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。
Every derangement of the natural distribution of stock is
necessarily hurtful to the society in which it takes place；
whether it be by repelling from a particular trade the stock
which would otherwise go to it； or by attracting towards a
particular trade that which would not otherwise come to it。 If；
without any exclusive company； the trade of Holland to the East
Indies would be greater than it actually is； that country must
suffer a considerable loss by part of its capital being excluded
from the employment most convenient for that part。 And in the
same manner； if； without an exclusive company； the trade of
Sweden and Denmark to the East Indies would be less than it
actually is； or； what perhaps is more probable； would not exist
at all； those two countries must likewise suffer a considerable
loss by part of their capital being drawn into an employment
which must be more or less unsuitable to their present
circumstances。 Better for them； perhaps； in their present
circumstances； to buy East India goods of other nations； even
though they should pay somewhat dearer； than to turn so great a
part of their small capital to so very distant a trade； in which
the returns are so very slow； in which that capital can maintain
so small a quantity of productive labour at home； where
productive labour is so much wanted； where so little is done； and
where so much is to do。
Though without an exclusive company； therefore； a particular
country should not be able to carry on any direct trade to the
East Indies； it will not from thence follow that such a company
ought to be established there； but only that such a country ought
not in these circumstances to trade directly to the East Indies。
That such companies are not in general necessary for carrying on
the East India trade is sufficiently demonstrated by the
experience of the Portuguese； who enjoyed almost the whole of it
for more than a century together without any exclusive company。
No private merchant； it has been said； could well have
capital sufficient to maintain factors and agents in the
different ports of the East Indies； in order to provide goods for
the ships which he might occasionally send thither； and yet；
unless he was able to do this； the difficulty of finding a cargo
might frequently make his ships lose the season for returning；
and the expense of so long a delay would not only eat up the
whole profit of the adventure； but frequently occasion a very
considerable loss。 This argument； however； if it proved anything
at all； would prove that no one great branch of trade could be
carried on without an exclusive company； which is contrary to the
experience of all nations。 There is no great branch of trade in
which the capital of any one private merchant is sufficient for
carrying on all the subordinate branches which must be carried
on； in order to carry on the principal one。 But when a nation is
ripe for any great branch of trade； some merchants naturally turn
their capitals towards the principal； and some towards the
subordinate branches of it； and though all the different branches
of it are in this manner carried on； yet it very seldom happens
that they are all carried on by the capital of one private
merchant。 If a nation； therefore； is ripe for the East India
trade； a certain portion of its capital will naturally divide
itself among all the different branches of that trade。 Some of
its merchants will find it for their interest to reside in the
East Indies； and to employ their capitals there in providing
goods for the ships which are to be sent out by other merchants
who reside in Europe。 The settlements which different European
nations have obtained in the East Indies； if they were taken from
the exclusive companies to which they at present belong and put
under the immediate protection of the sovereign； would render
this residence both safe and easy； at least to the merchants of
the particular nations to whom those settlements belong。 If at
any particular time that part of the capital of any country which
of its own accord tended and inclined； if I may say so； towards
the East India trade； was not sufficient for carrying on all
those different branches of it； it would be a proof that； at that
particular time； that country was not ripe for that trade； and
that it would do better to buy for some time； even at a higher
price； from other European nations； the East India goods it had
occasion for； than to import them itself directly from the East
Indies。 What it might lose by the high price of those goods could
seldom be equal to the loss which it would sustain by the
distraction of a large portion of its capital from other
employments more necessary； or more useful； or more suitable to
its circumstances and situation； than a direct trade to the East
Indies。
Though the Europeans possess many considerable settlements
both upon the coast of Africa and in the East Indies； they have
not yet established in either of those countries such numerous
and thriving colonies as those in the islands and continent of
America。 Africa； however； as well as several of the countries
comprehended under the general name of the East Indies； are
inhabited by barbarous nations。 But those nations were by no
means so weak and defenceless as the miserable and helpless
Americans； and in proportion to the natural fertility of the
countries which they inhabited； they were besides much more
populous。 The most barbarous nations either of Africa or of the
East Indies were shepherds； even the Hottentots were so。 But the
natives of every part of America； except Mexico and Peru； were
only hunters； and the difference is very great between the number
of shepherds and that of hunters whom the same extent of equally
fertile territory can maintain。 In Africa and the East Indies；
therefore； it was more difficult to displace the natives； and to
extend the European plantations over the greater part of the
lands of the original inhabitants。 The genius of exclusive
companies； besides； is unfavourable； it has already been
observed； to the growth of new colonies； and has probably been
the principal cause of the little progress which they have made
in the East Indies。 The Portuguese carried on the trade both to
Africa and the East Indies without any exclusive companies； and
their settlements at Congo； Angola； and Benguela on the coast of
Africa； and at Goa in the East Indies； though much depressed by
superstition and every sort of bad government； yet bear some
faint resemblance to the colonies of America； and are partly
inhabited by Portuguese who have been established there for
several generations。 The Dutch settlements at the Cape of Good
Hope and at Batavia are at present the most considerable colonies
which the Europeans have established either in Africa or in the
East Indies； and both these settlements are peculiarly fortunate
in their situation。 The Cape of Good Hope was inhabited by a race
of people almost as barbarous and quite as incapable of defending
themselves as the natives of America。 It is besides the halfway
house； if one may say so； between Europe and the East Indies； at
which almost every European ship makes some stay； both in going
and