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more polished, and what are commonly denominated the more luxurious ages." (Essay of Refinement in the Arts.)

Most commercial treatises, and most books on political economy, contain lengthened statements as to the comparative advantages derived from the home and foreign trade. But these statements are almost always bottomed on the most erroneous principles. The quantity and value of the commodities which the inhabitants of an extensive country exchange with each other, is far greater than the quantity and value of those they exchange with foreigners: but this is not, as is commonly supposed, enough to show that the home trade is proportionally more advantageous. Commerce, it must be borne in mind, is not a direct but an indirect source of wealth. . The mere exchange of commodities adds nothing to the riches of society. The influence of commerce on wealth con. sists in its allowing employments to be separated and prosecuted without interruption. It gives the means of pushing the divisions of labour to the furthest extent; and supplies mankind with an intinitely greater quantity of necessaries and accommodations of all sorts, than could have been produced, had individuals and nations been forced to depend upon their own comparatively feeble efforts for the supply of their wants. And hence, in estimating the comparative advantageousness of the home and foreign trades, the real questions to be decided are, which of them contributes most to the division of labour? and which of them gives the greatest stimulus to invention and industry? These ques. tions do not, perhaps, admit of any very satisfactory answer. The truth is, that both home trade and foreign trade are most prolific sources of wealth. Without the former, no division of labour could be established, and man would for ever remain in a barbarous state. Hence, perhaps, we may say that it is the most indispensable ; but the length to which it could carry any particular country in the career of civilisation, would be limitea indeed. Had Great Britain been cut off from all intercourse with strangers, there is no reason for thinking that we should have been at this day advanced beyond the point to which our ancestors had attained during the Heptarchy! It is to the products and the arts derived from others, and to the emulation inspired by their competition and example, that we are mainly indebted for the extraordinary progress we have already made, as well as for that we are yet destined to make.

Dr. Smith, though he has satisfactorily demonstrated the impolicy of all restrictions on the freedom of commerce, has, notwithstanding, endeavoured to show that it is more for the public advantage that capital should be employed in the home trade than in foreign trade, on the ground that the capitals employed in the former are more frequently returned, and that they set a greater quantity of labour in motion than those employed in the latter, But we have elsewhere endeavoured to show that the rate of profit which different businesses yield is the only test of their respective advantageousness. — (Prin. ciples of Political Economy, 3d ed. pp. 165-181.) Now, it is quite evident that capital will not be employed in foreign trade, unless it yield as much profit as could be made by employing it at home. No merchant sends a ship to China, if it be in his power to realise a larger profit by sending her to Dublin or Newcastle ; nor would any one build a ship, unless he expected that the capital so laid out would be as productive as if it were employed in agriculture or manufactures. The more or less rapid return of capital is a matter of very little importance. If the average rate of profit be 10 per cent., an individual who turns over his capital 10 times a year, will make one per cent of profit each time; whereas if he turns it only once a year, he will get the whole 10 per cent.

Competition reduces the rate of nett profit to about the same level in all businesses ; and we may be quite certain that those who employ themselves in the departments in which capital is most rapidly returned, do not, at an average, gain more than those who employ themselves in the departments in which the returns are most distant. No one is a foreign merchant because he would rather deal with foreigners than with his own countrymen, but because he believes he will be able to employ his capital more advantageously in foreign trade than in any other business : and while he does this, he is following that employment which is most beneficial for the public as well as for himself.

IV. RestricTIONS ON COMMERCE. The statements already made, by explaining the nature and principles of commercial transactions, are sufficient to evince the inexpediency of subjecting them to any species of restraint. It is obvious, indeed, that restrictions are founded on false principles. When individuals are left to pursue their own interest in their own way, they naturally resort to those branches of industry which they reckon most advantageous for themselves; and, as we have just seen, these are the very branches in which it is most for the public interest that they should be employed. Unless, therefore, it could be shown that a government can judge better as to what sort of transactions are profitable or otherwise than private individuals, its regulations cannot be of the smallest use, and may be ex. ceedingly injurious. But any such pretension on the part of government would be

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universally scouted. It is undeniably certain that a regard to our own interest is, if not an unerring guide to direct us in such matters, at least incomparably better than any other. If the trade with a particular country or in a particular commodity be a losing one, or merely a less profitable one than others, it is quite as unnecessary to pass an act to prevent it from being carried on, as it would be to interfere to prevent individuals from selling their labour or their commodities below the market price. It appears, therefore, that all regulations affecting the freedom of commerce, or of any branch of industry, are either useless or pernicious. They are useless, when they are intended to protect the interest of individuals by preventing them from engaging in disadvantageous businesses ; and pernicious, when they prevent them from engaging in those that are advantageous. The self-interest of the parties concerned is the only safe principle to go by in such matters. When the acts of the legislature are in unison with it, there is nothing to object to in them, save only that they might as well not exist; but whenever they are inconsistent with it, — that is, whenever they tend to divert capital and industry into channels into which individuals, if left to their own discretion, would not have carried them, — they are decidedly injurious.

