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at which a shopkeeper would have sold them, he lost a part of the
profit of his shop-keeping capital. Though he might appear,
therefore, to make a double profit upon the same piece of goods, yet,
as these goods made successively a part of two distinct capitals, he
made but a single profit upon the whole capital employed about them;
and if he made less than his profit, he was a loser, and did not
employ his whole capital with the same advantage as the greater part
of his neighbours.

What the manufacturer was prohibited to do, the farmer was in some
measure enjoined to do; to divide his capital between two different
employments; to keep one part of it in his granaries and stack-yard,
for supplying the occasional demands of the market, and to employ the
other in the cultivation of his land. But as he could not afford to
employ the latter for less than the ordinary profits of farming stock,
so he could as little afford to employ the former for less than the
ordinary profits of mercantile stock. Whether the stock which really
carried on the business of a corn merchant belonged to the person who
was called a farmer, or to the person who was called a corn merchant,
an equal profit was in both cases requisite, in order to indemnify its
owner for employing it in this manner, in order to put his business on
a level with other trades, and in order to hinder him from having an
interest to change it as soon as possible for some other. The farmer,
therefore, who was thus forced to exercise the trade of a corn
merchant, could not afford to sell his corn cheaper than any other
corn merchant would have been obliged to do in the case of a free
competition.

The dealer who can employ his whole stock in one single branch of
business, has an advantage of the same kind with the workman who can
employ his whole labour in one single operation. As the latter
acquires a dexterity which enables him, with the same two hands, to
perform a much greater quantity of work, so the former acquires so
easy and ready a method of transacting his business, of buying and
disposing of his goods, that with the same capital he can transact a
much greater quantity of business. As the one can commonly afford his
work a good deal cheaper, so the other can commonly afford his goods
somewhat cheaper, than if his stock and attention were both employed
about a greater variety of objects. The greater part of manufacturers
could not afford to retail their own goods so cheap as a vigilant and
active shopkeeper, whose sole business it was to buy them by wholesale
and to retail them again. The greater part of farmers could still less
afford to retail their own corn, to supply the inhabitants of a town,
at perhaps four or five miles distance from the greater part of them,
so cheap as a vigilant and active corn merchant, whose sole business
it was to purchase corn by wholesale, to collect it into a great
magazine, and to retail it again.

The law which prohibited the manufacturer from exercising the trade of
a shopkeeper, endeavoured to force this division in the employment of
stock to go on faster than it might otherwise have done. The law which
obliged the farmer to exercise the trade of a corn merchant,
endeavoured to hinder it from going on so fast. Both laws were evident
violations of natural liberty, and therefore unjust; and they were
both, too, as impolitic as they were unjust. It is the interest of
every society, that things of this kind should never either he forced
or obstructed. The man who employs either his labour or his stock in a
greater variety of ways than his situation renders necessary, can
never hurt his neighbour by underselling him. He may hurt himself, and
he generally does so. Jack-of-all-trades will never be rich, says the
proverb. But the law ought always to trust people with the care of
their own interest, as in their local situations they must generally
be able to judge better of it than the legislature can do. The law,
however, which obliged the farmer to exercise the trade of a corn
merchant was by far the most pernicious of the two.

It obstructed not only that division in the employment of stock which
is so advantageous to every society, but it obstructed likewise the
improvement and cultivation of the land. By obliging the farmer to
carry on two trades instead of one, it forced him to divide his
capital into two parts, of which one only could be employed in
cultivation. But if he had been at liberty to sell his whole crop to a
corn merchant as fast as he could thresh it out, his whole capital
might have returned immediately to the land, and have been employed in
buying more cattle, and hiring more servants, in order to improve and
cultivate it better. But by being obliged to sell his corn by retail,
he was obliged to keep a great part of his capital in his granaries
and stack-yard through the year, and could not therefore cultivate so
well as with the same capital he might otherwise have done. This law,
therefore, necessarily obstructed the improvement of the land, and,
instead of tending to render corn cheaper, must have tended to render
it scarcer, and therefore dearer, than it would otherwise have been.

After the business of the farmer, that of the corn merchant is in
reality the trade which, if properly protected and encouraged, would
contribute the most to the raising of corn. It would support the trade
of the farmer, in the same manner as the trade of the wholesale dealer
supports that of the manufacturer.

The wholesale dealer, by affording a ready market to the manufacturer,
by taking his goods off his hand as fast as he can make them, and by
sometimes even advancing their price to him before he has made them,
enables him to keep his whole capital, and sometimes even more than
his whole capital, constantly employed in manufacturing, and
consequently to manufacture a much greater quantity of goods than if
he was obliged to dispose of them himself to the immediate consumers,
or even to the retailers. As the capital of the wholesale merchant,
too, is generally sufficient to replace that of many manufacturers,
this intercourse between him and them interests the owner of a large
capital to support the owners of a great number of small ones, and to
assist them in those losses and misfortunes which might otherwise
prove ruinous to them.

An intercourse of the same kind universally established between the
farmers and the corn merchants, would be attended with effects equally
beneficial to the farmers. They would be enabled to keep their whole
capitals, and even more than their whole capitals constantly employed
in cultivation. In case of any of those accidents to which no trade is
more liable than theirs, they would find in their ordinary customer,
the wealthy corn merchant, a person who had both an interest to
support them, and the ability to do it; and they would not, as at
present, be entirely dependent upon the forbearance of their landlord,
or the mercy of his steward. Were it possible, as perhaps it is not,
to establish this intercourse universally, and all at once; were it
possible to turn all at once the whole farming stock of the kingdom to
its proper business, the cultivation of land, withdrawing it from
every other employment into which any part of it may be at present
diverted; and were it possible, in order to support and assist, upon
occasion, the operations of this great stock, to provide all at once
another stock almost equally great; it is not, perhaps, very easy to
imagine how great, how extensive, and how sudden, would be the
improvement which this change of circumstances would alone produce
upon the whole face of the country.

The statute of Edward VI. therefore, by prohibiting as much as
possible any middle man from coming in between the grower and the
consumer, endeavoured to annihilate a trade, of which the free
exercise is not only the best palliative of the inconveniencies of a
dearth, but the best preventive of that calamity; after the trade of
the farmer, no trade contributing so much to the growing of corn as
that of the corn merchant.

The rigour of this law was afterwards softened by several subsequent
statutes, which successively permitted the engrossing of corn when the
price of wheat should not exceed 20s. and 24s. 32s. and 40s. the
quarter. At last, by the 15th of Charles II. c.7, the engrossing or
buying of corn, in order to sell it again, as long as the price of
wheat did not exceed 48s. the quarter, and that of other grain in
proportion, was declared lawful to all persons not being forestallers,
that is, not selling again in the same market within three months. All
the freedom which the trade of the inland corn dealer has ever yet
enjoyed was bestowed upon it by this statute. The statute of the
twelfth of the present king, which repeals almost all the other
ancient laws against engrossers and forestallers, does not repeal the
restrictions of this particular statute, which therefore still
continue in force.

This statute, however, authorises in some measure two very absurd
popular prejudices.

First, It supposes, that when the price of wheat has risen so high
as 48s. the quarter, and that of other grain in proportion, corn is
likely to be so engrossed as to hurt the people. But, from what has
been already said, it seems evident enough, that corn can at no price
be so engrossed by the inland dealers as to hurt the people; and 48s.
the quarter, besides, though it may be considered as a very high
price, yet, in years of scarcity, it is a price which frequently takes
place immediately after harvest, when scarce any part of the new crop
can be sold off, and when it is impossible even for ignorance to
suppose that any part of it can be so engrossed as to hurt the people.

Secondly, It supposes that there is a certain price at which corn
is likely to be forestalled, that is, bought up in order to be sold
again soon after in the same market, so as to hurt the people. But if
a merchant ever buys up corn, either going to a particular market, or
in a particular market, in order to sell it again soon after in the
same market, it must be because he judges that the market cannot be so
liberally supplied through the whole season as upon that particular
occasion, and that the price, therefore, must soon rise. If he judges
wrong in this, and if the price does not rise, he not only loses the
whole profit of the stock which he employs in this manner, but a part
of the stock itself, by the expense and loss which necessarily attend
the storing and keeping of corn. He hurts himself, therefore, much
more essentially than he can hurt even the particular people whom he
may hinder from supplying themselves upon that particular market day,
because they may afterwards supply themselves just as cheap upon any
other market day. If he judges right, instead of hurting the great
body of the people, he renders them a most important service. By
making them feel the inconveniencies of a dearth somewhat earlier than
they otherwise might do, he prevents their feeling them afterwards so
severely as they certainly would do, if the cheapness of price
encouraged them to consume faster than suited the real scarcity of the
season. When the scarcity is real, the best thing that can be done for
the people is, to divide the inconvenience of it as equally as
possible, through all the different months and weeks and days of the
year. The interest of the corn merchant makes him study to do this as
exactly as he can; and as no other person can have either the same
interest, or the same knowledge, or the same abilities, to do it so
exactly as he, this most important operation of commerce ought to be
trusted entirely to him; or, in other words, the corn trade, so far at
least as concerns the supply of the home market, ought to be left
perfectly free.

