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These are two essays excerpted from a larger work in which David Hume covers much ground discussing everything from the arts, to philosophy, to practical politics, religion, and economics. The essays were published in several parts throughout the 1740s and 1750s, culminating in a 1758 edition that first grouped the essays together under their current title, Essays, Moral, Political, Literary (Original title: Political Discourses), with Hume continuing to add essays until he died in 1776. Unlike A Treatise of Human Nature, these essays were very popular with Hume’s contemporary readers.
The two pieces chosen here are from his political economic writings. Hume is responding to a philosophy common in the time of empire—mercantilism. This economic policy was used by France, Portugal, Britain, and as Alexander Hamilton’s “Report on Manufactures” shows (Document 14), also the United States. Thomas Mun describes the philosophy in detail, but the idea was that countries should export more than they import to obtain an overbalance of trade. In talking about the jealousy of trade and the balance of trade, Hume discusses what we today call “economic nationalism.”
These essays, in particular “Of the Balance of Trade” and two others, “Of Interest” and “Of Money,” were influential for Adam Smith (Documents 9-12), and he referred to them in lectures to students on jurisprudence. Benjamin Franklin called Hume’s essay “Of the Jealousy of Trade [Commerce]” “excellent,” and Hume told Franklin that he was America’s “first philosopher” and “first great man of letters.” (see Hanley 2002 in recommended readings).
Source: David Hume, “Of the Balance of Trade” and “Of the Jealousy of Trade,” Essays Moral, Political, Literary, edited and with a Foreword, Notes, and Glossary by Eugene F. Miller, with an appendix of variant readings from the  1889 edition by T.H. Green and T.H. Grose, revised edition (Indianapolis: Liberty Fund 1987). 5/27/2020. <https://oll.libertyfund.org/titles/704>
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.
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 among them, from two Greek words, which signify figs and discoverer. 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. 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.
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 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…
Nothing can be more entertaining on this head than Dr. Swift; an author so quick in discerning the mistakes and absurdities of others. He says, in his short view of the state of Ireland, that the whole cash of that kingdom formerly amounted but to 500,000 l.; that out of this the Irish remitted every year a neat million to England, and had scarcely any other source from which they could compensate themselves, and little other foreign trade than the importation of French wines, for which they paid ready money. The consequence of this situation, which must be owned to be disadvantageous, was, that, in a course of three years, the current money of Ireland, from 500,000 l. was reduced to less than two. And at present, I suppose, in a course of 30 years it is absolutely nothing. Yet I know not how, that opinion of the advance of riches in Ireland, which gave the Doctor so much indignation, seems still to continue, and gain ground with everybody.
In short, this apprehension of the wrong balance of trade, appears of such a nature, that it discovers itself, wherever one is out of humor with the ministry, or is in low spirits; and as it can never be refuted by a particular detail of all the exports, which counterbalance the imports, it may here be proper to form a general argument, that may prove the impossibility of this event, as long as we preserve our people and our industry.
Suppose four-fifths of all the money in Great Britain to be annihilated in one night, and the nation reduced to the same condition, with regard to specie, as in the reigns of the Harrys and Edwards, what would be the consequence? Must not the price of all labor and commodities sink in proportion, and everything be sold as cheap as they were in those ages? What nation could then dispute with us in any foreign market, or pretend to navigate or to sell manufactures at the same price, which to us would afford sufficient profit? In how little time, therefore, must this bring back the money which we had lost, and raise us to the level of all the neighboring nations? Where, after we have arrived, we immediately lose the advantage of the cheapness of labor and commodities; and the farther flowing in of money is stopped by our fulness and repletion.
Again, suppose, that all the money of Great Britain were multiplied fivefold in a night, must not the contrary effect follow? Must not all labor and commodities rise to such an exorbitant height, that no neighboring nations could afford to buy from us; while their commodities, on the other hand, became comparatively so cheap, that, in spite of all the laws which could be formed, they would be run in upon us, and our money flow out; till we fall to a level with foreigners, and lose that great superiority of riches, which had laid us under such disadvantages?
Now, it is evident, that the same causes, which would correct these exorbitant inequalities, were they to happen miraculously, must prevent their happening in the common course of nature, and must forever, in all neighboring nations, preserve money nearly proportionable to the art and industry of each nation. All water, wherever it communicates, remains always at a level. Ask naturalists the reason; they tell you, that, were it to be raised in any one place, the superior gravity of that part not being balanced, must depress it, till it meet a counterpoise; and that the same cause, which redresses the inequality when it happens, must forever prevent it, without some violent external operation. . . .
