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Mr1
f^J-
A PROJECT OF EMPIRE
MACMILLAN AND
LONDON
CO., Limited
THE MACMILLAN
CO. OF TORONTO
CANADA,
Ltd.
PROJECT OF EMPIRE
A CRITICAL STUDY OF THE ECONOMICS OF
IMPERIALISM,
TO THE
ADAM SMITH
BY
J.
SHIELD NICHOLSON
M.A., D.Sc, F.B.A.
The
rulers of
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 existed in imagination only.
It
Adam
Smith.
OF
MACMILLAN AND
ST.
CO.,
LIMITED
MARTIN'S STREET,
1909
LONDON
^PliEGKEu
PREFACE
The
question
of
imperial
defence
has suddenly
The
book
is
to reconsider the
in their
And
first
of defence
So long as
this
country
command
of the sea
we could
shown that
to
this
provide
from
own
resources
;
for
the
naval
and
call
in a great naval
up the ultimate
the
potential reserves of
The self-governing
conscious
nations,
colonies have
into self-
has
own
defence against
foreign attack.
201688
vi
A PROJECT OF EMPIRE
This duty, however,
may
be
performed in two
different ideals
;
different
ways
or according to
two
which
may
On
tlie first
state or nation,
to its
own
defence
which
it is
most
interested.
The ultimate
pendence
;
ideal
would be
On
as, for
example, by the
by a payment
in proportion to population, or
by
as in the case
On
the
first
plan,
if
we look
to the natural
growth
and
there
would
probably be five
nected
cle
only
by nominal
of sovereignty,
scheme
Crown
"
and other
appendages
would be considered as
United Kingdom which
supplementary
would alone
bear, as
at present, the
PREFACE
costs of defeuce
vii
and administration.
In the course
of time
some
of these possessions
might become de
"colony."
On
or the
United States
German
"
empire.
dages
were represented.
It
government of
first
this kind,
Of
these secondary
most
closely connected
with defence
organisation.
is
And
for this
economic development a
common
mented by a common
and
For
this further
development
viii
A PROJECT OF EMPIRE
;
ments
especially if the
in
appeal
is
made
to
free
recent trade
is
experience
(i.e.
empire-making.
Internal
differ-
In the United
Kingdom,
Scotland,
for
and
and no one
most advantageous.
United States of
states
On
America
also
most
instructive.
The thirteen
;
and
their freedom
by
on
its
own
and
one
this
sovereign power in
making commercial
treaties
sometimes
of
against
The Constitution
1789 vested
power
in the federal
would be
common
principles
and common
foreign
'
commercial
relations.
From
the
PREFACE
such
e.g.,
ix
common
in
making commercial
in case of
need, in retaliation.
The simplest
common commercial
would be
The
if
attained
empire to zero
its free
although the
its
own
To
within the
a necessary
as
to put needless
difficulties in
the way.
At
union of
free trade
all
A PROJECT OF EMPIRE
In dealing with these questions,
I
have taken as
;
Adam Smith
for several
the influence of the events which led up to the separation of the American colonies and the acquisition of
India.
urgent importance
then, as now,
and sovereignty
then, as now,
we were
faced with
;
then,
we had not an
It is
empire.
admitted on
that
Adam Smith
stress laid
on
to be
neglected
sense
and
No
other
him
in
and
in
the
appreciation
of the
moral and
political
sympathies
is
He was
intensely
and
his nationalism
of Moral Sentiments}
His
nationalism
of the nation
great work,
we
II.
PREFACE
union ever propounded.
xi
Both
politically
and econo-
far
Politi-
Adam
in
due propor-
immense
internal
it
;
market
for
for
and that
im-
perial
The climax
Nations
is
Wealth of
in the
ideas
on
Adam
trade
is
and
protection.
Here
view
He
so strong
indeed
is
his
labour and
home
by
And
it
was
to
Adam
xii
A PROJECT OF EMPIRE
to
of free trade
he
it
simplifying
these
ideas
for
aside,
and with
many
Of the
cited.
lost ideas of
is
be here
One
y'
and
reproduction.
ment
of
capital
most
profitable
to
is
the
of
individual
(whatever
the
mode
or
place)
most advantageous
to the nation
Adam
Smith.
of
From
nation's
his standpoint
it
is
capital
that
can be
met
before
sent
abroad.
may
ment
permanent investment,
Of these
modes Adam
in a chapter
Wealth of Nations}
Bk.
II.
chap.
V.
PREFACE
The other
regards the mobility of capital.
xiii
In what
is
called the
it is
no mobility of
theory
it
may
be neglected.
Adam
Smith, on the
by experience
(and
it
may
These
lost
public attention
by two
significant facts
first,
the
in
recent
the
commercial
policy
of
other
The dogmatic
the result that
had
many
made
partially
Adam
the
its
Smith elaborated,
advantage to a
of paradox, on
own
capital.
Always bearing
of
in
importance
the
home employment
show that "high
Adam Smith
tried to
xiv
theses
facts
A PROJECT OF EMPIRE
non Jingo
and
;
so constantly did
lie
appeal to
also,
and experience.
free
At
this
time of day
unless
the
protectionist
trader,
they wish to
And, perhaps,
at the
effective
way
to experience.
Adam
Smith, there
;
is
no intention of any
appeal to authority
which
shall solve
to miss
entirely
the spirit
method.
Accordingly,
to
by modern
instances, but to
express his
ideas in
modern
equivalents.
In spite of the changes in the means and conditions of war, the military writer
still
appeals to the
ideas
soldiers
and admirals
of the past
and
in this sense
and in
an appeal
all
is
made
economists.
Incidentally, however,
it
seemed desirable
to
show
the
way
in
which
Adam Smith
own
day, and
may
be considered on
one side as a
;
whilst on
the other
PREFACE
In the
final
XV
chapter
have given
my own
be
opinions
ideal
may
approached.
difi'erent
from
pendencies in
my
The
difi'erence is
Now
may
purposes
be an advantage.
J. S.
N.
University of Edinburgh,
December 1909.
Note.
The
title are to
^ In an introVol. iii. Bk. v. chap, xix., first published in 1901. ductory essay prefixed to an edition of the Wealth of Nations published in 1884 (Nelson), I called attention to the importance of Adam Smith's ideas on the employment of labour and on imperialism. See also my Essay on
Tariffs
in the
(1892).
CONTENTS
CHAPTER
I
1.
2.
3.
"The Theory
of
Moral Sentiments"
.... ....
.
PAGE
1
3-
CHAPTER
1.
II
3.
4.
5.
The Individual, the Family, and the Nation Adam Smith not Cosmopolitan Of Universal Benevolence Two Popular Errors
. .
.
....11
.
the
the
.12 .13
.15
.
6.
National
Military
Training
.
as
.
Part
of
.
Education of Youth
7.
8.
The Soldier and the Statesman Compared Adam Smith and Burkj; Idea of Historical Growth
Resume
16
9.
......
. . . .
18-
21
CHAPTER
1.
III
in
the
"
Wealth
23
xviH
2.
A PROJECT OF EMPIRE
PAGE
. .
24X
25
3. 4.
Sustaining
and Auxiliary
.27
.
5.
.
6.
The Relations of Capital and Monet Increasing Importance of the Money Attribute op
Capital
......
. . .
28
30
31''
7.
8.
32
CHAPTER
IV
......
in
.
34-^
36 37
/
'
2.
,
3.
4.
Resume
of
Adam
.
Smith's
.
Ideas
.
on
.
Labour and
Capital
5.
.38
.
40
>
6.
J
41
^
Interests
7.
Weakness
of
Dogmatic
Free
Trade
owing
.
to
.
\
42
CHAPTER V
Of the Different Employments of Capitals
1.
S5
2.
.44 .45
3.
advanta.
.46
.
}^
4.
5.
47
49
CONTENTS
^^6.
XIX
PAIJK
Home
Trade
Trade
Advantages
9- General Summary
relative
52
55 56
57
12.
How
his
can
Adam
Smith's
the Superior
13. Bearing
troversy
......
.
59
the
CHAPTEK
VI
Trade
2.
...... ......
Preference
op
64
Home
to Foreign
65
66
3.
4. 5. 6.
68
70
The
.71
.
72
73
Home
. .
Industries
.
11. Difficulty
Profits
12. 13,
......
.
.74 .75
76
Foreign
Trade
gives
Higher
Eeference to Experience
.77
.
78
79
8 14.
Adam
XX
15.
A PROJECT OF EMPIRE
PAOE
Home Trade
. .
to
.80
and
Export Trade
.
.82
CHAPTER
VII
1.
2.
3. 4.
The term Protection not used by Adam Smith Used in narrow sense by Alexander Hamilton
Meaning depends on Correlation
Distinction
.
83
84
.85 .86
87
dis-
between
. .
Objects
.
and Methods ok
.
Protection
5.
6,
Adam
Smith's
thetical
i$
...... ......
.
"
Monopoly "
7.
8.
9. 10.
New Theory
of Protection
CHAPTEE
Vlll
1.
ment OF Capital
2.
in
Possible
Displacement
.
.97
by
Industries
.
Foreign Imports
3.
Protection
in
Smith
4.
6.
Adam
Smith's
Capital
...... ......
Great
Britain
in
.98
100
101
time
of
Adam
first
CONTENTS
6.
xxi
PAOK
Second Answkr
tected
.
Home
.
.106
,107
Capital
7.
Third
Answer Effect of Protection on " The Annual Produce of the Land and Labour op
:
the Society"
8.
Fourth Answer
Displaced
Labour
and
.
Home
.111 .113
CHAPTER
That Cheapness
"
IX
1.
is
116
Consumption
the
sole
118
Taxes
on
Consumable
.
Commodities
.
Effect
.
on
Labour
.120
.
122 124
6.
.125
.
7.
8.
considers
....
the
Ideas
.
126
Producer as
127 134
CHAPTER X
The Negative Argument for Freedom of Trade
1.
Sidgwick's
Critique
of
Popular
.
on
.
Free
.136
.
137
xxii
3. 4.
A PROJECT OF EMPIRE
Thk f>iLs OF Monopoly
Monopoly and the Interests ok Labour
.
,^
....
PAGE
139
141
5.
6.
and
ditions
7.
8.
144
147
9.
55
2.
55
3.
CONTENTS
18. List on Retaliation
.
.
.
xxiii
PAOK
.171
.
171
172
173
174
CHAPTEK
The State
1.
XII
in
Relation to Commerce
Economic
. .
General
State
View
.
of
Functions of the
.
.
2. 3.
.175 .175
.
4.
Merchants not
.177
:
Regulated Companies
6.
.; 7.
Joint-Stock Companies
East
.
.178
.
India Company
179
.182
.
8.
Adam
Smith's
r,
183
CHAPTEE
XIII
1.
"Wealth
of Nations"
185
2.
Adam
sight
.186
.
3. 4.
187
188
xxiv
5. 6.
A PROJECT OF EMPIRE
PA(;e
Causes of Prosperity op
Special
New
.
Colonies
of
.189
North
Causes
of
R^vpid
Progress
.
American Colonies.
7.
Advantages
Countries
......
.
.191
192
to
Europe
of
Colonies
in
new
8.
9.
Power or Revenue not realised .193 Advantage of the Monopoly of the Colonial Trade examined. .195
. .
.
10.
196
11.
199
14.
of
......
.
.200
200
201
Monopoly
on
Rents,
Wages,
and
.204
.
i:^
17.
206
CHAPTEE XIV
The
1-
Imi'erialism of
Adam Smith
209
211
of
The " Shopkeeper " Idea of Empire criticised 2. The Ideal op Empire not purely Economic
3. Ideal
op
British
Empire
in
Development
British Constitution
M-
Practical Difficulties
.
The Case of India 6. The Public Dehts of the British Empire The Union with Ireland
8 8.
218
219
221
223
CONTENTS
CHAPTEE XV
British Colonial Policy since
1.
XXV
Adam Smith
PAGE
. .
226 228
2.
3.
Contrast
4.
5.
.230
.
What
Empire?
......
CHAPTEPt XVI
Conclusion
op
231
232
gi- British
Command
Co-operation
....
the Sea needs
Colonial
237
238
239
MICAL
.....
in
240
242 245
247
8. Difficulties
Free Trade
9-
how
met
253 256
260
11.
270
INDEX
273
CHAPTER
ADAM SMITH
1.
By way
of
of preliminary
necessary to
get rid
personality of
Adam
Smith.
cries,
of
all
the philosophers
who have condescended to make themselves intelHe had planned "a ligible to the common man.
connected history of the liberal sciences and elegant
arts."
For
this
of material
a
for
manner
There
This
is
of special interest at
A PROJECT OF EMPIRE
pantomime
is
"
dances.
Adam Smith
us
capable
of affecting
much
or painting,
all
and that
like epic
can represent
the
events of a long
of of
for
In another paper he
Italian
made a comparison
to
English and
Dr. Johnson,
metres
the
admiration
who
him
is
his preference of
rhyme
to blank verse.
There
an
was not
for
want of mathe-
much
is
store
by
political
The
\y)
influence of
Newton
adopted to
illustrate
and market values: "The natural price, therefore, is as it were the central price to which the [market]
prices of all commodities are continually gravitating.
.
.
them from
and conit."
^
**
home
principle that
is
constantly appealed to
'*
:
^
''
is
Home
is
in this
manner the
capitals
may
say
of
so,
of
the
inhabitants
every country
Rook
I.
chap.
ii.
tending, though
may some-
toward more
The catalogue
of
Adam
He was
widely
He knew
all
the best
men
of his time
Pitt,
;
Burke,
Hume, Reynolds,^
philosophers
for example, in
England
seeds
and
of
in
the
the
revolution in France.
Adam Smith
lived
\ff^-''^^'
and the
real world,
and
final
tradition
is
supposed
the
creator
and
economic man."
Smith, about twenty years before
The
real
Adam
Moral Sentiments.
is
The
the
basis of the
;
whole theory
of right conduct
^
^
2 Edited by Dr. Bonar, 1894. Book IV. chap. ii. The writer is the fortunate possessor of Adam Smith's presentation copy
of
tlie
Wealth of Nations
to Sir
Joshua Reynolds.
4
spectator.
A PROJECT OF EMPIRE
"
chap.
When
would suggest to
one
to that of many."
And
yet
power
of humanity,
it is
of self-love.
more
forcible
It is
on such occasions.
man
of our conduct."^
The-
man
within
is
he
is
whom
must be made.
To
this
One passage
is
strangely
pathetic
" It
is
man
much
It
regretted by anybody.
Scarce a child can die without rending asunder the heart of somebody."
that his
was found on
less
his
death
property
was much
away
may
perhaps
be
thought a matter of
little
The need for emphasising the moral jiliiiosopliy of Adam Smith is shown by the following quotation from the Introduction to Byles's Sophisins of Free Trade signed by the editors W. S. Lilly and C. S. Devas " No doubt Adam Smith regarded liis political economy as a branch of Ids moral philoBOphy. But unfortunately liis moral philosophy is in no true sense moral." Op. cU.
:
ntroJuction,
j).
xviii, note.
Smith to
"one-eyed
is
flatfish
man
as
and
with a
far
wider outlook
3.
Humanist and
Nationalist.
Adam Smith
for dealing
human
affairs,
and he
is
Adam
is
new economic
mind
problems,
wits
life.
by
in this part of
In particular
we may
learn of
Adam Smith
that
humanity
interests
and nationality
of cheapness
as well as the
more material
and plenty.
that
Adam Smith
Adam
If the
Smith,
is
economy.
named by
these
A PROJECT OF EMPIRE
it
is
chap,
be
his views of
Adam
he constantly
refers.
Most
quite
Adam
Smith.
The
it is
nationalism of
Adam
so important that
(edition
CHAPTER
II
1.
The Individual,
the
In
tlie last
edition of the
new
The
is
interesting in connection
attacks,
common thought
average Englishman.
stress
Adam Smith
The mere
far,
tie
of
not enough.
He
goes so
indeed, as to
colleges, a
essentially
From
but
let their
Partvi.
7
A PROJECT OF EMPIRE
is
from what
make any
what
is
necessarily lost
It is
by
it."
Adam
that properly to
understand his economics we must at any rate understand his attitude as regards the moral foundations of
society.
if
we remember that he was a and of home and home life from the home as the centre
;
on
liis
view
the
sympathies of
of friends and
is
acquaintances,
until in
this
way
"
the family
nation.
The
state or sovereignty in
we continue
society,
to live
is
Not only we
those
whom we
naturally love
and
and
their prosperity
its
measure upon
When
some
All
same kind
mortified in
has produced in
former times,
its
philosophers, and
men
of letters of
all
kinds,
we
are
partial
admiration
and
to
those
The
patriot
who
lays
down
exact
But
though
this
sacrifice
we know
how
difficult it is to
it.
make
it
capable of making
not only
our
entire
the
The
traitor,
situation
interest
fancies
promote
his
by betraying
;
to the public
of the
man
those with
all
whom
villains, the
most detestable."
2.
Adani Smith
is
not Cosmopolitan.
still
more remarkable
as
on
Adam
Smith's nationalism:
"The
love of our country seems not to be derived from the love of mankind.
is
altogether
independent of the
^
chap.
ii.
OP The
lo
A PROJECT OF EMPIRE
it.
France
of
may
number
In the
France should
appear to be
an
object
of
much
The
British
subject,
however,
all
who upon
that
account
should prefer on
We
do not
"part
ofTYianhmd; we love
for its
Adam
Smith,
patriotism
may
be
pushed too
of
far,
"
mean
principle
national
prejudice
often
He
of
admits
that
France
and England
of the
may
increase
naval and
military power
great
nations
to
the advancement of
its
its
ports
proficiency in
all
f"
\i
It is
on
Adam
^
'\
Smith's
*
our
ii.
own country
ii.
chap.
Ibid.
II
ii
shown
Wealth of Nations, we gain indirectly '* from the prosperity of our neighbours. The love of
our country seems in ordinary cases to involve in
it
two
principles
first,
is
actually established
and hnppy
is
as
we
can.
He
is
not a
who who
obey the
citizen
civil
and he
is
certainly not a
3.
Of Universal
^
Benevolence.
The chapter
in this section
which
is
entitled "
Of
"Though
may embrace
"
In the
man ought
wise
ii.
man
iii.
should
vi.
section
chap.
12
A PROJECT OF EMPIRE
what a good
soldier holds
all
himself at
But although
human contemplation by far the most sublime"; and although " we look with reverence on the man who is capable of absorbing himself in contemplation of this kind," we are told, as the
of
all
objects of
conclusion
of
the
" the
most
of the universe
the business of
To man
is
allotted a
care of his
own
It
4.
Ttvo
Popular Errors.
fore-
going
popular
opinion
on
Adam
Smith's philosophy
points.
'
In the
first place,
own
of others
and
main-
by cosmopolitan
writers liave laid too
considerations.
These two
delusions,
ideas, as so
'
Some
on
Adam
it.
Smith's "natural
In jmrticular, the
tlieolo^y "
su])]iosed to be
based on
hand" which
the
ardent admirer of
uncritical.
Hume
II
13
are
contradictory,
except on
is
the simple
best for the
and
This, however,
is is
Adam
Smith
is
concerned,
it
a greater
advanced
The
real
Adam
Smith
never
thought a
is
of
of
;
the
his
individual
in
isolation.
The
foundation
sympathy
the
spectator
the individual
member
is
of a family
life
he
brought in touch
circles of friends
and associates
as a
member
of
the
state.
And
here
for
most
practical
purposes
moments of exaltation he may indeed seek to enter into communion with the spirit of the universe, and in the same way
boundaries; although no doubt in
he
may
humanity.
5.
It is
Adam
it
is
of
Wealth of Nations itself that the nationalism Adam Smith finds the most unreserved and
expression.
unqualified
political
"The
great
is
object
of the
to increase the
14
riches
A PROJECT OF EMPIRE
and
the
power
of
that
country."^
This
reference to national
power
as the object
and aim of
mind
of
Adam Smith
is
of historical
development.
is
Laws.
may
is
of
most violent
" It
tions of this
They
are
as
wise,
how-
as 'if they
deliberate wisdom.
ticular
The
too
tliat it
was
this
very
first
Hook
II.
cliiij).
V.
ii.
II
15
more than
years ago.
Adam
Smith
also himself
6.
But
the
we
ideas
of
Adam Smith
are
more
intimate
bearing
on
present
One
apparently on a confusion
he was a
all
man who
loved
very idea of
this chapter,
As a matter
of fact, as
shown
in
military training
as one of the
The
art of
war
is
certainly
A coward, a man
incapable
people
Book
V. chap.
i.
part
iii.
article 2.
i6
A PROJECT OF EMPIRE
still
;
government
in the
same manner
would deserve its most serious attention to prevent a leprosy or any other loathsome or offensive
disease,
spreading
^'
among them."
to
'
liberty,
he goes on
indicate
important functions of
imposed
is
the
state
the
first
duty
independent societies
and
this
is
spoken
of as
intelli-
common
is
understandings."
In treating
first
of
charge
made
and
on the revenue
method and
discusses the
and
shows
an
intimate
"
acquaintance
with
the
" noblest of
all arts."
7.
glory of war
character
of
virtue.
who
is
at the
head
Hook
V. chai).
i.
jmrt
iii.
article 2.
IJook v.
cliaji.
i.
part
i.
17
who has
The
may
other.
Their characters
services
respective
appear
commonly more than doubtful. The glory which is acquired by foreign war is upon this account almost always more pure and more splendid than that
which can be
hero
acquired in
civil
faction."
"The
is
who
war
ism of
final
views on national
we
may sometimes
more
essential victories
much
and
'
important
than
the greatest
"He
may
re-establish
may assume
;
reformer and
his
institutions
secure
the
and
many
succeeding
vi.
section
ii.
chap.
'^
ii.
iii.
on
Ibid.
i8
A PROJECT OF EMPIRE
8.
chap.
Adam
Idea of
friends,
Histoiical Growth.
were close
and
common
philosophy.
The former
so well
known
as the
agreement
surprising.
between
the
two
thinkers
may seem
reported to
But
Adam Smith
that " he
himself
is
of political
^
munication."
And
last
words of
Adam
Smith, we find
which
in
is
in exact
idea
Burke's
Reflections on
in the
Revolution
in
same year (1790) as this " The man," last edition of the Moral Sentiments). writes Adam Smith, " whose public spirit is prompted
France (published
altogether
the
by humanity and benevolence will respect established powers and privileges even of
still
individuals and
and
societies into
which the
divided.
Though
he will
often
moderating
great
;
what
he
cannot
annihilate
without
:
" Excellent a ' IJurko said of the Wfnlth of Nations when jmblished dry abstract of which would convey no juster idea of it than the skeleton of a departed beauty would of her form wlicn she was alive." Prior's Life if
Burke,
p. CI
(George Bell,
188'.i).
I.
19
violence.
He
will
accommodate
as well
as
he
people.
It
may
Adam
c.
43)
"With
it
all
its
imperfections w^e
what was
the best
admit
It
may, perhaps,
^
due time
prepare the
way
for a better."
have
attacked
more
to
man
of
system who
seems
much
ease as the
hand
human
society
its
if this is
human
society wall go
on miserably."
Adam Smith
allows that
may
;
insist
at once,
and
may seem
to require.
chap.
Moral
ii.
ii.
Book
IV.
chap. v.
jforal Sentiments,
loc. cit.
20
A PROJECT OF EMPIRE
This insistence by
^\/
Adam
new
light
on
in
He did
and he
it
"
sM who by the
abandon
ably.
. . .
open to
very consider-
warning."
And
the case
is
still
stronger
if
we
Humanity may
in this case
and prohibitions
into the
home market
many
'"
may
render
it
in
"
See below,
p. 171.
v.,
I.
21
namely, the
ments of a larger
very forcibly
idea of nationality.
But
it
serves to illustrate
Adam
\y
It
is
9.
Resume.
he had ever anticipated in the
probable that
if
by
List,
who
his nationalism
more prominent.
it
But, in truth,
Adam Smith
One more
the
took
instance
must
suffice.
In
discussing
general
mercial treaties.
He
shows that
But the
idea
is
dismissed
"
The
being adopted."^
"No
nation ever
voluntarily gave
soever
afforded might
it
occasioned."
Adam
Smith's views on
^
Book
IV.
chap.
vii.
Ibid.
22
colonial
A PROJECT OF EMPIRE
policy
chap, n
and
imperial
federation
must be
To understand this part of his argument account must be taken in the first place of his position on the employment of labour and the relations
deferred.
Here again
it
will be
found
is
unc[uiestionably nationalist
and
not cosmopolitan.
CHAPTER
III
1.
Labour
the
Dominant Conception
in the
,^
The dominant
labour.
conception in
Adam
is
:
Smith's whole
unquestionably
"
The annual
with
it
all
which
what
List
is
other nations."
Even
is
how
sum
clearly
Adam Smith
is
condition of nations
The
first
book deals
in the
men
third
in the society.
