Butwhatalltheviolenceofthefeudalinstitutionscouldneverhaveeffected,thesilentandinsensibleoperationofforeigncommerceandmanufacturesgraduallybroughtabout。Thesegraduallyfurnishedthegreatproprietorswithsomethingforwhichtheycouldexchangethewholesurplusproduceoftheirlands,andwhichtheycouldconsumethemselveswithoutsharingiteitherwithtenantsorretainers。Allforourselvesandnothingforotherpeople,seems,ineveryageoftheworld,tohavebeenthevilemaximofthemastersofmankind。Assoon,therefore,astheycouldfindamethodofconsumingthewholevalueoftheirrentsthemselves,theyhadnodispositiontosharethemwithanyotherpersons。Forapairofdiamondbuckles,perhaps,orforsomethingasfrivolousanduseless,theyexchangedthemaintenance,orwhatisthesamething,thepriceofthemaintenanceofathousandmenforayear,andwithitthewholeweightandauthoritywhichitcouldgivethem。Thebuckles,however,weretobealltheirown,andnootherhumancreaturewastohaveanyshareofthem;whereasinthemoreancientmethodofexpensetheymusthavesharedwithatleastathousandpeople。
Withthejudgesthatweretodeterminethepreferencethisdifferencewasperfectlydecisive;andthus,forthegratificationofthemostchildish,themeanest,andthemostsordidofallvanities,theygraduallybarteredtheirwholepowerandauthority。
Inacountrywherethereisnoforeigncommerce,noranyofthefinermanufactures,amanoftenthousandayearcannotwellemployhisrevenueinanyotherwaythaninmaintaining,perhaps,athousandfamilies,whoareallofthemnecessarilyathiscommand。InthepresentstateofEurope,amanoftenthousandayearcanspendhiswholerevenue,andhegenerallydoesso,withoutdirectlymaintainingtwentypeople,orbeingabletocommandmorethantenfootmennotworththecommanding。
Indirectly,perhaps,hemaintainsasgreatorevenagreaternumberofpeoplethanhecouldhavedonebytheancientmethodofexpense。Forthoughthequantityofpreciousproductionsforwhichheexchangeshiswholerevenuebeverysmall,thenumberofworkmenemployedincollectingandpreparingitmustnecessarilyhavebeenverygreat。Itsgreatpricegenerallyarisesfromthewagesoftheirlabour,andtheprofitsofalltheirimmediateemployers。Bypayingthatpriceheindirectlypaysallthosewagesandprofitsandthusindirectlycontributestothemaintenanceofalltheworkmenandtheiremployers。Hegenerallycontributes,however,butaverysmallproportiontothatofeach,toveryfewperhapsatenth,tomanynotahundredth,andtosomenotathousandth,norevenaten—thousandthpartoftheirwholeannualmaintenance。Thoughhecontributes,therefore,tothemaintenanceofthemall,theyareallmoreorlessindependentofhim,becausegenerallytheycanallbemaintainedwithouthim。
Whenthegreatproprietorsoflandspendtheirrentsinmaintainingtheirtenantsandretainers,eachofthemmaintainsentirelyallhisowntenantsandallhisownretainers。Butwhentheyspendtheminmaintainingtradesmenandartificers,theymay,allofthemtakentogether,perhaps,maintainasgreat,or,onaccountofthewastewhichattendsrustichospitality,agreaternumberofpeoplethanbefore。Eachofthem,however,takensingly,contributesoftenbutaverysmallsharetothemaintenanceofanyindividualofthisgreaternumber。Eachtradesmanorartificerderiveshissubsistencefromtheemployment,notofone,butofahundredorathousanddifferentcustomers。Thoughinsomemeasureobligedtothemall,therefore,heisnotabsolutelydependentuponanyoneofthem。
Thepersonalexpenseofthegreatproprietorshavinginthismannergraduallyincreased,itwasimpossiblethatthenumberoftheirretainersshouldnotasgraduallydiminishtilltheywereatlastdismissedaltogether。Thesamecausegraduallyledthemtodismisstheunnecessarypartoftheirtenants。Farmswereenlarged,andtheoccupiersofland,notwithstandingthecomplaintsofdepopulation,reducedtothenumbernecessaryforcultivatingit,accordingtotheimperfectstateofcultivationandimprovementinthosetimes。Bytheremovaloftheunnecessarymouths,andbyexactingfromthefarmerthefullvalueofthefarm,agreatersurplus,orwhatisthesamething,thepriceofagreatersurplus,wasobtainedfortheproprietor,whichthemerchantsandmanufacturerssoonfurnishedhimwithamethodofspendinguponhisownpersoninthesamemannerashehaddonetherest。Thesamecausecontinuingtooperate,hewasdesiroustoraisehisrentsabovewhathislands,intheactualstateoftheirimprovement,couldafford。Histenantscouldagreetothisupononeconditiononly,thattheyshouldbesecuredintheirpossessionforsuchatermofyearsasmightgivethemtimetorecoverwithprofitwhatevertheyshouldlayoutinthefurtherimprovementoftheland。Theexpensivevanityofthelandlordmadehimwillingtoacceptofthiscondition;andhencetheoriginoflongleases。