Can one imagine, that it had ever been possible, by any laws, or even by any art or industry, to have kept all the money in Spain, which the galleons have brought from the Indies? Or that all commodities could be sold in France for a tenth of the price which they would yield on the other side of the Pyrenees, without finding their way thither, and draining from that immense treasure? What other reason, indeed, is there, why all nations, at present, gain in their trade with Spain and Portugal; but because it is impossible to heap up money, more than any fluid, beyond its proper level? The sovereigns of these countries have shown, that they wanted not inclination to keep their gold and silver to themselves, had it been in any degree practicable.
But as any body of water may be raised above the level of the surrounding element, if the former has no communication with the latter; so in money, if the communication be cut off, by any material or physical impediment, (for all laws alone are ineffectual) there may, in such a case, be a very great inequality of money. Thus the immense distance of China, together with the monopolies of our India companies, obstructing the communication, preserve in Europe the gold and silver, especially the latter, in much greater plenty than they are found in that kingdom. But, notwithstanding this great obstruction, the force of the causes abovementioned is still evident. The skill and ingenuity of Europe in general surpasses perhaps that of China, with regard to manual arts and manufactures; yet are we never able to trade thither without great disadvantage. And were it not for the continual recruits, which we receive from America, money would soon sink in Europe, and rise in China, till it came nearly to a level in both places. Nor can any reasonable man doubt, but that industrious nation, were they as near us as Poland or Barbary, would drain us of the overplus of our specie, and draw to themselves a larger share of the West Indian treasures. We need not have recourse to a physical attraction, in order to explain the necessity of this operation. There is a moral attraction, arising from the interests and passions of men, which is full as potent and infallible.
How is the balance kept in the provinces of every kingdom among themselves, but by the force of this principle, which makes it impossible for money to lose its level, and either to rise or sink beyond the proportion of the labor and commodities which are in each province?… It was a common apprehension in England, before the union, as we learn from L’abbe du Bos, that Scotland would soon drain them of their treasure, were an open trade allowed; and on the other side the Tweed a contrary apprehension prevailed: With what justice in both, time has shown.
What happens in small portions of mankind, must take place in greater. The provinces of the Roman empire, no doubt, kept their balance with each other, and with Italy, independent of the legislature; as much as the several counties of Great Britain, or the several parishes of each county. And any man who travels over Europe at this day, may see, by the prices of commodities, that money, in spite of the absurd jealousy of princes and states, has brought itself nearly to a level; and that the difference between one kingdom and another is not greater in this respect, than it is often between different provinces of the same kingdom. Men naturally flock to capital cities, sea-ports, and navigable rivers. There we find more men, more industry, more commodities, and consequently more money; but still the latter difference holds proportion with the former, and the level is preserved.
Our jealousy and our hatred of France are without bounds; and the former sentiment, at least, must be acknowledged reasonable and well-grounded. These passions have occasioned innumerable barriers and obstructions upon commerce, where we are accused of being commonly the aggressors. But what have we gained by the bargain? We lost the French market for our woolen manufactures, and transferred the commerce of wine to Spain and Portugal, where we buy worse liquor at a higher price. There are few Englishmen who would not think their country absolutely ruined, were French wines sold in England so cheap and in such abundance as to supplant, in some measure, all ale, and home-brewed liquors: But would we lay aside prejudice, it would not be difficult to prove, that nothing could be more innocent, perhaps advantageous. Each new acre of vineyard planted in France, in order to supply England with wine, would make it requisite for the French to take the produce of an English acre, sown in wheat or barley, in order to subsist themselves; and it is evident, that we should thereby get command of the better commodity.
. . .
From these principles we may learn what judgment we ought to form of those numberless bars, obstructions, and imposts, which all nations of Europe, and none more than England, have put upon trade; from an exorbitant desire of amassing money, which never will heap up beyond its level, while it circulates; or from an ill-grounded apprehension of losing their specie, which never will sink below it. Could anything scatter our riches, it would be such impolitic contrivances. But this general ill effect, however, results from them, that they deprive neighboring nations of that free communication and exchange which the Author of the world has intended, by giving them soils, climates, and geniuses, so different from each other.
