COMMERCE

COMMERCE.

As the history of Commerce has been already given in the body of the work, and, as the discussion of its nature and principles must necessarily be resumed in our article on POLITICAL ECONOMY, we mean, at present, to confine ourselves to a very brief exposition of the leading doctrine of that Science in regard to Trade, and to some practical discussions, which seem to find a fitter place here than in any other article. Our more general remarks, then, will relate chiefly to the nature and effects of that very erroneous system of Political Economy, commonly called the Mercantile System; and those of a more practical kind will be directed to the consideration of the profits of trade—of those transactions called speculations—of the effects of trade upon individual views of national policy—of the effects of long credit—and of the consequences that would result to commerce from the abolition of the restrictive statutes regarding interest of money.

I. The basis of the Mercantile System, which, though long relinquished by Political Economists, still retains an influence both on Merchants and Statesmen, is, that "wealth consists in the precious metals; that what is gained in trade by one nation must be lost by another; and that our great object in receiving returns should be to get money instead of merchandise." It followed from such notions, that of all possessions, a mining country, such as Mexico and Peru, was the most desirable; hence, in a great measure, our war with Spain, in 1740, which led to our unfortunate expedition to Carthage, involved us in a contest with France, and caused us, in the course of eight years, an immense waste of blood and treasure.

Though we failed in our favourite object, the influence of the mercantile system continued, and was singularly favoured by the annual statement of custom-house returns. These returns exhibit an apparent excess of exports above imports, and give rise to the notion that the balance is sent over in the shape of money. Supposing the exports of England to the Continent of Europe to amount for any given year to £20,000,000, and the imports to £14,000,000, the difference (£6,000,000) is, according to this absurd notion, the amount of profit paid to us in money. It is clear, however, that the custom-house returns take no notice of some very important items, such as the export of public money for our foreign garrisons, the transmission of bills of exchange to foreign merchants, or the import of smuggled goods. Besides, if the quantum of our circulating medium remain, as it probably does, very nearly on a par, what becomes of the supposed importation of money? Were England in possession of

all the annual balances which the advocates for this system suppose her to have received in money during the last century, our metallic stock would not be below £400,000,000 Sterling; that is, ten times its actual amount!

When a merchant exports goods, the sale, of course, takes place abroad, and a remittance is made, either by bill or by the return of other merchandise. It hardly ever enters into the contemplation of the exporter that he would find an advantage in obtaining a return in coin or bullion. Money owes the reputation it has acquired, as an object of national interchange, to its convenience in other points; to its being the commodity with which we regularly go to market, and to its fitness for the smallest purchases by the minuteness of its subdivisions. But this recommendation, however important in private business, should have no weight in the intercourse of nations: Merchants can be at no loss to dispose of a remittance made in the shape of goods; nor is it any object with them to multiply the means of petty purchases.

The interest of a commercial country is not to increase the amount of its currency, but to quicken its circulation; the same sum performing double and triple duty when passed expeditiously from hand to hand. Now, nothing promotes circulation so much as exemption from arbitrary interferences, were the effect nothing more than the general preservation of credit. In France, the monstrous abuse made of the paper system in the beginning of the Revolution has long prevented the use of any other circulating medium than coin; the result is an annual loss of three millions sterling to the public, such being the difference between the cost of paper and the precious metals, even after making allowance for the retention of a portion of the latter sufficient for the purposes of banking.

Some people, however, imagine that, to increase the amount of the circulating medium, is to increase the capital of a country. These persons should recollect that capital is by no means limited to money, but embraces all that mass of property which is devoted to reproductive consumption. When we wish to lend capital, or to employ it in business, we begin by selling the various articles at our disposal; the amount is then in our hands in the shape of money; but this is very transient; the money disappears as soon as we make payment for the new purchases. The public, not having time to enter into all this reasoning, judge from first impressions, and take for granted that money is capital, because its agency is required to put capital in motion. Governments, however, might have saved themselves much trouble in providing supplies of metallic currency; since the na-

Commerce. tural course of business will invariably provide them for itself. The plenty or scarcity of the precious metals depend on considerations altogether different from the imagined balance of trade. Specie was so scarce in England in 1809, that Government was not a little embarrassed to find L.200,000 for the Walcheren expedition; yet in that year our custom-house returns presented an apparent balance of above L.7,000,000 in our favour.*

We must not, however, be understood as advancing that the state of mercantile transactions has at no time had an influence on the course of exchange: the great import of corn in 1810 certainly lowered it materially; but this was owing to an extraordinary circumstance—the non-convertibility of our paper money. Had our circulating medium been such as to admit of exportation, and to possess currency on the Continent, the extra imports would have but slightly affected the rate of exchange.

No country has suffered so much from the errors of the mercantile system as England; partly on account of the influence of traders and manufacturers in our legislature; partly from the temporizing policy of our ministers, who have seldom scrupled to buy the consent of any great body of the community to a new tax by the grant of some injurious preference. Hence a variety of pernicious regulations in favour of the landed, the shipping, and the manufacturing interests; hence, also, a number of unfortunate measures in our foreign policy.

Our ancestors laid it down as a fundamental rule, that there could be no profit on the one hand, without a corresponding loss on the other. They considered trade as a game of mere transfer, and had no idea how a country could derive wealth by an intercourse, however actively or however skilfully kept up, between its own inhabitants. Charles II. entered on the war of 1672 with high hopes, imagining that, by destroying the commerce of Holland, we should not only increase our own, but in a manner absorb that of the world. Political reasons led us afterwards into close alliance with Holland, and prevented the ebullitions of our jealousy in that direction; but the alarming power of Louis XIV. and the prospect of his acquiring the crown of Spain, led us to a closer connection with Portugal, and particularly to the well-known Methven treaty, concluded in 1703, the object of which was to favour the consumption of port wine, in return for a similar preference to our manufactures. The result has been, that we have not scrupled, for more than a century, to punish our palates and injure our health for the sake of an imaginary political advantage; we say imaginary, because France would evidently have agreed to take our manufactures in return for her produce; and if the increase of her trade had, on one hand, the effect of augmenting, to a certain extent, her national power, it would, on the other, have increased her dependence on us, and have rendered a war with us extremely impolitic and unpopular.

