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exclusively from the proportion of the demand, or the proportion of the abundance or scarcity of the produce ; and all vary concerning the conduet to be observed in case the proporțion should be unfavourable. Some pretend that commerce is no-wise injured by an unfavourable balance, as it always offers some advantages ; others, on the contrary, think that commerce in that case might be shackled, restricted, and eyen entirely suppressed.

The same uncertainty prevails concerning the influence of money and credit upon commerce; their nature, and the principles by which they are guided; the institutions which are favourable or prejudicial to them; and the causes which obstruct or paralyse their effects.

Nor is there more unanimity respecting the question : which is the most useful and most profitable commerce? Some authors think that the inland trade is the most beneficial; but the greatest number regard foreign trade as the only profitable commerce.

The controversy in fine, has extended to the dif. ferent modes of trading. Almost all nations have adopted corporate bodies, privileged companies, colonies, and treaties of commerce, as the most advantageous mode ; and almost all authors have unanimously condemned these different modes as pernicious and prejudicial to commerce.

Amidst this variety of systems upon each ramification of this part of political economy, to which theory is the preference to be given as the most profitable to wealth? This is the subject which we intend to discuss in this book,

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Of the Causes of the Circulation of the Produce of


WHETHER the circulation of the produce of labour oves its origin to the desire to sell at high prices and purchase cheap, or to the propensity to truck and barter, or to the emulation and eagerness to excel, is of little importance. Be its source love of novelity, avarice, or vanity, the result is the same.

No one parts with the produce of his labour, and puts it into circulation, but in the expectation that it will procure him more food, or greater conveniencies, comforts and enjoyments; and every one labours so much the harder, as his hopes are but seldom disappointed. Hence, the farther circulation extends, or the larger the market and the more that market offers varied productions and new enjoyments, the more does labour increase in intensity and activity, the more is its produce multiplied, and the more is public and private wealth enlarged and augmented.

But is this propensity of mankind to enjoyment the work of nature or of commerce ? is it innate, or does it owe its existence merely to the attractions of commerce ?

Dr. Quesnay says, that “ prices and commerce are not owing to merchants; on the contrary, it is the pos

sibility of commerce and prices which gives birth to merchants."*

But what was commerce before the existence of merchants, and how is the possibility of trade and prices to be conceived at a time when there was nothing to be bought or sold ?

Before the existence of merchants, exchanges were as unprofitable to individuals as useless to wealth. They rarely extended beyond the limits of any particular place; and, confined within such narrow bounds, they had none of those attributes of circulation, which accelerate its motion and diffuse its benefits among all producers and consumers. The assertion therefore is strictly true, that at that time neither prices nor commerce were possible.

It was only when individuals undertook to export and import the produce of the soil and industry from one place to the other, and when they substituted exchanges to barter and sales to exchanges, that circulation actually commenced, that prices were formed, and commerce began to exist. This circulation was extended, developed, and increased in proportion as merchants multiplied in boroughs, towns, and cities; as they corresponded with each other, and invited individuals and nations to partake of the gifts which nature and labour have diffused in all countries and all climes. Commerce reached the highest degree of intensity, when the genius of the arts launched it on the vast expanse of the seas, guided it across inhospitáble deserts, and helped it to overcome the obstacles which nature and men opposed to its progress.

* Physiocratie, Obs. 6. and the note of Max. 9,

Thus the sources of the circulation of the produce of labour may be traced in the passion for enjoyment in the efforts of commerce, and in the genius of the arts. To their combined action commerce owes its impulse, its progress, and its success; and it will be seen in the following chapters, that it cannot pass the point which it has reached, unless these sources be further developed and improved.


Of the Value of the Produce of Labour.

WHEN men first wished to exchange the produce of their labour, either directly or indirectly, by means of merchants, they must have experienced a considerable difficulty in fixing its reciprocal value; and it is not easy to conceive how the difficulty was conquered. Perhaps, as they exchanged only objects of no value to the exchanger, they did not attach much importance to the matter, and every one was satisfied with receiving an useful commodity for an object of no value to himself.

But when the division of labour, says Adam Smith, had converted every man as it were into a merchant, and society itself grew to be what is properly called a commercial society, * no one was inclined to part

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* Wealth of Nations, vol. i. book i. chap. 4.

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with his produce but for an equivalent. To fix this equivalent, it was necessary to know the value of what was given and what was received ; and it must be confessed, that the difficulty of hitting upon the means of doing so must have been very considerable.

Dr. Quesnay pretends, that “the wants of the consumers, and their means of supplying them, originally determine the price of productions at their first sale."*

No doubt, this was the way resorted to at first in every exchange. It may reasonably be supposed, that every one who carried the surplus of his produce to market, must have ascertained its value from the number or quantity of other commodities he was offered in exchange.

But this must have ceased, when produce was no longer materially measured one by the other; when the equivalent was a generally preferred produce; and particularly when credit rendered even the actual conveyance of this preferred produce unnecessary.

Mankind must then have felt the want of a standard to judge of the relative value of any production compared to the preferred produce, and to ascertain how far the exchange provided every producer with a just equivalent. This standard of value has been the object of the inquiries of all who have written on subjects connected with political economy: “but,” as has been justly observed by the ingenious Galiani, “men have successfully discovered an immutable measure of time, space, and motion, the three great measures of

* Physiocratie, Obs. 6.

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