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Thiscommerceattaineditspresentimportancethroughthe
colonisationofEuropeansintheEastandWestIndies，andinNorth
andSouthAmericathroughthetransplantationofthesugarcane，of
thecoffeetree，ofcotton，rice，indigo，&c。，throughthe
transportationofnegroesasslavestoAmericaandtheWestIndies，
thenthroughthesuccessfulcompetitionoftheEuropeanwiththe
EastIndianmanufacturers，andespeciallythroughtheextensionof
theDutchandEnglishsovereigntyinforeignpartsoftheworld，
whilethesenations，incontrasttotheSpaniardsandPortuguese，
soughtandfoundtheiradvantagemoreintheexchangeof
manufacturedgoodsforcolonialgoods，thaninextortion。
Thiscommerceatpresentemploysthemostimportantpartofthe
largeshippingtradeandofthecommercialandmanufacturing
capitalofEuropewhichisemployedinforeigncommerce；andall
thehundredsofmillionsinvalueofsuchproductswhichare
transportedannuallyfromthecountriesofthetorridzonetothose
ofthetemperatezoneare，withbutlittleexception，paidforin
manufacturedgoods。
Theexchangeofcolonialproductsformanufacturedgoodsisof
manifoldusetotheproductivepowersofthecountriesofthe
temperatezone。Thesearticlesserveeither，ase。g。sugar，coffee，
tea，tobacco，partlyasstimulantstoagriculturaland
manufacturingproduction，partlyasactualmeansofnourishment；
theproductionofthemanufacturedgoodswhicharerequiredtopay
forthecolonialproducts，occupiesalargernumberof
manufacturers；manufactoriesandmanufacturingbusinesscanbe
conductedonamuchlargerscale，andconsequentlymoreprofitably；
thiscommerce，again，employsalargernumberofships，ofseamen，
andmerchants；andthroughthemanifoldincreaseofthepopulation
thusoccasioned，thedemandfornativeagriculturalproductsis
againverygreatlyincreased。
Inconsequenceofthereciprocaloperationwhichgoeson
betweenmanufacturingproductionandtheproductionsofthetorrid
zone，theEnglishconsumeonanaveragetwotothreetimesmore
colonialproducethantheFrench，threetofourtimesmorethanthe
Germans，fivetotentimesmorethanthePoles。
Moreover，thefurtherextensionofwhichcolonialproductionis
stillcapable，mayberecognisedfromasuperficialcalculationof
theareawhichisrequiredfortheproductionofthosecolonial
goodswhichareatpresentbroughtintocommerce。
Ifwetakethepresentconsumptionofcottonattenmillion
centners，andtheaverageproduceofanacre(40，000squarefeet)
onlyateightcentners，thisproductionrequiresnotmorethan1
1/4millionacresofland。Ifweestimatethequantityofsugar
broughtintocommerceat14millioncentners，andtheproduceofan
acreat10centners，thistotalproductionrequiresmerely11/2
millionacres。
Ifweassumefortheremainingarticles(coffee，rice，indigo，
spices，&c。)asmuchasforthesetwomainarticles，allthe
colonialgoodsatpresentbroughtintocommercerequirenomore
thanseventoeightmillionacres，anareawhichisprobablynot
thefiftiethpartofthesurfaceoftheearthwhichissuitablefor
thecultureofsucharticles。
TheEnglishintheEastIndies，theFrenchintheAntilles，the
DutchinJavaandSumatra，haverecentlyaffordedactualproofof
thepossibilityofincreasingtheseproductionsinanextraordinary
manner。hasincreasedherimportsofcottonfromEngland，
especially，theEastIndiesfourfold，andtheEnglishpapers
confidentlymaintainthatGreatBritain(especiallyifshesucceeds
ingettingpossessionoftheoldcommercialroutetotheEast
Indies)couldprocureallherrequirementsofcolonialproductsin
thecourseofafewyearsfromIndia。Thisanticipationwillnot
appearexaggeratedifwetakeintoconsiderationtheimmenseextent
oftheEnglishEastIndianterritory，itsfertility，andthecheap
wagespaidinthosecountries。
WhileEnglandinthismannergainsadvantagefromtheEast
Indies，theprogressincultivationoftheDutchintheislands
willincrease；inconsequenceofthedissolutionoftheTurkish
EmpireagreatportionofAfricaandthewestandmiddleofAsia
willbecomeproductive；theTexanswillextendNorthAmerican
cultivationoverthewholeofMexico；orderlygovernmentswill
settledowninSouthAmericaandpromotetheyieldoftheimmense
productivecapacityofthesetropicalcountries。
Ifthusthecountriesofthetorridzoneproduceenormously
greaterquantitiesofcolonialgoodsthanheretofore，theywill
supplythemselveswiththemeansoftakingfromthecountriesof
thetemperatezonemuchlargerquantitiesofmanufacturedgoods；
andfromthelargersaleofmanufacturedgoodsthemanufacturers
willbeenabledtoconsumelargerquantitiesofcolonialgoods。In
consequenceofthisincreasedproduction，andincreaseofthemeans
ofexchange，thecommercialintercoursebetweentheagriculturists
ofthetorridzoneandthemanufacturersofthetemperatezone，
i。e。thegreatcommerceoftheworld，willincreaseinfutureina
farlargerproportionthanithasdoneinthecourseofthelast
century。
Thispresentincrease，andthatyettobeanticipated，ofthe
nowgreatcommerceoftheworld，hasitsoriginpartlyinthegreat
progressofthemanufacturingpowersofproduction，partlyinthe
perfectionofthemeansoftransportbywaterandbyland，partly
inpoliticaleventsanddevelopments。
Throughmachineryandnewinventionstheimperfect
manufacturingindustryoftheEasthasbeendestroyedforthe
benefitoftheEuropeanmanufacturingpower，andthelatterenabled
tosupplythecountriesofthetorridzonewithlargequantitiesof
fabricsatthecheapestprices；andthustogivethemmotivesfor
augmentingtheirownpowersoflabourandproduction。
Inconsequenceofthegreatimprovementsinmeansoftransport，
thecountriesofthetorridzonehavebeenbroughtinfinitely
nearertothecountriesofthetemperatezone；theirmutual
commercialintercoursehasinfinitelyincreasedthroughdiminution
ofrisk，oftimeemployedandoffreights，andthroughgreater
regularity；anditwillincreaseinfinitelymoreassoonassteam
navigationhasbecomegeneral，andthesystemsofrailwaysextend
themselvestotheinteriorofAsia，Africa，andSouthAmerica。
ThroughthesecessionofSouthAmericafromSpainandPortugal，
andthroughthedissolutionoftheTurkishEmpire，amassofthe
mostfertileterritoriesoftheearthhavebeenliberated，which
nowawaitwithlongingdesireforthecivilisednationsofthe
earthtoleadtheminpeacefulconcordalongthepathofthe
securityoflawandorder，ofcivilisationandprosperity；and
whichrequirenothingmorethanthatmanufacturedgoodsshouldbe
broughttothem，andtheirownproductionstakeninexchange。
