General Balance of Trade in England.
When the proprietor of a considerable sum in the English funds examines Sir Charles Whitworth’s truly valuable work, State of the Trade of Great-Britain; he thanks his stars, and says, “I have nothing to fear whilst the balance of trade continues in favour of this kingdom; but the moment it shall turn against her, recourse must inevitably be had to the expedient so long postponed: the application of the sponge is inevitable.”—
I have perhaps already said enough to animate the greater part of those, who are concerned in the public funds of every enlightened nation, against every other fear but that of a reimbursement; but, as it may be believed, with regard to the public funds in England, that I have reasoned on the supposition, generally admitted, of that balance in their favour, of which the English are so jealous, I would wish doubly to strengthen the mind of the parties concerned, by proving to them that their fortune rests on a basis much more solid than that of a pretended favour, which the private interest of every merchant, vigilantly repels, whilst the fancy of the body at large happily confines them to believe in the idol, and to invoke it.
I am indebted to the details contained in Sir Charles Whitworth’s work, for the advantage of applying to real facts, many reflexions which I had digested before I had read that work; but I was, till then, reasoning on hypotheses; I now reason on what so nearly approaches reality, that it is necessary to controvert my arguments, instead of consigning their foundation to the system of chimeras.
By means of that valuable work, I see, from the year 1700 to 1775, and that in the greatest detail, strengthened by all the proofs that the nature of the subject can admit of, a constant superiority of exports, which, in the space of 75 years, amounts to the enormous sum of 267,774,769l. (I have overlooked the fractions of each article.) This is, in the total amount, much more than one half of the gold and silver imported into Europe from America, during the same lapse of time; but, of this period of 75 years, 30 must be attended to, wherein the superiority of English exports comes up very nearly to five-sixths of the general importation of those two precious metals, which were to make good so many other balances. We should also observe, amongst those years, a most flourishing one, wherein that English favour absorbs, as it were, all the silver imported into Europe; and five other years still more wonderful, where it surpasses that general importation by 10, 12, and even 1,300,000l.; for, in 1750 the general exportation of English goods exceeded the importation of foreign produce, by 7,359,964l. and yet all that product of the mines, belonging to Spain and Portugal, is estimated only at 6,000,000l. sterling per annum.
I shall suppose, for a moment, that, during the space of time I have just mentioned, the balance of trade did, in reality, produce to England an importation of money, to the amount of 267,774,769l. (for the reports of the Custom-House, as stated by Sir Charles Whitworth, brought in as a proof of that pretended, uninterrupted balance, in favour of the nation, mean what I have said, or mean nothing at all, in regard to this matter; they do not prove one penny if they do not prove the whole sum). It is true that, according to the same reports, we must deduct for the money exported from England, during the course of those 75 years, about 105 millions, by which the nation at least got rid of a surplus which would have strangely disparaged the price of that which was preserved in the country: but is it very certain that the 162,774,969l. the precious nett of the pretended balance, was actually preserved? This appears to me impossible, for the following reasons, which may perhaps furnish us with the means of knowing, precisely enough, in what the true balance consists.
Since the beginning of this century, the real and nominal value of the revenue in the other parts of Europe, has doubled, as well as in England. Now this augmentation, in the products and prices, has required, every where, a proportionable increase of the means of circulation; and Spain and Portugal are nearly the only two sources from whence that increase of means could be procured.
In the supposition that the revenue of England constitutes one tenth of that of Europe (it is a great deal), the other nations composing that part of the world were of course obliged to endeavour to secure the nine tenths of the money necessary for their own circulation; and their success in this is the less questionable, as, in case any one of them should be short of money for the circulation of its property, the English themselves would eagerly supply that part of the precious balance, which it might want, because, in this case, the importation of money into such country would prove more profitable than an importation of fresh goods, whilst the old ones, carried there already, waited for money to circulate them. Hence it may be concluded, that the English never had, or at least have not preserved, more than their tenth, twelfth, or rather, more than their natural portion in that absolute mass of gold and silver necessary to the circulation.
