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from the most infamous abuse and detraction, from personal insults, nor sometimes from real danger, arising from the insolent outrage of furious and disappointed monopolists.

not tend so much to disqualify him from being | same manner as the latter inflame their work. employed in a new trade, as those of the for- men, to attack with violence and outrage the mer from being employed in any. The ma-proposers of any such regulation; to attempt nufacturer has always been accustomed to to reduce the army would be as dangerous as look for his subsistence from his labour only; it has now become to attempt to diminish, in the soldier to expect it from his pay. Appli- any respect, the monopoly which our manucation and industry have been familiar to the facturers have obtained against us. one; idleness and dissipation to the other.nopoly has so much increased the number of But it is surely much easier to change the di- some particular tribes of them, that, like an rection of industry from one sort of labour to overgrown standing army, they have become. another, than to turn idleness and dissipation formidable to the government, and, upon mato any. To the greater part of manufactures, ny occasions, intimidate the legislature. The besides, it has already been observed, there are member of parliament who supports every other collateral manufactures of so similar a proposal for strengthening this monopoly, is rature, that a workman can easily transfer bis sure to acquire not only the reputation of unindustry from one of them to another. The derstanding trade, but great popularity and greater part of such workmen, too, are occa-influence with an order of men whose num sionally employed in country labour. The bers and wealth render them of great import. stock which employed them in a particular ance. If he opposes them, on the contrary, manufacture before, will still remain in the and still more, if he has authority enough to country, to employ an equal number of peo- be able to thwart them, neither the most acple in some other way. The capital of the knowledged probity, nor the highest rank, nor country remaining the same, the demand for the greatest public services, can protect him labour will likewise be the same, or very nearly the same, though it may be exerted in different places, and for different occupations. Soldiers and seamen, indeed, when discharged from the king's service, are at liberty to exerThe undertaker of a great manufacture, cise any trade within any town or place of who, by the home markets being suddenly Great Britain or Ireland. Let the same na laid open to the competition of foreigners, tural liberty of exercising what species of in- should be obliged to abandon his trade, would dustry they please, be restored to all his Ma- no doubt suffer very considerably. That part jesty's subjects, in the same manner as to sol- of his capital which had usually been employdiers and seamen ; that is, break down the ex- ed in purchasing materials, and in paying his clusive privileges of corporations, and repeal workmen, might, without much difficulty, perthe statute of apprenticeship, both which are haps, find another employment; but that part really encroachments upon natural liberty, of it which was fixed in workhouses, and in and add to those the repeal of the law of set the instruments of trade, could scarce be distlements, so that a poor workman, when posed of without considerable loss. thrown out of employment, either in one trade quitable regard, therefore, to his interest, reor in one place, may seek for it in another quires that changes of this kind should never trade or in another place, without the fear ei-be introduced suddenly, but slowly, gradualther of a prosecution or of a removal; and ly, and after a very long warning. The leneither the public nor the individuals will suf- gislature, were it possible that its deliberations fer much more from the occasional disbanding some particular classes of manufacturers, than from that of the soldiers. Our manufacturers have no doubt great merit with their country, but they cannot have more than those who defend it with their blood, nor deserve to be treated with more delicacy.

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could be always directed, not by the clamorous importunity of partial interests, but by an extensive view of the general good, ought, upon this very account, perhaps, to be particularly careful, neither to establish any new monopolies of this kind, nor to extend further those which are already established. Every To expect, indeed, that the freedom of trade such regulation introduces some aegree of should ever be entirely restored in Great Bri-real disorder into the constitution of the state, tain, is as absurd as to expect that an Oceana which it will be difficult afterwards to cure or Utopia should ever be established in it. without occasioning another disorder. Not only the prejudices of the public, but, How far it may be proper to impose taxes what is much more unconquerable, the private upon the importation of foreign goods, in orinterests of many individuals, irresistibly op-der not to prevent their importation, but tc pose it. Were the officers of the army to op-raise a revenue for government, I shall consi.. pose, with the same zeal and unanimity, any der hereafter when I come to treat of taxes. reduction in the number of forces, with which Taxes imposed with a view to prevent, or even master manufacturers set themselves against to diminish importation, are evidently as de every law that is likely to increase the num-structive of the revenue of the customs as of ber of their rivals in the home market; were the freedom of trade. Note 27.

the former to animate their soldiers, in the

CHAP. III.

