CHAP. XVI. ON EXCHANGES. 



stead of taking the value for his fish in cloths 

 manufactured by the Brabanter from English wool, 

 had taken home the amount in silver or gold. 



This effect of increasing the power of metallic 

 money by exchanges is so familiar to all who have 

 become acquainted with commercial subjects, that 

 perhaps some may judge this short elucidation to 

 have been unnecessary ; but though familiar to 

 many, it is not so universally looked at as is de- 

 sirable, and it seems important to notice it, be- 

 cause whilst it may serve to show in what manner 

 small sums of metallic money may perform great 

 commercial operations, it also proves how fallacious 

 are the statements often introduced into commercial 

 politics in the eager discussions on what is called 

 the balance of trade. 



The balance of trade will always be in favour 

 of the country which can produce the most value 

 in commodities with the least cost of labour 1 . 

 The greater proportion of commodities in general 

 will rest in that country, and it will possess the 

 largest proportion of the metallic as well as of 



1 According to Anderson the balance of trade in favour of 

 England in 1354 amounted by records of authenticity to 

 255,2 14/. of that money, or about 590,000/. in money of the 

 present day. The exports of wool, wool-fells, leather, and 

 coarse cloth, were 294, 184/., and the imports, consisting 

 almost wholly of silks, fine cloths, wines, spices, and a few 

 other articles of luxury which were used only by the royal 

 family and a small number of rich prelates and great barons, 

 amounted only to 38,970/. Anderson's Hist. Com. vol. i. year 

 1354. 



VOL. II. D 



