Monopoly from the Act of Navigation

¹⁰⁵ By the act of navigation, England assumed to herself the monopoly of the colony trade.

The foreign capitals employed in it were withdrawn from it. The English capital which did a part of it now did the whole.

The capital which supplied the colonies with part of the European goods they wanted was now all employed to supply them with the whole. But English capital could not supply the colonies with all European goods. Those goods it supplied were sold very dear.

The capital which bought only a part of the surplus produce of the colonies, was now all employed to buy the whole. But it could not buy the whole produce at the old price. Whatever it could buy it bought very cheap.

The profit must have been very great because the merchant sold very dear and bought very cheap. This superiority of profit in the colony trade must have drawn capital from other trades. This must have gradually increased the competition in the colony trade and lowered the profits. It must have gradually diminished the competition in other trades and raised their profits. The profits of all trades must have come to a new level higher than before.

106 This monopoly produced the double effects on its first establishment and has continued ever since=

Drawing capital from all other trades Raising profit rates higher in all trades

107 This monopoly continually drew capital from all other trades to be employed in the colonies.

108 Though the wealth of Great Britain increased very much since the act of navigation was established, it did not increase in the same proportion as the wealth of the colonies. “But the foreign trade of every country naturally increases in proportion to its wealth.” Its surplus produce increases in proportion to its whole produce. Great Britain engrossed to herself almost all of the foreign trade of the colonies. Her capital did not increase proportionately with the increase of that trade. She could not carry it on without= withdrawing some capital from other trades withholding from other trades more than what would have gone to them Since the act of navigation was established, the colony trade continually increased. However, other foreign trades to other parts of Europe continually decayed. Before the act of navigation, our manufactures for foreign sale were suited to= the European market the distant market around the Mediterranean Sea After the act of navigation, most of them were accommodated to the more distant colony markets. They went where they have the monopoly instead of where they have many competitors. The overgrowth of the colony trade is the cause of decay in other foreign trades. This cause includes the causes which Sir Matthew Decker and other writers attributed the decay to= The excess and improper mode of taxation The high price of labour The increase of luxury, etc. The mercantile capital of Great Britain was very great but not infinite. It greatly increased since the act of navigation. It did not increase proportionally to the colony trade. That trade could not be carried on without withdrawing some capital from other trades. Those other trades consequently decayed.

109 England was a great trading country.

Her mercantile capital was very great even before the act of navigation. In the Dutch war during the Cromwell government, her navy was superior to Holland. In the war in the beginning of the reign of Charles II, it was equal or superior to the united navies of France and Holland. Presently its superiority is not greater if the Dutch navy was proportional to the Dutch commerce now as it was before. This great naval power could not be due to the act of navigation. During the first of those wars, the plan of that act was just formed. Before the second war, that act was fully enacted. No part of it had time to produce any big effect. The colonies and their trade were inconsiderable then compared to now. Jamaica was an unwholesome desert, little inhabited, and less cultivated. New York and New Jersey were possessed by the Dutch. Half of St. Christopher’s was possessed by the French. Antigua, the two Carolinas, Pennsylvania, Georgia, and Nova Scotia were not planted. Virginia, Maryland, and New England were planted and thriving. No one foresaw their rapid progress in wealth, population, and improvement. Barbados was the only British colony which remained relatively unchanged. The act of navigation was not very strictly executed for several years. Even after the act of navigation, the colony trade of England, could not have caused at that time= the great English trade the great naval power supported by that trade. At that time, the trade of Europe and the Mediterranean Sea supported the great English naval power. Currently, that trade is not able support British naval power. Had the colony trade been left free to all nations, any British share in the colony trade would have added to the great European trade she had before. Because of the monopoly, the increase of the colony trade did not add much to the British trade.

110 This monopoly kept up profit rates in British trade higher than if all nations were allowed a free trade to the British colonies.

111 The monopoly of the colony trade drew more British capital than natural. By the expulsion of all foreign capitals, it reduced the whole capital employed in that trade below natural as in a free trade. By lessening the competition of capitals in the colony trade, it raised its profit rate. By lessening the competition of British capitals in other trades, it raised British profit rates in those other trades. The monopoly of the colony trade must have raised ordinary British profit rates higher than normal in all British trades. Since the act of navigation, ordinary British profit rates fell considerably. It would have fallen still lower if the monopoly established by that act did not keep it up.

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.

In trades where she has no monopoly, her merchants cannot get this greater profit without selling her foreign imports and her own exports dearer. The country must buy dearer and sell dearer. It must buy less and sell less. It must enjoy less and produce less.

114 It subjects her to a relative disadvantage.

In trades where she has no monopoly, other countries do not have the same absolute disadvantage. Other countries are more above or less below her. It enables them to enjoy more and to produce more. It renders their superiority greater or their inferiority less. By raising the price of her produce above the natural, it enables foreign merchants to undersell her in foreign markets. They jostle her out of trades where she has no monopoly.

115 Our merchants frequently complain of the high British wages as the cause of their manufactures being undersold in foreign markets.

They are silent about their high profits. “They complain of the extravagant gain of other people, but they say nothing of their own.” High British profits, however, may raise the price of British manufactures perhaps more than high British wages.

116 In this manner, British capital was partly driven from the trades where she has no monopoly=

From the trade of Europe in particular, and around the Mediterranean Sea

117 It was partly drawn from those trades by the attraction of superior profit in the colony trade due to=

the continual increase of that trade the continual insufficiency of capital needed to carry it on annually

118 It was partly driven from those trades by the high British profit rates.

Those rates gave advantages to other countries in trades where Great Britain has no monopoly.