The popular fear of engrossing and forestalling may be compared to the
popular terrors and suspicions of witchcraft. The unfortunate wretches
accused of this latter crime were not more innocent of the misfortunes
imputed to them, than those who have been accused of the former. The
law which put an end to all prosecutions against witchcraft, which put
it out of any man's power to gratify his own malice by accusing his
neighbour of that imaginary crime, seems effectually to have put an
end to those fears and suspicions, by taking away the great cause
which encouraged and supported them. The law which would restore
entire freedom to the inland trade of corn, would probably prove as
effectual to put an end to the popular fears of engrossing and
forestalling.

The 15th of Charles II. c. 7, however, with all its imperfections,
has, perhaps, contributed more, both to the plentiful supply of the
home market, and to the increase of tillage, than any other law in the
statute book. It is from this law that the inland corn trade has
derived all the liberty and protection which it has ever yet enjoyed;
and both the supply of the home market and the interest of tillage are
much more effectually promoted by the inland, than either by the
importation or exportation trade.

The proportion of the average quantity of all sorts of grain imported
into Great Britain to that of all sorts of grain consumed, it has been
computed by the author of the Tracts upon the Corn Trade, does not
exceed that of one to five hundred and seventy. For supplying the home
market, therefore, the importance of the inland trade must be to that
of the importation trade as five hundred and seventy to one.

The average quantity of all sorts of grain exported from Great Britain
does not, according to the same author, exceed the one-and-thirtieth
part of the annual produce. For the encouragement of tillage,
therefore, by providing a market for the home produce, the importance
of the inland trade must be to that of the exportation trade as thirty
to one.

I have no great faith in political arithmetic, and I mean not to
warrant the exactness of either of these computations. I mention them
only in order to show of how much less consequence, in the opinion of
the most judicious and experienced persons, the foreign trade of corn
is than the home trade. The great cheapness of corn in the years
immediately preceding the establishment of the bounty may, perhaps
with reason, he ascribed in some measure to the operation of this
statute of Charles II. which had been enacted about five-and-twenty
years before, and which had, therefore, full time to produce its
effect.

A very few words will sufficiently explain all that I have to say
concerning the other three branches of the corn trade.

II. The trade of the merchant-importer of foreign corn for home
consumption, evidently contributes to the immediate supply of the home
market, and must so far be immediately beneficial to the great body of
the people. It tends, indeed, to lower somewhat the average money
price of corn, but not to diminish its real value, or the quantity of
labour which it is capable of maintaining. If importation was at all
times free, our farmers and country gentlemen would probably, one year
with another, get less money for their corn than they do at present,
when importation is at most times in effect prohibited; but the money
which they got would be of more value, would buy more goods of all
other kinds, and would employ more labour. Their real wealth, their
real revenue, therefore, would be the same as at present, though it
might be expressed by a smaller quantity of silver, and they would
neither be disabled nor discouraged from cultivating corn as much as
they do at present. On the contrary, as the rise in the real value of
silver, in consequence of lowering the money price of corn, lowers
somewhat the money price of all other commodities, it gives the
industry of the country where it takes place some advantage in all
foreign markets and thereby tends to encourage and increase that
industry. But the extent of the home market for corn must be in
proportion to the general industry of the country where it grows, or
to the number of those who produce something else, and therefore, have
something else, or, what comes to the same thing, the price of
something else, to give in exchange for corn. But in every country,
the home market, as it is the nearest and most convenient, so is it
likewise the greatest and most important market for corn. That rise in
the real value of silver, therefore, which is the effect of lowering
the average money price of corn, tends to enlarge the greatest and
most important market for corn, and thereby to encourage, instead of
discouraging its growth.

By the 22d of Charles II. c. 13, the importation of wheat, whenever
the price in the home market did not exceed 53s:4d. the quarter, was
subjected to a duty of 16s. the quarter; and to a duty of 8s. whenever
the price did not exceed 4. The former of these two prices has, for
more than a century past, taken place only in times of very great
scarcity; and the latter has, so far as I know, not taken place at
all. Yet, till wheat has risen above this latter price, it was, by
this statute, subjected to a very high duty; and, till it had risen
above the former, to a duty which amounted to a prohibition. The
importation of other sorts of grain was restrained at rates and by
duties, in proportion to the value of the grain, almost equally high.
Before the 13th of the present king, the following were the duties
payable upon the importation of the different sorts of grain:

Grain. Duties. Duties Duties.
Beans to 28s. per qr. 19s:10d. after till 40s. 16s:8d. then 12d.
Barley to 28s. - 19s:10d. - 32s. 16s. - 12d.
Malt is prohibited by the annual malt-tax bill.
Oats to 16s. - 5s:10d. after - 9d.
Pease to 40s. - 16s: 0d. after - 9d.
Rye to 36s. - 19s:10d. till 40s. 16s:8d - 12d.
Wheat to 44s. - 21s: 9d. till 53s:4d. 17s. - 8s.
till 4, and after that about 1s:4d.
Buck-wheat to 32s. per qr. to pay 16s.

These different duties were imposed, partly by the 22d of Charles II.
in place of the old subsidy, partly by the new subsidy, by the
one-third and two-thirds subsidy, and by the subsidy 1747. Subsequent
laws still further increased those duties.

The distress which, in years of scarcity, the strict execution of
those laws might have brought upon the people, would probably have
been very great; but, upon such occasions, its execution was generally
suspended by temporary statutes, which permitted, for a limited time,
the importation of foreign corn. The necessity of these temporary
statutes sufficiently demonstrates the impropriety of this general
one.

These restraints upon importation, though prior to the establishment
of the bounty, were dictated by the same spirit, by the same
principles, which afterwards enacted that regulation. How hurtful
soever in themselves, these, or some other restraints upon
importation, became necessary in consequence of that regulation. If,
when wheat was either below 48s. the quarter, or not much above it,
foreign corn could have been imported, either duty free, or upon
paying only a small duty, it might have been exported again, with the
benefit of the bounty, to the great loss of the public revenue, and to
the entire perversion of the institution, of which the object was to
extend the market for the home growth, not that for the growth of
foreign countries.

III. The trade of the merchant-exporter of corn for foreign
consumption, certainly does not contribute directly to the plentiful
supply of the home market. It does so, however, indirectly. From
whatever source this supply maybe usually drawn, whether from home
growth, or from foreign importation, unless more corn is either
usually grown, or usually imported into the country, than what is
usually consumed in it, the supply of the home market can never be
very plentiful. But unless the surplus can, in all ordinary cases, be
exported, the growers will be careful never to grow more, and the
importers never to import more, than what the bare consumption of the
home market requires. That market will very seldom be overstocked; but
it will generally be understocked; the people, whose business it is to
supply it, being generally afraid lest their goods should be left upon
their hands. The prohibition of exportation limits the improvement and
cultivation of the country to what the supply of its own inhabitants
require. The freedom of exportation enables it to extend cultivation
for the supply of foreign nations.

By the 12th of Charles II. c.4, the exportation of corn was permitted
whenever the price of wheat did not exceed 40s. the quarter, and that
of other grain in proportion. By the 15th of the same prince, this
liberty was extended till the price of wheat exceeded 48s. the
quarter; and by the 22d, to all higher prices. A poundage, indeed, was
to be paid to the king upon such exportation; but all grain was rated
so low in the book of rates, that this poundage amounted only, upon
wheat to 1s., upon oats to 4d., and upon all other grain to 6d. the
quarter. By the 1st of William and Mary, the act which established
this bounty, this small duty was virtually taken off whenever the
price of wheat did not exceed 48s. the quarter; and by the 11th and
12th of William III. c. 20, it was expressly taken off at all higher
prices.

The trade of the merchant-exporter was, in this manner, not only
encouraged by a bounty, but rendered much more free than that of the
inland dealer. By the last of these statutes, corn could be engrossed
at any price for exportation; but it could not be engrossed for inland
sale, except when the price did not exceed 48s. the quarter. The
interest of the inland dealer, however, it has already been shown, can
never be opposite to that of the great body of the people. That of the
merchant-exporter may, and in fact sometimes is. If, while his own
country labours under a dearth, a neighbouring country should be
afflicted with a famine, it might be his interest to carry corn to the
latter country, in such quantities as might very much aggravate the
calamities of the dearth. The plentiful supply of the home market was
not the direct object of those statutes; but, under the pretence of
encouraging agriculture, to raise the money price of corn as high as
possible, and thereby to occasion, as much as possible, a constant
dearth in the home market. By the discouragement of importation, the
supply of that market; even in times of great scarcity, was confined
to the home growth; and by the encouragement of exportation, when the
price was so high as 48s. the quarter, that market was not, even in
times of considerable scarcity, allowed to enjoy the whole of that
growth. The temporary laws, prohibiting, for a limited time, the
exportation of corn, and taking off, for a limited time, the duties
upon its importation, expedients to which Great Britain has been
obliged so frequently to have recourse, sufficiently demonstrate the
impropriety of her general system. Had that system been good, she
would not so frequently have been reduced to the necessity of
departing from it.

