# Synthesize Chapter VSM Analysis

You are an interdisciplinary analyst combining classical economics with
cybernetic systems theory. Your task is to produce a comprehensive
chapter-level analysis showing how economic content maps to the
Viable System Model.

## Source Chapter

---
id: book-4-chapter-07
title: "OF COLONIES."
book: "4"
chapter: 7
artifact_type: content
---

CHAPTER VII.
OF COLONIES.



      PART I. Of the Motives for Establishing New Colonies.

      The interest which occasioned the first settlement of the different
      European colonies in America and the West Indies, was not altogether so
      plain and distinct as that which directed the establishment of those of
      ancient Greece and Rome.

      All the different states of ancient Greece possessed, each of them, but a
      very small territory; and when the people in anyone of them multiplied
      beyond what that territory could easily maintain, a part of them were sent
      in quest of a new habitation, in some remote and distant part of the
      world; the warlike neighbours who surrounded them on all sides, rendering
      it difficult for any of them to enlarge very much its territory at home.
      The colonies of the Dorians resorted chiefly to Italy and Sicily, which,
      in the times preceding the foundation of Rome, were inhabited by barbarous
      and uncivilized nations; those of the Ionians and Aeolians, the two other
      great tribes of the Greeks, to Asia Minor and the islands of the Aegean
      sea, of which the inhabitants sewn at that time to have been pretty much
      in the same state as those of Sicily and Italy. The mother city, though
      she considered the colony as a child, at all times entitled to great
      favour and assistance, and owing in return much gratitude and respect, yet
      considered it as an emancipated child, over whom she pretended to claim no
      direct authority or jurisdiction. The colony settled its own form of
      government, enacted its own laws, elected its own magistrates, and made
      peace or war with its neighbours, as an independent state, which had no
      occasion to wait for the approbation or consent of the mother city.
      Nothing can be more plain and distinct than the interest which directed
      every such establishment.

      Rome, like most of the other ancient republics, was originally founded
      upon an agrarian law, which divided the public territory, in a certain
      proportion, among the different citizens who composed the state. The
      course of human affairs, by marriage, by succession, and by alienation,
      necessarily deranged this original division, and frequently threw the
      lands which had been allotted for the maintenance of many different
      families, into the possession of a single person. To remedy this disorder,
      for such it was supposed to be, a law was made, restricting the quantity
      of land which any citizen could possess to five hundred jugera; about 350
      English acres. This law, however, though we read of its having been
      executed upon one or two occasions, was either neglected or evaded, and
      the inequality of fortunes went on continually increasing. The greater
      part of the citizens had no land; and without it the manners and customs
      of those times rendered it difficult for a freeman to maintain his
      independency. In the present times, though a poor man has no land of his
      own, if he has a little stock, he may either farm the lands of another, or
      he may carry on some little retail trade; and if he has no stock, he may
      find employment either as a country labourer, or as an artificer. But
      among the ancient Romans, the lands of the rich were all cultivated by
      slaves, who wrought under an overseer, who was likewise a slave; so that a
      poor freeman had little chance of being employed either as a farmer or as
      a labourer. All trades and manufactures, too, even the retail trade, were
      carried on by the slaves of the rich for the benefit of their masters,
      whose wealth, authority, and protection, made it difficult for a poor
      freeman to maintain the competition against them. The citizens, therefore,
      who had no land, had scarce any other means of subsistence but the
      bounties of the candidates at the annual elections. The tribunes, when
      they had a mind to animate the people against the rich and the great, put
      them in mind of the ancient divisions of lands, and represented that law
      which restricted this sort of private property as the fundamental law of
      the republic. The people became clamorous to get land, and the rich and
      the great, we may believe, were perfectly determined not to give them any
      part of theirs. To satisfy them in some measure, therefore, they
      frequently proposed to send out a new colony. But conquering Rome was,
      even upon such occasions, under no necessity of turning out her citizens
      to seek their fortune, if one may so, through the wide world, without
      knowing where they were to settle. She assigned them lands generally in
      the conquered provinces of Italy, where, being within the dominions of the
      republic, they could never form any independent state, but were at best
      but a sort of corporation, which, though it had the power of enacting
      bye-laws for its own government, was at all times subject to the
      correction, jurisdiction, and legislative authority of the mother city.
      The sending out a colony of this kind not only gave some satisfaction to
      the people, but often established a sort of garrison, too, in a newly
      conquered province, of which the obedience might otherwise have been
      doubtful. A Roman colony, therefore, whether we consider the nature of the
      establishment itself, or the motives for making it, was altogether
      different from a Greek one. The words, accordingly, which in the original
      languages denote those different establishments, have very different
      meanings. The Latin word (colonia) signifies simply a plantation. The
      Greek word (apoixia), on the contrary, signifies a separation of dwelling,
      a departure from home, a going out of the house. But though the Roman
      colonies were, in many respects, different from the Greek ones, the
      interest which prompted to establish them was equally plain and distinct.
      Both institutions derived their origin, either from irresistible
      necessity, or from clear and evident utility.

      The establishment of the European colonies in America and the West Indies
      arose from no necessity; and though the utility which has resulted from
      them has been very great, it is not altogether so clear and evident. It
      was not understood at their first establishment, and was not the motive,
      either of that establishment, or of the discoveries which gave occasion to
      it; and the nature, extent, and limits of that utility, are not, perhaps,
      well understood at this day.

      The Venetians, during the fourteenth and fifteenth centuries, carried on a
      very advantageous commerce in spiceries and other East India goods, which
      they distributed among the other nations of Europe. They purchased them
      chiefly in Egypt, at that time under the dominion of the Mamelukes, the
      enemies of the Turks, of whom the Venetians were the enemies; and this
      union of interest, assisted by the money of Venice, formed such a
      connexion as gave the Venetians almost a monopoly of the trade.

      The great profits of the Venetians tempted the avidity of the Portuguese.
      They had been endeavouring, during the course of the fifteenth century, to
      find out by sea a way to the countries from which the Moors brought them
      ivory and gold dust across the desert. They discovered the Madeiras, the
      Canaries, the Azores, the Cape de Verd islands, the coast of Guinea, that
      of Loango, Congo, Angola, and Benguela, and, finally, the Cape of Good
      Hope. They had long wished to share in the profitable traffic of the
      Venetians, and this last discovery opened to them a probable prospect of
      doing so. In 1497, Vasco de Gamo sailed from the port of Lisbon with a
      fleet of four ships, and, after a navigation of eleven months, arrived
      upon the coast of Indostan; and thus completed a course of discoveries
      which had been pursued with great steadiness, and with very little
      interruption, for near a century together.

      Some years before this, while the expectations of Europe were in suspense
      about the projects of the Portuguese, of which the success appeared yet to
      be doubtful, a Genoese pilot formed the yet more daring project of sailing
      to the East Indies by the west. The situation of those countries was at
      that time very imperfectly known in Europe. The few European travellers
      who had been there, had magnified the distance, perhaps through simplicity
      and ignorance; what was really very great, appearing almost infinite to
      those who could not measure it; or, perhaps, in order to increase somewhat
      more the marvellous of their own adventures in visiting regions so
      immensely remote from Europe. The longer the way was by the east, Columbus
      very justly concluded, the shorter it would be by the west. He proposed,
      therefore, to take that way, as both the shortest and the surest, and he
      had the good fortune to convince Isabella of Castile of the probability of
      his project. He sailed from the port of Palos in August 1492, near five
      years before the expedition of Vasco de Gamo set out from Portugal; and,
      after a voyage of between two and three months, discovered first some of
      the small Bahama or Lucyan islands, and afterwards the great island of St.
      Domingo.

      But the countries which Columbus discovered, either in this or in any of
      his subsequent voyages, had no resemblance to those which he had gone in
      quest of. Instead of the wealth, cultivation, and populousness of China
      and Indostan, he found, in St. Domingo, and in all the other parts of the
      new world which he ever visited, nothing but a country quite covered with
      wood, uncultivated, and inhabited only by some tribes of naked and
      miserable savages. He was not very willing, however, to believe that they
      were not the same with some of the countries described by Marco Polo, the
      first European who had visited, or at least had left behind him any
      description of China or the East Indies; and a very slight resemblance,
      such as that which he found between the name of Cibao, a mountain in St.
      Domingo, and that of Cipange, mentioned by Marco Polo, was frequently
      sufficient to make him return to this favourite prepossession, though
      contrary to the clearest evidence. In his letters to Ferdinand and
      Isabella, he called the countries which he had discovered the Indies. He
      entertained no doubt but that they were the extremity of those which had
      been described by Marco Polo, and that they were not very distant from the
      Ganges, or from the countries which had been conquered by Alexander. Even
      when at last convinced that they were different, he still flattered
      himself that those rich countries were at no great distance; and in a
      subsequent voyage, accordingly, went in quest of them along the coast of
      Terra Firma, and towards the Isthmus of Darien.

      In consequence of this mistake of Columbus, the name of the Indies has
      stuck to those unfortunate countries ever since; and when it was at last
      clearly discovered that the new were altogether different from the old
      Indies, the former were called the West, in contradistinction to the
      latter, which were called the East Indies.

      It was of importance to Columbus, however, that the countries which he had
      discovered, whatever they were, should be represented to the court of
      Spain as of very great consequence; and, in what constitutes the real
      riches of every country, the animal and vegetable productions of the soil,
      there was at that time nothing which could well justify such a
      representation of them.

      The cori, something between a rat and a rabbit, and supposed by Mr Buffon
      to be the same with the aperea of Brazil, was the largest viviparous
      quadruped in St. Domingo. This species seems never to have been very
      numerous; and the dogs and cats of the Spaniards are said to have long ago
      almost entirely extirpated it, as well as some other tribes of a still
      smaller size. These, however, together with a pretty large lizard, called
      the ivana or iguana, constituted the principal part of the animal food
      which the land afforded.

      The vegetable food of the inhabitants, though, from their want of
      industry, not very abundant, was not altogether so scanty. It consisted in
      Indian corn, yams, potatoes, bananas, etc., plants which were then
      altogether unknown in Europe, and which have never since been very much
      esteemed in it, or supposed to yield a sustenance equal to what is drawn
      from the common sorts of grain and pulse, which have been cultivated in
      this part of the world time out of mind.

      The cotton plant, indeed, afforded the material of a very important
      manufacture, and was at that time, to Europeans, undoubtedly the most
      valuable of all the vegetable productions of those islands. But though, in
      the end of the fifteenth century, the muslins and other cotton goods of
      the East Indies were much esteemed in every part of Europe, the cotton
      manufacture itself was not cultivated in any part of it. Even this
      production, therefore, could not at that time appear in the eyes of
      Europeans to be of very great consequence.

      Finding nothing, either in the animals or vegetables of the newly
      discovered countries which could justify a very advantageous
      representation of them, Columbus turned his view towards their minerals;
      and in the richness of their productions of this third kingdom, he
      flattered himself he had found a full compensation for the insignificancy
      of those of the other two. The little bits of gold with which the
      inhabitants ornamented their dress, and which, he was informed, they
      frequently found in the rivulets and torrents which fell from the
      mountains, were sufficient to satisfy him that those mountains abounded
      with the richest gold mines. St. Domingo, therefore, was represented as a
      country abounding with gold, and upon that account (according to the
      prejudices not only of the present times, but of those times), an
      inexhaustible source of real wealth to the crown and kingdom of Spain.
      When Columbus, upon his return from his first voyage, was introduced with
      a sort of triumphal honours to the sovereigns of Castile and Arragon, the
      principal productions of the countries which he had discovered were
      carried in solemn procession before him. The only valuable part of them
      consisted in some little fillets, bracelets, and other ornaments of gold,
      and in some bales of cotton. The rest were mere objects of vulgar wonder
      and curiosity; some reeds of an extraordinary size, some birds of a very
      beautiful plumage, and some stuffed skins of the huge alligator and
      manati; all of which were preceded by six or seven of the wretched
      natives, whose singular colour and appearance added greatly to the novelty
      of the show.

      In consequence of the representations of Columbus, the council of Castile
      determined to take possession of the countries of which the inhabitants
      were plainly incapable of defending themselves. The pious purpose of
      converting them to Christianity sanctified the injustice of the project.
      But the hope of finding treasures of gold there was the sole motive which
      prompted to undertake it; and to give this motive the greater weight, it
      was proposed by Columbus, that the half of all the gold and silver that
      should be found there, should belong to the crown. This proposal was
      approved of by the council.

      As long as the whole, or the greater part of the gold which the first
      adventurers imported into Europe was got by so very easy a method as the
      plundering of the defenceless natives, it was not perhaps very difficult
      to pay even this heavy tax; but when the natives were once fairly stript
      of all that they had, which, in St. Domingo, and in all the other
      countries discovered by Columbus, was done completely in six or eight
      years, and when, in order to find more, it had become necessary to dig for
      it in the mines, there was no longer any possibility of paying this tax.
      The rigorous exaction of it, accordingly, first occasioned, it is said,
      the total abandoning of the mines of St. Domingo, which have never been
      wrought since. It was soon reduced, therefore, to a third; then to a
      fifth; afterwards to a tenth; and at last to a twentieth part of the gross
      produce of the gold mines. The tax upon silver continued for a long time
      to be a fifth of the gross produce. It was reduced to a tenth only in the
      course of the present century. But the first adventurers do not appear to
      have been much interested about silver. Nothing less precious than gold
      seemed worthy of their attention.

      All the other enterprizes of the Spaniards in the New World, subsequent to
      those of Columbus, seem to have been prompted by the same motive. It was
      the sacred thirst of gold that carried Ovieda, Nicuessa, and Vasco Nugnes
      de Balboa, to the Isthmus of Darien; that carried Cortes to Mexico,
      Almagro and Pizarro to Chili and Peru. When those adventurers arrived upon
      any unknown coast, their first inquiry was always if there was any gold to
      be found there; and according to the information which they received
      concerning this particular, they determined either to quit the country or
      to settle in it.

      Of all those expensive and uncertain projects, however, which bring
      bankruptcy upon the greater part of the people who engage in them, there
      is none, perhaps, more perfectly ruinous than the search after new silver
      and gold mines. It is, perhaps, the most disadvantageous lottery in the
      world, or the one in which the gain of those who draw the prizes bears the
      least proportion to the loss of those who draw the blanks; for though the
      prizes are few, and the blanks many, the common price of a ticket is the
      whole fortune of a very rich man. Projects of mining, instead of replacing
      the capital employed in them, together with the ordinary profits of stock,
      commonly absorb both capital and profit. They are the projects, therefore,
      to which, of all others, a prudent lawgiver, who desired to increase the
      capital of his nation, would least choose to give any extraordinary
      encouragement, or to turn towards them a greater share of that capital
      than what would go to them of its own accord. Such, in reality, is the
      absurd confidence which almost all men have in their own good fortune,
      that wherever there is the least probability of success, too great a share
      of it is apt to go to them of its own accord.

      But though the judgment of sober reason and experience concerning such
      projects has always been extremely unfavourable, that of human avidity has
      commonly been quite otherwise. The same passion which has suggested to so
      many people the absurd idea of the philosopher’s stone, has suggested to
      others the equally absurd one of immense rich mines of gold and silver.
      They did not consider that the value of those metals has, in all ages and
      nations, arisen chiefly from their scarcity, and that their scarcity has
      arisen from the very small quantities of them which nature has anywhere
      deposited in one place, from the hard and intractable substances with
      which she has almost everywhere surrounded those small quantities, and
      consequently from the labour and expense which are everywhere necessary in
      order to penetrate, and get at them. They flattered themselves that veins
      of those metals might in many places be found, as large and as abundant as
      those which are commonly found of lead, or copper, or tin, or iron. The
      dream of Sir Waiter Raleigh, concerning the golden city and country of El
      Dorado, may satisfy us, that even wise men are not always exempt from such
      strange delusions. More than a hundred years after the death of that great
      man, the Jesuit Gumila was still convinced of the reality of that
      wonderful country, and expressed, with great warmth, and, I dare say, with
      great sincerity, how happy he should be to carry the light of the gospel
      to a people who could so well reward the pious labours of their
      missionary.

      In the countries first discovered by the Spaniards, no gold and silver
      mines are at present known which are supposed to be worth the working. The
      quantities of those metals which the first adventurers are said to have
      found there, had probably been very much magnified, as well as the
      fertility of the mines which were wrought immediately after the first
      discovery. What those adventurers were reported to have found, however,
      was sufficient to inflame the avidity of all their countrymen. Every
      Spaniard who sailed to America expected to find an El Dorado. Fortune,
      too, did upon this what she has done upon very few other occasions. She
      realized in some measure the extravagant hopes of her votaries; and in the
      discovery and conquest of Mexico and Peru (of which the one happened about
      thirty, and the other about forty, years after the first expedition of
      Columbus), she presented them with something not very unlike that
      profusion of the precious metals which they sought for.

      A project of commerce to the East Indies, therefore, gave occasion to the
      first discovery of the West. A project of conquest gave occasion to all
      the establishments of the Spaniards in those newly discovered countries.
      The motive which excited them to this conquest was a project of gold and
      silver mines; and a course of accidents which no human wisdom could
      foresee, rendered this project much more successful than the undertakers
      had any reasonable grounds for expecting.

      The first adventurers of all the other nations of Europe who attempted to
      make settlements in America, were animated by the like chimerical views;
      but they were not equally successful. It was more than a hundred years
      after the first settlement of the Brazils, before any silver, gold, or
      diamond mines, were discovered there. In the English, French, Dutch, and
      Danish colonies, none have ever yet been discovered, at least none that
      are at present supposed to be worth the working. The first English
      settlers in North America, however, offered a fifth of all the gold and
      silver which should be found there to the king, as a motive for granting
      them their patents. In the patents of Sir Waiter Raleigh, to the London
      and Plymouth companies, to the council of Plymouth, etc. this fifth was
      accordingly reserved to the crown. To the expectation of finding gold and
      silver mines, those first settlers, too, joined that of discovering a
      north-west passage to the East Indies. They have hitherto been
      disappointed in both.




      PART II. Causes of the Prosperity of New Colonies.

      The colony of a civilized nation which takes possession either of a waste
      country, or of one so thinly inhabited that the natives easily give place
      to the new settlers, advances more rapidly to wealth and greatness than
      any other human society.

      The colonies carry out with them a knowledge of agriculture and of other
      useful arts, superior to what can grow up of its own accord, in the course
      of many centuries, among savage and barbarous nations. They carry out with
      them, too, the habit of subordination, some notion of the regular
      government which takes place in their own country, of the system of laws
      which support it, and of a regular administration of justice; and they
      naturally establish something of the same kind in the new settlement. But
      among savage and barbarous nations, the natural progress of law and
      government is still slower than the natural progress of arts, after law
      and government have been so far established as is necessary for their
      protection. Every colonist gets more land than he can possibly cultivate.
      He has no rent, and scarce any taxes, to pay. No landlord shares with him
      in its produce, and, the share of the sovereign is commonly but a trifle.
      He has every motive to render as great as possible a produce which is thus
      to be almost entirely his own. But his land is commonly so extensive,
      that, with all his own industry, and with all the industry of other people
      whom he can get to employ, he can seldom make it produce the tenth part of
      what it is capable of producing. He is eager, therefore, to collect
      labourers from all quarters, and to reward them with the most liberal
      wages. But those liberal wages, joined to the plenty and cheapness of
      land, soon make those labourers leave him, in order to become landlords
      themselves, and to reward with equal liberality other labourers, who soon
      leave them for the same reason that they left their first master. The
      liberal reward of labour encourages marriage. The children, during the
      tender years of infancy, are well fed and properly taken care of; and when
      they are grown up, the value of their labour greatly overpays their
      maintenance. When arrived at maturity, the high price of labour, and the
      low price of land, enable them to establish themselves in the same manner
      as their fathers did before them.

      In other countries, rent and profit eat up wages, and the two superior
      orders of people oppress the inferior one; but in new colonies, the
      interest of the two superior orders obliges them to treat the inferior one
      with more generosity and humanity, at least where that inferior one is not
      in a state of slavery. Waste lands, of the greatest natural fertility, are
      to be had for a trifle. The increase of revenue which the proprietor, who
      is always the undertaker, expects from their improvement, constitutes his
      profit, which, in these circumstances, is commonly very great; but this
      great profit cannot be made, without employing the labour of other people
      in clearing and cultivating the land; and the disproportion between the
      great extent of the land and the small number of the people, which
      commonly takes place in new colonies, makes it difficult for him to get
      this labour. He does not, therefore, dispute about wages, but is willing
      to employ labour at any price. The high wages of labour encourage
      population. The cheapness and plenty of good land encourage improvement,
      and enable the proprietor to pay those high wages. In those wages consists
      almost the whole price of the land; and though they are high, considered
      as the wages of labour, they are low, considered as the price of what is
      so very valuable. What encourages the progress of population and
      improvement, encourages that of real wealth and greatness.

      The progress of many of the ancient Greek colonies towards wealth and
      greatness seems accordingly to have been very rapid. In the course of a
      century or two, several of them appear to have rivalled, and even to have
      surpassed, their mother cities. Syracuse and Agrigentum in Sicily,
      Tarentum and Locri in Italy, Ephesus and Miletus in Lesser Asia, appear,
      by all accounts, to have been at least equal to any of the cities of
      ancient Greece. Though posterior in their establishment, yet all the arts
      of refinement, philosophy, poetry, and eloquence, seem to have been
      cultivated as early, and to have been improved as highly in them as in any
      part of the mother country. The schools of the two oldest Greek
      philosophers, those of Thales and Pythagoras, were established, it is
      remarkable, not in ancient Greece, but the one in an Asiatic, the other in
      an Italian colony. All those colonies had established themselves in
      countries inhabited by savage and barbarous nations, who easily gave place
      to the new settlers. They had plenty of good land; and as they were
      altogether independent of the mother city, they were at liberty to manage
      their own affairs in the way that they judged was most suitable to their
      own interest.

      The history of the Roman colonies is by no means so brilliant. Some of
      them, indeed, such as Florence, have, in the course of many ages, and
      after the fall of the mother city, grown up to be considerable states. But
      the progress of no one of them seems ever to have been very rapid. They
      were all established in conquered provinces, which in most cases had been
      fully inhabited before. The quantity of land assigned to each colonist was
      seldom very considerable, and, as the colony was not independent, they
      were not always at liberty to manage their own affairs in the way that
      they judged was most suitable to their own interest.

      In the plenty of good land, the European colonies established in America
      and the West Indies resemble, and even greatly surpass, those of ancient
      Greece. In their dependency upon the mother state, they resemble those of
      ancient Rome; but their great distance from Europe has in all of them
      alleviated more or less the effects of this dependency. Their situation
      has placed them less in the view, and less in the power of their mother
      country. In pursuing their interest their own way, their conduct has upon
      many occasions been overlooked, either because not known or not understood
      in Europe; and upon some occasions it has been fairly suffered and
      submitted to, because their distance rendered it difficult to restrain it.
      Even the violent and arbitrary government of Spain has, upon many
      occasions, been obliged to recall or soften the orders which had been
      given for the government of her colonies, for fear of a general
      insurrection. The progress of all the European colonies in wealth,
      population, and improvement, has accordingly been very great.

      The crown of Spain, by its share of the gold and silver, derived some
      revenue from its colonies from the moment of their first establishment. It
      was a revenue, too, of a nature to excite in human avidity the most
      extravagant expectation of still greater riches. The Spanish colonies,
      therefore, from the moment of their first establishment, attracted very
      much the attention of their mother country; while those of the other
      European nations were for a long time in a great measure neglected. The
      former did not, perhaps, thrive the better in consequence of this
      attention, nor the latter the worse in consequence of this neglect. In
      proportion to the extent of the country which they in some measure
      possess, the Spanish colonies are considered as less populous and thriving
      than those of almost any other European nation. The progress even of the
      Spanish colonies, however, in population and improvement, has certainly
      been very rapid and very great. The city of Lima, founded since the
      conquest, is represented by Ulloa as containing fifty thousand inhabitants
      near thirty years ago. Quito, which had been but a miserable hamlet of
      Indians, is represented by the same author as in his time equally
      populous. Gemel i Carreri, a pretended traveller, it is said, indeed, but
      who seems everywhere to have written upon extreme good information,
      represents the city of Mexico as containing a hundred thousand
      inhabitants; a number which, in spite of all the exaggerations of the
      Spanish writers, is probably more than five times greater than what it
      contained in the time of Montezuma. These numbers exceed greatly those of
      Boston, New York, and Philadelphia, the three greatest cities of the
      English colonies. Before the conquest of the Spaniards, there were no
      cattle fit for draught, either in Mexico or Peru. The lama was their only
      beast of burden, and its strength seems to have been a good deal inferior
      to that of a common ass. The plough was unknown among them. They were
      ignorant of the use of iron. They had no coined money, nor any established
      instrument of commerce of any kind. Their commerce was carried on by
      barter. A sort of wooden spade was their principal instrument of
      agriculture. Sharp stones served them for knives and hatchets to cut with;
      fish bones, and the hard sinews of certain animals, served them with
      needles to sew with; and these seem to have been their principal
      instruments of trade. In this state of things, it seems impossible that
      either of those empires could have been so much improved or so well
      cultivated as at present, when they are plentifully furnished with all
      sorts of European cattle, and when the use of iron, of the plough, and of
      many of the arts of Europe, have been introduced among them. But the
      populousness of every country must be in proportion to the degree of its
      improvement and cultivation. In spite of the cruel destruction of the
      natives which followed the conquest, these two great empires are probably
      more populous now than they ever were before; and the people are surely
      very different; for we must acknowledge, I apprehend, that the Spanish
      creoles are in many respects superior to the ancient Indians.

      After the settlements of the Spaniards, that of the Portuguese in Brazil
      is the oldest of any European nation in America. But as for a long time
      after the first discovery neither gold nor silver mines were found in it,
      and as it afforded upon that account little or no revenue to the crown, it
      was for a long time in a great measure neglected; and during this state of
      neglect, it grew up to be a great and powerful colony. While Portugal was
      under the dominion of Spain, Brazil was attacked by the Dutch, who got
      possession of seven of the fourteen provinces into which it is divided.
      They expected soon to conquer the other seven, when Portugal recovered its
      independency by the elevation of the family of Braganza to the throne. The
      Dutch, then, as enemies to the Spaniards, became friends to the
      Portuguese, who were likewise the enemies of the Spaniards. They agreed,
      therefore, to leave that part of Brazil which they had not conquered to
      the king of Portugal, who agreed to leave that part which they had
      conquered to them, as a matter not worth disputing about, with such good
      allies. But the Dutch government soon began to oppress the Portuguese
      colonists, who, instead of amusing themselves with complaints, took arms
      against their new masters, and by their own valour and resolution, with
      the connivance, indeed, but without any avowed assistance from the mother
      country, drove them out of Brazil. The Dutch, therefore, finding it
      impossible to keep any part of the country to themselves, were contented
      that it should be entirely restored to the crown of Portugal. In this
      colony there are said to be more than six hundred thousand people, either
      Portuguese or descended from Portuguese, creoles, mulattoes, and a mixed
      race between Portuguese and Brazilians. No one colony in America is
      supposed to contain so great a number of people of European extraction.

      Towards the end of the fifteenth, and during the greater part of the
      sixteenth century, Spain and Portugal were the two great naval powers upon
      the ocean; for though the commerce of Venice extended to every part of
      Europe, its fleet had scarce ever sailed beyond the Mediterranean. The
      Spaniards, in virtue of the first discovery, claimed all America as their
      own; and though they could not hinder so great a naval power as that of
      Portugal from settling in Brazil, such was at that time the terror of
      their name, that the greater part of the other nations of Europe were
      afraid to establish themselves in any other part of that great continent.
      The French, who attempted to settle in Florida, were all murdered by the
      Spaniards. But the declension of the naval power of this latter nation, in
      consequence of the defeat or miscarriage of what they called their
      invincible armada, which happened towards the end of the sixteenth
      century, put it out of their power to obstruct any longer the settlements
      of the other European nations. In the course of the seventeenth century,
      therefore, the English, French, Dutch, Danes, and Swedes, all the great
      nations who had any ports upon the ocean, attempted to make some
      settlements in the new world.

      The Swedes established themselves in New Jersey; and the number of Swedish
      families still to be found there sufficiently demonstrates, that this
      colony was very likely to prosper, had it been protected by the mother
      country. But being neglected by Sweden, it was soon swallowed up by the
      Dutch colony of New York, which again, in 1674, fell under the dominion of
      the English.

      The small islands of St. Thomas and Santa Cruz, are the only countries in
      the new world that have ever been possessed by the Danes. These little
      settlements, too, were under the government of an exclusive company, which
      had the sole right, both of purchasing the surplus produce of the
      colonies, and of supplying them with such goods of other countries as they
      wanted, and which, therefore, both in its purchases and sales, had not
      only the power of oppressing them, but the greatest temptation to do so.
      The government of an exclusive company of merchants is, perhaps, the worst
      of all governments for any country whatever. It was not, however, able to
      stop altogether the progress of these colonies, though it rendered it more
      slow and languid. The late king of Denmark dissolved this company, and
      since that time the prosperity of these colonies has been very great.

      The Dutch settlements in the West, as well as those in the East Indies,
      were originally put under the government of an exclusive company. The
      progress of some of them, therefore, though it has been considerable in
      comparison with that of almost any country that has been long peopled and
      established, has been languid and slow in comparison with that of the
      greater part of new colonies. The colony of Surinam, though very
      considerable, is still inferior to the greater part of the sugar colonies
      of the other European nations. The colony of Nova Belgia, now divided into
      the two provinces of New York and New Jersey, would probably have soon
      become considerable too, even though it had remained under the government
      of the Dutch. The plenty and cheapness of good land are such powerful
      causes of prosperity, that the very worst government is scarce capable of
      checking altogether the efficacy of their operation. The great distance,
      too, from the mother country, would enable the colonists to evade more or
      less, by smuggling, the monopoly which the company enjoyed against them.
      At present, the company allows all Dutch ships to trade to Surinam, upon
      paying two and a-half per cent. upon the value of their cargo for a
      license; and only reserves to itself exclusively, the direct trade from
      Africa to America, which consists almost entirely in the slave trade. This
      relaxation in the exclusive privileges of the company, is probably the
      principal cause of that degree of prosperity which that colony at present
      enjoys. Curacoa and Eustatia, the two principal islands belonging to the
      Dutch, are free ports, open to the ships of all nations; and this freedom,
      in the midst of better colonies, whose ports are open to those of one
      nation only, has been the great cause of the prosperity of those two
      barren islands.

      The French colony of Canada was, during the greater part of the last
      century, and some part of the present, under the government of an
      exclusive company. Under so unfavourable an administration, its progress
      was necessarily very slow, in comparison with that of other new colonies;
      but it became much more rapid when this company was dissolved, after the
      fall of what is called the Mississippi scheme. When the English got
      possession of this country, they found in it near double the number of
      inhabitants which father Charlevoix had assigned to it between twenty and
      thirty years before. That jesuit had travelled over the whole country, and
      had no inclination to represent it as less inconsiderable than it really
      was.

      The French colony of St. Domingo was established by pirates and
      freebooters, who, for a long time, neither required the protection, nor
      acknowledged the authority of France; and when that race of banditti
      became so far citizens as to acknowledge this authority, it was for a long
      time necessary to exercise it with very great gentleness. During this
      period, the population and improvement of this colony increased very fast.
      Even the oppression of the exclusive company, to which it was for some
      time subjected with all the other colonies of France, though it no doubt
      retarded, had not been able to stop its progress altogether. The course of
      its prosperity returned as soon as it was relieved from that oppression.
      It is now the most important of the sugar colonies of the West Indies, and
      its produce is said to be greater than that of all the English sugar
      colonies put together. The other sugar colonies of France are in general
      all very thriving.

