Essays: Moral, Political, and Literary

ESSAY V

Essay_301-350.indd 308 12/27/11 9:04 PM ESSAY v OF THE BALANCE OF TRADE IT is very usual, in nations ignorant of the nature of commerce , to prohibit the exportation of commodities, and to preserve among themselves whatever they think valuable and useful. They do not consider, that, in this prohibition, they act directly contrary to their intention; and that the more is exported of any commodity, the more will be raised at home, of which they themselves will always have the first offer.o It is well known to the learned, that the ancient laws of ATHENS rendered the exportation of figs criminal; that being supposed a species of fruit so excellent in ATTICA, that the ATHENIANS deemed it too delicious for the palate of any foreigner. And in this ridiculous prohibition they were so much in earnest, that informers were thence called sycophants Essay_301-350.indd 309 12/27/11 9:04 PM 309 OF THE BALANCE OF TRADE among them, from two GREEK words, which signify figs and discoverer. I,a There are proofs in many old acts of parliament of the same ignorance in the nature of commerce, particularly in the reign of EDWARD III.2 And to this day, in FRANCE, the exportation of corn is almost always prohibited; in order, as they say, to prevent famines; though it is evident, that nothing contributes more to the frequent famines, which so much distress that fertile country. The same jealous fear, with regard to money, has also prevailed among several nations; and it required both reason and experience to convince any people, that these prohibitions serve to no other purpose than to raise the exchange against them, and produce a still greater exportation. 3 These errors, one may say, are gross and palpable: But there still prevails, even in nations well acquainted with commerce , a strong jealousy with regard to the balance of trade, and a fear, that all their gold and silver may be leaving them. This seems to me, almost in every case, a groundless apprehension ; and I should as soon dread, that all our springs and rivers should be exhausted, as that money should abandon a kingdom where there are people and industry. Let us carefully 1PLUT. De Curiositate. [Plutarch, Moralia, "On Curiosity," sec. 16.] 2[Edward III was king of England from 1327 to 1377.] 3[In this essay and the next, Hume combats the suspicious fear or "jealousy " of free trade that mercantilism had helped to promote. This essay seeks to allay the fear that an imbalance of imports over exports will deplete a nation's supply of gold and silver money. Hume develops a "general theory" according to which money bears a regular proportion to the industry and commodities of each nation. In the natural course of things, this level will be preserved; and a nation's attempts to hoard up a supply of money that exceeds this natural level, by trade barriers and restrictions on the circulation of money, are ineffectual and, at worst, destructive. Hume does concede at the end of this essay that protective tariffs may sometimes be beneficial, but generally his writings condemn domestic market restrictions. See Rotwein, David Hume: Writings onEconomics , pp. lxxii-lxxxi.] Essay_301-350.indd 310 12/27/11 9:04 PM 310 ESSAY V preserve these latter advantages; and we need never be apprehensive of losing the former. It is easy to observe, that all calculations concerning the balance of trade are founded on very uncertain facts and suppositions . The custom-house books are allowed to be an insufficient ground of reasoning; nor is the rate of exchange much better; unless we consider it with all nations, and know also the proportions of the several sums remitted; which one may safely pronounce impossible. Every man, who has ever reasoned on this subject, has always proved his theory, whatever it was, by facts and calculations, and by an enumeration of all the commodities sent to all foreign kingdoms. The writings of Mr. GEE struck the nation with an universal panic, when they saw it plainly demonstrated, by a detail of particulars, that the balance was against them for so considerable a sum as must leave them without a single shilling in fiveor six years.4 But luckily, twenty years have since elapsed, with an expensive foreign war; yet is it commonly supposed, that money is still more plentiful...