<!-- generated: provider=openrouter model=arcee-ai/trinity-large-preview:free date=2026-02-19 source=book-4-chapter-07 -->

# 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

---
