"This double effect of drawing capital from all other trades, and of raising the rate of profit somewhat higher than it otherwise would have been in all trades, was not only produced by this monopoly upon its first establishment, but has continued to be produced by it ever since.

"But whatever raises in any country the ordinary rate of profit higher than it otherwise would be, necessarily subjects that country both to an absolute and to a relative disadvantage in every branch of trade of which she has not the monopoly.

It subjects her to an absolute disadvantage: because, in such branches of trade, her merchants cannot get this greater profit, without selling dearer than they otherwise would do both the goods of foreign countries which they import into their own, and the goods of their own country which they export to foreign countries. Their own country must both buy dearer and sell dearer; must both buy less and sell less; must both enjoy less and produce less, than she otherwise would do.

"It subjects her to a relative disadvantage; because, in such branches of trade, it sets other countries, which are not subject to the same absolute disadvantage, either more above her or less below her than they otherwise would be. It enables them both to enjoy more and to produce more in proportion to what she enjoys and produces. It renders their superiority greater, or their inferiority less, than it otherwise would be. By raising the price of her produce above what it otherwise would be, it enables the mer

chants of other countries to under-sell her in foreign markets, and thereby to justle her out of almost all those branches of trade of which she has not the monopoly."

These reflections, which are extremely sagacious and uncommonly just, clearly shew the inutility of the efforts of monopolies to make the balance of trade turn to their advantage. The advantages which a monopoly obtains in the branches of trade of which it has possessed itself, are compensated by the disadvantages which it experiences in the other branches which it has been forced to relinquish; the counterpoise of general interest restores the equilibrium which it seeks to destroy; and, after all, if it be malignant, if it stop the progress of wealth, it derives no benefit from the harm it does. May this lamentable result enlighten monopolizing nations concerning the useless crimes of which they render themselves guilty towards other nations, and recall them to sentiments more congenial with their true interests! Were they even to open the ports of their colonies to the commerce of all nations, they still would find numerous advantages in the possession of territories of immense extent, of invaluable fertility, the productions of which cannot answer the demand, and which productions, by their variety and novelty, as well as by their plenty, insure to them infinite advantages in the balance of general

commerce.

* Wealth of Nations, vol. ii. pages 449, 450, 452, 453, 457, 458, 459.

Let us, therefore, conclude, that the monopoly of colonial trade is a method of commerce as defective as that of privileged companies and corporations, and ought to be universally condemned for the interest of public and private wealth.

CHAP. VIII.

Of Treaties of Commerce.

HAD nations at all times possessed correct notions of the circulation of the produce of labour or commerce, they never would have thought of confining it within the extent of a country, and frequently within a separate district of the same empire.

But almost all having at first imagined that it was advantageous for them to insulate themselves, to refuse communicating with other nations, and to keep their means and their resources undivided; it happened that, in proportion as political economy made any progress, enlightened nations availed themselves of every circumstance calculated to open a market for their produce among other nations, and to introduce new means of exchange into their own country.

Accordingly, treaties of commerce have been entered into by certain nations for the mutual exchange of the produce of their labour. Are such treaties favourable, or detrimental to the progress of public and private wealth?

E E

The principles established in this work render the solution of this question extremely easy.

When treaties of commerce are limited to the establishing of a trade between two countries, which before had no dealings with each other, such treaties are evidently beneficial to both countries, and must accelerate the progress of their labour, industry, and wealth.

But when these treaties are exclusive; when, while they allow the circulation of the produce of the labour of the two nations, they exclude the circulation of the produce of other countries, or only tolerate it on burthensome conditions; they are less beneficial, because they establish a monopoly which must lower the price of productions with regard to the producers, and raise it with regard to the consumers; and, consequently, they discourage production by diminishing consumption. The trade, under such circumstances. is not very profitable; yet it is more so than if the treaty had not taken place at all.

All questions, therefore, concerning a trade effected by commercial treaties are of the same nature as those concerning monopolies, and receive the same solution. It is a constant truth, that the limits imposed to trade, whatever may be their nature, are more or less fatal, and that trade is the more profitable and advantageous, the less it is confined and obstructed, and the more it is general.

CHAP. IX.

Of Exchanges and the Balance of Trade.

ALL nations have endeavoured to ascertain their share in the advantages derived from the circulation of the produce of general labour, their proportion of trade to that of other nations, and the extent of relative and absolute power gained through that circulation. Their inquiries were not dictated by an idle curiosity, or an ambitious ostentation; they were instigated by the hope of discovering rules to be directed in by their commercial concerns with other countries. It was supposed that, by restricting these concerns with nations to which commerce is profitable, and multiplying them with those to which it proves disadvantageous, greater benefits would be derived from trade. A particular attention was therefore bestowed upon the balance of trade, and upon the exchange with dif ferent places and different countries.

But experience, that great crucible of error and truth, has taught the most superstitious that they were running after vain illusions; that the information to which they attach so much importance, is concealed under an impenetrable cloud; and that, after all, any commerce between two nations is always advantageous to both, though in unequal degrees. It appears, at first sight, that an accurate register of