The second book discusses in parof labour and capital, whilst in the
political
is
In
Adam
Smith's
24
A PROJECT OF EMPIRE
the object of these
first
chap.
is
own words
four books
to
or
funds which in different ages and nations have supplied The " annual produce of their aunual consumption.
the land and labour "
is
an expression that
is
of as
frequent occurrence in
ing (and
Adam Smith
as the correspond-
much
" in
dividend
mental importance.
It
2.
Labour.
citation
to
show by the
labour
is
of
used by
Adam
are, in
Smith
most extended
each
necessary
sense.
There
his view,
productive
and un-
productive
society,
to
and
is
each
with
multitude
" There
upon which
it is
bestowed
there
as
effect.
The former,
it
produces a value,
may
latter unproductive."
the
and
is,
realises
as it were,
up ^ to
be employed
'
if
Ill
25
produced
it.
Typical
of
unproductive
labour
is
not
very instant of
leave
any trace of
The
tinct
;
distinction as
it
drawn
is
answers to
common
3.
And Adam
embodied
in
Their labour
is
how
honourable,
how
useful,
or
how
necessary
soever
Adam Smith
says
who
"unproductive" labourers.
And
state.
to the
same
Adam Smith
such labour
essential
the
Unproductive
26
A PROJECT OF EMPIRE
(though
it
chap.
money value
Ur'^
itself
Adam Smith
as,
is
that he applies
to
"productive" labour,
for example,
when he
journeyman
efficiency
and reward
Adam Smith
is
always intensely
realistic,
and the
who
Adam
be
may
the
further
by
his
application
of
men
who
tion
men
of speculation.
becomes
like
every
other
employment
the
it
subdivided
each
into
number
of
different to
branches,
of
which
affords
occupation
from
this
analysis of labour
is
not to be
**
pro-
ductive labour
"
in
Still less is it to
.1,
27
is
of
accumulated
values,"
which
the
every kind,
Adam Smith
always a
humanist
4.
never a materialist.
Cajntal
Many
are
now new
definitions
being attempted
and
new
criticisms
directed
this con-
The main
result of all
most important
by the
context, or
by
Adam
of
the
historical
method.
development in
Capital
is
all
periods and
all
treated in the
it
first
affords to labour.
Capital
required
28
A PROJECT OF EMPIRE
Not only must labour wait
to
is
chap.
forces of nature
have their
but whenever
it
division of labour
takes
for the
means of
subsistence.
is
sumable goods
kinds to wait.
required
enable labour of
all
But
capital
is
From
the earliest
as
times capital
auxiliary to labour.
With
the
"capital
goods" of the
of labour
modern economist
and
there
varied.
is
become
Corresponding
division
a division of capital.
5.
term,
as, for
tilling
land and
difficulty
not
much
and
the
auxiliary capital.
But the
act of production
is
is
not complete
till
commodity
if
in the
Accordingly, trade
afforded
the
satisfaction
of
human
wants.
With
progress
of society,
as
Adam Smith
29
historical references of
At the
limited
outset
we
are
by the extent
money.
One
He
had come
to attach too
much importance
into a country
;
to the
inflow of actual
treasure
and because
with
they niight
begin
the
constituents
of
money measure.
But one
consequence of the success of this attack on a degenerate mercantilism was, as so often happens, that
inferior
writers carried
the
attack to
an extreme.
They seemed
ing with
ingly, it
all
money
and of gold
commodity
like other
com-
modities.
special attributes of
of the
atten-
tion
was given
It
markets,
of trade.
seemed
so
" once
A PROJECT OF EMPIRE
the things were
there," once
the technical
themselves.
now
the appreciation of markets, and of the moneyas the basis of i^roduction, is not so clearly-
power
realised as it
was by
Adam
is
Smith.
On
his
view money
of fundamental importance,
Capital
is
;
retail
trade
They add to the value of the vendible commodities by increasing their utility
narrow sense of the term.
in time or place.
6,
of Capital.
In tracing the historical development of capital
we observe
ofoods"
the
changes in
we
of
money
becomes
greater
importance.
in his
This fact
very definition of
Capital
is
that part of a
employed
so as to yield
is
him a
devoted
immediate consumption.
But
this
revenue comes
credit
him
in
the
form of
money
(or
which
commands money).
Ill
31
money economy,
money
valua-
or building or whatever
may
The forms of capital are continuously being consumed and reproduced, but they are only reproduced by passing through a money
itself is so far depreciated.
transformation.
The products
This
must
be
sold
for
the reason
why
what
Adam Smith
the subject, or
it.
7.
Circulating
and Fixed
its
Capital.
Capital
revenue
its
by being
profit
employed.
or
"
The
he
sells
them
for
him
as little
till it is
money, and the money yields again exchanged for goods. His
from him in one shape and
The
fixed capital
etc.
yields
it
its
made good
also
by the
also manifest
capital lent at
32
interest.
A PROJECT OF EMPIRE
"
is
lent at interest
is
He
will
be restored to him,
will
and that
in the
pay him
The borrower
plain that the
may
use
it
immediate consumption."
capital
Here
it
is
must be
lent,
in
the form of
money
interest
form of money.
8.
One
it
of the
Adam
of
Smith's
acquired
and
useful
the
inhabitants
society."
Such
by the maintenance of
which
a
and
this
involves
real expense
it
is
capital fixed
and
realised as
or
personal
in
many ways
interesting,
and especially
showing
Adam
The conception
of capital
fixed
and embodied
Labour
if it is
in
persons serves to show the continuity between productive and unproductive labour.
is
pro-
used to
will
command
easy to
It is
up
m
which
33
the qualities
civilised
man from
the
lowest
is
savages,
fixed
and embodied
The importance of
capital of the
List,
continuity
in the
mental
human
race
by supposing he
recent
Adam
Even amongst
savages, as a
the stores of mental capital in the shape of knowledge of natural conditions locked up in the minds of
the squaws.
But
in nations with a
money economy
is
only possible
in
the case
of
material
capital)
through
the
The enormous
an illustration
is
may
CHAPTER
IV
1.
to the
The
relations of labour
capital,
on the view of
Adam
we
consider, as he does,
the relation of both to " the annual produce of the land and labour of the society," or " the great revenue of
modern
Smith's
The leading
ideas
:
may
"
first
be stated in
Adam
is
own words
yet
when
comes either
One
in the first
withdrawn from a
capital
as the rent
of his land.
CHAP. IV
35
Whatever part of
man employs
to be replaced to
him with
a profit.
He employs
;
it
and
constitutes
it
revenue
to
them.
Whenever he
hands of any
employs
in maintaining unproductive
is
capital
and
in
. .
the
stock
reserved
for
immediate consumption.
Unproductive labourers,
at
all,
by revenue."
This view
is
essentially
also
the
modern view
used partly for
and
is
partly
used
It
is
for
immediate
be noted
dis-
consumption or
carefully
gratification.
to
that
Adam Smith
all.
always draws a
tinction
who do not
conception
And
in
following
up
his
fixed
the
natural
and
acquired
abilities
we
see
that
part
of
productive
labour
may
be regarded as employed in
maintaining and
capital.
Tested
by
cost of production or
capital
is
living
of
far
36
A PROJECT OF EMPIRE
civilised society
chap.
modern
capital.^
Again,
if
in the
we
of
of wealth,
reference to material.
2.
Meaning
oj
Parsimony or Saving.
in
There
are,
no doubt, expressions
Adam Smith
all
the
and of the
the
relations of capital to
:
labour.
" Parsimony
we
are
told
that
indeed, provides
the
little
is
lower
down we read
" AVhat
is
is
annually saved
as
regularly consumed as
what
;
but
consumed by
Adam Smith
constantly uses
"
How
" or
introduce in brackets a
number of
plain tliat
Kingdom
qualifica-
tions.
to the
it
is
when he
and
Cf. Essay
ou
tlie
" Living
C;i|iit.il
oC the United
" in Strikes
37
means
wealth to the
who do not
labour
are
all
equally maintained
by the annual
Here,
aside,
any
rate, there is
payment
of the real
Smith's definite
and of the
we
3.
To begin
in his
Adam Smith
which
a single independent
sufficient
a stock
to
of
is
his
work
and
to
maintain
himself
it
completed.
On
Europe twenty
is
workmen
That
is
in-
dependent."
to say, the
command
and
of capital
is
necessary
in general this
of capital
is
not
in
the power
of
the
command workmen
themselves.
Capital and labour both being necessary for the
38
are paid,
A PROJECT OF EMPIRE
what are the
chap.
"What
are the
common wages
upon
made between those two parties (namely the masters and men) whose interests are by no means the same. The workmen desire to get as much, the masters to give as little, as possible. The
the contract usually
raise,
the
wages of labour."
He
advantage.
easily,
and the
their
prohibit
workmen.
obscured by
crude
theories
of wages
and of the
4.
on
Labour
The main
explained,
is
Adam
Smith, or to
make
and especially
to the
problems
For
but
this
purpose
it
is
not necessary to
give a
summary
of
all
is
Adam
and
capital,
it
fundamental positions.
And
these,
so
far
as
yet
IV
39
The annual produce of the land and labour the great revenue of the body of the people corresponds to
And
in
much more
produced
than
is
and
capital increases,
for
From
first
object of political
economy considered
people, or
more properly
to enable
them
to provide
The
orders
may
be
historical
But though,
and men
(or of capital
of nations
"
The wages
40
stock.
A PROJECT OF EMPIRE
The demand
for labour
;
chap.
and
after
to
.
increases
profits "
^
than
small
stock
with
great
in
however
moral
or
ideals
The
its
capital
existence,
And
of
stock
for
capital
sj
5.
tion of industry
in the
the capital.
and
depends largely
demand
'
of the consumers.
I.
The con3G6
sq.
Book
chap.
ix.
ii.
p.
41
complex interaction
of
is
economic
seems
prima facie
that
it
the national interests will be promoted simply b leaving individuals to do as they please.
Conflict possible between Individual ayid
G.
Public Interests.
This possible conflict of the interests of the individual
and
the
nation
is
emphasised by
for granted that,
Adam
owing
Smith.
He
it
circumstances
To
left
summit
Ricardo.
of optimism
was
the followers
of
are
and
and of the
fetter
mischiefs occasioned
its
less so in
He
42
A PROJECT OF EMPIRE
which are found to be most
for
of industry
the
far
swerve from
own
and
con-
He
employment,
that the
foreign trade
It is clear,
is
else
home
;
trade
direct
and the
imaginary.
individuals, whatever
most advantageous
to
them
body
;
individually
must be
and
it is
as large profits
and
7.
to
These distinctions
imaginary are with
which M'Culloch
of vital
regards
as
Adam Smith
is
importance.
And when
of
allowance
made
for
Adam
Smith's use
that
popular
language
Ijy
with
ambiguities
must
to
be interpreted
the
to
context,
they are
seen
be reasonable and
of
fact.
point to
important
matters
it is
owing to
UNIViiKbH
OF
43
trade "
by Adam Smith
and
it
on "
free trade."
CHAPTER V
OF THE DIFFERENT EMPLOYMENTS OF CAPITALS^
1.
Capital.
first
Under
the
the
Adam Smith
of
all
discusses
the
different
employments of
to
capital
in
home
country.
cited.
First,
capital
may
be
agriculture
and
of
the
extractive
industries
the
production
;
food
secondly,
sumption
may
be applied to the
by wholesale
trade
and
lastly,
capital
may
be devoted to the
retail trade.
"
Each
is
of
these
four
methods of employing a
capital
conveniency of society.
in transporting
abound
to places
This
ii.
chap.
v.
of the
U'lalth of Nations;
and
might now be
44
cH.v
EMPLOYMENT OF CAPITAL
for the
45
was necessary
neighbourhood."
2.
In this
way
The
necessity of trade
both
for
always
in
emphasised
by
Adam
Smith.
He shows
the
carried on
more easily than by land, grow up on the banks of rivers and with the growth of the markets
cities.
One
geography
up mainly through
and since
Adam Smith
wrote
The great cities are the great centres of trade. At the beginning of the third book he shows that the great commerce of every civilised society is that carried on between the towns and the country, and The the gains of both are mutual and reciprocal. nearer it is to the town so much greater is the
improvement of the country
led
to
;
and
that, in general,
the
is
the
in the
Book
III.
chap.
iv.
46
A PROJECT OF EMPIRE
In the chapter
^
chap.
on rent we read
rivers,
"
Good
roads,
canals,
and navigable
by diminishing the
ex-
They
are
improvements."
even to the
3.
advantageous
It
to the Society.
Adam
No
to the society."
And
into
most of
reasons
objection
is
assigned.
" ^^Do^ual
puts
Not only
In
man; and
its
produce has
men."
out already,
we ought always
I.
how
'^
far his
ii.
reasoning
v.
Book
chap.
xi.
Book
chap.
EMPLOYMENT OF CAPITAL
The main contention
all
47
may conform
guarded by hypotheses.
the extractive
and
In
confirmation
is
Kingdom and
of
we
immense advantage
which
is
natural
resources
only another
way
man
England.
And
one of the
main causes
4.
Adam
grounds,
of
which seem
reasonable
and have
weight
He
of
bestowed
the
liighest
praise
on
the
qualities
"After
what are
fessions,
called
however, there
and experi-
He
refers to the
all
And
all
that of
48
A PROJECT OF EMPIRE
Adam Smith
"
chap.
also
How
to
much
well
known
with both."
much more
and
it is
engaged in agriculture
bination possessed
is
by the
wages
in agriculture relatively,
and
no doubt the
national
rise will
be continued.
ao;riculture
Adam Smith
acquired
factures
to
is
also
commends
from the
is
always a
till
possession
some part of
cultivation
realised in the
lands.
and improvement of
EMPLOYMENT OF CAPITAL
5.
49
and Advantage.
realise that
And
we must
to be
Adam
employment
of capital
is
is
measured simply by
earned.
Wealth of Nations profit and national advantage are distinguished, and very often
Throughout the
indeed they are definitely opposed.
In dealing, for
that the
monopoly
shown
to be a national
The argument
meantime,
"
it
will be
examined
between
is
tion in idea, at
any
profit
and advantage.
the
The
ment of
of
it is
capital]
is
very great
employed."
6.
advantageous than
Foreign Trade.
All
wholesale
:
may
be reduced
to
thr
diff"erent sorts
the
home
The
is
obtained by the
trade.
employment of the
home
50
A PROJECT OF EMPIRE
the country and the encourage-
ment of productive labour in the home country. The advantage is distinctly and emphatically a The position is best illustrated national advantage. " The capital which sends Scotch by a concrete case.
manufactures to
corn
and
manufactures
Edinburgh necessarily
capitals
replaces
The
.capital
purchasing
foreign
goods
is
for
home
the
made with
too,
;
by every
domestic
capitals
but one of
them
only
is
employed
capital
supporting
industry.
Portuoral
The
Great
Britain replaces
British
capital.
Though the
home
it will
give but
or
the
industry
^But
the returns'
home
trade.
The returns
of
the
home
trade
generally
come
in before
the end
The returns of the foreign trade of consumption seldom come in before the end of the year and
till
sometimes not
after
two or three
years.
EMPLOYMENT OF CAPITAL
employed in the home trade
51
will
capital^ therefore
made
one.
If
the capitals are equal, therefore, the one will give four-
show that
in
Adam
first test
of the
capital
national
is
the country.
not a question of
capital
profit.
Foreign
profit.
employment of the
The advantage
may
give greater
to the country
itself,
or the greater
7.
capital
itself,
And
w^as
it
(other
being
This
just
quoted.
"
for
home
con-
sumption
may sometimes
These
52
A PROJECT OF EMPIRE
it
;
chap.
for,
the
case of
war or
be
foreign
goods
can
never
two
more
8.
different exchanges."
Varieties
He
foreign
the
more
distant, as
is
}\
same
principle
is
applied in determin-
The near
is
more
with India
And
which the
carrying
services
is
capital of
the
country
is
employed
in
its
modes
of the employ-
ment
"That
country which
employed
EMPLOYMENT OF CAPITAL
countries.
53
some foreign
Though
it
may
replace by
them belongs to that particular country. of the Dutch merchant which carries
The
capital
the corn of
fruits
and
two
in
capitals, neither of
employed
Holland
;
supporting the
productive labour of
And
here
again
it
Adam
that the
ships of a
its capital
When
particular country
and
employed
in it
is
distributed
should be so."
In our
own
and advantage.
"The
profits
and constitute the whole addition which this trade necessarily makes to the annual produce of the land and labour of that country." A good example of the difference between profit and advantage is given in "In the trade, therefore, to the chapter on Colonies (Bk. iv. oh. vii.). which these regulations confine the merchant of Hamburg his capital can keep in constant employment a much gi-eater quantity of German industry than it possibly could have done in the trade from which he is excluded." [The reference is to the exclusion from the distant trade of the British colonies.] "Though the one employment, therefore, may perhajis be to him less profitable than the other, it cannot be less advantageous to his country.'
54
generally
A PROJECT OF EMPIRE
is
chap.
that
;
it
British labour
must be remembered
that
Adam Smith
to British ships
and
British
shipping.
In
treating
of
the
pure
its
sailors
and shipping."
as
capital
may employ
trade
many
and shipping
home
that
when
carried on
number
of sailors
chiefly
on the former
coal
of
these
two
cir-
cumstances.
"
The
trade
from Newcastle to
all
London,
for
no great distance."
He
" to force
it
not
always
necessarily
increase
the
shipping
of that
country."
EMPLOYMENT OF CAPITAL
9.
55
General Summary.
of view
is
made prominent
in
" The^gapital
will
genenilly
encouragement
and
support
to
its
and a
in
capital
employed
in
this
capital
employed
is
the
The
question
The
riches and, so
riches, the
power of every
taxes
all
must ultimately be
no
preference
or
superior
encouragement to the
home
trade,
it
was
to
an
essential
the
mercantile
system
encourage exports.
by
treaties of
colonial
trade,
and
by the method of
bounties on exports.
In our
own day
to be
trade.
Adam
56
A PROJECT OF EMPIRE
of capital at
chap^
ment
home
is
aimed
at this policy
wh(m
he says that no
artificial
encouragement ought to be
foreign trade
was purely
time the capital was kept out of the country was the
measure of
its
disadvantage.
of the
employment
of capital at
in
1 0.
Importayice of the
Home
Market.
" the
,
commerce A
of every nation
is
is
carried on between J
the inhabitants of the town and those of the country " Whata passage occurs of singular significance
:
number of
to
all
diminish the
markets, for
still
home market,
and thereby
further
Adam
Smith's criticism
Book Book
IV. chap.
iii.
part
ii.
IV.
cliaj).
ix.
Tliis
Alexander Hamilton for the policy of protection of manuracturers in tlie United States, viz., that towns (with manufactures) must he developed in order to encourage agriculture.
EMPLOYMENT OF CAPITAL
of
57
Muu,
the
great
mercantilist,
illustrates
title
very
dispute
"
The
of
Mun's
of
maxim
home
in the political
all
economy not
The inland
the
or
trade in
which an equal
the
greatest revenue,
only to foreign
into the country
it.
It
neither brought
money
out of
The country,
become
by means of
^
except so far as
11.
Not only did Adam Smith maintain that the home employment of capital was generally more advantageous than any kind of foreign employment,
but he accepted the principle that certain forms of
capital
home
use.
the export
in
the price.
The whole
Book
IV. chap.
i.
58
A PROJECT OF EMPIRE
"
chap.
Every
different
order
of
citizens
is
bound
or
commonwealth.
would
less
probably would
It
would
sufficient
advantage to
the
manufacturer
his
buy
it
wool
alto-
still
buy
at least five or
could buy
it,
and insurance
It
is
to the
so
little
sovereign and at
inconveniency to
anybody."
It w^ould
importance assigned by
Adam Smith
to the
employ-
ment
'
and encouragement of
was 8id.
Book
lb.
chiip.
viii.
The
avura;^e
per
30s.
6il.),
U\.
and lowest
14s.).
the
.'is.
A duty was also imposed on tlie coal between English ports. To this Adam Smith strongly objects as burdensome to consumers and detrimental to manufactures and lie says that " if a bounty could in any case be reasonable it might perhaps be so upon the transportation of coals from those parts of the country in which thoy abound to those in wliich they are wanted" (Bk. v. ch. ii.). This passage shows very clearly the importance, in his view, of using the natural resources of the country for the development of the home
castwise
industries.
EMPLOYMENT OF CAPITAL
the productive labour of the
59
home
country, insteacT\
How
can
Adam
Advantage of
his advocacy
Home Trade
of Free Trade f
But
at this
If in general the
employment of
capital at
home
is
more advantageous
in
employment
particular
?
sovereign
power in the
its
state
not
give
encouragement to
own productive
all
labour
And
in
in particular, if the
is
employment
of capital
agriculture
of
employments
the
most
advantageous,
why
The answer
at
these
questions
time.
is
of peculiar
interest
the the
present
Many
of
those
who advocate
to think they
home
industries
if
seem
have
home
if
industries
it
than
is
sent
and and
than
that
trade,
is
for
of^^
example,
between
Edinburgh
to
London
trade
more
advantage
Britain
betweei
London and Lisbon, or trade between Edinburgh ai Hamburg. They do not appear to know that Adam
Smith gave
this illustration,
home
home employment
of capital, but
6o
A PROJECT OF EMPIRE
may
be valid against some of the
Their arguments
successors
(in
time) of
irrelevant
Adam
as
worse
himself.
than
against
Adam
Smith
The nationalism of Adam Smith was much more robust than that of the present day, and as
will be
shown
later, so
was
his imperialism.
The
Adam Smith
in
is
this
Why, holding
ideas, did
which these
is
The answer
and
that,
in
general
either
hurtful
or
useless,
the
monopoly of the
colonial trade
was injurious
to the
a source of strength.
Adam
Smith's system of
negative
dogma
of
difficulty of
answering
these questions
wrong
advantage
Those,
and
the
greater
profit
greater
advantage.
on
other
hand,
that he
ought never to
have
destroyed the
old
system.
EMPLOYMENT OF CAPITAL
13.
6i
the Present
The consistency
arguments
historical
or the reverse of
Adam
not
Smith's
may
interest only.
But
that
is
so.
The
truth
is
He
argument which
aspects
happen
to suit their
own narrower
view.
all its
An
ought to be the best introduction to an understanding of our present policy and of the value of the
may happen
that
that
show
to
the
ideas
with
which
Adam Smith
his
and that
are
if
views on
nationalism
realised
and imperialism
to
be effectually be
system must
must be given
Or,
it
amount
may
development
it
it is
now than
and the
was
Adam Smith
of the
that in order to
promote the
interests
nation
One thing
62
A PROJECT OF EMPIRE
Adam
Smith's
of
in
chap.
AVhether we look to
support
of
arguments
freedom
in
the
general
his
policy
from
restraints, or to
arguments
support of the
important
exceptions
which
he
approves
in
all
of,
he
the
certainly did
not imagine
that
cases
interests of individuals
with
or that national
interests are
Crucial
indefinitely extended.
such an examination of
ideas applicable
Adam
to the
Smith's reasons
present time.
must
also be introduced,
facts,
be applied to new
is
to
have guiding
And
of
whether
atV
Adam Smith
have had
economicy
Note on Byles's
The
point)
failure
"
to
distinguish
stand
between
profit
and
advantage
has
been
curiously
persistent.
Court
of
Common
At
Free Trade.
Corn Laws)
this
many
laisscr faire.
Adam
Smith that
in
general
the
home
trade
was,_more_
Adam Smith
Tlii.s
profit
and advantage.
EMPLOYMENT OF CAPITAL
work
of
63
The
editors,
W.
S.
Lilly
and
C. S.
and strong supporters of protection, throughout describe this position of Adam Smith (endorsed by Sir John Byles) as the Home Trade Fallaaj. In commenting on Chapter IV. of Byles's book they say " This chapter repeats the error of Adam Smith
:
that
home
trade
is ipso
facto
foreign trade.
It is Byles's
more profitable (^/t;) to a nation than main mistake, and exposed him to
For purposes and Ave will
then,
scornful refutation
of reference
we
proceed
to
expose
Adam
Smith's
remarks,
which
home
was
nor Byles
their contention is that it is more and the terms are by no means synonymous. Byles quotes at length the passage from Adam Smith given above, and restates the position in clear and vigorous language
more
p7vJitabW,
advanta,geous,
Adam Smith
They
political
that
it
affects
Although Byles had already stated the argument very " At the risk of being clearly and emphatically, he continues
:
candid and serious attention of the reader to a further consideration of it." And he gives another rendering.
if
the
home
trade
fallacy
is
not a
fallacy,
then, free
trade
must
ipw facto be a fallacy. They accept the authority of Adam Smith on the advantage of home trade over foreign, but they
never consider the arguments by which he tries
,
is
in general attained
These
CHAPTER
VI
1.
Foreign Trade.
