An inquiry into the nature and causes of the wealth of

780

The Wealth of Nations

tive stock, which has occasioned this redundancy of paper money.

In the exterior commerce which the different colonies carry on

with Great Britain, gold and silver are more or less employed,

exactly in proportion as they are more or less necessary. Where

those metals are not necessary, they seldom appear. Where they

are necessary, they are generally found.

In the commerce between Great Britain and the tobacco colo-

nies, the British goods are generally advanced to the colonists at a

pretty long credit, and are afterwards paid for in tobacco, rated at

a certain price. It is more convenient for the colonists to pay in

tobacco than in gold and silver. It would be more convenient for

any merchant to pay for the goods which his correspondents had

sold to him, in some other sort of goods which he might happen

to deal in, than in money. Such a merchant would have no occa-

sion to keep any part of his stock by him unemployed, and in

ready money, for answering occasional demands. He could have,

at all times, a larger quantity of goods in his shop or warehouse,

and he could deal to a greater extent. But it seldom happens to be

convenient for all the correspondents of a merchant to receive

payment for the goods which they sell to him, in goods of some

other kind which he happens to deal in. The British merchants

who trade to Virginia and Maryland, happen to be a particular set

of correspondents, to whom it is more convenient to receive pay-

ment for the goods which they sell to those colonies in tobacco,

than in gold and silver. They expect to make a profit by the sale of

the tobacco; they could make none by that of the gold and silver.

Gold and silver, therefore, very seldom appear in the commerce

between Great Britain and the tobacco colonies. Maryland and

Virginia have as little occasion for those metals in their foreign, as

in their domestic commerce. They are said, accordingly, to have

less gold and silver money than any other colonies in America.

They are reckoned, however, as thriving, and consequently as rich,

as any of their neighbours.

In the northern colonies, Pennsylvania, New York, New Jersey,

the four governments of New England, etc. the value of their own

produce which they export to Great Britain is not equal to that of

the manufactures which they import for their own use, and for

that of some of the other colonies, to which they are the carriers.

A balance, therefore, must be paid to the mother-country in gold

and silver and this balance they generally find.

In the sugar colonies, the value of the produce annually exported

to Great Britain is much greater than that of all the goods im-

ported from thence. If the sugar and rum annually sent to the

mother-country were paid for in those colonies, Great Britain

would be obliged to send out, every year, a very large balance in

money; and the trade to the West Indies would, by a certain spe-

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Adam Smith

cies of politicians, be considered as extremely disadvantageous.

But it so happens, that many of the principal proprietors of the

sugar plantations reside in Great Britain. Their rents are remitted

to them in sugar and rum, the produce of their estates. The sugar

and rum which the West India merchants purchase in those colo-

nies upon their own account, are not equal in value to the goods

which they annually sell there. A balance, therefore, must neces-

sarily be paid to them in gold and silver, and this balance, too, is

generally found.

The difficulty and irregularity of payment from the different

colonies to Great Britain, have not been at all in proportion to the

greatness or smallness of the balances which were respectively due

from them. Payments have, in general, been more regular from

the northern than from the tobacco colonies, though the former

have generally paid a pretty large balance in money, while the lat-

ter have either paid no balance, or a much smaller one. The diffi-

culty of getting payment from our different sugar colonies has

been greater or less in proportion, not so much to the extent of

the balances respectively due from them, as to the quantity of

uncultivated land which they contained; that is, to the greater or

smaller temptation which the planters have been under of over-

trading, or of undertaking the settlement and plantation of greater

quantities of waste land than suited the extent of their capitals.

The returns from the great island of Jamaica, where there is still

much uncultivated land, have, upon this account, been, in gen-

eral, more irregular and uncertain than those from the smaller

islands of Barbadoes, Antigua, and St. Christopher’s, which have,

for these many years, been completely cultivated, and have, upon

that account, afforded less field for the speculations of the planter.

The new acquisitions of Grenada, Tobago, St. Vincent’s, and

Dominica, have opened a new field for speculations of this kind;

and the returns front those islands have of late been as irregular

and uncertain as those from the great island of Jamaica.

