vanity which directs that of all the other great | chased it before can purchase three times their proprietors in their dominions. The insigni- former quantity, but it is brought down to the ficant pageantry of their court becomes every level of a much greater number of purchasers, day more brilliant; and the expense of it not perhaps to more than ten, perhaps to more only prevents accumulation, but frequently than twenty times the former number. Sc encroaches upon the funds destined for more that there may be in Europe at present, not necessary expenses. What Dercyllidas said only more than three times, but more than of the court of Persia, may be applied to that twenty or thirty times the quantity of plate of several European princes, that he saw there which would have been in it, even in its premuch splendour, but little strength, and many sent state of improvement, had the discovery servants, but few soldiers. of the American mines never been made. So The importation of gold and silver is not far Europe has, no doubt, gained a real conthe principal, much less the sole benefit, which|veniency, though surely a very trifling one. a nation derives from its foreign trade. Be- The cheapness of gold and silver renders those ween whatever places foreign trade is carried metals rather less fit for the purposes of moon, they all of them derive two distinct bene-ney than they were before. In order to make fits from it. It carries out that surplus part the same purchases, we must load ourselves of the produce of their land and labour for with a greater quantity of them, and carry awhich there is no demand among them, and bout a shilling in our pocket, where a groat brings back in return for it something else for would have done before. It is difficult to say which there is a demand. It gives a value to which is most trifling, this inconveniency, or their superfluities, by exchanging them for the opposite conveniency. Neither the one j something else, which may satisfy a part of nor the other could have made any very estheir wants and increase their enjoyments. By sential change in the state of Europe. The means of it, the narrowness of the home mar- discovery of America, however, certainly made ket does not hinder the division of labour in a most essential one. By opening a new and any particular branch of art or manufacture inexhaustible market to all the commodities of from being carried to the highest perfection. Europe, it gave occasion to new divisions of By opening a more extensive market for what- labour and improvements of art, which in the ever part of the produce of their labour may narrow circle of the ancient commerce could exceed the home consumption, it encourages never have taken place, for want of a market them to improve its productive power, and to to take off the greater part of their produce. augment its annual produce to the utmost, and The productive powers of labour were imthereby to increase the real revenue and wealth proved, and its produce increased in all the of the society. These great and important different countries of Europe, and together services foreign trade is continually occupied with it the real revenue and wealth of the inin performing to all the different countries habitants. The commodities of Europe were between which it is carried on. They all de-almost all new to America, and many of those rive great benefit from it, though that in which of America were new to Europe. A new set the merchant resides generally derives the of exchanges, therefore, began to take place, greatest, as he is generally more employed in which had never been thought of before, and supplying the wants, and carrying out the su- which should naturally have proved as advanperfluities of his own, than of any other parti- tageous to the new, as it certainly did to the cular country. To import the gold and silver old continent. The savage injustice of the which may be wanted into the countries which Europeans rendered an event, which ought to have no mines, is, no doubt, a part of the bu- have been beneficial to all, ruinous and de siness of foreign commerce. It is, however, structive to several of those unfortunate couna most insignificant part of it. A country tries. which carried on foreign trade merely upon The discovery of a passage to the East Inthis account, could scarce have occasion to dies by the Cape of Good Hope, which hap freight a ship in a century. pened much about the same time, opened perIt is not by the importation of gold and sil-haps a still more extensive range to foreign ver that the discovery of America has enrich- commerce, than even that of America, noted Europe. By the abundance of the Ame-withstanding the greater distance. There were rican mines, those metals have become cheap- but two nations in America, in any respect, ¡er. A service of plate can now be purchased superior to the savages, and these were defor about a third part of the corn, or a third stroyed almost as soon as discovered. The part of the labour, which it would have cost rest were mere savages. But the empires of in the fifteenth century. With the same an China, Indostan, Japan, as well as several nual expense of labour and commodities, Eu- others in the East Indies, without having rope can annually purchase about three times richer mines of gold or silver, were, in every the quantity of plate which it could have pur- other respect, much richer, better cultivated, chased at that time. But when a commodity and more advanced in all arts and manufaccomes to be sold for a third part of what had tures, than either Mexico or Peru, even though been its usual price, not only those who pur- we should credit, what plainly deserves no