The
Qiercantilists,
whose maxims
in political
all
economy
an
the nations of
Adam
to
Smith, laid
on the value
opposition
In
view
Adam
Smith insisted on the greater advantage in itself of the home trade, and showed that some of the principal
advantages claimed for foreign trade were
e.g.
illusory,
by means of
\y
The
refutation of the
balance
theory
that
the
advantage of
trade
was
by the
(e.g.
strongest
writers on
the protectionist
side
Cournot).^
insistent
So
'
indeed
is
Adam Smith
on
the
"
utterly ruined
be sustained."
p.
vigour and flexibility, Smith system known as the balance of trade which can no longer Cournot, Mathematical Principles of the Tluorij of H'eaith,
164 (translation).
64
CHAP. VI
FOREIGN TRADE
home
his
65
logical
outcome of
isolation.
of a certain
to
amount of
if
is
capital,
but
Adam Smith
tried
show that
conditions
that
without any
artificial
various^^
the
2.
resulting trade
would
in
general be of
to
is
that
in
it
naturally
seeks
employment
home
only
when
the
home channels
are filled
up that
abroad.
there
will
be an overflow of
the surplus
not
only
avoidable,
constraint
naturally
introduces
it."
suggestive of an a jjviori
Adam
;
on
any such
appeal
he
66
advances
A PROJECT OF EMPIRE
purely
chap.
economic
arguments founded
on
experience.
3.
"When
demand
of the country
demand
value of
its
demand
home
The surplus part of them, therefore, must be sent abroad and exchanged for someIt is thing: for which there is a demand at home.
market
requires.
can
acquire
value
sufficient
to
it.
compensate the
The neighbourall
navigable
more
in
demand
"
there."
In this
way
Again
When
the
home market,
at
the
exchanged
'
for
Book
something more
II.
demand
-
home."^
Ibkl,
vr
FOREIGN TRADE
it is
67
imports from
shown,
much
tobacco as
markets.
there
is
demand
for in
the English
If,
must
cease,
and
with
it
all
the people of
pay
"
may
"When
in
increased
to such a
that
it
cannot be
all
employed
porting
the
of that
particular
naturally disgorges
is
employed
in
other countries."
arises in this
but
it
it.
ment seem
and symptom
number
of its inhabitants
by
far
68
greatest
A PROJECT OF EMPIRE
share
of
the
carrying
trade.
Enghind,
is
also
it is
The example of Holland shows that capital may accumulate so rapidly and to such an extent that all
the channels of trade are
filled
obliged to export
capital
abroad
says
for
foreign
investment.
"In the
late
war,"
Adam
Smith,
"Holland
rate
that obtainable
in
Holland.^
Adam
Smith points
out that some people in his day argued that the trade
of Holland
profit
was
falling,
abundance of
The
is
Adam Smith
is
conditions.
engaged in
the
shipping, and a
considerable
amount
in
is
pure
carrying trade.
But a
still
larger part
invested
Book
II,
chap.
v.
Book
I.
chap.
ix.
VI
FOREIGN TRADE
The
fact that the rate of interest
is
69
lower in this
at the
is
same
of
time the
efficient
and
also a
symptom
The
so
much
addition to
redis-
revenue or dividend,
the
and being
Holland,
nearest
in
Adam
made the
still
(though
very
remote from
its
whole
necessary subsistence
As
illustrating his
breadth of view
asserts
it
may
the
mentioned that
form
of
Adam Smith
that
republican
government seems
to
be the
The
to
be obtained.
"The
residence of such
all
country.
Any
the
and
their capital
some other country, and the industry and commerce of Holland would soon follow the capitals which
supported them."
^
Book
V. chap.
ii.
part
ii.
art. iv.
70
A PROJECT OF EMPIRE
5.
chap.
Under natural
is
the
capital
of a country
first
of all
there
is
The
extent of the
home
trade
(i.e.
limited
of the distant
occasion
to
The
sumption
is
limited
by the value
of the
surplus
is
only
limited
by the value
is
the countries in
the world
branch of trade
We may
all
place
on the
same
footing
as
the
carrying trade
the
sorts
practically
At
this point,
Adam
of the
employment
relative
of capitals.
way already
explained,
advantages,
Adam Smith
concludes
with
the
foUowinor o
remarkable
statement of the
VI
FOREIGN TRADE
'
71
6,
"
sole
The consideration of
own
private profit
is
the
to
in
employ
teade.
The
it
it
which
which
and the
different values
employed
historical
thoughts."
Taking a broad
survey,
Adam
under
In
which
included the
influence
of
laws
and customs of
particular
all
kinds
has
which
greatly interfered
naturally
the
most advantageous of
persons frequently find
{i.e.
employments of
capital,
more
for their
advantage
as
measured by the
profit to be got) to
employ
the most
^
fertile
lands in their
own
neighbourhood."
^
Book
II.
chap. v.
"
Ihid.
72
A PROJECT OF EMPIRE
7.
chap.
Of such importance
this
difference
between
Adam Smith
torical causes
order of progress.
The general
than people in
them
of
monopolies, and
that
it is
against monopolies of
is
all
kinds
Adam
Smith's attack
is
mainly directed.
The
position, so far,
precisely the
same
the
as that
now
of
cities,
throuo^h
asrencies
tariff,
this policy,
pay more
for their
and
That
is
the general
interests,
And, just as
cause
is
Adam
make
effective combinations.
since
Adam
FOREIGN TRADE
73
been a closer approximation to freedom in the application of capital apart from the direction of the state
Under
these condiis,
whether
which
is
is
that
it is
most advantageous
as
For
to
is
certainly
true
as
ever
that
the guide
individuals
the
the
employment
profit to
of their
capital
by
be obtained.
to
8.
Advantage?
Much
Sup-
we
still
accept
Adam
only a surplus
Has
this develop-
ment taken
has
it
way
as to lead to an
home employment
?
of capital, or
Adam Smith
^conditions, that
to
state, individuals in
own
interest
jiation.
would in general
If left to themselves,
they would be
74
A PROJECT OF EMPIRE
is
chap.
which
most advantageous
and then
to the society
first in
agriculture,
in all sorts of
employment
at
home
9.
The
"
Natural
"
especially of Agriculture.
in conditions
?
Adam
is
prior to conveniency
in every particular
inclinations
of
man.
Upon
equal
or
nearly
their
men
will choose to
employ
The
it
more under
if
their
is
As
England
have been content to invest capital in land and its improvement with a lower average return than is to be found in any other mode of employment. People
in the
towns
-
still
iv.
spend
ii.
it
in
Book
III.
chap.
i.
Hook
chap.
VI
FOREIGN TRADE
any other industry.
75
of
Adam
Smith's argument
least, it
is
no
of
or, to
say the
has lost
much
ment
world.
regards
make
much
safer
by putting
it
so attractive to
Adam
The
attrac-
however,
still
so great that
of profit.
10.
Other
also
Home
Industries.
Adam Smith
industries
home
is
generally,
so
way
home requirements are satisfied. Here, on home investments, and the relatively low profits of home trade, seem to show that
again, the low yield
it is
is
exported.
It
76
A PROJECT OF EMPIRE
most advantageous
to the nation.
chap.
arises
What
if
The individual thinks nothing of the national advantage of the employment of productive labour, as Adam Smith has so emphatically declared.
This difficulty
is
to
some
in
which
according to
Adam
capital
Smith's test of
advantage,
was one of
the
least
advantageous
to the
(i.e.
home
were
But he says
distant
capital
into
this
and
uncertain
it
attracted
by a very high
rate of profit.
however,
profit is
higher
than
of
it
demand
kind.
He
circumstances
is
understocked.
If,
then, under
VI
FOREIGN TRADE
this trade prices
^-^
drawn into
producer
would
fall
who uses colonial raw materials would gain. The raw materials obtained from the colonies at the cheaper rates would be worked up by the home manufacturer,
for
export.
demand
for
home consumption.
As
Adam
Smith was
influ-
In
so
Cunningham has
materials.
For
Our
The countries
rate of profit
The high
higher than
still
is
necessary.
Owing
to the development of
new
and
British capital is
Op.
cit.
vol.
ii.
p. 495.
9s.
September 1909, plantation rubber sold at cost being reckoned at Is. 6d. to 2.s
2
78
A PROJECT OF EMPIRE
fall in
and there
will be a corresponding
it is
expansion in
In the
used.
meantime
creation of
of of
way the employment home labour is directly encouraged by the growth new industries, and the home country in spite of,
more
capital.
In this
all
possible
home
13.
Summary
employment abroad
the
If such an over-
Again,
if
we look
merely
as the exchange of
home goods
is
the goods exported are in general of the nature of a surplus for which there
no demand
in the
home markets.
This surplus
is
In this
way
home
there
is,
in the
words of
There
Adam
is
also
FOREIGN TRADE
So
export
far,
79
Up
to the time of
Adam Smith
statesmen had
specially,
be favourable.
encouragement
ideas which
down
to our
own
are
still
its
policy as
14.
Adam
SmitK s Attitude
Negative.
not purely
did
not
need
special
and
artificial
duties
prevents
it
importation
of
some of our
manufactures
them
to
8o
A PROJECT OF EMPIRE
in
retaliations
of this
a probability that
they will
complained
of.
market
will
generally
the
some
sorts of goods."
Adam
Smith of the
principle, although
it is
true that
shows the
difficulties of
carrying out the policy mainly owing to the imperfections of the statesmen to
whom
the negotiations
If,
must of necessity be
is
entrusted.
how^ever,
the
no doubt that
as
Adam
retaliation
practical
fair footing."
Adam Smith
relies
mainly on
capital
that the
employment of
at
home
is
more
advantageous.
Argument on Home
Trade
to
Imperial Trade.
present.
As
w^ill
be
shown
in detail later
on
Adam
Ibid.
VI
FOREIGN TRADE
employment
of capital
its
is
8i
within
the empire
employof view
j
ment
in foreign states.
From
this point
The permanent
e.g.,
in
government
is,
for
ductive purposes
least
on
Adam
advantageous of
of
all
the employments
capital
the
country.
Even
by
if
the
capital
the
advantage
obtained
country
is
is
relatively small,
confined
-
to the
interest
obtained.
If,
however, the
to
same amount of
the empire,
so
capital
some part
the power of
much
increased.
But we
requirements
The mobility of
and
its
retention within
parts,
if
the
empire
home
in
country.
This
point
will
come up
for
consideration
Adam Smith
of view.
82
A PROJECT OF EMPIRE
16. Distinction between Active
chap.vi
Export Trade
made
at
home
unless
there was
so long as
a foreign
market
at
and
we import
all
in return things
or only of
disadvantage, there
the
augmentation
claimed by
Adam Smith
as the real
advantages of
foreign trade.
of beginning with
an
a
we begin with
that
we
are passive
Is
it
the
foreigner.
not
these
foreign
imports
may
displace
to
Adam Smith's
is
answer
by no
means
CHAPTER
VII
1.
Adam
is
S7nith.
often used
all
may
is
unhistorical,
As it happens the term " protecnot used by Adam Smith at all, except in
of
life
and property.
He
term "
free trade,"
The
they were to
the
The
term which
Adam
as the
opposite of free
monopoly "
e.g.
84
A PROJECT OF EMPIRE
system."
;
chap.
the mercantile
is
The centre of
but
his
attack
certainly
monopoly
by the term
e.g. the undue importance attached to monopoly money, and the consequential ideas of a favourable
balance of trade
mercial treaties in
protection to the
2.
The term protection (with its corresponding adjective protectionist) was used by Alexander Hamilton The object of his Report (1791) in a narrow sense. on Manufactures was to show, first, that it would be
of a
immense advantaije
great
to the
United States
and,
this
to
become
to
manufacturing
nation,
secondly,
indicate the
attained.
methods by which
end might be
articles
intended to be encouraged."
But
e.g.
besides this
method he
to
materials
manufacture
bounties
premiums
MEANING OF PROTECTION
tion,
etc.
;
85
some
of these other
plicitly
approved of by
3.
Adam
Smith.
Correlation.
Meaning depends on
is
Protection
common
in
If
we
interpret
by the employment of
capital
the
home
may
Adam
Smith.
test of
economic
is
advantage, to which he
appeals,
the
To keep
own
value)
it
after being
consumed, and
is
employment
up the auxiliary
capital in a state
and
also
things which
Adam Smith
local
habitation of the
duction
is
ment
of a given
is
amount of
capital in
home
trade or
industry
so far directly
86
its
A PROJECT OF EMPIRE
employment
latter
the
may
by
Adam
Smith, but
is
Adam
it
Smith
is
the blackest of
Conversely, however,
may
for
be presumed that
if
and against
restric-
satisfied
best
he is a free trader
whom
simply irrelevant.
difference
Or
putting
"
it
otherwise, the
" free
and
trade
"
and
ought to be possible
on an appeal to the
As
will
free trade
admitted by
Adam
;
in
4.
and Methods of
The
policy
distinction
may
be achieved
is
If
MEANING OF PROTECTION
the objects are fundamentally different,
if
87
they appeal
and
the
the
like,
reconciliation
is
not
possible
until
if
ideals
is
altered.
But
there
ideals, if the
dispute
tion
facts
by impartial authority
{e.g.
in this country a
treats of
Royal Commission).
Adam Smith
"Of
restraints
what
is
now commonly
under the
title
upon importation
5.
And
it
chapter he
says
"
How
may
be proper to
Government,
treat
when
come to
of
taxes."
Adam Smith
So
far
ii.
from
Book
IV. chap.
ii.
88
A PROJECT OF EMPIRE
chap.
A
also
careful
shows that
Adam Smith
of
to
the
customs duties
kind
that
would give
He
states that
when
an excise duty
is
corresponding
to
every
On
the
some
given to the
home
day he says
By removing
all
by subjecting all foreign manufactures such moderate taxes as it was found from experience
upon each
article the greatest
afforded
revenue to the
own workmen might still have a considerable advantage in the home market and many articles
public our
;
"
MEANING OF PROTECTION
and others a very inconsiderable one might
very great one."
It is clear
^
89
afford a
from
this,
that
considerable revenue
if
they di^,
A
by entering
the
home producer
his attack
and was
it
was against
this'/
monopoly that
directed.
of the chapter
confirm this
duties
of or
by high
prohibitions
the importation
such
home
thei
monopoly
of the
home market
is
more
or less secured'
and
it
is
protection at present
of monopoly.
Yet even on
is
Adam Smith
of such
by no means unrestrained.
"
By means
it
indeed, a particular
manufacture
may
may
be made at
home
the
Provided there
a sufficiency of competition in
home country
Book
V. chap.
ii.
art. iv.
90
of
A PROJECT OF EMPIRE
monopoly
chap.
worst
effects.^
6.
Adam
It
Adam Smith
in
in
was
the
actual
and especially
of his
the actual
country.
own
home market
to the
home
producer.
He
this ultimate
It
was with
Smith had
to deal
exclusion
of
rival
commodities from
thje
home markets.
Accordingly,
it
is
the
method
of
monopoly which
home employment.
7.
Adam Smith
constantly
Cf.
VII
MEANING OF PROTECTION
;
91
if it
be such,
may
to secure a
maximum
maximum
These are
theory.
cases
is
it
now
the commonplaces
of economic
to practical
that
certain
amount
ascribed
of
to
unemployment
the
of
in
England
This
may
be
displacement of English
foreign goods.
labour by
the admission
capital
is
means that
reason
is
not
applied
;
to
the
same
does not
first
obtain
Accordingly, the
of the industry
is
that
shall be
made
profitable.
The
profit,
primary object
then
of
protection
must
be
may
new
be the wages
of labour.
in the " reformers " United States the ostensible aim of the
tariff"
was
to fix
way
that having
producer.
test.
The consequent
granted or not
employment
considered
for
at
In
Australia,
92
A PROJECT OF EMPIRE
in recent legislation to secure the
chap.
made
advantages
ij
8.
Employ-
ment of Labour.
In treating of the relative advantages of employing
capital
in
different
modes and
in
emphasising the
home employment
Adam Smith
home-
its
profits.-
minimum
profits
in the
home country
not be accumulated
Accordingly,
and reproduced or
the only
to
way of giving any artificial encouragement the employment of labour within the country is
That means, in the common phrase, to employment of the capital remunerative.
protective system, however loudly
of capital.
make
it
the
In this
way every
look
may
first
place
is
the
increase
of profit.
If
an
industry
to be maintained in
must be secured
it
secured by protection
But
this
increases
natural
competition
within
the
country.
VII
MEANING OF PROTECTION
(to the capital),
93
remuneration
is
a trust.^
In this
in
way
protection leads to
to
monopoly
monopoly
per-
and monopoly
prices.
is
general
permanently higher
on a large scale
attacked by
We
modern
own countrymen"
system
Adam
Smith.
(i.e.
the exclusion of
foreign goods),
may
is
how
more employment.
If capital
being already
how can
it
9.
New
Theory of Protection.
The development of the idea that in order to encourage home labour by protection the profit on capital must first of all be increased, leads to a new
theory of protection
;
National production in
the
all
its
branches requires
agents
co-operation of the
three
great
land
is
and
;
capital.
The land
if
derelict
;
also
^
always there
Of.
W.
Jenks, chap.
iii.
94
is liere
A PROJECT OF EMPIRE
to-day and gone to-morrow as profit
it
chap.
calls,
and
can be replaced
with a
will
profit.
Profit or
no
at
profit
the
it
labour
cannot
find
employment./'
Accordingly
increase
may
"the aggregate
capital
of the com-
munity
for a
consideration.
"I
tall
still
that a
however,
the
levied
on the richer
is
classes,
" aggregate
satisfaction "
increased
by making-
state-directed,
And
it
may
number
of
unemployed causes
to give
and
employment
at fair
wages to a
far greater
number.
A
prices,
protective duty
by the exclusion of
foreign
home producers
their profit.
to raise their
and
in that
way
duty
is
equivalent to
and
MEANING OF PROTECTION
consumed by the poor,
in effect they themselves
95
pay
But on the
payment may
it is
as
if
by way
It
may
be obtained by a natural
in the
wages of the
But
such a
unions
fall
;
might be prevented by the action of trade and in any case to be permanent it must be
fall, i.e.
part of a general
particular
10. Protection
It
and
Socialism.
last
follows
two
out leads
Socia lism,
may
be taken to mean
give
artificial profit to
it will
it
ground that
give advantageous
employment
to
labour, surely
may
is
secured.
many
respects,
of causes,
the least
socialistic
modern
own
the trusts
96
stilled if
A PROJECT OF EMPIRE
some
effective
chap,
vn
means of control
of of
is is
invented.
the trusts
described
socialism.
is
the
natural
result
evolutionary
nations
The
experience
of
continental
is
equally
apposite.
Socialism
prevalent in
Kingdom.
is
And
the reason
is
is
once approved
it
may
The method of
his
method
direct taxation
way
if
the employ-
ment
of the poor
is
the goal.
which capital
-who
are
owned and managed by individuals guided by profit and not by ideas of prois
satisfaction."
if
And
society
is
so constituted that
we wish
to be practical
we
must
CHAPTER
VllI
1.
Difficulty
ment of Capital in
Home
Trade.
In dealing with " protection to native industries," in the sense of " restraints upon importation from foreign
couiitries of
Adam Smith
view capital employed in home industries or in home trade is prima facie more advantageously employed
than when devoted to any kind of foreign trade or
investment
"
that
is
upon equal
If capital is
employed
demand
industry
in the
home market,
advantageous that
may
economical
additional
is
scale,
and
also
employment
to
there
a demand.
home
98
A PROJECT OF EMPIRE
chap.
and any growth of the export trade under the conditions assumed, gives, in general, more employment to
home
2.
Home
Industries by
Foreign Imports.
But
country
when
it
we consider
imports
made
into
Adam
Smith's principles
mean
is
a corresponding increase in
is
opened, a million
factures
pounds worth of
now imported
now
be given to
the foreigner.
In this case
it is is
manufacture that
exchanged
for foreign
goods that
ci\
On
the contrary,
trade
displaces
home
trade.
And
views
is
the
9/
immediate
effect
on
Adam
effect
Smith's
disadvantage.
would be a disad-
viH
PROTECTION
is
99
confirmed
Adam
Smith.
for
on
The and
implication, of course,
is
employment.
In the same
way Adam
It
is
by the
opening up of
new markets,
or
emj)loyment
market
is
If
always be obtained,
why submit to the losses of retaliation ? And when a foreign import displaces some home
product,
it is
new
industry.
But
be
made
"If the
free
suffer, and some of them perhaps go to ruin altogether, and a considerable part of the stock and industry employed in them would be forced to find out some other employment. [But the freest importation of the rude produce of the soil could have no Book iv. Chap. ii. The such eifect upon the agriculture of the country.]"
of the
sentence in
] is
noticed below.
loo
It
is
A PROJECT OF EMPIRE
clear that
Adam Smith
in
all
opinion
that
it
was
cases
an immediate
some old
It
is,
however,
also
equally
clear
from
the
home market
indeed,
home
producer.
He
notices,
some
may
rule.
What, then,
convinced
which
at
the
time
Adam Smith
upon the
not
can be produced at
home
"
were in general
?
second
Under present
conditions
this
cha^^ter
deserves
3.
Protection in
Great Britain in
Smith.
Time of
Adam
To begin
actually
by
high
duties
or
absolute
home/
salt
markets.
The importation of
live
cattle
and
The
vni
PROTECTION
to a prohibition.
loi
to
amounted
silks
With regard
manuand of
strides
sorts
many
in
other
manufactures
"
had
obtained
Great Britain
their
monopoly against
countrymen."
of which the
prohibited, either
what can
easily be suspected
by those who
of
are not
^
He
market
the
admits that
frequently
this
monopoly
great
the
home
to \
it,
gives
encouragement
that
particular
also
species
of industry
enjoys
and
that
frequently a greater
is
amount
of the
turned to this
it.
But he goes on
society or to give
is
to say
"
Whether
this
monopoly
Advantage
to
Particular
Industries.
It
is
absolutely
necessary
the
to
see
clearly
the
difference
between
interests
of particular in-
dustries
It
^
and the
cannot be doubted
the
that
is
is
Adam
*'
Smith's
own
On
number
first
of duties
In the
edition
"
certain "
evident," as pointed
I02
expression
A PROJECT OF EMPIRE
chap.
particular industries
would be the
case,
and attract
than
the
if
home market.
In the light of recent history this
is
an admission
of serious importance.
In
all
larger
and larger
scale
and
possession of the
home market
in
Adam
Smith's
own
an
all
markets"
is
immense advantage.
Again,
it is
be carried on on a large
case,
scale,
in
number
this
is
matter of arithmetic.
the principal
by protection
if
that means,
possession
it
is
is
home market,
to
gives
it
is
maintained
encouragement
;
the
expansion
of
foreign trade
clearly
than
Adam Smith
With
v.ii
PROTECTION
_io3
Smith's ter-
Adam
minology
for
such
sur-
5.
Adam
Smith's first
Answer
Industry limited
hy Capital.
Adam
Smithy however,
tries to
show
that, although
by pro-
home market
is
prejudiced.^
His
familiar
first
argument
is
to
it
students through
and
expansion
fundamental propositions on
Adam
Smith's
own statement
free
however, per-
fectly clear,
and
is
demand
commodities
is
not
demand
is
for labour,"
for labour
" the
"
wages fund."
The general industry of the society," says Adam Smith, " can never exceed what the capital of the
society can employ.
can be kept in
must bear a certain proportion to his capital, so the number of those that can be continually employed by all the members of a great society must bear a certain proportion to the whole capital of the society, and
never can exceed that proportion.
No
regulation of
of industry in
capital
can maintain.
I04
It can
A PROJECT OF EMPIRE
only divert a part of
it
chap.
it
which
and
it is
by
more advantageous
it
which
own
accord."
or,
The
relations
more
is
the
command
capital
and
in the
same way
Adam
is
employment of labour, and quite another to say that the amount of capital available for the industry in the sense, of any society is itself always limited namely, that any increase of employment at one place
or the
mean
it
a diminution else-
where.
is
up
have forgotten
the qualification
when he came
Adam Smith
it
"by no means
direction
VIII
PROTECTION
105
And
we see amount
society
if
we
for
home industry
it
any
only
always limited.
On
position
is that,
when
the
home
they require
its
command
a far larger
amount of capital than can be profitably employed in home industries and trade. Recent estimates show
^
that
we have
already
;
three
thousand millions of
this there is
the large
trade.
amount involved
on our foreign
The
increasing,
in the
amount that
retained at home.
That
is is
to
of
that the
is
conditions, then,
it
cannot be said
limited,
and that an
expansion of one
"Great Britain's Capital Investments in other Lauds," by G. Paish, Journal of Royal Statistical Society, September 1909. The market value of the public securities negotiable on the Paris Bourse at the end of 1908 was 2,629,520,000 French, and 2,705,800,000 foreign {Economist, August 21, 1909).
io6
it
A PROJECT OF EMPIRE
chap.
exported.
6.
Second Answer \
Home
Industries
7 ^
.
naturally ^protected.
