An Inquiry into the Permanent Causes of the Decline and Fall of Powerful and Wealthy Nations Part 29

In all commercial intercourse with each other, (or compet.i.tion in selling to a third nation,) the poorer nation has the advantage in its gain; but this advantage is generally prevented by the length of credit which the wealthy nation is enabled to give, by which manufacturers are sometimes ruined in their own country by strangers, who can neither rival them in lowness of price nor goodness in quality.

In countries that are poor, those who have the selling, but not the manufacturing of goods, are so much greater gainers by selling goods purchased on credit, of which they can keep a good stock and a.s.sortment, than in selling from a shop or store scantily supplied with ready money, that there is not almost any question about either price or quality; there is not scarcely an alternative. In one line, a man can begin who has scarcely any capital, and do a great deal of business; he can even afford to sell the articles he purchases on credit with very little profit, because they procure him ready money; whereas, if he sells an article upon which he has no credit, he must replace it with another, by paying money immediately. The consequence is, that while those who sell to the public are poor, the nation or manufacturer that gives the longest credit will have the preference; but this is daily diminis.h.i.+ng, for even with the capital of the rich nation itself, the manufactures of the poor one are encouraged; the manner is as follows:

A, at New York, purchases goods for one thousand pounds from B, at London, which he sells without any profit, and, perhaps, at a considerable loss; because B gives him twelve months credit. But A, who has, by this means, got hold of money, as if by a loan, will not lay that out with B, nor let him touch it till the year's end; and, having made no profit by the sale of B's goods, he must turn to advantage the money he obtained for them. According to the situation of mat-[end of page #179] ters in the country, and the nature of A's concerns, he will make more or less, but what he makes it is not the business to investigate; it is sufficient to know, that he will lay his ready money out with those who will sell cheap, in order to get by it; that is to say, he will lay it out with some person in his own country. {148} Thus, though the rich nation sells goods on credit at a price which cannot be obtained for them by the purchaser, yet its capital serves to give activity to the manufacturers in the poor country. It is true, that this operation is slow, but it produces an effect in time, and finishes by robbing the wealthy nation of its superiority, obtained by giving credit.

It is thus that in all their intercourse, the first advantage is to the rich nation, but terminates in favour of the poor; for whenever equality of prices are the question, and both can give sufficient credit, the poorer nation has the advantage in point of price.

With regard to rivalling each other, in a third place, the poor nation has the advantage, if the merchants there have the means of paying with ready money, because the price is lower than that of the richer country. {149} If they have not that means, they cannot deal with them, but must wait till they have, by perseverance; and, in course of time, come to have the means when the poor nation is certain to enter into compet.i.tion with advantage.

But this is not the only way in which the capital of a rich nation is employed in fostering a rivals.h.i.+p in a poorer nation. Were the manufacturers the only persons who sold goods, it would be confined to this; but that is not the case, for merchants, who are the sellers, study only where they can purchase the cheapest; thus English merchants purchase cloths in Silesia, watches in Switzerland, fire- arms at Liege,

{148} The Dutch used to give long credit, and buy with ready money, by which means they had great advantage for a long time; but, at last, the ready money they paid to some, and the credit they gave to others, set their industry at work, and they became rivals. Dutch capital was, at one period, of great service to the English, as that of England now is to the Americans.

{149} This is not meant to apply to any particular sort of manufacture.

In some, a nation may have a permanent advantage over another; in others, only a temporary one, and in the greater portion no other advantage than what arises from superior capital.

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in preference to laying out the money in England or Ireland; and they will give credit, as before explained, to the nation that wants it.

In this manner it is, that the capital of a rich country supplies the want of it in poorer ones, and that, by degrees, a nation saps the foundation of its own wealth and greatness, and gives encouragement to them in others.

It is then that the weight of taxes, the high price of commodities, and the various causes which enc.u.mber those who live in wealthy nations, begin to produce a pernicious effect. The tendency of industry is to remove its abode, and the capital of the merchants, who know no country, but understand arithmetic, and the profits of trade, gives the industry the means of doing it with more ease and prompt.i.tude.

The Dutch, for the last century, employed their capital in this manner, and, at one time, were the chief carriers, for they secured custom by paying readily and giving credit largely. They ruined many of their own manufactures in this manner, but it is impossible to separate the calculation of gain from the mercantile system and mercantile practice in individuals; therefore it is no reproach to their patriotism, for patriotism cannot be the rule in purchasing goods from an individual.

