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All prudent men think it best to sell at least as much as they buy; and if they have money enough for all demands, they may thrive by it. But when their purchases habitually exceed their sales, there is no recognised mode of settling balances except by cash. If cash had been hoarded, it might be safe and advisable to go on in this way, till the excess of usual and known demands should be exhausted. The values received, and put to use, might be profitable, when the hoarded money would not be so. But farther than that, could not be regarded as within the bounds of commercial prudence.

As a man, by cultivating his estate, and taking care not to buy more than he sells, may thrive, so the home trade of a nation, when there is no excess of imports over exports, is the way to a nation's wealth; and as a man who habitually runs in debt, must ultimately fail, so must a nation fail, that habitually imports more than it exports. The wealth of individuals and of nations is usually created at home. It never comes from abroad, except by a practice directly the reverse of M. Say's hypotheses. In that way, it may come; and in that way Great Britain has acquired immense wealth.

But Adam Smith was the author of the mode of reasoning above ascribed to M. Say; and it was originally presented by him in the following form: "If the tobacco which, in England, is worth only a hundred thousand pounds, when sent to France, will purchase wine which is, in England, worth a hundred and ten thousand pounds, the exchange will augment the capital of England by ten thousand pounds. If a hundred thousand pounds of English gold, in the same manner, will purchase French wine, which in England, is worth a hundred and ten thousand, this exchange will equally augment the capital of England by ten thousand pounds. As a merchant who has a hundred and ten thousand pounds worth of wine in his cellar, is a richer man than he who has only a hundred thousand pounds worth of tobacco in his warehouse, so is he likewise a richer man than he who has only a hundred thousand pounds worth of gold in his coffers. He can put into motion a greater quantity of industry, and give revenue, maintenance, and employment, to a greater number of people than either of the other two. But the capital of the country, is equal to the capitals of all its different inhabitants, and the quantity of industry which can be annually maintained in it, is equal to what all these different capitals can maintain. Both the capital of the country, therefore, and the quantity of industry which can be maintained in it, must generally be augmented by this exchange."

Adam Smith, as will be seen, has raised two questions here, one

of private and the other of public economy, and has confounded the two, to help himself to an absurd conclusion. In the matter of private economy, he is right, and right in his conclusions, so far as they fall within that range; but in that of public economy, he is wrong, because he is absurd. As we admit the correctness of his conclusions, so far as they relate to private economy, it is unnecessary to consider them. So far as public economy is concerned, the tobacco and the wine are equivalents. The nation is neither richer nor poorer, for the exchange, though the merchant has gained ten thousand pounds. Adam Smith's statement, that there is ten thousand pounds more ability to put industry in motion, is true as applied to the merchant, and false as applied to the nation, so far as his premises go. The gain of the merchant has only changed hands in England, so far as we are informed. It might have done more for industry in other hands, or it may do more in his; but on that point nothing need be said, as nothing can be proved. Adam Smith's reasoning, therefore, falls to the ground, as beginning with the exchange of the tobacco for the wine. But in the exchange of the gold for the wine, he has made a sad blunder. As he calls this "a trade of consumption," in this very connexion, we conclude his hypothesis leaves this wine, bought in France with gold, to be consumed in England. If so, though the merchant is richer by ten thousand pounds, nothing is more clear, than that the nation is minus a hundred thousand. If the wine had been re-exported, the nation might have been a gainer. But this does not appear to be a part of the hypothesis. The wine is drunk at home, and the gold is in France. Here is seen the difference between private and public economy, when private and public interests are both involved in the same foreign commercial transactions. Not that there is any difference in principle between private and public economy, nor that there can be two kinds of economy, of which more elsewhere; but a man may be enriched by the same act that subtracts from the wealth of a nation.

The ground of this fallacy of M. Say, Adam Smith, and others of that school, lies in the assumption, that there is no economical difference between money and the commodities for which it is exchanged -a question that has already been considered in chapter xiv. It is remarkable, how devotion to a theory will blind the eyes to absurdity. This, as will be found, is one of the most vital errors that could possibly be committed in a system of public economy. It is, perhaps, true to say, that it is the fundamental error of the advocates of Free Trade, and the source of all the rest.




These three are a natural Family of Interests in the United States -Agriculture alone subjects a Nation to Dependence-Adam Smith on this Point.-Adam Smith and his School have furnished the best Refutation of their own Errors.-An Argument on the indissoluble Connexion between these three great Interests.-The Mercantile and Agricultural Systems," as defined by Adam Smith and others, considered ―There is no Foundation for this Array of these two Systems, as opposed to each other, and made so much of by some of the Economists-The Importing Merchants favor Free Trade.Smith's and Gee's Description of this Class of Traders.-The Independent Position of every Commercial Transaction.

