The Effects of Monopoly on Britain

¹³³ “We must carefully distinguish between the effects of the colony trade and those of the monopoly of that trade.”

The effects of the colony trade are always beneficial.

The effects of the monopoly of the colony trade are always hurtful.

The colony trade is so beneficial even if it were subject to a monopoly with its hurtful effects.

¹³⁴ The effect of the colony trade in its natural and free state is to open a great, distant market for British industry which may exceed the demand at home, Europe, and the Mediterranean.

In its natural and free state, the colony trade:

• encourages Great Britain to continually increase the surplus by continually presenting new equivalents to be exchanged for it.
  • It does not draw produce from those markets previously sent to them.
• increases the quantity of productive labour in Great Britain.
  • It does not alter the direction of the labour previously employed there.
• allows competition from other nations.

This competition hinders the profit rate from rising above the common level in the new market or new employment.

• In this way, the new market does not draw produce from the old market.
• Instead, it would create a new produce for its own supply.

¹³⁵ The colony trade monopoly, on the contrary, excludes foreign competition.

It:

• raises the profit rate in the new market and the new employment
• draws produce from the old market and capital from the old employment

The avowed purpose of the monopoly is to increase our share of the colony trade beyond the natural.

If our share were no greater than without the monopoly, there could be no reason for establishing the monopoly.

More capital of the country is unnaturally forced into a trade where the returns are slower and more distant.

This:

• renders all the productive labour and national produce less than they otherwise would be
• keeps down the revenue of the inhabitants of that country below what it would naturally rise to
• reduces their power of accumulation
• hinders, at all times, their capital from maintaining productive labour as it would otherwise maintain
• hinders their capital from increasing so fast as it would otherwise increase to maintain more productive labour.

¹³⁶ The natural good effects of the colony trade more than counterbalance the bad effects of the monopoly on Great Britain.

The colony trade becomes greatly advantageous even with the monopoly.

The new market and new employment opened by the colony trade are wider than the old market and old employment lost by the monopoly.

The new produce and the new capital created by the colony trade maintain more productive labour in Great Britain than what was thrown out of employment by the revulsion of capital from other trades with more frequent returns.

If the colony trade is advantageous to Great Britain, it is in spite of the monopoly, not because of the monopoly.

¹³⁷ It for the manufactured than for the rude produce of Europe that the colony trade opens a new market.

Agriculture is the proper business of all new colonies.

The cheapness of land renders agriculture more advantageous than any other business.

They abound in the rude produce of land.

They generally have a large surplus to export.

In new colonies, agriculture:

• Draws hands from all other employments or
• Keeps them from going to any other employment

There are few hands to spare for the necessary manufactures and none for the ornamental ones.

They find it cheaper to purchase of manufactures of other countries than to make it themselves.

The colony trade indirectly encourages its agriculture by encouraging European manufactures.

The colony trade gives employment to European manufactures, which become a new and most advantageous market for rude produce.

The trade to America greatly extends the home market for corn, cattle, bread and meat of Europe.

¹³⁸ The monopoly of the trade of populous and thriving colonies is not alone sufficient to establish or maintain manufactures in any country.

This is demonstrated by Spain and Portugal.

“Spain and Portugal were manufacturing countries before they had any considerable colonies.”

They were once the richest and most fertile in the world but not anymore.

¹³⁹ The bad effects of the monopoly in Spain and Portugal were aggravated by other causes.

These causes perhaps overbalanced the natural good effects of the colony trade:

• Other monopolies
• The degradation of gold and silver value below its value in most other countries
• The exclusion from foreign markets by improper taxes upon exportation
• The narrowing of the home market by more improper taxes on the transportation of goods
• Above all, that irregular and partial administration of justice which protects the rich and powerful debtor from his injured creditor.

That unjust system makes the industrious:

• afraid to prepare goods for those haughty and great men.
• accept selling on credit despite uncertain repayment.

¹⁴⁰ In England, on the contrary, the natural good effects of the colony trade are assisted by other causes which conquered the bad effects of the monopoly.

These causes seem to be:

• The general liberty of trade which is at least equal or perhaps superior to any other country.
• The liberty of exporting, duty free, almost all sorts of domestic goods to almost any foreign country.
• More importantly, the unbounded liberty of transporting them from our own country to any other without:
  • Being obliged to give any account to any public office
  • Being liable to question or examination of any kind

Above all, that equal and impartial administration of justice which renders the meanest British subject respectable to the greatest.

This justice secures to every man the fruits of his own industry

It gives the greatest and most effectual encouragement to every sort of industry.

¹⁴¹ If British manufactures were advanced by the colony trade, it was not by its monopoly but in spite of its monopoly.

The monopoly:

• altered the quality and shape of some of British manufactures
• accommodated to a market where the returns are slow and distant, instead of a market where the returns are frequent and near.
• turned a part of British capital from an employment where it would have maintained more manufacturing industry to one where it maintains a much smaller
• reduced the quantity of manufacturing maintained in Great Britain

¹⁴² The colony trade monopoly is like all the other mean and malignant expedients of the mercantile system.

It:

• depresses the industry of all other countries and chiefly that of the colonies
• reduces the industry of the country for which is it is established