HIS THEORY OF TRADE
After examining in the third book the various policies of restriction and preference adopted by the countries of Europe, Smith in the fourth book launches into the famous polemic against the so-called mercantile system of political economy. Smith shows that the restrictive measures of the mercantilists tended rather to prevent men serving each other than to promote public opulence. He assailed the theory of the balance of trade, much as David Hume had done. Everywhere he vindicated the system of natural liberty, and maintained that prosperity is not manufactured by governments but comes from “the natural effort of every individual to better his own condition.” After disposing of the mercantilists, Smith treats of the “agricultural system” of political economy, which held that the net produce of the land is the sole source of national opulence. Since economists of this school had maintained that perfect liberty is the only policy that can raise this annual produce to a maximum, Smith considered their doctrines “the nearest approximation to the truth that has yet been published upon the subject of political economy.”