Chapter XXII: Introduction (11)

A third answer is, that any nation who would open its ports to all manner of foreign importation, without being assured of a reciprocal permission from all its neighbours, would, I think, very soon be ruined; and if this be true, it is a proof that a balance of trade is a possible supposition, and that proper restrictions upon importation may turn to the advantage of a state.

In order to promote industry, a statesman must act, as well as permit and protect. Could ever the woollen manufacture have been introduced into France, from the consideration of the great advantage England had drawn from it, if the King had not undertaken the support of it, by granting many privileges to the undertakers, and by laying strict prohibitions on all foreign cloths? Is there any other way of establishing a new manufacture any where?

Laying, therefore, trade quite open would have this effect, it would destroy at first, at least, all the luxurious arts; consequently, it would diminish consumption; consequently, diminish the quantity of circulating cash; consequently, it would promote hoarding; and consequently, would bring on poverty in all the _states_ of Europe. Nothing, I imagine, but an universal monarchy, governed by the same laws, and administred according to one plan well concerted, can be compatible with an universally open trade. While there are different states, there must be different interests; and when no one statesman is found at the head of these interests, there can be no such thing as a common good; and when there is no common good, every interest must be considered separately. But as this scheme of laying trade quite open, is not a thing likely to happen, we may save ourselves the trouble of inquiring more particularly into what might be its consequences; it is enough to observe, that they must, in their nature, be exceedingly complex, and if we have mentioned some of them, it has only been to apply principles, and shew how consequences _may_ follow one another: to foretel what _must_ follow is exceedingly difficult, if not impossible.

In discoursing of the balance of trade, I have hitherto considered it only so far as the specie of a country is augmented by it. In the subsequent book, when we shall have occasion to bring this subject once more upon the carpet, I shall shew how a balance may be extremely favourable without augmenting the mass of the precious metals; to wit, by providing subsistence for an additional number of inhabitants; by increasing the quantity of shipping, which is an article of wealth; by constituting all other nations debtors to it; by the importation of many durable commodities, which may be considered also as articles of wealth; as a well furnished house, a well stored cellar, an ample wardrobe, and a fine stable of horses, are articles which enhance the value of the inheritance of a landed man.

Then we shall have occasion to shew how industry heightens the permanent value of a nation, as agriculture increases its annual produce.

------------------------------------------------------------------------

CHAP. XXX.
_Miscellaneous Questions and Observations relative to Trade and
Industry._

It is now time to draw to a conclusion of this book. The subject of trade and industry is inexhaustible, if considered in all its branches, and traced through every consequence. My intention has been to inquire into the original principles which influence general operations, and which, less or more, enter into every combination. I have represented trade in its infancy, manhood, and old age; and have endeavoured to prescribe a general regimen of health for every period. It is sufficient to be thoroughly master of the principles, to be able to apply them to particular cases, providing every circumstance be exactly known.

The intention of this chapter, is, to review some parts of our subject, which I think have not received all the light necessary to be thrown upon them, to suggest some remarkable differences between antient and modern oeconomy, with regard to circulation and industry; and, in general, to lay certain circumstances together, which may point out the spirit of modern times, from which we are endeavouring to extract a set of consistent principles. Every thing which points out relations is useful; because we know nothing, but through this channel. Now certain relations are too frequently taken for granted, and nothing is more essential in political reasonings, than to point them out clearly, to proceed by the shortest steps, and still to keep experience and matter of fact before our eyes, when we draw a conclusion from a general proposition. Let the conclusion appear ever so just, if, when compared with experience, a disagreement appears, it is ten to one we have overlooked some circumstance, which ought to have entred into the combination.

To illustrate this, let me cite a mistake of my own, which I purposely left uncorrected, in the second chapter of the first book, where I very confidently declare, that a statesman, who, upon certain occasions, which seem favourable for raising great sums upon a people, increases taxes only in proportion to the interest of the money borrowed, must be shortsighted and regardless of futurity. This, I remember, appeared to me at the time I wrote, so clear and evident, that I thought I ran no risk in making it enter into a preliminary chapter. But when I came to look a little more particularly into the matter, I found I had been grosly mistaken; as I hope to shew evidently in its proper place. Had every such mistake been treated with the same indulgence, I should have been more employed in the correction of my own blunders, than in the prosecution of my subject. People who reason with tolerable exactness on such subjects, generally fall into mistakes, from the generality of their propositions. These may commonly be true enough, within the compass of the author’s combinations at the time, and yet may not be true in every other case. From which I infer, that every one of my readers, who can form combinations more extensive than mine, will find sufficient matter for criticism in every page of this inquiry. So much the better: it is by such criticisms and discussions, that particular branches of knowledge are brought to the certainty of science.