Evenatenantatwill,whopaysthefullvalueoftheland,isnotaltogetherdependentuponthelandlord。Thepecuniaryadvantageswhichtheyreceivefromoneanotheraremutualandequal,andsuchatenantwillexposeneitherhislifenorhisfortuneintheserviceoftheproprietor。Butifhehasaleaseforalongtermofyears,heisaltogetherindependent;andhislandlordmustnotexpectfromhimthemosttriflingservicebeyondwhatiseitherexpresslystipulatedintheleaseorimposeduponhimbythecommonandknownlawofthecountry。
Thetenantshavinginthismannerbecomeindependent,andtheretainersbeingdismissed,thegreatproprietorswerenolongercapableofinterruptingtheregularexecutionofjusticeorofdisturbingthepeaceofthecountry。Havingsoldtheirbirthright,notlikeEsauforamessofpottageintimeofhungerandnecessity,butinthewantonnessofplenty,fortrinketsandbaubles,fittertobetheplaythingsofchildrenthantheseriouspursuitsofmen,theybecameasinsignificantasanysubstantialburgherortradesmaninacity。Aregulargovernmentwasestablishedinthecountryaswellasinthecity,nobodyhavingsufficientpowertodisturbitsoperationsintheoneanymorethanintheother。
Itdoesnot,perhaps,relatetothepresentsubject,butI
cannothelpremarkingit,thatveryoldfamilies,suchashavepossessedsomeconsiderableestatefromfathertosonformanysuccessivegenerationsareveryrareincommercialcountries。Incountrieswhichhavelittlecommerce,onthecontrary,suchasWalesorthehighlandsofScotland,theyareverycommon。TheArabianhistoriesseemtobeallfullofgenealogies,andthereisahistorywrittenbyaTartarKhan,whichhasbeentranslatedintoseveralEuropeanlanguages,andwhichcontainsscarceanythingelse;aproofthatancientfamiliesareverycommonamongthosenations。Incountrieswherearichmancanspendhisrevenueinnootherwaythanbymaintainingasmanypeopleasitcanmaintain,heisnotapttorunout,andhisbenevolenceitseemsisseldomsoviolentastoattempttomaintainmorethanhecanafford。Butwherehecanspendthegreatestrevenueuponhisownperson,hefrequentlyhasnoboundstohisexpense,becausehefrequentlyhasnoboundstohisvanityortohisaffectionforhisownperson。Incommercialcountries,therefore,riches,inspiteofthemostviolentregulationsoflawtopreventtheirdissipation,veryseldomremainlonginthesamefamily。Amongsimplenations,onthecontrary,theyfrequentlydowithoutanyregulationsoflaw,foramongnationsofshepherds,suchastheTartarsandArabs,theconsumablenatureoftheirpropertynecessarilyrendersallsuchregulationsimpossible。
Arevolutionofthegreatestimportancetothepublichappinesswasinthismannerbroughtaboutbytwodifferentordersofpeoplewhohadnottheleastintentiontoservethepublic。Togratifythemostchildishvanitywasthesolemotiveofthegreatproprietors。Themerchantsandartificers,muchlessridiculous,actedmerelyfromaviewtotheirowninterest,andinpursuitoftheirownpedlarprincipleofturningapennywhereverapennywastobegot。Neitherofthemhadeitherknowledgeorforesightofthatgreatrevolutionwhichthefollyoftheone,andtheindustryoftheother,wasgraduallybringingabout。
ItisthusthatthroughthegreaterpartofEuropethecommerceandmanufacturesofcities,insteadofbeingtheeffect,havebeenthecauseandoccasionoftheimprovementandcultivationofthecountry。
