PREFACE.

Ix laying the following little work before the public I am fully conscious of its many imperfections; some of these it would have been no difficult matter to correct, had I possessed the necessary leisure; but, obliged to an almost constant attendance to a pursuit requiring unremitted attention, it has only been in my power to snatch a few minutes from time to time to commit to paper my ideas on a subject of considerable intricacy.

It will naturally be asked why I obtruded on the public, a work, which I had not leisure to render worthy of its eye.. My answer is, that the light in which I have seen this subject is, I believe, perfectly new; and if my ideas on it be correct, its publicity at this period is of some importance. I conceive that the present distress of the country arises from the adoption of measures founded on false notions, viz. That its prosperity depends on the granting to our merchants and manufacturers monopolies against our agriculturists, and against each other. That our manufactures cannot prosper but by the depression of the wages of labour. And that the interests of the landholder and of the public creditor are entitled to a paramount consideration in all acts of the legislature. These ideas appear to me to be so completely erroneous, that I conceive not a moment should be lost in their thorough investigation.

In the course of these sketches I have freely borrowed, and without acknowledgment, the ideas, and sometimes even the language of others; particularly of Dr. Adam Smith. I have nevertheless on

some occasions ventured to differ from this great luminary; who wrote at a time when the subject had been little canvassed, and when therefore it was hardly possible that any individual should have contemplated every part of it, under every possible bearing. In treating of the decay of manufactures in Spain, Dr. Smith attributes it principally to the danger and expense of smuggling silver out of that country, which, by causing a greater abundance of it there than in the rest of Europe, must necessarily enhance the money price of labor there, and consequently, he says, enable foreigners to undersell the Spaniards even in their own market. He did not consider that the foreigner who imported his manufactures into Spain must, in diminution of the price he received for them, pay for all the risk and expense of smuggling his returns, if made in silver, out of the country; and that in proportion as that risk and expense could have enhanced the money price of labor in Spain, so in like proportion it must have diminished the price which was ultimately received for foreign manufactures imported into that country.

In pointing out this error in Dr. Smith's reasoning, I by no means wish to undervalue the merit of his most excellent work, but, merely by showing that as the greatest industry and the most extensive human ability do not always exonerate from fault, to claim a lenient consideration for those which may be detected in the following sketches.

One, and only one advantage I derive from situation in the discussion of political subjects. I have long been an inhabitant of an island where the people, though unrepresented, are in some degree free from taxation; where they are neither agitated by political parties, nor the minds of individuals warped by the pressure of those public burthens to which Great Britain is peculiarly subjected. In such a situation, it is at least more easy to appreciate with candor all arguments connected with my subject than in one where the personal feelings are more directly interested.

Isle of Man, 22d May, 1317.

NO. XXII.

Pam.

VOL. XI.

2 D

IN the infancy of society, when the community lives by the produce of the chase, peltry is almost the only article of export. When the hunter has procured more skins than are necessary to his own wants, he willingly exchanges a part of them for such articles of foreign produce or manufacture as he may desire. It also sometimes happens, that he may not only thus exchange his surplus peltry, but even perhaps the whole of it, when by so doing he finds that the articles procured in barter for it may be substituted with advantage to all the purposes to which his skins had heretofore been employed. His exchanges are simple; and as money rarely forms a medium of his barter, the whole process is perceived at one view; and its principle, and its practice, have therefore never admitted of any dispute. But in the complex transactions of the commerce of civilized nations, such a circuitous mode of barter is often adopted, and our minds are so much habituated to consider money as the standard of value, rather than as the medium of barter, that in tracing the principles and effects of extended foreign commerce the judgment is apt to be bewildered in a maze of intricacy. And hence the various and often contradictory systems concerning commerce, with which the world has frequently been amused. The same principles however which govern the commerce of the savage, equally regulate that of the civilized man; they both part with so much of the produce of their land and labor as they can exchange for other produce which they consider more useful or more agreeable to them: and (conquest excepted) it will be difficult to devise any other effectual mode of procuring the latter than by parting with the fornier. This exchange however is frequently circuitous; and the different states

into which the original property is often converted, and the many hands through which it often passes before the ultimate exchange is completed, cause us frequently to lose sight of the transaction. The following example of the exchange of English cutlery for the teas of China, though by no means one of the most complicated, is still sufficiently so to bewilder those who do not trace commerce to its first principles :