The more simple any plan of political oeconomy is, the more it is easy to govern by general rules; the more complex it becomes, the more it is necessary for a statesman to enter into combinations. But when general rules have been long established, they gain such an authority over the minds of a people, that any deviation from them appears like heresy in religion: and how seldom does it happen, that a people is blessed with a governor, who has both penetration to discover, art to persuade, and power to execute a plan adapted to every combination of circumstances.

No change can happen in a state, but what is advantageous to some class or other, and when the public good requires that a stop should be put to such advantages, numbers of discontented people will always be found. Circumstances, therefore, ought to be well weighed before new plans of administration are entred upon; and when once adopted, those who pretend to criticise, must suppose themselves provided with superior talents and better informations as to every circumstance, than the author of the innovation. For this reason, there is little danger in censuring a statesman’s opinion, when he delivers it; but a great deal in finding fault with his conduct, when his motives are not known.

In the former chapters, we have been treating of the nature and consequences of circulation, the effects of augmentations and diminutions of specie, and the doctrine of Mr. Hume concerning the balance of trade. The perspicuity with which this author writes, renders his ideas easy to conceive; and when people understand one another, most disputes are soon at an end.

In order, therefore, to throw a little more light upon the nature of the balance of trade between nations, let me examine the following questions while we have the subject of the last chapter fresh in our memory.

QUEST. 1. Can any judgment be formed concerning the state of the balance of trade of a nation, barely from the quantity of specie that is found in it?

I answer in the negative. A great proportion of all the specie of Europe, may be found in a country against which the balance of trade has stood regularly for many years. An inconsiderable proportion of it may be found in another, which has had it as regularly in its favour for the same time.

The balance upon every article of trade, may be favourable to a nation which squanders away more than the returns of it, upon foreign wars.

The balance of every article of trade, may be against a country which receives more than all the loss incurred, either from her mines, from countries tributary to her, or who willingly furnish subsidies upon many political considerations.

Besides these varieties, there are still other combinations, relative to the specie itself. The money found in a country, may either be said to belong _absolutely_ to the country, when neither the state itself, or the particular people of it, are in debt to foreigners; or only so _by virtue of a loan_. Now, whether it is borrowed or not, the property of it belongs to the country; but the difference consists in this, that when it is borrowed, the acquisition of the metals adds nothing to the national patrimony, that is to say, there is no acquisition of wealth thereby made; but when it is gained by industry, the money adds to the real value of the country, in consequence of the principles laid down in the 26th chapter.

May not a nation then, having very little gold and silver, open a subscription for millions, at so much _per cent_? Will not strangers lend to her; when her own subjects cannot? May she not yearly, by paying away the interest of the money borrowed, and by a heavy balance of trade against her, be constantly diminishing her specie, and yet by new contracts, keep up, and even increase the mass of the circulating value, to such a degree, as to be possessed of a greater proportion of specie than any of her neighbours? Farther,

Is it not certain, that all nations will endeavour to throw their ready money, not necessary for their own circulation, into that country where the interest of money is high with respect to their own, and where consequently the value of property in land is low; since they may either draw a high interest from it, or make the acquisition of solid property? Forbidding therefore the acquisition of solid property to strangers, is, in effect, a prohibition upon the gratuitous importation of specie. I allow there may be examples of people who make such purchases, with a view to draw the rents of the lands bought, out of the country; but whatever be the intention at the time of purchase, such however is the effect of an established fortune in a country, that, sooner or later, it draws the proprietor to it; and when this does not happen, a subsequent alienation commonly takes place.

Were the purchase, therefore, of lands permitted universally, and were it established, that property in land, to a certain value, should give a right to naturalization, no doubt large sums would be brought into those countries, where lands are found cheapest; and as no exportable commodity is given in return, the specie of such countries might mark the quantity of lands sold, as well as that of merchandize exported. For want of a sufficient extension of these and many other combinations, which it would be easy to contrive, Mr. Belloni, in his _Dissertation upon Commerce_, Chap. I. Sect. 5. falls into several mistakes, when he judges of the exportation of commodities of a particular country, by the quantities of money found in it.

_Essendo adunque da ciò venuto_ (says he) _che l’abondanza del danaro, ovunque si ritrovi, significa l’abodanza stessa delle cose, delle quali egli é misura: perciò diviziosi meritamente sono stati detti quegli uomini, e ricco altersi quel regno, dove si ritrova gran copia di danaro. Dal altro canto poi, se si considera lo stato di un regno, ed il danaro, che è dentro di esso, tenendo sempre salda l’essenza della moneta (che altro non sia, che misura di cose, e prezzo, che viene in compenso di mercanzie) ovunque di essa vedrasi affluenza, ognuno ben vede, doversi subito necessariamente arguire, un gran traffico di quel dominio, con esito di merci, in uso degli esteri, e all’incontro ovunque questa venga a mancare, doversene dedurre grande introito di merci, che sieno subentrate nel luogo della moneta, e che l’abbiano fatta uscire._

These consequences are only just so far as money comes into, or goes out of a country, as the price of merchandize exported or imported. But how much money has not this author himself drawn into Rome from England, for the exportation of nothing but the bills of travellers?

