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Chapter 2



By restraining, either by high duties, or by absolute
prohibitions, the importation of such goods from foreign
countries as can be produced at home, the monopoly of the home
market is more or less secured to the domestic industry employed
in producing them. Thus the prohibition of importing either live
cattle or salt provisions from foreign countries, secures to the
graziers of Great Britain the monopoly of the home market for
butcher's meat. The high duties upon the importation of corn,
which, in times of moderate plenty, amount to a prohibition, give
a like advantage to the growers of that commodity. The
prohibition of the importation of foreign woollen is equally
favourable to the woollen manufacturers. The silk manufacture,
though altogether employed upon foreign materials, has lately
obtained the same advantage. The linen manufacture has not yet
obtained it, but is making great strides towards it. Many other
sorts of manufactures have, in the same manner obtained in Great
Britain, either altogether, or very nearly, a monopoly against
their countrymen. The variety of goods, of which the importation
into Great Britain is prohibited, either absolutely, or under
certain circumstances, greatly exceeds what can easily be
suspected by those who are not well acquainted with the laws of
the customs.

That this monopoly of the home market frequently gives great
encouragement to that particular species of industry which enjoys
it, and frequently turns towards that employment a greater share
of both the labour and stock of the society than would otherwise
have gone to it, cannot be doubted. But whether it tends either
to increase the general industry of the society, or to give it
the most advantageous direction, is not, perhaps, altogether so

The general industry of the society can never exceed what the
capital of the society can employ. As the number of workmen that
can be kept in employment by any particular person must bear a
certain proportion to his capital, so the number of those that
can be continually employed by all the members of a great society
must bear a certain proportion to the whole capital of the
society, and never can exceed that proportion. No regulation of
commerce can increase the quantity of industry in any society
beyond what its capital can maintain. It can only divert a part
of it into a direction into which it might not otherwise have
gone; and it is by no means certain that this artificial
direction is likely to be more advantageous to the society, than
that into which it would have gone of its own accord.

Every individual is continually exerting himself to find out the
most advantageous employment for whatever capital he can command.
It is his own advantage, indeed, and not that of the society,
which he has in view. But the study of his own advantage
naturally, or rather necessarily, leads him to prefer that
employment which is most advantageous to the society.

First, every individual endeavours to employ his capital as near
home as he can, and consequently as much as he can in the support
of domestic industry, provided always that he can thereby obtain
the ordinary, or not a great deal less than the ordinary profits
of stock.

Thus, upon equal, or nearly equal profits, every wholesale
merchant naturally prefers the home trade to the foreign trade of
consumption, and the foreign trade of consumption to the carrying
trade. In the home trade, his capital is never so long out of his
sight as it frequently is in the foreign trade of consumption. He
can know better the character and situation of the persons whom
he trusts; and if he should happen to be deceived, he knows
better the laws of the country from which he must seek redress.
In the carrying trade, the capital of the merchant is, as it
were, divided between two foreign countries, and no part of it is
ever necessarily brought home, or placed under his own immediate
view and command. The capital which an Amsterdam merchant employs
in carrying corn from Koningsberg to Lisbon, and fruit and wine
from Lisbon to Koningsberg, must generally be the one half of it
at Koningsberg, and the other half at Lisbon. No part of it need
ever come to Amsterdam. The natural residence of such a merchant
should either be at Koningsberg or Lisbon ; and it can only be
some very particular circumstances which can make him prefer the
residence of Amsterdam. The uneasiness, however, which he feels
at being separated so far from his capital, generally determines
him to bring part both of the Koningsberg goods which he destines
for the market of Lisbon, and of the Lisbon goods which he
destines for that of Koningsberg, to Amsterdam ; and though this
necessarily subjects him to a double charge of loading and
unloading as well as to the payment of some duties and customs,
yet, for the sake of having some part of his capital always under
his own view and command, he willingly submits to this
extraordinary charge; and it is in this manner that every country
which has any considerable share of the carrying trade, becomes
always the emporium, or general market, for the goods of all the
different countries whose trade it carries on. The merchant, in
order to save a second loading and unloading, endeavours always
to sell in the home market, as much of the goods of all those
different countries as he can; and thus, so far as he can, to
convert his carrying trade into a foreign trade of consumption. A
merchant, in the same manner, who is engaged in the foreign trade
of consumption, when he collects goods for foreign markets, will
always be glad, upon equal or nearly equal profits, to sell as
great a part of them at home as he can. He saves himself the risk
and trouble of exportation, when, so far as he can, he thus
converts his foreign trade of consumption into a home trade. Home
is in this manner the centre, if I may say so, round which the
capitals of the inhabitants of every country are continually
circulating, and towards which they are always tending, though,
by particular causes, they may sometimes be driven off and
repelled from it towards more distant employments. But a capital
employed in the home trade, it has already been shown,
necessarily puts into motion a greater quantity of domestic
industry, and gives revenue and employment to a greater number of
the inhabitants of the country, than an equal capital employed in
the foreign trade of consumption; and one employed in the foreign
trade of consumption has the same advantage over an equal capital
employed in the carrying trade. Upon equal, or only nearly equal
profits, therefore, every individual naturally inclines to employ
his capital in the manner in which it is likely to afford the
greatest support to domestic industry, and to give revenue and
employment to the greatest number of people of his own country.

