearly, a monopoly against their

countrymen. The variety of goods, of which the importation into Great

Britain is prohibited, either absolutely, or under certain circumstances,

greatly exceeds what can easily be suspected by those who are not well

acquainted with the laws of the customs.

That this monopoly of the home market frequently gives great encouragement

to that particular species of industry which enjoys it, and frequently

turns towards that employment a greater share of both the labour and stock

of the society than would otherwise have gone to it, cannot be doubted.

But whether it tends either to increase the general industry of the

society, or to give it the most advantageous direction, is not, perhaps,

altogether so evident.

The general industry of the society can never exceed what the capital of

the society can employ. As the number of workmen that can be kept in

employment by any particular person must bear a certain proportion to his

capital, so the number of those that can be continually employed by all

the members of a great society must bear a certain proportion to the whole

capital of the society, and never can exceed that proportion. No

regulation of commerce can increase the quantity of industry in any

society beyond what its capital can maintain. It can only divert a part of

it into a direction into which it might not otherwise have gone; and it is

by no means certain that this artificial direction is likely to be more

advantageous to the society, than that into which it would have gone of

its own accord.

Every individual is continually exerting himself to find out the most

advantageous employment for whatever capital he can command. It is his own

advantage, indeed, and not that of the society, which he has in view. But

the study of his own advantage naturally, or rather necessarily, leads him

to prefer that employment which is most advantageous to the society.

First, every individual endeavours to employ his capital as near home as

he can, and consequently as much as he can in the support of domestic

industry, provided always that he can thereby obtain the ordinary, or not

a great deal less than the ordinary profits of stock.

Thus, upon equal, or nearly equal profits, every wholesale merchant

naturally prefers the home trade to the foreign trade of consumption, and

the foreign trade of consumption to the carrying trade. In the home trade,

his capital is never so long out of his sight as it frequently is in the

foreign trade of consumption. He can know better the character and

situation of the persons whom he trusts; and if he should happen to be

deceived, he knows better the laws of the country from which he must seek

redress. In the carrying trade, the capital of the merchant is, as it

were, divided between two foreign countries, and no part of it is ever

necessarily brought home, or placed under his own immediate view and

command. The capital which an Amsterdam merchant employs in carrying corn

from Koningsberg to Lisbon, and fruit and wine from Lisbon to Koningsberg,

must generally be the one half of it at Koningsberg, and the other half at

Lisbon. No part of it need ever come to Amsterdam. The natural residence

of such a merchant should either be at Koningsberg or Lisbon; and it can

only be some very particular circumstances which can make him prefer the

residence of Amsterdam. The uneasiness, however, which he feels at being

separated so far from his capital, generally determines him to bring part

both of the Koningsberg goods which he destines for the market of Lisbon,

and of the Lisbon goods which he destines for that of Koningsberg, to

Amsterdam; and though this necessarily subjects him to a double charge of

loading and unloading as well as to the payment of some duties and

customs, yet, for the sake of having some part of his capital always under

his own view and command, he willingly submits to this extraordinary

charge; and it is in this manner that every country which has any

considerable share of the carrying trade, becomes always the emporium, or

general market, for the goods of all the different countries whose trade

it carries on. The merchant, in order to save a second loading and

unloading, endeavours always to sell in the home market, as much of the

goods of all those different countries as he can; and thus, so far as he

can, to convert his carrying trade into a foreign trade of consumption. A

merchant, in the same manner, who is engaged in the foreign trade of

consumption, when he collects goods for foreign markets, will always be

glad, upon equal or nearly equal profits, to sell as great a part of them

at home as he can. He saves himself the risk and trouble of exportation,

when, so far as he can, he thus converts his foreign trade of consumption

into a home trade. Home is in this manner the centre, if I may say so,

round which the capitals of the inhabitants of every country are

continually circulating, and towards which they are always tending,

though, by particular causes, they may sometimes be driven off and

repelled from it towards more distant employments. But a capital employed

in the home trade, it has already been shown, necessarily puts into motion

a greater quantity of domestic industry, and gives revenue and employment

to a greater number of the inhabitants of the country, than an equal

capital employed in the foreign trade of consumption; and one employed in

the foreign trade of consumption has the same advantage over an equal

capital employed in the carrying trade. Upon equal, or only nearly equal

profits, therefore, every individual naturally inclines to employ his

capital in the manner in which it is likely to afford the greatest support

to domestic industry, and to give revenue and employment to the greatest

number of people of his own country.