Were all nations to follow the liberal system of free exportation and
free importation, the different states into which a great continent
was divided, would so far resemble the different provinces of a great
empire. As among the different provinces of a great empire, the
freedom of the inland trade appears, both from reason and experience,
not only the best palliative of a dearth, but the most effectual
preventive of a famine; so would the freedom of the exportation and
importation trade be among the different states into which a great
continent was divided. The larger the continent, the easier the
communication through all the different parts of it, both by land and
by water, the less would any one particular part of it ever be exposed
to either of these calamities, the scarcity of any one country being
more likely to be relieved by the plenty of some other. But very few
countries have entirely adopted this liberal system. The freedom of
the corn trade is almost everywhere more or less restrained, and in
many countries is confined by such absurd regulations, as frequently
aggravate the unavoidable misfortune of a dearth into the dreadful
calamity of a famine. The demand of such countries for corn may
frequently become so great and so urgent, that a small state in their
neighbourhood, which happened at the same time to be labouring under
some degree of dearth, could not venture to supply them without
exposing itself to the like dreadful calamity. The very bad policy of
one country may thus render it, in some measure, dangerous and
imprudent to establish what would otherwise be the best policy in
another. The unlimited freedom of exportation, however, would be much
less dangerous in great states, in which the growth being much
greater, the supply could seldom be much affected by any quantity or
corn that was likely to be exported. In a Swiss canton, or in some of
the little states in Italy, it may, perhaps, sometimes be necessary to
restrain the exportation of corn. In such great countries as France or
England, it scarce ever can. To hinder, besides, the farmer from
sending his goods at all times to the best market, is evidently to
sacrifice the ordinary laws of justice to an idea of public utility,
to a sort of reasons of state; an act or legislative authority which
ought to be exercised only, which can be pardoned only, in cases of
the most urgent necessity. The price at which exportation of corn is
prohibited, if it is ever to be prohibited, ought always to be a very
high price.

The laws concerning corn may everywhere be compared to the laws
concerning religion. The people feel themselves so much interested in
what relates either to their subsistence in this life, or to their
happiness in a life to come, that government must yield to their
prejudices, and, in order to preserve the public tranquillity,
establish that system which they approve of. It is upon this account,
perhaps, that we so seldom find a reasonable system established with
regard to either of those two capital objects.

IV. The trade of the merchant-carrier, or of the importer of foreign
corn, in order to export it again, contributes to the plentiful supply
of the home market. It is not, indeed, the direct purpose of his trade
to sell his corn there; but he will generally be willing to do so, and
even for a good deal less money than he might expect in a foreign
market; because he saves in this manner the expense of loading and
unloading, of freight and insurance. The inhabitants of the country
which, by means of the carrying trade, becomes the magazine and
storehouse for the supply of other countries, can very seldom be in
want themselves. Though the carrying trade must thus contribute to
reduce the average money price of corn in the home market, it would
not thereby lower its real value; it would only raise somewhat the
real value of silver.

The carrying trade was in effect prohibited in Great Britain, upon all
ordinary occasions, by the high duties upon the importation of foreign
corn, of the greater part of which there was no drawback; and upon
extraordinary occasions, when a scarcity made it necessary to suspend
those duties by temporary statutes, exportation was always prohibited.
By this system of laws, therefore, the carrying trade was in effect
prohibited.

That system of laws, therefore, which is connected with the
establishment of the bounty, seems to deserve no part of the praise
which has been bestowed upon it. The improvement and prosperity of
Great Britain, which has been so often ascribed to those laws, may
very easily be accounted for by other causes. That security which the
laws in Great Britain give to every man, that he shall enjoy the
fruits of his own labour, is alone sufficient to make any country
flourish, notwithstanding these and twenty other absurd regulations of
commerce; and this security was perfected by the Revolution, much
about the same time that the bounty was established. The natural
effort of every individual to better his own condition, when suffered
to exert itself with freedom and security, is so powerful a principle,
that it is alone, and without any assistance, not only capable of
carrying on the society to wealth and prosperity, but of surmounting a
hundred impertinent obstructions, with which the folly of human laws
too often encumbers its operations: though the effect of those
obstructions is always, more or less, either to encroach upon its
freedom, or to diminish its security. In Great Britain industry is
perfectly secure; and though it is far from being perfectly free, it
is as free or freer than in any other part of Europe.

Though the period of the greatest prosperity and improvement of Great
Britain has been posterior to that system of laws which is connected
with the bounty, we must not upon that account, impute it to those
laws. It has been posterior likewise to the national debt; but the
national debt has most assuredly not been the cause of it.

Though the system of laws which is connected with the bounty, has
exactly the same tendency with the practice of Spain and Portugal, to
lower somewhat the value of the precious metals in the country where
it takes place; yet Great Britain is certainly one of the richest
countries in Europe, while Spain and Portugal are perhaps amongst the
most beggarly. This difference of situation, however, may easily be
accounted for from two different causes. First, the tax in Spain, the
prohibition in Portugal of exporting gold and silver, and the vigilant
police which watches over the execution of those laws, must, in two
very poor countries, which between them import annually upwards of six
millions sterling, operate not only more directly, but much more
forcibly, in reducing the value of those metals there, than the corn
laws can do in Great Britain. And, secondly, this bad policy is not in
those countries counterbalanced by the general liberty and security of
the people. Industry is there neither free nor secure; and the civil
and ecclesiastical governments of both Spain and Portugal are such as
would alone be sufficient to perpetuate their present state of
poverty, even though their regulations of commerce were as wise as the
greatest part of them are absurd and foolish.

The 13th of the present king, c. 43, seems to have established a new
system with regard to the corn laws, in many respects better than the
ancient one, but in one or two respects perhaps not quite so good.

By this statute, the high duties upon importation for home consumption
are taken off, so soon as the price of middling wheat rises to 48s.
the quarter; that of middling rye, pease, or beans, to 32s.; that of
barley to 24s.; and that of oats to 16s.; and instead of them, a small
duty is imposed of only 6d upon the quarter of wheat, and upon that or
other grain in proportion. With regard to all those different sorts of
grain, but particularly with regard to wheat, the home market is thus
opened to foreign supplies, at prices considerably lower than before.

By the same statute, the old bounty of 5s. upon the exportation of
wheat, ceases so soon as the price rises to 44s. the quarter, instead
of 48s. the price at which it ceased before; that of 2s:6d. upon the
exportation of barley, ceases so soon as the price rises to 22s.
instead of 24s. the price at which it ceased before; that of 2s:6d.
upon the exportation of oatmeal, ceases so soon as the price rises to
14s. instead of 15s. the price at which it ceased before. The bounty
upon rye is reduced from 3s:6d. to 3s. and it ceases so soon as the
price rises to 28s. instead of 32s. the price at which it ceased
before. If bounties are as improper as I have endeavoured to prove
them to be, the sooner they cease, and the lower they are, so much the
better.

The same statute permits, at the lowest prices, the importation of
corn in order to be exported again, duty free, provided it is in the
mean time lodged in a warehouse under the joint locks of the king and
the importer. This liberty, indeed, extends to no more than
twenty-five of the different ports of Great Britain. They are,
however, the principal ones; and there may not, perhaps, be warehouses
proper for this purpose in the greater part of the others.

So far this law seems evidently an improvement upon the ancient
system.

But by the same law, a bounty of 2s. the quarter is given for the
exportation of oats, whenever the price does not exceed fourteen
shillings. No bounty had ever been given before for the exportation of
this grain, no more than for that of pease or beans.

By the same law, too, the exportation of wheat is prohibited so soon
as the price rises to forty-four shillings the quarter; that of rye so
soon as it rises to twenty-eight shillings; that of barley so soon as
it rises to twenty-two shillings; and that of oats so soon as they
rise to fourteen shillings. Those several prices seem all of them a
good deal too low; and there seems to be an impropriety, besides, in
prohibiting exportation altogether at those precise prices at which
that bounty, which was given in order to force it, is withdrawn. The
bounty ought certainly either to have been withdrawn at a much lower
price, or exportation ought to have been allowed at a much higher.

