Let us, therefore, conclude, that the monopoly of colonial trade is a method of commerce as defective as that of privileged companies and corporations, and ought to be universally condemned for the interest of public and private wealth.

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CHAP. VIII.

Of Treaties of Commerce.

HAD nations at all times possessed correct notions of the circulation of the produce of labour or commerce, they never would have thought of confining it within the extent of a country, and frequently within a separate district of the same empire.

But almost all having at first imagined that it was advantageous for them to insulate themselves, to refuse communicating with other nations, and to keep their means and their resources undivided; it happened that, in proportion as political economy made any progress, enlightened nations availed themselves of every circumstance calculated to open a market for their produce among other nations, and to introduce new means of exchange into their own country.

Accordingly, treaties of commerce have been en`tered into by certain nations for the mutual exchange of the produce of their labour. Are such treaties favourable, or detrimental to the progress of public and private wealth?

The principles established in this work render the solution of this question extremely easy.

When treaties of commerce are limited to the establishing of a trade between two countries, which before had no dealings with each other, such treaties are evidently beneficial to both countries, and must accelerate the progress of their labour, industry, and wealth.

But when these treaties are exclusive; when, while they allow the circulation of the produce of the labour of the two nations, they exclude the circulation of the produce of other countries, or only tolerate it on burthensome conditions; they are less beneficial, because they establish a monopoly which must lower the price of productions with regard to the producers, and raise it with regard to the consumers ; and, consequently, they discourage production by diminishing consumption. The trade, under such circumstances, is not very profitable; yet it is more so than if the treaty had not taken place at all.

All questions, therefore, concerning a trade effected by commercial treaties are of the same nature as those concerning monopolies, and receive the same solution. It is a constant truth, that the limits imposed to trade, whatever may be their nature, are more or less fatal, and that trade is the more profitable and advantageous, the less it is confined and obstructed, and the more it is general,

CHAP. IX.

Of Exchanges and the Balance of Trade.

ALL nations have endeavoured to ascertain their share in the advantages derived from the circulation of the produce of general labour, their proportion of trade to that of other nations, and the extent of relative and absolute power gained through that circulation. Their inquiries were not dictated by an idle curiosity, or an ambitious ostentation; they were instigated by the hope of discovering rules to be directed in by their commercial concerns with other countries. It was supposed that, by restricting these concerns with nations to which commerce is profitable, and multiplying them with those to which it proves disadvantageous, greater benefits would be derived from trade. A particular attention was therefore bestowed upon the balance of trade, and upon the exchange with different places and different countries.

But experience, that great crucible of error and truth, has taught the most superstitious that they were running after vain illusions; that the information to which they attach so much importance, is concealed under an impenetrable cloud; and that, after all, any commerce between two nations is always advantageous to both, though in unequal degrees.

It appears, at first sight, that an accurate register of

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all the commodities exported, with the designation of their destination, and of those imported, with the designation of the place of their origin, ought to afford every information that can possibly be desired concerning the nature and effects of foreign trade in a given country. But it ought to have been remembered, that such registers state only the material quantity of the goods exported and imported, and that their declared value is never conformable to their true value. It was, however, supposed, that truth might be approximated within a certain distance : but experience has shewn, that such valuations differ about seventy per cent. from the true value; and hence it is evident, that any calculation on- such grounds is impossible. But the same has happened on this subject which generally takes place in such The impossibility of ascertaining by the balance of trade the rate of profit derived from foreign commerce, has led to the belief that such balances of trade are good for nothing. This inference appears as unreasonable as the hopes which had been conceived. Although the balance of trade cannot give the exact results of the circulation of the produce of every country, it may be of service to judge of its acceleration or obstruction, to lead an attentive and enlightened observer to discover the causes of either, and to suggest the means which may prevent its impediments and increase its beneficial effects. I therefore think the balance of exports and imports of great importance; it may afford much valuable information concerning the progressive, stationary, or retrograde state of national wealth.

cases.

The subject of exchanges is involved in still more inaccuracy, obscurity, and fallacy, than the balance of trade.'

Adam Smith has so clearly discussed this matter, that I cannot do better than quote what he states on the subject.

When," says he, "the exchange between two places, such as London and Paris, is at par, it is said to be a sign that the debts due from London to Paris are compensated by those due from Paris to London. On the contrary, when a premium is paid at London for a bill upon Paris, it is said to be a sign that the debts due from London to Paris are not compensated by those due from Paris to London; but that a balance in money must be sent out from the latter place, for the risk, trouble, and expence of exporting which, the premium is both demanded and given.

"But several causes destroy this consequence.

"1. We cannot always judge of the value of the current money of different countries by the standard of their respective mints. In some it is léss worn, clipt, and otherwise degenerated from that standard. But the value of the current coin of every country, compared with that of any other country, is in proportion not to the quantity of pure silver which it ought to contain, but to that which it actually does contain.

"2. In some countries, the expense of coinage is defrayed by the government; in others, it is defrayed by the private people, who carry their bullion to the mint; and the government even derives some revenue