Our attachment to Portugal arose, in a great measure, from her not being a manufacturing country,

and likely, in the opinion of the calculators of the day, to be so much the more advantageous to us in the capacity of a customer. This notion has prevailed in our councils to a very recent period; the Administration of 1808 and 1809, not scrupling to give encouragement to the export of merchandise, on a large scale, to the unproductive occupants of Brazil and Spanish America. Now, the fact is, that the means of extending our trade, and consequently our profits, with a foreign country, are to be estimated by a quite opposite rule; they depend on the productive power of that country,—on its means of affording equivalents for our commodities; in other words, on its capability of paying for that which it suits us to sell to it. Now, what country was ever wealthy without industry? The mines of Mexico and Peru, the richest the world ever saw, fall, in point of annual produce, far short of the annual value of the cotton, the tobacco, the flour, and other less tempting products of the United States. In like manner, the cochineal, the cocoa, the barilla, and even the indigo of Spanish America, form a small amount when put in competition with the exchangeable commodities possessed by the industrious nations in our own neighbourhood, such as France, the Netherlands, or the North of Germany.

If from our own favourite policy we turn our attention to that of continental states, we find Holland steering a course of impartiality, and guarded from an imitation of our trespasses, not indeed by superior knowledge, but by the characteristic moderation of her government. The northern kingdoms deserve comparatively little attention, their rulers having in general given their thoughts much more to war than to discussions of internal policy. The same thing was long true of a country where the commercial interest has at no time been very considerable; the personal will of the Sovereign, and the influence of the Noblesse, having afforded the grand raisons déterminantes for public measures. Still the history of France is not without traces of the effects of mercantile prejudices: among other regulations of the kind, there formerly existed several for the purpose of favouring linen manufactures instead of cotton, because flax was a home product, while the purchase of cotton carried money out of the country.

At last, it was found out by some Frenchmen of greater sagacity than the rest, that cotton might be safely admitted to entry, the money required to buy it proceeding necessarily from the employment of French industry in some shape or other. But the extent of popular prejudice was most singularly exemplified at the time when it was proposed to permit the unrestrained use of toiles peintes, or printed calicoes: every town that had a chamber of commerce remonstrated against it. A deputation sent from Rouen affirmed, that "the proposed measure would throw its inhabitants into despair, and make a desert of the surrounding country." Lyons, the centre of the silk manufacture, declared that "the news had spread terror into all its workshops." Tours

Commerce. "foresaw a commotion likely to cause a convulsion in the body politic;" Amiens asserted that "the proposed act would become the tomb of the manufacturing industry of France;" and Paris declared that "her merchants came forward that they might bathe the throne with their tears." The Government, however, stood firm, the duty on printed calico was withdrawn, and the Inspector General of Manufactures ventured some time afterwards to challenge the authors of these eloquent effusions to compare their predictions with the result. "Will any of you," he said, "deny that the manufacture of painted calico has been the cause of giving a vast extension to the industry of the country, by employing a number of hands in spinning, weaving, bleaching, and printing? Look only to the branch of dyeing, and say whether this change has not done more for it in a few years than other manufactures would have accomplished in a century." Say, Traité d'Economie Politique, Book I. chap. xvii.

In some countries Government goes much farther, and still acts in a commercial or manufacturing capacity, notwithstanding all the admonitions of political economists, or the more home felt lessons of experience. The Austrian Government conducts the gold and silver mines of Hungary, and to so little account, that the profit realized from these splendid establishments does not exceed a few thousands a-year. (See Dr Clarke's Travels, Vol. IV.) So lately as last summer (June 1817), the French Government, desirous of laying in a stock of corn for Paris, obtained a loan of money, with which they made purchases in the various markets both in and out of the kingdom. The result was most distressing; the price of corn rose from 80s. to 120s. per quarter. The people in the provincial towns became apprehensive of a scarcity, and though in general submissive to a fault, attempted at Rouen, and other places, to impede the course of the market, and to prescribe a limit to the price of corn. The alarm once given extended throughout all Europe, and gave occasion to a sudden rise, as may be seen by a reference to the corn prices at the time in London, Amsterdam, and Hamburg. Nothing, therefore, is more impolitic than the interference of the public treasury with markets, however good the motive; a truth which has been so thoroughly felt in England as to prevent anything of the kind during the last twenty-five years; Government having confined itself, in seasons of scarcity (as 1795, 1800, 1810), to granting an extra bounty on the import of corn.

Modified State of the Mercantile System. We are next to advert to the mercantile system in its most limited sense, in the shape which it now bears, after all the modifications of the experience of a century and a half. The predilection for the import of "hard dollars" has disappeared among a portion of the public, particularly since making the discovery that bank paper can be made to answer the purposes of gold and silver. But even these persons are far from admitting the doctrines of political economists in all their extent; they still cling to the notion that we should discourage the import of foreign produce whenever a corresponding commodity can be raised at home; that we should impede or even prohibit all foreign manufactures; and that we should not scruple to encourage certain

Commerce. fabrics of our own by bounties. Such is still the creed of the great majority of our merchants and manufacturers; such was, till within these few years, the creed of our Ministers and Presidents of the Board of Trade. It proceeds on the plausible idea that we cannot provide too much employment, and that our people would be in danger of falling short of work were we to purchase finished articles at the hand of foreigners. But there is not in the natural course of things any such deficiency of labour as to make it necessary or even expedient for us to turn things out of their regular order, for the sake of giving employment to our population. Providence has evidently ordained that industry should be at no loss for objects; the interruptions to its peaceful course arise from our own wayward policy, from our restraints, prohibitions, and, above all, from our sudden changes from war to peace, and from peace to war. These are the true causes of such scenes of embarrassment and bankruptcy as we witnessed in 1793 at the close of profound peace, and as we now unhappily witness at the end of a long continued war.

Equally erroneous is the notion, that it is more for our interest to send abroad manufactures than raw produce or money. If you grant a bounty on an export, you do nothing more or less than bribe a foreigner to make a purchase from you; you withdraw from its natural destination a portion of your capital and labour; for the sake of extending one branch of business, you weaken your means of competition in others. The money so long paid in the shape of bounties on one of our most popular exports, we mean British linen under 1s. 6d. a yard, is a public loss not only to the extent in question, but to twice or three times that extent in indirect injury; it has withheld the industry of our countrymen from other lines which they might have prosecuted without a premium, and in which they would have had no occasion to dread the rivalry of their neighbours.

Mr Hume has justly remarked, that in a question of personal right, the perceptions of a half-educated man may be sufficiently sound, but that the case is very different in regard to matters of general policy, where the real is often different from the apparent result. Now, this state of half knowledge has been the origin of almost all our mercantile miscalculations; we have listened to first impressions, and have not scrupled to give them a practical operation by acts of Parliament, without ever considering that the remote consequences would be injurious to ourselves.

