The National Gain

§ 1

It is not to be gainsaid that every Nation has gain as the chief object of its Economic and Political statutes, but if we consider the expedients each one has resorted to in order to secure gain, we shall notice incredible discrepancies.

Each vies with the other to arrive first; but they steer different courses and carry quite different sails, though almost the same wind fills them all.

They try to get to windward of one another and use special sailors' tricks to run into one another, though there is space and depth enough for them to sail abreast. It seems as if now one of the ships, now the other, was without a Pilot and a Helmsman.

Nobody can deny that in this way the work follows different rules. Either the Compass is unreliable or the Chart must be wrong.

A new guide is now put before the eyes of the Reader. It is quite a small one, so that everyone may be able to carry it in his pocket. It is new as well, I said, for it hardly conforms to any other in Europe. And I think it is reliable, too, for I have attempted to found it upon reason and experience. Let us first agree as to the words.

§ 2

A Nation is a multitude of people who have joined in order to secure their own prosperity and that of their descendants under the protection of the Government and through its Public Servants.

Man thrives when he enjoys his needs and comforts, which, according to our ordinary way of speaking, are called goods. Nature produces them, but they can never be of use to us without labour.

Our wants are various, and nobody has been found able to acquire even the necessaries without the aid of other people, and there is scarcely any Nation that has not stood in need of others. The Almighty himself has made our race such that we should help one another. Should this mutual aid be checked within or without the Nation, it is contrary to Nature.

When we exchange these commodities, it is called commerce, and the commodities that are commonly desired and accepted are gold and silver, larger or smaller coined parts of which are called money, which has become the measure of the value of other commodities.

No commodity exists, but that it cannot be changed into these Metals by commerce, nor can any commodity be obtained in the absence of other commodities desirable to the seller; and the quantity of money that must be paid for the commodity is called its value.

The value of exported goods in excess of that of imported ones is rightly called the gain of the Nation, and the value of imported goods in excess of that of exported ones will always be its loss. But a loss that is less compared to another one is called relative gain; and in the same way a smaller gain, when a greater can be attained, is called a loss.

§ 3

If the statement were correct in every respect that last year, 1764, Sweden exported goods to the amount of about 72 Million Daler of copper currency, but that the imports did not amount to more than 66 Millions, then our National gain for that year would have been 6 Million Daler.

The value of iron is about two-thirds of all our Exports, but let us assume that within a hundred years, on account of lack of forests or from other causes, the Export of Iron were reduced to one-half and were thus not to comprise more than one-third of our Exports, but that some others, e.g. corn, food, and timber, were exported instead of the third lost in the Iron trade. Then I ask, in case all the other exported and imported goods amounted to the same value as they have now, whether the National gain would not be just as great then? Or if the Export of Iron were at some time reduced by 6 Million Daler, but if the 10 Millions paid last year to foreigners for corn remained in the Country instead, would not the Nation then equally have gained 4 Millions by this change?

If we imagine that there were a State that had neither agriculture nor mining, neither cattlebreeding nor shipping, but only made an abundance of crockery from earth or clay, which was in great demand all over Europe, and hence obtained not only all its wants, but also received 2 Millions in gold and silver every year, would not these 2 Millions undeniably be the gain of that Nation?

But if one-third of the same Nation, after the example of others, were to abandon this trade of theirs and become farmers with the intention of thereby producing bread for themselves and their fellow-citizens, thinking that they would gain more in this way, but that the corn produced was 1 Million less in value than the former production of the same one-third, it is obvious that by this they would have caused the Nation 1 Million reduction in gain or, which is the same thing, an equally great loss.

From this it leaps to the eye that a Nation does not gain through being occupied with many different trades, but through working in those that pay best, that is, in which the least number of people can produce commodities to the highest value.

§ 4

Thus the wealth of a Nation consists in the multitude of products or, rather, in their value; but the multitude of products depends on two chief causes, namely, the number of workmen and their diligence. Nature will produce both, when she is left untrammelled.

Would the Great Master, who adorns the valley with flowers and covers the cliff itself with grass and mosses, exhibit such a great mistake in man, his masterpiece, that man should not be able to enrich the globe with as many inhabitants as it can support? That would be a mean thought even in a Pagan, but blasphemy in a Christian, when reading the Almighty's precept: "Be fruitful, multiply and fill the earth."