A merchant can have no other rule, but his own advantage, or, if he has, he will soon be ruined.

There are many manufactures in England that originally rose by means of Dutch capital, not lent capital, but by ready money paid for goods, which were carried to other nations, and sold here upon credit.

The English have, for a long time, been able to do this piece of business for themselves; and, of course, the Dutch did not find the same means of supporting their carrying trade; and as they had ruined many of their own manufactures, they sunk both as a commercial and manufacturing people.

If the time should ever come that capital should be so abundant in all nations, as that obtaining credit will not be an object, then it will be seen that no nation will have so very great a share of manufactures and commerce more than others, as has. .h.i.therto been the case.

In countries where the common practice is to sell, chiefly, for [end of page #181] ready money, great fortunes are seldom gained. Even in wealthy countries, in branches of business where no credit is given, great fortunes are very seldom got, and for a very simple reason. The business is pretty equally divided. But in a country that gives long credits, or in a branch of trade on which long credits are given, we always see some individuals gaining immense fortunes, by means of doing a great deal more business than others, who, having less capital, are enabled to do less.

There is not any one thing in which a nation resembles an individual so much, as in mercantile transactions; the rule of one is the rule of all, and the rich individual acts like a rich nation, and the poor one like a poor nation. The consequences are the same in both cases. The rich carry on an extensive trade, by means of great capital; the poor, a limited one, dependant =sic= chiefly on industry; but wherever the poor persevere in good conduct, they finish by getting the command of the capital of the rich, and then becoming their rivals.

There is one thing peculiar to the intercourse of rich and poor nations, in which it differs from the intercourse between rich and poor individuals in the same country. Money, which is the common measure of value, has a different price in different countries, and, indeed, in different parts of the same country. If a man, from a poor country, carries a bushel of corn with him into a rich, he can live as long upon it as if he had remained where he was; but if he carry the money, that would have bought a bushel of corn at home, he perhaps may not be able to live upon it half so long. {150}

The effect that this produces, in the intercourse between two countries, is, that in proportion as the difference becomes greater, the rich country feels it can command more of the industry of the poor, and the poor feels it can command less of the industry of the rich; so that

{150} In common life, this difference, between carrying money and necessaries, is perfectly well understood, but it is experience that is the teacher; and the rough countryman, or woman, when they have the opportunity of judging from fact, understand the motives as well as the most profound and ingenius =sic= writer on political economy.

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when their industry can be both applied, with any degree of equality, to the same object, the poor supplies the rich, and therefore increases its own wealth.

It is thus that great numbers of the people in London are fed with butcher-meat from Scotland, and wear shoes from Yorks.h.i.+re; but there would be a very limited sale in either of those places for meat from Smithfield, or shoes manufactured in London. {151}

This diminution of the value of money, that takes place in all rich countries, serves farther to increase the advantage of poorer ones in manufacturing, and accelerates the natural effect of compet.i.tion, which is facilitated, as has been said, by the capital of the rich country giving activity to the industry of the poorer one.

This last neither can be called an exterior nor an interior cause, as it is derived entirely from the relative situations of the two countries, and belongs to both, or originates in both; but, as it raises the poor nation nearer the level of the rich one, its effect gradually becomes less powerful. Though there is no means of preventing the operation of two nations coming nearly to a level by this means, yet it does not appear to be a necessary consequence that the nation that was the richer should become the poorer. As this, however, has been a general case, we must conclude it to be a natural one, but there we stop, and make a distinction between what is natural only, and what is a necessary effect. Their coming to a level was a necessary effect; but, though the other may be natural, it cannot be necessary, and therefore may be counteracted; to find the means of doing this, is all that is proposed by the present inquiry.

{151} If it was not for taxes and rent, that are chiefly spent in large towns, as well as law-expenses, and the prices of luxuries, of dress, and furniture, the cities, like London, would soon be reduced.

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CHAP. XII.

_Conclusion of exteror Causes.--Are seldom of much Importance, unless favoured by interior ones.--Rich Nations, with care, capable, in most Cases, of prolonging their Prosperity.--Digression on the Importance of Public Revenue, ill.u.s.trated by a statistical Chart_.

The exterior causes of the decline of any nation, that has risen above its level, though formidable, are nothing, in comparison to the interior causes, and are of no great effect without their co-operation.