No one denies that it is possible to confer, by means of a restrictive regulation, an advantage on a greater or less number of individuals. This, however, is no proof that it is advantageous in a public point of view; and it is by its influence in this respect that we are to decide concerning it. If the exclusion of an article imported from abroad, in order to encourage its manufacture at home, raise its price in the home market, that circumstance will, for a while at least, be advantageous to those engaged in its production. But is it not clear that all that is thus gained by them is lost by those who purchase the article? To suppose, indeed, that the exclusion of commodities that are comparatively cheap, to make room for those that are comparatively dear, can be a means of enriching a country, is equivalent to supposing that a people's wealth might be increased by destroying their most powerful machines, and throwing their best soils out of cultivation.

But it is contended, that though this might be the case in the instance of commodities produced at home, it is materially different when the cominodity excluded came to us from abroad. It is said, that in this case the exclusion of foreign produce increases the demand for that produced at home, and consequently contributes to increase the demand for labour; so that the rise of price it occasions is, in this way, more than balanced by the other advantages which it brings along with it. But the fact is, that though the demand for one species of produce may be increased by a prohibition of importation, the demand for some other species is sure to be at the same time equally diminished. There is no jugglery in commerce. Whether it be carried on between individuals of the same country, or of different countries, it is in all cases bottomed on a fair principle of reciprocity. Those who will not buy need not expect to sell, and conversely. It is impossible to export without making a corresponding importation. We get nothing from the foreigner gratuitously: and hence, when we prevent the importation of produce from abroad, we prevent, by the very same act, the exportation of an equal amount of British produce. All that the exclusion of foreign commodities ever effects, is the substitution of one sort of demand for another. It has been said, that “when we drink beer and porter we consume the produce of English industry, whereas when we drink port or claret we consume the produce of the industry of the Portuguese and French, to the obvious advantage of the latter, and the prejudice of our countrymen !” But, how paradoxical soever the assertion may at first sight appear, there is not at bottom any real distinction between the two cases. What is it that induces foreigners to supply us with port and claret? The answer is obvious : – We either send directly to Portugal and France an equivalent in British produce, or we send such equivalent, in the first place to South America for bullion, and then send that bullion to the Continent to pay for the wine. And hence it is as clear as the sun at noon-day, that the Englishman who drinks only French wine, who eats only bread made of Polish wheat, and who wears only Saxon cloth, gives, by occasioning the exportation of a corresponding amount of British cotton, hardware, leather, or other produce, the same encouragement to the industry of his countrymen, that he would give were he to consume nothing not immediately produced at home. A quantity of port wine and a quantity of Birmingham goods are respectively of the same value; so that whether we directly consume the hardware, or, having exchanged it for the wine, consume the latter, must plainly, in so far as the employment of British labour is concerned, be altogether indifferent.

It is absolutely nugatory, therefore, to attempt to encourage industry at home by restraining importation from abroad. We might as well try to promote it by interdicting the exchange of shoes for hats. We only resort to foreign markets, that we may supply ourselves with articles that cannot be produced at home, or that require more labour to produce them here than is required to produce the equivalent exported to pay for them. It is, if any thing can be, an obvious contradiction and absurdity to attempt

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to promote wealth or industry by prohibiting an intercourse of this sort. hibition, even when least injurious, is sure to force capital and labour into less productive channels; and cannot fail to diminish the foreign demand for one species of produce, quite as much as it extends the home demand for another.