OF THE EXTRAORDINARY RESTRAINTS UPON
THE IMPORTATION OF GOODS OF ALMOST
ALL KINDS, FROM THOSE COUNTRIES WITH
WHICH THE BALANCE IS SUPPOSED TO BE

DISADVANTAGEOUS.

PART I. Of the Unreasonableness of those
Restraints, even upon the Principles of the
Commercial System.

put an end to almost all fair commerce between
the two nations; and smugglers are now the
principal importers, either of British goods
into France, or of French goods into Great
The principles which I have been
Britain.
examining, in the foregoing chapter, took
their origin from private interest and the spi-
rit of monopoly; those which I am going to
examine in this, from national prejudice and
animosity. They are, accordingly, as might
well be expected, still more unreasonable.
They are so, even upon the principles of the
commercial system.

First, Though it were certain that in the To lay extraordinary restraints upon the im- case of a free trade between France and Eng portation of goods of almost all kinds, from land, for example, the balance would be in those particular countries with which the ba- favour of France, it would by no means follance of trade is supposed to be disadvanta- low that such a trade would be disadvantageous, is the second expedient by which the geous to England, or that the general balance commercial system proposes to increase the of its whole trade would thereby be turned If the wines of France are quantity of gold and silver. Thus, in Great more against it. Britain, Silesia lawns may be imported for better and cheaper than those of Portugal, or home consumption, upon paying certain du- its linens than those of Germany, it would be ties; but French cambrics and lawns are pro- more advantageous for Great Britain to purhibited to be imported, except into the port chase both the wine and the foreign linen of London, there to be warehoused for ex- which it had occasion for of France, than of portation. Higher duties are imposed upon Portugal and Germany. Though the value the wines of France than upon those of Por- of the annual importations from France would tugal, or indeed of any other country. By thereby be greatly augmented, the value of what is called the impost 1692, a duty of five- the whole annual importations would be diand-twenty per cent. of the rate or value, was minished, in proportion as the French goods laid upon all French goods; while the goods of the same quality were cheaper than those of of other nations were, the greater part of them, the other two countries. subjected to much lighter duties, seldom ex- case, even upon the supposition that the whole ceeding five per cent. The wine, brandy, French goods imported were to be consumed salt, and vinegar of France, were indeed ex- in Great Britain.

This would be the

cepted; these commodities being subjected to But, Secondly, A great part of them might other heavy duties, either by other laws, or by be re-exported to other countries, where, beparticular clauses of the same law. In 1696, ing sold with profit, they might bring back a a second duty of twenty-five per cent. the first return, equal in value, perhaps, to the prime not having been thought a sufficient discour-cost of the whole French goods imported. agement, was imposed upon all French goods, What has frequently been said of the East except brandy; together with a new duty of India trade, might possibly be true of the five-and-twenty pounds upon the ton of French French; that though the greater part of East wine, and another of fifteen pounds upon the India goods were bought with gold and silton of French vinegar. French goods have ver, the re-exportation of a part of them to never been omitted in any of those general other countries brought back more gold and subsidies or duties of five per cent. which have silver to that which carried on the trade, than been imposed upon all, or the greater part, of the prime cost of the whole amounted to. the goods enumerated in the book of rates. One of the most important branches of the If we count the one-third and two-third sub- Dutch trade at present, consists in the carsidies as making a complete subsidy between riage of French goods to other European them, there have been five of these general countries. Some part even of the French wine subsidies; so that, before the commencement drank in Great Britain, is clandestinely imof the present war, seventy-five per cent. may ported from Holland and Zealand. If there be considered as the lowest duty to which the was either a free trade between France and greater part of the goods of the growth, pro- England, or if French goods could be importduce, or manufacture of France, were liable. ed upon paying only the same duties as those But upon the greater part of goods, those du- of other European nations, to be drawn back ties are equivalent to a prohibition. The upon exportation, England might have some French, in their turn, have, I believe, treated share of a trade which is found so advanta our goods and manufactures just as hardly; geous to Holland. though I am not so well acquainted with the

