The Editor of the following Letter lays it before the Public in the same form he received it, unaltered, except in some few trifling verbal corrections. He conceives that by so doing, he best fulfils the intention of his late friend, the Author. The concluding passages are omitted, being on a somewhat different topic, and too desultory for publication."

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I have not leisure, at present, for the work you wish me to undertake; and cannot, without much pain and difficulty, separate my thoughts on a general subject, and bring forward only such portions of them as bear on some particular branch of it: but, as I every day see, more and more, the importance of setting in a right point of view the principles of profitable trade, I will endeavour io pick out, and put together in a connected manner, those observations I have so often made to you on that subject, in the garden at L-, and leave it to your discretion either to publish them as I deliver them, or (by first applying your taste and skill to the materials) to build them up into some handsomer form.

I recollect the difficulty you had in believing that so simple and elementary a principle, and one so important in its application, should have escaped the attention of the writers on political ecopomy; and now that so many years have elapsed, and these topics have been so often since discussed, I should not be at all surprised if in fact my ground be already taken possession of. Well; you live in the busy world-look into the pamphlets and dissertations of the day, and see if there be any tolerably clear exposition of my principle already before the public : if there should, suppress the observations I now send you. For myself, I have not yet seen anything that tends to clear up the mist which has hung over these points.

I will first refresh your mind with a sketch of some of those erroneous opinions (as I call them) that are to be met with every day; and then endeavour to state and illustrate the true principle. You will find the same things here that we have so often talked over; and though not moulded into that regularity which would properly fit them to be presented to the public, yet not less clearly put, I hope, than they appeared to you formerly.

1. If there are two articles proposed, one of export and one of import, and the advantages and disadvantages of exporting and selling the one, and with the proceeds of the sale buying and importing the other, be discussed, it is usual, I presume, to take into consideration the price at which the one (the article to be exported) can be furnished at home; and if it will not fetch that price, and even that price with a profit upon it in the other market, the one to which it is to be carried, to say that such article is exported at a loss, and that loss is actually sustained by such exportation; where the word loss is not used as a mere technical word expressive of a fact, but to denote real evil, real detriment.'

2. It is usual to consider the varied bounty or stinginess of pature in various countries, and to say that where the soil is ungrateful, or the disposition and power of the native inapt for a particular work, there with great toil and expense to produce an article, and export it to a country where it can be more cheaply and easily grown, is, in the very nature of things, trying to carry on a preposterous trade.

3. Again. A merchant selling a cargo in a foreign port at a loss, as it is called, (under prime cost, for example,) conceives that so far as that transaction goes, he suffers detriment; and it upon settling his accounts at home, after the sale of his return cargo, he finds that his time has been, on the whole, profitably employed, he places it solely to the account of the great profit he had on that return cargo, still thinking that he really lost by the sale of his outfit; but that the said profit on the return cargo was not only sufficient to counterbalance this loss, but over and above left him a reasonable net profit on the whole transaction ; and the

" There are instances where phrases that naturally and grammatically, as one may say, denote disadvantage, become the simple enunciation of a fact.

Such phrases are no doubt used, at first, in their natural sense. They arise from an apprehension and belief of certain injurious consequences. The apprehension may cease, and the phrase may remain. For example, the phrase " the balance of trade against" did once evidently express the opinion that a trade, by which more gold or silver was carried out of a country than brought into it, was against, and injurious to that country. Now, perhaps, it only expresses the above condition of that trade, viz. that by it, a diminution of gold and silver does take place.

It may be observed here, by the bye, that it would be well to get rid of these phrases, whose defined ineaning is at variance with the sentiment

aturally excited by them: for even the well-informed and accurate are entangled occasionally; and the mass of writers, readers, and talkers are absolutely unable, for five minutes together, to disenthral their minds from the influence of the natural import of the words.

statesmen, patriots, and others who speculate upon such transactions, are apt to regard them as unfavorable to the country so exporting; for though they allow (what they cannot deny) that the individual merchant has gained,' they are apt to say that the country has lost; and moreover such trade is in fact in various ways discouraged.

Now if the following investigation goes to show that these and the like reasonings and opinions are upfounded, it cannot be said to be merely conversant with verbal and nugatory distinctions ; nor, if its principles are true, to be unimportant.