To what fatality is it then owing, that, in this mighty commercial country, the public should still be so far behind hand in the knowledge of the principles of trade? Unfortunately these doctrines, though closely connected with the national prosperity, have never formed an object of attention at the English Universities, and but indirectly and imperfectly in those to the northward of the Tweed. Add to this, that most of the works hitherto published on Political Economy, are written in an abstract, unattractive style, fatiguing the attention of the reader by a long series of reasoning, and seldom relieving him by diversity of subject, or by the introduction of practi-

Commerce. cal illustrations. The public is still in want of a work which should convey the liberal doctrines of the philosopher in the plain language of business, and support the course of reasoning by an appeal to facts familiar to the mind of the merchant. Our limits do not by any means admit of our supplying this deficiency, or of bringing forward the arguments necessary to erect a structure of conclusive reasoning: they have enabled us only to state some of the more important results, to which we shall now make a few additions.

We may safely discharge from our minds all that has been said and all that has been written in regard to the greater relative advantage attendant in trading in this or that particular commodity: we may feel satisfied that profits are much more on an equality than is commonly supposed; that no one would long be a dealer in that which did not afford him advantage, or remain a stranger to that which was throwing an extra gain into the pockets of his neighbour. The same rule is applicable in a national sense, the traffic in one commodity being either directly or indirectly as productive of profit as in another. Even foreign articles of luxury should not be discouraged, since the money required to pay for them must be previously raised by the employment of British industry in some useful manner. This affords a new proof of the fallacy of first impressions, and leads to the grand practical conclusion of allowing people to "buy commodities wherever they can be got cheapest, without seeking to favour home produce above colonial or colonial above foreign."

Merchants should possess unrestricted freedom not only in regard to the articles they deal in, but in respect to the time of keeping them back or bringing them to market;—and this not only from the general title which every one has to the management of his own property, but from a conviction that whatever benefits the individual will be productive of corresponding benefit to the public. This is a point of the last importance, as reconciling the lower orders to a variety of unpopular employments of capital, such as buying up goods to be warehoused, and not brought to market till prices are advanced. Take, for instance, the capitalist who buys 1000 hhd. of sugar on its arrival from the West Indies in August, for the purpose of selling it in the succeeding March or April, such a transaction is of use to all parties; affording, in the first instance, a customer for the planter or planter's correspondent; a depository for the public during the season that the article ought in great part to be stored up; and finally a seller, at a time when, without such deposits and such forthcoming of supply, the price might have become exorbitant, and might have continued so until the arrival of the next year's crop. How applicable are these arguments to the most obnoxious of all traders,—the engrosser of corn!

The more we study the natural progress of commerce, the more we shall be satisfied of the expediency of leaving all its various agents to their uncontrolled management. Business then divides itself, particularly in a large city, into a variety of separate branches, each of which may be carried on to a surprising extent by separate establishments. The

commission charged by such persons is small, their dispatch extraordinary; capital does not remain locked up in their hands, and goods find their way to the market whenever prices are encouraging, that is, whenever the consumers are in want of them; they are withheld only when the market is glutted, and when to force sales would be productive of eventual injury to the buyers themselves. The doctrine of the happy medium is nowhere more applicable than in commerce: if you reduce prices for one season under what is necessary to indemnify the producer, you discourage production for the next, and you expose yourself to the hazard of a dearth.

Monopoly is now generally admitted to be highly impolitic; no new grants of the kind have been issued among us for many years, and every renewal of the charter of our principal existing association, has been marked by a diminution of its restrictive character. The public are now aware that a privileged company cannot make its purchases abroad on better terms than individuals, and that the chief operation of the privilege is to enhance the sale prices, or, in other words, to put money into the hands of a few at the expense of the nation. They are farther aware that the concerns of a large corporation cannot be managed with the minute economy and vigilance of the private merchant, and that its grand advantage lies in the intelligence and dexterity acquired by the transaction of business to a large extent by one establishment; an advantage of great importance, but which has nothing to do with the possession of exclusive privileges.

It is now about thirty years since the conclusion of our well known commercial treaty with France; a treaty which many on both sides of the channel were inclined to think particularly advantageous to us, and which certainly afforded a grand object of declamation to Bonaparte. The fact, however, is, that such treaties are good only in as far as they give general confidence to the merchants of both countries; whenever they go farther, and interfere by specific provisions, they are infallibly pernicious, and not the least so to the apparently favoured nation. It is a symptom of some promise in the present day that, though backed by all Europe, our ministers did not, in the treaties of either 1814 or 1815, go the length of imposing any restraints on the trade of France, but left things to their free course, subject only to such restrictions as might be deemed indispensable by either Government for the protection of particular branches of manufacture.

The final conclusions to be drawn from the principles of commerce are of the most comprehensive and beneficent nature. They teach us that every nation finds its account in the prosperity of its neighbours; that it would experience a corresponding suffering from their decline; that to aim at engrossing more trade than naturally falls to our share, is sooner or later injurious to ourselves; and that war, even when successful, is attended with the most serious losses. War turns to waste a large portion of our productive means; it leaves us oppressed with a ruinous burden in peace; it impedes the future extension of our exports, for the injury done to our neighbours recoils on ourselves; in

Commerce. short, it is so replete with evil to the public and individuals, as to be justifiable only in an extreme case, such as the defence of national independence or the overthrow of a tyrannical usurper.

Principles of Commerce, how far understood on the Continent. In point of knowledge of the great doctrines of political economy, Germany, or, to speak more properly, the Protestant part of Germany, in particular Saxony, may be said to take the lead of other countries on the Continent. The Dutch, however exemplary in their practical legislation, have little turn for speculative reasoning; the French have not patience to follow through its various links, a chain of philosophical deductions, but their admiration of whatever is humane or liberal, makes them wonderfully delighted with the brilliant conclusions of the science. They have the advantage of possessing in the work of Mr Say, already referred to, the best arranged general treatise that has hitherto appeared on the subject; and they are by no means ill prepared for a very extensive application of political improvements; such as the abolition of privateering, the repeal of all heavy duties on foreign goods, and the substitution of inland taxes for those custom-house imposts which impede the free communication of nations. The rest of Europe is so much in the dark, in regard to the great truths of political science, as to see merely through the medium of local governments: this is the case even in Italy, although that country can boast individuals of some note among the writers on the principles of commerce, and the reflecting turn of the people is favourable to such investigations.