Our modern politics embrace the only method of banishing money, the using of paper-credit; they reject the only method of amassing it, the practice of hoarding; and they adopt a hundred contrivances, which serve to no purpose but to check industry, and rob ourselves and our neighbors of the common benefits of art and nature.
All taxes, however, upon foreign commodities, are not to be regarded as prejudicial or useless, but those only which are founded on the jealousy above-mentioned. A tax on German linen encourages home manufactures, and thereby multiplies our people and industry. A tax on brandy increases the sale of rum, and supports our southern colonies. And as it is necessary, that imposts should be levied, for the support of government, it may be thought more convenient to lay them on foreign commodities, which can easily be intercepted at the port, and subjected to the impost. We ought, however, always to remember the maxim of Dr. Swift, That, in the arithmetic of the customs, two and two make not four, but often make only one. It can scarcely be doubted, but if the duties on wine were lowered to a third, they would yield much more to the government than at present: Our people might thereby afford to drink commonly a better and more wholesome liquor; and no prejudice would ensue to the balance of trade, of which we are so jealous. The manufacture of ale beyond the agriculture is but inconsiderable, and gives employment to few hands. The transport of wine and corn would not be much inferior.
But are there not frequent instances, you will say, of states and kingdoms, which were formerly rich and opulent, and are now poor and beggarly? Has not the money left them, with which they formerly abounded? I answer, If they lose their trade, industry, and people, they cannot expect to keep their gold and silver: For these precious metals will hold proportion to the former advantages. When Lisbon and Amsterdam got the East-India trade from Venice and Genoa, they also got the profits and money which arose from it. Where the seat of government is transferred, where expensive armies are maintained at a distance, where great funds are possessed by foreigners; there naturally follows from these causes a diminution of the specie. But these, we may observe, are violent and forcible methods of carrying away money, and are in time commonly attended with the transport of people and industry. But where these remain, and the drain is not continued, the money always finds its way back again, by a hundred canals, of which we have no notion or suspicion. . . .
In short, a government has great reason to preserve with care its people and its manufactures. Its money, it may safely trust to the course of human affairs, without fear or jealousy. Or if it ever give attention to this latter circumstance, it ought only to be so far as it affects the former.
ESSAY VI: OF THE JEALOUSY OF TRADE
Having endeavored to remove one species of ill-founded jealousy, which is so prevalent among commercial nations, it may not be amiss to mention another, which seems equally groundless. Nothing is more usual, among states which have made some advances in commerce, than to look on the progress of their neighbors with a suspicious eye, to consider all trading states as their rivals, and to suppose that it is impossible for any of them to flourish, but at their expense. In opposition to this narrow and malignant opinion, I will venture to assert, that the increase of riches and commerce in any one nation, instead of hurting, commonly promotes the riches and commerce of all its neighbors; and that a state can scarcely carry its trade and industry very far, where all the surrounding states are buried in ignorance, sloth, and barbarism.
It is obvious, that the domestic industry of a people cannot be hurt by the greatest prosperity of their neighbors; and as this branch of commerce is undoubtedly the most important in any extensive kingdom, we are so far removed from all reason of jealousy. But I go farther, and observe, that where an open communication is preserved among nations, it is impossible but the domestic industry of every one must receive an increase from the improvements of the others. Compare the situation of Great Britain at present, with what it was two centuries ago. All the arts both of agriculture and manufactures were then extremely rude and imperfect. Every improvement, which we have since made, has arisen from our imitation of foreigners; and we ought so far to esteem it happy, that they had previously made advances in arts and ingenuity. But this intercourse is still upheld to our great advantage: Notwithstanding the advanced state of our manufactures, we daily adopt, in every art, the inventions and improvements of our neighbors. The commodity is first imported from abroad, to our great discontent, while we imagine that it drains us of our money: Afterwards, the art itself is gradually imported, to our visible advantage: Yet we continue still to repine, that our neighbors should possess any art, industry, and invention; forgetting that, had they not first instructed us, we should have been at present barbarians; and did they not still continue their instructions, the arts must fall into a state of languor, and lose that emulation and novelty, which contribute so much to their advancement.
