During the greater part of the sixteenth century, the Portuguese endeavoured to manage the trade to the East Indies in the same manner, by claiming the sole right of sailing in the Indian seas, on account of the merit of having first found out the road to them.The Dutch still continue to exclude all other European nations from any direct trade to their spice islands.Monopolies of this kind are evidently established against all other European nations, who are thereby not only excluded from a trade to which it might be convenient for them to turn some part of their stock, but are obliged to buy the goods which that trade deals in somewhat dearer than if they could import them themselves directly from the countries which produce them.
But since the fall of the power of Portugal, no European nation has claimed the exclusive right of sailing in the Indian seas, of which the principal ports are now open to the ships of all European nations.Except in Portugal, however, and within these few years in France, the trade to the East Indies has in every European country been subjected to an exclusive company.
Monopolies of this kind are properly established against the very nation which erects them.The greater part of that nation are thereby not only excluded from a trade to which it might be convenient for them to turn some part of their stock, but are obliged to buy the goods which that trade deals somewhat dearer than if it was open and free to all their countrymen.Since the establishment of the English East India Company, for example, the other inhabitants of England, over and above being excluded from the trade, must have paid in the price of the East India goods which they have consumed, not only for all the extraordinary profits which the company may have made upon those goods in consequence of their monopoly, but for all the extraordinary waste which the fraud and abuse, inseparable from the management of the affairs of so great a company, must necessarily have occasioned.The absurdity of this second kind of monopoly, therefore, is much more manifest than that of the first.
Both these kinds of monopolies derange more or less the natural distribution of the stock of the society; but they do not always derange it in the same way.
Monopolies of the first kind always attract to the particular trade in which they are established a greater proportion of the stock of the society than what would go to that trade of its own accord.
Monopolies of the second kind may sometimes attract stock towards the particular trade in which they are established, and sometimes repel it from that trade according to different circumstances.In poor countries they naturally attract towards that trade more stock than would otherwise go to it.In rich countries they naturally repel from it a good deal of stock which would otherwise go to it.
Such poor countries as Sweden and Denmark, for example, would probably have never sent a single ship to the East Indies had not the trade been subjected to an exclusive company.The establishment of such a company necessarily encourages adventurers.Their monopoly secures them against all competitors in the home market, and they have the same chance for foreign markets with the traders of other nations.Their monopoly shows them the certainty of a great profit upon a considerable quantity of goods, and the chance of a considerable profit upon a great quantity.Without such extraordinary encouragement, the poor traders of such poor countries would probably never have thought of hazarding their small capitals in so very distant and uncertain an adventure as the trade to the East Indies must naturally have appeared to them.
Such a rich country as Holland, on the contrary, would probably, in the case of a free trade, send many more ships to the East Indies than it actually does.The limited stock of the Dutch East India Company probably repels from that trade many great mercantile capitals which would otherwise go to it.The mercantile capital of Holland is so great that it is, as it were, continually overflowing, sometimes into the public funds of foreign countries, sometimes into loans to private traders and adventurers of foreign countries, sometimes into the most round-about foreign trades of consumption, and sometimes into the carrying trade.All near employments being completely filled up, all the capital which can be placed in them with any tolerable profit being already placed in them, the capital of Holland necessarily flows towards the most distant employments.The trade to the East Indies, if it were altogether free, would probably absorb the greater part of this redundant capital.The East Indies offer a market for the manufactures of Europe and for the gold and silver as well as for several other productions of America greater and more extensive than both Europe and America put together.
