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The course of human prosperity, indeed, | London, and brings back English corn and seems scarce ever to have been of so long conti- manufactures to Edinburgh, necessarily renuance as to enable any great country to ac- places, by every such operation, two Briquire capital sufficient for all those three pur-tish capitals, which had both been employed poses; unless, perhaps, we give credit to the in the agriculture or manufactures of Great wonderful accounts of the wealth and culti- Britain.

vation of China, of those of ancient Egypt, | The capital employed in purchasing foreign and of the ancient state of Indostan. Even goods for home consumption, when this purthose three countries, the wealthiest, according chase is made with the produce of domestic to all accounts, that ever were in the world, industry, replaces, too, by every such operaare chiefly renowned for their superiority in tion, two distinct capitals; but one of them agriculture and manufactures. They do not only is employed in supporting domestic in appear to have been eminent for foreign trade.dustry. The capital which sends British goods The ancient Egyptians had a superstitious an- to Portugal, and brings back Portuguese goods tipathy to the sea; a superstition nearly of the to Great Britain, replaces, by every such opesame kind prevails among the Indians; and ration, only one British capital. The other is the Chinese have never excelled in foreign a Portuguese one. Though the returns, therecommerce. The greater part of the surplus fore, of the foreign trade of consumption, produce of all those three countries seems to should be as quick as those of the home trade, have been always exported by foreigners, who the capital employed in it will give but one gave in exchange for it something else, for half of the encouragement to the industry or which they found a demand there, frequently productive labour of the country. gold and silver.

It is thus that the same capitai will in any country put into motion a greater or smaller quantity of productive labour, and add a greater or smaller value to the annual produce of its land and labour, according to the different proportions in which it is employed in agriculture, manufactures, and wholesale trade. The difference, too, is very great, according to the different sorts of wholesale trade in which any part of it is employed.

But the returns of the foreign trade of con、 sumption are very seldom so quick as those of the home trade. The returns of the home trade generally come in before the end of the year, and sometimes three or four times in the year. The returns of the foreign trade of consumption seldom come in before the end of the year, and sometimes not till after two or three years. A capital, therefore, employed in the home trade, will sometimes make twelve operations, or be sent out and returned twelve times, before a capital employed in the foreign trade of consumption has made one. If the capitals are equal, therefore, the one will give four-and-twenty times more encourage. ment and support to the industry of the coun try than the other.

All wholesale trade, all buying in order to sell again by wholesale, may be reduced to three different sorts: the home trade, the foreign trade of consumption, and the carrying trade. The home trade is employed in purchasing in one part of the same country, and selling in another, the produce of the industry of that country. It comprehends both the inland and the coasting trade. The foreign trade of consumption is employed in purchasing foreign goods for home consumption. The must have been purchased, either immediately carrying trade is employed in transacting the commerce of foreign countries, or in carrying the surplus produce of one to another.

The foreign goods for home consumption may sometimes be purchased, not with the produce of domestic industry but with some other foreign goods. These last, however,

with the produce of domestic industry, or with something else that had been purchased with it; for, the case of war and conquest The capital which is employed in purchas- excepted, foreign goods can never be acquired, ing in one part of the country, in order to but in exchange for something that had been sell in another, the produce of the industry of produced at home, either immediately, or after that country, generally replaces, by every such two or more different exchanges. The effects, operation, two distinct capitals, that had both therefore, of a capital employed in such a been employed in the agriculture or manu- round-about foreign trade of consumption, factures of that country, and thereby enables are, in every respect, the same as those of one them to continue that employment. When it employed in the most direct trade of the same sends out from the residence of the merchant kind, except that the final returns are likely a certain value of commodities, it generally to be still more distant, as they must depend brings back in return at least an equal value upon the returns of two or three distinct fo of other commodities. When both are the reign trades. If the hemp and flax of Riga produce of domestic industry, it necessarily are purchased with the tobacco of Virginia, replaces, by every such operation, two distinct which had been purchased with British macapitals, which had both been employed in nufactures, the merchant must wait for the supporting productive labour, and thereby en- returns of two distinct foreign trades, before ables them to continue that support. The he can employ the same capital in repurchas capital which sends Scotch manufactures to ing a like quantity of British manufactures.

