START OF THE PROJECT GUTENBERG EBOOK WHAT IS FREE TRADE?*** E-text prepared by Sankar Viswanathan and the Project Gutenberg Online Distributed Proofreading Team (https://www.pgdp.net) from page images generously made available by the Making of America Collection of the University of Michigan Library (http://www.hti.umich.edu/m/moagrp/) Note: Images of the original pages are available through the Making of America Collection of the University of Michigan Library. See http://www.hti.umich.edu/m/moagrp/ WHAT IS FREE TRADE? An Adaptation of Frederick Bastiat's "Sophismes Économiques" Designed for the American Reader by EMILE WALTER A Worker New York: G. P. Putnam & Son, 661 Broadway The New York Printing Company, 81, 83, And 85 Centre Street, New York 1867 CONTENTS. CHAPTER I. Plenty and Scarcity CHAPTER II. Obstacles to Wealth and Causes of Wealth CHAPTER III. Effort--Result CHAPTER IV. Equalizing of the Facilities of Production CHAPTER V. Our Productions are Overloaded with Internal Taxes CHAPTER VI. Balance of Trade CHAPTER VII. A Petition CHAPTER VIII. Discriminating Duties CHAPTER IX. A Wonderful Discovery CHAPTER X. Reciprocity CHAPTER XI. Absolute Prices CHAPTER XII. Does Protection raise the Rate of Wages? CHAPTER XIII. Theory and Practice CHAPTER XIV. Conflict of Principles CHAPTER XV. Reciprocity Again CHAPTER XVI. Obstructed Rivers plead for the Prohibitionists CHAPTER XVII. A Negative Railroad CHAPTER XVIII. There are no Absolute Principles CHAPTER XIX. National Independence CHAPTER XX. Human Labor--National Labor CHAPTER XXI. Raw Material CHAPTER XXII. Metaphors CHAPTER XXIII. Conclusion INTRODUCTION. Years ago I could not rid my mind of the notion that Free Trade meant some cunning policy of British statesmen designed to subject the world to British interests. Coming across Bastiat's inimitable _Sophismes Economiques_ I learnt to my surprise that there were Frenchmen also who advocated Free Trade, and deplored the mischiefs of the Protective Policy. This made me examine the subject, and think a good deal upon it; and the result of this thought was the unalterable conviction I now hold--a conviction that harmonizes with every noble belief that our race entertains; with Civil and Religious Freedom for All, regardless of race or color; with the Harmony of God's works; with Peace and Goodwill to all Mankind. That conviction is this: that to make taxation the incident of protection to special interests, and those engaged in them, is robbery to the rest of the community, and subversive of National Morality and National Prosperity. I believe that taxes are necessary for the support of government, I believe they must be raised by levy, I even believe that some customs taxes may be more practicable and economical than some internal taxes; but I am entirely opposed to making anything the object of taxation but the revenue required by government for its economical maintenance. I do not espouse Free Trade because it is British, as some suppose it to be. Independent of other things, that would rather set me against it than otherwise, because generally those things which best fit European society ill befit our society--the structure of each being so different. Free Trade is no more British than any other kind of freedom: indeed, Great Britain has only followed quite older examples in adopting it, as for instance the republics of Venice and Holland, both of which countries owed their extraordinary prosperity to the fact of their having set the example of relaxing certain absurd though time-honored restrictions on commerce. I espouse Free Trade because it is just, it is unselfish, and it is profitable. For these reasons have I, a Worker, deeply interested in the welfare of the fellow-workers who are my countrymen, lent to Truth and Justice what little aid I could, by adapting Bastiat's keen and cogent Essay to the wants of readers on this side of the Atlantic. EMILE WALTER, _the Worker_. NEW YORK, 1866. WHAT IS FREE TRADE? CHAPTER I. PLENTY AND SCARCITY. Which is better for man and for society--abundance or scarcity? What! Can such a question be asked? Has it ever been pretended, is it possible to maintain, that scarcity is better than plenty? Yes: not only has it been maintained, but it is still maintained. Congress says so; many of the newspapers (now happily diminishing in number) say so; a large portion of the public say so; indeed, the _city theory_ is by far the more popular one of the two. Has not Congress passed laws which prohibit the importation of foreign productions by the maintenance of excessive duties? Does not the _Tribune_ maintain that it is advantageous to limit the supply of iron manufactures and cotton fabrics, by restraining any one from bringing them to market, but the manufacturers in New England and Pennsylvania? Do we not hear it complained every day: Our importations are too large; We are buying too much from abroad? Is there not an Association of Ladies, who, though they have not kept their promise, still, promised each other not to wear any clothing which was manufactured in other countries? Now tariffs can only raise prices by diminishing the quantity of goods offered for sale. Therefore, statesmen, editors, and the public generally, believe that scarcity is better than abundance. But why is this; why should men be so blind as to maintain that scarcity is better than plenty? Because they look at _price_, but forget _quantity_. But let us see. A man becomes rich in proportion to the remunerative nature of his labor; that is to say, _in proportion