duction, and neither the respective quantities which
may be produced, nor the competition amongst the purchasers.

According to Adam Smith the colony trade, by being one in which British
capital only can be employed, has raised the rate of profits of all
other trades; and as in his opinion high profits, as well as high wages,
raise the prices of commodities, the monopoly of the colony trade has
been, according to him, injurious to the mother country; as it has
diminished her power of selling manufactured commodities as cheap as
other countries. He says, that "in consequence of the monopoly, the
increase of the colony trade has not so much occasioned an addition to
the trade which Great Britain had before, as a total change in its
direction. Secondly, this monopoly has necessarily contributed to keep
up the rate of profit in all the different branches of British trade,
higher than it naturally would have been, had all nations been allowed a
free trade to the British colonies." "But whatever raises in any country
the ordinary rate of profit higher than it otherwise would be,
necessarily subjects that country both to an absolute, and to a relative
disadvantage in every branch of trade of which she has not the monopoly.
It subjects her to an absolute disadvantage, because in such branches of
trade, her merchants cannot get this greater profit without selling
dearer than they otherwise would do, both the goods of foreign countries
which they import into their own, and the goods of their own country
which they export to foreign countries. Their own country must both buy
dearer and sell dearer; must both buy less and sell less; must both
enjoy less and produce less than she otherwise would do."

"Our merchants frequently complain of the high wages of British labour
as the cause of their manufactures being undersold in foreign markets;
but they are silent about the high profits of stock. They complain of
the extravagant gain of other people, but they say nothing of their
own. The high profits of British stock, however, may contribute towards
raising the price of British manufacture in many cases as much, and in
some perhaps more, than the high wages of British labour."

I allow that the monopoly of the colony trade will change, and often
prejudicially, the direction of capital; but from what I have already
said on the subject of profits, it will be seen that any change from one
foreign trade to another, or from home to foreign