A. sends English cutlery from London to Hamburgh, there sells it to B. for bills on London; but B., having no funds in London, applies to a banker C., who grants a draft on his correspondent D. in London. This draft C. is enabled to grant, because E. has recently sent a cargo of linens from Silesia to London; and at the time he sent them, he drew on his agent F. in London for their amount; which bill, after travelling from Silesia to Hamburgh, was discounted by C. the banker there, and by him transmitted to his correspondent D. in London. F. sells the linens in London to G. and their proceeds cancel E.'s draft on F., which being held by D. puts him in funds to answer C.'s draft on him in favor of B., but which was endorsed over by him to A. in payment of the cutlery. G. exports the linens to Cadiz, and there sells them for Spanish dollars, which dollars he carries to London, and there lends them on bond to the East-India Company, who again ship them to China for the purchase of teas, and with the produce of these teas discharge their bond to G. Now it is evident, when the whole of these transactions are considered, that the cutlery exported by A. is ultimately exchanged for the teas imported by the East-India Company, as much as if the transaction had taken place by direct barter at the company's warehouse,

When a merchant engages in a foreign adventure, his object is to attain a certain quantity of something for which there is an effectual demand in his own country, and he sets himself to consider in what way he can procure this something at the least expense of the land and labor of his own country, or in other words, at the smallest price to himself. Perhaps, for instance, (to use our previous example) he wishes to import teas from China, and considers that these can be purchased more advantageously with Spanish dollars thau with the rude produce or manufactures of Britain; but as there are no silver mines in Britain, he, or (what is the same thing) some one else for him, must import these dollars; but as they cannot be procured at Cadiz but for an equivalent, he, or some one else for him, must send that equivalent; and if Silesian linens happen to be in much greater demand at Cadiz than British prodrce or manufactures, it may be more advantageous to send to Cadiz Silesian linens than British goods for the purpose of purchasing the necessary dollars. But as the Silesian lineus are not a manu

facture of Britain, and cannot be procured but for an equivalent, so he, or some one else for him, must send to Silesia such an equivalent in order to procure these linens; and if English cutlery be considered as the most advantageous means of procuring them, it may be sent directly from England to Germany.

In such a round-about trade of consumption, the whole of the intermediate exchanges, or sales and purchases, are seldom effected by the same person, and indeed seldom come under the view or knowledge of any single individual; but, by whomsoever they may be effected, the result is the same, the cutlery is ultimately the value paid by Britain for the teas so imported for the consumption of Britain.

In these transactions, it is not necessary to the profit of the merchants who carry them on, that the money price of the cutlery be higher in Germany than in England; it is sufficient for the interest of A., the exporter of the cutlery, that he can procure for it in Hamburgh, either bills or goods which will yield him in London the amount of the prime cost of the cutlery, together with the freight, insurance, and other charges on the voyage, as also a fair and reasonable profit on the capital employed. If A. sells his cutlery for bills on London, either the money price of the cutlery must be so much higher at Hamburgh than in London, as to compensate the expense, risk and profit of the voyage, or the course of exchange must be so much against London as to compensate any deficiency in such higher money price; otherwise A. will be a loser by the adventure, and consequently will be discouraged from continuing the trade.

In like manner it is not absolutely necessary to the prosperity of E.'s adventure of Silesian linens to London, that the money price of such linen be higher in London than in Silesia; but it is necessary that the prime cost and charges on the linens be compensated by the London money price of the linens together with the difference of exchange, otherwise E.'s agent F. would not be in funds to answer his bill.

It is not absolutely necessary to the success of G.'s adventure to Cadiz that the money price of linen should be higher at Cadiz than in London; but it is necessary that the linen should sell for such a quantity of dollars in Cadiz as should be worth, when imported into England, the prime cost of the linen in London, together with the charges and profit on it to Cadiz and on the dollars back to London; otherwise G. would lose by his adventure. But it is of no consequence to G. whether the advance of price necessary to meet the expense and profit of the voyage accrue on the sale of the linens at Cadiz, or of the dollars at London, or partly on both these transactions.

It is of no importance to the East India Company whether (in