It is but seldom, however, that a restriction on importation from abroad does no more than substitute one sort of employment for another. Its usual effect is both to alter the distribution of capital and to increase the price of commodities. A country rarely imports any commodity from abroad that may be as cheaply produced at home. In the vast majority of instances, the articles bought of the foreigner could not be directly produced at home, without a much greater outlay of capital. Suppose that we import 1,000,0001. worth of any commodity, that its importation is prohibited, and that the same quantity of produce cannot be raised in this country for less than 1,200,000!. or 1,500,0001. : in a case of this sort, - and this is actually the case in 99 out of every 100 instances in which prohibitions are enacted, -- the prohibition has the same effect on the consumers of the commodity, as if, supposing it not to have existed, they had been burdened with a peculiar tax of 200,0001. or 500,0001. a year. But, had such been the case, what the consumers lost would have gone into the coffers of the treasury, and would have afforded the means of repealing an equal amount of other taxes ; whereas, under the prohibitory system, the high price, being occasioned by an increased difficulty of production, is of no advantage to any one. So that, instead of gaining any thing by such a measure, the public incurs a dead loss of 200,0001. or 500,0001, a year.

We have said that a prohibition of importation may be productive of immediate advantage to the home producers of the prohibited article. It is essential, however, to remark that this advantage cannot continue for any considerable time, and that it must be followed by a period of distress. Were the importation of foreign silks put an end to, that circumstance, by narrowing the supply of silk goods, and raising their prices, would, no doubt, be, in the first instance, advantageous to the manufacturers, by elevating their profits above the common level. But the consequence would be, that those already engaged in the trade would immediately set about extending their concerns; at the same time that not a few of those engaged in other employments would enter a business which presented such a favourable prospect: nor would this transference of capital to the silk manufacture be stopped, till such an increased supply of silks had been brought to market as to occasion a glut. This reasoning is not founded upon hypothesis, but upon the widest experience. When a business is carried on under the protection of a restriction on importation, it is limited by the extent of the home market, and is incapable of further extension. It is, in consequence, particularly subject to that fuctuation which is the bane of industry. If, owing to a change of fashion, or any other cause, the demand be increased, then, as no supplies can be brought from abroad, prices suddenly rise, and the manufacture is rapidly extended, until a reaction takes place, and prices sink below their usual level : and if the demand decline, then, as there is no outlet abroad for the superfluous goods, their price is ruinously depressed, and the producers are involved in inextricable difficulties. The businesses deepest entrenched behind ramparts of prohibitions and restrictions, such as the silk trade previously to 1825, the West India trade, and agriculture since 1815, have undergone the most extraordinary vicissitudes; and have been at once more hazardous and less profitable than the businesses carried on under a system of fair and free competition.

A prohibition against buying in the cheapest markets is really, also, a prohibition against selling in the dearest markets. There is no test of high or low price, except the quantity of other produce for which an article exchanges. Suppose that, by sending a certain quantity of cottons or hardware to Brazil, we might get in exchange 150 hhds. of sugar, and that the same quantity, if sent to Jamaica, would only fetch 100 hhds; is it not obvious, that by preventing the importation of the former, we force our goods to be sold for two thirds of the price they would otherwise have brought? To suppose that a system productive of such results can be a means of increasing wealth, is to suppose what is evidently absurd. It is certainly true that a restrictive regulation, which has been long acted upon, and under which a large amount of capital is employed, should not be rashly or capriciously repealed. Every change in the public economy of a great nation ought to be gone about cautiously and gradually. Adequate time should be given to those who carry on businesses that have been protected, either to withdraw from them altogether, or to prepare to withstand the fair competition of foreigners. But this is all that such persons can justly claim. To persevere in an erroneous and oppressive system, merely because its abandonment might be productive of inconvenience to individuals, would be a proceeding inconsistent with every object for which society is formed, and subversive of all improvement.

It may, perhaps, be supposed that in the event of commodities being imported from abroad, after the abolition of a protecting regulation, that were previously produced

at home, the workmen and those engaged in their production would be thrown upon the darish. Such, however, is not the case. We may, by giving freedom to commerce, change the species of labour in demand, but it is not possible that we should thereby change its quantity. If, in consequence of the abolition of restrictions, our imports were increased 4,000,0001. or 5,000,0001., our exports, it is certain, must be augmented to the same extent : so that whatever diminution of the demand for labour might be experienced in certain departments would be balanced by a corresponding increase in cthers.