Onemayseethatthereissufficientroomhereforall
countriesofEuropeandNorthAmericawhicharefittedtodevelop
amanufacturingpoweroftheirown，tobringtheirmanufacturing
productionintofullactivity，toaugmenttheirownconsumptionof
theproductsoftropicalcountries，andtoextendinthesame
proportiontheirdirectcommercialintercoursewiththelatter。
NOTES：
1。EspritdesLois，Bookxx。chap。xii。
Chapter22
ThemanufacturingPowerandNavigation，NavalPowerand
Colonization
Manufacturesasthebasisofalargehomeandforeigncommerce
arealsothefundamentalconditionsoftheexistenceofany
considerablemercantilemarine。Sincethemostimportantfunction
ofinlandtransportconsistsinsupplyingmanufacturerswithfuel
andbuildingmaterials，rawmaterialsandmeansofsubsistence，the
coastandrivernavigationcannotwellprosperinamerely
agriculturalState。Thecoastnavigation，however，istheschool
andthedep魌ofsailors，ships\'captains，andofshipbuilding，and
henceinmerelyagriculturalcountriesthemainfoundationforany
largemaritimenavigationislacking。
Internationalcommerceconsistsprincipally(aswehaveshown
inthepreviouschapter)intheinterchangeofmanufacturedgoods
forrawmaterialsandnaturalproducts，andespeciallyforthe
productsoftropicalcountries。Buttheagriculturalcountriesof
thetemperatezonehavemerelytooffertothecountriesofthe
torridzonewhattheythemselvesproduce，orwhattheycannotmake
useof，namely，rawmaterialsandarticlesoffood；hencedirect
commercialintercoursebetweenthemandthecountriesofthetorrid
zone，andtheoceantransportwhicharisesfromit，isnottobe
expected。Theirconsumptionofcolonialproducemustbelimitedto
thosequantitiesforwhichtheycanpaybythesaleofagricultural
productsandrawmaterialstothemanufacturingandcommercial
nations；theymustconsequentlyprocurethesearticlessecond-hand。
Inthecommercialintercoursebetweenanagriculturalnationanda
manufacturingcommercialnation，however，thegreatestpartofthe
seatransportmustfalltothelatter，evenifitisnotinits
powerbymeansofnavigationlawstosecurethelion\'sshareto
itself。
Besidesinternalandinternationalcommerce，seafisheries
occupyaconsiderablenumberofships；butagainfromthisbranch
ofindustry，asarule，nothingorverylittlefallstothe
agriculturalnation；astherecannotexistinitmuchdemandfor
theproduceofthesea，andthemanufacturingcommercialnations
are，outofregardtothemaintenanceoftheirnavalpower，
accustomedtoprotecttheirhomemarketexclusivelyfortheirown
seafisheries。
Thefleetrecruitsitssailorsandpilotsfromtheprivate
mercantilemarine，andexperiencehasasyetalwaystaughtthat
ablesailorscannotbequicklydrilledlikelandtroops，butmust
betrainedupbyservinginthecoastingandinternational
navigationandinseafisheries。Thenavalpowerofnationswill
thereforealwaysbeonthesamefootingwiththesebranchesof
maritimeindustry，itwillconsequentlyinthecaseofthemere
agriculturalnationbealmostnil。
Thehighestmeansofdevelopmentofthemanufacturingpower，of
theinternalandexternalcommerceproceedingfromit，ofany
considerablecoastandseanavigation，ofextensiveseafisheries，
andconsequentlyofarespectablenavalpower，arecolonies。
Themothernationsuppliesthecolonieswithmanufactured
goods，andobtainsinreturntheirsurplusproduceofagricultural
productsandrawmaterials；thisinterchangegivesactivitytoits
manufactures，augmentstherebyitspopulationandthedemandfor
itsinternalagriculturalproducts，andenlargesitsmercantile
marineandnavalpower。Thesuperiorpowerofthemothercountryin
population，capital，andenterprisingspirit，obtainsthrough
colonisationanadvantageousoutlet，whichisagainmadegoodwith
interestbythefactthataconsiderableportionofthosewhohave
enrichedthemselvesinthecolonybringbackthecapitalwhichthey
haveacquiredthere，andpouritintothelapofthemothernation，
orexpendtheirincomeinit。
Agriculturalnations，whichalreadyneedthemeansofforming
colonies，alsodonotpossessthepowerofutilisingand
maintainingthem。Whatthecoloniesrequire，cannotbeofferedby
them，andwhattheycanofferthecolonyitselfpossesses。
Theexchangeofmanufacturedgoodsfornaturalproductsisthe
fundamentalconditiononwhichthepositionofthepresentcolonies
continues。OnthataccounttheUnitedStatesofNorthAmerica
secededfromEnglandassoonastheyfeltthenecessityandthe
powerofmanufacturingforthemselves，ofcarryingonfor
themselvesnavigationandcommercewiththecountriesofthetorrid
zone；onthataccountCanadawillalsosecedeaftershehasreached
thesamepoint，onthataccountindependentagricultural
manufacturingcommercialStateswillalsoariseinthecountriesof
temperateclimateinAustraliainthecourseoftime。
Butthisexchangebetweenthecountriesofthetemperatezone
andthecountriesofthetorridzoneisbaseduponnaturalcauses，
andwillbesoforalltime。HenceIndiahasgivenupher
manufacturingpowerwithherindependencetoEngland；henceall
Asiaticcountriesofthetorridzonewillpassgraduallyunderthe
dominionofthemanufacturingcommercialnationsofthetemperate
zone；hencetheislandsofthetorridzonewhichareatpresent
dependentcoloniescanhardlyeverliberatethemselvesfromthat
condition；andtheStatesofSouthAmericawillalwaysremain
dependenttoacertaindegreeonthemanufacturingcommercial
nations。
Englandowesherimmensecolonialpossessionssolelytoher
surpassingmanufacturingpower。IftheotherEuropeannationswish
alsotopartakeoftheprofitablebusinessofcultivatingwaste
territoriesandcivilisingbarbarousnations，ornationsonce
civilisedbutwhichareagainsunkinbarbarism，theymustcommence
withthedevelopmentoftheirowninternalmanufacturingpowers，of
theirmercantilemarine，andoftheirnavalpower。Andshouldthey
behinderedintheseendeavoursbyEngland\'smanufacturing，
commercial，andnavalsupremacy，intheunionoftheirpowerslies
theonlymeansofreducingsuchunreasonablepretensionsto
reasonableones。
Chapter23
TheManufacturingPowerandtheInstrumentofCirculation
Iftheexperienceofthelasttwenty-fiveyearshasconfirmed，
asbeingpartlycorrect，theprincipleswhichhavebeensetupby
theprevailingtheoryincontradictiontotheideasofthe
so-called\'mercantile\'systemonthecirculationoftheprecious
metalsandonthebalanceoftrade，ithas，ontheotherhand，
broughttolightimportantweakpointsinthattheoryrespecting
thosesubjects。