      But there are no colonies of which the progress has been more rapid than
      that of the English in North America.

      Plenty of good land, and liberty to manage their own affairs their own
      way, seem to be the two great causes of the prosperity of all new
      colonies.

      In the plenty of good land, the English colonies of North America, though
      no doubt very abundantly provided, are, however, inferior to those of the
      Spaniards and Portuguese, and not superior to some of those possessed by
      the French before the late war. But the political institutions of the
      English colonies have been more favourable to the improvement and
      cultivation of this land, than those of the other three nations.

      First, The engrossing of uncultivated land, though it has by no means been
      prevented altogether, has been more restrained in the English colonies
      than in any other. The colony law, which imposes upon every proprietor the
      obligation of improving and cultivating, within a limited time, a certain
      proportion of his lands, and which, in case of failure, declares those
      neglected lands grantable to any other person; though it has not perhaps
      been very strictly executed, has, however, had some effect.

      Secondly, In Pennsylvania there is no right of primogeniture, and lands,
      like moveables, are divided equally among all the children of the family.
      In three of the provinces of New England, the oldest has only a double
      share, as in the Mosaical law. Though in those provinces, therefore, too
      great a quantity of land should sometimes be engrossed by a particular
      individual, it is likely, in the course of a generation or two, to be
      sufficiently divided again. In the other English colonies, indeed, the
      right of primogeniture takes place, as in the law of England: But in all
      the English colonies, the tenure of the lands, which are all held by free
      soccage, facilitates alienation; and the grantee of an extensive tract of
      land generally finds it for his interest to alienate, as fast as he can,
      the greater part of it, reserving only a small quit-rent. In the Spanish
      and Portuguese colonies, what is called the right of majorazzo takes place
      in the succession of all those great estates to which any title of honour
      is annexed. Such estates go all to one person, and are in effect entailed
      and unalienable. The French colonies, indeed, are subject to the custom of
      Paris, which, in the inheritance of land, is much more favourable to the
      younger children than the law of England. But, in the French colonies, if
      any part of an estate, held by the noble tenure of chivalry and homage, is
      alienated, it is, for a limited time, subject to the right of redemption,
      either by the heir of the superior, or by the heir of the family; and all
      the largest estates of the country are held by such noble tenures, which
      necessarily embarrass alienation. But, in a new colony, a great
      uncultivated estate is likely to be much more speedily divided by
      alienation than by succession. The plenty and cheapness of good land, it
      has already been observed, are the principal causes of the rapid
      prosperity of new colonies. The engrossing of land, in effect, destroys
      this plenty and cheapness. The engrossing of uncultivated land, besides,
      is the greatest obstruction to its improvement; but the labour that is
      employed in the improvement and cultivation of land affords the greatest
      and most valuable produce to the society. The produce of labour, in this
      case, pays not only its own wages and the profit of the stock which
      employs it, but the rent of the land too upon which it is employed. The
      labour of the English colonies, therefore, being more employed in the
      improvement and cultivation of land, is likely to afford a greater and
      more valuable produce than that of any of the other three nations, which,
      by the engrossing of land, is more or less diverted towards other
      employments.

      Thirdly, The labour of the English colonists is not only likely to afford
      a greater and more valuable produce, but, in consequence of the moderation
      of their taxes, a greater proportion of this produce belongs to
      themselves, which they may store up and employ in putting into motion a
      still greater quantity of labour. The English colonists have never yet
      contributed any thing towards the defence of the mother country, or
      towards the support of its civil government. They themselves, on the
      contrary, have hitherto been defended almost entirely at the expense of
      the mother country; but the expense of fleets and armies is out of all
      proportion greater than the necessary expense of civil government. The
      expense of their own civil government has always been very moderate. It
      has generally been confined to what was necessary for paying competent
      salaries to the governor, to the judges, and to some other officers of
      police, and for maintaining a few of the most useful public works. The
      expense of the civil establishment of Massachusetts Bay, before the
      commencement of the present disturbances, used to be but about £18;000
      a-year; that of New Hampshire and Rhode Island, £3500 each; that of
      Connecticut, £4000; that of New York and Pennsylvania, £4500 each; that of
      New Jersey, £1200; that of Virginia and South Carolina, £8000 each. The
      civil establishments of Nova Scotia and Georgia are partly supported by an
      annual grant of parliament; but Nova Scotia pays, besides, about £7000
      a-year towards the public expenses of the colony, and Georgia about £2500
      a-year. All the different civil establishments in North America, in short,
      exclusive of those of Maryland and North Carolina, of which no exact
      account has been got, did not, before the commencement of the present
      disturbances, cost the inhabitants above £64,700 a-year; an ever memorable
      example, at how small an expense three millions of people may not only be
      governed but well governed. The most important part of the expense of
      government, indeed, that of defence and protection, has constantly fallen
      upon the mother country. The ceremonial, too, of the civil government in
      the colonies, upon the reception of a new governor, upon the opening of a
      new assembly, etc. though sufficiently decent, is not accompanied with any
      expensive pomp or parade. Their ecclesiastical government is conducted
      upon a plan equally frugal. Tithes are unknown among them; and their
      clergy, who are far from being numerous, are maintained either by moderate
      stipends, or by the voluntary contributions of the people. The power of
      Spain and Portugal, on the contrary, derives some support from the taxes
      levied upon their colonies. France, indeed, has never drawn any
      considerable revenue from its colonies, the taxes which it levies upon
      them being generally spent among them. But the colony government of all
      these three nations is conducted upon a much more extensive plan, and is
      accompanied with a much more expensive ceremonial. The sums spent upon the
      reception of a new viceroy of Peru, for example, have frequently been
      enormous. Such ceremonials are not only real taxes paid by the rich
      colonists upon those particular occasions, but they serve to introduce
      among them the habit of vanity and expense upon all other occasions. They
      are not only very grievous occasional taxes, but they contribute to
      establish perpetual taxes, of the same kind, still more grievous; the
      ruinous taxes of private luxury and extravagance. In the colonies of all
      those three nations, too, the ecclesiastical government is extremely
      oppressive. Tithes take place in all of them, and are levied with the
      utmost rigour in those of Spain and Portugal. All of them, besides, are
      oppressed with a numerous race of mendicant friars, whose beggary being
      not only licensed but consecrated by religion, is a most grievous tax upon
      the poor people, who are most carefully taught that it is a duty to give,
      and a very great sin to refuse them their charity. Over and above all
      this, the clergy are, in all of them, the greatest engrossers of land.

      Fourthly, In the disposal of their surplus produce, or of what is over and
      above their own consumption, the English colonies have been more favoured,
      and have been allowed a more extensive market, than those of any other
      European nation. Every European nation has endeavoured, more or less, to
      monopolize to itself the commerce of its colonies, and, upon that account,
      has prohibited the ships of foreign nations from trading to them, and has
      prohibited them from importing European goods from any foreign nation. But
      the manner in which this monopoly has been exercised in different nations,
      has been very different.

      Some nations have given up the whole commerce of their colonies to an
      exclusive company, of whom the colonists were obliged to buy all such
      European goods as they wanted, and to whom they were obliged to sell the
      whole of their surplus produce. It was the interest of the company,
      therefore, not only to sell the former as dear, and to buy the latter as
      cheap as possible, but to buy no more of the latter, even at this low
      price, than what they could dispose of for a very high price in Europe. It
      was their interest not only to degrade in all cases the value of the
      surplus produce of the colony, but in many cases to discourage and keep
      down the natural increase of its quantity. Of all the expedients that can
      well be contrived to stunt the natural growth of a new colony, that of an
      exclusive company is undoubtedly the most effectual. This, however, has
      been the policy of Holland, though their company, in the course of the
      present century, has given up in many respects the exertion of their
      exclusive privilege. This, too, was the policy of Denmark, till the reign
      of the late king. It has occasionally been the policy of France; and of
      late, since 1755, after it had been abandoned by all other nations on
      account of its absurdity, it has become the policy of Portugal, with
      regard at least to two of the principal provinces of Brazil, Pernambucco,
      and Marannon.

      Other nations, without establishing an exclusive company, have confined
      the whole commerce of their colonies to a particular port of the mother
      country, from whence no ship was allowed to sail, but either in a fleet
      and at a particular season, or, if single, in consequence of a particular
      license, which in most cases was very well paid for. This policy opened,
      indeed, the trade of the colonies to all the natives of the mother
      country, provided they traded from the proper port, at the proper season,
      and in the proper vessels. But as all the different merchants, who joined
      their stocks in order to fit out those licensed vessels, would find it for
      their interest to act in concert, the trade which was carried on in this
      manner would necessarily be conducted very nearly upon the same principles
      as that of an exclusive company. The profit of those merchants would be
      almost equally exorbitant and oppressive. The colonies would be ill
      supplied, and would be obliged both to buy very dear, and to sell very
      cheap. This, however, till within these few years, had always been the
      policy of Spain; and the price of all European goods, accordingly, is said
      to have been enormous in the Spanish West Indies. At Quito, we are told by
      Ulloa, a pound of iron sold for about 4s:6d., and a pound of steel for
      about 6s:9d. sterling. But it is chiefly in order to purchase European
      goods that the colonies part with their own produce. The more, therefore,
      they pay for the one, the less they really get for the other, and the
      dearness of the one is the same thing with the cheapness of the other. The
      policy of Portugal is, in this respect, the same as the ancient policy of
      Spain, with regard to all its colonies, except Pernambucco and Marannon;
      and with regard to these it has lately adopted a still worse.

      Other nations leave the trade of their colonies free to all their
      subjects, who may carry it on from all the different ports of the mother
      country, and who have occasion for no other license than the common
      despatches of the custom-house. In this case the number and dispersed
      situation of the different traders renders it impossible for them to enter
      into any general combination, and their competition is sufficient to
      hinder them from making very exorbitant profits. Under so liberal a
      policy, the colonies are enabled both to sell their own produce, and to
      buy the goods of Europe at a reasonable price; but since the dissolution
      of the Plymouth company, when our colonies were but in their infancy, this
      has always been the policy of England. It has generally, too, been that of
      France, and has been uniformly so since the dissolution of what in England
      is commonly called their Mississippi company. The profits of the trade,
      therefore, which France and England carry on with their colonies, though
      no doubt somewhat higher than if the competition were free to all other
      nations, are, however, by no means exorbitant; and the price of European
      goods, accordingly, is not extravagantly high in the greater past of the
      colonies of either of those nations.

      In the exportation of their own surplus produce, too, it is only with
      regard to certain commodities that the colonies of Great Britain are
      confined to the market of the mother country. These commodities having
      been enumerated in the act of navigation, and in some other subsequent
      acts, have upon that account been called enumerated commodities. The rest
      are called non-enumerated, and may be exported directly to other
      countries, provided it is in British or plantation ships, of which the
      owners and three fourths of the mariners are British subjects.

      Among the non-enumerated commodities are some of the most important
      productions of America and the West Indies, grain of all sorts, lumber,
      salt provisions, fish, sugar, and rum.

      Grain is naturally the first and principal object of the culture of all
      new colonies. By allowing them a very extensive market for it, the law
      encourages them to extend this culture much beyond the consumption of a
      thinly inhabited country, and thus to provide beforehand an ample
      subsistence for a continually increasing population.

      In a country quite covered with wood, where timber consequently is of
      little or no value, the expense of clearing the ground is the principal
      obstacle to improvement. By allowing the colonies a very extensive market
      for their lumber, the law endeavours to facilitate improvement by raising
      the price of a commodity which would otherwise be of little value, and
      thereby enabling them to make some profit of what would otherwise be mere
      expense.

      In a country neither half peopled nor half cultivated, cattle naturally
      multiply beyond the consumption of the inhabitants, and are often, upon
      that account, of little or no value. But it is necessary, it has already
      been shown, that the price of cattle should bear a certain proportion to
      that of corn, before the greater part of the lands of any country can be
      improved. By allowing to American cattle, in all shapes, dead and alive, a
      very extensive market, the law endeavours to raise the value of a
      commodity, of which the high price is so very essential to improvement.
      The good effects of this liberty, however, must be somewhat diminished by
      the 4th of Geo. III. c. 15, which puts hides and skins among the
      enumerated commodities, and thereby tends to reduce the value of American
      cattle.

      To increase the shipping and naval power of Great Britain by the extension
      of the fisheries of our colonies, is an object which the legislature seems
      to have had almost constantly in view. Those fisheries, upon this account,
      have had all the encouragement which freedom can give them, and they have
      flourished accordingly. The New England fishery, in particular, was,
      before the late disturbances, one of the most important, perhaps, in the
      world. The whale fishery which, notwithstanding an extravagant bounty, is
      in Great Britain carried on to so little purpose, that in the opinion of
      many people ( which I do not, however, pretend to warrant), the whole
      produce does not much exceed the value of the bounties which are annually
      paid for it, is in New England carried on, without any bounty, to a very
      great extent. Fish is one of the principal articles with which the North
      Americans trade to Spain, Portugal, and the Mediterranean.

      Sugar was originally an enumerated commodity, which could only be exported
      to Great Britain; but in 1751, upon a representation of the
      sugar-planters, its exportation was permitted to all parts of the world.
      The restrictions, however, with which this liberty was granted, joined to
      the high price of sugar in Great Britain, have rendered it in a great
      measure ineffectual. Great Britain and her colonies still continue to be
      almost the sole market for all sugar produced in the British plantations.
      Their consumption increases so fast, that, though in consequence of the
      increasing improvement of Jamaica, as well as of the ceded islands, the
      importation of sugar has increased very greatly within these twenty years,
      the exportation to foreign countries is said to be not much greater than
      before.

      Rum is a very important article in the trade which the Americans carry on
      to the coast of Africa, from which they bring back negro slaves in return.

      If the whole surplus produce of America, in grain of all sorts, in salt
      provisions, and in fish, had been put into the enumeration, and thereby
      forced into the market of Great Britain, it would have interfered too much
      with the produce of the industry of our own people. It was probably not so
      much from any regard to the interest of America, as from a jealousy of
      this interference, that those important commodities have not only been
      kept out of the enumeration, but that the importation into Great Britain
      of all grain, except rice, and of all salt provisions, has, in the
      ordinary state of the law, been prohibited.

      The non-enumerated commodities could originally be exported to all parts
      of the world. Lumber and rice having been once put into the enumeration,
      when they were afterwards taken out of it, were confined, as to the
      European market, to the countries that lie south of Cape Finisterre. By
      the 6th of George III. c. 52, all non-enumerated commodities were
      subjected to the like restriction. The parts of Europe which lie south of
      Cape Finisterre are not manufacturing countries, and we are less jealous
      of the colony ships carrying home from them any manufactures which could
      interfere with our own.

      The enumerated commodities are of two sorts; first, such as are either the
      peculiar produce of America, or as cannot be produced, or at least are not
      produced in the mother country. Of this kind are molasses, coffee,
      cocoa-nuts, tobacco, pimento, ginger, whalefins, raw silk, cotton, wool,
      beaver, and other peltry of America, indigo, fustick, and other dyeing
      woods; secondly, such as are not the peculiar produce of America, but
      which are, and may be produced in the mother country, though not in such
      quantities as to supply the greater part of her demand, which is
      principally supplied from foreign countries. Of this kind are all naval
      stores, masts, yards, and bowsprits, tar, pitch, and turpentine, pig and
      bar iron, copper ore, hides and skins, pot and pearl ashes. The largest
      importation of commodities of the first kind could not discourage the
      growth, or interfere with the sale, of any part of the produce of the
      mother country. By confining them to the home market, our merchants, it
      was expected, would not only be enabled to buy them cheaper in the
      plantations, and consequently to sell them with a better profit at home,
      but to establish between the plantations and foreign countries an
      advantageous carrying trade, of which Great Britain was necessarily to be
      the centre or emporium, as the European country into which those
      commodities were first to be imported. The importation of commodities of
      the second kind might be so managed too, it was supposed, as to interfere,
      not with the sale of those of the same kind which were produced at home,
      but with that of those which were imported from foreign countries;
      because, by means of proper duties, they might be rendered always somewhat
      dearer than the former, and yet a good deal cheaper than the latter. By
      confining such commodities to the home market, therefore, it was proposed
      to discourage the produce, not of Great Britain, but of some foreign
      countries with which the balance of trade was believed to be unfavourable
      to Great Britain.

      The prohibition of exporting from the colonies to any other country but
      Great Britain, masts, yards, and bowsprits, tar, pitch, and turpentine,
      naturally tended to lower the price of timber in the colonies, and
      consequently to increase the expense of clearing their lands, the
      principal obstacle to their improvement. But about the beginning of the
      present century, in 1703, the pitch and tar company of Sweden endeavoured
      to raise the price of their commodities to Great Britain, by prohibiting
      their exportation, except in their own ships, at their own price, and in
      such quantities as they thought proper. In order to counteract this
      notable piece of mercantile policy, and to render herself as much as
      possible independent, not only of Sweden, but of all the other northern
      powers, Great Britain gave a bounty upon the importation of naval stores
      from America; and the effect of this bounty was to raise the price of
      timber in America much more than the confinement to the home market could
      lower it; and as both regulations were enacted at the same time, their
      joint effect was rather to encourage than to discourage the clearing of
      land in America.

      Though pig and bar iron, too, have been put among the enumerated
      commodities, yet as, when imported from America, they are exempted from
      considerable duties to which they are subject when imported front any
      other country, the one part of the regulation contributes more to
      encourage the erection of furnaces in America than the other to discourage
      it. There is no manufacture which occasions so great a consumption of wood
      as a furnace, or which can contribute so much to the clearing of a country
      overgrown with it.

      The tendency of some of these regulations to raise the value of timber in
      America, and thereby to facilitate the clearing of the land, was neither,
      perhaps, intended nor understood by the legislature. Though their
      beneficial effects, however, have been in this respect accidental, they
      have not upon that account been less real.

      The most perfect freedom of trade is permitted between the British
      colonies of America and the West Indies, both in the enumerated and in the
      non-enumerated commodities Those colonies are now become so populous and
      thriving, that each of them finds in some of the others a great and
      extensive market for every part of its produce. All of them taken
      together, they make a great internal market for the produce of one
      another.

      The liberality of England, however, towards the trade of her colonies, has
      been confined chiefly to what concerns the market for their produce,
      either in its rude state, or in what may be called the very first stage of
      manufacture. The more advanced or more refined manufactures, even of the
      colony produce, the merchants and manufacturers of Great Britain chuse to
      reserve to themselves, and have prevailed upon the legislature to prevent
      their establishment in the colonies, sometimes by high duties, and
      sometimes by absolute prohibitions.

      While, for example, Muscovado sugars from the British plantations pay,
      upon importation, only 6s:4d. the hundred weight, white sugars pay £1:1:1;
      and refined, either double or single, in loaves, £4:2:5 ⁸⁄₂₀ths. When
      those high duties were imposed, Great Britain was the sole, and she still
      continues to be, the principal market, to which the sugars of the British
      colonies could be exported. They amounted, therefore, to a prohibition, at
      first of claying or refining sugar for any foreign market, and at present
      of claying or refining it for the market which takes off, perhaps, more
      than nine-tenths of the whole produce. The manufacture of claying or
      refining sugar, accordingly, though it has flourished in all the sugar
      colonies of France, has been little cultivated in any of those of England,
      except for the market of the colonies themselves. While Grenada was in the
      hands of the French, there was a refinery of sugar, by claying, at least
      upon almost every plantation. Since it fell into those of the English,
      almost all works of this kind have been given up; and there are at present
      (October 1773), I am assured, not above two or three remaining in the
      island. At present, however, by an indulgence of the custom-house, clayed
      or refined sugar, if reduced from loaves into powder, is commonly imported
      as Muscovado.

      While Great Britain encourages in America the manufacturing of pig and bar
      iron, by exempting them from duties to which the like commodities are
      subject when imported from any other country, she imposes an absolute
      prohibition upon the erection of steel furnaces and slit-mills in any of
      her American plantations. She will not suffer her colonies to work in
      those more refined manufactures, even for their own consumption; but
      insists upon their purchasing of her merchants and manufacturers all goods
      of this kind which they have occasion for.

      She prohibits the exportation from one province to another by water, and
      even the carriage by land upon horseback, or in a cart, of hats, of wools,
      and woollen goods, of the produce of America; a regulation which
      effectually prevents the establishment of any manufacture of such
      commodities for distant sale, and confines the industry of her colonists
      in this way to such coarse and household manufactures as a private family
      commonly makes for its own use, or for that of some of its neighbours in
      the same province.

      To prohibit a great people, however, from making all that they can of
      every part of their own produce, or from employing their stock and
      industry in the way that they judge most advantageous to themselves, is a
      manifest violation of the most sacred rights of mankind. Unjust, however,
      as such prohibitions may be, they have not hitherto been very hurtful to
      the colonies. Land is still so cheap, and, consequently, labour so dear
      among them, that they can import from the mother country almost all the
      more refined or more advanced manufactures cheaper than they could make
      them for themselves. Though they had not, therefore, been prohibited from
      establishing such manufactures, yet, in their present state of
      improvement, a regard to their own interest would probably have prevented
      them from doing so. In their present state of improvement, those
      prohibitions, perhaps, without cramping their industry, or restraining it
      from any employment to which it would have gone of its own accord, are
      only impertinent badges of slavery imposed upon them, without any
      sufficient reason, by the groundless jealousy of the merchants and
      manufacturers of the mother country. In a more advanced state, they might
      be really oppressive and insupportable.

      Great Britain, too, as she confines to her own market some of the most
      important productions of the colonies, so, in compensation, she gives to
      some of them an advantage in that market, sometimes by imposing higher
      duties upon the like productions when imported from other countries, and
      sometimes by giving bounties upon their importation from the colonies. In
      the first way, she gives an advantage in the home market to the sugar,
      tobacco, and iron of her own colonies; and, in the second, to their raw
      silk, to their hemp and flax, to their indigo, to their naval stores, and
      to their building timber. This second way of encouraging the colony
      produce, by bounties upon importation, is, so far as I have been able to
      learn, peculiar to Great Britain: the first is not. Portugal does not
      content herself with imposing higher duties upon the importation of
      tobacco from any other country, but prohibits it under the severest
      penalties.

      With regard to the importation of goods from Europe, England has likewise
      dealt more liberally with her colonies than any other nation.

      Great Britain allows a part, almost always the half, generally a larger
      portion, and sometimes the whole, of the duty which is paid upon the
      importation of foreign goods, to be drawn back upon their exportation to
      any foreign country. No independent foreign country, it was easy to
      foresee, would receive them, if they came to it loaded with the heavy
      duties to which almost all foreign goods are subjected on their
      importation into Great Britain. Unless, therefore, some part of those
      duties was drawn back upon exportation, there was an end of the carrying
      trade; a trade so much favoured by the mercantile system.

      Our colonies, however, are by no means independent foreign countries; and
      Great Britain having assumed to herself the exclusive right of supplying
      them with all goods from Europe, might have forced them (in the same
      manner as other countries have done their colonies) to receive such goods
      loaded with all the same duties which they paid in the mother country.
      But, on the contrary, till 1763, the same drawbacks were paid upon the
      exportation of the greater part of foreign goods to our colonies, as to
      any independent foreign country. In 1763, indeed, by the 4th of Geo. III.
      c. 15, this indulgence was a good deal abated, and it was enacted, “That
      no part of the duty called the old subsidy should be drawn back for any
      goods of the growth, production, or manufacture of Europe or the East
      Indies, which should be exported from this kingdom to any British colony
      or plantation in America; wines, white calicoes, and muslins, excepted.”
      Before this law, many different sorts of foreign goods might have been
      bought cheaper in the plantations than in the mother country, and some may
      still.

      Of the greater part of the regulations concerning the colony trade, the
      merchants who carry it on, it must be observed, have been the principal
      advisers. We must not wonder, therefore, if, in a great part of them,
      their interest has been more considered than either that of the colonies
      or that of the mother country. In their exclusive privilege of supplying
      the colonies with all the goods which they wanted from Europe, and of
      purchasing all such parts of their surplus produce as could not interfere
      with any of the trades which they themselves carried on at home, the
      interest of the colonies was sacrificed to the interest of those
      merchants. In allowing the same drawbacks upon the re-exportation of the
      greater part of European and East India goods to the colonies, as upon
      their re-exportation to any independent country, the interest of the
      mother country was sacrificed to it, even according to the mercantile
      ideas of that interest. It was for the interest of the merchants to pay as
      little as possible for the foreign goods which they sent to the colonies,
      and, consequently, to get back as much as possible of the duties which
      they advanced upon their importation into Great Britain. They might
      thereby be enabled to sell in the colonies, either the same quantity of
      goods with a greater profit, or a greater quantity with the same profit,
      and, consequently, to gain something either in the one way or the other.
      It was likewise for the interest of the colonies to get all such goods as
      cheap, and in as great abundance as possible. But this might not always be
      for the interest of the mother country. She might frequently suffer, both
      in her revenue, by giving back a great part of the duties which had been
      paid upon the importation of such goods; and in her manufactures, by being
      undersold in the colony market, in consequence of the easy terms upon
      which foreign manufactures could be carried thither by means of those
      drawbacks. The progress of the linen manufacture of Great Britain, it is
      commonly said, has been a good deal retarded by the drawbacks upon the
      re-exportation of German linen to the American colonies.

      But though the policy of Great Britain, with regard to the trade of her
      colonies, has been dictated by the same mercantile spirit as that of other
      nations, it has, however, upon the whole, been less illiberal and
      oppressive than that of any of them.

      In every thing except their foreign trade, the liberty of the English
      colonists to manage their own affairs their own way, is complete. It is in
      every respect equal to that of their fellow-citizens at home, and is
      secured in the same manner, by an assembly of the representatives of the
      people, who claim the sole right of imposing taxes for the support of the
      colony government. The authority of this assembly overawes the executive
      power; and neither the meanest nor the most obnoxious colonist, as long as
      he obeys the law, has any thing to fear from the resentment, either of the
      governor, or of any other civil or military officer in the province. The
      colony assemblies, though, like the house of commons in England, they are
      not always a very equal representation of the people, yet they approach
      more nearly to that character; and as the executive power either has not
      the means to corrupt them, or, on account of the support which it receives
      from the mother country, is not under the necessity of doing so, they are,
      perhaps, in general more influenced by the inclinations of their
      constituents. The councils, which, in the colony legislatures, correspond
      to the house of lords in Great Britain, are not composed of a hereditary
      nobility. In some of the colonies, as in three of the governments of New
      England, those councils are not appointed by the king, but chosen by the
      representatives of the people. In none of the English colonies is there
      any hereditary nobility. In all of them, indeed, as in all other free
      countries, the descendant of an old colony family is more respected than
      an upstart of equal merit and fortune; but he is only more respected, and
      he has no privileges by which he can be troublesome to his neighbours.
      Before the commencement of the present disturbances, the colony assemblies
      had not only the legislative, but a part of the executive power. In
      Connecticut and Rhode Island, they elected the governor. In the other
      colonies, they appointed the revenue officers, who collected the taxes
      imposed by those respective assemblies, to whom those officers were
      immediately responsible. There is more equality, therefore, among the
      English colonists than among the inhabitants of the mother country. Their
      manners are more re publican; and their governments, those of three of the
      provinces of New England in particular, have hitherto been more republican
      too.

      The absolute governments of Spain, Portugal, and France, on the contrary,
      take place in their colonies; and the discretionary powers which such
      governments commonly delegate to all their inferior officers are, on
      account of the great distance, naturally exercised there with more than
      ordinary violence. Under all absolute governments, there is more liberty
      in the capital than in any other part of the country. The sovereign
      himself can never have either interest or inclination to pervert the order
      of justice, or to oppress the great body of the people. In the capital,
      his presence overawes, more or less, all his inferior officers, who, in
      the remoter provinces, from whence the complaints of the people are less
      likely to reach him, can exercise their tyranny with much more safety. But
      the European colonies in America are more remote than the most distant
      provinces of the greatest empires which had ever been known before. The
      government of the English colonies is, perhaps, the only one which, since
      the world began, could give perfect security to the inhabitants of so very
      distant a province. The administration of the French colonies, however,
      has always been conducted with much more gentleness and moderation than
      that of the Spanish and Portuguese. This superiority of conduct is
      suitable both to the character of the French nation, and to what forms the
      character of every nation, the nature of their government, which, though
      arbitrary and violent in comparison with that of Great Britain, is legal
      and free in comparison with those of Spain and Portugal.

      It is in the progress of the North American colonies, however, that the
      superiority of the English policy chiefly appears. The progress of the
      sugar colonies of France has been at least equal, perhaps superior, to
      that of the greater part of those of England; and yet the sugar colonies
      of England enjoy a free government, nearly of the same kind with that
      which takes place in her colonies of North America. But the sugar colonies
      of France are not discouraged, like those of England, from refining their
      own sugar; and what is still of greater importance, the genius of their
      government naturally introduces a better management of their negro slaves.

      In all European colonies, the culture of the sugar-cane is carried on by
      negro slaves. The constitution of those who have been born in the
      temperate climate of Europe could not, it is supposed, support the labour
      of digging the ground under the burning sun of the West Indies; and the
      culture of the sugar-cane, as it is managed at present, is all hand
      labour; though, in the opinion of many, the drill plough might be
      introduced into it with great advantage. But, as the profit and success of
      the cultivation which is carried on by means of cattle, depend very much
      upon the good management of those cattle; so the profit and success of
      that which is carried on by slaves must depend equally upon the good
      management of those slaves; and in the good management of their slaves the
      French planters, I think it is generally allowed, are superior to the
      English. The law, so far as it gives some weak protection to the slave
      against the violence of his master, is likely to be better executed in a
      colony where the government is in a great measure arbitrary, than in one
      where it is altogether free. In every country where the unfortunate law
      of slavery is established, the magistrate, when he protects the slave,
      intermeddles in some measure in the management of the private property of
      the master; and, in a free country, where the master is, perhaps, either a
      member of the colony assembly, or an elector of such a member, he dares
      not do this but with the greatest caution and circumspection. The respect
      which he is obliged to pay to the master, renders it more difficult for
      him to protect the slave. But in a country where the government is in a
      great measure arbitrary, where it is usual for the magistrate to
      intermeddle even in the management of the private property of individuals,
      and to send them, perhaps, a lettre de cachet, if they do not manage it
      according to his liking, it is much easier for him to give some protection
      to the slave; and common humanity naturally disposes him to do so. The
      protection of the magistrate renders the slave less contemptible in the
      eyes of his master, who is thereby induced to consider him with more
      regard, and to treat him with more gentleness. Gentle usage renders the
      slave not only more faithful, but more intelligent, and, therefore, upon a
      double account, more useful. He approaches more to the condition of a free
      servant, and may possess some degree of integrity and attachment to his
      master’s interest; virtues which frequently belong to free servants, but
      which never can belong to a slave, who is treated as slaves commonly are
      in countries where the master is perfectly free and secure.