as he sells his produce at a high price_. The price of his produce is high in proportion to its scarcity. It is plain, then, that, so far as regards him at least, scarcity enriches him. Applying, in turn, this manner of reasoning to each class of laborers individually, the _scarcity theory_ is deduced from it. To put this theory into practice, and in order to favor each class of labor, an artificial scarcity is produced in every kind of produce by prohibitory tariffs, by restrictive laws, by monopolies, and by other analogous measures. In the same manner it is observed that when an article is abundant, it brings a small price. The gains of the producer are, of course, less. If this is the case with all produce, all producers are then poor. Abundance, then, ruins society; and as any strong conviction will always seek to force itself into practice, we see the laws of the country struggling to prevent abundance. Now, what is the defect in this argument? Something tells us that it must be wrong; but _where_ is it wrong? Is it false? No. And yet it is wrong? Yes. But how? _It is incomplete._ Man produces in order to consume. He is at once producer and consumer. The argument given above, considers him only under the first point of view. Let us look at him in the second character, and the conclusion will be different. We may say: The consumer is rich in proportion as he _buys_ at a low price. He buys at a low price in proportion to the abundance of the articles in demand; _abundance_, then, enriches him. This reasoning, extended to all consumers, must lead to the _theory of abundance_. Which theory is right? Can we hesitate to say? Suppose that by following out the _scarcity theory_, suppose that through prohibitions and restrictions we were compelled not only to make our own iron, but to grow our own coffee; in short, to obtain everything with difficulty and great outlay of labor. We then take an account of stock and see what our savings are. Afterward, to test the other theory, suppose we remove the duties on iron, the duties on coffee, and the duties on everything else, so that we shall obtain everything with as little difficulty and outlay of labor as possible. If we then take an account of stock, is it not certain that we shall find more iron in the country, more coffee, more everything else? Choose then, fellow-countrymen, between scarcity and abundance, between much and little, between Protection and Free Trade. You now know which theory is the right one, for you know the fruits they each bear. But, it will be answered, if we are inundated with foreign goods and produce, our specie, our precious product of California, our dollars, will leave the country. Well, what of that? Man is not fed with coin. He does not dress in gold, nor warm himself with silver. What does it matter, then, whether there be more or less specie in the country, provided there be more bread in the cupboard, more meat in the larder, more clothes in the wardrobe, and more fuel in the cellar? Again, it will be objected, if we accustom ourselves to depend upon England for iron, what shall we do in case of a war with that country? To this I reply, we shall then be compelled to produce iron ourselves. But, again I am told, we will not be prepared; we will have no furnaces in blast, no forges ready. True; neither will there be any time when war shall occur that the country will not be already filled with all the iron we shall want until we can make it here. Did the Confederates in the late war lack for iron? Why, then, shall we manufacture our own staples and bolts because we may some day or other have a quarrel with our ironmonger! To sum up: A radical antagonism exists between the vender and the buyer. The former wishes the article offered to be _scarce_, and the supply to be small, so that the price may be high. The latter wishes it _abundant_ and the supply to be large, so that the price may be low. The laws, which should at least remain neutral, take part for the vender against the buyer; for the producer against the consumer; for high against low prices; for scarcity against abundance; for protection against free trade. They act, if not intentionally, at least logically, upon the principle that _a nation is rich in proportion as it is in want of everything_. CHAPTER II. OBSTACLES TO WEALTH AND CAUSES OF WEALTH. Man is naturally in a state of entire destitution. Between this state, and the satisfying of his wants, there exist a number of obstacles which it is the object of labor to surmount. I wish to make a journey of some hundred miles. But between the point of my departure and my destination there are interposed mountains, rivers, swamps, forests, robbers; in a word--_obstacles_. To overcome these obstacles it is necessary that I should bestow much labor and great efforts in opposing them; or, what is the same thing, if others do it for me, I must pay them the value of their exertions. IT IS EVIDENT THAT I WOULD HAVE BEEN BETTER OFF HAD THESE OBSTACLES NEVER EXISTED. Remember this. Through the journey of life, in the long series of days from the cradle to the tomb, man has many difficulties to oppose him. Hunger, thirst, sickness, heat, cold, are so many obstacles scattered along his road. In a state of isolation he would be obliged to combat them all by hunting, fishing, agriculture, spinning, weaving, architecture, etc., and it is very evident that it would be better for him that these difficulties should exist to a less degree, or even not at all. In a state of society he is not obliged