Thisorder,however,beingcontrarytothenaturalcourseofthings,isnecessarilybothslowanduncertain。ComparetheslowprogressofthoseEuropeancountriesofwhichthewealthdependsverymuchupontheircommerceandmanufactureswiththerapidadvancesofourNorthAmericancolonies,ofwhichthewealthisfoundedaltogetherinagriculture。ThroughthegreaterpartofEuropethenumberofinhabitantsisnotsupposedtodoubleinlessthanfivehundredyears。InseveralofourNorthAmericancolonies,itisfoundtodoubleintwentyorfive—and—twentyyears。InEurope,thelawofprimogenitureandperpetuitiesofdifferentkindspreventthedivisionofgreatestates,andtherebyhinderthemultiplicationofsmallproprietors。Asmallproprietor,however,whoknowseverypartofhislittleterritory,whoviewsitwithalltheaffectionwhichproperty,especiallysmallproperty,naturallyinspires,andwhouponthataccounttakespleasurenotonlyincultivatingbutinadorningit,isgenerallyofallimproversthemostindustrious,themostintelligent,andthemostsuccessful。Thesameregulations,besides,keepsomuchlandoutofthemarketthattherearealwaysmorecapitalstobuythanthereislandtosell,sothatwhatissoldalwayssellsatamonopolyprice。Therentneverpaystheinterestofthepurchase—money,andis,besides,burdenedwithrepairsandotheroccasionalchargestowhichtheinterestofmoneyisnotliable。TopurchaselandiseverywhereinEuropeamostunprofitableemploymentofasmallcapital。Forthesakeofthesuperiorsecurity,indeed,amanofmoderatecircumstances,whenheretiresfrombusiness,willsometimeschoosetolayouthislittlecapitalinland。Amanofprofessiontoo,whoserevenueisderivedfrom。anothersource,oftenlovestosecurehissavingsinthesameway。Butayoungman,who,insteadofapplyingtotradeortosomeprofession,shouldemployacapitaloftwoorthreethousandpoundsinthepurchaseandcultivationofasmallpieceofland,mightindeedexpecttoliveveryhappily,andveryindependently,butmustbidadieuforevertoallhopeofeithergreatfortuneorgreatillustration,whichbyadifferentemploymentofhisstockhemighthavehadthesamechanceofacquiringwithotherpeople。Suchapersontoo,thoughhecannotaspireatbeingaproprietor,willoftendisdaintobeafarmer。Thesmallquantityofland,therefore,whichisbroughttomarket,andthehighpriceofwhatisbroughtthither,preventsagreatnumberofcapitalsfrombeingemployedinitscultivationandimprovementwhichwouldotherwisehavetakenthatdirection。InNorthAmerica,onthecontrary,fiftyorsixtypoundsisoftenfoundasufficientstocktobeginaplantationwith。Thepurchaseandimprovementofuncultivatedlandistherethemostprofitableemploymentofthesmallestaswellasofthegreatestcapitals,andthemostdirectroadtoallthefortuneandillustrationwhichcanbeacquiredinthatcountry。Suchland,indeed,isinNorthAmericatobehadalmostfornothing,oratapricemuchbelowthevalueofthenaturalproduce—athingimpossibleinEurope,or,indeed,inanycountrywherealllandshavelongbeenprivateproperty。Iflandedestates,however,weredividedequallyamongallthechildrenuponthedeathofanyproprietorwholeftanumerousfamily,theestatewouldgenerallybesold。Somuchlandwouldcometomarketthatitcouldnolongersellatamonopolyprice。Thefreerentofthelandwouldgonearertopaytheinterestofthepurchase—money,andasmallcapitalmightbeemployedinpurchasinglandasprofitablyasinanyotherway。
England,onaccountofthenaturalfertilityofthesoil,ofthegreatextentofthesea—coastinproportiontothatofthewholecountry,andofthemanynavigableriverswhichrunthroughitandaffordtheconveniencyofwatercarriagetosomeofthemostinlandpartsofit,isperhapsaswellfittedbynatureasanylargecountryinEuropetobetheseatofforeigncommerce,ofmanufacturesfordistantsale,andofalltheimprovementswhichthesecanoccasion。FromthebeginningofthereignofElizabethtoo,theEnglishlegislaturehasbeenpeculiarlyattentivetotheinterestsofcommerceandmanufactures,andinrealitythereisnocountryinEurope,Hollanditselfnotexcepted,ofwhichthelawis,uponthewhole,morefavourabletothissortofindustry。Commerceandmanufactureshaveaccordinglybeencontinuallyadvancingduringallthisperiod。Thecultivationandimprovementofthecountryhas,nodoubt,beengraduallyadvancingtoo;butitseemstohavefollowedslowly,andatadistance,themorerapidprogressofcommerceandmanufactures。ThegreaterpartofthecountrymustprobablyhavebeencultivatedbeforethereignofElizabeth;andaverygreatpartofitstillremainsuncultivated,andthecultivationofthefargreaterpartmuchinferiortowhatitmightbe。ThelawofEngland,however,favoursagriculturenotonlyindirectlybytheprotectionofcommerce,butbyseveraldirectencouragements。
