abundance of the mines, those metals have become cheaper, and have been brought to the level of a much greater number of purchasers. But the cheapness renders those metals rather less fit for the purposes of money than they were before. The discovery of America, however, by opening a new market for European commodities, gave occasion to new divisions of labour and improvements of art, which increase the real revenue and wealth of all the different countries in Europe, pp. 20, 21.

The discovery of a passage to the East Indies by the Cape of Good Hope opens a still more extensive range to foreign commerce than even that of America. The inhabitants of America were for the most part savages; those of the East Indies were rich, and advanced in arts and manufactures. Europe has derived less advantage from its commerce with the latter than from that with the former, owing to the restraints and monopolies with which the East India commerce is beset. By the exportation of silver to the East Indies plate is somewhat dearer in Europe than it might otherwise have been, and coined silver probably purchases a larger quantity both of labour and commodities. The former is a small loss, the latter a small advantage, pp. 21-23.

The two principles being established, viz. that wealth consisted in gold and silver, and that those metals could be brought into a country only by the balance of trade, it became the object of political economy to diminish the importation of foreign goods, and to increase the exportation of domestic industry. The restraints upon importation were (1) restraints upon the importation of such foreign goods, for home consumption, as could be produced at home; (2) Restraints upon the importation. of goods of almost all kinds from those particular

For certain other effects produced on the trade of Europe by the discovery of the American mine, see McLeod, Principles of Economical Philosophy, cap. xii. sect. 45.

countries with which the balance of trade was supposed to be disadvantageous. Those restraints consisted sometimes in high duties, and sometimes in absolute prohibitions,' pp. 23, 24.

Exportation was encouraged by drawbacks; by bounties; by advantageous treaties of commerce; and by the establishment of colonies. These two restraints on importation, and four encouragements to exportation, constitute the six principal means by which the commercial system proposes to increase the quantity of gold and silver in any country by turning the balance of trade in its favour. A particular chapter shall be devoted to the probable effects of each of them upon the annual produce of a country's industry, p. 24.

CHAPTER II.

Of restraints upon the Importation from foreign countries of such goods as can be produced at home.

By restraining 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 domestic industry. Thus the prohibition of importing live cattle or salt provisions secures to the graziers of Great Britain the monopoly of the home market for butchers' meat. This monopoly gives encouragement to particular species of industry, by turning towards it a greater share of both the labour and stock of the society than would otherwise have gone to it, but it is not certain whether it tends to increase the general industry of the society, which can never exceed what the capital of the society can employ, pp. 25, 26.

See, for an account of these attempts, Twiss, View of the Progress of Political Economy in Europe.

Every individual exerts himself to find out the most advantageous employment for whatever capital he can command. The study of his own advantage necessarily leads him to prefer what is most advantageous to the society, p. 26.

I. Every individual endeavours to employ his capital as near home as he can (profits being supposed equal or nearly equal), and consequently as much as he can in the support of domestic industry.-In the home trade the capital of a merchant is never so long out of his sight as in the foreign trade of consumption; he also knows better his customers, and the laws of the country from which he must seek redress. Hence 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, p. 26.

II. Every individual who employs his capital in the support of domestic industry endeavours so to direct that industry that the produce may be of the greatest possible value. The produce of industry is what adds to the materials upon which it is employed. In proportion to its value will be the profits, for the sake of which a man employs a capital in support of industry. The annual revenue of every society is equal to the exchangeable value of the whole annual produce of its industry; every individual, therefore, by employing his capital in the support of that industry, the produce of which is of the greatest possible value, labours to render the annual revenue of the society as great as he can, p. 28.

The best manner of employing his capital must be left to the discretion of each individual. Statesmen and senates are unequal to direct private people how to employ their capitals. But to give the monopoly of the home-market to the produce of domestic industry, in any art or manufacture, is to direct private people

in what manner they ought to employ their capitals, and must be 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 useless; if it cannot, it is hurtful. The tailor does not make his own shoes, nor the shoemaker his own clothes. If a foreign country can supply us with a commodity cheaper than we can make it, better buy it with some part of the produce of our own industry employed in a way in which we have some advantage; otherwise the industry of the country is turned away from a more to a less advantageous employment, and the value of the annual produce must be diminished by every such regulation, pp.

28-30.

By means of such regulations a particular manufacture may be acquired; but it does not follow that the industry or revenue of the society will be augmented. The industry of a society augments 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 the revenue, p. 30.

The natural advantages of some countries are so great that it would be in vain to struggle with them. Scotland, at thirty times the expense, might make good wine, but it would be absurd, on that account, to prohibit the importation of foreign wines; and to load any product of foreign countries with an import duty in order to favour native industry is an absurdity differing only in its degree,1 p. 31.

Merchants and manufactures derive the greatest advantage from the monopoly of the home-market.2

By these arguments the heart of the Protectionist position is pierced.

2 The advantage obtained from the monopoly by merchants and manufacturers is really very inconsiderable. (See Rogers's and M'Culloch's notes on the passage.) The case was different with the land

Manufactures are more easily transported than corn or cattle. In manufactures a small advantage will enable foreigners to undersell our own workmen. If the free importation of foreign manufactures were permitted, several of the home manufactures would go to ruin. But the freest importation of the rude produce of the soil could have no such effect upon the agriculture of the country. The grazing trade of Great Britain would not be much affected by the free importation of foreign cattle or salt provisions. Even the free importation of corn could very little affect the interest of the farmer. Country gentlemen and farmers are less subject to the spirit of monopoly than manufacturers, and are generally disposed rather to promote than to obstruct the cultivation and improvement of their neighbours' farms and estates. They seem, however, to have forgotten themselves and their own interests when they demanded the exclusive privilege of supplying their countrymen with corn and butchers' meat.1 To prohibit by a perpetual law the importation of foreign corn and cattle is 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, pp. 31-35. It may in two instances be advantageous to lay some burden upon foreign, for the encouragement of domestic, industry. First, when some particular sort of industry is necessary for the defence of the country. The defence of Great Britain depends upon its sailors and shipping.2 The Act of owners, as the area of land capable of cultivation not being practically unlimited in Great Britain, monopoly meant high prices and high rents. For the different significations in which the word 'monopoly' is employed, see the Editor's Questions and Exercises in Political Economy, pp. 23, 24.

1 See Rogers's note on passage, and (for an account of the Corn Laws) M'Culloch's edition of Wealth of Nations, pp. 511-34.

The arguments of Adam Smith must be modified to suit the change of affairs induced by railways.

2 It is very doubtful whether the Navigation Laws really answered the end for which they were designed. See Rogers's note and M'Culloch's Wealth of Nations, pp. 534-42.