trade must tend; and that a country has attained its object when that end is accomplished. It is even difficult to conceive that the smallest doubt can be raised on this point, and the question viewed in any other light. Indeed, it was long considered in that light only by the most esteemed writers on political economy. Prudence," says D'Avenant, "is generally wrong when it pretends to guide nature. The various products of different soils and countries is an indication that Providence intended they should be helpful to each other, and mutually supply the necessities of one another"* The benefit of trade does not consist in the profit of the home-merchant, but in the clear gain the nation acquires through the exchange of its raw and manufactured produce for the produce of other countries. Elsewhere he remarks, "that the foreign trade is the basis of the home-trade, that it causes consumption, and increases population in all countries where it flourishes and is encouraged." A great part of our domestic trade depends upon our foreign commerce; and we must sink in one, as the other decreases, Finally, he says, in another place, "it is an undeniable truth, that a rise in the value of a commodity of a penny per pound, proceeding from foreign expence, does more enrich the body of the nation than a rise of three-pence per pound occasioned only by our own consumption." Sir James Stuart observes, that "when foreign * Vol. i. page 104. + Ibidem, page 385. trade ceases, the internal mass of wealth cannot be augmented."* "A nation," says Forbonnais, "gains the amount of its sales to foreigners, and loses the amount of the purchases it makes abroad.'t Lastly, Montesquieu adds to these opinions a reflexion which is entitled to notice. "The nations of the same climate," says he, "having nearly the same productions, do not stand so much in need of trading with each other as those of a different climate. Hence the trade of Europe was formerly less extensive than it is at present. "As foreign trade is carried on with benefit," observes Beccaria, "that is, as it receives a greater quantity of values, it serves as a more powerful incentive, and is more efficacious to increase the sum of productions. Besides, it burthens the subjects of other countries with a considerable part of the taxes paid to the state." Were I to collect the opinions of all the writers who have sanctioned, supported, or adopted the sys * Inquiry into the Principles of Political Economy, book ii. chap. 26. But I have not been able to trace this passage in the quoted chapter. In the 24th chapter of the same book, of the edition of 1805, it is said: "When foreign trade is at an end, the number of inhabitants must be reduced to the proportion of home subsist ence."-T. + Elémens du Commerce, chap. i.--I do not quote this opinion as correct, but as a proof of the system of the best writers on com merce. ‡ Element. di Econom. Publ.-Genovesi, Carli, Verri, Palmieri and Corniani, speak nearly in the same terms respecting foreign trade. tem favourable to foreign trade, I should never have done. Dr. Quesnay is the first who attempted to combat that system. "In a free concurrence of foreign trade," says he, "there is but an exchange of equal value for equal value, without either loss or gain on either side, and a nation cannot. have a more advantageous commerce than its home-trade.*** Elsewhere he adds, "it would be necessary first to enrich the foreign purchasers, to extend the sale of your manufactured produce abroad, and to enrich yourselves in your turn by this trade at the expence of foreigners, &c. Foreign trade is but a last resource to nations, for which their home-trade is not sufficient profitably to dispose of the productions of their country."† Adam Smith has, like Dr. Quesnay, combated the system favourable to foreign trade, and extolled the home-trade as the most beneficial to national wealth : but his opinion has been influenced by motives not only different, but even opposed to those of Dr. Quesnay. "That trade," observes Adam Smith, "which, without force or constraint, is naturally and regularly carried on between any two places, is always advantageous, though not always equally so to both. By advantage or gain," he adds, "I understand, not the increase of the quantity of gold and silver, but that of the exchangeable value of the annual produce of the land and * Physiocratie, Observation 5. + Physiocratie, page 345. 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 * Wealth of Nations, London, 1805, vol. ii. page 244. sends British goods to Portugal, and brings back Portuguese goods to Great-Britain, replaces, by eve ry 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 home-trade, 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. |