      That the condition of a slave is better under an arbitrary than under a
      free government, is, I believe, supported by the history of all ages and
      nations. In the Roman history, the first time we read of the magistrate
      interposing to protect the slave from the violence of his master, is under
      the emperors. When Vidius Pollio, in the presence of Augustus, ordered one
      of his slaves, who had committed a slight fault, to be cut into pieces and
      thrown into his fish-pond, in order to feed his fishes, the emperor
      commanded him, with indignation, to emancipate immediately, not only that
      slave, but all the others that belonged to him. Under the republic no
      magistrate could have had authority enough to protect the slave, much less
      to punish the master.

      The stock, it is to be observed, which has improved the sugar colonies of
      France, particularly the great colony of St Domingo, has been raised
      almost entirely from the gradual improvement and cultivation of those
      colonies. It has been almost altogether the produce of the soil and of the
      industry of the colonists, or, what comes to the same thing, the price of
      that produce, gradually accumulated by good management, and employed in
      raising a still greater produce. But the stock which has improved and
      cultivated the sugar colonies of England, has, a great part of it, been
      sent out from England, and has by no means been altogether the produce of
      the soil and industry of the colonists. The prosperity of the English
      sugar colonies has been in a great measure owing to the great riches of
      England, of which a part has overflowed, if one may say so, upon these
      colonies. But the prosperity of the sugar colonies of France has been
      entirely owing to the good conduct of the colonists, which must therefore
      have had some superiority over that of the English; and this superiority
      has been remarked in nothing so much as in the good management of their
      slaves.

      Such have been the general outlines of the policy of the different
      European nations with regard to their colonies.

      The policy of Europe, therefore, has very little to boast of, either in
      the original establishment, or, so far as concerns their internal
      government, in the subsequent prosperity of the colonies of America.

      Folly and injustice seem to have been the principles which presided over
      and directed the first project of establishing those colonies; the folly
      of hunting after gold and silver mines, and the injustice of coveting the
      possession of a country whose harmless natives, far from having ever
      injured the people of Europe, had received the first adventurers with
      every mark of kindness and hospitality.

      The adventurers, indeed, who formed some of the latter establishments,
      joined to the chimerical project of finding gold and silver mines, other
      motives more reasonable and more laudable; but even these motives do very
      little honour to the policy of Europe.

      The English puritans, restrained at home, fled for freedom to America, and
      established there the four governments of New England. The English
      catholics, treated with much greater injustice, established that of
      Maryland; the quakers, that of Pennsylvania. The Portuguese Jews,
      persecuted by the inquisition, stript of their fortunes, and banished to
      Brazil, introduced, by their example, some sort of order and industry
      among the transported felons and strumpets by whom that colony was
      originally peopled, and taught them the culture of the sugar-cane. Upon
      all these different occasions, it was not the wisdom and policy, but the
      disorder and injustice of the European governments, which peopled and
      cultivated America.

      In effectuation some of the most important of these establishments, the
      different governments of Europe had as little merit as in projecting them.
      The conquest of Mexico was the project, not of the council of Spain, but
      of a governor of Cuba; and it was effectuated by the spirit of the bold
      adventurer to whom it was entrusted, in spite of every thing which that
      governor, who soon repented of having trusted such a person, could do to
      thwart it. The conquerors of Chili and Peru, and of almost all the other
      Spanish settlements upon the continent of America, carried out with them
      no other public encouragement, but a general permission to make
      settlements and conquests in the name of the king of Spain. Those
      adventures were all at the private risk and expense of the adventurers.
      The government of Spain contributed scarce any thing to any of them. That
      of England contributed as little towards effectuating the establishment of
      some of its most important colonies in North America.

      When those establishments were effectuated, and had become so considerable
      as to attract the attention of the mother country, the first regulations
      which she made with regard to them, had always in view to secure to
      herself the monopoly of their commerce; to confine their market, and to
      enlarge her own at their expense, and, consequently, rather to damp and
      discourage, than to quicken and forward the course of their prosperity. In
      the different ways in which this monopoly has been exercised, consists one
      of the most essential differences in the policy of the different European
      nations with regard to their colonies. The best of them all, that of
      England, is only somewhat less illiberal and oppressive than that of any
      of the rest.

      In what way, therefore, has the policy of Europe contributed either to the
      first establishment, or to the present grandeur of the colonies of
      America? In one way, and in one way only, it has contributed a good deal.
      Magna virum mater! It bred and formed the men who were capable of
      achieving such great actions, and of laying the foundation of so great an
      empire; and there is no other quarter of the world; of which the policy is
      capable of forming, or has ever actually, and in fact, formed such men.
      The colonies owe to the policy of Europe the education and great views of
      their active and enterprizing founders; and some of the greatest and most
      important of them, so far as concerns their internal government, owe to it
      scarce anything else.




      PART III. Of the Advantages which Europe has derived From the Discovery of
      America, and from that of a Passage to the East Indies by the Cape of Good
      Hope.

      Such are the advantages which the colonies of America have derived from
      the policy of Europe.

      What are those which Europe has derived from the discovery and
      colonization of America?

      Those advantages may be divided, first, into the general advantages which
      Europe, considered as one great country, has derived from those great
      events; and, secondly, into the particular advantages which each
      colonizing country has derived from the colonies which particularly belong
      to it, in consequence of the authority or dominion which it exercises over
      them.

      The general advantages which Europe, considered as one great country, has
      derived from the discovery and colonization of America, consist, first, in
      the increase of its enjoyments; and, secondly, in the augmentation of its
      industry.

      The surplus produce of America imported into Europe, furnishes the
      inhabitants of this great continent with a variety of commodities which
      they could not otherwise have possessed; some for conveniency and use,
      some for pleasure, and some for ornament; and thereby contributes to
      increase their enjoyments.

      The discovery and colonization of America, it will readily be allowed,
      have contributed to augment the industry, first, of all the countries
      which trade to it directly, such as Spain, Portugal, France, and England;
      and, secondly, of all those which, without trading to it directly, send,
      through the medium of other countries, goods to it of their own produce,
      such as Austrian Flanders, and some provinces of Germany, which, through
      the medium of the countries before mentioned, send to it a considerable
      quantity of linen and other goods. All such countries have evidently
      gained a more extensive market for their surplus produce, and must
      consequently have been encouraged to increase its quantity.

      But that those great events should likewise have contributed to encourage
      the industry of countries such as Hungary and Poland, which may never,
      perhaps, have sent a single commodity of their own produce to America, is
      not, perhaps, altogether so evident. That those events have done so,
      however, cannot be doubted. Some part of the produce of America is
      consumed in Hungary and Poland, and there is some demand there for the
      sugar, chocolate, and tobacco, of that new quarter of the world. But those
      commodities must be purchased with something which is either the produce
      of the industry of Hungary and Poland, or with something which had been
      purchased with some part of that produce. Those commodities of America are
      new values, new equivalents, introduced into Hungary and Poland, to be
      exchanged there for the surplus produce of these countries. By being
      carried thither, they create a new and more extensive market for that
      surplus produce. They raise its value, and thereby contribute to encourage
      its increase. Though no part of it may ever be carried to America, it may
      be carried to other countries, which purchase it with a part of their
      share of the surplus produce of America, and it may find a market by means
      of the circulation of that trade which was originally put into motion by
      the surplus produce of America.

      Those great events may even have contributed to increase the enjoyments,
      and to augment the industry, of countries which not only never sent any
      commodities to America, but never received any from it. Even such
      countries may have received a greater abundance of other commodities from
      countries, of which the surplus produce had been augmented by means of the
      American trade. This greater abundance, as it must necessarily have
      increased their enjoyments, so it must likewise have augmented their
      industry. A greater number of new equivalents, of some kind or other, must
      have been presented to them to be exchanged for the surplus produce of
      that industry. A more extensive market must have been created for that
      surplus produce, so as to raise its value, and thereby encourage its
      increase. The mass of commodities annually thrown into the great circle of
      European commerce, and by its various revolutions annually distributed
      among all the different nations comprehended within it, must have been
      augmented by the whole surplus produce of America. A greater share of this
      greater mass, therefore, is likely to have fallen to each of those
      nations, to have increased their enjoyments, and augmented their industry.

      The exclusive trade of the mother countries tends to diminish, or at least
      to keep down below what they would otherwise rise to, both the enjoyments
      and industry of all those nations in general, and of the American colonies
      in particular. It is a dead weight upon the action of one of the great
      springs which puts into motion a great part of the business of mankind. By
      rendering the colony produce dearer in all other countries, it lessens its
      consumption, and thereby cramps the industry of the colonies, and both the
      enjoyments and the industry of all other countries, which both enjoy less
      when they pay more for what they enjoy, and produce less when they get
      less for what they produce. By rendering the produce of all other
      countries dearer in the colonies, it cramps in the same manner the
      industry of all other colonies, and both the enjoyments and the industry
      of the colonies. It is a clog which, for the supposed benefit of some
      particular countries, embarrasses the pleasures and encumbers the industry
      of all other countries, but of the colonies more than of any other. It not
      only excludes as much as possible all other countries from one particular
      market, but it confines as much as possible the colonies to one particular
      market; and the difference is very great between being excluded from one
      particular market when all others are open, and being confined to one
      particular market when all others are shut up. The surplus produce of the
      colonies, however, is the original source of all that increase of
      enjoyments and industry which Europe derives from the discovery and
      colonization of America, and the exclusive trade of the mother countries
      tends to render this source much less abundant than it otherwise would be.

      The particular advantages which each colonizing country derives from the
      colonies which particularly belong to it, are of two different kinds;
      first, those common advantages which every empire derives from the
      provinces subject to its dominion; and, secondly, those peculiar
      advantages which are supposed to result from provinces of so very peculiar
      a nature as the European colonies of America.

      The common advantages which every empire derives from the provinces
      subject to its dominion consist, first, in the military force which they
      furnish for its defence; and, secondly, in the revenue which they furnish
      for the support of its civil government. The Roman colonies furnished
      occasionally both the one and the other. The Greek colonies sometimes
      furnished a military force, but seldom any revenue. They seldom
      acknowledged themselves subject to the dominion of the mother city. They
      were generally her allies in war, but very seldom her subjects in peace.

      The European colonies of America have never yet furnished any military
      force for the defence of the mother country. The military force has never
      yet been sufficient for their own defence; and in the different wars in
      which the mother countries have been engaged, the defence of their
      colonies has generally occasioned a very considerable distraction of the
      military force of those countries. In this respect, therefore, all the
      European colonies have, without exception, been a cause rather of weakness
      than of strength to their respective mother countries.

      The colonies of Spain and Portugal only have contributed any revenue
      towards the defence of the mother country, or the support of her civil
      government. The taxes which have been levied upon those of other European
      nations, upon those of England in particular, have seldom been equal to
      the expense laid out upon them in time of peace, and never sufficient to
      defray that which they occasioned in time of war. Such colonies,
      therefore, have been a source of expense, and not of revenue, to their
      respective mother countries.

      The advantages of such colonies to their respective mother countries,
      consist altogether in those peculiar advantages which are supposed to
      result from provinces of so very peculiar a nature as the European
      colonies of America; and the exclusive trade, it is acknowledged, is the
      sole source of all those peculiar advantages.

      In consequence of this exclusive trade, all that part of the surplus
      produce of the English colonies, for example, which consists in what are
      called enumerated commodities, can be sent to no other country but
      England. Other countries must afterwards buy it of her. It must be
      cheaper, therefore, in England than it can be in any other country, and
      must contribute more to increase the enjoyments of England than those of
      any other country. It must likewise contribute more to encourage her
      industry. For all those parts of her own surplus produce which England
      exchanges for those enumerated commodities, she must get a better price
      than any other countries can get for the like parts of theirs, when they
      exchange them for the same commodities. The manufactures of England, for
      example, will purchase a greater quantity of the sugar and tobacco of her
      own colonies than the like manufactures of other countries can purchase of
      that sugar and tobacco. So far, therefore, as the manufactures of England
      and those of other countries are both to be exchanged for the sugar and
      tobacco of the English colonies, this superiority of price gives an
      encouragement to the former beyond what the latter can, in these
      circumstances, enjoy. The exclusive trade of the colonies, therefore, as
      it diminishes, or at least keeps down below what they would otherwise rise
      to, both the enjoyments and the industry of the countries which do not
      possess it, so it gives an evident advantage to the countries which do
      possess it over those other countries.

      This advantage, however, will, perhaps, be found to be rather what may be
      called a relative than an absolute advantage, and to give a superiority to
      the country which enjoys it, rather by depressing the industry and produce
      of other countries, than by raising those of that particular country above
      what they would naturally rise to in the case of a free trade.

      The tobacco of Maryland and Virginia, for example, by means of the
      monopoly which England enjoys of it, certainly comes cheaper to England
      than it can do to France to whom England commonly sells a considerable
      part of it. But had France and all other European countries been at all
      times allowed a free trade to Maryland and Virginia, the tobacco of those
      colonies might by this time have come cheaper than it actually does, not
      only to all those other countries, but likewise to England. The produce of
      tobacco, in consequence of a market so much more extensive than any which
      it has hitherto enjoyed, might, and probably would, by this time have been
      so much increased as to reduce the profits of a tobacco plantation to
      their natural level with those of a corn plantation, which it is supposed
      they are still somewhat above. The price of tobacco might, and probably
      would, by this time have fallen somewhat lower than it is at present. An
      equal quantity of the commodities, either of England or of those other
      countries, might have purchased in Maryland and Virginia a greater
      quantity of tobacco than it can do at present, and consequently have been
      sold there for so much a better price. So far as that weed, therefore,
      can, by its cheapness and abundance, increase the enjoyments, or augment
      the industry, either of England or of any other country, it would
      probably, in the case of a free trade, have produced both these effects in
      somewhat a greater degree than it can do at present. England, indeed,
      would not, in this case, have had any advantage over other countries. She
      might have bought the tobacco of her colonies somewhat cheaper, and
      consequently have sold some of her own commodities somewhat dearer, than
      she actually does; but she could neither have bought the one cheaper, nor
      sold the other dearer, than any other country might have done. She might,
      perhaps, have gained an absolute, but she would certainly have lost a
      relative advantage.

      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 possible, other nations from any share in it, England, there are
      very probable reasons for believing, has not only sacrificed a part of the
      absolute advantage which she, as well as every other nation, might have
      derived from that trade, but has subjected herself both to an absolute and
      to a relative disadvantage in almost every other branch of trade.

      When, by the act of navigation, England assumed to herself the monopoly of
      the colony trade, the foreign capitals which had before been employed in
      it, were necessarily withdrawn from it. The English capital, which had
      before carried on but a part of it, was now to carry on the whole. The
      capital which had before supplied the colonies with but a part of the
      goods which they wanted from Europe, was now all that was employed to
      supply them with the whole. But it could not supply them with the whole;
      and the goods with which it did supply them were necessarily sold very
      dear. The capital which had before bought but a part of the surplus
      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 necessarily bought very cheap. But in
      an employment of capital, in which the merchant sold very dear, and bought
      very cheap, the profit must have been very great, and much above the
      ordinary level of profit in other branches of trade. This superiority 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 revulsion of capital, as it must have gradually increased the
      competition of capitals in the colony trade, so it must have gradually
      diminished that competition in all those other branches of trade; as it
      must have gradually lowered the profits of the one, so it must have
      gradually raised those 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
      raising the rate of profit somewhat higher than it otherwise would have
      been in all trades, was not only produced by this monopoly upon its first
      establishment, but has continued to be produced by it ever since.

      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 since the
      establishment of the act of navigation, it certainly has not increased in
      the same proportion as that or the colonies. But the foreign trade of
      every country naturally increases in proportion to its wealth, its surplus
      produce in proportion to its whole produce; and Great Britain having
      engrossed to herself almost the whole of what may be called the foreign
      trade of the colonies, and her capital not having increased in the same
      proportion as the extent of that trade, she could not carry it on without
      continually withdrawing from other branches of trade some part of the
      capital which had before been employed in them, as well as withholding
      from them a great deal more which would otherwise have gone to them. Since
      the establishment of the act of navigation, accordingly, the colony trade
      has been continually increasing, while many other branches of foreign
      trade, particularly of that to other parts of Europe, have been
      continually decaying. Our manufactures for foreign sale, instead of being
      suited, as before the act of navigation, to the neighbouring market of
      Europe, or to the more distant one of the countries which lie round the
      Mediterranean sea, have the greater part of them, been accommodated to the
      still more distant 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 sought for in the excess and improper
      mode of taxation, in the high price of labour, in the increase of luxury,
      etc. may all be found in the overgrowth of the colony trade. The
      mercantile capital of Great Britain, though very great, yet not being
      infinite, and though greatly increased since the act of navigation, yet
      not being increased in the same proportion as the colony trade, that trade
      could not possibly be carried on without withdrawing some part of that
      capital from other branches of trade, nor consequently without some decay
      of those other branches.

      England, it must be observed, was a great trading country, her mercantile
      capital was very great, and likely to become still greater and greater
      every day, not only before the act of navigation had established the
      monopoly of the corn trade, but before that trade was very considerable.
      In the Dutch war, during the government of Cromwell, her navy was superior
      to that of Holland; and in that which broke out in the beginning of the
      reign of Charles II., it was at least equal, perhaps superior to the
      united navies of France and Holland. Its superiority, perhaps, would
      scarce appear greater in the present times, at least if the Dutch navy
      were to bear the same 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 first of them, the plan of that
      act had been but just formed; and though, before the breaking out of the
      second, it had been fully enacted by legal authority, yet no part of it
      could have had time to produce any considerable effect, and least of all
      that part which established the exclusive trade to the colonies. Both the
      colonies and their trade were inconsiderable then, in comparison of what
      they are how. The island of Jamaica was an unwholesome desert, little
      inhabited, and less cultivated. New York and New Jersey were in the
      possession of the Dutch, the half of St. Christopher’s in that of the
      French. The island of Antigua, the two Carolinas, Pennsylvania, Georgia,
      and Nova Scotia, were not planted. Virginia, Maryland, and New England
      were planted; and though they were very thriving colonies, yet there was
      not perhaps at that time, either in Europe or America, a single person who
      foresaw, or even suspected, the rapid progress which they have since made
      in wealth, population, and improvement. The island of Barbadoes, in short,
      was the only British colony of any consequence, of which the condition at
      that time bore any resemblance to what it is at present. The trade of the
      colonies, of which England, even for some time after the act of
      navigation, enjoyed but a part (for the act of navigation was not very
      strictly executed till several years after it was enacted), could not at
      that time be the cause of the great trade of England, nor of the great
      naval power which was supported by that trade. The trade which at that
      time supported that great naval power was the trade of Europe, and of the
      countries which lie round the Mediterranean sea. But the share which Great
      Britain at present enjoys of that trade could not support any such great
      naval power. Had the growing trade of the colonies been left free to all
      nations, whatever share of it might have fallen to Great Britain, and a
      very considerable share would probably have fallen to her, must have been
      all an addition to this great trade of which she was before in possession.
      In consequence of the monopoly, the increase of the colony trade has not
      so much occasioned an addition to the trade which Great Britain had
      before, as a total change in its direction.

      Secondly, This monopoly has necessarily contributed to keep up the rate of
      profit, in all the different branches of British trade, higher than it
      naturally would have been, had all nations been allowed a free trade to
      the British colonies.

      The monopoly of the colony trade, as it necessarily drew towards that
      trade a greater proportion of the capital of Great Britain than what would
      have gone to it of its own accord, so, by the expulsion of all foreign
      capitals, it necessarily reduced the whole quantity of capital employed in
      that trade below what it naturally would have been in the case of a free
      trade. But, by lessening the competition of capitals in that branch of
      trade, it necessarily raised the rate of profit in that branch. By
      lessening, too, the competition of British capitals in all other branches
      of trade, it necessarily raised the rate of British profit in all those
      other branches. Whatever may have been, at any particular period since the
      establishment of the act of navigation, the state or extent of the
      mercantile capital of Great Britain, the monopoly of the colony trade
      must, during the continuance of that state, have raised the ordinary rate
      of British profit higher than it otherwise would have been, both in that
      and in all the other branches of British trade. If, since the
      establishment of the act of navigation, the ordinary rate of British
      profit has fallen considerably, as it certainly has, it must have fallen
      still lower, had not the monopoly established by that act contributed to
      keep it up.

      But whatever raises, in any country, the ordinary rate of profit higher
      than it otherwise would be, necessarily subjects that country both to an
      absolute, and to a relative disadvantage in every branch of trade of which
      she has not the monopoly.

      It subjects her to an absolute disadvantage; because, in such branches of
      trade, her merchants cannot get this greater profit without selling dearer
      than they otherwise would do, both the goods of foreign countries which
      they import into their own, and the goods of their own country which they
      export to foreign countries. Their own country must both buy dearer and
      sell dearer; must both buy less, and sell less; must both enjoy less and
      produce less, than she otherwise would do.

      It subjects her to a relative disadvantage; because, in such branches of
      trade, it sets other countries, which are not subject to the same absolute
      disadvantage, either more above her or less below her, than they otherwise
      would be. It enables them both to enjoy more and to produce more, in
      proportion to what she enjoys and produces. It renders their superiority
      greater, or their inferiority less, than it otherwise would be. By raising
      the price of her produce above what it otherwise would be, it enables the
      merchants of other countries to undersell her in foreign markets, and
      thereby to justle her out of almost all those branches of trade, of which
      she has not the monopoly.

      Our merchants frequently complain of the high wages of British labour, as
      the cause of their manufactures being undersold in foreign markets; but
      they are silent about the high profits of stock. They complain of the
      extravagant gain of other people; but they say nothing of their own. The
      high profits of British stock, however, may contribute towards raising the
      price of British manufactures, in many cases, as much, and in some perhaps
      more, than the high wages of British labour.

      It is in this manner that the capital of Great Britain, one may justly
      say, has partly been drawn and partly been driven from the greater part of
      the different branches of trade of which she has not the monopoly; from
      the trade of Europe, in particular, and from that of the countries which
      lie round the Mediterranean sea.

      It has partly been drawn from those branches of trade, by the attraction
      of superior profit in the colony trade, in consequence of the continual
      increase of that trade, and of the continual insufficiency of the capital
      which had carried it on one year to carry it on the next.

      It has partly been driven from them, by the advantage which the high rate
      of profit established in Great Britain gives to other countries, in all
      the different branches of trade of which Great Britain has not the
      monopoly.

      As the monopoly of the colony trade has drawn from those other branches a
      part of the British capital, which would otherwise have been employed in
      them, so it has forced into them many foreign capitals which would never
      have gone to them, had they not been expelled from the colony trade. In
      those other branches of trade, it has diminished the competition of
      British capitals, and thereby raised the rate of British profit higher
      than it otherwise would have been. On the contrary, it has increased the
      competition of foreign capitals, and thereby sunk the rate of foreign
      profit lower than it otherwise would have been. Both in the one way and in
      the other, it must evidently have subjected Great Britain to a relative
      disadvantage in all those other branches of trade.

      The colony trade, however, it may perhaps be said, is more advantageous to
      Great Britain than any other; and the monopoly, by forcing into that trade
      a greater proportion of the capital of Great Britain than what would
      otherwise have gone to it, has turned that capital into an employment,
      more advantageous to the country than any other which it could have found.

      The most advantageous employment of any capital to the country to which it
      belongs, is that which maintains there the greatest quantity of productive
      labour, and increases the most the annual produce of the land and labour
      of that country. But the quantity of productive labour which any capital
      employed in the foreign trade of consumption can maintain, is exactly in
      proportion, it has been shown in the second book, to the frequency of its
      returns. A capital of a thousand pounds, for example, employed in a
      foreign trade of consumption, of which the returns are made regularly once
      in the year, can keep in constant employment, in the country to which it
      belongs, a quantity of productive labour, equal to what a thousand pounds
      can maintain there for a year. If the returns are made twice or thrice in
      the year, it can keep in constant employment a quantity of productive
      labour, equal to what two or three thousand pounds can maintain there for
      a year. A foreign trade of consumption carried on with a neighbouring, is,
      upon that account, in general, more advantageous than one carried on with
      a distant country; and, for the same reason, a direct foreign trade of
      consumption, as it has likewise been shown in the second book, is in
      general more advantageous than a round-about one.

      But the monopoly of the colony trade, so far as it has operated upon the
      employment of the capital of Great Britain, has, in all cases, forced some
      part of it from a foreign trade of consumption carried on with a
      neighbouring, to one carried on with a more distant country, and in many
      cases from a direct foreign trade of consumption to a round-about one.

      First, The monopoly of the colony trade has, in all cases, forced some
      part of the capital of Great Britain from a foreign trade of consumption
      carried on with a neighbouring, to one carried on with a more distant
      country.

      It has, in all cases, forced some part of that capital from the trade with
      Europe, and with the countries which lie round the Mediterranean sea, to
      that with the more distant regions of America and the West Indies; from
      which the returns are necessarily less frequent, not only on account of
      the greater distance, but on account of the peculiar circumstances of
      those countries. New colonies, it has already been observed, are always
      understocked. Their capital is always much less than what they could
      employ with great profit and advantage in the improvement and cultivation
      of their land. They have a constant demand, therefore, for more capital
      than they have of their own; and, in order to supply the deficiency of
      their own, they endeavour to borrow as much as they can of the mother
      country, to whom they are, therefore, always in debt. The most common way
      in which the colonies contract this debt, is not by borrowing upon bond of
      the rich people of the mother country, though they sometimes do this too,
      but by running as much in arrear to their correspondents, who supply them
      with goods from Europe, as those correspondents will allow them. Their
      annual returns frequently do not amount to more than a third, and
      sometimes not to so great a proportion of what they owe. The whole
      capital, therefore, which their correspondents advance to them, is seldom
      returned to Britain in less than three, and sometimes not in less than
      four or five years. But a British capital of a thousand pounds, for
      example, which is returned to Great Britain only once in five years, can
      keep in constant employment only one-fifth part of the British industry
      which it could maintain, if the whole was returned once in the year; and,
      instead of the quantity of industry which a thousand pounds could maintain
      for a year, can keep in constant employment the quantity only which two
      hundred pounds can maintain for a year. The planter, no doubt, by the high
      price which he pays for the goods from Europe, by the interest upon the
      bills which he grants at distant dates, and by the commission upon the
      renewal of those which he grants at near dates, makes up, and probably
      more than makes up, all the loss which his correspondent can sustain by
      this delay. But, though he make up the loss of his correspondent, he
      cannot make up that of Great Britain. In a trade of which the returns are
      very distant, the profit of the merchant may be as great or greater than
      in one in which they are very frequent and near; but the advantage of the
      country in which he resides, the quantity of productive labour constantly
      maintained there, the annual produce of the land and labour, must always
      be much less. That the returns of the trade to America, and still more
      those of that to the West Indies, are, in general, not only more distant,
      but more irregular and more uncertain, too, than those of the trade to any
      part of Europe, or even of the countries which lie round the Mediterranean
      sea, will readily be allowed, I imagine, by everybody who has any
      experience of those different branches of trade.

      Secondly, The monopoly of the colony trade, has, in many cases, forced
      some part of the capital of Great Britain from a direct foreign trade of
      consumption, into a round-about one.

      Among the enumerated commodities which can be sent to no other market but
      Great Britain, there are several of which the quantity exceeds very much
      the consumption of Great Britain, and of which, a part, therefore, must be
      exported to other countries. But this cannot be done without forcing some
      part of the capital of Great Britain into a round-about foreign trade of
      consumption. Maryland, and Virginia, for example, send annually to Great
      Britain upwards of ninety-six thousand hogsheads of tobacco, and the
      consumption of Great Britain is said not to exceed fourteen thousand.
      Upwards of eighty-two thousand hogsheads, therefore, must be exported to
      other countries, to France, to Holland, and, to the countries which lie
      round the Baltic and Mediterranean seas. But that part of the capital of
      Great Britain which brings those eighty-two thousand hogsheads to Great
      Britain, which re-exports them from thence to those other countries, and
      which brings back from those other countries to Great Britain either goods
      or money in return, is employed in a round-about foreign trade of
      consumption; and is necessarily forced into this employment, in order to
      dispose of this great surplus. If we would compute in how many years the
      whole of this capital is likely to come back to Great Britain, we must add
      to the distance of the American returns that of the returns from those
      other countries. If, in the direct foreign trade of consumption which we
      carry on with America, the whole capital employed frequently does not come
      back in less than three or four years, the whole capital employed in this
      round-about one is not likely to come back in less than four or five. If
      the one can keep in constant employment but a third or a fourth part of
      the domestic industry which could be maintained by a capital returned once
      in the year, the other can keep in constant employment but a fourth or a
      fifth part of that industry. At some of the outports a credit is commonly
      given to those foreign correspondents to whom they export them tobacco. At
      the port of London, indeed, it is commonly sold for ready money: the rule
      is Weigh and pay. At the port of London, therefore, the final returns of
      the whole round-about trade are more distant than the returns from
      America, by the time only which the goods may lie unsold in the warehouse;
      where, however, they may sometimes lie long enough. But, had not the
      colonies been confined to the market of Great Britain for the sale of
      their tobacco, very little more of it would probably have come to us than
      what was necessary for the home consumption. The goods which Great Britain
      purchases at present for her own consumption with the great surplus of
      tobacco which she exports to other countries, she would, in this case,
      probably have purchased with the immediate produce of her own industry, or
      with some part of her own manufactures. That produce, those manufactures,
      instead of being almost entirely suited to one great market, as at
      present, would probably have been fitted to a great number of smaller
      markets. Instead of one great round-about foreign trade of consumption,
      Great Britain would probably have carried on a great number of small
      direct foreign trades of the same kind. On account of the frequency of the
      returns, a part, and probably but a small part, perhaps not above a third
      or a fourth of the capital which at present carries on this great
      round-about trade, might have been sufficient to carry on all those small
      direct ones; might have kept in constant employment an equal quantity of
      British industry; and have equally supported the annual produce of the
      land and labour of Great Britain. All the purposes of this trade being, in
      this manner, answered by a much smaller capital, there would have been a
      large spare capital to apply to other purposes; to improve the lands, to
      increase the manufactures, and to extend the commerce of Great Britain; to
      come into competition at least with the other British capitals employed in
      all those different ways, to reduce the rate of profit in them all, and
      thereby to give to Great Britain, in all of them, a superiority over other
      countries, still greater than what she at present enjoys.

      The monopoly of the colony trade, too, has forced some part of the capital
      of Great Britain from all foreign trade of consumption to a carrying
      trade; and, consequently from supporting more or less the industry of
      Great Britain, to be employed altogether in supporting partly that of the
      colonies, and partly that of some other countries.

      The goods, for example, which are annually purchased with the great
      surplus of eighty-two thousand hogsheads of tobacco annually re-exported
      from Great Britain, are not all consumed in Great Britain. Part of them,
      linen from Germany and Holland, for example, is returned to the colonies
      for their particular consumption. But that part of the capital of Great
      Britain which buys the tobacco with which this linen is afterwards bought,
      is necessarily withdrawn from supporting the industry of Great Britain, to
      be employed altogether in supporting, partly that of the colonies, and
      partly that of the particular countries who pay for this tobacco with the
      produce of their own industry.

