The Effects of Monopoly on the Nation

¹⁴³ The monopoly hinders the country’s capital from:

• maintaining so great a quantity of productive labour as it would otherwise maintain
• affording so great a revenue to its industrious people as it would otherwise afford.

The wages of labour is one great original source of revenue for them.

• The monopoly renders wages always less abundant than natural.

Capital can be increased only by savings from revenue.

¹⁴⁴ By raising mercantile profits, the monopoly discourages land improvement.

The profit of improvement depends on the difference between:

• what the land actually produces and
• what it can be made to produce through the application of capital.

If this difference makes capital produce more profit than when it is used in any mercantile employment, then land improvement will draw capital from all mercantile employments.

• If the profit is less, then mercantile employments will draw capital from land improvement.

Whatever raises the rate of mercantile profit lessens the superiority, or increases the inferiority of the profit of land improvement.

• The one case hinders capital from going to improvement.
• The other case draws capital from it.

The rent of land is another great original source of revenue.

• By discouraging improvement, the monopoly retards the natural increase of rent.
• By raising the profit rate, the monopoly keeps up the market interest rate higher than it otherwise would be.

But the price of land is in proportion to the rent which it affords.

• The price of land falls as interest rates rise and rises as interest rate falls.

The monopoly hurts the landlord’s interest by retarding the natural increase of:

• his rent
• the price of his land, relative to its rent

¹⁴⁵ The monopoly raises the mercantile profit rate and increases the gain of our merchants.

• But it obstructs the natural increase of capital.
• It reduces the total revenue derived by the citizens from the profits of stock.

A small profit on a great capital generally affords a greater revenue than a great profit on a small one.

The monopoly raises the profit rate but hinders the total profit from rising so high as it otherwise would do.

¹⁴⁶ The original sources of revenue are wages, rent, and profits.

The monopoly renders them all much less abundant than they otherwise would be.

“To promote the little interest of one little order of men in one country, it hurts the interest of all other orders of men in that country, and of all men in all other countries.”

¹⁴⁷ It is solely by raising the ordinary profit rate that the monopoly has proved advantageous to any order of men.

• The high rate of profit has one effect inseparable and more fatal than all its bad effects to the country combined.
• The high rate of profit seems every where to destroy that parsimony natural to the character of the merchant.

When profits are high, parsimony seems unsuitable to the affluence of his situation.

But the owners of the great mercantile capitals are the leaders and conductors of the industry of every nation.

Their example has more influence on the manners of its industrious people than any other order of men.

If his employer is attentive and parsimonious, the workman is very likely to be so too

But if the master is dissolute and disorderly, the servant will follow his master’s example.

Accumulation is thus prevented among the masters of industrious people.

The funds for maintaining productive labour receive no increase from the revenue of the masters who should naturally increase them the most.

The capital of the country gradually dwindles away.

The quantity of productive labour maintained in it grows less every day.

Have the exorbitant profits of the merchants of Cadiz and Lisbon increased the capital of Spain and Portugal?

“Have they alleviated the poverty, have they promoted the industry of those two beggarly countries?”

Those exorbitant profits seem insufficient to keep up the capitals on which they were made.

Every day, foreign capitals are intruding more and more into the trade of Cadiz and Lisbon.

The Spaniards and Portuguese endeavour every day to strengthen their absurd monopoly to expel those foreign capitals from a trade which their own capitals grows less capable of carrying on.

The conduct and character of merchants of Cadiz and Lisbon merchants are very different from those of Amsterdam.

The high and low profits of stock affect them differently.

London merchants have not yet become such magnificent lords as those of Cadiz and Lisbon.

They neither are as attentive and parsimonious burghers as those of Amsterdam. They are supposed to be richer than the merchants of Cadiz and Lisbon but not so rich as those of Amsterdam. Their profit rate is much lower than that of Cadiz and Lisbon and much higher than that of Amsterdam.

Light come, light go, says the proverb.

The ordinary tone of expence seems to be regulated everywhere by the facility of getting money to spend, not so much by the real ability of spending.

¹⁴⁸ The single advantage the monopoly brings to a single order of men is in many ways hurtful to the country’s interest.