in Italy bore 6 per cent.,* on common securities in Bithynia 12; 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 that have no mines, it has been gradual, and has not proceeded from the increase of money, considered merely in itself, but from that of industry, which is the natural effect of the former increase in that interval, before it raises the price of labor 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 labor and commodities, only represented by a smaller number of white or yellow pieces, which, being a circumstance of no moment, would only affect the wagoner, porter, and trunkmaker. Luxury, therefore, manufactures, arts, indus

* Plinii Epist. lib. vii. ep. 18. VOL. III.

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† Id. lib. x. ep. 62.

try, 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 proportion 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

PLUT. De Curiositate.

say, to prevent famines; though it is evident that nothing contributes more to the frequent famines which so much distress that fertile country.

The same jealous fear, with regard to money, has also prevailed among several nations; and it required both reason and experience to convince any people, that these prohibitions serve to no other purpose than to raise the exchange against them, and produce a still greater exportation.

These errors, one may say, are gross and palpable; but there still prevails, even in nations well acquainted with commerce, a strong jealousy with regard to the balance of trade, and a fear that all their gold and silver may be leaving them. This seems to me, almost in every case, a groundless apprehension; and I should as soon dread, that all our springs and rivers should be exhausted, as that money should abandon a kingdom where there are people and industry. Let us carefully preserve these latter advantages, and we need never be apprehensive of losing the former.

It is easy to observe, that all calculations concerning the balance of trade are founded on very uncertain facts and suppositions. The custom-house books are allowed to be an insufficient ground of reasoning; nor is the rate of exchange much better, unless we consider it with all nations, and know also the proportions of the several sums remitted, which one may safely pronounce impossible. Every man, who has ever reasoned on this subject, has always proved his theory, whatever it was, by facts and calculations, and by an enumeration of all the commodities sent to all foreign kingdoms.

The writings of Mr. Gee struck the nation with an universal panic, when they saw it plainly demonstrated, by a detail of particulars, that the balance was against

them for so considerable a sum, as must leave them without a single shilling in five or six years. But luckily, twenty years have since elapsed, with an expensive foreign war; yet it is commonly supposed that money is still more plentiful among us than in any former period.

Nothing can be more entertaining on this head than Dr. Swift; an author so quick in discerning the mistakes and absurdities of others. He says, in his Short View of the State of Ireland, that the whole cash of that kingdom formerly amounted but to £500,000; that out of this the Irish remitted every year a neat million to England, and had scarcely any other source from which they could compensate themselves, and little other foreign trade than the importation of French wines, for which they paid ready money. The consequence of this situation, which must be owned to be disadvantageous, was, that, in a course of three years, the current money of Ireland, from £500,000, was reduced to less than two. And at present, I suppose, in a course of thirty years, it is absolutely nothing. Yet I know not how that opinion of the advance of riches in Ireland, which gave the Doctor so much indignation, seems still to continue, and gain ground with everybody.

In short, this apprehension of the wrong balance of trade, appears of such a nature, that it discovers itself wherever one is out of humor with the ministry, or is in low spirits; and as it can never be refuted by a particular detail of all the exports which counterbalance the imports, it may here be proper to form a general argument, that may prove the impossibility of this event, so long as we preserve our people and our industry.

Suppose four fifths of all the money in Great Britain to be annihilated in one night, and the nation reduced