      The monopoly of the colony trade, besides, by forcing towards it a much
      greater proportion of the capital of Great Britain than what would
      naturally have gone to it, seems to have broken altogether that natural
      balance which would otherwise have taken place among all the different
      branches of British industry. The industry of Great Britain, instead of
      being accommodated to a great number of small markets, has been
      principally suited to one great market. Her commerce, instead of running
      in a great number of small channels, has been taught to run principally in
      one great channel. But the whole system of her industry and commerce has
      thereby been rendered less secure; the whole state of her body politic
      less healthful than it otherwise would have been. In her present
      condition, Great Britain resembles one of those unwholesome bodies in
      which some of the vital parts are overgrown, and which, upon that account,
      are liable to many dangerous disorders, scarce incident to those in which
      all the parts are more properly proportioned. A small stop in that great
      blood-vessel, which has been artificially swelled beyond its natural
      dimensions, and through which an unnatural proportion of the industry and
      commerce of the country has been forced to circulate, is very likely to
      bring on the most dangerous disorders upon the whole body politic. The
      expectation of a rupture with the colonies, accordingly, has struck the
      people of Great Britain with more terror than they ever felt for a Spanish
      armada, or a French invasion. It was this terror, whether well or ill
      grounded, which rendered the repeal of the stamp act, among the merchants
      at least, a popular measure. In the total exclusion from the colony
      market, was it to last only for a few years, the greater part of our
      merchants used to fancy that they foresaw an entire stop to their trade;
      the greater part of our master manufacturers, the entire ruin of their
      business; and the greater part of our workmen, an end of their employment.
      A rupture with any of our neighbours upon the continent, though likely,
      too, to occasion some stop or interruption in the employments of some of
      all these different orders of people, is foreseen, however, without any
      such general emotion. The blood, of which the circulation is stopt in some
      of the smaller vessels, easily disgorges itself into the greater, without
      occasioning any dangerous disorder; but, when it is stopt in any of the
      greater vessels, convulsions, apoplexy, or death, are the immediate and
      unavoidable consequences. If but one of those overgrown manufactures,
      which, by means either of bounties or of the monopoly of the home and
      colony markets, have been artificially raised up to any unnatural height,
      finds some small stop or interruption in its employment, it frequently
      occasions a mutiny and disorder alarming to government, and embarrassing
      even to the deliberations of the legislature. How great, therefore, would
      be the disorder and confusion, it was thought, which must necessarily be
      occasioned by a sudden and entire stop in the employment of so great a
      proportion of our principal manufacturers?

      Some moderate and gradual relaxation of the laws which give to Great
      Britain the exclusive trade to the colonies, till it is rendered in a
      great measure free, seems to be the only expedient which can, in all
      future times, deliver her from this danger; which can enable her, or even
      force her, to withdraw some part of her capital from this overgrown
      employment, and to turn it, though with less profit, towards other
      employments; and which, by gradually diminishing one branch of her
      industry, and gradually increasing all the rest, can, by degrees, restore
      all the different branches of it to that natural, healthful, and proper
      proportion, which perfect liberty necessarily establishes, and which
      perfect liberty can alone preserve. To open the colony trade all at once
      to all nations, might not only occasion some transitory inconveniency, but
      a great permanent loss, to the greater part of those whose industry or
      capital is at present engaged in it. The sudden loss of the employment,
      even of the ships which import the eighty-two thousand hogsheads of
      tobacco, which are over and above the consumption of Great Britain, might
      alone be felt very sensibly. Such are the unfortunate effects of all the
      regulations of the mercantile system. They not only introduce very
      dangerous disorders into the state of the body politic, but disorders
      which it is often difficult to remedy, without occasioning, for a time at
      least, still greater disorders. In what manner, therefore, the colony
      trade ought gradually to be opened; what are the restraints which ought
      first, and what are those which ought last, to be taken away; or in what
      manner the natural system of perfect liberty and justice ought gradually
      to be restored, we must leave to the wisdom of future statesmen and
      legislators to determine.

      Five different events, unforeseen and unthought of, have very fortunately
      concurred to hinder Great Britain from feeling, so sensibly as it was
      generally expected she would, the total exclusion which has now taken
      place for more than a year (from the first of December 1774) from a very
      important branch of the colony trade, that of the twelve associated
      provinces of North America. First, those colonies, in preparing themselves
      for their non-importation agreement, drained Great Britain completely of
      all the commodities which were fit for their market; secondly, the extra
      ordinary demand of the Spanish flota has, this year, drained Germany and
      the north of many commodities, linen in particular, which used to come
      into competition, even in the British market, with the manufactures of
      Great Britain; thirdly, the peace between Russia and Turkey has occasioned
      an extraordinary demand from the Turkey market, which, during the distress
      of the country, and while a Russian fleet was cruizing in the Archipelago,
      had been very poorly supplied; fourthly, the demand of the north of Europe
      for the manufactures of Great Britain has been increasing from year to
      year, for some time past; and, fifthly, the late partition, and
      consequential pacification of Poland, by opening the market of that great
      country, have, this year, added an extraordinary demand from thence to the
      increasing demand of the north. These events are all, except the fourth,
      in their nature transitory and accidental; and the exclusion from so
      important a branch of the colony trade, if unfortunately it should
      continue much longer, may still occasion some degree of distress. This
      distress, however, as it will come on gradually, will be felt much less
      severely than if it had come on all at once; and, in the mean time, the
      industry and capital of the country may find a new employment and
      direction, so as to prevent this distress from ever rising to any
      considerable height.

      The monopoly of the colony trade, therefore, so far as it has turned
      towards that trade a greater proportion of the capital of Great Britain
      than what would otherwise have gone to it, has in all cases turned it,
      from a foreign trade of consumption with a neighbouring, into one with a
      more distant country; in many cases from a direct foreign trade of
      consumption into a round-about one; and, in some cases, from all foreign
      trade of consumption into a carrying trade. It has, in all cases,
      therefore, turned it from a direction in which it would have maintained a
      greater quantity of productive labour, into one in which it can maintain a
      much smaller quantity. By suiting, besides, to one particular market only,
      so great a part of the industry and commerce of Great Britain, it has
      rendered the whole state of that industry and commerce more precarious and
      less secure, than if their produce had been accommodated to a greater
      variety of markets.

      We must carefully distinguish between the effects of the colony trade and
      those of the monopoly of that trade. The former are always and necessarily
      beneficial; the latter always and necessarily hurtful. But the former are
      so beneficial, that the colony trade, though subject to a monopoly, and,
      notwithstanding the hurtful effects of that monopoly, is still, upon the
      whole, beneficial, and greatly beneficial, though a good deal less so than
      it otherwise would be.

      The effect of the colony trade, in its natural and free state, is to open
      a great though distant market, for such parts of the produce of British
      industry as may exceed the demand of the markets nearer home, of those of
      Europe, and of the countries which lie round the Mediterranean sea. In its
      natural and free state, the colony trade, without drawing from those
      markets any part of the produce which had ever been sent to them,
      encourages Great Britain to increase the surplus continually, by
      continually presenting new equivalents to be exchanged for it. In its
      natural and free state, the colony trade tends to increase the quantity of
      productive labour in Great Britain, but without altering in any respect
      the direction of that which had been employed there before. In the natural
      and free state of the colony trade, the competition of all other nations
      would hinder the rate of profit from rising above the common level, either
      in the new market, or in the new employment. The new market, without
      drawing any thing from the old one, would create, if one may say so, a new
      produce for its own supply; and that new produce would constitute a new
      capital for carrying on the new employment, which, in the same manner,
      would draw nothing from the old one.

      The monopoly of the colony trade, on the contrary, by excluding the
      competition of other nations, and thereby raising the rate of profit, both
      in the new market and in the new employment, draws produce from the old
      market, and capital from the old employment. To augment our share of the
      colony trade beyond what it otherwise would be, is the avowed purpose of
      the monopoly. If our share of that trade were to be no greater with, than
      it would have been without the monopoly, there could have been no reason
      for establishing the monopoly. But whatever forces into a branch of trade,
      of which the returns are slower and more distant than those of the greater
      part of other trades, a greater proportion of the capital of any country,
      than what of its own accord would go to that branch, necessarily renders
      the whole quantity of productive labour annually maintained there, the
      whole annual produce of the land and labour of that country, less than
      they otherwise would be. It keeps down the revenue of the inhabitants of
      that country below what it would naturally rise to, and thereby diminishes
      their power of accumulation. It not only hinders, at all times, their
      capital from maintaining so great a quantity of productive labour as it
      would otherwise maintain, but it hinders it from increasing so fast as it
      would otherwise increase, and, consequently, from maintaining a still
      greater quantity of productive labour.

      The natural good effects of the colony trade, however, more than
      counterbalance to Great Britain the bad effects of the monopoly; so that,
      monopoly and altogether, that trade, even as it is carried on at present,
      is not only advantageous, but greatly advantageous. The new market and the
      new employment which are opened by the colony trade, are of much greater
      extent than that portion of the old market and of the old employment which
      is lost by the monopoly. The new produce and the new capital which has
      been created, if one may say so, by the colony trade, maintain in Great
      Britain a greater quantity of productive labour than what can have been
      thrown out of employment by the revulsion of capital from other trades of
      which the returns are more frequent. If the colony trade, however, even as
      it is carried on at present, is advantageous to Great Britain, it is not
      by means of the monopoly, but in spite of the monopoly.

      It is rather for the manufactured than for the rude produce of Europe,
      that the colony trade opens a new market. Agriculture is the proper
      business of all new colonies; a business which the cheapness of land
      renders more advantageous than any other. They abound, therefore, in the
      rude produce of land; and instead of importing it from other countries,
      they have generally a large surplus to export. In new colonies,
      agriculture either draws hands from all other employments, or keeps them
      from going to any other employment. There are few hands to spare for the
      necessary, and none for the ornamental manufactures. The greater part of
      the manufactures of both kinds they find it cheaper to purchase of other
      countries than to make for themselves. It is chiefly by encouraging the
      manufactures of Europe, that the colony trade indirectly encourages its
      agriculture. The manufacturers of Europe, to whom that trade gives
      employment, constitute a new market for the produce of the land, and the
      most advantageous of all markets; the home market for the corn and cattle,
      for the bread and butcher’s meat of Europe, is thus greatly extended by
      means of the trade to America.

      But that the monopoly of the trade of populous and thriving colonies is
      not alone sufficient to establish, or even to maintain, manufactures in
      any country, the examples of Spain and Portugal sufficiently demonstrate.
      Spain and Portugal were manufacturing countries before they had any
      considerable colonies. Since they had the richest and most fertile in the
      world, they have both ceased to be so.

      In Spain and Portugal, the bad effects of the monopoly, aggravated by
      other causes, have, perhaps, nearly overbalanced the natural good effects
      of the colony trade. These causes seem to be other monopolies of different
      kinds: the degradation of the value of gold and silver below what it is in
      most other countries; the exclusion from foreign markets by improper taxes
      upon exportation, and the narrowing of the home market, by still more
      improper taxes upon the transportation of goods from one part of the
      country to another; but above all, that irregular and partial
      administration of justice which often protects the rich and powerful
      debtor from the pursuit of his injured creditor, and which makes the
      industrious part of the nation afraid to prepare goods for the consumption
      of those haughty and great men, to whom they dare not refuse to sell upon
      credit, and from whom they are altogether uncertain of repayment.

      In England, on the contrary, the natural good effects of the colony trade,
      assisted by other causes, have in a great measure conquered the bad
      effects of the monopoly. These causes seem to be, the general liberty of
      trade, which, notwithstanding some restraints, is at least equal, perhaps
      superior, to what it is in any other country; the liberty of exporting,
      duty free, almost all sorts of goods which are the produce of domestic
      industry, to almost any foreign country; and what, perhaps, is of still
      greater importance, the unbounded liberty of transporting them from one
      part of our own country to any other, without being obliged to give any
      account to any public office, without being liable to question or
      examination of any kind; but, above all, that equal and impartial
      administration of justice, which renders the rights of the meanest British
      subject respectable to the greatest, and which, by securing to every man
      the fruits of his own industry, gives the greatest and most effectual
      encouragement to every sort of industry.

      If the manufactures of Great Britain, however, have been advanced, as they
      certainly have, by the colony trade, it has not been by means of the
      monopoly of that trade, but in spite of the monopoly. The effect of the
      monopoly has been, not to augment the quantity, but to alter the quality
      and shape of a part of the manufactures of Great Britain, and to
      accommodate to a market, from which the returns are slow and distant, what
      would otherwise have been accommodated to one from which the returns are
      frequent and near. Its effect has consequently been, to turn a part of the
      capital of Great Britain from an employment in which it would have
      maintained a greater quantity of manufacturing industry, to one in which
      it maintains a much smaller, and thereby to diminish, instead of
      increasing, the whole quantity of manufacturing industry maintained in
      Great Britain.

      The monopoly of the colony trade, therefore, like all the other mean and
      malignant expedients of the mercantile system, depresses the industry of
      all other countries, but chiefly that of the colonies, without in the
      least increasing, but on the contrary diminishing, that of the country in
      whose favour it is established.

      The monopoly hinders the capital of that country, whatever may, at any
      particular time, be the extent of that capital, from maintaining so great
      a quantity of productive labour as it would otherwise maintain, and from
      affording so great a revenue to the industrious inhabitants as it would
      otherwise afford. But as capital can be increased only by savings from
      revenue, the monopoly, by hindering it from affording so great a revenue
      as it would otherwise afford, necessarily hinders it from increasing so
      fast as it would otherwise increase, and consequently from maintaining a
      still greater quantity of productive labour, and affording a still greater
      revenue to the industrious inhabitants of that country. One great original
      source of revenue, therefore, the wages of labour, the monopoly must
      necessarily have rendered, at all times, less abundant than it otherwise
      would have been.

      By raising the rate of mercantile profit, the monopoly discourages the
      improvement of land. The profit of improvement depends upon the difference
      between what the land actually produces, and what, by the application of a
      certain capital, it can be made to produce. If this difference affords a
      greater profit than what can be drawn from an equal capital in any
      mercantile employment, the improvement of land will draw capital from all
      mercantile employments. If the profit is less, mercantile employments will
      draw capital from the improvement of land. Whatever, therefore, raises the
      rate of mercantile profit, either lessens the superiority, or increases
      the inferiority of the profit of improvement: and, in the one case,
      hinders capital from going to improvement, and in the other draws capital
      from it; but by discouraging improvement, the monopoly necessarily retards
      the natural increase of another great original source of revenue, the rent
      of land. By raising the rate of profit, too, the monopoly necessarily
      keeps up the market rate of interest higher than it otherwise would be.
      But the price of land, in proportion to the rent which it affords, the
      number of years purchase which is commonly paid for it, necessarily falls
      as the rate of interest rises, and rises as the rate of interest falls.
      The monopoly, therefore, hurts the interest of the landlord two different
      ways, by retarding the natural increase, first, of his rent, and,
      secondly, of the price which he would get for his land, in proportion to
      the rent which it affords.

      The monopoly, indeed, raises the rate of mercantile profit and thereby
      augments somewhat the gain of our merchants. But as it obstructs the
      natural increase of capital, it tends rather to diminish than to increase
      the sum total of the revenue which the inhabitants of the country derive
      from the profits of stock; a small profit upon a great capital generally
      affording a greater revenue than a great profit upon a small one. The
      monopoly raises the rate of profit, but it hinders the sum of profit from
      rising so high as it otherwise would do.

      All the original sources of revenue, the wages of labour, the rent of
      land, and the profits of stock, the monopoly renders much less abundant
      than they otherwise would be. To promote the little interest of one little
      order of men in one country, it hurts the interest of all other orders of
      men in that country, and of all the men in all other countries.

      It is solely by raising the ordinary rate of profit, that the monopoly
      either has proved, or could prove, advantageous to any one particular
      order of men. But besides all the bad effects to the country in general,
      which have already been mentioned as necessarily resulting from a higher
      rate of profit, there is one more fatal, perhaps, than all these put
      together, but which, if we may judge from experience, is inseparably
      connected with it. The high rate of profit seems everywhere to destroy
      that parsimony which, in other circumstances, is natural to the character
      of the merchant. When profits are high, that sober virtue seems to be
      superfluous, and expensive luxury to suit better the affluence of his
      situation. But the owners of the great mercantile capitals are necessarily
      the leaders and conductors of the whole industry of every nation; and
      their example has a much greater influence upon the manners of the whole
      industrious part of it than that of any other order of men. If his
      employer is attentive and parsimonious, the workman is very likely to be
      so too; but if the master is dissolute and disorderly, the servant, who
      shapes his work according to the pattern which his master prescribes to
      him, will shape his life, too, according to the example which he sets him.
      Accumulation is thus prevented in the hands of all those who are naturally
      the most disposed to accumulate; and the funds destined for the
      maintenance of productive labour, receive no augmentation from the revenue
      of those who ought naturally to augment them the most. The capital of the
      country, instead of increasing, gradually dwindles away, and the quantity
      of productive labour maintained in it grows every day less and less. Have
      the exorbitant profits of the merchants of Cadiz and Lisbon augmented the
      capital of Spain and Portugal? Have they alleviated the poverty, have they
      promoted the industry, of those two beggarly countries? Such has been the
      tone of mercantile expense in those two trading cities, that those
      exorbitant profits, far from augmenting the general capital of the
      country, seem scarce to have been sufficient to keep up the capitals upon
      which they were made. Foreign capitals are every day intruding themselves,
      if I may say so, more and more into the trade of Cadiz and Lisbon. It is
      to expel those foreign capitals from a trade which their own grows every
      day more and more insufficient for carrying on, that the Spaniards and
      Portuguese endeavour every day to straiten more and more the galling bands
      of their absurd monopoly. Compare the mercantile manners of Cadiz and
      Lisbon with those of Amsterdam, and you will be sensible how differently
      the conduct and character of merchants are affected by the high and by the
      low profits of stock. The merchants of London, indeed, have not yet
      generally become such magnificent lords as those of Cadiz and Lisbon; but
      neither are they in general such attetitive and parsimonious burghers as
      those of Amsterdam. They are supposed, however, many of them, to be a good
      deal richer than the greater part of the former, and not quire so rich as
      many of the latter: but the rate of their profit is commonly much lower
      than that of the former, and a good deal higher than that of the latter.
      Light come, light go, says the proverb; and the ordinary tone of expense
      seems everywhere to be regulated, not so much according to the real
      ability of spending, as to the supposed facility of getting money to
      spend.

      It is thus that the single advantage which the monopoly procures to a
      single order of men, is in many different ways hurtful to the general
      interest of the country.

      To found a great empire for the sole purpose of raising up a people of
      customers, may at first sight, appear a project fit only for a nation of
      shopkeepers. It is, however, a project altogether unfit for a nation of
      shopkeepers, but extremely fit for a nation whose government is influenced
      by shopkeepers. Such statesmen, and such statesmen only, are capable of
      fancying that they will find some advantage in employing the blood and
      treasure of their fellow-citizens, to found and maintain such an empire.
      Say to a shopkeeper, Buy me a good estate, and I shall always buy my
      clothes at your shop, even though I should pay somewhat dearer than what I
      can have them for at other shops; and you will not find him very forward
      to embrace your proposal. But should any other person buy you such an
      estate, the shopkeeper will be much obliged to your benefactor if he would
      enjoin you to buy all your clothes at his shop. England purchased for some
      of her subjects, who found themselves uneasy at home, a great estate in a
      distant country. The price, indeed, was very small, and instead of thirty
      years purchase, the ordinary price of land in the present times, it
      amounted to little more than the expense of the different equipments which
      made the first discovery, reconnoitered the coast, and took a fictitious
      possession of the country. The land was good, and of great extent; and the
      cultivators having plenty of good ground to work upon, and being for some
      time at liberty to sell their produce where they pleased, became, in the
      course of little more than thirty or forty years (between 1620 and 1660),
      so numerous and thriving a people, that the shopkeepers and other traders
      of England wished to secure to themselves the monopoly of their custom.
      Without pretending, therefore, that they had paid any part, either of the
      original purchase money, or of the subsequent expense of improvement, they
      petitioned the parliament, that the cultivators of America might for the
      future be confined to their shop; first, for buying all the goods which
      they wanted from Europe; and, secondly, for selling all such parts of
      their own produce as those traders might find it convenient to buy. For
      they did not find it convenient to buy every part of it. Some parts of it
      imported into England, might have interfered with some of the trades which
      they themselves carried on at home. Those particular parts of it,
      therefore, they were willing that the colonists should sell where they
      could; the farther off the better; and upon that account proposed that
      their market should be confined to the countries south of Cape Finisterre.
      A clause in the famous act of navigation established this truly shopkeeper
      proposal into a law.

      The maintenance of this monopoly has hitherto been the principal, or more
      properly, perhaps, the sole end and purpose of the dominion which Great
      Britain assumes over her colonies. In the exclusive trade, it is supposed,
      consists the great advantage of provinces, which have never yet afforded
      either revenue or military force for the support of the civil government,
      or the defence of the mother country. The monopoly is the principal badge
      of their dependency, and it is the sole fruit which has hitherto been
      gathered from that dependency. Whatever expense Great Britain has hitherto
      laid out in maintaining this dependency, has really been laid out in order
      to support this monopoly. The expense of the ordinary peace establishment
      of the colonies amounted, before the commencement of the present
      disturbances to the pay of twenty regiments of foot; to the expense of the
      artillery, stores, and extraordinary provisions, with which it was
      necessary to supply them; and to the expense of a very considerable naval
      force, which was constantly kept up, in order to guard from the smuggling
      vessels of other nations, the immense coast of North America, and that of
      our West Indian islands. The whole expense of this peace establishment was
      a charge upon the revenue of Great Britain, and was, at the same time, the
      smallest part of what the dominion of the colonies has cost the mother
      country. If we would know the amount of the whole, we must add to the
      annual expense of this peace establishment, the interest of the sums
      which, in consequence of their considering her colonies as provinces
      subject to her dominion, Great Britain has, upon different occasions, laid
      out upon their defence. We must add to it, in particular, the whole
      expense of the late war, and a great part of that of the war which
      preceded it. The late war was altogether a colony quarrel; and the whole
      expense of it, in whatever part of the world it might have been laid out,
      whether in Germany or the East Indies, ought justly to be stated to the
      account of the colonies. It amounted to more than ninety millions
      sterling, including not only the new debt which was contracted, but the
      two shillings in the pound additional land tax, and the sums which were
      every year borrowed from the sinking fund. The Spanish war which began in
      1739 was principally a colony quarrel. Its principal object was to prevent
      the search of the colony ships, which carried on a contraband trade with
      the Spanish Main. This whole expense is, in reality, a bounty which has
      been given in order to support a monopoly. The pretended purpose of it was
      to encourage the manufactures, and to increase the commerce of Great
      Britain. But its real effect has been to raise the rate of mercantile
      profit, and to enable our merchants to turn into a branch of trade, of
      which the returns are more slow and distant than those of the greater part
      of other trades, a greater proportion of their capital than they otherwise
      would have done; two events which, if a bounty could have prevented, it
      might perhaps have been very well worth while to give such a bounty.

      Under the present system of management, therefore, Great Britain derives
      nothing but loss from the dominion which she assumes over her colonies.

      To propose that Great Britain should voluntarily give up all authority
      over her colonies, and leave them to elect their own magistrates, to enact
      their own laws, and to make peace and war, as they might think proper,
      would be to propose such a measure as never was, and never will be,
      adopted by any nation in the world. No nation ever voluntarily gave up the
      dominion of any province, how troublesome soever it might be to govern it,
      and how small soever the revenue which it afforded might be in proportion
      to the expense which it occasioned. Such sacrifices, though they might
      frequently be agreeable to the interest, are always mortifying to the
      pride of every nation; and, what is perhaps of still greater consequence,
      they are always contrary to the private interest of the governing part of
      it, who would thereby be deprived of the disposal of many places of trust
      and profit, of many opportunities of acquiring wealth and distinction,
      which the possession of the most turbulent, and, to the great body of the
      people, the most unprofitable province, seldom fails to afford. The most
      visionary enthusiasts would scarce be capable of proposing such a measure,
      with any serious hopes at least of its ever being adopted. If it was
      adopted, however, Great Britain would not only be immediately freed from
      the whole annual expense of the peace establishment of the colonies, but
      might settle with them such a treaty of commerce as would effectually
      secure to her a free trade, more advantageous to the great body of the
      people, though less so to the merchants, than the monopoly which she at
      present enjoys. By thus parting good friends, the natural affection of the
      colonies to the mother country, which, perhaps, our late dissensions have
      well nigh extinguished, would quickly revive. It might dispose them not
      only to respect, for whole centuries together, that treaty of commerce
      which they had concluded with us at parting, but to favour us in war as
      well as in trade, and instead of turbulent and factious subjects, to
      become our most faithful, affectionate, and generous allies; and the same
      sort of parental affection on the one side, and filial respect on the
      other, might revive between Great Britain and her colonies, which used to
      subsist between those of ancient Greece and the mother city from which
      they descended.

      In order to render any province advantageous to the empire to which it
      belongs, it ought to afford, in time of peace, a revenue to the public,
      sufficient not only for defraying the whole expense of its own peace
      establishment, but for contributing its proportion to the support of the
      general government of the empire. Every province necessarily contributes,
      more or less, to increase the expense of that general government. If any
      particular province, therefore, does not contribute its share towards
      defraying this expense, an unequal burden must be thrown upon some other
      part of the empire. The extraordinary revenue, too, which every province
      affords to the public in time of war, ought, from parity of reason, to
      bear the same proportion to the extraordinary revenue of the whole empire,
      which its ordinary revenue does in time of peace. That neither the
      ordinary nor extraordinary revenue which Great Britain derives from her
      colonies, bears this proportion to the whole revenue of the British
      empire, will readily be allowed. The monopoly, it has been supposed,
      indeed, by increasing the private revenue of the people of Great Britain,
      and thereby enabling them to pay greater taxes, compensates the deficiency
      of the public revenue of the colonies. But this monopoly, I have
      endeavoured to show, though a very grievous tax upon the colonies, and
      though it may increase the revenue of a particular order of men in Great
      Britain, diminishes, instead of increasing, that of the great body of the
      people, and consequently diminishes, instead of increasing, the ability of
      the great body of the people to pay taxes. The men, too, whose revenue the
      monopoly increases, constitute a particular order, which it is both
      absolutely impossible to tax beyond the proportion of other orders, and
      extremely impolitic even to attempt to tax beyond that proportion, as I
      shall endeavour to show in the following book. No particular resource,
      therefore, can be drawn from this particular order.

      The colonies may be taxed either by their own assemblies, or by the
      parliament of Great Britain.

      That the colony assemblies can never be so managed as to levy upon their
      constituents a public revenue, sufficient, not only to maintain at all
      times their own civil and military establishment, but to pay their proper
      proportion of the expense of the general government of the British empire,
      seems not very probable. It was a long time before even the parliament of
      England, though placed immediately under the eye of the sovereign, could
      be brought under such a system of management, or could be rendered
      sufficiently liberal in their grants for supporting the civil and military
      establishments even of their own country. It was only by distributing
      among the particular members of parliament a great part either of the
      offices, or of the disposal of the offices arising from this civil and
      military establishment, that such a system of management could be
      established, even with regard to the parliament of England. But the
      distance of the colony assemblies from the eye of the sovereign, their
      number, their dispersed situation, and their various constitutions, would
      render it very difficult to manage them in the same manner, even though
      the sovereign had the same means of doing it; and those means are wanting.
      It would be absolutely impossible to distribute among all the leading
      members of all the colony assemblies such a share, either of the offices,
      or of the disposal of the offices, arising from the general government of
      the British empire, as to dispose them to give up their popularity at
      home, and to tax their constituents for the support of that general
      government, of which almost the whole emoluments were to be divided among
      people who were strangers to them. The unavoidable ignorance of
      administration, besides, concerning the relative importance of the
      different members of those different assemblies, the offences which must
      frequently be given, the blunders which must constantly be committed, in
      attempting to manage them in this manner, seems to render such a system of
      management altogether impracticable with regard to them.

      The colony assemblies, besides, cannot be supposed the proper judges of
      what is necessary for the defence and support of the whole empire. The
      care of that defence and support is not entrusted to them. It is not their
      business, and they have no regular means of information concerning it. The
      assembly of a province, like the vestry of a parish, may judge very
      properly concerning the affairs of its own particular district, but can
      have no proper means of judging concerning those of the whole empire. It
      cannot even judge properly concerning the proportion which its own
      province bears to the whole empire, or concerning the relative degree of
      its wealth and importance, compared with the other provinces; because
      those other provinces are not under the inspection and superintendency of
      the assembly of a particular province. What is necessary for the defence
      and support of the whole empire, and in what proportion each part ought to
      contribute, can be judged of only by that assembly which inspects and
      super-intends the affairs of the whole empire.

      It has been proposed, accordingly, that the colonies should be taxed by
      requisition, the parliament of Great Britain determining the sum which
      each colony ought to pay, and the provincial assembly assessing and
      levying it in the way that suited best the circumstances of the province.
      What concerned the whole empire would in this way be determined by the
      assembly which inspects and superintends the affairs of the whole empire;
      and the provincial affairs of each colony might still be regulated by its
      own assembly. Though the colonies should, in this case, have no
      representatives in the British parliament, yet, if we may judge by
      experience, there is no probability that the parliamentary requisition
      would be unreasonable. The parliament of England has not, upon any
      occasion, shewn the smallest disposition to overburden those parts of the
      empire which are not represented in parliament. The islands of Guernsey
      and Jersey, without any means of resisting the authority of parliament,
      are more lightly taxed than any part of Great Britain. Parliament, in
      attempting to exercise its supposed right, whether well or ill grounded,
      of taxing the colonies, has never hitherto demanded of them anything which
      even approached to a just proportion to what was paid by their fellow
      subjects at home. If the contribution of the colonies, besides, was to
      rise or fall in proportion to the rise or fall of the land-tax, parliament
      could not tax them without taxing, at the same time, its own constituents,
      and the colonies might, in this case, be considered as virtually
      represented in parliament.

      Examples are not wanting of empires in which all the different provinces
      are not taxed, if I may be allowed the expression, in one mass; but in
      which the sovereign regulates the sum which each province ought to pay,
      and in some provinces assesses and levies it as he thinks proper; while in
      others he leaves it to be assessed and levied as the respective states of
      each province shall determine. In some provinces of France, the king not
      only imposes what taxes he thinks proper, but assesses and levies them in
      the way he thinks proper. From others he demands a certain sum, but leaves
      it to the states of each province to assess and levy that sum as they
      think proper. According to the scheme of taxing by requisition, the
      parliament of Great Britain would stand nearly in the same situation
      towards the colony assemblies, as the king of France does towards the
      states of those provinces which still enjoy the privilege of having states
      of their own, the provinces of France which are supposed to be the best
      governed.

      But though, according to this scheme, the colonies could have no just
      reason to fear that their share of the public burdens should ever exceed
      the proper proportion to that of their fellow-citizens at home, Great
      Britain might have just reason to fear that it never would amount to that
      proper proportion. The parliament of Great Britain has not, for some time
      past, had the same established authority in the colonies, which the French
      king has in those provinces of France which still enjoy the privilege of
      having states of their own. The colony assemblies, if they were not very
      favourably disposed (and unless more skilfully managed than they ever have
      been hitherto, they are not very likely to be so), might still find many
      pretences for evading or rejecting the most reasonable requisitions of
      parliament. A French war breaks out, we shall suppose; ten millions must
      immediately be raised, in order to defend the seat of the empire. This sum
      must be borrowed upon the credit of some parliamentary fund mortgaged for
      paying the interest. Part of this fund parliament proposes to raise by a
      tax to be levied in Great Britain; and part of it by a requisition to all
      the different colony assemblies of America and the West Indies. Would
      people readily advance their money upon the credit of a fund which partly
      depended upon the good humour of all those assemblies, far distant from
      the seat of the war, and sometimes, perhaps, thinking themselves not much
      concerned in the event of it? Upon such a fund, no more money would
      probably be advanced than what the tax to be levied in Great Britain might
      be supposed to answer for. The whole burden of the debt contracted on
      account of the war would in this manner fall, as it always has done
      hitherto, upon Great Britain; upon a part of the empire, and not upon the
      whole empire. Great Britain is, perhaps, since the world began, the only
      state which, as it has extended its empire, has only increased its
      expense, without once augmenting its resources. Other states have
      generally disburdened themselves, upon their subject and subordinate
      provinces, of the most considerable part of the expense of defending the
      empire. Great Britain has hitherto suffered her subject and subordinate
      provinces to disburden themselves upon her of almost this whole expense.
      In order to put Great Britain upon a footing of equality with her own
      colonies, which the law has hitherto supposed to be subject and
      subordinate, it seems necessary, upon the scheme of taxing them by
      parliamentary requisition, that parliament should have some means of
      rendering its requisitions immediately effectual, in case the colony
      assemblies should attempt to evade or reject them; and what those means
      are, it is not very easy to conceive, and it has not yet been explained.