It is not, therefore, the poverty of the colonies which occasions,

in the greater part of them, the present scarcity of gold and silver

money. Their great demand for active and productive stock makes

it convenient for them to have as little dead stock as possible, and

disposes them, upon that account, to content themselves with a

cheaper, though less commodious instrument of commerce, than

gold and silver. They are thereby enabled to convert the value of

that gold and silver into the instruments of trade, into the materi-

als of clothing, into household furniture, and into the iron work

necessary for building and extending their settlements and plan-

tations. In those branches of business which cannot be transacted

without gold and silver money, it appears, that they can always

find the necessary quantity of those metals; and if they frequently

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782

The Wealth of Nations

do not find it, their failure is generally the effect, not of their

necessary poverty, but of their unnecessary and excessive enter-

prise. It is not because they are poor that their payments are ir-

regular and uncertain, but because they are too eager to become

excessively rich. Though all that part of the produce of the colony

taxes, which was over and above what was necessary for defraying

the expense of their own civil and military establishments, were to

be remitted to Great Britain in gold and silver, the colonies have

abundantly wherewithal to purchase the requisite quantity of those

metals. They would in this case be obliged, indeed, to exchange a

part of their surplus produce, with which they now purchase ac-

tive and productive stock, for dead stock. In transacting their do-

mestic business, they would be obliged to employ a costly, instead

of a cheap instrument of commerce; and the expense of purchas-

ing this costly instrument might damp somewhat the vivacity and

ardour of their excessive enterprise in the improvement of land. It

might not, however, be necessary to remit any part of the Ameri-

can revenue in gold and silver. It might be remitted in bills drawn

upon, and accepted by, particular merchants or companies in Great

Britain, to whom a part of the surplus produce of America had

been consigned, who would pay into the treasury the American

revenue in money, after having themselves received the value of it

in goods; and the whole business might frequently be transacted

without exporting a single ounce of gold or silver from America.

It is not contrary to justice, that both Ireland and America should

contribute towards the discharge of the public debt of Great Brit-

ain. That debt has been contracted in support of the government

established by the Revolution; a government to which the

protestants of Ireland owe, not only the whole authority which

they at present enjoy in their own country, but every security which

they possess for their liberty, their property, and their religion; a

government to which several of the colonies of America owe their

present charters, and consequently their present constitution; and

to which all the colonies of America owe the liberty, security, and

property, which they have ever since enjoyed. That public debt

has been contracted in the defence, not of Great Britain alone, but

of all the different provinces of the empire. The immense debt

contracted in the late war in particular, and a great part of that

contracted in the war before, were both properly contracted in

defence of America.

By a union with Great Britain, Ireland would gain, besides the

freedom of trade, other advantages much more important, and

which would much more than compensate any increase of taxes

that might accompany that union. By the union with England,

the middling and inferior ranks of people in Scotland gained a

complete deliverance from the power of an aristocracy, which had

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Adam Smith

always before oppressed them. By a union with Great Britain, the

greater part of people of all ranks in Ireland would gain an equally

complete deliverance from a much more oppressive aristocracy;

an aristocracy not founded, like that of Scotland, in the natural

and respectable distinctions of birth and fortune, but in the most

odious of all distinctions, those of religious and political preju-

dices; distinctions which, more than any other, animate both the

insolence of the oppressors, and the hatred and indignation of the

oppressed, and which commonly render the inhabitants of the

same country more hostile to one another than those of different

countries ever are. Without a union with Great Britain, the in-

habitants of Ireland are not likely, for many ages, to consider them-

selves as one people.

No oppressive aristocracy has ever prevailed in the colonies. Even

they, however, would, in point of happiness and tranquillity, gain

considerably by a union with Great Britain. It would, at least,

deliver them from those rancourous and virulent factions which

are inseparable from small democracies, and which have so fre-

quently divided the affections of their people, and disturbed the

tranquillity of their governments, in their form so nearly demo-

cratical. In the case of a total separation from Great Britain, which,

unless prevented by a union of this kind, seems very likely to take

place, those factions would be ten times more virulent than ever.

Before the commencement of the present disturbances, the coer-

cive power of the mother-country had always been able to restrain

those factions from breaking out into any thing worse than gross

brutality and insult. If that coercive power were entirely taken

away, they would probably soon break out into open violence and

bloodshed. In all great countries which are united under one uni-

form government, the spirit of party commonly prevails less in

the remote provinces than in the centre of the empire. The dis-

tance of those provinces from the capital, from the principal seat

of the great scramble of faction and ambition, makes them enter

less into the views of any of the contending parties, and renders

them more indifferent and impartial spectators of the conduct of

all. The spirit of party prevails less in Scotland than in England. In

the case of a union, it would probably prevail less in Ireland than

in Scotland; and the colonies would probably soon enjoy a degree

of concord and unanimity, at present unknown in any part of the

British empire. Both Ireland and the colonies, indeed, would be

subjected to heavier taxes than any which they at present pay. In

consequence, however, of a diligent and faithful application of the

public revenue towards the discharge of the national debt, the

greater part of those taxes might not be of long continuance, and

the public revenue of Great Britain might soon be reduced to what

was necessary for maintaining a moderate peace-establishment.