It was punishment for fallen man to support himself in the sweat of his brow; but this punishment was such that Nature itself measured it out, when man was forced to work because of his wants, when he had nothing but his own hands to rely on for his needs; and toil was made lighter by the desire for his own benefit, when he saw that he could thereby get what he needed.

If either is lacking, the fault should be sought in the laws of the Nation, hardly, however, in any want of laws, but in the impediments that are put in the way of Nature.

If by them citizens are rendered incapable of supporting themselves and their children, they must either die together with their offspring or forsake their native land. The more expedients are afforded by laws for some people to live by the toil of others, while others are prevented from supporting themselves by work, the more is diligence checked, and the Nation cannot but resemble the mould in which it is cast.

§ 5

Now, if this is incontrovertible, I intend to found thereon the following proposition, i.e. that every individual spontaneously tries to find the place and the trade in which he can best increase National gain, if laws do not prevent him from doing so.

Every man seeks his own gain. This inclination is so natural and necessary that all Communities in the world are founded upon it. Otherwise Laws, punishments and rewards would not exist and mankind would soon perish altogether. The work that has the greatest value is always best paid, and what is best paid is most sought after.

As long as I can produce 6 Daler worth of goods a day in one trade, I do not willingly change to another that brings in 4. In the former case the Nation's gain and mine was one-third more than in the latter.

It is thus undoubtedly a loss to the Nation when somebody is forced or is encouraged by public rewards to work in a trade other than the one in which he earns the highest profit; for this does not happen without such inducements, just as a merchant does not sell his Wares for less than what is offered him.

If he whose work someone has been forced to do gains as much as the worker has lost, it is not National gain; but if he gains more, only the difference is the gain of the Nation, but obtained through the oppression of its citizens.

Thus it is obvious that, when somebody conducts an enterprise by the work of others, but neither pays nor is able to pay without loss as much as the workers can earn in some other trade, the deficiency in their wages must then be a National loss.

§ 6

For example, if an Ironworks producing 2000 ship's pounds a year had at its command one hundred Peasants, who had to work fifty days a year each for this Works, but at one Daler Copper currency less than they would have been able to earn either by their own work or otherwise - and this to the end that the Exported goods might be sold abroad at some profit - then it is obvious that each Peasant will in that way lose 50 Daler Copper currency a year or, which is the same thing, will produce goods to the value of 50 Daler less than in other work, so that the National loss will be 5000 Daler.

If there were at the command of the same Ironworks several hundred Peasants, who had to provide it with the charcoal necessary for the work, for example 3500 chaldrons either for a number of Daler agreed upon at an earlier date or else for what the owner of the Works would give, for example 6 Daler Copper currency less for every chaldron than they would have been able to earn in another way during the same time (even if the Owner cannot pay a higher price for this commodity, if the iron is to be sold with any profit abroad; but if the same Peasants, during the time they worked on the coal, had been able in farming, handicrafts and weaving or other trades to earn the loss on every chaldron of coal, that is, had been able to produce goods to the value of 21000 Daler Copper currency more, then it is obvious that the National loss is thereby increased by as large a sum. If we add to this the almost irreparable loss of the Country's best forests, which after some time would have afforded us various materials for handicraft and timbertrees, and reckon ten cartloads of long logs for every large chaldron of charcoal used for these 2000 Ship's pounds of Bar-iron from the moment the ore was dug out of the mine till the time when the Iron is hammered out into bars, 35000 cartloads of wood, which, only reckoned at 16 öre a cartload, will increase the loss by 17500 Daler, which taken together means a loss of 43500 Daler Copper currency.

Now, if these 2000 ship's pounds were sold at an average price of 6 Riksdaler Banco a ship's pound, exclusive of the freight, and thus made a sum Of 240000 Daler Copper currency at the exchange rate of 80 marks, it is obvious that rather more than one-fifth of this sum is a National loss, even though the whole quantity is sold abroad.

§ 7

Gold and silver are, indeed, the most precious Metals, but they do not therefore always increase the National gain when they must be extracted from the earth. All merchandise can be exchanged into so much of these Metals as corresponds to its value. Neither is the Ducat ever so red that it will not be given for bread, as our ancestors used to say.

