Chap. XVI: Illustration of some Principles laid down in the former Chapter, relative to the Advancement and Support of f

I am now to give an illustration of some things relating to that species of trade which is carried on with other nations, laid down, I think, in too general terms in the former chapter.

I have constantly in view to separate and distinguish the principles of foreign trade, from those which influence the advancement of an inland commerce, and a brisk circulation only; operations which produce very different effects, equally meriting the attention of a statesman.

The very existence of foreign trade, implies a separate interest between those nations who are found on the opposite sides of the mercantile contract, namely the buyers and the sellers, as both endeavour to make the hest bargain possible for themselves. These transactions imply a mutual dependence upon one another, which may either be necessary or contingent. It is necessary, when one of the nations cannot subsist without the assistance of the other, as is the case between the province of Holland, and those countries which supply it with grain; or contingent, when the wants of a particular nation cannot be supplied by their own inhabitants, from a want of skill and dexterity, only.

Wherever, therefore, one nation finds another necessarily depending upon her for particular branches of traffic, there is a certain foundation for foreign trade; where the dependence is contingent, there is occasion for management, and for the hand of an able statesman.

The best way to preserve every advantage is, to examine how far they are necessary, and how far they are only contingent, to consider in what respect the nation may be most easily rivalled by her neighbours, and in what respect she has natural advantages which cannot be taken from her.

The natural advantages are chiefly to be depended on: France, for example, never can be rivalled in her wines. Other countries may enjoy great advantages from their situation, mines, rivers, sea-ports, fishing, timber, and certain productions proper to the soil. If you abstract from these natural advantages, all nations are upon an equal footing as to trade. Industry and labour are no properties attached to place, any more than oeconomy and sobriety.

This proposition may be called in question, upon the principles of M. de Montesquieu, who deduces the origin of many laws, customs, and even religions, from the influence of climate. This great man reasoned from fact and from experience, and from the power and tendency of natural causes, to produce certain effects, when they are not checked by other circumstances; but in my method of treating this subject, I do not suppose that these causes are ever to be allowed to produce their natural and immediate effects, when such effects would be followed by a political inconvenience: but I constantly suppose a statesman at the head of government, who makes every circumstance concur in promoting the execution of the plan he has laid down.

First, If a nation then has formed a scheme of being long great and powerful by trade, she must first apply closely to the manufacturing every natural produce of the country. For this purpose a sufficient number of hands must be employed: for if hands be found wanting, the natural produce will be exported without receiving any additional value from labour; and the consequences of this natural advantage will be lost.

The price of food, and all necessaries for manufacturers, must be found at an easy rate.

And, in the last place, if oeconomy and sobriety in the workmen, and good regulations on the part of the statesman, are not kept up, the end will not be obtained: for if the manufacture, when brought to market, do not retain the advantages which the manufacturer had in the beginning, by employing the natural produce of the country; it is the same thing as if the advantage had not existed. I shall illustrate this by an example.

I shall suppose wool to be better, more plentiful, and cheaper, in one country than in another, and both to be rivals in the woollen trade. It is natural that the last should desire to buy wool of the first, and that the other should desire to keep it at home, in order to manufacture it. Here then is a natural advantage which the first country has over the latter, and which cannot be taken from her. I shall suppose that subsistence is as cheap in one country as in the other; that is to say, that bread and every other necessary of life is at the same price. If the workmen of the first country (by having been the founders of the cloth manufacture, and by having had, for a long tract of years, so great a superiority over other nations, as to make them, in a manner, absolutely dependent upon them for cloths) shall have raised their prices from time to time; and if, in consequence of large profits, long enjoyed without rivalship, these profits shall have been consolidated with the real value, in consequence of an habitually greater expence in living, which implies an augmentation of wages; this country may thereby lose all the advantages it had from the low price and superior quality of its wool. But if, on the other hand, the workmen in the last country work less, be less dextrous, pay extravagant prices for wool at prime cost, and be at great expence in carriage; if manufactures cannot be carried on successfully, but by public authority, and if private workmen be crushed with excessive taxes upon their industry; all the accidental advantages which the last country had over the first, may come to be more than balanced, and the first may regain those which nature first had given her. But this should by no means make the first country rest secure. These accidental inconveniences found in the rival nation may come to cease; and therefore her only real security for this branch, will be the cheapness of the workmanship.

Secondly, In speaking of a standard price, for goods in the last chapter, I established a distinction between one regulated by the height of foreign demand, and another kept as low as the possibility of supplying the manufacture can admit. This requires a little explanation.

It must not here be supposed that a people, from a principle of public spirit, will ever be engaged to relinquish the profit of a rise in foreign demand; and as this rise may proceed from circumstances and events which are entirely hid from the manufacturers, such revolutions are unavoidable. We must therefore restrain the generality of our former proposition, and observe, that the indispensible vibrations of this foreign demand do no harm; but that the statesman should be constantly on his guard to prevent the subversion of the balance, or the smallest consolidation of extraordinary profits with the real value. This he may accomplish, as has been observed, by multiplying hands in those branches of exportation, upon which profits have risen. This will increase the home supply, and frustrate his own people of extraordinary gains, which would otherwise terminate in a prejudice to foreign trade.

A statesman may sometimes, out of a principle of benevolence, perhaps of natural equity towards the classes of the industrious, as well as from sound policy, permit extraordinary profits, as an encouragement to some of the more elegant arts, which serve as an ornament to a country; which establish a reputation for taste and refinement in favour of a people, and thereby make strangers prefer articles of their production, which have no superior merit but the name of the country they come from: but even these, he never ought to allow to rise so high in the price as to prove an encouragement to other nations to establish a successful rivalship.

Thirdly, The encouragement recommended to be given to the domestic consumption of superfluities, as oft as the foreign demand for them happens to fall so low as to be followed with the distress of the workmen, requires a little farther explanation.

If what I laid down in the last chapter with respect to this encouragement be taken literally, I own it appears an absurd supposition, because it both implies a degree of public spirit in those who are in a capacity to purchase the superfluities, no where to be met with, and at the same time a self-denial, in discontinuing the demand, so soon as another branch of foreign trade is opened for the employment of the industrious; one and the other being equally contrary to the principles upon which we have founded the whole scheme of our political oeconomy.

I have elsewhere observed, that were revolutions to happen as suddenly as I am obliged to represent them, all would go into confusion.

What, therefore, is recommended upon such an exigence comes to this. That when a statesman finds, that the natural taste of his people does not lead them to profit of the surplus of commodities which lie upon hand, and which used to be exported, he should interpose his authority and management in such a way as to prevent the distress of the workmen, and when, by a sudden fall in a foreign demand, this distress becomes unavoidable, without a more powerful interposition, he should then himself become the purchaser, if others will not; or, by premiums or bounties on the exportation of the surplus which lies upon hand, promote the sale of it at any rate, until the supernumerary hands can be otherwise provided for. And although I allow that the rich people of a state are not commonly led, from a principle either of public spirit or self-denial, to concur in such political operations; yet we cannot deny, that it is in the power of a good governor, by exposing the political state of certain classes of the people, to prevail with men of substance to join in schemes for their relief; and this is all I intend to recommend in practice. My point of view is to lay down the principles, and I never recommend them farther than they may be rendered possible in execution, by preparatory steps, and by properly working on the spirit of the people.