ticut, and are a gain to England. There is an advantage, undoubtedly, to both communities (the expenses of transportation, &c., being left out of the calculation), but it is only half as great as the advantage to either would have been, if both parties to the exchange and both profits had belonged to itself.

If the English shoemaker can be induced to emigrate, and to pursue his craft in Connecticut, exchanging with the hatter as before, it is manifest that a double benefit accrues to that State.

The community is enriched by what enriches him-the enhanced productiveness of his labour, which results from his having the capacity to exchange it with that of the native citizen, enures to the advantage of the State, in the tangible form of an increased supply of boots and shoes.

No possible estimation of value in the commodities exchanged, no variation of price between boots in Liverpool and boots in New Haven, can in the least degree affect this grand fact; though a reasoning based upon values and prices may obscure the perception of it. Value and price may, indeed, in connection with other circumstances, furnish indications in respect to the limit of cost at which the advantage of domestic exchange may be purchased, with profit to a community; but this does not impair the conclusion that internal exchange, other things being equal, and looking only at the essential foundation of all exchange, is more advantageous than foreign trade.

If there be a single individual in Connecticut who sits idle-able to make shoes, but incapable of any other species of productive industry it presents a case where the advantage of a system of domestic exchanges which shall secure him the opportunity, is readily appreciable. Idle or busy he must be fed, and in either case his subsistence must be provided from the labour of the other members of society. Suppose that it requires twice the labour for him to make a pair of boots, and, consequently, that he must be paid twice the price, to enable him to procure the subsistence which the public would otherwise be compelled to furnish, that the Englishman demands, it is evident that the community may as well pay him that price, as feed him in idleness and obtain its boots from

England. Its total expenditure and total acquisition are the same in one case as in the other.

We are now prepared to appreciate the justice with which Adam Smith insisted upon the superior advantage of internal over foreign trade. The following extract exhibits his views:

"The same capital will, in any country, put in motion a greater or smaller quantity of productive labour, and add a greater or smaller value to the annual produce of its land and labour, according to the different proportions in which it is employed in agriculture, manufactures, and wholesale trade. The difference, too, is very great, according to the different sorts of wholesale trade in which any part of it is employed. * * * "The capital which is employed in purchasing in one part of the country in order to sell in another, the produce of the industry of that country, generally replaces by every such operation two distinct capitals, that had both been employed in the agriculture or manufactures of that country, and thereby enables them to continue that employment. When it sends out from the residence of the merchant a certain value of commodities, it generally brings back in return at least an equal value of other commodities. When both are the produce of domestic industry, it necessarily replaces by every such operation two distinct capitals, which had both been employed in supporting productive labour, and thereby enables them to continue that support. The capital which sends Scotch manufactures to London, and brings back English corn and manufactures to Edinburgh, necessarily replaces by every such operation two British capitals, which had both been employed in the agriculture or manufactures of Great Britain.

"The capital employed in purchasing foreign goods for home consumption, when this purchase is made with the produce of domestic industry, replaces, too, by every such operation, two distinct capitals; but one of them only is employed in supporting domestic industry. The capital which sends British goods to Portugal, and brings back Portuguese goods to Great Britain, replaces by every such operation only one British capital. The other is a Portuguese one. Though the returns, therefore, of the foreign trade of consumption should be as quick as those of the home trade, it will give but one-half of the encouragement to the industry or productive labour of the country."- Wealth of Nations, Book II., chap. 5.

Mons. Say concurs with Smith, holding the following language:"The internal commerce of a country, though from its minute ramification it is less obvious and striking, besides being the most considerable is likewise the most advantageous. For both the remittance and returns of this commerce are necessarily home products. It sets in motion a double production; and the profits of it are not participated with foreigners."Say's Political Economy, Book I., chap. 9.

In a subsequent chapter, commenting with disapprobation upon the policy which induced the British Government, in its anxiety to enlarge the foreign vent for its manufactures, to grant bounties upon exportations, the same author observes,

"The British Government seems not to have perceived that the most profitable sales to a nation, are those made by one individual to another

within the nation; for these latter imply a national production of Two values-the value sold and that given in exchange." — Say's Political Economy, Book I., chap. 17.

The language employed by Dr. Smith in the preceding extract, does not appear very well calculated to convey the true grounds upon which its doctrine rests. The idea of an intermediate capital, employed in replacing two other capitals, introduces a needless complexity, inasmuch as the whole question turns upon the advantage of an exchange of a product, or quantity of products, or a given amount of capital, if that term is preferred, for another capital, like it in the circumstance of being the result of domestic industry, or unlike it, as being the result of the industry of strangers. It is one of these which replaces the other. The capital employed in effecting the exchange, may, if the products are in adjacent warehouses, consist only of money in coin. If the distance between them is two or three miles, it will consist in part of wagons and horses. If they are separated by a distance of a hundred miles, it may include also a railway, with its engines and cars; or a canal, with its boats and the animals who tow them. The capital which is the instrument of exchange has no influence upon the result, except that it requires pay for the services it has rendered, and thus abstracts some share of the products from those whose toil brought them into the sphere of exchange. It is difficult to see in what sense it can be said to replace anything, since, while it adds to value-that which measures the difficulty of obtaining a commodity—it adds nothing directly to the quantity of commodities, but trenches upon the quantity that would otherwise be shared by the producers. It does not follow that such services are unprofitable to a community. A certain amount of them is absolutely indispensable; and a class of men devoting themselves to the business of effecting exchanges, can do so with a saving to the community, resulting from the general principle by which the division of labour secures economy of labour. It is obvious, nevertheless, that the smaller the amount of capital and of labour required for the purpose of conducting the traffic of a community, the greater will be the amount left free for the work of production.

