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are aware, indeed, that the British economists least speak of the profits of the merchants as belonging to this reckoning. But all the profits of the American importer fall as much within the scope of the home trade as any other domestic transaction for the transaction that makes his profit is domestic, between him and the American people; and as to the profits of the foreign factor, who, hitherto, has made more than the American importer, he carries it all out of the country, which, for this reason, should not be mentioned by our opponents, who only lose by it in the argument, and help our side.

But suppose that, for other reasons-though we do not see where they can be found-the relative augmentation, when perfect accuracy is obtained, should be on the side of the exports, still the difference between the two is so prodigious, that the general result could not be materially affected; and the domestic history of the country, as to its periods of commercial prosperity and adversity, corresponds so well with the assumption, that these tables, on the whole, are a pretty fair exhibit, as to impart to them a strong presumptive sanction.

It is remarkable how practical men can never express themselves, when the effects of disturbing the balance of trade are apparent, without calling it involuntarily, and as a matter of course, by that name; and not less remarkable how a soi-disant Free-Trade nation will itself do it by the mouth of its organs. For example, the London Times of January 19, 1847, devotes a column to the subject, all under this name, without thinking of its inconsistency with the Free-Trade theory. It finds "the balance" disturbed by sending, as a loan, one million sterling of bullion from the bank of England to the bank of France. The money-market feels it; interest rises from 3 to 3 per cent.; and there is "alinost a panic." How much more, that journal says, when the other two or three millions, promised, shall go? It predicts, that, in the course of the year 1847, there will be "a balance of trade" against England of seventeen millions sterling; that there will be a crisis, and great commercial distress; and recommends that every effort should be made to discourage and check imports, so as to reduce this anticipated "balance." This is very inconsistent language for a Free-Trade country, and a Free-Trade journal. It only shows, that when the pressure of reality comes, they can not help calling things by their right names. Even the export of so small a sum as one million sterling, produces "almost a panic." This trifling loss of bullion,

or specie, would not be felt in o dinary times; but in consequence of the potato-rot and scarcity of bread-stuffs in Great Britain, she is not only paying higher for her necessary supplies, but is obliged to buy more than usual; in other words, she buys more than she sells, imports more than she exports, which brings "the balance of trade" against her. Every million of money, therefore, that is exported at such a time, to settle balances in the United States or elsewhere, for breadstuffs, is felt, and threatens a crisis-occasions a panic. Why?-Because there is such a thing as a favorable or unfavorable balance of trade between one nation and all others —a state of things easily and universally recognised. In practice, in the current of events, whether it be one way or the other, all see and feel it; while in theory, it is denied. Why does not Great Britain stand by her own proclaimed theory, at such a time, and not be so sensitive because of this draught on her bullion, or specie? There can be no danger from this course, according to the doctrine of her Smiths, her Ricardos, and her M'Cullochs. But practice, experience, is found to be a very different thing from a Free-Trade theory. In doctrine they say, Free Trade always balances itself; in practice, they dare not trust it.

Precisely according to these predictions the crisis came, and the commercial condition of England never received a greater shock than in 1847, all from an unfavorable balance of trade, inducing large exports of specie, of which some 20 to 25 millions of dollars came to the United States to pay for bread-stuffs. And yet every one of our Free-Trade economists say, this was no disadvantage, because the money was exported as a commodity.

But Adam Smith has given up the question, as follows: "It would, indeed, be more advantageous," he says, "for England, that it could purchase the wines of France with its own hardware and broadcloth, than with either the tobacco of Virginia, or with the gold and silver of Brazil and Peru."-" As a country which has wherewithal to buy tobacco, will never be long in want of it; so neither will one be long in want of gold and silver which has wherewithal to purchase these metals." The first of these extracts needs no comment. The simplicity of the second, however, is really too remarkable to be passed over without notice. In the first place, it begs the question: a nation will not want money that has wherewithal to purchase it. Nor will a beggar in the streets. These Free-Trade economists say, and say truly, that money is a commodity, and as much a subject of trade as any other commod

ity; but why should they fail to consider, that it has attributes, and discharges functions, by the common consent of mankind, which can be ascribed to no other commodity? Why should they fail to consider the consequences resulting from the facts, that it is a common currency throughout the world, in the negotiation of exchanges of all other commodities, and that it is the only thing to settle balances, when barter is declined by a creditor?