credit, the exaggerated accounts of the Spanish | the restraints which it everywhere labours writers concerning the ancient state of those under. empires. But rich and civilized nations can I thought it necessary, though at the haz always exchange to a much greater value with ard of being tedious, to examine at full length one another, than with savages and barbarians. this popular notion, that wealth consists in Europe, however, has hitherto derived much money or in gold and silver. Money, in less advantage from its commerce with the common language, as I have already observed, East Indies, than from that with America. frequently signifies wealth; and this ambiguiThe Portuguese monopolized the East India ty of expression has rendered this popular notrade to themselves for about a century; and tion so familiar to us, that even they who are it was only indirectly, and through them, that convinced of its absurdity, are very apt to forthe other nations of Europe could either send get their own principles, and, in the course of out or receive any goods from that country. their reasonings, to take it for granted as a When the Dutch, in the beginning of the last certain and undeniable truth. Some of the best century, began to encroach upon them, they English writers upon commerce set out with vested their whole East India commerce in an observing, that the wealth of a country conexclusive company. The English, French, sists, not in its gold and silver only, but in its Swedes, and Danes, have all followed their lands, houses, and consumable goods of all example; so that no great nation of Europe different kinds. In the course of their rea has ever yet had the benefit of a free com-sonings, however, the lands, houses, and conmerce to the East Indies. No other reason sumable goods, seem to slip out of their me need be assigned why it has never been so ad- mory; and the strain of their argument frevantageous as the trade to America, which, quently supposes that all wealth consists in between almost every nation of Europe and gold and silver, and that to multiply those its own colonies, is free to all its subjects. metals is the great object of national industry The exclusive privileges of those East India and commerce. companies, their great riches, the great favour The two principles being established, how. and protection which these have procured them ever, that wealth consisted in gold and silver, from their respective governments, have ex- and that those metals could be brought into a cited much envy against them. This envy country which had no mines, only by the banas frequently represented their trade as alto-lance of trade, or by exporting to a greater gether pernicious, on account of the great value than it imported; it necessarily became quantities of silver which it every year exports the great object of political economy to dimi from the countries from which it is carried on. The parties concerned have replied, that their trade by this continual exportation of silver, might indeed tend to impoverish Europe in general, but not the particular country from which it was carried on; because, by the exportation of a part of the returns to other European countries, it annually brought home a much greater quantity of that metal than it carried out. Both the objection and the reply are founded in the popular notion which I have been just now examining. It is therefore unnecessary to say any thing further about either. By the annual exportation of Secondly, restraints upon the importation silver to the East Indies, plate is probably of goods of almost all kinds, from those parsomewhat dearer in Europe than it otherwise ticular countries with which the balance of might have been; and coined silver probably trade was supposed to be disadvantageous. purchases a larger quantity both of labour and commodities. The former of these two effects is a very small loss, the latter a very small advantage; both too insignificant to deExportation was encouraged sometimes by serve any part of the public attention. The drawbacks, sometimes by bounties, sometimes trade to the East Indies, by opening a mar- by advantageous treaties of commerce with ket to the commodities of Europe, or, what foreign states, and sometimes by the establishcomes nearly to the same thing, to the gold ment of colonies in distant countries. and silver which is purchased with those com- Drawbacks were given upon two different modities, must necessarily tend to increase occasions. When the home manufactures were the annual production of European commo- subject to any duty or excise, either the whole dities, and consequently the real wealth and or a part of it was frequently drawn back uprevenue of Europe. That it has hitherto in- on their exportation; and when foreign goods crease them so little, is probably owing to liable to a duty were imported, in order to t

nish as much as possible the importation of foreign goods for home consumption, and to increase as much as possible the exportation of the produce of domestic industry. Its two great engines for enriching the country, therefore, were restraints upon importation, and encouragement to exportation.

The restraints upon importation were of two kinds.

First, restraints upon the importation of such foreign goods for home consumption as could be produced at home, from whatever country they were imported.

