Thecaseinwhichitmaysometimesbeamatterofdeliberationhowfaritispropertocontinuethefreeimportationofcertainforeigngoodsis，whensomeforeignnationrestrainsbyhighdutiesorprohibitionstheimportationofsomeofourmanufacturesintotheircountry。Revengeinthiscasenaturallydictatesretaliation，andthatweshouldimposethelikedutiesandprohibitionsupontheimportationofsomeoralloftheirmanufacturesintoours。Nations，accordingly，seldomfailtoretaliateinthismanner。TheFrenchhavebeenparticularlyforwardtofavourtheirownmanufacturesbyrestrainingtheimportationofsuchforeigngoodsascouldcomeintocompetitionwiththem。InthisconsistedagreatpartofthepolicyofMr。Colbert，who，notwithstandinghisgreatabilities，seemsinthiscasetohavebeenimposeduponbythesophistryofmerchantsandmanufacturers，whoarealwaysdemandingamonopolyagainsttheircountrymen。ItisatpresenttheopinionofthemostintelligentmeninFrancethathisoperationsofthiskindhavenotbeenbeneficialtohiscountry。Thatminister，bythetariffof1667，imposedveryhighdutiesuponagreatnumberofforeignmanufactures。UponhisrefusingtomoderatetheminfavouroftheDutch，theyin1671prohibitedtheimportationofthewines，brandies，andmanufacturesofFrance。Thewarof1672
　　seemstohavebeeninpartoccasionedbythiscommercialdispute。
　　ThepeaceofNimeguenputanendtoitin1678bymoderatingsomeofthosedutiesinfavouroftheDutch，whoinconsequencetookofftheirprohibition。ItwasaboutthesametimethattheFrenchandEnglishbeganmutuallytooppresseachother’sindustrybythelikedutiesandprohibitions，ofwhichtheFrench，however，seemtohavesetthefirstexample。Thespiritofhostilitywhichhassubsistedbetweenthetwonationseversincehashithertohinderedthemfrombeingmoderatedoneitherside。In1697theEnglishprohibitedtheimportationofbonelace，themanufactureofFlanders。Thegovernmentofthatcountry，atthattimeunderthedominionofSpain，prohibitedinreturntheimportationofEnglishwoollens。In1700，theprohibitionofimportingbonelaceintoEnglandwastakenoffuponconditionthattheimportanceofEnglishwoollensintoFlandersshouldbeputonthesamefootingasbefore。
　　Theremaybegoodpolicyinretaliationsofthiskind，whenthereisaprobabilitythattheywillprocuretherepealofthehighdutiesorprohibitionscomplainedof。Therecoveryofagreatforeignmarketwillgenerallymorethancompensatethetransitoryinconveniencyofpayingdearerduringashorttimeforsomesortsofgoods。Tojudgewhethersuchretaliationsarelikelytoproducesuchaneffectdoesnot，perhaps，belongsomuchtothescienceofalegislator，whosedeliberationsoughttobegovernedbygeneralprincipleswhicharealwaysthesame，astotheskillofthatinsidiousandcraftyanimal，vulgarlycalledastatesmanorpolitician，whosecouncilsaredirectedbythemomentaryfluctuationsofaffairs。Whenthereisnoprobabilitythatanysuchrepealcanbeprocured，itseemsabadmethodofcompensatingtheinjurydonetocertainclassesofourpeopletodoanotherinjuryourselves，notonlytothoseclasses，buttoalmostalltheotherclassesofthem。Whenourneighboursprohibitsomemanufactureofours，wegenerallyprohibit，notonlythesame，forthatalonewouldseldomaffectthemconsiderably，butsomeothermanufactureoftheirs。Thismaynodoubtgiveencouragementtosomeparticularclassofworkmenamongourselves，andbyexcludingsomeoftheirrivals，mayenablethemtoraisetheirpriceinthehomemarket。Thoseworkmen，however，whosufferedbyourneighbours’prohibitionwillnotbebenefitedbyours。Onthecontrary，theyandalmostalltheotherclassesofourcitizenswilltherebybeobligedtopaydearerthanbeforeforcertaingoods。Everysuchlaw，therefore，imposesarealtaxuponthewholecountry，notinfavourofthatparticularclassofworkmenwhowereinjuredbyourneighbours’prohibition，butofsomeotherclass。
　　Thecaseinwhichitmaysometimesbeamatterofdeliberation，howfar，orinwhatmanner，itispropertorestorethefreeimportationofforeigngoods，afterithasbeenforsometimeinterrupted，is，whenparticularmanufactures，bymeansofhighdutiesorprohibitionsuponallforeigngoodswhichcancomeintocompetitionwiththem，havebeensofarextendedastoemployagreatmultitudeofhands。Humanitymayinthiscaserequirethatthefreedomoftradeshouldberestoredonlybyslowgradations，andwithagooddealofreserveandcircumspection。