The increase of domestic industry lays the foundation of foreign commerce. Where a great number of commodities are raised and perfected for the home-market, there will always be found some which can be exported with advantage. But if our neighbors have no art or cultivation, they cannot take them; because they will have nothing to give in exchange. In this respect, states are in the same condition as individuals. A single man can scarcely be industrious, where all his fellow-citizens are idle. The riches of the several members of a community contribute to increase my riches, whatever profession I may follow. They consume the produce of my industry, and afford me the produce of theirs in return.
Nor needs any state entertain apprehensions, that their neighbors will improve to such a degree in every art and manufacture, as to have no demand from them. Nature, by giving a diversity of geniuses, climates, and soils, to different nations, has secured their mutual intercourse and commerce, as long as they all remain industrious and civilized. Nay, the more the arts increase in any state, the more will be its demands from its industrious neighbors. The inhabitants, having become opulent and skillful, desire to have every commodity in the utmost perfection; and as they have plenty of commodities to give in exchange, they make large importations from every foreign country. The industry of the nations, from whom they import, receives encouragement: Their own is also increased, by the sale of the commodities which they give in exchange.
But what if a nation has any staple commodity, such as the woolen manufacture is in England? Must not the interfering of our neighbors in that manufacture be a loss to us? I answer, that, when any commodity is denominated the staple of a kingdom, it is supposed that this kingdom has some peculiar and natural advantages for raising the commodity; and if, notwithstanding these advantages, they lose such a manufacture, they ought to blame their own idleness, or bad government, not the industry of their neighbors. It ought also to be considered, that, by the increase of industry among the neighboring nations, the consumption of every particular species of commodity is also increased; and though foreign manufactures interfere with them in the market, the demand for their product may still continue, or even increase. And should it diminish, ought the consequence to be esteemed so fatal? If the spirit of industry be preserved, it may easily be diverted from one branch to another; and the manufacturers of wool, for instance, be employed in linen, silk, iron, or any other commodities, for which there appears to be a demand. We need not apprehend, that all the objects of industry will be exhausted, or that our manufacturers, while they remain on an equal footing with those of our neighbors, will be in danger of wanting employment. The emulation among rival nations serves rather to keep industry alive in all of them: And any people is happier who possess a variety of manufactures, than if they enjoyed one single great manufacture, in which they are all employed. Their situation is less precarious; and they will feel less sensibly those revolutions and uncertainties, to which every particular branch of commerce will always be exposed.
The only commercial state, that ought to dread the improvements and industry of their neighbors, is such a one as the Dutch, who enjoying no extent of land, nor possessing any number of native commodities, flourish only by their being the brokers, and factors, and carriers of others. Such a people may naturally apprehend, that, as soon as the neighboring states come to know and pursue their interest, they will take into their own hands the management of their affairs, and deprive their brokers of that profit, which they formerly reaped from it. But though this consequence may naturally be dreaded, it is very long before it takes place; and by art and industry it may be warded off for many generations, if not wholly eluded. The advantage of superior stocks and correspondence is so great, that it is not easily overcome; and as all the transactions increase by the increase of industry in the neighboring states, even a people whose commerce stands on this precarious basis, may at first reap a considerable profit from the flourishing condition of their neighbors. The Dutch, having mortgaged all their revenues, make not such a figure in political transactions as formerly; but their commerce is surely equal to what it was in the middle of the last century, when they were reckoned among the great powers of Europe.
Were our narrow and malignant politics to meet with success, we should reduce all our neighboring nations to the same state of sloth and ignorance that prevails in Morocco and the coast of Barbary. But what would be the consequence? They could send us no commodities: They could take none from us: Our domestic commerce itself would languish for want of emulation, example, and instruction: And we ourselves should soon fall into the same abject condition, to which we had reduced them. I shall therefore venture to acknowledge, that, not only as a man, but as a British subject, I pray for the flourishing commerce of Germany, Spain, Italy, and even France itself. I am at least certain, that Great Britain, and all those nations, would flourish more, did their sovereigns and ministers adopt such enlarged and benevolent sentiments towards each other.
- 1. Hume refers here to Jonathan Swift (1667-1745), an Irish satirist who is famous for writing Gulliver’s Travels.
- 2. Jean-Baptiste DuBos (1670-1742) was a French author and a member of the French Academy who interacted with many French Enlightenment thinkers such as Voltaire, Montesquieu (Document 6), and Jean-Jacques Rousseau (Document 7).
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