Precious Metals

Whatever brilliant or solid qualities the precious metals may possess, their value depends upon the use made of them, and that use is limited.

Like carriages, they have a value peculiar to them; a value that diminishes in proportion to the increase of their relative plenty, in comparison with the objects of exchange, and increases in proportion to their relative scarcity.

If it were no advantage to import any but the most durable items of productive capital, there are other very durable objects, such as stone or iron, that ought to share in our partiality with silver and gold.

But the point of real importance is, the durability, not of any particular substance, but of the value of capital.

Now the value of capital is perpetuated, notwithstanding the repeated change of the material shape in which it is vested. Nay, it cannot yield either interest or profit, un- less that shape be continually varied.

To confine it to the single shape of money. would be to condemn it to remain unproductive.

One is told, that every thing may be procured with gold or silver. True; but upon what terms? The terms are less advan- tageous, when these metals are forcibly multiplied beyond the demand; hence their strong tendency to emigration under such circumstances.

The export of silver from Spain was prohibited; yet Spain supplied all Europe with it. In 1812, the paper money of England having rendered superfluous all the gold money of that country, and made that metal too abun- dant for its other remaining uses, its relative value fell, and her guineas emigrated to France, in spite of the ease with which the coasts of an island may be guarded, and of the denunciation of capital punishment against the exporters.

But I will go a step further, and, having shown that there is no advantage in importing gold and silver more than any other article of merchandise, I will assert, that, supposing it were desirable to have the balance of trade always in our favour, yet it is morally impossible it should be so. Gold and silverare like all the other substances that, in the aggregate, com-

To what good purpose, then, do governments labour to turn the balance of commerce in favour of their respective na- tions? To none whatever; unless, perhaps, to exhibit the show of financial advantages, unsupported by fact or experience. 158 How can maxims so clear, so agreeable to plain common sense, and to facts attested by all who have made commerce their study, have yet been rejected in practice by all the ruling powers of Europe, 159 nay, even have been attacked by a num- ber of writers, that have evinced both genius and information on other subjects?

To speak the truth, it is because the first principles of political economy are as yet but little known; because ingenious systems and reasonings have been built upon hollow foundations, and taken advantage of, on the one hand, by interested rulers, who employ prohibition as a weapon of offence or an instrument of revenue; and, on the other, by the personal avarice of merchants and manufacturers, who have a private interest in exclusive measures, and take but little pains to inquire, whether their profits arise from actual production, or from a simultaneous loss thrown upon other classes of the community.

By the absolute exclusion of specific manufactures of foreign fabric, a government establishes a monopoly in favour of the home producers of these articles, and in prejudice of the home consumers; that is to say, those classes of the nation which produce them, being entitled to their exclusive sale, can raise their prices above the natural rate; while the home consumers, being unable to purchase elsewhere, are compelled to pay for them unnaturally dear. 161 If the articles be not wholly prohibited, but merely saddled with an import duty, the home producer can then increase their price by the whole amount of the duty, and the consumer will have to pay the difference.

For example, if an import duty of 20 cents per dozen be laid upon earthenware plates worth 60 cents per dozen, the im- porter whatever country he may belong to, must charge the consumer 30 cents; and the home manufacturer of that com- modity is enabled to ask 80 cents per dozen of his customersfor plates of the same quality; which he could not do without the intervention of the duty because the consumer could get the same article for 60 cents= thus, a premium to the whole extent of the duty is given to the home manufacturer out of the consumer’s pocket.

A favourable balance of trade is achieved by exporting goods and receiving specie. But this is the same as having no foreign trade at all.

This is because the other nation can only give what It has.

If the selling nation only receives precious metals, the buying nation might also want to receive only precious metals. Thus, there is no exchange.

Were it practicable to monopolize the precious metals, there are few nations in the world that would not be cut off from all hope of mutual commercial relations. If one country afford to another what the latter wants in exchange, what more would she have? or in what respect would gold be preferable? for what else can it be wanted, than as the means of subsequently purchas- ing the objects of desire?

Mercantilists think that:

• the advantage of producing at home counterbalances the hardship of paying dearer for almost every article
• our own capital and labour are engaged in the production, and the profits pocketed by our own fellow-citizens

But I think that our imports are not bought for free. We must purchase them with our own produce, done through our own employment and capital.

We must always remember this maxim: products are always bought ultimately with products.

We should use our productive powers not in trading precious metals, something that foreigners are better at. We should use our powers to produce those which we excel in.

The opposite course would be just as absurd, as if a man should wish to make his own coats and shoes.

What would the world say, if, at the door of every house an import duty were laid upon coats and shoes, for the laudable purpose of compelling the inmates to make them for themselves?

Would not people say with justice, Let us follow each his own pur- suits, and buy what we want with what we produce, or, which comes to the same thing, with what we get for our products.

The system would be precisely the same, only carried to a ridiculous extreme.

The day will come, sooner or later, when people will wonder at the necessity of taking all this trouble to expose the folly of a system, so childish and absurd, and yet so often enforced at the point of the bayonet. 160

[End of the digression upon the balance of trade.]