　　Werethosehighdutiesandprohibitionstakenawayallatonce，cheaperforeigngoodsofthesamekindmightbepouredsofastintothehomemarketastodepriveallatoncemanythousandsofourpeopleoftheirordinaryemploymentandmeansofsubsistence。
　　Thedisorderwhichthiswouldoccasionmightnodoubtbeveryconsiderable。Itwouldinallprobability，however，bemuchlessthaniscommonlyimagined，forthetwofollowingreasons:—
　　First，allthosemanufactures，ofwhichanypartiscommonlyexportedtootherEuropeancountrieswithoutabounty，couldbeverylittleaffectedbythefreestimportationofforeigngoods。
　　Suchmanufacturesmustbesoldascheapabroadasanyotherforeigngoodsofthesamequalityandkind，andconsequentlymustbesoldcheaperathome。Theywouldstill，therefore，keeppossessionofthehomemarket，andthoughacapriciousmanoffashionmightsometimespreferforeignwares，merelybecausetheywereforeign，tocheaperandbettergoodsofthesamekindthatweremadeathome，thisfollycould，fromthenatureofthings，extendtosofewthatitcouldmakenosensibleimpressionuponthegeneralemploymentofthepeople。Butagreatpartofallthedifferentbranchesofourwoollenmanufacture，ofourtannedleather，andofourhardware，areannuallyexportedtootherEuropeancountrieswithoutanybounty，andthesearethemanufactureswhichemploythegreatestnumberofhands。Thesilk，perhaps，isthemanufacturewhichwouldsufferthemostbythisfreedomoftrade，andafteritthelinen，thoughthelattermuchlessthantheformer。
　　Secondly，thoughagreatnumberofpeopleshould，bythusrestoringthefreedomoftrade，bethrownallatonceoutoftheirordinaryemploymentandcommonmethodofsubsistence，itwouldbynomeansfollowthattheywouldtherebybedeprivedeitherofemploymentorsubsistence。Bythereductionofthearmyandnavyattheendofthelatewar，morethanahundredthousandsoldiersandseamen，anumberequaltowhatisemployedinthegreatestmanufactures，wereallatoncethrownoutoftheirordinaryemployment;but，thoughtheynodoubtsufferedsomeinconveniency，theywerenottherebydeprivedofallemploymentandsubsistence。Thegreaterpartoftheseamen，itisprobable，graduallybetookthemselvestothemerchant—serviceastheycouldfindoccasion，andinthemeantimeboththeyandthesoldierswereabsorbedinthegreatmassofthepeople，andemployedinagreatvarietyofoccupations。Notonlynogreatconvulsion，butnosensibledisorderarosefromsogreatachangeinthesituationofmorethanahundredthousandmen，allaccustomedtotheuseofarms，andmanyofthemtorapineandplunder。Thenumberofvagrantswasscarceanywheresensiblyincreasedbyit，eventhewagesoflabourwerenotreducedbyitinanyoccupation，sofarasIhavebeenabletolearn，exceptinthatofseameninthemerchantservice。Butifwecomparetogetherthehabitsofasoldierandofanysortofmanufacturer，weshallfindthatthoseofthelatterdonottendsomuchtodisqualifyhimfrombeingemployedinanewtrade，asthoseoftheformerfrombeingemployedinany。Themanufacturerhasalwaysbeenaccustomedtolookforhissubsistencefromhislabouronly:thesoldiertoexpectitfromhispay。Applicationandindustryhavebeenfamiliartotheone;idlenessanddissipationtotheother。
　　Butitissurelymucheasiertochangethedirectionofindustryfromonesortoflabourtoanotherthantoturnidlenessanddissipationtoany。Tothegreaterpartofmanufacturesbesides，ithasalreadybeenobserved，thereareothercollateralmanufacturesofsosimilaranaturethataworkmancaneasilytransferhisindustryfromoneofthemtoanother。Thegreaterpartofsuchworkmentooareoccasionallyemployedincountrylabour。Thestockwhichemployedtheminaparticularmanufacturebeforewillstillremaininthecountrytoemployanequalnumberofpeopleinsomeotherway。Thecapitalofthecountryremainingthesame，thedemandforlabourwilllikewisebethesame，orverynearlythesame，thoughitmaybeexertedindifferentplacesandfordifferentoccupations。Soldiersandseamen，indeed，whendischargedfromtheking’sservice，areatlibertytoexerciseanytrade，withinanytownorplaceofGreatBritainorIreland。Letthesamenaturallibertyofexercisingwhatspeciesofindustrytheyplease，berestoredtoallhisMajesty’ssubjects，inthesamemannerastosoldiersandseamen;thatis，breakdowntheexclusiveprivilegesofcorporations，andrepealtheStatuteofApprenticeship，bothwhicharerealencroachmentsuponnaturalliberty，andaddtothesetherepealoftheLawofSettlements，sothatapoorworkman，whenthrownoutofemploymenteitherinonetradeorinoneplace，mayseekforitinanothertradeorinanotherplacewithoutthefeareitherofaprosecutionorofaremoval，andneitherthepublicnortheindividualswillsuffermuchmorefromtheoccasionaldisbandingsomeparticularclassesofmanufacturersthanfromthatofsoldiers。Ourmanufacturershavenodoubtgreatmeritwiththeircountry，buttheycannothavemorethanthosewhodefenditwiththeirblood，nordeservetobetreatedwithmoredelicacy。