The pressure of taxation has often been alleged as an excuse for restrictions on commerce; but it is not more valid than the rest. Taxation may be heavy, and even oppressive ; but so long as it is impartially and fairly assessed, it equally effects all branches of industry carried on at home, and consequently affords no ground whatever for the enactment of regulations intended to protect any particular business. And to propose to protect all branches of industry from foreign competition, is, in effect, to propose to put a total stop to commerce ; for if nothing is to be imported, nothing can be exported. The imposition of moderate duties on foreign commodities, for the sake of revenue, is quite another thing. Several of these commodities are among the very best subjects of taxation ; and when the duties on them are confined within proper bounds, – that is, when they are not so high as to exert any injurious influence over trade, or to occasion smuggling and fraud, -- they cannot fairly be objected to.

It is sometimes contended, by those who assert, on general grounds, that restrictions are inexpedient, that it would be unwise, on the part of any country, to abolish them until she had obtained a security that those imposed by her neighbours would also be abolished. But the reasons that have been alleged in favour of this statement are not entitled to the least weight. It is our business to buy in the cheapest and sell in the dearest markets, without being, in any degree, influenced by the conduct of others. If they consent to repeal the restrictions they have laid on commerce, so much the better. But whatever others may do, the line of policy we ought to follow is clear and well defined. To refuse, for example, to buy claret, brandy, &c. from the French, because they lay restrictions on the importation of British hardware, cottons, &c., is not to retaliate upon them, but upon ourselves. The fact that we do import French wine and brandy shows that we do export to France, or to some other country to which France is indebted, an equivalent, in some sort, of British produce. The fear of being glutted with foreign products, unless we secure beforehand a certain outlet for our own, is the most unfounded that can be imagined. The foreigner who will take nothing of ours, can send us nothing of his. Though our ports were open to the merchants of all the countries of the world, the exports of British produce must always be equal to the imports of foreign produce; and none but those who receive our commodities, either at first or second hand, could continue to send any thing to us.

“ Les étrangers ne peuvent demander ni désirer rien mieux, que la liberté de vous acheter et de vous vendre chez vous et dans vos colonies. Il faut la leur accorder, non par foiblesse et par impuissance, mais parcequ'elle est juste en elle-même, et qu'elle vous est utile. Ils ont tort sans doute de la refuser chez eux : mais cette faute d'ignorance, dont, sans le savoir, ils sont punis les premiers, n'est pas un raison qui doive vous porter à vous nuire à vous-même en suivant cet exemple, et à vous exposer aux suites et aux dépenses d'une guerre pour avoir la vaine satisfaction d'user des représailles, dont l'effet ne peut manquer de retomber sur vous, et de rendre votre commerce plus désavantageux.” - (Le Trosne de l'Ordre Social, p. 416.)

There are some, however, who contend, that though restrictions on importation from abroad be unfavourable to opulence, and the advancement of individuals and nations in arts and civilisation, they may, notwithstanding, be vindicated on other grounds, as contributing essentially to independence and security. The short and decisive answer to this is to be found in the reciprocity of commerce. It does not enrich one individual or nation at the expense of others, but confers its favours equally on all. We are under no obligations to the Portuguese, the Russians, or any other people with whom we carry on trade. It is not our advantage, but their own, that they have in view in dealing with us. We give them the full value of all that we import; and they would suffer quite as much inconvenience as we should do were this intercourse put an end to. The independence at which those aspire who would promote it by laying restrictions on commerce, is the independence of the solitary and unsocial savage; it is not an independence productive of strength, but of weakness. “ The most flourishing states, at the moment of their highest elevation, when they were closely connected with every part of the civilised world by the golden chains of successful commercial enterprise, were, according to this doctrine, in the most perfect state of absolute dependence. It was not till all these connections were dissolved, and they had sunk in the scale of nations, that their true independence commenced !

Such statements carry with them their own refutation. There is a natural dependence of nations upon each other, as there is a natural dependence of

individuals upon each other. Heaven has so ordered it. Some soils, some climates, some situations, are productive exclusively of some peculiar fruits, which cannot else where be profitably produced. Let nations follow this as their guide. In a rich and rising community, the opulent capitalists may be as dependent upon the poor labourers, as the poor labourers upon the opulent capitalists. So it is with nations. The mutual dependence of individuals upon each other knits and binds society together, and leads to the most rapid advancement in wealth, in intelligence, and in every kind of improvement. It is the same, but on a far larger scale, with the mutual dependence of nations. To this alone do we owe all the mighty efforts of commerce : and what lights, what generous feelings, and multiplied means of human happiness, has it not every where spread!” —(North American Review, No. 57.)