On the other hand, may not a country, which is actually in possession of great quantities of gold and silver, call in these metals, and circulate, in their place, a symbolical money? May not a nation then, as well as a private person, employ this specie in a profitable foreign trade, and gain daily by it? May she not, after some time, withdraw her stock, by calling in her debts? And may she not also call in her paper, and remain with an additional acquisition of specie in her pocket? Consequently, during the circulation of the paper, no judgment can be formed as to the balance of her trade, by examining the state of her specie; because I can suppose that at this time every shilling of it may be in the hands of strangers. Consequently, the richest nation in Europe may be the poorest in circulating specie.

“The writings of Mr. Gee (says Mr. Hume, in his _Political Discourse upon the Balance of Trade_) struck all the nation with a pannic fear, by shewing from a long enumeration of particulars, that the balance inclined so much against us, and for so considerable sums, that in the space of five or six years, there would not remain one shilling in England. But happily twenty years are elapsed since, we have supported a long and expensive foreign war, and nevertheless, it is commonly believed, that money is at present as plentiful in the kingdom as ever.” I quote from the French translation.

Mr. Gee was in the wrong to conclude, that the balance of trade would have the effect of carrying off the coin: and Mr. Hume has been misled by this mistake, to conclude, that Mr. Gee’s calculations were false. I know nothing as to the matter of fact; nor whether Mr. Gee was a good or a bad judge of the question he treated; but from what has been said, I hope it appears, that the state of the coin in England, at the time Mr. Hume wrote, was no proof on either side.

To judge of the balance of trade is one thing; to judge of the wealth of a nation as to specie is another. England may greatly increase her specie by her trade, and greatly diminish it by her wars: perhaps this may be the fact. She may also, at certain times, have a balance of trade against her; and great sums laid out in foreign wars, may be the means of making it return in her favour. Should that nation begin to pay off her debts to strangers, in ready coin, might she not soon diminish, perhaps exhaust, the specie she is now possessed of; yet surely none ever became poorer by paying off their debts. Nothing is so easy as to have specie, when one has solid property to pledge for it; and nothing can be worse judged, than to purchase specie from strangers, at the expence of paying an interest for it, when they can contrive a circulating value in paper money, representing the solid value which must have been pledged to strangers for the loan of their metals.

But still it may be asked, how it happens, that notwithstanding of the most unfavourable balance of trade, no nation is ever found to be entirely drained of her specie; and since we have proved, that the specie of a country may be diminished by a disadvantageous trade, what are the principles which prevent the total dissipation of it?

This is a very curious question, and opens a door to a multitude of new ideas, which will furnish abundant matter of speculation, when we come to treat more directly of credit. I shall here examine it in general, only for the sake of applying the principles we have laid down.

I. It may be said, that as common prudence prevents a private person from spending to his last shilling; so the like prudence commonly engages a people to put a stop to trade, before it has had time totally to drain them. Although most people drink wine, there is no reason why every body should be drunk.

II. Nothing is so complicated as the balance of trade, considered among many nations. The general wealth circulates from one to another, as the money which the farmer gives the landlord circulates back to the farmer. In the number of hands through which the money passes, some are of the class of the luxurious, some of the frugal; the first represents those nations who lose by the balance, the latter those who gain. But the most industrious nations of all, and those who, considered abstractedly from extraordinary accidents, appear in the way to swallow up the wealth of the rest, are, by the means of such accidents, made liable to terrible restitutions. How many millions, for example, has England restored to the continent, in consequence of her wars and subsidies? She then lays a foundation for many more years of favourable balance, and accordingly we see it return to her, as the money which the state spends within the nation, returns into the exchequer at the end of the year.

III. It may be asked, how it happens that no nation has ever spent to its last farthing, as many an individual has done? I answer, that I am far from believing that this has never happened; nay, I believe there is nothing more frequent or familiar than this very case, providing the riches of a country be here supposed to mean no more than the specie _absolutely_ belonging to herself, not borrowed from other nations.

I have said above, that the acquisition of money by industry, increased the real value of a country, as much as the addition of a portion of territory: now what should hinder a people from spending their ready money, and, at the same time, preserving their land? Because a young gentleman, whose father has left him a fine estate in land, and ten thousand pounds in ready money, has spent the ten thousand pounds, does it follow, that he is without a shilling? Upon this view of the question, it will, I believe, be granted, that Dr. Swift’s idea that all the specie of Ireland would in a short time be exported, in consequence of an unfavourable balance of trade, is very far from being chimerical, and might be exactly true; although at this time there be six times more in circulation than ever; just as a person who is running through his fortune, has commonly more money in his hands than his father used to have, when he was acquiring it. Let Ireland pay her debts to England, and then count her specie. Let England pay her’s to all the world, and then weigh her gold and silver. Suppose that on summing up the accounts, there is not found one shilling in either country, is this any proof of their being undone? By no means: _coin is one article of our wealth, but never can be the measure of it_.

