r of wine; and in England by the negociation of the
same bill, the exporter of the cloth will be authorized to receive its
value from the importer of wine.

But if the prices of wine were such that no wine could be exported to
England, the importer of cloth would equally purchase a bill; but the
price of that bill would be higher, from the knowledge which the seller
of it would possess, that there was no counter bill in the market by
which he could ultimately settle the transactions between the two
countries: he might know that the gold or silver money which he received
in exchange for his bill, must be actually exported to his correspondent
in England, to enable him to pay the demand which he had authorized to
be made upon him, and he might therefore charge in the price of his bill
all the expenses to be incurred, together with his fair and usual
profit.

If then this premium for a bill on England should be equal to the profit
on importing cloth, the importation would of course cease; but if the
premium on the bill were only 2 per cent., if to be enabled to pay a
debt in England of 100_l._, 102_l._ should be paid in Portugal, whilst
cloth which cost 45_l._ would sell for 50_l._, cloth would be imported,
bills would be bought, and money would be exported, till the diminution
of money in Portugal, and its accumulation in England, had produced such
a state of prices, as would make it no longer profitable to continue
these transactions.

But the diminution of money in one country, and its increase in another,
do not operate on the price of one commodity only, but on the prices of
all, and therefore the price of wine and cloth will be both raised in
England, and both lowered in Portugal. The price of cloth from being
45_l._ in one country, and 50_l._ in the other, would probably fall to
49_l._ or 48_l._ in Portugal, and rise to 46_l._ or 47_l._ in England,
and not afford a sufficient profit after paying a premium for a bill, to
induce any merchant to import that commodity.

It is thus that the money of each country is apportioned to it in such
quantities only as may be necessary to regulate a profitable trade of
barter. England exported cloth in exchange for wine, because by so
doing, her industry was rendered more productive to her; she had more
cloth and wine than if she had manufactured both for herself; and
Portugal imported cloth, and exported wine, because the industry of
Portugal could be more beneficially employ