COMMERCE
COMMERCE, in its general acceptation, is the international traffic in goods, or what constitutes the foreign trade of all countries as distinct from their domestic trade, and it will be convenient in this place to treat it chiefly under this aspect
The same causes which give rise to exchange of commodities in a limited field call it into operation over more extended territories, and the same effects which flow from it in the smaller flow from it in the larger sphere. There are the same phenomena in either case, but in proportion as trade extends beyond the narrow boundaries of a tribe or a nation, the greater are the obstacles it has to encounter, not only in physical distance, and the practicable transit of commodities, but in computation, in gauging the capacity and course of markets, in the risk of making wrong adventures, in the rivalry and exclusiveness, the wars and revolutions of states; and consequently the more liable it becomes to complications, partly native and partly foreign to itself, by which its advantages have been obscured and its progress has been impeded in all ages.
Exchange of commodities implies not only a division of labour, but a development of natural resources where most abundant and accessible. As long as mankind live in scattered and isolated families, each supplying its own wants directly by its own labour, there can be little or no commerce; and as long as there is no commerce every local habitation of man must depend on its natural resources, however poor, unvaried, or difficult to utilize. Division of labour and exchange may be said to be of twin birth, since the existence of the one cannot be conceived without the other; and as they grow up from the simplest embryo, they act and react on each other, giving always wider scope to their mutual operation, and preparing a certain density of population in central places, or markets, where the traffickers meet and artificers find it their interest to settle, whether in the desert where caravans converge in their various routes from one region to another, or at the confluence of navigable rivers, or in secure bays of inland seas, commanding an extensive coast line, or some interoceanic passage, and thus laying the foundation of towns and cities, to become, it may be, as they have become in many instances, the seats of rule and empire. The direct result of these primitive human instincts, as they may be called, of division and exchange of the products of labour was to extend among mankind a material and social comity, apart from all tribal or political relations, from which sprung, as on a solid base or framework, the fair but often frail fabric of civilization, arts, sciences, letters, philosophy, religion—all that gives grace and dignity to humanity. The special office of commerce, in the material part of the economy, is to organize places, soils, climates, all local conveniences of land or sea, and superior natural resources of various countries, as that of the division of labour is to organize the talent, handiness, and aptitude of individuals.
The formative and developing power of this function of commerce is much more conspicuous in the phenomena of ancient history and in contemporary results than may at first sight appear. It were easy, judging from local qualities alone, to explain why the metropolis of the United Kingdom should be on the Thames where London now is; how rival ports arose along the western coast of Britain, on the Severn, the Mersey, and the Clyde; why Lancashire should have become the great centre of the cotton manufacture; why Dundee, from a small beginning in flax from the adjacent Baltic, should have become a great emporium of flaxen and cognate fabrics; why there should be a Hull on the Humber, a Newcastle on the Tyne, and a rapidly rising Middlesborough on the Tees; why the Thames should maintain, after many centuries of change and amidst many rivals, its pristine supremacy, and yet the western coast of our island be much more brilliant commercially than the eastern. But the same principle may be no less a guide to our understanding why the earliest records we have of great seats of population should be on the Euphrates, the Nile, the Ganges, and the Blue and Yellow Rivers of China; how Palmyra, the ancient grandeur of which has been discovered in its modern ruins, should have been built in the middle of a desert; how the cradle of navigation and maritime commerce should be so indelibly couched along the coasts and round the numerous islands of the Mediterranean Sea; how international trade, seeking an outlet from its dreary prison of overland desert, war, and rapine, should have found it for a time by the Mediterranean to the Red Sea and the Indian Ocean, only to be diverted by a bold navigation round the cape of Africa, and should now be returning under more secure conditions to the shorter route again. The tendency of commerce to connect one seat of population with another, to open roads, to seize on every physical advantage of transit between them, to create new centres of industry and traffic on the lines of communication, and by the union, not only of human labour and capacities, but of almost boundlessly diversified territorial resources thus effected, to increase the production and circulation of commodities, is too obvious to require illustration. This is what has been called by economists “the territorial division of labour,” but the term scarcely reaches a full expression of the effect of commerce. There is not only a territorial extension of the division of labour in the sense of being spread over a larger area and a greatly more numerous population, but the physical resources, the natural agents of wealth themselves, as found in various countries and places, are brought into the general organization as they could be by no other means, and made to yield in due harmony with each other all their special and relative superiorities.
A consideration of this action of international traffic in commodities is sufficient to dispel many false views that have at various times been propounded with much authority such as that commerce, being an exchange of value for value, can add nothing to the general wealth; or that the profit of one party to an exchange is the loss of the other party; or that the only profit of commerce consists of the balance accruing in the precious metals; and similar crudities of conception. The substratum of the whole system of international traffic is that commodities, after bearing the cost of transit, are of more value in one place than in another. Commodities are often so abundant, or capable of being produced so abundantly in some places, as to be superfluities, and absolutely valueless in such places, and yet are of much value in other places. As this relation is mutual, there is nothing inconsistent in an exchange of commodities of more value in one place than in another with a gain of value on both sides of the exchange; and this becomes all the more apparent when, in addition to the profit of the merchants or agents employed in the transaction, there is taken into account the gain arising to the communities in their industry, and in the profits of their industry.
