Adam Smith's Simplified Wealth of Nations, Book 4, Chapter 7g: Act of Navigation

Chapter 7g: Monopoly from the Act of Navigation

105 By the act of navigation, England assumed to herself the monopoly of the colony trade. 106 This monopoly produced the double effects on its first establishment and has continued ever since:
  1. 107 This monopoly continually drew capital from all other trades to be employed in the colonies.
109 England was a great trading country.
  1. 110 This monopoly kept up profit rates in British trade higher than if all nations were allowed a free trade to the British colonies.
112 Whatever raises the ordinary profit rate in any country higher than it otherwise would be, necessarily subjects that country to an absolute and a relative disadvantage in every trade which she has no monopoly of. 113 It subjects her to an absolute disadvantage. 114 It subjects her to a relative disadvantage. 115 Our merchants frequently complain of the high British wages as the cause of their manufactures being undersold in foreign markets. 116 In this manner, British capital was partly driven from the trades where she has no monopoly: 117 It was partly drawn from those trades by the attraction of superior profit in the colony trade due to: 118 It was partly driven from those trades by the high British profit rates. 119 The monopoly of the colony trade drew British capital from other trades. 120 The colony trade perhaps is more advantageous to Great Britain than any other trade.

121 "The most advantageous employment of any capital to the country to which it belongs is that which maintains there the greatest quantity of productive labour, and increases the most the annual produce of the land and labour of that country."

122 The monopoly of the colony trade forced some British capital from a foreign trade of consumption with a neighbouring country, to a trade with a more distant country.
  1. 123 The monopoly of the colony trade forced some British capital from a foreign trade of consumption with a neighbouring country to a trade with a more distant country.
  1. 125 The monopoly of the colony trade forced some part of British capital from a direct foreign trade of consumption into a round-about one.

Next: Chapter 7h: The effects of monopoly