　　Toexpect，indeed，thatthefreedomoftradeshouldeverbeentirelyrestoredinGreatBritainisasabsurdastoexpectthatanOceanaorUtopiashouldeverbeestablishedinit。Notonlytheprejudicesofthepublic，butwhatismuchmoreunconquerable，theprivateinterestsofmanyindividuals，irresistiblyopposeit。Weretheofficersofthearmytoopposewiththesamezealandunanimityanyreductioninthenumbersofforceswithwhichmastermanufacturerssetthemselvesagainsteverylawthatislikelytoincreasethenumberoftheirrivalsinthehomemarket;weretheformertoanimatetheirsoldiersinthesamemannerasthelatterenflametheirworkmentoattackwithviolenceandoutragetheproposersofanysuchregulation，toattempttoreducethearmywouldbeasdangerousasithasnowbecometoattempttodiminishinanyrespectthemonopolywhichourmanufacturershaveobtainedagainstus。Thismonopolyhassomuchincreasedthenumberofsomeparticulartribesofthemthat，likeanovergrownstandingarmy，theyhavebecomeformidabletothegovernment，anduponmanyoccasionsintimidatethelegislature。TheMemberofParliamentwhosupportseveryproposalforstrengtheningthismonopolyissuretoacquirenotonlythereputationofunderstandingtrade，butgreatpopularityandinfluencewithanorderofmenwhosenumbersandwealthrenderthemofgreatimportance。Ifheopposesthem，onthecontrary，andstillmoreifhehasauthorityenoughtobeabletothwartthem，neitherthemostacknowledgedprobity，northehighestrank，northegreatestpublicservicescanprotecthimfromthemostinfamousabuseanddetraction，frompersonalinsults，norsometimesfromrealdanger，arisingfromtheinsolentoutrageoffuriousanddisappointedmonopolists。
　　Theundertakerofagreatmanufacture，who，bythehomemarketsbeingsuddenlylaidopentothecompetitionofforeigners，shouldbeobligedtoabandonhistrade，wouldnodoubtsufferveryconsiderably。Thatpartofhiscapitalwhichhadusuallybeenemployedinpurchasingmaterialsandinpayinghisworkmenmight，withoutmuchdifficulty，perhaps，findanotheremployment。Butthatpartofitwhichwasfixedinworkhouses，andintheinstrumentsoftrade，couldscarcebedisposedofwithoutconsiderableloss。Theequitableregard，therefore，tohisinterestrequiresthatchangesofthiskindshouldneverbeintroducedsuddenly，butslowly，gradually，andafteraverylongwarning。Thelegislature，wereitpossiblethatitsdeliberationscouldbealwaysdirected，notbytheclamorousimportunityofpartialinterests，butbyanextensiveviewofthegeneralgood，oughtuponthisveryaccount，perhaps，tobeparticularlycarefulneithertoestablishanynewmonopoliesofthiskind，nortoextendfurtherthosewhicharealreadyestablished。Everysuchregulationintroducessomedegreeofrealdisorderintotheconstitutionofthestate，whichitwillbedifficultafterwardstocurewithoutoccasioninganotherdisorder。
　　Howfaritmaybepropertoimposetaxesupontheimportationofforeigngoods，inordernottopreventtheirimportationbuttoraisearevenueforgovernment，IshallconsiderhereafterwhenIcometotreatoftaxes。Taxesimposedwithaviewtoprevent，oreventodiminishimportation，areevidentlyasdestructiveoftherevenueofthecustomsasofthefreedomoftrade。
　　CHAPTERIII
　　OftheextraordinaryRestraintsupontheImportationofGoodsofalmostallkindsfromthoseCountrieswithwhichtheBalanceissupposedtobedisadvantageousPARTI