Exceptintimesofscarcity,theexportationofcornisnotonlyfree,butencouragedbyabounty。Intimesofmoderateplenty,theimportationofforeigncornisloadedwithdutiesthatamounttoaprohibition。Theimportationoflivecattle,exceptfromIreland,isprohibitedatalltimes,anditisbutoflatethatitwaspermittedfromthence。Thosewhocultivatetheland,therefore,haveamonopolyagainsttheircountrymenforthetwogreatestandmostimportantarticlesoflandproduce,breadandbutcher’smeat。Theseencouragements,thoughatbottom,perhaps,asIshallendeavourtoshowhereafter,altogetherillusory,sufficientlydemonstrateatleastthegoodintentionofthelegislaturetofavouragriculture。Butwhatisofmuchmoreimportancethanallofthem,theyeomanryofEnglandarerenderedassecure,asindependent,andasrespectableaslawcanmakethem。Nocountry,therefore,inwhichtherightofprimogenituretakesplace,whichpaystithes,andwhereperpetuities,thoughcontrarytothespiritofthelaw,areadmittedinsomecases,cangivemoreencouragementtoagriculturethanEngland。Such,however,notwithstanding,isthestateofitscultivation。Whatwouldithavebeenhadthelawgivennodirectencouragementtoagriculturebesideswhatarisesindirectlyfromtheprogressofcommerce,andhadlefttheyeomanryinthesameconditionasinmostothercountriesofEurope?ItisnowmorethantwohundredyearssincethebeginningofthereignofElizabeth,aperiodaslongasthecourseofhumanprosperityusuallyendures。
FranceseemstohavehadaconsiderableshareofforeigncommercenearacenturybeforeEnglandwasdistinguishedasacommercialcountry。ThemarineofFrancewasconsiderable,accordingtothenotionsofthetimes,beforetheexpeditionofCharlesVIIItoNaples。ThecultivationandimprovementofFrance,however,is,uponthewhole,inferiortothatofEngland。
Thelawofthecountryhasnevergiventhesamedirectencouragementtoagriculture。
TheforeigncommerceofSpainandPortugaltotheotherpartsofEurope,thoughchieflycarriedoninforeignships,isveryconsiderable。Thattotheircoloniesiscarriedonintheirown,andismuchgreater,onaccountofthegreatrichesandextentofthosecolonies。Butithasneverintroducedanyconsiderablemanufacturesfordistantsaleintoeitherofthosecountries,andthegreaterpartofbothstillremainsuncultivated。TheforeigncommerceofPortugalisofolderstandingthanthatofanygreatcountryinEurope,exceptItaly。
ItalyistheonlygreatcountryofEuropewhichseemstohavebeencultivatedandimprovedineverypartbymeansofforeigncommerceandmanufacturesfordistantsale。BeforetheinvasionofCharlesVIII,ItalyaccordingtoGuicciardin,wascultivatednotlessinthemostmountainousandbarrenpartsofthecountrythanintheplainestandmostfertile。Theadvantageoussituationofthecountry,andthegreatnumberofindependentstateswhichatthattimesubsistedinit,probablycontributednotalittletothisgeneralcultivation。Itisnotimpossibletoo,notwithstandingthisgeneralexpressionofoneofthemostjudiciousandreservedofmodernhistorians,thatItalywasnotatthattimebettercultivatedthanEnglandisatpresent。
Thecapital,however,thatisacquiredtoanycountrybycommerceandmanufacturesisallaveryprecariousanduncertainpossessiontillsomepartofithasbeensecuredandrealizedinthecultivationandimprovementofitslands。Amerchant,ithasbeensaidveryproperly,isnotnecessarilythecitizenofanyparticularcountry。Itisinagreatmeasureindifferenttohimfromwhatplacehecarriesonhistrade;andaverytriflingdisgustwillmakehimremovehiscapital,andtogetherwithitalltheindustrywhichitsupports,fromonecountrytoanother。