I know little of the state of Ireland; but if it be true, that paper money is increasing daily in that country, it is, I suppose, because the specie is daily exported to England, as the returns of estates belonging to people who reside there, and that the Irish, instead of buying it back again for their own use in circulation, augment their paper, in proportion to the progress of their industry; and only buy such quantities of specie as are necessary for paying the balance of their trade. Now by buying specie, I do not suppose, that they bring any over to Ireland, in order to send it back to England; but that they send over goods to the value, which the English merchants pay in specie, or in English paper, to those who are creditors upon Ireland, for the value of their rents, &c.

Suppose then, for a farther illustration of some principles, that all the lands of Ireland belonged to Englishmen residing in their own country, and annually drawing from Ireland the income belonging to them, what would the consequence be? As long as this portion of the produce of lands, which goes for rent, (and which, as we have said, is the fund provided for the subsistence of the free hands who purchase their own necessaries) could be bought and consumed by the Irish themselves, that is, in other words, while in Ireland there was a demand for this portion of the fruits, it would be paid for, either in coin, to the diminution of their specie, or in something which might be converted into money; that is, by the produce of their industry, and thus, by the means of trade, would come into the hands of the English proprietors, either in specie, or in any other form they judged proper.

That so soon as the demand for this portion of fruits came to fail, for want of money, or industry, in Ireland to purchase it, what remained on hand would be sent over to England in kind; or by the way of trade, be made to circulate with other nations (in beef, butter, tallow, &c.) who would give silver and gold for it, to the proprietors of the Irish lands. By such a diminution of demand in the country, for the fruits of the earth, the depopulation of Ireland would be implied; because they who consumed them formerly, consume them no more; that is to say, they either died, or left the country.

To conclude, a great part of the value of a country is its produce and manufactures; but it does not follow, as Mr. Belloni asserts, that these should as necessarily draw a proportional sum of the gold and silver of Europe into that country, as a shoal of small fishes draws water fowl, or as charity draws the poor, or as beauty draws admiration.

QUEST. 2. Can no rule be found to judge of the balance of trade from the state of specie, or at least to perceive the effects of that balance in augmenting or diminishing the mass of riches?

Could it be supposed that specie never circulated between nations, but in the way of trade, and in exchange for exportable commodities, this would be a rule.

In nations where the earth produces neither gold or silver, and where these metals are imported as the returns of industry only, the balance in their favour, from the introduction of specie, to this day, would be measured by the quantity of it which they possess. Here Mr. Belloni’s opinion is just.

Farther, the consumption made by any nation for the same term of years, is equal to the whole natural produce and labour of the inhabitants for that time, _minus_ the quantity of such produce and labour, as is, or has been equal in value to the actual national specie.

On the other hand, in nations where gold and silver are produced by the earth, the balance of trade against them, from the time these metals became the object of trade, to this day, may be estimated by the quantity of them which has been exported.

And farther, the consumption made by such nations, for the same term of years, is equal to the whole natural produce and labour of the inhabitants for that time, _plus_ the quantity of such produce and labour, as is, or has been equal to the quantity of these metals exported.

These positions are by much too general to be laid down as principles, because trade is not concerned in every acquisition or alienation of specie; but they may serve, in the mean time, to illustrate the doctrine we have been considering, and even in many cases may be found pretty exact. For example,

If it be true, that in any nation of Europe, there be now just as much silver and gold as there was ten years ago, and if that nation during this period, has supported, without borrowing from strangers, an expensive war which may have cost it, I suppose, five millions, it is certain, that during this period, the home consumption must have been the value of five millions less than the natural produce, labour, and industry of the inhabitants; which sum of five millions must have come from abroad, in return for a like value of the production, labour, &c. remaining over and above their own consumption.

In this supposition, the national wealth (the metals) remains as before, the balance of it only is changed. How this change is performed, and what are its consequences, may be discovered by an application of the principles already laid down.

QUEST. 3. What were the effects of riches before the introduction of trade and industry?

I never can sufficiently recommend to my readers to compare circumstances, in the oeconomy of the antients, with that of modern times; because I see a multitude of new doctrines laid down, which, I think, never would have been broached, had such circumstances been properly attended to. I have endeavoured to shew, that the price of goods, but especially of articles of the first necessity, have little or no connection with the quantities of specie in a country. The slightest inspection into the state of circulation, in different ages, will fortify our reasoning: but the general taste of dissipation which is daily gaining ground, makes people now begin to imagine, that wealth and circulation are synonimous terms; whereas nothing is more contrary both to reason and matter of fact. A slight review of this matter, in different ages, will set it in a clearer light than a more abstract reasoning can.