Here
artificial
Adam
thatjix)
needed,
because
incHvi dual
and consequently
support of
of stock."
are
advanced to show
why
the individual
has this
employment of
different
capital as near
home
The
:
cases are
examined Mith
"
Home
is
may sometimes
employed
in
be driven
off
it
But a
capital
home
trade,
it
ment
trade
to a greater
number
in
the
I.,
vm
PROTECTION
107
same advantage
Upon
every individual
capital in the
inclines
it
is
to
employ
his
manner
which
likely to afibrd
to the greatest
number
of
own
first,
country."
is
This passage
two points
home
it
ployment of
capital at
home
most advantageous.
arises.
And
here
the
difficulty
Suppose
the
away the
and a replacement of
country
London
7.
Tliird
Answer
Annual Produce of
the Society.''
is
eff'ect
And
this
io8
are
A PROJECT OF EMPIRE
most used
in support of free trade,
inliuence.
chap.
and which
historically
had most
The test of the relative advantages of different modes of employing an equal amount of capital is not
merely the quantity of productive labour that
in
is
put
that
motion
but
" likewise
the value
which
employment adds
On Adam
employed
it
is
it is
the
amount of
but
labour should be
effective
employed in
manner.
If
fall at
we look merely
if
to the
employment of labour we
which,
is
whole.
evil effects
"
the "
work made
by the
times;
old Poor
Law
for the
own
the
"work made"
;
ment of labour
which
in
these are
illustrations
on a large scale
"
"
making work
"
other words in
general
means
wasting
" fallacy
labour." /''^
Adam Smith
'
making work
VIII
PROTECTION
I09
forces of
And
his
argument
argument,
still
them with some part of the, produce of our own industry, employed in a way The general in which we have some advantage.
can make
better
buy
it
of
will
not thereby be
but only
left to find
out the
way
in
which
It
is
employed
to the greatest
advantage
it
when
can make.
The value of
from
its
certainly
more
or less diminished
when
it
is
thus
turned
away
producing
modity which
to the
it is
directed to produce.
According
from foreign countries cheaper than it can he made at home it could therefore have been purchased ivith^
;
a part only of the commodities, or what is the samj thing with depart only of the price of the commodities,
which the industry employed by an equal would have produced at home, had it been
follow
its
capital
left to
natural course.
is
The
therefore,
no
value of
A PROJECT OF EMPIRE
;
advantageous employment
its
and
of
the
exchangeable
according
the
intention
the
lawgiver
must
of the
necessarily be diminished
by every such
the
regulation."
usscucl'
argument, and
it
even
in this,
popular interpretation
that of
Adam Smith
to
himself.
Adam Smith
it
is
does not
for
best
the
consumer
buy
is
in
In this
As
reward of labour.
an advantage to that
labour
if
we import goods
because in this
way we employ
"
less
to say,
we avoid
making work
by prohibitions
The argument is clenched by the famous of the wine made from Scottish grapes.
"
By means
made
which at
least equally
countries.
Would
it
making
of claret
^
and Burgundy
See next chapter.
in Scotland
PROTECTION
In an extreme case like this
III
or
that of Bastiat's
sun,
candlemakers'
petition
it
against
the
perhaps
suggested by
that
every
making work by
artificial restraints
its
would not
increase
is
employment and
reward,
when
the question
8.
may
In other
is
often
Adam
if
extreme
limit.
"
But
such
employment
thirtieth,
or
even
three-
either."
But
as the follow(as
in
employment.
For
he
continues
hr^'r
"
Whether the
be
'^^^intr}^
f^v^r nn other
112
A PROJECT OF EMPIRE
is
chap.
natural or acquired
in this
respect of no conse-
quence.
As long
as
the
those
will
always
former rather
than to make.
It
is
an acquired
has
advantage
only
which
one
artificer
;
over
bis-
it
more advantageous
to
buy
of one another
It is clear
that
Adam
of free imports can only be reconciled with his position on the relative advantage of the
home employ-
ment
of capital
and labour,
if it is
employment
the
capital
at
the
result were
if it
that
would be sent
it
abroad, or
would
not be replaced as
if
labour
efi'ect
the
in
general
of
Smith's
ideas of advantage,
i.e.
standpoint.
In this connection
it
is
noteworthy that
Adam
s mall
Smith
states
that
"in manufactures a ve ry
foreigners
to
advantage
will
enable
in
undersell
^
our
the
home market."
And
who
it is
with
Ibid.
PROTECTION
derive
of the
It
113
the
greatest
home market.
must be repeated that the guide
of capital
is
to the
employ-
ment
always
profit.
If,
then, a foreign
is
profit,
the
home industry
checked
depends on the
It
is
quite
And
that
is,
from
Adam
is
And
9.
Appeal
to
Experience necessary.
facts,
Adam
makes
it
an
home country
elsewhere.
It
that
it
the country
its
if it
own
existence (as
the
capital
case,
sunk in landed
considerations,
But
in
in
the
it is
normal
commercial
profit,
measured
terms
of
of capital.
If,
then,
own workmen,
if
the
duty
it
114
A PROJECT OF EMPIRE
if
chap.
displaced,
would find
something
else.
is
And
that
we cannot
We
in-
home
;
and
we must appeal
do not
suffice, a
to present facts.
If official statistics
If
by such an appeal
to present experience
we
home
being
displaced
by the
those
lower,
or
that
industries
in
these
and
Adam
Smith,
it
state to their
and
to that
by means of
aids
protective
restraints.
duties,
or
other
and
be
But
And
of
view the
natural
strength
liberty.
the
negative
argument
for
PROTECTION
And
as
it
is
115
laid
evident that
Adam Smith
quite
much
stress
consumer
that
to the producer
is
of so
much importance
a somewhat
desirable
CHAPTER
IX
1.
That Cheapness
is
Benefit
:
and Employment
both Truisms.
a Necessity
to the
Consume^'
To
all
those
who
dogma
that under
conditions
in
the
home ment of
country or elsewhere,
protection to native
Adam
Smith's treat-
industries will
seem
needlessly elaborate.
And
to the
same people an
and
statistics (or
will also
a proposition of Euclid.
It
is,
but
it
is
if
all
way
is
of charity.
And
as
Adam
Smith
observed
" It
we expect our
own
interest.
cH.ix
117
We
their self-love
necessities,
But
to get any-
thing by
way
and
in
money
(metallic or representative)
employment.
he
Employment, then,
is
of consumption.
He
work neither
work
shall
have no meat,
is
man
of business.
cheapness
is
of employment.
The one
is
as
much
a truism as the
truisms, like
other
and
as every one
knows general
common
combined with
and
Adam
well
as
trade from
point
of
from that
the
test
equally
of
applies
test
of
cheapness.
There
Wealth
of Nations which have often been quoted to show that, in his opinion, it was only requisite to look
to
passage very
Book
I.
chap.
ii.
ii8
A PROJECT OF EMPIRE
summary
of the
2. " Consumption the sole End and Purpose of all Production" : Critical Examination of.
"
Consumption
;
is
all
production
and the
ought
may
it
be neces-
promoting
that
of
the
consumer.
The
maxim
would be
But
in the mercantile
is
;
almost con-
and
it
seems
as the
merce."
man
the
and that
utility itself
to satisfy a
want
have
political
economy.
But
Adam
Smith's reference to
"
to
mean
has been
supposed that
Adam
that in the
Book
IV.
chap.
viii.
IX
119
interest of the
was to be made
as cheap as possible,
and
if,
of
little
men
it
it
was
to be preferred.
of maxim,
maxim
all
that
came
improvement of the conditions of labour which have marked the economic progress of the nineteenth
century.
Wealth of Nations cannot be understood from a few isolated sentences. And with Adam Smith there is
the less justification for this perversion of popular
his
meaning
perfectly clear by a context illuminated by facts. The sentence under examination follows immediately on a passage in which he severely condemns the laws which prohibited the emigration of skilled workmen
:
" It
is
unnecessary to observe
how
contrary such
we
case
affect to
is
be so very jealous
sacrificed
but which
the
futile
so
plainly
to
interests of our
in
effect
use the
modern term.
in which,
And
after a
summary
of the
modes
interests of the
sacrificed
:
to
we have
as the conclusion
" It
cannot be very
difiicult to
not
I20
A PROJECT OF EMPIRE
we may
believe,
;
chap.
the consumers
has
been so
carefully
and
among
In
the
our merchants
far the principal
and manuarchitects.
by
mercantile
regulations
which
have
been
and the
that
of
interests, not so
much
of
some
other
sets
has
been
sacrificed to it."
first
sentence
runs
"Every man,
as
is
violate the
laws of justice,
own
interest his
own way."
the
is
But
it
is
plain,
from
the
argument, in
which
attacked that, in
Adam
Smith's
had and
by
been
sacrificed
of consumers
had
suff'ered
same monopolies.
:
3.
Effect
on Labour.
The same
-^the
is
'
distinction
drawn between
Book
IV. chap. viii.
the
taxes
which
141-4.
are
intended
The producers
1,
artisans, etc.
*
121
primarily for revenue and those the object of which is " Taxes to secure the monopoly of the home market.
evidently
as
destructive
of
the
purpose
give
not of
revenue
monopoly or
and
to
our
own
By
all
it
removing
all
prohibitions,
by subjecting
from each
aflforded
article
own workmen still have a considerable advantag;e in the home market and many articles, some of which at present
the greatest revenue to the public, our
;
afford
This passage
is
it is
of the advantages of this proposed reform of the customs duties the phrase occurs, " taxation being
by those
who imagine
that
all
Adam Smith
conditions of
portation under
improvements he suggested
in
the customs
His lead-
Book
V. chap.
ii.
122
ing ideas
A PROJECT OF EMPIRE
were
:
that
the
number
;
of such
duties
by the extension
expense
should
administration
of
demand
by the
no
be diminished
by more
of
in
efiective
and
provision
bonded
and
very
warehouses.
public
system the
trade
a
revenue
the
manufactures of
considerable
the
country would
gain
in
advantage.
The trade
far
the
com-
modities
not taxed,
by
the greatest
number,
would be perfectly
free
and from
all
advantage.
Amonoj
all
those
be
all
comprehended
the
necessaries
and
...
it is
must always
4.
Taxation of Necessaries
here
it
Reasons against}
And
Adam
Smith
sacrifice
and the
did not
taxes.
He
On
who
lived very
near the
saries
minimum
'
must
163.
123
indirectly
the
cost
of the
so that taxes
rise
oreneral meant a o
country concerned.
were taken
of labour.
off,
(so
far as
would be
raised.
This
argument
of
historical importance, as it
had
the
corn laws.
The
benefit to the
in the present
argument
that
Adam Smith
effect
The
unless their
money wages
fall in
proportion to the
much
is
at all
because there
an
demand
for labour.
The people might be relieved from some of the most burdensome taxes from those
the national debt.
;
"
life
or
upon
' '
The labouring
^ The reduction in the money price of labour would necessarily he attended with a proportionable one in that of all home manufactures, which would thereby gain some advantage in all foreign markets " (Bk. v. oh. ii.).
124
A PROJECT OF EMPIRE
The cheapness
of their
demand for them, and consequently for the labour of those who produced them. The increase in the demand for labour would both increase the numbers
and improve the circumstances of the labouring poor.
Their consumption would increase, and together with
it
all
5.
There
famous passage
in
in
Mr.
Gladstone's
replies to
which he
to
who tried
is
show that
a reassertion of
Adam
a mistake to suppose
mode
by them.
you want
of
to
do them the
maximum
of
articles
^
which give
illustrates
employment."
He
by
if
He
says
it is
doubtful
in
wages, and
" the
Book
V. cliap.
iii.
]).
128.
125
That
is
the principle
economy
applicable to commercial
6.
Employment."
" All
taxes
on
consumable
commodities
productive labour
be,
if
below what
paring
otherwise would
either
in pre-
the commodities
taxed
they are
home
which they
purchased
if
they are
foreign
commodities."
adversely affected
is
not
common
artisan but
the manufacturer
"
pays
sells
buys
to
comes to the same thing, with the price of which he That part of his hardware, therefore, becomes it.
of less value to him, and he has less encouragement
work
at it."
And
ciple that is
fundamental in
foreign trade
"
The
the
for
surplus produce of another, the cheaper they necessarily sell that part of their
own
buy
it.
That part of
their
own
126
surplus
A PROJECT OF EMPIRE
produce
^
becomes
less
of
less
value
to
them,
its
and
they have
encouragement to increase
quantity."
7.
The Masses of the People are the Masses of Consumers and Producers.
Adam Smith
also
brings
out
"
ranks
it
of
must be
much
and
The whole
almost the
much
is
In the
first
annually distributed
among
productive labour."
is
And
besides, the
own
a certain amount of
The
view.
IJook V. chap.
ii.
127
wrote
taxes
on
principally
which are
all
now regarded
fall
on
a relatively small
And
con-
large
revenue
is
to be obtained
from
must be imposed on
But a
is
re-
the
same thing
amount
of labour a
reward
is
forthcoming.
8.
Adam
Adam Smith
always
effects of foreign
from
with
Comparing
his treatment
little
century."
Book
i.
chap.
xi.
128
A PROJECT OF EMPIRE
it
chap.
may
they
sumer.
of the
To begin
first
employment under which the cheapness was attained. Gradually, however, public opinion was aroused and
the regulation of the conditions of labour was enforced
by manifold
legal
In our
own days
unemployment
of labour
is
the principles of
Adam
Smith.
The experience of
may
be
interests of the
consumer
may
be
unduly
neglected.
The
actual
method
adopted by
Adam
at the people of
He was
he considered
employment and
same way he was
And
in the
employment
the
of
home
labour
he
took account of
monopoly of
to
home market.
IX
129
or the
interest of
is
Adam Smith
restraints
in
the
the mercantilist
supposed
is
to
be unfavourable."
popular that
to
The idea
special
still
we should
give
advantages
those
countries
which take
Adam
vantage of trade
the
is
is
to be
money value
it
buy
in the cheapest
and
sell
in the
balances.
The
argument
assumption as in
regarded, relatively
as
the
together.
to
It
is
quite clear
on
the
any country,
we
must look
imports.
and the
fallacy,
own
principles," he goes
on to show on other
the unreasonableness
principles.
'
of
these
restraints
Book
IV.
chap.
iii.
Book
iv. chap.
iii.
part
ii.
I30
A PROJECT OF EMPIRE
this part that are
It is in
found
tlie
passages so
often
quoted
which
seem
to
dogmatic
position
that in
foreign
only
the
" In
interests of the
every country
interest
it
be, the
of the
to
buy
sell it
the cheapest.
The proposition is so manifest that it seems ridiculous nor could it ever have to take any pains to prove it
;
been
called
in
question
had
not
the
interested
the
common
sense of mankind.
Their interest
is
in
this respect
body of the
As
it
is
home market.
other European
Hence
in
countries the
upon almost
all
Hence the high duties and prohibitions upon all those foreign manufactures which can come into competition with
restraints
our own.
Hence,
too, the
extraordinary
all
sorts of
trade
is
supposed to be unfavourable
that
is,
from
those against
whom
in
Adam
Smith,
this
place,
also
introduces his
leading principle
tliat
131
i.s
certainly
all
most
likely to
do
so
when
neighbours are
"
rich, industrious,
and
commercial nations.
nations,
The wealth of
in
neisfhbourinor
politics,
is
though dangerous
in
war and
certainly advantageous
trade."
:
The
the
all
gain
trade
of
may
cited
his
not be equal).
work
Adam Smith
;
is
monopolists
spirit of
" the
mean
body of
The
interest
any particular
always in some
to,
that of
the public.
narrow the
competition,
but to narrow
it,
and can
be, to levy,
for their
own
benefit,
their fellow-citizens.
or regulation of
The proposal of any new law commerce which comes from this
132
order,
A PROJECT OF EMPIRE
and ought never
to
chap.
caution,
after
When
{i.e.
of the
weighed against
dearness
it
artificial
first
quite
clear
that "those
who
taught
[i.e.
no means such
it."
down
summary
of the
Wealth of Nations on the national policy that ought to govern foreign trade.
"producer."
to
And
if
the "consumer"
is
interpreted
mean
the
" great
body of the
people "
the
;
now
evident from
is
and
for the
most part
in order to
sell,
consume, a
man must
toil.
first
produce something to
man must
to quote
from
Adam Smith
i.
This passage
is
IX
133
to
home over
to neo^lect
them
fundamental principles of the Wealth of Nations and Those considerably more than half of the difficulties.
who
Adam Smith
Smith
home labour
and Adam
confronted by
Obviously one of
Adam Smith
reconciliation
;
flattered
himself
feel
he had efiected a
the
he did not
discomfort of
struggling contradictions.
He
But
as already
shown
generation
experience
to
changes or
may
change.
What we have
show
is
Adam
134
A PROJECT OF EMPIRE
will
forms of labour
be employed
iii
we
substitute
In this
The
monopoly
of
the
home
market
is
only
possible through a
tions imposed
number
state.
by the
And
before an opinion
must be taken of difficulties involved. These difficulties may be summarised under the exvention, account
pression
the negative
argument
for
freedom
the
9.
ment
of
this
may
Robert
Peel
and
Richard Cobden.
The
fact
Peel
was a
to
model
landlord
leases
his
yearly
tenants
in
refused
accept
most
interested
the
Cobden, on
Com
IX
135
the other hand, said of Peel that he took " the least
when he proposed to lower prices instead of aiming to maintain them by enlarging the circle of exchange."
^
i.
p.
322.
CHAPTER X
THE NEGATIVE ARGUMENT FOR FllEEDOM OF TRADE
1.
The
may
be introduced by
Henry Sidgwick, who could divide a hair between south and south-west side with greater nicety than any Greek sophist or mediaeval casui st
a passage from
In his chapter on
ordinary
Protection
held
by
practical persons
who wish
to avoid both
extremes
is
practical issue
most commonly
protection
is
raised.
The moderate
view
is
that
all
theoretically wrong, so
far as purely
harm
owing
I
to
hold,
is
considered
it
is
abstract
theory
Book in.
136
cHAP.x
L.
137
dilHculty
sufficient
it
withdrawal,
to
is
to adhere
at
any
rate in a free
2.
Adam
is
their Advisers.
It
clear
the
importance
of
assigned
by
and
rate,
Adam Smith
capital in
the
employment
labour
at any
the
home country
that he,
cosmopolitan to
freedom of
be easily
may
number
he took
Influenced
by the appeal
the
to experience
distrusted
the wisdom,
strength,
still
and the
more he
the
the
following
passages,
some of them
13S
familiar
A PROJECT OF EMPIRE
from frequent quotation, but essential to
"
I
bave
never
tbose
wbo
affected
to trade for
good,
it is
an affectation
indeed not
very
common among
merchants,
and
from
it."
should attempt
employ
could
no
folly
and presumption
, . .
enough
to fancy himself
to exercise it."
"To
to
much
be
governed
by general
that
principles
which are
and crafty
insidious
by the momentary
distrusted the
fluctuations
of affairs."
But
advisers.
if
Adam Smith
"
wisdom and
more
their
still
well knew.
it
The
But
manner
enriched
it.
was their
l)usiness to
know
139
know
in
what manner
their
it
enriched
the country
was no
part of their
business.
came
into
consideration
some change
then became
trade,
in
which those
stood."
may
that
be recalled,
who
replied
asserted
Adam Smith
sir,
"He
is
mistaken,
there
is
to be illustrated
It
3.
of Monopoly.
must not be supposed that Adam Smith's severe strictures on the merchants and manufacturers
were called forth simply as a rhetorical support of the
system of natural
in the first place
principles.
liberty.
His attitude
is
explained
than competition.
interest
is
On
monopoly.
that
is
Adam
in,
Smith thinks
advantage
;
in general,
I40
A PROJECT OF EMPIRE
his attack
The centre of
system
is
that
it
Mono-
..." Merchants
market."
to
their
..." Country
great
honour,
people
the
least
The
of
made
fundamental difference.
" The_suj)orioritv
which
is
supported
by many other
by
alien
regulations.
upon
goods imported
merchants
all
by
own countrymen.
Those
The enhancement
by both
farmers,
is
everywhere
finally paid
by the landlords,
have
combinations
sophistry
of
merchants
and
The
reference
is
by the
niedia'val
towns
to jtrotect their
own
burgesses.
141
the general
As already
detail later on,
indicated,
and
as
will
be shown in
colonies of
tile
mercanof
;
policy
;
to
realise
the
larger
is
issues
empire
and
"
the same
spirit of trade
;
monopoly.
but
it is
Monopoly
is
show that
m^tal
gains
If their
growth cannot
be come
proper."
being of
all
most
4.
Monopoly and
"
the Interests
of Labour.
of the Mer-
The chapter
cantile
entitled "
The Conclusion
System
(Bk.
in
tion of the
way
and not
for
employment
of
home
labour.
To begin
Adam
I.
Book
chap. x. part
Book
v. chap.
ii.
part
ii.
art. iv.
Adam Smith
by
him
xv.
142
of
A PROJECT OF EMPIRE
manufacture
;
chap.
were
in
many
the
important
cases
admitted free
have
been
extorted
by
the
and
if,
con-
be extended to
all
the
other
materials of
manuSo
a position
is
"
The
case
examined
this
At one time
per pound
And on
this repeal
Adam Smith
remarkable that
common
yarn
employed than
in the
To say nothing
constant employment
the
four-fifths of
whole quantity
labour
is
necessary
in
for
the
preparation
of linen cloth
employed
that of
143
linen yarn
women
by
commonly
scattered about in
make
their profits.
As
it
is
their interest
it is
to
as cheap, as possible.
By
extorting
own
linen,
all
home
they
linen,
endeavour to sell their own goods as dear as possible. They are as intent to keep down the wages of their own weavers as the earnings of the poor spinners and it is by no means for the benefit of the workmen
that they endeavour either to raise the price of the
on
is
principally encouraged
is is
That which
carried on
and indigent
^
too often
clear
either
neglected or oppressed."
It
is
quite
from
Adam
home
by the
^
labour of flaxgrowers
and spinners.
is
It
is
measured
amount
of the
home
labour employed.
The application
obvious.
144
A PROJECT OF EMPIRE
he considered that the duty was
the
interests
solely
in
repealed
the
of the
profit
of
to
manufacturers of
linen
cloth
who
sought
5.
Protection
to
07i
Mo7iopoly
all
is
kinds.
In
by
far the
most important, namely, that of agriculture, he does not think the landed interests were actuated by the
spirit of
monopoly.
It is
which led to the repeal of the corn laws, that Adam Smith did not originate nor even share this distrust
of the landlord.
He
It is true that
he
by which
and perpetuated
the
be reformed altogether
"
monopoly.
dis-
combine
as
145
their
endeavour
to
obtain
against
all
against
the
inhabitants
of their
to
towns.
have
was
which
is
common
privilege
to their station as to
demand
the
exclusive
of supplying
their
countrymen
not, perhaps,
They did
how much
6.
With regard
agriculture
Adam Smith
is
relies
suflSciently
Not
but
employ
profit,
that
if
Book
IV. chap.
ii.
146
A PROJECT OF EMPIRE
:
chap.
he proceeds
"
But the
soil
rude
produce of the
not necessary to
in
which he
both
It is
and lean
of salted
provisions,
and of
grain.
argument remained
after it
essenti-
hundred years
was advanced
years
(1776-1876), including
And
They supposed
and
at
the main on
its
own
agricultural resources,
any
must be
could be effective.
The
dis-
such supplies.^
"
able
to
Even the
little
could very
affect
of Great Britain.
Corn
pound
of
wheat at
as dear as a
pound
of butcher's
meat
at fourpence.
of foreign corn
may
fear
from the
freest importation."
'
writer, p. 160.
Book
147
in
But though this argument remained essentially true fact for a hundred years, during the last generaon the one
and on the other the exploitation regardless of
^
the waste
new
It is quite
Adam
7.
Smith
laid
such stress
no longer applicable.
ivith
Growth of
not
only
As already
observed,
Adam Smith
And
"
foreign corn
To prohibit by a perpetual law the importation of and cattle is in reality to enact that the
produce
of
its
own
can maintain."
"In
apparent prosperity
doubtful
if it
148
A PROJECT OF EMPIRE
in the
must
of other countries.
8.
The history
Corn Laws
is full
of
The
And
failed to
in
agriculture.
in
1811 to
families.
number of
de-
number
of families in agriculture in
of about 19 per cent
in the
of an
increase
aggregfate
number
...
If
we
compare
1831
with
1841,
with
an
absolute
two
millions, there
was
employed
9.
in agriculture."
Adam
Smith deals with the Agricultural System of Political Economy which had been expounded by the French
economists with
1
whom
62.
149
sympathy.
the
harmony of
of the
original
it
Glasgow,
his visit
But
on the fundamental
profits
of
industry,
it is
agriculture.
employments
in order
promote
it,
may
be recalled,
that
Adam Smith
strongly
of corn, although
agriculture.
