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BOOK has been in any respect impoverished by this IV. caufe. Every town and country, on the con

trary, in proportion as they have opened their ports to all nations, instead of being ruined by this free trade, as the principles of the commercial fyftem would lead us to expect, have been enriched by it. Though there are in Europe, indeed, a few towns which in fome refpects deserve the name of free ports, there is no country which does fo. Holland, perhaps, approaches the nearest to this character of any, though ftill very remote from it; and Holland, it is acknow¬ ledged, not only derives its whole wealth, but a great part of its neceffary fubfiftence, from foreign trade.

THERE is another balance, indeed, which has already been explained, very different from the balance of trade, and which, according as it happens to be either favourable or unfavourable, neceffarily occafions the profperity or decay of every nation. This is the balance of the annual produce and confumption. If the exchangeable value of the annual produce, it has already been obferved, exceeds that of the annual confumption, the capital of the fociety muft annually increase in proportion to this excefs. The fociety in this cafe lives within its revenue, and what is annually faved out of its revenue, is naturally added to its capital, and employed fo as to increafe ftill further the annual produce. the exchangeable value of the annual produce, on the contrary, fall fhort of the annual confumption, the capital of the fociety muft an

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nually

III.

nually decay in proportion to this deficiency. CHA P. The expence of the fociety in this cafe exceeds its revenue, and neceffarily encroaches upon its capital. Its capital, therefore, muft neceffarily decay, and, together with it, the exchangeable value of the annual produce of its industry.

THIS balance of produce and confumption is entirely different from, what is called, the balance of trade. It might take place in a nation which had no foreign trade, but which was entirely separated from all the world. It may take place in the whole globe of the earth, of which the wealth, population, and improvement may be either gradually increafing or gradually decaying,

THE balance of produce and confumption may be conftantly in favour of a nation, though what is called the balance of trade be generally against it. A nation may import to a greater value than it exports for half a century, perhaps, together; the gold and filver which comes into it during all this time may be all immediately fent out of it; its circulating coin may gradually decay, different forts of paper money being fubftituted in its place, and even the debts too which it contracts in the principal nations with whom it deals, may be gradually increafing; and yet its real wealth, the exchangeable value of the annual produce of its lands and labour, may, during the fame period, have been increasing in a much greater proportion. The ftate of our North American colonies, and of the trade which they carried on with Great Britain, before

the

BOOK the commencement of the prefent disturbances *

IV.

may serve as a proof that this is by no means an impoffible fuppofition.

MER

CHA P. IV.

Of Drawbacks.

ERCHANTS and manufacturers are not contented with the monopoly of the home market, but defire likewise the most extenfive foreign fale for their goods. Their country has no jurisdiction in foreign nations, and therefore can feldom procure them any monopoly there. They are generally obliged, therefore, to content themselves with petitioning for certain encouragements to exportation.

Of these encouragements what are called Drawbacks feem to be the most reasonable. To allow the merchant to draw back upon exportation, either the whole or a part of whatever excife or inland duty is impofed upon domestic induftry, can never occafion the exportation of a greater quantity of goods than what would have been exported had no duty been impofed. Such encouragements do not tend to turn towards any particular employment a greater fhare 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

*This paragraph was written in the year 1775.

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IV.

that fhare to other employments. They tend с НАР. not to overturn that balance which naturally establishes itself among all the various employments of the fociety; but to hinder it from being overturned by the duty. They tend not to deftroy, but to preferve, what it is in most cafes advantageous to preferve, the natural divifion and diftribution of labour in the fociety.

THE fame thing may be faid of the drawbacks upon the re-exportation of foreign goods imported; which in Great Britain generally amount to by much the largest part of the duty upon importation. By the fecond of the rules, annexed to the act of parliament, which impofed, what is now called, the old subsidy, every merchant, whether English or alien, was allowed to draw back half that duty upon exportation; the English merchant, provided the exportation took place within twelve months; the alien, provided it took place within nine months. Wines, currants, and wrought filks were the only goods which did not fall within this rule, having other and more advantageous allowances. The duties imposed by this act of parliament were, at that time, the only duties upon the importation of foreign goods. The term within which this, and all other drawbacks, could be claimed, was afterwards (by 7 Geo. I. chap. 21. fect. 10.) extended to three years.

THE duties which have been impofed fince the old fubfidy, are, the greater part of them, wholly drawn back upon exportation. This general rule, however, is liable to a great number

of

IV.

BOOK of exceptions, and the doctrine of drawbacks has become a much less simple matter, than it was at their firft inftitution.

UPON the exportation of fome foreign goods, of which it was expected that the importation would greatly exceed what was neceffary for the home confumption, the whole duties are drawn back, without retaining even half the old fubfidy. Before the revolt of our North American colonies, we had the monopoly of the tobacco of Maryland and Virginia. We imported about ninety-fix thousand hogfheads, and the home confumption was not fuppofed to exceed fourteen thousand. To facilitate the great exportation which was neceffary, in order to rid us of the reft, the whole duties were drawn back, provided the exportation took place within three

years.

WE ftill have, though not altogether, yet very nearly, the monopoly of the fugars of our Weft Indian islands. If fugars are exported within a year, therefore, all the duties upon importation are drawn back, and if exported within three years, all the duties, except half the old subsidy, which ftill continues to be retained upon the exportation of the greater part of goods. Though the importation of fugar exceeds, a good deal, what is neceffary for the home confumption, the excefs is inconfiderable, in comparison of what it used to be in tobacco.

SOME goods, the particular objects of the jealoufy of our own manufacturers, are prohibited to be imported for home confumption. They

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