Experiencehasprovedrepeatedly(andespeciallyinRussiaand
NorthAmerica)thatinagriculturalnations，whosemanufacturing
marketisexposedtothefreecompetitionofanationwhichhas
attainedmanufacturingsupremacy，thevalueoftheimportationof
manufacturedgoodsexceedsfrequentlytoanenormousextentthe
valueoftheagriculturalproductswhichareexported，andthat
therebyattimessuddenlyanextraordinaryexportationofprecious
metalsisoccasioned，wherebytheeconomyoftheagricultural
nation，especiallyifitsinternalinterchangeischieflybasedon
papercirculation，fallsintoconfusion，andnationalcalamities
aretheresult。
Thepopulartheorymaintainsthatifweprovideourselveswith
thepreciousmetalsinthesamemanneraseveryotherarticle，it
isinthemainindifferentwhetherlargeorsmallquantitiesof
preciousmetalsareincirculation，asitmerelydependsonthe
relationofthepriceofanyarticleinexchangewhetherthat
articleshallbecheapordear；aderangementintherateof
exchangeactssimplylikeapremiumonalargerexportationof
goodsfromthatcountry，infavourofwhichitoscillatesfromtime
totime：consequentlythestockofmetallicmoneyandthebalance
betweentheimportsandexports，aswellasalltheother
economicalcircumstancesofthenation，wouldregulatethemselves
inthesafestandbestmannerbytheoperationofthenatural
courseofthings。
Thisargumentisperfectlycorrectasrespectstheinternal
interchangeofanation；itisdemonstratedinthecommercial
intercoursebetweentownandtown，betweentownandcountry
districts，betweenprovinceandprovince，asintheunionbetween
StateandState。Anypoliticaleconomistwouldbedeservingofpity
whobelievedthatthebalanceofthemutualimportsandexports
betweenthevariousstatesoftheAmericanUnionortheGerman
Zollverein，orbetweenEngland，Scotland，andIreland，canbe
regulatedbetterthroughStateregulationsandlawsthanthrough
freeinterchange。Onthehypothesisthatasimilarunionexisted
betweenthevariousstatesandnationsoftheearth，theargument
ofthetheoryoftrustingtothenaturalcourseofthingswouldbe
quiteconsistent。Nothing，however，ismorecontrarytoexperience
thantosupposeundertheexistingconditionsoftheworldthatin
internationalexchangethingsactwithsimilareffect。
Theimportsandexportsofindependentnationsareregulated
andcontrolledatpresentnotbywhatthepopulartheorycallsthe
naturalcourseofthings，butmostlybythecommercialpolicyand
thepowerofthenation，bytheinfluenceoftheseonthe
conditionsoftheworldandonforeigncountriesandpeoples，by
colonialpossessionsandinternalcreditestablishments，orbywar
andpeace。Here，accordingly，allconditionsshapethemselvesinan
entirelydifferentmannerthanbetweensocietieswhichareunited
bypolitical，legal，andadministrativebondsinastateof
unbrokenpeaceandofperfectunityofinterests。
Letustakeintoconsiderationasanexampletheconditions
betweenEnglandandNorthAmerica。IfEnglandfromtimetotime
throwslargemassesofmanufacturedgoodsontotheNorthAmerican
market；iftheBankofEnglandstimulatesorrestricts，inan
extraordinarydegree，theexportstoNorthAmericaandthecredit
grantedtoherbyitsraisingorloweringitsdiscountrates；if，
inadditiontoandasaconsequenceofthisextraordinaryglutof
theAmericanmarketformanufacturedgoods，ithappensthatthe
EnglishmanufacturedgoodscanbeobtainedcheaperinNorthAmerica
thaninEngland，nay，sometimesmuchbelowthecostpriceof
production；ifthusNorthAmericagetsintoastateofperpetual
indebtednessandofanunfavourableconditionofexchangetowards
England，yetwouldthisdisorganisedstateofthingsreadily
rectifyitselfunderastateofperfectlyunrestrictedexchange
betweenthetwocountries。NorthAmericaproducestobacco，timber，
corn，andallsortsofmeansofsubsistenceverymuchcheaperthan
Englanddoes。ThemoreEnglishmanufacturedgoodsgotoNorth
America，thegreaterarethemeansandinducementstotheAmerican
plantertoproducecommoditiesofvaluesufficienttoexchangefor
them；themorecreditisgiventohimthegreateristheimpulseto
procureforhimselfthemeansofdischarginghisliabilities；the
moretherateofexchangeonEnglandistothedisadvantageof
NorthAmerica，thegreateristheinducementtoexportAmerican
agriculturalproducts，andhencethemoresuccessfulwillbethe
competitionoftheAmericanagriculturistintheEnglishproduce
market。
Inconsequenceoftheseexportationstheadverserateof
exchangewouldspeedilyrectifyitself；indeed，itcouldnoteven
reachanyveryunfavourablepoint，becausethecertainanticipation
inNorthAmericathattheindebtednesswhichhadbeencontracted
throughthelargeimportationofmanufacturedgoodsinthecourse
ofthepresentyear，wouldequaliseitselfthroughthesurplus
productionandincreasedexportsofthecomingyear，wouldbe
followedbyeasieraccommodationinthemoneymarketandincredit。
Suchwouldbethestateofthingsiftheinterchangebetween
theEnglishmanufacturerandtheAmericanagriculturistwereas
littlerestrictedastheinterchangebetweentheEnglish
manufacturerandtheIrishagriculturistis。Buttheyareandmust
bedifferent：ifEnglandimposesadutyonAmericantobaccooffrom
fivehundredtoonethousandpercent；ifsherendersthe
importationofAmericantimberimpossiblebyhertariffs，and
admitstheAmericanmeansofsubsistenceonlyintheeventof
famine，foratpresenttheAmericanagriculturalproductioncannot
balanceitselfwiththeAmericanconsumptionofEnglish
manufacturedgoods，norcanthedebtincurredforthosegoodsbe
liquidatedbyagriculturalproducts；atpresenttheAmerican
exportstoEnglandarelimitedbynarrowbounds，whiletheEnglish
exportstoNorthAmericaarepracticallyunlimited；therateof
exchangebetweenbothcountriesundersuchcircumstancescannot
equaliseitself，andtheindebtednessofAmericatowardsEngland
mustbedischargedbyexportsofbulliontothelattercountry。
Theseexportsofbullion，however，astheyunderminethe
Americansystemofpapercirculation，necessarilyleadtotheruin
ofthecreditoftheAmericanbanks，andtherewithtogeneral
revolutionsinthepricesoflandedpropertyandofthegoodsin
circulation，andespeciallytothosegeneralconfusionsofprices
andcreditwhichderangeandoverturntheeconomyofthenation，
andwithwhich，wemayobserve，thattheNorthAmericanfreeStates
arevisitedwhenevertheyhavefoundthemselvesunabletorestore
abalancebetweentheirimportsandtheirexportsbyStatetariff
regulations。
ItcannotaffordanygreatconsolationtotheNorthAmerican