It is a question with me, whether the mines of Potosi and Brasil, have produced more riches to Spain and Portugal, within these two hundred years, than the treasures heaped up in Asia, Greece, and Egypt, after the death of Alexander, furnished to the Romans, during the two hundred years which followed the defeat of Perseus, and the conquest of Macedonia.

From the treasures mentioned by all the historians who have writ of the conquest of those kingdoms by the Romans, I do not think I am far from truth, when I compare the treasures of the frugal Greeks to the mines of the new world.

What effect, as to circulation, had the accumulation of these vast treasures? Not any to accelerate it, surely: and no person, the least conversant in antiquity, will pretend that the circulating specie in those times, bore as great a proportion to their treasures, as what is at present circulating among us, bears to the wealth of the most oeconomising Prince in Europe. If any one doubt of this particular, let him listen to Appian, who says, that the successors of Alexander, the possessors of those immense riches, lived with the greatest frugality. Those treasures were then, as I have said, a real addition to the value of their kingdoms; but had not the smallest influence upon prices. In those days of small circulation, the prices of every thing must have been vastly low, not from the great abundance of them, but because of the little demand; and as a proof of this, I cite the example of a country, which, within the space of fifty years, possessed in _specie_ at one time, considerably beyond the worth of the land, houses, slaves, merchandize, natural produce, moveables, and ready money, at another. The example is mentioned by Mr. Hume, and I am surprized the consequence of it did not strike him. For if the money they possessed was greatly above the worth of all their property, moveable and immoveable, surely it never could be considered as a representation of their industry, which made so small a part of the whole. Athens possessed, before the Peloponesian war, a treasure of ten thousand talents; and fifty years afterwards, all Athens, in the several articles above specified, did not amount to the value of six thousand. Hume’s _Political Discourses upon the Balance of Trade_.

These treasures were spent in the war, and they had been laid up for no other purpose. Therefore I was in the right, when I observed above, Chap. 22. that war in antient times, had the effect that industry has now: it was the only means of making wealth circulate. But peace producing a general stagnation of circulation, people returned to the antient simplicity of their manners, and the prices of subsistence remained on the former footing; because there was no increase of appetite, or rising of demand upon any necessary article. So much for the state of wealth during the days of frugality.

The Romans subdued all those kingdoms of the Greeks, and drew their treasures to Rome. The republic went to destruction, and a succession of the most prodigal Princes ever known in history succeeded one another for about two hundred years. Those monstrous treasures were then thrown into circulation, and I must now give an idea of the effects produced by such a revolution.

I have already observed (Chap. 28.) that in consequence of the great prodigality of those times, the prices of superfluities rose to a monstrous height; while those of necessaries kept excessively low. The fact is indisputable, and any one who inclines to satisfy himself farther, may look into that valuable collection of examples of antient luxury, wealth, and at the same time of simplicity, found in Mr. Wallace’s _Dissertation upon the Numbers of Mankind in antient and modern Times_, p. 132. et seq.

But how is it to be accounted for, that the prices of superfluities should stand so high, while necessaries were so low? The reason is plain, from the principles we have laid down. The circulation of money had no resemblance to that of modern times: fortunes were made by corruption, fraud, concussion, rapine, and penury; not by trade and industry. Seneca amassed in four years 2,400,000 pounds sterling. An augur was worth 3 millions sterling. M. Antony owed on the Ides of March, 322,916 pounds sterling, and paid it before the calends of April. We know of no such circulation. Every revolution was violent: the powerful were rapacious and prodigal, the weak were poor and lived in the greatest simplicity: consequently, the objects of the desires of the rich were immensely dear; and the necessaries for the poor were excessively cheap. This is a confirmation of the principles we have laid down in Chap. 28. that the price of subsistence must ever be in proportion to the faculties of the numerous classes of those who buy: that the price of every thing must be in proportion to the demand made for it; and that in every case, where the supply can naturally increase in proportion to the demand, there must be a determined proportion between the price of such articles and that of subsistence. Now in the examples given by Mr. Wallace, of such articles as were found at monstrous prices, we only find such as could not be increased according to demand: here is the enumeration of them. Large asses brought from Spain, peacocks, fine doves, mullets, lampreys, peaches, large asparagus, purple, wool, jewels, carpets, _vestes Byssinæ_, slaves skilled in the finer arts, pictures, statues, books, and rewards to those who taught the sciences. By casting a glance upon the catalogue, we may easily perceive that the extraordinary price must have proceeded from the impossibility of augmenting the supply in proportion to the demand; not from the abundance of the money, which had no effect in raising the price of necessaries. The cheapness again of these, did not proceed from vast plenty; but because the price must have remained in proportion to the faculties of the numerous poor; and because the augmentation of the wealth of the rich never could increase their consumption of any necessary article. Had the Roman empire been governed with order and tranquility, this taste of luxury, by precipitating money into the hands of the numerous classes, would, in time, have wrought the effects of multiplying the number of the industrious, by purging the lands; consequently, of increasing the demand for vendible subsistence; consequently, of raising the price of it. And on the other hand, the adequate proportion between services and rewards given by the public, would have checked the other branch of circulation which produced those monstrous fortunes, to wit, rapine and corruption: and industry receiving a regular encouragement, every article of extraordinary demand for delicate aliments, birds, fishes, fruits, &c. would have been supplied with sufficient abundance; and consequently, would have fallen in its price. But when either despotism or slavery were the patrimonial inheritance of every one on coming into the world, we are not to expect to see the same principles operate, as in ages where the monarch and the peasant are born equally free to enjoy the provision made for them by their forefathers.

