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commonly allowed to be inseparable with regard to commerce; and as private men receive greater security, in the possession of their trade and riches, from the power of the public ; so the public becomes powerful in proportion to the opulence and extensive commerce of private men.” + “ Like sale, like production ;” says Dr. Quesnay +. “That commerce is necessary,” says Galiani, “ for the support of life and the happiness of nations, is well known. Commerce owes its rise to the necessity of exchanging the surplus of our commodities for those we stand in need of, and may be defined, the interchange of the produce of general labour to provide for the wants of all. In the wretched state of mature, every one thinks only of himself: but commerce leads to social life, in which every one thinks and labours for all, not from a principle of piety and virtue, but from interest and utility. ..." “ The end of social economy,” says Genovesi, “is, 1st, an increased population ; 2dly, wealth; 3dly, natural and civil happiness; 4thly, the grandeur, glory, and welfare of the sovereign. “Of all the means capable of attaining this end, there is not one more efficient than commerce, which avails iself of human avidity, as the most powerful promoter of all social advantages.” S
* IIume’s Essays, Edinb. 1804, vol. i. Essay on Commerce, page 271.
+ Physiocratic, Max. 16.
† Della Moneta.
§ Lezioni di Econom. Civile, part i, chap. 16.
“As it is the power of exchanging,” says Adam Smith, “ that gives occasion to the division of labour, so the extent of this division must always be limited by the extent of that power, or, in other words, by the extent of the market.” + There is, therefore, no doubt remaining concerning the extreme importance of commerce or the circulation of the produce of labour, not respecting its intimate connection with individual wealth and national power. All writers on political economy are unanimous in this respect; there is not any one point more firmly established. But with regard to the principle, nature, progress, method, different modes, and numerous effects of this productive and beneficial circulation, opinions vary, systems differ, and the science fluctuates between a number of contradictory theories. The origin of commerce is sought for by some in the avarice of mankind + ; by others in their propensity to truck, barter, and exchange one thing for another f ; and by others, in their vanity S. Nor are authors better agreed concerning the laws which determine the respective value of the produce exchanged by commerce. Some make it depend upon a fixed and invariable standard ; others derive it
* Wealth of Nations, London, 1805, vol. i. book i. chap. page 27.
+ Physiocratic, Obs. 6.
† Health of Nations, by .fdam Smith, 1805, vol. i. book i. chap. 2, page 21.
Ś Principcs d’Economic Politique, par Canard, page Sã.
exclusively from the proportion of the demand, or the proportion of the abundance or scarcity of the produce; and all vary concerning the conduct to be observed in case the proportion should be unfavourable. Some pretend that commerce is no-wise injured by an unfavourable balance, as it always offers some advantages; others, on the contrary, think that commerce in that case ought to be shackled, restricted, and even entirely suppressed. The same uncertainty prevails concerning the influence of money and credit upon commerce ; their nature, and the principles by which they are guided ; the institutions which are favourable or prejudicial to them ; and the causes which obstruct or paralyse their effects. f • * Nor is there more unanimity respecting the question: which is the most useful and most profitable commerce : Some authors think that the inland trade is the most beneficial ; but the greatest number regard foreign trade as the only profitable commerce. The controversy, in fine, has extended to the different modes of trading. Almost all nations have adopted corporate bodies, privileged companies, colonies, and frcaties of commerce, as the most advantageous mode; and almost all authors have unanimously condemned these different modes as pernicious and prejudicial to commerce. Amidst this variety of systems upon each ramification of this part of political economy, to which theory is the preference to be given as the most profitable to wealth This is the subject which we intend to discuss in this book.
Of the Causes of the Circulation of the Produce of
WHETHER the circulation of the produce of labour owes its origin to the desire to sell at high prices and purchase cheap, or to the propensity to truck and barter, or to the emulation and eagerness to excel, is of little importance. Be its source love of novelty, avarice, or vanity, the result is the same. No one parts with the produce of his labour, and puts it into circulation, but in the expectation that it will procure him more food, or greater conveniencies, comforts, and enjoyments; and every one labours so much the harder, as his hopes are but seldom disappointed. Hence, the farther circulation extends, or the larger the market and the more that market offers varied productions and new enjoyments, the more does labour increase in intensity and activity, the more is its produce multiplied, and the more is public and private wealth enlarged and augmented. But is this propensity of mankind to enjoyment the work of nature or of commerce 3 is it innate, or does it owe its existence merely to the attractions of commerce 2 Dr. Quesnay says, that “ prices and commerce are not owing to merchants : on the contrary, it is the possibility of commerce and prices which gives birth to merchants.”% e But what was commerce before the existence of merchants, and how is the possibility of trade and prices to be conceived at a time when there was nothing to be bought or sold 2 Before the existence of merchants, exchanges were as unprofitable to individuals as useless to wealth. They rarely extended beyond the limits of any particular place ; and, confined within such narrow bounds, they had none of those attributes of circulation, which accelerate its motion and diffuse its benefits among all producers and consumers. The assertion therefore is strictly true, that at that time neither prices nor commerce were possible. It was only when individuals undertook to axport and import the produce of the soil and industry from one place to the other, and when they substituted exchanges to barter and sales to exchanges, that circulation actually commenced, that prices were formed, and commerce began to exist. This circulation was extended, developed, and increased in proportion as merchants multiplied in boroughs, towns, and cities; as they corresponded with each other, and invited individuals and nations to partake of the gifts which nature and labour have diffused in all countries and all climes. Commerce reached the highest degree of intensity, when the genius of the arts launched it on the vast expanse of the seas, guided it across inhospi