The Effects of Monopoly on Britain

^'119' The monopoly of the colony trade drew British capital from other trades.

• It forced into those other trades many foreign capitals which would never have gone to them.
  • In those other trades, it diminished the competition of British capital.
• It raised British profit rates higher than natural.

On the contrary, it increased the competition of foreign capitals.

• It sunk the rate of foreign profit lower.

In both ways, it must have subjected Great Britain to a relative disadvantage in all those other trades.

^'120' The colony trade perhaps is more advantageous to Great Britain than any other trade.

The monopoly forced more British capital into the colony trade than what would have gone to it. It turned that capital into an employment 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.”

It has been shown in the Book 2 that the quantity of productive labour which capital can maintain in the foreign trade of consumption is exactly in proportion to the frequency of its returns.

For example, a capital of 1,000 pounds employed in a foreign trade of consumption with returns of once a year, can maintain and employ what 1,000 pounds can for a year. If the returns are made twice or thrice a year, it can keep employed what 2,000 or 3,000 pounds can maintain there for a year.

In this case, a foreign trade of consumption done with a neighbouring country is more advantageous than a trade with a distant country. For the same reason, a direct foreign trade of consumption is in general more advantageous than a round-about one, as shown in Book 2.

^'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.

In many cases, it forced British capital from a direct foreign trade of consumption to a round-about one.

^'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.

124 It forced some British capital from the trade with Europe and the Mediterranean. to the trade with America and the West Indies, where the returns are less frequent. New colonies are always understocked.

"Their capital is always much less than what they could employ with great profit and advantage in the improvement and cultivation of their land."
"They have a constant demand, for more capital than they have of their own;"

To supply their deficiency, they borrow as much as they can of the mother country.

They are therefore always in debt to the mother country.

The most common way they contract this debt is by running in arrears to their correspondents as far as possible.

Their correspondents supply them with European goods. They sometimes borrow on bond of the rich people of the mother country.

But they do not do this commonly because their annual returns frequently are less than a third of what they owe.

The whole capital advanced by their correspondents is seldom returned to Britain in less than three years. £1,000 of British capital which returned to Great Britain once in five years, can keep only 1/5 British industry constantly employed compared to 5/5 industry if such capital returned once a year.

It can keep only £200 worth of industry employed for each year for those five years.

The planter probably makes up the loss his correspondent sustains by this delay through=

the high price the planter pays for European goods the interest on the bills the planter grants at distant dates the commission on the renewal of those bills which the planter grants at near dates

Although he may make up the loss of his correspondent, he cannot make up the loss of Great Britain.

The merchant’s profit may be more in a trade where the returns are very distant than in a trade where they are very frequent and near.

But the advantage of the country where he resides must always be much less=

The quantity of productive labour maintained there The annual produce of its land and labour

The returns of the trade to America and the West Indies are more distant, irregular, and uncertain than those to Europe and the Mediterranean.

^'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.

^'126' Enumerated commodities can only be sent to Great Britain.

There are several enumerated commodities which are in excess of what is needed by Great Britain. It must be exported. This cannot be done without forcing some British capital into a round-about foreign trade of consumption.

For example, Maryland and Virginia, send more than 96,000 hogsheads of tobacco to Great Britain annually. The consumption of Great Britain does not exceed 14,000 hogheads. More than 82,000 hogsheads must be exported to= France Holland The Baltic countries The Mediterranean countries

The British capital which imports and re-exports those 82,000 hogsheads is employed in a round-about foreign trade of consumption. It brings back goods or money from those countries in return. It is forced to dispose of this great surplus. To compute how many years this capital would come back to Great Britain, we must add the returns from those other countries to the American returns. If the capital employed in the direct foreign trade of consumption with America does not come back in less than 3-4 years, the capital employed in this round-about trade is not likely to return in less than 4-5 years. If the capital employed in the direct trade can employ only 1/3 or 1/4 domestic industry, the capital employed in the round-about trade can employ but 1/4 or 1/5 of that industry. At some ports, a credit is given to the foreign correspondents who buy their tobacco. At London, this credit is commonly sold for ready money. “The rule is, Weigh and pay.”

At London, the final returns of the round-about trade are more distant than the returns from America by the time the goods lie unsold in the warehouse.

Had the tobacco of the colonies not been confined to the British market, very little of it would probably have come to us than necessary. Instead of using the surplus tobacco from the colonies to buy the foreign goods she wants at home, she would probably use her own produce. Instead of being entirely suited to one great market as at present, that produce would probably have been fitted to many smaller markets. Instead of one great round-about foreign trade of consumption, Great Britain would probably have carried on many small direct foreign trades. Because of the frequency of the returns, probably 1/3 or 1/4 of the capital presently employed in this great round-about trade might have been sufficient to carry on all those small direct trades. It might have= kept an equal quantity of British industry constantly employed equally supported Great Britain’s annual produce. Since this trade would be supported by a much smaller capital, there would have been a large spare capital for other purposes= To improve the lands To increase the manufactures To extend the commerce of Great Britain To compete with other British capitals employed in all those different ways To reduce the profit rate in them all To give a greater superiority to Great Britain in all of them over other countries.