Thirdly, and lastly, There is no certain criparticular hardships which they have imposed terion by which we can determine on which Those mutual restraints have side what is called the balance between any

upon them.

two countries lies, or which of them exports of debt and credit between England and Holto the greatest value. National prejudice and land will not be regulated entirely by the oranimosity, prompted always by the private in- dinary course of the dealings of those two terest of particular traders, are the principles countries with one another, but will be influwhich generally direct our judgment upon all enced by that of the dealings in England with questions concerning it. There are two cri- those other places. England may be obliged terions, however, which have frequently been to send out every year money to Holland, appealed to upon such occasions, the custom- though its annual exports to that country may house books and the course of exchange. The exceed very much the annual value of its imcustom-house books, I think, it is now gene- ports from thence, and though what is called rally acknowledged, are a very uncertain cri- the balance of trade may be very much in terion, on account of the inaccuracy of the favour of England. valuation at which the greater part of goods are rated in them. The course of exchange is, perhaps, almost equally so.

In the way, besides, in which the par of exchange has hitherto been computed, the ordinary course of exchange can afford no sufficient indication that the ordinary state of debt and credit is in favour of that country which seems to have, or which is supposed to have, the ordinary course of exchange in its favour; or, in other words, the real exchange may be, and in fact often is, so very different from the computed one, that, from the course of the latter, no certain conclusion can, upon many occasions, be drawn concerning that of the

When the exchange between two places, such as London and Paris, is at par, it is said to be a sign that the debts due from London to Paris are compensated by those due from Paris to London. On the contrary, when a premium is paid at London for a bill upon Paris, it is said to be a sign that the debts due from London to Paris are not compensated by those due from Paris to London, but that a balance in money must be sent out former. from the latter place; for the risk, trouble, When for a sum of money paid in Engand expense, of exporting which, the premium land, containing, according to the standard of is both demanded and given. But the ordi-the English mint, a certain number of ounces nary state of debt and credit between those of pure silver, you receive a bill for a sum of two cities must necessarily be regulated, it is money to be paid in France, containing, acsaid, by the ordinary course of their dealings cording to the standard of the French mint, with one another. When neither of them im- an equal number of ounces of pure silver, exports from the other to a greater amount than change is said to be at par between England it exports to that other, the debts and credits and France. When you pay more, you are of each may compensate one another. But supposed to give a premium, and exchange is when one of them imports from the other to said to be against England, and in favour of a greater value than it exports to that other, France. When you pay less, you are sup the former necessarily becomes indebted to posed to get a premium, and exchange is said the latter in a greater sum than the latter be- to be against France, and in favour of Engcomes indebted to it: the debts and creditsland.

of each do not compensate one another, and Bat, first, We cannot always judge of the money must be sent out from that place of value of the current money of different counwhich the debts overbalance the credits. The ordinary course of exchange, therefore, being an indication of the ordinary state of debt and credit between two places, must likewise be an indication of the ordinary course of their exports and imports, as these necessarily regulate that state.

tries by the standard of their respective mints In some it is more, in others it is less worn, clipt, and otherwise degenerated from that standard. But the value of the current coin of every country, compared with that of any other country, is in proportion, not to the quantity of pure silver which it ought to conBut though the ordinary course of exchange tain, but to that which it actually does conshall be allowed to be a sufficient indication tain. Before the reformation of the silver of the ordinary state of debt and credit be- coin in King William's time, exchange between any two places, it would not from tween England and Holland, computed in the thence follow, that the balance of trade was usual manner, according to the standard of in favour of that place which had the ordi- their respective mints, was five-and-twenty per nary state of debt and credit in its favour. cent. against England. But the value of the The ordinary state of debt and credit between current coin of England, as we learn from any two places is not always entirely regu- Mr Lowndes, was at that time rather more lated by the ordinary course of their dealings than five-and-twenty per cent. below its stand. with one another, but is often influenced by ard value. The real exchange, therefore, may that of the dealings of either with many other even at that time have been in favour of Eng places. If it is usual, for example, for the land, notwithstanding the computed exchange merchants of England to pay for the goods was so much against it; a smaller number of which they buy of Hamburg, Dantzic, Riga, ounces of pure silver, actually paid in Eng&c. by bills upon Holland, the ordinary state land, may have purchased a bill for a greater

