§ 10. Nothing, in the opinion of Dr. Smith, could be "more absurd than the whole doctrine of the balance of trade." "A nation may," as he assures his readers, "import to a greater value than it exports for half a century, perhaps, together; the gold and silver which come into it during all this time may all be immediately sent out of it; its circulating coin may gradually decay, different sorts of money may be substituted in its place, and even the debts which it contracts in the powerful nations with which it deals may be gradually increasing; and yet its real wealth, the exchangeable value of its land and labor, may, during the same period, have been increasing in a much greater proportion." *

Were all this asserted of an individual man, it would be regarded as in the highest degree absurd; yet it is here asserted of nations, as though the laws which govern communities of thousands and millions of individuals, were not the same with those that govern each of the men of whom they are composed. The man who spends more than he makes, and finds his command over money gradually decay, with constantly increasing necessity for going into debt, at length discovers that his credit has followed his money, and that with every step in that direction there has been a decline in the value of his labor-tending gradually towards placing him in the prison or the poorhouse; and such, precisely, is the case with nations. It was by means of assertions like this, that Dr. Smith proved, as his followers yet think, that "nothing could be more absurd than the whole doctrines of the balance of trade ;" and, that a deficiency in the supply of cotton or sugar, was more important to a nation than a diminution in the supply of the great instrument provided for enabling men to combine their exertions, and thus increase their productive power.

The colonies of Dr. Smith's day were in a situation nearly resembling that of Jamaica at the present time. Their people suffering under a load of debt were dependent on the mercy of their creditors; and for the reason, that the mother country sought to prevent all combination of action for the purpose of bringing the loom and the plough to the neighborhood of each other. To the feeling that that policy was destructive of their best interests, and not to the paltry tax on tea, the American * Wealth of Nations, book 4, chap. iii.

Revolution was due. Jamaica has since gone on in the course then prescribed to these colonies precisely that here indicated by Dr. Smith as likely to be followed by increase in the value of land and labor; yet the result is altogether different from that described by him the value of both having been destroyed. Theories opposed, as is the case with those we have now before us, to constant facts, could scarcely be deemed entitled to the attention here given to them, were it not that this especial portion of Dr. Smith's great work-the one in which he was most in error is held, by modern economists generally, to

1

be the one by which he is most distinguished.

More than any other country in Europe, Turkey has acted in accordance with the teachings of Hume and Smith; and the observations of a recent traveller in that country enable us to see with what effect. There, says Thornton, "the chimera of a balance of trade never entered into heads sensible enough not to dream of calculating whether there was more profit in buying or selling." "There," as he adds, "every object of exchange is admitted, and circulates without meeting other obstacle than the payment of an infinitely small portion [three per cent.] of their value at the custom-house."

Under this system, Turkish manufactures have been annihilated, and with every advantage for supplying the world with silks, cloth, iron, and other metals, the whole people of the empire have been converted into wretched cultivators on one hand, and grasping traders on the other these effects having been accompanied by the almost entire disappearance of money, whether for the use of the people or the government. The great bulk of the farmers "cultivate the same articles of produce and pursue the same routine of culture; consequently, every man possesses a superfluity of the article which his neighbor is desirous of selling;" all of which are, therefore, cheap, while cloth and iron are dear.

The absence of money renders it necessary to collect taxes in kind, and the regulations forced upon the government "to guard against fraud, confine the routine of agriculture within the rudest limits." The industry of the land-owner being thus fettered, the peasantry "live in a state of society" well characterized * Blackwood's Magazine, November, 1854.

as

"barbarous." "The whole grain crops frequently remain nearly two months exposed in the open air on the threshing-floors, merely to prevent the cultivator from extracting some portion for the use of his family, without paying the government the tenth on this trifle."

Money tending always to flow outwards, the government is driven to a constant depreciation of the currency —a direction in which the movement has been most rapid during the present century, which has witnessed the total downfall of every species of manufacture. "Whenever," says this writer, "the specie in the Sultan's treasury has been found inadequate to meet his immediate payments, the deficiency has been supplied by the addition. of the quantity of base metal necessary to augment the bulk of the precious metals on hand; and in this way a debt of three ounces of silver has often been paid with two ounces of silver and one of copper or tin."