Nopartofitcanbesaidtobelongtoanyparticularcountry,tillithasbeenspreadasitwereoverthefaceofthatcountry,eitherinbuildingsorinthelastingimprovementoflands。NovestigenowremainsofthegreatwealthsaidtohavebeenpossessedbythegreaterpartoftheHanstownsexceptintheobscurehistoriesofthethirteenthandfourteenthcenturies。ItisevenuncertainwheresomeofthemweresituatedortowhattownsinEuropetheLatinnamesgiventosomeofthembelong。ButthoughthemisfortunesofItalyintheendofthefifteenthandbeginningofthesixteenthcenturiesgreatlydiminishedthecommerceandmanufacturesofthecitiesofLombardyandTuscany,thosecountriesstillcontinuetobeamongthemostpopulousandbestcultivatedinEurope。ThecivilwarsofFlanders,andtheSpanishgovernmentwhichsucceededthem,chasedawaythegreatcommerceofAntwerp,Ghent,andBruges。ButFlandersstillcontinuestobeoneoftherichest,bestcultivated,andmostpopulousprovincesofEurope。Theordinaryrevolutionsofwarandgovernmenteasilydryupthesourcesofthatwealthwhicharisesfromcommerceonly。Thatwhicharisesfromthemoresolidimprovementsofagricultureismuchmoredurableandcannotbedestroyedbutbythosemoreviolentconvulsionsoccasionedbythedepredationsofhostileandbarbarousnationscontinuedforacenturyortwotogether,suchasthosethathappenedforsometimebeforeandafterthefalloftheRomanempireinthewesternprovincesofEurope。
ANINQUIRYINTOTHENATUREANDCAUSESOFTHEWEALTHOFNATIONS
byAdamSmith1776
BOOKFOUR
OFSYSTEMSOFPOLITICALECONOMY
INTRODUCTION
POLITICALeconomy,consideredasabranchofthescienceofastatesmanorlegislator,proposestwodistinctobjects:first,toprovideaplentifulrevenueorsubsistenceforthepeople,ormoreproperlytoenablethemtoprovidesucharevenueorsubsistenceforthemselves;andsecondly,tosupplythestateorcommonwealthwitharevenuesufficientforthepublicservices。
Itproposestoenrichboththepeopleandthesovereign。
Thedifferentprogressofopulenceindifferentagesandnationshasgivenoccasiontotwodifferentsystemsofpoliticaleconomywithregardtoenrichingthepeople。Theonemaybecalledthesystemofcommerce,theotherthatofagriculture。I
shallendeavourtoexplainbothasfullyanddistinctlyasIcan,andshallbeginwiththesystemofcommerce。Itisthemodernsystem,andisbestunderstoodinourowncountryandinourowntimes。
CHAPTERI
OfthePrincipleoftheCommercial,orMercantileSystemTHATwealthconsistsinmoney,orandsilver,isapopularnotionwhichnaturallyarisesfromthedoublefunctionofmoney,astheinstrumentofcommerceandasthemeasureofvalue。Inconsequenceofitsbeingtheinstrumentofcommerce,whenwehavemoneywecanmorereadilyobtainwhateverelsewehaveoccasionforthanbymeansofanyothercommodity。Thegreataffair,wealwaysfind,istogetmoney。Whenthatisobtained,thereisnodifficultyinmakinganysubsequentpurchase。Inconsequenceofitsbeingthemeasureofvalue,weestimatethatofallothercommoditiesbythequantityofmoneywhichtheywillexchangefor。Wesayofarichmanthatheisworthagreatdeal,andofapoormanthatheisworthverylittlemoney。Afrugalman,oramaneagertoberich,issaidtolovemoney;andacareless,agenerous,oraprofuseman,issaidtobeindifferentaboutit。
Togrowrichistogetmoney;andwealthandmoney,inshort,are,incommonlanguage,consideredasineveryrespectsynonymous。
Arichcountry,inthesamemannerasarichman,issupposedtobeacountryaboundinginmoney;andtoheapupgoldandsaverinanycountryissupposedtobethereadiestwaytoenrichit。ForsometimeafterthediscoveryofAmerica,thefirstinquiryoftheSpaniards,whentheyarriveduponanunknowncoast,usedtobe,iftherewasanygoldorsilvertobefoundintheneighbourhood。Bytheinformationwhichtheyreceived,theyjudgedwhetheritwasworthwhiletomakeasettlementthere,orifthecountrywasworththeconquering。PlanoCarpino,amonk,sentambassadorfromtheKingofFrancetooneofthesonsofthefamousGenghisKhan,saysthattheTartarsusedfrequentlytoaskhimiftherewasplentyofsheepandoxeninthekingdomofFrance。TheirinquiryhadthesameobjectwiththatoftheSpaniards。Theywantedtoknowifthecountrywasrichenoughtobeworththeconquering。AmongtheTartars,asamongallothernationsofshepherds,whoaregenerallyignorantoftheuseofmoney,cattlearetheinstrumentsofcommerceandthemeasuresofvalue。Wealth,therefore,accordingtothem,consistedincattle,asaccordingtotheSpaniardsitconsistedingoldandsilver。Ofthetwo,theTartarnotion,perhaps,wasthenearesttothetruth。
