Further, as taxes or regulations which raise the market price above the natural price diminish public opulence, so do bounties like those upon corn and coarse linen, which depress the market price below the natural price. A bounty stimulates the production of a particular commodity, and makes it cheaper for foreigners at the expense of the public at home. Another serious objection to the system is that people are diverted from other employments, and thus “what may be called the natural balance of industry” is disturbed. “Upon the whole, therefore, it is by far the best police to leave things to their natural course and allow no bounties nor impose taxes on commodities.” In a subsequent lecture he arrived at the same conclusion by an analysis of the true nature of money. At that time money was almost universally identified with wealth. Though Hume had exposed the fallacy ten years before, his essay had not affected national policy.[17] Treaties of commerce were always based upon the theory of the balance of trade, which again rested on the notion that if a country’s exports could be made to exceed its imports, it would receive the balance in gold and so become wealthy. By way of refuting this strange dogma of the mercantilists, Smith used a very felicitous illustration. He compared money to the highroads of a country “which bear neither corn nor grass themselves but circulate all the corn and grass in the country.” If we could save some of the ground taken up by highways without diminishing the facilities of carriage and communication, we should add to the wealth of the country; and the case would be the same if by such a device as paper-money we could reduce the stock of coin required without impairing its efficiency as a medium of exchange. For the ground saved could be cultivated, and the money saved could be sent abroad in exchange for useful commodities. Thus the nation would be enriched; for its opulence “does not consist in the quantity of coin, but in the abundance of commodities which are necessary for life.” In deference to the mercantilists the government had prohibited the exportation of coin, “which prohibition has been extremely hurtful to the commerce of the country,” for every unnecessary accumulation of money is a dead stock. The same idea that wealth consists in money had also led to fiscal discrimination against France and in favour of Spain and Portugal. Why was this policy absurd? The reason, said Smith, will appear on the least reflection, and he thereupon put to the students in a few telling sentences those elementary truths about the nature of foreign trade which seem too simple even to have been discovered, yet are still sometimes but imperfectly applied by the most enlightened statesmen, and have not always been apprehended by trained economists:—