　　OftheUnreasonablenessofthoseRestraintsevenuponthePrinciplesoftheCommercialSystemTOlayextraordinaryrestraintsuponthethoseparticularcountrieswithwhichtheimportationofgoodsofalmostallkindsfrombalanceoftradeissupposedtobedisadvantageous，isthesecondexpedientbywhichthecommercialsystemproposestoincreasethequantityofgoldandsilver。ThusinGreatBritain，Silesialawnsmaybeimportedforhomeconsumptionuponpayingcertainduties。ButFrenchcambricsandlawnsareprohibitedtobeimported，exceptintotheportofLondon，theretobewarehousedforexportation。HigherdutiesareimposeduponthewinesofFrancethanuponthoseofPortugal，orindeedofanyothercountry。Bywhatiscalledtheimpost1692，adutyoffive—and—twentypercentoftherateorvaluewaslaiduponallFrenchgoods;whilethegoodsofothernationswere，thegreaterpartofthem，subjectedtomuchlighterduties，seldomexceedingfivepercent。Thewine，brandy，saltandvinegarofFrancewereindeedexcepted;thesecommoditiesbeingsubjectedtootherheavyduties，eitherbyotherlaws，orbyparticularclausesofthesamelaw。In1696，aseconddutyoftwenty—fivepercent，thefirstnothavingbeenthoughtasufficientdiscouragement，wasimposeduponallFrenchgoods，exceptbrandy;togetherwithanewdutyoffive—and—twentypoundsuponthetonofFrenchwine，andanotheroffifteenpoundsuponthetonofFrenchvinegar。Frenchgoodshaveneverbeenomittedinanyofthosegeneralsubsidies，ordutiesoffivepercent，whichhavebeenimposeduponall，orthegreaterpartofthegoodsenumeratedinthebookofrates。Ifwecounttheone—thirdandtwo—thirdsubsidiesasmakingacompletesubsidybetweenthem，therehavebeenfiveofthesegeneralsubsidies;sothatbeforethecommencementofthepresentwarseventy—fivepercentmaybeconsideredasthelowestdutytowhichthegreaterpartofthegoodsofthegrowth，produce，ormanufactureofFrancewereliable。Butuponthegreaterpartofgoods，thosedutiesareequivalenttoaprohibition。TheFrenchintheirturnhave，Ibelieve，treatedourgoodsandmanufacturesjustashardly;thoughIamnotsowellacquaintedwiththeparticularhardshipswhichtheyhaveimposeduponthem。Thosemutualrestraintshaveputanendtoalmostallfaircommercebetweenthetwonations，andsmugglersarenowtheprincipalimporters，eitherofBritishgoodsintoFrance，orofFrenchgoodsintoGreatBritain。TheprincipleswhichIhavebeenexaminingintheforegoingchaptertooktheiroriginfromprivateinterestandthespiritofmonopoly;thosewhichIamgoingtoexamineinthis，fromnationalprejudiceandanimosity。Theyare，accordingly，asmightwellbeexpected，stillmoreunreasonable。
　　Theyareso，evenupontheprinciplesofthecommercialsystem。
　　First，thoughitwerecertainthatinthecaseofafreetradebetweenFranceandEngland，forexample，thebalancewouldbeinfavourofFrance，itwouldbynomeansfollowthatsuchatradewouldbedisadvantageoustoEngland，orthatthegeneralbalanceofitswholetradewouldtherebybeturnedmoreagainstit。IfthewinesofFrancearebetterandcheaperthanthoseofPortugal，oritslinensthanthoseofGermany，itwouldbemoreadvantageousforGreatBritaintopurchaseboththewineandtheforeignlinenwhichithadoccasionforofFrancethanofPortugalandGermany。ThoughthevalueoftheannualimportationsfromFrancewouldtherebybegreatlyaugmented，thevalueofthewholeannualimportationswouldbediminished，inproportionastheFrenchgoodsofthesamequalitywerecheaperthanthoseoftheothertwocountries。Thiswouldbethecase，evenuponthesuppositionthatthewholeFrenchgoodsimportedweretobeconsumedinGreatBritain。
　　But，secondly，agreatpartofthemmightbere—exportedtoothercountries，where，beingsoldwithprofit，theymightbringbackareturnequalinvalue，perhaps，totheprimecostofthewholeFrenchgoodsimported。WhathasfrequentlybeensaidoftheEastIndiatrademightpossiblybetrueoftheFrench;thatthoughthegreaterpartofEastIndiagoodswereboughtwithgoldandsilver，there—exportationofapartofthemtoothercountriesbroughtbackmoregoldandsilvertothatwhichcarriedonthetradethantheprimecostofthewholeamountedto。OneofthemostimportantbranchesoftheDutchtrade，atpresent，consistsinthecarriageofFrenchgoodstootherEuropeancountries。SomepartevenoftheFrenchwinedrankinGreatBritainisclandestinelyimportedfromHollandandZeeland。IftherewaseitherafreetradebetweenFranceandEngland，orifFrenchgoodscouldbeimporteduponpayingonlythesamedutiesasthoseofotherEuropeannations，tobedrawnbackuponexportation，EnglandmighthavesomeshareofatradewhichisfoundsoadvantageoustoHolland。
