its members trade on their own account and cannot be prevented from doing So, and this private trade is more extensive and harmful than the public trade of the company. All the members of the administration, besides, trade more or less upon their own account, and it is in vain to prohibit them from doing So. Nothing can be more completely foolish than to expect that the clerks of a great counting-house at ten thousand miles distance, and consequently almost quite out of sight, should, upon a simple order from their masters, give up at once doing any sort of business upon their own account, abandon for ever all hopes of making a fortune, of which they have the means in their hands, and content themselves with the moderate salaries which those masters allow them, and which, moderate as they are, can seldom be augmented, being commonly as large as the real profits of the company trade can afford. In such circumstances, to prohibit the servants of the company from trading upon their own account, can have scarce any other effect than to enable the superior servants, under pretence of executing their masters order, to oppress such of the inferior ones as have had the misfortune to fall under their displeasure. The servants naturally endeavour to establish the same monopoly in favour of their own private trade as of the public trade of the company. If they are suffered to act as they could wish, they will establish this monopoly openly and directly, by fairly prohibiting all other people from trading in the articles in which they chuse to deal; and this, perhaps, is the best and least oppressive way of establishing it. But if by an order from Europe they are prohibited from doing this, they will, notwithstanding, endeavour to establish a monopoly of the same kind, secretly and indirectly, in a way that is much more destructive to the country. They will employ the whole authority of government, and pervert the administration of justice, in order to harass and ruin those who interfere with them in any branch of commerce which, by means of agents, either concealed, or at least not publicly avowed, they may chuse to carry on. But the private trade of the servants will naturally extend to a much greater variety of articles than the public trade of the company. The public trade of the company extends no further than the trade with Europe, and comprehends a part only of the foreign trade of the country. But the private trade of the servants may extend to all the different branches both of its inland and foreign trade. The monopoly of the company can tend only to stunt the natural growth of that part of the surplus produce which, in the case of a free trade, would be exported to Europe. That of the servants tends to stunt the natural growth of every part of the produce in which they chuse to deal, of what is destined for home consumption, as well as of what is destined for exportation; and consequently to degrade the cultivation of the whole It tends to country, and to reduce the number of its inhabitants. From the nature of their situation too the servants must be more disposed to support with rigorous severity their own interest against that of the country which they govern, than their masters can be to support theirs. The country belongs to their masters, who cannot avoid having some regard for the interest of what belongs to them. But it does not belong to the servants. The real interest of their masters, if they were capable of understanding it, is the same with that of the country,2 and it is from ignorance chiefly, and the meanness of mercantile prejudice, that they ever oppress it. But the real interest of the servants is by no means the same with that of the country, and the most perfect information would not necessarily put an end to their oppressions. The regulations accordingly which have been sent out from Europe, though they have been frequently weak, have upon most occasions been well-meaning. More intelligence and perhaps less good-meaning has sometimes appeared in those established by the [Smith had in his library (see Bonar's Catalogue, p. 15) William Bolts, Considerations on India Affairs, particularly respecting the present state of Bengal and its Dependencies, ed. 1772. Pt. i., ch. xiv., of this is ' On the general modern trade of the English in Bengal; on the oppressions and monopolies which have been the causes of the decline of trade, the decrease of the revenues, and the present ruinous condition of affairs in Bengal'. At p. 215 we find the servants of the Company . . . directly or indirectly monopolise whatever branches they please of the internal trade of those countries'.] ... 2 The interest of every proprietor of India Stock, however, is by no means the same with that of the country in the government of which his vote gives him some influence. See Book V. Chap. i. Part 3d. [This note appears first in ed. 3; ed. 2 has the following note: This would be exactly true if those masters never had any other interest but that which belongs to them as Proprietors of India stock. But they frequently have another of much greater importance. Frequently a man of great, sometimes even a man of moderate fortune, is willing to give thirteen or fourteen hundred pounds (the present price of a thousand pounds share in India stock) merely for the influence which he expects to acquire by a vote in the Court of Proprietors. It gives him a share, though not in the plunder, yet in the appointment of the plunderers of India; the Directors, though they make those appointments, being necessarily more or less under the influence of the Court of Proprietors, which not only elects them, but sometimes over-rules their appointments. A man of great or even a man of moderate fortune, provided he can enjoy this influence for a few years, and thereby get a certain number of his friends appointed to employments in India, frequently cares little about the dividend which he can expect from so small a capital, or even about the improvement or loss of the capital itself upon which his vote is founded. About the prosperity or ruin of the great empire, in the government of which that vote gives him a share, he seldom cares at all. No other sovereigns ever were, or from the nature of things ever could be, so perfectly indifferent about the happiness or misery of their subjects, the improvement or waste of their dominions, the glory or disgrace of their administration, as, from irresistible moral causes, the greater part of the Proprietors of such a mercantile Company are, and necessarily must be.' This matter with some slight alterations reappears in the portion of bk. v., chap. i., part iii., art. 1st, which was added in ed. 3 below, p. 243.] [Ed. I reads 'ignorance only.] [Ed. I reads 'have commonly been well meaning'.] The interest of the servants