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England exercised an absolute dominion over general circulation, or commerce.

It is therefore without any foundation that Adam Smith has tranformed the English act of Navigation into an act of safety. It is evidently nothing but an act of hostility and ambition, incapable of forming a just exception to the necessity of a free circulation of the produce of general labour.

The second case, which, according to Adam Smith, ought to induce a nation to restrict the liberty of commerce, is when the produce of foreign industry is not burthened with a tax equal to that imposed upon the produce of inland industry. He thinks it is then reasonable that an equal tax should be imposed upon the like produce of foreign industry, because foreign industry would else have a certain advantage over the produce of national industry.

The second limitation of the fredom of trade has led Adam Smith to examine whether it ought to be extended to the produce imported from countries which impose no tax upon objects of the first necessity, whilst in the country into which they are imported the necessaries of life are burthened with a tax. And although this second case appears every way similar to the first, his decision is precisely the contrary to what it had been in the former case. Thearguments on which he grounds this diversity of opinion, are :

1. That it might always be known with great exactness how far the price of such a commodity could be enhanced by such a tax: but how far the general enhancement of the price of labour might affect the

price of every different commodity about which labour was employed, could never be known with any tolerable exactness.

2. That taxes upon the necessaries of life have nearly the same effect upon the circumstances of the people, as a poor soil and a bad climate; and as in this case it would be absurd to direct the people in what manner they ought to employ their capitals and industry ; it would be equally absurd, on account of an artificial scarcity arising from such taxes,: To be left to accommodate their industry to their situation, and to find out those employments in which, notwithstanding their unfavourable circumstances, they might have some advantage either in the home or in the foreign market, is what in both cases would evidently be most for their advantage.

3. That, to lay a tax upon the foreign produce, because the home produce is already overburthened with taxes, and to make the natives pay dear for the greater part of other cominodities, because the necessaries of life are dear, are certainly two most absurd ways of making amends.*

But in spite of Adam Smith's endeavours to establish a difference between the two cases, I think there is none : to burthen the produce of foreign industry with taxes equal to those imposed upon the produce of national industry, and not to impose any tax upon the raw produce of a foreign country, although the produce of the soil at home is burthened with a tax, appears a contradiction. If, in the first case, national, industry would be discouraged, national agriculture would be alike discouraged in the second. Consequently, if the equality is to be restored in one case, it ought to be so in the other,

206. * Wealth of Nations ; London, 1805; vol. ii. b. iv. ch. 2,p.

The question therefore remains, and we must still examine, whether nations ought to refuse circulating the raw and manufactured produce of other countries, under the pretence that the exchangeable value of their productions does not afford them equivalents equal to those which the foreign producer receives. I think the question is completely answered by what I have stated above.

If the equivalent obtained by commerce does not repay the national producer for what his commodity has cost him to produce, he will cease producing it, and employ bis capital and industry in some other labour in which he is enabled to stand the competition, and to reap profits equal to those of the foreign trader; or if all productions are burthened with taxes to such a degree, that none can staud the competition with foreign productions, not even in the honie-market, government in that case is so bad, that it becomes a matter of indispensable necessity to stop all kiod of foreign commerce.

Finally, Adam Smith examines how far it may be proper to continue the free importation of certain foreign goods, when the foreign nation restrains, by high duties or prohibitions, the importation of some of our manufactured produce into their country; and he justly decides, that when there is no probability that retaliation will procure the repeal of such prohibitions, it is a bad method of compensating the injury done to

certain classes of our people, to do another injury ourselves, not only to those classes, but to almost all classes of the community. Such law would impose a real tax upon the whole country, not in favour of that particular class of workmen who were injured, but of some other class.

Thus, of all the motives which may induce a nation to prohibit the importation of the produce of other countries, there is but one that is reasonable and just, because it is necessary ; I mean when the government of our own country is so defective, that none of our home-productions can stand a competition with foreign productions even in the home-market; when national industry is not capable of being stimulated by the rivalship of foreign industry; and when the people, being discouraged and debased, abandon themselves to sloth and misery. Except this case, foreign commerce or general circulation is beneficial, useful, and profitable to all, and contributes, if not with equal, at least with certain success, to the progress of public and private wealth.

The author says :

Autrement c'est imposer une taxe sur tout le pays en faveur de la classe d ouvriers qui fournit les produits prohibés ;" which is perfectly correct : but Adam Smith skews particularly, that the workmen who suffer by our neighbour's prohibition are not benefited by ours, which is the main point of the question. (Wealth of Nations, 1805, vol. ii, book iv. chap. 2, pages 207-210.)---It is this point which the framers of the famous English Orders in Council, by which it was intended to retaliate upon France, appear not to have sufficiently considered. -T.

CHAP. III.

Of the influence of Money and Credit upon the Cir.

culation of the Produce of Labour.

As soon as mankind discovered that commodities have no value but what is determined by their being exchanged, they must easily have perceived that this value is always in proportion to the extent of the competition ; that is to say, that the more a produce is sought for, the more is its exchangeable value enhanced : of course, every producer would carry his productions to the place where the competition was the most considerable, and consequently the market of the borough must have been preferred to the village-market, that of the town to the borough's, that of the capital to the town's, and that of great fairs and staple cities to the market of capitals.

This direction of the circulation of the produce of labour is visibly the work of commerce; and it is exclusively to merchants that we are indebted for the benefits which it diffuses.

The interest of the producers and traders would, however, have been but imperfectly consulted, if on the most adyantageous spot for their exchanges they should have been unable to procure the commodities they wanted otherwise than by the actual interchange of raw and manufactured produce.

How many exchanges would they have been obliged to make

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