It
these arguments
it is
enough
what
case
Adam Smith
And
not because he
is
led
away by
I50
state
;
A PROJECT OF EMPIRE
for
chap.
much
Adam Smith
aorriculture
in
the
restraints
of
facilities for
ment
of capital
ideas
trade
demands
When Adam
examples of the
such theories,
difficulties
for
example, as the
encouragement
to native industry
by
the
eflfective
use of retaliation;
;
reciprocity
colonies
treaties
the
preferential
state
treatment of
control.
The
advocates
trade
could
in
its
way
as remarkable a
document
of
1834.
either
case,
owing to change
modify the
in
conditions,
we have again
'
to
legislation
151
difficulty-
was unemployment.
cure unemployment, the same
The
down
in
way
Every one who has studied the agreed that such was the result of the " bad
;
founded on
in
main dangers
constantly appealed to by
Adam
own countrymen.
;
We
modern
that
monopoly
the result of
modern
conditions
increasing return.
Adam Smith
showed,
we must guard
Secondly,
monopoly.
there
the
danger
that
we may impose
152
A PROJECT OF EMPIRE
is
chap, x
come
less
And
thirdly, there
is
the
and attempts at
retaliation.
fully
considered,
is
it
/^ ^
circumstances
the
interfere
with
the
Adam Smith
himself
and importance.
will
An
light
examination of
both
these
exceptions
throw
on
the
XL)
CHAPTER XI
ADAM
1.
TRADE
^
Meaning of
Exceptions
to
Free Traded
is
The term
some-
times taken
but in
political
we look
term has
much more
restricted meaning.
used specially
home products
it
is
in
this
Adam
it
two cases
in
which
upon foreign
industry."
for
encouragement of domestic
2.
First Exception
if the Industry
the
is
necessary
for Defence
"
is
Navigation Act.
particular sort of industry
The
first is
when some
defence of the
country.
The
of the State to
commerce
chapter.
IS3
154
A PROJECT OF EMPIRE
the numbers of
of
to
its
chap.
much upon
The
Act
endeavours
sailors
and shipping.
properly
of
Navigation, therefore,
give the
sailors
very
and
shipping
of their
own
and
foreisrn countries."
Then
was based.
" It
is
may have
proceeded from
as
national animosity.
if
They
they had
all
wisdom.
aimed
at the very
same
object,
liberate
wisdom
would
have
recommended,
the
England."
"
On
other grounds
it is
was condemned
not
favourable
to
which can
its
from
it.
The
interests of a nation in
is
like that
different
people
sell as
with
whom
dear as possible.
cheap,
But
it will
when by
all
encourages
it
nations to bring to
;
and
for the
same reason
XI
155
it
most likely to
sell
dear
when
its
markets
The Act
of Navigation,
true, lays
no burden on
come to export the produce of Even the ancient aliens duty, which
all
But
if
either
by prohibitions
coming
;
or
high
to
sell,
they cannot
own
By
we
to
buyers, and
buy
of
foreign
goods
if
dearer,
but
a
sell
our
own
cheaper than
trade.
there
was
more
is
perfect
freedom
As
defence, however,
of
perhaps, the
in general principles
particular instances.
best
statements of
general
all
rule
in
favour of
The
duty
is
of
market dues
is
156
A PROJECT OF EMPIRE
chap.
reintroduced.^
Adam
ing, is in
in dealing
Smith's opinion
it,
as will appear
imperial federation."
It is in the assertion of the subordinate
importance
of opulence
to
to be
If the exception
is
to be applied in our
own
we
and
ought
;
to
the spirit
at
all,
difficulties
is
so strongly
affords
approved of by
Adam Smith
on principle,
The better opinion of the author of the standard work on economic history, namely, Dr. Cunningham,
In 1860 Gladstone imposed a duty of one penny per jiacka^t- on all poods exported or imported. It was at lirst estimated to yield 300,000 per annum. His reasons in support are piven in Financial Statemaits, pp. 160,
'
161.
2
His reasons
p.
372.
XI
157
who, as
happens,
is
to be classed as sympathetic
freedom from
matter
purpose.
An
may
ham.
Commenting on the
its
of the
Act of 1660,
he writes:^
navian trade
and the
restrictions
imposed on them
this
line
to
abandon
of
commerce
obtained a
altogether.
what small
affair.
On
the whole,
it
Dutch did not suffer perceptibly during the seventeenth century." It is true that Dr. Cunningham also
points
and "it
of course
that
the
but there
is
no
sufficient proof of
any
direct connection
between
this celebrated It is
measure
largely attri-
wealth depended so
much
Vol.
ii.
p. 212.
158
A PROJECT OF EMPIRE
Adam
Smith's favourite
first
by
British statesmen
was
this
on the
final repeal
(1854) Dr.
"It
is
impossible to say
how much
due
to the application
ocean
traffic,
in the
The
total imports
and
by
their competitors
United States."
may
shown by Adam
may
way
encouragement given
own
shipping.
' Cf. On the eflect of the Navigation Act on the British colonies, see p. 48. two admirable essays on " England and America" and "American Smuggling," by Professor Ashley in Economic Surveys, pp. 310-360. * See below, Chapter XVI. - Vol. ii. part ii. p. 833.
XI
159
Adam
It is
general,
Adam
way
these industries
would be encouraged
such
he con-
important elements of
national defence
to rely on us.
5.
Adam
are
except in so
as
the
ideas
From
this point of
ideas
by which
Adam
Smith
Pursued
Adam
whole commercial
way
as to
make
secure.
*
It
may
:
it
can be shown
Book
IV. chap. v.
" If any particular manufacture was necessary, indeed, might not always be prudent to depend upou
i6o
A PROJECT OF EMPIRE
is
chap.
and that the surest way to the increase of opulence is by unrestricted trade with foreign countries. But
the moral of
we cannot take it for granted that this simple easy method To take a living is also the best for our purpose. example, the protection afforded by Germany to agriSmith's treatment
is
Adam
that
culture
is
of imperial defence
and
it
is
at least theoretically
Empire may
find
it
may
not be by
on the export of
6.
sailcloth
and gunpowder.
Second Exception
Taxes on
Import duties
Products.
it
to
Balance
Home
"
The second
case in which
will generally
be
for
encouragement of
is
domestic industry
the
is
when
some tax
of
produce
the
latter.
case
it
seems
reasonable
the
to domestic industry,
what would naturally go to it. It would only hinder any part of what would naturally go to it from being
turned away by the tax into a
less natural direction,
XI
i6i
as
the
tax as nearly
it."
as before
free
This
trade
(or
free
imports) seems
o;eneral
harmony with common-sense ideas of natural justice. To act otherwise would be to give a bounty to foreign industry and to discourage home labour. In practice
the most narrow of popular free traders would admit
that
to
every
excise
duty there
ought
to
be
is
a
as
The
difficulty
the carrying
7.
it
There
first
:
of
all,
Adam
is
Smith
laid
much
heavier
all
foreign goods of
Whether
treatment
or
is
not desirable
may
be a matter for
discussion, but it
Adam Smith
heavier
been
is
given.
If
it
a
will
much
customs duty
imposed
give
the
home
be
It will
i62
A PROJECT OF EMPIRE
Adam Smith
deals with the case
8.
But
Meaning
exactly
of'^
What
If the
is
principle
practical
would be
importance.
curtailed
as to be of little
com-
general
the
great
trades
of
the
world are
naturally in
dififerent
kinds
satisfy
of things.
But very
practical
different things
may
what are
for
that
it is
necessary to tax
possible substitutes.
9.
The same
the
be taxed.
for
quantity.
now
what
spirit), etc.
difficulty arises
to
XI
163
Smith him-
10.
Home
Taxes.
be extended
much
The
by way of
illustration is
Adam Smith
is
of
home
the
country.
But he
method
of countervailing
all
duties of a
general
character on
first,
known
as in the
and secondly because the remedy proposed would probably only aggravate the
Taxes on necessaries, he says, " when they
disorder.
it
is
in the richest
that
they
i64
A PROJECT OF EMPIRE
No
To
lay a
chap.
generally imposed.
so great a disorder.
new
to
make them
certainly a
of such Extension,
it is
At
often maintained,
that
as an element
And
then
fair
it is
footing
is
This case
by
Adam
The
Smith, and
arguments.
first
presented by
difficulty,
every
system of
differential
duties.
It
is
properly con-
The second
of
Adam
Smith's
objections to the
The popular
ducer
and
Adam
'
XI
165
con;
most
difficult in
economics
and
the general result appears to be that only in exceptional cases does the tax fall to
an appreciable extent
It
may, and
if
heavy
enough surely
will,
competition will
raise
prices.
On
home
rise
country
itself,
may
not eventually
12.
Adam
He
rests
the
will be
simply restored to
justifies the
its
Later on he
methods
of drawbacks on exportation
If the
its
by a
similar argument.
duty
is
drawn back,
it
natural channels.
It
argument of
sugar.
Adam
is
Smith as disturbing the natural course of trade, and ostensibly the object of the countervailing duty
simply to bring back the status quo ante.
1
If it
be
xiii.,
by present
writer.
i66
A PROJECT OF EMPIRE
cap.
Adam
that
much
the
better for
any
trading nation
appeals.
a principle to
which he constantly
the
We
sugar industries.
;
In theory, a bounty
is
a negative tax
and
if
the
to be
compensated
for
an excise
be compensated for a
admitted, the
5^
way
is
open
for a still
wider extension.
13.
It
may
be said that
if
way
natural
channels,
we
are justified
imposing
to us.
The
justice
may
be admitted,
for
to be
an
eye.
But the
case
And we
is
by the
proposed taxes.
The case
altered
if
may
be induced
X.
167
to take
This leads up to
is
con-
Adam Smith
under
:
retaliation.
"
1 4.
Third Exception
Case of Retaliation.
As
there are
two
cases in
which
it
will generally
two others
in
;
which
it
may sometimes
how
far it is
be a matter of
proper to con-
deliberation
in the one
and in the
been
"
for
other,
how
far or in
what manner
it
may
has
it
The
first is
the case
for retaliation.
The
which
it
may sometimes
be a matter
of deliberation
free
how
when
by high duties or prohibitions the importation of some of our manufactures Revenge in this case naturally into their country. dictates retaliation, and that we should impose the
some foreign nation
like duties
some
accordingly seldom
Here, as usual,
Adam Smith
i68
A PROJECT OF EMPIRE
chap.
About the same time the French and English began mutually to oppress each others industry, and
the hostility continued until, under the influence of
Adam
This
Smith's
teaching, Pitt
made
the
celebrated
it is
importof the
retalia-
is
tion.
{^
When
Justijied.
" There
may
there
The recovery
of
great
foreign
market
time
will
generally
more than
compensate
the
some
sorts of goods."
Adam Smith
position.
it is
and the
thereby
reason assigned
quite in
is
harmony with
his general
if
The
retaliation
only expedient
likely tliat
may
be
restored.
Retaliation that
\Q>.
Diffimdties
of.
"When
there
is
them.
When
XI
169
ture of ours
them
considerably,
theirs.
This may, no
workmen among
their rivals
ourselves,
may
enable
by
ours.
On
Every such
class of
upon
injured
by our neighbours'
prohibitions, but of
some other
class."
a statesman or politariff
wars shows
that
it
very
difficult to
Grounds
exami7ied.
retaliation
In our
own times
those
who advocate
seem
to rely less
by way
of
natural
is
from
our
markets.
This, however,
to reduce retaliation to
Adam
explicitly
ijo
A PROJECT OF EMPIRE
By
retaliation
condemns.
fiscal
war
war with
it
Being war
must be carried on
for success
is
by the
methods of war.
policy of pin-pricks
not war,
should be pre-
loss,
and
strike
hard
trade.
small
ad
valorein duty on
all
good beginning
but
it
understood by
that
it
Adam Smith
in inducing
on the contrary
to
make an
increase.
some
Germany)
to take off or
German
trade.
We
Such
Germany was
by the history
end
concerned.
retaliation, to
judge
more
likely to
us,
imposed against
and
in real w\ir.
risks.
Retaliation, how^-
must run
XI
171
List
on Retaliation.
should have
brought forward one of the strongest objections to In comretaliation as advocated by Adam Smith.
menting
"
on
Adam
it
Smith's
is
position,
List
says
The
principle of retaliation
if
able only
industrial
it
as
His reason
is
way supposed
by Adam Smith.
This consideration naturally leads to the second
exception which
of deliberation
;
Adam Smith
this
thinks
may
be worthy
may
Case of Vested
Interests.
The
case in which
it
may sometimes
or
in
be a matter
it
of deliberation
how
far
what manner
of
is
proper
to restore the
it
free
importation
foreign
goods after
is
when
particular manufactures,
by means
of high
duties or prohibitions
upon
all
can
come
into
so far extended as to
Humanity may
in
this case
dom
of
trade
should
be restored only
by slow
172
gradations
A PROJECT OF EMPIRE
and with a good
deal
of reserve
and
circumspection."
As already observed,
that
it is in
Adam Smith advocates this cautious restoration of free trade. He gives reasons, however, why it may be supposed that the disorder caused by the
abolition of protection as
is
would not be
so considerable
commonly imagined.
is
be
available.
This guarded
statement
converted
of
Adam
by popular
taken for
and
it
has been
granted that in
all
employment
in other things.
If
by
free
trade
is
of differential
"
To
expect,
Oceana or Utopia
pre-
what
is
oppose
it."
{^
20.
The
also be
may
it
extended to other
if
cases.
In the
first
place
may
be argued that
an old-established industry
XI
173
is
new
foreign
source
supply,
in
temporary protection
interests
may
that
be
is
desirable
the
of
the
labour
employed.
And
here
we
find
protection
afibrded
As already pointed out England repealed the Corn Laws at a time when every one believed that the country must still rely in the main on her own agriculture.
the cheap supplies of food from
countries.
new
The other
industries,
application
is
to the case
free
of infant
the
exception
to
trade
generally
name
is
of
John Stuart
Mill.
Here
is
The danger
is
confirmed by
Adam Smith
may
otherwise would
would make on
rapid progress.^
in the best
consequence neither
increase
^
population
The
slow progress
the
This is one of the positions of Aiiam Smith contested by Alexander Hamilton, who emphasised the necessity of the growth of manufactures (aided by protection) even from the point of view of the growth In the case of the United Kingdom at present this case is of capital. In the case of the British colonies, however, of theoretical interest only. it is of the greatest practical importance, and is examined in detail below (Chapter XVI.),
174
A PROJECT OF EMPIRE
chap, x,
Exceptions"
to
Free Trade.
It is a
common mistake
effect
examined
in this chapter as of
no practical importance,
in
and
as
having no
The
truth, as confirmed
by
Germany
all
protects
involved
defended
its
protective system
by
all
the exceptions
All
power
and
all
CHAPTER
XII
1.
In his
fifth
book
Adam Smith
of the sovereign or
commonwealth
may
great
of
justice,
etc.
;
of
and
religious
establishments,
2.
The
first
fundamental position of
Adam Smith
commerce
in
is
merce
certain
public
it
works
and
institutions
are
necessary which
individual or small
number
of individuals to maintain.
175
176
If
A PROJECT OF EMPIRE
chap.
is
worse than
profit,
useless.
and
profit is not
The
which
may
be a source of
permanent expense.
more distant future for a return, and the return need not be measured only in terms of money. Accordingly,
the
intervention
of the
state
eS'ort.^
may
be justified as
supplementary to private
In the second place
Adam Smith
are
commercial undertakings
effort
If,
unsuited for
for
likely to acquire
is
And, on the
other
hand, monopolies
may
3.
General Rule
Non-interference
still
prevails
On
Adam Smith
does
domain
of the state.
Commerce should be
left to
the
\
J
ment Fund
in
XII
i-j-j
in the affairs of
laisser
passer
so
also the
Adam
Smith's
regards
state, as
in-
called
of
state
;
management
presumption
still
surstate
vives
which,
course absurd.
may
be passed over
must be given
to
Adam
4.
to
undertake
the
Duties of
was to enforce
Adam Smith
introduced
in general
has always
The subject
treated by
tlie
Economy, Book
v.,
and
i.
in the
"On
2
Book
V. chap.
part
iii.
178
A PROJECT OF EMPIRE
to
the
defence of the
the
power.
The
that
collection
to
power.
of trade
particular branch
and
if
left
equally to
its disposal.
But
many
;
others, nations
have not
greater
and
of
in
the
part
the
commercial
states
Europe
particular
companies of
merchants have
had the
duty of the
the
they
may
making
the estate
prudent
to
useless,
and have
either
mismanaged
or
confined
the trade."
5.
This opinion
is
An
account
is
given
of the
old
" regulated
179
To trade
in
member
the
fees
of the
and a
partial
monopoly
to
In
these
regulated
companies,
and
regulations.
The con-
"
To be merely useless,
and
indeed,
the
three companies
forts
contributed to the expense of maintaining ambassadors or consuls " who, like other
by the
the
state
laid
open to
taxes
all
His
Majesty's
subjects.
The
different
is
levied
by
company
[the reference
to
for this
a revenue
6.
Joint-Stock Companies
The
the
trade, as
name
i8o
each
A PROJECT OF EMPIRE
member
amount
India
of his shares.
chap.
to the
(1600)
as
The history
In this
company
is
as
illustrative of his
principles,
The company constantly complained of the competition " The miserable effects of which the of interlopers.
company complained were the cheapness of consumption and the encouragement given to production precisely the two effects which it is the great business The competition, of political economy to promote.
;
By
the
fair
their
during the
the Indian princes, and with politics came wars. " After many signal successes and equally signal
losses
they at
last lost
principal settlement in
was restored
to
India
have
left
them."
:
"
The great
increase
i8i
and a cover
greater
The conduct
state of
in consequence
made in the constitution of their, government, both at home and abroad." ..." But it seems impossible, by
any
fit
any respect
government of
the
a great
empire
it."
man
is
of great,
sometimes even a
man
pound share
proprietors.
in India stock
him
number
about the
which
it is
empire in
About the prosperity of the great the government of which that vote gives
based.
him a
ever
share,
he seldom cares at
all.
No
about
other
could
be
so
perfectly
indifi'erent
the
i82
A PROJECT OF EMPIRE
chap.
company are and necessarily must be." With the mismanagement of sovereign power was associated mismanagement of trade, so that " in consequence of these disorders the company is now (1784, the date
tile
of
Adam
than ever.
by the different parties in Parliament for the better management of its affairs, and all those plans seem to
agree in supposing what was, indeed, always abun-
it is
possessions."
7.
to
"
No two
characters
Company
renders
them
spirit of sovereignty
seems to
The present condition of India under British rule is the best commentary on the soundness of Adam The government of the millions Smith's judgment.
of India by a few thousand British civilians
is
one of
;
is
that
Equally
xu
183
the example
of the
Congo
State.
make bad traders is only a variant on the betterknown proposition that for the state to direct private people in what manner they ought to employ their
capitals
must
be either a useless or
a hurtful regulation.
8.
Adam
Indian Empire.
It
Adam Smith
merits
did not
of those
who
of
" I
chapter on
colonies
and
colonial
policy.^
I
mean
not, however,
by anything which
have
less
mean
to censure,
it.
who have
acted in
They
Rome
vii.
in the best
days
The members
^
of those councils,
Book
IV.
chap.
i84
A PROJECT OF EMPIRE
politics.
chap.xh
But
their
situation alone,
them
all
which
with
required,
abilities
not well
know they
always more or
in
less
inconvenient to
established,
and
fall
destructive to those
who have
^
the misfortune to
ii.
Book
by the author.
CHAPTER
XIII
1.
Wealth of Nations was published on the 9th of March 1776 the Declaration of the Independence of the American Colonies was
The
first
edition
of
the
made on July 4
third edition of the
of
the
same
year.
;
This
in
inde-
and
1784 the
Wealth of Nations was published with some considerable additions and alterations by the author, after which he made no more than verbal
corrections.
The composition
of the
1749 to 1776, and from the former date to the death of the author in 1790 occurred the most important
events connected with the building up of the British
Empire,
on the one
loss
and
This
was
the
when
which burst
in the great
i86
A PROJECT OF EMPIRE
is
called
2.
Adam
and
Adam Smith
and
"
in the
o^reat events,
The discovery
Good Hope
are the
in
made
it is
What
benefits or
what misfortunes
mankind may
human
fore-
wisdom can
foresee."
is
This passage
cast that in little
made
in wealth, population,
to taxation, according to
Adam
Smith's scheme of
and
United States has been of the magnitude indicated, though the separation has at any rate deferred the
problem of the transfer of the seat of empire.
The
COLONIAL POLICY
passage quoted
is
187
also
immediately followed by a
"
At
when
force
side of the
remote
countries
may grow
;
may
grow weaker
the different
may
some
to
establish
this
all
countries to
all
countries
it."
The sudden
rise of
Japan
" short
own
times
is
likely
to
witness changes
still
more
remarkable.
3.
The treatment by
throw
light
Adam
i88
A PROJECT OF EMPIRE
Adam Smith
may
chap.
reflect that
be a short period.
And
is
in the
in
Adam
Smith
still
political leaders of
our
own
In other matters
the level of
prohibitions
and
high
;
duties
for
protection
and
we have enforced
universal
elementary education
we have improved
the mobility
market
we have reformed
we have
intro-
Adam
4.
in
The chapter on colonial policy is one of the longest the book, and is supplemented by the chapter which
Before extracting the leading ideas for present use
attention
It is
may
of this chapter on
new
chap.
colonies in ancient
'^
and
in
iii.
modern
Book
IV.
vii.
Book
v. chap.
COLONIAL POLICY
times.
189
There
is
population of the
of
food-supplies,
by
swarming
in
the
manner
of bees, the
new
is
independence.
There
Roman empire
end proved
fatal.
with
its
military and
political
organisation
and a
There
centralisation
is
which
in the
the
want
of
method with
by private
and partly by
freedom
;
political
all
and
religious outcasts
in search of
the
colonial
trade a perquisite
of the
mother
country.^
5.
Adam
new
Smith examines
and the
colonies,
inquiry
parts of
the world.
examined
and
The
colonists take
to
I90
A PROJECT OF EMPIRE
useful arts
;
chap.
and other
ment and
*'
law.
importance of
Among
slower than
so far established as
is
necessary for
their protection."
Next
"
the abundance
gets
of un-
developed land.
Every
colonist
more land
With
the abundance
wages there
is
" In
inferior
one "
new
two superior
where that
Later on,
at least
Adam Smith
good treatment
good economy
better,
plantations were
so
far,
than
the
English,
new
colonies have
made
good conditions whatever their origins; e.g. the French colony of St. Domingo was established by pirates and
freebooters,
last
acknowledged the
had
to be treated
fast.
Other
COLONIAL POLICY
colonies of which the progress has been
191
more rapid
Plenty
affairs
manage
their
own
the
great causes of
S^^ecial
American
Special causes are given
Colonies.
why
:
been so
much
engrossed
there
has been
greater
cultivated
land
is
the
greatest
obstruction
to
its
improvement."
in these
did
not
before
the
commencement
at
of
how
may
not only
be governed
policy of the
The commercial
colonists
in detail
much
shown
their
commerce
to particular
192
ports
;
A PROJECT OF EMPIRE
" but though the policy of Great Britaiu, with
by the same mercantile spirit as that of other nations it has, however, upon the whole, been less illiberal
and oppressive than any of them.
colonists to
Ill
everything
manage
their
own
affairs in their
own way
new
fore,
colonies
is
summarised
in a
:
there-
In one
way and
in
one way
only
it
Magna virum
mater.
7.
Advantages
to
Countries.
In Part
III.
of the
same chapter
Adam Smith
advantages
may
be divided into
These
general
and
national.
employment of
Even
those
X.I.
COLONIAL POLICY
and did not even obtain
193
new
colonial produce
8.
Power
The general advantages to Europe have been undoubted but when we come to the peculiar and
;
special
been
derive
from
the
is
possession
of
colonies
altered.
which has a
*'
dominion
which
and secondly,
in the revenue
its
civil
The Roman
The Greek
colonies sometimes
They seldom acknowledged themselves subject to the dominion of the mother city. They were generally
her
allies
in war,
peace."
The military force has never and in the their own defence
;
194
A PROJECT OF EMPIRE
a
chap.
generally-
very
considerable
distraction
of
the
In this respect,
the
So
much
As regards
revenue, "the
The taxes which have been levied on those of other European nations upon those of England in
ment.
particular
laid
to the
expense
sufficient to
of war.
pay that which they occasioned in time Such colonies, therefore, have been a source
mother countries."
As
is
shown
at the conclusion of
Book
V., in the
two wars against Spain and France, the American colonies cost Great Britain much more than double
the
the
it
sum which the national debt amounted to commencement of the first of them (1739).
this
it
before
"
Had
;
not been for those wars the debt might and probably
time
(l
would by
and had
not,
it is
hardly necessary to
XIII
COLONIAL POLICY
still
195
national debt
unpaid,
still
tliat it is
dependencies which
At the conference
in
of
London
as Colonial Secretary,
is officially
"
You
to say,
dependency
likely to
like Lidia.
