only those who purchased it before can purchase CHA P. three times their former quantity, but it is brought down to the level of a much greater

1.

number of purchasers, perhaps to more than ten, perhaps to more than twenty times the former number. So that there may be in Europe at prefent not only more than three times, but more than twenty or thirty times the quantity of plate which would have been in it, even in its prefent state of improvement, had the discovery of the American mines never been made. So far Europe has, no doubt, gained a real conveniency, though furely a very trifling one. The cheapnefs of gold and filver renders thofe metals rather lefs fit for the purposes of money than they were before. In order to make the fame purchases, we must load ourselves with a greater quantity of them, and carry about a fhilling in our pocket where a groat would have done be fore. It is difficult to fay which is moft trifling, this inconveniency, or the oppofite conveniency. Neither the one nor the other could have made any very effential change in the state of Europe. The discovery of America, however, certainly made a moft effential one. By opening a new and inexhauftible market to all the commodities of Europe, it gave occafion to new divifions of labour and improvements of art, which, in the narrow circle of the ancient commerce, could never have taken place for want of a market to take off the greater part of their produce. The productive powers of labour were improved, and its produce increased in all the different coun

BOOK ation of a part of the returns to other European

IV.

countries, it annually brought home a much greater quantity of that metal than it carried out. Both the objection and the reply are founded in the popular notion which I have been · juft now examining. It is, therefore, unnecessary to fay any thing further about either. By the annual exportation of filver to the Eaft Indies, plate is probably fomewhat dearer in Europe than it otherwife might have been; and coined filver probably purchases a larger quantity both of labour and commodities. The former of thefe two effects is a very fmall lofs, the latter a very fmall advantage; both too infignificant to deferve any part of the public attention. The trade to the Eaft Indies, by opening a market to the commodities of Europe, or, what comes nearly to the fame thing, to the gold and filver which is purchased with thofe commodities, muft neceffarily tend to increase the annual production of European commodities, and consequently the real wealth and revenue of Europe. That it has hitherto increafed them fo little, is probably owing to the restraints which it every-where labours under.

I THOUGHT it neceffary, though at the hazard of being tedious, to examine at full length this popular notion that wealth confifts in money, or in gold and filver. Money in common language, as I have already obferved, frequently fignifies wealth; and this ambiguity of expreffion has rendered this popular notion fo familiar to us, that even they, who are convinced of its ab

furdity,

I.

furdity, are very apt to forget their own princi. CHA P. ples, and in the course of their reafonings to take it for granted as a certain and undeniable truth. Some of the beft English writers upon commerce set out with obferving, that the wealth of a county confifts, not in its gold and filver only, but in its lands, houses, and consumable goods of all different kinds. In the courfe of their reasonings, however, the lands, houses, and confumable goods feem to flip out of their memory, and the ftrain of their argument frequently supposes that all wealth consists in gold and filver, and that to multiply thofe metals is the great object of national industry and com

merce.

THE two principles being established, however, that wealth confifted in gold and filver, and that those metals could be brought into a country which had no mines only by the balance of trade, or by exporting to a greater value than it imported; it neceffarily became the great object of political economy to diminish as much as poffible the importation of foreign goods for home-confumption, and to increase as much as poffible the exportation of the produce of domestic industry. Its two great engines for enriching the country, therefore, were reftraints. upon importation, and encouragements to exportation.

THE restraints upon importation were of two kinds.

FIRST, Reftraints upon the importation of fuch foreign goods for home-confumption as

could

IV.

BOOK could be produced at home, from whatever country they were imported.

SECONDLY, Restraints upon the importation of goods of almost all kinds from thofe particular countries with which the balance of trade was fuppofed to be disadvantageous.

THOSE different reftraints confifted fometimes in high duties, and fometimes in abfolute prohibitions.

EXPORTATION was encouraged sometimes by drawbacks, fometimes by bounties, fometimes by advantageous treaties of commerce with foreign states, and fometimes by the establishment of colonies in diftant countries.

DRAWBACKS were given upon two different occafions. When the home-manufactures were fubject to any duty or excife, either the whole or a part of it was frequently drawn back upon their exportation; and when foreign goods liable to a duty were imported in order to be exported again, either the whole or a part of this duty was fometimes given back upon fuch exportation.

BOUNTIES were given for the encouragement either of fome beginning manufactures, or of fuch forts of industry of other kinds as were fuppofed to deferve particular favour.

By advantageous treaties of commerce, particular privileges were procured in fome foreign ftate for the goods and merchants of the country, beyond what were granted to thofe of other countries.

1.

By the establishment of colonies in diftant CHA P. countries, not only particular privileges, but a monopoly was frequently procured for the goods and merchants of the country which established them.

THE two forts of reftraints upon importation. above-mentioned, together with thefe four encouragements to exportation, conftitute the fix principal means by which the commercial fyftem proposes to increafe the quantity of gold and filver in any country by turning the balance of trade in its favour. I fhall confider each of them in a particalar chapter, and without taking much further notice of their fupposed tendency to bring money into the country, I fhall examine chiefly what are likely to be the effects of each of them upon the annual produce of its industry. According as they

tend either to increase or diminish the value of this annual produce, they muft evidently tend either to increase or diminish the real wealth and revenue of the country.

CHAP.