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labour of the country, or the increase of the annual revenue of its inhabitants.” + Thus Adam Smith is of an opinion directly opposite to that of Dr. Quesnay concerning the nature and effects of foreign trade. He acknowledges that this trade is useful, and yields profits to the nations that devote themselves to it: but he pretends that these profits are in no proportion with those resulting from the home-trade; and he grounds his opinion on the following argument: * “ The capital which is employed in purchasing, in one part of the country, in order to sell in another, the produce of the industry of that country, generally replaces, by every such operation, two distinct capitals that had both been employed in the agriculture or manufactures of that country; and thereby enables them to continue that employment. When it sends out from the residence of the merchant a certain value of commodities, it generally brings back in return at least an equal value of other commodities. When both are the produce of domestic industry, it necessarily replaces, by every such operation, two distinct capitals which had both been employed in supporting productive labour, and thereby enables them to continue that support.—The capital employed in purchasing foreign goods for home-consumption, when this purchase is made with the produce of domestic industry, replaces too, by every such operation, two distinct capitals : but one of them only is employed in supporting domestic industry. The capital which sends British goods to * Wealth of Nations, London, 1805, vol. ii. page 244.

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Portugal, and brings back Portugese goods to GreatBritain, replaces, by every such operation, only one British capital. The other is a Portuguese capital. Though, therefore, the returns of the foreign trade of consumption should be as quick as those of the hometrade, the capital employed in it will give but one half of the encouragement to the industry or productive labour of the country. “But the returns of the foreign trade of consumption are very seldom so quick as those of the hometrade. The returns of the home-trade generally come in before the end of the year, and sometimes three or four times in the year. The returns of the foreign trade of consumption seldom come in before the end of the year, and sometimes not till after two or three years. A capital therefore employed in the hometrade will sometimes make twelve operations, or be sent out and returned twelve times, before a capital employed in the foreign trade of consumption has made one. If therefore the capitals are equal, the one will give four-and-twenty times more encouragement and support to the industry of the country than the other.”% This doctrine of Adam Smith is, no doubt, very plausible, and discovers much sagacity; hence it has seduced all who have written after him on subjects connected with political economy. All have adopted it unreservedly and indiscriminately, and I must confess that the unanimous approbation with which this doctrine has been crowned, has made me carefully

* Wealth of Nations, vol. ii. pages 63, 64.

weigh the motives that induced me to doubt its correctness: but after having seriously meditated on the subject, I thought that private considerations ought not to prevent my stating my doubts on this important point of political economy, and I flatter myself that, were I even mistaken, my error will find grace before the most enthusiastic adherents of Adam Smith, because they will be convinced that I have only yielded to the love of truth and to the interests of the science. In order to be certain whether, as is asserted by Adam Smith, the capital employed in circulating the raw and manufactured produce of a country supports four-and-twenty times more national labour when that circulation takes place at home than when the productions are sent abroad, we must fix the amount of that capital, follow its operations, and endeavour to ascertain its results. Let us suppose that the capital of the trade which replaces the capital destined to support the labour of a country, amounts to one-thousand millions of French livres, and that the stock which commerce devotes to circulate this one-thousand millions amounts to twohundred millions; the whole capital which supports the labour of the country will, in this hypothesis, amount to twelve-hundred millions. As soon as commerce circulates the produce of the soil and industry of a country, the labour of the country has been performed ; and it matters very little to that labour, whether its produce be consumed abroad or at home; both consumptions restore to the labour of the nation the one-thousand millions destined for its support.

Under the supposition that this one-thousand millions is consumed at home, it is re-imbursed by the national income ; when it is consumed abroad it is re-imbursed by the income of the foreign country : for, abroad, as at home, consumption can take place only by means of an equivalent especially reserved for the labour, the produce of which has been consumed. In both cases, therefore, no part of the one-thousand millions destined for the support of national labour undergoes the smallest diminution. As for the two-hundred millions employed in the labour of circulating the produce, it matters not whether it is paid for the circulation abroad or at home; in both cases, the amount is repaid by the national or foreign consumers, and consequently it always remains entire with regard to the labour of the country. It therefore appears quite clear, that the capital destined to support the labour of a country cannot be impaired, whether its produce be consumed at home or abroad; and in this sense Dr. Quesnay was right, when he said that in the foreign trade there is neither loss nor gain on either side. But if the matter be considered in another point of view; if we ask whether the consumption of the produce of the soil and industry of a country be most advantageous to public and private wealth, when it takes place at home, or when it takes place abroad ; the nature of the question is altered; it then becomes of the greatest interest, and affords results much more useful and much more productive for the science. When the produce of national labour is consumed in the country, its consumption is not very active,

because, as Montesquieu observes, people of the same climate have nearly the same productions, and find in them none but common and ordinary enjoyments : consumption never goes beyond their wants, because the productions are not capable of exciting their desires, gratifying their sensuality, or flattering their vanity. All that can be wished for of such a consumption is, that it shall regularly absorb the produce of national labour. In such a state of things, it is very fortunate for the nation, if its wealth continue stationary, as it is more likely to be retrograding than progressive, When, on the contrary, the produce of national labour is consumed abroad, the returns, which consist of new, various, and more abundant productions, are generally sought after, their consumption is rapid, labour and industry redouble their efforts to procure them, and both private and public wealth make an astonishing progress. Moreover, the returns for the exported produce are always more considerable than that produce; that is, the foreign country gives a greater quantity of produce than it receives, and this surplus consequently increases the capital destined for the support of national wealth. The characteristic of foreign commerce is to offer to all nations the produce which suits them best, and consequently to make them pay dearer for it than what it is worth in the place where it is produced. Hence it follows, that foreign commerce affords every nation sure means of selling dear the produce of its own labour, and purchasing cheap the produce of foreign labour. This phenomenon has been discovered by Adam Smith, and he explains it thus,

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