Secondly, every individual who employs his capital in the support
of domestic industry, necessarily endeavours so to direct that
industry, that its produce may be of the greatest possible value.

The produce of industry is what it adds to the subject or
materials upon which it is employed. In proportion as the value
of this produce is great or small, so will likewise be the
profits of the employer. But it is only for the sake of profit
that any man employs a capital in the support of industry; and he
will always, therefore, endeavour to employ it in the support of
that industry of which the produce is likely to be of the
greatest value, or to exchange for the greatest quantity either
of money or of other goods.

But the annual revenue of every society is always precisely equal
to the exchangeable value of the whole annual produce of its
industry, or rather is precisely the same thing with that
exchangeable value. As every individual, therefore, endeavours as
much as he can, both to employ his capital in the support of
domestic industry, and so to direct that industry that its
produce maybe of the greatest value; every individual necessarily
labours to render the annual revenue of the society as great as
he can. He generally, indeed, neither intends to promote the
public interest, nor knows how much he is promoting it. By
preferring the support of domestic to that of foreign industry,
he intends only his own security ; and by directing that industry
in such a manner as its produce may be of the greatest value, he
intends only his own gain; and he is in this, as in many other
cases, led by an invisible hand to promote an end which was no
part of his intention. Nor is it always the worse for the society
that it was no part of it. By pursuing his own interest, he
frequently promotes that of the society more effectually than
when he really intends to promote it. I have never known much
good done by those who affected to trade for the public good. It
is an affectation, indeed, not very common among merchants, and
very few words need be employed in dissuading them from it.

What is the species of domestic industry which his capital can
employ, and of which the produce is likely to be of the greatest
value, every individual, it is evident, can in his local
situation judge much better than any statesman or lawgiver can do
for him. The statesmn, 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 only 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 give the monopoly of the home market to the produce of
domestic industry, in any particular art or manufacture, is in
some measure to direct private people in what manner they ought
to employ their capitals, and must in almost all cases be either
a useless or a hurtful regulation. If the produce of domestic can
be brought there as cheap as that of foreign industry, the
regulation is evidently useless. If it cannot, it must generally
be hurtful. It is the maxim of every prudent master of a family,
never to attempt to make at home what it will cost him more to
make than to buy. The tailor does not attempt to make his own
shoes, but buys them of the shoemaker. The shoemaker does not
attempt to make his own clothes, but employs a tailor. The farmer
attempts to make neither the one nor the other, but employs those
different artificers. All of them find it for their interest to
employ their whole industry in a way in which they have some
advantage over their neighbours, and to purchase with a part of
its produce, or, what is the same thing, with the price of a part
of it, whatever else they have occasion for.

What is prudence in the conduct of every private family, can
scarce be folly In that of a great kingdom. If a foreign country
can supply us with a commodity cheaper than we ourselves can make
it, better buy it of them with some part of the produce of our
own industry, employed in a way in which we have some advantage.
The general industry of the country being always in proportion to
the capital which employs it, will not thereby be diminished, no
more than that of the abovementioned artificers; but only left to
find out the way in which it can be employed with the greatest
advantage. It is certainly not employed to the greatest
advantage, when it is thus directed towards an object which it
can buy cheaper than it can make. The value of its annual produce
is certainly more or less diminished, when it is thus turned away
from producing commodities evidently of more value than the
commodity which it is directed to produce. According to the
supposition, that commodity could be purchased from foreign
countries cheaper than it can be made at home ; it could
therefore have been purchased with a part only of the
commodities, or, what is the same thing, with a part only of the
price of the commodities, which the industry employed by an equal
capital would have produced at home, had it been left to follow
its natural course. The industry of the country, therefore, is
thus turned away from a more to a less advantageous employment ;
and the exchangeable value of its annual produce, instead of
being increased, according to the intention of the lawgiver, must
necessarily be diminished by every such regulation.

