BY restraining, either by high duties or by absolute prohibitions, the importation of such
goods from foreign countries as can be produced at home, the monopoly of the home market
is more or less secured to the domestic industry employed in producing them. Thus the
prohibition of importing either live cattle or salt provisions from foreign countries secures to
the graziers of Great Britain the monopoly of the home market for butcher's meat. The high
duties upon the importation of corn, which in times of moderate plenty amount to a
prohibition, give a like advantage to the growers of that commodity. The prohibition of the
importation of foreign woollens is equally favourable to the woollen manufacturers. The silk
manufacture, though altogether employed upon foreign materials, has lately obtained the same
advantage. The linen manufacture has not yet obtained it, but is making great strides towards it. Many other sorts of manufacturers have, in the same manner, obtained in Great Britain,
either altogether or very nearly, a monopoly against their countrymen. The variety of goods of
which the importation into Great Britain is prohibited, either absolutely, or under certain
circumstances, greatly exceeds what can easily be suspected by those who are not well
acquainted with the laws of the customs.
That this monopoly of the home market frequently gives great encouragement to that
particular species of industry which enjoys it, and frequently turns towards that employment a
greater share of both the labour and stock of the society than would otherwise have gone to it,
cannot be doubted. But whether it tends either to increase the general industry of the society,
or to give it the most advantageous direction, is not, perhaps, altogether so evident.
The general industry of the society never can exceed what the capital of the society can
employ. As the number of workmen that can be kept in employment by any particular person
must bear a certain proportion to his capital, so the number of those that can be continually
employed by all the members of a great society must bear a certain proportion to the whole
capital of that society, and never can exceed that proportion. No regulation of commerce can
increase the quantity of industry in any society beyond what its capital can maintain. It can
only divert a part of it into a direction into which it might not otherwise have gone; and it is
by no means certain that this artificial direction is likely to be more advantageous to the
society than that into which it would have gone of its own accord.
Every individual is continually exerting himself to find out the most advantageous
employment for whatever capital he can command. It is his own advantage, indeed, and not
that of the society, which he has in view. But the study of his own advantage naturally, or
rather necessarily, leads him to prefer that employment which is most advantageous to the
society.
First, every individual endeavours to employ his capital as near home as he can, and
consequently as much as he can in the support of domestic industry; provided always that he
can thereby obtain the ordinary, or not a great deal less than the ordinary profits of stock.
Thus, upon equal or nearly equal profits, every wholesale merchant naturally prefers the
home trade to the foreign trade of consumption, and the foreign trade of consumption to the
carrying trade. In the home trade his capital is never so long out of his sight as it frequently is
in the foreign trade of consumption. He can know better the character and situation of the
persons whom he trusts, and if he should happen to be deceived, he knows better the laws of
the country from which he must seek redress. In the carrying trade, the capital of the merchant
is, as it were, divided between two foreign countries, and no part of it is ever necessarily
brought home, or placed under his own immediate view and command. The capital which an
Amsterdam merchant employs in carrying corn from Konigsberg to Lisbon, and fruit and
wine from Lisbon to Konigsberg, must generally be the one half of it at Konigsberg and the
other half at Lisbon. No part of it need ever come to Amsterdam. The natural residence of
such a merchant should either be at Konigsberg or Lisbon, and it can only be some very
particular circumstances which can make him prefer the residence of Amsterdam. The
uneasiness, however, which he feels at being separated so far from his capital generally
determines him to bring part both of the Konigsberg goods which he destines for the market
of Lisbon, and of the Lisbon goods which he destines for that of Konigsberg, to Amsterdam:
and though this necessarily subjects him to a double charge of loading and unloading, as well
as to the payment of some duties and customs, yet for the sake of having some part of his
capital always under his own view and command, he willingly submits to this extraordinary
charge; and it is in this manner that every country which has any considerable share of the
carrying trade becomes always the emporium, or general market, for the goods of all the
different countries whose trade it carries on. The merchant, in order to save a second loading
and unloading, endeavours always to sell in the home market as much of the goods of all
those different countries as he can, and thus, so far as he can, to convert his carrying trade into a foreign trade of consumption. A merchant, in the same manner, who is engaged in the
foreign trade of consumption, when he collects goods for foreign markets, will always be
glad, upon equal or nearly equal profits, to sell as great a part of them at home as he can. He
saves himself the risk and trouble of exportation, when, so far as he can, he thus converts his
foreign trade of consumption into a home trade. Home is in this manner the centre, if I may
say so, round which the capitals of the inhabitants of every country are continually
circulating, and towards which they are always tending, though by particular causes they may
sometimes be driven off and repelled from it towards more distant employments. But a capital
employed in the home trade, it has already been shown, necessarily puts into motion a greater
quantity of domestic industry, and gives revenue and employment to a greater number of the
inhabitants of the country, than an equal capital employed in the foreign trade of
consumption: and one employed in the foreign trade of consumption has the same advantage
over an equal capital employed in the carrying trade. Upon equal, or only nearly equal profits,
therefore, every individual naturally inclines to employ his capital in the manner in which it is
likely to afford the greatest support to domestic industry, and to give revenue and employment
to the greatest number of people of his own country.
Secondly, every individual who employs his capital in the support of domestic industry,
necessarily endeavours so to direct that industry that its produce may be of the greatest
possible value.
The produce of industry is what it adds to the subject or materials upon which it is
employed. In proportion as the value of this produce is great or small, so will likewise be the
profits of the employer. But it is only for the sake of profit that any man employs a capital in
the support of industry; and he will always, therefore, endeavour to employ it in the support of
that industry of which the produce is likely to be of the greatest value, or to exchange for the
greatest quantity either of money or of other goods.
But the annual revenue of every society is always precisely equal to the exchangeable value
of the whole annual produce of its industry, or rather is precisely the same thing with that
exchangeable value. As every individual, therefore, endeavours as much as he can both to
employ his capital in the support of domestic industry, and so to direct that industry that its
produce may be of the greatest value; every individual necessarily labours to render the
annual reve nue of the society as great as he can. He generally, indeed, neither intends to
promote the public interest, nor knows how much he is promoting it. By preferring the
support of domestic to that of foreign industry, he intends only his own security; and by
directing that industry in such a manner as its produce may be of the greatest value, he intends
only his own gain, and he is in this, as in many other cases, led by an invisible hand to
promote an end which was no part of his intention. Nor is it always the worse for the society
that it was no part of it. By pursuing his own interest he frequently promotes that of the
society more effectually than when he really intends to promote it. I have never known much
good done by those who affected to trade for the public good. It is an affectation, indeed, not
very common among merchants, and very few words need be employed in dissuading them
from it.