I shall now come nearer home, and examine a very remarkable difference between the oeconomy in practice some hundred years ago, and that of the present time, with regard to the method of levying men and money.

This change is a consequence of trade and industry, and as I have been preparing the way for the introduction of other matters which equally owe their existence to them, it may not be improper, in this last chapter, to point out the natural causes of this change in modern politics. When people consider effects only, without examining the causes which produce them, they commonly blame rashly, or fall into an idle admiration of fortune. It is only by tracing natural causes, that we come at the means of forming a solid judgment of the nature of every abuse, and of every advantage.

The general taste for the extension of industry, is what has brought such loads of money into circulation; not the discovery of America. We read of treasures in antient times which appear to rival the wealth of modern Europe. Appian, as cited by Mr. Hume, mentions a treasure of the Kings of Egypt, of near two hundred millions sterling; and says, that all the successors of Alexander were nearly as rich, and fully as frugal. Frugality then is compatible with the greatest wealth. Therefore the wealth of America, has not been the cause of European refinement; but the extension of civil liberty has obliged the possessors of treasures, which in all ages have been coveted by man, to open their repositories, in order to procure the service of those who formerly made a branch of the property of the most wealthy. This is the foundation of trade and industry.

Why, therefore, has trade and industry laid the foundation of taxes and standing armies, which appear so contrary to the one and the other?

I answer shortly, that very little change has been made as to things themselves by that revolution; but with respect to the order of things, the difference is great. Trade and industry cannot flourish without method and regularity; taxes and standing armies are only a systematical execution of the old plan, for preserving the power, safety, and independence of the nations of Europe.

Taxes are no more than the liquidation of those services which formerly were performed in kind. Standing armies are become necessary, that the call of the rich luxurious, who are insatiable in their demand for the service of the poor, may not be able to engross also the hands necessary for the defence of the state. Personal services were the taxes of former times. Let no man imagine, that ever any state could subsist without the contribution of its subjects. But a more authentic proof of this opinion is, that in the year 1443, while Charles the VIIth was engaged in the long war with the Kings of England, who disputed with him the monarchy of France, the services of the vassals of that kingdom (by the edict of Saumur of the 14th of September) were formally converted into the perpetual _Taille_; and this may be considered, as the foundation of the regular military force of the French nation. No body, in those days, imagined such an imposition to be oppressive or unjust: and if those who remain subject to it, appear under oppression at present, it is only because they continue in their antient situation. Personal services are the heaviest of all impositions.

QUEST. 4. Why, therefore, are taxes so generally cried out against, why do they appear so new an invention, and why do people flatter themselves, that there is a possibility of putting an end to so general an oppression? I answer, because people commonly attend to words, and not to things. In former times, the great bulk of the inhabitants lived upon the lands, and were bound to personal service. This kind of imposition was familiar, general, and equal; every class of the people was bound to services analogous to their rank in the state. The industrious who lived without any dependence upon the lands, and who did not enjoy the privileges of cities and corporations, were so few, that they were not an object of public attention. Farther, most privileges then known, were in consequence of land-property; consequently, those independent people were in a manner without protection, they were vassals to no body; consequently, had no body to interest themselves for them; consequently, were a prey to every one who had power, and no body was sorry to see a rich fellow, who had got plenty of ready money, and who seemed to do nothing for it, plundered by a lord who appeared in the service of his country. We see in the time of the croisades how odious all those money gatherers were; these were what we now call traders, it was principally in hatred to them, that the borrowing of money at interest was declared antichristian; because the Jews were principally in those days the merchants or the money lenders.