Secondly, every individual who employs his capital in the support of

domestic industry, necessarily endeavours so to direct that industry, that

its produce may be of the greatest possible value.

The produce of industry is what it adds to the subject or materials upon

which it is employed. In proportion as the value of this produce is great

or small, so will likewise be the profits of the employer. But it is only

for the sake of profit that any man employs a capital in the support of

industry; and he will always, therefore, endeavour to employ it in the

support of that industry of which the produce is likely to be of the

greatest value, or to exchange for the greatest quantity either of money

or of other goods.

But the annual revenue of every society is always precisely equal to the

exchangeable value of the whole annual produce of its industry, or rather

is precisely the same thing with that exchangeable value. As every

individual, therefore, endeavours as much as he can, both to employ his

capital in the support of domestic industry, and so to direct that

industry that its produce maybe of the greatest value; every individual

necessarily labours to render the annual revenue of the society as great

as he can. He generally, indeed, neither intends to promote the public

interest, nor knows how much he is promoting it. By preferring the support

of domestic to that of foreign industry, he intends only his own security;

and by directing that industry in such a manner as its produce may be of

the greatest value, he intends only his own gain; and he is in this, as in

many other cases, led by an invisible hand to promote an end which was no

part of his intention. Nor is it always the worse for the society that it

was no part of it. By pursuing his own interest, he frequently promotes

that of the society more effectually than when he really intends to

promote it. I have never known much good done by those who affected to

trade for the public good. It is an affectation, indeed, not very common

among merchants, and very few words need be employed in dissuading them

from it.

What is the species of domestic industry which his capital can employ, and

of which the produce is likely to be of the greatest value, every

individual, it is evident, can in his local situation judge much better

than any statesman or lawgiver can do for him. The statesman, who should

attempt to direct private people in what manner they ought to employ their

capitals, would not only load himself with a most unnecessary attention,

but assume an authority which could safely be trusted, not only to no

single person, but to no council or senate whatever, and which would

nowhere be so dangerous as in the hands of a man who had folly and

presumption enough to fancy himself fit to exercise it.

To give the monopoly of the home market to the produce of domestic

industry, in any particular art or manufacture, is in some measure to

direct private people in what manner they ought to employ their capitals,

and must in almost all cases be either a useless or a hurtful regulation.

If the produce of domestic can be brought there as cheap as that of

foreign industry, the regulation is evidently useless. If it cannot, it

must generally be hurtful. It is the maxim of every prudent master of a

family, never to attempt to make at home what it will cost him more to

make than to buy. The tailor does not attempt to make his own shoes, but

buys them of the shoemaker. The shoemaker does not attempt to make his own

clothes, but employs a tailor. The farmer attempts to make neither the one

nor the other, but employs those different artificers. All of them find it

for their interest to employ their whole industry in a way in which they

have some advantage over their neighbours, and to purchase with a part of

its produce, or, what is the same thing, with the price of a part of it,

whatever else they have occasion for.

What is prudence in the conduct of every private family, can scarce be

folly in that of a great kingdom. If a foreign country can supply us with

a commodity cheaper than we ourselves can make it, better buy it of them

with some part of the produce of our own industry, employed in a way in

which we have some advantage. The general industry of the country being

always in proportion to the capital which employs it, will not thereby be

diminished, no more than that of the abovementioned artificers; but only

left to find out the way in which it can be employed with the greatest

advantage. It is certainly not employed to the greatest advantage, when it

is thus directed towards an object which it can buy cheaper than it can

make. The value of its annual produce is certainly more or less

diminished, when it is thus turned away from producing commodities

evidently of more value than the commodity which it is directed to

produce. According to the supposition, that commodity could be purchased

from foreign countries cheaper than it can be made at home; it could

therefore have been purchased with a part only of the commodities, or,

what is the same thing, with a part only of the price of the commodities,

which the industry employed by an equal capital would have produced at

home, had it been left to follow its natural course. The industry of the

country, therefore, is thus turned away from a more to a less advantageous

employment; and the exchangeable value of its annual produce, instead of

being increased, according to the intention of the lawgiver, must

necessarily be diminished by every such regulation.

