To Mathew Carey
Ocr. 25. 
An absence from home with some pressing avocations since my return have delayd. thus long my acknowledgment of your’s of the 3d. inst; and of the pamphlet on our commercial policy, which is another proof of your disinterested zeal on an important subject.
You have placed in a strong light the evils necessarily resulting from the excess of our importations over our exportations, and the expediency of restoring an equilibrium.
I wish the remedy were as easy as the malady is distressing. The malady does indeed like some physical ones, carry in some degree its cure within itself. The amount of purchases, must be controuled by deficient means of payment. But as long as a foreign credit is given, a limited balance may be kept up, producing a drain of the circulating metals and embarrassment in our internal affairs.
How a remedial equilibrium in our foreign trade is to be brought about is the problem?
Our Imported articles are of 2 Classes. 1. Such as are or may be provided at home. 2. Such as can not, either at all, or for a long time, be otherwise obtained than from abroad.
With respect to the first, an encouragement to home products results from a declension of foreign demand, for our articles of export, and from the profitableness of transferring labour from these to manufactured articles. In the policy of favoring this transfer, within the reasons, heretofore intimatd I entirely concur.
I fear however that this source of relief would fall short of the object. Whatever might be gained by such a transfer of labour as would diminish our imports in a greater proportion than it would diminish our exports, the remaining class of imports which can not be provided at home, and which has in fact, been a main source of the unfavorable balance might still keep the scale agst. us. It is the class consisting in great part of luxuries, which the habits of our people are prone to call for when they can be obtained from indulgent Creditors. Whilst foreign capital gives a credit to our importing Merchants, which enables these to do the same to the retail Merchants, who are thus induced to extend it to the consumers, experience has shewn the danger that the consumption will not be measured by the rules of economy. The trade of this Country in its Colonial State was always a trade of Credit, and the Country, as a consequence always under the pressure of debts to Brith: Merchants, and perplexed in its pecuniary affairs. Hence the resort to paper currencies, and hence the amount of British debts at the commencement of the revolutionary war. Since the peace of 1783, the like cause & the like effects have marked our situation, which has been not a little aggravated by the abuses of the Banking system.
Our difficulties would seem then to have deeper roots than many suppose. On the disposition of G. B. to avail herself of her great mercantile capital in her commerce with us we have neither a power of controul nor a right to complain. And over the habitual propensities of our own Citizens, there could be no adequate controul but by sumptuary prohibitions; to which they are averse as well from a sentiment of liberty, as on the score of enjoyment.
Must we then despair of our situation? Far from it. Progressive alleviations at least may fairly be looked for, which may prepare the way for the desired State of things. Among our misfortunes have been unusual failures of some of our Staple crops which reduced the quantity in greater proportion than they raised the price. Future seasons may be less unpropitious. Our growing manufactures, which may be still further fostered by public patronage, will abridge the excess of our imports. The harrassing consequences of improvident consumption, may be expected to check in individuals an indulgence in foreign superfluities. Reforms in the Banking System may put an end to the lavish credits which have conspired to produce extravagant habits. A like tendency will result from a more prompt and exact administration of justice, where relaxations or aberrations have crept into it. All these causes together must have a healing influence that will be felt in the general condition of the Country. Nor is it a premature consideration that the young nations which are entering into the commerce of the world, and which are still more agricultural than the U.S. will by narrowing the room for our present staples in foreign Markets, hasten & extend the application of our industry, to manufactured articles which their own growing markets will call for, & of which our comparative vicinity will favor supplies from our workshops. Whatever advantage therefore may accrue to a nation from a combination of manufacturing with agricultural industry will in our case be forwarded by the Independent rank assumed by our fellow inhabitants of this Hemisphere. Finally we are not to lose sight of the material fact, that an insufficiency of our exports to balance our imports, must of necessity, restrain or reduce the latter within certain limits; and co-operate powerfully with other means of promoting an equilibrium. Among the persuasive means, it is not an empty compliment to class the impressive statements and sound admonitions which your pamphlet addresses to the good sense & interest of all who have contributed to the evils of an unfavorable balance of trade, by their inconsiderate use of imported merchandizes. Of all the remedies for our embarrassments, economical habits are the most desirable & the most effectual. If individuals live within their incomes the nation must do so.
Such is the view of the subject which at present occurs to me. I am aware that it may not in some respects receive your approbation. Of the frankness with which it is given I am sure you will not disapprove. With sincere esteem & respect
Draft (DLC: Rives Collection, Madison Papers). Year supplied at a later date in pencil in JM’s hand.