personally to struggle with each of these obstacles, but others do it for him; and he, in turn, must remove some one of them for the benefit of his fellow-men. This doing one kind of labor for another, is called the division of labor. Considering mankind as a whole, _let us remember once more that it would be better for society that these obstacles should be as weak and as few as possible_. But mark how, in viewing this simple truth from a narrow point of view, we come to believe that obstacles, instead of being a disadvantage, are actually a source of wealth! If we examine closely and in detail the phenomena of society and the private interests of men _as modified by the division of labor_, we perceive, without difficulty, how it has happened that wants have been confounded with riches, and the obstacle with the cause. The separation of occupations, which results from the division of labor, causes each man, instead of struggling against _all_ surrounding obstacles, to combat only _one_; the effort being made not for himself alone, but for the benefit of his fellows, who, in their turn, render a similar service to him. It hence results that this man looks upon the obstacle which he has made it his profession to combat for the benefit of others, as the immediate cause of his riches. The greater, the more serious, the more stringent, may be this obstacle, the more he is remunerated for the conquering of it, by those who are relieved by his labors. A physician, for instance, does not busy himself in baking his bread, or in manufacturing his clothing and his instruments; others do it for him, and he, in return, combats the maladies with which his patients are afflicted. The more dangerous and frequent these maladies are, the more others are willing, the more, even, are they forced, to work in his service. Disease, then, which is an obstacle to the happiness of mankind, becomes to him the source of his comforts. The reasoning of all producers is, in what concerns themselves, the same. As the doctor draws his profits from _disease_, so does the ship-owner from the obstacle called _distance_; the agriculturist from that named _hunger_; the cloth manufacturer from _cold_; the schoolmaster lives upon _ignorance_, the jeweler upon _vanity_, the lawyer upon _cupidity and breach of faith_. Each profession has then an immediate interest in the continuation, even in the extension, of the particular obstacle to which its attention has been directed. Theorists hence go on to found a system upon these individual interests, and say: Wants are riches: Labor is riches: The obstacle to well-being is well-being: To multiply obstacles is to give food to industry. Then comes the statesman; and as the developing and propagating of obstacles is the developing and propagating of riches, what more natural than that he should bend his efforts to that point? He says, for instance: If we prevent a large importation of iron, we create a difficulty in procuring it. This obstacle severely felt, obliges individuals to pay, in order to relieve themselves from it. A certain number of our citizens, giving themselves up to the combating of this obstacle, will thereby make their fortunes. In proportion, too, as the obstacle is great, and the mineral scarce, inaccessible, and of difficult and distant transportation, in the same proportion will be the number of laborers maintained by the various branches of this industry. The same reasoning will lead to the proscription of machinery. Here are men who are at a loss how to dispose of their petroleum. This is an obstacle which other men set about removing for them by the manufacture of casks. It is fortunate, say our statesmen, that this obstacle exists, since it occupies a portion of the labor of the nation, and enriches a certain number of our citizens. But here is presented to us an ingenious machine, which cuts down the oak, squares it, makes it into staves, and, gathering these together, forms them into casks. The obstacle is thus diminished, and with it the fortunes of the coopers. We must prevent this. Let us proscribe the machine! To sift thoroughly this sophism, it is sufficient to remember that human labor is not an _end_ but a _means_. _Labor is never without employment._ If one obstacle is removed, it seizes another, and mankind is delivered from two obstacles by the same effort which was at first necessary for one. If the labor of coopers could become useless, it must take another direction. To maintain that human labor can end by wanting employment, it would be necessary to prove that mankind will cease to encounter obstacles. CHAPTER III. EFFORT--RESULT. We have seen that between our wants and their gratification many obstacles are interposed. We conquer or weaken these by the employment of our faculties. It may be said, in general terms, that industry is an effort followed by a result. But by what do we measure our well-being? By our riches? By the result of our effort, or by the effort itself? There exists always a proportion between the effort employed and the result obtained. Does progress consist in the relative increase of the second or of the first term of this proportion--between effort or result? Both propositions have been sustained, and in political economy opinions are divided between them. According to the first system, riches are the result of labor. They increase in the same ratio as _the result does to the effort_. Absolute perfection, of which God is the type, consists in the infinite distance between these two terms in this relation, viz., effort none, result infinite. The second system maintains that it is the effort itself which forms the measure of, and constitutes, our riches. Progression is the increase of the _proportion of the effect to the result_. Its ideal extreme may be represented by the eternal and fruitless efforts of Sisyphus.