From the mistaken theory that wealth consists in money, or in gold and silver, there has arisen an erroneous and harmful system of political economy and of legislation in the supposed interests of manufacture, of commerce, and of the wealth of nations. A rich country is supposed to be a country abounding in money; and all the nations of Europe have consequently studied, though to little purpose, every possible means of accumulating gold and silver in their respective countries. For example, they have at times forbidden, or hindered by heavy duties, the export of these metals. But all these attempts are vain; for on the one hand, when the quantity of gold and silver imported into any country exceeds the effectual demand, no vigilance can prevent their exportation; and on the other hand, if gold and silver should fall short in a country, there are more expedients for supplying their place than that of any other commodity. The real inconvenience which is commonly called "scarcity of money" is not a shortness in the medium of exchange, but is a weakening and diminution of credit, due to over-trading. Money is part of the national capital, but only a small part and always the most unprofitable part of it. The principle of the "commercial system" or "mercantile system" is, that wealth consists in money, or in gold and silver. It is an utterly untrue principle. But once it had been established in general belief that wealth consists in gold and silver, and that these metals can be brought into a country which has no mines only by the "balance of trade," that is to say, by exporting to a greater value than it imports, it necessarily became the great object of political economy to diminish as much as possible the importation of foreign goods for home consumption, and to increase as much as possible the exportation of the produce of domestic industry. Its two great engines for enriching the country, therefore, were restraints upon importation and encouragements to exportation. The restraints upon importation were of two kinds: first, restraints upon the importation of such foreign goods for home consumption as could be produced at home, from whatever country they were imported; and secondly, restraints upon the importation of goods of almost all kinds from those particular countries with which the balance of trade was supposed to be disadvantageous. These different restraints consisted sometimes in high duties, and sometimes in absolute prohibitions. Exportation was encouraged sometimes by drawbacks, sometimes by bounties, sometimes by advantageous treaties of commerce with sovereign states, and sometimes by the establishment of colonies in distant countries. The above two restraints, and these four encouragements to exportation, constitute the six principal means by which the commercial or mercantile system proposes to increase the quantity of gold and silver in any country by turning the balance of trade in its favour.