I shall now say, that it is not even probable that they have preserved that quota, necessary every where else for the circulation of a revenue similar to theirs, because England is, of all known nations, the one where the circulation of property of all kinds, requires a less quantity of real cash: the merciless severity of the laws against debtors, the general credit which it encourages, the use and indubitable value of paper currency, which are derived equally from both, are three objects which, in this respect, set England far above par, in comparison with all the other nations who have neglected to secure to themselves the same advantages.
Might we not further say, that England evidently has not thought proper to get that quota, which she might have claimed, since one third, and perhaps half of her circulation, is effected by paper-money with more dispatch, with more facility, and with as much solidity as if it were effected by cash?
It will be asked, perhaps, if I pretend to infer at last, that the exportation has not been so considerable as it ought to be supposed from the statements of Sir Charles Whitworth? I shall answer to this, as to many other queries; it may now be seen that a few millions more or less, are a matter of perfect indifference, in regard to my main object. The exportation from England is clearly prodigious; its immensity is proved by that of the tonnage of the shipping employed for her trade, 775,624 tons in the years 1771, 1772, and 1773, (see Chalmers’s Estimate); this point is established beyond all equivocation. What I refuse therefore to the imagination of the trader, is solely what appears to me chimerical and useless in that favourable balance of money; and this I refuse, because I cannot possibly but acknowledge, that every trader has too much good sense to act against the general interest of trade, when such operation must, at the same time, prove contrary to his own interest. Nay, is much more than plain instinct wanted, not to import money which yields a very trifling benefit when there is no demand for it, whilst one may take up foreign goods, on which there is a certain gain of 10 or 12 per cent. because they are eagerly sought after? and when, besides, the nation, on a certainty, will not finally pay for them but with national goods, since she has no mines of her own? I must observe, indeed, that this very trader, guilty of such an act of impatriotism, of this national crime of importing merchandize instead of gold and silver, cries up, as loud as any other, the necessity of striking a favourable balance; but private wisdom gets the better of public folly; every one imports such goods as he is in hopes to sell to advantage, and leaves to his neighbour the care of importing that favour on which no profit can be got.
What is then the quantity of bullion really imported every year into England?
It is incontestably, in the first place, so much of it as is necessary to answer the progressive increase of the prices and products, both of the land and industry; the bank-notes cannot suffice to that augmentation, but in their ordinary proportion to the real specie in circulation; all supplement of bank-notes, which in the needful hour exceeds that proportion, must soon be replaced by real specie; on this exactness stand the credit of the Bank, and the vast advantage accruing therefrom to the public, and to the State; but from thence also results a greater inutility of accumulating money before it is wanted.
It is, in the second place, all the bullion necessary for the labouring gold and silver-smiths, from the first gold-smith in London to the last plated-button maker at Birmingham.
It is, thirdly, all that importation which is required to make good the deficit occasioned by petty stock-jobbing, and the melting down of guineas, which no workman will ever scruple, when there will be a few more pence to be got that way, than by the purchase of bullion, or as often as, having no bullion at hand, he shall find himself in the immediate necessity of working.
It is, fourthly, all that which is wanted to replace the few guineas carried away annually from England by travellers, smugglers, or by means of some inferior transactions in trade, and which cannot always be exactly balanced by the contraband trade carried on elsewhere by the nation.
Ever since the English have acquired the immense landed revenue which they possess in the East-Indies, it is probable they do not carry there so much money; yet some must be sent there. The above five articles are the only ones I know of, which may render necessary an annual importation of money. The first of those articles is absolutely independent of the caprice of any one; it is always subservient to the quantity of effects to be put into circulation, as well as to their price; and can at no time deprive the other parts of Europe of their share in the mines of America. The third and fourth are in a manner included in the first; nor can they, when viewed separately, be very considerable: The second alone is truly prodigious, but is likewise subservient to the demands of that very silver when wrought, that is to say, converted into some articles of luxury: But it is necessary to observe, in regard to this, that great care is taken to find out purchasers for that metal thus improved by the hands of the workman, not only in England, but wherever people can possibly be found willing to take from her, that part of the precious balance, which she had taken upon herself, only in hopes of getting rid of it.