By means of such regulations, indeed, a particular manufacture may

sometimes be acquired sooner than it could have been otherwise, and after

a certain time may be made at home as cheap, or cheaper, than in the

foreign country. But though the industry of the society may be thus

carried with advantage into a particular channel sooner than it could have

been otherwise, it will by no means follow that the sum-total, either of

its industry, or of its revenue, can ever be augmented by any such

regulation. The industry of the society can augment only in proportion as

its capital augments, and its capital can augment only in proportion to

what can be gradually saved out of its revenue. But the immediate effect

of every such regulation is to diminish its revenue; and what diminishes

its revenue is certainly not very likely to augment its capital faster

than it would have augmented of its own accord, had both capital and

industry been left to find out their natural employments.

Though, for want of such regulations, the society should never acquire the

proposed manufacture, it would not upon that account necessarily be the

poorer in anyone period of its duration. In every period of its duration

its whole capital and industry might still have been employed, though upon

different objects, in the manner that was most advantageous at the time.

In every period its revenue might have been the greatest which its capital

could afford, and both capital and revenue might have been augmented with

the greatest possible rapidity.

The natural advantages which one country has over another, in producing

particular commodities, are sometimes so great, that it is acknowledged by

all the world to be in vain to struggle with them. By means of glasses,

hot-beds, and hot-walls, very good grapes can be raised in Scotland, and

very good wine, too, can be made of them, at about thirty times the

expense for which at least equally good can be brought from foreign

countries. Would it be a reasonable law to prohibit the importation of all

foreign wines, merely to encourage the making of claret and Burgundy in

Scotland? But if there would be a manifest absurdity in turning towards

any employment thirty times more of the capital and industry of the

country than would be necessary to purchase from foreign countries an

equal quantity of the commodities wanted, there must be an absurdity,

though not altogether so glaring, yet exactly of the same kind, in turning

towards any such employment a thirtieth, or even a three hundredth part

more of either. Whether the advantages which one country has over another

be natural or acquired, is in this respect of no consequence. As long as

the one country has those advantages, and the other wants them, it will

always be more advantageous for the latter rather to buy of the former

than to make. It is an acquired advantage only, which one artificer has

over his neighbour, who exercises another trade; and yet they both find it

more advantageous to buy of one another, than to make what does not belong

to their particular trades.

Merchants and manufacturers are the people who derive the greatest

advantage from this monopoly of the home market. The prohibition of the

importation of foreign cattle and of salt provisions, together with the

high duties upon foreign corn, which in times of moderate plenty amount to

a prohibition, are not near so advantageous to the graziers and farmers of

Great Britain, as other regulations of the same kind are to its merchants

and manufacturers. Manufactures, those of the finer kind especially, are

more easily transported from one country to another than corn or cattle.

It is in the fetching and carrying manufactures, accordingly, that foreign

trade is chiefly employed. In manufactures, a very small advantage will

enable foreigners to undersell our own workmen, even in the home market.

It will require a very great one to enable them to do so in the rude

produce of the soil. If the free importation of foreign manufactures were

permitted, several of the home manufactures would probably suffer, and

some of them perhaps go to ruin altogether, and a considerable part of the

stock and industry at present employed in them, would be forced to find

out some other employment. But the freest importation of the rude produce

of the soil could have no such effect upon the agriculture of the country.

If the importation of foreign cattle, for example, were made ever so free,

so few could be imported, that the grazing trade of Great Britain could be

little affected by it. Live cattle are, perhaps, the only commodity of

which the transportation is more expensive by sea than by land. By land

they carry themselves to market. By sea, not only the cattle, but their

food and their water too, must be carried at no small expense and

inconveniency. The short sea between Ireland and Great Britain, indeed,

renders the importation of Irish cattle more easy. But though the free

importation of them, which was lately permitted only for a limited time,

were rendered perpetual, it could have no considerable effect upon the

interest of the graziers of Great Britain. Those parts of Great Britain

which border upon the Irish sea are all grazing countries. Irish cattle

could never be imported for their use, but must be drove through those

very extensive countries, at no small expense and inconveniency, before

they could arrive at their proper market. Fat cattle could not be drove so

far. Lean cattle, therefore, could only be imported; and such importation

could interfere not with the interest of the feeding or fattening

countries, to which, by reducing the price of lean cattle it would rather

be advantageous, but with that of the breeding countries only. The small

number of Irish cattle imported since their importation was permitted,

together with the good price at which lean cattle still continue to sell,

seem to demonstrate, that even the breeding countries of Great Britain are

never likely to be much affected by the free importation of Irish cattle.

