(7) That this equality can less easily be maintained inproportion as foreign manufactured goods can successfully competein the home manufacturing markets, and in proportion as theexportation of native agricultural products is limited by foreigncommercial restrictions; finally, that this equality can lesseasily be disturbed in proportion as the nation is independent offoreign nations for its supply of manufactured goods, and for thedisposal of its own produce.
These doctrines are also confirmed by the experience of Russia.
We may remember to what convulsions public credit in the RussianEmpire was subjected as long as the market there was open to theoverwhelming consignments of English manufactured goods, and thatsince the introduction of the tariff of 1821 no similar convulsionhas occurred in Russia.
The popular theory has evidently fallen into the oppositeextreme to the errors of the so-called mercantile system.It wouldbe of course false if we maintained that the wealth of nationsconsisted merely in precious metals; that a nation can only becomewealthy if it exports more goods than it imports, and if hence thebalance is discharged by the importation of precious metals.But itis also erroneous if the popular theory maintains, under theexisting conditions of the world, that it does not signify how muchor how little precious metals circulate in a nation; that the fearof possessing too little of the precious metals is a frivolous one,that we ought rather to further their exportation than favour theirimportation, &c.&c.This manner of reasoning would only be correctin case we could consider all nations and countries as united underone and the same system of law; if no commercial restrictions ofany kind against the exportation of our products existed in thosenations for whose manufactured goods we can only repay with theproductions of our agriculture; if the changes wrought by war andpeace caused no fluctuations in production and consumption, inprices, and on the money market; if the great credit institutionsdo not seek to extend their influence over other nations for thespecial interest of the nation to which they belong.But as long asseparate national interests exist, a wise State policy will adviseevery great nation to guard itself by its commercial system againstextraordinary money fluctuations and revolutions in prices whichoverturn its whole internal economy, and it will attain thispurpose only by placing its internal manufacturing production in aposition of proper equality with its internal agriculturalproduction and its imports with its exports.
The prevailing theory has evidently not sufficientlydiscriminated between the mere possession of the precious metalsand the power of disposition of the precious metals ininternational interchange.Even in private exchange, the necessityof this distinction is clearly evident.No one wishes to keep moneyby him, everyone tries to remove it from the house as soon aspossible; but everybody at the same time seeks to be able todispose at any time of the sums which he requires.The indifferencein regard to the actual possession of ready money is manifestedeverywhere in proportion to wealth.The richer the individual is,the less he cares about the actual possession of ready money ifonly he is able at any hour to dispose of the ready cash lying inthe safes of other individuals; the poorer, however, the individualis, and the smaller his power of disposing of the ready money lyingin other people's hands, the more anxiously must he take care tohave in readiness what is required.The same is the case withnations which are rich in industry or poor in industry.If Englandcares but little as a rule about how great or how small a quantityof gold or silver bars are exported out of the country, she isperfectly well aware that an extraordinary export of preciousmetals occasions on the one hand a rise in the value of money andin discount rates, on the other hand a fall in the prices offabrics, and that she can regain through larger exportation offabrics or through realisation of foreign stocks and State paperspeedy possession of the ready money required for her trade.
England resembles the rich banker who, without having a thaler inhis pocket, can draw for any sum he pleases on neighbouring or moredistant business connections.If, however, in the case of merelyagricultural nations extraordinary exports of coin take place, theyare not in the same favourable position, because their means ofprocuring the ready money they require are very limited, not merelyon account of the small value in exchange of their products andagricultural values, but also on account of the hindrances whichforeign laws put in the way of their exportation.They resemble thepoor man who can draw no bills on his business friends, but who isdrawn upon if the rich man gets into any difficulty; who can,therefore, not even call what is actually in his hands, his own.
A nation obtains the power of disposition of the amount ofready money which is always required for its internal trade, mainlythrough the possession or the production of those goods and valueswhose facility of exchange approaches most nearly to that of theprecious metals.
The diversity of this property of the facility of exchange inrespect to the various articles of commerce and of property, hasbeen as little taken into consideration by the popular school ofeconomists in judging of international commerce, as the power ofdisposition of the precious metals.If we consider in this respectthe various articles of value existing in private interchange, weperceive that many of them are fixed in such a way that their valueis exchangeable only on the spot where they are, and that eventhere their exchange is attended with great costs and difficulties.