Those different restraints consisted sometimes in high duties, and sometimes in absolute prohibitions.

exported again, either the whole or a part of but is making great strides towards it. Many this duty was sometimes given back upon such other sorts of manufactures have, in the same exportation. manner obtained in Great Britain, either al Bounties were given for the encouragement, together, or very nearly, a monopoly against either of some beginning manufactures, or of their countrymen. The variety of goods, of such sorts of industry of other kinds as were which the importation into Great Britain is supposed to deserve particular favour.

By advantageous treaties of commerce, particular privileges were procured in some foreign state for the goods and merchants of the country, beyond what were granted to those of other countries.

By the establishment of colonies in distant countries, not only particular privileges, but a monopoly was frequently procured for the goods and merchants of the country which established them.

prohibited, either absolutely, or under certain circumstances, greatly exceeds what can easily be suspected by those who are not well acquainted with the laws of the customs.

That this monopoly of the home market frequently gives great encouragement to that particular species of industry which enjoys it and frequently turns towards that employment a greater share of both the labour and stock of the society than would otherwise have gone to it, cannot be doubted. But whether it tends either to increase the general industry of the society, or to give it the most advantageous direction, is not, perhaps, altogether so evident.

The two sorts of restraints upon importation above mentioned, together with these four encouragements to exportation, constitute the six principal means by which the commercial system proposes to increase the quantity of The general industry of the society can gold and silver in any country, by turning the never exceed what the capital of the society balance of trade in its favour. I shall consi- can employ. As the number of workmen der each of them in a particular chapter, and, that can be kept in employment by any par without taking much farther notice of their ticular person must bear a certain proporsupposed tendency to bring money into the tion to his capital, so the number of those country, I shall examine chiefly what are that can be continually employed by all likely to be the effects of each of them upon the members of a great society must bear a the annual produce of its industry. Accord- certain proportion to the whole capital of the ing as they tend either to increase or diminish the value of this annual produce, they must evidently tend either to increase or diminish the real wealth and revenue of the country. Notes 25, 26.

CHAP. II.

society, and never can exceed that proportion. No regulation of commerce can increase the quantity of industry in any society beyond what its capital can maintain. It can only divert a part of it into a direction into which it might not otherwise have gone; and it is by no means certain that this artificial direction is likely to be more advantageous to the society, than that into which it would have gone of its own accord.

Every individual is continually exerting

OF RESTRAINTS UPON IMPORTATION FROM FO-himself to find out the most advantageous em REIGN COUNTRIES OF SUCH GOONS AS CAN

BE PRODUCED AT HOME.

ployment for whatever capital he can command. It is his own advantage, indeed, and not that of the society, which he has in view. But the study of his own advantage naturally, or rather necessarily, leads him to prefer that employment which is most advantageous to

By restraining, either by high duties, or by absolute prohibitions, the importation of such goods from foreign countries as can be produced at home, the monopoly of the home the society. market is more or less secured to the domes- First, every individual endeavours to emtic industry employed in producing them. ploy his capital as near home as he can, and Thus the prohibition of importing either live consequently as much as he can in the supcattle or salt provisions from foreign coun- port of domestic industry, provided always tries, secures to the graziers of Great Britain that he can thereby obtain the ordinary, or not the monopoly of the home market for but- a great deal less than the ordinary profits of cher's meat. The high duties upon the im-stock.

portation of corn, which, in times of moderate Thus, upon equal, or nearly equal profits, plenty, amount to a prohibition, give a like every wholesale merchant naturally prefers the advantage to the growers of that commodity. home trade to the foreign trade of consump. The prohibition of the importation of foreign tion, and the foreign trade of consumption to woollens is equally favourable to the woollen the carrying trade. In the home trade, his manufacturers. The silk manufacture, though capital is never so long out of his sight as it altogether employed upon foreign materials, frequently is in the foreign trade of consump has lately obtained the same advantage. The tion. He can know better the character and linen manufacture has not yet obtained it, situation of the persons whom he trusts; and

if he should happen to be deceived, he knows | sumption has the same advantage over an equal better the laws of the country from which he capital employed in the carrying trade. Upmust seek redress. In the carrying trade, the pn equal, or only nearly equal profits, therecapital of the merchant is, as it were, divided fore, every individua! naturally inclines to between two foreign countries, and no part of employ his capital in the manner in which it it is ever necessarily brought home, or placed is likely to afford the greatest support to dounder his own immediate view and command. mestic industry, and to give revenue and emThe capital which an Amsterdam merchant ployment to the greatest number of people of employs in carrying corn from Koningsberg his own country.

