Part 8
I have already said, and repeated, that in every circumstance where it is necessary to borrow or to displace a capital, it is better to borrow, even at 5 _per cent._ than to remove a capital which returns double that sum; and that, on the other hand, it is more advantageous to lend any sum abroad upon good security at 5, or even at 3 _per cent._ than to lend the same sum at home, where it would yield only 2 _per cent._ or to bury it in the abyss of a Bank, whence nothing returns. Now what proves that _Great Britain_ and _Holland_ are in this case with regard to each other, is, that _England_ seldom or never opens a loan, but what the _Dutch_ take a share in. What do they give for the purchase? Nothing more than the surplus of the ordinary profits arising from a trade, which they cannot extend sufficiently to employ the whole amount of their savings. And why has this part of the _English_ loan been given up to the _Dutch_ by the national capitalists? Because the latter could find in their own trade, susceptible of a farther extension, a way of employing their capitals to greater advantage, that is to say, of reaping a benefit superior to the interest offered by the loan: How can this be doubted, when we see that the loan falls into the hands of a small number of merchants, who soon afterwards make over their debt? Would they transfer it to any one, were not the interest it brings in, interest secured by the nation, inferior to the ordinary profits of their commerce?
Therefore, if the balance due to the _Dutch_ is thought _burdensome_, only in the supposition that it serves to pay _burdensome_ interests, it cannot be looked upon in the same light, when the matter rests upon a debt, by which the borrower clears a benefit superior to the interest that he has to pay.—I shall present this question under another point of view.
In the war which was terminated by the treaty of _Paris_, the most considerable part of the debt contracted for its support, was acquired by the _Dutch_: Why so? Because the _English_, carrying on, without any opposition, an exclusive trade with every part of the world open to them alone, found therein the opportunity of employing their capitals to a far greater advantage, than that held out by government in the interest of the loan. During the last war, on the contrary, the _English_, being more narrowly circumscribed in regard to their commercial operations, by a navy, the possibility of which they did not even suspect, much less its real existence, and being kept more circumspect by a new system which opened a free navigation to all the powers not involved in war, thought themselves happy to find, in the national loan, an employment for that portion of their capitals, which, from circumstances, was become useless. The interests of the last debt are then due and paid within, and by _Great Britain_; but will it be said, that _England_ would not be so rich, were the 3 millions additional interest, with which she is burdened, due to _Holland_, and had the _English_, instead of employing their capitals, as they have done, in support of the last war, made use of them in the same profitable manner as in the year 1755? had that money, for instance, been laid out in the improvement of their waste lands in _Europe_, _whilst Dutch cash should have fought against French money, to determine how many European nations ought to be permitted to carry to North America, the goods of the other parts of the globe_!
As to the full acquittal in money, _real_ and _effective_, of the 2,000,000_l._ interest, due to _Holland_ for her previous loan, it is improbable, impossible, and useless.
_It is improbable_, because _Holland_, being already overstocked with money, and carefully intent on getting rid of her surplusage in this particular, at the first opportunity of placing it with security, would still lower the price of it at home, were she to increase its mass; and that, on the contrary, whilst _Holland_ takes in goods instead of money, she keeps up the interest of the one, by securing to herself a benefit upon the other.
_It is impossible_, because _England_ importing bullion from _Spain_ and _Portugal_, to the amount only of one third, and being very cautious, as observed before, not to import more than _one third_ of what she owes to the _Dutch_, and this, not to pay them, but because this third answers sufficiently to the five articles of which I have spoken before;—_England_, then, cannot give to the _Dutch_ what she has not received from another, and which she has not of her own.
_It is useless_, in fine, because all accounts whatever are balanced with more ease, in the age we live in, by bills of exchange, than with cash, and because the claims of _Holland_ are more naturally paid off, by another debt due to _Great Britain_, for the produce of her exports to some other parts of _Europe_, from whence the _Dutch_ carefully avoid, as much as possible, to import any thing but merchandise.
But _would it not be better to owe nothing to foreign nations_? For to this one point we ought to confine all the lamentations about _Dutch_ creditors.
