Part II.—Of the Unreasonableness of those 
extraordinary Restraints, upon other Principles. 
In the foregoing part of this chapter, I have 
endeavoured to show, even upon the principles 
of the commercial system, how unnecessary 
it is to lay extraordinary restraints upon 
the importation of goods from those countries 
with which the balance of trade is supposed 
to be disadvantageous
Nothing, however, can be more absurd than 
this whole doctrine of the balance of trade
upon which, not only these restraints, but almost 
all the other regulations of commerce
are founded. When two places trade with one 
another, this doctrine supposes that, if the balance 
be even, neither of them either loses or 
gains; but if it leans in any degree to one 
side, that one of them loses, and the other 
gains, in proportion to its declension from the 
exact equilibrium. Both suppositions are 
false. A trade, which is forced by means of 
bounties and monopolies, may be, and commonly 
is, disadvantageous to the country in 
whose favour it is meant to be established, as 
I shall endeavour to show hereafter. But that 
trade which, without force or constraint, is naturally 
and regularly carried on between any 
two places, is always advantageous, though 
not always equally so, to both. 
By advantage or gain, I understand, not 
the increase of the quantity of gold or silver, 
but that of the exchangeable value of the annual 
produce of the land and labour of the 
country, or the increase of the annual revenue 
of its inhabitants. 
If the balance be even, and if the trade between 
the two places consist altogether in the 
exchange of their native commodities, they 
will, upon most occasions, not only both gain
but they will gain equally, or very nearly 
equally; each will, in this case, afford a market 
for a part of the surplus produce of the 
other; each will replace a capital which had 
been employed in raising and preparing for 
the market this part of the surplus produce of 
the other, and which had been distributed 
among, and given revenue and maintenance 
to, a certain number of its inhabitants. Some 
part of the inhabitants of each, therefore, will 
directly derive their revenue and maintenance 
from the other. As the commodities exchanged
too, are supposed to be of equal value, so the 
two capitals employed in the trade will, upon 
most occasions, be equal or very nearly equal
and both being employed in raising the native 
commodities of the two countries, the revenue 
and maintenance which their distribution will 
afford to the inhabitants of each will be equal
or very nearly equal. This revenue and maintenance
this mutually afforded, will be greater 
or smaller, in proportion to the extent of their 
dealings. If these should annually amount 
to L.100,000, for example, or to L.1,000,000, 
on each side, each of them will afford an annual 
revenue, in the one case, of L.100,000, 
and, in the other, of L.1,000,000, to the inhabitants 
of the other. 
If their trade should be of such a nature
that one of them exported to the other nothing 
but native commodities, while the returns 
of that other consisted altogether in foreign 
goods; the balance, in this case, would 
still be supposed even, commodities being paid 
for with commodities. They would, in this 
case too, both gain, but they would not gain 
equally; and the inhabitants of the country 
which exported nothing but native commodities
would derive the greatest revenue from 
the trade. If England, for example, should 
import from France nothing but the native 
commodities of that country, and not having 
such commodities of its own as were in demand 
there, should annually repay them by 
sending thither a large quantity of foreign 
goods, tobacco, we shall suppose, and East 
India goods; this trade, though it would give 
some revenue to the inhabitants of both countries
would give more to those of France than 
to those of England. The whole French capital 
annually employed in it would annually 
be distributed among the people of France
but that part of the English capital only, 
which was employed in producing the English 
commodities with which those foreign goods 
were purchased, would be annually distributed 
among the people of England. The greater 
part of it would replace the capitals which 
had been employed in Virginia, Indostan, and 
China, and which had given revenue and 
maintenance to the inhabitants of those distant 
countries. If the capitals were equal, or 
nearly equal, therefore, this employment of 
the French capital would augment much more 
the revenue of the people of France, than that 
of the English capital would the revenue of 
the people of England. France would, in this 
case, carry on a direct foreign trade of consumption 
with England; whereas England 
would carry on a round-about trade of the 
same kind with France. The different effects 
of a capital employed in the direct, and of 
one employed in the round-about foreign trade 
of consumption, have already been fully explained
There is not, probably, between any two 
countries, a trade which consists altogether in 
the exchange, either of native commodities 
on both sides, or of native commodities on 
one side, and of foreign goods on the other. 
Almost all countries exchange with one another, 
partly native and partly foreign goods
That country, however, in whose cargoes there 
is the greatest proportion of native, and the 
least of foreign goods, will always be the principal 
If it was not with tobacco and East India