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CHAP. V.

TRADE AND COMMERCE.-NAVIGATION LAWS.

Ír is no small proof of the growing liberality of the times, that government has been emboldened to investigate the principles of that commercial policy which had been matured by the ingenuity of a long succession of statesmen, and had been considered, as the common law of England has been designated to be, the perfection of reason; and, on finding some of those principles to be utterly erroneous, to recommend such necessary changes as were called for by the increased intelligence, as well as by the altered circumstances of the nation. The public mind, however, was not yet wholly prepared for such changes. The ancient policy of the kingdom had been a theme of praise in every British statesman's mouth, until it became an axiom of universal belief,-confirmed by the circumstance, that under that system our commerce had attained to extraordinary prosperity. There is not a more vulgar error than, when two things, having some visible affinity, co-exist, to conclude that they are respectively allied to each other as cause and effect; and it is, therefore, far from surprising that the commercial policy pursued by

Britain should, both by natives and fo- ́ reigners, have been held to be the cause of her commercial greatness. That, in some measure, the one was a cause of the other, we are prepared to concede; for we are not so transcendental as to believe that, in some respects, it did not operate to her advantage. But it remains to be shown by its advocates, that the ancient policy of England was, on the whole, more advantageous than injurious to her; second, that any virtue it possessed was inherent to it, and not derived from extraneous and transitory circumstances; and, third, granting, for argument's sake, that it worked well for a length of time, that, in the present state of trade, as it has been regulated by foreign governments, it could still be profitably, or even safely, persevered in.

The balance of trade was a notion which, for a long time, misled the whole of our statesmen. When a nation in its dealings with another exported more in value (market value of course) than she imported, the balance to be paid to her in money, was called the balance of trade; and by so much was she considered a gainer. Accord

ing to this view, gold was everything, and commodities as nothing, excepting in so far as they might procure a supply of the former; whereas, in point of fact, gold is as next to nothing, were it not that, as the representative of value, it may purchase commodities. We will suppose a country in which all things that can conduce to the wants, real and artificial, of its inhabitants, so greatly abound, that each has so large a portion of them, that he has no occasion to purchase from any of his neighbours. Such a people might justly be considered rich, though there should be no money among them. But suppose, what will ever be the case, that there is an inequality of wealth among a people-that some are deficient in commodities which others are largely possessed of, a commercial intercourse would necessarily spring up among them; and the use of money would be speedily discovered. An individual, call him A, purchasing from another, who may be called B, would most naturally pay him rather in money than in kind; but it may happen, that A has a commodity to dispose of such as B desires to purchase; in which case B would be no loser were he, instead of receiving a money payment for what, he has sold, to receive in exchange A's commodity at a fairly estimated value. Were he to prefer the money, the ba lance of trade, as it has been defined, would be in his favour; but then he would either have to dispense with the commodity which he stands in need of, or to disburse that money in purchasing it from some other. We shall suppose still farther, that A can afford to sell the commodity much cheaper than any other, and that the transfer of it from him to B may be most easily effected. In that case would it not be the extreme of folly in B, from his terror of the balance of trade not being in his favour, to decline accepting A's commodity in payment, and insisting

for money in preference; and then to go to a distance, and purchase the same article from some other at an extravagant price? His friends would naturally say to him, " If this article be necessary in the trade which you are conducting, why not obtain it at the cheapest rate? If you take money in preference to it, you must part with that money to obtain the article elsewhere at a greater cost. Consider, too, that the article is with you really more than equivalent to the money you mean to receive; for you have only to retail it at an advanced price, or enhance its value by working it up into some new form."

But we are supposing not one half of the insanity which B. may commit, by indulging his predilection for the balance of trade principle. He may thus reason with himself: "If the balance of trade be a good thing, the whole of a trade must be still better. I will sell for money what I produce; but I will purchase nothing. I shall have no out-goings of money; and, of course, will wax exceedingly rich. I will be my own tailor, shoemaker, hatter, baker, brewer, and butcher: nay more, I will raise my own mutton and beef, my own grain, and the articles necessary to clothe me." son acquainted with-we shall not say the principles of Political Economy, or the arcana of trade, but the commonest maxims of human life, it will be quite unnecessary to observe, that such a resolution would prove utterly ruinous to any individual adopting it.

To any per

Should, however, the whole individuals composing a nation adopt such a resolution, (and if it be a wise resolution for one, it must be so for all), the inevitable result would be, a total cessation of trade; the industry of an individual would be of no farther avail than that the fruits of it would support himself; there would be no accumulation of capital; but, on the contrary

what capital there was would infallibly be wasted.

