Smith finds great potential in
colonies and colonial wealth generation possibilities. He suggests there are
three things that greatly help a colony to properly prosper by their commerce. One,
there needs to be a “general liberty of trade” as Smith describes it. The
producers of goods need to have access to markets and the knowledge that those
markets will treat them fairly and promptly. They need to be paid for their
produce or goods in a consistent, reasonable and as timely a manner as
possible. Two, the less interference, constraint or cost of moving goods and
produce the better. Profits can quickly be lost with high or frequent duties or
tariffs on transportation. Further, limits on exporting will greatly affect the
ability to move goods and receive the best price. In France during and just prior
to the time of Smith, farmers were barred or greatly hindered from moving
grains from one district to another thereby forcing artificial prices and production
based on district, not on best production practices. Smith was very aware of
the need to move produce and goods easily without hindrance by laws or
officials and with a minimum of costs (other than transportation expenses).
Third, and this is the most important, Smith suggests that there must be equal
and impartial administration of justice. There needs to be an equality under
the law regarding land, land use, selling and producing goods. He suggests that
these are the most important things for allowing improvement and prosperity. The laws must be administered in a fair,
reasonable and consistent manner.
So we return to the initial
statement by Smith in Part 1 – “Great Britain derives nothing but loss from the
dominion which she assumes over her colonies”. He has a novel solution. He
suggests that Great Britain voluntarily give up authority over her colonies.
Let them elect their own legislatures and establish their own laws. They can
make war or peace as they see fit and trade with whomever they desire on
whatever terms they can establish. Let them charge whatever prices for their
goods and produce markets will bear. He suggests four advantages to Great
Britain. First, she immediately is freed from the cost of providing a standing
army and naval support. If the colonies want protection they can contract to
provide such at some agreed on payment thus providing a revenue source for
Great Britain’s military operations. Second, as a recognized government the
colonies could enter into commerce treaties that would be of greater benefit to
the majority of Great Britain at the expense of the current monopoly powers. The
merchants with monopolies would lose their lucrative contracts but the general populous
would benefit from cheaper goods and produce. Third, Great Britain would
generate a great deal of good will with the colonists and her own citizens. The
prospect of self-government is a potent medicine for the colonists and better
and cheaper goods and produce a strong inducement for the citizens of Great
Britain. Fourth, the colonies may in fact favor and even support Great Britain
in war. Smith suggests that instead of the colonists being “turbulent and factious
subjects” they would become “our most faithful, affectionate, and generous
allies”. Here then is Smith’s answer to the problem of the colonies, however he
suggests that most if not all great powers will not establish colonies just to
let them become independent because it goes against the very nature and pride
of a nation. He also suggests that the act of freeing a colony is “contrary to
the private interest of the governing part of it”. He suggests that those who
govern want to control, if only for the chance to build wealth or distinction
for themselves or other personal interests. He suggests that keen self-interest
is stronger than altruistic nation motives. So, regardless of the potential
upside benefit the current status quo no matter how costly will likely prevail.
Next paper, Part 3. If Great
Britain won’t give the colonies their independence how do they get paid for
their expenses and costs and just what that might lead to.