thatinconsequenceofbankruptciesanddiminishedconsumption，the
importsandexportsbetweenbothcountriesareatalaterperiod
restoredtoatolerableproportiontooneanother。Forthe
destructionandconvulsionsofcommerceandincredit，aswellas
thereductioninconsumption，areattendedwithdisadvantagesto
thewelfareandhappinessofindividualsandtopublicorder，from
whichonecannotveryquicklyrecoverandthefrequentrepetition
ofwhichmustnecessarilyleavepermanently，ruinousconsequences。
StilllesscanitaffordanyconsolationtotheNorth
Americans，ifthepopulartheorymaintainsthatitisan
indifferentmatterwhetherlargeorsmallquantitiesofprecious
metalsareincirculation；thatweexchangeproductsmerelyfor
products；whetherthisexchangeismadebymeansoflargeorsmall
quantitiesofmetalliccirculationisofnoimportanceto
individuals。Totheproducerorproprietoritcertainlymaybeof
noconsequencewhethertheobjectofhisproductionorofhis
possessionisworth100centimesor100francs，providedalways
thathecanprocurewiththe100centimesaslargeaquantityof
objectsofnecessityandofenjoymentashecanwiththe100
francs。Butloworhighpricesarethusamatterofindifference
onlyincasetheyremainonthesamefootinguninterruptedlyfora
longperiodoftime。
If，however，theyfluctuatefrequentlyandviolently，
disarrangementsarisewhichthrowtheeconomyofeveryindividual，
aswellasthatofsociety，intoconfusion。Whoeverhaspurchased
rawmaterialsathighprices，cannotunderlowprices，bythesale
ofhismanufacturedarticle，realiseagainthatsuminprecious
metalswhichhisrawmaterialshavecosthim。Whoeverhasboughtat
highpriceslandedpropertyandhasleftaportionofthepurchase
moneyasamortgagedebtuponit，loseshisabilityofpaymentand
hisproperty；because，underdiminishedprices，probablythevalue
oftheentirepropertywillscarcelyequaltheamountofthe
mortgage。Whoeverhastakenleasesofpropertyunderastateof
highprices，findshimselfruinedbythedecreaseinprices，orat
leastunabletofulfilthecovenantsofhisleases。Thegreaterthe
risingandfallingofprices，andthemorefrequentlythat
fluctuationsoccur，themoreruinousistheireffectonthe
economicalconditionsofthenationandespeciallyoncredit。But
nowherearethesedisadvantageouseffectsoftheunusualinfluxor
effluxofpreciousmetalsseeninamoreglaringlightthanin
thosecountrieswhichareentirelydependentonforeignnationsin
respectoftheirmanufacturingrequirementsandthesaleoftheir
ownproducts，andwhosecommercialtransactionsarechieflybased
onpapercirculation。
Itisacknowledgedthatthequantityofbanknoteswhicha
countryisabletoputintoandtomaintainincirculation，is
dependentonthelargenessoftheamountofmetallicmoneywhichit
possesses。Everybankwillendeavourtoextendorlimititspaper
circulationanditsbusinessinproportiontotheamountof
preciousmetalslyinginitsvaults。Iftheincreaseinitsown
moneycapitalorindepositsislarge，itwillgivemorecredit；
andthroughthiscredit，increasethecreditgivenbyitsdebtors，
andbysodoingraisetheamountofconsumptionandprices；
especiallythoseoflandedproperty。If，onthecontrary，anefflux
ofpreciousmetalsisperceptible，suchabankwilllimitits
credit，andtherebyoccasionrestrictionofcreditandconsumption
byitsdebtors，andbythedebtorsofitsdebtors，andsoonto
thosewhobycreditareengagedinbringingintoconsumptionthe
importedmanufacturedgoods。Insuchcountries，therefore，the
wholesystemofcredit，themarketforgoodsandproducts，and
especiallythemoneyvalueofalllandedproperty，isthrowninto
confusionbyanyunusualdrainofmetallicmoney。
ThecauseofthelatestaswellasofformerAmerican
commercialcrises，hasbeenallegedtoexistintheAmerican
bankingandpapersystem。Thetruthisthatthebankshavehelped
tobringaboutthesecrisesinthemannerabovenamed，butthemain
causeoftheiroccurrenceisthatsincetheintroductionofthe\'
compromise，billthevalueoftheEnglishmanufacturedgoodshas
farsurpassedthevalueoftheexportedAmericanproducts，andthat
therebytheUnitedStateshavebecomeindebtedtotheEnglishto
theamountofseveralhundredsofmillionsforwhichtheycouldnot
payinproducts。Theproofthatthesecrisesareoccasionedby
disproportionateimportationis，thattheyhavealwaystakenplace
whenever(inconsequenceofpeacehavingsetinorofareduction
beingmadeintheAmericancustomsduties)importationof
manufacturedgoodsintotheUnitedStateshasbeenunusuallylarge，
andthattheyhaveneveroccurredaslongastheimportsofgoods
havebeenpreventedbycustomsdutiesonimportsfromexceedingthe
valueoftheexportsofproduce。
Theblameforthesecriseshasfurtherbeenlaidonthelarge
capitalwhichhasbeenexpendedintheUnitedStatesinthe
constructionofcanalsandrailways，andwhichhasmostlybeen
procuredfromEnglandbymeansofloans。Thetruthisthatthesein
loanshavemerelyassistedindelayingthecrisesforseveral
years，andincreasingitwhenitarose；buttheseveryloans
themselveshaveevidentlybeenincurredthroughtheinequality
whichhadarisenbetweentheimportsandexports，andbutforthat
inequalitywouldnothavebeenmadeandcouldnothavebeenmade。
WhileNorthAmericabecameindebtedtotheEnglishforlarge
sumsthroughthelargeimportationofmanufacturedgoodswhich
couldnotbepaidforinproduce，butonlyinthepreciousmetals，
theEnglishwereenabled，andinconsequenceoftheunequalrates
ofexchangeandinterestfoundittotheiradvantage，tohavethis
balancepaidforinAmericanrailway，canalandbankstocks，orin
AmericanStatepaper。
ThemoretheimportofmanufacturedgoodsintoAmerica
surpassedherexportsinproduce，andthegreaterthatthedemand
forsuchpaperinEnglandbecame，themoreweretheNorthAmericans
incitedtoembarkinpublicenterprises；andthemorethatcapital
wasinvestedinsuchenterprisesinNorthAmerica，thegreaterwas
thedemandforEnglishmanufacturedgoods，andatthesametimethe
disproportionbetweentheAmericanimportsandexports。
IfontheonehandtheimportationofEnglishmanufactured
goodsintoNorthAmericawaspromotedbythecreditgivenbythe
Americanbanks，theBankofEnglandontheothersidethroughthe
creditfacilitieswhichitgaveandbyitslowratesofdiscount
operatedinthesamedirection。Ithasbeenprovedbyanofficial
accountoftheEnglishCommitteeonTradeandManufactures，that
theBankofEnglandlessened(inconsequenceofthesediscounts)
thecashinitspossessionfromeightmillionpoundstotwo
millions。Ittherebyontheonehandweakenedtheeffectofthe
