An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith (ebook reader macos .TXT) 📕

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 Portual 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

status 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 enrichiug 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 seedtime 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