APPENDIX XVI

Dudley North’s genius is proved and his place in the history of Political Economy established by an anonymous pamphlet which he published shortly before his death under the title Discourses upon Trade, principally directed to the cases of the Interest, Coinage, Clipping and Encrease of Money. This great little treatise, suppressed by the Government of William III. in 1691, was reprinted, from one of the very few copies extant, in 1856 by J. R. M’Culloch among his Early English Tracts on Commerce. It embodies, briefly and boldly, a system the originality and completeness of which may be judged from the following abstract—a theory in essence similar to, in some respects more consistent than, that enunciated by Adam Smith generations later:

“The whole world, as to trade, is but one nation or people, and therein nations are as persons. The loss of a trade with one nation is not that only, separately considered, but so much of the trade of the world rescinded and lost, for all is combined together. There can be no trade unprofitable to the public; for if any prove so, men leave it off: and, wherever the traders thrive, the public of which they are a part thrive also. To force men to deal in any prescribed manner, may profit such as happen to serve them, but the public gains not, because it is taking from one subject to give to another. No laws can set prices in trade, the rates of which must and will make themselves. But when such laws do happen to lay any hold, it is so much impediment to trade, and therefore prejudicial. Money is merchandize, whereof there may be a glut, as well as a scarcity, and that even to an inconvenience. A people cannot want money to serve the ordinary dealing, and more than enough they will not have. No man will be the richer for the making much money, nor any part of it, but as he buys it for an equivalent price.... Exchange and ready money are the same; nothing but carriage and re-carriage being saved. Money exported in trade is an increase to the wealth of the nation; but spent in war and payments abroad, is so much impoverishment....” The tract ends with these weighty words: “No people ever yet grew rich by policies: but it is peace, industry, and freedom that bring trade and wealth, and nothing else.”

The author describes his propositions as “paradoxes, no less strange to most men than true in themselves.” Their truth may still be a matter of controversy; their strangeness at the time at which they appeared is unquestionable. They were rank heresies against the dominant creed of the day. According to the cardinal article of that creed—the “balance of trade”—wealth consisted solely of money: whatever sent the precious metals out of a country impoverished it: whatever tended to swell the quantity of bullion in a country added to its riches. Therefore, no trade with any country was profitable, unless we exported to that country more value in goods than we imported, receiving the difference in money, which was considered the measure of our profit. North, presumably, had his eyes opened to the fallacy of this mercantile doctrine by the facts of our Levant trade. In the earlier days our exports to Turkey fully paid for our imports, and in those days English writers proudly contrasted our position with that of other nations—the French, Dutch, Italians, Germans—who paid a balance in cash. It did not occur to them that those nations must have found it as profitable to pay for what they got in gold and silver as we did in goods, else they would not have done so: and if they got their money’s worth for their money, which no doubt they did, they were quite as well off as the English who, of course, got no more than the worth of their manufactures. [See Munn’s Discourse of Trade, 1621, in Geo. L. Craik’s History of British Commerce, 1844, vol ii. pp. 19-20.] However, before North left Turkey, our merchants had got into the habit of sending, in addition to goods, large quantities of specie: in other words, now the “balance of trade” was against us—and yet our Levant trade never was more profitable! Here was a paradox to set a sensible man thinking.

But few men can think. Acting upon the established belief, English public opinion clamoured for the exclusion from the Kingdom of the products of foreign countries, particularly those of our traditional rival, France. In one of these paroxysms of popular frenzy an entire prohibition of French goods was proclaimed by Act of Parliament (1678). On that occasion, indeed, national hatred and religious excitement combined to invigorate and envenom the feelings arising from commercial jealousy, for it was the time of the ferment about the secret designs of France and Charles, out of which sprang the wild delusion of the Popish Plot. But the chief motive of that legislative measure was the prevailing notion that the country was suffering enormous pecuniary loss in consequence of our excessive importation of French commodities. Dudley North’s comments on that notion are refreshing: “trade is not distributed, as government, by nations and kingdoms; but is one throughout the whole world, as the main sea, which cannot be emptied or replenished in one part, but the whole, more or less, will be affected. So when a nation thinks, by rescinding the trade of any other country, which was the case of our prohibiting all commerce with France, they do not lop off that country, but so much of their trade of the whole world as what that which was prohibited bore in proportion with all the rest; and so it recoiled a dead loss of so much general trade upon them. And as to the pretending a loss by any commerce, the merchant chooses in some respects to lose, if by that he acquires an accommodation of a profitable trade in other respects.” [Life of Francis North, Baron of Guilford, 1742, p. 168.] No wonder such views were obnoxious to a Government bent blindly on crushing France, as the Whig Government of 1691 was, and it may be suspected that in choosing that moment for the publication of his heresies North was actuated quite as much by the wish to thwart the war policy of his opponents as by the desire to promote the cause of Truth.

The Act of 1678 had been repealed in the beginning of James II.’s reign, but immediately after the Revolution all commerce with France was again barred. The boycott continued through the two wars of 1689-97 and 1701-12, and the attempt made by the Tories in 1713, when peace was restored between England and France, to re-open the trade with the latter country, failed: the merchants took the alarm, the Whig politicians exploited that alarm, public opinion was roused, and the Bill was lost. We have heard the same clamour for breaking off all commercial relations with a rival nation in our own day—over two hundred years after Dudley North exposed the egregious folly of such a policy.