the country in order to sell in another the produce of the
industry of that country, generally replaces by every such
operation two distinct capitals that had both been employed in
the agriculture or manufactures of that country, and thereby
enables them to continue that employment. When it sends out from
the residence of the merchant a certain value of commodities, it
generally brings back in return at least an equal value of other
commodities. When both are the produce of domestic industry, it
necessarily replaces by every such operation two distinct
capitals which had both been employed in supporting productive
labour, and thereby enables them to continue that support. The
capital which sends Scotch manufactures to London, and brings
back English corn and manufactures to Edinburgh, necessarily
replaces by every such operation, two British capitals which had
both been employed in the agriculture or manufactures of Great
Britain.
The capital employed in purchasing foreign goods for home
consumption, when this purchase is made with the produce of
domestic industry, replaces too, by every such operation, two
distinct capitals; but one of them only is employed in supporting
domestic industry. The capital which sends British goods to
Portugal, and brings back Portuguese goods to Great Britain,
replaces by every such operation only one British capital. The
other is a Portuguese one. Though the returns, therefore, of the
foreign trade of consumption should be as quick as those of the
home trade, the capital employed in it will give but one half the
encouragement to the industry or productive labour of the
country.
But the returns of the foreign trade of consumption are very
seldom so quick as those of the home trade. The returns of the
home trade generally come in before the end of the year, and
sometimes three or four times in the year. The returns of the
foreign trade of consumption seldom come in before the end of the
year, and sometimes not till after two or three years. A capital,
therefore, employed in the home trade will sometimes make twelve
operations, or be sent out and returned twelve times, before a
capital employed in the foreign trade of consumption has made
one. If the capitals are equal, therefore, the one will give
four-and-twenty times more encouragement and support to the
industry of the country than the other.
The foreign goods for home consumption may sometimes be
purchased, not with the produce of domestic industry, but with
some other foreign goods. These last, however, must have been
purchased either immediately with the produce of domestic
industry, or with something else that had been purchased with it;
for, the case of war and conquest excepted, foreign goods can
ever be acquired but in exchange for something that had been
produced at home, either immediately, or after two or more
different exchanges. The effects, therefore, of a capital
employed in such a roundabout foreign trade of consumption, are,
in every respect, the same as those of one employed in the most
direct trade of the same kind, except that the final returns are
likely to be still more distant, as they must depend upon the
returns of two or three distinct foreign trades. If the flax and
hemp of Riga are purchased with the tobacco of Virginia, which
had been purchased with British manufactures, the merchant must
wait for the returns of two distinct foreign trades before he can
employ the same capital in re-purchasing a like quantity of
British manufactures. If the tobacco of Virginia had been
purchased, not with British manufactures, but with the sugar and
rum of Jamaica which had been purchased with those manufactures,
he must wait for the returns of three. If those two or three
distinct foreign trades should happen to be carried on by two or
three distinct merchants, of whom the second buys the goods
imported by the first, and the third buys those imported by the
second, in order to export them again, each merchant indeed will
in this case receive the returns of his own capital more quickly;
but the final returns of the whole capital employed in the trade
will be just as slow as ever. Whether the whole capital employed
in such a round-about trade belong to one merchant or to three
can make no difference with regard to the country, though it may
with regard to the particular merchants. Three times a greater
capital must in both cases be employed in order to exchange a
certain value of British manufactures for a certain quantity of
flax and hemp than would have been necessary had the manufactures
and the flax and hemp been directly exchanged for one another.
The whole capital employed, therefore, in such a round-about
foreign trade of consumption will generally give less
encouragement and support to the productive labour of the country
than an equal capital employed in a more direct trade of the same
kind.
Whatever be the foreign commodity with which the foreign
goods for home consumption are purchased, it can occasion no
essential difference either in the nature of the trade, or in the
encouragement and support which it can give to the productive
labour of the country from which it is carried on. If they are
purchased with the gold of Brazil, for example, or with the
silver of Peru, this gold and silver, like the tobacco of
Virginia, must have been purchased with something that either was
the produce of the industry of the country, or that had been
purchased with something else that was so. So far, therefore, as
the productive labour of the country is concerned, the foreign
trade of consumption which is carried on by means of gold and
silver has all the advantages and all the inconveniences of any
other equally round-about foreign trade of consumption, and will
replace just as fast or just as slow the capital which is
immediately employed in supporting that productive labour. It
seems even to have one advantage over any other equally
roundabout foreign trade. The transportation of those metals from
one place to another, on account of their small bulk and great
value, is less expensive than that of almost any other foreign
goods of equal value. Their freight is much less, and their
insurance not greater; and no goods, besides, are less liable to
suffer by the carriage. An equal quantity of foreign goods,
therefore, may frequently be purchased with a smaller quantity of
the produce of domestic industry, by the intervention of gold and
silver, than by that of any other foreign goods. The demand of
the country may frequently, in this manner, be supplied more
completely and at a smaller expense than in any other. Whether,
by the continual exportation of those metals, a trade of this
kind is likely to impoverish the country from which it is carried
on, in any other way, I shall have occasion to examine at great
length hereafter.
