dependently of each other) the money price of dollars or that of teas be higher in China or in London; but it is absolutely necessary to the success of their adventure, that a given quantity of dollars should, in China, exchange for such a quantity of teas, as will again sell in London for a sum equal to the prime cost of the dollars in London together with the charges and profit on the adventure from London to China and back again. If they do not sell for so much, the company would evidently be losers by the trade, and consequently would not continue it.

It is evident that the ultimate result of this circuitous commerce resolves itself into the simple barter of the cutlery for the teas; loaded however with the expenses and profits on three distinct voyages to Hamburgh, to Cadiz, and to China, with the commissions of agency and on granting and discounting the bills at Hamburgh. The higher, then, was the original price of the cutlery, the higher the money price of the labor employed in constructing and navigating the ships which performed these different voyages; the higher the rates of commission and of profit on the capitals employed in them, the dearer must consequently the teas be sold by the company to the consumers. It is the consumers of the teas therefore, and they only, who ultimately pay for the cutlery together with all the expenses of the intermediate traffic between its sale and that of the tea.

CHAPTER II. The money price of foreign commodities is principally regulated by the money price of labor, and rate of profit in the home market.

If we continue to pursue the example adduced in the preceding chapter, it will appear that as the consumers of the teas ultimately pay for them the prime cost of the cutlery, together with all the charges and profits attending the intermediate traffic, so the price of teas in Britain will therefore be affected by the high or low price of labor, and the high or low rate of profit in Britain in nearly the same degree as if they were articles of the growth and manufacture of Britain. I say nearly, because as some foreign capital may have been employed in the interchanges between the cutlery and the teas, and as some foreign labor may have been employed in effecting these interchanges, so far as the teas are chargeable with that profit and with that labor, their prices will be enhanced in proportion to the price of labor and to the rate of profits in these foreign countries.

But the price of labor or the rate of profit in China, or in any of the other foreign countries in which the interchanges were effected, can only influence the price of the teas in Britain, in so far as they were employed in effecting these exchanges; but in no

respect will the price of teas in Britain be influenced by the bigh or low money price of the wages of the labor, or of the rate of profit on the capital, employed in the cultivation and manufacture of the teas, or in working the mines, or in refining the silver, or in cultivating the flax and manufacturing the linen; because (as Dr. Smith has clearly proved) the true measure of the value of every article of consumption, is the quantity of labor which it will purchase; and the difficulty of procuring silver remaining in like proportion to that of procuring tea in China, an equal quantity of the one will continue to exchange for an equal quantity of the other, be the price of labor or the profits of stock what they may: In like manner while the quantity of labor required to procure linen and to procure dollars remain the same as before, in Spain a like quantity of linen will there continue to exchange for a like quantity of dollars, be the price of labor or the profit on stock what they may: and in like manner while the quantity of labor required to procure a certain quantity of linens, and a certain quantity of cutlery continue, in Germany, the same, a like quantity of the one will also continue to exchange for a like quantity of the other, let the wages of labor and the profits of stock, in that country, be what they may.

It also appears clearly that in the instance under discussion, nothing more was effected (as indeed in no instance any thing more can be effected) by means of the bills of exchange, than to facilitate general barter; for wherever a bill of exchange is granted, value must some how or other be sent to meet it, otherwise it must be protested, and remain a debt against the drawer.

As it appears, that in our adopted example, the high or low price of the wages of labor or of the rate of profit in foreign countries, have little or no influence on the prices of foreign articles in the home market, it therefore remains for us to examine by what the fluctuations in these prices are regulated. The vicissitudes of seasons, and the deficient, or too abundant supplies of the market certainly are the principal causes of the alterations which take place in the price of foreign commodities within any given short period of time; but in considerably extended periods of time these causes can produce no effect whatever in the general average prices; which must, so far as these causes are concerned, be regulated by the general average of the seasons and of the impor tation in proportion to the effectual demand. But as we have already seen that even the most circuitous commerce resolves itself ultimately into barter, and as the money price of home produce must necessarily rise or fall in proportion to the rise or fall in the money price of the labor and rate of profit which has been employed in procuring such home produce; so it follows that the nioney price of the foreign commodities for which that home pro

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duce is exchanged, must also necessarily rise or fall, in the home market, in a ratio equal or nearly equal to the rise or fall in the produce which has been bartered for these commodities; and consequently in a ratio equal or nearly equal to the rise or fall of the money price of labor and rate of profit in the home market. lea

