on one side, which you might have had,
as well as on the other, and you lose a market for British industry to
the full extent of that gross value."[324]

If the principle laid down by Adam Smith were unsound, that the man who
buys British commodities with British commodities replaces two British
capitals, whilst he who buys foreign commodities with British
commodities replaces but one British capital, Mr. M'Culloch had an
inviting opportunity of exposing its unsoundness in the edition of _The
Wealth of Nations_ edited by him; and in fact he has written an
elaborate note on the passage, but, as it seems to me, without proving
the doctrine which it enunciates to be incorrect. Here is the portion of
Mr. M'Culloch's footnote which deals with the subject: "Dr. Smith does
not say that the importation of foreign commodities has any tendency to
force capital abroad; and unless it did this, it is plain that his
statement with respect to the effect of changing a home for a foreign
trade of consumption, is quite inconsistent with the fundamental
principle he has elsewhere established, that industry is always in
proportion to the amount of capital." From this, his opening sentence,
it would seem that Mr. M'Culloch mistook the force and tendancy of Adam
Smith's reasoning, who does not, in the passage annotated by Mr.
M'Culloch, advocate the change of a foreign for a home trade of
consumption. He only goes to prove that a home trade is more profitable
to a nation than a foreign one, in as much as _it replaces two home
capitals_, whilst the foreign trade replaces but _one_. For a country
with vast manufactories, like Great Britain, the home trade would not be
at all sufficient, but--_as far as it goes_--it is double as
advantageous as the foreign trade. Adam Smith seeks to prove no more.
But Mr. M'Culloch meets the question more directly as follows: "Suppose,
for the sake of illustration, that the case put by Dr. Smith actually
occurs--that the Scotch manufactures are sent to Portugal; it is
obvious, if the same demand continue in London for these manufactures as
before they began to be sent abroad, that additional capital and
labourers will be required to furnish commodities for both the London
and Portuguese markets. In this case, therefore, instead of the industry
of the country sustaining any diminution from the export of Scotch
manufactures to a foreign country, it would evidently be augmented, and
a new field would be discovere