In the beginning of the sixteenth century, when Princes began to take a taste for magnificence, finding no body, almost, within their own country capable to supply them, they used to send to Flanders and Venice, the great trading states in those days, for many kinds of manufactures. This is the fountain of foreign trade in Europe. These two states perceiving the great benefit resulting to them from this new taste of dissipation, gave great encouragement to the industrious. Had they begun to impose high taxes upon them, they would have ruined all. Industry, then, was encouraged at first, and little loaded with any imposition. This is perfectly consistent with our doctrine. Some Princes, perceiving the daily diminution of their wealth, made efforts to restore this antient simplicity, by forbidding this hurtful trade; others, such as Francis I. of France, and Henry VIII. of England, endeavoured all they could to establish industry in their own states. For this purpose, great privileges were granted to the industrious, who thereby increased daily. But this revolution naturally purged the lands, and by that operation diminished the number of personal service-men; or, as in France, where personal service was at an end, the number of those subject to the _taille_. I shall not trace this progress very minutely, but come directly to the period of extensive taxation. When industry was fairly established, and when nations began to be well clothed with the produce of their own soil, wrought up in a thousand different forms, by their own industrious subjects, Princes soon perceived their treasures to melt away, and saw plainly, that without a method of drawing back the money from this new class of inhabitants, the whole wealth of the state would come to center in their hands; but the means of coming at money was extremely difficult. The proprietors of the riches had no solid property in proportion; and their money was inaccessible. Some betook themselves to violence, and others to fraud: the one and the other produced the worst effects. The violence destroyed industry, and rendred the industrious miserable: for we have observed, that when inhabitants are once purged from off the lands, they have no resource left them but their industry; whereas let a peasant be robbed ever so often of his money, he still has the earth to maintain him. The fraudulent corrupted the great; the ministers of Princes became the terror of every man who had money; they enriched themselves by accepting of compositions, and the state remained constantly in want. At last, the scheme of proportional taxes took place: but for this purpose it was necessary to obtain the consent of the whole state; for no Prince’s power extended so far, and they were not come to the time of being able to enlarge their prerogative. Such impositions, therefore, were first introduced in republics, and mixed governments. In monarchies they were established with more difficulty; because the great were equally affected by them with the small. But when long and expensive wars rendred supplies of money absolutely necessary, then were taxes consented to; and the Prince who had not power enough to _establish_ them, easily found means to _keep them up_, when once introduced.

From this progress we may easily discover the reason why taxes are cried out against. The system appears new, because we remember, in a manner, the doubling of the impositions, and we see them daily gaining ground; but we never reflect on the change of circumstances, and seldom attend to the consequences of that new species of circulation, which is carried on between the public and those employed by it. The state now pays for every service, because the people furnish it with money for this purpose.

If the blood therefore be let out, in modern times, at a thousand orifices of the body politic, there are just as many absorbitories (if I may be allowed such an expression) opened to receive it back. From this last circumstance I imply the perpetuity of taxes, while this system of political oeconomy prevails. We have not as yet seen an example of any state abolishing them, though many indeed have had such a scheme in view. But to resume my former comparison, I may suggest, that if all the orifices through which the blood issues, should be bound up, all the absorbitories which are fed with the returning blood, must be starved. But more of this in its proper place.

QUEST. 5. Why are standing armies a consequence of trade and industry?

In the first place, armies in all ages, past, present, and to come, have been, are, and will be calculated for offensive and defensive war; while therefore war subsists among men, armies in one way or other, will be necessary.

The advantage of regular armies has been known in all ages; and yet we find, that for many centuries they appeared in a manner discontinued; that is to say, we read neither of legions, nor of regiments, nor of any denomination of bodies of warlike men, kept up and exercised in time of peace, as was the custom while the Roman empire subsisted: and now, since trade has been established, we see the antient Roman military oeconomy again revived. Let us therefore apply our principles, in order to account for this revolution also.

During the Roman empire, there was a very great flux of money into the coffers of the state, which proceeded more from rapine than from taxes. Consequently, it was an easy matter to keep up large bodies of regular forces.

With these they subdued the world, as I may call it, that is, all the polite nations then known; the Carthaginians, Greeks, and Asiatics. Had they remained satisfied, their empire might possibly have subsisted; because people who are rich, luxurious, and polite, are commonly peaceable. But nothing could satisfy their ambition: they conquered Gaul, and stretched the boundary of their empire from the streights of Gibraltar to the mouth of the Rhine. All was peaceable on that side, and in two or three centuries, both Spain and Gaul had adopted the spirit, language, and manners of the Roman people. But when they passed the Rhine, the Danube, and the Euphrates, they found mankind still less cultivated, and very little known. Their enemies fled before them, and left a territory which was not worth possessing. This of all barriers is the strongest. By carrying on war against such people, the match was very unequal; those nations had every thing to gain, and nothing to lose; the Romans had all to lose, and nothing to win. Those wars continued until the Barbarians learned the Roman discipline, and became warriors. It was the most profitable trade for them, as well as the only means of safety. That this was the plan of their oeconomy appears plainly from the form of government every where established by them. Where every free man was a soldier, there was no occasion for a regular militia.