With declining power of association, there having been a steady decline in the power to make or to maintain roads or bridges by means of which to communicate with the distant market-"the expense of transport has of late years been increasing, and hence the cultivation and export of several articles peculiarly adapted to the soil and climate have diminished." The effect of this is seen in the almost entire destruction of the value of labor and land-being directly the reverse of the facts observed in all those countries whose policy has tended towards the promotion of association at home, and the establishment of a favorable balance payable in those metals by means of which, alone, man is enabled to combine his efforts with those of his neighbor-men.

Nevertheless, on turning to Hume or Smith, we find that the question of the balance of trade is totally unworthy to occupy the attention of those charged with the duties of government; and their doctrine has been repeated, with little change, by all the writers on money from their day to the present time. None can now study the writings of either without arriving at the conclusion, that they had a most inadequate appreciation of the importance of the functions performed by money, and that, having studied in their closets the laws of nature, they forgot to verify their conclusions by studying the operations of the world around them.

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11. In thus examining the doctrines of the earlier English writers on money, we have, in effect, examined those of the Ricardo-Malthusian school of the present day - Messrs. McCulloch and Mill differing little from Messrs. Hume and Smith. Mr. Mill quotes, approvingly, the ideas of Hume as to the effect that would result from having every person in a nation to "wake and find a gold coin in his pocket"-suggesting, however, that we might better suppose "that to every pound, or shilling, or penny in the possession of any one, another pound, shilling, or penny were suddenly added. There would," as he continues, "be an increased money demand, and consequently an increased money value, or price, for things of all sorts. This increased value would do no good to any one; would make no difference, except that of having to reckon pounds, shillings, and pence in higher numbers."'*

With great respect for the writer of this, we would suggest that the necessity for thus resorting to unsupposable cases affords strong evidence of weakness of position. Were an earthquake to shatter the walls of all the cotton factories of England, the result would be found in a rapid rise in the price of cloth, accompanied by a fall in that of cotton; but no economist would venture to adduce the facts in proof that the price of cloth tended naturally to rise, or that of cotton to fall. It might, however, be as properly done in that case as in those of Messrs. Hume and Mill.

What we need is facts not suppositions. The experience of the world shows, that in all countries the circulation of society becomes more rapid as the machinery of circulation is improved

that human power, mental and physical, is then economized— that consumption then more instantly follows production - that land and labor, and the rude products of both, then rise in price -that the higher products of a scientific agriculture, and finished commodities of every kind, then fall in price. and that there is then afforded that most conclusive of all the evidences of advancing civilization, a diminution in the proportion of the product of labor going to the middleman, and a diminution in the power of the trader to control the movements of society. That such are the facts presented by an examination of the history of the world * J. S. MILL: Principles, book 3, chap. viii.

for centuries past, the reader can readily satisfy himself; yet it would be easy to find both periods and countries, in which the reverse of this has all the appearance of being true. When, however, we come to examine into the causes of those appearances, we find, invariably, that they are readily susceptible of explanation — leaving altogether untouched the great principle in virtue of which, prices approximate as men grow in wealth, power, morals, intellect, and all the other characteristics of an advancing civilization.

In the natural course of things, population and wealth tend to increase, and the prices of all the metals gold, silver, copper, iron, tin, lead, and every other that can be named - when measured by corn or wool, tend to fall; and the more rapid the tendency in that direction, the greater is the progress in wealth, strength, and power. That this is so, is proved by all the experience of the world, from the creation to the present time. That it is so, is proved by the special experience of Britain for a series of centuries, and by that of all the countries of Northern Europe in the last half century. The people of the United States, nevertheless, are steadily, year after year, and decade after decade, giving a larger quantity of wheat and cotton for a smaller one of each and every of the metallic products of the earth doing so, too, in common with all the purely agricultural countries of the world. Does this, however, invalidate the great principle of whose truth evidence may everywhere else be found? Certainly not. It is the exception that proves the rule thus establishing a necessity for such a change in the policy of all those countries as will tend to the promotion of association, to the development of individuality, and to the extension of that commerce which, in so many countries, is now perishing under the assaults of trade.

$12. Further in common with Mr. Hume, Mr. Mill has a slight opinion of the efficacy of money in the economy of society it being, as he thinks, "intrinsically" most "insignificant," "except in the character of a contrivance for sparing time or labor." In that character, precisely, it is, that it is importantmore being done in that way by a single hundred thousand dollars' worth of money, than by tens of millions' worth of ships, canals, and railroads. "Insignificant" as it is, it has a value in