EAST INDIAN TRADE. II. 55 the East India Company led men to suppose, that ex- LECTURE perience would sanction the general application of the principle to all foreign commerce. In this we seem to have an instance of the very common mistake which men make, in confounding an essential condition with a cause. In order that the course of commerce between two countries should be attended by an influx of gold and silver, from one into the other country, as an exchange of equivalents is the foundation of all commerce, it is a necessary condition that one of the two countries should have imported general commodities of greater value than those which it has exported. In this case two alternatives present themselves; either it must employ the special commodities of gold or silver, as the universal merchandise, to make up the balance, or it must suspend its importations until the account is balanced by further general exports. If the former of these alternatives be adopted, the cause will be found in the circumstance, that the country has more than enough of gold or silver, and less than enough of other commodities. Overtrading, indeed, or rather, as it might with more propriety be said, over-purchasing, is the cause of one country getting into debt with another, but not of its paying its debt: the getting into debt is a circumstance necessary as a condition precedent to a country paying its debt, but it has no tendency to produce such a result. Public men, however, were led to suppose that the more that they raised impediments to the importation of foreign commodities, and gave encouragement to the exportation of their own goods, the more were they creating causes to make specie flow into their own country. Thus there was an enactment in the reign of Edward III. (A. D. 1342) which ordained that Edward III. "Whoso transporteth wool out of the realm shall bring in for every pack carried forth four nobles, 56 II. CAUSES OF INFLUX OF SPECIE. LECTURE (17. 6s. 8d.) in bullion, and so for all merchandise, according to the rate of the pack." Now the chief export trade of England in wool at this time was to Flanders, and Flanders had not more than enough of gold and silver; so the Duke of Brabant issued a prohibition against the exportation of gold and silver from Flanders, and the Commons of England found themselves obliged, in 1347, A. D., to petition the Crown for a repeal of the very statute, which had been passed five years before at their own request. Here then was an instance where it was attempted to cause gold and silver to flow into England by exporting her wool to Flanders. Now the importation of English wool into Flanders would most probably have been a necessary condition for the importation of Flemish bullion into England; but an adequate cause was wanting why Flanders should part with her gold and silver, and consequently the result anticipated by the Commons of England did not ensue. An excess of general exports over imports is thus not alone sufficient to account for an influx of bullion: bullion must be cheaper in other countries, or the alternative of a suspension of commerce will be adopted. Influx of specie. The mercantile system possessed one decided superiority over the old exclusive system; it had something positive about it as distinguished from the negative character of the latter. Whilst the exclusive system tended to check productive industry, the mercantile system tended in a certain manner to stimulate it. Whilst the former sought to prevent the exportation of gold and silver, the latter sought to promote its importation. Hence it was unavoidably calculated to encourage the spirit of tampering regulation, which under the garb of political sagacity loves to interfere in matters which should be left to individual discretion. It has thus commended itself EVILS OF MERCANTILE SYSTEM. II. system. 57 to the notice of statesmen, and the most disastrous LECTURE consequences to the welfare of nations have thereupon ensued. Attaching a peculiar value to the Evils of precious metals, and professing to ensure an abund- mercantile ance of them to the state which should listen to its suggestions, it has led nations to consider the welfare of their neighbours to be incompatible with their own, as all cannot have an increased share in a limited quantity of wealth. Hence has originated the mutual desire to hurt and impoverish one another: hence that commercial jealousy, the immediate or remote cause of most of the wars of later times. It is this system, which has multiplied obstacles to international communication, and kept on foot armies of custom-house officers, to be paid from the fruits of productive industry for the express purpose, not of facilitating, but of impeding its operations. It is this system, which, as M. Say has well observed, has prompted statesmen to employ force or stratagem to obtain from the fears or ignorance of neighbouring nations what they deemed to be advantageous treaties of commerce, in which, however, the dupers have been not unfrequently duped. It is this system, which regards colonies merely in the light of useful dependencies to the mother country, for the purpose of enabling her to have a monopoly of new markets, and of securing for her merchants a succession of new customers. But in admitting these as results, we must not consider them to be, strictly speaking, the effects of the system, but of causes which were in active operation long prior to the system; namely, erroneous notions as to the nature of wealth, and the conditions of value, as well as the principle of exchanges. As long as men believed that gold and silver were the sole articles of wealth, that value and utility were identical, and, therefore, that an article of necessary 58 II. FREE EXPORTATION OF BULLION. LECTURE use was more valuable than a luxury, and that a commercial exchange could never benefit both parties to it equally, but that the one party invariably gained something at the expense of the other, the results, which followed the general adoption of the mercantile system, would have attended any other system based on such fundamental errors. There might have been some little modification in the form of the results; but in whatever form the system might have been cast, it would have been equally prejudicial to the interests of nations. bullion. Debate in House of Commons Of these fundamental errors, the earliest that was assailed, as we have already observed, was the inveterate notion respecting the nature of wealth, that it consisted exclusively of gold and silver. We have seen that the English Parliament in 1663 permitted Free expor- the free exportation of bullion, when it threw open tation of the trade to India, and from this time bullion seems to have been regarded in England as a commodity. Still the exportation of it was vigorously contested. Thus in a debate in the House of Commons in 1680, on a petition being presented from the company of A. D. 1680. silk weavers against the importation of Indian silks, as destructive to their branch of manufactures, it was contended by one member (Mr. John Basset) "that the people in India are such slaves as to work for less than a penny a day, whereas ours here will not work for less than a shilling; and they have all materials also very reasonable, and are thereby enabled to make their goods so cheap, as it will be impossible for our people here to contend with them. And, therefore, because the said trade hath abundantly increased of late years, that we may not enrich the Indians, and impoverish our own people, I humbly move you that this petition may be referred to some Committee that may take particular care of it." The next speaker (Mr. John Parkhurst) maintained DEBATE IN THE HOUSE OF COMMONS. II. 59 "that the manufactures of this country were dis- LECTURE couraged because Indian goods hindered the expense of our own woollen goods by serving instead of them here, and also by hindering the consumption of them in other parts too, to which we export them, and by obstructing the expense of linen and silks, which we formerly purchased from our neighbour nations in return of our manufactures. For when that mutual conveniency of taking off their goods in return of ours failed, it is found by experience that our trade in manufactures is failed also." "But this," he continues, "is not all. This trade is carried on by the exportation of 5 or 600,000%. per annum in bullion, which is so useful a commodity as ought not to be exported in so great a quantity, especially seeing its exportation hath increased in some years from 200,000l. to 600,000l. per annum. For it may increase to millions, to the discouragement of the exportation of the products of our country, upon which the maintenance of our poor and rent of land depends; whereas by the exportation of so much bullion no immediate advantage redounds to the nation; and though it is usually affirmed, that the trade brings back as much money as it exports, yet, upon an inquiry, it will be found a mistake. And I think every nation, but especially this, which is so well stored with other commodities for trade, ought to be very jealous of a trade carried on by the exportation of our gold and silver, and to be very careful how to allow it, it being dangerous to make that which is the standard of trade merchandise itself." A third speaker (Mr. William Love), to much the same purport, argued, "that the East India trade will in time ruin a great part of our manufactures, if not prevented. For the cheapness of wages |