Unfortunately, the condition of most countries, but particularly of Britain, is adverse to the speedy application of these simple and beneficent principles. Particular branches of trade are loaded with taxes which cannot be recalled; capital is invested in manufactures raised by means of bounties, which, however impolitic, ought not to be suddenly withdrawn; while, to throw open our ports to the unrestrained import of foreign merchandise, would lead to a general derangement of industry, unfitted as we at present are to withstand the cheaper labour of the Continent. It was admitted by all parties in Parliament in a late memorable debate (13th March 1817), that "unbounded freedom in trade was our true policy;" but it was urged, that to resort to such a course would overthrow too many private interests, and raise too general a clamour, to be practicable for many years. All that can be done in this embarrassing situation is to acknowledge the true system, to approximate to it gradually but surely, to renounce the errors of our ancestors, and, in point of taxation, to impose duties merely for the purpose of revenue, never with the view of encouraging any particular branch at the expense of another.

II. Having thus briefly stated the general doctrine of Free Trade, we shall proceed to the practical topics which we proposed to discuss; beginning with the consideration of the average profit of capital employed in trade.

Profits of Trade. 1. It is common to estimate the emolument of a wholesale business in Britain, in a small established concern, at 10 per cent. on the capital;

Commerce. moderate calculators will qualify this by calling it between 8 and 10 per cent.; but they who are at great pains to take every thing into the account, and to enumerate a variety of petty deductions which escape the sanguine reckoner, will find that in a large concern 7 per cent. is in general the extent of the clear earnings; leaving only 2 per cent. above that which has been the current rate of interest during the last twenty-five years. Mercantile profits are subject to a variety of unforeseen deductions, originating partly in an accumulation of petty expences, but more, at least in business of long credit, from deficient payments. The latter are technically called bad debts, and almost always exceed the anticipated amount, in consequence both of the sanguine temper of our countrymen, and of the actual capital of the buyers being much inferior to its appearance. Secrecy, both as to property and annual profit, is considered a first rate point among mercantile men; to the latter there can be no objection, but the concealment of the amount of capital, and the almost invariable consequence, its exaggeration, is productive of very pernicious effects. It is founded partly on the general vanity, and more, perhaps, on an expectation of direct advantage from the command of credit. But were the practice of transacting with ready money to become general, a merchant would have no greater motive to be thought in affluence than an individual in any other line. Be this as it may, the fact is, that the clear profits of trade, whether home or foreign, whether mercantile or manufacturing, whether retail or wholesale, are greatly below what the world imagines. Many hold a contrary language with regard to trade in general, but few do so in respect to their own particular business. "Ours," they say, "is of limited emolument, but other lines are very different, inasmuch as they admit of speculation and of higher charges." Whoever takes the trouble to question men in almost any business or profession, may reckon on receiving a succession of such answers,—answers not suggested by a wish to deceive or to conceal the profits of the individual, but originating in the general disposition to take the omne ignotum pro magifico. We dwell on this point from a desire to correct, as far as our influence goes, the prevalence of existing errors, and prepare our countrymen for the adoption of that patient and pains-taking course which was the basis of the prosperity of our ancestors, and which alone can extricate us from our present embarrassment. Some years ago, such language would not have been listened to; our minds were kept in a ferment by the fluctuations of war; property, whether in land, houses, or merchandise, had obtained an unexampled value; the majority of the possessors considered themselves the masters of assured fortunes, and never doubted that the general enhancement was an evidence of augmented national wealth.

Now that we have gained every political object, and that we know to our cost how far we are from enjoying internal prosperity, we are more disposed to give attention to the monitor who recalls the almost antiquated maxims of industry and economy, and who tells us, that, though we surpass our neighbours in activity and combination, we have much to

Commerce. learn from them, both in point of caution in enterprise, and of moderation in expenditure.

We are next to see how far these opinions are supported by official documents. The returns for the property-tax have of late afforded considerable means of ascertaining the circumstances of persons engaged in trade. If it be objected that many persons have not made a fair return, we may rejoin that, on the other hand, a number chose to conceal their disappointments from the world, and to pay the tax on an income they had not realized. The total number of families deriving an income from trade, manufacture, and professions, in England, Wales, and Scotland, is about 160,000:

120,000 of these returned their incomes under L. 150 a-year.

40,000 were above L. 150 a-year; and of these 3800 declared their income to exceed L. 1000 a-year.

Now, let any of our readers compare this statement with their previous ideas of the mercantile wealth of Great Britain, and they will bring to mind, if we are not much mistaken, an impression that the number of rich merchants throughout the empire greatly exceeded 3800. The total sum paid as property-tax under the head of the "profits of trade, manufactures, and professions," for 1814, was somewhat under 3½ millions, a sum certainly not to be paralleled in any other country, but falling considerably below the anticipation of Mr Pitt when he first introduced the income-tax so long ago as 1798.

We have naturally a strong disposition to contemplate the past or the distant through a magnifying medium, and to believe whatever the confident assertions of others, or the love of wonder in ourselves, suggests with regard to reported wealth. Hence the allegations so confidently brought forward in regard to the riches of ancient cities; hence the notion generally entertained with respect to the rapidity of fortune-making in our foreign settlements. India has long been proverbial in this respect, and it requires much more than the usual stock of information to discover, that if we make allowance for deaths and disappointments from various causes, the proportion of those who succeed in that country is not greater than at home; and that a fortune, when it does happen to be made, is the result of the length of time, of a habit of saving favoured by exemption from the expence of a family, of rare political contingencies, or, finally, of unusual opportunities consequent on the mortality of competitors. In point of trade few countries are more limited than India. In the West Indies, the field of industry is wider, particularly for planters, but the ratio of emolument has certainly not been greater, taking the whole of the last twenty years together, than in Great Britain. In support of these assertions, we appeal not to the young beginner, entering with sanguine hopes on his career, nor even to him who is advanced half-way in the eager pursuit, but to all who have passed a length of years in these countries, and who possess a sufficient share of reflection to turn their experience to account, by making a deliberate survey between the mother-country and her settlements. Particular instances may be given of the acquisition of mer-

cantile fortunes even in the last ten or twelve years, partly in India, and partly in Canada; but these have been rare, and the result of peculiar circumstances. Equal judgment and exertion have certainly been possessed by many merchants in the West India, American, and Continental branches; yet, we believe, that the whole list of these houses may be fairly challenged for an example of the rapid acquisition of fortune since the peace of Amiens.