By means of such regulations, indeed, a particular manufacture
may sometimes be acquired sooner than it could have been
otherwise, and after a certain time may be made at home as cheap,
or cheaper, than in the foreign country. But though the industry
of the society may be thus carried with advantage into a
particular channel sooner than it could have been otherwise, it
will by no means follow that the sum-total, either of its
industry, or of its revenue, can ever be augmented by any such
regulation. The industry of the society can augment only in
proportion as its capital augments, and its capital can augment
only in proportion to what can be gradually saved out of its
revenue. But the immediate effect of every such regulation is to
diminish its revenue; and what diminishes its revenue is
certainly not very likely to augment its capital faster than it
would have augmented of its own accord, had both capital and
industry been left to find out their natural employments.

Though, for want of such regulations, the society should never
acquire the proposed manufacture, it would not upon that account
necessarily be the poorer in anyone period of its duration. In
every period of its duration its whole capital and industry might
still have been employed, though upon different objects, in the
manner that was most advantageous at the time. In every period
its revenue might have been the greatest which its capital could
afford, and both capital and revenue might have been augmented
with the greatest possible rapidity.

The natural advantages which one country has over another, in
producing particular commodities, are sometimes so great, that it
is acknowledged by all the world to be in vain to struggle with
them. By means of glasses, hot-beds, and hot-walls, very good
grapes can be raised in Scotland, and very good wine, too, can be
made of them, at about thirty times the expense for which at
least equally good can be brought from foreign countries. Would
it be a reasonable law to prohibit the importation of all foreign
wines, merely to encourage the making of claret and Burgundy in
Scotland ? But if there would be a manifest absurdity in turning
towards any employment thirty times more of the capital and
industry of the country than would be necessary to purchase from
foreign countries an equal quantity of the commodities wanted,
there must be an absurdity, though not altogether so glaring, yet
exactly of the same kind, in turning towards any such employment
a thirtieth, or even a three hundredth part more of either.
Whether the advantages which one country has over another be
natural or acquired, is in this respect of no consequence. As
long as the one country has those advantages, and the other wants
them, it will always be more advantageous for the latter rather
to buy of the former than to make. It is an acquired advantage
only, which one artificer has over his neighbour, who exercises
another trade; and yet they both find it more advantageous to buy
of one another, than to make what does not belong to their
particular trades.

Merchants and manufacturers are the people who derive the
greatest advantage from this monopoly of the home market The
prohibition of the importation of foreign cattle and of salt
provisions, together with the high duties upon foreign corn,
which in times of moderate plenty amount to a prohibition, are
not near so advantageous to the graziers and farmers of Great
Britain, as other regulations of the same kind are to its
merchants and manufacturers. Manufactures, those of the finer
kind especially, are more easily transported from one country to
another than corn or cattle. It is in the fetching and carrying
manufactures, accordingly, that foreign trade is chiefly
employed. In manufactures, a very small advantage will enable
foreigners to undersell our own workmen, even in the home market.
It will require a very great one to enable them to do so in the
rude produce of the soil. If the free importation of foreign
manufactures were permitted, several of the home manufactures
would probably suffer,and some of them perhaps go to ruin
altogether, and a considerable part of the stock and industry at
present employed in them, would be forced to find out some other
employment. But the freest importation of the rude produce of the
soil could have no such effect upon the agriculture of the

If the importation of foreign cattle, for example, were made ever
so free, so few could be imported, that the grazing trade of
Great Britain could be little affected by it. Live cattle are,
perhaps, the only commodity of which the transportation is more
expensive by sea than by land. By land they carry themselves to
market. By sea, not only the cattle, but their food and their
water too, must be carried at no small expense and inconveniency.
The short sea between Ireland and Great Britain, indeed, renders
the importation of Irish cattle more easy. But though the free
importation of them, which was lately permitted only for a
limited time, were rendered perpetual, it could have no
considerable effect upon the interest of the graziers of Great
Britain. Those parts of Great Britain which border upon the Irish
sea are all grazing countries. Irish cattle could never be
imported for their use, but must be drove through those very
extensive countries, at no small expense and inconveniency,
before they could arrive at their proper market. Fat cattle could
not be drove so far. Lean cattle, therefore, could only be
imported; and such importation could interfere not with the
interest of the feeding or fattening countries, to which, by
reducing the price of lean cattle it would rather be
advantageous, but with that of the breeding countries only. The
small number of Irish cattle imported since their importation was
permitted, together with the good price at which lean cattle
still continue to sell, seem to demonstrate, that even the
breeding countries of Great Britain are never likely to be much
affected by the free importation of Irish cattle. The common
people of Ireland, indeed, are said to have sometimes opposed
with violence the exportation of their cattle. But if the
exporters had found any great advantage in continuing the trade,
they could easily, when the law was on their side, have conquered
this mobbish opposition.