Whe

If the tobacco of Virginia had been purchas-quantity of the produce of domestic industry,
ed, not with British manufactures, but with by the intervention of gold and silver, than
the sugar and rum of Jamaica, which had by that of any other foreign goods. The de
been purchased with those manufactures, he mand of the country may frequently, in this
must wait for the returns of three. If those manner, be supplied more completely, and at
two or three distinct foreign trades should a smaller expense, than in any other.
happen to be carried on by two or three dis- ther, by the continual exportation of those
tinct merchants, of whom the second buys metals, a trade of this kind is likely to impo-
the goods imported by the first, and the third verish the country from which it is carried on
buys those imported by the second, in order in any other way, I shall have occasion to exa-
to export them again, each merchant, indeed, mine at great length hereafter.
will, in this case, receive the returns of his That part of the capital of any country
own capital more quickly; but the final re- which is employed in the carrying trade, is
turns of the whole capital employed in the altogether withdrawn from supporting the pro-
trade will be just as slow as ever. Whether ductive labour of that particular country, to
the whole capital employed in such a round-support that of some foreign countries. Though
about trade belong to one merchant or to it may replace, by every operation, two dis-
three, can make no difference with regard to
the country, though it may with regard to the
particular merchants. Three times a greater
capital must in both cases be employed, in or-
der to exchange a certain value of British
manufactures for a certain quantity of flax
and hemp, than would have been necessary,
had the manufactures and the flax and hemp
been directly exchanged for one another. The but one of them in supporting that of Po-
whole capital employed, therefore, in such a
round-about foreign trade of consumption,
will generally give less encouragement and
support to the productive labour of the coun-
try, than an equal capital employed in a more
direct trade of the same kind.

tinct capitals, yet neither of them belongs to
that particular country. The capital of the
Dutch merchant, which carries the corn of
Poland to Portugal, and brings back the
fruits and wines of Portugal to Poland, re-
places by every such operation two capitals,
neither of which had been employed in sup
porting the productive labour of Holland;

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employed in it which pays the freight is dis-
tributed among, and puts into motion, a cur-
tain number of productive labourers of that
country. Almost all nations that have had
any considerable share of the carrying trade
have, in fact, carried it on in this manner.
The trade itself has probably derived its name
from it, the people of such countries being
the carriers to other countries. It does not,
however, seem essential to the nature of the
trade that it should be so. A Dutch merchant
may, for example, employ his capital in trans-
acting the commerce of Poland and Portugal,
by carrying part of the surplus produce of the
one to the other, not in Dutch, but in British
bottoms.

land, and the other that of Portugal. The profits only return regularly to Holland, and constitute the whole addition which this trade necessarily makes to the annual produce of the land and labour of that country. When, indeed, the carrying trade of any particular Whatever be the foreign commodity with country is carried on with the ships and sailwhich the foreign goods for home consump-ors of that country, that part of the capital tion are purchased, it can occasion no essential difference, either in the nature of the trade, or in the encouragement and support which it can give to the productive labour of the country from which it is carried on. If they are purchased with the gold of Brazil, for example, or with the silver of Peru, this gold and silver, like the tobacco of Virginia, must have been purchased with something that either was the produce of the industry of the country, or that had been purchased with something else that was so. So far, therefore, as the productive labour of the country is concerned, the foreign trade of consumption, which is carried on by means of gold and silver, has all the advantages and all the inconveniencies It may be presumed, that he ac of any other equally round-about foreign trade tually does so upon some particular occasions. of consumption; and will replace, just as fast, It is upon this account, however, that the caror just as slow, the capital which is imme- rying trade has been supposed peculiarly addiately employed in supporting that produc- vantageous to such a country as Great Britive labour. It seems even to have one ad- tain, of which the defence and security depend vantage over any other equally round-about upon the number of its sailors and shipping, foreign trade. The transportation of those But the same capital may employ as many metals from one place to another, on account sailors and shipping, either in the foreign trade of their small bulk and great value, is less ex- of consumption, or even in the home trade, pensive than that of almost any other foreign when carried on by coasting vessels, as it goods of equal value. Their freight is much less, could in the carrying trade, The number of and their insurance not greater; and no goods, sailors and shipping which any particular cabesides, are less liable to suffer by the carriage.pital can employ, does not depend upon the An equal quantity of foreign goods, therefore, nature of the trade, but partly upon the bulk may frequently be purchased with a smaller of the goods, in proportion to their value, and

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partly upon the distance of the ports between produce for something else which is more in which they are to be carried; chiefly upon demand there.

the former of those two circumstances. The When the foreign goods which are thus purcoal trade from Newcastle to London, for ex- chased with the surplus produce of domestic ample, employs more shipping than all the car-industry exceed the demand of the home marrying trade of England, though the ports are ket, the surpius part of them must be sent at no great distance. To force, therefore, by abroad again, and exchanged for something extraordinary encouragements, a larger share more in demand at home. About 96,00C

of the capital of any country into the carry-hogsheads of tobacco are annually purchased ing trade, than what would naturally go to it, in Virginia and Maryland with a part of the will not always necessarily increase the ship-surplus produce of British industry. But the ping of that country. demand of Great Britain does not require.