The common people of Ireland, indeed, are said to have sometimes opposed

with violence the exportation of their cattle. But if the exporters had

found any great advantage in continuing the trade, they could easily, when

the law was on their side, have conquered this mobbish opposition.

Feeding and fattening countries, besides, must always be highly improved,

whereas breeding countries are generally uncultivated. The high price of

lean cattle, by augmenting the value of uncultivated land, is like a

bounty against improvement. To any country which was highly improved

throughout, it would be more advantageous to import its lean cattle than

to breed them. The province of Holland, accordingly, is said to follow

this maxim at present. The mountains of Scotland, Wales, and

Northumberland, indeed, are countries not capable of much improvement, and

seem destined by nature to be the breeding countries of Great Britain. The

freest importation of foreign cattle could have no other effect than to

hinder those breeding countries from taking advantage of the increasing

population and improvement of the rest of the kingdom, from raising their

price to an exorbitant height, and from laying a real tax upon all the

more improved and cultivated parts of the country.

The freest importation of salt provisions, in the same manner, could have

as little effect upon the interest of the graziers of Great Britain as

that of live cattle. Salt provisions are not only a very bulky commodity,

but when compared with fresh meat they are a commodity both of worse

quality, and, as they cost more labour and expense, of higher price. They

could never, therefore, come into competition with the fresh meat, though

they might with the salt provisions of the country. They might be used for

victualling ships for distant voyages, and such like uses, but could never

make any considerable part of the food of the people. The small quantity

of salt provisions imported from Ireland since their importation was

rendered free, is an experimental proof that our graziers have nothing to

apprehend from it. It does not appear that the price of butcher’s meat has

ever been sensibly affected by it.

Even the free importation of foreign corn could very little affect the

interest of the farmers of Great Britain. Corn is a much more bulky

commodity than butcher’s meat. A pound of wheat at a penny is as dear as a

pound of butcher’s meat at fourpence. The small quantity of foreign corn

imported even in times of the greatest scarcity, may satisfy our farmers

that they can have nothing to fear from the freest importation. The

average quantity imported, one year with another, amounts only, according

to the very well informed author of the Tracts upon the Corn Trade, to

23,728 quarters of all sorts of grain, and does not exceed the five

hundredth and seventy-one part of the annual consumption. But as the

bounty upon corn occasions a greater exportation in years of plenty, so it

must, of consequence, occasion a greater importation in years of scarcity,

than in the actual state of tillage would otherwise take place. By means

of it, the plenty of one year does not compensate the scarcity of another;

and as the average quantity exported is necessarily augmented by it, so

must likewise, in the actual state of tillage, the average quantity

imported. If there were no bounty, as less corn would be exported, so it

is probable that, one year with another, less would be imported than at

present. The corn-merchants, the fetchers and carriers of corn between

Great Britain and foreign countries, would have much less employment, and

might suffer considerably; but the country gentlemen and farmers could

suffer very little. It is in the corn-merchants, accordingly, rather than

the country gentlemen and farmers, that I have observed the greatest

anxiety for the renewal and continuation of the bounty.

Country gentlemen and farmers are, to their great honour, of all people,

the least subject to the wretched spirit of monopoly. The undertaker of a

great manufactory is sometimes alarmed if another work of the same kind is

established within twenty miles of him; the Dutch undertaker of the

woollen manufacture at Abbeville, stipulated that no work of the same kind

should be established within thirty leagues of that city. Farmers and

country gentlemen, on the contrary, are generally disposed rather to

promote, than to obstruct, the cultivation and improvement of their

neighbours farms and estates. They have no secrets, such as those of the

greater part of manufacturers, but are generally rather fond of

communicating to their neighbours, and of extending as far as possible any

new practice which they may have found to be advantageous. “Pius

quaestus”, says old Cato, “stabilissimusque, minimeque invidiosus;

minimeque male cogitantes sunt, qui in eo studio occupati sunt.” Country

gentlemen and farmers, dispersed in different parts of the country, cannot

so easily combine as merchants and manufacturers, who being collected into

towns, and accustomed to that exclusive corporation spirit which prevails

in them, naturally endeavour to obtain, against all their countrymen, the

same exclusive privilege which they generally possess against the

inhabitants of their respective towns. They accordingly seem to have been

the original inventors of those restraints upon the importation of foreign

goods, which secure to them the monopoly of the home market. It was

probably in imitation of them, and to put themselves upon a level with

those who, they found, were disposed to oppress them, that the country

gentlemen and farmers of Great Britain so far forgot the generosity which

is natural to their station, as to demand the exclusive privilege of

supplying their countrymen with corn and butcher’s meat. They did not,

perhaps, take time to consider how much less their interest could be

affected by the freedom of trade, than that of the people whose example

they followed.