This
is
is
remain true
there
to the
is
If
we had no empire
Adam
Smith,
clear that
when he wrote
had suffered
9.
loss
and accumulated
debt.
But
particular
colonising
of the remainder of
is
Adam
Smith's
devoted to an examination of
C 8596.
196
tion
is
A PROJECT OF EMPIRE
that this boasted
chap.
monopoly had
itself also
been
Adam
by the maintenance
an
The revolt and subsequent separation of the American colonies was the beginning of the total abandonment of the monopoly of the colonial trade,
and
in the course of time the self-governing colonies right,
and exercised
it,
of imposing
The
is
shown
specially in the
closed market
for
home
of
country.
in a pre-
ferential
foreign.
10.
Adam
colonial trade
intricate
^
and
difficult,
but
it is
well
XV.
COLONIAL POLICY
worthy of careful study,
first
197
for
two
reasons.
In the
is
place,
the idea
in
again
beginning:
find
favour that
the interests of
monopoly
partially
ought to be
to
ought,
therefore,
be of
interest
and of
monopoly when
place,
In the second
rests
the argument of
Adam Smith
almost
of
the
old
system was
not
is
consideration
how
Natural
Effects.
monopoly
Adam Smith
monopoly.
in general,
and and
which
it is
composed.
The
198
A PROJECT OF EMPIRE
from the monopoly, and most of the oppressive regulations were inoperative.^
It is
to be observed
that
Adam
Smith, having
is
now
con-
it
is
home country
it is
advantageous that
first
should
be employed,
of
all,
in
home
may
with advantage
;
also, capital
may
home country
materials,
if at all,
obtains valuable
products,
especially
raw
which
it
could
itself,
at a
much
greater
If at
the
people
were
obtaining
products at an excessive
cost.
by the
in
fall,
home country would obtain more capital and give greater employment to home labour. So far, of course,
the the argument would apply equally to the development
of any
foreign trade through which
we gained an
increase either in
consuming or
is
in productive power.
This consideration
examination
of
the
'
effects
See below,
foreign
XIII
COLONIAL POLICY
In
the
199
meantime,
effects
by means of the
12.
Adam
monopoly
that
its
by
this
natural
employment
either at
home
or in
more favourable
that the
The reason
profit,
is,
and
capital always
this artificial
diversion
of
that there
is
relatively
home and
The
ments
profit,
also rises.
now becoming
all
duction of
this
In
are
way
our
exports
to
foreign
countries
diminished, and
we
are undersold
in the near
and
we have
:
"
The
200
A PROJECT OF EMPIRE
13. Disadvantage of high rate of Profit.
chap.
is
incidentally, at
any
drawn by
Adam
Smith between
profit
and advantage.
in his
The great
mercantilist writer,
Thomas Mun,
profit.
Adam
was
less,
because
employment
to productive labour,
to the
the country
and
Profits.
Adam Smith
shows
profit.
Rents
made
amenities
of agriculture)
the
price
of land
falls
fall in rent,
on capital
in general
labour also
home supply
of capital
and
COLONIAL POLICY
secondly,
201
because
in
the
division
of the
annual
and
lastly,
high rate
stimulates
country
case,
is
less
and as shown
is
that one
of foreign
colonial
market
stable than a
number
markets.
15. Effects
It
Adam
why
the English
that in their
more than those of other countries case the monopoly and consequent
restrictions
much
less stringent.
view
this artificial
and expositive
must
also
have had
far,
its
advantages
must have
brought out by Professor Ashley in his essay on ^ '* The Relations of England and America, 1660-1760."
He
Adam Smith
of
the
fruitful
"
The
progress
our
North
Economic Surveys,
p. 332.
202
A PROJECT OF EMPIRE
less rapid
much
had no
capital but
what belonged
to
He
speech on American taxation in 1774, in which, after noting that America had
tolerated the system of
:
"
by a pecuniary compensation.
men
in
By
his
immense
capital (primarily
emtheir
ployed not for their benefit but for his own) they were enabled to proceed with their
fisheries,
Nothing
progress."
in the
mankind
is
like
their
And
by Adam Smith, that unjust as the prohibitions of the monopoly may have been, they have not hitherto and Professor been very hurtful to the colonies
;
Ashley's
own judgment
is,
much
At
shows,
Cunningham
the restraints,
if
spirit of national
independence.^
Ciuiiiiughani, vol.
ii.
p. ,')83 sq.
COLONIAL POLICY
the object
is
203
it is
not
necessary to go into
monopoly.
in general
it
fuller
modifications of the
Bounties,
for
example,
certain
stores
were
given
by the
for
mother country on
country,
e.g.,
naval
and
materials
shipbuilding
and manu-
factures,
imposed
On
Adam Smith
has
the forcible commentary, of great interest from the point of view of a real union " The interest of our
:
of
the
mother country.
. .
.
Their
wealth
was
in
it
was an expense
on the
improvement of our own property and for the profitable employment of our own people. It is unnecessary,
apprehend at present (1784), to say anything further in order to expose the folly of a system which fatal
I
experience has
now
sufficiently exposed."
also, in
drawbacks on
to
articles
England
;
colonies
home
shown
in detail that
American
colonies,
204
A PROJECT OF EMPIRE
restrictions
which
1 6.
General
Loss
to
Britain
When
taking a
Empire and
conclusion
its
that
this
power or
advantage of the
As regards the
monopoly two more sentences may be quoted of the " In the exclusive nature of a general summary.
trade
it
is
provinces
which
have
never
yet
afforded
either
civil
But
are told
"
Even
dis-
and
men
their
may have
COLONIAL POLICY
205
Nor can this gain be taken from the favoured class " The by taxation for the benefit of the nation.
the
monopoly
it is
increases
con-
both absolutely
impossible
orders,
proportioD."
British
The general result is that the provinces of the Empire had not contributed, and at the time
civil
government
own
And
that
owing
variety
of causes
the principal
way
owed
of
so
much.
taxes,
The
irritation
caused
by the imposition of
purposes,
ostensibly
for
imperial
such
small
was
it
sufficient to cut
ties
which
was sought
to tighten.
no
illusions as to the
weakness
British Empire,
weakness.
2o6
A PROJECT OF EMPIRE
17. Alternative
chap.
of Disintegration or
Real Union.
" Countries which contribute neither revenue nor
military
force
the Atlantic.
empire
It
has
empire
mine
cost,
and which,
it
immense expense
It is surely
profit.
now time
it
awaken the
it
people.
the
project cannot
If
be
completed
any of the
be
the
provinces of the
to
empire
cannot
of
made
whole
contribute
it
is
towards
the support
empire,
free
herself
any
in
of
their
;
civil
or
military
to
establishments
time of peace
and endeavour
accommodate her
COLONIAL POLICY
her circumstances."
^
207
Adam
hesitation.
To
give up
to elect their
laws,
and
to
to
enact their
own
adopted by any
nation
the
world
The
most
visionary
its
ever
being adopted."
If such a separation
between
solution
might be
the
best.
The
colonies,
in time of peace
would at
any
rate be our
maximum
this supit
on
to
own
defence,
is
allies.
But
this
alternative
at
of
separation
is
rejected
by
Adam
Smith
sentiment.
Adam
Book
V.
chap.
iii.
2o8
A PROJECT OF EMPIRE
chap.xih
shadow of what
it
was
when he complained
project.
of
proportion
taxation
for
imperial
CHAPTER XIV
THE IMPERIALISM OF ADAM SMITH
1.
Criticised.
To found a great empire for the sole purpose of raising up a people of customers may at first sight
appear a project
It
is,
"
fit
for a nation
whose
government
is
influenced
by shopkeepers.
Such
found and
shopkeeper.
Say
to
Buy me
buy
my
clothes at
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.
much
he would
enjoin
you to buy
England purchased
a
distant country.
for
home
a great estate in
The
209
cultivators
became
p
in
\
2IO
little
A PROJECT OF EMPIRE
more than
thirty or forty years so
chap.
numerous
the
shopkeepers and
monopoly of
the
original
their
custom.
Without
or
of
purchase
money
of the
first
for
;
buying
all
and secondly
buy.
own
convenient to
it
convenient to buy
it
every part of
Enojland
Some
parts of
imported into
it,
therefore,
sell
;
that
the
colonists
off"
should
where they
could
the farther
the better
Cape
Finisterre.
clause
this
the famous
fi rst
interests
of the
(i.e.
home
country!
benefit
c lasses
who who
'^shopkeepers
sell
make
buy and
chap.
vii.
at
their
Book
IV.
x.v
*'
211
is
advantageous employments.
is
The
less
advan-
tageous
than
the
foreign
trade
developed
under
natural conditions.
2.
Adam Smith
standpoint.
up the economic
From
this point of
were allowed
" Great
Britain
would
not only be
efi'ectually
more advanat
present enjoys.
natural
affection
By
of
the
mother
It
whole
together
that
treaty of
commerce which
and
factious
212
A PROJECT OF EMPIRE
and generous
allies
;
chap.
affectionate,
sort of
respect
Greece
and
the
cities
descended."
In
spite,
however, of
rejected
its
economic advantages,
Adam Smith
this
scheme
of
friendly
mental notions of
territorial sovereignty.
But the
first ideals
impressed
it
must
must learn
if
to
manufacture
to remain a
cities
mere
way
and
setting
in
the
world's
history
in
the
brilliant
biography by Mr. F.
S. Oliver. its
And
origin,
republic
country,
interests
spite
and
policies
not too
much
much
XIV
213
so well depicted
their origin.
Adam Smith
for the
country of
And
which by the
fear
force of circumstances
as
well
as
by the
of
ment
no question that
would be
And for
its
advantages, although in
bears a dispro-
meantime
the
home country
portionate
part of the
3.
Adam Smith
when
his
upon
nations.
Writing
fact,
the
it
separation
was
an
accomplished
it
and before
seemed
fact,
likely that
he propounded
as the natural
tion.
integration he set
up the
ideal of
;
Roman
organisation
was the
Adam
was
for the
Roman
Empire, and
it
he sought
214
A PROJECT OF EMPIRE
"
The idea of
representation was
unknown
in ancient times.
When
by coming
body
to vote
state.
The
Roman
. . .
citizens completely
ruined the
Roman
Republic.
Republic, therefore,
union of
Rome
with the
be completed by out
it."'
and seems
to be imperfect with-
4.
Practical Difficulties.
admits, very great
diffi-
There
are,
Adam Smith
way.
"
I
culties in the
The
principal arise
this
and on the
confronts
Adam Smith
them
you
'"
Representation
will,
in
if
the states-
for the
conduct of
in pro-
imperial affairs
is
to be based
is
on taxation, and
to be the representation.
-
Book
Book
v.
chap.
iii.
p.
397.
XIV
215
an Imperial Parliament, based on taxation, are boldlyThe people on this side, faced and boldly answered.
he says, are afraid that in the course of time the
balance of the constitution would be overturned, and
that either the power of the crown or the power of
the
democracy would
is
be unduly increased.
;
His
as the
answer
as
would not have the same real share in the Government, and that they would not be The answer is treated with the same consideration.
that the colonial representatives would find
it
to their
any
in these
distant
and that
would
out
their
diffi-
largely depend on
their
efficiency
in pointing
and removing any causes of dissatisfaction of And he goes on to say that the constituents.
culty of distance
would not be of very long duration, because with the growth of wealth and population " in little more than a century the seat of empire would
naturally remove itself to that part of the empire
Nor must
of
the
seat
empire
be
regarded
simply as the logical outcome of the scheme of a visionary. Adam Smith, first and last, is under the
2i6
A PROJECT OF EMPIRE
;
his
large
as
they
are
are
raised
within
the
limits of reality.
He was
of the past, that the seat of empire might be transferred in response to changes in the distribution of
power
and
he
based
his
anticipation
of
the
on the relative
And
ful in
if
is
to be success-
our century,
we must
5.
TJie
Case of India.
Adam Smith
shown
is
as already
condemnation
bestowed
on
the
The
greatest of econo-
the millions
of India
cannot be
subordinated
to
^the trade policy of the mercantile classes of Britain. The ruling country must take up the burden of
government
itself,
and
apply
without
fear
the
It is
matter
XIV
217
of history that
ideas emphasised
by Adam Smith
been the
of the
Empire over
alien races.
by no means the
creations of
Adam Smith
in the
not only by
Adam Smith
but by
;
all
men and
they
were embedded
bills.
in the arid
forms of Parliamentary
is
growing v^
mere growth
So
Adam
Smith's imperialism
has been taken for the most part from the chapter
on Colonies
it
later
This later
The
real
are
through
familiarity,
in the
and
through
the
un-
paralleled
growth
Book
Book
v. chap.
iii.
2i8
A PROJECT OF EMPIRE
those which deal with the
rehations
of public
debts to imperialism.
wrote the
growth of empire had meant the growth of debt from his time to our own we find the same correlation.
Adam
difficulties,
and
Since
the debt has been incurred for the sake of the empire
the constituent parts of
the empire should
contri-
For
of
Adam Smith
" Ireland
would be required.
v5
7.
Irelarid.
It
wTiting
Union with Ireland (1800), of which, altogether apart from any wider imperial
"By
a union with
These
in
much
the
x.v
219
rule of
on the
religious
most odious of
distinctions, those
of
and
sors
any other animate both the insolence of the oppresand the hatred and the indignation
of
the
commonly render
hostile to
are.
the inhabi-
one another
Without a
themselves
first
one people."
hand
by Adam Smith
the
political, religious,
and
social conditions of
Ireland
though, until recently, strangely neglected in comparison with the other works
ao;riculturist.
by
this
most famous
8.
To return
main argument
Adam
Smith's
taxation,
so far
as suitable
empire.
220
" could
A PROJECT OF EMPIRE
perhaps scarcely be done
of consistently with
principles
the
the British
constitution without
or, if
you
will,
all
that
of
each
same
a repeti-
is
forced to admit
And
the
"
to
show
still
more
difficulties,
he continues
Without pretending
to determine
whether such
it
may
not,
system of taxa-
might be applicable
;
of the empire
it if
so applied
and
in
of this kind
might be
different provinces
com-
amusing
cer-
ever,
^
Both quotations are from the first edition, wliich, liowSee above, 4. was not published till 177G tlie year of the American sejiaration.
shows clearly that Adam Smith did not consider the question of empire, as is sometimes asserted, merely from the point of view
This
iJESSiifje
of benefit to Britain.
XIV
221
may
be recalled that
already-
of Great Britain
and
revenue are
all
founded on existing
and
are
by
no means
illustrations
9.
British revenue
Each of these
is
for imperial
at length.
more bur-
pay a land-tax.
The lands
in
America and
the
West
They could
rent-roll.
not, therefore, be
assessed according to
any
Mary
assessed according to
any
rent-roll,
be assessed in
was
lately
made
in the Milanese
and
in the
dominions
222
A PROJECT OF EMPIRE
chap.
Adam Smith
The
stamp
any variation
process,
and personal,
the same.
"
The extension
was accompanied,
highest
as in justice it
ought to
be,
with
would be
.
in the
.
both.
The
an
British empire
would thus
different
afford within
itself
immense
duce of
its
provinces.
So great an
" from the increase of the customs duties." The excise is the only part of the system which
Adam Smith
culties
diffi-
owing to the difference in the kinds of produce, and even the excise might be adapted with some modifications to the circumstances of the different provinces.
of the
British
imperial revenue.
calculations,
Cf.
Wealth of
Xalio7hi,
v.
chap.
ii.
part
ii.
art.
1.
See below,
G.
XIV
223
ten being
time of writing.
government
shown
one million
purpose
to
by-
for the
The proportions
startling,
an age
they
but
show that
real
Adam
empire,
united
the
great
up the
9.
account of
Adam
it
summary we may
of
then consider
how
Adam
how
far it is
or
to practice (see
Chapter XVL).
The
first
is
dependencies
that
are
;
the the
and to the
interest on
224
A PROJECT OF EMPIRE
its
debt incurred in
full
development.
first
This idea
is
in
and expenditure.
The
of
first
is
every
state
ought
to
contribute
towards the
that
is
in pro-
The
subjects are
compared
acquisition.
Similarly the
is
first
for the
expense of defence.
The
first
duty of the
ideas
is
that
Such control can only be exercised by some method The want of such representation of representation.
the
development of representation
is
in
pro-
portion to taxation
essential to the
growth of the
British Constitution.
The
is
Mercantile profit
is
\
XIV
IMPERIALISM OF
;
ADAM SMITH
a
225
of national advantage
are
in
some important
is
cases they
;
opposed.
The
state
bad trader
and the
of subject races.
is
and dependencies.
It will
are positive
the subjects
and the
by the monopoly of trade. Incidentally Adam Smith considers the alternative what policy to this scheme for imperial federation
state cannot get its revenue
;
may
Under
rate in a friendly
manner with
treaties of
commerce
nation
now
own
This method
is
rejected
by
Adam
in our
Smith
as
opposed to
The
possibility
is
shown
of
own
times by the
;
political
severance
but
Adam
closer
prevent disintegration
witness the
civil
wars in the
Africa,
CHAPTER XV
BRITISH COLONIAL POLICY SINCE
1.
ADAM SMITH
The
the
recognition of their
an
be
made
to indicate the
To begin
especially Canada,
Government
internal
to
as
try
to
keep the
colonies
regards the
management
first
affairs.
This
was the
careful
idea
more
It
manaofement, and
more
had
management.
was believed
that
the
sentiment of indeeffectual
.home control.
colonies
to be
some cases
for
and weakened
politically, so as to
prevent
in
any dangerous
federation.
Pitt,
example,
CH. XV
227
American example
had,
or
which the
have
not
thirteen
colonies
same
interests.
Both of
ousted
jealousy.
ideas
devolution and
the
ideas
have
altoQ-ether O
of
management and
is
instructive.
had
to be appointed directly
by the
the purpose)
the patronage
home
country.
In the
Crown
Crown
by
(i.e.
of its advisers)
The management
omniscience
and
home
control
was exercised
was there
but in pracinterests in
by dominant
Street."^
Downing
p. 361.
Erskine May's Cmistitutional History of England, vol. Ibid, for the abuses connected with patronage.
iii.
chap. xvii.
228
2.
A PROJECT OF EMPIRE
Growth of Self-Government
Duties.
chap.
Preferential
The irritation caused by these abuses of management from Downing Street, naturally led the colonists to demand, and the progressive party in
England
to support,
an extension of self-government.
With
by way
to
Mindful of the
imposed
under the
old
Intercolonial
trade was
managed from the same point of view namely, The the commercial nexus as the bond of empire. West Indies, for example, instead of being allowed to
develop their natural trade with the United States,
prices, the
produce
But the
bribe to
Canada
The
the
for
imposed.
began to
realise or to
imagine (which in
politics has
229
England
had a monopoly
mother country
This was
Cunningham
^
The
that in
saw
some
cases they
with
other
countries,
notably
United States.
home
and
political restrictions
;
site ejffect to
it
jealousies
The
reciprocity was,
procity of disadvantage.
to trade
And
stifle
its
Cunningham,
Cf.
vol.
ii.
p. 333.
n., for
summary
duties.
230
its
A PROJECT OF EMPIRE
colonies
;
chap.
but,
at
3.
of Imperial Union:
Contrast.
had been a
sort of
compensa-
naturally led to a
still
government
day we are
so
minimum
of
empire,"
or,
conversely,
is
they are
practically inde-
pendent.
Especially
with regard to
Adam Smith
placed
first
tinct
home country,
way
monopoly of
that
of
trade.
And
sive,
certainly the
monopoly was
and
the
sufficiently exclu-
even
if
less
;
exclusive than
other
colonising
nations
monopoly embraced
Adam
Smith,
by
monopoly was
illusory
;
XV
231
had a
veritable gold
mine
in the
monopoly of
4.
*'
the Project
of an
we
find
every shred of
;
vanished
the
so
that as a nation
empire,"
in
Adam
Smith,
It
" has
imagination only.
has been
Judged by the
tests
which
must be
called a
little
dream within
become
a dream.
In the course of
free nations,
of
commerce
by
Adam
we have succeeded
ties
;
in pro-
portion as
of empire
in
all,
and above
and dependencies,
governed
yet, if
if
And
the words of
Adam
232
Smith,
A PROJECT OF EMPIRE
is still
chap.
has been,
must be admitted that neither the statesmen nor the peoples of the most civilised countries have yet come within sight of the acceptance
At the same
time,
of a cosmopolitan
political
ideal,
which
shall
sub-
general.
home
Congo, and
whelming domination
cosmopolitan sentiment.
national
compared
to quote
with
And, again
is
Adam
5.
mankind
in o;eneral.
What
then,
of Empire f
If,
still
we
ask, as
Adam Smith
if
What
What
233
There
is, first
of
all,
settlement and
country.
room
for
an
expanding population.
feels a pressing
need
dominion in view of
territorial
The
expansion
for
the
emigration
of our
surplus
we have taken no pains to put the surplus labourers into that field we have left them to overcrowd our own cities, or to seek new homes in foreign
;
states,
as
their
to
ignorance
or
inclination
directed.
"From 1853
1898
to the
welcomed
and recently,
for
far
is
United
Kingdom.
a lower
It
said
that
for
the
the
emigrants to
most
part,
British,
and
much more
become the
real
234
A PROJECT OF EMPIRE
of emigration
full
The question
and immigration
is,
no
of difficulty.
In the past
alien immigrants,
and
it
may
but
gain under
it is
modern
way
hardly probable
Kingdom
the
and
empire
to the
after
produce the
maximum
of benefit either
home country
or the empire.
For
fifty
years
Adam Smith
workman
agent.
to a foreign state
Already,
it is
true,
we have been
forced
by
of certain classes.
But
may
be termed
of
intermigration
empire.
between the
intents
different
parts
the
To
all
equally open to
all
other countries.
Secondly,
as
capital,
the most
if
the
value
is
reckoned
strictly in
goes whither
it
complex
under
manent
investment
of
British
capital
in
foreign
XV
235
countries
what
is
general
is
the
employment of
capital
within
country
it is
more advantageous
The advantage of
and contrue of a
the
employment
;
is
profit
we must look
is
tinuous reproduction.
And
so far
what
in
is
country
for
Railways,
the United
States
in
may
is
Canada or South
very
empire
different.
Adam
so far
Smith,
all
foreign trade
means
to
employment of
is
less
certain conditions
and
in
old
is
have long
been
wealthy,
there
home
trade.
On Adam
more
advantageous to the
empire
Even
assumed
made for free trade between Under present conditions, howthe United Kingdom with foreign
its
countries
is
trade with
possessions
and
although
is
on
236
the whole
this
for,
A PROJECT OF EMPIRE
much
less
chap, xv
distribution
in
can
be accounted
connection.
home
Accordingly,
we
from a share in
or to
and
capital,
we have
of an empire."
whether the time has not arrived when, from the point of view of defence, the
empire must be turned into
actualities.
especially
potentialities of
To the world
Britannica
pax
if
empire
is
to be preserved under
modern
the
conditions, the
United
;
Empire.
if this is
That
the
first
essential
requisite
for
and
attained the
way
is
prepared
social
closer
union
for
other
political
and
requirements.
CHAPTER XVI
CONCLUSION
1.
British
Command
Co-operation.
The growth
especially
of the naval
power of foreign
in
states
of
those
which
military
power are
Kingdom
make
for
it
years,
this
command
of
The
British
command
be retained with
The need
of naval
maintenance
it
power
is
cannot be
fulfilment;
nor merely
by the adoption
of
In times of
commercial
excellent
crisis it is
permanent investments
;
cannot meet
of
immediate requirements
and
in
case
war no
sufiSce
build
and man
ships,
and
to
train
and equip
238
A PROJECT OF EMPIRE
2.
Need for
is
Co-operation.
The
recur
required
is
adequate
may
take
it
new
How,
then,
is
What
new
democracies
to
burden
It
must be voluntary.
affectinoj their
the
essential
elements
self-o[overninsr
They
even
and
protective
mother country
they can
make any experiments they choose in industrial legislation. They have full command over their lands,
country to insist on the payment of " ship-mone}^ " would be more likely,
labour,
capital.
and
For
this
as in the past,
to
arouse
civil
war than
to further
national defence.
XVI
CONCLUSION
3.
239
It
this insistence
self-
How,
?
then, shall
we venture
to
The answer
is
Let
it
Canada, Australia,
New
is
alternative
is
own
ment
powers.
must
also
provide an
effective
naval
force.
They
pendence.
With the
keep up
240
A PROJECT OF EMPIRE
;
chap.
and
if
the empire
for
is
must bear
their share.
The point
is
all
must consent
to provide a
becomes an
power
and
if
she
elects
to
remain an
is
Empire
this obligation
in no
way
4.
diminished.
self-
and
at present there
And
it
is
promoted by a
close organisation
with
Empire,
revenue
if
no doubt desire
CONCLUSION
that the most effective use possible should be
of their contributions.