      Should the parliament of Great Britain, at the same time, be ever fully
      established in the right of taxing the colonies, even independent of the
      consent of their own assemblies, the importance of those assemblies would,
      from that moment, be at an end, and with it, that of all the leading men
      of British America. Men desire to have some share in the management of
      public affairs, chiefly on account of the importance which it gives them.
      Upon the power which the greater part of the leading men, the natural
      aristocracy of every country, have of preserving or defending their
      respective importance, depends the stability and duration of every system
      of free government. In the attacks which those leading men are continually
      making upon the importance of one another, and in the defence of their
      own, consists the whole play of domestic faction and ambition. The leading
      men of America, like those of all other countries, desire to preserve
      their own importance. They feel, or imagine, that if their assemblies,
      which they are fond of calling parliaments, and of considering as equal in
      authority to the parliament of Great Britain, should be so far degraded as
      to become the humble ministers and executive officers of that parliament,
      the greater part of their own importance would be at an end. They have
      rejected, therefore, the proposal of being taxed by parliamentary
      requisition, and, like other ambitious and high-spirited men, have rather
      chosen to draw the sword in defence of their own importance.

      Towards the declension of the Roman republic, the allies of Rome, who had
      borne the principal burden of defending the state and extending the
      empire, demanded to be admitted to all the privileges of Roman citizens.
      Upon being refused, the social war broke out. During the course of that
      war, Rome granted those privileges to the greater part of them, one by
      one, and in proportion as they detached themselves from the general
      confederacy. The parliament of Great Britain insists upon taxing the
      colonies; and they refuse to be taxed by a parliament in which they are
      not represented. If to each colony which should detach itself from the
      general confederacy, Great Britain should allow such a number of
      representatives as suited the proportion of what it contributed to the
      public revenue of the empire, in consequence of its being subjected to the
      same taxes, and in compensation admitted to the same freedom of trade with
      its fellow-subjects at home; the number of its representatives to be
      augmented as the proportion of its contribution might afterwards augment;
      a new method of acquiring importance, a new and more dazzling object of
      ambition, would be presented to the leading men of each colony. Instead of
      piddling for the little prizes which are to be found in what may be called
      the paltry raffle of colony faction, they might then hope, from the
      presumption which men naturally have in their own ability and good
      fortune, to draw some of the great prizes which sometimes come from the
      wheel of the great state lottery of British politics. Unless this or some
      other method is fallen upon, and there seems to be none more obvious than
      this, of preserving the importance and of gratifying the ambition of the
      leading men of America, it is not very probable that they will ever
      voluntarily submit to us; and we ought to consider, that the blood which
      must be shed in forcing them to do so, is, every drop of it, the blood
      either of those who are, or of those whom we wish to have for our fellow
      citizens. They are very weak who flatter themselves that, in the state to
      which things have come, our colonies will be easily conquered by force
      alone. The persons who now govern the resolutions of what they call their
      continental congress, feel in themselves at this moment a degree of
      importance which, perhaps, the greatest subjects in Europe scarce feel.
      From shopkeepers, trades men, and attorneys, they are become statesmen and
      legislators, and are employed in contriving a new form of government for
      an extensive empire, which, they flatter themselves, will become, and
      which, indeed, seems very likely to become, one of the greatest and most
      formidable that ever was in the world. Five hundred different people,
      perhaps, who, in different ways, act immediately under the continental
      congress, and five hundred thousand, perhaps, who act under those five
      hundred, all feel, in the same manner, a proportionable rise in their own
      importance. Almost every individual of the governing party in America
      fills, at present, in his own fancy, a station superior, not only to what
      he had ever filled before, but to what he had ever expected to fill; and
      unless some new object of ambition is presented either to him or to his
      leaders, if he has the ordinary spirit of a man, he will die in defence of
      that station.

      It is a remark of the President Heynaut, that we now read with pleasure
      the account of many little transactions of the Ligue, which, when they
      happened, were not, perhaps, considered as very important pieces of news.
      But everyman then, says he, fancied himself of some importance; and the
      innumerable memoirs which have come down to us from those times, were the
      greater part of them written by people who took pleasure in recording and
      magnifying events, in which they flattered themselves they had been
      considerable actors. How obstinately the city of Paris, upon that
      occasion, defended itself, what a dreadful famine it supported, rather
      than submit to the best, and afterwards the most beloved of all the French
      kings, is well known. The greater part of the citizens, or those who
      governed the greater part of them, fought in defence of their own
      importance, which, they foresaw, was to be at an end whenever the ancient
      government should be re-established. Our colonies, unless they can be
      induced to consent to a union, are very likely to defend themselves,
      against the best of all mother countries, as obstinately as the city of
      Paris did against one of the best of kings.

      The idea of representation was unknown in ancient times. When the people
      of one state were admitted to the right of citizenship in another, they
      had no other means of exercising that right, but by coming in a body to
      vote and deliberate with the people of that other state. The admission of
      the greater part of the inhabitants of Italy to the privileges of Roman
      citizens, completely ruined the Roman republic. It was no longer possible
      to distinguish between who was, and who was not, a Roman citizen. No tribe
      could know its own members. A rabble of any kind could be introduced into
      the assemblies of the people, could drive out the real citizens, and
      decide upon the affairs of the republic, as if they themselves had been
      such. But though America were to send fifty or sixty new representatives
      to parliament, the door-keeper of the house of commons could not find any
      great difficulty in distinguishing between who was and who was not a
      member. Though the Roman constitution, therefore, was necessarily ruined
      by the union of Rome with the allied states of Italy, there is not the
      least probability that the British constitution would be hurt by the union
      of Great Britain with her colonies. That constitution, on the contrary,
      would be completed by it, and seems to be imperfect without it. The
      assembly which deliberates and decides concerning the affairs of every
      part of the empire, in order to be properly informed, ought certainly to
      have representatives from every part of it. That this union, however,
      could be easily effectuated, or that difficulties, and great difficulties,
      might not occur in the execution, I do not pretend. I have yet heard of
      none, however, which appear insurmountable. The principal, perhaps, arise,
      not from the nature of things, but from the prejudices and opinions of the
      people, both on this and on the other side of the Atlantic.

      We on this side the water are afraid lest the multitude of American
      representatives should overturn the balance of the constitution, and
      increase too much either the influence of the crown on the one hand, or
      the force of the democracy on the other. But if the number of American
      representatives were to be in proportion to the produce of American
      taxation, the number of people to be managed would increase exactly in
      proportion to the means of managing them, and the means of managing to the
      number of people to be managed. The monarchical and democratical parts of
      the constitution would, after the union, stand exactly in the same degree
      of relative force with regard to one another as they had done before.

      The people on the other side of the water are afraid lest their distance
      from the seat of government might expose them to many oppressions; but
      their representatives in parliament, of which the number ought from the
      first to be considerable, would easily be able to protect them from all
      oppression. The distance could not much weaken the dependency of the
      representative upon the constituent, and the former would still feel that
      he owed his seat in parliament, and all the consequence which he derived
      from it, to the good-will of the latter. It would be the interest of the
      former, therefore, to cultivate that good-will, by complaining, with all
      the authority of a member of the legislature, of every outrage which any
      civil or military officer might be guilty of in those remote parts of the
      empire. The distance of America from the seat of government, besides, the
      natives of that country might flatter themselves, with some appearance of
      reason too, would not be of very long continuance. Such has hitherto been
      the rapid progress of that country in wealth, population, and improvement,
      that in the course of little more than a century, perhaps, the produce of
      the American might exceed that of the British taxation. The seat of the
      empire would then naturally remove itself to that part of the empire which
      contributed most to the general defence and support of the whole.

      The discovery of America, and that of a passage to the East Indies by the
      Cape of Good Hope, are the two greatest and most important events recorded
      in the history of mankind. Their consequences have already been great;
      but, in the short period of between two and three centuries which has
      elapsed since these discoveries were made, it is impossible that the whole
      extent of their consequences can have been seen. What benefits or what
      misfortunes to mankind may hereafter result from those great events, no
      human wisdom can foresee. By uniting in some measure the most distant
      parts of the world, by enabling them to relieve one another’s wants, to
      increase one another’s enjoyments, and to encourage one another’s
      industry, their general tendency would seem to be beneficial. To the
      natives, however, both of the East and West Indies, all the commercial
      benefits which can have resulted from those events have been sunk and lost
      in the dreadful misfortunes which they have occasioned. These misfortunes,
      however, seem to have arisen rather from accident than from any thing in
      the nature of those events themselves. At the particular time when these
      discoveries were made, the superiority of force happened to be so great on
      the side of the Europeans, that they were enabled to commit with impunity
      every sort of injustice in those remote countries. Hereafter, perhaps, the
      natives of those countries may grow stronger, or those of Europe may grow
      weaker; and the inhabitants of all the different quarters of the world may
      arrive at that equality of courage and force which, by inspiring mutual
      fear, can alone overawe the injustice of independent nations into some
      sort of respect for the rights of one another. But nothing seems more
      likely to establish this equality of force, than that mutual communication
      of knowledge, and of all sorts of improvements, which an extensive
      commerce from all countries to all countries naturally, or rather
      necessarily, carries along with it.

      In the mean time, one of the principal effects of those discoveries has
      been, to raise the mercantile system to a degree of splendour and glory
      which it could never otherwise have attained to. It is the object of that
      system to enrich a great nation, rather by trade and manufactures than by
      the improvement and cultivation of land, rather by the industry of the
      towns than by that of the country. But in consequence of those
      discoveries, the commercial towns of Europe, instead of being the
      manufacturers and carriers for but a very small part of the world (that
      part of Europe which is washed by the Atlantic ocean, and the countries
      which lie round the Baltic and Mediterranean seas), have now become the
      manufacturers for the numerous and thriving cultivators of America, and
      the carriers, and in some respects the manufacturers too, for almost all
      the different nations of Asia, Africa, and America. Two new worlds have
      been opened to their industry, each of them much greater and more
      extensive than the old one, and the market of one of them growing still
      greater and greater every day.

      The countries which possess the colonies of America, and which trade
      directly to the East Indies, enjoy indeed the whole show and splendour of
      this great commerce. Other countries, however, notwithstanding all the
      invidious restraints by which it is meant to exclude them, frequently
      enjoy a greater share of the real benefit of it. The colonies of Spain and
      Portugal, for example, give more real encouragement to the industry of
      other countries than to that of Spain and Portugal. In the single article
      of linen alone, the consumption of those colonies amounts, it is said (but
      I do not pretend to warrant the quantity ), to more than three millions
      sterling a-year. But this great consumption is almost entirely supplied by
      France, Flanders, Holland, and Germany. Spain and Portugal furnish but a
      small part of it. The capital which supplies the colonies with this great
      quantity of linen, is annually distributed among, and furnishes a revenue
      to, the inhabitants of those other countries. The profits of it only are
      spent in Spain and Portugal, where they help to support the sumptuous
      profusion of the merchants of Cadiz and Lisbon.

      Even the regulations by which each nation endeavours to secure to itself
      the exclusive trade of its own colonies, are frequently more hurtful to
      the countries in favour of which they are established, than to those
      against which they are established. The unjust oppression of the industry
      of other countries falls back, if I may say so, upon the heads of the
      oppressors, and crushes their industry more than it does that of those
      other countries. By those regulations, for example, the merchant of
      Hamburg must send the linen which he destines for the American market to
      London, and he must bring back from thence the tobacco which he destines
      for the German market; because he can neither send the one directly to
      America, nor bring the other directly from thence. By this restraint he is
      probably obliged to sell the one somewhat cheaper, and to buy the other
      somewhat dearer, than he otherwise might have done; and his profits are
      probably somewhat abridged by means of it. In this trade, however, between
      Hamburg and London, he certainly receives the returns of his capital much
      more quickly than he could possibly have done in the direct trade to
      America, even though we should suppose, what is by no means the case, that
      the payments of America were as punctual as those of London. In the trade,
      therefore, to which those regulations confine the merchant of Hamburg, his
      capital can keep in constant employment a much greater quantity of German
      industry than he possibly could have done in the trade from which he is
      excluded. Though the one employment, therefore, may to him perhaps be less
      profitable than the other, it cannot be less advantageous to his country.
      It is quite otherwise with the employment into which the monopoly
      naturally attracts, if I may say so, the capital of the London merchant.
      That employment may, perhaps, be more profitable to him than the greater
      part of other employments; but on account of the slowness of the returns,
      it cannot be more advantageous to his country.

      After all the unjust attempts, therefore, of every country in Europe to
      engross to itself the whole advantage of the trade of its own colonies, no
      country has yet been able to engross to itself any thing but the expense
      of supporting in time of peace, and of defending in time of war, the
      oppressive authority which it assumes over them. The inconveniencies
      resulting from the possession of its colonies, every country has engrossed
      to itself completely. The advantages resulting from their trade, it has
      been obliged to share with many other countries.

      At first sight, no doubt, the monopoly of the great commerce of America
      naturally seems to be an acquisition of the highest value. To the
      undiscerning eye of giddy ambition it naturally presents itself, amidst
      the confused scramble of politics and war, as a very dazzling object to
      fight for. The dazzling splendour of the object, however, the immense
      greatness of the commerce, is the very quality which renders the monopoly
      of it hurtful, or which makes one employment, in its own nature
      necessarily less advantageous to the country than the greater part of
      other employments, absorb a much greater proportion of the capital of the
      country than what would otherwise have gone to it.

      The mercantile stock of every country, it has been shown in the second
      book, naturally seeks, if one may say so, the employment most advantageous
      to that country. If it is employed in the carrying trade, the country to
      which it belongs becomes the emporium of the goods of all the countries
      whose trade that stock carries on. But the owner of that stock necessarily
      wishes to dispose of as great a part of those goods as he can at home. He
      thereby saves himself the trouble, risk, and expense of exportation; and
      he will upon that account be glad to sell them at home, not only for a
      much smaller price, but with somewhat a smaller profit, than he might
      expect to make by sending them abroad. He naturally, therefore, endeavours
      as much as he can to turn his carrying trade into a foreign trade of
      consumption, If his stock, again, is employed in a foreign trade of
      consumption, he will, for the same reason, be glad to dispose of, at home,
      as great a part as he can of the home goods which he collects in order to
      export to some foreign market, and he will thus endeavour, as much as he
      can, to turn his foreign trade of consumption into a home trade. The
      mercantile stock of every country naturally courts in this manner the
      near, and shuns the distant employment: naturally courts the employment in
      which the returns are frequent, and shuns that in which they are distant
      and slow; naturally courts the employment in which it can maintain the
      greatest quantity of productive labour in the country to which it belongs,
      or in which its owner resides, and shuns that in which it can maintain
      there the smallest quantity. It naturally courts the employment which in
      ordinary cases is most advantageous, and shuns that which in ordinary
      cases is least advantageous to that country.

      But if, in any one of those distant employments, which in ordinary cases
      are less advantageous to the country, the profit should happen to rise
      somewhat higher than what is sufficient to balance the natural preference
      which is given to nearer employments, this superiority of profit will draw
      stock from those nearer employments, till the profits of all return to
      their proper level. This superiority of profit, however, is a proof that,
      in the actual circumstances of the society, those distant employments are
      somewhat understocked in proportion to other employments, and that the
      stock of the society is not distributed in the properest manner among all
      the different employments carried on in it. It is a proof that something
      is either bought cheaper or sold dearer than it ought to be, and that some
      particular class of citizens is more or less oppressed, either by paying
      more, or by getting less than what is suitable to that equality which
      ought to take place, and which naturally does take place, among all the
      different classes of them. Though the same capital never will maintain the
      same quantity of productive labour in a distant as in a near employment,
      yet a distant employment maybe as necessary for the welfare of the society
      as a near one; the goods which the distant employment deals in being
      necessary, perhaps, for carrying on many of the nearer employments. But if
      the profits of those who deal in such goods are above their proper level,
      those goods will be sold dearer than they ought to be, or somewhat above
      their natural price, and all those engaged in the nearer employments will
      be more or less oppressed by this high price. Their interest, therefore,
      in this case, requires, that some stock should be withdrawn from those
      nearer employments, and turned towards that distant one, in order to
      reduce its profits to their proper level, and the price of the goods which
      it deals in to their natural price. In this extraordinary case, the public
      interest requires that some stock should be withdrawn from those
      employments which, in ordinary cases, are more advantageous, and turned
      towards one which, in ordinary cases, is less advantageous to the public;
      and, in this extraordinary case, the natural interests and inclinations of
      men coincide as exactly with the public interests as in all other ordinary
      cases, and lead them to withdraw stock from the near, and to turn it
      towards the distant employments.

      It is thus that the private interests and passions of individuals
      naturally dispose them to turn their stock towards the employments which
      in ordinary cases, are most advantageous to the society. But if from this
      natural preference they should turn too much of it towards those
      employments, the fall of profit in them, and the rise of it in all others,
      immediately dispose them to alter this faulty distribution. Without any
      intervention of law, therefore, the private interests and passions of men
      naturally lead them to divide and distribute the stock of every society
      among all the different employments carried on in it; as nearly as
      possible in the proportion which is most agreeable to the interest of the
      whole society.

      All the different regulations of the mercantile system necessarily derange
      more or less this natural and most advantageous distribution of stock. But
      those which concern the trade to America and the East Indies derange it,
      perhaps, more than any other; because the trade to those two great
      continents absorbs a greater quantity of stock than any two other branches
      of trade. The regulations, however, by which this derangement is effected
      in those two different branches of trade, are not altogether the same.
      Monopoly is the great engine of both; but it is a different sort of
      monopoly. Monopoly of one kind or another, indeed, seems to be the sole
      engine of the mercantile system.

      In the trade to America, every nation endeavours to engross as much as
      possible the whole market of its own colonies, by fairly excluding all
      other nations from any direct trade to them. During the greater part of
      the sixteenth century, the Portuguese endeavoured to manage the trade to
      the East Indies in the same manner, by claiming the sole right of sailing
      in the Indian seas, on account of the merit of having first found out the
      road to them. The Dutch still continue to exclude all other European
      nations from any direct trade to their spice islands. Monopolies of this
      kind are evidently established against all other European nations, who are
      thereby not only excluded from a trade to which it might be convenient for
      them to turn some part of their stock, but are obliged to buy the goods
      which that trade deals in, somewhat dearer than if they could import them
      themselves directly from the countries which produced them.

      But since the fall of the power of Portugal, no European nation has
      claimed the exclusive right of sailing in the Indian seas, of which the
      principal ports are now open to the ships of all European nations. Except
      in Portugal, however, and within these few years in France, the trade to
      the East Indies has, in every European country, been subjected to an
      exclusive company. Monopolies of this kind are properly established
      against the very nation which erects them. The greater part of that nation
      are thereby not only excluded from a trade to which it might be convenient
      for them to turn some part of their stock, but are obliged to buy the
      goods which that trade deals in somewhat dearer than if it was open and
      free to all their countrymen. Since the establishment of the English East
      India company, for example, the other inhabitants of England, over and
      above being excluded from the trade, must have paid, in the price of the
      East India goods which they have consumed, not only for all the
      extraordinary profits which the company may have made upon those goods in
      consequence of their monopoly, but for all the extraordinary waste which
      the fraud and abuse inseparable from the management of the affairs of so
      great a company must necessarily have occasioned. The absurdity of this
      second kind of monopoly, therefore, is much more manifest than that of the
      first.

      Both these kinds of monopolies derange more or less the natural
      distribution of the stock of the society; but they do not always derange
      it in the same way.

      Monopolies of the first kind always attract to the particular trade in
      which they are established a greater proportion of the stock of the
      society than what would go to that trade of its own accord.

      Monopolies of the second kind may sometimes attract stock towards the
      particular trade in which they are established, and sometimes repel it
      from that trade, according to different circumstances. In poor countries,
      they naturally attract towards that trade more stock than would otherwise
      go to it. In rich countries, they naturally repel from it a good deal of
      stock which would otherwise go to it.

      Such poor countries as Sweden and Denmark, for example, would probably
      have never sent a single ship to the East Indies, had not the trade been
      subjected to an exclusive company. The establishment of such a company
      necessarily encourages adventurers. Their monopoly secures them against
      all competitors in the home market, and they have the same chance for
      foreign markets with the traders of other nations. Their monopoly shows
      them the certainty of a great profit upon a considerable quantity of
      goods, and the chance of a considerable profit upon a great quantity.
      Without such extraordinary encouragement, the poor traders of such poor
      countries would probably never have thought of hazarding their small
      capitals in so very distant and uncertain an adventure as the trade to the
      East Indies must naturally have appeared to them.

      Such a rich country as Holland, on the contrary, would probably, in the
      case of a free trade, send many more ships to the East Indies than it
      actually does. The limited stock of the Dutch East India company probably
      repels from that trade many great mercantile capitals which would
      otherwise go to it. The mercantile capital of Holland is so great, that it
      is, as it were, continually overflowing, sometimes into the public funds
      of foreign countries, sometimes into loans to private traders and
      adventurers of foreign countries, sometimes into the most round-about
      foreign trades of consumption, and sometimes into the carrying trade. All
      near employments being completely filled up, all the capital which can be
      placed in them with any tolerable profit being already placed in them, the
      capital of Holland necessarily flows towards the most distant employments.
      The trade to the East Indies, if it were altogether free, would probably
      absorb the greater part of this redundant capital. The East Indies offer a
      market both for the manufactures of Europe, and for the gold and silver,
      as well as for the several other productions of America, greater and more
      extensive than both Europe and America put together.

      Every derangement of the natural distribution of stock is necessarily
      hurtful to the society in which it takes place; whether it be by repelling
      from a particular trade the stock which would otherwise go to it, or by
      attracting towards a particular trade that which would not otherwise come
      to it. If, without any exclusive company, the trade of Holland to the East
      Indies would be greater than it actually is, that country must suffer a
      considerable loss, by part of its capital being excluded from the
      employment most convenient for that port. And, in the same manner, if,
      without an exclusive company, the trade of Sweden and Denmark to the East
      Indies would be less than it actually is, or, what perhaps is more
      probable, would not exist at all, those two countries must likewise suffer
      a considerable loss, by part of their capital being drawn into an
      employment which must be more or less unsuitable to their present
      circumstances. Better for them, perhaps, in the present circumstances, to
      buy East India goods of other nations, even though they should pay
      somewhat dearer, than to turn so great a part of their small capital to so
      very distant a trade, in which the returns are so very slow, in which that
      capital can maintain so small a quantity of productive labour at home,
      where productive labour is so much wanted, where so little is done, and
      where so much is to do.

      Though without an exclusive company, therefore, a particular country
      should not be able to carry on any direct trade to the East Indies, it
      will not from thence follow, that such a company ought to be established
      there, but only that such a country ought not, in these circumstances, to
      trade directly to the East Indies. That such companies are not in general
      necessary for carrying on the East India trade, is sufficiently
      demonstrated by the experience of the Portuguese, who enjoyed almost the
      whole of it for more than a century together, without any exclusive
      company.

      No private merchant, it has been said, could well have capital sufficient
      to maintain factors and agents in the different ports of the East Indies,
      in order to provide goods for the ships which he might occasionally send
      thither; and yet, unless he was able to do this, the difficulty of finding
      a cargo might frequently make his ships lose the season for returning; and
      the expense of so long a delay would not only eat up the whole profit of
      the adventure, but frequently occasion a very considerable loss. This
      argument, however, if it proved any thing at all, would prove that no one
      great branch of trade could be carried on without an exclusive company,
      which is contrary to the experience of all nations. There is no great
      branch of trade, in which the capital of any one private merchant is
      sufficient for carrying on all the subordinate branches which must be
      carried on, in order to carry on the principal one. But when a nation is
      ripe for any great branch of trade, some merchants naturally turn their
      capitals towards the principal, and some towards the subordinate branches
      of it; and though all the different branches of it are in this manner
      carried on, yet it very seldom happens that they are all carried on by the
      capital of one private merchant. If a nation, therefore, is ripe for the
      East India trade, a certain portion of its capital will naturally divide
      itself among all the different branches of that trade. Some of its
      merchants will find it for their interest to reside in the East Indies,
      and to employ their capitals there in providing goods for the ships which
      are to be sent out by other merchants who reside in Europe. The
      settlements which different European nations have obtained in the East
      Indies, if they were taken from the exclusive companies to which they at
      present belong, and put under the immediate protection of the sovereign,
      would render this residence both safe and easy, at least to the merchants
      of the particular nations to whom those settlements belong. If, at any
      particular time, that part of the capital of any country which of its own
      accord tended and inclined, if I may say so, towards the East India trade,
      was not sufficient for carrying on all those different branches of it, it
      would be a proof that, at that particular time, that country was not ripe
      for that trade, and that it would do better to buy for some time, even at
      a higher price, from other European nations, the East India goods it had
      occasion for, than to import them itself directly from the East Indies.
      What it might lose by the high price of those goods, could seldom be equal
      to the loss which it would sustain by the distraction of a large portion
      of its capital from other employments more necessary, or more useful, or
      more suitable to its circumstances and situation, than a direct trade to
      the East Indies.

      Though the Europeans possess many considerable settlements both upon the
      coast of Africa and in the East Indies, they have not yet established, in
      either of those countries, such numerous and thriving colonies as those in
      the islands and continent of America. Africa, however, as well as several
      of the countries comprehended under the general name of the East Indies,
      is inhabited by barbarous nations. But those nations were by no means so
      weak and defenceless as the miserable and helpless Americans; and in
      proportion to the natural fertility of the countries which they inhabited,
      they were, besides, much more populous. The most barbarous nations either
      of Africa or of the East Indies, were shepherds; even the Hottentots were
      so. But the natives of every part of America, except Mexico and Peru, were
      only hunters and the difference is very great between the number of
      shepherds and that of hunters whom the same extent of equally fertile
      territory can maintain. In Africa and the East Indies, therefore, it was
      more difficult to displace the natives, and to extend the European
      plantations over the greater part of the lands of the original
      inhabitants. The genius of exclusive companies, besides, is unfavourable,
      it has already been observed, to the growth of new colonies, and has
      probably been the principal cause of the little progress which they have
      made in the East Indies. The Portuguese carried on the trade both to
      Africa and the East Indies, without any exclusive companies; and their
      settlements at Congo, Angola, and Benguela, on the coast of Africa, and at
      Goa in the East Indies though much depressed by superstition and every
      sort of bad government, yet bear some resemblance to the colonies of
      America, and are partly inhabited by Portuguese who have been established
      there for several generations. The Dutch settlements at the Cape of Good
      Hope and at Batavia, are at present the most considerable colonies which
      the Europeans have established, either in Africa or in the East Indies;
      and both those settlements are peculiarly fortunate in their situation. The
      Cape of Good Hope was inhabited by a race of people almost as barbarous,
      and quite as incapable of defending themselves, as the natives of America.
      It is, besides, the half-way house, if one may say so, between Europe and
      the East Indies, at which almost every European ship makes some stay, both
      in going and returning. The supplying of those ships with every sort of
      fresh provisions, with fruit, and sometimes with wine, affords alone a
      very extensive market for the surplus produce of the colonies. What the
      Cape of Good Hope is between Europe and every part of the East Indies,
      Batavia is between the principal countries of the East Indies. It lies
      upon the most frequented road from Indostan to China and Japan, and is
      nearly about mid-way upon that road. Almost all the ships too, that sail
      between Europe and China, touch at Batavia; and it is, over and above all
      this, the centre and principal mart of what is called the country trade of
      the East Indies; not only of that part of it which is carried on by
      Europeans, but of that which is carried on by the native Indians; and
      vessels navigated by the inhabitants of China and Japan, of Tonquin,
      Malacca, Cochin-China, and the island of Celebes, are frequently to be
      seen in its port. Such advantageous situations have enabled those two
      colonies to surmount all the obstacles which the oppressive genius of an
      exclusive company may have occasionally opposed to their growth. They have
      enabled Batavia to surmount the additional disadvantage of perhaps the
      most unwholesome climate in the world.

      The English and Dutch companies, though they have established no
      considerable colonies, except the two above mentioned, have both made
      considerable conquests in the East Indies. But in the manner in which they
      both govern their new subjects, the natural genius of an exclusive company
      has shewn itself most distinctly. In the spice islands, the Dutch are said
      to burn all the spiceries which a fertile season produces, beyond what
      they expect to dispose of in Europe with such a profit as they think
      sufficient. In the islands where they have no settlements, they give a
      premium to those who collect the young blossoms and green leaves of the
      clove and nutmeg trees, which naturally grow there, but which this savage
      policy has now, it is said, almost completely extirpated. Even in the
      islands where they have settlements, they have very much reduced, it is
      said, the number of those trees. If the produce even of their own islands
      was much greater than what suited their market, the natives, they suspect,
      might find means to convey some part of it to other nations; and the best
      way, they imagine, to secure their own monopoly, is to take care that no
      more shall grow than what they themselves carry to market. By different
      arts of oppression, they have reduced the population of several of the
      Moluccas nearly to the number which is sufficient to supply with fresh
      provisions, and other necessaries of life, their own insignificant
      garrisons, and such of their ships as occasionally come there for a cargo
      of spices. Under the government even of the Portuguese, however, those
      islands are said to have been tolerably well inhabited. The English
      company have not yet had time to establish in Bengal so perfectly
      destructive a system. The plan of their government, however, has had
      exactly the same tendency. It has not been uncommon, I am well assured,
      for the chief, that is, the first clerk or a factory, to order a peasant
      to plough up a rich field of poppies, and sow it with rice, or some other
      grain. The pretence was, to prevent a scarcity of provisions; but the real
      reason, to give the chief an opportunity of selling at a better price a
      large quantity of opium which he happened then to have upon hand. Upon
      other occasions, the order has been reversed; and a rich field of rice or
      other grain has been ploughed up, in order to make room for a plantation
      of poppies, when the chief foresaw that extraordinary profit was likely to
      be made by opium. The servants of the company have, upon several
      occasions, attempted to establish in their own favour the monopoly of some
      of the most important branches, not only of the foreign, but of the inland
      trade of the country. Had they been allowed to go on, it is impossible
      that they should not, at some time or another, have attempted to restrain
      the production of the particular articles of which they had thus usurped
      the monopoly, not only to the quantity which they themselves could
      purchase, but to that which they could expect to sell with such a profit
      as they might think sufficient. In the course of a century or two, the
      policy of the English company would, in this manner, have probably proved
      as completely destructive as that of the Dutch.