So far, therefore, this law seems to be inferior to the ancient
system. With all its imperfections, however, we may perhaps say of it
what was said of the laws of Solon, that though not the best in
itself, it is the best which the interest, prejudices, and temper of
the times, would admit of. It may perhaps in due time prepare the way
for a better.





CHAPTER VI.

OF TREATIES OF COMMERCE.

When a nation binds itself by treaty, either to permit the entry of
certain goods from one foreign country which it prohibits from all
others, or to exempt the goods of one country from duties to which it
subjects those of all others, the country, or at least the merchants
and manufacturers of the country, whose commerce is so favoured, must
necessarily derive great advantage from the treaty. Those merchants
and manufacturers enjoy a sort of monopoly in the country which is so
indulgent to them. That country becomes a market, both more extensive
and more advantageous for their goods: more extensive, because the
goods of other nations being either excluded or subjected to heavier
duties, it takes off a greater quantity of theirs; more advantageous,
because the merchants of the favoured country, enjoying a sort of
monopoly there, will often sell their goods for a better price than if
exposed to the free competition of all other nations.

Such treaties, however, though they may be advantageous to the
merchants and manufacturers of the favoured, are necessarily
disadvantageous to those of the favouring country. A monopoly is thus
granted against them to a foreign nation; and they must frequently buy
the foreign goods they have occasion for, dearer than if the free
competition of other nations was admitted. That part of its own
produce with which such a nation purchases foreign goods, must
consequently be sold cheaper; because, when two things are exchanged
for one another, the cheapness of the one is a necessary consequence,
or rather is the same thing, with the dearness of the other. The
exchangeable value of its annual produce, therefore, is likely to be
diminished by every such treaty. This diminution, however, can scarce
amount to any positive loss, but only to a lessening of the gain which
it might otherwise make. Though it sells its goods cheaper than it
otherwise might do, it will not probably sell them for less than they
cost; nor, as in the case of bounties, for a price which will not
replace the capital employed in bringing them to market, together with
the ordinary profits of stock. The trade could not go on long if it
did. Even the favouring country, therefore, may still gain by the
trade, though less than if there was a free competition.

Some treaties of commerce, however, have been supposed advantageous,
upon principles very different from these; and a commercial country
has sometimes granted a monopoly of this kind, against itself, to
certain goods of a foreign nation, because it expected, that in the
whole commerce between them, it would annually sell more than it would
buy, and that a balance in gold and silver would be annually returned
to it. It is upon this principle that the treaty of commerce between
England and Portugal, concluded in 1703 by Mr Methuen, has been so
much commended. The following is a literal translation of that treaty,
which consists of three articles only.

ART. I.

His sacred royal majesty of Portugal promises, both in his own name
and that of his successors, to admit for ever hereafter, into
Portugal, the woollen cloths, and the rest of the woollen manufactures
of the British, as was accustomed, till they were prohibited by the
law; nevertheless upon this condition:

ART. II.

That is to say, that her sacred royal majesty of Great Britain shall,
in her own name, and that of her successors, be obliged, for ever
hereafter, to admit the wines of the growth of Portugal into Britain;
so that at no time, whether there shall be peace or war between the
kingdoms of Britain and France, any thing more shall be demanded for
these wines by the name of custom or duty, or by whatsoever other
title, directly or indirectly, whether they shall be imported into
Great Britain in pipes or hogsheads, or other casks, than what shall
be demanded for the like quantity or measure of French wine, deducting
or abating a third part of the custom or duty. But if, at any time,
this deduction or abatement of customs, which is to be made as
aforesaid, shall in any manner be attempted and prejudiced, it shall
be just and lawful for his sacred royal majesty of Portugal, again to
prohibit the woollen cloths, and the rest of the British woollen
manufactures.

ART. III.

The most excellent lords the plenipotentiaries promise and take upon
themselves, that their above named masters shall ratify this treaty;
and within the space of two months the ratification shall be
exchanged.

By this treaty, the crown of Portugal becomes bound to admit the
English woollens upon the same footing as before the prohibition; that
is, not to raise the duties which had been paid before that time. But
it does not become bound to admit them upon any better terms than
those of any other nation, of France or Holland, for example. The
crown of Great Britain, on the contrary, becomes bound to admit the
wines of Portugal, upon paying only two-thirds of the duty which is
paid for those of France, the wines most likely to come into
competition with them. So far this treaty, therefore, is evidently
advantageous to Portugal, and disadvantageous to Great Britain.

It has been celebrated, however, as a masterpiece of the commercial
policy of England. Portugal receives annually from the Brazils a
greater quantity of gold than can be employed in its domestic
commerce, whether in the shape of coin or of plate. The surplus is too
valuable to be allowed to lie idle and locked up in coffers; and as it
can find no advantageous market at home, it must, notwithstanding; any
prohibition, be sent abroad, and exchanged for something for which
there is a more advantageous market at home. A large share of it comes
annually to England, in return either for English goods, or for those
of other European nations that receive their returns through England.
Mr Barretti was informed, that the weekly packet-boat from Lisbon
brings, one week with another, more than 50,000 in gold to England.
The sum had probably been exaggerated. It would amount to more than
2,600,000 a year, which is more than the Brazils are supposed to
afford.

Our merchants were, some years ago, out of humour with the crown of
Portugal. Some privileges which had been granted them, not by treaty,
but by the free grace of that crown, at the solicitation, indeed, it
is probable, and in return for much greater favours, defence and
protection from the crown of Great Britain, had been either infringed
or revoked. The people, therefore, usually most interested in
celebrating the Portugal trade, were then rather disposed to represent
it as less advantageous than it had commonly been imagined. The far
greater part, almost the whole, they pretended, of this annual
importation of gold, was not on account of Great Britain, but of other
European nations; the fruits and wines of Portugal annually imported
into Great Britain nearly compensating the value of the British goods
sent thither.

Let us suppose, however, that the whole was on account of Great
Britain, and that it amounted to a still greater sum than Mr Barretti
seems to imagine; this trade would not, upon that account, be more
advantageous than any other, in which, for the same value sent out, we
received an equal value of consumable goods in return.

It is but a very small part of this importation which, it can be
supposed, is employed as an annual addition, either to the plate or to
the coin of the kingdom. The rest must all be sent abroad, and
exchanged for consumable goods of some kind or other. But if those
consumable goods were purchased directly with the produce of English
industry, it would be more for the advantage of England, than first to
purchase with that produce the gold of Portugal, and afterwards to
purchase with that gold those consumable goods. A direct foreign trade
of consumption is always more advantageous than a round-about one; and
to bring the same value of foreign goods to the home market requires a
much smaller capital in the one way than in the ether. If a smaller
share of its industry, therefore, had been employed in producing goods
fit for the Portugal market, and a greater in producing those lit for
the other markets, where those consumable goods for which there is a
demand in Great Britain are to be had, it would have been more for the
advantage of England. To procure both the gold which it wants for its
own use, and the consumable goods, would, in this way, employ a much
smaller capital than at present. There would be a spare capital,
therefore, to be employed for other purposes, in exciting an
additional quantity of industry, and in raising a greater annual
produce.

Though Britain were entirely excluded from the Portugal trade, it
could find very little difficulty in procuring all the annual supplies
of gold which it wants, either for the purposes of plate, or of coin,
or of foreign trade. Gold, like every other commodity, is always
somewhere or another to be got for its value by those who have that
value to give for it. The annual surplus of gold in Portugal, besides,
would still be sent abroad, and though not carried away by Great
Britain, would be carried away by some other nation, which would be
glad to sell it again for its price, in the same manner as Great
Britain does at present. In buying gold of Portugal, indeed, we buy it
at the first hand; whereas, in buying it of any other nation, except
Spain, we should buy it at the second, and might pay somewhat dearer.
This difference, however, would surely be too insignificant to deserve
the public attention.

Almost all our gold, it is said, comes from Portugal. With other
nations, the balance of trade is either against as, or not much in our
favour. But we should remember, that the more gold we import from one
country, the less we must necessarily import from all others. The
effectual demand for gold, like that for every other commodity, is in
every country limited to a certain quantity. If nine-tenths of this
quantity are imported from one country, there remains a tenth only to
be imported from all others. The more gold, besides, that is annually
imported from some particular countries, over and above what is
requisite for plate and for coin, the more must necessarily be
exported to some others: and the more that most insignificant object
of modern policy, the balance of trade, appears to be in our favour
with some particular countries, the more it must necessarily appear to
be against us with many others.