Another point in which a similar delusion prevails, relates to the effects of war, particularly that of 1793; a war in which we still believe ourselves, and are believed by foreigners to have engrossed and absorbed the commerce of the world. A reference, however, to official documents will show that the exports and imports of the most boasted years of the war in question, were below the peace year 1802, and even below those of our late years of suffering. The flag of our enemies was indeed expelled from the Ocean, but the greater proportion of trade passed into the hands of neutrals: and, when in 1808, we took it out of their possession, we were taught, by dear bought experience, that war, under any circumstances, is adverse to commerce.

These observations must be understood not as intended to depreciate the value of commerce, or to damp the hopes of eventual success. They show, indeed, that the ratio of profit is generally small, but they afford the consolatory assurance that mercantile concerns may be carried to a great extent, and that the amount of gain may, in process of time, be rendered very considerable. This leads us to advert to a matter of great interest to us as we now stand, relatively to the rival countries of the Continent. It is a maxim, that commercial establishments, whether in the mercantile or manufacturing line, should be confined to a few objects, and conducted on a large scale. It is by this only that the task of individuals can be simplified; that employment can be subdivided; that work can be put quickly through hands, or that we can provide on the spot a supply of the various and indispensable requisites of business. A large establishment affords the means of employment to every kind of capacity; in fact, the duty is so facilitated as to become, in many cases, a mere routine; while the more intelligent and attentive workmen act as superintendents, the mass of the unambitious and unthinking are occupied with the detail. It is owing to this process of subdivision, and to the relative magnitude of the London workshops, that many articles can be supplied in our metropolis as cheaply as in the provincial towns, where labour is 40 per cent. lower: the same rule accounts for the charge on the transaction of business by merchants, accountants, attorneys, notaries, and agents, being less heavy than might be apprehended from the enormous expence of living in London. Similar results take place in regard to manufacture in favour of such towns as Birmingham, Sheffield, Manchester, Leeds; and it is to this, more than to any other cause, that we owe our ability to compete with the cheaper labour of the Continent.

2. This analysis of the profit of trade leads us to say a few words on a topic which has hitherto been very Speculative defined.

Commerce. generally misunderstood, we mean the profits of speculation. That term is confined, by politico-economic writers, to the purchase of an article at a given time, with profit. Among men of business, however, this expression has a much more extended signification, and is applied, generally, to incurring extensive hazards of any kind in the hope of extensive emolument; in short, to whatever is foreign to the proper business of the individual, or beyond the control of common rules. It is to such undertakings that vulgar credulity ascribes extraordinary profits; and even well informed men are apt to give way to the assertions so confidently made, of vast occasional gains in this line of business. Dr Smith himself, after remarking (Wealth of Nations, Book I. chap. 10.), that to make a fortune in a regular line commonly requires a long life of industry and frugality, adds, no doubt on the faith of repeated assurances from mercantile friends, that there are many examples of fortunes realized by speculators in the course of a few years. Now, the men who embark in speculation are, in general, very loose accountants; their estimate of profits applies to the gross, never to the nett return; besides, they are almost always adventurers, and adventurers have seldom been noted for the observance of truth. Their favourite season of activity is a time like that of 1808, when the sudden stoppage of ordinary intercourse caused a rapid fluctuation in the prices of commodities, and when the regular merchants withdraw from the scene. Now, what sober estimate can be formed of loss or gain in such a chaos? Add to this that these men trade almost always on credit, and in need of all the support which flattering representations, and rumours of sudden profit, can give them. All these reasons seem to justify a deliberate inquirer in doing what is very seldom done in such occasions, we mean in withholding his belief from the confident allegations of speculators, so long as they are not supported by collateral evidence.

Our opinion is, that, instead of the large profits commonly ascribed to this course of trade, it will be found that the individuals concerned in it experience little else than disappointments, and maintain a perpetual struggle to keep up a fair appearance to the world. This opinion is founded partly on a knowledge of the actual career and circumstances of speculators, but more on the well known fact, that almost every line of business is in the hands of established merchants, who, of course, are too vigilant to overlook the opportunity of emolument, and who have much better means of information than temporary interlopers. Still, should there remain doubts as to the accuracy of our opinion, the question may be brought to a point by a reference to the account-books of any given number of celebrated speculators: their affairs end almost always in bankruptcy; their papers continue

open to access for years in the hands of their solicitors or assignees; and we are much mistaken if an inspection of them would show, in one case out of ten, that the parties had at any period succeeded in making their boasted profits. Commerce.

We have been induced to dwell the more on the Its pernicious Effects. boasts of speculators, because they are productive of the greatest mischief in unsettling persons in business, particularly young men, and in making them look on their proper line with comparative contempt. It would be endless to attempt an enumeration of the various ways in which the rage for speculation has brought misfortune on our merchants and manufacturers. The opening of a new country, such as Buenos Ayres, Brazil, or Caraccas, has led to the export not only of a prodigious overstock of merchandise fitted for the country, but of many articles totally unsuited to the climate and habits of the people.*

Again, when the late war was drawing to a close, goods, both colonial and manufactured, were poured into the Continent of Europe, as if the market were inexhaustible, and as if the calamities of war had produced no decrease of disposable capital. At home, also, vast sums have been lavished in buildings, in mines, manufactories, and other establishments which never had a fair prospect of success, and owed their origin to the sanguine imagination of one projector, and the credulity of another.

The result of all this is, that hitherto our trading concerns have been very frequently mismanaged; that a great deal of property has been wasted by the inexperienced and sanguine; and that those who really expect to succeed in business must lay their account with submitting not only to a deal of labour, but of self-denial, in resisting the temptation of flattering projects, out of their own line. What a beneficial result would be produced were young merchants to adopt it as a rule not to listen to the ardent suggestions of persons of their own time of life, but to recur, on every question of consequence, to the advice of their seniors; of men who have had to make their own way in the world, and who, without perhaps possessing the advantage of education, or the talent of moulding their reasoning into the form of general principles, will still be found safe counsellors in the practical part of the business. If the result of their admonitions be to abridge some of the pleasing illusions of the mercantile beginner, is it not better that the true nature of his prospects should be made known to him in the early part of life? A deduction from anticipated enjoyment is a trifling sacrifice in comparison with the distress produced by failure in latter years, when the individual is less able to contend with difficulty, and has probably to provide for a family. Let any one extensively acquainted with mercantile men, call to recollection the situation of the majority of his

* Elegant services of cut glass were sent out to men accustomed to drink out of a horn or a cocoa-nut shell; skates were forwarded to a country where ice was unknown; and tools with a hatchet on one side, and a hammer on the other, to break the rocks, and cut the precious metals from them, as if the inhabitant had merely to go to the mountains, and cut down gold and silver by wholesale.—Mawe's Travels to Brazil.