***** CHAPTER III.-Of the Value of the Precious Metals. ⠀⠀ Except in cases of foreign conquests, of colonies, or of persons drawing a revenue from one country which they spend in another, there are no means by which the people of one country can acquire a share of the produce of the land and labor of another but by parting with some part of the produce of the land and labor of their own. This is the fund from which all subsistence is derived whether native or foreign; and in proportion as it costs much or little money to produce a certain quantity of commodities in our own country, so in like proportion we must pay much or little money for such commodities as we consume, whether of the produce of our own country, or procured from foreign independent countries, by the only means which is within our power, viz. that of exchanging our own for them. But as gold and silver are not only articles of commerce whose values are regulated by the quantity of labor which they will respectively purchase in different countries, but have also become the standard circulating medium in most of these countries, and as they are very portable and durable commodities, they have in consequence attained, in most commercial countries, a more equal value than most other commodities. And between any two adjacent countries in which these metals form the circulating medium, and between which the commerce is perfectly free, the real value of these metals cannot greatly vary: Because if the real price of gold and silver were lower, or, what is the same thing, where these metals form the currency, if the money price of the greater part of commodities were higher in any one country than in some other one adjacent with which the commerce was perfectly free, it would evidently be the interest of the merchants of the former country to export gold and silver in order to purchase in the latter country such commodities as they could again sell for much more gold and silver in their own: and this traffic would continue until by a continual abstraction of these metals from the former country, and accumulation of them in the latter, the value of them in each would become so nearly equal that they could no longer be transported from the one to the other with any advantage.

But this natural equality in the value of the precious metals in the neighbouring independent countries may be, and indeed generally is, greatly diminished by the regulations of commerce, by

duties and taxes, and by the profusion or scarcity of paper in eirculation in these countries respectively.

If, for instance, there subsist between two countries a mutual prohibition of the produce and manufactures of each other, it is evident that the prices of the one may be out of all proportion to those of the other. If Britain were to prohibit the wines of France, and France in return to prohibit the hardware of England, as many pots and pans might, after a short period, be procured in England for a small quantity of claret, as would in France exchange for a very large quantity of the same wine. Should the exportation of silver be prohibited from South America, and the prohibition be rendered effectual, an ounce of silver might come to be of as much value in Europe, as a pound of it would be in that country.

Duties on foreign commodities have a similar effect with prohibition, though in a less degree, enhancing the price of the article on which they are levied, to the consumer, and thereby diminishing the extent of that consumption. If Britain were to lay a duty of fifty per cent. on the importation of all foreign commodities, it is evident that no merchant could, without loss, import any article into Britain to be exchanged for gold and silver, unless such article were at least fifty per cent. dearer in Britain than in the country from which it was imported; and therefore that no gold and silver would be exported from Britain, until the value of these metals had in Britain sunk so low as to be at most only two thirds of their value in respect to some other commodity in some other country.

Duties on importation therefore tend to diminish the value of the precious metals in the home market and consequently to raise the money price of labor there.

Taxes such as those of the excise, which tend to increase the money price of the home produce (if not drawn back on exportation of that produce) affect the value of the precious metals in two different and opposite ways: 1st. By increasing the price of other commodities in proportion to that of gold and silver in the homé market, they tend to depress the value of these metals, and consequently to raise the money price of labor. And 2dly. By increasing the value of the home produce in proportion to that of the precious metals, the exportation of the latter is encouraged instead of the former, which must necessarily tend to raise the value of gold and silver in the home market, and thereby to diminish the money rate of wages.

In countries where penal laws exist against melting the current coin, the multiplication of paper currency may have a temporary, but it can hardly have a very permanent, influence in depreciating

the precious metals. Its effects on the price of labor and of modities shall be treated of hereafter.

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CHAP. IV. Of the Effects of Taxesordidor

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IT rarely happens that the government of any country can levy any tax, which shall ultimately be paid by the people of an independent foreign country, because few countries produce exclusively any particular commodity, for which no convenient substitute can be found in another. The Chinese exactae tax, or duty, on the exportation of tea, and if such tax be kept sufficiently low, (it may fall entirely on the consumer; but if pushed too far, more might be lost by the diminution of the demand, than would be gained by the augmentation of the duty. Till of late, Britain enjoyed the monopoly of plumbago, or black lead; on the exportation of which a duty might have been levied, which must have been altogether borne by foreign countries. Our wool is said to have been in great demand on the continent, on account of its superior softness; so much so, that it would have borne a duty on exportation; but with the short-sighted monopolizing spirit which has ever actuated all mercantile governments, we have rather chosen to retain our wool at home, to the evident discouragement of our agriculture. While foreigners, by our ill-judged policy, have been stimulated to make exertions for the improvement of their breeds of sheep, which have not failed to be ultimately successful. The objects, however, on which a duty can be beneficially levied on exportation are generally few in number, and inconsiderable in total value.

All such taxes as cannot, by means of a monopoly, be levied on foreigners, must of course fall on the people of the country in which they are levied, and they must be paid out of some one or more of the three sources of income; the wages of labor, the rent of land, or the profits of stock. Such as fall on the wages of labor, those paid either directly or indirectly by the laborer, and which he cannot get back by a proportionate increase of his wages, render him less able to support a family, and consequently discourage population: they also render him less industrious, by diminishing the reward of industry. They consequently strike at the very root of the prosperity, the happiness, and the strength of the State; for the prosperity of a state is alone constituted by its production exceeding its consumption, and whatever tends to discourage the industry of its inhabitants, must of course, in a like proportion, diminish the produce of their labor. Those taxes, on the other hand, which fall on the rent of land, or on the profits of stock, have no such direct tendency to diminish the population, or to discourage the industry of the country, because the landed proprietor generally spends the whole or nearly the whole of his