Part II.—Of the Unreasonableness of those
extraordinary Restraints, upon other Principles.
In the foregoing part of this chapter, I have
endeavoured to show, even upon the principles
of the commercial system, how unnecessary
it is to lay extraordinary restraints upon
the importation of goods from those countries
with which the balance of trade is supposed
to be disadvantageous.
Nothing, however, can be more absurd than
this whole doctrine of the balance of trade,
upon which, not only these restraints, but almost
all the other regulations of commerce,
are founded. When two places trade with one
another, this doctrine supposes that, if the balance
be even, neither of them either loses or
gains; but if it leans in any degree to one
side, that one of them loses, and the other
gains, in proportion to its declension from the
exact equilibrium. Both suppositions are
false. A trade, which is forced by means of
bounties and monopolies, may be, and commonly
is, disadvantageous to the country in
whose favour it is meant to be established, as
I shall endeavour to show hereafter. But that
trade which, without force or constraint, is naturally
and regularly carried on between any
two places, is always advantageous, though
not always equally so, to both.
By advantage or gain, I understand, not
the increase of the quantity of gold or silver,
but that of the exchangeable value of the annual
produce of the land and labour of the
country, or the increase of the annual revenue
of its inhabitants.
If the balance be even, and if the trade between
the two places consist altogether in the
exchange of their native commodities, they
will, upon most occasions, not only both gain,
but they will gain equally, or very nearly
equally; each will, in this case, afford a market
for a part of the surplus produce of the
other; each will replace a capital which had
been employed in raising and preparing for
the market this part of the surplus produce of
the other, and which had been distributed
among, and given revenue and maintenance
to, a certain number of its inhabitants. Some
part of the inhabitants of each, therefore, will
directly derive their revenue and maintenance
from the other. As the commodities exchanged,
too, are supposed to be of equal value, so the
two capitals employed in the trade will, upon
most occasions, be equal or very nearly equal;
and both being employed in raising the native
commodities of the two countries, the revenue
and maintenance which their distribution will
afford to the inhabitants of each will be equal,
or very nearly equal. This revenue and maintenance,
this mutually afforded, will be greater
or smaller, in proportion to the extent of their
dealings. If these should annually amount
to L.100,000, for example, or to L.1,000,000,
on each side, each of them will afford an annual
revenue, in the one case, of L.100,000,
and, in the other, of L.1,000,000, to the inhabitants
of the other.
If their trade should be of such a nature,
that one of them exported to the other nothing
but native commodities, while the returns
of that other consisted altogether in foreign
goods; the balance, in this case, would
still be supposed even, commodities being paid
for with commodities. They would, in this
case too, both gain, but they would not gain
equally; and the inhabitants of the country
which exported nothing but native commodities,
would derive the greatest revenue from
the trade. If England, for example, should
import from France nothing but the native
commodities of that country, and not having
such commodities of its own as were in demand
there, should annually repay them by
sending thither a large quantity of foreign
goods, tobacco, we shall suppose, and East
India goods; this trade, though it would give
some revenue to the inhabitants of both countries,
would give more to those of France than
to those of England. The whole French capital
annually employed in it would annually
be distributed among the people of France;
but that part of the English capital only,
which was employed in producing the English
commodities with which those foreign goods
were purchased, would be annually distributed
among the people of England. The greater
part of it would replace the capitals which
had been employed in Virginia, Indostan, and
China, and which had given revenue and
maintenance to the inhabitants of those distant
countries. If the capitals were equal, or
nearly equal, therefore, this employment of
the French capital would augment much more
the revenue of the people of France, than that
of the English capital would the revenue of
the people of England. France would, in this
case, carry on a direct foreign trade of consumption
with England; whereas England
would carry on a round-about trade of the
same kind with France. The different effects
of a capital employed in the direct, and of
one employed in the round-about foreign trade
of consumption, have already been fully explained.
There is not, probably, between any two
countries, a trade which consists altogether in
the exchange, either of native commodities
on both sides, or of native commodities on
one side, and of foreign goods on the other.
Almost all countries exchange with one another,
partly native and partly foreign goods.
That country, however, in whose cargoes there
is the greatest proportion of native, and the
least of foreign goods, will always be the principal
gainer.
If it was not with tobacco and East India