Adam Smith – “Of Colonies” from The Wealth of Nations, 1776

Adam Smith – “Of Colonies” from The Wealth of Nations, 1776

“Of the advantages which Europe has derived from the discovery of America” – from the Wealth of Nations, Book 4, Chapter 7, Part 3

  1. General advantages
  2. Particular advantages

 

  1. General advantages
    • Increase of enjoyments (increase in variety of goods)
    • Augmentation of industry (increase in productivity)
    • Surplus of America is imported to Europe & provides new commodities previously unavailable
      • For pleasure, ornaments or for industry
    • Augments colonizers themselves (Spain, Portugal, France & England)
      • Also those who trade with colonies & colonizers (Austrian Flanders & Germany)
      • Provides a more extensive market for their surplusses
      • Not so evident for Poland & Hungary
        • But they do buy some new world goods & this expands aggregate demand for them & can expand trade in other ways within their countries
    • America’s industry helps out countries it will never trade with because it increase the welfare & productivity of itself & its trading partner, which will help non-trading-partner countries
      • Circulation of commodities helps America as well
  2. Particular Advantages
    • Common advantages every empire receives from its dominions
    • Peculiar advantages of specific dominions
    • It’s uncertain what the long-term effects of what the discovery of America & the passage to East Indies around the Cape of Good Hope will be
      • So far, it unites distant parts of the world by allowing trade of necessities & luxuries & encourages increasing industrial productivity
    • Mercantile system seeks to make money off trade & manufacturing rather than land cultivation
      • Focus is on towns & not countryside
      • Encourages coastal towns to focus on trade & manufacturing for the rest of the world to benefit everything they touch.

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