III. An Inquiry into the Nature and Causes of the Wealth of Nations. By Adam Smith, LL. D and F. R. S. In Two Volumes. 410. 11. 16s. boards. Cadell. (Concluded from p. 369.) IN N the fixth chapter the subject of the author's confideration is treaties of commerce. He obferves that 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 fubjects thofe of all others, the country, or at least the merchants and manufacturers of the country, whofe commerce is fo favoured, muft neceffarily derive great advantage from the treaty; but that fuch treaties are disadvantageous to the merchants and manufacturers of the favouring country. A monopoly, he remarks, is thus granted against them to a foreign nation; and they muft frequently buy the foreign goods they have occafion for dearer than if the free competition of other nations was admitted. That part of its produce with which fuch a nation purchafes foreign goods, muft confequently be fold cheaper; because when two things are exchanged for one another, the cheapness of the one is a neceffary confequence, or rather is the fame thing with the dearnefs of the other. The exchangeable value of its annual produce, therefore, is likely to be diminished by every such treaty; though this diminution, however, can fcarce amount to any pofitive lofs, but only to a leffening of the gain which it might otherwife make. Dr. Smith further obferves, that fome treaties of commerce have been fuppofed advantageous upon principles very dif ferent from thefe; and that a commercial country has fometimes 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 fell more than it would buy, and that a balance in gold and filver would be annually returned to it. It is upon this principle, continues he, that the treaty of commerce between England and Portugal, concluded in 1703 by Mr. Methuen, has been fo much commended. He prefents us with a literal translation of that treaty, which confifts of three articles only; the shortest, perhaps, that occurs among the political transactions of modern times, and which, on account of its brevity, we fhall lay before our readers. Art. I. His facred royal majefty of Portugal promifes, both in his own name, and that of his fucceffors, to admit, for ever hereafter, into Portugal, the woollen cloths, and the reft of the woollen manufactures of the British, as was accustomed, VOL. XLI. June, 1776. Ff till till they were prohibited by the law; nevertheless upon this condition: Art. II. That is to fay, that her facred royal majesty of Great Britain fhall, in her own name, and that of her fucceffors, be obliged for ever hereafter, to admit the wines of the growth of Portugal into Britain; fo that at no time, whether there fhall be peace or war between the kingdoms of Britain and France, any thing more fhall be demanded for thefe 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 hogfheads, or other cafks, than what fhall be demanded for the like quantity or meafure 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 aforefaid, fhall in any manner be attempted and prejudiced, it fhall be juft and lawful for his facred royal majefty of Portugal, again to prohibit the woollen cloths, and the rest of the Briti woollen manufactures. • Art III. The moft excellent lords the plenipotentiaries promife and take upon themselves, that their above-named masters fhall ratify this treaty, and within the space of two months, the ratifications fhall be exchanged.' Dr. Smith remarks that by this treaty the crown of Por tugal becomes bound to admit the English woollens upon the fame 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. 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 thofe of France, the wines most likely to come into competition with them. So far this treaty, therefore, is evidently advantageous to Portugal, and difadvantageous to Great Britain; notwithstanding it has been celebrated as a mafter-piece of the commercial policy of England. In the feventh chapter the author treats at great length of colonies. His obfervations on this fubject are divided into three parts, in the first of which he inquires into the motives for establishing colonies. He begins with remarking that the intereft which occafioned the first settlement of the different European colonies in America and the Weft Indies, was not altogether fo plain and diftin&t as that which directed the eftablishment of thofe of ancient Greece and Rome. Among the former of these two, the emigrants were confidered as totally emancipated from the jurifdiction of their original coun-. try. But the Roman colonies, the establishment of which was fuggefted by other motives than an impoffibility of the, па natives of the republic being maintained within its own ter ritories, were never abfolved from the legislative authority of the ftate. The ancient colonies, Dr. Smith observes, derived their origin either from irresistible neceffity, or from clear and evident utility. But the eftablishment of the European colonies in America and the Weft Indies arose from neceffity; and though the utility which has refulted from them, has been very great, it is not altogether fo clear and evident. The second part treats of the causes of the prosperity of new colonies. Our author here obferves that the colony of a civilized nation which takes poffeffion, either of a waste country, or of one fo thinly inhabited that the natives easily give place to the new fettlers, advances more rapidly to wealth and greatnefs than any other human fociety. He also remarks that there are no colonies of which the progress has been more rapid than that of the English in North America; owing to their political inftitutions being more favourable to the improvement and cultivation of the land; and to various other circumstances which are fully explained. Among many just observations which occur on this fubject, our author clearly evinces, that though the policy of Great Britain with regard to the trade of her colonies has been dictated by the fame commercial spirit as that of other nations, it has, however, upon the whole, been lefs illiberal and oppreffive than that of any of them. The third part treats of the advantages which Europe has derived from the discovery of America, and from that of a paffage to the Eaft Indies by the Cape of Good Hope. These he divides, firft, into the general advantages which Europe, confidered as one great country, has derived from those events; and, secondly, into the particular advantages which each colonizing country has derived from the colonies which particularly belong to it, in