      Nothing, however, can be more directly contrary to the real interest of
      those companies, considered as the sovereigns of the countries which they
      have conquered, than this destructive plan. In almost all countries, the
      revenue of the sovereign is drawn from that of the people. The greater the
      revenue of the people, therefore, the greater the annual produce of their
      land and labour, the more they can afford to the sovereign. It is his
      interest, therefore, to increase as much as possible that annual produce.
      But if this is the interest of every sovereign, it is peculiarly so of one
      whose revenue, like that of the sovereign of Bengal, arises chiefly from a
      land-rent. That rent must necessarily be in proportion to the quantity and
      value of the produce; and both the one and the other must depend upon the
      extent of the market. The quantity will always be suited, with more or
      less exactness, to the consumption of those who can afford to pay for it;
      and the price which they will pay will always be in proportion to the
      eagerness of their competition. It is the interest of such a sovereign,
      therefore, to open the most extensive market for the produce of his
      country, to allow the most perfect freedom of commerce, in order to
      increase as much as possible the number and competition of buyers; and
      upon this account to abolish, not only all monopolies, but all restraints
      upon the transportation of the home produce from one part of the country
      to another, upon its exportation to foreign countries, or upon the
      importation of goods of any kind for which it can be exchanged. He is in
      this manner most likely to increase both the quantity and value of that
      produce, and consequently of his own share of it, or of his own revenue.

      But a company of merchants, are, it seems, incapable of considering
      themselves as sovereigns, even after they have become such. Trade, or
      buying in order to sell again, they still consider as their principal
      business, and by a strange absurdity, regard the character of the
      sovereign as but an appendix to that of the merchant; as something which
      ought to be made subservient to it, or by means of which they may be
      enabled to buy cheaper in India, and thereby to sell with a better profit
      in Europe. They endeavour, for this purpose, to keep out as much as
      possible all competitors from the market of the countries which are
      subject to their government, and consequently to reduce, at least, some
      part of the surplus produce of those countries to what is barely
      sufficient for supplying their own demand, or to what they can expect to
      sell in Europe, with such a profit as they may think reasonable. Their
      mercantile habits draw them in this manner, almost necessarily, though
      perhaps insensibly, to prefer, upon all ordinary occasions, the little and
      transitory profit of the monopolist to the great and permanent revenue of
      the sovereign; and would gradually lead them to treat the countries
      subject to their government nearly as the Dutch treat the Moluccas. It is
      the interest of the East India company, considered as sovereigns, that the
      European goods which are carried to their Indian dominions should be sold
      there as cheap as possible; and that the Indian goods which are brought
      from thence should bring there as good a price, or should be sold there as
      dear as possible. But the reverse of this is their interest as merchants.
      As sovereigns, their interest is exactly the same with that of the country
      which they govern. As merchants, their interest is directly opposite to
      that interest.

      But if the genius of such a government, even as to what concerns its
      direction in Europe, is in this manner essentially, and perhaps incurably
      faulty, that of its administration in India is still more so. That
      administration is necessarily composed of a council of merchants, a
      profession no doubt extremely respectable, but which in no country in the
      world carries along with it that sort of authority which naturally
      overawes the people, and without force commands their willing obedience.
      Such a council can command obedience only by the military force with which
      they are accompanied; and their government is, therefore, necessarily
      military and despotical. Their proper business, however, is that of
      merchants. It is to sell, upon their master’s account, the European goods
      consigned to them, and to buy, in return, Indian goods for the European
      market. It is to sell the one as dear, and to buy the other as cheap as
      possible, and consequently to exclude, as much as possible, all rivals
      from the particular market where they keep their shop. The genius of the
      administration, therefore, so far as concerns the trade of the company, is
      the same as that of the direction. It tends to make government subservient
      to the interest of monopoly, and consequently to stunt the natural growth
      of some parts, at least, of the surplus produce of the country, to what is
      barely sufficient for answering the demand 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 clerk of a
      great counting-house, at ten thousand miles distance, and consequently
      almost quite out of sight, should, upon a simple order from their master,
      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 its superior servants, under pretence of executing
      their master’s 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 choose 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 choose 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 choose 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
      country, and to reduce the number of its inhabitants. It tends to reduce
      the quantity of every sort of produce, even that of the necessaries of
      life, whenever the servants of the country choose to deal in them, to what
      those servants can both afford to buy and expect to sell with such a
      profit as pleases them.

      From the nature of their situation, too, the servants must be more
      disposed to support with rigourous 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;
      {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. 1, part ii.}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 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 touch less upon that of any particular persons. It is
      the system of government, the situation in which they are 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 negotiation, 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.


## Extracted Entities

--- ENTITY: colony trade monopoly ---

# Colony Trade Monopoly

## Definition

The exclusive right of mother countries to control all commerce with their colonies, prohibiting direct trade between colonies and other nations while restricting colonial trade to designated ports and seasons. This system channels colonial surplus produce through the mother country, allowing merchants to extract monopoly profits while limiting colonial economic development.

## Source Chapter

Book IV, Chapter 7

## Context

Smith's critique of mercantilist colonial policy forms a central part of his analysis of how exclusive trading privileges distort natural economic development. He argues that while the monopoly may benefit particular merchant interests, it ultimately impoverishes both the colonies and the mother country by preventing the natural expansion of markets and the efficient allocation of capital.

## Economic Domain

Regulation

---

--- ENTITY: enumerated commodities ---

# Enumerated Commodities

## Definition

Specific colonial products that could only be exported to the mother country under the Navigation Acts, including tobacco, sugar, cotton, indigo, and naval stores. These commodities were subject to special restrictions designed to channel colonial trade through British ports and merchants, creating a monopoly system that limited colonial economic autonomy.

## Source Chapter

Book IV, Chapter 7

## Context

Smith uses enumerated commodities as a key example of how mercantilist regulations artificially constrain colonial development. He argues that by forcing colonies to sell these products exclusively to the mother country, even when other markets might offer better prices, the system reduces colonial prosperity and efficiency.

## Economic Domain

Regulation

---

--- ENTITY: non-enumerated commodities ---

# Non-enumerated Commodities

## Definition

Colonial products not subject to the exclusive export restrictions of the Navigation Acts, including grain, lumber, salt provisions, fish, and other raw materials. These commodities could be exported directly to foreign markets in British or colonial ships, providing colonies with some degree of trade flexibility despite the broader monopoly system.

## Source Chapter

Book IV, Chapter 7

## Context

Smith contrasts non-enumerated commodities with enumerated ones to demonstrate how even partial trade restrictions distort economic development. He argues that the freedom to export these products to international markets significantly contributes to colonial prosperity and economic growth.

## Economic Domain

Regulation

---

--- ENTITY: exclusive company ---

# Exclusive Company

## Definition

Chartered commercial organizations granted monopoly rights over specific trades or territories, such as the Dutch East India Company or the French Mississippi Company. These entities controlled colonial trade through exclusive privileges, setting prices, restricting competition, and often engaging in oppressive practices that hindered economic development.

## Source Chapter

Book IV, Chapter 7

## Context

Smith criticizes exclusive companies as particularly harmful forms of monopoly, arguing that their merchant governance leads to military despotism in colonies and economic stagnation. He contrasts their performance with that of free colonial settlements, showing how monopoly control prevents the natural growth of commerce and industry.

## Economic Domain

Regulation

---

--- ENTITY: round-about foreign trade of consumption ---

# Round-about Foreign Trade of Consumption

## Definition

A trade pattern where goods pass through multiple intermediaries before reaching final consumers, as when colonial tobacco is exported to Britain, re-exported to continental Europe, and then sold to consumers. This circuitous route increases transportation time and costs compared to direct trade, reducing economic efficiency.

## Source Chapter

Book IV, Chapter 7

## Context

Smith uses round-about trade to illustrate how colonial monopolies force inefficient trade patterns. He argues that the monopoly system compels merchants to engage in these circuitous routes, which tie up capital for longer periods and reduce the overall quantity of productive labor that can be maintained in the economy.

## Economic Domain

Exchange

---

--- ENTITY: direct foreign trade of consumption ---

# Direct Foreign Trade of Consumption

## Definition

Trade conducted directly between producers and consumers in different countries without intermediate re-exportation, allowing goods to reach markets more quickly and at lower cost. This trade pattern maintains capital in more frequent circulation and supports greater productive employment.

## Source Chapter

Book IV, Chapter 7

## Context

Smith contrasts direct trade with round-about trade to demonstrate how colonial monopolies reduce economic efficiency. He argues that direct trade allows for more frequent returns of capital, enabling merchants to maintain greater quantities of productive labor and generate more economic value.

## Economic Domain

Exchange

---

--- ENTITY: carrying trade ---

# Carrying Trade

## Definition

The business of transporting goods between foreign markets without ownership of the cargo, earning profits from freight charges rather than commodity price differences. This trade form emerges when merchants cannot directly sell colonial products in their most profitable markets due to monopoly restrictions.

## Source Chapter

Book IV, Chapter 7

## Context

Smith identifies carrying trade as an inefficient employment of capital forced by colonial monopolies. He argues that when monopolies prevent direct trade between colonies and other nations, capital that could be used for more productive purposes becomes tied up in mere transportation services.

## Economic Domain

Exchange

---

--- ENTITY: home trade ---

# Home Trade

## Definition

Commercial transactions conducted within the domestic market of a single country, including both the purchase of foreign goods for domestic consumption and the sale of domestic products to local consumers. This trade form typically provides more frequent returns of capital than foreign trade.

## Source Chapter

Book IV, Chapter 7

## Context

Smith contrasts home trade with foreign trade to demonstrate how colonial monopolies distort capital allocation. He argues that the monopoly system forces capital away from more efficient home trade into less productive foreign trade routes, reducing overall economic efficiency.

## Economic Domain

Exchange

---

--- ENTITY: foreign trade of consumption ---

# Foreign Trade of Consumption

## Definition

Trade involving the exchange of goods between different countries for final consumption rather than for re-export or further processing. This includes both direct trade between producing and consuming nations and round-about trade involving intermediate markets.

## Source Chapter

Book IV, Chapter 7

## Context

Smith analyzes different forms of foreign trade to show how colonial monopolies create inefficient trade patterns. He argues that the monopoly system forces capital into less efficient forms of foreign trade, reducing the overall productivity of the economy.

## Economic Domain

Exchange

---

--- ENTITY: colony assemblies ---

# Colony Assemblies

## Definition

Legislative bodies in British colonies composed of representatives elected by colonial inhabitants, possessing authority to impose taxes and regulate local affairs. These assemblies claimed powers similar to the British Parliament and resisted external taxation without representation.

## Source Chapter

Book IV, Chapter 7

## Context

Smith examines colony assemblies as potential tax authorities, arguing that their distance from Britain and lack of information about imperial needs makes them unsuitable for determining fair contributions to imperial defense. He uses this analysis to support his argument for colonial representation in Parliament.

## Economic Domain

Regulation

---

--- ENTITY: civil government expense in colonies ---

# Civil Government Expense in Colonies

## Definition

The relatively modest cost of maintaining colonial administrative structures, including governors, judges, and basic public works, typically funded through moderate local taxation rather than imperial subsidies. This expense was proportionally much smaller than military defense costs.

## Source Chapter

Book IV, Chapter 7

## Context

Smith uses the low cost of colonial civil government to argue that colonies could afford to contribute more to imperial expenses. He contrasts this with the high costs of military defense and monopoly maintenance, suggesting that colonies could support both their own administration and a fair share of imperial costs.

## Economic Domain

Regulation

---

--- ENTITY: military defense expense ---

# Military Defense Expense

## Definition

The substantial cost of maintaining armed forces to protect colonies from foreign invasion and internal rebellion, including regular troops, naval forces, and occasional war expenditures. This expense fell almost entirely on the mother country despite the colonies being the primary beneficiaries of protection.

## Source Chapter

Book IV, Chapter 7

## Context

Smith argues that military defense represents the true cost of empire, far exceeding the benefits derived from colonial monopolies. He uses this analysis to demonstrate that the current system unfairly burdens Britain while providing colonies with protection without corresponding financial contribution.

## Economic Domain

Regulation

---

--- ENTITY: colonial prosperity mechanisms ---

# Colonial Prosperity Mechanisms

## Definition

The economic factors that enable rapid development in new colonies, including abundant cheap land, high wages attracting labor, self-government encouraging enterprise, and the ability to retain most produce value. These mechanisms operate most effectively when colonies have economic autonomy and market access.

## Source Chapter

Book IV, Chapter 7

## Context

Smith contrasts colonial prosperity mechanisms with the constraints imposed by mercantilist policies. He argues that the natural advantages of new settlements—particularly land abundance and labor scarcity—create conditions for rapid economic growth that monopoly restrictions artificially limit.

## Economic Domain

Production

---

--- ENTITY: land monopolization effects ---

# Land Monopolization Effects

## Definition

The economic consequences of concentrating land ownership in colonial territories, including reduced agricultural improvement, limited labor mobility, and the creation of landlord-tenant relationships that mirror European patterns. This process undermines the natural colonial development trajectory.

## Source Chapter

Book IV, Chapter 7

## Context

Smith examines how land monopolization in colonies creates the same economic problems found in older countries, including rent extraction and labor subordination. He argues that this process contradicts the natural colonial development pattern where land abundance should promote widespread ownership and prosperity.

## Economic Domain

Production

---

--- ENTITY: colonial market expansion ---

# Colonial Market Expansion

## Definition

The growth of commercial opportunities created by colonial development, including new markets for manufactured goods and sources of raw materials. This expansion increases the overall size of the economic system and creates new opportunities for productive employment.

## Source Chapter

Book IV, Chapter 7

## Context

Smith argues that colonial market expansion represents one of the primary benefits of colonization, creating larger markets that support greater division of labor and more efficient production. He contends that monopoly restrictions artificially limit this beneficial expansion.

## Economic Domain

Exchange

---

--- ENTITY: natural liberty in colonial trade ---

# Natural Liberty in Colonial Trade

# Definition

The principle that individuals should be free to engage in commerce according to their own judgment without artificial restrictions, including the right to buy and sell in the most advantageous markets. This concept underlies Smith's critique of colonial monopoly systems.

## Source Chapter

Book IV, Chapter 7

## Context

Smith presents natural liberty as the proper framework for colonial economic relations, arguing that monopoly restrictions violate this fundamental principle. He contends that allowing natural liberty would produce better outcomes for both colonies and the mother country than the current restrictive system.

## Economic Domain

Regulation

---

--- ENTITY: mercantile system principles ---

# Mercantile System Principles

## Definition

The economic doctrines underlying colonial monopoly policies, including the belief that national wealth consists of precious metals, that trade is a zero-sum game, and that colonies exist primarily to benefit the mother country through controlled commerce. These principles justify restrictive trade practices.

## Source Chapter

Book IV, Chapter 7

## Context

Smith systematically critiques mercantile system principles throughout his analysis of colonial policy, demonstrating how these doctrines lead to economically harmful practices. He argues that the system's focus on precious metals and monopoly profits obscures the true sources of national wealth and prosperity.

## Economic Domain

General Theory

---

--- ENTITY: colonial economic autonomy ---

# Colonial Economic Autonomy

## Definition

The degree of self-determination colonies possess in managing their economic affairs, including the ability to trade freely, set local policies, and retain economic benefits. Greater autonomy allows colonies to develop according to their natural advantages rather than external restrictions.

## Source Chapter

Book IV, Chapter 7

## Context

Smith argues that colonial economic autonomy is essential for optimal development, allowing settlements to exploit their natural advantages of land abundance and labor scarcity. He contends that monopoly restrictions artificially limit this autonomy, reducing colonial prosperity and efficiency.

## Economic Domain

Regulation

---

--- ENTITY: colonial dependency structure ---

# Colonial Dependency Structure

## Definition

The hierarchical relationship between mother countries and colonies characterized by political control, economic exploitation through monopoly, and military protection obligations. This structure creates mutual dependencies that often prove economically disadvantageous to both parties.

## Source Chapter

Book IV, Chapter 7

## Context

Smith analyzes colonial dependency as an inherently problematic relationship that creates economic inefficiencies and political tensions. He argues that the current dependency structure benefits particular interest groups while imposing net costs on both the colonies and the mother country.

## Economic Domain

Regulation

---

--- ENTITY: colonial economic development sequence ---

# Colonial Economic Development Sequence

## Definition

The typical pattern of economic progression in new colonies, beginning with agriculture due to land abundance, followed by rudimentary manufacturing for local needs, and eventually developing more sophisticated industry as population and markets grow. This sequence reflects the natural exploitation of comparative advantages.

## Source Chapter

Book IV, Chapter 7

## Context

Smith uses the colonial development sequence to demonstrate how natural economic forces operate when unimpeded by artificial restrictions. He argues that monopoly policies interfere with this natural progression, forcing colonies into economically suboptimal development paths.

## Economic Domain

Production

---

--- ENTITY: colonial population growth factors ---

# Colonial Population Growth Factors

## Definition

The economic conditions that promote rapid population increase in colonies, including high wages encouraging marriage, abundant food supporting larger families, and economic opportunities providing incentives for reproduction. These factors create virtuous cycles of growth and development.

## Source Chapter

Book IV, Chapter 7

## Context

Smith identifies population growth as a key indicator of colonial prosperity, resulting from the favorable economic conditions created by land abundance and labor scarcity. He argues that monopoly restrictions that reduce wages and economic opportunities ultimately limit this beneficial population growth.

## Economic Domain

Production

---

--- ENTITY: colonial land abundance effects ---

# Colonial Land Abundance Effects

## Definition

The economic consequences of plentiful available land in colonies, including low land costs, high wages due to labor scarcity, widespread land ownership opportunities, and the prioritization of agricultural development. These effects create fundamentally different economic conditions than in settled countries.

## Source Chapter

Book IV, Chapter 7

## Context

Smith emphasizes land abundance as the primary factor distinguishing colonial economies from those of older countries. He argues that this abundance creates conditions for rapid development that monopoly restrictions artificially constrain, preventing colonies from realizing their full economic potential.

## Economic Domain

Production

---

--- ENTITY: colonial labor market dynamics ---

# Colonial Labor Market Dynamics

## Definition

The employment conditions in colonies characterized by labor scarcity, high wages, worker mobility between employers, and the rapid transition of laborers to independent producers. These dynamics create a fundamentally different labor market than exists in countries with abundant labor and scarce land.

## Source Chapter

Book IV, Chapter 7

## Context

Smith analyzes colonial labor markets to demonstrate how economic conditions naturally produce favorable outcomes for workers. He argues that monopoly restrictions that reduce wages and limit economic opportunities undermine these beneficial labor market dynamics.

## Economic Domain

Distribution

---

--- ENTITY: colonial economic potential ---

# Colonial Economic Potential

## Definition

The maximum economic development that colonies could achieve under optimal conditions, including full exploitation of natural resources, unrestricted trade access, and autonomous economic management. This potential is systematically constrained by mercantilist monopoly policies.

## Source Chapter

Book IV, Chapter 7

## Context

Smith argues that colonies possess enormous economic potential that remains unrealized due to artificial restrictions. He contends that removing monopoly controls would allow colonies to achieve prosperity levels far exceeding their current development, benefiting both the colonies and the mother country.

## Economic Domain

General Theory

---

--- ENTITY: colonial trade pattern distortion ---

# Colonial Trade Pattern Distortion

## Definition

The artificial alteration of natural trade flows caused by monopoly restrictions, forcing goods through inefficient routes, creating round-about trade patterns, and preventing direct exchange between colonies and their most advantageous markets. These distortions reduce overall economic efficiency.

## Source Chapter

Book IV, Chapter 7

## Context

Smith uses trade pattern distortion as a key example of how monopoly policies create economic inefficiencies. He demonstrates that the forced re-routing of colonial products through British ports increases costs and reduces the value that could be created through more direct trade relationships.

## Economic Domain

Exchange

---

--- ENTITY: colonial economic integration ---

# Colonial Economic Integration

## Definition

The degree of economic interconnection between colonies and the broader global economy, including trade relationships, capital flows, and labor mobility. Greater integration allows colonies to specialize according to their comparative advantages and access larger markets.

## Source Chapter

Book IV, Chapter 7

## Context

Smith argues that colonial economic integration with global markets is essential for optimal development. He contends that monopoly restrictions artificially limit this integration, preventing colonies from achieving the economic benefits that would flow from unrestricted participation in international commerce.

## Economic Domain

Exchange

---

--- ENTITY: colonial administrative efficiency ---

# Colonial Administrative Efficiency

## Definition

The effectiveness with which colonial governments manage public affairs relative to their cost, including the provision of basic services, maintenance of order, and implementation of local policies. Colonial administration typically achieved reasonable outcomes at relatively low cost due to limited scope and local accountability.

## Source Chapter

Book IV, Chapter 7

## Context

Smith uses colonial administrative efficiency to argue that colonies could reasonably contribute more to imperial expenses. He contrasts the modest cost of effective local government with the substantial expenses of military protection and monopoly maintenance, suggesting a more balanced fiscal relationship would be feasible.

## Economic Domain

Regulation

---

--- ENTITY: colonial military burden ---

# Colonial Military Burden

## Definition

The cost and responsibility of providing military protection for colonies, including naval forces, regular troops, and occasional war expenditures. This burden fell almost entirely on the mother country despite colonies being the primary beneficiaries of protection and often the source of military conflicts.

## Source Chapter

Book IV, Chapter 7

## Context

Smith identifies the military burden as the primary cost of empire that cannot be justified by benefits from colonial trade. He argues that this disproportionate burden, combined with the inefficiencies created by monopoly policies, makes the current colonial system economically disadvantageous for the mother country.

## Economic Domain

Regulation

---

--- ENTITY: colonial revenue potential ---

# Colonial Revenue Potential

## Definition

The capacity of colonies to generate public revenue through taxation and trade duties, given their economic development, population size, and commercial activity. This potential remained largely untapped due to the focus on monopoly profits rather than systematic revenue collection.

## Source Chapter

Book IV, Chapter 7

## Context

Smith argues that colonies possess significant revenue potential that could support both local administration and contributions to imperial expenses. He contends that developing this potential through fair taxation would be more beneficial than maintaining the current monopoly system that provides uncertain profits while creating political tensions.

## Economic Domain

Regulation

---

--- ENTITY: colonial market access costs ---

# Colonial Market Access Costs

## Definition

The expenses incurred by colonies in reaching international markets, including transportation costs, middleman profits, and restrictions on direct trade. These costs are artificially inflated by monopoly policies that force inefficient trade routes and limit market access.

## Source Chapter

Book IV, Chapter 7

## Context

Smith analyzes how monopoly policies increase colonial market access costs, reducing the economic benefits that would flow from natural trade relationships. He argues that removing these artificial barriers would significantly reduce costs and increase colonial prosperity.

## Economic Domain

Exchange

---

--- ENTITY: colonial economic opportunity costs ---

# Colonial Economic Opportunity Costs

## Definition

The foregone economic benefits that colonies sacrifice due to monopoly restrictions, including lost trade opportunities, inefficient resource allocation, and prevented economic development. These opportunity costs represent the gap between actual outcomes and potential prosperity under free trade.

## Source Chapter

Book IV, Chapter 7

## Context

Smith uses opportunity cost analysis to demonstrate the substantial economic losses created by colonial monopoly policies. He argues that the visible profits of monopoly trade obscure much larger invisible losses from prevented economic development and inefficient resource allocation.

## Economic Domain

General Theory

---

--- ENTITY: colonial economic freedom ---

# Colonial Economic Freedom

## Definition

The absence of artificial restrictions on colonial economic activities, including free trade rights, autonomous policy-making, and unrestricted market access. Economic freedom allows colonies to develop according to their natural advantages and individual initiative.

## Source Chapter

Book IV, Chapter 7

## Context

Smith presents colonial economic freedom as the optimal condition for development, arguing that natural economic forces produce better outcomes than government planning or monopoly control. He contends that removing artificial restrictions would unleash colonial economic potential and benefit both colonies and the mother country.

## Economic Domain

Regulation

---

--- ENTITY: colonial economic development constraints ---

# Colonial Economic Development Constraints

## Definition

The artificial limitations on colonial economic growth imposed by monopoly policies, including restricted trade access, controlled production, and limited market opportunities. These constraints prevent colonies from achieving their natural development trajectory.

## Source Chapter

Book IV, Chapter 7

## Context

Smith systematically identifies how monopoly policies create development constraints that limit colonial prosperity. He argues that removing these artificial constraints would allow colonies to develop more rapidly and achieve higher levels of economic success.

## Economic Domain

Production

---

--- ENTITY: colonial economic system comparison ---

# Colonial Economic System Comparison

## Definition

The analysis of different approaches to managing colonial economies, contrasting monopoly-controlled systems with more open arrangements that allow greater economic freedom and market access. This comparison demonstrates the relative effectiveness of different policy approaches.

## Source Chapter

Book IV, Chapter 7

## Context

Smith uses comparative analysis to demonstrate how different colonial policies produce different economic outcomes. He argues that systems allowing greater economic freedom consistently produce better results than those based on monopoly control and restriction.

## Economic Domain

General Theory

---

--- ENTITY: colonial economic policy alternatives ---

# Colonial Economic Policy Alternatives

## Definition

Different approaches to managing colonial economic relationships, ranging from complete monopoly control to varying degrees of economic freedom and market access. These alternatives represent different balances between control and autonomy in colonial administration.

## Source Chapter

Book IV, Chapter 7

## Context

Smith presents various policy alternatives to demonstrate that complete monopoly is not the only approach to colonial management. He argues that more moderate policies allowing greater economic freedom could achieve better outcomes for both colonies and the mother country.

## Economic Domain

Regulation

---

--- ENTITY: colonial economic efficiency analysis ---

# Colonial Economic Efficiency Analysis

## Definition

The systematic examination of how different policies and practices affect the productive use of resources in colonial economies, including the comparison of actual outcomes with potential efficiency under alternative arrangements. This analysis reveals the economic costs of monopoly policies.

## Source Chapter

Book IV, Chapter 7

## Context

Smith employs efficiency analysis throughout his discussion of colonial policy to demonstrate how monopoly restrictions reduce economic productivity. He argues that more efficient resource allocation under free trade would generate greater overall wealth for both colonies and the mother country.

## Economic Domain

General Theory

---

--- ENTITY: colonial economic justice ---

# Colonial Economic Justice

## Definition

The fairness of economic arrangements between colonies and the mother country, including the distribution of costs and benefits, the respect for property rights, and the provision of equal treatment under commercial law. Just arrangements promote stability and mutual benefit.

## Source Chapter

Book IV, Chapter 7

## Context

Smith argues that current colonial arrangements lack economic justice, imposing disproportionate burdens on the mother country while restricting colonial development. He contends that more just arrangements allowing greater economic freedom would produce better outcomes for all parties.

## Economic Domain

Regulation

---

--- ENTITY: colonial economic stability ---

# Colonial Economic Stability

## Definition

The resilience of colonial economies to external shocks and internal disruptions, including the ability to maintain consistent growth, manage market fluctuations, and adapt to changing conditions. Greater economic freedom typically promotes greater stability through diversified economic activity.

## Source Chapter

Book IV, Chapter 7

## Context

Smith argues that monopoly policies reduce colonial economic stability by creating artificial dependencies and limiting adaptive capacity. He contends that more open economic arrangements would promote greater stability through diversified trade relationships and autonomous policy responses.

## Economic Domain

General Theory

---

--- ENTITY: colonial economic adaptation ---

# Colonial Economic Adaptation

## Definition

The capacity of colonial economies to adjust to changing circumstances, including market conditions, technological developments, and competitive pressures. Greater economic freedom enhances adaptive capacity by allowing decentralized decision-making and market-driven adjustments.

## Source Chapter

Book IV, Chapter 7

## Context

Smith emphasizes adaptation as a key advantage of economic freedom, arguing that monopoly policies reduce colonial economies' ability to respond effectively to changing conditions. He contends that more flexible arrangements would promote better adaptation and sustained development.

## Economic Domain

General Theory

---

--- ENTITY: colonial economic growth patterns ---

# Colonial Economic Growth Patterns

## Definition

The typical trajectories of economic development in colonies, including the sequence of agricultural expansion, manufacturing development, and commercial growth. These patterns reflect the natural exploitation of comparative advantages under favorable conditions.

## Source Chapter

Book IV, Chapter 7

## Context

Smith uses growth pattern analysis to demonstrate how natural economic forces operate in colonial contexts. He argues that monopoly policies interfere with these natural patterns, forcing colonies into economically suboptimal development trajectories.

## Economic Domain

Production

---

--- ENTITY: colonial economic comparative advantage ---

# Colonial Economic Comparative Advantage

## Definition

The relative efficiency with which colonies can produce certain goods compared to other regions, based on natural resources, labor conditions, and market access. Exploiting comparative advantages through specialized production and trade maximizes economic benefits.

## Source Chapter

Book IV, Chapter 7

## Context

Smith argues that colonies possess significant comparative advantages, particularly in agricultural production, that should guide their economic development. He contends that monopoly policies prevent colonies from fully exploiting these advantages through restricted trade and controlled production.

## Economic Domain

Production

---

--- ENTITY: colonial economic specialization ---

# Colonial Economic Specialization

## Definition

The concentration of economic activity in areas where colonies have natural advantages, including agricultural production, raw material extraction, and specific manufacturing activities. Specialization increases efficiency and allows colonies to trade for other needed goods.

## Source Chapter

Book IV, Chapter 7

## Context

Smith advocates economic specialization as the most efficient development path for colonies, arguing that their natural advantages in agriculture and resource extraction should guide their economic focus. He contends that monopoly policies that force artificial diversification reduce overall efficiency.

## Economic Domain

Production

---

--- ENTITY: colonial economic diversification ---

# Colonial Economic Diversification

## Definition

The development of varied economic activities within colonies, including agriculture, manufacturing, commerce, and services. While some diversification is natural as economies develop, artificial diversification forced by monopoly policies often reduces efficiency.

## Source Chapter

Book IV, Chapter 7

## Context

Smith distinguishes between natural economic diversification that occurs as colonies develop and artificial diversification forced by monopoly policies. He argues that the latter often reduces efficiency by preventing colonies from specializing according to their natural advantages.

## Economic Domain

Production

---

--- ENTITY: colonial economic interdependence ---

# Colonial Economic Interdependence

## Definition

The mutual economic relationships between colonies and other regions, including trade dependencies, capital flows, and labor mobility. Greater interdependence through open trade relationships typically promotes economic efficiency and development.

## Source Chapter

Book IV, Chapter 7

## Context

Smith argues that colonial economic interdependence with global markets is essential for optimal development. He contends that monopoly policies that restrict these relationships artificially limit colonial prosperity and economic potential.

## Economic Domain

Exchange

---

--- ENTITY: colonial economic autonomy benefits ---

# Colonial Economic Autonomy Benefits

## Definition

The advantages that colonies gain from managing their own economic affairs, including the ability to exploit natural advantages, respond to local conditions, and retain economic benefits. Greater autonomy typically promotes more rapid and sustainable development.

## Source Chapter

Book IV, Chapter 7

## Context

Smith systematically identifies the benefits of colonial economic autonomy, arguing that self-management allows colonies to develop according to their natural advantages rather than external restrictions. He contends that these benefits outweigh any supposed advantages of monopoly control.

## Economic Domain

Regulation

---

--- ENTITY: colonial economic policy effectiveness ---

# Colonial Economic Policy Effectiveness

## Definition

The degree to which different approaches to colonial management achieve their intended economic outcomes, including development goals, revenue generation, and mutual benefit. More open policies typically prove more effective than restrictive monopoly approaches.

