Chap 11-12: Balance of Trade

Chap 11: the Balance of Trade

 

  • The idea of public opulence consisting in money has caused other bad effects.
    • The most pernicious regulations have been established on this principle.
    • The commerce which drain us of our money are thought disadvantageous.
      • This is prohibited.
    • The commerce which increase money are thought beneficial.
      • This is encouraged.
  • France is thought to produce more of the elegancies of life than England.
    • We take much from them.
    • They need little from us.
    • The balance of trade is against us.
    • Therefore, almost all our trade with France is banned by great taxes and import duties.
  • On the other hand, Spain and Portugal take more of our commodities than we take of theirs,
    • The balance is in our favour.
    • This trade is encouraged.
  • The absurdity of these regulations will appear on the least reflection.
    • All commerce 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.
      • One man has perhaps more commodities than he needs,
      • He exchanges some of it with the other man, for another commodity that will be more useful to him.
      • 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 nations.
    • The goods which the English merchants want to import from France are certainly more valuable to the English than what the English give for those goods.
    • Our very desire to buy them shows that we have more use for them than either [205] the money or the commodities which we give for them.
  • ‘Money lasts for ever, but that claret and cambrics are soon consumed.’
    • This is true.
    • But what is the intention of industry if it be not to produce those things which are capable of being used, and are conducive to the convenience and comfort of human life?
    • 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 upon foreign commodities, what purpose serves it to 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 is necessary for that purpose, why throw more into it?

 

  • Again, by banning the exportation of goods to foreign markets, the country’s industry is greatly discouraged.
    • It is a very great motive to industry, that people have it in their power to exchange the produce of their labour for what they please, and
    • wherever there is any restraint on people in this respect, they will not be so vigorous in improving manufactures.
  • If we are banned from sending corn and cloth to France, that 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 attend to it, we shall find that it comes to the same thing at last.
  • By hindering people to dispose of their money as they think proper, you discourage those manufactures by which this money is gained.
  • All jealousies between different nations, and prejudices of this kind, are extremely hurtful to commerce, and limit public opulence.
    • This is always the case between France and us in wartime.

 

[206]

  • In general, these jealousies and prohibitions are most hurtful to the richest nations, just as free trade would be advantageous.
    • When a rich man and a poor man deal with one another, both of them will increase their riches.
    • 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 prohibition of this commerce is most hurtful to the rich nation.
  • All our trade with France is prohibited by the high duties imposed on every imported French commodity.
    • It would have been better police to encourage our trade with France.
    • If any foreign commerce is to be prohibited, it should be that with Spain and Portugal.
      • This would have been most advantageous to England.
  • France is:
    • much more populous
    • more extensive
    • more advanced in arts and manufactures.
  • Our industry, which a commerce with France would have excited, would have been much greater.
  • 20 million people working to each other’s hands through the division of labour, would produce 1,000 times more goods than another society of only 3 million.
    • It would be better for England and France to:
      • have all national prejudices rooted out, and
      • have a free and uninterrupted commerce established.

 

  • In general, no nation has been ruined by this balance of trade.
    • When Gee published his book, the balance with all nations was against us, except Spain and Portugal.
    • It was then [207thought that in a few years that 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 are far richer than before.
    • We can raise much more money when needed.
  • A late minister of state levied 23 million in one year with greater ease than Lord Godolphin could levy 6 million in Queen Anne’s time.
  • The French and Dutch writers embraced the same principle.
  • They 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 with wisdom and prudence.
    • It proceeds from much the same causes with those which render an individual 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.

 

 

Chap 12: the Opinion that no Expense at Home can be hurtful

  • The absurd notion that national opulence consists in money has another bad effect.
  • It is commonly imagined that whatever people [208] spend in their own country cannot reduce public opulence, if you take care of exports and imports.
    • This is the foundation of Dr. Mandeville’s system that private vices are public benefits.
      • What is spent at home is all spent among ourselves.
      • None of it goes out of the country.
  • But when any man wears and tears and spends his stock, without employing himself in any species of industry, the nation is at the end of the year so much the poorer by it.
    • If he spends only the interest of the money, he does no harm since the capital still remains and is employed in promoting industry.
    • But if he spends the capital, the whole is gone.
  • To illustrate this, suppose that my father at his death, instead of 1,000 pounds in cash, leaves me the necessaries and conveniences of life worth 1,000 pounds, which I would have bought if I received cash instead.
    • I get a number of idle folks about me and eat, drink, tear, and wear, until the whole is consumed.
    • By this, I not only reduce myself to want, but certainly rob the public stock of 1,000 pounds, as it is spent and nothing produced for it.
  • Another illustration of the public hurt from such practices:
    • Let us suppose that this island was invaded by Tartars, who have little or no idea of industry.
    • They would find here all commodities for the taking.
    • They would put on fine clothes, eat, drink, tear, and wear everything they could get.
    • From the highest degree of opulence, the whole country would be reduced to the [209] lowest misery and brought back to its ancient state.
    • The 30 million pounds of money would probably remain for some time.
    • But all the necessaries of life would be consumed.
  • This shows the absurdity of the opinion that no home consumption can hurt the country’s opulence.

 

  • Upon this principle:
    • a war in Germany is thought as a dreadful calamity as it drains the country of money, and
    • a land war is always thought more prejudicial than a sea war for the same reason.
  • But upon reflection, we will find that it is the same thing to the nation, how or where its stock be spent.
    • If I purchase 1,000 pounds’ worth of French wines and drink them all, the country is 2,000 pounds poorer because the goods and money are gone.
    • If I spend 1,000 pounds worth of goods at home on myself, the country is only deprived of 1,000 pounds, as the money still remains.
  • But in maintaining an army in a distant war, it is the same thing whether we pay them in goods or money, because the consumption is the same at any rate.
    • Perhaps it is the better police to pay them in money, as goods are better fitted for the purposes of life at home.
    • For the same reason, there is no difference between land and sea wars, as commonly imagined.

 

  • From the above considerations:
    • Britain should be made a free port so that there would be no interruptions on foreign trade.
    • All duties, customs, and excise should be abolished if it were possible to defray government expenses by any other method
    • Free commerce and liberty of exchange should be allowed with all nations, and for all things.

 

[210]

  • On the same absurd principles, an apology is made for the public debt.
    • They say that though we presently owe more than 100 million, we owe it to ourselves, or at least very little of it to foreigners.
    • It is just the right hand owing the left.
    • On the whole, it can be little or no disadvantage.
  • But the interest of this 100 million is paid by industrious people and given to support idle people employed in gathering it.
    • Thus, industry is taxed to support idleness.
    • If the debt had not been contracted, the nation would have been much richer by prudence and economy than at present.
    • Their industry would not be hurt by the oppression of those idle people who live on it.
    • Instead of the brewer paying taxes which are often improper, the stock might have been lent out to industrious people who would:
      • have made 6 or 7% by it, and
      • have given better interest than the government does.
    • This stock would then have been employed for the country’s welfare.
  • When there are such heavy taxes to pay, every merchant must carry on less trade.
    • He must pay his taxes before selling his commodities.
    • This narrows his stock and hinders his trade from being so extensive as it otherwise would be.
  • To stop this clamour, Sir Robert Walpole tried to show that the public debt was no inconvenience.
    • Though I [211] suppose that he saw the contrary himself.

Words: 1850

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