We shall have occasion to refer to other passages of the "Wealth of Nations," from which the grounds of the proposition under dis-

cussion may be inferred more clearly and satisfactorily. That which has been cited above, was selected for the purpose of presenting, in connection with it, the contradiction which it has met from Mr. Ricardo and his followers. It is a place where the paths divideand they lead to irreconcilable differences. Mr. Ricardo quotes at full length the proposition of Adam Smith, and comments as follows:

"This argument appears to me to be fallacious; for, though two capitals, one Portuguese and one English, be employed, as Dr. Smith supposes, still a capital will be employed in the foreign trade double of what would be employed in the home trade. Suppose that Scotland employs a capital of £1000 in making linen, which linen she exchanges for the produce of a similar capital, employed in making silks in England: £2000, and a proportionate quantity of labour, will be employed in the two countries. Suppose, now, that England discovers that she can import more linen from Germany for the silks that she before exported to Scotland, and that Scotland discovers that she can obtain more silks from France in return for her linen than she before obtained from England, will not England and Scotland immediately cease trading with each other? and will not the home trade of consumption be changed for a foreign trade of consumption? But, although two additional capitals will enter into this trade-the capital of Germany and that of France-will not the same amount of Scotch and English capital continue to be employed? and will it not give motion to the same quantity of industry as when it was engaged in the home trade?" -Principles of Political Economy, chap. 26.

These questions may be safely answered in the affirmative, without conceding the fallacy of Dr. Smith's argument. The answer would only admit, that if at the same time that Scotland lost a market in England she found a better in France, and England also found a market in Germany in the place of that she lost in Scotlandthat is, were Two foreign exchanges substituted for the single domestic exchange-exchanges involving the value of £4000, £2000 supplied by Great Britain, and £1000 each from Germany and France, instead of an exchange at home comprehending values on both sides, amounting to but £2000-then the same quantity of industry would be put in motion as if the silk and linen had been exchanged within the island. The form of the interrogatory admits, by necessary implication, that both the contingencies specified should concur, before the industry of Great Britain can be compensated for the suspension of its internal commerce; and this is admitting that commerce to be equivalent to double the amount of foreign trade, in its contributions to the support of domestic labour. This, however, is the very proposition the fallacy of which was to be shown. We are under no obligation, therefore, to inquire whether

the supposed contingencies are likely to occur at the same time. If we were, a mere probability would not suffice. It ought to be shown that the one had a necessary tendency to bring about the other— that the fact that Scotch linen would not pay for English silk, afforded a positive reason why it should be received in payment for French silk-that because English silk was rejected by Scotchmen, therefore, Germans would be anxious to obtain it. It is cheapness, unquestionably, that must be supposed to recommend an article tʊ purchasers, other things being equal. Mr. Ricardo's illustration implies, that German linen is found to be cheaper to the English, who pay for it with silk, than the linen of Scotland: why then should the people of France, who also pay in silk, purchase the dear Scotch commodity instead of the cheap German? The supposition involves a state of things which would naturally lead to the destruction of the linen manufacture in Scotland, because of its inability to produce as cheaply as Germany, and of the silk manufacture in England, from inability to compete with France. The entire industry of Great Britain, in both species of manufacture, must either be thrown out of employment, or that disaster averted by means which Mr. Ricardo does not suggest, and which are inconsistent with the belief that foreign trade is equally advantageous with internal exchange.

Mr. M'Culloch, in a work on Commerce, quotes the proposition of Adam Smith, and reasons upon it as follows:

"If, when Scotch manufactures are sent to Portugal, the same demand for them continues in England as before they began to go abroad, an additional capital and an additional number of labourers will be required, to furnish supplies for both the English and Portuguese markets."

This requires no comment.

He then puts the other case.

"If, at the same time that the Scotch began to export manufactured goods to Portugal, the Londoners also found a foreign market, where they could be supplied at a cheaper rate with the goods they had formerly imported from Scotland, all intercourse between Scotland and London would immediately cease, and the home trade would be changed for a foreign trade. It is obvious, however, that this change would not occasion any embarrassment, and that it would not throw a single individual out of employment."

We pause here to remark, that, as in the illustration of Mr. Ricardo, we have two foreign markets, supposed to have been acquired, in the place of one internal exchange suppressed. The quotation continues: