Chapter 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.
- The commerce which increase money are thought beneficial.
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 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.
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.
- 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.
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.
- Thus human industry is not discouraged.'
- This is always the case between France and us in wartime.
In general, these jealousies and prohibitions are most hurtful to the richest nations, just as free trade would be advantageous.
Similarly, when a rich and a poor nation engage in trade, the rich nation will have the greatest advantage.
- 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.
All our trade with France is prohibited by the high duties imposed on every imported French commodity.
- Therefore, the prohibition of this commerce is most hurtful to the rich nation.
- 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.
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.
- much more populous
- more extensive
- more advanced in arts and manufactures.
- 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.
Despite all this, we are far richer than before.
- When Gee published his book, the balance with all nations was against us, except Spain and Portugal.
- It was then thought 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.
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.
- We can raise much more money when needed.
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.
- 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.
- Its stock of opulence must gradually go to nothing.