The Effects of Monopoly -- Spain and Portugal

¹²⁷ The monopoly of the colony trade forced some British capital from all foreign trade of consumption to a carrying trade. It forced it from supporting British industry towards supporting the industry of the colonies and other countries.

¹²⁸ For example, the goods purchased with the great tobacco surplus of 82,000 hogsheads are not all consumed in Great Britain.

Part of them such as linen from Germany and Holland are returned to the colonies for their consumption. The British capital which buys the tobacco which is exchanged for linen is withdrawn from supporting British industry. It instead supports the industry of the colonies and the industry of Germany and Holland.

¹²⁹ The monopoly of the colony trade broke that natural balance of British industry.

British industry was turned to suit one great market instead of many small markets.

Her commerce ran principally in one great channel instead of running in many small channels.

Her industry and commerce was made less secure.

Her whole political body was made less healthy.

In her present condition, Great Britain resembles an unwholesome body with some overgrown vital parts.

• Her body is liable to many dangerous disorders which affect unproportioned bodies.
• Her blood vessel was artificially swelled beyond natural by the industry and commerce forced to circulate in it.

A small stop in that great blood-vessel will very likely bring the most dangerous disorders on the whole political body.

The expectation of a rupture with the colonies has struck the British with more terror than the Spanish armada or a French invasion.

This terror rendered the repeal of the stamp act a popular measure among the merchants, at least.

If we were totally excluded from the colony market just for a few years:

• Most of our merchants foresee an entire stop to their trade
• Most of our master manufacturers foresee the entire ruin of their business
• Most of our workmen foresee an end of their employment

A rupture with any of our European neighbours will cause some stop or interruption in the employments of some of these orders of people.

It is foreseen,without any such emotion.

If blood circulation is stopped in the smaller vessels, it easily disgorges itself into the greater vessels without creating any dangerous disorder.

“but, when it is stopped in any of the greater vessels, convulsions, apoplexy, or death, are the immediate and unavoidable consequences.”

Its overgrown manufactures were artificially raised through bounties or the monopoly of the home and colony markets.

If one of those overgrown manufactures is interrupted, it frequently causes:

• A mutiny and disorder alarming to government
• An embarrassment to the deliberations of the legislature.

How great would be the disorder and confusion caused by a sudden and entire stop in the employment of so many of our principal manufacturers?

¹³⁰ A moderate and gradual relaxation of the British exclusive trade to the colonies, until it is rendered free, is the only expedient which can deliver her from this danger in the future.

Only this can enable her to withdraw some of her capital from this overgrown employment.

It can turn her capital towards other employments, though with less profit.

By gradually reducing one industry and increasing the rest, this relaxation can restore her industry to that natural and healthy proportion which perfect liberty necessarily establishes.

Perfect liberty can alone preserve this natural balance.

Opening the colony trade all at once to all nations might create some temporary inconvenience.

It might create a great permanent loss to most of those presently engaged in it. Even the sudden loss of the employment of the ships which import the surplus tobacco might alone be felt very sensibly.

“Such are the unfortunate effects of all the regulations of the mercantile system!”

They introduce very dangerous disorders into the political body Those disorders are often difficult to remedy without creating greater short term disorders.

We must leave the following to the wisdom of future statesmen and legislators to determine=

How the colony trade should be gradually opened

Which restraints should be taken away first and which one taken away last.

How the natural system of perfect liberty and justice should be gradually restored.

¹³¹ Great Britain has now been excluded from the trade with the 12 North American provinces for more than a year (from December 1, 1774).

Five unforeseen events have very fortunately concurred to hinder Great Britain from feeling this total exclusion from the colony trade:

The North American colonies prepared themselves for their non-importation agreement.

• They drained Great Britain completely of all the commodities fit for their market

This year, the extraordinary demand of the Spanish Flota drained Germany and the North of many commodities which competed with British manufactures.

• Linen was one of such commodities

The peace between Russia and Turkey created an extraordinary demand from the Turkey market

• Turkey was very poorly supplied during its distress while a Russian fleet was cruising in the Archipelago

The rising year on year demand of Northern Europe for British manufactures

The late partition and consequential pacification of Poland.

• It opened the market of that great country
• This year it added an extraordinary demand for British manufactures.

All these events, except the fourth, were transitory and accidental.

The continued exclusion from the colony trade may still create some distress.

This distress will come gradually.

It will be felt much less severely than if it came all at once.

In the meantime, Great Britain’s industry and capital may find new employment and direction to prevent this distress from rising.

¹³² In all cases, the colony trade monopoly turned British capital from a foreign trade of consumption with a neighbouring country to a more distant country.

• In many cases, it turned British capital from a direct foreign trade of consumption into a round-about one.
• In some cases, it turned British capital from a foreign trade of consumption into a carrying trade.
• In all cases, it turned British capital from a direction where it could maintain more productive labour into one where it can maintain fewer.

By suiting only to one market so much of British industry and commerce, the monopoly rendered them less secure than if they were accommodated to more markets.