The Value of Colonies
- The Value of Colonies
Footnotes
1. Thucydides, II, 27.
2. Quoted, Beard, The Rise of American Civilization, I, p. 723.
3. E.g., Sir William Petty, Verbum Sapienti, chap. ii.
4. This was the opinion of Josiah Child.
5. Wealth of Nations (Everyman ed.), I, p. 376.
6. On the other hand, the argument of some Socialists that colonial trade is of benefit only to the capitalist class, or even to a few capitalists, because only a few people engage in it, or are affected by it, seems to me not well founded. It sometimes commits the error referred to by J. S. Mill, of “fastening attention on the fortunes acquired by particular merchants” in considering the benefits of foreign trade. The fortune can be acquired, however, only by exchanging goods and services of the home land for those of the colony, in some way or other, and so whatever benefits there are become distributed in large part among people who are not members of the capitalist or entrepreneur classes. Thus, the advantage, whatever it may be, of a colonial empire to the shipping industry is not confined to the shipowners, but is distributed to seamen, shipbuilders, and so to innumerable others. In a similar way the benefits derived by a particular industry from a protective duty are not confined to the investors in the industry, or the entrepreneurs, but are shared, such as they are, among all who derive their incomes from the industry. Even if we consider a mere transfer of capital to a colony, such as investment in a rubber plantation, the capital could be transferred, in the end, only by selling something whose production would involve the distribution of income to others than capitalists.
The point made above rests upon the fact that a good many fields of investment, in the social sense of the word, including some of the most important, are, even in a capitalist economy, excluded from exploitation by private capital. If those fields are relatively under-exploited from the social standpoint, the investment which is most profitable in the capitalistic sense will not be the most profitable socially. In the language of Professor Pigou, the marginal private net product will not equal the marginal social net product, and, on our particular assumptions, waste results. This waste could be avoided only by a government policy which would absorb into home investment of the necessary sorts some of the capital which would otherwise go for colonial exploitation. This is, indeed, a sort of “socialistic” ground for regarding imperialism as the last refuge of a wasteful capitalism, but it is a different ground from the other.
7. The inclusion of the Dominion as well as the colonial trade is justified, and indeed necessary, because the Dominions are, in fact, areas of preferential trade, as well as the colonies, though the political basis of the preference is different.
8. The point that colonial possessions are of little value because only in rare instances do colonies possess monopolies of important commodities, is even Jess substantial, since it is not necessary to have a monopoly of an article in order to derive an advantage from trading in it. Where monopoly exists the advantage of preferential trade is, of course, even greater.
9. Such special regulations are, of course, becoming more common.