The principles of commercial freedom, and the injurious influence of restrictive regu. lations, were set in a very striking point of view by Dr. Smith, in his great work; and they have been since repeatedly explained and elucidated. Perhaps, however, the true doctrines upon this subject have nowhere been better stated than in the petition presented by the merchants of London to the House of Commons on the 8th of May, 1820. This document is one of the most gratifying proofs of the progress of liberal and enlarged views. It was subscribed by all the principal merchants of the metropolis, who did not scruple to express their conviction, that the repeal of every protective regulation would be for the public advantage. Such an address, confirming, as it did, the conclusions of science, by the approval of the best informed and most extensive merchants of the world, had a powerful influence over the legislature. During the last 20 years several most important reforms have been made in our commercial system; so that, besides being the first to promulgate the true theory of commerce, we are now entitled to the praise of being the first to carry it into effect. No doubt our trade is still fettered by many vexatious restraints; but these will gradually disappear, according as experience serves to disclose the benefits resulting from the changes already made, and the pernicious operation of the restrictions that are still allowed to continue.

The petition now referred to is too important to be omitted in a work of this sort, It is as follows:

“ To the Honourable the Commons, &c. The Petition of the Merchants of the City of London, " Sheweth,

“ That foreign commerce is eminently conducive to the wealth and prosperity of a country, by enabling it to import the commodities for the production of which the soil, climate, capital, and industry of other countries are best calculated, and to export, in payment, those articles for which its own situation is better adapted.

“ That freedom from restraint is calculated to give the utmost extension to foreign trade, and the best direction to the capital and industry of the country:

" That the maxim of buying in the cheapest market, and selling in the dearest, which regulates every merchant in his individual dealings, is strictly applicable, as the best rule for the trade of the whole nation.

* That a policy founded on these principles would render the commerce of the world an interchange of mutual advantages, and diffuse an increase of wealth and enjoyments among the inhabitants of each state.

“ That, unfortunately, a policy the very reverse of this has been and is more or less adopted and acted upon by the government of this and every other country: each trying to exclude the productions of other countries, with the sprcious and well-meant design of encouraging its own productions: thus inflicting on the bulk of its subjects, who are consumers, the necessity of submitting to privations in the quantity or quality of commodities, and thus rendering what ought to be the source of mutual benefit and of harmony among states, a constantly recurring occasion of jealousy and hostility.

“ That the prevailing prejudices in favour of the protective or restrictive system may be traced to the erroneous supposition that every importation of foreign commodities occasions a diminution or discouragement of our own produ 'tions to the same extent: whereas it may be clearly shown, that although the particular description of production which could not stand against unrestrained foreign competition would be discouraged, yet, as no importation could be continued for any length of time without a corre. sponding exportation, direct or indirect, there would be an encouragement, for the purpose of that exportation, of some other production to which our situation might be better suited ; thus affording at least an equal, and probably a greater, and certainly a more beneficial, employment to our own capital and labour.

*** That of the numerous protective and prohibitory duties of our commercial code, it may be prored that, while all operate as a very heavy tax on the community at large, very few are of any ultimate benefit to the classes in whose favour they were originally instituted, and none to the extent of the loss occasioned by them to other classes.

" That among the other evils of the restrictive or protective system, not the least is, that the artificial protection of one branch of industry or source of production against foreign competition, is set up as a ground of claim by other branches for similar protection; so that is the reasoning upon which these restrictive or prohibitory regulations are founded were followed out consistently, it would not stop short of excluding us from all foreign commerce whatsoever. And the same train of argument, which, with correspondig prohibitions and protective duties, should exclude us from foreign trade, might he brought forward to justify the re-enactment of restrictions upon the interchange of productions (unconnected with public revenue) among the kingdoms composing the union, or among the counties of the same kingdom,

" That an investigation of the effects of the restrictive system at this time is peculiarly called for, as it may, in the opinion of your petitioners, lead to a strong presumption, that the distress, which now so generally prevails, is considerably aggravated by that system ; and that some relief may be obtained by the earliest practicable removal of such of the restraints as may be shown to be most injurious to the capital and industry of the community, and to be attended with no compensating benefit to the public revenue,

" That a declaration against the anti-commercial principles of our restrictive system is of the more Importance at the present juncture; inasmuch as, in several instances of recent occurrence, the mer. chants and manufacturers of foreign countries have assailed their respective governments with applica. tions for further protective or prohibitory duties and regulations, urging the example and authority of this country, against which they are almost exclusively directed, as a sanction for the policy of such

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