241
made
only
its
own
local defence,
which
it is
most concerned,
that
its
its
own own
economy and a
in
loss of
Adam
Smith's
He
needed
is
management
And
much
to
Defence
is
central government,
and
in
any
real
empire there
must be some
It is also
to an imperial
uses to
navy they must have a voice in the But this can only which it shall be put.
they have
a voice in the appointment
mean
that
At the same
to an ideal
time,
we
are
warned by
history,
and
must be made by tentative steps. Adam Smith was no advocate of systems meant to be estabHe looked on colonial lished by sudden revolutions. R
242
A PROJECT OF EMPIRE
as
chap.
representation
the
natural
development of the
British constitution.
ideas, there is
no reason
why
On
in
this plan
we go
far
England,
not only
traders,
particular
in
and
their
own
tection of property
may
;
be
the
development
highest organism in
all
its
moments.
we may be
if
sure
only
final
5.
If
i. j)p. 105, 117, .093. In Saxon was bound to furnish ships in jtroportion to its number of hundreds the shire was in origin an under-kingdom, and in the twelfth century the ships of different localities sailed under their own local magnates
times each
;
as captains.
XVI
CONCLUSION
may
243
may seem
much
on
fiscal
autonomy.
But
in the
what
might
practical politician
years.
Of the modes of raising revenue for defence suggested by Adam Smith as capable of being applied
at the present time, namely, the land-taxes
and the
customs duties.
They
vision
e.g. in
of ships
we read
made
There
old,
is
nothing
is
new under
the sun
all
taxes are
;
and
it
the
period.^
Modern
in the
"
are,
which can
The hide
"
is
supposed to be land
for
When
to
be let for, the improvement, or advance money, was usually called Creme7Uum, the increment " (Madox, Excheqtier, p. 225). In Magna Charta clause 25 provides that counties, etc., shall be let out at the old rents without any increment {ad antiquas firmas absque ullo iiicremento) and it is signihcant that in subsequent confirmations this cl&use was omitted.
;
244
best
A PROJECT OF EMPIRE
bear
'
chap.
to
them."
Adam Smith
it
not
much
and
"
America pays no
tithe,
pay a land-tax."
at
already, but
if
if
we assume
that
new
countries,
fitted for
The other
Here
interesting as bearing
on present-day proposals.
of merchants.
"
The
duties of customs
The gains of alien merchants were looked upon more unfavourably than
profits
.
.
It
times
it
was not
Adam
understood
that
the profits of
;
or that
of special
The whole
;
of
is
He shows
taxed
approves, and
is
and
something
more than
in that j)roportion."
Hook
\.
chap.
ii.
art. 1.
XV.
CONCLUSION
payment of
all
245
fall
^
the final
with
may
the consideration
of
internal
trade
{i.e.
of the
One more
reference, however,
may
be
made
to general principles.
The method
of assigning
was
most part
abandoned.
a
method may be
its
more simple
type.
year from
it
revenue
defence,
new
so
needs.
In
matters
a
of
imperial
often
observed,
century
may
be
a short period.
If
6.
Free Trade
tvithin the
Empire.
Smith's ideas on
of
Adam
re-
and
free trade
with
Book
art. 4.
246
A PROJECT OF EMPIRE
;
chap.
foreign nations
by a
The United
adopted against
;
but
con-
free
trade
for
between
the
was provided
by the
constitution.^
And
in
the same
states
way
the
of
German
empire
is
;
combined with
much
in favour
of the
as of the
second condition.
of opinion
essential
and
the condition
if
trade
that
to say, political
disintegration
and open
And
which he himself
is
that the
"The
British
trade between
all
empire
would,
consequence
of
tlie
See below,
9.
XVI
CONCLUSION
is
247
at present.
itself
The
British empire
different provinces."
Then
follows
" So great an
all
7.
development of internal
free
trade.
In mediaeval
itself
against every other, and one of the principal characteristics of the transition
regulation of trade.
centuries
political
"The
fifteenth
and sixteenth
not only in a
;
rise of nationalities
since
industry
organised
basis.
commerce
national
were
beginning
to
be
objects
and on a national
its
position as the
plain that
vol.
ii.
p. 5.
248
in
A PROJECT OF EMPIRE
chap.
between the
kingdoms was
unity.
certain
inconveniences
as
reorards
revenue,
from the necessary alteration of their customs duties which at present, to a considerable extent, fall on the
products of different parts of the empire
;
but there
can be
little
and customs
for
revenue
as necessary.
The
real
the
if
And
must be made
In the
clear.
first
place,
is
flow where
most required.
in
And
ca,ses
there can
be no
both
mother country
attract labour
to the colonies.
to
and
capital.
The
interests
of the colonies
in
this matter
of
may
by Alexander
in this
Hamilton.
If
it
form
in
XVI
CONCLUSION
249
should
it
which economically
ment
It
at present the
question
differential duties,
fall
on British
goods.
The
is
world
With
Kingdom
and Canada
is
that
his
attention
had been
" particularly to
and
other
essential
supplies."
all
Amongst
these
essential
supplies
are
kinds of
manufactures
and he goes on
and accordingly
imposed on
if
when
barriers were
It
is
obvious that
Canada
is
is
totally different
250
from
A PROJECT OF EMPIRE
dependence
on
are,
foreign
nations
and
the
markets of England
for years,
was
desir-
an encourao^ement
can be
little
to agriculture.
Here
af^^ain
there
prejudiced
by the
manu-
Thirdly,
there
is
is
country
it
necessary to
promote
in
artificially
the
cities
order to obtain a
social
and other
advantages.
This argument
may
Internal free
over these
vast
territories,
means of
cities in cities
did
towns and
newer
in the
And
same way
towns and
it
may
be
cities in
One
of the
is
CONCLUSION
view of colonial interests
trade with the United
striving for
;
251
which no regard
is
paid
Kingdom
is
an object worth
gain to trade
would more
than
compensate
the
temporary
loss
protected manufiictures.
down
;
of fiscal barriers
but
it
is
also
a
all
development of
and transport
(in
Adam
by
improvements
"),
so
men and
ideas
may
ment
with
between
closely connected
may add
organisation.
at the con-
Adam
Smith
found
and
civilised
it difficult
and barbarous
find
it
to
^
part
i.
252
A PROJECT OF EMPIRE
civilised.
chap.
opulent and
The invention of
first
firearms,
to
an invention which at
pernicious,
is
sight appears
be so
permanency
since
and extension of
Smith wrote
this
And
Adam
in force
at an increasing rate
we
by which
this poten-
in wishing to co-operate in
modern times national or imperial power is increased by everything that increases the numbers and wealth
of the empire as a whole, and by everything that
unites
more
on a large
scale.
The resources
The
rise in
the
standard of
life
increase in
the
powers of the
The most
efficient
XVI
CONCLUSION
colonies, as
253
new
shown by Adam Smith on a wide inductive survey, is the capital, living and dead,
which they acquire from the old
civilisations.
If the
ment
colonies have
much
to gain
. 8.
of Internal
would be
all
foolish to
deny
protective duties
now
and
localities.
trade
statesmen and
The most formidable are not founded on facts but on opinions, and opinions may be changed. In the
forefront there
is
and so
impossible,
it is
It will cease to
be impossible as soon as
im-
in peace
In
the
background
;
there
the
prejudices
continues,
of
the people
but though
the
race
the
254
A PROJECT OF EMPIRE
chap.
them.
These
are,
no doubt, commouphice
generalities,
but
The
difficulties,
may
be met
by
a variety of methods,
some
In the
first
place,
by slow
gradations.
nature of
;
the
gradations must be
left
to the practical
to be
mean
either
now,
or
in
the
future,
might be accompanied,
by
real difficulty is
And
these
" There
is
no prescription of
is
institutions "
the
utmost that
to
required
is
the of
adequate compensation
the
vested
interests
XVI
CONCLUSION
And what
constitutes
255
adequate
or
individuals.
it
ranges in prac-
John Stuart
down
to the cancelment
compensation whatever.
From
view
in
the
out compensation
there
In
is
extreme.
the
security
must be
and
it
sacrificed to security in
Bentham's
phrase
social
is
e.g. in
tenure of land.
In some cases
it
seems
and some-
times people
may
limit of time
might be indicated
for the
coming of
new
it
difi"erential
Certainly
has never
the
permanence of protective
industrial
in
expectations
implied
in
contracts
and
argument
support of such
256
duties in
A PROJECT OF EMPIRE
new
countries
is
chap.
abolition of a complicated
seems
absurd to suppose
that
to
in
new
countries which
under-
take
all sorts
compensation, but
Adam
fairly
why
Kingdom.
of labour,
We
and
in this
Free trade
within
of
the
establishment
labour
between
the
in-
9.
The method,
much favoured
at
present,
of
XVI
CONCLUSION
{i.e.
257
by taxes on
interests.
of
class
for the
they are to be
colonies.
Whatever method
of compensation
stuffs
would be unpopular
large
number
is
of people.
first
And
in a matter of union
sentiment
of the
importance.
The people
in
the colonies
classes,
who would
who
are confessedly in
no need at present of
any such
aid.
The bargain
so far
It
may
be proved by
would be no
readily.
first
by the
The extent
If
same
as before, the
main
result will be
a substitution of a certain
for foreign,
suffer.
amount
of British imports
and the colonial manufacturers will not But by preferences of this kind no real
advance
is
made towards
258
A PROJECT OF EMPIRE
root idea in this policy would be the protection
The
against the
foreigner
by the empire
(the
United
Kingdom included), rather than the gradual development of free trade within the empire. The system
of preferences
resfarded
as
may
be promoted.
would tend to be permanent owing to the creation of vested interests, and possibly to increase owing
to the political
interests.
There
is
mean
be decided by a conflict of
classes,
conflict
it
may
be necessary.
continuous
reduction
the
duties
imposed
on
empire
is
to be attained
it
must be by the
is
realisation
a fundamental condi-
CONCLUSION
tion of
259
Here, as already
any
real
imperial union.
conclusive.
The
colonies without
any
bribe, or
any
realised.
Their states-
men
mercial favours.
If in the
greater
community of
interests,
as a whole, it
may
be ex-
The adoption of
free
free trade as
by the
treaty of 1783.
The point has been admirably brought out One of Hamilton's chief difficulties was
in
Mr.
to get
matters of trade.
"Power, prosperity, and consideration, which all men affected to desire, were only to be had on terms which the states could not bring themselves to
pay.
. . .
The
hixury of an internecine tariff war. The states with their land-locked brethren, and provoked a boycott dangerous game, ruinous in itself, and behind the men were beginning to furbish up the locks of their
upon
was a
Hamilton,
p. 134,
by
F. S. Oliver).
The
necessity
for vesting
the
control of
foreign
commerce
solely
in
Congress and the difficulties of an independent commercial policy for each state, have been well summarised by Dr, E. L. Bogart in his excellent " Until 1789, therefore, Economic History of the United States (p. 102 sq.).
secure greater freedom
the states undertook to regulate commerce, and by retaliatory measures to {i.e. in foreign trade). During the years 1780 to 1788
Pennsylvania enacted fifteen tariffs, Virginia twelve, Massachusetts, New York, and Maryland, each seven Connecticut six, and the other states a smaller number. ... To make matters worse the states finally began to make commercial war upon each other. It had now become evident that if
;
26o
A PROJECT OF EMPIRE
to,
or
common
the
and Commercial
Relations of the
difficult
question
What
ideas
What
of
Adam
?
results
We
Adam
happens,
moment
day were
own
Unified
in
made supreme
Moreover, the mutual jealousies of the states were daily making some plan of central control more necessary. At the same time, American industries had been developing, and a growing desire for protection
began slowly to replace the idea of retaliation." Inter-state protection was abandoned by the Constitution of 1789, but protection against foreign countries did not become the main idea of commercial policy till after the conclusion of The point is that internal free trade within the the great Napoleonic wars. secondly, for the power it gave states was adopted first on its own account and lastly (after an interval) the comin retaliation and treaty-making The mercial union was used largely for protection against foreign countries. commercial relations of Britain and the colonies and of the colonies inter sc are certainly much less strained and more callable of adjustment than were It must be remembered also that Pitt the relations of the thirteen states. in 1783 (no doubt under the inlluence of Adam Smith) tried to persuade the British Parliament to offer full freedom of trade to the new United States, possibly with the idea of again bringing about a union with tlie mother
;
;
country.
CONCLUSION
policy there
is
261
no appeal to authority
and what we
said,
want
If
but
why
he said
it
settled
by the appropriate ipse dixit, the answer would Adam Smith certainly approved of a be simple.
customs union for the whole
empire
;
a uniform
Adam
for
an imperial
;
The idea
shall not
is
depend on the
purposes approved
by
are represented.
"
What
is
of the
The
purposes was
obviously
to
get
over the
Adam
possibility of
Book
262
using the
A PROJECT OF EMPIRE
customs union
for
"chap.
protective
purposes
it
was accompanied, as
The extension
of freedom of
of Ireland
Britain.
and the
Adam Smith
lays
down
revenue and
may
judgment the
rule
would apply
customs proposed.
it is
duty on the home product, there ought to be a corresponding customs duty on the foreign import, he
never
insists
to
He
facts
on the
liquor
called beer,
"but which,
as
it
is
made
";
of molasses,
bears very
little
but he does
an excise
XVI
'
CONCLUSION
and high
duties,"
263
which
Adam
Smith's attack
it
and
if
may
be observed that
it
was not
till
long after
the
repeal of the
an import duty of
should be retained
amount
of corn.
in the
home
And
duty on
the
home
producer.
"A
I
duty of
importation to which
wish to approach
am sure,
but
would rather
err
^
on
Ricardo's
Works (M'Culloch's
edition, p. 493).
reason that protecting duties are not justifiable on account of the rise of wages generally, from whatever cause it may proceed, it is evident they are not to be defended when taxation is general and equally aftects all classes of producers " {ibid. p. 463). Nor did he approve of the idea which was supposed to be the guiding principle in the recent revision of the United States tariff, viz. that the foreign cost should be estimated and a duty levied equal to the diiference between the American and the foreigu cost with a fair profit to the American producer. Ricardo argued that countervailing protection for high wages or general taxation or to secure " remuneratory " prices would mean Like Adam Smith, however, he did not carry the simply general protection.
The
revival of
264
If,
A PROJECT OF EMPIRE
then, a customs union could be adopted
by the
British
for the
assignment
of a
certain
would be absurd to
difficulty
of
imposing
Internal
free
trade
interpretation
of
free
trade,
which
is
as
little
Nor
is
the exact
realised
fair distribution of
is
The
best of
The principal difficulty to surmount is the danger of monopoly and corruption, and to guard against this danger the system adopted ought to be simple and
only subject to change
conditions.
less
on important changes in
suitable
more liable to sinister manipulation. The imperial customs union might, no doubt, be used, as by other nations it is used, not merely for
the principle of continuity in economic theory warns us of the danger of arguing from particular cases to general propositions. Ricardo's approval of a lOs. import duty on corn did not make him an approver of general protection. See above, Chapter XI. 11.
XVI
CONCLUSION
And
265
the possible uses
careful consideration.
customs union
for the
whole
instru-
agreements or for
retaliation.
would be
to
decide
on the
principles
weapon
principles
for
would
British
new
ideas of
making full allowance for his emphasis on the relative advantages of home over foreign trade, which would lead up to any
after
there
is
nothing in the
if
we
system
who doubts
States
new
tariff of
it
might be
The new
Tariff
1909.
It is published in the
Act (Payne) was signed by the President on 5th Augnst Economist for 21st August with the schedules in
Its general characteristics are of
The
dutiable
list
embraces
and multitudinous items are 481 in number, and extend over about twenty columns of the
clauses indicating various
266
A PROJECT OF EMPIRE
to take account also, not only of
But we have
the
but of the
or duties
:
prohibitions,"
efficacious
Hamilton said
" This
another and
tures
but, in general,
only
fit
to be
employed
and
is
when
in so
a manufacture has
made such
progress,
many
which
Adam Smith
in attacking
To attempt
the real
to
abandon
for the
empire
Throughout
;
under
;
present conditions, in England, of manufactures the colonies, of raw materials and food-stufis
;
in
these
Economist in small print. The free list embraces 237 items, most of those of any importance being subject to various provisions for duties under certain
The last clause in the dutiable list provides that every imported enumerated which is similar either in material, (juality, texture, or the use to which it may be applied, to any article chargeable with duty, shall pay tlie same duty, etc., etc. There is also tlio provision of a maximum and minimum tariff, the maximum being imposed by way of retaliation on any state not granting reciprocity. Some of the duties are extremely heavy, but are not easy to quote. Ready-made clothing, made wholly or partially oi wool, for example, pays in the first place a sjiecific duty per pound on its weight, the duty being four times that on unwashed wool per pound, and in addition there is an ad valorem duty of 60 ])er cent. The differences in the duties are extremely curious. A great variety of buttons are subject to varying duties, e.g. metal trousers buttons (except steel) are at one rate, and steel trousers buttons at another buttons of metal, embossed with a design, device, pattern, or lettering, pay 45 per cent rt<^ valorem, but all buttons not specially provided for in the section on buttons, and all collar or cuff buttons or studs comi)03ed wholly of bone, mother-o'-pearl, or ivory, pay 50 per cent ad valorem. Why should a bone collar-stud pay 5 per cent more ad valorem than an embossed button
conditions.
article not
;
'!
XVI
CONCLUSION
must be exported
267
surpluses
empire
is
Adam
the
we
are to recall,
and to
insist
on
Adam
Smith's
different advantages of
employing capital
in different
modes, we must
that the
recall
home
trade
more
To Canada, much of the trade with the United States is more advantageous (from this point of view) than trade with the United Kingdom. Under present
conditions the population of the United
Kingdom
is
and
its
wealth
is
in the aggregate in
its
In this inquiry
ideas
we
and the
ideals of
Adam
all
From
aim
Are we
when
the British
empire shall be as
and
self-sufficing
or
268
is
A PROJECT OF EMPIRE
?
The
extending commerce.
The
British
commerce of the
be
its
empire so
much
moral and
political iufluence in
civilisation.^
advance of
it
is
and
this
by
No
Adam Smith
of
employment
of capital in the
the
importance
the
home
more
clearly
He condemned
by prohibitions
By
' "In the case of the British possessions there are strong reasons for maintaining the present slight bond of connection. ... It has tlie advantage, specially valuable at the present time, of adding to the moral influence and weight in the councils of the world of the Power which of all in existence best understands liberty, and whatever may have been its errors in the past, has attained to more of conscience and moral principle in its dealings with foreigners than any other great nation seems either to conceive as possible or
recognise as desirable"
for the slight
(J.
S. Mill, Jlcprcxeittative
Govermnait,
real
p.
133).
If
union so
much
XVI
CONCLUSION
*'
269
such a policy
men
of a great empire.
By
trades,
and
to
ought naturally to
individuals a
bond of union and friendship has become the most fertile source of discord and animosity. The capricious ambition of kings and ministers has
not during the present and the preceding centuries
fatal to the repose of
been more
The empire projected by Adam Smith was an empire with a world-wide commerce flowino; in natural
channels
sisting
;
in-
placing obstructions
demanded by the supreme interests of imperial defence. But the minute supervision and management of the multitudinous transactions of foreign commerce was a task not to be entrusted to "any
senate whatever," and
of a great empire.
still less
With
system
is
foreign
trade
is
as
that which
automatic in
requires
adjustments
most management.
Book
IV. chap.
iii.
270
portance,
A PROJECT OF EMPIRE
but the duties are best
fulfilled
by
per-
principles.
empire inter
se,
and of
the
whole
empire to foreign
given to
fiscal
states, attention
considerations.
But there
many
pendent action,
of the
e.g.
general
management
of mails and
telegraphs, sub-
sidies of various
just as
trade.
it
free
And
union on the
Adam Smith
ought
is
once accepted.
11.
I'he Project
of an Empire.
his
Many
of
some
are in
is
his project of
an empire
a project.
The
project
seemed inevitable
XVI
CONCLUSION
real
271
It
is
union.
not
twice
offered
yet to-day
it
is
offered
to
the
more
In parting,
;
every nation
or
dominion
commonwealth
its
or
;
share
an immense internal
all
market
produce of
stituents
common
;
the empire.^
^
8, n.
INDEX
Advantage ProfitCoincident with, 73-4, 75-6 Distinguished from, 49, 53
n.,
203
Test
duties
on,
92
Agriculture
Advantages
America,
and
social,
and
n.
Artificial
sirable,
165-6 Nature of, 94, 166 Sugar, on, 165-6 Britannic Confederation cited, xv ?i. Burke, E., Smith's attitude towards, cited, 217 18 quoted, 202 Bylea's Sophisms of Free Trade cited, 4 n., 62-3
; ;
British, in, protective policy harmful to, 250 Combinations of those engaged in, conditions hostile to, 140, 144
Colonies,
Camb)'idge
Canada
Agriculture
protective
policy
Decline in numbers engaged in, in Great Britain (1811-41), 148 Encouragement of, methods of, approved by A. Smith, 150 Free imports of produce of the soil innocuous to, 99 7^., 146 German protection of, 160, 174 Home market's importance to, 56
aiuf, n.'^
harmful to, 250 Development of, possible future, 216 Economic conditions in, 72
Fiscal
policy
of,
question
as
to,
Land
ing, 144,
150
sphere
of,
Monopoly
Neglect
in the
144-5
of, for
greater profits, 71
Profits of, low, 74-5 Ashley, Prof., Economic Surveys cited, 15 n}, 201-3 Australia
by,
249-50 Immigration to, of many nationalities, 233 Maritime defence incumbent on, 240 Protection of infant industries in, 173 Quebec Bill (1791) 226-7 United States, advantage of trade with, 267 West Indian trade of, 228 Cannan, Dr., A. Smith's original lecture notes published by, 149
Capital
Absenteeism
port of
of, see
subheading Ex-
Consumer
Protection
in, in,
position
of,
128
92, 173-4
Ambiguity
advantages
Bentham
cited,
255
,
Bogart, Dr. E. L. Economic History of the United States by, quoted, 259 n.
27-
274
Capital, contd.
A PROJECT OF EMPIRE
of
of,
Employment
Carrying trade Comparison of, with other forms of trade, 52-4 Effect, not cause, of wealth, 67-8 Expansion of, scope for, 70
Carver,
T.
Four modes
44
N.,
Histo-ricdl
Sketch
of
Home
trade, in
Bounties to induce, question as to, 113-14 Investors' advantage in, 2, 106 National advantage of, xi, xiii, 49-51, 57, 65, 80, 85-6. 97, 106, 198, 235, 267, 268
Protective duties to induce, question as to, 94, 113-14 Profit the guide to, 113, 199
Export
of
of,
Amount
105
of,
Increase in rate
105
68, 93,
Magnitude
of,
xiii,
234
199
78,
Modes
of, xii
Overflow,
representing,
105,
236
of, for mother country, 231 public debt to be partly a charge on, A. Smith's proposal as to, 223-4 Capital desired by, 248 Chamberlain quoted on, 195 Crown, 227, 231 Defence, duty of, recognised by, v,
Affection
British
28
Individual's
most profitable
invest-
ment
of,
259 Emigration
field
ism National iuterests) Industry limited by, 103 Interest, at. 31-2 Labour's interests in relation to, 39 Labour's need of auxiliary and sustaining, 27-8, 37, 40, 104 Mental or immaterial, 32-3, 35-6
233-4 Expenses, not revenue, a source 194, 195, 204, 205, 211
tion, neglected as,
of,
Government
Abuses
in,
of
227
and
n.
of,
MoV)ility
necessary
of,
for
foreign
trade, xiii
30-31 Money Money fundanicntally important in creation and application of, 30 Parsimony and industry in relation to, 36
attribute
I'rotit
233-4 Imperial federation scheme for, A. Smith's, 208, 213-18, 219-25, 269 (see also Imperial Union) Imperial sentiment among, 240
Labour inmiignition desired by, 248 Maritime supremacy of the Empire to be contributed to by
Fiscal
employment
Rej)lacenient
union closely connected with, 251-2 Method of, proposed, 240-2 Necessity for, 236-40
duce, 34-5
Revenue
126
of,
suggested,
INDEX
Colonies. British, cimtU. Taxation, new, requisite for, 238 Military drain owing to, 193-5, 204
275
Act (1660) as affecting, 158 .', 203North America, in (present U.S. A. )Development of, rapidity of, 191,
Navif,'ation
Consuming power of the masses, increase in, advantageous, 78, 82 Consumption as production's sole end ami puri)ose, 118 Continuity, principle of, 32, 111, 264 n. Corn laws
Histo-ry of the English Ctfrn Lav;s
cited,
202, 216 Expenses of government in, 191 Freedom accorded to, 191-2, 201 Identity nf interests of. with those of mother country, assumption as to, 203
134
'
.,
146 ami
n.,
148
146,
cmd
Repeal
173_
n.
of,
circumstances
of,
Navigation Act as affecting, 203 Revolt of, 196, 205, 212, 226, 239 Origins of, 189 and n. "Project of Empire," constituting, rather than empire, 206, 231, 236 Reversal of policy regarding, 226-7 Taxation, British system of, A. Smith's proposed extension of, to, 219-22
Cosmopolitanism Nationalism contrasted with, by A. Smith, 9-10 Smith erroneously charged with, 5, 12-13, 137, 232 Cournot's Mathematical Principles of the Theory of Wealth, 64 n. Cunningham, Dr., cited, 77, 189 n., 202 and n., 229 and n. quoted, 157, 158, 247 aiid, n.
