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

; that is, break down the exclusive privileges of corporations,

and repeal the statute of apprenticeship, both which are really

encroachments upon natural Liberty, and add to those the repeal

of the law of settlements, so that a poor workman, when thrown

out of employment, either in one trade or in one place, may seek

for it in another trade or in another place, without the fear

either of a prosecution or of a removal; and neither the public

nor the individuals will suffer much more from the occasional

disbanding some particular classes of manufacturers, than from

that of the soldiers. Our manufacturers have no doubt great merit

with their country, but they cannot have more than those who

defend it with their blood, nor deserve to be treated with more

delicacy.

To expect, indeed, that the freedom of trade should ever be

entirely restored in Great Britain, is as absurd as to expect

that an Oceana or Utopia should ever be established in it. Not

only the prejudices of the public, but, what is much more

unconquerable, the private interests of many individuals,

irresistibly oppose it. Were the officers of the army to oppose,

with the same zeal and unanimity, any reduction in the number of

forces, with which master manufacturers set themselves against

every law that is likely to increase the number of their rivals

in the home market ; were the former to animate their soldiers.

In the same manner as the latter inflame their workmen, to attack

with violence and outrage the proposers of any such regulation;

to attempt to reduce the army would be as dangerous as it has now

become to attempt to diminish, in any respect, the monopoly which

our manufacturers have obtained against us. This monopoly has so

much increased the number of some particular tribes of them,

that, like an overgrown standing army, they have become

formidable to the government, and, upon many occasions,

intimidate the legislature. The member of parliament who supports

every proposal for strengthening this monopoly, is sure to

acquire not only the reputation of understanding trade, but great

popularity and influence with an order of men whose numbers and

wealth render them of great importance. If he opposes them, on

the contrary, and still more, if he has authority enough to be

able to thwart them, neither the most acknowledged probity, nor

the highest rank, nor the greatest public services, can protect

him from the most infamous abuse and detraction, from personal

insults, nor sometimes from real danger, arising from the

insolent outrage of furious and disappointed monopolists.

The undertaker of a great manufacture, who, by the home markets

being suddenly laid open to the competition of foreigners, should

be obliged to abandon his trade, would no doubt suffer very

considerably. That part of his capital which had usually been

employed in purchasing materials, and in paying his workmen,

might, without much difficulty, perhaps, find another employment

; but that part of it which was fixed in workhouses, and in the

instruments of trade, could scarce be disposed of without

considerable loss. The equitable regard, therefore, to his

interest, requires that changes of this kind should never be

introduced suddenly, but slowly, gradually, and after a very long

warning. The legislature, were it possible that its deliberations

could be always directed, not by the clamorous importunity of

partial interests, but by an extensive view of the general good,

ought, upon this very account, perhaps, to be particularly

careful, neither to establish any new monopolies of this kind,

nor to extend further those which are already established. Every

such regulation introduces some degree of real disorder into the

constitution of the state, which it will be difficult afterwards

to cure without occasioning another disorder.

How far it may be proper to impose taxes upon the importation of

foreign goods, in order not to prevent their importation, but to

raise a revenue for government, I shall consider hereafter when I

come to treat of taxes. Taxes imposed with a view to prevent, or

even to diminish importation, are evidently as destructive of the

revenue of the customs as of the freedom of trade.

CHAPTER III.

OF THE EXTRAORDINARY RESTRAINTS UPON THE IMPORTATION OF GOODS OF

ALMOST ALL KINDS, FROM THOSE COUNTRIES WITH WHICH THE BALANCE IS

SUPPOSED TO BE DISADVANTAGEOUS.

Part I - Of the Unreasonableness of those Restraints, even upon

the Principles of the Commercial System.

To lay extraordinary restraints upon the importation of goods of

almost all kinds, from those particular countries with which the

balance of trade is supposed to be disadvantageous, is the second

expedient by which the commercial system proposes to increase the

quantity of gold and silver. Thus, in Great Britain, Silesia

lawns may be imported for home consumption, upon paying certain

duties; but French cambrics and lawns are prohibited to be

imported, except into the port of London, there to be warehoused

for exportation. Higher duties are imposed upon the wines of

France than upon those of Portugal, or indeed of any other

country. By what is called the impost 1692, a duty of five

and-twenty per cent. of the rate or value, was laid upon all

French goods; while the goods of other nations were, the greater

part of them, subjected to much lighter duties, seldom exceeding

five per cent. The wine, brandy, salt, and vinegar of France,

were indeed excepted; these commodities being subjected to other

heavy duties, either by other laws, or by particular clauses of

the same law. In 1696, a second duty of twentyfive per cent. the

first not having been thought a sufficient discouragement, was

imposed upon all French goods, except brandy ; together with a

new duty of five-and-twenty pounds upon the ton of French wine,

and another of fifteen pounds upon the ton of French vinegar.

