11: Balance of Trade

11. the Balance of Trade

  • The idea of public opulence consisting in money has led to other bad effects.
    • Most pernicious regulations have been established on this principle.
  • Those commerce which drain us of our money are thought of as disadvantageous.
    • Therefore, these are prohibited.
  •  Those which increase money are thought of as beneficial.
    • These are encouraged.
  • France is thought to produce more of the elegancies of life than England.
    • England takes much from France.
    • France needs little from England.
    • The balance of trade is said to be against England.
    • Therefore, almost all our trade with France is prohibited by high taxes and import duties.
  • On the other hand, Spain and Portugal buy more of our commodities than we buy of theirs.
    • The balance is in our favour.
    • This trade is allowed and encouraged.
  • The absurdity of these regulations will appear on the least reflection.
    • All commerce that is done between any two countries is advantageous to both.
  • The very intention of commerce is to exchange your own commodities for others which you think will be more convenient for you.
  • When two men trade between themselves it is undoubtedly for the advantage of both.
    • The one has perhaps more of one kind of commodities than he needs.
    • He therefore exchanges a certain amount of it with the other, for another more useful commodity.
    • The other agrees to the bargain on the same account.
    • In this way, the mutual commerce is advantageous to both.
  • The case is exactly the same between any two nations1.
    • The goods which the English merchants want to import from France are certainly more valuable to them than what they give for them.
    • Our very desire to purchase them shows that we have more use for them than either [205] the money or the commodities which we give for them.
  • It is said that Money lasts for ever, but that claret and cambrics are soon consumed.
    • This is true.
    • But what is the intention of industry if it is not to produce those things which are:
      • capable of being used, and
      • conducive to human life’s convenience and comfort?
    • Unless we use the produce of our industry, unless we can subsist more people in a better way, what avails it?
    • Besides, if we have money to spend on foreign commodities, why should we keep it in the country?
    • If the circulation of commodities require it, there will be none to spare.
      • If the channel of circulation is full, no more is necessary.
      • If only a certain sum be necessary for that purpose, why throw more into it?
  • By the ban on the exportation of goods to foreign markets, the country’s industry is greatly discouraged.
    • People being able to exchange the produce of their labour for what they please, is a very great motive to industry.
    • Wherever there is any restraint on people in this respect, they will not be so vigorous in improving manufactures.
  • If we were banned from sending corn and cloth to France, the industry which raises corn and prepares cloth for the French market is stopped.
    • If we were allowed to trade with France, we would not exchange our commodities with theirs, but our money.
    • Thus, human industry is not discouraged.
    • But if we look into this, we shall find that trade ultimately ends up with the exchange of commodities.
  • By hindering people to dispose of their money as they think proper, you discourage those manufactures by which this money is gained.
  • All jealousies therefore between different nations, and prejudices of this kind:
    • are extremely hurtful to commerce, and
    • limit public opulence1.
  • This is always the case between France and us in wartime.

[206]

  • These jealousies and prohibitions are most hurtful to the richest nations, just as a free commerce would be advantageous.
    • When a rich man and a poor man deal with one another, they both will increase their riches if they deal prudently.
    • But the rich man’s stock will increase in a greater proportion than the poor man’s.
  • Similarly, when a rich and a poor nation engage in trade, the rich nation will have the greatest advantage.
    • Therefore, the ban of this commerce is most hurtful to it of the two.
  • All our trade with France is prohibited by the high duties imposed on every imported French commodity.
    • It would, however, have been better to encourage our trade with France.
  • If any foreign commerce is to be banned, it should be with the one with Spain and Portugal.
    • This would be most advantageous to England.
    • France is:
      • much more populous
      • more extensive
      • farther advanced in arts and manufactures.
    • The British industry excited by a commerce with France1 would have been much greater.
  • 20,000,000 people in a big society working with each other’s hands from the nature of the division of labour, would produce 1,000 times more goods than another society of only 2 or 3,000,0000.
    • It would be good for both England and France that:
      • all national prejudices were rooted out, and
      • a free and uninterrupted commerce was established.
  • We generally never heard of any nation ruined by this balance of trade.
  • When Gee published his book, the balance with all nations was against us, except Spain and Portugal2.
  • It was then [207]thought that in a few years we would be reduced to an absolute state of poverty.
  • This has been the cry of all political writers since the time of Charles II.
  • Despite all this, we find ourselves far richer than before.
  • When there is occasion for it, we can raise much more money than ever has been done.
  • A late minister of state levied in one year 23,000,000 1 with greater ease than Lord Godolphin could levy six years in Queen Anne’s time.
  • The French and Dutch writers, embracing the same principle, frequently alarmed their country with the same groundless terror.
    • But they still continue to flourish.
  • The nation’s poverty can never proceed from foreign trade if done wisely and prudently.
    • It has the same causes which make a person poor.
  • When a man consumes more than he gains by his industry, he must impoverish himself unless he has some other way of subsistence.
    • In the same way, if a nation consumes more than it produces, poverty is inevitable.
    • If its annual produce is 90 million and its annual consumption is 100 million, then it spends, eats, and drinks, wears and tears, 10 million more than it produces.
    • Its stock of opulence must gradually go to nothing.

Words: 1,065