Adam Smith's Simplified Wealth of Nations, Book 4, Chapter 7k: Economic Karma
Chapter 7k: Economic Karma
166 The discovery of America and the Cape of Good Hope are the two greatest and most important events recorded in history.
After two or three centuries since those discoveries, it is impossible that their great consequences could have been seen.
No human wisdom can foresee what benefits or misfortunes may result from those great events.
They were generally beneficial by:
uniting the most distant parts of the world
enabling those parts to:
relieve one another's wants
increase one another's enjoyments
encourage one another's industry.
To the natives of the East and West Indies, however, all the commercial benefits from those events were lost in the dreadful misfortunes.
These misfortunes arose from accident than from the nature of those events themselves.
At the time of those discoveries, Europe was so militarily superior that they were able to commit every injustice with impunity.
Hereafter, those natives may grow stronger or the Europeans may grow weaker.
All the people of the world may arrive at that equality of courage and force.
It can inspire mutual fear which can alone overawe the injustice of independent nations into respecting each other's rights.
This equality of force can only be established by that mutual communication of knowledge and improvements.
This communication is carried on naturally by an extensive commerce from all countries to all countries.
167 In the meantime, those discoveries principally raised the mercantile system to the splendour and glory which it could never have attained.
The mercantile system aims to enrich a great nation:
more by trade and manufactures than by the improvement and cultivation of land
more by the industry of the towns than by the industry of the countryside.
Because of those discoveries, the European commercial towns became:
the manufacturers for thriving American cultivators
the carriers and manufacturers for almost all Asian, African, and American nations.
Those towns were no longer the manufacturers and carriers just for the Atlantic part of Europe and the Baltic and Mediterranean.
Two new worlds were opened to European industry.
Each world was much greater and more extensive than Atlantic Europe, Baltic, and Mediterranean.
The American market of the new world grew greater every day.
168 The countries which possess the American colonies, and those which trade directly to the East Indies, enjoy the splendour of this great commerce.
Even other countries enjoy a greater share of the real benefit of this great commerce, despite all the restraints which exclude them.
For example, the colonies of Spain and Portugal give more encouragement to the industry of other countries than to the industry of Spain and Portugal.
The consumption of those colonies in linen alone is more than 3 million sterling a year.
This great consumption is almost entirely supplied by France, Flanders, Holland, and Germany.
Spain and Portugal furnish but a small part of it.
The capital which supplies the colonies with this linen is distributed among France, Flanders, Holland, and Germany.
It gives a revenue to the people of those countries.
Only its profits are spent in Spain and Portugal.
Those profits support the profusion of the Cadiz and Lisbon merchants.
169 Even the regulations which secure to each nation the exclusive trade of its own colonies are frequently more hurtful to the beneficiary countries than to those countries which they are against.
The oppression of the industry of other countries falls back on the heads of the oppressors.
It crushes their industry more than it crushes the industry of those other countries.
For example, because of those regulations:
The Hamburgh merchant must send the German linen for America to London.
He must bring back from London the American tobacco for Germany.
He cannot send the German linen directly to America nor bring back the tobacco directly from America.
By this restraint, he is probably obliged to sell German linen cheaper and to buy American tobacco dearer.
His profits are probably abridged by this restraint.
However, he receives the returns of his capital more quickly through the trade between Hamburgh and London than with a direct trade to America, even if American payments were as punctual as London payments.
Those regulations which confine the Hamburgh merchant causes his capital to employ more German industry than if it were employed directly in the American trade.
Though his confined trade may be less profitable to him than a direct trade, it cannot be less advantageous to his country.
It is otherwise with the capital of the London merchant.
The direct American trade may be more profitable to him, but it cannot be more advantageous to his country due to the slowness of the returns.
170 After all the unjust attempts of every European country to engross to itself the trade of its own colonies, they only thing they engrossed was the cost of their oppressive authority.
Every colonizing country has completely engrossed to itself the inconvenience of possessing its colonies.
It shared with many other countries the advantages from their colony trade.
171 At first sight, the monopoly of the American commerce naturally seems to the most valuable acquisition.
To the undiscerning eye of giddy ambition, it naturally presents itself as a very dazzling object to fight for, politically and militarily.
The dazzling splendour of the object in the greatness of the commerce, is the very quality which renders its monopoly hurtful.
Its makes a less-advantageous employment absorb more of the country's capital than natural.