which are not altogether destitute of plausibility, but which, on examination, will be found extremely unsound, in favour of the active interposition of Government to produce an increased could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it. "To give the monopoly of the home market to the produce of domestic industry, in any particular art or manufacture, is in some measure to direct private people in what manner they ought to employ their capitals, and must, in almost all cases, be either a useless or a hurtful regulation. If the produce of domestic can be brought there as cheap as that of foreign industry, the regulation is evidently useless. If it cannot, it must generally be hurtful. It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy. The tailor does not attempt to make his own shoes, but buys them of the shoemaker. The shoemaker does not attempt to make his own clothes, but employs a tailor. The farmer attempts to make neither the one nor the other, but employs those different artificers. All of them find it for their interest to employ their whole industry in a way in which they have some advantage over their neighbours, and to purchase with a part of its produce, or what is the same thing, with the price of a part of it, whatever else they have occasion for. "What is prudence in the conduct of every private family, can scarce be folly in that of a great kingdom. If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry employed in a way in which we have some advantage. The general industry of the country being always in proportion to the capital which employs it, will not thereby be diminished, no more than that of the above mentioned artificers', but only left to find out the way in which it can be employed with the greatest advantage. It is certainly not employed to the greatest advantage when it is thus directed towards an object which it can buy cheaper than it can make. The value of its annual produce is certainly more or less diminished when it is thus turned away from producing commodities evidently of more value than the commodity which it is directed to produce: according to the supposition, that commodity could be purchased from foreign countries cheaper than it can be made at home. It could therefore have been purchased with a part only of the commodities, or what is the same thing, with a part only of the price of the commodities, which the industry employed by an equal capital would naturally have produced at home. . . . "By means of such regulations, indeed, a particular manufacture may sometimes be acquired sooner than it could have been otherwise, and after a certain time may be made at home as cheap or cheaper than in the foreign country. But it will by no means follow that the sum total either of its industry or of its revenue can ever be augmented by any such regulation. . . . Though for want of such regulations the society should never acquire the proposed manufacture, it would not upon that account necessarily be the poorer in any one period of its duration. Its whole capital and industry might still have been employed, though upon different objects, in the manner the mos advantageous at the time. plantation of English oaks, in order to render the regular supply of timber for his Majesty's dock-yards independent of the accidents of commerce and war. On these reasonings, I pro "The natural advantages which one country has over another in producing particular commodities, are sometimes so great, that it is acknowledged by all the world to be in vain to struggle with them. By means of glasses, hot-beds, and hot walls, very good grapes can be raised in Scotland; and very good wine too can be made of them at about thirty times the expense for which at least equally good can be brought from foreign countries. Would it be a reasonable law to prohibit the importation of all foreign wines, merely to encourage the making of Claret and Burgundy in Scotland? But if there would be a manifest absurdity in turning towards any employment, thirty times more of the capital and industry of the country, than would be necessary to purchase from foreign countries an equal quantity of the commodities wanted, there must be an absurdity, though not altogether so glaring, yet exactly of the same kind, in turning towards any such employment a thirtieth, or even a three hundredth part more of either.'* "The reasoning through all this passage appears to me clear and satisfactory; and from the whole it is plain, and may be assumed as certain truth, that the system of forcing, by restraints upon foreign commodities, a part of the capital of a nation from its natural direction, instead of being beneficial, must be highly prejudicial. ping. The Act of Navigation, therefore, very properly endeavours to give the sailors and shipping of Great Britain the monopoly of the trade of their own country, in some cases, by absolute prohibitions, and in others by heavy burdens upon the shipping of foreign countries.'"+ (After Mr. Stewart's remarks on this exception, Mr. Bonar continues :) "Besides the restraining, or totally prohibiting the importation of certain species of commodities for the encouragement of domestic production, the Commercial System has devised another expedient for the purpose of preventing what has been supposed the unfavourable balance of trade; that is, the granting extraordinary encouragements to the exportation of commodities by the means of drawbacks and bounties. "Of these,' Mr. Smith justly remarks, 'drawbacks seem to be the most reasonable. To allow the merchant to draw back upon exportation either the whole, or a part of whatever excise or inland duty is imposed upon domestic industry, can never occasion the exportation of a greater quantity of goods than what would have been exported had no duty been imposed. Such encouragements do not tend to turn towards any particular employment a greater share 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 that share to other employments. "The same thing may be said of the drawbacks upon the re-exportation of foreign goods imported.' "The case, however, is different in [Ibid. p. 192.] [Ibid. p. 252, seq.] pose to offer some particular strictures afterwards. But I shall first finish the general outline of Mr. Smith's view of the Mercantile system, before proceeding to this. (After stating the disposition which this country has always manifested to depress the commerce of France, Mr. Stewart observed :) The impolicy of these regulations was distinctly declared in the late commercial treaty entered into with that country. The influence, I may observe, which the writings of Mr. Smith are allowed to have had on our national conduct, in this and some other instances, affords a memorable example