e demand of the home market requires. The
surplus part of them, therefore, must be sent abroad, and
exchanged for something for which there is a demand at
home. It is only by means of such exportation, that this
surplus can acquire a value sufficient to compensate the
labour and expense of producing it." One would be led to
think by the above passage, that Adam Smith concluded we
were under some necessity of producing a surplus of corn,
woollen goods, and hardware, and that the capital which
produced them could not be otherwise employed. It is,
however, always a matter of choice in what way a capital
shall be employed, and therefore there can never, for any
length of time, be a surplus of any commodity; for if
there were, it would fall below its natural price, and
capital would be removed to some more profitable
employment. No writer has more satisfactorily and ably
shewn than Dr. Smith, the tendency of capital to move from
employments in which the goods produced do not repay by
their price the whole expenses, including the ordinary
profits, of producing and bringing them to market.[35]

[35] See Chap. 10. Book I.

[36] "All kinds of public loans," observes M. Say, "are
attended with the inconvenience of withdrawing capital, or
portions of capital, from productive employments, to
devote them to consumption; and when they take place in a
country, _the Government of which does not inspire much
confidence_, they have the further inconvenience of
raising the interest of capital. Who would lend at 5 per
cent. per annum to agriculture, to manufacturers, and to
commerce, when a borrower may be found ready to pay an
interest of 7 or 8 per cent.? That sort of income, which
is called profit of stock, would rise then at the expense
of the consumer. Consumption would be reduced by the rise
in the price of produce; and the other productive services
would be less in demand, less well paid. The whole nation,
capitalists excepted, would be the sufferers from such a
state of things." To the question: "who would lend money
to farmers, manufacturers, and merchants, at 5 per cent.
per annum, when another borrower having little credit,
would give 7 or 8?" I reply, that every prudent and
reasonable man would. Because the rate of interest is 7 or
8 per cent. there where the lender runs extraordinary
risk, is this any reason that it should be equally hig