The Simplified Wealth of Nations of Adam Smith, Book 5, Chapter 3: International Barter Taxation

Chapter 3g: International barter taxation

Translator's note: On this page, I will add links to Keynes' International Clearing Union which is consistent with Smith's proposal below

79It has been said that the Americans have no gold or silver money.

80The current scarcity of gold and silver money in America is not the effect of the inability of the Americans to buy those metals.

81Gold and silver money is necessary or convenient for transacting domestic or foreign business.  

82Book 2 has shown that the domestic business of every country may be transacted through paper currency as conveniently as by gold and silver money, at least in peacetime.

83In the commerce between Great Britain and the tobacco colonies, the British goods are generally advanced to the colonists at a pretty long credit.

84In the northern colonies, the value of their own exports to Great Britain is more than the value of their imports.

85In the sugar colonies, the value of exports to Great Britain is much greater than the value of all the goods imported.

86The difficulty and irregularity of payment from the colonies to Great Britain have not been proportional to the balances due from them.

87It is not the poverty of the colonies which creates the present scarcity of gold and silver money.

88It is just fair that Ireland and America contribute towards discharging Great Britain's public debt.

  sup 89 | By a union with Great Britain, Ireland would gain the freedom of trade and other much more important advantages. ul li | These advantages would much more than compensate any tax increases that might accompany that union. li | By the union with England, the Scottish middle and lower classes were completely freed from the power of an aristocracy which always oppressed them. li | By a union with Great Britain, most Irish would gain an equally complete freedom from a much more oppressive aristocracy. ul li | Unlike Scotland's aristocracy, Irish aristocracy is not founded in the natural and respectable distinctions of birth and fortune. li | It is founded on religious and political prejudices, the most odious of all distinctions. ul li | These prejudices: ul li | animate most: ul li | the oppressors' insolence and li | the hatred of the oppressed li | commonly render its own people more hostile to one another than to foreigners li .text-smith b Without a union with Great Britain, the Irish will not likely consider themselves as one people for many ages.

90No oppressive aristocracy has ever prevailed in the colonies.

91The East India Company's territorial acquisitions is the right of the British people.

  sup 92 .text-smith strong | If it is impractical for Great Britain to increase its revenue from the resources mentioned, her only remaining resource is to reduce her expence. ul li | Great Britain is at least as economical as her neighbours in collecting and spending the public revenue. ul li | There is still room for improvement for both collecting and spending. li | Her military is more moderate than any European state of equal status. li | None of those articles seem to admit of any considerable reduction of expence. li | Before the present disturbances, the peace-keeping costs in the colonies was very big. ul li | It should be all saved if no revenue can be drawn from the colonies. li | This constant expence in peacetime was very great, but is insignificant compared to wartime. ul li | The Seven Years' War was undertaken for the colonies. ul li | It cost Great Britain more than £90 million. li | The Spanish War of Jenkins' Ear of 1739 was principally undertaken for the colonies. li | The French War of the Austrian Succession was the consequence of that Spanish war. ul li | That French war cost Great Britain more than £40 million. li | Most of it should be charged to the colonies. li | In those two wars, the colonies cost Great Britain more than twice the national debt before the Spanish war started. li | Without those wars, Great Britain's debt might have been completely paid by this time. li | Had it not been for the colonies, those two wars certainly would not have been undertaken. ul li | They were undertaken because the colonies were supposed to be provinces of the British empire. li.text-smith b "But countries which contribute neither revenue nor military force towards the support of the empire cannot be considered as provinces." li | They may be considered as appendages, as showy equipage of the empire. li | But if the empire can no longer keep up this equipage, it should be laid down. li | If it cannot raise its revenue in proportion to its expence, it should at least match its expence to its revenue. li | The colonies refuse to submit to British taxes. ul li | If they are still to be considered as British provinces, their defence in a future war might cost Great Britain a very big expence. li | For more than a century, Great Britain's rulers have amused the people with the imagination that they had a great empire in North America. ul li | This empire has existed in imagination only. li | It has been the project of an empire and not an empire. li | It was the project of a gold mine, not a gold mine. ul li | It was a project which has cost and will likely cost immense expence, without bringing any profit. ul li | To the people, the monopoly of the colony trade was a mere loss instead of profit. li | Our rulers and the people should realize this golden dream which they have been indulging themselves in. ul li | Our rulers should awake themselves and the people from it. li | If the project cannot be completed, it should be given up. li | If any of the British empire's provinces cannot be made to contribute to support the whole empire, Great Britain should free herself from the cost of: ul li | defending those provinces, and li | supporting their civil or military establishments. li | She should make future plans according to the real mediocrity of her circumstances. hr b END