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

jealousy of merchants and manufacturers. The violence and

injustice of the rulers of mankind is an ancient evil, for which,

I am afraid, the nature of human affairs can scarce admit of a

remedy : but the mean rapacity, the monopolizing spirit, of

merchants and manufacturers, who neither are, nor ought to be,

the rulers of mankind, though it cannot, perhaps, be corrected,

may very easily be prevented from disturbing the tranquillity of

anybody but themselves.

That it was the spirit of monopoly which originally both invented

and propagated this doctrine, cannot be doubted and they who

first taught it, were by no means such fools as they who believed

it. In every country it always is, and must be, the interest of

the great body of the people, to buy whatever they want of those

who sell it cheapest. The proposition is so very manifest, that

it seems ridiculous to take any pains to prove it ; nor could it

ever have been called in question, had not the interested

sophistry of merchants and manufacturers confounded the common

sense of mankind. Their interest is, in this respect, directly

opposite to that of the great body of the people. As it is the

interest of the freemen of a corporation to hinder the rest of

the inhabitants from employing any workmen but themselves; so it

is the interest of the merchants and manufacturers of every

country to secure to themselves the monopoly of the home market.

Hence, in Great Britain, and in most other European countries,

the extraordinary duties upon almost all goods imported by alien

merchants. Hence the high duties and prohibitions upon all those

foreign manufactures which can come into competition with our

own. Hence, too, the extraordinary restraints upon the

importation of almost all sorts of goods from those countries

with which the balance of trade is supposed to be

disadvantageous; that is, from those against whom national

animosity happens ta be most violently inflamed.

The wealth of neighbouring nations, however, though dangerous in

war and politics, is certainly advantageous in trade. In a state

of hostility, it may enable our enemies to maintain fleets and

armies superior to our own; but in a state of peace and commerce

it must likewise enable them to exchange with us to a greater

value, and to afford a better market, either for the immediate

produce of our own industry, or for whatever is purchased with

that produce. As a rich man is likely to be a better customer to

the industrious people in his neighbourhood, than a poor, so is

likewise a rich nation. A rich man, indeed, who is himself a

manufacturer, is a very dangerous neighbour to all those who deal

in the same way. All the rest of the neighbourhood, however, by

far the greatest number, profit by the good market which his

expense affords them. They even profit by his underselling the

poorer workmen who deal in the same way with him. The

manufacturers of a rich nation, in the same manner, may no doubt

be very dangerous rivals to those of their neighbours. This very

competition, however, is advantageous to the great body of the

people, who profit greatly, besides, by the good market which the

great expense of such a nation affords them in every other way.

Private people, who want to make a fortune, never think of

retiring to the remote and poor provinces of the country, but

resort either to the capital, or to some of the great commercial

towns. They know, that where little wealth circulates, there is

little to be got; but that where a great deal is in motion, some

share of it may fall to them. The same maxim which would in this

manner direct the common sense of one, or ten, or twenty

individuals, should regulate the judgment of one, or ten, or

twenty millions, and should make a whole nation regard the riches

of its neighbours, as a probable cause and occasion for itself to

acquire riches. A nation that would enrich itself by foreign

trade, is certainly most likely to do so, when its neighbours are

all rich, industrious and commercial nations. A great nation,

surrounded on all sides by wandering savages and poor barbarians,

might, no doubt, acquire riches by the cultivation of its own

lands, and by its own interior commerce, but not by foreign

trade. It seems to have been in this manner that the ancient

Egyptians and the modern Chinese acquired their great wealth. The

ancient Egyptians, it is said, neglected foreign commerce, and

the modem Chinese, it is known, hold it in the utmost contempt,

and scarce deign to afford it the decent protection of the laws.

The modern maxims of foreign commerce, by aiming at the

impoverishment of all our neighbours, so far as they are capable

of producing their intended effect, tend to render that very

commerce insignificant and contemptible.