confequence of the authority or dominion which it exercises over them. He obferves that the general advantages which Europe, confidered as one great country, has derived from the difcovery and colonization of America, confift in the increase of its enjoyments, and in the augmentation of its induftry. We fhall prefent our readers with fome of the author's remarks on the effects produced by the trade of England with her colonies. In order, however, to obtain this relative advantage in the colony trade, in order to execute the invidious and malignant project of excluding as much as poffible other nations from any fhare in it, England, there are very probable reasons for believing, has not only facrificed a part of the abfolute advan tage which the, as well as every other nation, might have defived from that trade, but has fubjected herself both to an absolute and to a relative difadvantage in almost every other branch of trade. When, by the act of navigation, England affumed to herfelf the monopoly of the colony trade, the foreign capitals which had before been employed in it were neceffarily withdrawn from it. The English capital, which had before carried on but a part of it, was now to carry on the whole. The ca pital which had before fupplied the colonies with but a part of the goods which they wanted from Europe, was now all that was employed to fupply them with the whole. But it could not fupply them with the whole, and the goods with which it did fupply them were neceffarily fold very dear. The capital which had before bought but a part of the furplus produce of the colonies, was now all that was employed to buy the whole. But it could not buy the whole at any thing near the old price, and, therefore, whatever it did buy it neceffarily bought very cheap. But in an employment of capital in which the merchant fold very dear and bought very cheap, the profit muft have been very great, and much above the ordinary level of profit in other branches of trade. This fuperiority of profit in the colony trade, could not fail to draw from other branches of trade a part of the capital which had before been employed in them. But this revulfion of capital, as it must have gradually increafed the competition of capitals in the colony trade, fo it muft have gradually diminished that competition in all those other branches of trade; as it must have gradually lowered the profits of the one, fo it must have gradually raised thofe of the other, till the profits of all came to a new level, different from and somewhat higher than that at which they had been before. This double effect, of drawing capital from all other trades, and of raifing the rate of profit fomewhat higher than it otherwife would have been in all trades, was not only produced by this monopoly upon its firft establishment, but has continued to be produced by it ever fince. First, this monopoly has been continually drawing capital from all other trades to be employed in that of the colonies. Though the wealth of Great Britain has increased very much fince the establishment of the act of navigation, it certainly has not increafed in the fame proportion as that of the colonies. But the foreign trade of every country naturally increases in proportion to its wealth, its furplus produce in pro. portion to its whole produce; and Great Britain having engroffed to herself almoft the whole of what may be called the foreign trade of the colonies, and her capital not having increafed in the fame proportion as the extent of that trade, she could not carry it on without continually withdrawing from other branches of trade fome part of the capital which had be fore fore been employed in them, as well as with-holding from them a great deal more which would otherwife have gone to them. Since the establishment of the act of navigation, accordingly, the colony trade has been continually increafing, while many other branches of foreign trade, particularly of that to other parts of Europe, have been continually decaying. Our manufactures for foreign fale, instead of being fuited, as before the act of navigation, to the neighbouring market of Europe, or to the more diftant one of the countries which lie round the Mediterranean fea, have, the greater part of them, been accommodated to the ftill more diftant one of the colonies, to the market in which they have the monopoly, rather than to that in which they have many competitors. The causes of decay in other branches of foreign trade, which, by Sir Matthew Decker and other writers, have been fought for in the excess and improper mode of taxation, in the high price of labour, in the increase of luxury, &c. may all be found in the over-growth of the colony trade. The mercantile capital of Great Britain, though very great, yet not being infinite; and though greatly increased fince the act of navigation, yet not being increased in the fame proportion as the colony trade, that trade could not poffibly be carried on without withdrawing fome part of that capital from other branches of trade, nor confequently without fome decay of thofe other branches. England, it must be obferved, was a great trading country, her mercantile capital was very great and likely to become ftill greater and greater every day, not only before the act of navigation had established the monopoly of the colony trade, but before that trade was very confiderable. In the Dutch war, during the government of Cromwell, her navy was fuperior to that of Holland; and in that which broke out in the beginning of the reign of Charles 11. it was at least equal, perhaps fuperior, to the united navies of France and Holland. Its fuperiority, perhaps, would fcarce appear greater in the prefent times; at least if the Dutch navy was to bear the fame proportion to the Dutch commerce now which it did then. But this great naval power could not, in either of those wars, be owing to the act of navigation. During the firft of them the plan of that act had been but juft formed; and though before the breaking out of the fecond it had been fully enacted by legal authority; yet no part of it could have had time to produce any confiderable effect, and leaft of all that part which eftablished the exclufive trade to the colonies. Both the colonies and their trade were inconfiderable then in comparison of what they are now.' Dr. Smith enumerates five different events, unforeseen and unthought of, which have concurred to hinder Great Britain from feeling, fo fenfibly as it was generally expected the would, the total interruption which has taken place in her Ff3 trade |