ed for both countries in
producing wine. Let there be more difficulty in England in producing
cloth, or in Portugal in producing wine, or let there be more facility
in England in producing wine, or in Portugal in producing cloth, and the
trade must immediately cease.

No change whatever takes place in the circumstances of Portugal; but
England finds that she can employ her labour more productively in the
manufacture of wine, and instantly the trade of barter between the two
countries changes. Not only is the exportation of wine from Portugal
stopped, but a new distribution of the precious metals takes place, and
her importation of cloth is also prevented.

Both countries would probably find it their interest to make their own
wine and their own cloth; but this singular result would take place: in
England, though wine would be cheaper, cloth would be elevated in price,
more would be paid for it by the consumer; while in Portugal the
consumers, both of cloth and of wine, would be able to purchase those
commodities cheaper. In the country where the improvement was made,
prices would be enhanced; in that where no change had taken place, but
where they had been deprived of a profitable branch of foreign trade,
prices would fall.

This, however, is only a seeming advantage to Portugal, for the quantity
of cloth and wine together produced in that country would be diminished,
while the quantity produced in England would be increased. Money would
in some degree have changed its value in the two countries--it would be
lowered in England, and raised in Portugal. Estimated in money, the
whole revenue of Portugal would be diminished; estimated in the same
medium, the whole revenue of England would be increased.

Thus then it appears, that the improvement of a manufacture in any
country tends to alter the distribution of the precious metals amongst
the nations of the world: it tends to increase the quantity of
commodities, at the same time that it raises general prices in the
country where the improvement takes place.

To simplify the question, I have been supposing the trade between two
countries to be confined to two commodities, to wine and cloth, but it
is well known that many and various articles enter into the list of
exports and imports. By the abstraction of money from one country, and
the accumulation of it in another, all commodities are affected in
price, and consequently encouragement is given to the exportation of