The advantage of any trade, where one article is to be exported, and either mediately or immediately to be erchanged for another to be imported, depends on the proportion between the quantities of the two articles that may be bought for the same price in the one market being effectually different from the proportion between the quantities of the same two articles that may be bought in the other market for one and the same price: that article, the home price of any proposed quantity of which will buy less of the other article (at home) than the foreign price of the same quantity of that article will abroad, being the one to export, and the other the one to import: in other words, that article (of the two) which is, relatively to the other, cheaper at home than abroad, being the one to export, and the other the one to import.

Observe; it matters nothing whether the article, thus comparatively cheaper, be really cheaper or dearer than in the other market; but only that it should be cheaper, if paid for in that other article. As for example, silk stockings, bought with brandy in England, may be cheaper than in France. A gallon of brandy may buy more than in France; though perhaps, absolutely, silk stockings may be as cheap in France as in England, or cheaper.

It is not necessary, here, either that one or the other of the two quantities supposed to be bought in the one market, or that the price or sum proposed to buy them with, should be the same as in the other market, but only that the cost of the two things be the same in the same market, and the proportion between the quantities of things effectually different in the two markels.

Let A denote one species of goods, (of uniform quality,) B any other species. Let mA and nB be equivalent quantities in the

* It is not meant to be implied here, that whatever trade is profitable to the merchant and others employed in it, is therefore necessarily profitable to the country-(a trade may perhaps he very profitable to those concerned in it, and yet ruinous to the country,)- but only that no disadvantage to the country can be legitimately inferred from the circumstance of the exports being sold at or below prime cost.

the expenses ;

home market; and let mA, 7+r. B (nB+rB) be equivalent quantities in the other market."

For the sake of simplicity, I have taken the quantity of A the same in both markets. Now it is evident that m is greater with respect to n, than with respect to n+r; therefore, according to the above principle, the article A is proper to export and exchange for B, provided that the ratio of m to n+r be effectually different from the ratio of m to n; or, to speak somewhat more loosely, provided n+r be effectually greater than n; i. e. provided rB will pay, with reasonable profit, all the expenses of exporting and selling mA, and buying and importing and selling n +r.B.

For carrying out mA, he brings home n+r.B, (nB+rB). The sale of nB replaces mA, and there is over and above rВ to pay

and it is manifest that it is upon this excess of ntr above n, and upon this alone, that the profit depends; and not at all upon what mA sells for in the foreign market. For example, mA may cost ten times as much at home as what it sold for abroad; yet the n +r. B, which is brought home, equally replaces mA, and leaves rВ extra, 3

These multipliers, m, n, r, are numbers of yards, of pounds, of gallons, of dozens, of units, &c. according to the nature of the articles. For example, if A be cloth, and B be hemp, and 50 yards of the cloth cost the same as 2 ton of the hemp, m and n denote 50 yards and 2 ton; or 100 yards and 4 ton; or, &c. Let us take m and n to be 50 yards and 2 ton; then if in the other market (Russia, for example) 50 yards of the cloth cost the same as 3 ton of the hemp, ntr will denote 3 ton, and r will denote 1 ton; i. e. r will be in.

2 There might be a difference so trifling as not to be worth considering. In order to distinguish the substantial differences, that will really pay for freight, time, &c. from such nugatory ones, I use the word effectual.

3. The value or price (at home) of rB being - x the price of nB, orthe price of mA, (for mA and nB are supposed to be equivalent,) is ths of the capital supposed to be employed in purchasing the outfit. Call this capital (in pounds sterling) P; and call the expense of freight, &c. sp. Also let the average time employed be T years, and let c per cent. per annum be a reasonable profit: the value of rВ is "P; and the transaction is profitable, if -P be equal to or greater than sP+P+sp. 100; i. €. (dividing by P) ir. be equal to, or greater than s +1+s. 6. Example:- Let the time be a year, and the expenses of freight, &c. nothing; and 5 per cent. be a reasonable profit. Here s=0; T=1; c=5; thereforest 17s..o becomes ó ci and the transaction is profitable, provided be as great as 6o; for then "P (the price of rB) will be Tooths or more of P; i. 6. the profit 5 per cent. or


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