The above question, so apparently simple, so readily to be resolved in the affirmative, would grow perhaps more intricate, were it ushered in by some previous queries, which might permit us to foresee the effect of the national wish, when accomplished, if it could be obtained by the easiest answer that could be given; for the case, no doubt, is not to examine, whether it would not be better to have borrowed, without being obliged to return, than to pay an interest after the money has been borrowed. In the state of things, the question alluded to, to be fair and within the pale of common sense, must mean nothing more than this: _Would it not be better, that the proprietors of the two millions interest, paid to a foreign nation, should make their residence in England?_ And in this case it leads us, by degrees, to the following query: _Would it not be better, if all and every man in the world, who has money to spare, should come to spend it in London?_ Then indeed _London_ would be a dear place to live in! And this is, methinks, the most dreaded effect arising from taxes. _O ye, whose covetousness knows no limits but the bounds of the earth! do ye pretend to be the sole inhabitants thereof?_ Can ye draw off the capitalists of a country, without completing its ruin? Can ye effect its ruin, without losing both that portion which the produce of your soil secures to you in the produce of that nation’s industry, and the share which the produce of your industry has secured for you in those of her soil?
What then appears to me to be the result of this _fatal_ interest of two millions due annually to _Holland_?—That the latter is essentially interested, not in an increase of the power of _England_, who might make a bad use of it; not in an increase of specie in _England_, which, by lowering its value, must compel her to return that of the _Dutch_, already so much disparaged in their country; but to a further extension of the _English_ trade, or rather of the general commerce, which can alone, by advancing constantly, and every where, the quantity and price of the objects that are to circulate, increase in the same proportion the necessity of the _instruments_ indispensable to every kind of circulation and undertaking, and keep up in every part, _for the interest of Spain and Portugal, as well as for that of Holland_, the value of the sign intended for a general representation, which _Holland_ in her proportion will ever have in greater plenty than all other nations, thanks to the narrow limits of her territories, and to the manners of her inhabitants, which, in all probability, are the consequence of that limitation.
_Balance of ~France~ with ~England~._
Of all the balances of _England_ summed up by Sir _Charles Whitworth_, that which is most to be wondered at every where but in _Japan_ and _China_, where foreign trade is but poorly encouraged, is the balance between _England_ and _France_, these two nations being parted, as they are, only by a simple brook.
The wonder cannot but increase, if we consider with what eagerness those two countries are intent upon improving their trade.
The wonder will still increase, when it is observed, that the _French_ carry to the highest pitch their rage for _English_ modes, whilst the _English_ experience the same kind of frenzy for _French_ fashions.
The wonder must increase still further, when it is observed, that the same nations, in possession of the most active and most intelligent industry, are also possessed of all the cash necessary to give an additional activity to that _industry_, which might be required to carry on a branch of trade, as it were, at their door, but which is neglected, out of regard for old and absurd prejudices.
Still must the wonder increase, if it is observed, that a first capital of 200,000_l._ laid out in that trade by the two nations, would occasion in both, more work in cultivation, as well as in the arts, than 600,000_l._ which each of them might employ in a trade to _China_, if it were possible to lay out such a sum upon it?
The wonder will be still greater, when we consider that, _by favouring, with equal care, the imports and exports to and from one country into the other, the two nations would, without the least inconvenience, acquire the means of increasing the revenue of their customs respectively, according to their wants, by agreeing mutually upon a tarif, which would be rated upon the average of those wants_; a tarif, which the rest of _Europe_ might adapt to its circumstances, if it were the general intention to increase, every where, the revenue of the State and the industry of the people, in a like proportion.
This is certainly what the two nations might have compassed. That which follows, is what they have done.
In the year 1699 the exports of _England_ to _France_ amounted to 287,050_l._ and her imports from _France_ to 94,641_l_:—
In 1773, the period at which Sir _Charles Whitworth_ closes his statements, the exports from _England_ were rated at 285,776_l._ and the imports from _France_ at only 44,484_l._—On this the enthusiastic admirers of the Balance _in favour_ bless their stars that their country imports now 50,157_l._ less in _French_ goods, than it did in 1699, and that, in order to secure this advantage, _England_ experiences no other damage than that the _French_ are fallen in their imports from _England_ only 1274_l._ since the year 1699.