Feeding and fattening countries, besides, must always be highly
improved, whereas breeding countries are generally uncultivated.
The high price of lean cattle, by augmenting the value of
uncultivated land, is like a bounty against improvement. To any
country which was highly improved throughout, it would be more
advantageous to import its lean cattle than to breed them. The
province of Holland, accordingly, is said to follow this maxim at
present. The mountains of Scotland, Wales, and Northumberland,
indeed, are countries not capable of much improvement, and seem
destined by nature to be the breeding countries of Great Britain.
The freest importation of foreign cattle could have no other
effect than to hinder those breeding countries from taking
advantage of the increasing population and improvement of the
rest of the kingdom, from raising their price to an exorbitant
height, and from laying a real tax upon all the more improved and
cultivated parts of the country.

The freest importation of salt provisions, in the same manner,
could have as little effect upon the interest of the graziers of
Great Britain as that of live cattle. Salt provisions are not
only a very bulky commodity, but when compared with fresh meat
they are a commodity both of worse quality, and, as they cost
more labour and expense, of higher price. They could never,
therefore, come into competition with the fresh meat, though they
might with the salt provisions of the country. They might be used
for victualling ships for distant voyages, and such like uses,
but could never make any considerable part of the food of the
people. The small quantity of salt provisions imported from
Ireland since their importation was rendered free, is an
experimental proof that our graziers have nothing to apprehend
from it. It does not appear that the price of butchet's meat
has ever been sensibly affected by it.

Even the free importation of foreign corn could very little
affect the interest of the farmers of Great Britain. Corn is a
much more bulky commodity than butcher's meat. A pound of wheat
at a penny is as dear as a pound of butcher's meat at fourpence.
The small quantity of foreign corn imported even in times of the
greatest scarcity, may satisfy our farmers that they can have
nothing to fear from the freest importation. The average quantity
imported, one year with another, amounts only, according to the
very well informed author of the Tracts upon the Corn Trade, to
23,728 quarters of all sorts of grain, and does not exceed the
five hundredth and seventy-one part of the annual consumption.
But as the bounty upon corn occasions a greater exportation in
years of plenty, so it must, of consequence, occasion a greater
importation in years of scarcity, than in the actual state of
tillage would otherwise take place. By means of it, the plenty of
one year does not compensate the scarcity of another; and as the
average quantity exported is necessarily augmented by it, so must
likewise, in the actual state of tillage, the average quantity
imported. If there were no bounty, as less corn would be
exported, suit is probable that, one year with another, less
would be imported than at present. The corn-merchants, the
fetchers and carriers of corn between Great Britain and foreign
countries, would have much less employment, and might suffer
considerably ; but the country gentlemen and farmers could suffer
very little. It is in the corn-merchants, accordingly, rather
than the country gentlemen and farmers, that I have observed the
greatest anxiety for the renewal and continuation of the bounty.

Country gentlemen and farmers are, to their great honour, of all
people, the least subject to the wretched spirit of monopoly. The
undertaker of a great manufactory is sometimes alarmed if another
work of the same kind is established within twenty miles of him;
the Dutch undertaker of the woollen manufacture at Abbeville,
stipulated that no work of the same kind should be established
within thirty leagues of that city. Farmers and country
gentlemen, on the contrary, are generally disposed rather to
promote, than to obstruct, the cultivation and improvement of
their neighbours farms and estates. They have no secrets, such as
those of the greater part of manufacturers, but are generally
rather fond of communicating to their neighbours, and of
extending as far as possible any new practice which they may have
found to be advantageous. "Pius quaestus", says old Cato,
"stabilissimusque, minimeque invidiosus; minimeque male
cogitantes sunt, qui in eo studio occupati sunt." Country
gentlemen and farmers, dispersed in different parts of the
country, cannot so easily combine as merchants and manufacturers,
who being collected into towns, and accustomed to that exclusive
corporation spirit which prevails in them, naturally endeavour to
obtain, against all their countrymen, the same exclusive
privilege which they generally possess against the inhabitants of
their respective towns. They accordingly seem to have been the
original inventors of those restraints upon the importation of
foreign goods, which secure to them the monopoly of the home
market. It was probably in imitation of them, and to put
themselves upon a level with those who, they found, were disposed
to oppress them, that the country gentlemen and farmers of Great
Britain so far forgot the generosity which is natural to their
station, as to demand the exclusive privilege of supplying their
countrymen with corn and butcher's meat. They did not, perhaps,
take time to consider how much less their interest could be
affected by the freedom of trade, than that of the people whose
example they followed.

To prohibit, by a perpetual law, the importation of foreign corn
and cattle, is in reality to enact, that the population and
industry of the country shall, at no time, exceed what the rude
produce of its own soil can maintain.

There seem, however, to be two cases, in which it will generally
be advantageous to lay some burden upon foreign, for the
encouragement of domestic industry.

