Hume's Political Discourses

by David Hume

The writings of Mr. Gee struck the nation with a universal panic when they saw it plainly demonstrated by a detail of particulars that the balance was against them for so considerable a sum as must leave them without a single shilling in five or six years. But luckily twenty years have since elapsed, with an expensive foreign war, and yet it is commonly supposed that money is still more plentiful among us than in any former period.

Nothing can be more entertaining on this head than Dr. Swift, an author so quick in discerning the mistakes and absurdities of others. He says, in his Short View of the State of Ireland, that the whole cash of that kingdom amounted but to £500,000; that out of this they remitted every year a neat million to England, and had scarce any other source from which they could compensate themselves, and little other foreign trade but the importation of French wines, for which they paid ready money. The consequence of this situation, which must be owned to be disadvantageous, was that in a course of three years the current money of Ireland from £500,000 was reduced to less than two; and at present, I suppose, in a course of thirty years, it is absolutely nothing. Yet I know not how {p53} that opinion of the advance of riches in Ireland, which gave the Doctor so much indignation, seems still to continue and gain ground with everybody.

In short, this apprehension of the wrong balance of trade appears of such a nature that it discovers itself wherever one is out of humour with the ministry, or is in low spirits; and as it can never be refuted by a particular detail of all the exports which counterbalance the imports, it may here be proper to form a general argument which may prove the impossibility of that event as long as we preserve our people and our industry.

Suppose four-fifths of all the money in Britain to be annihilated in one night, and the nation reduced to the same condition, with regard to specie, as in the reigns of the Harrys and Edwards, what would be the consequence? Must not the price of all labour and commodities sink in proportion, and everything be sold as cheap as they were in those ages? What nation could then dispute with us in any foreign market, or pretend to navigate or to sell manufactures at the same price which to us would afford sufficient profit? In how little time, therefore, must this bring back the money which we had lost, and raise us to the level of all the neighbouring nations? where, after we have arrived, we immediately lose the advantage of the cheapness of labour and commodities, and the further flowing in of money is stopped by our fulness and repletion.

Again, suppose that all the money of Britain were multiplied fivefold in a night, must not the contrary effect follow? Must not labour and commodities rise to such an exorbitant height that no neighbouring nations could afford to buy from us, while their commodities, on the other hand, became so cheap in comparison that, in spite of all the laws which could be formed, they would be run in upon us, and our money flow out till we come to a level with foreigners, and lose that great superiority of riches which had laid us under such disadvantages?

Now, it is evident that the same causes which would correct these exorbitant inequalities, were they to happen {p54} miraculously, must prevent their happening in the common course of nature, and must for ever, in all the neighbouring nations, preserve money nearly proportionable to the art and industry of each nation. All water, wherever it communicates, remains always at a level. Ask naturalists the reason: they tell you that were it to be raised in any one place, the superior gravity of that part not being balanced, must depress it till it meets a counterpoise; and that the same cause which redresses the inequality when it happens must for ever prevent it without some violent external operation.​[17]

Can one imagine that it had ever been possible, by any laws, or even by any art or industry, to have kept all the money in Spain which the galleons have brought from the Indies? or that all commodities could be sold in France for a tenth of the price which they would yield on the other side of the Pyrenees, without finding their way thither, and draining from that immense treasure? What other reason, indeed, is there why all nations at present gain in their trade with Spain and Portugal, but because it is impossible to heap up money, more than any fluid, beyond its proper level? The sovereigns of these countries have shown that they wanted not inclination to keep their gold and silver to themselves had it been in any degree practicable.

But as any body of water may be raised above the level of the surrounding element, if the former has no communication with the latter, so in money, if the communication be cut off by any material or physical impediment (for all laws alone are ineffectual), there may, in such a case, be a very great inequality of money. Thus the immense distance of China, together with the monopolies of our India {p55} companies, obstructing the communication, preserve in Europe the gold and silver, especially the latter, in much greater plenty than they are found in that kingdom. But, notwithstanding this great obstruction, the force of the causes above-mentioned is still evident. The skill and ingenuity of Europe in general surpasses perhaps that of China with regard to manual arts and manufactures, yet are we never able to trade thither without great disadvantage; and were it not for the continual recruits which we receive from America, money would very soon sink in Europe and rise in China, till it came nearly to a level in both places. Nor can any reasonable man doubt but that industrious nation, were they as near us as Poland or Barbary, would drain us of the overplus of our specie, and draw to themselves a larger share of the West Indian treasures. We need have no recourse to a physical attraction to explain the necessity of this operation; there is a moral attraction arising from the interests and passions of men which is full as potent and infallible.

How is the balance kept in the provinces of every kingdom among themselves but by the force of this principle, which makes it impossible for money to lose its level, and either to rise or sink beyond the proportion of the labour and commodities which is in each province? Did not long experience make people easy on this head, what a fund of gloomy reflections might calculations afford a melancholy Yorkshireman while he computed and magnified the sums drawn to London by taxes, absentees, commodities, and found on comparison the opposite articles so much inferior? And no doubt, had the Heptarchy subsisted in England, the legislature of each state had been continually alarmed by the fear of a wrong balance; and it is probable that the mutual hatred of these states would have been extremely violent on account of their close neighbourhood; they would have loaded and oppressed all commerce by a jealous and superfluous caution. Since the Union has removed the barriers between Scotland and England, which of these nations gains from the other by this free commerce? Or if {p56} the former kingdom has received any increase of riches, can it be reasonably accounted for by anything but the increase of its art and industry? It was a common apprehension in England before the Union, as we learn from L’Abbe du Bos, that Scotland would soon drain them of their treasure were an open trade allowed; and on the other side of the Tweed a contrary apprehension prevailed—with what justice in both time has shown.

What happens in small portions of mankind must take place in greater. The provinces of the Roman empire no doubt kept their balance with each other, and with Italy, independent of the legislature, as much as the several counties of Britain or the several parishes of each county. And any man who travels over Europe at this day may see by the prices of commodities that money, in spite of the absurd jealousy of princes and states, has brought itself nearly to a level, and that the difference between one kingdom and another is not greater in this respect than it is often between different provinces of the same kingdom. Men naturally flock to capital cities, seaports, and navigable rivers. There we find more men, more industry, more commodities, and consequently more money; but still the latter difference holds proportion with the former, and the level is preserved.​[18]