credit, the exaggerated accounts of the Spanish
writers concerning the ancient state of those
empires. But rich and civilized nations can
always exchange to a much greater value with
one another, than with savages and barbarians.
Europe, however, has hitherto derived much
less advantage from its commerce with the
East Indies, than from that with America.
The Portuguese monopolized the East India
trade to themselves for about a century; and
it was only indirectly, and through them, that
the other nations of Europe could either send
out or receive any goods from that country.
When the Dutch, in the beginning of the last
century, began to encroach upon them, they
vested their whole East India commerce in an
exclusive company. The English, French,
Swedes, and Danes, have all followed their
example; so that no great nation of Europe
has ever yet had the benefit of a free commerce
to the East Indies. No other reason
need be assigned why it has never been so advantageous
as the trade to America, which,
between almost every nation of Europe and
its own colonies, is free to all its subjects.
The exclusive privileges of those East India
companies, their great riches, the great favour
and protection which these have procured them
from their respective governments, have excited
much envy against them. This envy
has frequently represented their trade as altogether
pernicious, on account of the great
quantities of silver which it every year exports
from the countries from which it is carried
on. The parties concerned have replied, that
their trade by this continual exportation of
silver, might indeed tend to impoverish Europe
in general, but not the particular country
from which it was carried on; because, by
the exportation of a part of the returns to
other European countries, it annually brought
home a much greater quantity of that metal
than it carried out. Both the objection and
the reply are founded in the popular notion
which I have been just now examining. It is
therefore unnecessary to say any thing further
about either. By the annual exportation of
silver to the East Indies, plate is probably
somewhat dearer in Europe than it otherwise
might have been; and coined silver probably
purchases a larger quantity both of labour and
commodities. The former of these two effects
is a very small loss, the latter a very
small advantage; both too insignificant to deserve
any part of the public attention. The
trade to the East Indies, by opening a market
to the commodities of Europe, or, what
comes nearly to the same thing, to the gold
and silver which is purchased with those commodities,
must necessarily tend to increase
the annual production of European commodities,
and consequently the real wealth and
revenue of Europe. That it has hitherto increased
them so little, is probably owing to
the restraints which it everywhere labours
under.
I thought it necessary, though at the hazard
of being tedious, to examine at full length
this popular notion, that wealth consists in
money or in gold and silver. Money, in
common language, as I have already observed,
frequently signifies wealth; and this ambiguity
of expression has rendered this popular notion
so familiar to us, that even they who are
convinced of its absurdity, are very apt to forget
their own principles, and, in the course of
their reasonings, to take it for granted as a
certain and undeniable truth. Some of the best
English writers upon commerce set out with
observing, that the wealth of a country consists,
not in its gold and silver only, but in its
lands, houses, and consumable goods of all
different kinds. In the course of their reasonings,
however, the lands, houses, and consumable
goods, seem to slip out of their memory;
and the strain of their argument frequently
supposes that all wealth consists in
gold and silver, and that to multiply those
metals is the great object of national industry
and commerce.
The two principles being established, however,
that wealth consisted in gold and silver,
and that those metals could be brought into a
country which had no mines, only by the balance
of trade, or by exporting to a greater
value than it imported; it necessarily became
the great object of political economy to diminish
as much as possible the importation of
foreign goods for home consumption, and to
increase as much as possible the exportation
of the produce of domestic industry. Its two
great engines for enriching the country, therefore,
were restraints upon importation, and
encouragement to exportation.
The restraints upon importation were of
two kinds.
First, restraints upon the importation of
such foreign goods for home consumption as
could be produced at home, from whatever
country they were imported.
Secondly, restraints upon the importation of
goods of almost all kinds, from those particular
countries with which the balance of
trade was supposed to be disadvantageous.
Those different restraints consisted sometimes
in high duties, and sometimes in absolute
prohibitions.
Exportation was encouraged sometimes by
drawbacks, sometimes by bounties, sometimes
by advantageous treaties of commerce with
foreign states, and sometimes by the establishment
of colonies in distant countries.
Drawbacks were given upon two different
occasions. When the home manufactures were
subject to any duty or excise, either the whole
or a part of it was frequently drawn back upon
their exportation; and when foreign goods
liable to a duty were imported, in order to be