_Further Reasons why all Ideas of a favourable Balance in Money, different from that which I have supposed, should be rejected._
_Great-Britain_ is not the only nation that claims a right to that kind of _favour_, which would reduce all _Europe_, in all transactions, to the use of paper-money; but I only speak of _England_ in this place.
Money is not hid under ground in a country where administration is convinced, both of the impossibility of the people paying exorbitant taxes, without proportionable riches, and of the impossibility of being as rich as is requisite for the discharge of enormous taxes, when individuals are compelled to appear less rich, that they may be less burdened with imposts.
Money is not laid under ground in a country, where the smallest sum, as it were, equally with the largest, may be placed most securely, till the very moment, when, led by fancy or want, one may think well to withdraw it, and which, from the time when it has been placed, to that of recalling it, produces nevertheless a sure interest, which never was delayed a single minute; an interest, which is a matter neither of reproach nor of shame.
Money is not laid under ground in a country, where the reputation of being rich exposes not the subject to an arbitrary taxation, nor to demands equally ruinous, to informations, extortions, or at least to some injustice in case of a refusal.
Money is not laid under ground in a country, where regard is the appendage not only of wealth, but of credit also, which carries the appearance of, and can procure the former.
Nor is money hid under ground in a country, where it shews the value of a man as positively as that of a piece of goods; in a country, where it is frankly said, _this man is worth a million_; whether this expression be made use of to signify that the possessor of a million is, at least, by the whole extent of that million, far from being guilty of meanness and injustice, or that it be understood that nothing but the offer of another million could tempt him to commit anything base or unjust. Money is never buried under ground in a country, where it acts so essential a part; it cannot then be its fate in _England_: all the money in the possession of _England_ stands in full evidence; it consists,—1st, in objects of private luxury, the quantity of which is by no means extravagant;—2dly, in the mass of cash in circulation. Now this very _mass_ is despotically determined by the number of affairs transacted, and likewise by the prices and quantity of the property which is to be circulated; yet this mass is, perhaps, in _England_ one half less than it would prove any where else, supposing the same objects to be attained; that universal _mobile_ is too justly appreciated there, to be lavished, that is to say, to be _turned into cash_, beyond what is required to give credit to the paper currency substituted to _cash_.
I shall therefore ask, In what public funds abroad the _English_ merchants vest annually the four or five millions of that pretended _favourable_ balance in money, since they do not bury it at home?—There might, it is true, still exist another resource; the general balance is only the aggregate of all private balances.⸺But is it very certain that, upon an average, the private balances of all the merchants in _Europe_, who correspond with _England_, are annually charged by one fourth of the amount accruing from that correspondence? For if the _English_ send them 16 every year, and every year import only 12, their correspondents are consequently indebted to them annually 4 more than they were the preceding year.
The _favourable balance_, as it is commonly understood, is then a mere chimera, which, if realised, would produce no other effect than to advance, at some period or other, the price of a pound of bread to that of a pound weight of gold; yet it results, methinks, from the exports of _England_, almost trebled within a century, that each nation, with whom the former has trebled her trade, has increased her own, at least, by the whole amount of the balance due by her to _England_; for it is beyond a doubt, that one must have three times more to sell, in order to be able to purchase constantly, and pay three times more than he used to do. But from this principle may it not be inferred also, that every nation, wishing to increase her trade, is interested in an increase of the commerce of all those with whom she means to correspond?—If, in order to reduce into practice, if to establish on the most equitable and most solid foundation, a system so truly advantageous to society, Nature had nothing more to combat than private _cupidities_—they balance each other. But how many national prejudices, how many maxims sacred to each nation, how many absurd regulations, springing from those very maxims and prejudices, is she not obliged to modify, as it were, underhand, in their effects! What a number of smugglers does that good mother employ, for the purpose of bringing all things nearer to that _equilibrium_, from which many are still persuaded it is so very material to deviate!