If the United States is in the habit of buying annually more than it sells, or can sell, and has no money to spare from its own bosom, how are these balances to be settled? That is the question. Adam Smith and others of his school answer, that we shall not long want the money, if we have wherewithal to buy it. This is only another form of putting the same question, and it is a problem still. Certainly, it is not helping us out of the difficulty. "If we have wherewithal to buy it ;" alias, if there be a market for our "wherewithal." This last is the only condition on which Adam Smith could fairly have come to his conclusion; and the very case supposes, that this condition is out of the question. Money in abeyance is the correlative of the "wherewithal;" and since the money is not in abeyance, or if it be not, it is impossible that we should have the wherewithal." It is clear, if the money had been in abeyance to anything we had to give for it, it would have been realized. The case supposed, therefore, could not possibly

occur.

This apparent failure of the Free-Trade economists to recognise the peculiar and exclusive functions of money, in the market of the world, and their pertinacity in ranking it with all other exchangeable commodities, would seem to have heen the occasion of this very erroneous conclusion, that it is equally obtainable by other commodities, as others are by itself. There is no exchangeable commodity which money can not buy ; but it may happen that all the commodities a man or a nation may have, can not buy money, unless it be at ruinous prices, and that to a limited extent, simply because there is no market, no demand for them, where money will be given.

This fallacious doctrine, it seems, was in vogue when Joshua Gee published his work entitled "Trade and Navigation of Great Britain," and he declares that he undertook it expressly to expose this error. He says: "So mistaken are many

For the distinction between money as a subject and as the instrument of trade, see chapter xiv.

people, that they say, money is a commodity like other things, and think themselves never the poorer for what the nation daily exports," of the precious metals. He therefore says: "I have thought the only method to furnish gentlemen with proper considerations, is to give some account of the commodities the nations we trade with take from us, and what we take from them, and to give my thoughts where I think the balance lies." And he did so, to the full conviction of all British statesmen, who, in their legislation, have adhered to Gee's doctrine, from that time to the present. Any one can see, that a true account of the foreign trade of Great Britain, or of any other nation, according to this plan of Joshua Gee, that is, "of the commodities the nations we trade with take from us, and what we take from them," will show whether that nation is gaining or losing by its foreign commerce. If it gets an annual balance of money, it is gaining; if it parts with an annual balance of money, it is losing.

Among the many true things which Adam Smith has saidand he has said enough for all our purposes-nothing is more true than the following:

The balance of produce and consumption [home produce and consumption] may be constantly in favor of a nation, though what is called the balance of trade [its foreign trade] be 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 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 which it deals, may be gradually increasing; and yet its real wealth, the exchangeable value of the annual produce of its land and labor, 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 [this was written in 1777], may serve as a proof, that this is by no means an impossible supposition."

Apropos. This is the more valuable, not only as coming from such authority, but as being the best possible description of our own case, such as it was before the revolution, such as it was under the confederation, and such, to a great extent, as it has been, even under the operation of the federal constitution, down to this time, for want of adequate protection. Exactly so. Such were

the enterprise, industry, and other virtues of the American fathers, and such the resources and capabilities of the country, that they improved their lands, built houses and towns, and created a great amount of permanent wealth, which could not be conveniently carried away, and which remained behind, notwithstanding all their wrongs. Exactly so. "The circulating coin gradually decayed" for fifty years, or more, "different sorts of paper-money being substituted in its place." Exactly so. "Even the debts contracted with the principal nations," Great Britain chiefly, "with which they dealt, gradually increased." Exactly so. "And yet the real wealth [the permanent wealth], the exchangeable value of the annual produce of land and labor may, during that period, have been increased in a much greater proportion." It doubtless increased, in either greater or less proportion, as compared with the increase of these foreign debts, chiefly contracted with the mother-country probably, in a greater proportion. Certainly, it would have been a harder case than was alleged, and is generally supposed, if it did not. And was this the grace done to the colonists, that the mother-country did not carry away their houses, and other permanent fixtures, created by their industry and labor; but only took away their money-everything that could be taken, and run them in debt-debts constantly increasing for half a century—to absorb all the money as fast as it should come in-and left the colonists, not exactly like the Mexicans in California, with hides for a currency, but with that which was worse, and good for nothing, "different sorts of paper-money," that had no specie basis.

Yes, verily, nothing could be more true than this description, by Adam Smith, of the state of the colonies before the revolution. It was this very state of things that occasioned the revolution. And yet Adam Smith, an economist of the highest pretensions, and of a universal credit that has run down through three fourths of a century, has the audacity to adduce this condition of the colonists, not only as a reason why they ought to have been very contented, but as irrefragable proof, according to his theory, of their prosperity and increasing wealth! It is no matter, according to him, how much the foreign balances are against the country; or how large the foreign debts, and how much they are increasing; or though all the precious metals, as fast as they come in, be drawn away from the country by these debts; or though the circulating medium, by such a cause, be composed of irredeemable paper, not really worth a penny;—all this is no matter, according to Adam Smith,

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