familiar from frequent quotation, but essential to the understanding of his general position. "I have never known much good done by those who affected to trade for the public good. It is an affectation indeed not very common among merchants, and very few words need be employed in dissuading them from it.' "The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted not to no single person but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.” "To judge whether such retaliations are likely to produce such an effect does not perhaps belong so much to the science of the legislator whose deliberations ought to be governed by general principles which are always the same, as to that insidious and crafty animal vulgarly called a statesman or politician, whose councils are directed by the momentary fluctuations of affairs."

But if Adam Smith distrusted the wisdom and powers of statesmen he distrusted still more their advisers. "That foreign trade enriched the country, experience demonstrated to the nobles and country gentlemen, as well as to the merchants; but how or in what manner none of them well knew. The merchants knew perfectly in what manner it enriched themselves. It was their business to know it. But

to know in what manner it enriched the country was no part of their business. This subject never came into their consideration but when they had occasion to apply to their country for some change in the laws relating to foreign trade. It then became necessary to say something about the beneficial effects of foreign trade, and the manner in which those effects were obstructed by the laws as they then stood." In this connection the remark of Dr. Johnson may be recalled, who replied when some one asserted that Adam Smith was not qualified to write about trade because he had never been in trade: "He is mistaken, sir, there is nothing which requires more to be illustrated by philosophy than trade does."

§ 3. The Evils of Monopoly.

It must not be supposed that Adam Smith's severe strictures on the merchants and manufacturers were called forth simply as a rhetorical support of the system of natural liberty. His attitude is explained in the first place by reference to underlying economic principles. Individuals naturally seek to attain the best profit on their capital; but for this purpose a combination or monopoly will often be more effective than competition. On the whole, however, the public interest is promoted by competition and injured by monopoly. Profit realised under natural conditions, that is to say, without the aid of monopoly, Adam Smith thinks is, in general, conducive to the national advantage; but as soon as monopoly enters in, the nation suffers for the benefit of a class.

The centre of his attack on the old mercantile system is that it was based on monopoly. "Monopoly of one kind or another seems to be the sole engine of the mercantile system.' "Merchants

and manufacturers are the people who derive the greatest advantage from this monopoly of the home market." Country gentlemen and farmers are, to their great honour, of all people the least subject to this wretched spirit of monopoly." The following passage shows the wide application made of this fundamental difference. "The superiority which the industry of the towns has everywhere in Europe over that of the country is not altogether owing to corporations and corporation laws.' It is supported by many other regulations. The high duties upon foreign_manufactures and upon all goods imported by alien merchants all tend to the same purpose. Corporation laws enable the inhabitants of the towns to raise their prices without fear to be undersold by the free competition of their own countrymen. Those other regulations secure them equally against that of foreigners. The enhancement of price occasioned by both is everywhere finally paid by the landlords, farmers, and labourers of the country who have seldom opposed the establishment of such monopolies. They have commonly neither inclination nor fitness. to enter into combinations; and the clamour and sophistry of merchants and manufacturers easily persuade them that the private interest of a part, and

1 The reference is to the exclusive regulations adopted by the medieval towns to protect their own burgesses.

of a subordinate part of the society, is the general interest of the whole." 1

As already indicated, and as will be shown in detail later on, Adam Smith was not only a national but an imperial economist, and the centre of this attack on the imperial policy of the mercantilists was that it was based on monopoly. Alike in the British colonies of North America and in India, the mercantile policy failed to realise the larger issues of empire; and in both cases the reason is the same; the policy was actuated by the narrow spirit of trade monopoly. Monopoly is the great engine of both; but it is a different sort of monopoly."

Examples might be multiplied from the Wealth of Nations to show that in every part of the economic system, with few exceptions, monopolies were detrimental to the public interest. If their growth cannot be prevented then they should be mulcted of their gains-" the gains of monopolists, whenever they can be come at, being of all subjects of taxation the most proper." 2

§ 4. Monopoly and the Interests of Labour.

The chapter entitled "The Conclusion of the Mercantile System" (Bk. Iv. ch. viii.)3 gives a good illustration of the way in which the monopoly of the home market was managed merely for profit and not for the increased employment of home labour. To begin with, Adam Smith points out that the raw materials

2 Book v. chap. ii. part ii. art. iv.

1 Book I. chap. x. part ii. This chapter was added by Adam Smith to the last edition revised by him (the third in 1784). See Dr. Cannan's edition, Introduction, p. xv.

of manufacture were in many important cases admitted free; and although these exemptions "may have been extorted from the legislature by the private interests of our merchants and manufacturers they are perfectly just and reasonable; and if, consistently with the necessities of the State, they could be extended to all the other materials of manufacture, the public would certainly be a gainer." So far, this is a position which has been generally adopted both in theory and in practice. But the particular example which follows is of the nature of a crucial instance. "The avidity of our great manufacturers, however, has in some cases extended these exemptions a good deal beyond what can justly be considered as the rude materials of their work." The case examined at length is that of linen yarn. At one time this importation had been subject to a high duty, but finally even the surviving small duty of one penny per pound had been repealed. And on this repeal Adam Smith has some very remarkable comments, -remarkable that is to say, in view of the common opinion of his system. "In the different operations which are necessary for the preparation of linen yarn a good deal more industry is employed than in the subsequent operation of preparing linen cloth from linen yarn. To say nothing of the industry of the flaxgrowers and flaxdressers, three or four spinners at least are necessary in order to keep one weaver in constant employment; and more than four-fifths of the whole quantity of labour necessary for the preparation of linen cloth is employed in that of