As the government of a country has an influence over the interior causes, so its alliances, and the laws of nations, though not very well attended to, (yet seldom altogether forgot,) have a tendency to stop the progress of the exterior causes, before they advance too far; that is to say, before they absolutely depress a nation.

For several centuries, the stronger nations of Europe protected the weaker, and the matter was carried so far, that the weak powers generally gained the most. Prussia and Sardinia are two examples of nations rising by political connections; and though the system is lately changed, and Poland has been despoiled and divided amongst nations, to each of which it was superior in power only two centuries ago, and though Holland and Switzerland groan under the yoke of France, yet, it is to be hoped, the old system is not abandoned, otherwise there will be no end to the encroachments of the great powers on the smaller.

The means of communicating, between nations, are now easy; they have felt the advantage of preserving a sort of balance, {152} and the ad-

{152} The expression, balance of power, gives a false idea. It seems to imply, that alliances in Europe were so nicely arranged, as to make the force of nations, in opposite interests, equal; but this never was the case for half an hour, nor was it ever intended. The whole [end of page #184] that is meant, is to prevent the present order from being overturned, by one nation annihilating or subduing another; and then, by their united strength, swallowing up a third, as was the case with the Romans.

vantages are so great, that they probably never will be entirely abandoned, though we have strong proofs, of late years, that they are not always held very sacred.

The chart subjoined to this, giving a statistical representation of the powers of Europe, shews nearly in what manner power is distributed at this time; the population and extent are there represented with accuracy: these are the foundation of power; and the amount of the revenue may be said to shew the means, which a nation has of exerting that power. (For the description and explanation see the page opposite the chart). [Transcriber's note: seemingly a reference to Chart No. 2; the explanation in fact appears on page 190.]

The balance of power, however well attended to, could not prevent the decline of a nation from interior causes. It may prevent the operation of exterior causes from pus.h.i.+ng a nation to the extreme of humiliation, by taking advantage of its internal situation. But the decline of almost every nation has commenced within its own bosom, and has been completed by causes acting from without.

The common termination of the interior causes of decline is revolt, or a division into parties, when the party that has the disadvantage generally calls in some neighbour to its aid. This is the most miserable fate that can befal =sic= a country, and no punishment is sufficiently severe for the men, who have so far lost every sentiment of patriotism as to have recourse to such a step.

The exterior causes of decline, namely, rivals.h.i.+p in peace and the combined efforts of enemies in war may be considered as irresistible, if the government, which has the direction of a nation, does not act wisely; but, if it does, they may be put at defiance. If a nation preserves its interior sources of prosperity, and acts with moderation and firmness towards others, their envy and efforts will be without effect, and need never be a cause of much uneasiness.

In its relation to other nations, the government of a country acts like an individual. The first thing is to regulate its interior affairs, and, the next is, in treating with others, to consider circ.u.mstances, and take justice and moderation for a rule of conduct. [end of page #185]

The circuitous politics attributed to amba.s.sadors, who represent states, is a common theme of invective: as custom has established it as a sort of rule, in all such transactions as they conduct, to conceal a part of what is meant, to demand more than is expected to be obtained, and offer less than is intended to be given, there is no immediate remedy; but this is only in the mode and manner of treating, and does not necessarily imply unfair intention. If it has become a custom to ask three by way of obtaining two, and of offering only two to prevent the necessity of giving four, (which would be expected if three, the number intended to be given, were offered at first) it is an abuse of language, in so far that what is expressed is neither meant by one, nor understood by the other to be meant; but, it is nothing more: neither is it a custom void of meaning; it is founded on the nature of man.

If men were perfect, and capable of seeing at one view what was fair, each might come prepared to ask exactly what he wanted, and determined not to yield any thing; and it would result from their being perfect, that each would just demand what was right, and the other was disposed to give; but, as men are not perfect, and as it is the inclination and even the duty of each to obtain the most favourable terms he can, (and as he does not see exactly what is right,) he naturally demands more than he has a right to expect, or than the other is disposed to give. If amba.s.sadors met together with a determination to speak explicitly at first, and with a determination not to recede, the consequence would probably be, that they would not treat at all, so that the mode of receding a little does not absolutely imply that more is asked than is wished for, but that each party over-rates its own pretensions, in order to obtain what is right.

One thing is certain, that the treaties that have been the best observed have been those founded on equity, where the contracting parties were neither of them under the influence of fear or necessity.