AmericanprotectivesystemtotheadvantageoftheEnglish
competitionwiththeAmericanmanufactories；ontheotherhandit
thusofferedfacilitiesfor，andstimulated，theplacingof
AmericanstocksandStatepaperinEngland。Foraslongasmoney
couldbegotinEnglandatthreepercent。theAmericancontractors
andloanprocurerswhoofferedsixpercentinteresthadnolackof
buyersoftheirpaperinEngland。
Theseconditionsofexchangeaffordedtheappearanceofmuch
prosperity，althoughunderthemtheAmericanmanufactorieswere
beinggraduallycrushed。FortheAmericanagriculturistssolda
greatpartofthatsurplusproducewhichunderfreetradethey
wouldhavesoldtoEngland，orwhichunderamoderatesystemof
protectionoftheirownmanufactoriestheywouldhavesoldtothe
workingmenemployedtherein，tothoseworkmenwhowereemployedin
publicworksandwhowerepaidwithEnglishcapital。Suchan
unnaturalstateofthingscouldnot，however，lastlongintheface
ofopposinganddividednationalinterests，andthebreakupofit
wasthemoredisadvantageoustoNorthAmericathelongeritwas
repressed。Asacreditorcankeepthedebtoronhislegsforalong
timebyrenewalsofcredit，butthebankruptcyofthedebtormust
becomesomuchthegreaterthelongerheisenabledtoprolonga
courseofruinoustradingbymeansofcontinuallyaugmentedcredit
fromthecreditor，sowasitalsointhiscase。
ThecauseofthebankruptcyinAmericawastheunusualexport
ofbullionwhichtookplacefromEnglandtoforeigncountriesin
consequenceofinsufficientcropsandinconsequenceofthe
Continentalprotectivesystems。Wesayinconsequenceofthe
Continentalprotectivesystems，becausetheEnglish——ifthe
EuropeanContinentalmarketshadremainedopentothem——would
havecoveredtheirextraordinaryimportationsofcornfromthe
ContinentchieflybymeansofextraordinaryexportofEnglish
manufacturedgoodstotheContinent，andbecausetheEnglish
bullion——evenhaditflownoverforatimetothecontinent——
wouldagainhavefounditswaybacktoEnglandinashorttimein
consequenceoftheaugmentedexportofmanufacturedgoods。Insuch
acasetheContinentalmanufactorieswouldundoubtedlyhavefallen
asacrificetotheEnglish-Americancommercialoperations。
Asmattersstood，however，theBankofEnglandcouldonlyhelp
itselfbylimitingitscreditandincreasingitsrateofdiscount。
Inconsequenceofthismeasurenotonlythedemandformore
AmericanstocksandStatepaperfelloffinEngland，butalsosuch
paperaswasalreadyincirculationnowforceditselfmoreonthe
market。TheUnitedStatesweretherebynotmerelydeprivedofthe
meansofcoveringtheircurrentdeficitbythefurthersaleof
paper，butpaymentofthewholedebttheyhadcontractedinthe
courseofmanyyearswithEnglandbymeansoftheirsalesofstocks
andStatepaperbecameliabletobedemandedinmoney。Itnow
appearedthatthecashcirculationinAmericareallybelongedto
theEnglish。ItappearedyetfurtherthattheEnglishcoulddispose
ofthatreadymoneyonwhosepossessionthewholebankandpaper
systemoftheUnitedStateswasbased，accordingtotheirown
inclination。If，however，theydisposedofit，theAmericanbank
andpapersystemwouldtumbledownlikeahousebuiltofcards，and
withitthefoundationwouldfallwhereonrestedthepricesof
landedproperty，consequentlytheeconomicalmeansofexistenceof
agreatnumberofprivatepersons。
TheAmericanbankstriedtoavoidtheirfallbysuspending
speciepayments，andindeedthiswastheonlymeansofatleast
modifyingit；ontheonehandtheytriedbythismeanstogaintime
soastodecreasethedebtoftheUnitedStatesthroughtheyield
ofthenewcottoncropsandtopayitoffbydegreesinthis
manner；ontheotherhandtheyhopedbymeansofthereductionof
creditoccasionedbythesuspensiontolessentheimportsof
Englishmanufacturedgoodsandtoequalisetheminfuturewith
theirowncountry\'sexports。
Howfartheexportationofcottoncanaffordthemeansof
balancingtheimportationofmanufacturedgoodsis，however，very
doubtful。Formorethantwentyyearstheproductionofthisarticle
hasconstantlyoutstrippedtheconsumption，sothatwiththe
increasedproductionthepriceshavefallenmoreandmore。Henceit
happensthat，ontheonehand，thecottonmanufacturersareexposed
toseverecompetitionwithlinenmanufactures，perfectedasthese
arebygreatlyimprovedmachinery；whilethecottonplanters，on
theotherhand，areexposedtoitfromtheplantersofTexas，
Egypt，Brazil，andtheEastIndies。
Itmust，inanycase，beborneinmindthattheexportsof
cottonofNorthAmericabenefitthoseStatestotheleastextent
whichconsumemostoftheEnglishmanufacturedgoods。
IntheseStates，namely，thosewhichderivefromthe
cultivationofcornandfromcattle-breedingthechiefmeansof
procuringmanufacturedgoods，acrisisofanotherkindnow
manifestsitself。Inconsequenceofthelargeimportationof
EnglishmanufacturedgoodstheAmericanmanufactureswere
depressed。Allincreaseinpopulationandcapitalwasthereby
forcedtothenewsettlementsinthewest。Everynewsettlement
increasesatthecommencementthedemandforagriculturalproducts，
butyieldsafterthelapseofafewyearsconsiderablesurplusof
them。Thishasalreadytakenplaceinthosesettlements。The
WesternStateswillthereforepour，inthecourseofthenextfew
years，intotheEasternStatesconsiderablesurplusproduce，bythe
newlyconstructedcanalsandrailways；whileintheEasternStates，
inconsequenceoftheirmanufactoriesbeingdepressedbyforeign
competition，thenumberofconsumershasdecreasedandmust
continuallydecrease。Fromthis，depreciationinthevalueof
produceandoflandmustnecessarilyresult，andiftheUniondoes
notsoonpreparetostopupthesourcesfromwhichthe
above-describedmoneycrisesemanate，ageneralbankruptcyofthe
agriculturistsinthecorn-producingStatesisunavoidable。
ThecommercialconditionsbetweenEnglandandNorthAmerica
whichwehaveaboveexplained，thereforeteach：
(1)ThatanationwhichisfarbehindtheEnglishincapital
andmanufacturingpowercannotpermittheEnglishtoobtaina
predominatingcompetitiononitsmanufacturingmarketwithout
becomingpermanentlyindebtedtothem；withoutbeingrendered
dependentontheirmoneyinstitutions，anddrawnintothewhirlpool
oftheiragricultural，industrial，andcommercialcrises。
(2)ThattheEnglishnationalbankisablebyitsoperationsto
depressthepricesofEnglishmanufacturedgoodsintheAmerican
marketswhichareplacedunderitsinfluence——totheadvantageof
theEnglishandtothedisadvantageoftheAmericanmanufactories。
(3)ThattheEnglishnationalbankcouldeffectbyits