Would it not be useful to consider whether the 38 marks 4 Iods of gold and 5464 marks ½ lod of silver that have been extracted, from the beginning of 1760 to the end of 1764, are equivalent to the cost and work spent on them and to the rent of land from several parishes which has been appropriated thereto and so on? Or whether for all this many times as much silver and gold could not have been imported at the highest rate of exchange? Or whether such patriotism or love of Swedish gold and silver has really increased the National gain? Or whether they had to be maintained only in the hope of greater gain in the future?

Finally, is there not an evidence of National loss in the complaints and poverty of the workmen and Peasantry at and around the Ironworks, from being under compulsion, and desirous of using their time and abilities on what would be more useful to them and the Realm at the present time?

Here I am by no means talking about such works as exist without any disadvantage to the Peasantry and workmen; they are just as precious jewels of the Nation as ever Farming, Trade and Manufacture.

§ 8

From this it follows of itself that it is quite unnecessary for the Government to draw workmen from one trade into another by means of laws.

Nevertheless, how many Statesmen are there that have busied themselves with this? Almost all Europe is making efforts to draw the people from their previous trades and put them into others either by force or by granting them privileges. They boast of a National gain as great as the value of the new production, and often forget that the workmen employed in this production might if free, have produced goods in their former trade, to an equal or higher value, and in the first case there was no gain, but in the second a real loss to the Nation.

If ten men produce goods to the value of 100 Daler a day in one trade, but in another to a value of not more than 80, it is obvious that in the latter eventuality the Nation will lose 20 Daler a day on those ten men's work. Whether these ten workmen be at liberty to sell their produce or be free to negotiate for daily wages with those who conduct the trade in question, the difference in their wages will always be in the said proportion, and then it is certain that they will enter the former as being more profitable to the Nation and to themselves.

But if these workmen are forced to remain in the other trade at 20 per cent. less wages, this 20 per cent. is their loss and the Nation's. How unnecessary laws seem to be in such cases!

§ 9

Neither Bounties on Production nor on Exportation are of any good to increase or promote National gain.

They are resorted to almost all over Europe, but more especially in England, though they infallibly increase the real loss everywhere. The Bounties on Production do harm in a simple way, but those on Exportation in a twofold way.

If there are workmen enough in a trade and Bounties on Production are given notwithstanding, then too many people will be tempted to leave other trades, a superabundance of goods will make it less profitable and cause lack of workmen in other remunerative branches of trade, and the State will be burdened by enriching certain citizens. If people do not enter a known trade without special rewards, then it is obvious that it is less profitable than other trades in which workmen are never lacking.

If, by means of rewards, the State makes up the loss suffered in this trade by the workmen and the Nation, there may be those who will take it up, but their work is lost to the more remunerative trade. Thus, as much as the values of the products differ, so great undeniably will be the loss of the Nation.

§ 10

But the Bounties on Exportation have not only the disadvantages mentioned above, but also much more important ones: citizens are here taxed doubly in relation to the amount of the Bounty and a great part of it is put into the hands of foreigners, a fact that cannot but pain everybody who has come to love his Native Country.

A seller always tries to get the highest price for his goods. The owner agrees with the foreigner upon, for instance, 6 Riksdaler for the article; but for this he gets a Bounty of 2 Riksdaler, and thus he will get 8 Riksdaler in all.

Now, if a Swede wants to buy this same commodity, it is undeniable that he must pay the seller as much as the latter will make by selling it to the foreigner, namely, 8 Riksdaler, otherwise the seller thinks that he has lost money on this transaction.

A foreigner will thus buy 2 Riksdaler cheaper on account of the Bounty on Exportation, and because of that a Swede will be doubly taxed, namely, 2 Riksdaler to the fund for facilitating the purchases of the foreigner and 2 Riksdaler to indemnify the seller.

Accordingly it must happen that the foreigner can carry on the most profitable trade with our products in our own country. I stick to the little example I have mentioned: the Swedish Manufactured goods that were sold to the foreigner for 6 Riksdaler he can immediately on the spot sell for 7½ Riksdaler, at a profit of 25 per cent., to a Swede, who thus makes a purchase for half a Riksdaler less, or gains 8 1/3 per cent., than if he bought them from a Swedish Factory-shop, and therefore there will never be any lack of buyers.

