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_.
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