It was upon this silly notion, however, that England could not subsist
without the Portugal trade, that, towards the end of the late war,
France and Spain, without pretending either offence or provocation,
required the king of Portugal to exclude all British ships from his
ports, and, for the security of this exclusion, to receive into them
French or Spanish garrisons. Had the king of Portugal submitted to
those ignominious terms which his brother-in-law the king of Spain
proposed to him, Britain would have been freed from a much greater
inconveniency than the loss of the Portugal trade, the burden of
supporting a very weak ally, so unprovided of every thing for his own
defence, that the whole power of England, had it been directed to that
single purpose, could scarce, perhaps, have defended him for another
campaign. The loss of the Portugal trade would, no doubt, have
occasioned a considerable embarrassment to the merchants at that time
engaged in it, who might not, perhaps, have found out, for a year or
two, any other equally advantageous method of employing their
capitals; and in this would probably have consisted all the
inconveniency which England could have suffered from this notable
piece of commercial policy.

The great annual importation of gold and silver is neither for the
purpose of plate nor of coin, but of foreign trade. A round-about
foreign trade of consumption can be carried on more advantageously by
means of these metals than of almost any other goods. As they are the
universal instruments of commerce, they are more readily received in
return for all commodities than any other goods; and, on account of
their small bulk and great value, it costs less to transport them
backward and forward from one place to another than almost any other
sort of merchandize, and they lose less of their value by being so
transported. Of all the commodities, therefore, which are bought in
one foreign country, for no other purpose but to be sold or exchanged
again for some other goods in another, there are none so convenient as
gold and silver. In facilitating all the different round-about foreign
trades of consumption which are carried on in Great Britain, consists
the principal advantage of the Portugal trade; and though it is not a
capital advantage, it is, no doubt, a considerable one.

That any annual addition which, it can reasonably be supposed, is made
either to the plate or to the coin of the kingdom, could require but a
very small annual importation of gold and silver, seems evident
enough; and though we had no direct trade with Portugal, this small
quantity could always, somewhere or another, be very easily got.

Though the goldsmiths trade be very considerable in Great Britain, the
far greater part of the new plate which they annually sell, is made
from other old plate melted down; so that the addition annually made
to the whole plate of the kingdom cannot be very great, and could
require but a very small annual importation.

It is the same case with the coin. Nobody imagines, I believe, that
even the greater part of the annual coinage, amounting, for ten years
together, before the late reformation of the gold coin, to upwards of
800,000 a-year in gold, was an annual addition to the money before
current in the kingdom. In a country where the expense of the coinage
is defrayed by the government, the value of the coin, even when it
contains its full standard weight of gold and silver, can never be
much greater than that of an equal quantity of those metals uncoined,
because it requires only the trouble of going to the mint, and the
delay, perhaps, of a few weeks, to procure for any quantity of
uncoined gold and silver an equal quantity of those metals in coin;
but in every country the greater part of the current coin is almost
always more or less worn, or otherwise degenerated from its standard.
In Great Britain it was, before the late reformation, a good deal so,
the gold being more than two per cent., and the silver more than eight
per cent. below its standard weight. But if forty-four guineas and
a-half, containing their full standard weight, a pound weight of gold,
could purchase very little more than a pound weight of uncoined gold;
forty-four guineas and a-half, wanting a part of their weight, could
not purchase a pound weight, and something was to be added, in order
to make up the deficiency. The current price of gold bullion at
market, therefore, instead of being the same with the mint price, or
46:14:6, was then about 47:14s., and sometimes about 48. When the
greater part of the coin, however, was in this degenerate condition,
forty four guineas and a-half, fresh from the mint, would purchase no
more goods in the market than any other ordinary guineas; because,
when they came into the coffers of the merchant, being confounded with
other money, they could not afterwards be distinguished without more
trouble than the difference was worth. Like other guineas, they were
worth no more than 46:14:6. If thrown into the melting pot, however,
they produced, without any sensible loss, a pound weight of standard
gold, which could be sold at any time for between 47:14s. and 48,
either in gold or silver, as fit for all the purposes of coin as that
which had been melted down. There was an evident profit, therefore, in
melting down new-coined money; and it was done so instantaneously,
that no precaution of government could prevent it. The operations of
the mint were, upon this account, somewhat like the web of Penelope;
the work that was done in the day was undone in the night. The mint
was employed, not so much in making daily additions to the coin, as in
replacing the very best part of it, which was daily melted down.

Were the private people who carry their gold and silver to the mint to
pay themselves for the coinage, it would add to the value of those
metals, in the same manner as the fashion does to that of plate.
Coined gold and silver would be more valuable than uncoined. The
seignorage, if it was not exorbitant, would add to the bullion the
whole value of the duty; because, the government having everywhere the
exclusive privilege of coining, no coin can come to market cheaper
than they think proper to afford it. If the duty was exorbitant,
indeed, that is, if it was very much above the real value of the
labour and expense requisite for coinage, false coiners, both at home
and abroad, might be encouraged, by the great difference between the
value of bullion and that of coin, to pour in so great a quantity of
counterfeit money as might reduce the value of the government money.
In France, however, though the seignorage is eight per cent., no
sensible inconveniency of this kind is found to arise from it. The
dangers to which a false coiner is everywhere exposed, if he lives in
the country of which he counterfeits the coin, and to which his agents
or correspondents are exposed, if he lives in a foreign country, are
by far too great to be incurred for the sake of a profit of six or
seven per cent.

The seignorage in France raises the value of the coin higher than in
proportion to the quantity of pure gold which it contains. Thus, by
the edict of January 1726, the mint price of fine gold of twenty-four
carats was fixed at seven hundred and forty livres nine sous and one
denier one-eleventh the mark of eight Paris ounces. {See Dictionnaire
des Monnoies, tom. ii. article Seigneurage, p. 439, par 81. Abbot de
Bazinghen, Conseiller-Commissaire en la Cour des Monnoies Paris.}
The gold coin of France, making an allowance for the remedy of the
mint, contains twenty-one carats and three-fourths of fine gold, and
two carats one-fourth of alloy. The mark of standard gold, therefore,
is worth no more than about six hundred and seventy-one livres ten
deniers. But in France this mark of standard gold is coined into
thirty louis d'ors of twenty-four livres each, or into seven hundred
and twenty livres. The coinage, therefore, increases the value of a
mark of standard gold bullion, by the difference between six hundred
and seventy-one livres ten deniers and seven hundred and twenty
livres, or by forty-eight livres nineteen sous and two deniers.

A seignorage will, in many cases, take away altogether, and will in
all cases diminish, the profit of melting down the new coin. This
profit always arises from the difference between the quantity of
bullion which the common currency ought to contain and that which it
actually does contain. If this difference is less than the seignorage,
there will be loss instead of profit. If it is equal to the
seignorage, there will be neither profit nor loss. If it is greater
than the seignorage, there will, indeed, be some profit, but less than
if there was no seignorage. If, before the late reformation of the
gold coin, for example, there had been a seignorage of five per cent.
upon the coinage, there would have been a loss of three per cent. upon
the melting down of the gold coin. If the seignorage had been two per
cent., there would have been neither profit nor loss. If the
seignorage had been one per cent., there would have been a profit but
of one per cent. only, instead of two per cent. Wherever money is
received by tale, therefore, and not by weight, a seignorage is the
most effectual preventive of the melting down of the coin, and, for
the same reason, of its exportation. It is the best and heaviest
pieces that are commonly either melted down or exported, because it is
upon such that the largest profits are made.

The law for the encouragement of the coinage, by rendering it
duty-free, was first enacted during the reign of Charles II. for a
limited time, and afterwards continued, by different prolongations,
till 1769, when it was rendered perpetual. The bank of England, in
order to replenish their coffers with money, are frequently obliged to
carry bullion to the mint; and it was more for their interest, they
probably imagined, that the coinage should be at the expense of the
government than at their own. It was probably out of complaisance to
this great company, that the government agreed to render this law
perpetual. Should the custom of weighing gold, however, come to be
disused, as it is very likely to be on account of its inconveniency;
should the gold coin of England come to be received by tale, as it was
before the late recoinage this great company may, perhaps, find that
they have, upon this, as upon some other occasions, mistaken their own
interest not a little.

Before the late recoinage, when the gold currency of England was two
per cent. below its standard weight, as there was no seignorage, it
was two per cent. below the value of that quantity of standard gold
bullion which it ought to have contained. When this great company,
therefore, bought gold bullion in order to have it coined, they were
obliged to pay for it two per cent. more than it was worth after the
coinage. But if there had been a seignorage of two per cent. upon the
coinage, the common gold currency, though two per cent. below its
standard weight, would, notwithstanding, have been equal in value to
the quantity of standard gold which it ought to have contained; the
value of the fashion compensating in this case the diminution of the
weight. They would, indeed, have had the seignorage to pay, which
being two per cent., their loss upon the whole transaction would have
been two per cent., exactly the same, but no greater than it actually
was.

If the seignorage had been five per cent. and the gold currency only
two per cent. below its standard weight, the bank would, in this case,
have gained three per cent. upon the price of the bullion; but as they
would have had a seignorage of five per cent. to pay upon the coinage,
their loss upon the whole transaction would, in the same manner, have
been exactly two per cent.