If we then add the 33 1/3 per cent. better bargain of the foreigner to the 25 per cent. gained on the sale, it will make a profit for him of 58 1/3 per cent., which has been gained only owing to the Bounties upon Exportation and which would otherwise never have been possible. And this is a truth that not only has been proved in theory, but has also many times been confirmed by actual experience.

I could reveal a little Commercial plan that would give Sweden several thousands from some foreign Bounties on Exportation, did I not fear to wake others from their lethargy, when they might close some secret veins which, without being noticed in the Balance of Trade, now really counterbalance our deficit.

Therefore I sincerely wish that the English and other Nations may not only maintain their Bounties on Exportation, but also that these may be markedly increased on all the goods that can be placed to our debit; but, on the other hand, that my Native Country may get rid of these Bounties together with the obligations that prevent us from taxing our neighbours freely and frequently.

§ 11

Now I venture to go further and assert that laws which force people to enter certain trades are harmful to the Nation and reduce its gain: I am moved to do so for four reasons which are very important in my opinion.

In all Europe there is no fixed principle yet governing this distribution of workmen; for such laws are sometimes made to improve a new kind of handicraft or manufacture; sometimes to procure a livelihood for more inhabitants, and sometimes to give the owner of a workshop a greater profit by reducing wages.

Sometimes this is done to make our manufactures exportable; sometimes to produce some necessity or other within the Country. Now such an arrangement is made so that our own shipowners may profit by the freights on our own goods and Swedish men by wages; now, again, to get gold and silver into the country. Sometimes the Statutes aim at preventing the people emigrating; sometimes they aim at checking luxury. Sometimes they are found necessary to maintain order in trade and industry, and sometimes they must exist to prevent people driving different trades at the same time, and innumerable other things.

Is not all this lacking in the right sort of System? And must not a house built after so many designs have a strange appearance and lack the necessary stability?

§ 12

The second reason is this: that no Statesman is yet found capable of stating positively which trade will give us the greatest National gain, and consequently the Legislator must remain irresolute as to what goal he should guide our workmen to by his laws.

Who could be so stupid, someone will probably think, as not to know this? I assure you that it is not so easy as people imagine. Many who have troubled to think about these matters may have laid down a System and put every trade in order of precedence, but if we compare these Systems with those of others, we shall notice what differences there are between them.

I think that mine is certainly the best, but observing that everybody thinks the same of his, one must, like a sensible being, doubt everything until the matter is fully proved.

M. says that agriculture is the best; E. S. that this honour belongs to handicrafts; O. R. proves that it is commerce; A. G. that the Country must be helped by our ironworks, which are the source of its chief Exports, and so on. Who of all these is right?

They are all of them enlightened and scrupulous men, and they also enjoy the confidence of their fellow-citizens, and still it will be a long time before this dispute is settled. What trade, however, should the Government consider the most useful, and to which should they lead the population to the gain of the Nation? Or can mistakes be avoided in such circumstances?

However, if this controversy were quite settled, and a Statute were issued that should guide the people to the most profitable trade, I wonder if the Legislator would be capable of saying how many thousands of people could, now, work in it to the gain of the Nation, and that the same Statute would have the desired effect during so and so many years. It might happen only too soon that people would be drawn from other trades, and produce in this one a superabundance of goods, which consequently might lose their value abroad and result in an appreciable loss to the Nation.

§ 13

But even if it were possible to have all the knowledge needed for this - a thing that would be absolutely impossible - might it not happen, notwithstanding, that goodwill might be lacking among those who arrange this matter, a fact which I give as the third reason.

It might easily happen that they themselves derived some advantage from the people being guided to that or another special trade, and would therefore advocate it. What else could happen then but that the most useful trade would be robbed of people to the irreparable loss of the Country?

§ 14

If we finally imagine that we have surmounted all these obstacles and got ideal laws on this subject, a few special incidents might change the whole of this excellent state of things and make the most useful laws quite harmful to the Nation, in which fact the fourth reason against them is obviously to be found.

What changes in goods, what different values, are not to be seen daily? Quite unexpectedly Providence opens to a Nation a source of Wealth that will last for some time; but often it suddenly dries up, and a second or a third comes into existence on which the National gain will chiefly depend. Among the thousands of possibilities the law - even if it is the very best - is thus useful only in certain circumstances, namely, in those for which it was made, but harmful in all others.