Mr。Lockeremarksadistinctionbetweenmoneyandothermovablegoods。Allothermovablegoods,hesays,areofsoconsumableanaturethatthewealthwhichconsistsinthemcannotbemuchdependedon,andanationwhichaboundsinthemoneyearmay,withoutanyexportation,butmerelytheirownwasteandextravagance,beingreatwantofthemthenext。Money,onthecontrary,isasteadyfriend,which,thoughitmaytravelaboutfromhandtohand,yetifitcanbekeptfromgoingoutofthecountry,isnotveryliabletobewastedandconsumed。Goldandsilver,therefore,are,accordingtohim,themostsolidandsubstantialpartofthemovablewealthofanation,andtomultiplythosemetalsought,hethinks,uponthataccount,tobethegreatobjectofitspoliticaleconomy。
Othersadmitthatifanationcouldbeseparatedfromalltheworld,itwouldbeofnoconsequencehowmuch,orhowlittlemoneycirculatedinit。Theconsumablegoodswhichwerecirculatedbymeansofthismoneywouldonlybeexchangedforagreaterorasmallernumberofpieces;buttherealwealthorpovertyofthecountry,theyallow,woulddependaltogetherupontheabundanceorscarcityofthoseconsumablegoods。Butitisotherwise,theythink,withcountrieswhichhaveconnectionswithforeignnations,andwhichareobligedtocarryonforeignwars,andtomaintainfleetsandarmiesindistantcountries。This,theysay,cannotbedonebutbysendingabroadmoneytopaythemwith;andanationcannotsendmuchmoneyabroadunlessithasagooddealathome。Everysuchnation,therefore,mustendeavourintimeofpeacetoaccumulategoldandsilverthat,whenoccasionrequires,itmayhavewherewithaltocarryonforeignwars。
Inconsequenceofthesepopularnotions,allthedifferentnationsofEuropehavestudied,thoughtolittlepurpose,everypossiblemeansofaccumulatinggoldandsilverintheirrespectivecountries。SpainandPortugal,theproprietorsoftheprincipalmineswhichsupplyEuropewiththosemetals,haveeitherprohibitedtheirexportationundertheseverestpenalties,orsubjectedittoaconsiderableduty。ThelikeprohibitionseemsancientlytohavemadeapartofthepolicyofmostotherEuropeannations。Itiseventobefound,whereweshouldleastofallexpecttofindit,insomeoldScotchactsofParliament,whichforbidunderheavypenaltiesthecarryinggoldorsilverforthofthekingdom。ThelikepolicyancientlytookplacebothinFranceandEngland。
Whenthosecountriesbecamecommercial,themerchantsfoundthisprohibition,uponmanyoccasions,extremelyinconvenient。
Theycouldfrequentlybuymoreadvantageouslywithgoldandsilverthanwithanyothercommoditytheforeigngoodswhichtheywanted,eithertoimportintotheirown,ortocarrytosomeotherforeigncountry。Theyremonstrated,therefore,againstthisprohibitionashurtfultotrade。
Theyrepresented,first,thattheexportationofgoldandsilverinordertopurchaseforeigngoods,didnotalwaysdiminishthequantityofthosemetalsinthekingdom。That,onthecontrary,itmightfrequentlyincreasethatquantity;
because,iftheconsumptionofforeigngoodswasnottherebyincreasedinthecountry,thosegoodsmightbere—exportedtoforeigncountries,and,beingtheresoldforalargeprofit,mightbringbackmuchmoretreasurethanwasoriginallysentouttopurchasethem。Mr。Muncomparesthisoperationofforeigntradetotheseed—timeandharvestofagriculture。\"Ifweonlybehold,\"sayshe,\"theactionsofthehusbandmanintheseed—time,whenhecastethawaymuchgoodcornintotheground,weshallaccounthimratheramadmanthanahusbandman。Butwhenweconsiderhislaboursintheharvest,whichistheendofhisendeavours,weshallfindtheworthandplentifulincreaseofhisaction。\"
Theyrepresented,secondly,thatthisprohibitioncouldnothindertheexportationofgoldandsilver,which,onaccountofthesmallnessoftheirbulkinproportiontotheirvalue,couldeasilybesmuggledabroad。Thatthisexportationcouldonlybepreventedbyaproperattentionto,whattheycalled,thebalanceoftrade。Thatwhenthecountryexportedtoagreatervaluethanitimported,abalancebecameduetoitfromforeignnations,whichwasnecessarilypaidtoitingoldandsilver,andtherebyincreasedthequantityofthosemetalsinthekingdom。Butthatwhenitimportedtoagreatervaluethanitexported,acontrarybalancebecameduetoforeignnations,whichwasnecessarilypaidtotheminthesamemanner,andtherebydiminishedthatquantity。