## Source Chapter

Book IV, Chapter 7

## Context

Smith evaluates the effectiveness of different colonial policies, arguing that monopoly approaches consistently fail to achieve their stated objectives while creating numerous unintended negative consequences. He contends that more open policies would prove more effective in promoting development and mutual benefit.

## Economic Domain

Regulation

---

--- ENTITY: colonial economic system sustainability ---

# Colonial Economic System Sustainability

## Definition

The ability of different approaches to colonial management to maintain long-term economic viability without creating unsustainable dependencies or inefficiencies. More open systems typically prove more sustainable than restrictive monopoly arrangements.

## Source Chapter

Book IV, Chapter 7

## Context

Smith argues that monopoly-based colonial systems are inherently unsustainable, creating economic inefficiencies and political tensions that ultimately undermine their viability. He contends that more open arrangements would prove more sustainable by promoting natural economic development and mutual benefit.

## Economic Domain

General Theory

---

--- ENTITY: colonial economic system transformation ---

# Colonial Economic System Transformation

## Definition

The process of changing from restrictive monopoly-based colonial management to more open economic arrangements that allow greater freedom and market access. Such transformations can significantly improve economic outcomes for both colonies and the mother country.

## Source Chapter

Book IV, Chapter 7

## Context

Smith advocates for transforming colonial economic systems from monopoly-based to more open arrangements, arguing that such changes would produce substantial benefits. He presents this transformation as both economically advantageous and politically necessary for long-term stability.

## Economic Domain

Regulation

---

--- ENTITY: colonial economic system evaluation ---

# Colonial Economic System Evaluation

## Definition

The systematic assessment of different approaches to colonial management based on their economic outcomes, efficiency, and mutual benefits. This evaluation demonstrates that more open systems consistently outperform restrictive monopoly arrangements.

## Source Chapter

Book IV, Chapter 7

## Context

Smith employs systematic evaluation throughout his analysis of colonial policy, comparing different approaches based on their actual economic outcomes. He argues that this evaluation consistently demonstrates the superiority of more open economic arrangements over monopoly control.

## Economic Domain

General Theory

---

--- ENTITY: colonial economic system principles ---

# Colonial Economic System Principles

## Definition

The fundamental concepts underlying different approaches to colonial management, including the belief in natural economic liberty, the importance of comparative advantage, and the benefits of open trade. These principles guide the evaluation and design of colonial economic policies.

## Source Chapter

Book IV, Chapter 7

## Context

Smith articulates principles that should guide colonial economic policy, arguing that respect for natural economic liberty and market forces produces better outcomes than artificial restrictions. He contends that these principles provide a sound foundation for more effective colonial management.

## Economic Domain

General Theory

---

--- ENTITY: colonial economic system objectives ---

# Colonial Economic System Objectives

## Definition

The goals that different approaches to colonial management seek to achieve, including economic development, revenue generation, political control, and mutual benefit. More open systems typically achieve these objectives more effectively than restrictive monopoly arrangements.

## Source Chapter

Book IV, Chapter 7

## Context

Smith examines the objectives of different colonial policies, arguing that monopoly approaches often fail to achieve their stated goals while creating numerous negative consequences. He contends that more open arrangements would better achieve objectives of development and mutual benefit.

## Economic Domain

Regulation

---

--- ENTITY: colonial economic system outcomes ---

# Colonial Economic System Outcomes

## Definition

The actual results produced by different approaches to colonial management, including economic development levels, revenue generation, political stability, and mutual benefit. More open systems consistently produce better outcomes than restrictive monopoly arrangements.

## Source Chapter

Book IV, Chapter 7

## Context

Smith analyzes the outcomes of different colonial policies, demonstrating that monopoly approaches consistently produce suboptimal results. He argues that more open arrangements would generate better economic and political outcomes for both colonies and the mother country.

## Economic Domain

General Theory

---

--- ENTITY: colonial economic system performance ---

# Colonial Economic System Performance

## Definition

The effectiveness with which different approaches to colonial management achieve their intended purposes, including economic development, revenue generation, and political control. Performance evaluation reveals the superiority of more open economic arrangements.

## Source Chapter

Book IV, Chapter 7

## Context

Smith evaluates the performance of different colonial economic systems, arguing that monopoly-based approaches consistently underperform compared to more open arrangements. He contends that performance analysis demonstrates the need for policy transformation.

## Economic Domain

General Theory

---

--- ENTITY: colonial economic system design ---

# Colonial Economic System Design

## Definition

The structure and rules governing colonial economic relationships, including trade regulations, production controls, and market access policies. Better system design based on economic principles produces more effective and beneficial outcomes.

## Source Chapter

Book IV, Chapter 7

## Context

Smith advocates for redesigning colonial economic systems based on principles of natural liberty and market efficiency. He argues that better system design would produce superior outcomes compared to the current monopoly-based arrangements.

## Economic Domain

Regulation

---

--- ENTITY: colonial economic system implementation ---

# Colonial Economic System Implementation

## Definition

The practical application of different approaches to colonial management, including the establishment of trade regulations, administrative structures, and enforcement mechanisms. Implementation quality significantly affects the effectiveness of different policy approaches.

## Source Chapter

Book IV, Chapter 7

## Context

Smith examines how different colonial policies are implemented in practice, arguing that monopoly approaches often fail due to poor implementation and unintended consequences. He contends that more open arrangements would be easier to implement effectively.

## Economic Domain

Regulation

---

--- ENTITY: colonial economic system governance ---

# Colonial Economic System Governance

## Definition

The structures and processes through which colonial economic policies are made and administered, including legislative bodies, administrative agencies, and enforcement mechanisms. Better governance typically produces more effective and beneficial economic outcomes.

## Source Chapter

Book IV, Chapter 7

## Context

Smith analyzes colonial governance structures, arguing that monopoly-based systems often suffer from poor governance and lack of accountability. He contends that more open arrangements with greater local participation would produce better governance and economic outcomes.

## Economic Domain

Regulation

---

--- ENTITY: colonial economic system coordination ---

# Colonial Economic System Coordination

## Definition

The mechanisms through which different economic activities in colonies are aligned and integrated, including market relationships, production planning, and trade flows. Better coordination through market mechanisms typically produces more efficient outcomes than central planning.

## Source Chapter

Book IV, Chapter 7

## Context

Smith argues that market mechanisms provide superior coordination compared to monopoly control, allowing economic activities to align naturally according to comparative advantages and consumer demands. He contends that this coordination produces more efficient outcomes.

## Economic Domain

Exchange

---

--- ENTITY: colonial economic system adaptation mechanisms ---

# Colonial Economic System Adaptation Mechanisms

## Definition

The processes through which colonial economies adjust to changing conditions, including market responses, policy modifications, and structural changes. More open systems typically possess better adaptation mechanisms through decentralized decision-making.

## Source Chapter

Book IV, Chapter 7

## Context

Smith emphasizes the importance of adaptation mechanisms in colonial economic systems, arguing that monopoly policies often lack effective adaptation processes. He contends that more open arrangements with market mechanisms would provide better adaptation capabilities.

## Economic Domain

General Theory

---

--- ENTITY: colonial economic system feedback loops ---

# Colonial Economic System Feedback Loops

## Definition

The information flows and response mechanisms through which colonial economies adjust to performance outcomes, including market prices, profit signals, and consumer demands. Better feedback loops through market mechanisms promote more effective economic adjustment.

## Source Chapter

Book IV, Chapter 7

## Context

Smith argues that market mechanisms provide superior feedback compared to monopoly control, allowing economic actors to respond effectively to changing conditions. He contends that these feedback loops promote more efficient resource allocation and economic adjustment.

## Economic Domain

Exchange

---

--- ENTITY: colonial economic system resilience ---

# Colonial Economic System Resilience

## Definition

The capacity of colonial economies to withstand and recover from shocks, including market disruptions, policy changes, and external pressures. More open systems typically demonstrate greater resilience through diversified economic activity and adaptive capacity.

## Source Chapter

Book IV, Chapter 7

## Context

Smith argues that monopoly-based colonial systems often lack resilience, creating artificial dependencies and limiting adaptive capacity. He contends that more open arrangements would promote greater resilience through diversified economic relationships and autonomous adjustment capabilities.

## Economic Domain

General Theory

---

--- ENTITY: colonial economic system stability mechanisms ---

# Colonial Economic System Stability Mechanisms

## Definition

The processes and structures that maintain economic equilibrium in colonies, including market regulation, policy consistency, and institutional frameworks. Better stability mechanisms through balanced policies promote more sustainable economic development.

## Source Chapter

Book IV, Chapter 7

## Context

Smith examines stability mechanisms in different colonial economic systems, arguing that monopoly policies often create artificial instability through market distortions and political tensions. He contends that more open arrangements would promote greater stability through natural market equilibrium.

## Economic Domain

General Theory

---

--- ENTITY: colonial economic system balance ---

# Colonial Economic System Balance

## Definition

The equilibrium between different economic forces in colonies, including production and consumption, investment and saving, and domestic and foreign trade. Better balance through market mechanisms promotes more sustainable and efficient economic development.

## Source Chapter

Book IV, Chapter 7

## Context

Smith argues that market mechanisms naturally promote economic balance, while monopoly policies often create artificial imbalances through market distortions and controlled production. He contends that more open arrangements would achieve better economic balance.

## Economic Domain

General Theory

---

--- ENTITY: colonial economic system equilibrium ---

# Colonial Economic System Equilibrium

## Definition

The stable state toward which colonial economies naturally tend under free market conditions, characterized by balanced production, consumption, and trade relationships. This equilibrium is often disrupted by monopoly policies that create artificial market distortions.

## Source Chapter

Book IV, Chapter 7

## Context

Smith argues that natural market forces tend toward economic equilibrium, while monopoly policies often prevent this natural balance through artificial restrictions and controlled production. He contends that more open arrangements would allow colonies to achieve natural economic equilibrium.

## Economic Domain

General Theory

---

--- ENTITY: colonial economic system dynamics ---

# Colonial Economic System Dynamics

## Definition

The patterns of change and development in colonial economies over time, including growth trajectories, structural transformations, and adjustment processes. Better understanding of these dynamics promotes more effective policy design and implementation.

## Source Chapter

Book IV, Chapter 7

## Context

Smith analyzes the dynamics of colonial economic development, arguing that natural market forces produce predictable patterns of growth and transformation. He contends that monopoly policies often interfere with these natural dynamics, preventing optimal development trajectories.

## Economic Domain

General Theory

---

--- ENTITY: colonial economic system evolution ---

# Colonial Economic System Evolution

## Definition

The long-term development and transformation of colonial economic arrangements over time, including the progression from simple agricultural economies to more complex commercial and industrial systems. This evolution reflects the natural development of economic capabilities and market relationships.

## Source Chapter

Book IV, Chapter 7

## Context

Smith presents colonial economic evolution as a natural process that occurs when unimpeded by artificial restrictions. He argues that monopoly policies often prevent this natural evolution, forcing colonies into economically suboptimal development paths that limit their long-term potential.

## Economic Domain

General Theory

---

--- ENTITY: colonial economic system learning ---

# Colonial Economic System Learning

## Definition

The processes through which colonial economies acquire knowledge and experience about effective economic practices, including market experimentation, policy adjustment, and institutional development. Better learning processes promote more effective economic development over time.

## Source Chapter

Book IV, Chapter 7

## Context

Smith emphasizes the importance of learning processes in colonial economic development, arguing that market mechanisms provide superior learning opportunities compared to monopoly control. He contends that this learning promotes more effective economic practices and policies over time.

## Economic Domain

General Theory

---

--- ENTITY: colonial economic system innovation ---

# Colonial Economic

## VSM Mappings

--- MAPPING: colony trade monopoly-to-System 3 (Control) ---

# Colony Trade Monopoly -> System 3 (Control)

## Economic Entity Reference

--- ENTITY: colony trade monopoly ---

# Colony Trade Monopoly

## Definition

The exclusive right of mother countries to control all commerce with their colonies, prohibiting direct trade between colonies and other nations while restricting colonial trade to designated ports and seasons. This system channels colonial surplus produce through the mother country, allowing merchants to extract monopoly profits while limiting colonial economic development.

## Source Chapter

Book IV, Chapter 7

## Context

Smith's critique of mercantilist colonial policy forms a central part of his analysis of how exclusive trading privileges distort natural economic development. He argues that while the monopoly may benefit particular merchant interests, it ultimately impoverishes both the colonies and the mother country by preventing the natural expansion of markets and the efficient allocation of capital.

## Economic Domain

Regulation

---

## VSM Concept Reference

### System 3 (Control)

The structures and controls that establish the rules, resources, rights, and responsibilities of System 1 and provide an interface between Systems 1 and Systems 4/5. System 3 represents the day-to-day control of the organisation. It optimises the internal environment.

**Key properties:** Internal regulation, resource allocation, accountability, synergy extraction, performance management.

---

## Mapping Rationale

The colonial trade monopoly functions as a System 3 control mechanism by establishing rules and constraints on economic operations. It defines the rights and responsibilities of colonial merchants and producers, allocates resources through controlled trade channels, and attempts to optimise the internal colonial economic environment according to mercantilist principles. This regulatory structure creates the framework within which all colonial economic activities must operate, similar to how System 3 establishes operational constraints and resource allocation rules.

## Mapping Strength

Strong

---

--- MAPPING: colony trade monopoly-to-System 5 (Policy) ---

# Colony Trade Monopoly -> System 5 (Policy)

## Economic Entity Reference

--- ENTITY: colony trade monopoly ---

# Colony Trade Monopoly

## Definition

The exclusive right of mother countries to control all commerce with their colonies, prohibiting direct trade between colonies and other nations while restricting colonial trade to designated ports and seasons. This system channels colonial surplus produce through the mother country, allowing merchants to extract monopoly profits while limiting colonial economic development.

## Source Chapter

Book IV, Chapter 7

## Context

Smith's critique of mercantilist colonial policy forms a central part of his analysis of how exclusive trading privileges distort natural economic development. He argues that while the monopoly may benefit particular merchant interests, it ultimately impoverishes both the colonies and the mother country by preventing the natural expansion of markets and the efficient allocation of capital.

## Economic Domain

Regulation

---

## VSM Concept Reference

### System 5 (Policy)

The policy-making body that balances demands from Systems 3 and 4 and defines the identity, values, and purpose of the organisation. System 5 provides closure to the whole system and represents its supreme authority.

**Key properties:** Identity, ethos, supreme command, policy closure, balancing internal and external perspectives.

---

## Mapping Rationale

The colonial trade monopoly represents a fundamental policy choice about the nature and purpose of the colonial economic system. It defines the identity and values of the mercantilist system, establishing the principle that colonies exist primarily to benefit the mother country through controlled commerce. This policy framework provides closure to the economic system by determining the overarching purpose and rules that govern all economic relationships between colonies and the mother country.

## Mapping Strength

Strong

---

--- MAPPING: enumerated commodities-to-System 3 (Control) ---

# Enumerated Commodities -> System 3 (Control)

## Economic Entity Reference

--- ENTITY: enumerated commodities ---

# Enumerated Commodities

## Definition

Specific colonial products that could only be exported to the mother country under the Navigation Acts, including tobacco, sugar, cotton, indigo, and naval stores. These commodities were subject to special restrictions designed to channel colonial trade through British ports and merchants, creating a monopoly system that limited colonial economic autonomy.

## Source Chapter

Book IV, Chapter 7

## Context

Smith uses enumerated commodities as a key example of how mercantilist regulations artificially constrain colonial development. He argues that by forcing colonies to sell these products exclusively to the mother country, even when other markets might offer better prices, the system reduces colonial prosperity and efficiency.

## Economic Domain

Regulation

---

## VSM Concept Reference

### System 3 (Control)

The structures and controls that establish the rules, resources, rights, and responsibilities of System 1 and provide an interface between Systems 1 and Systems 4/5. System 3 represents the day-to-day control of the organisation. It optimises the internal environment.

**Key properties:** Internal regulation, resource allocation, accountability, synergy extraction, performance management.

---

## Mapping Rationale

Enumerated commodities represent a System 3 control mechanism that regulates the flow of specific resources within the colonial economic system. By designating certain products as restricted and controlling their trade routes, this policy establishes rules about resource allocation and creates constraints on operational autonomy. The enumeration system defines which products can be traded where and under what conditions, directly controlling the internal economic environment.

## Mapping Strength

Strong

---

--- MAPPING: non-enumerated commodities-to-System 3 (Control) ---

# Non-enumerated Commodities -> System 3 (Control)

## Economic Entity Reference

--- ENTITY: non-enumerated commodities ---

# Non-enumerated Commodities

## Definition

Colonial products not subject to the exclusive export restrictions of the Navigation Acts, including grain, lumber, salt provisions, fish, and other raw materials. These commodities could be exported directly to foreign markets in British or colonial ships, providing colonies with some degree of trade flexibility despite the broader monopoly system.

## Source Chapter

Book IV, Chapter 7

## Context

Smith contrasts non-enumerated commodities with enumerated ones to demonstrate how even partial trade restrictions distort economic development. He argues that the freedom to export these products to international markets significantly contributes to colonial prosperity and economic growth.

## Economic Domain

Regulation

---

## VSM Concept Reference

### System 3 (Control)

The structures and controls that establish the rules, resources, rights, and responsibilities of System 1 and provide an interface between Systems 1 and Systems 4/5. System 3 represents the day-to-day control of the organisation. It optimises the internal environment.

**Key properties:** Internal regulation, resource allocation, accountability, synergy extraction, performance management.

---

## Mapping Rationale

Non-enumerated commodities represent a System 3 control mechanism that establishes differential rules for different types of resources within the colonial economic system. By creating a two-tier system of trade regulation, this policy defines different rights and responsibilities for different product categories, effectively allocating resources and opportunities based on product classification. This regulatory framework directly controls the internal economic environment by determining which products have greater operational autonomy.

## Mapping Strength

Strong

---

--- MAPPING: exclusive company-to-System 3 (Control) ---

# Exclusive Company -> System 3 (Control)

## Economic Entity Reference

--- ENTITY: exclusive company ---

# Exclusive Company

## Definition

Chartered commercial organizations granted monopoly rights over specific trades or territories, such as the Dutch East India Company or the French Mississippi Company. These entities controlled colonial trade through exclusive privileges, setting prices, restricting competition, and often engaging in oppressive practices that hindered economic development.

## Source Chapter

Book IV, Chapter 7

## Context

Smith criticizes exclusive companies as particularly harmful forms of monopoly, arguing that their merchant governance leads to military despotism in colonies and economic stagnation. He contrasts their performance with that of free colonial settlements, showing how monopoly control prevents the natural growth of commerce and industry.

## Economic Domain

Regulation

---

## VSM Concept Reference

### System 3 (Control)

The structures and controls that establish the rules, resources, rights, and responsibilities of System 1 and provide an interface between Systems 1 and Systems 4/5. System 3 represents the day-to-day control of the organisation. It optimises the internal environment.

**Key properties:** Internal regulation, resource allocation, accountability, synergy extraction, performance management.

---

## Mapping Rationale

Exclusive companies function as System 3 control mechanisms by establishing comprehensive regulatory frameworks over specific economic territories. They set rules for trade practices, allocate resources through controlled access to markets, and define the rights and responsibilities of economic actors within their domains. These chartered entities exercise day-to-day control over colonial economic operations, attempting to optimise the internal environment according to their own interests rather than natural market principles.

## Mapping Strength

Strong

---

--- MAPPING: round-about foreign trade of consumption-to-System 3 (Control) ---

# Round-about Foreign Trade of Consumption -> System 3 (Control)

## Economic Entity Reference

--- ENTITY: round-about foreign trade of consumption ---

# Round-about Foreign Trade of Consumption

## Definition

A trade pattern where goods pass through multiple intermediaries before reaching final consumers, as when colonial tobacco is exported to Britain, re-exported to continental Europe, and then sold to consumers. This circuitous route increases transportation time and costs compared to direct trade, reducing economic efficiency.

## Source Chapter

Book IV, Chapter 7

## Context

Smith uses round-about trade to illustrate how colonial monopolies force inefficient trade patterns. He argues that the monopoly system compels merchants to engage in these circuitous routes, which tie up capital for longer periods and reduce the overall quantity of productive labor that can be maintained in the economy.

## Economic Domain

Exchange

---

## VSM Concept Reference

### System 3 (Control)

The structures and controls that establish the rules, resources, rights, and responsibilities of System 1 and provide an interface between Systems 1 and Systems 4/5. System 3 represents the day-to-day control of the organisation. It optimises the internal environment.

**Key properties:** Internal regulation, resource allocation, accountability, synergy extraction, performance management.

---

## Mapping Rationale

Round-about trade represents a System 3 control mechanism that regulates the flow of resources through the colonial economic system. By forcing goods through inefficient trade routes, this policy establishes rules about how resources must move through the system, effectively allocating capital and labor according to artificial constraints rather than natural market efficiency. This control structure optimises the internal environment according to mercantilist principles rather than economic efficiency.

## Mapping Strength

Strong

---

--- MAPPING: direct foreign trade of consumption-to-System 3 (Control) ---

# Direct Foreign Trade of Consumption -> System 3 (Control)

## Economic Entity Reference

--- ENTITY: direct foreign trade of consumption ---

# Direct Foreign Trade of Consumption

## Definition

Trade conducted directly between producers and consumers in different countries without intermediate re-exportation, allowing goods to reach markets more quickly and at lower cost. This trade pattern maintains capital in more frequent circulation and supports greater productive employment.

## Source Chapter

Book IV, Chapter 7

## Context

Smith contrasts direct trade with round-about trade to demonstrate how colonial monopolies reduce economic efficiency. He argues that direct trade allows for more frequent returns of capital, enabling merchants to maintain greater quantities of productive labor and generate more economic value.

## Economic Domain

Exchange

---

## VSM Concept Reference

### System 3 (Control)

The structures and controls that establish the rules, resources, rights, and responsibilities of System 1 and provide an interface between Systems 1 and Systems 4/5. System 3 represents the day-to-day control of the organisation. It optimises the internal environment.

**Key properties:** Internal regulation, resource allocation, accountability, synergy extraction, performance management.

---

## Mapping Rationale

Direct trade represents a System 3 control mechanism that optimises the internal economic environment through efficient resource allocation. By allowing goods to flow directly between producers and consumers, this policy establishes rules that promote natural market efficiency rather than artificial constraints. This control structure creates an internal environment where capital circulates more frequently and supports greater productive employment.

## Mapping Strength

Strong

---

--- MAPPING: carrying trade-to-System 3 (Control) ---

# Carrying Trade -> System 3 (Control)

## Economic Entity Reference

--- ENTITY: carrying trade ---

# Carrying Trade

## Definition

The business of transporting goods between foreign markets without ownership of the cargo, earning profits from freight charges rather than commodity price differences. This trade form emerges when merchants cannot directly sell colonial products in their most profitable markets due to monopoly restrictions.

## Source Chapter

Book IV, Chapter 7

## Context

Smith identifies carrying trade as an inefficient employment of capital forced by colonial monopolies. He argues that when monopolies prevent direct trade between colonies and other nations, capital that could be used for more productive purposes becomes tied up in mere transportation services.

## Economic Domain

Exchange

---

## VSM Concept Reference

### System 3 (Control)

The structures and controls that establish the rules, resources, rights, and responsibilities of System 1 and provide an interface between Systems 1 and Systems 4/5. System 3 represents the day-to-day control of the organisation. It optimises the internal environment.

**Key properties:** Internal regulation, resource allocation, accountability, synergy extraction, performance management.

---

## Mapping Rationale

Carrying trade represents a System 3 control mechanism that regulates how capital is allocated within the colonial economic system. By forcing capital into inefficient transportation services rather than direct trade, this policy establishes rules about resource allocation that optimise the internal environment according to mercantilist principles rather than economic efficiency. This control structure creates constraints on how capital can be employed productively.

## Mapping Strength

Strong

---

--- MAPPING: home trade-to-System 3 (Control) ---

# Home Trade -> System 3 (Control)

## Economic Entity Reference

--- ENTITY: home trade ---

# Home Trade

## Definition

Commercial transactions conducted within the domestic market of a single country, including both the purchase of foreign goods for domestic consumption and the sale of domestic products to local consumers. This trade form typically provides more frequent returns of capital than foreign trade.

## Source Chapter

Book IV, Chapter 7

## Context

Smith contrasts home trade with foreign trade to demonstrate how colonial monopolies distort capital allocation. He argues that the monopoly system forces capital away from more efficient home trade into less productive foreign trade routes, reducing overall economic efficiency.

## Economic Domain

Exchange

---

## VSM Concept Reference

### System 3 (Control)

The structures and controls that establish the rules, resources, rights, and responsibilities of System 1 and provide an interface between Systems 1 and Systems 4/5. System 3 represents the day-to-day control of the organisation. It optimises the internal environment.

**Key properties:** Internal regulation, resource allocation, accountability, synergy extraction, performance management.

---

## Mapping Rationale

Home trade represents a System 3 control mechanism that optimises the internal economic environment through efficient capital allocation. By promoting trade within domestic markets, this policy establishes rules that create frequent capital returns and support productive employment. This control structure creates an internal environment where resources circulate efficiently and support maximum productive activity.

## Mapping Strength

Strong

---

--- MAPPING: foreign trade of consumption-to-System 3 (Control) ---

# Foreign Trade of Consumption -> System 3 (Control)

## Economic Entity Reference

--- ENTITY: foreign trade of consumption ---

# Foreign Trade of Consumption

## Definition

Trade involving the exchange of goods between different countries for final consumption rather than for re-export or further processing. This includes both direct trade between producing and consuming nations and round-about trade involving intermediate markets.

## Source Chapter

Book IV, Chapter 7

## Context

Smith analyzes different forms of foreign trade to show how colonial monopolies create inefficient trade patterns. He argues that the monopoly system forces capital into less efficient forms of foreign trade, reducing the overall productivity of the economy.

## Economic Domain

Exchange

---

## VSM Concept Reference

### System 3 (Control)

The structures and controls that establish the rules, resources, rights, and responsibilities of System 1 and provide an interface between Systems 1 and Systems 4/5. System 3 represents the day-to-day control of the organisation. It optimises the internal environment.

**Key properties:** Internal regulation, resource allocation, accountability, synergy extraction, performance management.

---

## Mapping Rationale

Foreign trade of consumption represents a System 3 control mechanism that regulates how resources flow between different economic systems. By establishing rules for international trade, this policy controls resource allocation and defines the rights and responsibilities of traders operating across borders. This control structure optimises the internal environment according to mercantilist principles of national advantage rather than natural market efficiency.

## Mapping Strength

Strong

---

--- MAPPING: colony assemblies-to-System 3 (Control) ---

# Colony Assemblies -> System 3 (Control)

## Economic Entity Reference

--- ENTITY: colony assemblies ---

# Colony Assemblies

## Definition

Legislative bodies in British colonies composed of representatives elected by colonial inhabitants, possessing authority to impose taxes and regulate local affairs. These assemblies claimed powers similar to the British Parliament and resisted external taxation without representation.

## Source Chapter

Book IV, Chapter 7

## Context

Smith examines colony assemblies as potential tax authorities, arguing that their distance from Britain and lack of information about imperial needs makes them unsuitable for determining fair contributions to imperial defense. He uses this analysis to support his argument for colonial representation in Parliament.

## Economic Domain

Regulation

---

## VSM Concept Reference

### System 3 (Control)

The structures and controls that establish the rules, resources, rights, and responsibilities of System 1 and provide an interface between Systems 1 and Systems 4/5. System 3 represents the day-to-day control of the organisation. It optimises the internal environment.

**Key properties:** Internal regulation, resource allocation, accountability, synergy extraction, performance management.

---

## Mapping Rationale

Colony assemblies function as System 3 control mechanisms by establishing local rules and regulations for colonial economic operations. They define the rights and responsibilities of economic actors within their jurisdictions, allocate resources through taxation and spending decisions, and attempt to optimise the internal colonial environment according to local priorities. These assemblies create the framework within which all colonial economic activities must operate.

## Mapping Strength

Strong

---

--- MAPPING: civil government expense in colonies-to-System 3 (Control) ---

# Civil Government Expense in Colonies -> System 3 (Control)

## Economic Entity Reference

--- ENTITY: civil government expense in colonies ---

# Civil Government Expense in Colonies

## Definition

The relatively modest cost of maintaining colonial administrative structures, including governors, judges, and basic public works, typically funded through moderate local taxation rather than imperial subsidies. This expense was proportionally much smaller than military defense costs.

## Source Chapter

Book IV, Chapter 7

## Context

Smith uses the low cost of colonial civil government to argue that colonies could afford to contribute more to imperial expenses. He contrasts this with the high costs of military defense and monopoly maintenance, suggesting that colonies could support both their own administration and a fair share of imperial costs.

## Economic Domain

Regulation

---

## VSM Concept Reference

### System 3 (Control)

The structures and controls that establish the rules, resources, rights, and responsibilities of System 1 and provide an interface between Systems 1 and Systems 4/5. System 3 represents the day-to-day control of the organisation. It optimises the internal environment.

**Key properties:** Internal regulation, resource allocation, accountability, synergy extraction, performance management.

---

## Mapping Rationale

Civil government expense in colonies represents a System 3 control mechanism that allocates resources for maintaining the administrative framework of the colonial economic system. This expenditure establishes the infrastructure necessary for enforcing rules, resolving disputes, and providing basic services that enable economic operations. The cost structure optimises the internal environment by maintaining the minimal administrative apparatus required for colonial governance.

## Mapping Strength

Strong

---

--- MAPPING: military defense expense-to-System 3 (Control) ---

# Military Defense Expense -> System 3 (Control)

## Economic Entity Reference

--- ENTITY: military defense expense ---

# Military Defense Expense

## Definition

The substantial cost of maintaining armed forces to protect colonies from foreign invasion and internal rebellion, including regular troops, naval forces, and occasional war expenditures. This expense fell almost entirely on the mother country despite the colonies being the primary beneficiaries of protection.

## Source Chapter

Book IV, Chapter 7

## Context

Smith argues that military defense represents the true cost of empire, far exceeding the benefits derived from colonial monopolies. He uses this analysis to demonstrate that the current system unfairly burdens Britain while providing colonies with protection without corresponding financial contribution.

## Economic Domain

Regulation

---

## VSM Concept Reference

### System 3 (Control)

The structures and controls that establish the rules, resources, rights, and responsibilities of System 1 and provide an interface between Systems 1 and Systems 4/5. System 3 represents the day-to-day control of the organisation. It optimises the internal environment.

**Key properties:** Internal regulation, resource allocation, accountability, synergy extraction, performance management.

---

## Mapping Rationale

Military defense expense functions as a System 3 control mechanism that allocates substantial resources to maintain the security framework of the colonial economic system. This expenditure establishes the conditions necessary for economic operations by protecting against external threats and maintaining internal order. The cost structure optimises the internal environment by providing the security infrastructure required for colonial economic activities to function.

## Mapping Strength

Strong

---

--- MAPPING: colonial prosperity mechanisms-to-System 1 (Operations) ---

# Colonial Prosperity Mechanisms -> System 1 (Operations)

## Economic Entity Reference

--- ENTITY: colonial prosperity mechanisms ---

# Colonial Prosperity Mechanisms

## Definition

The economic factors that enable rapid development in new colonies, including abundant cheap land, high wages attracting labor, self-government encouraging enterprise, and the ability to retain most produce value. These mechanisms operate most effectively when colonies have economic autonomy and market access.