And these are the real reasons why our wellintentioned Statutes must have had such an ill effect.

§ 15

Now I think it is about time to investigate more closely what kind of Statutes these are that draw people from one trade to another.

Such are all those that directly or indirectly grant privileges to one trade in preference to another. This is done directly, when the words of the Statute explicitly grant them; but indirectly, when the privileges are a necessary consequence of the observance of the Statute.

Thus, all privileges in trade belong here, not only the Exclusive ones, but also all those which give a producer some special advantage; all classifications of trade made by Law; for Nature itself makes a classification, which is the safest; but as soon as the Laws add to or deduct something from it, disturbances will immediately be noticed, which favour some special persons, but prevent others from carrying on their trade. Further, all Bounties on Production and Exportation are classed among these, together with all restrictions of liberty of dwelling or carrying on trade in towns or in the country.

What else are these things but dams that collect people in certain places, remove them from one place to another without anyone being able to say in which place they will be of most use, or whether they will increase or reduce the National gain, as is proved above.

When a stream is allowed to flow smoothly, every drop of water is in motion. Men there are no hindrances, every workman strives for his daily bread and thereby increases the gain of the Nation. But by Statutes the people are collected into certain groups, the possibilities of trade become limited, and in each group a small number keeps at the top above the great body of the people whose opulence is used as a reason for assuming the prosperity of the whole Nation.

§ 16

These dams are the same that impede the increase of the number of Swedish workmen, which, however, as shown in § 4, is the first foundation of National gain.

The weight of the water in a dam rests on the Water nearest to the bottom, so that the building must be much stronger and much more solid there; for we know from experience that the water at the bottom pours out through the smallest opening with greater rapidity than it does at the surface.

It is just the same thing with our population. We may turn to any trade and the number of people working in it.

If we look at the landowners, we shall scarcely find a single example of anybody who owns a large estate wanting to emigrate, though those who are waiting to get the same property after him are willing to give him money for the journey; but I wonder whether we can be just as sure about the Crofters of this Estate and their children?

I have often asked them where their children were, but from most of them I have got sad answers. "What should we do with them at home now? We have to toil hard to support ourselves in this place as long as God permits it. For some years our eldest, son was a sailor on a boat running to Holland, but stayed out there and is said to be prospering now. The second is on a boat running to England, but the last time we saw him he said good-bye for ever, intending to settle down there. The third went to Pomerania with the Army; he was taken prisoner by the King of Prussia, but when God gave us peace he did not want to return; he is now in the Prussian service and has married out there. The fourth is still a boy in petticoats, and God only knows what he will do or what will become of him."

Why does not a Yeoman remove? Because he is rooted there. But why should a farm-hand be more likely to do so? The answer is obvious: because the Statutes have not allowed him to settle down in any one place.

§ 17

If we look at our Guilds and the crowds within them, we shall notice a few well-off Masters, who need no longer sit in their workshops themselves, who live comfortably, dress themselves and their families after the latest fashion, keep a good table every day, pay and receive calls most of the time, and have ten or twelve workmen in their workshops, six of whom work for their food only, the others for a few Dalers a week. I ask, "Does such a man want to leave the country? " He will not do so as long as the Guild can provide him with workmen and takes care that the number of Masters does not become so great that he will of necessity be short of work and thus unable to dictate the price.

But what happens to his Journeymen and Apprentices? That is a more delicate question. I have sometimes heard their swan song and a general complaint in the Country, because they leave for Prussia and Russia; for there those soon become Masters who like.

Fancy! How benevolent are our Guilds not to cast off a poor man's children, but allow them to fill a gap thus opened without any payment.

§ 18

If we turn to our Iron works, we shall soon notice that it is far from being the wish of the owners of most of those Works to leave Sweden; but several poor Owners, who lack capital for carrying on their business, complain about slow sales, compulsory prices and the poverty they are threatened with, and that is quite another matter.

What is it that Smiths and Workmen complain of? Why do not the imported foreign workmen stay long? Why do the natives seldom marry and mostly become miserable creatures in the end? And how is it that the Corn and Provision business is only a little less profitable to the Owner than the Forging of Iron itself? And what is the cause of the peasants, who are under the command of the Works, getting breeze in their fields* and telling such stories about their children as did the Crofter mentioned above?