could have supported it. The whole gold them is kept at home, and only the surplus and silver annually imported into both part of their work is exported. Mr Hume Spain and Portugal, according to the best frequently takes notice of the inability of the accounts, does not commonly much exceed ancient kings of England to carry on, without £6,000,000 sterling, which, in some years, interruption, any foreign war of long duration. would scarce have paid four months expense of the late war.

The English in those days had nothing wherewithal to purchase the pay and provisions of The commodities most proper for being their armies in foreign countries, but either transported to distant countries, in order to the rude produce of the soil, of which no conpurchase there either the pay and provisions of siderable part could be spared from the home an army, or some part of the money of the consumption, or a few manufactures of the mercantile republic to be employed in pur- coarsest kind, of which, as well as of the rude chasing them, seem to be the finer and more produce, the transportation was too expensive. improved manufactures; such as contain a This inability did not arise from the want of great value in a small bulk, and can therefore money, but of the finer and more improved be exported to a great distance at little ex- manufactures. Bying and selling was transpense. A country whose industry produces acted by means of money in England then as a great annual surplus of such manufactures, well as now. The quantity of circulating which are usually exported to foreign coun- money must have borne the same proportion tries, may carry on for many years a very ex- to the number and value of purchases and pensive foreign war, without either exporting sales usually transacted at that time, which it any considerable quantity of gold and silver, does to those transacted at present; or, rather, or even having any such quantity to export. it must have borne a greater proportion, beA considerable part of the annual surplus of cause there was then no paper, which now ocits manufactures must, indeed, in this case, be cupies a great part of the employment of gold exported without bringing back any returns and silver. Among nations to whom comto the country, though it does to the mer-merce and manufactures are little known, the chant; the government purchasing of the mer- sovereign, upon extraordinary occasions, can chant his bills upon foreign countries, in order seldom draw any considerable aid from his to purchase there the pay and provisions of an subjects, for reasons which shall be explained army. Some part of this surplus, however, hereafter. It is in such countries, therefore, may still continue to bring back a return. that he generally endeavours to accumulate a The manufacturers during the war will have a treasure, as the only resource against such double demand upon them, and be called up- emergencies. Independent of this necessity, on first to work up goods to be sent abroad, he is, in such a situation, naturally disposed for paying the bills drawn upon foreign coun- to the parsimony requisite for accumulation. tries for the pay and provisions of the army: In that simple state, the expense even of a soand, secondly, to work up such as are necessa-vereign is not directed by the vanity which de ry for purchasing the common returns that lights in the gaudy finery of a court, but is had usually been consumed in the country. In employed in bounty to his tenants, and hospithe midst of the most destructive foreign war, tality to his retainers. But bounty and hostherefore, the greater part of manufactures pitality very seldom lead to extravagance; may frequently flourish greatly; and, on the though vanity almost always does. Every contrary, they may decline on the return of Tartar chief, accordingly, has a treasure. The peace. They may flourish amidst the ruin of treasures of Mazepa, chief of the Cossacks in their country, and begin to decay upon the the Ukraine, the famous ally of Charles XII., return of its prosperity. The different state of are said to have been very great. The French many different branches of the British manu- kings of the Merovingian race nad all treafactures during the late war, and for some sures. When they divided eir kingdom time after the peace, may serve as an illustra- among their different children. they divided tion of what has been just now said. their treasures too. The Saxo princes, and No foreign war, of great expense or dura. the first kings after the Conquest, seem liketion, could conveniently be carried on by the wise to have accumulated treasures. The first exportation of the rude produce of the soil. exploit of every new reign was commonly to The expense of sending such a quantity of it seize the treasure of the preceding king, as into a foreign country as might purchase the the most essential measure for securing the pay and provisions of an army would be too succession. The sovereigns of improved and great. Few countries, too, produce much commercial countries are not under the same more rude produce than what is sufficient for necessity of accumulating treasures, because the subsistence of their own inhabitants. To they can generally draw from their subjects send abroad any great quantity of it, therefore, extraordinary aids upon extraordinary occawould be to send abroad a part of the necessions. They are likewise less disposed to do sary subsistence of the people. It is other so. They naturally, perhaps necessarily, folwise with the exportation of manufactures. low the mode of the times; and their expense The maintenance of the people employed in comes to be regulated by the same extravagant

