try, it would be of more advantage to England; a direct foreign trade being more advantageous than a roundabout one, p. 125. Though Great Britain were excluded from the Portugal trade, it would find no difficulty in purchasing its annual supplies of gold and silver; for the annual supplies of gold in Portugal must be sent abroad, where Great Britain might buy it at a little more expense than she could at first hand in Portugal. Almost all our gold and silver is said to come from Portugal with other nations the balance of trade is either against us, or not much in our favour. But the more gold we import from one country, the less we must necessarily import from others. The effectual demand for gold is limited to a certain quantity. The more gold annually imported from some particular countries, over and above what is requisite for plate and coin, the more must be exported to other countries, and the more the balance of trade will appear to be in our favour with some countries, and the more against us with others. It was upon the silly notion that England could not subsist without the trade of Portugal that France and Spain once combined to exclude British ships from the ports of Portugal. The loss of this trade would have embarrassed our merchants for a year or two; but we should have been freed from the burden of supporting a very weak ally; and in this would have consisted all the inconvenience which England would have suffered from this notable piece of commercial policy, pp. 126-27.

The great annual importation of gold and silver is neither for the purpose of plate nor of coin, but of foreign trade, which can be carried on better by means of these metals than of almost any other goods. They are the universal instruments of commerce, and are easily conveyed from place to place. In facilitating the roundabout foreign trades of consumption which are carried on in Great Britain consists the principal

advantages of the Portugal trade. The new plate made by goldsmiths is, for the most part, made from other old plate melted down, so that the addition made to the whole plate of the kingdom cannot be very great. It is the same case with the coin. While there is an evident profit in melting new guineas, the operations of the mint will be like the web of Penelope, the work that is done in the day will be undone in the night. But were the people who carry their gold and silver to the mint to pay for the coinage, it would add to the value of the metals. Coined gold would be more valuable than uncoined. The seignorage, if it was not exorbitant, would add to the bullion the whole value of the duty. But if the duty was exorbitant, it would encourage false coining. A seignorage will diminish the profit of melting down new coin, which always arises from the difference between the quantity of bullion which the common currency ought to contain, and that which it does really contain. A seignorage is, therefore, the most effectual way to prevent the melting or exporting of coin. The law for the encouragement of the coinage, by rendering it duty free for a limited time, was enacted during the reign of Charles II. In 1769 it was rendered perpetual in complaisance to the Bank of England, who supposed it their interest that the coinage should be at the expense of government rather than at their own. This may perhaps be found to be a mistake. If there was a reasonable seignorage, while at the same time the coin contained its full standard weight, whatever the bank might lose in seignorage they would gain upon the price of bullion, and vice versâ, pp. 129-32.

When the tax upon a commodity is so moderate as not to encourage smuggling, the merchant who deals in it, though he advances, does not properly pay the tax. The tax is finally paid by the consumer. But money is a commodity with regard to which every man is a

merchant. Nobody buys it but in order to sell again, and in this there is, properly, no last purchaser or consumer. When the tax upon coinage, therefore, is so moderate as not to encourage false coining, though everybody advances the tax, nobody finally pays it, because everybody gets it back in the advanced value of coin. A moderate seignorage, therefore, would not augment the expense of the bank, and the want of it. does not diminish it. The government, when it defrays the expense of coinage, incurs expense, and loses revenue, and nobody is benefited by this useless piece of public generosity, which in case of any degradation of the gold coin might even cause considerable loss to the Bank of England, the only company which sends any considerable quantity of bullion to the mint,' pp. 132-34.

CHAPTER VII.

Of Colonies.2

PART I.

Of the motives for establishing new Colonies.

THE interest which occasioned the first settlement of the European colonies in America and the West Indies was not so plain and distinct as that which directed the establishment of those of ancient Greece and Rome. The states of Greece possessed, each of them, but a small territory, and when the people in any one of them

1 No wonder. The Bank of England must always keep a considerable stock of gold, and may just as well keep it in the cellars of the Mint as in its own, whilst other companies and private persons who lie under no such necessity would lose the interest during the necessary delay of the Mint.

2 For a list of works bearing on this subject, see M'Culloch's note, p. 250 of his edition of Wealth of Nations.

multiplied beyond what that territory could maintain, a part were sent in quest of a new habitation, in some distant part of the world. The mother city considered the colony as an emancipated child, entitled to great favour, and owing in return much respect, but subject to no direct authority or jurisdiction, pp. 134, 135.

Rome was founded upon an agrarian law. The course of human affairs deranged the original division, and threw the lands of many families into the possession of a single person. Hence the law restricting the quantity of land which any citizen could possess to about 350 English acres. This law was soon neglected, and the inequality of fortunes went on continually increasing. The greater part of the citizens had no land, and had scarce any other means of subsistence but the bounties of the candidates at the annual electious. Excited by the tribunes, the people became clamorous to get land. To satisfy them, the rich frequently proposed to send out a new colony to some of the conquered provinces of Italy, subject to the jurisdiction of the mother city. Roman colonies were different from the Greek ones, being rather plantations and garrisons than free cities. Both institutions derive their origin from necessity, or from evident utility, pp. 135-37.

The establishment of the European colonies in America and the West Indies arose from no necessity; and though the utility which has resulted from them has been great, it is not so evident. The Venetians, during the fourteenth and fifteenth centuries, carried on an advantageous commerce in East India goods which they purchased in Egypt. The profits of the Venetians tempted the avidity of the Portuguese. In 1497 Vasco de Gama sailed from Lisbon, and in eleven months arrived upon the coast of Hindostan, and thus completed a course of discoveries that had been steadily pursued for nearly a

1 For an account of the trade of Europeans with India from the earliest times, see Robertson, Dissertation on India.

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century. Some years before this, Columbus, a Genoese pilot, formed the daring project of sailing to the East Indies by the West; and after a voyage of two or three months, he discovered the Bahama Islands, and the Island of St. Domingo. This he at first mistook for China. In consequence of this mistake of Columbus, the name of Indies has stuck to those countries ever since.2 These countries were represented to the court of Spain as of great consequence, though in the animal and vegetable productions of the soil there was, at that time, nothing which could justify such a representation of them. Columbus turned his view towards their minerals, and he supposed that he had found a full compensation for the insignificancy of the other two kingdoms. He accordingly proposed that the half of the gold and silver that should be found there should belong to the crown. But when the natives were stripped of their ornaments, and it became necessary to dig for these metals in the mines, there was no possibility of paying this tax, and it was at length reduced to a twentieth part of the gross produce of the gold mines. All the other enterprises of the Spaniards in the New World seem to have been prompted by the love of gold, pp. 137-41.

No projects are more ruinous than the search after new gold and silver mines. They ought not, therefore, to meet with any extraordinary encouragements from the prudent lawgiver who desires to increase the capital of his nation: he should not turn towards them a greater share of that capital than what would go to them of its own accord. Though the judgment of

For an account of this long course of discovery, see Helps, Spanish America, and Heeren, Europe and its Colonies.

2 See the authorities above quoted, and for a very full and elegant account of his achievements, Life and Voyages of Christopher Columbus, by Washington Irving.

Robertson's classical History of America and Helps's Spanish America furnish full information with reference to the Spanish Colonies.