The first is, when some particular sort of industry is necessary
for the defence of the country. The defence of Great Britain, for
example, depends very much upon the number of its sailors and
shipping. The act of navigation, therefore, very properly
endeavours to give the sailors and shipping of Great Britain the
monopoly of the trade of their own country, in some cases, by
absolute prohibitions, and in others, by heavy burdens upon the
shipping of foreign countries. The following are the principal
dispositions of this act.

First, All ships, of which the owners, masters, and three-fourths
of the mariners, are not British subjects, are prohibited, upon
pain of forfeiting ship and cargo, from trading to the British
settlements and plantations, or from being employed in the
coasting trade of Great Britain.

Secondly, A great variety of the most bulky articles of
importation can be brought into Great Britain only, either in
such ships as are above described, or in ships of the country
where those goods are produced, and of which the owners, masters,
and three-fourths of the mariners, are of that particular country
; and when imported even in ships of this latter kind, they are
subject to double aliens duty. If imported in ships of any other
country, the penalty is forfeiture of ship and goods. When this
act was made, the Dutch were, what they still are, the great
carriers of Europe; and by this regulation they were entirely
excluded from being the carriers to Great Britain, or from
importing to us the goods of any other European country.

Thirdly, A great variety of the most bulky articles of
importation are prohibited from being imported, even in British
ships, from any country but that in which they are produced,
under pain of forfeiting ship and cargo. This regulation, too,
was probably intended against the Dutch. Holland was then, as
now, the great emporium for all European goods ; and by this
regulation, British ships were hindered from loading in Holland
the goods of any other European country.

Fourthly, Salt fish of all kinds, whale fins, whalebone, oil, and
blubber, not caught by and cured on board British vessels, when
imported into Great Britain, are subject to double aliens duty.
The Dutch, as they are still the principal, were then the only
fishers in Europe that attempted to supply foreign nations with
fish. By this regulation, a very heavy burden was laid upon their
supplying Great Britain.

When the act of navigation was made, though England and Holland
were not actually at war, the most violent animosity subsisted
between the two nations. It had begun during the government of
the long parliament, which first framed this act, and it broke
out soon after in the Dutch wars, during that of the Protector
and of Charles II. It is not impossible, therefore, that some of
the regulations of this famous act may have proceeded from
national animosity. They are as wise, however, as if they had all
been dictated by the most deliberate wisdom. National animosity,
at that particular time, aimed at the very same object which the
most deliberate wisdom would have recommended, the diminution of
the naval power of Holland, the only naval power which could
endanger the security of England.

The act of navigation is not favourable to foreign commerce, or
to the growth of that opulence which can arise from it. The
interest of a nation, in its commercial relations to foreign
nations, is, like that of a merchant with regard to the different
people with whom he deals, to buy as cheap, and to sell as dear
as possible. But it will be most likely to buy cheap, when, by
the most perfect freedom of trade, it encourages all nations to
bring to it the goods which it has occasion to purchase ; and,
for the same reason, it will be most likely to sell dear, when
its markets are thus filled with the greatest number of buyers.
The act of navigation, it is true, lays no burden upon foreign
ships that come to export the produce of British industry. Even
the ancient aliens duty, which used to be paid upon all goods,
exported as well as imported, has, by several subsequent acts,
been taken off from the greater part of the articles of
exportation. But if foreigners, either by prohibitions or high
duties, are hindered from coming to sell, they cannot always
afford to come to buy ; because, coming without a cargo, they
must lose the freight from their own country to Great Britain. By
diminishing the number of sellers, therefore, we necessarily
diminish that of buyers, and are thus likely not only to buy
foreign goods dearer, but to sell our own cheaper, than if there
was a more perfect freedom of trade. As defence, however, is of
much more importance than opulence, the act of navigation is,
perhaps, the wisest of all the commercial regulations of England.

The second case, in which it will generally be advantageous to
lay some burden upon foreign for the encouragement of domestic
industry, is when some tax is imposed at home upon the produce of
the latter. In this case, it seems reasonable that an equal tax
should be imposed upon the like produce of the former. This would
not give the monopoly of the borne market to domestic industry,
nor turn towards a particular employment a greater share of the
stock and labour of the country, than what would naturally go to
it. It would only hinder any part of what would naturally go to
it from being turned away by the tax into a less natural
direction, and would leave the competition between foreign and
domestic industry, after the tax, as nearly as possible upon the
same footing as before it. In Great Britain, when any such tax is
laid upon the produce of domestic industry, it is usual, at the
same time, in order to stop the clamorous complaints of our
merchants and manufacturers, that they will be undersold at home,
to lay a much heavier duty upon the importation of all foreign
goods of the same kind.