　　Thirdly，andlastly，thereisnocertaincriterionbywhichwecandetermineonwhichsidewhatiscalledthebalancebetweenanytwocountrieslies，orwhichofthemexportstothegreatestvalue。Nationalprejudiceandanimosity，promptedalwaysbytheprivateinterestofparticulartraders，aretheprincipleswhichgenerallydirectourjudgmentuponallquestionsconcerningit。
　　Therearetwocriterions，however，whichhavefrequentlybeenappealedtouponsuchoccasions，thecustomhousebooksandthecourseofexchange。Thecustom—housebooks，Ithink，itisnowgenerallyacknowledged，areaveryuncertaincriterion，onaccountoftheinaccuracyofthevaluationatwhichthegreaterpartofgoodsareratedinthem。Thecourseofexchangeis，perhaps，almostequallyso。
　　Whentheexchangebetweentwoplaces，suchasLondonandParis，isatpar，itissaidtobeasignthatthedebtsduefromLondontoParisarecompensatedbythoseduefromParistoLondon。Onthecontrary，whenapremiumispaidatLondonforabilluponParis，itissaidtobeasignthatthedebtsduefromLondontoParisarenotcompensatedbythoseduefromParistoLondon，butthatabalanceinmoneymustbesentoutfromthelatterplace;fortherisk，trouble，andexpenseofexportingwhich，thepremiumisbothdemandedandgiven。Buttheordinarystateofdebtandcreditbetweenthosetwocitiesmustnecessarilyberegulated，itissaid，bytheordinarycourseoftheirdealingswithoneanother。Whenneitherofthemimportsfromtheothertoagreateramountthanitexportstothatother，thedebtsandcreditsofeachmaycompensateoneanother。Butwhenoneofthemimportsfromtheothertoagreatervaluethanitexportstothatother，theformernecessarilybecomesindebtedtothelatterinagreatersumthanthelatterbecomesindebtedtoit;thedebtsandcreditsofeachdonotcompensateoneanother，andmoneymustbesentoutfromthatplaceofwhichthedebtsoverbalancethecredits。Theordinarycourseofexchange，therefore，beinganindicationoftheordinarystateofdebtandcreditbetweentwoplaces，mustlikewisebeanindicationoftheordinarycourseoftheirexportsandimports，asthesenecessarilyregulatethatstate。
　　Butthoughtheordinarycourseofexchangeshouldbeallowedtobeasufficientindicationoftheordinarystateofdebtandcreditbetweenanytwoplaces，itwouldnotfromthencefollowthatthebalanceoftradewasinfavourofthatplacewhichhadtheordinarystateofdebtandcreditinitsfavour。Theordinarystateofdebtandcreditbetweenanytwoplacesisnotalwaysentirelyregulatedbytheordinarycourseoftheirdealingswithoneanother;butisofteninfluencedbythatofthedealingsofeitherwithmanyotherplaces。Ifitisusual，forexample，forthemerchantsofEnglandtopayforthegoodswhichtheybuyofHamburg，Danzig，Riga，etc。，bybillsuponHolland，theordinarystateofdebtandcreditbetweenEnglandandHollandwillnotberegulatedentirelybytheordinarycourseofthedealingsofthosetwocountrieswithoneanother，butwillbeinfluencedbythatofthedealingsofEnglandwiththoseotherplaces。EnglandmaybeobligedtosendouteveryyearmoneytoHolland，thoughitsannualexportstothatcountrymayexceedverymuchtheannualvalueofitsimportsfromthence;andthoughwhatiscalledthebalanceoftrademaybeverymuchinfavourofEngland。
　　Intheway，besides，inwhichtheparofexchangehashithertobeencomputed，theordinarycourseofexchangecanaffordnosufficientindicationthattheordinarystateofdebtandcreditisinfavourofthatcountrywhichseemstohave，orwhichissupposedtohave，theordinarycourseofexchangeinitsfavour:or，inotherwords，therealexchangemaybe，and，infact，oftenissoverydifferentfromthecomputedone，thatfromthecourseofthelatternocertainconclusioncan，uponmanyoccasions，bedrawnconcerningthatoftheformer。
　　WhenforasumofmoneypaidinEngland，containing，accordingtothestandardoftheEnglishmint，acertainnumberofouncesofpuresilver，youreceiveabillforasumofmoneytobepaidinFrance，containing，accordingtothestandardoftheFrenchmint，anequalnumberofouncesofpuresilver，exchangeissaidtobeatparbetweenEnglandandFrance。Whenyoupaymore，youaresupposedtogiveapremium，andexchangeissaidtobeagainstEnglandandinfavourofFrance。Whenyoupayless，youaresupposedtogetapremium，andexchangeissaidtobeagainstFranceandinfavourofEngland。