[A] [Footnote A: We will therefore beg the reader to allow us in future, for the sake of conciseness, to designate this system under the term of _Sisyphism_, from Sisyphus, who, in punishment of his crimes, was compelled to roll a stone up hill, which fell to the bottom as fast as he rolled it to the top, so that his labor was interminable as well as fruitless.] The first system tends naturally to the encouragement of everything which diminishes difficulties, and augments production--as powerful machinery, which adds to the strength of man; the exchange of produce, which allows us to profit by the various natural agents distributed in different degrees over the surface of our globe; the intellect which discovers, the experience which proves, and the emulation which excites. The second as logically inclines to everything which can augment the difficulty and diminish the product; as, privileges, monopolies, restrictions, prohibition, suppression of machinery, sterility, &c. It is well to mark here that the universal practice of men is always guided by the principle of the first system. Every _workman_, whether agriculturist, manufacturer, merchant, soldier, writer or philosopher, devotes the strength of his intellect to do better, to do more quickly, more economically--in a word, _to do more with less_. The opposite doctrine is in use with theorists, essayists, statesmen, ministers, men whose business is to make experiments upon society. And even of these we may observe, that in what personally concerns themselves, they act, like everybody else, upon the principle of obtaining from their labor the greatest possible quantity of useful results. It may be supposed that I exaggerate, and that there are no true Sisyphists. I grant that in practice the principle is not pushed to its extreme consequences. And this must always be the case when one starts upon a wrong principle, because the absurd and injurious results to which it leads, cannot but check it in its progress. For this reason, practical industry never can admit of Sisyphism. The error is too quickly followed by its punishment to remain concealed. But in the speculative industry of theorists and statesmen, a false principle may be for a long time followed up, before the complication of its consequences, only half understood, can prove its falsity; and even when all is revealed, the opposite principle is acted upon, self is contradicted, and justification sought, in the incomparably absurd modern axiom, that in political economy there is no principle universally true. Let us see, then, if the two opposite principles I have laid down do not predominate, each in its turn; the one in practical industry, the other in industrial legislation. When a man prefers a good plough to a bad one; when he improves the quality of his manures; when, to loosen his soil, he substitutes as much as possible the action of the atmosphere for that of the hoe or the harrow; when he calls to his aid every improvement that science and experience have revealed, he has, and can have, but one object, viz., to _diminish the proportion of the effort to the result_. We have indeed no other means of judging of the success of an agriculturist or of the merits of his system, but by observing how far he has succeeded in lessening the one, while he increases the other; and as all the farmers in the world act upon this principle, we may say that all mankind are seeking, no doubt for their own advantage, to obtain at the lowest price, bread, or whatever other article of produce they may need, always diminishing the effort necessary for obtaining any given quantity thereof. This incontestable tendency of human nature, once proved, would, one might suppose, be sufficient to point out the true principle to the legislator, and to show him how he ought to assist industry (if indeed it is any part of his business to assist it at all), for it would be absurd to say that the laws of men should operate in an inverse ratio from those of Providence. Yet we have heard members of Congress exclaim, "I do not understand this theory of cheapness; I would rather see bread dear, and work more abundant." And consequently these gentlemen vote in favor of legislative measures whose effect is to shackle and impede commerce, precisely because by so doing we are prevented from procuring indirectly, and at low price, what direct production can only furnish more expensively. Now it is very evident that the system of Mr. So-and-so, the Congressman, is directly opposed to that of Mr. So-and-so, the agriculturist. Were he consistent with himself, he would as legislator vote against all restriction; or else as farmer, he would practise in his fields the same principle which he proclaims in the public councils. We would then see him sowing his grain in his most sterile fields, because he would thus succeed in _laboring much_, to _obtain little_. We would see him forbidding the use of the plough, because he could, by scratching up the soil with his nails, fully gratify his double wish of "_dear bread_ and _abundant labor_." Restriction has for its avowed object and acknowledged effect, the augmentation of labor. And again, equally avowed and acknowledged, its object and effect