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or corporate whatsoever, of, or for the sole buying, selling, making, working, or using of anything within this realm;

. . and all proclamations, inhibitions, restraints, warrants of assistants, and all other matters and things whatsoever, any way tending to the instituting, erecting, strengthening, furthering, or countenancing of the same, or any of them, are altogether contrary to the laws of this realm, and so are, and shall be utterly void and of none effect, and in no wise to be put in use or execution." The following passage I quote verbatim from a petition presented to the House of Commons in 1691, relative to the East India trade, on behalf of divers Merchants and Traders in and about the City of London, and other their Majesties' Subjects. "The trade to the East Indies is of very great importance to this nation; and yet, by the manifold abuses of the present East India Company both at home and abroad, (who have managed the same for their private gain, without any regard to the public good,) the trade is likely to be utterly lost to this kingdom, and to fall into the hands of foreigners, unless timely prevented by some better regulation thereof, on a new joint-stock and constitution." The petitioners further pray, "that the House will take into consideration the establishing of a new East India Company, in such manner, and with such powers and limitations, as to them shall be thought most conducing to the preservation of so beneficial a trade to the kingdom." One great objection urged by the favourers of the Company against the freedom of trade is, that "it will not only cause the said trade to suffer much, but other European nations will make great advantage thereof, to the hazard, if not the ruin, of the English commerce to those parts."

In this manner, then, the policy of Europe, by the privileges of corporations, by apprenticeships, exclusive companies, and other regulations favouring monopolies, restrains the competition in some employments of stock and labour to a smaller number than would otherwise be disposed to enter into them. "Secondly, In some other cases, it tends to increase the competition beyond the natural proportion." Of these, obvious * [Wealth of Nations, Book I. chap. x.; Vol. I. p. 202, tenth edit.-See above, p. 12.]

examples are found in the institutions of bursaries, scholarships, &c. On this article, however, it is unnecessary to enlarge, as the inconveniences which they produce to individuals are amply compensated by the public benefit which attends them.

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Thirdly, The policy of Europe, by obstructing the free circulation of labour and stock both from employment to employment, and from place to place, occasions in some cases a very inconvenient inequality in the whole of the advantages and disadvantages of their different employments.

"The statute of apprenticeship obstructs the free circulation of labour from one employment to another, even in the same place. The exclusive privileges of corporations obstruct it from one place to another, even in the same employment.

"It frequently happens, that while high wages are given to the workmen in one manufacture, those in another are obliged to content themselves with bare subsistence. The one is in an advancing state, and has, therefore, a continued demand for new hands; the other is in a declining state, and the superabundance of hands is continually increasing. Those two manufactures may sometimes be in the same town, and sometimes in the same neighbourhood, without being able to lend the least assistance to one another. The statute of apprenticeship may oppose it in the one case, and both that and an exclusive corporation in the other. In many different manufactures, however, the operations are so much alike, that the workmen could easily change trades with one another, if those absurd laws did not hinder them. . . .

"The obstruction which corporation laws give to the free circulation of labour, is common, I believe, to every part of Europe. That which is given to it by the poor-laws is, so far as I know, peculiar to England. It consists in the difficulty which a poor man has in obtaining a settlement, or even in being allowed to exercise his industry in any parish but that to which he belongs. It is the labour of artificers and manufactures only of which the free circulation is obstructed by corporation laws. The difficulty of obtaining settlements obstructs even that of common labour."* But I shall delay entering on the consideration of the

* [Ibid. pp. 209-212.]

English poor-laws, till we have taken a view of the different systems which have been proposed for the maintenance of the poor. So much with respect to the policy of restraints on domestic commerce and industry.

[SUBSECT. II.-Of Restraints on the Commercial Intercourse of Different Nations.]

I shall now proceed to consider the restraints which affect the commercial intercourse of different nations. The system of regulations, which we are to examine under that head, is distinguished by Mr. Smith by the title of the Commercial or Mercantile system of Political Economy. This last phrase, as before hinted, is used by him in a very restricted sense. Its objects, he tells us, are the two following:-" 1st, To provide a plentiful revenue or subsistence for the people, or more properly, to enable them to provide such a revenue or subsistence for themselves; and, 2dly, To supply the state or commonwealth with a revenue sufficient for the public services."* According to the definition which I formerly gave of Political Economy,† it applies to all the different objects of law and political regulation, among which, undoubtedly, the principles which regulate the systems of agricultural or commercial policy occupy a very distinguished place. I mention this circumstance, that I may not be supposed, by adopting the language of Mr. Smith, to have lost sight of the explanation given in my Introductory Lectures of the province of Political Economy.

In stating the argument for a free trade with other countries, I shall aim at nothing more than a very succinct abridgment of Mr. Smith's doctrines on this subject; a general knowledge of which I must necessarily presuppose in my hearers, when I proceed to the discussion of some of the questions connected with these inquiries. While this outline may facilitate the studies of those who have not yet perused that invaluable work, it will, I hope, be not altogether useless to others, as containing a recapitulation of some of the more important doctrines which it explains.

*[Ibid. Book IV. Introduction; Vol. II. p. 138, tenth edition.]