This second limitation of the freedom of trade, according to some
people, should, upon most occasions, be extended much farther
than to the precise foreign commodities which could come into
competition with those which had been taxed at home. When the
necessaries of life have been taxed in any country, it becomes
proper, they pretend, to tax not only the like necessaries of
life imported from other countries, but all sorts of foreign
goods which can come into competition with any thing that is the
produce of domestic industry. Subsistence, they say, becomes
necessarily dearer in consequence of such taxes ; and the price
of labour must always rise with the price of the labourer's
subsistence. Every commodity, therefore, which is the produce of
domestic industry, though not immediately taxed itself, becomes
dearer in consequence of such taxes, because the labour which
produces it becomes so. Such taxes, therefore, are really
equivalent, they say, to a tax upon every particular commodity
produced at home. In order to put domestic upon the same footing
with foreign industry, therefore, it becomes necessary, they
think, to lay some duty upon every foreign commodity, equal to
this enhancement of the price of the home commodities with which
it can come into competition.

Whether taxes upon the necessaries of life, such as those in
Great Britain upon soap, salt, leather, candles, etc. necessarily
raise the price of labour, and consequently that of all other
commodities, I shall consider hereafter, when I come to treat of
taxes. Supposing, however, in the mean time, that they have this
effect, and they have it undoubtedly, this general enhancement of
the price of all commodities, in consequence of that labour, is a
case which differs in the two following respects from that of a
particular commodity, of which the price was enhanced by a
particular tax immediately imposed upon it.

First, It might always be known with great exactness, how far the
price of such a commodity could be enhanced by such a tax ; but
how far the general enhancement of the price of labour might
affect that of every different commodity about which labour was
employed, could never be known with any tolerable exactness. It
would be impossible, therefore, to proportion, with any tolerable
exactness, the tax of every foreign, to the enhancement of the
price of every home commodity.

Secondly, Taxes upon the necessaries of life have nearly the same
effect upon the circumstances of the people as a poor soil and a
bad climate. Provisions are thereby rendered dearer, in the same
manner as if it required extraordinary labour and expense to
raise them. As, in the natural scarcity arising from soil and
climate, it would be absurd to direct the people in what manner
they ought to employ their capitals and industry, so is it
likewise in the artificial scarcity arising from such taxes. To
be left to accommodate, as well as they could, their industry to
their situation, and to find out those employments in which,
notwithstanding their unfavourable circumstances, they might have
some advantage either in the home or in the foreign market, is
what, in both cases, would evidently be most for their advantage.
To lay a new-tax upon them, because they are already overburdened
with taxes, and because they already pay too dear for the
necessaries of life, to make them likewise pay too dear for the
greater part of other commodities, is certainly a most absurd way
of making amends.

Such taxes, when they have grown up to a certain height, are a
curse equal to the barrenness of the earth, and the inclemency of
the heavens, and yet it is in the richest and most industrious
countries that they have been most generally imposed. No other
countries could support so great a disorder. As the strongest
bodies only can live and enjoy health under an unwholesome
regimen, so the nations only, that in every sort of industry have
the greatest natural and acquired advantages, can subsist and
prosper under such taxes. Holland is the country in Europe in
which they abound most, and which, from peculiar circumstances,
continues to prosper, not by means of them, as has been most
absurdly supposed, but in spite of them.

As there are two cases in which it will generally be advantageous
to lay some burden upon foreign for the encouragement of domestic
industry, so there are two others in which it may sometimes be a
matter of deliberation, in the one, how far it is proper to
continue the free importation of certain foreign goods; and, in
the other, how far, or in what manner, it may be proper to
restore that free importation, after it has been for some time

The case in which it may sometimes be a matter of deliberation
how far it is proper to continue the free importation of certain
foreign goods, is when some foreign nation restrains, by high
duties or prohibitions, the importation of some of our
manufactures into their country. Revenge, in this case, naturally
dictates retaliation, and that we should impose the like duties
and prohibitions upon the importation of some or all of their
manufactures into ours. Nations, accordingly, seldom fail to
retaliate in this manner. The French have been particularly
forward to favour their own manufactures, by restraining the
importation of such foreign goods as could come into competition
with them. In this consisted a great part of the policy of Mr
Colbert, who, notwithstanding his great abilities, seems in this
case to have been imposed upon by the sophistry of merchants and
manufacturers, who are always demanding a monopoly against their
countrymen. It is at present the opinion of the most intelligent
men in France, that his operations of this kind have not been
beneficial to his country. That minister, by the tariff of 1667,
imposed very high duties upon a great number of foreign
manufactures. Upon his refusing to moderate them in favour of the
Dutch, they, in 1671, prohibited the importation of the wines,
brandies, and manufactures of France. The war of 1672 seems to
have been in part occasioned by this commercial dispute. The
peace of Nimeguen put an end to it in 1678, by moderating some of
those duties in favour of the Dutch, who in consequence took off
their prohibition. It was about the same time that the French and
English began mutually to oppress each other's industry, by the
like duties and prohibitions, of which the French, however, seem
to have set the first example, The spirit of hostility which has
subsisted between the two nations ever since, has hitherto
hindered them from being moderated on either side. In 1697, the
Ehglish prohibited the importation of bone lace, the manufacture
of Flanders. The government of that country, at that time under
the dominion of Spain, prohibited, in return, the importation of
English woollens. In 1700, the prohibition of importing bone lace
into England was taken oft; upon condition that the importation
of English woollens into Flanders should be put on the same
footing as before.