As with the individuals composing a community, so it nearly is with the community of nations. Had each within the limits of its own territory all that could minister to its wants and desires, (and China stands much in that predicament,) there would be no necessity of foreign commerce among them; and money, excepting for the purposes of internal trade, would be quite superfluous. But each has its own peculiar wants, which the others can supply; and hence arises foreign commerce, or the interchange of commodities among nations. It is next to chimerical to suppose, that the mutual dealings of any two nations can be so exactly equal, but that there will be a balance due by the one to the other, which must, of course, be paid in that universal representative of value-money. But it far from follows, that the nation having that money to pay is a loser by the commerce. The other may not have purchased from it so largely as might have been wished; but still for its money paid away, it has received an equivalent in goods; which goods it would otherwise, perhaps, have had to purchase from some more remote quarter, and at an increased cost. Supposing such goods to be not destined for luxurious consumption, but to serve as the material of industry, they may more properly be considered an increment to the national wealth than even money itself. We shall take, as an example, the trade maintained between Great Britain and the United States of America, the balance of which is always decidedly against the former country. Has Britain, in consequence, been a loser by that trade? No. Her immense importations of cotton chiefly caused the balance of trade against her; but this cotton being worked up by her manufacturing industry into certain fabrics, it was sold in its mo

dified forms to foreigners, (including the Americans themselves,) at a greatly enhanced price, which far more than compensated for such balance; and did, in fact, constitute a most abundant source of the national wealth. This example shows as decidedly as a hundred examples could do, that an industrious nation cannot import foreign commodities too liberally.

If a nation (acting upon the absurd principle we have supposed of the individual B) resolve to purchase from no other that which, by any possibility, she can produce herself, so as to enlarge in her own favour the balance of trade; and especially, if she refuse to deal in the staple produce of another, because doing so might turn the balance of trade against her, the consequences are obvious. As real value, (we speak of it as opposed to money) is at the bottom of all commercial transactions and as, in such transactions, there must always be quid pro quo, it is morally certain and demonstrable that the nation we are supposing, by limiting her imports from the other, must submit to a consequent limitation of her exports; and that articles which she might purchase cheaply, and import easily, she will have to procure circuitously, and at a dearer rate. If Britain refuse, for example, to purchase from France her wines, France, as a necessary consequence, cannot well purchase from Britain her soft goods and hardwares. But this is not all. Nations too powerful and proud to submit to trade with another upon terms which being unequal are degrading to them, will be sure to defeat such selfish policy as that we are considering, by having recourse to direct retaliation; then non-intercourse succeeds to unequal intercourse; and the grasping avarice of the one is not only disappointed, but signally punished by the resentment of the other.

It may happen that the unequal system

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what capital there was would infallibly be wasted.

As with the individuals composing a community, so it nearly is with the community of nations. Had each within the limits of its own territory all that could minister to its wants and desires, (and China stands much in that predicament,) there would be no necessity of foreign commerce among them; and money, excepting for the purposes of internal trade, would be quite superfluous. But each has its own peculiar wants, which the others can supply; and hence arises foreign commerce, or the interchange of commodities among nations. It is next to chimerical to suppose, that the mutual dealings of any two nations can be so exactly equal, but that there will be a balance due by the one to the other, which must, of course, be paid in that universal representative of value-money. But it far from follows, that the nation having that money to pay is a loser by the commerce. The other may not have purchased from it so largely as might have been wished; but still for its money paid away, it has received an equivalent in goods; which goods it would otherwise, perhaps, have had to purchase from some more remote quarter, and at an increased cost. Supposing such goods to be not destined for luxurious consumption, but to serve as the material of industry, they may more properly be considered an increment to the national wealth than even money itself. We shall take, as an example, the trade maintained between Great Britain and the United States of America, the balance of which is always decidedly against the former country. Has Britain, in consequence, been a loser by that trade? No. Her immense importations of cotton chiefly caused the balance of trade against her; but this cotton being worked up by her manufacturing industry into certain fabrics, it was sold in its mo

dified forms to foreigners, (including the Americans themselves,) at a greatly enhanced price, which far more than compensated for such balance; and did, in fact, constitute a most abundant source of the national wealth. This example shows as decidedly as a hundred examples could do, that an industrious nation cannot import foreign commodities too liberally.

If a nation (acting upon the absurd principle we have supposed of the individual B) resolve to purchase from no other that which, by any possibility, she can produce herself, so as to enlarge in her own favour the balance of trade; and especially, if she refuse to deal in the staple produce of another, because doing so might turn the balance of trade against her, the consequences are obvious. As real value, (we speak of it as opposed to money) is at the bottom of all commercial transactions and as, in such transactions, there must always be quid pro quo, it is morally certain and demonstrable that the nation we are supposing, by limiting her imports from the other, must submit to a consequent limitation of her exports; and that articles which she might purchase cheaply, and import easily, she will have to procure circuitously, and at a dearer rate. If Britain refuse, for example, to purchase from France her wines, France, as a necessary consequence, cannot well purchase from Britain her soft goods and hardwares. But this is not all. Nations too powerful and proud to submit to trade with another upon terms which being unequal are degrading to them, will be sure to defeat such selfish policy as that we are considering, by having recourse to direct retaliation; then non-intercourse succeeds to unequal intercourse; and the grasping avarice of the one is not only disappointed, but signally punished by the resentment of the other.

It may happen that the unequal system

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