proceed to consider in how many different ways an individual merchant may trade with foreign countries, and we shall show, by considering the dealings of an individual, how utterly erroneous it is to suppose that an influx of Bullion is, ipso facto, a proof that commerce is flourishing and profitable to the country, and that, whether it is so or not, depends very much as to where it comes from, as well as a number of other circumstances

With respect to those countries in which Bullion is a native product, and to which we trade for the express purpose of obtaining it, we have already shown that unless the quantity obtained in exchange for our goods exceeds a certain amount, the commerce is not a profitable one, and that the simple fact of Bullion being remitted from them, and, therefore, though the Exchanges with them must always be in our favour, it is no proof whatever of prosperity or profit

Next, with respect to countries which do not produce Bullion, it is easy to show the extreme fallacy of the opinion that our exports should exceed our imports, and that the difference will be the profit of the country; in many cases the precise reverse is true, that our imports should exceed our exports, and the profits are measured by the exact sum by which the imports exceed the exports, or the excess of what we receive over what we give

To prove this, let us take a simple case. Suppose a merchant in London sends out £1,000 of goods to Bordeaux: by the time they arrive there, the mere addition of freight, insurance, and other charges, will probably have increased their cost of production, or the expense of placing them where they are, to £1,050, supposing them to be sold without any profit at all. But, as the merchant would never have sent them to that market unless he expected to realise a good profit, we may assume that the market is favourable, and that they sell for £1,500, and he would probably draw against his agent for £1,200. His correspondent at Bordeaux, instead of remitting the money to England, would find it far more profitable to invest the proceeds of the goods in some native product, which would fetch a good price in England. The chief native product of that country is wine, so the agent would invest the proceeds of the goods, after deducting all charges for freight, commission, &c., in Bordeaux wine, and send it to

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England. This wine would probably be sold at a considerable profit in the English market: say it would fetch £2,000; and, after deducting all the charges of every description on the cargoes both ways, the difference would be the merchant's profit. In this case it is quite clear that no Bullion would pass between the countries and the merchant would apparently import more than he exported and it is also clear that his profits are exactly estimated by the Excess of the Value of the inward cargo above that of the outward one, after deducting all charges both ways and just as this difference is the greater so is his gain greater. In this case, as no bullion would pass from either country to the other, there would be no question of exchanges

It is clear that the London merchant's agent at Bordeaux would be governed by several considerations as to whether he would remit specie or wine to London, and he would be chiefly governed by the state of the wine markets, both at Bordeaux and London. For, supposing the goods to be sold at a good profit at Bordeaux, he must next consider the price of the wine at Bordeaux, and also what it might be expected to fetch in London. If some great disaster had happened to the vines so that there was a failure of the crops, the price of wine at Bordeaux might rule excessively high, but at the same time there might be a large stock of wine in London, and the price might not be unusually high; so that if he were to purchase wine at Bordeaux, and send it to London, it might be a loss. In such a case as this, if there were no other native product to send, he would find it more advantageous to remit specie, whatever he could sell the goods for, and then the exchange would be in favour of London; but, before the London merchant could reckon his profits, he would have to deduct the freight, insurance, &c., on the specie

Whether the transaction was profitable or not to the London merchant would entirely depend on the amount of specie he received after deducting all charges; and if he had purchased the goods he sent out from England cheap, and there was a scarcity of them at Bordeaux, he might realise high prices there, which might leave him a good profit. It would be very improbable that he could realise so much profit on that single operation as in the double one of exporting goods and importing wine. So that the import of the specie would be

less profitable to him, and the nation at large, than the import of the wine

The reasons which caused the export of specie from Bordeaux, and the import of it into England, in this case, are very plain, they were the scarcity and dearness of the native products at Bordeaux, and the abundant supply of them already in the London market. Hence, we gather that the scarcity and dearness of native products is an infallible cause of the export of specie from a country on the contrary, an abundant supply of cheap products of all sorts, both foreign and native, will cause an importation of Bullion: and when products, both native and foreign, are scarce and dear, it will cause an export of Bullion

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We have before observed that the exchange being in favour of a country means nothing more than that Bullion has to be remitted to it. In the case above described, the exchange at Bordeaux would be in favour of London; but this simple case is as good as a thousand to shew the extreme and dangerous fallacy of drawing any conclusion as to the advantage of the trade to England, from the simple fact of the exchange being favourable to her, and an inflow of Bullion taking place

