In the sixth chapter of his fourth book Adam Smith says, thatinasmuch as under the Methuen Treaty the wines of Portugal wereadmitted upon paying only two-thirds of the duty which was paid onthose of other nations, a decided advantage was conceded to thePortuguese; whereas the English, being bound to pay quite as higha duty in Portugal on their exports of cloth as any other nation,had, therefore, no special privilege granted to them by thePortuguese.But had not the Portuguese been previously importing alarge proportion of the foreign goods which they required fromFrance, Holland, Germany, and Belgium? Did not the Englishthenceforth exclusively command the Portuguese market for amanufactured product, the raw material for which they possessed intheir own country? Had they not discovered a method of reducing thePortuguese customs duty by one-half? Did not the course of exchangegive the English consumer of Portuguese wines a profit of fifteenper cent? Did not the consumption of French and German wines inEngland almost entirely cease? Did not the Portuguese gold andsilver supply the English with the means of bringing vastquantities of goods from India and of deluging the continent ofEurope with them? Were not the Portuguese cloth manufactoriestotally ruined, to the advantage of the English? Did not all thePortuguese colonies, especially the rich one of Brazil, by thismeans become practically English colonies? Certainly this treatyconferred a privilege upon Portugal, but only in name; whereas itconferred a privilege upon the English in its actual operation andeffects.A like tendency underlies all subsequent treaties ofcommerce negotiated by the English.By profession they were alwayscosmopolites and philanthropists, while in their aims andendeavours they were always monopolists.
According to Adam Smith's second argument, the English gainedno particular advantages from this treaty, because they were to agreat extent obliged to send away to other countries the moneywhich they received from the Portuguese for their cloth, and withit to purchase goods there; whereas it would have been far moreprofitable for them to make a direct exchange of their clothsagainst such commodities as they might need, and thus by oneexchange accomplish that which by means of the trade with Portugalthey could only effect by two exchanges.Really, but for the veryhigh opinion which we entertain of the character and the acumen ofthis celebrated savant, we should in the face of this argument bedriven to despair either of his candour or of his clearness ofperception.To avoid doing either, nothing is left for us but tobewail the weakness of human nature, to which Adam Smith has paida rich tribute in the shape of these paradoxical, almost laughable,arguments among other instances; being evidently dazzled by thesplendour of the task, so noble in itself, of pleading ajustification for absolute freedom of trade.
In the argument just named there is no more sound sense orlogic than in the proposition that a baker, because he sells breadto his customers for money, and with that money buys flour from themiller, does an unprofitable trade, because if he had exchanged hisbread directly for flour, he would have effected his purpose by asingle act of exchange instead of by two such acts.It needs surelyno great amount of sagacity to answer such an allegation by hintingthat the miller might possibly not want so much bread as the bakercould supply him with, that the miller might perhaps understand andundertake baking himself, and that, therefore, the baker's businesscould not go on at all without these two acts of exchange.Such ineffect were the commercial conditions of Portugal and England atthe date of the treaty.Portugal received gold and silver fromSouth America in exchange for manufactured goods which she thenexported to those regions; but too indolent or too shiftless tomanufacture these goods herself, she bought them of the English inexchange for the precious metals.The latter employed the preciousmetals, in so far as they did not require them for the circulationat home, in exportation to India or China, and bought goods therewhich they sold again on the European continent, whence theybrought home agricultural produce, raw material, or precious metalsonce again.
We now ask, in the name of common sense, who would havepurchased of the English all those cloths which they exported toPortugal, if the Portuguese had chosen either to make them at homeor procure them from other countries? The English could not in thatcase have sold them to Portugal, and to other nations they werealready selling as much as those nations would take.Consequentlythe English would have manufactured so much less cloth than theyhad been disposing of to the Portuguese; they would have exportedso much less specie to India than they had obtained from Portugal.
They would have brought to Europe and sold on the Continent justthat much less of East Indian merchandise, and consequently wouldhave taken home with them that much less of raw material.
Quite as untenable is Adam Smith's third argument that, ifPortuguese money had not flowed in upon them, the English mighthave supplied their requirements of this article in other ways.