The capital, therefore, employed in the perhaps, more than 14,000. If the remainhome trade of any country, will generally ing 82,000, therefore, could not be sent agive encouragement and support to a greater broad, and exchanged for something more in quantity of productive labour in that country, demand at home, the importation of them must and increase the value of its annual produce, cease immediately, and with it the productive more than an equal capital employed in the labour of all those inhabitants of Great Britain foreign trade of consumption; and the capital who are at present employed in preparing the employed in this latter trade has, in both these goods with which these 82,000 hogsheads are respects, a still greater advantage over an annually purchased. Those goods, which are equal capital employed in the carrying trade. part of the produce of the land and labour of The riches, and so far as power depends upon Great Britain, having no market at home, and riches, the power of every country must al-being deprived of that which they had abroad, ways be in proportion to the value of its annual produce, the fund from which all taxes must ultimately be paid. But the great object of the political economy of every country, is to increase the riches and power of that country. It ought, therefore, to give no preference nor superior encouragement to the foreign trade of consumption above the home trade, nor to the carrying trade above either of the other two. It ought neither to force nor to allure into either of those two channels a greater share of the capital of the country, than what would naturally flow into them of its own accord.

must cease to be produced. The most roundabout foreign trade of consumption, therefore, may, upon some occasions, be as neceasary for supporting the productive labour of the country, and the value of its annual produce, as the most direct.

When the capital stock of any country is increased to such a degree that it cannot be all employed in supplying the consumption, and supporting the productive labour of that particular country, the surplus part of it naturally disgorges itself into the carrying trade, and is employed in performing the same offices to other countries. The carrying trade is the Each of those different branches of trade, natural effect and symptom of great national however, is not only advantageous, but neces-wealth; but it does not seem to be the natural sary and unavoidable, when the course of cause of it. Those statesmen who have been things, without any constraint or violence, na- [disposed to favour it with particular encoutrually introduces it. ragement, seem to have mistaken the effect and When the produce of any particular branch symptom for the cause. Holland, in proporof industry exceeds what the demand of the tion to the extent of the land and the number country requires, the surplus must be sent of its inhabitants, by far the richest country in abroad, and exchanged for something for Europe, has accordingly the greatest share of which there is a demand at home. With the carrying trade of Europe. England, perout such exportation, a part of the produc-haps the second richest country of Europe, is tive labour of the country must cease, and likewise supposed to have a considerable share the value of its annual produce diminish. in it; though what commonly passes for the The land and labour of Great Britain produce carrying trade of England will frequently, generally more corn, woollens, and hardware, perhaps, be found to be no more than a roundthan the demand of the home market requires. about foreign trade of consumption. Such The surplus part of them, therefore, must be are, in a great measure, the trades which carry sent abroad, and exchanged for something for the goods of the East and West Indies and of which there is a demand at home. It is only America to the different European markets. by means of such exportation, that this surplus Those goods are generally purchased, either can acquire a value sufficient to compensate immediately with the produce of British inthe labour and expense of producing it. The dustry, or with something else which had been neighbourhood of the sea-coast, and the banks purchased with that produce, and the final reof all navigable rivers, are advantageous situa- turns of those trades are generally used or contions for industry, only because they facilitate sumed in Great Britain. The trade which is the exportation and exchange of such surplus carried on in British bottoms between the dif

The extent of the home trade, and of the capital which can be employed in it, is necessarily limited by the value of the surplus produce of all those distant places within the country which have occasion to exchange their respective productions with one another; that of the foreign trade of consumption, by the value of the surplus produce of the whole country, and of what can be purchased with it; that of the earrying trade, by the value of the surplus produce of all the different countries in the world. Its possible extent, therefore, is in a manner infinite in comparison of that of the other two, and is capable of absorbing the greatest capitals.