There may be good policy in retaliations of this kind, when there
is a probability that they will procure the repeal of the high
duties or prohibitions complained of. The recovery of a great
foreign market will generally more than compensate the transitory
inconveniency of paying dearer during a short time for some sorts
of goods. To judge whether such retaliations are likely to
produce such an effect, does not, perhaps, belong so much to the
science of a legislator, whose deliberations ought to be governed
by general principles, which are always the same, as to the skill
of that insidious and crafty animal vulgarly called a statesman
or politician, whose councils are directed by the momentary
fluctuations of affairs. When there is no probability that any
such repeal can be procured, it seems a bad method of
compensating the injury done to certain classes of our people, to
do another injury ourselves, not only to those classes, but to
almost all the other classes of them. When our neighbours
prohibit some manufacture of ours, we generally prohibit, not
only the same, for that alone would seldom affect them
considerably, but some other manufacture of theirs. This may, no
doubt, give encouragement to some particular class of workmen
among ourselves, and, by excluding some of their rivals, may
enable them to raise their price in the home market. Those
workmen however, who suffered by our neighbours prohibition, will
not be benefited by ours. On the contrary, they, and almost all
the other classes of our citizens, will thereby be obliged to pay
dearer than before for certain goods. Every such law, therefore,
imposes a real tax upon the whole country, not in favour of that
particular class of workmen who were injured by our neighbours
prohibitions, but of some other class.

The case in which it may sometimes be a matter of deliberation,
how far, or in what manner, it is proper to restore the free
importation of foreign goods, after it has been for some time
interrupted, is when particular manufactures, by means of high
duties or prohibitions upon all foreign goods which can come into
competition with them, have been so far extended as to employ a
great multitude of hands. Humanity may in this case require that
the freedom of trade should be restored only by slow gradations,
and with a good deal of reserve and circumspection. Were those
high duties and prohibitions taken away all at once, cheaper
foreign goods of the same kind might be poured so fast into the
home market, as to deprive all at once many thousands of our
people of their ordinary employment and means of subsistence. The
disorder which this would occasion might no doubt be very
considerable. It would in all probability, however, be much less
than is commonly imagined, for the two following reasons.

First, All those manufactures of which any part is commonly
exported to other European countries without a bounty, could be
very little affected by the freest importation of foreign goods.
Such manufactures must be sold as cheap abroad as any other
foreign goods of the same quality and kind, and consequently must
be sold cheaper at home. They would still, therefore, keep
possession of the home market; and though a capricious man of
fashion might sometimes prefer foreign wares, merely because they
were foreign, to cheaper and better goods of the same kind that
were made at home, this folly could, from the nature of things,
extend to so few, that it could make no sensible impression upon
the general employment of the people. But a great part of all the
different branches of our woollen manufacture, of our tanned
leather, and of our hardware, are annually exported to other
European countries without any bounty, and these are the
manufactures which employ the greatest number of hands. The silk,
perhaps, is the manufacture which would suffer the most by this
freedom of trade, and after it the linen, though the latter much
less than the former.

