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Facts in this instance support the principles, and tend to demonstrate alike that private and public wealth does not result from the direction of labour, capitals, and commerce, to a particular spot, but from their direction to the soil, industry, and commerce, which yield the most abundant produce, the consumption of which is most certain, and whose exchangeable value is most considerable.
As wealth consists in the surplus of produce above consumption, it is the interest of every individual, of every nation, of the whole world, to cultivate the most fertile soils which yield the most considerable net produce, to favour the industry of the country whose productions cost least and possess the greatest value, and to encourage the least expensive and most economical commerce. The more the surplus of the productions of the soil, industry, and commerce, are considerable, the more they increase general wealth, afford resources to private capitals, and contribute to develope individual faculties.
The advantages which nature or social institutions have conferred on some countries are not prejudicial to the countries that are deprived of those advantages; they may, on the contrary, furnish them with useful means of prosperity and wealth. The abundance of the produce of America has fertilized the greatest part of the soil of Europe, created or at least accelerated the progress of her industry, and laid the foundation of her immense commerce. The sugar, coffee, cotton, and tobacco of America have encouraged in Europe the growing of corn and rearing of cattle, the working of mines and improving of fisheries, the growth of the
manufactures of linen, silks, hardware, woollen cloth, jewellery, household-furniture, and arms, and the perfection of navigation and commerce. The assertion therefore is correct, that Europe is grown rich with the wealth of America ; and the result will constantly and every-where be the same. The characteristic of wealth is to spread, to multiply in its progress, and to swell in proportion to the extent of the ground it has gone over. All doctrines that preach local labour, local industry, and local commerce, stop tile circulation of wealth, stint its growth, and limit its extent. In short, the progress of general wealth is so much the more rapid, when it is the result of the concurrence of general labour, of all capitals, and of universal commerce ; and it is so much slower when wealth is the result of private labour, and of the capitals and commerce of an individual nation.
But if it must be acknowledged, and if Adam Smith himself has confessed, that Europe has derived great advantages from the colonization of America, it does not appear equally certain that nations with colonies have shared more largely in those advantages than those nations that have no colonies.
“ The particular advantages,” says Adam Smith, “ which each colonizing country derives from the colonies which particularly belong to it, are of two different kinds; first, those common advantages which every empire derives from the provinces subject to its dominion ; and, secondly, those peculiar advantages which are supposed to result from provinces of so very peculiar a nature as the European colonies of America.
“ The common advantages which every empire derives from the provinces subject to its dominion consist, first, in the military force which they furnish for its defence ; and, secondly, in the revenue which they furnish for the support of its civil government.— The European colonies of America have never yet furnished any military force for the defence of the mother-country. The military force has never yet been sufficient for their own defence; and in the different wars in which the mother-countries have been engaged, the defence of their colonies has generally occasioned a very considerable distraction of the military force of those countries. In this respect, therefore, all the European colonies have, without exception, been a cause rather of weakness than of strength to their respective mother-country.” “
This assertion of Adam Smith does not appear quite correct. The provinces subject to the same dominion in general contribute to the support of the military force and civil government of the country by their pecuniary contributions; and the colonies of America pay such contributions, not only for their own defence and their civil government, but also for the defence and civil government of the mother-country. They are not, it is true, direct contributions; and for that reason have not the appearance of contributions. But they are not less so in reality; and whether it be by taxes on the consumption of the colonies, or by taxes on the produce of the colonies at its importation in the ports of the mother-country, or, lastly,
* I Wealth of Nations, vol. ii. pages 447, 448.
by the monopoly of colonial trade, the wealth of the colonies does effectually contribute to the defence and civil government of the mother-country as all the other wealth of the mother-country does. Adam Smith asserts, it is true, that the monopoly of colonial trade is of little benefit to the mothercountry : but this circumstance is perfectly indifferent, since the monopoly is not the less burthensome to the colonies; and hence it is not fair to conclude that it ought to count for nothing in the catalogue of the advantages which the mother-country derives from colonies. How many other burthens laid upon the wealth of the mother-country are not more beneficial to the state; and yet no one ever attempted to maintain that the individuals subject to those burthens do not contribute to the defence and civil government of the empire But how far is Adam Smith warranted in asserting that the monopoly of colonial trade, so prejudicial to the colonies, is of no benefit to the mother-country This fact is entitled to an attentive consideration, because it affords instructive information concerning the nature and effects of monopolies. “ The exclusive trade of the colonies,” says Adam Smith, “ as it diminishes, or at least keeps down below what they would otherwise rise to, both the enjoyments and the industry of the countries which do not possess it; so it gives an evident advantage to the countries which do possess it over those of other countries. “ The advantage, however, will perhaps be found to be rather what may be called a relative than an absolute advantage; and to give a superiority to the country which enjoys it, rather by depressing the industry and produce of other countries, than by raising those of that particular country above what they would maturally rise to in the case of a free trade. “ In order, however, to obtain this relative advantage in the colony-trade, in order to execute the invidious and malignant project of excluding as much as possible other nations from any share in it; England, there are very probable reasons for believing, has not only sacrificed a part of the absolute advantage which she, as well as every other nation, might have derived from that trade, but has subjected herself both to an absolute and to a relative disadvantage in almost every other branch of trade. “But in an employment of capital in which the merchant sold very dear and bought very cheap, the profit must have been very great, and much above the ordinary level of profit in other branches of trade. This superiority of profit in the colony-trade could not fail to draw from other branches of trade a part of the capital which had before been employed by them. But this revulsion of capital, as it must have gradually increased the competition of capitals in the colony-trade, so it must have gradually diminished that competition in all those other branches of trade ; as it must have gradually lowered the profits of the one, so it must have gradually raised those of the other, till the profits of all came to a new level, different from and somewhat higher than that at which they had been before.