Thatinthiscasetoprohibittheexportationofthosemetalscouldnotpreventit,butonly,bymakingitmoredangerous,renderitmoreexpensive。Thattheexchangewastherebyturnedmoreagainstthecountrywhichowedthebalancethanitotherwisemighthavebeen;themerchantwhopurchasedabillupontheforeigncountrybeingobligedtopaythebankerwhosoldit,notonlyforthenaturalrisk,trouble,andexpenseofsendingthemoneythither,butfortheextraordinaryriskarisingfromtheprohibition。Butthatthemoretheexchangewasagainstanycountry,themorethebalanceoftradebecamenecessarilyagainstit;themoneyofthatcountrybecomingnecessarilyofsomuchlessvalueincomparisonwiththatofthecountrytowhichthebalancewasdue。ThatiftheexchangebetweenEnglandandHolland,forexample,wasfivepercentagainstEngland,itwouldrequireahundredandfiveouncesofsilverinEnglandtopurchaseabillforahundredouncesofsilverinHolland:thatahundredandfiveouncesofsilverinEngland,therefore,wouldbeworthonlyahundredouncesofsilverinHolland,andwouldpurchaseonlyaproportionablequantityofDutchgoods;butthatahundredouncesofsilverinHolland,onthecontrary,wouldbeworthahundredandfiveouncesinEngland,andwouldpurchaseaproportionablequantityofEnglishgoods:thattheEnglishgoodswhichweresoldtoHollandwouldbesoldsomuchcheaper;andtheDutchgoodswhichweresoldtoEnglandsomuchdearerbythedifferenceoftheexchange;thattheonewoulddrawsomuchlessDutchmoneytoEngland,andtheothersomuchmoreEnglishmoneytoHolland,asthisdifferenceamountedto:andthatthebalanceoftrade,therefore,wouldnecessarilybesomuchmoreagainstEngland,andwouldrequireagreaterbalanceofgoldandsilvertobeexportedtoHolland。
Thoseargumentswerepartlysolidandpartlysophistical。
Theyweresolidsofarastheyassertedthattheexportationofgoldandsilverintrademightfrequentlybeadvantageoustothecountry。Theyweresolid,too,inassertingthatnoprohibitioncouldpreventtheirexportationwhenprivatepeoplefoundanyadvantageinexportingthem。Buttheyweresophisticalinsupposingthateithertopreserveortoaugmentthequantityofthosemetalsrequiredmoretheattentionofgovernmentthantopreserveortoaugmentthequantityofanyotherusefulcommodities,whichthefreedomoftrade,withoutanysuchattention,neverfailstosupplyintheproperquantity。Theyweresophisticaltoo,perhaps,inassertingthatthehighpriceofexchangenecessarilyincreasedwhattheycalledtheunfavourablebalanceoftrade,oroccasionedtheexportationofagreaterquantityofgoldandsilver。Thathighprice,indeed,wasextremelydisadvantageoustothemerchantswhohadanymoneytopayinforeigncountries。Theypaidsomuchdearerforthebillswhichtheirbankersgrantedthemuponthosecountries。Butthoughtheriskarisingfromtheprohibitionmightoccasionsomeextraordinaryexpensetothebankers,itwouldnotnecessarilycarryanymoremoneyoutofthecountry。Thisexpensewouldgenerallybealllaidoutinthecountry,insmugglingthemoneyoutofit,andcouldseldomoccasiontheexportationofasinglesixpencebeyondtheprecisesumdrawnfor。Thehighpriceofexchangetoowouldnaturallydisposethemerchantstoendeavourtomaketheirexportsnearlybalancetheirimports,inorderthattheymighthavethishighexchangetopayuponassmallasumaspossible。Thehighpriceofexchange,besides,mustnecessarilyhaveoperatedasatax,inraisingthepriceofforeigngoods,andtherebydiminishingtheirconsumption。Itwouldtend,therefore,nottoincreasebuttodiminishwhattheycalledtheunfavourablebalanceoftrade,andconsequentlytheexportationofgoldandsilver。