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. So 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 tween 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 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 the merchant resides generally derives the greatest, as he is generally more employed in supplying the wants, and carrying out the superfluities of his own, than of any other particular country. To import the gold and silver which may be wanted into the countries which have no mines, is, no doubt, a part of the business of foreign commerce. It is, however, a most insignificant part of it. A country which carried on foreign trade merely upon this account, could scarce have occasion to freight a ship ir a century.

of America were new to Europe. A new set of exchanges, therefore, began to take place, which had never been thought of before, and which should naturally have proved as advantageous to the new, as it certainly did to the old continent. The savage injustice of the Europeans rendered an event, which ought to have been beneficial to all, ruinous and destructive to several of those unfortunate countries.

The discovery of a passage to the East Indies by the Cape of Good Hope, which happened 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 part of the labour, which it would have cost in the fifteenth century. With the same annual expense of labour and commodities, Europe can annually purchase about three times the quantity of plate which it could have purchased at that time. But when a commodity comes to be sold for a third part of what had been its usual price, not only those who pur

stroyed almost as soon as discovered. The rest were mere savages. But the empires of China, Indostan, Japan, as well as several others in the East Indies, without having richer mines of gold or silver, were, in every other respect, much richer, better cultivated, and more advanced in all arts and manufactures, than either Mexico or Peru, even though we should credit, what plainly deserves no

sumable goods, seem to slip out of their memory; and the strain of their argument frequently supposes that all wealth consists in god and silver, and that to multiply those metals is the great object of national industry and commerce.

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 hazalways 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 reahas ever yet had the benefit of a free com- sonings, however, the lands, houses, and conmerce to the East Indies. No other reason need be assigned why it has never been so advantageous as the trade to America, which, between almost every nation of Europe and its own colonies, is free to all its subjects. The exclusive privileges of those East India companies, their great riches, the great favour The two principles being established, howand 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 bahas 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 dimifrom 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 Eu rope 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 might have been; and coined silver probably 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 de- Exportation 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 creased them so little, is probably owing to liable to a duty were imported, in order to be

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.

ticular countries with which the balance of trade was supposed to be disadvantageous.

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 alBounties 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. prohibited, either absolutely, or under certain By advantageous treaties of commerce, par- circumstances, greatly exceeds what can eaticular privileges were procured in some fo-sily be suspected by those who are not well reign state for the goods and merchants of the acquainted with the laws of the customs. 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.

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 parwithout 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. According 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.

CHAP. II.

OF RESTRAINTS UPON IMPORTATION FROM FO-
REIGN COUNTRIES OF SUCH GOODS AS CAN

BE PRODUCED AT HOME.

certain proportion to the whole capital of the society, and never can excced 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 himself to find out the most advantageous employment 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 the society.

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 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 consumphas 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 on 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.

will always, therefore, endeavour to employ it in the support of that industry of which the produce is likely to be of the greatest value, or to exchange for the greatest quantity either of money or of other goods.

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 se- the 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 market of Lisbon, and of the Lisbon goods which he destines for that of Koningsberg, to Amsterdam; and though this necessarily subjects him to a double charge of loading and 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 submits dustry, or rather is precisely the same thing to this extraordinary charge; and it is in this with that exchangeable value. As every inmanner 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- render 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, countries 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 part of his intention. Nor is it alportation, when, so far as he can, he thus con-ways 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 propitals of the inhabitants of every country are continually circulating, and towards which they are always tending, though, by particular causes, they may sometimes be driven off and repelled from it towards more distant employBut a capital employed in the home 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 p

ments.

mote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it.