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occasions; thereupon we attacked their gold。'(9*) This trade the
English continued down to very recent times。 They exported all the
precious metals which the Portuguese had obtained from their
colonies; and sent a large portion of them to the East Indies and
to China; where; as we saw in Chapter IV; they exchanged them for
goods which they disposed of on the continent of Europe against raw
materials。 The yearly exports of England to Portugal exceed the
imports from that country by the amount of one million sterling。
This favourable balance of trade lowered the rate of exchange to
the extent of fifteen per cent to the disadvantage of Portugal。
'The balance of trade is more favourable to us in our dealings with
Portugal than it is with any other country;' says the author of
'The British Merchant' in his dedication to Sir Paul Methuen; the
son of the famous minister; 'and our imports of specie from that
country have risen to the sum of one and a half millions sterling;
whereas formerly they amounted only to 300;000 l。'(10*)
All the merchants and political economists; as well as all the
statesmen of England; have ever since eulogised this treaty as the
masterpiece of English commercial policy。 Anderson himself; who had
a clear insight enough into all matters affecting English
commercial policy and who in his way always treats of them with
great candour call's it 'an extremely fair and advantageous
treaty;' nor could he forbear the na飗e exclamation; 'May it endure
for ever and ever!'(11*)
For Adam Smith alone it was reserved to set up a theory
directly opposed to this unanimous verdict; and to maintain that
the Methuen Treaty had in no respect proved a special boon to
British commerce。 Now; if anything will suffice to show the blind
reverence with which public opinion has accepted the (partly very
paradoxical) views of this celebrated man; surely it is the fact
that the particular opinion above mentioned has hitherto been left
unrefuted。
In the sixth chapter of his fourth book Adam Smith says; that
inasmuch as under the Methuen Treaty the wines of Portugal were
admitted upon paying only two…thirds of the duty which was paid on
those of other nations; a decided advantage was conceded to the
Portuguese; whereas the English; being bound to pay quite as high
a duty in Portugal on their exports of cloth as any other nation;
had; therefore; no special privilege granted to them by the
Portuguese。 But had not the Portuguese been previously importing a
large proportion of the foreign goods which they required from
France; Holland; Germany; and Belgium? Did not the English
thenceforth exclusively command the Portuguese market for a
manufactured product; the raw material for which they possessed in
their own country? Had they not discovered a method of reducing the
Portuguese customs duty by one…half? Did not the course of exchange
give the English consumer of Portuguese wines a profit of fifteen
per cent? Did not the consumption of French and German wines in
England almost entirely cease? Did not the Portuguese gold and
silver supply the English with the means of bringing vast
quantities of goods from India and of deluging the continent of
Europe with them? Were not the Portuguese cloth manufactories
totally ruined; to the advantage of the English? Did not all the
Portuguese colonies; especially the rich one of Brazil; by this
means become practically English colonies? Certainly this treaty
conferred a privilege upon Portugal; but only in name; whereas it
conferred a privilege upon the English in its actual operation and
effects。 A like tendency underlies all subsequent treaties of
commerce negotiated by the English。 By profession they were always
cosmopolites and philanthropists; while in their aims and
endeavours they were always monopolists。
According to Adam Smith's second argument; the English gained
no particular advantages from this treaty; because they were to a
great extent obliged to send away to other countries the money
which they received from the Portuguese for their cloth; and with
it to purchase goods there; whereas it would have been far more
profitable for them to make a direct exchange of their cloths
against such commodities as they might need; and thus by one
exchange accomplish that which by means of the trade with Portugal
they could only effect by two exchanges。 Really; but for the very
high opinion which we entertain of the character and the acumen of
this celebrated savant; we should in the face of this argument be
driven to despair either of his candour or of his clearness of
perception。 To avoid doing either; nothing is left for us but to
bewail the weakness of human nature; to which Adam Smith has paid
a rich tribute in the shape of these paradoxical; almost laughable;
arguments among other instances; being evidently dazzled by the
splendour of the task; so noble in itself; of pleading a
justification for absolute freedom of trade。
In the argument just named there is no more sound sense or
logic than in the proposition that a baker; because he sells bread
to his customers for money; and with that money buys flour from the
miller; does an unprofitable trade; because if he had exchanged his
bread directly for flour; he would have effected his purpose by a
single act of exchange instead of by two such acts。 It needs surely
no great amount of sagacity to answer such an allegation by hinting
that the miller might possibly not want so much bread as the baker
could supply him with; that the miller might perhaps understand and
undertake baking himself; and that; therefore; the baker's business
could not go on at all without these two acts of exchange。 Such in
effect were the commercial conditions of Portugal and England at
the date of the treaty。 Portugal received gold and silver from
South America in exchange for manufactured goods which she then
exported to those regions; but too indolent or too shiftless to
manufacture these goods herself; she bought them of the English in
exchange for the precious metals。 The latter employed the precious
metals; in so far as they did not require them for the circulation
at home; in exportation to India or China; and bought goods there
which they sold again on the European continent; whence they
brought home agricultural produce; raw material; or precious metals
once again。
We now ask; in the name of common sense; who would have
purchased of the English all those cloths which they exported to
Portugal; if the Portuguese had chosen either to make them at home
or procure them from other countries? The English could not in that
case have sold them to Portugal; and to other nations they were
already selling as much as those nations would take。 Consequently
the English would have manufactured so much less cloth than they
had been disposing of to the Portuguese; they would have exported
so much less specie to India than they had obtained from Portugal。
They would have brought to Europe and sold on the Continent just
that much less of East Indian merchandise; and consequently would
have taken home with them that much less of raw material。
Quite as untenable is Adam Smith's third argument that; if
Portuguese money had not flowed in upon them; the English might
have supplied their requirements of this article in other ways。
Portugal; he conceived; must in any case have exported her
superfluous store of precious metals; and these would have reached
England through some other channel。 We here assume that the
Portuguese had manufactured their cloths for themselves; had
themselves exported their superfluous stock of precious metals to
India and China; and had purchased the return cargoes in other
countries; and we take leave to ask the question whether under
these circumstances the English would have seen much of Portuguese
money? It would have been just the same if Portugal had concluded
a Methuen Treaty with Holland or France。 In both these cases; no
doubt; some little of the money would have gone over to England;
but only so much as she could have acquired by the sale of her raw
wool。 In short; but for the Methuen Treaty; the manufactures; the
trade; and the shipping of the English could never have reached
such a degree of expansion as they have attained to。
But whatever be the estimate formed of the effects of the
Methuen Treaty as respects England; this much a