quantity of other things to be exchanged for it; in other words, half the number or amount of ex`changes would be made. And, in general, the failure of any crop, or the diminution of any kind of production, must cause a stagnation of business in that article itself, and also in whatever is usually exchanged for it. Thus, also, if production languish from civil war, or from insecurity of property, exchanges of all kinds diminish, towns are depopulated, harbors are deserted, and the accumulated treasure of past generations insensibly melts away.

3. A glut, or stagnation of business, may also arise from comparative poverty in one of the parties making the exchange. If a nation is able to produce but one hundred thousand dollars' worth of exports, it can purchase but one hundred thousand dollars' worth of imports. This, then, will generally be the annual amount that will be brought to its market. But if from any cause, a larger amount, say one hundred and fifty thousand dollars' worth, is brought thither, there will arise a glut, or temporary stagnation of business. There will be fifty thousand dollars' worth more than can be exchanged. The reason is not, that they do not want the additional fifty thousand dollars' worth of the productions of other countries, but that they have nothing with which to purchase it. Hence, after one hundred thousand dollars' worth have been purchased, there will be sellers, but no buyers. It will be seen, however, that such a case can generally exist only in new, small, or in very unproductive countries, or for short periods; or else in respect to articles of which the consumption of the whole community is but small.

4. A stagnation of business may be the effect of legislation.. Suppose the importation of coffee into this country be a million pounds per annum. This must be paid for, in some way, by the productions of our own industry; and the demand for those productions to this extent, is for the sole purpose of

paying for this coffee. There must, of course, be a great variety of exchanges required to collect these products, to bring them to the seaports, to exchange them for coffee, and again to circulate this coffee throughout the country. Now, let a duty be laid upon coffee, which shall double its price, and thus diminish its consumption one half. The demand for one half of the products by which it was paid for, ceases, the demand for coffee, to this extent, also ceases; and the labor of transportation on both articles is reduced one half. Here must be a stagnation of business, in both of these articles; and half the shipping thus employed, will, for a time, be useless. Hence, there must, of course, arise a stagnation of business; that is, a permanent diminution of exchanges, in all the departments of industry affected by this arrangement. The same effect will be produced by any act of legislation by which public confidence is shaken, the currency disordered, or the facilities of exchange diminished. IV. Of the effects of legislative enactments on Exchange.

I think it too obvious to need remark, that duties on imports can have no favorable effect on exchange. Their only effect must be, to raise the price of the products, and, of course, to diminish the ability in both parties to exchange. Every one knows that the exchanges between two places are diminished by any natural obstacle to communication. If a road were so bad that it cost five dollars per hundred weight to transport merchandise between two places, every one knows that exchanges between these places would be fewer than they would be if the road were improved, so that transportation could be effected for twenty-five cents per hundred weight. Now, it makes no difference whether this additional four dollars and seventy-five cents be the result of the badness of the road, or of a transit duty between the two places. The diminution of exchange which it causes, will be precisely the same. In a severe win

ter, our northern harbors are closed, for weeks or months, by the ice. This is a natural tariff, and imposes a large protecting duty, inasmuch as exchanges must be effected, if they be effected at all, at a vastly greater price than in summer. I suppose it is not generally believed, that this has no effect on the number of exchanges; and I have never heard it mentioned, as specially favorable to domestic industry.

I therefore think it evident, that government can do nothing to facilitate exchanges by means of discriminating duties. They have, however, attempted to accomplish this result, by means of bounties on particular exports.

The manner in which this is accomplished, is this. Suppose we were not able, profitably, to produce and offer to other nations in exchange, some particular article, say, for instance, iron. To encourage this export, a bounty is granted on every ton of iron exported, equal to the difference between our cost of producing it, and that at which other nations produce it. Our producer can then sell it in a foreign port, as cheap as the producer from another nation. But where does this bounty come from? Why, it is from a duty laid on some other import, or else from a tax laid on some other product. The iron worker is no better off than any other man, and all the other exchangers or producers, or both, are just so much worse off; and the value of capital and labor is, by the whole operation, diminished, as we have shown in the article on the effect of legislative enactments upon production. Did any merchant ever grow rich by selling under cost, for the sake of competition with his neighbor? It would be very difficult to show how a nation can grow rich in the same way. But, as the principles, on which this discussion depends, have been already treated of in the article above alluded to, I need not here repeat them.

If, then, governments can do nothing in this man

ner to promote the business of exchanges, in what manner may exchange be affected by legislation?

We have said that exchanges are the natural result of mutual desire and mutual ability. In what manner may these be influenced by legislative enactments?

1. Of Desire. If by desire be meant the original impulses implanted in the bosom of man, it is evident that these can be neither increased nor diminished. These are a fixed quantity, with which we cannot interfere. These desires, however, generally remain dormant, until they are awakened into exercise by the presence, or by the knowledge, of their appropriate objects. It is by a knowledge of the existence of these objects, therefore, and of the modes by which they may be obtained, that the desire for exchange is excited. Hence it is plain, that the desire for exchange may be increased;

1. By the general diffusion of knowledge, especially of that sort of knowledge by which man is taught how he may benefit his condition. This will be accomplished generally, by a universal diffusion of the means of common education.

2. By removing all impediments to the diffusion of knowledge. In this respect, a duty on imported books, which is really a tax on knowledge, is, in a free government, absurdly injudicious.

3. By increasing the physical means for the dissemination of knowledge and intelligence. This will be done by allowing every facility for internal improvement; by an efficient and cheap post-office system, pervading every portion of the country, and bringing to every man's door the information circulating throughout the civilized world.

I do not know that a government can do more than this to excite in a people the desire to exchange.

2. Of Ability. The ability to exchange depends, as we have shown, upon productiveness. Hence, every means by which the productiveness of indus

try is increased, will also benefit exchange. These have already been alluded to, in the former book, and need not here to be repeated.

There is, however, one branch of productive industry which is more immediately connected with exchange than any other, and which deserves, on that account, in this place, a more minute consideration. I refer to internal improvements. On this, I shall offer a few remarks.

An internal inprovement, is any means by which the operation of change in place may be performed at a less expense than formerly. It is, in fact, a labor-saving machine, peculiar to this branch of industry. Of those at present in use, the most common are roads, railways, and canals.

What is peculiar to these machines, is, First, they are very costly, and hence, in general, require more capital than can be commanded by a single individual; and, therefore, must be owned by a number of persons associated together. Secondly: they must pass through the lands of various individuals who have no special interest in them, and are thus liable to interfere with the right of property. This interference can be allowed only by the whole community; and, hence, there arises a necessity for legislative enanctment, granting permission to this effect.

Now, inasmuch as such machines, if properly constructed and skillfully managed, are greatly for the benefit of the whole society, it is manifestly the duty of society to grant all suitable facilities for constructing them. Inasmuch, however, as they, like any other privileges, are liable to be abused, and may, in the end, injure the interests which they were intended to benefit, it becomes a legislature, on all such occasions, to reserve, at the outset, the right of visitation; the power to modify or amend, on equitable terms, the privileges granted, in such manner, as the exigencies of the public may require. Whether a government should itself undertake