'
;
Trade
of
of. supposed, 195-7, 230-31 Colonies, effect on, 198, 202-4
Customs duties
valorem duty on all imports, probable effects of, 170 British system of, proposed extension of, to whole empire, 222, 261, 262 Collection of, a proper function of the State, 178 Colonial, suggested as source of imperial defence revenue, 244-5,
British
Ad
Monopoly Advantage
Disadvantage
of,
real,
60, 76,
248
Excise duties in relation to Balance of excise duties by customs duties, 88, 160-61, 262 Countervailing duties, A. Smith's objections to, 163-4 Excess of customs duties over excise on "goods of same kind," 161-2 Imperial union of, ix, 264-5 Incidence of, 164-5 Retaliatory, see Retaliation Revenue, for, A. Smith's view of, 87-9, 121-2, 262
Former, 228 and .'-', 229 atid nr, 230 Modern proposed revival of, disadvantages of, 256-8 Intercolonial, 228 Protective policy in, 173 w., 174, 196 Vested interests in, question as to disturbance of, 254-6, 258 Colonies, French, 190 Colonies, German, 233
Colonies, Greek, 188-9, 193, 211, 231,
246
Colonies, new, causes of prosperity
of,
189-92
Colonies, Roman, 188-9, 193, 213, 224 Colonies, Spanish and Portuguese, 194
Dancing, A. Smith's views on, 1-2 Davidson's Commercial Federation and Colonial Trade Policy cited, 228
and
nn.,
229 and
n. ^
Commerce, see Trade Commercial union of the empire, see Imperial union^ Free Trade Communication, importance of means
Debts, public, 217-18, 223 Defence, colonial Duty of, recognised by colonies,
v,
259
Probabilities as
to,
of, 46,
251
under separation
Congo
State, 183,
232
<;onsumers and producers, interests of Identity of, in the mass, 126. 132,'l34-5 Wecdth of Nations on, misconceptions as to, 117-20
supremacy
Colonial recognition of duty of, 259
276
A PROJECT OF EMPIRE
Defence, imperial, contd. Expense of, a. first claim on imperial revenue, 224, 230
to,
see
German method
of, vi
under Customs
Experience, necessity of appeal
to,
National defence compare<l with, vi Nature and methods of. vi, 218, 240-2 Defence, national Bounties for, ir)9 Colonial attitude towards, v, 259 Duty of, primary, 2-'39 Free trade exception in ease of,
113,
Home
Drawbacks
on, 165
Imperial defence compared with, vi Importance of, greater than that of opulence, 14, 16, 155-6 Land, a burden on, in ancient times,
Excess of, over imports, " balance of trade" theory as to, see Trade Balance Gladstone's duties on (1860-63),
156
of,
n.'
of,
Growth
158
63
as a test of prosperity,
for by, 51-2
55 Imports paid
affected
by
prices
of
value imports,
;
Customs,
ment
of,
British
164
{see
also Colonies,
ferential)
Excise, see
Home
life in relation to, A. Smith's views on, 7-8 Maintenance during, capital involved
125-6 Kinds of, relative advantages of 56 Profit, high rate of, in home market as affecting, 199 Re-exports Comparison of, with other exports, 56 Conditions necessitating, 66-7 Drawbacks on, 203 Surplus produce, of, advantageous, 66, 78, 97-8, 102 Wool, of, A. Smith's attitude towards duty on, 57-8 Extractive industries, advantages of, 46-7
in,
32
of,
Family
A.
on, 7-8
Employment
{see also Labour) Cheapness in relation to, Gladstone quoted on, 124-5 Necessity of, to the consumer, 116-17 Profit on capital a requisite lor, 92, 94
Federal government, sec Imperial union Foreign bounties, countervailing duties on, 165-6 Foreign trade
Protection-raised prices
in
relation
Advantages of, 65, 78, 266-8 British, compared with British colonial, 235-6 Carrying trade between two foreign
countries, 52-3 Colonies, of, restrictions on, 192 Companies engageil in, history and
tendency towards Contraction of supply of capital, by, 200 Taxation of commodities, by, 125-6 Test of economic advantage, 85, 92 Exchange, see Markets
of,
95 Reduction
to,
to,
Excise duties
British system
of,
A. Smith's proof,
posed
to
whole
65 Consumers' interests in, mistake looking solely to, 130 Customs, see Hint title Development of, nuignitude of, 73 Disadvantage of, 50-51, 56
ol
INDEX
Foreign trade, could. Export of capital a necessity
xiii,
2/7
contd.
in
Free trade,
for,
Establisiiment of
65
title
Complete,
principle of
Great
Britain,
Fundamental
^prices of
Smitli's
falsified,
projihecy
A. regarding,
172
to,
Gradual approach
aiivocacy
of,
A. Smith's
99,
20,
171-2,
Humanity and
nationality as affect-
ing, 5 Imperial need of, 266-7 Imports, see that title Internal free trade compatible with variety in policy regarding, viii-ix,
'246,
Customs
254
of,
Limitations
70
Mun's England' s Treasure by Foreign Trade citeil, 57, 200 Nearer, more advantageous than the more remote, 52, 200, 267
Retaliation, see that title
of, as compared with home trade returns, 50-52 Security of, increased, 75 Simplicity of system of, advantages
Returns
137 Importance of, 150, 152, 174 Gradual approach to, see under subheading Establishment of
Home
of,
269
of, relative
Varieties
advantages
of,
Wealth
duties,
difficulties as
ous to, 131, 166, 268 Prance Aix-la-Chapelle Treaty (1748), 180 Colonies of, conditions in, 190 Commercial Treaty with (1784), 168 Commercial Treaty with (1860), Gladstone's defence of, 124-5 Economists of, A. Smith's views in harmony with those of, 148-9 Foreign investments of, 105 ?i." Revolution in, 185 War with Britain (1755-62), 180 Free trade Advantages of, needing demonstration, enumerated, 133-4 Byles's Sophisms of Free Trade cited, 4 n., 62-3 Cheapness, argument for, 109-12 countered by protectionist argument of employment, 117 Colonies, etc., free trade between Great Britain and Foreign trade policy, variety in, compatible with, viii-ix, 246,
;
164 Navigation Act (1660), a good example of, 156-9 Present importance of, 150-2 Sidgwick's statement of, 136-7 Smith's statement of, 137-9, 144-7 United States Tariff Act (1909) a good example of, 265 n. Producers and consumers benefited by, question as to, 133 Protection, difference from, one not of principles but of methods, 86 Royal Commission on, suggestion as to, xiv, 87, 114, 116
Smith's connection with, xi - xii his approval of, 133 Fund, A. Smith's use of term, 36-7
;
Germany
Agricultural protection
in,
160, 174
254
Imperial union, under, see Imperial union Free trade Separation of colonies accompanied by, suggestion as to, 207, 211, 225, 246 Dogmatic, weakness of, 42-3
Defence method adopted by, vi Expansion of, a necessity, 233 Foreign investments of, 105 m.^ Free trade, internal, with external protection in, 246 Navigation Act, suggested revival of,
against,
170
Gladstone, W. E., export and import duties levied and repealed by, 156 quoted, on price of comand n.^ modities compared with rate of wages, 124-5
;
278
Great Britain
A PROJECT OF EMPIRE
Imperial union with Federal Govern-
abroad
Amount
of, 10;")
for,
advantages
of, ix,
Magnitude
Colonies
93,
234
Profits of, 77
of, se-e
Colonies, British as
to,
under
Labour
Exjiansion
of,
Ditliculties in connection with, 214-15 Foreign trade advantageous to, 266-7 Free trade within Advantages of, 81, 246-53, 256 Customs union advantageous but not necessary ix, for,
233
264
Preferences by method of supertaxes a substitute for, not a
Foreign and eolonial trade of, compared, 235-6 Industrial revolution in, 186, 229 Maritime supremacy of, imperial preservation of, necessary, 236-40
of,
other than
under Colonies, British Maritime su])remacy) May's Vdustitu/ionnl Ilislary of England quoted, 227 and n. Natural resources of, 47
(see also
219-20, 224
Revenue of
Amount
of,
of,
A. Smith's estimate
to,
223
assessment
of,
242
n.
Contributions
Hamilton, Alexander, cited 56 n.~, quoted, 249, 84, 173 n., 246 266 ; biography of, by F. S. Oliver,
;
cited, 212 quoted, 259 n. Holland Carrying trade of, 67-8, 157 Decline of, 157 Government of, as atiectiiig economic conditions in, 69 Naval power of, 154 War of 1672-8, 167 Wealth of, 68, 69
;
of, control of, 224 Seal of empire, suggestion as to transference of, 186, 215-16 Taxation scheme for, 219-22, 224
224 Expenditure
Imports " Balance of trade " theory as to, Trade Balance Displacement of home industry by, question of, 98-100 Duties on, see Customs and Protection Exports necessary to pay for, 51-2
Home
trade
Capital's
employment
106
in
of exports as aft'ected by prices of imports, 125-6 Food stuffs, of, necessitated by growth
value
Advantages of
Investors', 2,
49-51, 57, xi, 65, 80, 85-6, 97, 106, 198, 235, 267, 268 Bounties to induce, question as to,
xiii,
National,
113-14
Protective duties to induce, question as to, 94, 113-14
of population, 147-8 Free, see Free Tratie Gladstone's policy regarding (18601863), 156 ami n} Linen yarn, A. Snath's crucial instance of, 142-3 Prices of, as affecting value of exports,
125-6
Raw
materials,
of,
A. Smith's views
rise in
fluties,
as to duties on, 122, 142 Taxes on, for revenue, see Customs
emphasised Smith, xi, xiii, 2. 56, 268 Limitation of, 70 Monopoly of, see Monojioly
of,
165 Importance
l>y
A.
Protection
for, src.
Protection
foreign
lleturns of, as
compared with
towanls,
12
India East India Company, history and abuses of, 180-4 Mercantilist i>oliovin, condemned by A. Smith, 21 6.' 230 Present condition of, 182, 187 Individualism Erroneous charge of, against A. Smith, 12-i:i National interests in relation to Coincident, 73-4, 75-6
INDEX
Individualism, conttl.
279
contd.
in
National interests, contd. Opposed, xii, 41-2, 62, 71-2, 176, 200, 224-5
Reconciled, 76
Industrial
relations,
Labour,
Dominant conception
Nations, 23 Emigration of
Wealth of
complexities
of,
sire for,
248
40-41
Industrial revolution in England, 180,
229
Industries
Infant,
Employment,
Free
trade
affecting,
within
the
empire
as
256
;
Markets for, organisation of, 128 Mobility of, 172 increase of, probable under free trade within the
em])ire, 256 Monopoly of, desired bv mercantilists, 119
Augmentation of, aii vantageous, 78,82 Trade precarious as compared with, 48, 157
Interest {see also Profit)
Capital lent
Rate of, foreign, 69, 75 Investments, home and foreign, comalso pared, 71, 74-5, 81 (see
Capital)
Employment
ment)
Profit
Ireland
Emigration from, to U.S.A., 233 Trade restraints imposed on, 262 Union of, with Great Britain, A. Smith's views as to, 218-19
Johnson, Dr., cited, 2
;
quoted, 139
on capital a requisite for, 92, 94 Test of economic advantage, 85, 92 Maintenance of, source of Capital, 35 Produce, annual, of land and labour, 37 Nature of, 24-5
Labour
Agricultural, advantages of, natural
Unemployment,
Unproductive
"
and social, 46-8 Annual produce of the land and labour," modern corresponding
from absence of
term for, 24, 34, 39 Broad significance of term, as used by A. Smith, 26 Capital required by, auxiliary and sustaining, 27-8, 37, 40, 104 Capital's interests in relation to, 39 Combinations of Prohibition of, by law, 38
Importance and necessity of, 25-6 Maintenance of, source of Produce, annual, of land and labour, 37 Revenue, 35 Nature of, 25 V^alue added by, to national dividend to be considered rather than mere employment, 108-10 Vested interests of, 171-2, 254-6
72
Wages
Waste
108
of, see
of,
in
work,"
Ixdssez-faire
119
Regulation
in
of, in
Consuming power
Magnitude Reduction
falling
of, in,
dogma a perversion of A. Smith's system, 60; his approval of the policy, 177; his large exceptions to it, 150 {see also Free Trade) Land, abundance of, as affecting wages,
190
in aggregate, 126-7
in
otf
Land laws
Security, consideration
ing,
of,
in
alter-
produce, 127
255
views
regarding,
Cost
of,
as affected
by taxation of
163
Smith's
144,
necessaries, 122-8,
150
28o
Land taxes
A PROJECT OF EMPIRE
Militarism, A. Smith's views on, 15-17
Mill,
MediiEval recognition of unearned increment, 243 and n^ Smith's views on, 221-2, 243-4 Liberty, natural Free trade of more restricted meaning than, 153 his Smith's description of, 120 views similar to those of French economists, 149 Lilly, W. S., quoted, 4 n., 63
;
173, 255
Money
Capital,
money
29-30
Monopoly
Agriculturists not actuated by spirit
of, in A. Smith's view, 144 Colonial traile, of, see !//i<ier Colonies, British Trade of British Evils of, 89, 139, 141 reduction of
List,
cosmopolitanism of, 5-6 attacks by, on A. Smith, 13, 21, 27 ; citt'd, 23, 33, 246 quoted, JVatioTuU Syston of Political 171
Friedrich,
;
Economy
by, cited, 6 n.
productive labourers
Limited time, granted for, 176 Mercantilist system based on and permeated with, 83-4, 93, 140, 141,
151 Merchants and manufacturers chiefly benefited by, 112-13, 140-3 Protection necessarily conducive to, 93, 101
attack on, 72, 130, 131, 140, 141-4, 263, 266 State intervention in regard to, 134,
Smith's
Home,
see
Home
Labour,
for,
trade organisation
of,
128
in
176 Taxation of gains of monopolists, A. Smith's views on, 141, 205 Taxation to secure, A. Smith's views on, 88, 121 Trusts no modern growth, 151 Wages not increased under, 143 Muu's England's Treasure by Foreign Trade cited, 57, 200
" National dividend," A. Smith's term for, 24, 34, 39 National interests
connection with, 29-30 Situation of, conditions determining, 45 May, Erskine, Constitutional History of Enyland by, quoted, 227 and n.
Mercantilists " Balance of trade " theory held by,
64, 84, 129, 130
Importance
of,
86
of,
desire 140, 141, 151 for monopoly of labour, 119 Smith's attack on, 29, 57, 64, 84, 89, 90, 93, 118-21, 129, 140, 141, 210, 216 his suspicion against, 131-2 Merchant sliippiug, non- British capital in, 53-4
;
Opposed, xii, 41-2, 62, 71-2, 176, 200, 224-0 Reconciled, 76 Nationalism, A.Smith's defence of,8-] 4; bis adherence to, see tinder Smith Navigation laws
American
colonies'
shipbuilding
Merchants
Interference of, in proper functions of the State, disadvantages of, 177-84, 225 Monopoly cliiefly of benefit to manufitcturers an<i," 112-13, 140-3
encouraged by, 203 Negative argument for free trade. Navigation Act of 1660 considered :is, 156-9 Rei>eal of Act of 1660, 158 Revival of, suggested, against (Jerniany, 170
INDEX
Newton,
Isaac,
2I
A.
Smith's
attitude
of,
towards,
xiii, 2,
Norway and
225
66 Taxes
all
paid from, 55
Two
Old age, A. Smith's views on, 4 Oliver, F. S., biography of Alexander
Hamilton by, 259 n.
cited,
Upkeep
39
212
quoted,
"Producer," misinterpretation of A. Smith's use of term, 118-20 Producers and consumers, interests
Smith's forecast
of
Identity
of,
in
Paish, G., cited, 105 w.^ Pareto, Cours d' economic politique by,
cited,
40
n?
regarding,
Parsimony, 36-7
Peel,
Smith's views
of,
134-5 Wealth of Nations on, misconceptions as to, 117-20 Production (see also Labour) Consumption the sole end of, 118 Cost of, raised by monopoly, 119 Money power the basis of, 30 Trade a part of, 28, 30, 45
Profit [see also Interest)
134-5 Pitt, William, free trade with U.S.A. proposed by (1783), 260 .; Commercial Treaty with France (1784) Quebec Bill of made by, 168 (1791), 226-7 Poetry, A. Smith's views on, 2
;
Advantage
Coincident with, 73-4, 75-6 Distinguished from, 49, 53 w., 62-3, 71-2, 96, 176, 200, 224225, 235 Agriculture, from, 74-5
Capital,
Political
economy
investment
of,
determined
by, 113, 199 " Equal or nearly equal," A. Smith's proviso as to, 74, 75, 92, 97, 106-
Economy (List) cited, 6 n. Object of, first, 39 Principles of Political Economy (Nicholson) cited, xv, 165 n.,
\Tt n}, 184 n.
Principles of Political Economy (Sidgwick) quoted, 136-7 Smith the founder of, 5 importance of his ideas on making of economic
;
High
107, 113 rate of Cost of production and export trade in relation to, 199 Understocking indicated by, 76,
198
Increase
of
of,
stock
in
relation
to
amount Monopoly
merely
Protection
40
of
for,
141-3
Xation quoted,
Australia, in, 91 -2
Natural
Raising
of,
relation
to
market
Capital retained in
home
trade
bj',
prices, 2
94-5
Prior's Life of
Colonies, in, 91-2, 173 ., 174, 196 Employment argument of, against
and
39
for,
24,
Monopoly conducive
120
Protection as
the
to reduction of,
argument of cheapness, 117 Exports increased under, argument as to, 102-3 Free trade, difference from, one not of principles but of methods, 86 Gladstone's import duties (1860-63), 156 ri.i Hamilton's use of term, 84 among to, Increasing tendency
free trade
people
the
same thing
as
127
foreign states, xiii Infant industries, of, 89, 173-4 supposed to be temporary, 265-6
282
Mediseval
A PROJECT OF EMPIRE
individualiKiu
of,
l*rotection, contd.
Revenue, contd.
as
towns'
scheme, 223
93
Natural existence of, 106 Objects of, primary and ultimate, 91 Particular industries' benefit under,
as
against general
f/ scq.
disadvantage,
101
for, distinguished from taxes monojmly, 87-9, 120-1 " Revenue of the body of the people," modern corresponding term for, 24, 34, 39 Ricardians 41 Ricardo cited, 90 quoted, 263 and n.
Taxes
for
power exercised by protected interests, 258 Popular view regarding, 136 Practical difficulties of, 137 {see also Free Trade Negative argument) Preferential, see under Colonies, British Trade of British
Political
Rubber
77-8
industry,
illustration
from,
manufacture
Security, sai-ritice
in, of,
110
;
Prevalence
of,
in
A. Smith's time,
100-101
Prices necessarily raised by, 92-5 Produce, annual, of land and labour as affected by, 107-11 Ricardo's views on, cited, 263 /(. Royal Commission on, suggestion as to, xiv, 87, 114, 116 Sidgwick's views on, 136-7 Smith alleged to be founder of, xi his non-use of the term, 83 his equivalent phrase, 87 his view of, xiii, 60, 88-9, 100, 133 Socialism the logical outcome of, 95-6 Temporary, question as to, 173,
;
;
Sidgwick,
cited,
to security, 255 Henry, estimate of, 136 Princijjles of Political 36 Econony by, quoted, 136-7
;
Smith,
Adam
x, 1,
5,
69,
270
Foresight, 186-7
Humanism,
5,
19, 27
method adopted
by,
18,
Imperialism
in, see
under United
A.
Smith's
of, 60, 80, 141, 209 scheme of imperial union, xi, 213 25, 269
his
charged
Rent, 34, 70
monopoly
as affecting,
200
1-2
Lost ideas of, xii-xiii Moral philosophy of, 3-4 and n. Nationalism of, x, xi, 5-14, 21, 22,
60, 137, 141,
232
" School " of, 6 Test to be applied to writings of, 46 Tlieology of, 12 u. Theory of the Moral Sentiments, see that title Wecdth of Nations, see that title
Socialism British public opinion iu regard to
177
of,
171
Protection
logically
resulting
in,
Revenue
95-6
State intervention in commerce and industry, cases where suitable, unsuitable, general 175-6 in
;
Ad
sidered as source of, 170 Four principal branches of, Smith's time, 221
(Jross
A.
and
net,
relations
between,
91
INDEX
Statesiiu^i
283
and
of,
politicians,
A. Smith's
cited,
dislnist
137-8
of,
as distinct from
Strikes
and
11.
/Social
Problems
36
212
Tarifl'
/(.
industry, 48, 157 Production, a part of, 28, 30, 45 Protection, see that title Sudden dislocations of, deprecated,
20
wars, lessons from, 1()9
Town and
Taxation Bounties a form of, 94 British system of, proposed extension of, to whole empire, 219-20, 261 Colonies, of, for maritime defence,
necessity for, 238 Commodities suitable from, 122
for
of,
48 Importance of, 45, 56 Town and country compared as 140 Wholesale, three divisions of, 49
to,
exemption
taxation
Employment reduced by
on commodities, 125-6 Incidence of, 161-6 Land, of, see Land taxes
Monopolists' gains, of, views on, 141, 205 Necessaries, of
Articles
all
with, 128
inetlective regarding,
A.
Smith's
now
classed as necessaries
formerly luxuries, 127 and n. Cost of labour and of consumption, effect on, 122-3, 163 Revenue, for, as distinguished from
taxation to secure monopoly, 8789, 120-21
United States of America Agriculture in, 147 and n., 250 Ashley's Economic Surveys as relating to, cited, 158 n}, 201202
British colonial trade with, restrictions on, 228, 229 Canadian trade with, advantageous
to Canada, 267 Colonies, British, as, see Colonies, North America British Declaration of Independence, date
of,
162-3
TheoTjt of the
Moral Sentiments
Additions to, in final edition, quoted, 4, 16-17 Basis of, 3-4 Nationalism vindicated in, x
of,
185
Economic conditions in, 72 Economic History of the United States (Bogart), quoted, 259 n.
Free trade
of, viii,
Trade Balance of, exploded theory as to, 64 andn., 84, 129, 130 Capital required for, 30 {see also
Capital) Carrying, see that
Cities'
title
in,
internal, establishment
246, 259 n. Great Britain Affectionate regard for, 212-13 Immigration from Ireland and
growth due to, 45, 250 Colonial, see under Colonies, British Commercial Federation and Colonial Trade Policy (Davidson), cited, 228 and nn., 229 and n?
Exports, see tliat title Foreign, see Foreign traile Free, see Free trade Home, see Home trade Imports, see that title
Intercolonial, 228 Colonies, British
(1853-98), 233 Maritime rivalry with, 158 Natural resources of, 47 Principles adopted by, 212 Protection in
Hamil56 n.~,
246
Infant industries, of, 173 Origin of, 260 n. Tariff Act (1909), provisions
of,
Trade)
(see
also
under
265 n.
Tariff " reformers' " ostensible aim
in,
Monopoly,
29-30
91,263
Organisation
money necessary
to,
Smith's prediction regardingdevelopnient of, 186 State ownership of trusts as to, 95-6
in, feeling
284
Vested interests
A PROJECT OF EMPIRE
Wages, contd. Taxation of necessaries as
Wealth of Xations
Burke's estimate
with,
to
of, 18 n. Cannan's edition of, cited, 101 141 n? Composition of Circumstances of, x, 185-86 Period occupied by, 185
ti.-,
Colonial, question as to disturbance of, 254-6, 258 Compensation to, question as to,
affecting,
122-4
254-6
Interference
be gradual,
171-2
Voltaire, A. Smith's attitude towards,
12 n.
Wages
Adjustment of particular, to general level, 95 Agriculture, in, rise in, 48
Capital distributed
in,
Place
of,
220
n.^
proportion
of,
126 Contract determining, 38, 39 Corn law repeal as affecting, 124-5 Land, abundance of, as affecting, 190 Monopoly as aflecting, 143, 200-201 Profits of stock, relation to, 39-40 Protective system as affecting, 151
Forgotten chapter of, 44 n. Labour the dominant conception in, 23 M'CuUoch's Introduction to, quoted, 41-2 Reynolds's presentation copy of, 3 n.^
of,
228
in Ireland by,
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