are, the increase of prices--a synonymous term for scarcity of produce. Pushed then to its greatest extreme, it is pure Sisyphism as we have defined it; _labor infinite; result nothing_. There have been men who accused railways of _injuring shipping_; and it is certainly true that the most perfect means of attaining an object must always limit the use of a less perfect means. But railways can only injure shipping by drawing from it articles of transportation; this they can only do by transporting more cheaply; and they can only transport more cheaply, by _diminishing the proportion of the effort employed to the result obtained_--for it is in this that cheapness consists. When, therefore, these men lament the suppression of labor in attaining a given result, they maintain the doctrine of Sisyphism. Logically, if they prefer the vessel to the railway, they should also prefer the wagon to the vessel, the pack-saddle to the wagon, and the sack to the pack-saddle: for this is, of all known means of transportation, the one which requires the greatest amount of labor, in proportion to the result obtained. "Labor constitutes the riches of the people," say some theorists. This was no elliptical expression, meaning that the "results of labor constitute the riches of the people." No; these theorists intended to say, that it is the _intensity_ of labor which measures riches; and the proof of this is that from step to step, from restriction to restriction, they forced on the United States (and in so doing believed that they were doing well) to give to the procuring of, for instance, a certain quantity of iron, double the necessary labor. In England, iron was then at $20; in the United States it cost $40. Supposing the day's work to be worth $2.50, it is evident that the United States could, by barter, procure a ton of iron by eight days' labor taken from the labor of the nation. Thanks to the restrictive measures of these gentlemen, sixteen days' work were necessary to procure it, by direct production. Here then we have double labor for an identical result; therefore double riches; and riches, measured not by the result, but by the intensity of labor. Is not this pure and unadulterated Sisyphism? That there may be nothing equivocal, these gentlemen carry their idea still farther, and on the same principle that we have heard them call the intensity of labor _riches_, we will find them calling the abundant results of labor and the plenty of everything proper to the satisfying of our wants, _poverty_. "Everywhere," they remark, "machinery has pushed aside manual labor; everywhere production is superabundant; everywhere the equilibrium is destroyed between the power of production and that of consumption." Here then we see that, according to these gentlemen, if the United States was in a critical situation it was because her productions were too abundant; there was too much intelligence, too much efficiency in her national labor. We were too well fed, too well clothed, too well supplied with everything; the rapid production was more than sufficient for our wants. It was necessary to put an end to this calamity, and therefore it became needful to force us, by restrictions, to work more in order to produce less. All that we could have further to hope for, would be, that human intellect might sink and become extinct; for, while intellect exists, it cannot but seek continually to increase the _proportion of the end to the means; of the product to the labor_. Indeed it is in this continuous effort, and in this alone, that intellect consists. Sisyphism has been the doctrine of all those who have been intrusted with the regulation of the industry of our country. It would not be just to reproach them with this; for this principle becomes that of our administration only because it prevails in Congress; it prevails in Congress only because it is sent there by the voters; and the voters are imbued with it only because public opinion is filled with it to repletion. Let me repeat here, that I do not accuse the protectionists in Congress of being absolutely and always Sisyphists. Very certainly they are not such in their personal transactions; very certainly each of them will procure for himself _by barter_, what by _direct production_ would be attainable only at a higher price. But I maintain that they are Sisyphists when they prevent the country from acting upon the same principle. CHAPTER IV. EQUALIZING OF THE FACILITIES OF PRODUCTION. The protectionists often use the following argument: "It is our belief that protection should correspond to, should be the representation of, the difference which exists between the price of an article of home production and a similar article of foreign production. A protective duty calculated upon such a basis does nothing more than secure free competition; free competition can only exist where there is an equality in the facilities of production. In a horse-race the load which each horse carries is weighed and all advantages equalized; otherwise there could be no competition. In commerce, if one producer can undersell all others, he ceases to be a competitor and becomes a monopolist. Suppress the protection which represents the difference of price according to each, and foreign produce must immediately inundate and obtain the monopoly of our market. Every one ought to wish, for his own sake and for that of the community, that the productions of the country should be protected against foreign competition, _whenever the latter may be able to undersell the