number of ounces of pure silver to be paid in | of Amsterdam, for example, are of more va Holland, and the man who was supposed to lue than a thousand guilders of Amsterdam give, may in reality have got the premium. currency. The difference between them is The French coin was, before the late refor-called the agio of the bank, which at Amstermation of the English gold coin, much less dam is generally about five per cent. Supwore than the English, and was perhaps two posing the current money of the two countries or three per cent. nearer its standard. If the equally near to the standard of their respeccomputed exchange with France, therefore, tive mints, and that the one pays foreign bills was not more than two or three per cent. in this common currency, while the other pays against England, the real exchange might them in bank money, it is evident that the have been in its favour. Since the reforma- computed exchange may be in favour of that tion of the gold coin, the exchange has been which pays in bank money, though the real constantly in favour of England, and against exchange should be in favour of that which France. pays in current money; for the same reason that the computed exchange may be in favour of that which pays in better money, or in mo

real exchange should be in favour of that which pays in worse. The computed exchange, before the late reformation of the gold coin, was generally against London with Amsterdam, Hamburg, Venice, and, I believe, with all other places which pay in what is called bank money. It will by no means fol. low, however, that the real exchange was against it.

Secondly, In some countries the expense of coinage is defrayed by the government; in others, it is defrayed by the private people,ney nearer to its own standard, though the who carry their bullion to the mint, and the government even derives some revenue from the coinage. In England it is defrayed by the government; and if you carry a pound weight of standard silver to the mint, you get back sixty-two shillings, containing a pound weight of the like standard silver. In France a duty of eight per cent. is deducted for the coinage, which not only defrays the expense of it, but affords a small revenue to the government. In England, as the coinage costs nothing, the current coin can never be much more valuable than the quantity of bullion which it actually contains. In France, the workmanship, as you pay for it, adds to the value, in the same manner as to that of wrought plate. A sum of French money, therefore, containing an equal weight of pure silver, is more valuable than a sum of English money containing an equal weight of pure silver, and must require more bullion, or other commodities, to purchase it. Though the current coin of the two countries, therefore, were equally near the standards of their respective mints, a sum of English money could not well purchase a sum of French money containing an equal number of ounces of pure silver, nor, consequently, a bill upon France for such a

sum.

If, for such a bill, no more additional money was paid than what was sufficient to compensate the expense of the French coinage, the real exchange might be at par between the two countries; their debts and credits might mutually compensate one another, while the computed exchange was considerably in favour of France. If less than this was paid, the real exchange might be in favour of England, while the computed was in favour

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Since the reformation of the gold coin, it has been in favour of London, even with those places. The computed exchange has generally been in favour of London with Lisbon, Antwerp, Leghorn, and, if you except France, I believe with most other parts of Europe that pay in common currency; and it is not improbable that the real exchange was so too. Note 28.

Digression concerning Banks of Deposit, par

ticularly concerning that of Amsterdam.

THE currency of a great state, such as France or England, generally consists almost entirely of its own coin. Should this currency, therefore, be at any time worn, clipt, or otherwise degraded below its standard value, the state, by a reformation of its coin, can effectually re-establish its currency. But the currency of a small state, such as Genoa or Hamburg, can seldom consist altogether in its own coin, but must be made up, in a great measure, of the coins of all the neighbouring states with which its inhabitants have a continual intercourse. Such a state, therefore, by reforming its coin, will not always be able to reform its currency. If foreign bills of exchange are paid in this currency, the uncertain value of any sum, of what is in its own nature so uncertain, must render the exchange always very much against such a state, its currency being in all foreign states necessarily valued even below what it is worth.