　　But，first，wecannotalwaysjudgeofthevalueofthecurrentmoneyofdifferentcountriesbythestandardoftheirrespectivemints。Insomeitismore，inothersitislessworn，clipt，andotherwisedegeneratedfromthatstandard。Butthevalueofthecurrentcoinofeverycountry，comparedwiththatofanyothercountry，isinproportionnottothequantityofpuresilverwhichitoughttocontain，buttothatwhichitactuallydoescontain。BeforethereformationofthesilvercoininKingWilliam’stime，exchangebetweenEnglandandHolland，computedintheusualmanneraccordingtothestandardoftheirrespectivemints，wasfive—and—twentypercentagainstEngland。ButthevalueofthecurrentcoinofEngland，aswelearnfromMr。
　　Lowndes，wasatthattimerathermorethanfive—and—twentypercentbelowitsstandardvalue。Therealexchange，therefore，mayevenatthattimehavebeeninfavourofEngland，notwithstandingthecomputedexchangewassomuchagainstit;asmallernumberofouncesofpuresilveractuallypaidinEnglandmayhavepurchasedabillforagreaternumberofouncesofpuresilvertobepaidinHolland，andthemanwhowassupposedtogivemayinrealityhavegotthepremium。TheFrenchcoinwas，beforethelatereformationoftheEnglishgoldcoin，muchlesswornthantheEnglish，andwasperhapstwoorthreepercentneareritsstandard。IfthecomputedexchangewithFrance，therefore，wasnotmorethantwoorthreepercentagainstEngland，therealexchangemighthavebeeninitsfavour。Sincethereformationofthegoldcoin，theexchangehasbeenconstantlyinfavourofEngland，andagainstFrance。
　　Secondly，insomecountries，theexpenseofcoinageisdefrayedbythegovernment;inothers，itisdefrayedbytheprivatepeoplewhocarrytheirbulliontothemint，andthegovernmentevenderivessomerevenuefromthecoinage。InEngland，itisdefrayedbythegovernment，andifyoucarryapoundweightofstandardsilvertothemint，yougetbacksixty—twoshillings，containingapoundweightofthelikestandardsilver。InFrance，adutyofeightpercentisdeductedforthecoinage，whichnotonlydefraystheexpenseofit，butaffordsasmallrevenuetothegovernment。InEngland，asthecoinagecostsnothing;thecurrentcoincanneverbemuchmorevaluablethanthequantityofbullionwhichitactuallycontains。
　　InFrance，theworkmanship，asyoupayforit，addstothevalueinthesamemannerastothatofwroughtplate。AsumofFrenchmoney，therefore，containingacertainweightofpuresilver，ismorevaluablethanasumofEnglishmoneycontaininganequalweightofpuresilver，andmustrequiremorebullion，orothercommodities，topurchaseit。Thoughthecurrentcoinofthetwocountries，therefore，wereequallynearthestandardsoftheirrespectivemints，asumofEnglishmoneycouldnotwellpurchaseasumofFrenchmoneycontaininganequalnumberofouncesofpuresilver，norconsequentlyabilluponFranceforsuchasum。
　　IfforsuchabillnomoreadditionalmoneywaspaidthanwhatwassufficienttocompensatetheexpenseoftheFrenchcoinage，therealexchangemightbeatparbetweenthetwocountries，theirdebtsandcreditsmightmutuallycompensateoneanother，whilethecomputedexchangewasconsiderablyinfavourofFrance。
　　Iflessthanthiswaspaid，therealexchangemightbeinfavourofEngland，whilethecomputedwasinfavourofFrance。
　　Thirdly，andlastly，insomeplaces，asatAmsterdam，Hamburg，Venice，etc。，foreignbillsofexchangearepaidinwhattheycallbankmoney;whileinothers，asatLondon，Lisbon，Antwerp，Leghorn，etc。，theyarepaidinthecommoncurrencyofthecountry。Whatiscalledbankmoneyisalwaysofmorevaluethanthesamenominalsumofcommoncurrency。AthousandguildersintheBankofAmsterdam，forexample，areofmorevaluethanathousandguildersofAmsterdamcurrency。Thedifferencebetweenthemiscalledtheagioofthebank，which，atAmsterdam，isgenerallyaboutfivepercent。Supposingthecurrentmoneyofthetwocountriesequallyneartothestandardoftheirrespectivemints，andthattheonepaysforeignbillsinthiscommoncurrency，whiletheotherpaystheminbankmoney，itisevidentthatthecomputedexchangemaybeinfavourofthatwhichpaysinbankmoney，thoughtherealexchangeshouldbeinfavourofthatwhichpaysincurrentmoney;forthesamereasonthatthecomputedexchangemaybeinfavourofthatwhichpaysinbettermoney，orinmoneynearertoitsownstandard，thoughtherealexchangeshouldbeinfavourofthatwhichpaysinworse。Thecomputedexchange，beforethelatereformationofthegoldcoin，wasgenerallyagainstLondonwithAmsterdam，Hamburg，Venice，and，Ibelieve，withallotherplaceswhichpayinwhatiscalledbankmoney。Itwillbynomeansfollow，however，thattherealexchangewasagainstit。Sincethereformationofthegoldcoin，ithasbeeninfavourofLondonevenwiththoseplaces。ThecomputedexchangehasgenerallybeeninfavourofLondonwithLisbon，Antwerp，Leghorn，and，ifyouexceptFrance，Ibelieve，withmostotherpartsofEuropethatpayincommoncurrency;anditisnotimprobablethattherealexchangewassotoo。