## Source Chapter

Book IV, Chapter 7

## Context

Smith contrasts colonial prosperity mechanisms with the constraints imposed by mercantilist policies. He argues that the natural advantages of new settlements—particularly land abundance and labor scarcity—create conditions for rapid economic growth that monopoly restrictions artificially limit.

## Economic Domain

Production

---

## VSM Concept Reference

### System 1 (Operations)

The primary activities that produce the organisation's purpose. These are the operational units that directly create value. Each operational element is itself a viable system (the principle of recursion).

**Key properties:** Autonomy within constraints, self-organisation, direct engagement with the environment.

---

## Mapping Rationale

Colonial prosperity mechanisms represent System 1 operational activities that directly produce economic value in new settlements. These mechanisms include the primary productive activities of land cultivation, labor employment, and enterprise development that create the fundamental economic output of colonies. They operate with significant autonomy within the constraints of their natural environment, directly engaging with the physical and economic conditions that enable colonial development.

## Mapping Strength

Strong

---

--- MAPPING: land monopolization effects-to-System 1 (Operations) ---

# Land Monopolization Effects -> System 1 (Operations)

## Economic Entity Reference

--- ENTITY: land monopolization effects ---

# Land Monopolization Effects

## Definition

The economic consequences of concentrating land ownership in colonial territories, including reduced agricultural improvement, limited labor mobility, and the creation of landlord-tenant relationships that mirror European patterns. This process undermines the natural colonial development trajectory.

## Source Chapter

Book IV, Chapter 7

## Context

Smith examines how land monopolization in colonies creates the same economic problems found in older countries, including rent extraction and labor subordination. He argues that this process contradicts the natural colonial development pattern where land abundance should promote widespread ownership and prosperity.

## Economic Domain

Production

---

## VSM Concept Reference

### System 1 (Operations)

The primary activities that produce the organisation's purpose. These are the operational units that directly create value. Each operational element is itself a viable system (the principle of recursion).

**Key properties:** Autonomy within constraints, self-organisation, direct engagement with the environment.

---

## Mapping Rationale

Land monopolization effects represent System 1 operational constraints that directly impact productive activities in colonial economies. These effects include the primary economic operations of land use, agricultural production, and labor employment that are fundamentally altered by concentrated ownership patterns. They demonstrate how operational autonomy is constrained by ownership structures, directly affecting the engagement between economic actors and their productive environment.

## Mapping Strength

Strong

---

--- MAPPING: colonial market expansion-to-System 1 (Operations) ---

# Colonial Market Expansion -> System 1 (Operations)

## Economic Entity Reference

--- ENTITY: colonial market expansion ---

# Colonial Market Expansion

## Definition

The growth of commercial opportunities created by colonial development, including new markets for manufactured goods and sources of raw materials. This expansion increases the overall size of the economic system and creates new opportunities for productive employment.

## Source Chapter

Book IV, Chapter 7

## Context

Smith argues that colonial market expansion represents one of the primary benefits of colonization, creating larger markets that support greater division of labor and more efficient production. He contends that monopoly restrictions artificially limit this beneficial expansion.

## Economic Domain

Exchange

---

## VSM Concept Reference

### System 1 (Operations)

The primary activities that produce the organisation's purpose. These are the operational units that directly create value. Each operational element is itself a viable system (the principle of recursion).

**Key properties:** Autonomy within constraints, self-organisation, direct engagement with the environment.

---

## Mapping Rationale

Colonial market expansion represents System 1 operational activities that directly create economic value through increased commercial opportunities. These activities include the primary productive operations of market development, trade facilitation, and employment creation that expand the scope of economic engagement. They operate with enhanced autonomy as markets grow, directly engaging with expanding commercial environments to create new value.

## Mapping Strength

Strong

---

--- MAPPING: natural liberty in colonial trade-to-System 1 (Operations) ---

# Natural Liberty in Colonial Trade -> System 1 (Operations)

## Economic Entity Reference

--- ENTITY: natural liberty in colonial trade ---

# Natural Liberty in Colonial Trade

## Definition

The principle that individuals should be free to engage in commerce according to their own judgment without artificial restrictions, including the right to buy and sell in the most advantageous markets. This concept underlies Smith's critique of colonial monopoly systems.

## Source Chapter

Book IV, Chapter 7

## Context

Smith presents natural liberty as the proper framework for colonial economic relations, arguing that monopoly restrictions violate this fundamental principle. He contends that allowing natural liberty would produce better outcomes for both colonies and the mother country than the current restrictive system.

## Economic Domain

Regulation

---

## VSM Concept Reference

### System 1 (Operations)

The primary activities that produce the organisation's purpose. These are the operational units that directly create value. Each operational element is itself a viable system (the principle of recursion).

**Key properties:** Autonomy within constraints, self-organisation, direct engagement with the environment.

---

## Mapping Rationale

Natural liberty in colonial trade represents System 1 operational autonomy that enables direct value creation through unrestricted commercial activities. This principle allows economic actors to self-organise their productive activities according to natural market signals, directly engaging with the most advantageous commercial environments. It maximizes operational autonomy within the natural constraints of market conditions rather than artificial regulatory restrictions.

## Mapping Strength

Strong

---

--- MAPPING: mercantile system principles-to-System 5 (Policy) ---

# Mercantile System Principles -> System 5 (Policy)

## Economic Entity Reference

--- ENTITY: mercantile system principles ---

# Mercantile System Principles

## Definition

The economic doctrines underlying colonial monopoly policies, including the belief that national wealth consists of precious metals, that trade is a zero-sum game, and that colonies exist primarily to benefit the mother country through controlled commerce. These principles justify restrictive trade practices.

## Source Chapter

Book IV, Chapter 7

## Context

Smith systematically critiques mercantile system principles throughout his analysis of colonial policy, demonstrating how these doctrines lead to economically harmful practices. He argues that the system's focus on precious metals and monopoly profits obscures the true sources of national wealth and prosperity.

## Economic Domain

General Theory

---

## VSM Concept Reference

### System 5 (Policy)

The policy-making body that balances demands from Systems 3 and 4 and defines the identity, values, and purpose of the organisation. System 5 provides closure to the whole system and represents its supreme authority.

**Key properties:** Identity, ethos, supreme command, policy closure, balancing internal and external perspectives.

---

## Mapping Rationale

Mercantile system principles represent System 5 policy framework that defines the identity and purpose of the colonial economic system. These principles establish the supreme authority's values about national wealth, trade relationships, and colonial purpose, providing closure to the entire economic system. They balance internal demands for monopoly profits with external demands for colonial development, defining the overarching ethos that governs all economic relationships.

## Mapping Strength

Strong

---

--- MAPPING: colonial economic autonomy-to-System 1 (Operations) ---

# Colonial Economic Autonomy -> System 1 (Operations)

## Economic Entity Reference

--- ENTITY: colonial economic autonomy ---

# Colonial Economic Autonomy

## Definition

The degree of self-determination colonies possess in managing their economic affairs, including the ability to trade freely, set local policies, and retain economic benefits. Greater autonomy allows colonies to develop according to their natural advantages rather than external restrictions.

## Source Chapter

Book IV, Chapter 7

## Context

Smith argues that colonial economic autonomy is essential for optimal development, allowing settlements to exploit their natural advantages of land abundance and labor scarcity. He contends that monopoly restrictions artificially limit this autonomy, reducing colonial prosperity and efficiency.

## Economic Domain

Regulation

---

## VSM Concept Reference

### System 1 (Operations)

The primary activities that produce the organisation's purpose. These are the operational units that directly create value. Each operational element is itself a viable system (the principle of recursion).

**Key properties:** Autonomy within constraints, self-organisation, direct engagement with the environment.

---

## Mapping Rationale

Colonial economic autonomy represents System 1 operational autonomy that enables direct value creation through self-determined economic activities. This autonomy allows colonies to self-organise their productive operations according to their natural advantages, directly engaging with their specific environmental conditions without external restrictions. It maximizes operational freedom within the natural constraints of colonial circumstances.

## Mapping Strength

Strong

---

--- MAPPING: colonial dependency structure-to-System 5 (Policy) ---

# Colonial Dependency Structure -> System 5 (Policy)

## Economic Entity Reference

--- ENTITY: colonial dependency structure ---

# Colonial Dependency Structure

## Definition

The hierarchical relationship between mother countries and colonies characterized by political control, economic exploitation through monopoly, and military protection obligations. This structure creates mutual dependencies that often prove economically disadvantageous to both parties.

## Source Chapter

Book IV, Chapter 7

## Context

Smith analyzes colonial dependency as an inherently problematic relationship that creates economic inefficiencies and political tensions. He argues that the current dependency structure benefits particular interest groups while imposing net costs on both the colonies and the mother country.

## Economic Domain

Regulation

---

## VSM Concept Reference

### System 5 (Policy)

The policy-making body that balances demands from Systems 3 and 4 and defines the identity, values, and purpose of the organisation. System 5 provides closure to the whole system and represents its supreme authority.

**Key properties:** Identity, ethos, supreme command, policy closure, balancing internal and external perspectives.

---

## Mapping Rationale

Colonial dependency structure represents System 5 policy framework that defines the identity and purpose of the colonial relationship. This hierarchical structure establishes the supreme authority's values about political control, economic exploitation, and mutual obligations, providing closure to the entire colonial system. It balances internal demands for control with external demands for development, defining the overarching ethos that governs all colonial relationships.

## Mapping Strength

Strong

---

--- MAPPING: colonial economic development sequence-to-System 1 (Operations) ---

# Colonial Economic Development Sequence -> System 1 (Operations)

## Economic Entity Reference

--- ENTITY: colonial economic development sequence ---

# Colonial Economic Development Sequence

## Definition

The typical pattern of economic progression in new colonies, beginning with agriculture due to land abundance, followed by rudimentary manufacturing for local needs, and eventually developing more sophisticated industry as population and markets grow. This sequence reflects the natural exploitation of comparative advantages.

## Source Chapter

Book IV, Chapter 7

## Context

Smith uses the colonial development sequence to demonstrate how natural economic forces operate when unimpeded by artificial restrictions. He argues that monopoly policies interfere with this natural progression, forcing colonies into economically suboptimal development paths.

## Economic Domain

Production

---

## VSM Concept Reference

### System 1 (Operations)

The primary activities that produce the organisation's purpose. These are the operational units that directly create value. Each operational element is itself a viable system (the principle of recursion).

**Key properties:** Autonomy within constraints, self-organisation, direct engagement with the environment.

---

## Mapping Rationale

Colonial economic development sequence represents System 1 operational progression that directly creates value through successive stages of productive activity. This sequence includes the primary economic operations of agricultural development, manufacturing establishment, and industrial growth that create fundamental economic output. It operates with natural autonomy as colonies self-organise their productive activities according to environmental conditions and market opportunities.

## Mapping Strength

Strong

---

--- MAPPING: colonial population growth factors-to-System 1 (Operations) ---

# Colonial Population Growth Factors -> System 1 (Operations)

## Economic Entity Reference

--- ENTITY: colonial population growth factors ---

# Colonial Population Growth Factors

## Definition

The economic conditions that promote rapid population increase in colonies, including high wages encouraging marriage, abundant food supporting larger families, and economic opportunities providing incentives for reproduction. These factors create virtuous cycles of growth and development.

## Source Chapter

Book IV, Chapter 7

## Context

Smith identifies population growth as a key indicator of colonial prosperity, resulting from the favorable economic conditions created by land abundance and labor scarcity. He argues that monopoly restrictions that reduce wages and economic opportunities ultimately limit this beneficial population growth.

## Economic Domain

Production

---

## VSM Concept Reference

### System 1 (Operations)

The primary activities that produce the organisation's purpose. These are the operational units that directly create value. Each operational element is itself a viable system (the principle of recursion).

**Key properties:** Autonomy within constraints, self-organisation, direct engagement with the environment.

---

## Mapping Rationale

Colonial population growth factors represent System 1 operational conditions that directly produce economic value through human resource development. These factors include the primary productive activities of labor market operation, family formation, and workforce expansion that create fundamental economic capacity. They operate with natural autonomy as economic conditions self-organise to promote population growth according to market opportunities.

## Mapping Strength

Strong

---

--- MAPPING: colonial land abundance effects-to-System 1 (Operations) ---

# Colonial Land Abundance Effects -> System 1 (Operations)

## Economic Entity Reference

--- ENTITY: colonial land abundance effects ---

# Colonial Land Abundance Effects

## Definition

The economic consequences of plentiful available land in colonies, including low land costs, high wages due to labor scarcity, widespread land ownership opportunities, and the prioritization of agricultural development. These effects create fundamentally different economic conditions than in settled countries.

## Source Chapter

Book IV, Chapter 7

## Context

Smith emphasizes land abundance as the primary factor distinguishing colonial economies from those of older countries. He argues that this abundance creates conditions for rapid development that monopoly restrictions artificially constrain, preventing colonies from realizing their full economic potential.

## Economic Domain

Production

---

## VSM Concept Reference

### System 1 (Operations)

The primary activities that produce the organisation's purpose. These are the operational units that directly create value. Each operational element is itself a viable system (the principle of recursion).

**Key properties:** Autonomy within constraints, self-organisation, direct engagement with the environment.

---

## Mapping Rationale

Colonial land abundance effects represent System 1 operational conditions that directly produce economic value through resource utilization. These effects include the primary productive activities of land acquisition, agricultural development, and labor market operation that create fundamental economic opportunities. They operate with natural autonomy as land abundance self-organises economic conditions according to environmental availability.

## Mapping Strength

Strong

---

--- MAPPING: colonial labor market dynamics-to-System 1 (Operations) ---

# Colonial Labor Market Dynamics -> System 1 (Operations)

## Economic Entity Reference

--- ENTITY: colonial labor market dynamics ---

# Colonial Labor Market Dynamics

## Definition

The employment conditions in colonies characterized by labor scarcity, high wages, worker mobility between employers, and the rapid transition of laborers to independent producers. These dynamics create a fundamentally different labor market than exists in countries with abundant labor and scarce land.

## Source Chapter

Book IV, Chapter 7

## Context

Smith analyzes colonial labor markets to demonstrate how economic conditions naturally produce favorable outcomes for workers. He argues that monopoly restrictions that reduce wages and limit economic opportunities undermine these beneficial labor market dynamics.

## Economic Domain

Distribution

---

## VSM Concept Reference

### System 1 (Operations)

The primary activities that produce the organisation's purpose. These are the operational units that directly create value. Each operational element is itself a viable system (the principle of recursion).

**Key properties:** Autonomy within constraints, self-organisation, direct engagement with the environment.

---

## Mapping Rationale

Colonial labor market dynamics represent System 1 operational conditions that directly produce economic value through human resource management. These dynamics include the primary productive activities of employment arrangement, wage determination, and labor mobility that create fundamental economic efficiency. They operate with natural autonomy as market conditions self-organise labor relationships according to supply and demand.

## Mapping Strength

Strong

---

--- MAPPING: colonial economic potential-to-System 5 (Policy) ---

# Colonial Economic Potential -> System 5 (Policy)

## Economic Entity Reference

--- ENTITY: colonial economic potential ---

# Colonial Economic Potential

## Definition

The maximum economic development that colonies could achieve under optimal conditions, including full exploitation of natural resources, unrestricted trade access, and autonomous economic management. This potential is systematically constrained by mercantilist monopoly policies.

## Source Chapter

Book IV, Chapter 7

## Context

Smith argues that colonies possess enormous economic potential that remains unrealized due to artificial restrictions. He contends that removing monopoly controls would allow colonies to achieve prosperity levels far exceeding their current development, benefiting both the colonies and the mother country.

## Economic Domain

General Theory

---

## VSM Concept Reference

### System 5 (Policy)

The policy-making body that balances demands from Systems 3 and 4 and defines the identity, values, and purpose of the organisation. System 5 provides closure to the whole system and represents its supreme authority.

**Key properties:** Identity, ethos, supreme command, policy closure, balancing internal and external perspectives.

---

## Mapping Rationale

Colonial economic potential represents System 5 policy framework that defines the ultimate purpose and identity of the colonial economic system. This potential establishes the supreme authority's vision for what colonies could achieve under optimal conditions, providing closure to the entire economic system. It balances internal demands for control with external demands for development, defining the overarching policy that should govern colonial relationships.

## Mapping Strength

Strong

---

--- MAPPING: colonial trade pattern distortion-to-System 3 (Control) ---

# Colonial Trade Pattern Distortion -> System 3 (Control)

## Economic Entity Reference

--- ENTITY: colonial trade pattern distortion ---

# Colonial Trade Pattern Distortion

## Definition

The artificial alteration of natural trade flows caused by monopoly restrictions, forcing goods through inefficient routes, creating round-about trade patterns, and preventing direct exchange between colonies and their most advantageous markets. These distortions reduce overall economic efficiency.

## Source Chapter

Book IV, Chapter 7

## Context

Smith uses trade pattern distortion as a key example of how monopoly policies create economic inefficiencies. He demonstrates that the forced re-routing of colonial products through British ports increases costs and reduces the value that could be created through more direct trade relationships.

## Economic Domain

Exchange

---

## VSM Concept Reference

### System 3 (Control)

The structures and controls that establish the rules, resources, rights, and responsibilities of System 1 and provide an interface between Systems 1 and Systems 4/5. System 3 represents the day-to-day control of the organisation. It optimises the internal environment.

**Key properties:** Internal regulation, resource allocation, accountability, synergy extraction, performance management.

---

## Mapping Rationale

Colonial trade pattern distortion represents System 3 control mechanisms that regulate resource flows through artificial constraints. By forcing goods through inefficient trade routes, this policy establishes rules about how resources must move through the system, effectively allocating capital and labor according to artificial rather than natural market conditions. This control structure optimises the internal environment according to mercantilist principles of national advantage.

## Mapping Strength

Strong

---

--- MAPPING: colonial economic integration-to-System 1 (Operations) ---

# Colonial Economic Integration -> System 1 (Operations)

## Economic Entity Reference

--- ENTITY: colonial economic integration ---

# Colonial Economic Integration

## Definition

The degree of economic interconnection between colonies and the broader global economy, including trade relationships, capital flows, and labor mobility. Greater integration allows colonies to specialize according to their comparative advantages and access larger markets.

## Source Chapter

Book IV, Chapter 7

## Context

Smith argues that colonial economic integration with global markets is essential for optimal development. He contends that monopoly restrictions artificially limit this integration, preventing colonies from achieving the economic benefits that would flow from unrestricted participation in international commerce.

## Economic Domain

Exchange

---

## VSM Concept Reference

### System 1 (Operations)

The primary activities that produce the organisation's purpose. These are the operational units that directly create value. Each operational element is itself a viable system (the principle of recursion).

**Key properties:** Autonomy within constraints, self-organisation, direct engagement with the environment.

---

## Mapping Rationale

Colonial economic integration represents System 1 operational activities that directly create value through expanded commercial relationships. These activities include the primary productive operations of international trade, capital investment, and labor mobility that create fundamental economic opportunities. They operate with enhanced autonomy as integration increases, directly engaging with global commercial environments to create new value.

## Mapping Strength

Strong

---

--- MAPPING: colonial administrative efficiency-to-System 3 (Control) ---

# Colonial Administrative Efficiency -> System 3 (Control)

## Economic Entity Reference

--- ENTITY: colonial administrative efficiency ---

# Colonial Administrative Efficiency

## Definition

The effectiveness with which colonial governments manage public affairs relative to their cost, including the provision of basic services, maintenance of order, and implementation of local policies. Colonial administration typically achieved reasonable outcomes at relatively low cost due to limited scope and local accountability.

## Source Chapter

Book IV, Chapter 7

## Context

Smith uses colonial administrative efficiency to argue that colonies could reasonably contribute more to imperial expenses. He contrasts the modest cost of effective local government with the substantial expenses of military protection and monopoly maintenance, suggesting a more balanced fiscal relationship would be feasible.

## Economic Domain

Regulation

---

## VSM Concept Reference

### System 3 (Control)

The structures and controls that establish the rules, resources, rights, and responsibilities of System 1 and provide an interface between Systems 1 and Systems 4/5. System 3 represents the day-to-day control of the organisation. It optimises the internal environment.

**Key properties:** Internal regulation, resource allocation, accountability, synergy extraction, performance management.

---

## Mapping Rationale

Colonial administrative efficiency represents System 3 control mechanisms that regulate resource allocation for governance operations. This efficiency establishes rules about how administrative resources should be deployed to maintain order and provide services, effectively optimising the internal environment through cost-effective governance. The control structure creates accountability for administrative performance while maintaining the minimal infrastructure required for colonial management.

## Mapping Strength

Strong

---

--- MAPPING: colonial military burden-to-System 3 (Control) ---

# Colonial Military Burden -> System 3 (Control)

## Economic Entity Reference

--- ENTITY: colonial military burden ---

# Colonial Military Burden

## Definition

The cost and responsibility of providing military protection for colonies, including naval forces, regular troops, and occasional war expenditures. This burden fell almost entirely on the mother country despite colonies being the primary beneficiaries of protection and often the source of military conflicts.

## Source Chapter

Book IV, Chapter 7

## Context

Smith identifies the military burden as the primary cost of empire that cannot be justified by benefits from colonial trade. He argues that this disproportionate burden, combined with the inefficiencies created by monopoly policies, makes the current colonial system economically disadvantageous for the mother country.

## Economic Domain

Regulation

---

## VSM Concept Reference

### System 3 (Control)

The structures and controls that establish the rules, resources, rights, and responsibilities of System 1 and provide an interface between Systems 1 and Systems 4/5. System 3 represents the day-to-day control of the organisation. It optimises the internal environment.

**Key properties:** Internal regulation, resource allocation, accountability, synergy extraction, performance management.

---

## Mapping Rationale

Colonial military burden represents System 3 control mechanisms that allocate substantial resources to maintain security infrastructure. This expenditure establishes rules about how military resources must be deployed to protect economic operations, effectively optimising the internal environment through security provision. The control structure creates accountability for defense costs while maintaining the military infrastructure required for colonial protection.

## Mapping Strength

Strong

---

--- MAPPING: colonial revenue potential-to-System 3 (Control) ---

# Colonial Revenue Potential -> System 3 (Control)

## Economic Entity Reference

--- ENTITY: colonial revenue potential ---

# Colonial Revenue Potential

## Definition

The capacity of colonies to generate public revenue through taxation and trade duties, given their economic development, population size, and commercial activity. This potential remained largely untapped due to the focus on monopoly profits rather than systematic revenue collection.

## Source Chapter

Book IV, Chapter 7

## Context

Smith argues that colonies possess significant revenue potential that could support both local administration and contributions to imperial expenses. He contends that developing this potential through fair taxation would be more beneficial than maintaining the current monopoly system that provides uncertain profits while creating political tensions.

## Economic Domain

Regulation

---

## VSM Concept Reference

### System 3 (Control)

The structures and controls that establish the rules, resources, rights, and responsibilities of System 1 and provide an interface between Systems 1 and Systems 4/5. System 3 represents the day-to-day control of the organisation. It optimises the internal environment.

**Key properties:** Internal regulation, resource allocation, accountability, synergy extraction, performance management.

---

## Mapping Rationale

Colonial revenue potential represents System 3 control mechanisms that could regulate resource allocation through systematic taxation rather than monopoly profits. This potential establishes rules about how public revenue could be generated and deployed to support administrative and imperial expenses, effectively optimising the internal environment through fair fiscal relationships. The control structure creates accountability for revenue generation while maintaining the financial infrastructure required for colonial governance.

## Mapping Strength

Strong

---

--- MAPPING: colonial market access costs-to-System 3 (Control) ---

# Colonial Market Access Costs -> System 3 (Control)

## Economic Entity Reference

--- ENTITY: colonial market access costs ---

# Colonial Market Access Costs

## Definition

The expenses incurred by colonies in reaching international markets, including transportation costs, middleman profits, and restrictions on direct trade. These costs are artificially inflated by monopoly policies that force inefficient trade routes and limit market access.

## Source Chapter

Book IV, Chapter 7

## Context

Smith analyzes how monopoly policies increase colonial market access costs, reducing the economic benefits that would flow from natural trade relationships. He argues that removing these artificial barriers would significantly reduce costs and increase colonial prosperity.

## Economic Domain

Exchange

---

## VSM Concept Reference

### System 3 (Control)

The structures and controls that establish the rules, resources, rights, and responsibilities of System 1 and provide an interface between Systems 1 and Systems 4/5. System 3 represents the day-to-day control of the organisation. It optimises the internal environment.

**Key properties:** Internal regulation, resource allocation, accountability, synergy extraction, performance management.

---

## Mapping Rationale

Colonial market access costs represent System 3 control mechanisms that regulate how resources must flow through artificial trade constraints. By forcing colonies to incur additional expenses to reach markets, this policy establishes rules about resource allocation that optimise the internal environment according to mercantilist principles rather than economic efficiency. The control structure creates constraints on how colonies can access commercial opportunities.

## Mapping Strength

Strong

---

--- MAPPING: colonial economic opportunity costs-to-System 5 (Policy) ---

# Colonial Economic Opportunity Costs -> System 5 (Policy)

## Economic Entity Reference

--- ENTITY: colonial economic opportunity costs ---

# Colonial Economic Opportunity Costs

## Definition

The foregone economic benefits that colonies sacrifice due to monopoly restrictions, including lost trade opportunities, inefficient resource allocation, and prevented economic development. These opportunity costs represent the gap between actual outcomes and potential prosperity under free trade.

## Source Chapter

Book IV, Chapter 7

## Context

Smith uses opportunity cost analysis to demonstrate the substantial economic losses created by colonial monopoly policies. He argues that the visible profits of monopoly trade obscure much larger invisible losses from prevented economic development and inefficient resource allocation.

##

## VSM Framework Reference

---
id: vsm-framework
name: vsm_framework
artifact_type: content
description: Stafford Beer's Viable System Model reference for economic analysis
version: 1.0.0
---

# Stafford Beer's Viable System Model (VSM)

The Viable System Model (VSM) is a model of the organisational structure of any
autonomous system capable of producing itself. It was created by management
cybernetician Stafford Beer in his books *Brain of the Firm* (1972) and
*The Heart of Enterprise* (1979).

## Core Principle: Viability

A viable system is any system organised in such a way as to meet the demands
of surviving in a changing environment. One of the prime features of systems
that survive is that they are adaptable. The VSM expresses a model for a
viable system, which is an abstracted cybernetic description applicable to
any organisation that is a going concern.

## The Five Systems

### System 1 (S1) — Operations

The primary activities that produce the organisation's purpose. These are the
operational units that directly create value. Each operational element is itself
a viable system (the principle of recursion).

**In economic terms:** Productive enterprises, factories, farms, workshops,
individual labourers performing specialised tasks, merchant operations.

**Key properties:** Autonomy within constraints, self-organisation,
direct engagement with the environment.

### System 2 (S2) — Coordination

The information channels and bodies that allow the primary activities in
System 1 to communicate with each other and that allow System 3 to monitor
and coordinate activities. System 2 dampens oscillations and resolves
conflicts between operational units.

**In economic terms:** Market price mechanisms, trade customs, standard
weights and measures, commercial law, banking clearinghouses, trade guilds.

**Key properties:** Anti-oscillatory, dampening, scheduling, conflict
resolution, standardisation.

### System 3 (S3) — Control / Operational Management

The structures and controls that establish the rules, resources, rights,
and responsibilities of System 1 and provide an interface between Systems 1
and Systems 4/5. System 3 represents the day-to-day control of the
organisation. It optimises the internal environment.

**In economic terms:** Government regulation of trade, taxation policy, labour
laws, enforcement of contracts, the "invisible hand" as emergent internal
regulation, guilds and corporations governing members.

**Key properties:** Internal regulation, resource allocation, accountability,
synergy extraction, performance management.

### System 3* (S3*) — Audit / Monitoring

The audit and monitoring channel that allows System 3 to verify information
coming from System 1 through channels other than those provided by System 2.
System 3* provides sporadic, direct access to operational reality.

**In economic terms:** Market inspections, quality checks, auditing of accounts,
surprise investigations into trade practices, verification of weights and measures.

**Key properties:** Sporadic direct investigation, reality checking, bypassing
normal reporting channels.

### System 4 (S4) — Intelligence / Adaptation

The bodies and processes that look outward to the environment to monitor
how the organisation needs to adapt to remain viable. System 4 captures
all relevant information about the outside-and-then environment. It is
responsible for strategic responses.

**In economic terms:** Foreign intelligence about trade opportunities,
market research, new technology adoption, colonial exploration and trade
route development, understanding of foreign economic systems.

**Key properties:** Environmental scanning, future orientation, strategic
planning, modelling, research and development.

### System 5 (S5) — Policy / Identity

The policy-making body that balances demands from Systems 3 and 4 and defines
the identity, values, and purpose of the organisation. System 5 provides
closure to the whole system and represents its supreme authority.

**In economic terms:** Sovereign authority, constitutional principles governing
economic policy, national economic identity, the philosophical foundations
of economic systems (mercantilism vs. free trade), the overarching purpose
of the commonwealth.

**Key properties:** Identity, ethos, supreme command, policy closure,
balancing internal and external perspectives.

## Key Concepts

### Recursion

Every viable system contains and is contained in a viable system. The same
five-system structure recurs at every level of organisation. A workshop is
a viable system within a factory, which is a viable system within an
industry, which is a viable system within a national economy.

### Variety

A measure of the number of possible states of a system. The Law of Requisite
Variety (Ashby's Law) states that only variety can absorb variety. A
controller must have at least as much variety as the system it controls.

### Requisite Variety

The principle that for effective regulation, the variety of the regulator
must match the variety of the system being regulated. This is achieved
through variety attenuation (reducing the variety coming up from operations)
and variety amplification (increasing the variety of management's responses).

### Attenuation and Amplification

Variety engineering mechanisms. Attenuation reduces variety (e.g., reporting
summaries, statistical aggregation, standardisation). Amplification increases
variety (e.g., delegation, empowerment, decentralisation).

### Algedonic Signals

Emergency signals that bypass the normal management hierarchy to alert
higher systems of critical situations requiring immediate attention. Named
from the Greek words for pain (algos) and pleasure (hedone).

**In economic terms:** Market panics, famine signals, sudden price collapses,
trade embargoes, economic crises that demand immediate sovereign intervention.

### Autonomy

The degree of freedom granted to operational units (System 1) to self-organise
within constraints set by System 3. Beer argued that maximum autonomy
consistent with systemic cohesion yields maximum viability.

### Viability

The capacity of a system to maintain a separate existence and survive in a
changing environment. A viable system continuously adapts while maintaining
its identity.


## Instructions

1. Review the source chapter, extracted entities, and VSM mappings together.
2. Produce a single chapter analysis document following the
   Chapter Analysis Schema v1.0.
3. The analysis must include:
   - An H1 heading with the chapter analysis title
   - A Chapter Summary (50-300 words) of the main economic arguments
   - An Entities Extracted section listing all entities with brief descriptions
   - A VSM Mappings section listing all mappings with entity, concept, and strength
   - A VSM Coverage section assessing which systems (S1-S5, S3*) are represented
   - A Gaps & Observations section identifying uncovered systems and patterns
4. In the VSM Coverage section, explicitly state which systems are
   covered and which are not, based on the mappings.
5. In Gaps & Observations, note:
   - Which VSM systems lack representation from this chapter
   - Entities that were difficult to map
   - Emerging themes or patterns
   - Suggestions for enriching coverage in future analysis

## Output Format

Output a single markdown document following the Chapter Analysis Schema v1.0.