Men are governed by prejudice more than by reason: to this I attribute the sudden change in the government of Europe. In place of one man governing the world, as was the case of the Emperors, the new spirit was, that all soldiers were equal, and a King was but _primus inter pares_. The sudden revolution had the effect of ruining every thing: learning, industry, politics, all went to wreck. _One hundred years of barbarity must ruin the effects of a thousand centuries of politeness._ This is the date of the annihilation of standing armies. A powerful Prince, such as Charles the Great, who acted in a high sphere, and who made the world his own, might, during his lifetime, establish the old oeconomy. But the general establishment of the feudal form of government, which, no doubt, was the best for preserving a great empire, filled with barbarity every where, joined with the weakness of that Prince’s successors, introduced a new form less barbarous than the former, but equally compatible with a numerous standing militia. Every Baron became a sovereign, and his vassals were bred to arms; but as they were forced to attend the plough for subsistence, as well as the camp; wars were carried on consistently with agriculture. Certain months of the year were appropriated for war; others for peace. This was easily accomplished: war was constantly at the door; a campaign was finished in a week, because every man’s nearest neighbour was commonly his worst enemy.

Europe remained in this general state of confusion for some centuries. Princes had, during that period, a most precarious authority, and when any nation chanced to be under the government of one who had talents to unite his subjects, he became so formidable that there was no possibility of resisting him. In those days, it was a hard matter to form an idea of a balance of power; because there was no rule to determine the force of nations. Under the Otho’s, Germany threatned Italy with chains; under Edward and Henry, England seemed on the road of adding all France to her monarchy; Ferdinand the catholic, laid the foundation of the Spanish greatness, and his successors bid fair for the universal monarchy of Europe. In our days, the acquisition of a small province, nay of a considerable town, is not to be made by conquest, without a general convention between all the powers of Europe, and those who are conversant in foreign affairs, can estimate, in a minute, the force of Princes, by the troops they are able to maintain; nothing is so easy as to lay down, on a sheet of paper, a state of all the armed men in Europe. A Prince can hardly add a soldier to a company, but all the world is informed of it. Excepting the extent of their credit, and the talents of their generals and counsellors, every thing relative to power is become the object of computation. Hence the balance of power, formerly unknown, is now become familiar. So much is sufficient for the matter of fact; let us now examine why _trade_ and _industry_ have given rise to so regular a system of war.

The reason is, because in a state where those are introduced, every thing must be made regular, or all will go to wreck. The keeping up of large armies, is the remains of that turbulent spirit which animated royalty for so many centuries. All literature is filled with warlike sentiments, from.the books of Moses to the news papers of this day. A young person cannot learn to read without imbibing the fire of war. But as nothing is so evident, from the consideration of the total revolution in the spirit of the people of Europe, as that war is inconsistent with the prosperity of a modern state, I sometimes allow my imagination to carry me so far as to believe the time is at hand when war will come to cease. But there is no such thing as predicting in political matters: general peace is a contingent consequence which a thousand accidents may prevent; and one among the rest is, that the whole plan of modern policy may be broken to pieces, before Princes come to discover that it is their interest to be quiet. The ambition of one, arms all the rest, and when once they are at the head of their armies, want of money only assembles a congress, not to make peace, but that the parties may have some years to gather new force.

It is not therefore trade and industry which have given birth to standing armies, they have only rendred war impossible without them. It is the ambition of Princes to extend their dominion, and even sometimes to extend their commerce, which gives occasion to war. And we see daily how difficult it becomes to provide troops for this purpose, from no other reason so much as from the progress of trade and industry. Those who have the money cannot have the men, those who have the men cannot have the money. Do we not see how the greatest monarchy in Europe, the Prince who has the most millions of subjects, cannot preserve the rank of power he has prescribed to himself (_his political-necessary for war_) without a body of above thirty thousand strangers, in the time of the most profound peace, and after the greatest reduction judged consistent with the safety of the country? These cost vastly more than national troops, and brave men of all countries are alike; so that the only reason for keeping up so large a body of foreigners, is to facilitate augmentations when occasion requires it; and not to spare the subjects who are willing to serve, but to spare agriculture and industry, after the superfluities of these have fallen in, to compleat that body of troops which experience has determined to be proportioned to such superfluities.

From this short exposition let me deduce a principle. That since every state has occasion, according to the present system of Europe, for a certain number of armed men for their defence, the first care of a statesman, is, to discover to what number those of his subjects, who willingly prefer the conditions offered for military service to the occupations of industry, may amount. If he finds these exceed the number wanted for recruiting the army, it is a good reason to diminish the pay; until the encouragement comes upon a level with the supply demanded. If on the contrary, the number of volunteers falls below the standard required, he must examine the state of the balance of work and demand, before he can give any farther encouragement. If this balance stands even, he must take care that the pay given to soldiers be not carried so high, as to engage those of the lowest class of profitable industry to desert it.

What measures, therefore, can be fallen upon? There are two. Either to hire foreign troops, as many states do; and I suppose for good reasons, only because it is done. But I should prefer another method, which is to create a new class of inhabitants, appropriated for supplying the army, upon the principle above laid down, that he who feeds may have as many mouths as he pleases.