ferent ports of the Mediterranean, and some¡ The profits of agriculture, however, seem to trade of the same kind carried on by British have no superiority over those of other employmerchants between the different ports of In-ments in any part of Europe. Projectors, dia, make, perhaps, the principal branches of indeed, in every corner of it, have, within what is properly the carrying trade of Great these few years, amused the public with most Britain. magnificent accounts of the profits to be made by the cultivation and improvement of land. Without entering into any particular discus. sion of their calculations, a very simple obser vation may satisfy us that the result of them must be false. We see, every day, the most splendid fortunes, that have been acquired in the course of a single life, by trade and manufactures, frequently from a very small capi. tal, sometimes from no capital. A single instance of such a fortune, acquired by agricul ture in the same time, and from such a capital, has not, perhaps, occurred in Europe, during the course of the present century. In all the great countries of Europe, however, much good land still remains uncultivated; and the The consideration of his own private profit greater part of what is cultivated, is far from is the sole motive which determines the owner being improved to the degree of which it is of any capital to employ it either in agricul. capable. Agriculture, therefore, is almost ture, in manufactures, or in some particular everywhere capable of absorbing a much greatbranch of the wholesale or retail trade. The er capital than has ever yet been employed in different quantities of productive labour which it. What circumstances in the policy of Euit may put into motion, and the different va- rope have given the trades which are carried lues which it may add to the annual produce on in towns so great an advantage over that of the land and labour of the society, accord- which is carried on in the country, that private ing as it is employed in one or other of those persons frequently find it more for their addifferent ways, never enter into his thoughts. vantage to employ their capitals in the most In countries, therefore, where agriculture is distant carrying trades of Asia and America, the most profitable of all employments, and than in the improvement and cultivation of farming and improving the most direct roads the most fertile fields in their own neighbour. to a splendid fortune, the capitals of indivi- hood, I shall endeavour to explain at ful duals will naturally be employed in the man-length in the two following books. Note 20. ner most advantageous to the whole society.

BOOK III.

OF THE DIFFERENT PROGRESS OF OPULENCE IN DIFFERENT NATIONS

CHAP. I.

OF THE NATURAL PROGRESS OF OPULENCE.

speculations that have been propagated concerning the balance of trade, it has never been pretended that either the country loses by its commerce with the town, or the town by that with the country which maintains it.

not only pay the expense of raising and bringing it to market, but afford, too, the ordinary profits of agriculture to the farmer. The proprietors and cultivators of the counTHE great commerce of every civilized society try, therefore, which lies in the neighbourhood is that carried on between the inhabitants of of the town, over and above the ordinary prothe town and those of the country. It con- fits of agriculture, gain, in the price of what sists in the exchange of rude for manufactured they sell, the whole value of the carriage of produce, either immediately, or by the inter- the like produce that is brought from more vention of money, or of some sort of paper distant parts; and they save, besides, the whole which represents money. The country sup-value of this carriage in the price of what they plies the town with the means of subsistence buy. Compare the cultivation of the lands in and the materials of manufacture. The town the neighbourhood of any considerable town, repays this supply, by sending back a part of with that of those which lie at some distance the manufactured produce to the inhabitants from it, and you will easily satisfy yourself of the country. The town, in which there how much the country is benefited by the comneither is nor can be any reproduction of sub-merce of the town. Among all the absurd stances, may very properly be said to gain its whole wealth and subsistence from the country. We must not, however, upon this account, imagine that the gain of the town is the loss of the country. The gains of both are inutual and reciprocal, and the division of la- As subsistence is, in the nature of things, bour is in this, as in all other cases, advanta- prior to conveniency and luxury, so the ingeous to all the different persons employed industry which procures the former, must necesthe various occupations into which it is sub- sarily be prior to that which ministers to the divided. The inhabitants of the country pur- latter. The cultivation and improvement of chase of the town a greater quantity of manu- the country, therefore, which affords subsistfactured goods with the produce of a much ence, must, necessarily, be prior to the insmaller quantity of their own labour, than crease of the town, which furnishes only the they must have employed had they attempted means of conveniency and luxury. It is the to prepare them themselves. The town affords surplus produce of the country only, or what a market for the surplus produce of the coun- is over and above the maintenance of the cultry, or what is over and above the maintenance tivators, that constitutes the subsistence of the of the cultivators; and it is there that the in-town, which can therefore increase only with habitants of the country exchange it for something else which is in demand among them. The greater the number and revenue of the inhabitants of the town, the more extensive is the market which it affords to those of the country; and the more extensive that market, it is always the more advantageous to a great number. The corn which grows within a mile of the town, sells there for the same price with that which comes from twenty miles distance. But the price of the latter must, generally,

the increase of the surplus produce. The town, indeed, may not always derive its whole subsistence from the country in its neighbour hood, or even from the territory to which it belongs, but from very distant countries; and this, though it forms no exception from the general rule, has occasioned considerable variations in the progress of opulence in different ages and nations.

That order of things which necessity im poses, in general, though not in every particu

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