Accordingly, we find in Rome that so early as Tiberius’s time interest had again mounted to 6 per cent., though no accident had happened to drain the empire of money. In Trajan’s time money lent on mortgages in Italy bore 6 per cent.; on common securities in Bithynia, 12. And if interest in Spain has not risen to its old pitch, this can be ascribed to nothing but the continuance of the same {p50} cause that sunk it—viz., the large fortunes continually made in the Indies, which come over to Spain from time to time and supply the demand of the borrowers. By this accidental and extraneous cause more money is to be lent in Spain—that is, more money is collected into large sums than would otherwise be found in a state where there are so little commerce and industry.
As to the reduction of interest which has followed in England, France, and other kingdoms of Europe that have no mines, it has been gradual, and has not proceeded from the increase of money, considered merely in itself, but from the increase of industry, which is the natural effect of the former increase, in that interval, before it raises the price of labour and provisions. For to return to the foregoing supposition, if the industry of England had risen as much from other causes (and that rise might easily have happened though the stock of money had remained the same), must not all the same consequences have followed which we observe at present? The same people would, in that case, be found in the kingdom, the same commodities, the same industry, manufactures, and commerce, and consequently the same merchants with the same stocks—that is, with the same command over labour and commodities, only represented by a smaller number of white or yellow pieces, which, being a circumstance of no moment, would only affect the waggoner, porter, and trunk-maker. Luxury, therefore, manufactures, arts, industry, frugality flourishing equally as at present, it is evident that interest must also have been as low, since that is the necessary result of all these circumstances, so far as they determine the profits of commerce and the proportion between the borrowers and lenders in any state.
NOTE, OF INTEREST.
[16] Price for a meal.
OF THE BALANCE OF TRADE.
It is very usual in nations ignorant of the nature of commerce to prohibit the exportation of commodities, and to preserve among themselves whatever they think valuable and useful. They consider not that in this prohibition they act directly contrary to their intention, and that the more is exported of any commodity the more will be raised at home, of which they themselves will always have the first offer.
It is well known to the learned that the ancient laws of Athens rendered the exportation of figs criminal, that being supposed a species of fruit so excellent in Attica that the Athenians esteemed it too delicious for the palate of any foreigner; and in this ridiculous prohibition they were so much in earnest that informers were thence called “sycophants” among them, from two Greek words which signify figs and discoverer. There are proofs in many old Acts of Parliament of the same ignorance in the nature of commerce, particularly in the reign of Edward III.; and to this day in France the exportation of corn is almost always prohibited—in order, as they say, to prevent famines, though it is evident that nothing contributes more to the frequent famines which so much distress that fertile country.
The same jealous fear with regard to money has also prevailed among several nations, and it required both reason and experience to convince any people that these prohibitions serve to no other purpose than to raise the exchange against them and produce a still greater exportation.
These errors, one may say, are gross and palpable; but there still prevails, even in nations well acquainted with commerce, a strong jealousy with regard to the balance of trade, and a fear that all their gold and silver may be leaving them. This seems to me, almost in every case, a very groundless apprehension, and I should as soon {p52} dread that all our springs and rivers should be exhausted as that money should abandon a kingdom where there are people and industry. Let us carefully preserve these latter advantages, and we need never be apprehensive of losing the former.
It is easy to observe that all calculations concerning the balance of trade are founded on very uncertain facts and suppositions. The custom-house books are allowed to be an insufficient ground of reasoning; nor is the rate of exchange much better, unless we consider it with all nations, and know also the proportion of the several sums remitted, which one may safely pronounce impossible. Every man who has ever reasoned on this subject has always proved his theory, whatever it was, by facts and calculations, and by an enumeration of all the commodities sent to all foreign kingdoms.