frequently impede and restrict the trade between neighbouring nations, which would otherwise be carried on with such great and reciprocal advantage! But we shall reserve till our next interview the observations we have to make on foreign trade. CONVERSATION XIX. ON FOREIGN TRADE. འ་ ADVANTAGES OF FOREIGN TRADE. IT EMPLOYS THE SURPLUS OF CAPITAL, AND DISPOSES OF A EFFECTS OF RESTRICTIONS ON FOREIGN TRADE. 344 2 CAROLINE. AT our last interview, Mrs. B., you were regretting that any restraint should be imposed on our trade with foreign countries; yet I cannot help thinking that every measure tending to discourage foreign commerce, and promote our own industry, would be extremely useful. MRS. B. You would find it difficult to accomplish both those objects; for in order to encourage our own industry we must facilitate the means of selling the produce of our manufactures, and extend their market as much as possible. On the other hand, if we prohibit exportation, we limit the production of our manufactures to the supply which can be consumed at home. If the woollen manufacturers of Leeds, after having supplied the whole demand of England for broad cloths, have any capital left, they will use it in the preparation of woollen goods for exportation. CAROLINE. Why not rather employ it in the fabrication of other commodities which may be consumed at home? MRS. B. If there were a deficiency of capital in any other branch of industry at home, the redundancy would naturally be drawn to that branch; but if all the trade, that is, all the exchanges that could be made at home, have been made, we send the residue of our commodities to foreign markets for sale. CAROLINE. Yet it appears a great hardship on the poor to send goods abroad, which so many of them are in want of at home. MRS. B. The poor are first supplied with whatever they can afford to purchase: and without the means of purchase you must recollect that there can be no effectual demand. It is not to be expected that farmers and manufacturers should labour for them merely from charitable motives, and were they so disposed, they would not long possess the means of continuing their benevolence. It would be very wrong, therefore, to consider this surplus produce as taken from the poor; for it would not have been produced had there been no demand for it in foreign countries. CAROLINE. That is very true. In all employment of capital men labour with a view to profit; they work, therefore, only for those who will pay them the value of their produce. And it is easy to conceive that those who have no further want of English commodities may yet wish to procure foreign goods. The English merchant will therefore say, "Since there is no more demand for the goods I deal in, I will export the remainder, which will be purchased abroad, and I shall get foreign commodities in exchange;— though my countrymen do not require any more cotton goods, I know that they will purchase wines, coffee, sugar, &c." MRS. B. Very well. Let us examine now what would be the effect of confining the employment of 1 commercial capital to the home trade. If the inhabitants of the West-Indian islands, Jamaica, for instance, were to prohibit the exportation of coffee and sugar, and the planters were obliged to trade only within the island, the consequence would be, that the demand for coffee and sugar would be very insignificant, and that an inconsiderable part only of the capital of the colony would find employment. The same effect would take place in Russia, if foreign merchants were not allowed to purchase the hemp and flax so abundantly produced in that country. If in Peru and Chili the exportation of indigo, bark, and other drugs was prohibited, the Europeans, who purchase them, would not be the only sufferers; the Americans would be impoverished for want of employment for their capital. CAROLINE. All this is very clear, I admit. But what security have we that merchants will not employ their capital in foreign commerce, before the demand for it in the home trade is fully supplied? MRS. B. That security is derived from the natural distri bution of capital according to the rate of profit. If foreign commerce employed more capital than the |