Suchastheywere,however,thoseargumentsconvincedthepeopletowhomtheywereaddressed。Theywereaddressedbymerchantstoparliamentsandtothecouncilsofprinces,tonoblesandtocountrygentlemen,bythosewhoweresupposedtounderstandtradetothosewhowereconscioustothemselvesthattheyknewnothingaboutthematter。Thatforeigntradeenrichedthecountry,experiencedemonstratedtothenoblesandcountrygentlemenaswellastothemerchants;buthow,orinwhatmanner,noneofthemwellknew。Themerchantsknewperfectlyinwhatmanneritenrichedthemselves。Itwastheirbusinesstoknowit。Buttoknowinwhatmanneritenrichedthecountrywasnopartoftheirbusiness。Thissubjectnevercameintotheirconsiderationbutwhentheyhadoccasiontoapplytotheircountryforsomechangeinthelawsrelatingtoforeigntrade。Itthenbecamenecessarytosaysomethingaboutthebeneficialeffectsofforeigntrade,andthemannerinwhichthoseeffectswereobstructedbythelawsastheythenstood。Tothejudgeswhoweretodecidethebusinessitappearedamostsatisfactoryaccountofthematter,whentheyweretoldthatforeigntradebroughtmoneyintothecountry,butthatthelawsinquestionhindereditfrombringingsomuchasitotherwisewoulddo。Thoseargumentsthereforeproducedthewished—foreffect。TheprohibitionofexportinggoldandsilverwasinFranceandEnglandconfinedtothecoinofthoserespectivecountries。Theexportationofforeigncoinandofbullionwasmadefree。InHolland,andinsomeotherplaces,thislibertywasextendedeventothecoinofthecountry。Theattentionofgovernmentwasturnedawayfromguardingagainsttheexportationofgoldandsilvertowatchoverthebalanceoftradeastheonlycausewhichcouldoccasionanyaugmentationordiminutionofthosemetals。
Fromonefruitlesscareitwasturnedawaytoanothercaremuchmoreintricate,muchmoreembarrassing,andjustequallyfruitless。ThetitleofMun’sbook,England’sTreasureinForeignTrade,becameafundamentalmaximinthepoliticaleconomy,notofEnglandonly,butofallothercommercialcountries。Theinlandorhometrade,themostimportantofall,thetradeinwhichanequalcapitalaffordsthegreatestrevenue,andcreatesthegreatestemploymenttothepeopleofthecountry,wasconsideredassubsidiaryonlytoforeigntrade。Itneitherbroughtmoneyintothecountry,itwassaid,norcarriedanyoutofit。Thecountry,therefore,couldneverbecomeeitherricherorpoorerbymeansofit,exceptsofarasitsprosperityordecaymightindirectlyinfluencethestateofforeigntrade。
Acountrythathasnominesofitsownmustundoubtedlydrawitsgoldandsilverfromforeigncountriesinthesamemannerasonethathasnovineyardsofitsownmustdrawitswines。Itdoesnotseemnecessary,however,thattheattentionofgovernmentshouldbemoreturnedtowardstheonethantowardstheotherobject。Acountrythathaswherewithaltobuywinewillalwaysgetthewinewhichithasoccasionfor;andacountrythathaswherewithaltobuygoldandsilverwillneverbeinwantofthosemetals。Theyaretobeboughtforacertainpricelikeallothercommodities,andastheyarethepriceofallothercommodities,soallothercommoditiesarethepriceofthosemetals。Wetrustwithperfectsecuritythatthefreedomoftrade,withoutanyattentionofgovernment,willalwayssupplyuswiththewinewhichwehaveoccasionfor:andwemaytrustwithequalsecuritythatitwillalwayssupplyuswithallthegoldandsilverwhichwecanaffordtopurchaseortoemploy,eitherincirculatingourcommodities,orinotheruses。
Thequantityofeverycommoditywhichhumanindustrycaneitherpurchaseorproducenaturallyregulatesitselfineverycountryaccordingtotheeffectualdemand,oraccordingtothedemandofthosewhoarewillingtopaythewholerent,labour,andprofitswhichmustbepaidinordertoprepareandbringittomarket。Butnocommoditiesregulatethemselvesmoreeasilyormoreexactlyaccordingtothiseffectualdemandthangoldandsilver;because,onaccountofthesmallbulkandgreatvalueofthosemetals,nocommoditiescanbemoreeasilytransportedfromoneplacetoanother,fromtheplaceswheretheyarecheaptothosewheretheyaredear,fromtheplaceswheretheyexceedtothosewheretheyfallshortofthiseffectualdemand。IftherewereinEngland,forexample,aneffectualdemandforanadditionalquantityofgold,apacket—boatcouldbringfromLisbon,orfromwhereverelseitwastobehad,fiftytonsofgold,whichcouldbecoinedintomorethanfivemillionsofguineas。Butiftherewereaneffectualdemandforgraintothesamevalue,toimportitwouldrequire,atfiveguineasaton,amillionoftonsofshipping,orathousandshipsofathousandtonseach。ThenavyofEnglandwouldnotbesufficient。
Whenthequantityofgoldandsilverimportedintoanycountryexceedstheeffectualdemand,novigilanceofgovernmentcanpreventtheirexportation。AllthesanguinarylawsofSpainandPortugalarenotabletokeeptheirgoldandsilverathome。