This I think is sufficient to demonstrate the impossibility of that pretended favourable balance, amounting, in the space of 75 years, to 162,774,769l. the existence of which many people imagine to be real, from the statements of Sir Charles Whitworth: for, if they would confine themselves to say, that, in the course of 75 years, England has profited in trade to the amount of 162,774,769l. I have proved much more, since I proved (p. 17 to 22) that all the benefits which have accrued, and might now be spent, form together a solid mass of clear and palpable savings; and that this mass would now be, without doubt, 332 millions, instead of 162, had the 180 millions, lent by the subjects to government, and swallowed up by the war, been laid out in the improvement of lands and industry.
As to the inference that might be drawn from the apparent exportation of 105 millions of money, during the same period, according to the above statement, it is also necessary to make an observation on this matter.
In any grand mercantile operation, where prompt and certain remittances are required, be the motive of such operations what it may; if there goes out of England, we shall suppose, 400,000l. in bullion, this very same bullion, after the bargain is struck and fulfilled, either in goods or in bills of exchange, comes back to London, to resume if necessary, the same course three weeks afterwards: For the space of 40 years, therefore, the same sum may an hundred times be placed in the catalogue of exports, and perfectly answer to a capital of 40 millions, the place of which it has really supplied: This is a well-known resource; nothing then can be concluded in regard to the 105 millions of bullion exported, according to Sir Charles, but, that there ever has been, and probably ever will be, in England all the bullion necessary to answer the exigencies of the most unforeseen and extraordinary negociations of all kinds, and industry enough to recall in time, that bullion which had only been given as a pledge. It is like a jewel worth 100,000 crowns, which, for the space of 20 years, is said to have passed ten times backwards and forwards from Paris to Amsterdam, but finally remained at Amsterdam, by a reason contrary to that which keeps up the commercial shuttle between England and Holland.
In order to come as close to the point as it is necessary, on a matter, besides, of which it is equally useless and impossible to obtain an exact knowledge, here follow some facts, the essential results of which by no means depend on more or less exaggeration in the exposition either of the sale, or of the credit.
The period from 1764 to 1773, must be allowed to have been the most flourishing era of Great Britain. During those ten years the exportation of English merchandises into Spain, has exceeded the importations from Spain into England, by 5,095,998l. In the same space of time, the balance of trade between England and Portugal has been 3,274,133l. in favour of the former. The two favours united, amount all together to 8,370,131l.; add thereto the favourable balances of Madeira, and the Canary Islands, paid probably in Spain and Portugal, amounting, in the same space of time, to 516,863l.—the total presents us with the aggregate sum of 8,886,994l. which, divided by 10 years, proves an annual balance, in favour of England, of 888,699l. real money.
The light of probability now begins to dawn upon me: at least I here find myself at the source of money; and, as I know, first, that England must absolutely be provided with a certain quantity of it, whatever that quantity may be, for the five articles before mentioned:
Secondly, That she exports, of her own goods, fifteen times as much as she need to do for that purpose:
Thirdly, That gold and silver are to Spain and Portugal, what wines are to France, silks to Piedmont, hemp and timber to Russia; and that, in order to procure those different articles at the easiest rates, they must be fetched from France, Piedmont, and Russia:
Fourthly and lastly, that Spain and Portugal stand exactly in the same need of making away with the surplus of their gold and silver, as England does of acquiring it, by getting rid of a surplus of her manufactures: I cannot therefore entertain the least doubt, but that it is at Cadiz and Lisbon that England procures all that gold and silver which is indispensably wanted for the five operations spoken of; and I must positively conclude, that there she has taken the whole quantity which she had occasion for; but I as positively conclude, that she took up only so much of it as was wanted, when I see that it depended entirely upon her to take more, and that she has not done it: A decisive point, which I cannot by any means call in question, when I have convinced myself, by Sir Charles Whitworth’s statements, that this sum of 888,699l. which England, if so disposed, might have procured annually during the ten years above mentioned, is no more than the balance of 1,785,826l. in goods exported there, one year with another, during the same space of time:—For, after all, why should not England have taken in money the amount of 897,157l. of Spanish and Portuguese goods, taken by her ships in return, were it not that the value of money, as that of all other kinds of merchandise, is always tyrannically fixed by the demand?