_Equilibrium necessary in all things.—On the surest means of establishing it._
It is a difficult matter to guard against a prejudice in favour of liberty, when we consider, that, thanks to the freedom which has always very generally prevailed in those parts of Science, wherein policy disdained to restrain it, we have been taught to weigh air, before any precise idea was obtained on the rule of proportion, which ought to regulate matters of exchange. Every thing, in this last particular, is even still merely mechanical; and perhaps if the matter were thoroughly examined, it would be found that there is never too much, nor too little in one of the scales of the balance, but from an effect of the means devised to establish or preserve the Equilibrium. I do not pretend to lay down, for an absolute principle, that the hand of man, like that of the harpies, is only capable of poisoning whatever comes within its reach, and that the wisest conduct would be, to keep it with care from every thing that one should wish to preserve from corruption; such a proposition would, no doubt, prove rather too general; yet one cannot help observing, that there are but few countries where administration has not often, owing to the grossest ignorance, or some principle of injustice, or of a cupidity almost equally blind, restrained some very lucrative _cultures_, to which the nature of the soil and of the climate would have given a perfection that could be attained no where else; or have not encouraged some costly produce, to which Nature refuses those qualities which she liberally bestows under another sky.
Neither can one refrain from remarking also, that from those regulations, and from many more of the same kind relative to manufactories, no other effect can result than that of buying up at home, very dear, and often of a bad or indifferent quality, that which might be purchased abroad of an excellent kind, and at a cheaper rate, and which might be paid for with the productions of the earth and industry, better suited to the climate of the purchaser.
It is also observed, that, without the interference of administration or of philosophy, the balance between want and the relative quantity of the different productions of the earth, is always, upon a medium, admirably supported by the sole interest of the cultivator, ever perfectly and solely guided by the common demand for each of these productions.
It is also remarked, that a second balance, and a very necessary one, between the mean price of those different productions, is also mechanically established, on the difference of labour and of the capitals, which the same cultivator lays out upon each of them, without any other motive but that of employing with discernment, his hands and his capital, to derive from them the greatest benefit. He never thinks of restoring the equilibrium between the general prices, when the price of the product A has fallen, and when a continued advance on the product B invites him to multiply the latter, by transferring to its cultivation, a more considerable share of his labour and of his capital. Nor does he think of it, when laying out new supplies of labour and money if the price of the product B keeps up whilst that of the product A goes on increasing; he does not think of it; and yet, without any other reason or motive than his own interest, he restores that necessary equilibrium. Much less still does he think that an increase maintained in the price of one object, without diminution in that of other articles, bespeaks an increase of the general consumption, which soon must raise the price of every thing. Nay, it is very probable that he will not take notice that he _sells_ all his goods at a higher rate, and that he will soon complain of the general advance in the price of all those which he buys, because his interest is his only guide: but this interest is opposed by that of industry; and from this clashing, in spite of the two opponents, arises a new balance, more loaded, no doubt, than the first, but not less necessary, not less equitable, and yet no one has meddled with it.
All these things may be easily observed; but what ought to be more particularly attended to, and what is most overlooked, is the impossibility of ascertaining the difference between the hand-labour and capitals to which we owe the productions of the earth, the knowledge of which is within the reach of every one, and the labour and capitals to which we owe the productions of industry, in which the workmanship of an article often constitutes the half, and sometimes 99 hundredths of its value: it is a disadvantage against which agriculture cannot be effectually protected but by a competition, which can be the result only of the greatest freedom. The absolute _passiveness_, which, in the above stated circumstances, is sufficient, on the part of Government, to effect the greatest good, appears here indispensable, to avoid acts of injustice. Why should the trading part complain of that _passiveness_, whilst a number of cultivators, proportioned to that of the artisans, produce in the State a revenue equal to the maintenance and support of industry? Now the fact appears the more certain, as, upon the least reflexion, one may be sensible, that if an epidemic disorder should break out amongst the husbandmen only, and thus deprive cultivation of one half of its proper number of hands, the survivors would not fail to increase the price of their labour, and the farmer that of his farm, by so much as would indemnify agriculture for the loss which she might have sustained, and that the advance in her prices would fall off only in proportion as the handicraftsmen without employment, by the uselessness of that portion of the produce of industry, hitherto consumed by the cultivators who fell victims to the disease, would themselves turn cultivators; an operation which would soon restore the proper balance between the two revenues, as well as between the prices of labour, from which all kinds of produce originate. Let the effects of the disease be transferred from the cultivators to the handicraftsmen, the same manœuvre will be played off by those who preside over industry.