　　DIGRESSIONCONCERNINGBANKSOFDEPOSIT，PARTICULARLYCONCERNING
　　THATOFAMSTERDAM
　　Thecurrencyofagreatstate，suchasFranceorEngland，generallyconsistsalmostentirelyofitsowncoin。Shouldthiscurrency，therefore，beatanytimeworn，clipt，orotherwisedegradedbelowitsstandardvalue，thestatebyareformationofitscoincaneffectuallyre—establishitscurrency。Butthecurrencyofasmallstate，suchasGenoaorHamburg，canseldomconsistaltogetherinitsowncoin，butmustbemadeup，inagreatmeasure，ofthecoinsofalltheneighbouringstateswithwhichitsinhabitantshaveacontinualintercourse。Suchastate，therefore，byreformingitscoin，willnotalwaysbeabletoreformitscurrency。Ifforeignbillsofexchangearepaidinthiscurrency，theuncertainvalueofanysum，ofwhatisinitsownnaturesouncertain，mustrendertheexchangealwaysverymuchagainstsuchastate，itscurrencybeing，inallforeignstates，necessarilyvaluedevenbelowwhatitisworth。
　　Inordertoremedytheinconveniencetowhichthisdisadvantageousexchangemusthavesubjectedtheirmerchants，suchsmallstates，whentheybegantoattendtotheinterestoftrade，havefrequentlyenacted，thatforeignbillsofexchangeofacertainvalueshouldbepaidnotincommoncurrency，butbyanorderupon，orbyatransferinthebooksofacertainbank，establisheduponthecredit，andundertheprotectionofthestate;thisbankbeingalwaysobligedtopay，ingoodandtruemoney，exactlyaccordingtothestandardofthestate。ThebanksofVenice，Genoa，Amsterdam，Hamburg，andNuremberg，seemtohavebeenalloriginallyestablishedwiththisview，thoughsomeofthemmayhaveafterwardsbeenmadesubservienttootherpurposes。
　　Themoneyofsuchbanksbeingbetterthanthecommoncurrencyofthecountry，necessarilyboreanagio，whichwasgreaterorsmalleraccordingasthecurrencywassupposedtobemoreorlessdegradedbelowthestandardofthestate。TheagiooftheBankofHamburg，forexample，whichissaidtobecommonlyaboutfourteenpercentisthesupposeddifferencebetweenthegoodstandardmoneyofthestate，andtheclipt，worn，anddiminishedcurrencypouredintoitfromalltheneighbouringstates。
　　Before1609thegreatquantityofcliptandwornforeigncoin，whichtheextensivetradeofAmsterdambroughtfromallpartsofEurope，reducedthevalueofitscurrencyaboutninepercentbelowthatofgoodmoneyfreshfromthemint。Suchmoneynosoonerappearedthanitwasmelteddownorcarriedaway，asitalwaysisinsuchcircumstances。Themerchants，withplentyofcurrency，couldnotalwaysfindasufficientquantityofgoodmoneytopaytheirbillsofexchange;andthevalueofthosebills，inspiteofseveralregulationswhichweremadetopreventit，becameinagreatmeasureuncertain。
　　Inordertoremedytheseinconveniences，abankwasestablishedin1609undertheguaranteeofthecity。Thisbankreceivedbothforeigncoin，andthelightandworncoinofthecountryatitsrealintrinsicvalueinthegoodstandardmoneyofthecountry，deductingonlysomuchaswasnecessaryfordefrayingtheexpenseofcoinage，andtheothernecessaryexpenseofmanagement。Forthevaluewhichremained，afterthissmalldeductionwasmade，itgaveacreditinitsbooks。Thiscreditwascalledbankmoney，which，asitrepresentedmoneyexactlyaccordingtothestandardofthemint，wasalwaysofthesamerealvalue，andintrinsicallyworthmorethancurrentmoney。Itwasatthesametimeenacted，thatallbillsdrawnuponornegotiatedatAmsterdamofthevalueofsixhundredguildersandupwardsshouldbepaidinbankmoney，whichatoncetookawayalluncertaintyinthevalueofthosebills。Everymerchant，inconsequenceofthisregulation，wasobligedtokeepanaccountwiththebankinordertopayhisforeignbillsofexchange，whichnecessarilyoccasionedacertaindemandforbankmoney。