former_." This argument is constantly recurring in all writings of the protectionist school. It is my intention to make a careful investigation of its merits, and I must begin by soliciting the attention and the patience of the reader. I will first examine into the inequalities which depend upon natural causes, and afterwards into those which are caused by diversity of taxes. Here, as elsewhere, we find the theorists who favor protection taking part with the producer. Let us consider the case of the unfortunate consumer, who seems to have entirely escaped their attention. They compare the field of protection to the _turf_. But on the turf, the race is at once a _means and an end_. The public has no interest in the struggle, independent of the struggle itself. When your horses are started in the course with the single object of determining which is the best runner, nothing is more natural than that their burdens should be equalized. But if your object were to send an important and critical piece of intelligence, could you without incongruity place obstacles to the speed of that one whose fleetness would secure you the best means of attaining your end? And yet this is your course in relation to industry. You forget the end aimed at, which is the _well-being_ of the community; you set it aside; more, you sacrifice it by a perfect _petitio principii_. But we cannot lead our opponents to look at things from our point of view; let us now take theirs: let us examine the question as producers. I will seek to prove: 1. That equalizing the facilities of production is to attack the foundations of mutual exchange. 2. That it is not true that the labor of one country can be crushed by the competition of more favored climates. 3. That, even were this the case, protective duties cannot equalize the facilities of production. 4. That freedom of trade equalizes these conditions as much as possible; and 5. That the countries which are the least favored by nature are those which profit most by mutual exchange. 1. _Equalizing the facilities of production is to attack the foundations of mutual exchange._ The equalizing of the facilities of production, is not only the shackling of certain articles of commerce, but it is the attacking of the system of mutual exchange in its very foundation principle. For this system is based precisely upon the very diversities, or, if the expression be preferred, upon the inequalities of fertility, climate, temperature, capabilities, which the protectionists seek to render null. If New England sends its manufactures to the West, and the West sends corn to New England, it is because these two sections are, from different circumstances, induced to turn their attention to the production of different articles. Is there any other rule for international exchanges? Again, to bring against such exchanges the very inequalities of condition which excite and explain them, is to attack them in their very cause of being. The protective system, closely followed up, would bring men to live like snails, in a state of complete isolation. In short, there is not one of its sophisms, which, if carried through by vigorous deductions, would not end in destruction and annihilation. 2. _It is not true that the labor of one country can be crushed by the competition of more favored climates._ The statement is not true that the unequal facility of production, between two similar branches of industry, should necessarily cause the destruction of the one which is the least fortunate. On the turf, if one horse gains the prize, the other loses it; but when two horses work to produce any useful article, each produces in proportion to his strength; and because the stronger is the more useful it does not follow that the weaker is good for nothing. Wheat is cultivated in every section of the United States, although there are great differences in the degree of fertility existing among them. If it happens that there be one which does not cultivate it, it is because, even to itself, such cultivation is not useful. Analogy will show us, that under the influences of an unshackled trade, notwithstanding similar differences, wheat would be produced in every portion of the world; and if any nation were induced to entirely abandon the cultivation of it, this would only be because it would _be her interest_ to otherwise employ her lands, her capital, and her labor. And why does not the fertility of one department paralyze the agriculture of a neighboring and less favored one? Because the phenomena of political economy have a suppleness, an elasticity, and, so to speak, _a self-levelling power_, which seems to escape the attention of the school of protectionists. They accuse us of being theoretic, but it is themselves who are so to a supreme degree, if the being theoretic consists in building up systems upon the experience of a single fact, instead of profiting by the experience of a series of facts. In the above example, it is the difference in the value of lands which compensates for the difference in their fertility. Your field produces three times as much as mine. Yes. But it has cost you ten times as much, and therefore I can still compete with you: this is the sole mystery. And observe how the advantage on one point leads to disadvantage on the other. Precisely because your soil is more fruitful it is more dear. It is not _accidentally_ but _necessarily_ that the equilibrium is established, or at least inclines to establish itself: and can it be denied that perfect freedom in exchanges is of all systems