22. The example given above is of the simplest description, and a merchant of eminence, who has correspondents in several different parts of the world, might easily multiply these operations, so as to visit many markets before the returns of his cargo were brought home. Thus, instead of having the wine sent home from Bordeaux, his correspondent might find it more profitable to send it to Buenos Ayres, and dispose of it there. The chief native product of that place is hides, and we may suppose that his correspondent there might invest the proceeds of the cargo of wine in hides, which there might be a favourable opportunity of selling in the West Indies. When the cargo arrived in the West Indies, instead of remitting the proceeds directly home, it might very well happen that, owing to a scarcity of corn at home, it might be very high there, and cheap in Canada, so he would invest the proceeds of the hides in sugar, and dispatch that to Canada, where the merchant's correspondent there would dispose of it, and purchase corn, which he would send to England

In the case just described, we observe that there are five distinct operations; and, as we may suppose, that there is a profit upon each of them, by the time the returns for the goods, which originally cost £1,000, are brought to England, it may very well be that the corn, which forms the ultimate payment of them, may be several times as valuable as the original cargo; and, as we have supposed the charges on each operation to be deducted before investing the proceeds in other articles, it is clear that the merchant's profits upon the whole is exactly the difference in value in England between the articles last purchased and sent home and the original cargo, after deducting all the expenses of sending home the last cargo; and we also observe that no specie has been sent from one country to the other in the whole course of the extended operation

This example is sufficient to demonstrate the utter fallacy of the old idea, which is even yet not extinguished, of the Balance of Trade. Nothing can be more clear, that unless the value of the cargo which comes into England, in payment of the cargo that was sent out, is sufficient, not only to defray the cost of the original cargo, as well as all charges upon it and the return cargo, and leave a profit besides, the commerce could not be carried on. No English merchant could export goods unless he receives in return others of much greater value; and the obvions consideration, that the more he gets for what he sends out, the more profitable it is to himself and the nation, is sufficient by itself to explode the old fallacy of the balance of trade. One obvious source of error is that the value of the exports from this country is estimated at the time of their leaving the country, and before the charges for freight, &c., are incurred, which must necessarily raise their selling price in the foreign market, if they are not sold at a loss, and their value in that market is expected to be considerably higher than that. On the other hand, the value of the imports is estimated, not according to their value when they left the foreign country, but what it is upon their arrival here, including all their charges upon them

23. If we suppose that Bordeaux had but one native product -wine-the chances of finding the markets, both at Bordeaux and London, in a favourable state for importing produce instead of

specie, would be limited to that single article. But if it had other products, such as olive oil, the chances would be increased of finding articles to suit the market, and the chances would evidently be multiplied according to the number and variety of its products

24. Let us take another example and let New York be the starting place. The staple products of America are breadstuffs and provisions. A merchant of New York sends a cargo of corn to Liverpool, and his correspondent there will endeavour to invest the proceeds of that in British goods, if he finds the state of the markets in England and New York will make such an operation profitable. Suppose that the price of corn is very high here, and British goods are also very high here, and very low in America, it is clear that nothing but specie will be sent. In cases where a great and unexpected dearth of corn occurs in England, and its price rises enormously high, the infallible result is to cause a great drain of specie for the time being, because our necessity for food is much more pressing and immediate than their necessity or capability of consuming our cotton or woollen goods. And the only way to arrest such drain is to effect such a reduction in the prices of British goods as shall make it more profitable to export goods than specie

25. In the cases we have hitherto been considering, we have described the operations as if merchants were left perfectly free to carry their goods whither they pleased, and were not met and obstructed by artificial obstacles purposely devised for interfering with their business, by the laws of different nations. But there are few nations, and our own among the rest, which have not habitually discouraged the importation of foreign goods, and imposed heavy duties for the specific purpose of excluding them, as they conceived the extraordinary idea that all foreign goods brought into the country were so much loss to it. Thus, the statute of William III. (1688, c. 24) says-" It hath been found by long experience that the importing of French commodities of all sorts" (enumerating them) "hath much exhausted the treasure of this nation, lessened the value of the native commodities and manufactures thereof, and greatly impoverished the