to Lisbon, and fruit and wine from Lisbon Secondly, every individual who employs his to Koningsberg, must generally be the one capital in the support of domestic industry, half of it at Koningsberg, and the other half necessarily endeavours so to direct that indusat Lisbon. No part of it need ever come to try, that its produce may be of the greatest Amsterdam. The natural residence of such possible value. a merchant should either be at Koningsberg The produce of industry is what it adds to or Lisbon; and it can only be some very par-the subject or materials upon which it is emticular circumstances which can make him ployed. In proportion as the value of this prefer the residence of Amsterdam. The un-produce is great or small, so will likewise be easiness, however, which he feels at being sethe profits of the employer. But it is only parated so far from his capital, generally de-for the sake of profit that any man employs a termines him to bring part both of the Ko- capital in the support of industry; and he ningsberg goods which he destines for the will always, therefore, endeavour to employ it market of Lisbon, and of the Lisbon goods in the support of that industry of which the which he destines for that of Koningsberg, to produce is likely to be of the greatest value, Amsterdam; and though this necessarily sub- or to exchange for the greatest quantity either jects him to a double charge of loading and of money or of other goods. unloading as well as to the payment of some But the annual revenue of every society is duties and customs, yet, for the sake of hav-always precisely equal to the exchangeable vaing some part of his capital always under his lue of the whole annual produce of its inown view and command, he willingly submit dustry, or rather is precisely the same thing to this extraordinary charge; and it is in this with that exchangeable value. As every in manner that every country which has any con-dividual, therefore, endeavours as much as he siderable share of the carrying trade, becomes can, both to employ his capital in the support always the emporium, or general market, for of domestic industry, and so to direct that inthe goods of all the different countries whose dustry that its produce may be of the greatest trade it carries on. The merchant, in order value; every individual necessarily labours to to save a second loading and unloading, en-pender the annual revenue of the society as deavours always to sell in the home market great as he can. He generally, indeed, nei as much of the goods of all those different ther intends to promote the public interest, ountries as he can; and thus, so far as he nor knows how much he is promoting it. By can, to convert his carrying trade into a fo- preferring the support of domestic to that of reign trade of consumption. A merchant, in foreign industry, he intends only his own sethe same manner, who is engaged in the fo- curity; and by directing that industry in such reign trade of consumption, when he collects a manner as its produce may be of the greatgoods for foreign markets, will always be est value, he intends only his own gain; and glad, upon equal or nearly equal profits, to he is in this, as in many other cases, led by sell as great a part of them at home as he can. an invisible hand to promote an end which He saves himself the risk and trouble of ex-was no was no part of his intention. Nor is it alportation, when, so far as he can, he thus conways the worse for the society that it was no verts his foreign trade of consumption into a part of it. By pursuing his own interest, he home trade. Home is in this manner the frequently promotes that of the society more centre, if I may say so, round which the ca- effectually than when he really intends to pro pitals of the inhabitants of every country are mote it. I have never known much good continually circulating, and towards which done by those who affected to trade for the they are always tending, though, by particular public good. It is an affectation, indeed, not causes, they may sometimes be driven off and very common among merchants, and very repelled from it towards more distant employ-words need be employed in dissuading them ments. But a capital employed in the home from it.

few

trade, it has already been shown, necessarily What is the species of domestic industry puts into motion a greater quantity of domes- which his capital can employ, and of which tic industry, and gives revenue and employ- the produce is likely to be of the greatest vament to a greater number of the inhabitants lue, every individual, it is evident, can in his of the country, than an equal capital employ- local situation judge much better than any ed in the foreign trade of consumption; and statesman or lawgiver can do for him. The one employed in the foreign trade of con- statesman, who should attempt to direct pri

vate people in what manner they ought to em- | course. The industry of the country, thereploy their capitals, would not only load him- fore, is thus turned away from a more to a less self with a most unnecessary attention, but as- advantageous employment; and the exchangesume an authority which could safely be trust-able value of its annual produce, instead of ed, not only to no single person, but to no being increased, according to the intention of council or senate whatever, and which would the lawgiver, must necessarily be diminished nowhere be so dangerous as in the hands of a by every such regulation. man who had folly and presumption enough to fancy himself fit to exercise it.

