Adam Smith's Simplified Wealth of Nations, Book 4, Chapter 9d: Foreign Economic systems

Chapter 9d: Foreign Economic systems

39 The political economy of modern European nations was more favourable to manufactures and foreign trade, the industry of the towns, than to agriculture, the industry of the countryside.
The Policy of China

40The policy of China favours agriculture more than all other employments.

  • In China, the great ambition of every man is to possess some little land in purchase or lease.
  • The Chinese have little respect for foreign trade.
  • Except with Japan, the Chinese carry on little or no foreign trade themselves and in their own ships.
  • Foreign trade in China is confined within a much narrower circle than what would naturally extend itself, if more freedom was allowed in Chinese or foreign ships.
  • 41 Manufactures frequently contain a great value in a small bulk.
  • Manufactures require the support of foreign trade in countries less extensive and less favourably circumstanced for commerce than China.
  • The perfection of the manufacturing industry depends on the division of labour.
  • The Chinese home market is of so extensive because of:
  • The Chinese home market is alone sufficient to:
  • The Chinese home market is perhaps not much inferior in extent to the entire European market put together.
  • By a more extensive navigation, the Chinese would naturally learn:
  • "Upon their present plan they have little opportunity except that of the Japanese."

  • The policy of India and Egypt

    42 The policy of ancient Egypt and India favoured agriculture more than all other employments. 43 The people there were divided into different castes or tribes.
  • In both countries, the caste of the priests held the highest rank.
  • In both countries, the caste of the farmers and labourers was superior to the castes of merchants and manufacturers.
  • 44 The governments of ancient Egypt and India were particularly attentive to the interest of agriculture.
  • Both countries were famous for their great fertility even though they occasionally had dearths.
  • 45 "The ancient Egyptians had a superstitious aversion to the sea."
  • In effect, it bans them from all distant sea voyages.
  • The Egyptians and Indians must have depended on foreign navigators to export their surplus produce.
  • Manufactures require a more extensive market than the most important rude produce of the land.
  • In a large country, the most numerous class of artificers will seldom make more than 2% or 1% of the total number of families in it.
  • Most of the agricultural produce of France and England is consumed at home.
  • "Agriculture, can support itself under the discouragement of a confined market much better than manufactures."
  • In ancient Egypt and India, the confinement of the foreign market was compensated by the conveniency of many inland navigations.
  • The great extent of India, too, rendered its home market:
  • But the small extent of ancient Egypt was never equal to England.
  • Bengal is an Indian province.
  • Ancient Egypt exported some manufactures such as fine linen.
  • 46 The sovereigns of China, ancient Egypt, and India have always derived the biggest part of their revenue from land-tax or land-rent.
  • It was natural therefore that those sovereigns should be attentive to the interests of agriculture.

  • Greek and Roman Policy

    47 The policy of the ancient Greek and Roman republics honoured agriculture more than manufactures or foreign trade.
  • Manufacturing and trade were considered fit only for slaves.
  • Trades are now exercised by the lower sort of people of towns.
  • Montesquieu

    Mr. Montesquieu remarked that the Hungarian mines always operated with less cost and more profit than the Turkish mines in their neighbourhood.

  • The Turkish mines are wrought by slaves.
  • Very little is known about the price of manufactures in the Greek and Roman times.

  • The price which a lady paid for very fine linen seems equally extravagant.
  • The price of fine woollens was not quite so extravagant.
  • The Triclinaria were a sort of woollen pillows on couches.
  • Dr. Arbuthnot observes that there was much less variety in the dress of fashionable people in ancient than in modern times.
  • "When the expence of fashionable dress is very great, the variety must be very small."

    48The greatest and most important commerce of every nation is the commerce between the town and the countryside.

  • The trade between these two consists ultimately in rude produce exchanged for manufactured produce.
  • The dearer the manufactured produce, the cheaper the rude produce.
  • Whatever reduces the number of artificers and manufacturers reduces the home market and consequently discourages agriculture, because the home market is the most important market for rude produce.
  • 49 Those systems which prefer agriculture impose restraints on manufactures and foreign trade.
  • The mercantile system encourages manufactures and foreign trade more than agriculture.
  • Those agricultural systems, on the contrary, really and ultimately discourage their own favourite industry.
  • 50 Thus, economic systems can subvert the great purpose they mean to promote if they: Such systems retard the progress of society towards real wealth and greatness instead of accelerating it.

    51When preference or restraint is completely removed from all systems, the obvious and simple system of natural liberty establishes itself of its own accord.

  • The sovereign is completely discharged from a duty which would always expose him to innumerable delusions.
  • According to the system of natural liberty, the sovereign has only three important duties which are plain and intelligible to common understandings:
    1. The duty of protecting society from violence and invasion of other independent societies
    2. The duty of establishing an exact administration of justice
  • The duty of building and maintaining public works and institutions which can never be for the interest of any individual to build and maintain
  • 52 The proper performance of those duties necessarily incurs a certain cost.
    1. What are the sovereign's necessary expences
  • Methods how society may be made to contribute towards defraying the expences incumbent on the whole
  • The reasons and causes which have induced modern governments to contract debts or mortgage part of this revenue

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