To prohibit, by a perpetual law, the importation of foreign corn and

cattle, is in reality to enact, that the population and industry of the

country shall, at no time, exceed what the rude produce of its own soil

can maintain.

There seem, however, to be two cases, in which it will generally be

advantageous to lay some burden upon foreign, for the encouragement of

domestic industry.

The first is, when some particular sort of industry is necessary for the

defence of the country. The defence of Great Britain, for example, depends

very much upon the number of its sailors and shipping. The act of

navigation, therefore, very properly endeavours to give the sailors and

shipping of Great Britain the monopoly of the trade of their own country,

in some cases, by absolute prohibitions, and in others, by heavy burdens

upon the shipping of foreign countries. The following are the principal

dispositions of this act.

First, All ships, of which the owners, masters, and three-fourths of the

mariners, are not British subjects, are prohibited, upon pain of

forfeiting ship and cargo, from trading to the British settlements and

plantations, or from being employed in the coasting trade of Great

Britain.

Secondly, A great variety of the most bulky articles of importation can be

brought into Great Britain only, either in such ships as are above

described, or in ships of the country where those goods are produced, and

of which the owners, masters, and three-fourths of the mariners, are of

that particular country; and when imported even in ships of this latter

kind, they are subject to double aliens duty. If imported in ships of any

other country, the penalty is forfeiture of ship and goods. When this act

was made, the Dutch were, what they still are, the great carriers of

Europe; and by this regulation they were entirely excluded from being the

carriers to Great Britain, or from importing to us the goods of any other

European country.

Thirdly, A great variety of the most bulky articles of importation are

prohibited from being imported, even in British ships, from any country

but that in which they are produced, under pain of forfeiting ship and

cargo. This regulation, too, was probably intended against the Dutch.

Holland was then, as now, the great emporium for all European goods; and

by this regulation, British ships were hindered from loading in Holland

the goods of any other European country.

Fourthly, Salt fish of all kinds, whale fins, whalebone, oil, and blubber,

not caught by and cured on board British vessels, when imported into Great

Britain, are subject to double aliens duty. The Dutch, as they are still

the principal, were then the only fishers in Europe that attempted to

supply foreign nations with fish. By this regulation, a very heavy burden

was laid upon their supplying Great Britain.

When the act of navigation was made, though England and Holland were not

actually at war, the most violent animosity subsisted between the two

nations. It had begun during the government of the long parliament, which

first framed this act, and it broke out soon after in the Dutch wars,

during that of the Protector and of Charles II. It is not impossible,

therefore, that some of the regulations of this famous act may have

proceeded from national animosity. They are as wise, however, as if they

had all been dictated by the most deliberate wisdom. National animosity,

at that particular time, aimed at the very same object which the most

deliberate wisdom would have recommended, the diminution of the naval

power of Holland, the only naval power which could endanger the security

of England.

The act of navigation is not favourable to foreign commerce, or to the

growth of that opulence which can arise from it. The interest of a nation,

in its commercial relations to foreign nations, is, like that of a

merchant with regard to the different people with whom he deals, to buy as

cheap, and to sell as dear as possible. But it will be most likely to buy

cheap, when, by the most perfect freedom of trade, it encourages all

nations to bring to it the goods which it has occasion to purchase; and,

for the same reason, it will be most likely to sell dear, when its markets

are thus filled with the greatest number of buyers. The act of navigation,

it is true, lays no burden upon foreign ships that come to export the

produce of British industry. Even the ancient aliens duty, which used to

be paid upon all goods, exported as well as imported, has, by several

subsequent acts, been taken off from the greater part of the articles of

exportation. But if foreigners, either by prohibitions or high duties, are

hindered from coming to sell, they cannot always afford to come to buy;

because, coming without a cargo, they must lose the freight from their own

country to Great Britain. By diminishing the number of sellers, therefore,

we necessarily diminish that of buyers, and are thus likely not only to

buy foreign goods dearer, but to sell our own cheaper, than if there was a

more perfect freedom of trade. As defence, however, is of much more

importance than opulence, the act of navigation is, perhaps, the wisest of

all the commercial regulations of England.

