whole capital annually employed would be distributed among the people: but in the other, only that part of the capital which was employed in producing commodities with which the foreign goods were purchased would be annually distributed among the people. The one would carry on a direct foreign trade, the other a roundabout trade. All countries exchange with one another partly native and partly foreign goods; that country will be the principal gainer in whose cargoes there is the greatest proportion of native goods, pp. 64, 65.

If England paid for the commodities imported from France with gold and silver and not with tobacco and India goods, the balance would be supposed against us. The trade would give revenue to both countries, but more to France. If the tobacco which in England is worth only 100,000l. when sent to France will purchase wine which is in England worth 110,000l., the exchange will augment the capital of England by 10,000l. The same may be said of a like sum of English gold. It would be more advantageous for England that it could purchase the wines of France with its own hardware than with the tobacco of Virginia or the gold and silver of Peru, since a direct foreign trade of consumption is always more advantageous than a roundabout one. But there is no reason to suppose that a roundabout foreign trade of consumption carried on with gold and silver is less advantageous than any other equally roundabout one. A country which has no mines is not more likely to be exhausted of gold and silver by the exportation of those metals than one which does not grow tobacco by the exportation of that plant, pp. 65, 66.

That is thought a losing trade which a workman carries on with the alehouse, and the trade which a manufacturing nation would naturally carry on with a wine country may be considered of the same nature. The trade with the alehouse is as advantageous and

necessary to the workman as any other (though more liable to be abused), the employment of the brewer being as necessary a division of labour as any other. Individuals may ruin their fortunes by an excessive consumption of fermented liquors, but there seems to be no risk that a nation should do so. The cheapness of wine is the cause, not of drunkenness, but of sobriety. The restraints upon the wine trade are not calculated to keep people from the alehouse, but to prevent them from going where they can buy the best and cheapest liquor. They favour the wine of Portugal, and discourage that of France, because the Portuguese, it is said, are better customers for our manufactures than the French. The arts of underling tradesmen are thus erected into political maxims for the conduct of a great empire. By such maxims nations have been taught that their interest consisted in beggaring all their neighbours. Commerce has become the source of animosity. The ambition of kings and ministers has not been more fatal to the repose of Europe than the jealousy of merchants and manufacturers, pp. 66-68.

It was the spirit of monopoly which invented this doctrine. It is the interest of the people to buy of those who sell the cheapest. This proposition has been called in question only by merchants and manufacturers whose interest is opposite to that of the great body of the people. Hence the duty on goods imported by alien merchants, the duties and prohibitions on foreign manufactures, and the restraints upon the importation of goods from countries with which the balance of trade is supposed disadvantageous, that is, from those countries against whom national animosity happens to be most violently inflamed,' pp. 68, 69.

The wealth of a neighbouring nation, though dangerous in war, is advantageous in trade. A rich man is

All this is now happily at an end.

likely to be a better customer to the people in his neighbourhood than a poor man; so is likewise a rich nation. The manufacturers of a rich nation may be dangerous rivals to those of their neighbours; but the competition is advantageous to the great body of the people. Private people who want to make a fortune resort to the capital, or to some of the great commercial towns; where much wealth circulates, some share of it may fall to them. The same maxims should make a whole nation regard the riches of its neighbours as an occasion for itself to acquire riches. The modern maxims of foreign commerce, by aiming at the impoverishment of all our neighbours, tend to render that very commerce contemptible. Hence the restraints on the commerce between France and England. If the real interest of both countries were considered, a reciprocal commerce might be most advantageous to each. France is the nearest neighbour to Great Britain; the returns might be made four, five, or six times in the year, consequently the same capital would keep in motion four, five, or six times the quantity of industry which an equal capital could do in most other branches of foreign trade. Between the parts of France and Great Britain the most remote from one another, the returns might be expected once a year; this would make the trade with France three times more advantageous than the trade with North America. France, besides, contains twenty-four millions of inhabitants; America, but three. France is also a much richer country. Such is the difference between that trade, which the wisdom of both nations has thought proper to discourage, and that which it has favoured the most, pp. 69-71.

The same circumstances which would have rendered an open and free commerce between the two countries so advantageous to both have occasioned the principal obstructions to that commerce, owing to national animosity and mercantile jealousy. Every town and

country, in proportion as they have opened their ports to all nations, have been enriched by the free trade, pp. 71, 72.

There is another balance, which, according as it happens to be favourable or unfavourable, occasions the prosperity or decay of every nation. This is the balance of the annual produce and consumption, which is entirely different from the balance of trade. It may take place in a nation which has no foreign trade. It may take place in the whole earth, of which the wealth and population may be either increasing or decaying. The balance of produce and consumption may be in favour of a nation, though the balance of trade be against it, pp. 72, 73.

CHAPTER IV.

Of Drawbacks.1

MERCHANTS and manufacturers, not contented with the monopoly of the home market, have sought certain encouragements to exportation: of these, drawbacks seem to be the most reasonable. To allow the merchant to draw back the whole or a part of whatever excise or inland duty is imposed upon domestic industry can never occasion the exportation of more 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.

Most of the complicated laws relating to the customs were consolidated by Pitt in 1787. He also established bonded warehouses, which did away with the necessity for drawbacks in most cases. They still exist in a few, such as tobacco and plate. See Rogers's and M'Culloch's notes.

They tend to preserve the natural division and distribution of labour in the society, pp. 73, 74. The same thing may be said of the drawbacks upon the re-exportation of foreign goods imported. Formerly the merchant was allowed to draw back half the duty upon exportation, provided the exportation by the English merchant took place within twelve months; by the alien within nine months: this was afterwards extended to three years, p. 74. Upon the exportation of tobacco, of which we had the monopoly, the whole duties were drawn back. Sugars came nearly under the same rule. Some goods

are entirely prohibited to be imported for home consumption. If imported for exportation, no part of the duties to which they are in that case liable is drawn back; such are French cambrics, printed calicoes, &c., pp. 74, 75.

Upon all French commodities less of the duties were allowed to be drawn back than upon those of other countries, pp. 75-77.

Drawbacks were perhaps granted for the encouragement of the carrying trade, which, as the freight of the ships is frequently paid by foreigners, was peculiarly fitted for bringing gold and silver into the country. The motive of the institution was foolish, though the institution itself was reasonable. Such drawbacks cannot force into this trade a greater share of the capital of the country than what would have gone into it of its own accord, had there been no duties on importation. The carrying trade is a resource to those capitals which cannot find employment in the agriculture or the manufactures of the country. The revenue profits by that part of the duty which is retained. If the whole duties had been retained, the foreign goods could seldom have been exported, nor consequently imported, for want of a market. These reasons will justify drawbacks in those cases in which the goods for the exportation of which they are given are really exported to some foreign country, and not clandestinely reimported into our own, pp. 77,78.