French goods have never been omitted in any of those general

subsidies or duties of five per cent. which have been imposed

upon all, or the greater part, of the goods enumerated in the

book of rates. If we count the one-third and two-third subsidies

as making a complete subsidy between them, there have been five

of these general subsidies; so that, before the commencement of

the present war, seventy-five per cent. may be considered as the

lowest duty to which the greater part of the goods of the growth,

produce, or manufacture of France, were liable. But upon the

greater part of goods, those duties are equivalent to a

prohibition. The French, in their turn, have, I believe, treated

our goods and manufactures just as hardly; though I am not so

well acquainted with the particular hardships which they have

imposed upon them. Those mutual restraints have put an end to

almost all fair commerce between the two nations; and smugglers

are now the principal importers, either of British goods into

France, or of French goods into Great Britain. The principles

which I have been examining, in the foregoing chapter, took their

origin from private interest and the spirit of monopoly ; those

which I am going te examine in this, from national prejudice and

animosity. They are, accordingly, as might well be expected,

still more unreasonable. They are so, even upon the principles of

the commercial system.

First, Though it were certain that in the case of a free trade

between France and England, for example, the balance would be in

favour of France, it would by no means follow that such a trade

would be disadvantageous to England, or that the general balance

of its whole trade would thereby be turned more against it. If

the wines of France are better and cheaper than those of

Portugal, or its linens than those of Germany, it would be more

advantageous for Great Britain to purchase both the wine and the

foreign linen which it had occasion for of France, than of

Portugal and Germany. Though the value of the annual importations

from France would thereby be greatly augmented, the value of the

whole annual importations would be diminished, in proportion as

the French goods of the same quality were cheaper than those of

the other two countries. This would be the case, even upon the

supposition that the whole French goods imported were to be

consumed in Great Britain.

But, Secondly, A great part of them might be re-exported to other

countries, where, being sold with profit, they might bring back a

return. equal in value, perhaps, to the prime cost of the whole

French goods imported. What has frequently been said of the East

India trade, might possibly be true of the French; that though

the greater part of East India goods were bought with gold and

silver, the re-exportation of a part of them to other countries

brought back more gold and silver to that which carried on the

trade, than the prime cost of the whole amounted to. One of the

most important branches of the Dutch trade at present, consists

in the carriage of French goods to other European countries. Some

part even of the French wine drank in Great Britain, is

clandestinely imported from Holland and Zealand. If there was

either a free trade between France and England, or if French

goods could be imported upon paying only the same duties as those

of other European nations, to be drawn back upon exportation,

England might have some share of a trade which is found so

advantageous to Holland.

Thirdly, and lastly, There is no certain criterion by which we

can determine on which side what is called the balance between

any two countries lies, or which of them exports to the greatest

value. National prejudice and animosity, prompted always by the

private interest of particular traders, are the principles which

generally direct our judgment upon all questions concerning it.

There are two criterions, however, which have frequently been

appealed to upon such occasions, the custom-house books and the

course of exchange. The custom-house books, I think, it is now

generally acknowledged, are a very uncertain criterion, on

account of the inaccuracy of the valuation at which the greater

part of goods are rated in them. The course of exchange is,

perhaps, almost equally so.

When the exchange between two places, such as London and Paris,

is at par, it is said to be a sign that the debts due from London

to Paris are compensated by those due from Paris to London. On

the contrary, when a premium is paid at London for a bill upon

Paris, it is said to be a sign that the debts due from London to

Paris are not compensated by those due from Paris to London, but

that a balance in money must be sent out from the latter place;

for the risk, trouble, and expense, of exporting which, the

premium is both demanded and given. But the ordinary state of

debt and credit between those two cities must necessarily be

regulated, it is said, by the ordinary course of their dealings

with one another. When neither of them imports from from other to

a greater amount than it exports to that other, the debts and

credits of each may compensate one another. But when one of them

imports from the other to a greater value than it exports to that

other, the former necessarily becomes indebted to the latter in a

greater sum than the latter becomes indebted to it: the debts and

credits of each do not compensate one another, and money must be

sent out from that place of which the debts overbalance the

credits. The ordinary course of exchange, therefore, being an

indication of the ordinary state of debt and credit between two

places, must likewise be an indication of the ordinary course of

their exports and imports, as these necessarily regulate that

state.

But though the ordinary course