If the seignorage had been only one per cent., and the gold currency
two per cent. below its standard weight, the bank would, in this case,
have lost only one per cent. upon the price of the bullion; but as
they would likewise have had a seignorage of one per cent. to pay,
their loss upon the whole transaction would have been exactly two per
cent., in the same manner as in all other cases.

If there was a reasonable seignorage, while at the same time the coin
contained its full standard weight, as it has done very nearly since
the late recoinage, whatever the bank might lose by the seignorage,
they would gain upon the price of the bullion; and whatever they might
gain upon the price of the bullion, they would lose by the seignorage.
They would neither lose nor gain, therefore, upon the whole
transaction, and they would in this, as in all the foregoing cases, be
exactly in the same situation as if there was no seignorage.

When the tax upon a commodity is so moderate as not to encourage
smuggling, the merchant who deals in it, though he advances, does not
properly pay the tax, as he gets it back in the price of the
commodity. The tax is finally paid by the last purchaser or consumer.
But money is a commodity, with regard to which every man is a
merchant. Nobody buys it but in order to sell it again; and with
regard to it there is, in ordinary cases, no last purchaser or
consumer. When the tax upon coinage, therefore, is so moderate as not
to encourage false coining, though every body advances the tax, nobody
finally pays it; because every body gets it back in the advanced value
of the coin.

A moderate seignorage, therefore, would not, in any case, augment the
expense of the bank, or of any other private persons who carry their
bullion to the mint in order to be coined; and the want of a moderate
seignorage does not in any case diminish it. Whether there is or is
not a seignorage, if the currency contains its full standard weight,
the coinage costs nothing to anybody; and if it is short of that
weight, the coinage must always cost the difference between the
quantity of bullion which ought to be contained in it, and that which
actually is contained in it.

The government, therefore, when it defrays the expense of coinage, not
only incurs some small expense, but loses some small revenue which it
might get by a proper duty; and neither the bank, nor any other
private persons, are in the smallest degree benefited by this useless
piece of public generosity.

The directors of the bank, however, would probably be unwilling to
agree to the imposition of a seignorage upon the authority of a
speculation which promises them no gain, but only pretends to insure
them from any loss. In the present state of the gold coin, and as long
as it continues to be received by weight, they certainly would gain
nothing by such a change. But if the custom of weighing the gold coin
should ever go into disuse, as it is very likely to do, and if the
gold coin should ever fall into the same state of degradation in which
it was before the late recoinage, the gain, or more properly the
savings, of the bank, inconsequence of the imposition of a seignorage,
would probably be very considerable. The bank of England is the only
company which sends any considerable quantity of bullion to the mint,
and the burden of the annual coinage falls entirely, or almost
entirely, upon it. If this annual coinage had nothing to do but to
repair the unavoidable losses and necessary wear and tear of the coin,
it could seldom exceed fifty thousand, or at most a hundred thousand
pounds. But when the coin is degraded below its standard weight, the
annual coinage must, besides this, fill up the large vacuities which
exportation and the melting pot are continually making in the current
coin. It was upon this account, that during the ten or twelve years
immediately preceding the late reformation of the gold coin, the
annual coinage amounted, at an average, to more than 850,000. But if
there had been a seignorage of four or five per cent. upon the gold
coin, it would probably, even in the state in which things then were,
have put an effectual stop to the business both of exportation and of
the melting pot. The bank, instead of losing every year about two and
a half per cent. upon the bullion which was to be coined into more
than eight hundred and fifty thousand pounds, or incurring an annual
loss of more than 21,250 pounds, would not probably have incurred the
tenth part of that loss.

The revenue allotted by parliament for defraying the expense of the
coinage is but fourteen thousand pounds a-year; and the real expense
which it costs the government, or the fees of the officers of the
mint, do not, upon ordinary occasions, I am assured, exceed the half
of that sum. The saving of so very small a sum, or even the gaining of
another, which could not well be much larger, are objects too
inconsiderable, it may be thought, to deserve the serious attention of
government. But the saving of eighteen or twenty thousand pounds
a-year, in case of an event which is not improbable, which has
frequently happened before, and which is very likely to happen again,
is surely an object which well deserves the serious attention, even of
so great a company as the bank of England.

Some of the foregoing reasonings and observations might, perhaps, have
been more properly placed in those chapters of the first book which
treat of the origin and use of money, and of the difference between
the real and the nominal price of commodities. But as the law for the
encouragement of coinage derives its origin from those vulgar
prejudices which have been introduced by the mercantile system, I
judged it more proper to reserve them for this chapter. Nothing could
be more agreeable to the spirit of that system than a sort of bounty
upon the production of money, the very thing which, it supposes,
constitutes the wealth of every nation. It is one of its many
admirable expedients for enriching the country.





CHAPTER VII.

OF COLONIES.

PART I.

Of the Motives for Establishing New Colonies.

The interest which occasioned the first settlement of the different
European colonies in America and the West Indies, was not altogether
so plain and distinct as that which directed the establishment of
those of ancient Greece and Rome.

All the different states of ancient Greece possessed, each of them,
but a very small territory; and when the people in anyone of them
multiplied beyond what that territory could easily maintain, a part of
them were sent in quest of a new habitation, in some remote and
distant part of the world; the warlike neighbours who surrounded them
on all sides, rendering it difficult for any of them to enlarge very
much its territory at home. The colonies of the Dorians resorted
chiefly to Italy and Sicily, which, in the times preceding the
foundation of Rome, were inhabited by barbarous and uncivilized
nations; those of the Ionians and Aeolians, the two other great tribes
of the Greeks, to Asia Minor and the islands of the Aegean sea, of
which the inhabitants sewn at that time to have been pretty much in
the same state as those of Sicily and Italy. The mother city, though
she considered the colony as a child, at all times entitled to great
favour and assistance, and owing in return much gratitude and respect,
yet considered it as an emancipated child, over whom she pretended to
claim no direct authority or jurisdiction. The colony settled its own
form of government, enacted its own laws, elected its own magistrates,
and made peace or war with its neighbours, as an independent state,
which had no occasion to wait for the approbation or consent of the
mother city. Nothing can be more plain and distinct than the interest
which directed every such establishment.

Rome, like most of the other ancient republics, was originally founded
upon an agrarian law, which divided the public territory, in a certain
proportion, among the different citizens who composed the state. The
course of human affairs, by marriage, by succession, and by
alienation, necessarily deranged this original division, and
frequently threw the lands which had been allotted for the maintenance
of many different families, into the possession of a single person. To
remedy this disorder, for such it was supposed to be, a law was made,
restricting the quantity of land which any citizen could possess to
five hundred jugera; about 350 English acres. This law, however,
though we read of its having been executed upon one or two occasions,
was either neglected or evaded, and the inequality of fortunes went on
continually increasing. The greater part of the citizens had no land;
and without it the manners and customs of those times rendered it
difficult for a freeman to maintain his independency. In the present
times, though a poor man has no land of his own, if he has a little
stock, he may either farm the lands of another, or he may carry on
some little retail trade; and if he has no stock, he may find
employment either as a country labourer, or as an artificer. But among
the ancient Romans, the lands of the rich were all cultivated by
slaves, who wrought under an overseer, who was likewise a slave; so
that a poor freeman had little chance of being employed either as a
farmer or as a labourer. All trades and manufactures, too, even the
retail trade, were carried on by the slaves of the rich for the
benefit of their masters, whose wealth, authority, and protection,
made it difficult for a poor freeman to maintain the competition
against them. The citizens, therefore, who had no land, had scarce any
other means of subsistence but the bounties of the candidates at the
annual elections. The tribunes, when they had a mind to animate the
people against the rich and the great, put them in mind of the ancient
divisions of lands, and represented that law which restricted this
sort of private property as the fundamental law of the republic. The
people became clamorous to get land, and the rich and the great, we
may believe, were perfectly determined not to give them any part of
theirs. To satisfy them in some measure, therefore, they frequently
proposed to send out a new colony. But conquering Rome was, even upon
such occasions, under no necessity of turning out her citizens to seek
their fortune, if one may so, through the wide world, without knowing
where they were to settle. She assigned them lands generally in the
conquered provinces of Italy, where, being within the dominions of the
republic, they could never form any independent state, but were at
best but a sort of corporation, which, though it had the power of
enacting bye-laws for its own government, was at all times subject to
the correction, jurisdiction, and legislative authority of the mother
city. The sending out a colony of this kind not only gave some
satisfaction to the people, but often established a sort of garrison,
too, in a newly conquered province, of which the obedience might
otherwise have been doubtful. A Roman colony, therefore, whether we
consider the nature of the establishment itself, or the motives for
making it, was altogether different from a Greek one. The words,
accordingly, which in the original languages denote those different
establishments, have very different meanings. The Latin word (colonia)
signifies simply a plantation. The Greek word (apoixia), on the
contrary, signifies a separation of dwelling, a departure from home, a
going out of the house. But though the Roman colonies were, in many
respects, different from the Greek ones, the interest which prompted
to establish them was equally plain and distinct. Both institutions
derived their origin, either from irresistible necessity, or from
clear and evident utility.