Commerce. personal friends during the last twenty years, and say, whether any degree of self-denial would not be preferable to that succession of disappointments, anxieties, and losses, which have baffled the exertions and broken the spirits of so many meritorious persons.

The country in which trade has shone forth in all its splendour, where it has been cultivated without the support of arms or prohibitory regulations, where, in short, it has developed its beneficent tendency in all its extent, is Holland. If we look to the early enterprises of the Dutch, we find them enabled by the power of their productive industry to assert their independence at home, and to assail their enemies in the remotest part of their empire. The Portuguese in the east, and the Spaniards in the west, were each found unequal to the task of resisting these Republicans: a proud stand was made by them against the navy of England, and they did not fall into despair even when assailed by our forces in conjunction with those of France. Afterwards, when happily restored to our alliance, and when they concurred and cooperated with us in the great struggle against Louis XIV., it is surprising how large a proportion both of troops and subsidies was furnished by this apparently inconsiderable state. "No country," says Sir William Temple, "can be found where so vast a trade has been managed, yet the inhabitants have no native commodities towards building vessels, and hardly any that are considerable for traffic with their neighbours. Holland is grown rich by force of industry, by improvement and manufacture of foreign growths." Proceeding to specify more particularly the causes of this mercantile prosperity, Sir William enumerates "the easy communication of water, particularly by the Rhine and Maese; the security of property; the undisturbed liberty of conscience, and the progressive influx of people persecuted for their religious opinions in Flanders, England, France, and Germany." Such were the original causes; those of subsequent operation were the "general habit of industry and economy; the formation of canals; the institution of Banks; the low interest of money; the exemption of trade from imposts; the appropriation of particular towns to particular branches of business; application to the fisheries, and (what he regrets much should not exist in England) the practice of keeping an official register of all purchases of property;" a practice introduced into Holland and Flanders in the reign of Charles V. to the incalculable convenience and security of money transactions.

3. We are now to say a few words on a different topic,—the effects of trade in forming the character of individuals, a matter of no little importance in a country like ours, where merchants both constitute so large a portion of the community, and exercise such influence on the proceedings of Government. The mercantile character has a number of good points, being exempt from the vacuity and indecision so frequent in fashionable life, as well as from the various vices consequent on the habit of idleness, and which are so strikingly exemplified in the gaming and libertinism of the French metropolis. Whatever good is produced by continued activity and by a

Commerce. pointed attention to the specific objects of one's occupation, may be confidently looked for among commercial men; with the farther advantage, in large concerns, of an exemption from petty jealousies and invidious interferences. In such cities as London and Amsterdam, merchants become aware, less by a process of reasoning than by the continued result of experience, that the field is ample for all; that the prosperity of one is very far from impeding that of others; and that when disappointment and failure occur, their origin is to be sought in a very different cause from competition. Here, however, we must close our encomium; and, in the spirit of impartiality, proceed to exhibit the opposite side of the picture. The merchant's knowledge is particular, not general; he obtains a habit of understanding individual character, and a dexterity in managing his own affairs; but he has not, and cannot, from his course of occupation, acquire the power of reasoning comprehensively on the interests of trade. He is, accordingly, a very unfit adviser, or even referee, for a minister or legislator; being accustomed to draw his deductions from his own particular branch of business, or apt, if he go out of it, to form a hasty judgment from first impressions. If he observe in war a tendency to raise prices, or to invigorate particular lines of trade (such as ship-owning or insurance), he will probably be led to the general inference, that, to a maritime country, war is advantageous. Our last contests having been attended with the undisputed command of the ocean, nothing more was required to satisfy the majority of merchants that our mercantile marine was in a state of equal ascendancy: they took à la lettre the custom-house reports of our annual exports, without observing how much was to be deducted for the progressive depreciation of money, or how surely we were laying the foundation of foreign rivalry, by submitting to enormous taxation, and a consequent enhancement of provisions and labour. Again, when in 1807 the long continuance of war had given a serious wound to our trade and navigation, a majority of the merchants ascribed it not to the true cause, but to the undermining competition of the Americans. Their range of reflection was not such as to enable them to perceive that, by overturning the prosperity of the latter, we should sap the foundation of our own; and that every million which we prevented our Transatlantic neighbours from adding to their capital, was so much withdrawn from a fund devoted to the increase of the productive industry of Britain. Hence our unfortunate Orders in Council, the main cause of the overthrow of our exchanges with the Continent, of the increase of our expenses in Spain and Germany, of our war with the United States, in short, of the long continuance of our sufferings since the peace. Can it be necessary to add more to demonstrate the impolicy of being guided in general questions by mercantile men? Let them confine themselves to the sphere of practical exertion; a sphere sufficiently wide to gratify the most ardent or patriotic, assured, as they well may be, that it is not only the road to individual wealth, but the means of furnishing a most effectual addition to the stock of national power.

4. Nothing would, in our opinion, conduce more to the prosperity of trade than the adoption of the plan of doing all wholesale business for ready money, and the relinquishment of that habit of long credit which prompts to unguarded enterprise, and has for so many years been the principal cause of crowding the columns of our Gazettes. Hopes of a change in this respect may now be confidently entertained, partly from the greater plenty of money consequent on a state of peace, and more from the general conviction of the impolicy of limiting the rate of interest by law. The repeal of the restrictive statutes will probably be founded on a partial view of the case, and more particularly on the desire of enabling landholders to obtain loans, without resorting to the disreputable alternative of annuities. Its effect in trade have been little anticipated, but we venture to predict that the extent of beneficial change will far outrun the expectation of the supporters of the measure.

