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shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of." 1

Similarly, it was by appealing to the principle of self-interest as it operates in commercial transactions, and to the physical properties of the precious metals as portable commodities, that the same writer overthrew the dogmas of the mercantile system, and established the doctrines of free trade.

"No commodities," he tells us, "regulate themselves more easily or more exactly according to the effectual demand than gold and silver; because, on account of the small bulk and great value of those metals, no commodities can be more easily transported from one place to another-from the places where they are cheap to those where they are dear."

"A country," he continues, "that has no mines of its own must undoubtedly draw its gold and silver from foreign countries, in the same manner as one that has no vineyards of its own must draw its wines. A country that has wherewithal to buy wine will always get the wine it has occasion for; and a country that has wherewithal to buy gold and silver will never be in want of those metals. They are to be bought for a certain price like other commodities, and as they are the price of all other commodities, so all other commodities are the price of those metals. We trust with perfect security that the freedom of trade, without any attention of government, will always supply us with the wine which we have occasion for; and we may trust with equal security that it will always supply us with all the gold and silver which we can afford to purchase or to employ, either in circulating our commodities or in other uses: 2—

1 'Wealth of Nations,' McCulloch's ed., 1850, p. 7.

2 Ibid.,
p. 190.

the reason, though not expressed, being clearly implied, that the same self-interest which is sufficient to induce the wine producers in France and Spain to send us their wines, will be sufficient also to induce the producers of gold and silver to send us these metals, if, as in the former case, we are prepared to give them their value in return.

Again, reasoning against another doctrine of the same school-that the regulation of trade by a system of duties and prohibitions was indispensable to the commercial prosperity of the country-Adam Smith thus argues:

"This is to direct private people in what manner they ought to employ their capitals, and must in almost all cases be either a useless or a hurtful regulation. If the produce of domestic can be bought there as cheap as that of foreign industry, the regulation is evidently useless. If it cannot, it must generally be hurtful. It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy. The tailor does not attempt to make his own shoes, but buys them of the shoemaker. The shoemaker does not attempt to make his own clothes, but employs a tailor. The farmer attempts to make neither the one nor the other, but employs those different artificers. . . . What is prudence in the conduct of a private family can scarce be folly in that of a great kingdom. If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry employed in a way in which we have some advantage. The general industry of the country being always in proportion to the capital which employs it, will not' thereby be diminished, no more than that of the above-mentioned artificers, but only left to find out the way in which it can be employed with the greatest advan

tage. It is certainly not employed to the greatest advantage when it is directed towards an object which it can buy cheaper than it can make. The value of its annual produce is certainly more or less diminished, when it is thus turned away from producing commodities evidently of more value than the commodity which it is directed to produce."

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In all this reasoning, I need scarcely remark, the appeal throughout is to the principle of self-interest. Restrictions on trade, if not useless, are hurtful—are prejudicial to the increase of national wealth, because in the operations of trade men naturally seek their own interest, and, consequently, if left to themselves, will naturally employ their industry in that way in which they have some advantage; the general industry of a country, therefore, will not be diminished by freedom of trade, but only be employed to most advantage—which is in other words to say, employed so as to produce the greatest possible amount of wealth.

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It is true, Adam Smith afterwards refers to historical facts, and adduces the cases of Spain and Portugal to show the prejudicial effect of the mercantile system on the trade of those countries. will observe, however, that when he has recourse to history, it is always in illustration or confirmation; he never makes it the basis of his doctrines. He first lays the foundation deep in the principles of human nature and the physical facts of the external world; the subsequent reference to historical events is merely in illustration of the mode in which the laws thus established operate.

1 'Wealth of Nations,' p. 200.

Take another example from one of our greatest economic discoverers. One of the most important discoveries in Political Economy which has been made since the time of Adam Smith is the theory of foreign trade established by Ricardo. Previous to this,' as Mr. Mill observes, the theory of foreign trade was an- unintelligible chaos.' The discovery of Ricardo was briefly this-he showed that the circumstance which determined an interchange of commodities between two nations was not, as had previously been supposed, a difference in the absolute cost of producing the commodities exchanged, but a differenee in the comparative cost. Corn and iron, e.g., might both be obtained at less cost in Sweden than in England, and yet no exchange of corn and iron would necessarily take place between Sweden and England; but if the comparative costs of iron and corn were different in these two countries, the principles of self-interest would inevitably lead to an exchange. I have already quoted the passage1 in which Ricardo, illustrating this position by a simple hypothesis, was enabled to establish it as a doctrine of economic science by a direct appeal to the motives which engage men in the production and exchange of wealth.

So also, in discussing with M. Say the theory of rent, of profits, of taxation, the question is invariably reduced by Ricardo, either to some acknowledged principle of human action, or to some question of physical fact to such issues, e.g., as the following— What is the productive capacity of the soil? Is the

Ante, p. 82.

ratio of returns to outlay, ceteris paribus, the same, or greater, or less, as the outlay is increased? Does not the conduct of farmers in resorting to inferior soils prove it to be less? In the cultivation of land, therefore, is there not a point at which the returns pay the capital and labour employed in cultivation, and no more? Will not the self-interest of farmers lead them to push cultivation to this point? Will not the same consideration prevent them from pushing it further? Are there not soils of every possible degree of fertility? Are there not some, therefore, which will merely yield an average profit on the outlay, and no more? Will not the competition of farmers, each guided by considerations of individual self-interest, force up the rent of land till the returns merely leave them the average rate of profits on their capital? Will not the same motive prevent them from raising it further? Is not rent, therefore, determined by the difference between the cost of that portion of agricultural produce which is raised at greatest expense, and that which is raised at less? Supposing a tax on raw produce, the farmer will not pay the tax, for then he would not get the average profits, and rather than submit to less, his self-interest will lead him to withdraw his capital from the land. Will he evade the tax by contracting the area of cultivation and giving a lower rent; or will the wants of consumers induce them to give a higher price rather than diminish their consumption? Will, therefore, the minimum rate of profit, necessary in order to secure the investment of the farmer's capital, be main

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