In order to remedy the inconvenience tc which this disadvantageous exchange must have subjected their merchants, such small states, when they began to attend to the interest of trade, have frequently enacted that

foreign bills of exchange of a certain value trinsic superiority to currency, and the addishould be paid, not in common currency, but tional value which this demand necessarily by an order upon, or by a transfer in the books gives it, has likewise some other advantages. of a certain bank, established upon the credit, It is secure from fire, robbery, and other ac. and under the protection of the state, this bank cidents; the city of Amsterdam is bound for being always obliged to pay, in good and true it; it can be paid away by a simple transfer, money, exactly according to the standard of without the trouble of counting, or the risk the state. The banks of Venice, Genoa, Am- of transporting it from one place to another. sterdam, Hamburg, and Nuremberg, seem to In consequence of those different advantages, have been all originally established with this it seems from the beginning to have borne an view, though some of them may have after- agio; and it is generally believed that all the wards been made subservient to other pur- money originally deposited in the bank, was poses. The money of such banks, being bet- allowed to remain there, nobody caring to deter than the common currency of the country, mand payment of a debt which he could sel necessarily bore an agio, which was greater or for a premium in the market. By demandsmaller, according as the currency was sup- ing payment of the bank, the owner of a bank posed to be more or less degraded below the credit would lose this premium. As a shil. standard of the state. The agio of the bank ling fresh from the mint will buy no more of Hamburg, for example, which is said to be commonly about fourteen per cent. is the supposed difference between the good standard money of the state, and the clipt, worn, and diminished currency, poured into it from all the neighbouring states.

goods in the market than one of our common worn shillings, so the good and true money which might be brought from the coffers of the bank into those of a private person, being mixed and confounded with the common cur.. rency of the country, would be of no more Before 1609, the great quantity of clipt and value than that currency, from which it could worn foreign coin which the extensive trade no longer be readily distinguished. While it of Amsterdam brought from all parts of Eu- remained in the coffers of the bank, its superope, reduced the value of its currency about riority was known and ascertained. When it nine per cent. below that of good money fresh had come into those of a private person, its from the mint. Such money no sooner ap.. superiority could not well be ascertained peared, than it was melted down or carried without more trouble than perhaps the differaway, as it always is in such circumstances. ence was worth. By being brought from the The merchants, with plenty of currency, could coffers of the bank, besides, it lost all the onot always find a sufficient quantity of good ther advantages of bank money; its security, money to pay their bills of exchange; and the its easy and safe transferability, its use in payvalue of those bills, in spite of several regula-ing foreign bills of exchange. Over and ations which were made to prevent it, became in a great measure uncertain.

bove all this, it could not be brought from those coffers, as will appear by and by, without previously paying for the keeping.

The

In order to remedy these inconveniencies, a bank was established in 1609, under the guaThose deposits of coin, or those deposits rantee of the city. This bank received both which the bank was bound to restore in coin, foreign coin, and the light and worn coin of constituted the original capital of the bank, or the country, at its real intrinsic value in the the whole value of what was represented by good standard money of the country, deduct- what is called bank money. At present they ing only so much as was necessary for defray-are supposed to constitute but a very small ing the expense of coinage and the other ne- part of it. In order to facilitate the trade in cessary expense of management. For the bullion, the bank has been for these many value which remained after this small deduc-years in the practice of giving credit in its tion was made, it gave a credit in its books. books, upon deposits of gold and silver bullion. This credit was called bank money, which, as This credit is generally about five per cent. it represented money exactly according to the below the mint price of such bullion. standard of the mint, was always of the same bank grants at the same time what is called a real value, and intrinsically worth more than recipice or receipt, entitling the person who current money. It was at the same time en- makes the deposit, or the bearer, to take out acted, that all bills drawn upon or negociated the bullion again at any time within six months, at Amsterdam, of the value of 600 guilders upon transferring to the bank a quantity of and upwards, should be paid in bank money, bank money equal to that for which credit had which at once took away all uncertainty in been given in its books when the deposit was the value of those bills. Every merchant, in made, and upon paying one-fourth per cent. consequence of this regulation, was obliged to for the keeping, if the deposit was in silver; keep an account with the bank, in order to and one-half per cent. if it was in gold; but pay his foreign bills of exchange, which ne- at the same time declaring, that in default of cessarily occasioned a certain demand for bank such payment, and upon the expiration of this term, the deposit should belong to the bank, Bank money, over and above both its in-at the price at which it had been received, or

money.

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