(3.xviii.13) This advantage, if drawn by the mother country, would be drawn at the expenseof the colony. In free trade, both parties gain. In the advantage produced by forcing, whatever isgained by the one party is lost by the other. The mother country, in compelling the colony to sellgoods cheaper to her than she might sell them to other countries, merely imposes upon her atribute; not direct, indeed, but not the less real because it is disguised.
(3.xviii.14) If any advantage is derived from restraining, any otherwise than by an exclusivecompany, the trade with the colonies, it must consist in forcing the colonies to sell to none butthe mother country, not in forcing them to buy from none but the mother country. A greatimprovement, therefore, in colonial policy would be, to throw open the supply of the colonies,permitting them to purchase the goods which they want, wherever they could find the mostfavourable market, only restraining them in the sale of their goods: allowing them to buywherever they pleased, permitting them to sell to none but the mother country.
(3.xviii.15) It is at the same time to be observed, that if the merchants of the mother countryhave freedom to export the goods which are derived from the colonies, the price of these goodswill be raised in their own country to the level of the price in other countries. The competition ofthe merchants will, also, raise the price of the goods to a correspondent height in the colonies;and thus the benefit to the mother country is lost.
(3.xviii.16) Treaties of commerce are sometimes concluded, for the purpose of limiting thefreedom of trade. One country can be limited to another in but two ways; either in its purchases,or its sales. Suppose that Great Britain binds some other country to purchase certaincommodities exclusively from her; Great Britain can derive no advantage from such a treaty.
The competition of her merchants will make them sell those commodities as cheap to themerchants of that country, as to their own countrymen. Their stock is not more profitablyemployed than it would be if no such trade existed. There are cases in which a country may gainby binding another country to sell to none but itself. If one country is bound to sell nocommodities whatsoever, except to another particular country; this is the same case, exactly,with that of a colony bound to sell to none but the mother country. As no free country, however,is likely to bind itself to sell none of its commodities except to one other, this is not a case whichwe need to regard as practicable or real.
(3.xviii.17) One country may bind itself to sell exclusively to another particular country, notall the articles it has for foreign sale, but only some of them.
(3.xviii.18) These may be articles which yield nothing, even in a state of freedom, but theordinary profits of stock; as cloth, hardware, hats, &c. : or they may be articles which yieldsomething over and above the ordinary profits of stock; as corn, wine, minerals, &c. whichare the source of rent.
(3.xviii.19) One country can derive no advantage from compelling another to sell to it,exclusively, articles of the first sort. If the price which the favoured country pays for the goods isnot sufficient to afford the ordinary profits of stock, they will not be produced. If the price whichit pays is sufficient to afford the ordinary profits of stock, it would, at that price, obtain thegoods, without any treaty of restriction.
(3.xviii.20) The case is different, where the goods yield something, as rent, or the profits of amonopoly, over and above the profits of stock. The quantity which may be sent in this case tothe favoured country, may sink there the price of the restricted commodity lower than it is in theneighbouring countries; and lower than the restricted country would, if not under restriction, beenabled to sell it in those countries. To this extent, and to this only, can one country benefit, byconfining the trade of another to itself. The restriction may operate to a diminution of the profitsof a monopolized commodity, or a diminution of rent.
(3.xviii.21) There is one mode of presenting this subject, which is apt to puzzle a mind notaccustomed to trace the intricacies of this science.
(3.xviii.22) Suppose two countries, A and B, of which A is bound by treaty, or otherwise, toreceive all its shoes from B, and to sell to B all its sugars: Suppose, also, that A could, if left atliberty, obtain its shoes 50 per cent. cheaper from some other country; in that case, it may for amoment appear, that B, obtains the sugars which it buys of A, with 50 per cent. less of its ownlabour, than it would if A were allowed to purchase where it pleased.
(3.xviii.23) If B paid for the supposed sugars in shoes, it would, no doubt, pay 50 per cent. more in the case of a free trade.
(3.xviii.24) But if there were any other article with which it could purchase those sugars, andwhich it could afford as cheap as any other country, it would lose nothing in the case of a freetrade; it would purchase the same quantity of sugar with the produce of the same quantity oflabour as before; only, that produce would be, not shoes, but some other article.
(3.xviii.25) That there would be articles which B could afford as cheap as any other country,is certain, because otherwise it could have no foreign trade.
(3.xviii.26) It may be said, however, that though B might have articles which it could sell ascheap as other countries, they might not be in demand in the country which produced the sugars.
But if shoes only were in demand in the colonies, those other articles could purchase shoeswhere they were cheapest; and thus obtain the same quantity of sugar, in the free, as in therestricted state of the trade.