The second case, in which it will generally be advantageous to lay some

burden upon foreign for the encouragement of domestic industry, is when

some tax is imposed at home upon the produce of the latter. In this case,

it seems reasonable that an equal tax should be imposed upon the like

produce of the former. This would not give the monopoly of the home

market to domestic industry, nor turn towards a particular employment a

greater share of the stock and labour of the country, than what would

naturally go to it. It would only hinder any part of what would naturally

go to it from being turned away by the tax into a less natural direction,

and would leave the competition between foreign and domestic industry,

after the tax, as nearly as possible upon the same footing as before it.

In Great Britain, when any such tax is laid upon the produce of domestic

industry, it is usual, at the same time, in order to stop the clamorous

complaints of our merchants and manufacturers, that they will be undersold

at home, to lay a much heavier duty upon the importation of all foreign

goods of the same kind.

This second limitation of the freedom of trade, according to some people,

should, upon most occasions, be extended much farther than to the precise

foreign commodities which could come into competition with those which had

been taxed at home. When the necessaries of life have been taxed in any

country, it becomes proper, they pretend, to tax not only the like

necessaries of life imported from other countries, but all sorts of

foreign goods which can come into competition with any thing that is the

produce of domestic industry. Subsistence, they say, becomes necessarily

dearer in consequence of such taxes; and the price of labour must always

rise with the price of the labourer’s subsistence. Every commodity,

therefore, which is the produce of domestic industry, though not

immediately taxed itself, becomes dearer in consequence of such taxes,

because the labour which produces it becomes so. Such taxes, therefore,

are really equivalent, they say, to a tax upon every particular commodity

produced at home. In order to put domestic upon the same footing with

foreign industry, therefore, it becomes necessary, they think, to lay some

duty upon every foreign commodity, equal to this enhancement of the price

of the home commodities with which it can come into competition.

Whether taxes upon the necessaries of life, such as those in Great Britain

upon soap, salt, leather, candles, etc. necessarily raise the price of

labour, and consequently that of all other commodities, I shall consider

hereafter, when I come to treat of taxes. Supposing, however, in the mean

time, that they have this effect, and they have it undoubtedly, this

general enhancement of the price of all commodities, in consequence of

that labour, is a case which differs in the two following respects from

that of a particular commodity, of which the price was enhanced by a

particular tax immediately imposed upon it.

First, It might always be known with great exactness, how far the price of

such a commodity could be enhanced by such a tax; but how far the general

enhancement of the price of labour might affect that of every different

commodity about which labour was employed, could never be known with any

tolerable exactness. It would be impossible, therefore, to proportion,

with any tolerable exactness, the tax of every foreign, to the enhancement

of the price of every home commodity.

Secondly, Taxes upon the necessaries of life have nearly the same effect

upon the circumstances of the people as a poor soil and a bad climate.

Provisions are thereby rendered dearer, in the same manner as if it

required extraordinary labour and expense to raise them. As, in the

natural scarcity arising from soil and climate, it would be absurd to

direct the people in what manner they ought to employ their capitals and

industry, so is it likewise in the artificial scarcity arising from such

taxes. To be left to accommodate, as well as they could, their industry to

their situation, and to find out those employments in which,

notwithstanding their unfavourable circumstances, they might have some

advantage either in the home or in the foreign market, is what, in both

cases, would evidently be most for their advantage. To lay a new-tax upon

them, because they are already overburdened with taxes, and because they

already pay too dear for the necessaries of life, to make them likewise

pay too dear for the greater part of other commodities, is certainly a

most absurd way of making amends.

Such taxes, when they have grown up to a certain height, are a curse equal

to the barrenness of the earth, and the inclemency of the heavens, and yet

it is in the richest and most industrious countries that they have been

most generally imposed. No other countries could support so great a

disorder. As the strongest bodies only can live and enjoy health under an

unwholesome regimen, so the nations only, that in every sort of industry

have the greatest natural and acquired advantages, can subsist and prosper

under such taxes. Holland is the country in Europe in which they abound

most, and which, from peculiar circumstances, continues to prosper, not by

means of them, as has been most absurdly supposed, but in spite of them.

As there are two cases in which it will generally be advantageous to lay

some burden upon foreign for the encouragement of domestic industry, so

there are two others in which it may sometimes be a matter of

deliberation, in the one, how far it is proper to continue the free

importation of certain foreign goods; and, in the other, how far, or in

what manner, it may be proper to restore that free importation, after it

has been for some time interrupted.