To that class belong more than three-fourths of all nationalproperty-namely, immovable properties and fixed plant andinstruments.However large the landed property of an individual maybe, he cannot send his fields and meadows to town in order toobtain money or goods for them.He can, indeed, raise mortgages onsuch property, but he must first find a lender on them; and thefurther from his estate that such an individual resides, thesmaller will be the probability of the borrower's requirementsbeing satisfied.
Next after property thus fixed to the locality, the greatestpart of agricultural products (excepting colonial produce and a fewless valuable articles) have in regard to international intercoursethe least facility for exchange.The greatest part of these values,as e.g.building materials and wood for fuel, bread stuffs, &c.,fruit, and cattle, can only be sold within a reasonable distance ofthe place where they are produced, and if a great surplus of themexists they have to be warehoused in order to become realisable.Sofar as such products can be exported to foreign countries theirsale again is limited to certain manufacturing and commercialnations, and in these also their sale is generally limited byduties on importation and is affected by the larger or smallerproduce of the purchasing nation's own harvests.The inlandterritories of North America might be completely overstocked withcattle and products, but it would not be possible for them toprocure through exportation of this excess considerable amounts ofthe precious metals from South America, from England, or from theEuropean continent.The valuable manufactured goods of common use,on the other hand, possess incomparably greater facilities forexchange.They find at ordinary times a sale in all open markets ofthe world; and at extraordinary crises they also find a sale (atlower prices) in those markets whose protective tariffs arecalculated to operate adversely merely in ordinary times.The powerof exchange of these articles clearly approaches most nearly tothat of the precious metals, and the experience of England showsthat if in consequence of deficient harvests money crises occur,the increased exportation of fabrics, and of foreign stocks andState paper, quickly rectifies the balance.The latter, the foreignstocks and State paper, which are evidently the results of formerfavourable balances of exchange caused by exportations of fabrics,constitute in the hands of the nation which is rich inmanufacturing industry so many bills which can be drawn on theagricultural nation, which at the time of an extraordinary demandfor the precious metals are indeed drawn with loss to theindividual owner of them (like the manufactured goods at the timeof money crises), but, nevertheless, with immense advantage to themaintenance of the economical conditions of that nation which isrich in manufacturing industry.
However much the doctrine of the balance of trade may have beenscorned by the popular school, observations like those abovedescribed encourage us nevertheless to express the opinion thatbetween large and independent nations something of the nature of abalance of trade must exist; that it is dangerous for great nationsto remain for a long period at very considerable disadvantage inrespect of this balance, and that a considerable and lasting effluxof the precious metals must always be followed as a consequence byimportant revolutions in the system of credit and in the conditionof prices in the interior of the nation.We are far from wishing inthese remarks to revive the doctrine of the balance of trade as itexisted under the so-called 'mercantile system,' and to maintainthat the nation ought to impose obstacles in the way of theexportation of precious metals, or that we must keep a speciallyexact account with each individual nation, or that in the commercebetween great nations a few millions difference between the importsand exports is of great moment.What we deny is merely this: thata great and independent nation, as Adam Smith maintains at theconclusion of his chapter devoted to this subject,(1*) 'maycontinually import every year considerably larger values inproducts and fabrics than it exports; that the quantities ofprecious metals existing in such a nation may decrease considerablyfrom year to year and be replaced by paper circulation in theinterior; moreover, that such a nation may allow its indebtednesstowards another nation continually to increase and expand, and atthe same time nevertheless make progress from year to year inprosperity.
This opinion, expressed by Adam Smith and maintained since thattime by his school, is alone that which we here characterise as onethat has been contradicted a hundred times by experience, as onethat is contrary in the very nature of things to common sense, inone word (to retort upon Adam Smith his own energetic expression)as 'an absurdity.'
