merce and industry, they are altogether independent of each other. For suppose a nation removed into the Pacific ocean, without any foreign commerce, or any knowledge of navigation: Suppose, that this nation possesses always the same stock of coin, but is continually increasing in its numbers and industry: It is evident, that the price of every commodity must gradually di minish in that kingdom; since it is the proportion between money and any species of goods which fixes their mutual value: and, upon the present supposition, the conveniencies of life become every day more abundant, without any alteration in the current specie. A less quantity of money, therefore, among this people, will make a rich man, during the times of industry, than would suffice to that purpose, in ignorant and slothful ages. Less, money will build a house, portion a daughter, buy an estate, support a manufactory, or maintain a family and equipage. These are the uses for which men borrow money; and therefore, the greater or less quantity of it in a state has no influence on the interest. But it is evident, that the greater or less stock of labour and commodities must have a great influence; since we really and in effect borrow these, when we take money upon interest. It is true, when commerce is extended all over the globe, the most industrious nations always abound most with the precious metals; So that low interest and plenty of money are in fact almost inseparable. But still it is of consequence to know the principle whence any phenomenon arises, and to distinguish between a cause and a concomitant effect. Besides that the speculation is curious, it may frequently be of use in the conduct of public affairs. At least, it must be owned, that nothing can be of more use than to improve, by practice, the method of reasoning on these

subjects, which of all others are the most important; though they are commonly treated in the loosest and most careless manner.

Another reason of this popular mistake with regard to the cause of low interest, seems to be the instance of some nations; where, after a sudden acquisition of money, or of the precious metals, by means of foreign conquest, the interest has fallen, not only among them, but in all the neighbouring states, as soon as that money was dispersed, and had insinuated itself into every corner. Thus, interest in SPAIN fell near a half immediately after the discovery of the WEST INDIES, as we are informed by GARCILASSO DE LA VEGA: And it has been ever since gradually sinking in every kingdom of EUROPE. Interest in ROME, after the conquest of EGYPT, fell from 6 to 4 per cent. as we learn from DION*.

The causes of the sinking of interest, upon such an event, seem different in the conquering country and in the neighbouring states; but in neither of them can we justly ascribe that effect merely to the increase of gold and silver.

In the conquering country, it is natural to imagine, that this new acquisition of money will fall into a few hands, and be gathered into large sums, which seek a secure revenue, either by the purchase of land, or by interest; and consequently the same effect follows, for a little time, as if there had been a great accession of industry and commerce. The increase of lenders above the borrowers sinks the interest; and so much the faster, if those, who have acquired those large sums, find

* Lib. li.

no industry or commerce in the state, and no method of employing their money but by lending it at interest. But after this new mass of gold and silver has been digested, and has circulated through the whole state, af fairs will soon return to their former situation; while the landlords and new money-holders, living idly, squander above their income; and the former daily contract debt, and the latter encroach on their stock till its final extinction. The whole money may still be in the state, and make itself felt by the increase of prices: But not being now collected into any large masses or stocks, the disproportion between the borrowers and lenders is the same as formerly, and consequently the high inte

rest returns.

Accordingly we find, in ROME, that, so early as TIBERIUS's time, interest had again mounted to 6* per cent. though no accident had happened to drain the empire of money. In TRAJAN's time, money lent on mortgages in ITALY, bore 6 per cent. t; on common securities in BITHYNIA, 121. And if interest in SPAIN has not risen to its old pitch, this can be ascribed to nothing but the continuance of the same cause that sunk it, to wit, the large fortunes continually made in the INDIES, which come over to SPAIN from time to time, and supply the demand of the borrowers. By this accidental and extraneous cause, more money is to be lent in SPAIN, that is, more money is collected into large sums, than would otherwise be found in a state, where there are so little commerce and industry.

As to the reduction of interest, which has followed in ENGLAND, FRANCE, and other kingdoms of EUROPE,

*COLUMELLA, lib. iii. cap. 3.

PLINII Epist. lib. vii. ep. 18.

Id. lib. x. ep. 62.

that have no mines, it has been gradual; and has not proceeded from the increase of money, considered mere,

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ly in itself; but from that of industry, which is the natural effect of the former increase, in that interval, before it raises the prices of labour and provisions, For to return to the foregoing supposition; if the industry of ENGLAND had risen as much from other causes (and that rise might easily have happened, though the stock of money had remained the same), must not all the same consequences have followed, which we observe at present? The same people would, in that case, be found in the kingdom, the same commodities, the same industry, manufactures, and commerce; and consequently the same merchants, with the same stocks, that is, with the same command over labour and commodities, only represented by a smaller number of white or yel low pieces; which, being a circumstance of no moment, would only affect the waggoner, porter, and trunk-maker. Luxury, therefore, manufactures, arts, industry, frugality, flourishing equally as at present, it is evident, that interest must also have been as low; since that is the necessary result of all these circumstances, so far as they determine the profits of commerce, and the pro portion between the borrowers and lenders in any state.

ESSAY V.

OF THE BALANCE OF TRADE.

Ir is very usual, in nations ignorant of the nature of commerce, to prohibit the exportation of commodities, and to preserve among themselves whatever they think valuable and useful. They do not consider, that, in this prohibition, they act directly contrary to their intention ; and that the more is exported of any commodity, the more will be raised at home, of which they themselves will always have the first offer.

It is well known to the learned, that the ancient laws of ATHENS rendered the exportation of figs criminal; that being supposed a species of fruit so excellent in ATTICA, that the ATHENIANS deemed it too delicious for the palate of any foreigner. And in this ridiculous prohibition they were so much in earnest, that informers were thence called sycophants among them, from two GREEK words, which signify figs and discoverer*. There are proofs in many old acts of parliament of the same ignorance in the nature of commerce, particularly in the reign of EDWARD III. And to this day, in FRANCE, the exportation of corn is almost always prohibited; in order, as they say, to prevent famines; though

PLUT. De Curiositate.