+[Supra, Political Economy, Vol. I. p. 9, seq.]

The great principle of the Mercantile system is, that money constitutes the wealth of a nation, or in other words, that a nation is rich or poor in proportion to the plenty or scarcity of the precious metals.

(Here Mr. Stewart introduced an abridged view of the first eight chapters of the fourth book of the Wealth of Nations,*

* [The abstract here alluded to by Mr. Bridges, as given in the notes taken by Mr. Bonar, is as follows:-"It was for a long time the opinion of statesmen, that as the wealth of an individual consists in the quantity of money which he possesses, or can command, and that as the more this is increased, the more is his wealth augmented, so the same thing must hold true of a nation; and, therefore, that the more gold and silver which can be accumulated in a nation, the more will its opulence and prosperity be increased. Hence one great object of government was, by means of laws and regulations, to prevent the exportation of gold and silver out of a country, and to draw into the country as much specie as possible. Experience, however, at last proved that all such attempts were unavailing; that where a superfluity of gold and silver was accumulated in a country, no laws or regulations could prevent its being sent abroad for the purchase of commodities. This is clearly proved in the case of Spain and Portugal, where all their sanguinary laws against carrying gold and silver out of the country have never prevented their exportation, as they come into these countries in greater abundance than their own necessities require. It has been computed that the Lisbon packet brings over to Britain on an average no less than £50,000 worth of gold and silver weekly. This may not be accurate, but there can be no doubt that all the laws and regulations that were made, never had the effect of detaining in the country the superfluous gold and silver that could not be made use of if it remained.

"Governments finding it impossible

to restrain by force the exportation of gold and silver from a country, came next to turn their attention to what was termed the balance of trade. It was thought, that according to the value which these commodities imported by a nation bear to the commodities exported by it, as greater or less, so would the prosperity of the country rise or fall. If it was found that the value of the goods sent out was greater than that of those imported, then it was of course reckoned that the country was in a prosperous state, but if it was otherwise, the country was deemed to be declining.

"For the ascertaining of the value of the commodities sent out and received, two methods were had recourse to, one was the Custom House books, the other the Rate of Exchange."

(After referring to Mr. Macpherson's views given in the text on the Custom House entries as testing a nation's prosperity, Mr. Bonar proceeds :)" The other criterion resorted to for this purpose, the Rate of Exchange, though perhaps not quite so fallacious, yet is by no means a certain test. Many circumstances often occasion a rise or fall in the course of the Exchange, independent of the amount of goods actually exported and imported.

Notwithstanding the fallacy of the modes of ascertaining the proportional value of commodities exported and imported, still the balance of trade, as it has been called, has been constantly the object of solicitous attention to governments. With a view to guard against what is supposed an unfavourable bal

with the following additions. After stating Mr. Smith's reasonings with regard to the Navigation Act, he added:)—

On the same principle have been founded some late reasonings,

ance, it has been the aim of legislators, by laws and regulations, to restrain commerce with foreign nations, in such a manner as they thought most likely to prevent the consequence so much dreaded. This has been attempted chiefly in two ways: the imposition of heavy duties, or even the total prohibition of importing the commodities of another nation, and the granting of bounties and other encouragements to the exportation of native commodities. "These restraints upon importation, and encouragements to exportation, constitute,' as Mr. Smith remarks, 'the principal means by which the Commercial System proposes to increase the quantity of gold and silver in any country, by turning the balances of trade in its favour.'*

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'Against this system Mr. Smith argues in the following satisfactory and conclusive manner:

"By restraining either by high duties or by absolute prohibitions, the importation of such goods from foreign countries as can be produced at home, the monopoly of the home market is more or less secured to the domestic industry employed in producing them. . . . That this monopoly of the home market frequently gives great encouragement to that particular species of industry which enjoys it, and frequently turns toward that employment a greater share of both the labour and stock of the society, than would otherwise have gone to it, cannot be doubted. But whether it tends either to increase the general industry of the society, or to give it the most advantageous direction, is not perhaps altogether so evident. . . . No regulation of commerce can increase the quantity of industry in any society, beyond what

its capital can maintain. It can only divert a part of it into a direction into which it might not otherwise have gone; and it is by no means certain that this artificial direction is likely to be more advantageous to the society than that into which it would have gone of its own accord. Every individual is continually exerting himself to find out the most advantageous employment for whatever capital he can command.'†

"As every individual endeavours as much as he can, both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value, every individual therefore labours to render the annual revenue of the society as great as he can. He generally indeed neither intends to promote the public interest, nor knows how much he is promoting it. . . . He intends only his own gain; and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it the worse for the society that it was no part of it. By pursuing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it..

"What is the species of domestic industry which his capital can employ, and of which the produce is likely to be of the greatest value, every individual, it is evident, can, in his local situation, judge much better than any statesman or lawgiver can do for him. The statesman who should attempt to direct private people in what manner they ought to employ their capitals, would not only load himself with a most unnecessary attention, but assume an authority which

* [Wealth of Nations, Book IV. chap. i.; Vol. II. p. 175, tenth edition.]
[Ibid. chap. ii. p. 176, seq.]

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