In all commercial intercourse with each other, (or competition in selling to a third nation,) the poorer nation has the advantage in its gain; but this advantage is generally prevented by the length of credit which the wealthy nation is enabled to give, by which manufacturers are sometimes ruined in their own country by strangers, who can neither rival them in lowness of price nor goodness in quality.

In countries that are poor, those who have the selling, but not the manufacturing of goods, are so much greater gainers by selling goods purchased on credit, of which they can keep a good stock and assortment, than in selling from a shop or store scantily supplied with ready money, that there is not almost any question about either price or quality; there is not scarcely an alternative.  In one line, a man can begin who has scarcely any capital, and do a great deal of business; he can even afford to sell the articles he purchases on credit with very little profit, because they procure him ready money; whereas, if he sells an article upon which he has no credit, he must replace it with another, by paying money immediately.  The consequence is, that while those who sell to the public are poor, the nation or manufacturer that gives the longest credit will have the preference; but this is daily diminishing, for even with the capital of the rich nation itself, the manufactures of the poor one are encouraged; the manner is as follows: 

A, at New York, purchases goods for one thousand pounds from B, at London, which he sells without any profit, and, perhaps, at a considerable loss; because B gives him twelve months credit.  But A, who has, by this means, got hold of money, as if by a loan, will not lay that out with B, nor let him touch it till the year’s end; and, having made no profit by the sale of B’s goods, he must turn to advantage the money he obtained for them.  According to the situation of mat-[end of page #179] ters in the country, and the nature of A’s concerns, he will make more or less, but what he makes it is not the business to investigate; it is sufficient to know, that he will lay his ready money out with those who will sell cheap, in order to get by it; that is to say, he will lay it out with some person in his own country. {148} Thus, though the rich nation sells goods on credit at a price which cannot be obtained for them by the purchaser, yet its capital serves to give activity to the manufacturers in the poor country.  It is true, that this operation is slow, but it produces an effect in time, and finishes by robbing the wealthy nation of its superiority, obtained by giving credit.  It is thus that in all their intercourse, the first advantage is to the rich nation, but terminates in favour of the poor; for whenever equality of prices are the question, and both can give sufficient credit, the poorer nation has the advantage in point of price.

With regard to rivalling each other, in a third place, the poor nation has the advantage, if the merchants there have the means of paying with ready money, because the price is lower than that of the richer country. {149} If they have not that means, they cannot deal with them, but must wait till they have, by perseverance; and, in course of time, come to have the means when the poor nation is certain to enter into competition with advantage.