What is the literal and also the figurative meaning of Benjamin Franklin's "Rules by Which a Great Empire May Be Reduced to a Small One"?  

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In "Rules by Which a Great Empire May Be Reduced to a Small One," Benjamin Franklin literally indicates those areas that will make great empires into small ones.  Franklin offers advice to the reader concerning the effective ruling of a large territory, from taking care to secure the borders of a great empire to allowing the different parts of the empire a degree of freedom.  Franklin addresses his text to a minister who presumably wants to reduce his dominion.

Figuratively speaking, Franklin is also being very tongue-in-cheek in his phraseology.  Usually when indicating a list of rules, it would be in the aspiration of some larger goal (i.e. winning a game).  Instead, Franklin uses the phrasing to illustrate a goal that is the opposite -- a great empire does not want to fall, or be reduced to a small one.

In another way, Franklin is intimating that these rules are "rules" which apply to the British Empire, particularly in the wake of the American Revolution.  Franklin is getting a dig in at the British.  Many of the rules to which Franklin refers  pertain to the British.  Franklin references the arrival of collectors to oversee tax collection, in much the same way that the British sent officials to the colonies to oversee the collection of taxes.

Franklin literally provides a set of rules for a great empire to become a small one, but figuratively his list can be read as much more than that.  It uses irony to subtlety bring the British colonies under criticism, and it is very effective in doing so.

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