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CHAP. IX.

Of the Commercial System.

A COUNTRY which excels in commerce and manufactures, may purchase corn from a great variety of others; and it may be

supposed, perhaps, that, proceeding upon this system, it may continue to purchase an increasing quantity, and to maintain a rapidly increasing population, till the lands of all the nations with which it trades are fully cultivated. As this is an event necessarily at a great distance, it may appear that the population of such a country will not be checked from the difficulty of procuring subsistence till after the lapse of a great number of ages.

There are, however, causes constantly in operation, which will occasion the

pressure of this difficulty, long before the event here contemplated has taken place, and while the means of raising food in the surrounding

countries slow

countries

may still be comparatively abundant.

In the first place, advantages' which depend exclusively upon capital and skill, and the present possession of particular channels of commerce, cannot in their nature be permanent. We know how difficult it is to confine improvements in machinery to a single spot; we know that it is the constant object, both of individuals and countries, to increase their capital ; and we know, from the past history of commercial states, that the channels of trade are not unfrequently taking a different direction. It is unreasonable therefore to expect that any one country, merely by the force of skill and capital, should remain in possession of markets uninterrupted by foreign competition. But, when a powerful foreign competition takes place, the exportable commodities of the country in question must soon fall to prices which will essentially reduce profits; and the fall of profits will diminish both the power and the will to save.

Under these circumstances the accumulation of capital will be 2 D 2

slow, and the demand for labour proportionably slow, till it comes nearly to a stand; while, perhaps, the new competitors, either by raising their own raw materials or by some other advantages, may still be increasing their capitals and population with some degree of rapidity.

But, secondly, even if it were possible for a considerable time to exclude any formidable foreign competition, it is found that domestic competition produces almost unavoidably the same effects. If a machine be invented in a particular country, by the aid of which one man can do the work of ten, the possessors of it will of course at first make very unusual profits ; but, as soon as the invention is generally known, so much capital and industry will be brought into this new and profitable employment, as to make its products greatly exceed both the foreign and domestic demand at the old prices. These prices, therefore, will continue to fall, till the stock and labour employed in this direction cease to yield unusual profits. In this case it is evident that ; though in an early period

of

of such a manufacture, the product of the industry of one man for a day might have been exchanged for such a portion of food as would support forty or fifty persons; yet, at a subsequent period, the product of the same industry might not purchase the support of ten.

In the cotton trade of this country, which has extended itself so wonderfully during the last twenty-five years, very little effect has hitherto been produced by foreign competition. The very great fall which has taken place in the prices of cotton goods has been almost exclusively owing to domestic competition; and this competition has so glutted both the home and foreign markets, that the present capitals employed in the trade, notwithstanding the very peculiar advantages which they possess from the saving of labour, have ceased to possess any

advantage whatever in the general rate of their profits. Although, by means of the admirable machinery used in the spinning of cotton, one boy. or girl can now do as much as many grown persons could do

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formerly ; yet neither the wages of the labourer, nor the profits of his master, are higher than in those employments where no machinery is used, and no saving of labour accomplished.

The country has, however, in the mean time, been verygreatly benefitted. Not only have all its inhabitants been enabled to obtain a superior fabric for clothing, at a less expense of labour and property, which must be considered as a great and permanent advantage ; but the high temporary profits of the trade have occasioned a great accumulation of capital, and consequently a great demand for labour; while the extending markets abroad and the new values thrown into the market at home, have created such a demand for the products of every species of industry, agricultural and colonial, as well as commercial and manufacturing, as to prevent a fall of profits..

This country, from the extent of its lands, and its rich colonial possessions, has a large arena for the employment of an increasing capital; and the general rate of its profits are not as it appears, very easily and rapidly

reduced

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