The establishment of the European colonies in America and the West
Indies arose from no necessity; and though the utility which has
resulted from them has been very great, it is not altogether so clear
and evident. It was not understood at their first establishment, and
was not the motive, either of that establishment, or of the
discoveries which gave occasion to it; and the nature, extent, and
limits of that utility, are not, perhaps, well understood at this day.

The Venetians, during the fourteenth and fifteenth centuries, carried
on a very advantageous commerce in spiceries and other East India
goods, which they distributed among the other nations of Europe. They
purchased them chiefly in Egypt, at that time under the dominion of
the Mamelukes, the enemies of the Turks, of whom the Venetians were
the enemies; and this union of interest, assisted by the money of
Venice, formed such a connexion as gave the Venetians almost a
monopoly of the trade.

The great profits of the Venetians tempted the avidity of the
Portuguese. They had been endeavouring, during the course of the
fifteenth century, to find out by sea a way to the countries from
which the Moors brought them ivory and gold dust across the desert.
They discovered the Madeiras, the Canaries, the Azores, the Cape de
Verd islands, the coast of Guinea, that of Loango, Congo, Angola, and
Benguela, and, finally, the Cape of Good Hope. They had long wished to
share in the profitable traffic of the Venetians, and this last
discovery opened to them a probable prospect of doing so. In 1497,
Vasco de Gamo sailed from the port of Lisbon with a fleet of four
ships, and, after a navigation of eleven months, arrived upon the
coast of Indostan; and thus completed a course of discoveries which
had been pursued with great steadiness, and with very little
interruption, for near a century together.

Some years before this, while the expectations of Europe were in
suspense about the projects of the Portuguese, of which the success
appeared yet to be doubtful, a Genoese pilot formed the yet more
daring project of sailing to the East Indies by the west. The
situation of those countries was at that time very imperfectly known
in Europe. The few European travellers who had been there, had
magnified the distance, perhaps through simplicity and ignorance; what
was really very great, appearing almost infinite to those who could
not measure it; or, perhaps, in order to increase somewhat more the
marvellous of their own adventures in visiting regions so immensely
remote from Europe. The longer the way was by the east, Columbus very
justly concluded, the shorter it would be by the west. He proposed,
therefore, to take that way, as both the shortest and the surest, and
he had the good fortune to convince Isabella of Castile of the
probability of his project. He sailed from the port of Palos in August
1492, near five years before the expedition of Vasco de Gamo set out
from Portugal; and, after a voyage of between two and three months,
discovered first some of the small Bahama or Lucyan islands, and
afterwards the great island of St. Domingo.

But the countries which Columbus discovered, either in this or in any
of his subsequent voyages, had no resemblance to those which he had
gone in quest of. Instead of the wealth, cultivation, and populousness
of China and Indostan, he found, in St. Domingo, and in all the other
parts of the new world which he ever visited, nothing but a country
quite covered with wood, uncultivated, and inhabited only by some
tribes of naked and miserable savages. He was not very willing,
however, to believe that they were not the same with some of the
countries described by Marco Polo, the first European who had visited,
or at least had left behind him any description of China or the East
Indies; and a very slight resemblance, such as that which he found
between the name of Cibao, a mountain in St. Domingo, and that of
Cipange, mentioned by Marco Polo, was frequently sufficient to make
him return to this favourite prepossession, though contrary to the
clearest evidence. In his letters to Ferdinand and Isabella, he called
the countries which he had discovered the Indies. He entertained no
doubt but that they were the extremity of those which had been
described by Marco Polo, and that they were not very distant from the
Ganges, or from the countries which had been conquered by Alexander.
Even when at last convinced that they were different, he still
flattered himself that those rich countries were at no great distance;
and in a subsequent voyage, accordingly, went in quest of them along
the coast of Terra Firma, and towards the Isthmus of Darien.

In consequence of this mistake of Columbus, the name of the Indies has
stuck to those unfortunate countries ever since; and when it was at
last clearly discovered that the new were altogether different from
the old Indies, the former were called the West, in contradistinction
to the latter, which were called the East Indies.

It was of importance to Columbus, however, that the countries which he
had discovered, whatever they were, should be represented to the court
of Spain as of very great consequence; and, in what constitutes the
real riches of every country, the animal and vegetable productions of
the soil, there was at that time nothing which could well justify such
a representation of them.

The cori, something between a rat and a rabbit, and supposed by Mr
Buffon to be the same with the aperea of Brazil, was the largest
viviparous quadruped in St. Domingo. This species seems never to have
been very numerous; and the dogs and cats of the Spaniards are said
to have long ago almost entirely extirpated it, as well as some other
tribes of a still smaller size. These, however, together with a pretty
large lizard, called the ivana or iguana, constituted the principal
part of the animal food which the land afforded.

The vegetable food of the inhabitants, though, from their want of
industry, not very abundant, was not altogether so scanty. It
consisted in Indian corn, yams, potatoes, bananas, etc., plants which
were then altogether unknown in Europe, and which have never since
been very much esteemed in it, or supposed to yield a sustenance equal
to what is drawn from the common sorts of grain and pulse, which have
been cultivated in this part of the world time out of mind.

The cotton plant, indeed, afforded the material of a very important
manufacture, and was at that time, to Europeans, undoubtedly the most
valuable of all the vegetable productions of those islands. But
though, in the end of the fifteenth century, the muslins and other
cotton goods of the East Indies were much esteemed in every part of
Europe, the cotton manufacture itself was not cultivated in any part
of it. Even this production, therefore, could not at that time appear
in the eyes of Europeans to be of very great consequence.

Finding nothing, either in the animals or vegetables of the newly
discovered countries which could justify a very advantageous
representation of them, Columbus turned his view towards their
minerals; and in the richness of their productions of this third
kingdom, he flattered himself he had found a full compensation for the
insignificancy of those of the other two. The little bits of gold with
which the inhabitants ornamented their dress, and which, he was
informed, they frequently found in the rivulets and torrents which
fell from the mountains, were sufficient to satisfy him that those
mountains abounded with the richest gold mines. St. Domingo,
therefore, was represented as a country abounding with gold, and upon
that account (according to the prejudices not only of the present
times, but of those times), an inexhaustible source of real wealth to
the crown and kingdom of Spain. When Columbus, upon his return from
his first voyage, was introduced with a sort of triumphal honours to
the sovereigns of Castile and Arragon, the principal productions of
the countries which he had discovered were carried in solemn
procession before him. The only valuable part of them consisted in
some little fillets, bracelets, and other ornaments of gold, and in
some bales of cotton. The rest were mere objects of vulgar wonder and
curiosity; some reeds of an extraordinary size, some birds of a very
beautiful plumage, and some stuffed skins of the huge alligator and
manati; all of which were preceded by six or seven of the wretched
natives, whose singular colour and appearance added greatly to the
novelty of the show.

In consequence of the representations of Columbus, the council of
Castile determined to take possession of the countries of which the
inhabitants were plainly incapable of defending themselves. The pious
purpose of converting them to Christianity sanctified the injustice of
the project. But the hope of finding treasures of gold there was the
sole motive which prompted to undertake it; and to give this motive
the greater weight, it was proposed by Columbus, that the half of all
the gold and silver that should be found there, should belong to the
crown. This proposal was approved of by the council.

As long as the whole, or the greater part of the gold which the first
adventurers imported into Europe was got by so very easy a method as
the plundering of the defenceless natives, it was not perhaps very
difficult to pay even this heavy tax; but when the natives were once
fairly stript of all that they had, which, in St. Domingo, and in all
the other countries discovered by Columbus, was done completely in six
or eight years, and when, in order to find more, it had become
necessary to dig for it in the mines, there was no longer any
possibility of paying this tax. The rigorous exaction of it,
accordingly, first occasioned, it is said, the total abandoning of the
mines of St. Domingo, which have never been wrought since. It was soon
reduced, therefore, to a third; then to a fifth; afterwards to a
tenth; and at last to a twentieth part of the gross produce of the
gold mines. The tax upon silver continued for a long time to be a
fifth of the gross produce. It was reduced to a tenth only in the
course of the present century. But the first adventurers do not appear
to have been much interested about silver. Nothing less precious than
gold seemed worthy of their attention.

All the other enterprizes of the Spaniards in the New World,
subsequent to those of Columbus, seem to have been prompted by the
same motive. It was the sacred thirst of gold that carried Ovieda,
Nicuessa, and Vasco Nugnes de Balboa, to the Isthmus of Darien; that
carried Cortes to Mexico, Almagro and Pizarro to Chili and Peru. When
those adventurers arrived upon any unknown coast, their first inquiry
was always if there was any gold to be found there; and according to
the information which they received concerning this particular, they
determined either to quit the country or to settle in it.