Secondly, Though a great number of people should, by thus
restoring the freedom of trade, be thrown all at once out of
their ordinary employment and common method of subsistence, it
would by no means follow that they would thereby be deprived
either of employment or subsistence. By the reduction of the army
and navy at the end of the late war, more than 100,000 soldiers
and seamen, a number equal to what is employed in the greatest
manufactures, were all at once thrown out of their ordinary
employment : but though they no doubt suffered some
inconveniency, they were not thereby deprived of all employment
and subsistence. The greater part of the seamen, it is probable,
gradually betook themselves to the merchant service as they could
find occasion, and in the mean time both they and the soldiers
were absorbed in the great mass of the people, and employed in a
great variety of occupations. Not only no great convulsion, but
no sensible disorder, arose from so great a change in the
situation of more than 100,000 men, all accustomed to the use of
arms, and many of them to rapine and plunder. The number of
vagrants was scarce anywhere sensibly increased by it ; even the
wages of labour were not reduced by it in any occupation, so far
as I have been able to learn, except in that of seamen in the
merchant service. But if we compare together the habits of a
soldier and of any sort of manufacturer, we shall find that those
of the latter do not tend so much to disqualify him from being
employed in a new trade, as those of the former from being
employed in any. The manufacturer has always been accustomed to
look for his subsistence from his labour only ; the soldier to
expect it from his pay. Application and industry have been
familiar to the one; idleness and dissipation to the other. But
it is surely much easier to change the direction of industry from
one sort of labour to another, than to turn idleness and
dissipation to any. To the greater part of manufactures, besides,
it has already been observed, there are other collateral
manufactures of so similar a nature, that a workman can easily
transfer his industry from one of them to another. The greater
part of such workmen, too, are occasionally employed in country
labour. The stock which employed them in a particular manufacture
before, will still remain in the country, to employ an equal
number of people in some other way. The capital of the country
remaining the same, the demand for labour will likewise be the
same, or very nearly the same, though it may be exerted in
different places, and for different occupations. Soldiers and
seamen, indeed, when discharged from the king's service, are at
liberty to exercise any trade within any town or place of Great
Britain or Ireland. Let the same natural liberty of exercising
what species of industry they please, be restored to all his
Majesty's subjects, in the same manner as to soldiers and seamen
; that is, break down the exclusive privileges of corporations,
and repeal the statute of apprenticeship, both which are really
encroachments upon natural Liberty, and add to those the repeal
of the law of settlements, so that a poor workman, when thrown
out of employment, either in one trade or in one place, may seek
for it in another trade or in another place, without the fear
either of a prosecution or of a removal; and neither the public
nor the individuals will suffer much more from the occasional
disbanding some particular classes of manufacturers, than from
that of the soldiers. Our manufacturers have no doubt great merit
with their country, but they cannot have more than those who
defend it with their blood, nor deserve to be treated with more

To expect, indeed, that the freedom of trade should ever be
entirely restored in Great Britain, is as absurd as to expect
that an Oceana or Utopia should ever be established in it. Not
only the prejudices of the public, but, what is much more
unconquerable, the private interests of many individuals,
irresistibly oppose it. Were the officers of the army to oppose,
with the same zeal and unanimity, any reduction in the number of
forces, with which master manufacturers set themselves against
every law that is likely to increase the number of their rivals
in the home market ; were the former to animate their soldiers.
In the same manner as the latter inflame their workmen, to attack
with violence and outrage the proposers of any such regulation;
to attempt to reduce the army would be as dangerous as it has now
become to attempt to diminish, in any respect, the monopoly which
our manufacturers have obtained against us. This monopoly has so
much increased the number of some particular tribes of them,
that, like an overgrown standing army, they have become
formidable to the government, and, upon many occasions,
intimidate the legislature. The member of parliament who supports
every proposal for strengthening this monopoly, is sure to
acquire not only the reputation of understanding trade, but great
popularity and influence with an order of men whose numbers and
wealth render them of great importance. If he opposes them, on
the contrary, and still more, if he has authority enough to be
able to thwart them, neither the most acknowledged probity, nor
the highest rank, nor the greatest public services, can protect
him from the most infamous abuse and detraction, from personal
insults, nor sometimes from real danger, arising from the
insolent outrage of furious and disappointed monopolists.

The undertaker of a great manufacture, who, by the home markets
being suddenly laid open to the competition of foreigners, should
be obliged to abandon his trade, would no doubt suffer very
considerably. That part of his capital which had usually been
employed in purchasing materials, and in paying his workmen,
might, without much difficulty, perhaps, find another employment
; but that part of it which was fixed in workhouses, and in the
instruments of trade, could scarce be disposed of without
considerable loss. The equitable regard, therefore, to his
interest, requires that changes of this kind should never be
introduced suddenly, but slowly, gradually, and after a very long
warning. The legislature, were it possible that its deliberations
could be always directed, not by the clamorous importunity of
partial interests, but by an extensive view of the general good,
ought, upon this very account, perhaps, to be particularly
careful, neither to establish any new monopolies of this kind,
nor to extend further those which are already established. Every
such regulation introduces some degree of real disorder into the
constitution of the state, which it will be difficult afterwards
to cure without occasioning another disorder.

How far it may be proper to impose taxes upon the importation of
foreign goods, in order not to prevent their importation, but to
raise a revenue for government, I shall consider hereafter when I
come to treat of taxes. Taxes imposed with a view to prevent, or
even to diminish importation, are evidently as destructive of the
revenue of the customs as of the freedom of trade.

Adam Smith

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