operationstheconsumptionbytheNorthAmericans，foraseriesof
years，ofamuchlargervalueofimportedgoodsthantheywouldbe
abletorepaybytheirexportationofproducts，andthatthe
Americanshadtocovertheirdeficitduringseveralyearsbythe
exportationofstocksandStatepaper。
(4)ThatundersuchcircumstancestheAmericanscarriedon
theirinternalinterchangeandtheirbankandpaper-moneysystem
withreadymoney，whichtheEnglishbankwasabletodrawtoitself
forthemostpartbyitsownoperationswheneveritfeltinclined
sotodo。
(5)Thatthefluctuationsinthemoneymarketunderall
circumstancesactontheeconomyofthenationsinahighly
disadvantageousmanner，especiallyincountrieswhereanextensive
bankandpaper-moneysystemisbasedonthepossessionofcertain
quantitiesofthepreciousmetals。
(6)Thatthefluctuationsinthemoneymarketandthecrises
whichresulttherefromcanonlybeprevented，andthatasolid
bankingsystemcanonlybefoundedandmaintained，iftheimports
ofthecountryareplacedonafootingofequalitytotheexports。
(7)Thatthisequalitycanlesseasilybemaintainedin
proportionasforeignmanufacturedgoodscansuccessfullycompete
inthehomemanufacturingmarkets，andinproportionasthe
exportationofnativeagriculturalproductsislimitedbyforeign
commercialrestrictions；finally，thatthisequalitycanless
easilybedisturbedinproportionasthenationisindependentof
foreignnationsforitssupplyofmanufacturedgoods，andforthe
disposalofitsownproduce。
ThesedoctrinesarealsoconfirmedbytheexperienceofRussia。
WemayremembertowhatconvulsionspubliccreditintheRussian
Empirewassubjectedaslongasthemarkettherewasopentothe
overwhelmingconsignmentsofEnglishmanufacturedgoods，andthat
sincetheintroductionofthetariffof1821nosimilarconvulsion
hasoccurredinRussia。
Thepopulartheoryhasevidentlyfallenintotheopposite
extremetotheerrorsoftheso-calledmercantilesystem。Itwould
beofcoursefalseifwemaintainedthatthewealthofnations
consistedmerelyinpreciousmetals；thatanationcanonlybecome
wealthyifitexportsmoregoodsthanitimports，andifhencethe
balanceisdischargedbytheimportationofpreciousmetals。Butit
isalsoerroneousifthepopulartheorymaintains，underthe
existingconditionsoftheworld，thatitdoesnotsignifyhowmuch
orhowlittlepreciousmetalscirculateinanation；thatthefear
ofpossessingtoolittleofthepreciousmetalsisafrivolousone，
thatweoughtrathertofurthertheirexportationthanfavourtheir
importation，&c。&c。Thismannerofreasoningwouldonlybecorrect
incasewecouldconsiderallnationsandcountriesasunitedunder
oneandthesamesystemoflaw；ifnocommercialrestrictionsof
anykindagainsttheexportationofourproductsexistedinthose
nationsforwhosemanufacturedgoodswecanonlyrepaywiththe
productionsofouragriculture；ifthechangeswroughtbywarand
peacecausednofluctuationsinproductionandconsumption，in
prices，andonthemoneymarket；ifthegreatcreditinstitutions
donotseektoextendtheirinfluenceoverothernationsforthe
specialinterestofthenationtowhichtheybelong。Butaslongas
separatenationalinterestsexist，awiseStatepolicywilladvise
everygreatnationtoguarditselfbyitscommercialsystemagainst
extraordinarymoneyfluctuationsandrevolutionsinpriceswhich
overturnitswholeinternaleconomy，anditwillattainthis
purposeonlybyplacingitsinternalmanufacturingproductionina
positionofproperequalitywithitsinternalagricultural
productionanditsimportswithitsexports。
Theprevailingtheoryhasevidentlynotsufficiently
discriminatedbetweenthemerepossessionofthepreciousmetals
andthepowerofdispositionofthepreciousmetalsin
internationalinterchange。Eveninprivateexchange，thenecessity
ofthisdistinctionisclearlyevident。Noonewishestokeepmoney
byhim，everyonetriestoremoveitfromthehouseassoonas
possible；buteverybodyatthesametimeseekstobeableto
disposeatanytimeofthesumswhichherequires。Theindifference
inregardtotheactualpossessionofreadymoneyismanifested
everywhereinproportiontowealth。Therichertheindividualis，
thelesshecaresabouttheactualpossessionofreadymoneyif
onlyheisableatanyhourtodisposeofthereadycashlyingin
thesafesofotherindividuals；thepoorer，however，theindividual
is，andthesmallerhispowerofdisposingofthereadymoneylying
inotherpeople\'shands，themoreanxiouslymusthetakecareto
haveinreadinesswhatisrequired。Thesameisthecasewith
nationswhicharerichinindustryorpoorinindustry。IfEngland
caresbutlittleasaruleabouthowgreatorhowsmallaquantity
ofgoldorsilverbarsareexportedoutofthecountry，sheis
perfectlywellawarethatanextraordinaryexportofprecious
metalsoccasionsontheonehandariseinthevalueofmoneyand
indiscountrates，ontheotherhandafallinthepricesof
fabrics，andthatshecanregainthroughlargerexportationof
fabricsorthroughrealisationofforeignstocksandStatepaper
speedypossessionofthereadymoneyrequiredforhertrade。
Englandresemblestherichbankerwho，withouthavingathalerin
hispocket，candrawforanysumhepleasesonneighbouringormore
distantbusinessconnections。If，however，inthecaseofmerely
agriculturalnationsextraordinaryexportsofcointakeplace，they
arenotinthesamefavourableposition，becausetheirmeansof
procuringthereadymoneytheyrequireareverylimited，notmerely
onaccountofthesmallvalueinexchangeoftheirproductsand
agriculturalvalues，butalsoonaccountofthehindranceswhich
foreignlawsputinthewayoftheirexportation。Theyresemblethe
poormanwhocandrawnobillsonhisbusinessfriends，butwhois
drawnuponiftherichmangetsintoanydifficulty；whocan，
therefore，notevencallwhatisactuallyinhishands，hisown。
Anationobtainsthepowerofdispositionoftheamountof
readymoneywhichisalwaysrequiredforitsinternaltrade，mainly
throughthepossessionortheproductionofthosegoodsandvalues
whosefacilityofexchangeapproachesmostnearlytothatofthe
preciousmetals。
Thediversityofthispropertyofthefacilityofexchangein
respecttothevariousarticlesofcommerceandofproperty，has
beenaslittletakenintoconsiderationbythepopularschoolof
economistsinjudgingofinternationalcommerce，asthepowerof
dispositionofthepreciousmetals。Ifweconsiderinthisrespect
thevariousarticlesofvalueexistinginprivateinterchange，we
perceivethatmanyofthemarefixedinsuchawaythattheirvalue
isexchangeableonlyonthespotwheretheyare，andthateven
theretheirexchangeisattendedwithgreatcostsanddifficulties。
