be credited, that a country which annually exports commodities inferior in value to what it imports, which, we will suppose, purchases abroad goods to the amount of ten millions, and exports produce amounting only to five millions, which of course contracts every year a debt of five millions; how is it to be credited, I say, that such a country should cover this excess of expenditure abroad with an equal or superior excess of its income at home 2 The phenomenon is, however, explained in the simplest manner. The excess of foreign produce imported into a country above the productions exported is not always consumed in the country as part of the national income, but as part of the circulating capital destined to augment the fixed capital which produces a revenue. These five millions are consequently a loan borrowed from foreigners, to increase the annual labour, to embark in undertakings the abundant produce of which does more than cover the loan and the interest or profit due to the creditors. In this instance alone, it is true that an unfavourable balance of trade is not a proof of declining wealth, and may even prove not injurious to the progressive prosperity of a country. Were the excess of imports above exports consumed as a revenue, there is no doubt but this excess of consumption would ultimately occasion the ruin of the country. And this consideration enforces still more the necessity of endeavouring to find out a way to know the balance of annual income and annual consumption,

Is there any such way that can be relied upon as certain and positive 2 There is none. We must as yet be contented with mere conjectures built upon an augmented population, and particularly upon the increase of the industrious classes * and towns, upon the good condition of agricultural buildings, upon the number of acres cleared or inclosed, and upon the facility with which the public contributions are collected. To those conjectures some add those resulting from the rate of interest of money : but this conjecture is, in my opinion, erroneous and delusive. A high rate of interest is not always a proof of the declining wealth of a country; on the contrary, it is a proof of its prosperity when this prosperity is progressive. The interest of money must always be very high in countries whose prosperity is progressive, because its agriculture and manufactures, increasing with its population, are always requiring fresh capitals, the demand for which necessarily keeps the rate of interest very high. A low rate of interest may likewise not be an infallible sign of the wealth of a country being progressive. “A low rate of interest,” says Swift, “the usual sign of the wealth of a state, may also be a sign of misery, when no one, for instance, wants to

* In the mercantile system there is a very simple way for nations to judge at all times of their population and prosperity; they need only to ascertain from time to time the numbers of their manufacturers.--Discours Fondamental sur la Population, par IIerren.


borrow, because there is neither industry nor commerce in the country.” +

To this observation of Swift's it might be added, that the case is exactly the same with a mere agricultural nation, whose industry has made little progress, and whose commerce is confined to the home-trade ; or even with a flourishing mation, the industry of which is stopped, and which is deprived of its foreign trade by extraordinary and prolonged circumstances. Surely, under these different suppositions, the rate of interest might be very low, and wealth yet be on the decline.

It is therefore without any foundation that a low rate of interest has hitherto been ranked among the signs that indicate the progressive, stationary, or retrograde condition of national wealth ; this criterion is imperfect, insufficient, and incapable of affording any correct information. The signs which we have pointed out are also merely conjectural ; yet they may lead to truth.

+ Short Piew of the State of Ireland, vol. i.


Conclusion of the Fourth Book.

The circulation of the produce of labour effected by commerce has its principle in the passion for enjoyment, which men gratify by interchanging the produce of their labour, industry, talents, knowledge, and genius. This circulation is more productive in proportion as it is less confined, more extensive, and more general. When it extends only from the country to the neighbouring towns, and from the towns to the country, it is slow, weak, and languid, because the produce which it offers to the consumers is ealculated only for the most ordinary wants of life. It gains in animation, activity, and usefulness, when it pervades every district, every town, every city, and the metropolis of every country, because it then circulates productions more numerous, more various, better calculated for the conveniency, comforts, and peculiar enjoyments of every country. It attains the highest pitch of grandeur and power, when in its course it embraces all climates, all countries, and all nations, because it then distributes to every consumer the produce of all soils, the productions of all kinds of industry, all the riches of nature and labour, and excites every desire, flatters every taste, and gratifies every caprice and every fancy. Commerce, in its various stages, bestows upon the different produce of labour a value constantly relative to the demand of the consumers and to the abundance or scarcity of the commodity. This value is always proportioned to the extent of the commerce, to the number of consumers, and to the variety of productions: but in fixing this value, which is sometimes uncertain and frequently arbitrary, commerce generally gives to every producer the equivalent of what his production has cost him. Were this indispensable condition not fulfilled, re-production would be at a stand, and circulation would lose its activity, and perhaps entirely cease. This condition once performed, commerce observes no other law in the distribution of equivalents, but the demand for and the abundance or scarcity of the commodity: and this law is always fluctuating, always uncertain, and consequently always unequal. But this inequality obstructs neither the activity nor the range of the circulation; it only affects the rate of profits; and a small profit is always preferable to none. Notwithstanding these advantages and the general interest which it must inspire, the circulation of the produce of labour would have met with but an indifferent success, had it not been for the assistance of a preferred produce, which every producer willingly takes at all times in exchange for its produce, because he is certain that the partiality or predilection which he entertains for that produce is common to the producers of all countries. When money has that indispensable and necessary character ; when it consists in a produce universally preferred, and for which all other productions are

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