Chapter 3d Part 2 of Book 4

France & England; Balance of Produce & Consumption Icon

March 23, 2020

41 Because of these maxims, the commerce between France and England has been subjected to so many discouragements and restraints.

If those two countries considered their real interest, without mercantile jealousy or national animosity, French commerce might be more advantageous to Great Britain than any other country. Great Britain’s commerce will also be more advantageous to France. France is the nearest neighbour to Great Britain. The returns of the trade between the southern coast of England and the northern coasts of France might be expected at 4-6 times a year. The frequency is the same as in the inland trade. In those two countries, the capital employed in this trade could keep in motion 4-6 times the amount of industry. It could afford employment and subsistence to 4-6 times more people than if it were employed in foreign trade. Between the most remote parts of France and Great Britain, the returns might be expected at least once a year. Even this trade would be at least equally advantageous as most of our foreign European trade. This trade would be at least three times more advantageous than the boasted trade with our North American colonies, in which the returns frequently take 4-5 years. France is supposed to have 24 million people. Our North American colonies were never supposed to have more than 3 million. France is a much richer country than North America. There is much more poverty in France than North America because of the more unequal distribution of riches. France’s market is at least eight times more extensive than North America. France is 24 times more advantageous to our trade than our North American colonies due to the superior frequency of the returns, The trade of Great Britain would be just as advantageous to France. It would have the same superiority to France than the trade to her own colonies. Such is the very great difference between the trade which both nations= discouraged, and have favoured the most

42 The very same circumstances which would have rendered free commerce so advantageous to both, have created the principal obstructions to that commerce.

Being neighbours, they are necessarily enemies. The wealth and power of each becomes more formidable to the other. What increases the national friendship only inflames national animosity. They are both rich and industrious nations. The merchants and manufacturers of each dread the competition of the other. The violence of national animosity excites, inflames, and is inflamed by mercantile jealousy. The traders of both countries announced falsely the certain ruin of each, from that unfavourable balance of trade which they pretend would be caused by free trade.

43 All European commercial countries were told by the pretended doctors of this system of the approaching ruin from an unfavourable balance of trade.

No European nation has been impoverished by this cause, despite= all the anxiety they have excited the vain attempts of trading nations to turn that balance to their favour On the contrary, every town and countryside has been enriched by it in proportion to how they have opened their ports. They were not ruined by this free trade, as the principles of the commercial system would lead us to expect. There is no country which has free ports. Although there are a few European towns which deserve such a name. Perhaps Holland is the nearest to being a free port. Though it is still very far from it. It derives its whole wealth and most of its subsistence from foreign trade.

44 There is another balance which is very different from the balance of trade.

It creates the prosperity or decay of every nation as it is either favourable or unfavourable. This is the balance of the annual produce and consumption. If the exchangeable value of the annual produce exceeds the value of the annual consumption, the society’s capital must annually increase in proportion to this excess. In this case, the society lives within its revenue. What is annually saved out of its revenue is naturally added to its capital. Its savings are employed to further increase the annual produce. On the contrary, if the exchangeable value of the annual produce falls short of the annual consumption, the society’s capital must annually decay in proportion to this deficiency. In this case, the society’s expence exceeds its revenue and encroaches on its capital. Its capital must decay and together with it the exchangeable value of the annual produce of its industry.

45 This balance of produce and consumption is entirely different from the balance of trade .

It might take place in a nation which= has no foreign trade was entirely separated from all the world It may take place in the whole planet with its wealth, population, and improvement gradually increasing or decaying.

46 The balance of produce and consumption may be constantly in favour of a nation, even though the balance of trade is generally against it.

A nation may import a greater value than it exports for half a century. The gold and silver which comes into it during an this time may be all immediately sent out of it. Its circulating coin may gradually decay. Paper money may substitute in its place. It may even have rising foreign debts. Yet its real wealth, the exchangeable value of the annual produce of its lands and labour, may increase in a much greater proportion. The state of our North American colonies and the trade they carried on with Great Britain serves as a proof of this.


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