By means of such regulations, indeed, a particular manufacture may sometimes be acTo give the monopoly of the home market quired sooner than it could have been otherto the produce of domestic industry, in any wise, and after a certain time may be made at particular art or manufacture, is in some mea- home as cheap, or cheaper, than in the foreign sure to direct private people in what manner country. But though the industry of the sothey ought to employ their capitals, and must ciety may be thus carried with advantage into in almost all cases be either a useless or a a particular channel sooner than it could have) hurtful regulation. If the produce of domes- been otherwise, it will by no means follow that tic can be brought there as cheap as that of the sum-total, either of its industry, or of its foreign industry, the regulation is evidently revenue, can ever be augmented by any such useless. If it cannot, it must generally be regulation. The industry of the society can hurtful. It is the maxim of every prudent augment only in proportion as its capital aug master of a family, never to attempt to make ments, and its capital can augment only in at home what it will cost him more to make proportion to what can be gradually saved than to buy. The tailor does not attempt to out of its revenue. But the immediate effect make his own shoes, but buys them of the of every such regulation is to diminish its reshoemaker. The shoemaker does not attempt venue; and what diminishes its revenue is to make his own clothes, but employs a tailor. certainly not very likely to augment its capital The farmer attempts to make neither the one faster than it would have augmented of its nor the other, but employs those different ar-own accord, had both capital and industry been X tificers. All of them find it for their interest left to find out their natural employments. to employ their whole industry in a way in which they have some advantage over their neighbours, and to purchase with a part of its produce, or, what is the same thing, with the price of a part of it, whatever else they have occasion for.

Though, for want of such regulations, the society should never acquire the proposed manufacture, it would not upon that account necessarily be the poorer in any one period of its duration. In every period of its duration its whole capital and industry might still have been employed, though upon different objects, in the manner that was most advantageous at the time. In every period its revenue might have been the greatest which its capital could afford, and both capital and revenue might have been augmented with the greatest possible rapidity.

What is prudence in the conduct of every private family, can scarce be folly in that of a great kingdom. If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage. The general industry of The natural advantages which one country the country being always in proportion to the has over another, in producing particular comcapital which employs it, will not thereby be modities, are sometimes so great, that it is acdiminished, no more than that of the above- knowledged by all the world to be in vain to mentioned artificers; but only left to find out struggle with them. By means of glasses, the way in which it can be employed with the hot-beds, and hot-walls, very good grapes can greatest advantage. It is certainly not em- be raised in Scotland, and very good wine, too, ployed to the greatest advantage, when it is can be made of them, at about thirty times the thus directed towards an object which it can expense for which at least equally good can be buy cheaper than it can make. The value of brought from foreign countries. Would it be its annual produce is certainly more or less di- a reasonable law to prohibit the importation of minished, when it is thus turned away from all foreign wines, merely to encourage the producing commodities evidently of more va- making of claret and Burgundy in Scotland? lue than the commodity which it is directed to But if there would be a manifest absurdity in produce. According to the supposition, that turning towards any employment thirty times commodity could be purchased from foreign more of the capital and industry of the councountries cheaper than it can be made at home; try than would be necessary to purchase from it could therefore have been purchased with a foreign countries an equal quantity of the part only of the commodities, or, what is the commodities wanted, there must be an absursame thing, with a part only of the price of dity, though not altogether so glaring, yet exthe commodities, which the industry employ-actly of the same kind, in turning towards any ed by an equal capital would have produced such employment a thirtieth, or even a three at home, had it been left to follow its natural hundredth part more of either Whether the