The National Gain, § 29

§ 29

We moan about the consequences but will not go to the source from which they flow. As soon as anyone mentions free trade, the response is: we must not confuse such private matters with the general and national ones. I am not sure what to say: either we read nothing or we think very little.

Is not our unhealthy obsession with bills of exchange the greatest restraint of trade that could possibly exist? Is there, then, any other conceivable remedy than to establish free trade?

There are two major means, in particular, towards that end: the first is to break the power of those who have exercised the tyranny of the bills of exchange, without respect of persons, so as to render them incapable of doing anything more. If it is too late to do so, it is obvious that the state has given away too much and is obliged to tremble before the weapons that it has itself placed in their hands. Once power has been lost, one is obliged to behave submissively.

The second is to repeal those regulations that in any way inhibit trade and destroy industry. If everyone had the right and opportunity to trade personally with foreigners, not so many would need to pay tribute to the exporters in order to purchase bills of exchange; and to oblige them by laws and oaths to charge a reasonable price in the hope of thereby bringing relief to the country is, in my view, to build castles in the air.

Both of these measures are indispensable. The latter will be useless unless it is preceded by the former, and the former will be of no avail if the regulations remain in force, for others will then inevitably take the place of the previous ones, and it will scarcely make any difference to the nation30 whether the man exercising arbitrary power is named Caesar or Octavius. It will be bad enough once liberty has been lost!

As simple as these remedies for an unstable exchange rate may seem, they are the sole and only effective ones, without which no relief may be expected.

All agree that increasing the country’s exports and increasing the amount of currency in circulation serves to lower the rate of exchange. The former can never be done without freedom of trade and I know of no other method of creating wealth than by foreign trade. If that is in the hands of a few individuals, they will necessarily continue to maintain the same kind of Exchange Bill Offices,1Exchange Bill Offices refers to a group of influential merchants, who during the years 1747–56 and 1758–61 were commissioned by the state and with financial aid from the same to try to improve the value of Swedish money. In practice this was done by taking up foreign loans and using the money to draw bills abroad. The operations of the wäxel-contoir in 1758–61 failed completely and contributed to the defeat of the Hat party in the Diet elections of 1765. Many held the persons who had taken part in the operations of the Exchange Bill Offices responsible for the deplorable economic state of the Swedish realm. Initially Anders Chydenius also held this view, being under the strong influence of his intellectual father-figure Anders Nordencrantz at the time. See Anders Chydenius’s life and work/The Diet of 1765–6 though under different names from the former ones, which is bound to have the same effect on the rate of exchange.

All domestic transactions and even the most subtle financial operations that do not also expand foreign trade are, in my view, as useless as abstract theories about a perpetuum mobile or a water-powered contraption that is to keep itself in motion inside a well.

The inventor of these may develop them as far as he wishes. They must nevertheless eventually come to a stop. And even he who has made the most subtle calculations will finally see, when his proposal is carried into effect, that the entire operation amounts to nothing more than transferring something from one hand to another.

1. Exchange Bill Offices refers to a group of influential merchants, who during the years 1747–56 and 1758–61 were commissioned by the state and with financial aid from the same to try to improve the value of Swedish money. In practice this was done by taking up foreign loans and using the money to draw bills abroad. The operations of the wäxel-contoir in 1758–61 failed completely and contributed to the defeat of the Hat party in the Diet elections of 1765. Many held the persons who had taken part in the operations of the Exchange Bill Offices responsible for the deplorable economic state of the Swedish realm. Initially Anders Chydenius also held this view, being under the strong influence of his intellectual father-figure Anders Nordencrantz at the time. See Anders Chydenius’s life and work/The Diet of 1765–6