CAROLINE

I HAVE been reflecting a great deal on our last conversation, Mrs. B., and the conclusions I have drawn from it are, that the greater the capital a country possesses, the greater number of people it can maintain, and the higher the wages of labour will be.

MRS. B

The greater the stock of subsistence, the more people may be maintained by it, no doubt; but your second inference is not at all a necessary conclusion. China is a very rich country, and yet wages are I believe no where so low. The accounts which travellers give of the miserable state of the inferior classes, are painful to hear; and their poverty is not the result of idleness, for they run about the streets with tools in their hands, begging for work.

CAROLINE

That is owing to the immense population of China; so that, though the capital of the country may be very considerable, still it is insufficient for the maintenance of all its inhabitants.

MRS. B

You should therefore always remember that the rate of wages does not depend upon the absolute quantity of capital, but upon its quantity relative to the number of people to be maintained by it. This is a truth which, however simple, is continually lost sight of, and hence arise errors without number in political economy. If China had ten times the wealth it actually possesses, and its population were at the same time tenfold as numerous, the people would not be better fed.

CAROLINE

AT our last interview, Mrs. B., you were regretting that any restraint should be imposed on our trade with foreign countries; but since you have explained to me the superior advantages arising from the home trade, I should have supposed that every measure tending to discourage foreign commerce, and promote our own industry, would be extremely useful.

MRS. B

You would find it difficult to accomplish both those objects; for in order to encourage our own industry we must facilitate the means of selling the produce of our manufactures, and extend their market as much as possible. On the other hand, if we prohibit exportation, we limit the production of our manufactures to the supply which can be consumed at home. No measure tending to the discouragement of foreign trade can, therefore, be said to promote the industry of the country.

CAROLINE

But foreign trade cannot be both advantageous and disadvantageous to a country?

MRS. B

It is never disadvantageous, but only less beneficial than the home trade. It is only after the demand at home is supplied, that our surplus produce is sent to foreign markets. When we have more capital to dispose of than is required in the home trade, instead of leaving it useless and the labourers it would employ idle, we set them to work for foreign markets. If, for instance, the woollen manufacturers of Leeds, after having supplied the whole demand of England for broad cloths, have any capital left, they will use it in the preparation of woollen goods for exportation.