In order to show the results of long credit, it is necessary to go a considerable length into practical illustration, and to apprise those of our readers who are not in the mercantile line, of the real situation of the majority of our manufacturers and export merchants. A manufacturer on the present footing receives orders in the course of a year from twenty or thirty mercantile houses; the goods to be exported probably to the West Indies, the United States, the Spanish Main or Brazil; the understood term of credit fourteen months. The manufacturer does not receive the orders from abroad; he has an intermediate guarantee—that of the exporting merchant. Still the risk is considerable, but he naturally hopes for the best, and is unwilling to decline an order when it comes to him from a quarter of respectability. Now, by mercantile respectability, we must apprise our readers that they are to understand integrity, and the intention of acting up to engagements; the power of doing so, especially at a remote date, is a very different question, and is, in general, possessed in a much smaller degree than the public imagines. The trader, whose capital is L. 30,000, will not scruple to ship goods to the value of L. 40,000; first, in the hope so general among merchants, of realizing a handsome profit; and next, in the confidence that, should the foreign market be dull, and should delays occur in obtaining returns within the given time, his credit will procure him indulgence for several months, at the end of which the expected remittances can hardly fail to arrive. He may, and in general does, go on for several years without much embarrassment, receiving, indeed, less than he sends out, but assured that all has been well sold, and cannot fail to be soon realized. He thus goes on, pleasing himself at every balance of his books with the seeming profit, and only regretting that hitherto that profit has not been tangible, since it exists only in the shape of a debt, due by his Trans-Atlantic correspondents. He continues, however, under a favourable expectation of their making up for past deficiencies; and flatters himself that the delay that has hitherto occurred has resulted from partial or temporary causes. He begins to find himself somewhat straitened for funds, but has as yet little difficulty in obtaining relief from a monied friend, or a prolonged credit from the

manufacturers. His correspondents continue to write in a strain of confidence, and to call for more goods, which, if he be of a confiding character, will lead him to extend the annual amount of his shipments; but, at all events, he is obliged to continue a certain supply for the sake of keeping up the assortment of stock. Still he finds that, year after year, a larger portion of his capital remains on the other side of the Atlantic, and that his correspondents, however desirous (for we by no means put an extreme case), are unable to prevent the accumulation of debt, because they are, in like manner, left unpaid by the inhabitants of the country. To go to law would be of no avail, since it is the policy of almost every government in a recently settled country to favour the debtor, and to give him the means of retaining capital in his hands. Affairs now come to be serious with the exporter; the manufacturers and other creditors cannot or will not give farther time, and demand an explanation of his circumstances. This explanation takes place, and serves to show that their debtor is a man of honour, with more assets than debts; but the latter are certain, while the former are at the distance of 3000 miles. The consequence is a grant of time; an allowance to the debtor of two, three, or four years, to act under letter of licence, in the hope of making up that which cannot, it is evident, be performed sooner. This is, in general, both the most wise and most liberal course; still it is not often found to succeed, because the foreign debts cannot be realized in climates where life is held by so uncertain a tenure, where respectable agents are so rarely found, where buyers of goods have so little capital, and, above all, where the law allows so little support to the creditor. A few of the promised instalments are probably made good; but, in general, the merchant recognises the impracticability of fulfilling the remainder, and finds it eventually necessary to submit to the mortification of a bankruptcy.

Such has been the case of a very large proportion of the mercantile establishments in our outports, and even in London, during the last twenty years. Distressing, indeed, has been the catalogue as exhibited in the Gazette, particularly since 1810; but even at present the public are not aware of the real extent of the failures, because in many the arrangements are private. Add to this, that the attention of the public is seldom so long directed to one object as to lead to conclusions of the general nature now mentioned. The fact, however, is, that old establishments, we mean houses which go back for half a century or more, are almost the only ones which have escaped insolvency. Among houses of recent origin, what a succession of failures has taken place in Liverpool, Glasgow, Manchester, Birmingham, and even in London! But we forbear to enlarge on this distressing picture, and turn for relief to countries which have been exposed to considerable shocks, but which have never conducted business on the system of long credit.

If we begin with Holland, we find that bargains Holland a in that country were, in its better days, almost al- Country ways made for ready money, or for so short a date as six weeks or a couple of months; profits were small in their ratio, but the quickness of returns

Commerce. made them eventually large; failures were rare, even in so distressing an era as the occupation of their country by the French, which began in 1795, and involved, from the outset, a stoppage of maritime intercourse with all their possessions in India and America. The consequence of this stoppage was a decay of trade, a suspension of various undertakings, a scarcity of work, a miserable dullness in the sale of goods; all leading, in the first instance, to diminished income, and eventually to encroachment on capital; but, amidst all this distress, the failures were surprisingly few,—fewer, indeed, than occur in Britain in any ordinary season. Another example, equally replete with instruction, is the present state of France, where, ever since the invasion of 1814, there has been very little credit given; and where business has been done for ready money from necessity, exactly as it was formerly done in Holland from choice. Of late years, one great misfortune has followed another in that country. The return of Bonaparte from Elba, the second invasion of the allies, the heavy contributions, the expence of the Army of Occupation, and, worst of all, the bad harvest of 1816, seemed to shake property to its foundation. There prevailed, in fact, a general discouragement among the upper ranks, and a great deal of wretchedness among the lower, trade being at a stand, and stocks of goods lying unsold in shops or warehouses for years; still bankruptcy was and is exceedingly rare. All this shows what a satisfactory prospect we may anticipate when we come the length of transacting the greater part of our business for ready money.

Beneficial Effects that would result from the Abolition of the Usury Law.

5. Yet we are far from recommending any law or measure to enforce that object; the evident advantage of the plan will not fail to secure its adoption, whenever we succeed in obtaining the removal of the grand legal impediment. What, it may be asked, do we mean by this impediment? We answer, that law which imposes a forced limitation on the rate of interest. By that law, a capitalist is not permitted to take more than 5 per cent. interest for the loan of money, whatever may be the risk. If he exceed that limit, he renders himself liable to the ruinous penalties of the laws, or to all the hazards attendant on a mercantile partnership, hazards which affect not merely the sum advanced, but the whole of his fortune. He is consequently obliged to seek other means of employing his money; vesting it in the public funds; confining it to the discount of the best mercantile bills; lending it on mortgage, and not unfrequently sending it out of the country, tempted by the higher interest given in France and other parts of the Continent. Now there are, in all mercantile cities, and particularly in London, a body of capitalists, who are too well aware of the hazards of trade to expose their whole property to them, but who would gladly bring forward a fourth, a third, or even a half of it, in the hope of realizing an increased income, and for the sake of enjoying that gratification which attends active employment, and the indulgence of hope and prospect. Men of business are not capable of absolute retirement; the object of their latter years is to lessen anxiety, not to withdraw entirely from the scene of

activity. Their habits, their calculations, their attachments, all keep them in connection with their early friends, and with the scene of their exertions: the point, therefore, should be not to urge them, as the law has hitherto done, to an abrupt dereliction of mercantile chances, but to enable them to continue them in a greater or lesser degree, as may suit their circumstances or individual character.