is not, like the real interest of the company, the same as that of the country. The evils come from the system, not from the character of the men who administer it. Exclusive companies are nuisances. servants in India. It is a very singular government in which every member of the administration wishes to get out of the country, and consequently to have done with the government, as soon as he can, and to whose interest, the day after he has left it and carried his whole fortune with him, it is perfectly indifferent though the whole country was swallowed up by an earthquake. I mean not, however, by any thing which I have here said, to throw any odious imputation upon the general character of the servants of the East India company, and much less upon that of any particular persons. It is the system of government, the situation in which they are 2 placed, that I mean to censure; not the character of those who have acted in it. They acted as their situation naturally directed, and they who have clamoured the loudest against them would, probably, not have acted better themselves. In war and negociation, the councils of Madras and Calcutta have upon several occasions conducted themselves with a resolution and decisive wisdom which would have done honour to the senate of Rome in the best days of that republic. The members of those councils, however, had been bred to professions very different from war and politics. But their situation alone, without education, experience, or even example, seems to have formed in them all at once the great qualities which it required, and to have inspired them both with abilities and virtues which they themselves could not well know that they possessed. If upon some occasions, therefore, it has animated them to actions of magnanimity which could not well have been expected from them, we should not wonder if upon others it has prompted them to exploits of somewhat a different nature. Such exclusive companies, therefore, are nuisances in every respect; always more or less inconvenient to the countries in which they are established, and destructive to those which have the misfortune to fall under their government. TH CHAPTER VIII CONCLUSION OF THE MERCANTILE SYSTEM 1 `HOUGH the encouragement of exportation, and the discouragement of importation, are the two great engines by which the mercantile system proposes to enrich every country, yet with regard to some particular commodities, it seems to follow an opposite plan: to discourage exportation and to encourage importation. Its ultimate object, however, it pretends, is always the same, to enrich the country by an advantageous balance of trade. It discourages the exportation of the materials of manufacture, and of the instruments of trade, in order to give our own workmen an advantage, and to enable them to undersell those of other nations in all foreign markets: and by restraining, in this manner, the exportation of a few commodities, of no great price, it proposes to occasion a much greater and more valuable exportation of others. It encourages the importation of the materials of manufacture, in order that our own people may be enabled to work them up more cheaply, and thereby prevent a greater and more valuable importation of the manufactured commodities. I do not observe, at least in our Statute Book, any encouragement given to the importation of the instruments of trade. When manufactures have advanced to a certain pitch of greatness, the fabrication of the instruments of trade becomes itself the object of a great number of very important manufactures. To give any particular encouragement to the importation of such instruments, would interfere too much with the interest of those manufactures. Such importation, therefore, instead of being encouraged, has frequently been prohibited. Thus the importation of wool cards, except from Ireland, or when brought in as wreck or prize goods, was prohibited by the 3d of Edward IV.;2 which prohibition was renewed by the 39th of Elizabeth,3 and has been continued and rendered perpetual by subsequent laws.1 The mercantile system discourages the exporta. tion of materials of manufacture and instruments of trade. It encourages the importation of materials though not of instruments of trade. Various materials are exempt from customs duties. Yarn, though a manufactured article is free from duty, The importation of the materials of manufacture has sometimes been encouraged by an exemption from the duties to which other goods are subject, and sometimes by bounties. 5 The importation of sheep's wool from several different countries,1 of cotton wool from all countries,2 of undressed flax,3 of the greater part of dying drugs, of the greater part of undressed hides from Ireland or the British colonies, of seal skins from the British Greenland fishery, 6 of pig and bar iron from the British colonies, as well as of several other materials of manufacture, has been encouraged by an exemption from all duties, if properly entered at the customhouse. The private interest of our merchants and manufacturers may, perhaps, have extorted from the legislature these exemptions, as well as the greater part of our other commercial regulations. They are, however, 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. 8 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. By the 24 Geo. II. chap. 46. a small duty of only one penny the pound was imposed upon the importation of foreign brown linen yarn, instead of much higher duties to which it had been subjected before, viz. of sixpence the pound upon sail yarn, of one shilling the pound upon all French and Dutch yarn, and of two pounds thirteen shillings and fourpence upon the hundred weight of all spruce or Muscovia yarn. But our manufacturers were not long satisfied with this reduction. By the 29th of the same king, chap. 15. the same law which gave a bounty upon the exportation of British and Irish linen of which the price did not exceed eighteen pence the yard, even this small duty upon the importation of brown linen yarn was taken away. In the different operations, however, 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 flax-growers and flax-dressers, three or four spinners, at least, are 1[From Ireland, 12 Geo. II., c. 21; 26 Geo. II., c. 8. Spanish wool for clothing and Spanish felt wool.-Saxby, British Customs, p. 263.] 2 [6 Geo. III., c. 52, § 20.] 48 Geo. I., c. 15, § 10; see below, p. 155.] [4 Geo. II., c. 27.] $19 Geo. III., c. 39, § 1, continued by 14 Geo. III., c. 86, § 11, and 21 Geo. III., c. 29, §3.] 6[15 Geo. III., c. 31, § 10.] 7 [Above, p. 82.] 8[Smith has here inadvertently given the rates at which the articles were valued in the 'Book of Rates,' 12 Car. II., c. 4, instead of the duties, which would be 20 per cent, on the rates. See below, pp. 363, 364.] |