242 ADAM SMITH. 



exclusive traffic with the colonies. The former have 

 been very trifling, as means of defence and revenue 

 are all that a State can derive from its own territory, 

 and of these nothing has been afforded, except the 

 revenue derived from the Spanish and Portuguese 

 settlements. But the commercial monopoly has cer- 

 tainly been very lucrative. This advantage, however, 

 is, by Dr. Smith, considered to be rather relative than 

 absolute, an advantage over nations having no colo- 

 nies, and whose industry is to a certain degree op- 

 pressed by their exclusion from the colonial commerce. 

 The monopoly has kept down the agriculture and trade 

 of the colonies, and thus it has injured the mother 

 country by curtailing the natural supply and thereby 

 raising the natural price of colonial produce. But it 

 has also injured the natural trade and agriculture of 

 the mother country, by drawing much more capital 

 towards the colonial traffic and cultivation than would 

 naturally have gone thither, thus gradually lowering 

 the profits by increasing the competition in the colonial 

 trade, and proportionably decreasing the competition 

 and raising the profits in other branches of commerce. 

 The rate of profit in the mother country being thus 

 kept unnaturally high, has necessarily been hurtful to 

 its trade with all other countries. Dr. Smith likewise 

 contends, that the monopoly draws capital from a foreign 

 trade of consumption with foreign countries yielding 

 quick returns, to a similar trade with distant countries 

 yielding slow returns ; that it draws capital from a direct 

 to a round-about foreign trade of consumption ; and 

 that it draws some capital from all trade of consump- 

 tion to a carrying trade. In these respects he holds 

 the colonial monopoly to have been greatly prejudicial. 

 Lastly, he considers it a disadvantage that this great 

 branch of commerce occasions our manufactures not 

 to be adapted to a variety of small markets but to one 

 or two large ones, destroying the uniform and equal 

 balance that would naturally have taken place among 



