country which does so. Holland, perhaps,
approaches the nearest to this character of any,
though still very remote from it; and Holland,
it is acknowledged, not only derives its
whole wealth, but a great part of its necessary
subsistence, from foreign trade.
There is another balance, indeed, which has
already been explained, very different from
the balance of trade, and which, according as
it happens to be either favourable or unfavourable,
necessarily occasions the prosperity
or decay of every nation. This is the balance
of the annual produce and consumption. If
the exchangeable value of the annual produce,
it has already been observed, exceeds that of
the annual consumption, the capital of the society
must annually increase in proportion to
this excess. The society in this case lives within
its revenue; and what is annually saved
out of its revenue, is naturally added to its capital,
and employed so as to increase still further
the annual produce. If the exchangeable
value of the annual produce, on the contrary,
fall short of the annual consumption,
the capital of the society must annually decay
in proportion to this deficiency. The expense
of the society, in this case, exceeds its revenue,
and necessarily encroaches upon its capital.
Its capital, therefore, must necessarily
decay, and, together with it, the exchangeable
value of the annual produce of its industry.
This balance of produce and consumption
is entirely different from what is called the
balance of trade. It might take place in a
nation which had no foreign trade, but which
was entirely separated from all the world.
It may take place in the whole globe of the
earth, of which the wealth, population, and
improvement, may be either gradually increasing
or gradually decaying.
The balance of produce and consumption
may be constantly in favour of a nation, though
what is called the balance of trade be generally
against it. A nation may import to a greater
value than it exports for half a century, perhaps,
together; the gold and silver which
comes into it during all this time, may be all
immediately sent out of it; its circulating
coin may gradually decay, different sorts of
paper money being substituted in its place,
and even the debts, too, which it contracts in
the principal nations with whom it deals, may
be gradually increasing; and yet its real
wealth, the exchangeable value of the annual
produce of its lands and labour, may, during
the same period, have been increasing in a
much greater proportion. The state of our
North American colonies, and of the trade
which they carried on with Great Britain, before
the commencement of the present disturbances,[38]
may serve as a proof that this is
by no means an impossible supposition.
CHAP. IV.
OF DRAWBACKS.
Merchants and manufacturers are not contented
with the monopoly of the home market,
but desire likewise the most extensive foreign
sale for their goods. Their country has no
jurisdiction in foreign nations, and therefore
can seldom procure them any monopoly there.
They are generally obliged, therefore, to content
themselves with petitioning for certain
encouragements to exportation.
Of these encouragements, what are called
drawbacks seem to be the most reasonable.
To allow the merchant to draw back upon exportation,
either the whole, or a part of whatever
excise or inland duty is imposed upon
domestic industry, can never occasion the exportation
of a greater quantity of goods than
what would have been exported had no duty
been imposed. Such encouragements do not
tend to turn towards any particular employment
a greater share of the capital of the
country, than what would go to that employment
of its own accord, but only to hinder
the duty from driving away any part of that
share to other employments. They tend not
to overturn that balance which naturally establishes
itself among all the various employments
of the society, but to hinder it from being
overturned by the duty. They tend not
to destroy, but to preserve, what it is in most
cases advantageous to preserve, the natural
division and distribution of labour in the society.
The same thing may be said of the drawbacks
upon the re-exportation of foreign goods
imported, which, in Great Britain, generally
amount to by much the largest part of the
duty upon importation. By the second of the
rules, annexed to the act of parliament, which
imposed what is now called the old subsidy,
every merchant, whether English or alien,
was allowed to draw back half that duty upon
exportation; the English merchant, provided
the exportation took place within twelve
months; the alien, provided it took place
within nine months. Wines, currants, and
wrought silks, were the only goods which did
not fall within this rule, having other and
more advantageous allowances. The duties
imposed by this act of parliament were, at
that time, the only duties upon the importation
of foreign goods. The term within which
this, and all other drawbacks could be claimed,
was afterwards (by 7 Geo. I. chap. 21.
sect. 10.) extended to three years.
The duties which have been imposed since
the old subsidy, are, the greater part of them,
wholly drawn back upon exportation. This
general rule, however, is liable to a great
number of exceptions; and the doctrine of