"The division of labor is limited by the extent of the market.Before any man, or any set of men, can in common prudence devote themselves to any particular employment, they must be assured that they can dispose of the commodity which their exertions in the prosecution of that employment will produce.In situations where there is not a sufficient number of customers near at hand to consume the manufactured article, or where it cannot with advantage be transported to those at a distance, the making of that article can never become the exclusive employment of any man, or set of men.When, therefore, there is not a sufficiently extensive market, labor cannot be so much subdivided as it otherwise would, and its productive powers are cramped for want of room in which to exert themselves.The increase of capital extends the market by adding to the numbers and general opulence of the community, and by facilitating the modes of communication between all parts of the territories which it possesses, and this extending market gives, in turn, additional celerity to the increase of capital."To this accumulation of capital, this continual parsimonious saving out of revenue, the principle that, according to our author, animates the whole progressive movement of the society, he assigns the following limit.
"When the stocks of many rich merchants are turned into the same trade, their mutual competition naturally tends to lower its profit; and, when there is a like increase of stock in all the different trades carried on in the same society, the same competition must produce the same effect on them all.As, then, the profits of capital continually lower with its augmentation, there must arrive a period when they will be so diminished as to render it no longer possible to save any part of them." When this period arrives, the country would then, I think, according to our author, have acquired its full complement of riches; every branch of business therein having the greatest quantity of capital that could be employed in it.
"But besides the immediate produce of its own industry, a country that has made any progress in the accumulation of capital, and consequent division of labor, and facility of production, comes to furnish other countries with many articles, and, in exchange, to receive from them many other articles.
This forms another source from whence the necessaries, conveniences, and amusements of nations may be supplied.A country is enabled to do this from two causes.The soil, climate, and natural productions of countries are various.Hence one country has generally peculiar advantages over others in manufacturing certain articles.Again, one country exceeds another in the amount of capital it possesses, and consequently in the skill with which its industry is applied; hence, also, there are articles which it can produce in greater perfection than other countries, with greater facility, or both.
"This is the origin, and these are the advantages, of foreign trade.
By means of it two or more nations are enabled to exchange with one another what would otherwise have been to each superfluous for what, through these exchanges, procures to each an additional amount of the necessaries, conveniences, and amusements of life.
"It is capital which enables them to effect these beneficial exchanges, and the amount of them must be limited by the amount of capital that can be embarked in the employment." What quantity of capital this employment may absorb, what quantity of productions may thus be exchanged between different countries, is a problem which our author has not, as far as Iperceive, given us certain data for solving.Some of his followers think it illimitable, but it is clear that this was not his opinion, and that, though he did not assign the limits, he nevertheless believed there were limits to it.Accordingly he makes another channel, through which, when these are filled, it may flow, gathering still volume to itself, and adding to the national prosperity as it proceeds.
"This is what is called the carrying trade, the carrying the surplus produce of one nation to another.Two countries may have products which it would be advantageous for them to exchange, but they may not have capital sufficient to provide the means necessary for effecting this exchange.
In such case, another nation having a superabundant capital may embark part of it in performing this office for them, and into this employment a country so circumstanced naturally directs such a capital.When the capital stock of any country is increased in such a degree, that it cannot be all employed in supplying the consumption, and supporting the productive labor of that particular country, the surplus part of it naturally disgorges itself into the carrying trade, and is employed in performing the same offices to other countries." (17)It may be observed, however, with regard to this last employment, which our author assigns to capital, that it implies a superiority in the progress of the productive industry of the country enjoying the trade, which cannot be calculated on beforehand.A nation can only possess a carrying trade, from other nations wanting foreign trade.Though it may, therefore, form a source of gain to a particular nation, it seems not so properly to be reckoned among the causes of the wealth of nations; for, with the general progress of that wealth, according to the theory of our author, it would decay.
The ingenious theory, of the main elements of which, I have thus attempted to delineate the outlines, its eminent author has illustrated with a felicity of observation, and laboriousness of research, which it were as vain to attempt to depreciate.as superfluous to praise.He conceives that it establishes the following conclusions.