That part of the capital of any country which is employed in
the carrying trade is altogether withdrawn from supporting the
productive labour of that particular country, to support that of
some foreign countries. Though it may replace by every operation
two distinct capitals, yet neither of them belongs to that
particular country. The capital of the Dutch merchant, which
carries the corn of Poland to Portugal, and brings back the
fruits and wines of Portugal to Poland, replaces by every such
operation two capitals, neither of which had been employed in
supporting the productive labour of Holland; but one of them in
supporting that of Poland, and the other that of Portugal. The
profits only return regularly to Holland, and constitute the
whole addition which this trade necessarily makes to the annual
produce of the land and labour of that country. When, indeed, the
carrying trade of any particular country is carried on with the
ships and sailors of that country, that part of the capital
employed in it which pays the freight is distributed among, and
puts into motion, a certain number of productive labourers of
that country. Almost all nations that have had any considerable
share of the carrying trade have, in fact, carried it on in this
manner. The trade itself has probably derived its name from it,
the people of such countries being the carriers to other
countries. It does not, however, seem essential to the nature of
the trade that it should be so. A Dutch merchant may, for
example, employ his capital in transacting the commerce of Poland
and Portugal, by carrying part of the surplus produce of the one
to the other, not in Dutch, but in British bottoms. It may be
presumed that he actually does so upon some particular occasions.
It is upon this account, however, that the carrying trade has
been supposed peculiarly advantageous to such a country as Great
Britain, of which the defence and security depend upon the number
of its sailors and shipping. But the same capital may employ as
many sailors and shipping, either in the foreign trade of
consumption, or even in the home trade, when carried on by
coasting vessels, as it could in the carrying trade. The number
of sailors and shipping which any particular capital can employ
does not depend upon the nature of the trade, but partly upon the
bulk of the goods in proportion to their value, and partly upon
the distance of the ports between which they are to be carried;
chiefly upon the former of those two circumstances. The coal
trade from Newcastle to London, for example, employs more
shipping than all the carrying trade of England, though the ports
are at no great distance. To force, therefore, by extraordinary
encouragements, a larger share of the capital of any country into
the carrying trade than what would naturally go to it will not
always necessarily increase the shipping of that country.
The capital, therefore, employed in the home trade of any
country will generally give encouragement and support to a
greater quantity of productive labour in that country, and
increase the value of its annual produce more than an equal
capital employed in the foreign trade of consumption: and the
capital employed in this latter trade has in both these respects
a still greater advantage over an equal capital employed in the
carrying trade. The riches, and so far as power depends upon
riches, the power of every country must always be in proportion
to the value of its annual produce, the fund from which all taxes
must ultimately be paid. But the great object of the political
economy of every country is to increase the riches and power of
that country. It ought, therefore, to give no preference nor
superior encouragement to the foreign trade of consumption above
the home trade, nor to the carrying trade above either of the
other two. It ought neither to force nor to allure into either of
those two channels a greater share of the capital of the country
than what would naturally flow into them of its own accord.
When the produce of any particular branch of industry
exceeds what the demand of the country requires, the surplus must
be sent abroad and exchanged for something for which there is a
demand at home. Without such exportation a part of the productive
labour of the country must cease, and the value of its annual
produce diminish. The land and labour of Great Britain produce
generally more corn, woollens, and hardware than the demand of
the home market requires. The surplus part of them, therefore,
must be sent abroad, and exchanged for something for which there
is a demand at home. It is only by means of such exportation that
this surplus can acquire a value sufficient to compensate the
labour and expense of producing it. The neighbourhood of the
sea-coast, and the banks of all navigable rivers, are
advantageous situations for industry, only because they
facilitate the exportation and exchange of such surplus produce
for something else which is more in demand there.
When the foreign goods which are thus purchased with the
surplus produce of domestic industry exceed the demand of the
home market, the surplus part of them must be sent abroad again
and exchanged for something more in demand at home. About
ninety-six thousand hogsheads of tobacco are annually purchased
in Virginia and Maryland with a part of the surplus produce of
British industry. But the demand of Great Britain does not
require, perhaps, more than fourteen thousand. If the remaining
eighty-two thousand, therefore, could not be sent abroad and
exchanged for something more in demand at home, the importation
of them must cease immediately, and with it the productive labour
of all those inhabitants of Great Britain, who are at present
employed in preparing the goods with which these eighty-two
thousand hogsheads are annually purchased. Those goods, which are
part of the produce of the land and labour of Great Britain,
having no market at home, and being deprived of that which they
had abroad, must cease to be produced. The most round-about
foreign trade of consumption, therefore may, upon some occasions,
be as necessary for supporting the productive labour of the
country, and the value of its annual produce, as the most direct.
When the capital stock of any country is increased to such a
degree that it cannot be all employed in supplying the
consumption and supporting the productive labour of that
particular country, the surplus part of it naturally disgorges
itself into the carrying trade, and is employed in performing the
same offices to other countries. The carrying trade is the
natural effect and symptom of great national wealth; but it does
not seem to be the natural cause of it. Those statesmen who have
been disposed to favour it with particular encouragements seem to
have mistaken the effect and symptom for the cause. Holland, in
proportion to the extent of the land and the number of its
inhabitants, by far the richest country in Europe, has,
accordingly, the greatest share of the carrying trade of Europe.
England, perhaps the second richest country of Europe, is
likewise supposed to have a considerable share of it; though what
