which sends British goods to Portugal, and brings back Portuguese goods to Great Britain, replaces, by every such operation, only ONE British capital: the other is a Portuguese one. Though the returns, therefore, of the foreign trade of consumption should be as quick as those of the home trade, the capital employed in it will give but ONE-HALF the encouragement to the industry or productive labour of the country." Now, in the passage just quoted, its author has arrived at the conclusion that foreign, as compared with home trade, gives but ONE-HALF the encouragement to the productive labour of a country, or, in other words, that home trade is doubly productive over foreign, on account of its keeping in operation Two distinct sources of production. I have, in the next place, to adduce a similar decision, laid down by the French economist, Monsieur Say. His judgment is as follows: "The British government seems not to have perceived that the most profitable sales to a nation are those made by one individual to another within the nation; for these latter imply a national production of Two values-the value sold, and that given in exchange." Now, this proposition of M. Say's is identical with that laid down by Adam Smith, and it is also more clearly and concisely expressed. Thus two of the most eminent writers on the science of Political Economy answer the question now propounded in a similar way, maintaining the conclusion, that home trade is doubly advantageous over foreign.† On seeking to understand the argument, which, on account of its complicated character, requires very close examination, and a most accurate method of reasoning, the student should * The Wealth of Nations, by Adam Smith, book 2, ch. v. carefully bear in mind the grounds on which this reasoning of the two Economists rests, which are these: That as every exchange must include Two parties, and also two kinds of productions wherewith the exchange is realised, so all trade or exchanges, carried on within a nation by the people of the nation, and with commodities procured by the labour of this people, must comprehend and sustain the interests of Two parties. Thus, if a given number of agriculturists, with a given capital, exchange their agricultural productions with a given number of manufacturers for a like given amount of their manufactured commodities, two kinds or classes of capitalists and of labourers are supported by this course and system of exchange. Thus, if the capital of the agricultural producers which is so sustained be of the amount of 1000l., and the capital of the manufacturing producers which is so sustained be of the amount of 1000l., there is supported within the society of the nation an aggregate capital under these two heads of the amount of 2000l. Now, here then is presented a well-constructed and solid proposition. The matter to be dealt with is put into that shape which every true and able inquirer and actor in the field. of science, rejoices to have before him, because he sees that by a persevering examination of the arrangement of facts which the proposition involves, right or wrong must be discovered, and that, not by means of vague guessing, conjecture, or mere opinion, but by that practical demonstration which every scientific reasoner professes to work up to. The question next for consideration is,-How has this solid proposition, thus advanced by two of the most eminent economists, and placed by them in a central position within the educed state of the science, been received and treated by other members of the same school? The writer to whose treatment of it, and judgment, I will refer in the first place, is Mr. M'Culloch. This writer, evidently impressed and oppressed by the weighty, intricate, and difficult character which the proposition of Adam Smith and M. Say presents, with little or rather no confidence in his power of meeting it thoroughly or affirmatively, approached the question most distrustfully and unscientifically, commencing his treatment of it in the following manner : "I shall not imitate the example of most writers on commerce, by entering into a lengthened examination of the question whether the home or foreign trade be most advantageous. It is indeed quite obvious, that it admits of no satisfactory solution." * By this passage it is shown that its author evades an examination of the propositions of Adam Smith and M. Say. He endeavours to get rid of the task of demonstrating, by advancing the weak, the unphilosophical, and, therefore, the unwarrantable assertion, that the subject does not admit of solution. He then continues his remarks; but as these are consequent on the above admission of weakness, it was not to be expected that they would be of a character other than vague and erroneous. It does not appear to me essential to quote them here at length, though on a subsequent occasion I may have to enter upon a minute examination of the most particular portion of them. As merely referring to them at present, I beg to remark, that the author having no command of a true hypothesis, and declining the task of finding one, advances in his argument by means of taking a false one as granted him, which being done, his deductions, as a matter of course, are then easily worked out. Although I do not here adduce the whole of these passages, nevertheless I desire to draw attention to them, because they furnish a good illustration of how little care, and how little of accurate reasoning * Principles of Political Economy, by J. R. M. M'Culloch, chap. v. p. 147. have been employed in constructing arguments on the important subject to which they relate. The matter alluded to is contained in pages 147 to 159 inclusive. Leaving this part of the work, therefore, for more ample examination on a future occasion, it is necessary for me to have recourse now to another by the same author, and which has been more recently presented to the public. The title of this work is "Commerce." It was published under the auspices of the Society for the Diffusion of Useful Knowledge. In the second chapter of this work the author, when dilating on the various kinds of trade, necessarily arrived a second time at the same great question, namely, the comparative advantageousness to a country of home or foreign trade; and herein he does not evade the question in the same manner as he did in his first treatise, but ventures somewhat further into the arena of discussion. His commencement, however, is of a similar character. At page 13 of this work there is the following passage: "It is clear, therefore, that in estimating the comparative advantageousness of the home and foreign trade, it will not do to look merely at the number of transactions in each. The real question is, which occasions the greatest subdivision of employments, and gives the most powerful spur to industry? This, however, is a question that does not, perhaps, admit of any very satisfactory solution.” Following almost immediately upon this reiteration of the above remarkable assumption, the author for the first time makes direct allusion to the proposition of Adam Smith, which he quotes, and then attempts a refutation of it by means of the following series of assertions: "Now it will be observed, that Dr. Smith does not say that the importation of foreign commodities has any tendency to force capital abroad; and unless it do this, it is plain that the statement in the above paragraph is quite inconsistent with the fundamental principle he has elsewhere established, that the productive industry of every country must always be proportioned to the amount of its capital. Suppose, for the sake Smith actually occurs of illustration, that the case put by Dr. that the Scotch manufactures are sent to Portugal, it is obvious that if the same demand continue in London for Scotch manufactures as before they began to be sent abroad, an additional capital and an additional number of labourers will be required to furnish supplies for both the London and Portuguese markets. In this case, therefore, instead of the industry of the country sustaining any diminution from the export of the Scotch manufactures to a foreign country, it would evidently be augmented, and a new field would be open for the profitable employment of stock. But if at the same time that the Scotch began to export manufactured goods to Portugal, the Londoners also found out a foreign market, where they could be supplied at a cheaper rate with the goods they had previously imported from Scotland, all intercourse between Scotland and London would immediately cease, and the home trade would be changed for a foreign trade. It is obvious, however, that this change could not occasion any embarrassment, and that it would not throw a single individual out of employment. On the contrary, a fresh stimulus would be given to the manufactures both of Scotland and the Metropolis, inasmuch as nothing but their being able to dispose of their produce to greater advantage, could have induced the merchants to change the home for a foreign market. The fact is, that when a home trade is changed for a foreign trade, an additional capital belonging to the nation with which it is carried on, enters into it; but there is no diminution whatever either of the capital or industry of the nation which has made the change. So far from this, they are plainly diverted into more productive chan |