It is in consequence of these maxims, that the commerce between

France and England has, in both countries, been subjected to so

many discouragements and restraints. If those two countries,

however, were to consider their real interest, without either

mercantile jealousy or national animosity, the commerce of France

might be more advantageous to Great Britain than that of any

other country, and, for the same reason, that of Great Britain to

France. France is the nearest neighbour to Great Britain. In the

trade between the southern coast of England and the northern and

north-western coast of France, the returns might be expected, in

the same manner as in the inland trade, four, five, or six times

in the year. The capital, therefore, employed in this trade

could, in each of the two countries, keep in motion four, five,

or six times the quantity of industry, and afford employment and

subsistence to four, five, or six times the number of people,

which all equal capital could do in the greater part of the other

branches of foreign trade. Between the parts of France and Great

Britain most remote from one another, the returns might be

expected, at least, once in the year ; and even this trade would

so far be at least equally advantageous, as the greater part of

the other branches of our foreign European trade. It would be, at

least, three times more advantageous than the boasted trade with

our North American colonies, in which the returns were seldom

made in less than three years, frequently not in less than four

or five years. France, besides, is supposed to contain 24,000,000

of inhabitants. Our North American colonies were never supposed

to contain more than 3,000,000; and France is a much richer

country than North America; though, on account of the more

unequal distribution of riches, there is much more poverty and

beggary in the one country than in the other. France, therefore,

could afford a market at least eight times more extensive, and,

on account of the superior frequency of the returns,

four-and-twenty times more advantageous than that which our North

American colonies ever afforded. The trade of Great Britain would

be just as advantageous to France, and, in proportion to the

wealth, population, and proximity of the respective countries,

would have the same superiority over that which France carries on

with her own colonies. Such is the very great difference between

that trade which the wisdom of both nations has thought proper to

discourage, and that which it has favoured the most.

But the very same circumstances which would have rendered an open

and free commerce between the two countries so advantageous to

both, have occasioned the principal obstructions to that

commerce. Being nighbours, they are necessarily enemies, and the

wealth and power of each becomes, upon that account, more

formidable to the other; and what would increase the advantage of

national friendship, serves only to inflame the violence of

national animosity. They are both rich and industrious nations;

and the merchants and manufacturers of each dread the competition

of the skill and activity of those of the other. Mercantile

jealousy is excited, and both inflames, and is itself inflamed,

by the violence of national animosity, and the traders of both

countries have announced, with all the passionate confidence of

interested falsehood, the certain ruin of each, in consequence of

that unfavourable balance of trade, which, they pretend, would be

the infallible effect of an unrestrained commerce with the other.

There is no commercial country in Europe, of which the

approaching ruin has not frequently been foretold by the

pretended doctors of this system, from all unfavourably balance

of trade. After all the anxiety, however, which they have

excited about this, after all the vain attempts of almost all

trading nations to turn that balance in their own favour, and

against their neighbours, it does not appear that any one nation

in Europe has been, in any respect, impoverished by this cause.

Every town and country, on the contrary, in proportion as they

have opened their ports to all nations, instead of being ruined

by this free trade, as the principles of the commercial system

would lead us to expect, have been enriched by it. Though there

are in Europe indeed, a few towns which, in same respects,

deserve the name of free ports, there is no country which does

so. Holland, perhaps, approaches the nearest to this character of

any, though still very remote from it; and Holland, it is

acknowledged, not only derives its whole wealth, but a great part

of its necessary subsistence, from foreign trade.

There is another balance, indeed, which has already been

explained, very different from the balance of trade, and which,

according as it happens to be either favourable or unfavourable,

necessarily occasions the prosperity or decay of every nation.

This is the balance of the annual produce and consumption. If the

exchangeable value of the annual produce, it has already been

observed, exceeds that of the annual consumption, the capital of

the society must annually increase in proportion to this excess.

The society in this case lives within its revenue; and what is

annually saved out of its revenue, is naturally added to its

capital, and employed so as to increase still further the annual

produce. If the exchangeable value of the annual produce, on the

contrary, fall short of the annual consumption, the capital of

the society must annually decay in prorportion to this

deficiency. The expense of the society, in this case, exceeds its

revenue, and necessarily encroaches upon its capital. Its

capital, therefore, must necessarily decay, and, together with

it, the exchangeable value of the annual produce of its industry.

This balance of produce and consumption is entirely different

from what is called the balance of trade. It might take place in

a nation which had no foreign trade, but which was entirely

separated from all the world. It may take place in the whole

globe of the earth, of which the wealth, population, and

improvement, may be either gradually increasing or gradually

decaying.

The balance of produce and consumption may be constantly in

favour of a nation, though what is called the balance of trade be

generally against it. A nation may import to a greater value than

it exports for half a century, perhaps, together; the gold and

silver which comes into it during all this time, may be all

immediately sent out of it; its circulating coin may gradually

decay, different sorts of paper money being substituted in its

place, and even the debts, too, which it contracts in the

principal nations with whom it deals, may be gradually

increasing; and yet its real wealth, the exchangeable value of

the annual produce of its lands and labour, may, during the same

period, have been increasing in a much greater proportion. The

state of our North American colonies, and of the trade which they

carried on with Great Britain,