It seems, therefore, probable enough, that the money annually imported by England, during the period aforesaid, does not exceed the 888,698l. of the balance which appears against Spain, Portugal, Madeira, and the Canary Islands: But here follows a strong conjecture, that it is not so considerable as it appears by those accounts.—It is an uncontroverted fact, that the article of exportation is always exaggerated more or less; the man who first bethought himself of this harmless cunning, fancied that his own importance would appear more conspicuous to the nation, by reason of the quantity of goods which he might seem to export: this is now the secret of the play-house, every body knows it; but this practice is in a manner become necessary: one must unblushingly raise himself above his level, in order to be thought in his real place; the only way of deceiving in this respect, would be to speak the truth; and, in this case, the deceit would fall on the deceiver himself, and that just regard which the exporter has a right to claim, would be lost to him: Add to this necessary artifice, which is no longer a cheat, the usual mode adopted in regard to importation, the value of which is always a little under-rated, but only a little, because there might be some inconvenience in cheating Government to excess. With these trifling modifications, I think England will be found not much above the par of her quota, in the gold and silver imported from America.
Now, out of these 6 or 700,000l. in money, which I believe are really and annually imported into England, what quantity is sent to foreign markets,—not, indeed, before its value is considerably advanced by the workmanship?—But, if this metal be so precious, why part with it when once acquired? Why not employ the workman upon objects, the price of which would have received a ten-fold increase by his labour? Why should these continual prophanations of the sacred metal be permitted? Why give encouragement to that kind of prostitution of gildings of all sorts, which daily consume such quantities of gold? It is said, that in Birmingham alone, they consume 30,000l. worth per annum:—And shall it be on a metal thus lavished away, shall it be on that pretended balance, that England will build her resources, and the security of her creditors?—In what consists, then, the wealth of the nation, that wealth which is truly independent of all circumstances, and which will ever be superior to the national wants?
It consists in any sum whatever, money and paper currency, which is required to keep in the utmost activity, 3,000,000 of cultivators, 3,000,000 of tradesmen, and 3,000,000 of other consumers, as indispensable to realise the value of the objects by them consumed, as the tradesman and cultivator are necessary to produce them:—And if any question should arise on the number of inhabitants,
It consists in the number of men necessary to furnish annually exports to the value of fifteen or sixteen millions:—And if it should be urged that this exportation is over-rated,
It consists in the number of men capable of making up that quantity of exports, which is annually required for a trading navy of 775,024 tons, on the statement of which there cannot arise a single doubt.
It consists in a population necessary (which doth really exist, and could not be dispensed with) to find, without any other inconvenience but a momentary sensation, the 100,000 seamen of the royal navy, the 70,000 national soldiers, and the 3 or 400,000 artificers, and other persons employed in every way, who, by the last war, were for some years taken away, from their daily and useful occupations, some monuments of which would probably have been transmitted to posterity, in order to their being employed in all the accidental operations that were requisite to carry on those destructive plans, which have left nothing but a sad remembrance behind: A remembrance, nevertheless, of which the most allowable pride should allay the bitterness.
It consists also, perhaps, in that revolution, which must have been effected in the mind of every intelligent Briton, by the demonstration grounded on experience, of the impossibility of doing beyond a few minutes, with a given number of men, more than that same number is capable of effecting habitually, and without fatigue.
It consists in the impossibility of not doing, even to the end of ages, with a given number of industrious men, all that which the same number have executed during 80 years, not only without exhausting themselves, but rather, on the contrary, still increasing their strength and wealth.
It consists, in fine, in the demonstration which will become daily more palpable, that labour alone is the source of that wealth; that the more the sum of this labour shall augment, the greater will be the increase of riches; but that this same labour will not reach its last degree of activity in England, till it is nearly in the same state in Siberia; and that there is no great harm in an English mechanic creating a cultivator in Siberia, or even in France, provided a Siberian or French mechanic, create a cultivator or mechanic in England.