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784

The Wealth of Nations

The territorial acquisitions of the East India Company, the un-

doubted right of the Crown, that is, of the state and people of

Great Britain, might be rendered another source of revenue, more

abundant, perhaps, than all those already mentioned. Those coun-

tries are represented as more fertile, more extensive, and, in pro-

portion to their extent, much richer and more populous than Great

Britain. In order to draw a great revenue from them, it would not

probably be necessary to introduce any new system of taxation

into countries which are already sufficiently, and more than suffi-

ciently, taxed. It might, perhaps, be more proper to lighten than

to aggravate the burden of those unfortunate countries, and to

endeavour to draw a revenue from them, not by imposing new

taxes, but by preventing the embezzlement and misapplication of

the greater part of those which they already pay.

If it should be found impracticable for Great Britain to draw

any considerable augmentation of revenue from any of the re-

sources above mentioned, the only resource which can remain to

her, is a diminution of her expense. In the mode of collecting and

in that of expending the public revenue, though in both there

may be still room for improvement, Great Britain seems to be at

least as economical as any of her neighbours. The military estab-

lishment which she maintains for her own defence in time of peace,

is more moderate than that of any European state, which can pre-

tend to rival her either in wealth or in power. None of these ar-

ticles, therefore, seem to admit of any considerable reduction of

expense. The expense of the peace-establishment of the colonies

was, before the commencement of the present disturbances, very

considerable, and is an expense which may, and, if no revenue can

be drawn from them, ought certainly to be saved altogether. This

constant expense in time of peace, though very great, is insignifi-

cant in comparison with what the defence of the colonies has cost

us in time of war. The last war, which was undertaken altogether

on account of the colonies, cost Great Britain, it has already been

observed, upwards of ninety millions. The Spanish war of 1739

was principally undertaken on their account; in which, and in the

French war that was the consequence of it, Great Britain, spent

upwards of forty millions; a great part of which ought justly to be

charged to the colonies. In those two wars, the colonies cost Great

Britain much more than double the sum which the national debt

amounted to before the commencement of the first of them. Had

it not been for those wars, that debt might, and probably would

by this time, have been completely paid; and had it not been for

the colonies, the former of those wars might not, and the latter

certainly would not, have been undertaken. It was because the

colonies were supposed to be provinces of the British Empire, that

this expense was laid out upon them. But countries which con-

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Adam Smith

tribute neither revenue nor military force towards the support of

the empire, cannot be considered as provinces. They may, per-

haps, be considered as appendages, as a sort of splendid and shewy

equipage of the empire. But if the empire can no longer support

the expense of keeping up this equipage, it ought certainly to lay it

down; and if it cannot raise its revenue in proportion to its ex-

pense, it ought at least to accommodate its expense to its revenue.

If the colonies, notwithstanding their refusal to submit to British

taxes, are still to be considered as provinces of the British empire,

their defence, in some future war, may cost Great Britain as great

an expense as it ever has done in any former war. The rulers of

Great Britain have, for more than a century past, amused the people

with the imagination that they possessed a great empire on the

west side of the Atlantic. This empire, however, has hitherto ex-

isted in imagination only. It has hitherto been, not an empire, but

the project of an empire; not a gold mine, but the project of a gold

mine; a project which has cost, which continues to cost, and which,

if pursued in the same way as it has been hitherto, is likely to cost,

immense expense, without being likely to bring any profit; for the

effects of the monopoly of the colony trade, it has been shewn, are

to the great body of the people, mere loss instead of profit. It is

surely now time that our rulers should either realize this golden

dream, in which they have been indulging themselves, perhaps, as

well as the people; or that they should awake from it themselves,

and endeavour to awaken the people. If the project cannot be

completed, it ought to be given up. If any of the provinces of the

British empire cannot be made to contribute towards the support

of the whole empire, it is surely time that Great Britain should

free herself from the expense of defending those provinces in time

of war, and of supporting any part of their civil or military estab-

lishment in time of peace; and endeavour to accommodate her

future views and designs to the real mediocrity of her circum-

stances.

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