It must be well understood that we are not speaking here ofcountries which carry on the production of the precious metalsthemselves at a profit, from which therefore the export of thesearticles has quite the character of an export of manufacturedgoods.We are also not speaking of that difference in the balanceof trade which must necessarily arise if the nation rates itsexports and imports at those prices which they have in their ownseaport towns.That in such a case the amount of imports of everynation must exceed its exports by the total amount of the nation'sown commercial profits (a circumstance which speaks to itsadvantage rather than to its disadvantage), is clear andindisputable.Still less do we mean to deny the extraordinary caseswhere the greater exportation rather denotes loss of value thangain, as e.g.if property is lost by shipwreck.The popular schoolhas made clever use of all those delusions arising from ashopkeeper-like calculation and comparison of the value of theexchanges arising from the exports and imports, in order to make usdisbelieve in the disadvantages which result from a real andenormous disproportion between the exports and imports of any greatand independent nation, even though such disproportion be notpermanent, which shows itself in such immense sums as for instancein the case of France in 1786 and 1789, in that of Russia in 1820and 1821, and in that of the United States of North America afterthe 'Compromise Bill.'
Finally, we desire to speak (and this must be specially noted)not of colonies, not of dependent countries, not of small states orof single independent towns, but of entire, great, independentnations, which possess a commercial system of their own, a nationalsystem of agriculture and industry, a national system of money andcredit.
It evidently consists with the character of colonies that theirexports can surpass their imports considerably and continuously,without thereby involving any conclusion as to the decrease orincrease of their prosperity.The colony always prospers in theproportion in which the total amount of its exports and importsincreases year by year.If its export of colonial produce exceedsits imports of manufactured goods considerably and lastingly themain cause of this may be that the landed proprietors of the colonylive in the mother country, and that they receive their income inthe shape of colonial goods, in produce, or in the money which hasbeen obtained for them.If, however, the exports of fabrics to thecolony exceed the imports of colonial goods considerably, this maybe chiefly due to the fact that by emigrations or loans from yearto year large masses of capital go to the colony.This lattercircumstance is, of course, of the utmost advantage to theprosperity of the colony.It can continue for centuries and yetcommercial crises under such circumstances may be infrequent orimpossible, because the colony is endangered neither by wars nor byhostile commercial measures, nor by operations of the national bankof the mother country, because it possesses no independent systemof commerce, credit, and industry peculiar to itself, but is, onthe contrary, supported and constantly upheld by the institutionsof credit and political measures of the mother country.
Such a condition existed for more than a century with advantagebetween North America and England, exists still between England andCanada, and will probably exist for centuries between England andAustralia.
This condition becomes fundamentally changed, however, from themoment in which the colony appears as an independent nation withevery claim to the attributes of a great and independentnationality -- in order that it may develop a power and policy ofits own and its own special system of commerce and credit.Theformer colony then enacts laws for the special benefit of its ownnavigation and naval power -- it establishes in favour of its owninternal industry a customs tariff of its own; it establishes anational bank of its own, &c., provided namely that the new nationthus passing from the position of a colony to independence feelsitself capable, by reason of the mental, physical, and economicalendowments which it possesses, of becoming an industrial andcommercial nation.The mother country, in consequence, placesrestrictions, on its side, on the navigation, commerce, andagricultural production of the former colony, and acts, by itsinstitutions of credit, exclusively for the maintenance of its ownnational economical conditions.
But it is precisely the instance of the North American coloniesas they existed before the American War of Independence by whichAdam Smith seeks to prove the above-mentioned highly paradoxicalopinion: that a country can continually increase its exportation ofgold and silver, decrease its circulation of the precious metals,extend its paper circulation, and increase its debts contractedwith other nations while enjoying simultaneously steadilyincreasing prosperity.Adam Smith has been very careful not to citethe example of two nations which have been independent of oneanother for some time, and whose interests of navigation, commerce,industry, and agriculture are in competition with those of otherrival nations, in proof of his opinion he merely shows us therelation of a colony to its mother country.If he had lived to thepresent time and only written his book now, he would have been verycareful not to cite the example of North America, as this exampleproves in our days just the opposite of what he attempts by it todemonstrate.
Under such circumstances, however, it may be urged against usthat it would be incomparably more to the advantage of the UnitedStates if they returned again to the position of an English colony.