Tothatclassbelongmorethanthree-fourthsofallnational
property-namely，immovablepropertiesandfixedplantand
instruments。Howeverlargethelandedpropertyofanindividualmay
be，hecannotsendhisfieldsandmeadowstotowninorderto
obtainmoneyorgoodsforthem。Hecan，indeed，raisemortgageson
suchproperty，buthemustfirstfindalenderonthem；andthe
furtherfromhisestatethatsuchanindividualresides，the
smallerwillbetheprobabilityoftheborrower\'srequirements
beingsatisfied。
Nextafterpropertythusfixedtothelocality，thegreatest
partofagriculturalproducts(exceptingcolonialproduceandafew
lessvaluablearticles)haveinregardtointernationalintercourse
theleastfacilityforexchange。Thegreatestpartofthesevalues，
ase。g。buildingmaterialsandwoodforfuel，breadstuffs，&c。，
fruit，andcattle，canonlybesoldwithinareasonabledistanceof
theplacewheretheyareproduced，andifagreatsurplusofthem
existstheyhavetobewarehousedinordertobecomerealisable。So
farassuchproductscanbeexportedtoforeigncountriestheir
saleagainislimitedtocertainmanufacturingandcommercial
nations，andinthesealsotheirsaleisgenerallylimitedby
dutiesonimportationandisaffectedbythelargerorsmaller
produceofthepurchasingnation\'sownharvests。Theinland
territoriesofNorthAmericamightbecompletelyoverstockedwith
cattleandproducts，butitwouldnotbepossibleforthemto
procurethroughexportationofthisexcessconsiderableamountsof
thepreciousmetalsfromSouthAmerica，fromEngland，orfromthe
Europeancontinent。Thevaluablemanufacturedgoodsofcommonuse，
ontheotherhand，possessincomparablygreaterfacilitiesfor
exchange。Theyfindatordinarytimesasaleinallopenmarketsof
theworld；andatextraordinarycrisestheyalsofindasale(at
lowerprices)inthosemarketswhoseprotectivetariffsare
calculatedtooperateadverselymerelyinordinarytimes。Thepower
ofexchangeofthesearticlesclearlyapproachesmostnearlyto
thatofthepreciousmetals，andtheexperienceofEnglandshows
thatifinconsequenceofdeficientharvestsmoneycrisesoccur，
theincreasedexportationoffabrics，andofforeignstocksand
Statepaper，quicklyrectifiesthebalance。Thelatter，theforeign
stocksandStatepaper，whichareevidentlytheresultsofformer
favourablebalancesofexchangecausedbyexportationsoffabrics，
constituteinthehandsofthenationwhichisrichin
manufacturingindustrysomanybillswhichcanbedrawnonthe
agriculturalnation，whichatthetimeofanextraordinarydemand
forthepreciousmetalsareindeeddrawnwithlosstothe
individualownerofthem(likethemanufacturedgoodsatthetime
ofmoneycrises)，but，nevertheless，withimmenseadvantagetothe
maintenanceoftheeconomicalconditionsofthatnationwhichis
richinmanufacturingindustry。
Howevermuchthedoctrineofthebalanceoftrademayhavebeen
scornedbythepopularschool，observationslikethoseabove
describedencourageusneverthelesstoexpresstheopinionthat
betweenlargeandindependentnationssomethingofthenatureofa
balanceoftrademustexist；thatitisdangerousforgreatnations
toremainforalongperiodatveryconsiderabledisadvantagein
respectofthisbalance，andthataconsiderableandlastingefflux
ofthepreciousmetalsmustalwaysbefollowedasaconsequenceby
importantrevolutionsinthesystemofcreditandinthecondition
ofpricesintheinteriorofthenation。Wearefarfromwishingin
theseremarkstorevivethedoctrineofthebalanceoftradeasit
existedundertheso-called\'mercantilesystem，\'andtomaintain
thatthenationoughttoimposeobstaclesinthewayofthe
exportationofpreciousmetals，orthatwemustkeepaspecially
exactaccountwitheachindividualnation，orthatinthecommerce
betweengreatnationsafewmillionsdifferencebetweentheimports
andexportsisofgreatmoment。Whatwedenyismerelythis：that
agreatandindependentnation，asAdamSmithmaintainsatthe
conclusionofhischapterdevotedtothissubject，(1*)\'may
continuallyimporteveryyearconsiderablylargervaluesin
productsandfabricsthanitexports；thatthequantitiesof
preciousmetalsexistinginsuchanationmaydecreaseconsiderably
fromyeartoyearandbereplacedbypapercirculationinthe
interior；moreover，thatsuchanationmayallowitsindebtedness
towardsanothernationcontinuallytoincreaseandexpand，andat
thesametimeneverthelessmakeprogressfromyeartoyearin
prosperity。
Thisopinion，expressedbyAdamSmithandmaintainedsincethat
timebyhisschool，isalonethatwhichweherecharacteriseasone
thathasbeencontradictedahundredtimesbyexperience，asone
thatiscontraryintheverynatureofthingstocommonsense，in
oneword(toretortuponAdamSmithhisownenergeticexpression)
as\'anabsurdity。\'
Itmustbewellunderstoodthatwearenotspeakinghereof
countrieswhichcarryontheproductionofthepreciousmetals
themselvesataprofit，fromwhichthereforetheexportofthese
articleshasquitethecharacterofanexportofmanufactured
goods。Wearealsonotspeakingofthatdifferenceinthebalance
oftradewhichmustnecessarilyariseifthenationratesits
exportsandimportsatthosepriceswhichtheyhaveintheirown
seaporttowns。Thatinsuchacasetheamountofimportsofevery
nationmustexceeditsexportsbythetotalamountofthenation\'s
owncommercialprofits(acircumstancewhichspeakstoits
advantageratherthantoitsdisadvantage)，isclearand
indisputable。Stilllessdowemeantodenytheextraordinarycases
wherethegreaterexportationratherdenoteslossofvaluethan
gain，ase。g。ifpropertyislostbyshipwreck。Thepopularschool
hasmadecleveruseofallthosedelusionsarisingfroma
shopkeeper-likecalculationandcomparisonofthevalueofthe
exchangesarisingfromtheexportsandimports，inordertomakeus
disbelieveinthedisadvantageswhichresultfromarealand
enormousdisproportionbetweentheexportsandimportsofanygreat
andindependentnation，eventhoughsuchdisproportionbenot
permanent，whichshowsitselfinsuchimmensesumsasforinstance
inthecaseofFrancein1786and1789，inthatofRussiain1820
and1821，andinthatoftheUnitedStatesofNorthAmericaafter
the\'CompromiseBill。\'
Finally，wedesiretospeak(andthismustbespeciallynoted)
notofcolonies，notofdependentcountries，notofsmallstatesor
ofsingleindependenttowns，butofentire，great，independent
nations，whichpossessacommercialsystemoftheirown，anational
systemofagricultureandindustry，anationalsystemofmoneyand
credit。
Itevidentlyconsistswiththecharacterofcoloniesthattheir
exportscansurpasstheirimportsconsiderablyandcontinuously，