Of all those expensive and uncertain projects, however, which bring
bankruptcy upon the greater part of the people who engage in them,
there is none, perhaps, more perfectly ruinous than the search after
new silver and gold mines. It is, perhaps, the most disadvantageous
lottery in the world, or the one in which the gain of those who draw
the prizes bears the least proportion to the loss of those who draw
the blanks; for though the prizes are few, and the blanks many, the
common price of a ticket is the whole fortune of a very rich man.
Projects of mining, instead of replacing the capital employed in them,
together with the ordinary profits of stock, commonly absorb both
capital and profit. They are the projects, therefore, to which, of all
others, a prudent lawgiver, who desired to increase the capital of his
nation, would least choose to give any extraordinary encouragement, or
to turn towards them a greater share of that capital than what would
go to them of its own accord. Such, in reality, is the absurd
confidence which almost all men have in their own good fortune, that
wherever there is the least probability of success, too great a share
of it is apt to go to them of its own accord.

But though the judgment of sober reason and experience concerning such
projects has always been extremely unfavourable, that of human avidity
has commonly been quite otherwise. The same passion which has
suggested to so many people the absurd idea of the philosopher's
stone, has suggested to others the equally absurd one of immense rich
mines of gold and silver. They did not consider that the value of
those metals has, in all ages and nations, arisen chiefly from their
scarcity, and that their scarcity has arisen from the very small
quantities of them which nature has anywhere deposited in one place,
from the hard and intractable substances with which she has almost
everywhere surrounded those small quantities, and consequently from
the labour and expense which are everywhere necessary in order to
penetrate, and get at them. They flattered themselves that veins of
those metals might in many places be found, as large and as abundant
as those which are commonly found of lead, or copper, or tin, or iron.
The dream of Sir Waiter Raleigh, concerning the golden city and
country of El Dorado, may satisfy us, that even wise men are not
always exempt from such strange delusions. More than a hundred years
after the death of that great man, the Jesuit Gumila was still
convinced of the reality of that wonderful country, and expressed,
with great warmth, and, I dare say, with great sincerity, how happy he
should be to carry the light of the gospel to a people who could so
well reward the pious labours of their missionary.

In the countries first discovered by the Spaniards, no gold and silver
mines are at present known which are supposed to be worth the working.
The quantities of those metals which the first adventurers are said to
have found there, had probably been very much magnified, as well as
the fertility of the mines which were wrought immediately after the
first discovery. What those adventurers were reported to have found,
however, was sufficient to inflame the avidity of all their
countrymen. Every Spaniard who sailed to America expected to find an
El Dorado. Fortune, too, did upon this what she has done upon very few
other occasions. She realized in some measure the extravagant hopes of
her votaries; and in the discovery and conquest of Mexico and Peru (of
which the one happened about thirty, and the other about forty, years
after the first expedition of Columbus), she presented them with
something not very unlike that profusion of the precious metals which
they sought for.

A project of commerce to the East Indies, therefore, gave occasion to
the first discovery of the West. A project of conquest gave occasion
to all the establishments of the Spaniards in those newly discovered
countries. The motive which excited them to this conquest was a
project of gold and silver mines; and a course of accidents which no
human wisdom could foresee, rendered this project much more successful
than the undertakers had any reasonable grounds for expecting.

The first adventurers of all the other nations of Europe who attempted
to make settlements in America, were animated by the like chimerical
views; but they were not equally successful. It was more than a
hundred years after the first settlement of the Brazils, before any
silver, gold, or diamond mines, were discovered there. In the English,
French, Dutch, and Danish colonies, none have ever yet been
discovered, at least none that are at present supposed to be worth the
working. The first English settlers in North America, however, offered
a fifth of all the gold and silver which should be found there to the
king, as a motive for granting them their patents. In the patents of
Sir Waiter Raleigh, to the London and Plymouth companies, to the
council of Plymouth, etc. this fifth was accordingly reserved to the
crown. To the expectation of finding gold and silver mines, those
first settlers, too, joined that of discovering a north-west passage
to the East Indies. They have hitherto been disappointed in both.


PART II.

Causes of the Prosperity of New Colonies.

The colony of a civilized nation which takes possession either of a
waste country, or of one so thinly inhabited that the natives easily
give place to the new settlers, advances more rapidly to wealth and
greatness than any other human society.

The colonies carry out with them a knowledge of agriculture and of
other useful arts, superior to what can grow up of its own accord, in
the course of many centuries, among savage and barbarous nations. They
carry out with them, too, the habit of subordination, some notion of
the regular government which takes place in their own country, of the
system of laws which support it, and of a regular administration of
justice; and they naturally establish something of the same kind in
the new settlement. But among savage and barbarous nations, the
natural progress of law and government is still slower than the
natural progress of arts, after law and government have been so far
established as is necessary for their protection. Every colonist gets
more land than he can possibly cultivate. He has no rent, and scarce
any taxes, to pay. No landlord shares with him in its produce, and,
the share of the sovereign is commonly but a trifle. He has every
motive to render as great as possible a produce which is thus to be
almost entirely his own. But his land is commonly so extensive, that,
with all his own industry, and with all the industry of other people
whom he can get to employ, he can seldom make it produce the tenth
part of what it is capable of producing. He is eager, therefore, to
collect labourers from all quarters, and to reward them with the most
liberal wages. But those liberal wages, joined to the plenty and
cheapness of land, soon make those labourers leave him, in order to
become landlords themselves, and to reward with equal liberality other
labourers, who soon leave them for the same reason that they left
their first master. The liberal reward of labour encourages marriage.
The children, during the tender years of infancy, are well fed and
properly taken care of; and when they are grown up, the value of their
labour greatly overpays their maintenance. When arrived at maturity,
the high price of labour, and the low price of land, enable them to
establish themselves in the same manner as their fathers did before
them.

In other countries, rent and profit eat up wages, and the two superior
orders of people oppress the inferior one; but in new colonies, the
interest of the two superior orders obliges them to treat the inferior
one with more generosity and humanity, at least where that inferior
one is not in a state of slavery. Waste lands, of the greatest natural
fertility, are to be had for a trifle. The increase of revenue which
the proprietor, who is always the undertaker, expects from their
improvement, constitutes his profit, which, in these circumstances, is
commonly very great; but this great profit cannot be made, without
employing the labour of other people in clearing and cultivating the
land; and the disproportion between the great extent of the land and
the small number of the people, which commonly takes place in new
colonies, makes it difficult for him to get this labour. He does not,
therefore, dispute about wages, but is willing to employ labour at any
price. The high wages of labour encourage population. The cheapness
and plenty of good land encourage improvement, and enable the
proprietor to pay those high wages. In those wages consists almost the
whole price of the land; and though they are high, considered as the
wages of labour, they are low, considered as the price of what is so
very valuable. What encourages the progress of population and
improvement, encourages that of real wealth and greatness.

The progress of many of the ancient Greek colonies towards wealth and
greatness seems accordingly to have been very rapid. In the course of
a century or two, several of them appear to have rivalled, and even to
have surpassed, their mother cities. Syracuse and Agrigentum in
Sicily, Tarentum and Locri in Italy, Ephesus and Miletus in Lesser
Asia, appear, by all accounts, to have been at least equal to any of
the cities of ancient Greece. Though posterior in their establishment,
yet all the arts of refinement, philosophy, poetry, and eloquence,
seem to have been cultivated as early, and to have been improved as
highly in them as in any part of the mother country The schools of the
two oldest Greek philosophers, those of Thales and Pythagoras, were
established, it is remarkable, not in ancient Greece, but the one in
an Asiatic, the other in an Italian colony. All those colonies had
established themselves in countries inhabited by savage and barbarous
nations, who easily gave place to the new settlers. They had plenty of
good land; and as they were altogether independent of the mother city,
they were at liberty to manage their own affairs in the way that they
judged was most suitable to their own interest.

The history of the Roman colonies is by no means so brilliant. Some of
them, indeed, such as Florence, have, in the course of many ages, and
after the fall of the mother city, grown up to be considerable states.
But the progress of no one of them seems ever to have been very rapid.
They were all established in conquered provinces, which in most cases
had been fully inhabited before. The quantity of land assigned to each
colonist was seldom very considerable, and, as the colony was not
independent, they were not always at liberty to manage their own
affairs in the way that they judged was most suitable to their own
interest.

In the plenty of good land, the European colonies established in
America and the West Indies resemble, and even greatly surpass, those
of ancient Greece. In their dependency upon the mother state, they
resemble those of ancient Rome; but their great distance from Europe
has in all of them alleviated more or less the effects of this

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