of the triumph of philosophy over the dictates of prejudice, and leads us to indulge a hope, that in an age of free and unrestrained discussion like the present, principles founded on truth and justice will gradually supplant the errors of ignorance. (After stating the nature of the evidence which the custom respect to bounties. These are expressly given to enable merchants and manufacturers to sell their goods as cheap or cheaper than their rivals in the foreign market. . . . We cannot, it is said, force foreigners to buy our goods; the next best expedient, therefore, it has been thought, is to pay them for buying. It is in this manner that the mercantile system proposes to enrich the whole country. Bounties, it is allowed, ought to be given to those branches of trade only which cannot be carried on without them. But every branch of trade in which the merchant can sell his goods for a price which replaces to him, with the ordinary profits of stock, the whole capital employed in preparing and sending them to market, can be carried on without a bounty. . . . Those trades only require bounties in which the merchant is obliged to sell his goods for a price which does not replace to him his capital together with the ordinary profit, or in which he is obliged to sell them for less than it really costs him to send them to market. The bounty is given in order to make up this loss, and to encourage him to continue, perhaps to begin a trade of which the expense is supposed to be greater than the returns, of which every operation eats up a part of the capital employed in it, and which is of such a nature, that if all other trades resembled it, there would soon be no capital left in the country. . . . If the bounty did not repay to the merchant what he would otherwise lose upon the price of his goods, his own interest would soon oblige him to employ his stock in another way, or to find out a trade in which the price of the goods would replace with the ordinary profit the capital employed in sending them to market. The effect of bounties, like that of all the other expedients of the mercantile system, can only be to force the trade of a country into a channel much less advantageous than that in which it would naturally run of its own accord.'"] * * [Ibid. pp. 261-263.] house books afford of the balance of trade, Mr. Stewart observed :) As Mr. Smith has not entered into any details, with regard to the nature of the objection to the evidence of the customhouse books in this respect, taking their fallaciousness for granted as a thing too well understood to require any particular illustration, it may not be improper to supply this elementary article of information, by a short statement of the particular facts and principles on which the doctrine may be justified. This is the more necessary, as the complicated commercial accounts of nations have been usually stated like the simple transactions of private merchants; and the technical businesslike appearance of accuracy which the results exhibit, are apt to procure to them a degree of popular credit to which they have in truth no claim, and which is daily employed to mislead the public mind, by writers who, at the time, are fully aware of their general incorrectness. In illustration of this subject, I gladly avail myself of some judicious remarks of Mr. Macpherson. "It has been customary," says that very laborious and accurate writer, "to consider our trade with those countries, from which we import a greater value than we export to them, as unprofitable; and that to those, to which our exports exceed the value of our imports, as profitable. But such a rule is liable to a great number of exceptions. The apparent balance must be frequently erroneous from the inaccuracy of the valuation. For example, the Irish linens are all rated in the custom-house entries in England at eightpence a yard on an average, whereas one shilling and fourpence a yard, the average price assumed in the Irish custom-house books, is rather under the value. linens generally constitute above a half of the value of the imports from Ireland to England and Scotland, the error in the value of that one article turns the balance of trade with Ireland against Great Britain; (See Lord Sheffield's Observations on the Manufactures, &c., of Ireland, p. 276, third edition, 1785;) and the valuations in many other branches of our commerce are not a whit more accurate. Money brought into Great Britain is not subject to entry, and As therefore does not appear in the custom-house books, any more than bills of exchange. Money carried out swells the amount of export entries, and consequently enlarges the supposed general profit; though, according to the doctrine that gold and silver are the only standard of wealth, such exportation is so much clear loss to the nation. Great quantities of goods, subject to high duties, totally prohibited, or shipped for exportation upon bounties or drawbacks, are clandestinely imported. Such importations, though not appearing in the general account, there is reason to believe, have considerable influence on the exchange with some neighbouring countries. And such of those smuggled goods as have been entered for exportation, perhaps over and over again, thus make great additions to the fallacious estimate of the profitable balance, without ever being, in reality, exported at all for foreign consumption. All goods exported for the use of our armies abroad, are part of the national expenditure, and can no more constitute a real part of the profitable balance, apparently swelled by their exportation, than the goods taken from his stock by a manufacturer or shopkeeper for his own use, can be stated as enlarging his profitable sales. Cargoes entered outward, which are lost at sea, or taken by the enemy, swell the amount of exports, and, consequently, of supposed profit, whereas, in fact, they are a dead loss to the nation, (and, in case of capture, tend to enrich the enemy, by whom they are in reality exported ;) while the want of the homeward cargo, which should have been imported in return, and which, to the individual sufferer, is not only a real loss but a heavy disappointment and derangement of his plans of trade, tends to enlarge the supposed balance of trade in our favour. And the loss or capture of homeward-bound ships in the same manner, by diminishing the amount of entered imports, fallaciously adds to the apparent favourable balance. "On the other hand, there are branches of trade which would be ruinous if the imports did not exceed the exports, or, in other words, if the balance were not unfavourable, according to this standard of estimation. Such is the trade with all our West India settlements, which have been formed and supported by |