withouttherebyinvolvinganyconclusionastothedecreaseor
increaseoftheirprosperity。Thecolonyalwaysprospersinthe
proportioninwhichthetotalamountofitsexportsandimports
increasesyearbyyear。Ifitsexportofcolonialproduceexceeds
itsimportsofmanufacturedgoodsconsiderablyandlastinglythe
maincauseofthismaybethatthelandedproprietorsofthecolony
liveinthemothercountry，andthattheyreceivetheirincomein
theshapeofcolonialgoods，inproduce，orinthemoneywhichhas
beenobtainedforthem。If，however，theexportsoffabricstothe
colonyexceedtheimportsofcolonialgoodsconsiderably，thismay
bechieflyduetothefactthatbyemigrationsorloansfromyear
toyearlargemassesofcapitalgotothecolony。Thislatter
circumstanceis，ofcourse，oftheutmostadvantagetothe
prosperityofthecolony。Itcancontinueforcenturiesandyet
commercialcrisesundersuchcircumstancesmaybeinfrequentor
impossible，becausethecolonyisendangeredneitherbywarsnorby
hostilecommercialmeasures，norbyoperationsofthenationalbank
ofthemothercountry，becauseitpossessesnoindependentsystem
ofcommerce，credit，andindustrypeculiartoitself，butis，on
thecontrary，supportedandconstantlyupheldbytheinstitutions
ofcreditandpoliticalmeasuresofthemothercountry。
Suchaconditionexistedformorethanacenturywithadvantage
betweenNorthAmericaandEngland，existsstillbetweenEnglandand
Canada，andwillprobablyexistforcenturiesbetweenEnglandand
Australia。
Thisconditionbecomesfundamentallychanged，however，fromthe
momentinwhichthecolonyappearsasanindependentnationwith
everyclaimtotheattributesofagreatandindependent
nationality——inorderthatitmaydevelopapowerandpolicyof
itsownanditsownspecialsystemofcommerceandcredit。The
formercolonythenenactslawsforthespecialbenefitofitsown
navigationandnavalpower——itestablishesinfavourofitsown
internalindustryacustomstariffofitsown；itestablishesa
nationalbankofitsown，&c。，providednamelythatthenewnation
thuspassingfromthepositionofacolonytoindependencefeels
itselfcapable，byreasonofthemental，physical，andeconomical
endowmentswhichitpossesses，ofbecominganindustrialand
commercialnation。Themothercountry，inconsequence，places
restrictions，onitsside，onthenavigation，commerce，and
agriculturalproductionoftheformercolony，andacts，byits
institutionsofcredit，exclusivelyforthemaintenanceofitsown
nationaleconomicalconditions。
ButitispreciselytheinstanceoftheNorthAmericancolonies
astheyexistedbeforetheAmericanWarofIndependencebywhich
AdamSmithseekstoprovetheabove-mentionedhighlyparadoxical
opinion：thatacountrycancontinuallyincreaseitsexportationof
goldandsilver，decreaseitscirculationofthepreciousmetals，
extenditspapercirculation，andincreaseitsdebtscontracted
withothernationswhileenjoyingsimultaneouslysteadily
increasingprosperity。AdamSmithhasbeenverycarefulnottocite
theexampleoftwonationswhichhavebeenindependentofone
anotherforsometime，andwhoseinterestsofnavigation，commerce，
industry，andagricultureareincompetitionwiththoseofother
rivalnations，inproofofhisopinionhemerelyshowsusthe
relationofacolonytoitsmothercountry。Ifhehadlivedtothe
presenttimeandonlywrittenhisbooknow，hewouldhavebeenvery
carefulnottocitetheexampleofNorthAmerica，asthisexample
provesinourdaysjusttheoppositeofwhatheattemptsbyitto
demonstrate。
Undersuchcircumstances，however，itmaybeurgedagainstus
thatitwouldbeincomparablymoretotheadvantageoftheUnited
StatesiftheyreturnedagaintothepositionofanEnglishcolony。
Tothisweanswer，yes，providedalwaysthattheUnitedStatesdo
notknowhowtoutilisetheirnationalindependencesoasto
cultivateanddevelopanationalindustryoftheirown，anda
self-supportingsystemofcommerceandcreditwhichisindependent
oftheworldoutside。But(itmaybeurged)isitnotevidentthat
iftheUnitedStateshadcontinuedtoexistasaBritishcolonyno
Englishcornlawwouldeverhavebeenpassed；thatEnglandwould
neverhaveimposedsuchhighdutiesonAmericantobacco；that
continualquantitiesoftimberwouldhavebeenexportedfromthe
UnitedStatestoEngland；thatEngland，farfromeverentertaining
theideaofpromotingtheproductionofcottoninothercountries，
wouldhaveendeavouredtogivethecitizensoftheUnitedStatesa
monopolyinthisarticle，andtomaintainit；thatconsequently
commercialcrisessuchashaveoccurredwithinthelastdecadesin
NorthAmerica，wouldhavebeenimpossible？Yes；iftheUnited
Statesdonotmanufacture，iftheydonotfoundadurablesystemof
creditoftheirown；iftheydonotdesireorarenotableto
developanavalpower。Butthen，inthatcase，thecitizensof
Bostonhavethrowntheteaintotheseainvain；thenalltheir
declamationastoindependenceandfuturenationalgreatnessisin
vain：thenindeedwouldtheydobetteriftheyre-enterassoonas
possibleintodependenceonEnglandashercolony。Inthatevent
Englandwillfavourtheminsteadofimposingrestrictionsonthem；
shewillratherimposerestrictionsonthosewhocompetewiththe
NorthAmericansincottoncultureandcornproduction，&c。than
raiseupwithallpossibleenergycompetitorsagainstthem。The
BankofEnglandwillthenestablishbranchbanksintheUnited
States，theEnglishGovernmentwillpromoteemigrationandthe
exportofcapitaltoAmerica，andthroughtheentiredestructionof
theAmericanmanufactories，aswellasbyfavouringtheexportof
AmericanrawmaterialsandagriculturalproducetoEngland，take
maternalcaretopreventcommercialcrisesinNorthAmerica，andto
keeptheimportsandexportsofthecolonyalwaysataproper
balancewithoneanother。Inoneword，theAmericanslaveholders
andcottonplanterswillthenrealisethefulfilmentoftheir
finestdreams。Infact，suchapositionhasalreadyforsometime
pastappearedtothepatriotism，theinterests，andrequirementsof
theseplantersmoredesirablethanthenationalindependenceand
greatnessoftheUnitedStates。Onlyinthefirstemotionsof
libertyandindependencedidtheydreamofindustrialindependence。
Theysoon，however，grewcooler，andforthelastquarterofa
centurytheindustrialprosperityofthemiddleandeasternstates
istothemanabomination；theytrytopersuadetheCongressthat
theprosperityofAmericadependsontheindustrialsovereigntyof
EnglandoverNorthAmerica。Whatelsecanbemeantbytheassertion
thattheUnitedStateswouldbericherandmoreprosperousifthey
againwentovertoEnglandasacolony？
