BALANCE OF TRADE. In a tract published in 1677, called England's Great Happiness,' which is quoted by Mr. M'Culloch in the introductory dis course to his edition of Smith's Wealth of Nations,' is the following dialogue be tween "Complaint" and " Content :"— " Complaint. What think you of the French trade, which draws away our money by wholesale ? Mr. Fortreff gives an account that they get 1,600,0001. a year from us.
"Content. "ris a great stmi; but, perhaps, were it put to a vote in a wise council, whether for that reason the trade should be left offi 'twould go in the negative. I must confess I had rather they'd use our goods than our money; but if not, I would not lose the getting of ten pounds because I can't get an hundred. . . . suppose John-a-Nokes to be a butcher, Dick-a Styles to be an exchange man, yourself a lawyer,—will you buy no meat or ribands, or your wife a fine Indian gown or fan, because they will not truck with you for indentures which they have need of? I suppose no ; but if you get money enough of others, you care not thou you give it away in specie for these things. I think 'tis the same case." The year after this sensible and clusive passage was written, an act was " to prohibit the importation of passed French goods, as highly detrimental to this kingdom." This act was to continue in force to the end of the then next smite of Parliament; and no session having been held during the remainder of the reign of Charles IL, the prohibition con fumed until the accession of James II., who procured the repeal of the act in 1685; but the renewal of the prohibition was one of the first consequences of the revolution of 1688. From 1685 to 1688, says Anderson, this country was nearly 'beggared" by an inundation of French commodities. In the reign of William UL the legislature voted the French trade a nuisance, and made the pro hibition perpetual. This was to en force what was called a favourable ba lance of trade. The notion, we thus see, was not a vague theory, but a mis chievous rule of practice, which even now some people regard with admiration, sod would make a part of our commercial code. They would have the nation to be the lawyer who wants to truck his in dentures with the wine-merchant; but because the wine-merchant will not have the indentures, the lawyer ought, ac cording to this, to go without the wine, although he might sell the indentures to the exchange-man, who would thus fur nish him with the specie for buying the wine.
The balance of trade, as understood by those who adopt the theory, is the dif ference between the aggregate amount of a nation's exports and imports, or the balance of the particular account of the nation's trade with another nation. If the account shows that the imports (valued in money) exceed the exports (valued also in money), the balance is said to be against the nation ; if the exports exceed the imports, the balance is said to be in the nation's favour. This mode of estimating the so-called balance is evidently founded on the assumption that the precious metals constitute the wealth of a country ;—when the imports from any country, as valued in money, exceed the exports to the same, also valued in money, the exporting country must part with some of its precious me tals in payment ; and, according to the doctrine, must so far lose by the trade. A nation, such for instance as our own, has not the means of keeping very clear accounts of these matters, for we have an arbitrary standard of value, called eicial, which has been in use for about a century and a half, and which official value is an ingenious device for perplexing many otherwise simple questions, and for keep ing up many absurd prejudices. Now,
taking these official or unreal values in connexion with the device of the balance of trade, we find that during the year 1843 the United Kingdom gained some forty eight millions sterling by a favourable balance ; for its imports, or the goods which it received from foreigners, amounted to sixty-five millions, whilst its exports, or the goods it sent to fo reigners, amounted to one hundred and thirteen millions, official valuation. In 1842 the same sort of excess amounted to fifty-two millions, and in 1841 to forty-nine millions. If the favourable balance of these three years were any thing but a fiction, it is manifest that the nation would, in these three years only, have accumulated specie to the extent of the favourable balance, and this would amount to the sum of eighty eight millions sterling. But, further, the same favourable balance has been going on for the last half-century, or longer ; and the result would be. that all the specie in the world would at the present time be locked up in this island, and that the balance of forty-eight millions in 1843 would only be a small addition to the heap. Such a result is impossible, for bullion is as much a commodity for sale as corn, and is consequently as ge nerally exchanged. [BULLION.] But if this result were possible, and a nation resolving to sell only for specie, as the Chinese affect to do with regard to tea, could have the power of selling only for specie, this power of turning all its goods to gold, like the same power bestowed upon the wise king Midas, would con fer the privilege of being without food, and clothes, and every worldly comfort upon the unhappy inhabitants of such a nation. The truth is, that no commerce is of any value to a country except as it supplies the people of that country with foreign productions, which they either cannot produce at home, or which are produced cheaper and better abroad. The exchanging of the surplus produce of one country for the surplus produce of another country is the object of all foreign com merce. The profit of the individual mer chant is the moving force which impels the machinery of this commerce, but the end is that each country may consume what it would otherwise go without. In this point of view, every country is a gainer by its foreign commerce ; and if this gain could be estimated by figures, every country which exchanges its products with another country would have a favourable balance of trade : for both individuals and nations exchange that which they do not want for other things that they do want; and when both parties continue to carry on such exchange, it is clear that both are gainers. Which gains most is a question that cannot be settled, and would be of no use if it could be settled.
But gold and silver are in one sense the most valuable products, because they have a universal value, and a nation which in its trade can get all it wants and gold too, will be richer than other nations. It will always have a great quantity of a material that is com mercially more valuable than corn or manufactured articles. England has re ceived a large part of its precious metal thus, in which it abounds above all coun tries; and this is invested in articles of use and ornament, and also gives em ployment to a vast mass of people, who receive for their wages a commodity of universal value. It also enables us to base our paper-money on the sound prin ciple of convertibility for the precious metal.