　　Bankmoney，overandaboveitsintrinsicsuperioritytocurrency，andtheadditionalvaluewhichthisdemandnecessarilygivesit，haslikewisesomeotheradvantages。Itissecurefromfire，robbery，andotheraccidents;thecityofAmsterdamisboundforit;itcanbepaidawaybyasimpletransfer，withoutthetroubleofcounting，ortheriskoftransportingitfromoneplacetoanother。Inconsequenceofthosedifferentadvantages，itseemsfromthebeginningtohaveborneagio，anditisgenerallybelievedthatallthemoneyoriginallydepositedinthebankwasallowedtoremainthere，nobodycaringtodemandpaymentofadebtwhichhecouldsellforapremiuminthemarket。Bydemandingpaymentofthebank，theownerofabankcreditwouldlosethispremium。Asashillingfreshfromthemintwillbuynomoregoodsinthemarketthanoneofourcommonwornshillings，sothegoodandtruemoneywhichmightbebroughtfromthecoffersofthebankintothoseofaprivateperson，beingmixedandconfoundedwiththecommoncurrencyofthecountry，wouldbeofnomorevaluethanthatcurrencyfromwhichitcouldnolongerbereadilydistinguished。Whileitremainedinthecoffersofthebank，itssuperioritywasknownandascertained。Whenithadcomeintothoseofaprivateperson，itssuperioritycouldnotwellbeascertainedwithoutmoretroublethanperhapsthedifferencewasworth。Bybeingbroughtfromthecoffersofthebank，besides，itlostalltheotheradvantagesofbankmoney;itssecurity，itseasyandsafetransferability，itsuseinpayingforeignbillsofexchange。Overandaboveallthis，itcouldnotbebroughtfromthosecoffers，asitwillappearbyandby，withoutpreviouslypayingforthekeeping。
　　Thosedepositsofcoin，orthosedepositswhichthebankwasboundtorestoreincoin，constitutedtheoriginalcapitalofthebank，orthewholevalueofwhatwasrepresentedbywhatiscalledbankmoney。Atpresenttheyaresupposedtoconstitutebutaverysmallpartofit。Inordertofacilitatethetradeinbullion，thebankhasbeenforthesemanyyearsinthepracticeofgivingcreditinitsbooksupondepositsofgoldandsilverbullion。Thiscreditisgenerallyaboutfivepercentbelowthemintpriceofsuchbullion。Thebankgrantsatthesametimewhatiscalledarecipeorreceipt，entitlingthepersonwhomakesthedeposit，orthebearer，totakeoutthebullionagainatanytimewithinsixmonths，uponre—transferringtothebankaquantityofbankmoneyequaltothatforwhichcredithadbeengiveninitsbookswhenthedepositwasmade，anduponpayingone—fourthpercentforthekeeping，ifthedepositwasinsilver;andone—halfpercentifitwasingold;butatthesametimedeclaringthat，indefaultofsuchpayment，andupontheexpirationofthisterm，thedepositshouldbelongtothebankatthepriceatwhichithadbeenreceived，orforwhichcredithadbeengiveninthetransferbooks。Whatisthuspaidforthekeepingofthedepositmaybeconsideredasasortofwarehouserent;andwhythiswarehouserentshouldbesomuchdearerforgoldthanforsilver，severaldifferentreasonshavebeenassigned。Thefinenessofgold，ithasbeensaid，ismoredifficulttobeascertainedthanthatofsilver。Fraudsaremoreeasilypractised，andoccasionagreaterlossinthemorepreciousmetal。Silver，besides，beingthestandardmetal，thestate，ithasbeensaid，wishestoencouragemorethemakingofdepositsofsilverthanthoseofgold。
　　Depositsofbullionaremostcommonlymadewhenthepriceissomewhatlowerthanordinary;andtheyaretakenoutagainwhenithappenstorise。InHollandthemarketpriceofbullionisgenerallyabovethemintprice，forthesamereasonthatitwassoinEnglandbeforethelatereformationofthegoldcoin。Thedifferenceissaidtobecommonlyfromaboutsixtosixteenstiversuponthemark，oreightouncesofsilverofelevenpartsfineandonepartalloy。Thebankprice，orthecreditwhichthebankgivesfordepositsofsuchsilver（whenmadeinforeigncoin，ofwhichthefinenessiswellknownandascertained，suchasMexicodollars），istwenty—twoguildersthemark;themintpriceisabouttwenty—threeguilders，andthemarketpriceisfromtwenty—threeguilderssixtotwenty—threeguilderssixteenstivers，orfromtwotothreepercentabovethemintprice。*Theproportionsbetweenthebankprice，themintprice，andthemarketpriceofgoldbullionarenearlythesame。Apersoncangenerallysellhisreceiptforthedifferencebetweenthemintpriceofbullionandthemarketprice。Areceiptforbullionisalmostalwaysworthsomething，anditveryseldomhappens，therefore，thatanybodysuffershisreceipttoexpire，orallowshisbulliontofalltothebankatthepriceatwhichithadbeenreceived，eitherbynottakingitoutbeforetheendofthesixmonths，orbyneglectingtopaytheone—fourthorone—halfpercentinordertoobtainanewreceiptforanothersixmonths。