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Ir is remarkable, that these three comprehensive words, agriculture, manufactures, and commerce, have, from the beginning of our history, been employed to represent the three cardinal interests of the country. They are equally natural, proper, and true -natural as suggested by experience and observation; proper as expressing the things intended; and true as expressing them in their natural order and relative importance. Each of them, in a great country-more especially in one that aspires to independence is indispensable to each. They are a natural family of interests, that can not be divorced, without fatal injury to the common good; and since each is indispensable to the wealth, greatness, power, and independence of a nation, it is not easy to say which could be wanting with the least impediment to these objects. Agriculture is doubtless most necessary to the subsistence of a people, in the more primitive condition of the race; but there can be but little of private or public wealth, but little of civilization, nothing of independence as a political commonwealth, and there must be almost or quite a total want of political power among nations, with that member of the great family whose sole pursuit is agriculture merely. To furnish food for others to live on, and raw materials for others to work over and grow rich by, in the application of their ingenuity, skill, and art, is a condition of dependence and subserviency, both of individual persons and of nations. Adam Smith has stated this point with great force, as follows: "A small quantity of manufactured produce purchases a great quantity of rude produce. A trading and manufacturing country, therefore,

with a small part of its manufactured produce, will purchase a great part of the rude produce of other countries; while, on the contrary, a country, without trade and manufactures, is generally obliged to purchase, at the expense of a great part of its rude produce, a very small part of the manufactured produce of other countries. The one exports what can subsist and accommodate but a very few, and imports the subsistence and accommodation of a great number. The other exports the accommodation and subsistence of a great number, and imports that of a very few only. The inhabitants of the one must always enjoy a much greater quantity of subsistence than what their own lands, in the actual state of their cultivation, could afford; and the inhabitants of the other must always enjoy a much smaller quantity."

This, as can not be denied, is very remarkable language, for one who is set up as authority in the United States, to make us contented with being mere raw producers for Europe, and Great Britain in particular. The case, certainly, is here very fairly stated by Adam Smith: "The one [the raw-producing country] exports what can subsist and accommodate but a very few [of its own population], and imports the subsistence and accommodation of a greater number [in the manufacturing country]. The other [the manufacturing country] exports the subsistence and accommodation of a greater number [of its own population], and imports that of a very few only [of the population of the raw-producing country]. The inhabitants of the one [the manufacturing country] must always enjoy a much greater quantity of subsistence," &c. Again, the same principle is developed by Adam Smith in the following sentence: "In every country of Europe we find, at least, a hundred people who have acquired great fortunes from small beginnings, by trade and manufactures-the industry which properly belongs to towns-for one who has done so by that which properly belongs to the country, viz., the raising of rude produce, by the improvement and cultivation of land."

The condition of the raw-producing country, as above described by Adam Smith, is precisely that into which it was proposed by the secretary of the treasury, in his annual report of December, 1845, to put the United States; that is, to raise rude produce for manufacturing nations, such as England. He says: "Agriculture is our chief employment. It is best adapted to our situation." England, and other foreign workshops, would, in such a case, make all the fortunes, by the sweat of American brows. Admit

that these fortunes would otherwise be made by American manufacturing towns, under a protective system, the capital would then remain at home, and be employed here. It would flow back from the towns to the country, and enrich the whole community. Is any one so simple as to imagine, that it is equally well, and even better, for the country, that its money should go abroad to enrich foreigners, than to stay at home, and enrich Americans, who would employ it all at home?-But Adam Smith discloses yet another pertinent and forcible principle, applicable here, in the following words: "The commerce and manufactures of cities, instead of being the effect, have been the cause and occasion of the cultivation of the country." Thus he recognises, very justly, the indissoluble connexion between agriculture, manufactures, and commerce, and at the same time proves that the manufacturing and commerce must be done by the nation that produces the raw material, else its wealth will be drawn away, and the manufacturing nation or nations will grow rich at its expense. It is well to be able to establish so clear a proposition, by the authority which is cited to overthrow it. Fortunately it happens, as we often have occasion to remark, that every one of the European economists, from whom the doctrine of Free Trade has been borrowed by their American disciples, who seem to be incapable of discrimination, has unavoidably laid down, here and there, isolated propositions, which not only establish a protective policy on the strongest possible foundation, but which utterly subvert all the reasoning, found in the same authorities, favoring Free Trade. They have themselves furnished the best refutation of their own errors.

Dr. List, a German economist, and an advocate of Protection, says: "The production of raw material and food, is of high importance among the nations of the temperate zone, only with regard to their internal commerce. By the export of grain, wine, flax, hemp, wool, and such like, a rude or poor nation, in the infancy of its civilization, may signally raise its agriculture; but a great nation has never thereby arrived at wealth, civilization, and power. One may lay it down as a rule, that a nation is so much the more wealthy and powerful, the more it exports manufactured products, the more it imports raw materials, and the more it consumes the products of the torrid zone."

We proceed to state, that, in proportion as home manufactures are multiplied and extended by a protective system, so, not in the same proportion, but in a far greater proportion, are the agriculture

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