Such would be the effect of a change in regard to the lender. Let us next advert to the situation of the borrower. There is a general disposition in merchants to carry their business beyond the extent of their personal capital, a disposition which has no doubt frequently been carried to excess, but which ought by no means to be subjected to unqualified censure. No one can pretend to draw a general line of distinction between laudable enterprise and sanguine speculation; it must be left to the decision of the individual, and of the connections who support him. Often will it happen that a man of talent and judgment finds his personal funds inadequate to enter on the field of fair and legitimate enterprise, or to procure him an adequate share in an established business. We are perfectly aware that in London, men of this description frequently succeed, in the middle or latter part of life, in becoming partners in well established concerns; but it is equally true, that many of them are doomed to a different lot, and pass their life in unproductive routine. Counting-house occupation is carried on in comparative retirement; it presents no opportunities of public appearance as in the profession of the Law, and years pass away without bringing an individual into notice with others than his employers and immediate connections. Hence the importance of removing a great impediment imposed by our usury laws, the effect of which is to prevent the capitalist from coming forward to the aid of a promising beginner.

Let us next say a few words on the situation of our manufacturers. A disposition to enterprise existing strongly among our export merchants; the result is, that business must be done; and, if not for money, for credit;—on whom shall the responsibility fall? "Not," says the law, "on the capitalist; if he take more than five per cent., he shall subject himself to the penalties of usury, or he shall risk his whole fortune by a partnership." The spirit of adventure is not, however, to be restrained; orders arrive, and goods must be supplied; the burden of credit is then made to devolve upon the furnishers of these goods, whether manufacturers or wholesale vendors. It would be in vain for these persons, particularly the former, to urge that it is entirely out of their line to judge of the stability of the merchant, residing, as he generally does, in a different quarter, and connected with people to whom they are strangers. The case is peremptory, "if you do not give credit, we must apply to others who will." The alternative of the manufacturer, or wholesale vendor, is then to make such additional charge on his goods, as may prove an indemnity for his average loss; a charge amounting in general to 12, 15, or 18, per cent., and which, besides its magnitude, has the unfortunate effect of pressing equally on the solvent and insolvent buyers. How different will be the case when the ca-

Commerce. Capitalist shall find himself at liberty to stipulate a rate of interest proportioned to his risk! He will look around the circle of his mercantile friends for a man of honour and prudence, offer to supply his deficiency of pecuniary means, receives such security as the case admits of, and bargains, not for a share in the adventure, but for an extra interest, and the repayment of his money at a remote date. The important point once adjusted, what does the merchant do?—He goes to the manufacturer, not as at present, to ask credit for twelve or fourteen months, but with ready money in his hands. What a surprising difference does this make to the manufacturer! instead of adding, and being in fact obliged in self-defence to add the large sum mentioned above, he sells and sells cheerfully at so trifling a profit as $2\backslash frac\{1\}\{2\}$, 2, or $1\backslash frac\{1\}\{2\}$ per cent. for ready money. Nothing can be more erroneous than to suspect a real man of business of aiming at a high profit; security, quick returns, and exemption from perplexed accounts, are his objects; and, when paid in cash, he is saved so much trouble and uncertainty, that his demand becomes extremely moderate. The manufacturer looks for no other indemnity than, first, a reimbursement of his outlay for the raw material; next, a small consideration for the expence of his establishment in rent and salaries, and, finally, a still smaller for his personal trouble. An enlarged income is, no doubt, his eventual hope, but that, he is conscious, must arise not from swelling his charge, but from extending the scale of his business. Observe the admirable effects of the ready-money plan on the progressive ramification of business,—it affords the manufacturer the power of purchasing the raw material for ready-money; he obtains it at a reduced price, exactly as the merchant obtains the finished article from him; accounts are greatly simplified; a briskness is given to mercantile transactions in all their stages; an important reduction takes place in the price of export goods, and we become much more able to stand the competition of foreign manufacturers. It is, moreover, no insignificant advantage that our traders are thus enabled to know their real situation, and to be aware of the limits of their income, while assured of the security of the principal: they thus become better calculators, and avoid those expences which steal so naturally on the mind of a person accustomed to view the profits through a magnifying medium, and which are one of the great causes of bankruptcy being so much more frequent among merchants than in the other classes of society.

Among other advantages resulting from the adoption of such a plan, would be that of saving a heavy expence, incurred at present by many houses in the collection of debts. A travelling clerk can hardly cost less than L. 400 or L. 500 a-year; and, in the metropolis, where such collections are made by a partner or principal clerk, a deal of precious time is lost in repeated calls on the one hand, and on the other in expedients to postpone the day of settle-

ment. We should no longer see new establishments seeking to procure orders by outbidding their neighbours in offers of prolonging credit; and we might hope to witness the gradual abandonment of certain very costly, and by no means effectual methods of courting business. We allude to the habit of expensive living as a proof of property, and as a means of attracting connections. All such expedients are flattering in the eyes of the inexperienced beginner, but their inefficacy is well known to the veteran merchant, who will not hesitate to declare that were his career to be renewed, he would make a point of avoiding them as well as almost all the steps so frequently embraced for the sake of pushing business. In the mercantile, as in other lines, the means of success are few and simple; not easy of attainment, indeed, and requiring, above all, long continued perseverance, but less varied and complicated than a youthful mind is apt to imagine. Analyze the true qualities of a man of business, you will find them reduce themselves to fairness, vigilance, and steadiness,—fairness, exemplified in declaring his terms at once, and in never deviating from an engagement—vigilance in superintending his assistants, his clerks, and his workmen—and steadiness in following up his proper line, year after year, without turning to the right or left in pursuit of speculative advantages. These, plain as they are, form the true virtues of mercantile life; the man who is known to possess them will be at no loss for connections, and may safely leave to others the task of seeking a reputation for hospitality by their mode of living, of activity by the frequency of their solicitations, or of liberality by an unusual prolongation of credit.

In reasoning with such confidence on the good effects of so simple a measure as that of laying open the rate of interest, we may be charged with going too far, and with indulging in sanguine anticipations; but no one can pretend to foresee or to limit the extent of good arising from restoring business to its free course. Again, if we are thought to lay too much stress on the degree of aid to be derived by a supply of capital to the mercantile body, our answer is, that merchants are, in general, much shorter of capital than the public imagine, and that the rate of interest is low only for stock, lands, or other undoubted securities. Such was, in a great degree, the case in 1809 and 1810, yet merchants, it is well known, were far from experiencing a pecuniary overflow. Finally, it may be objected, that money will not unfrequently be lost by the capitalist from his being pressed to join in incautious speculations. All enterprise is necessarily exposed to hazard; but the probability is, that the loss will be much less to the capitalist than it at present is to the manufacturer, the latter being wholly in the dark as to the circumstances of his various debtors, while the former has evidently good means of information as to the one or the two persons whom he may chuse to entrust with his money. (D.D.)