the one which favors this tendency? I have cited an agricultural example; I might as easily have taken one from any trade. There are tailors at Barnegat, but that does not prevent tailors from being in New York also, although the latter have to pay a much higher rent, as well as higher price for furniture, workmen, and food. But their customers are sufficiently numerous not only to reëstablish the balance, but also to make it lean on their side. When, therefore, the question is about equalizing the advantages of labor, it would be well to consider whether the natural freedom of exchange is not the best umpire. This self-levelling faculty of political phenomena is so important, and at the same time so well calculated to cause us to admire the providential wisdom which presides over the equalizing government of society, that I must ask permission a little longer to turn to it the attention of the reader. The protectionists say, Such a nation has the advantage over us, in being able to procure cheaply, coal, iron, machinery, capital; it is impossible for us to compete with it. We must examine this proposition under other aspects. For the present, I stop at the question, whether, when an advantage and a disadvantage are placed in juxtaposition, they do not bear in themselves, the former a descending, the latter an ascending power, which must end by placing them in a just equilibrium? Let us suppose the countries A and B. A has every advantage over B; you thence conclude that labor will be concentrated upon A, while B must be abandoned. A, you say, sells much more than it buys; B buys much more than it sells. I might dispute this, but I will meet you upon your own ground. In the hypothesis, labor being in great demand in A, soon rises in value; while labor, iron, coal, lands, food, capital, all being little sought after in B, soon fall in price. Again: A being always selling and B always buying, cash passes from B to A. It is abundant in A, very scarce in B. But where there is abundance of cash, it follows that in all purchases a large proportion of it will be needed. Then in A, _real dearness_, which proceeds from a very active demand, is added to _nominal dearness_, the consequence of a superabundance of the precious metals. Scarcity of money implies that little is necessary for each purchase. Then in B, a _nominal cheapness_ is combined with _real cheapness_. Under these circumstances, industry will have the strongest possible motives for deserting A to establish itself in B. Now, to return to what would be the true course of things. As the progress of such events is always gradual, industry from its nature being opposed to sudden transits, let us suppose that, without waiting the extreme point, it will have gradually divided itself between A and B, according to the laws of supply and demand; that is to say, according to the laws of justice and usefulness. _I do not advance an empty hypothesis when I say, that were it possible that industry should concentrate itself upon a single point, there must, from its nature, arise spontaneously, and in its midst_, AN IRRESISTIBLE POWER OF DECENTRALIZATION. We will quote the words of a manufacturer to the Chamber of Commerce at Manchester (the figures brought into his demonstration being suppressed): "Formerly we exported goods; this exportation gave way to that of thread for the manufacture of goods; later, instead of thread, we exported machinery for the making of thread; then capital for the construction of machinery; and lastly, workmen and talent, which are the source of capital. All these elements of labor have, one after the other, transferred themselves to other points, where their profits were increased, and where the means of subsistence being less difficult to obtain, life is maintained at less cost. There are at present to be seen in Prussia, Austria, Saxony, Switzerland, and Italy, immense manufacturing establishments, founded entirely by English capital, worked by English labor, and directed by English talent." We may here perceive that Nature, with more wisdom and foresight than the narrow and rigid system of the protectionists can suppose, does not permit the concentration of labor, and the monopoly of advantages, from which they draw their arguments as from an absolute and irremediable fact. It has, by means as simple as they are infallible, provided for dispersion, diffusion, mutual dependence, and simultaneous progress; all of which, your restrictive laws paralyze as much as is in their power, by their tendency towards the isolation of nations. By this means they render much more decided the differences existing in the conditions of production; they check the self-levelling power of industry, prevent fusion of interests, neutralize the counterpoise, and fence in each nation within its own peculiar advantages and disadvantages. 3. _Even were the labor of one country crushed by the competition of more favored climates (which is denied), protective duties cannot equalize the facilities of production._ To say that by a protective law the conditions of production are equalized, is to disguise an error under false terms. It is not true that an import duty equalizes the conditions of production. These remain after the imposition of the duty just as they were before. The most that law can do is to equalize the _conditions of sale_. If it should be said that I am playing upon words, I retort the accusation upon my adversaries. It is for them to prove that _production_ and _sale_ are synonymous terms, which if they cannot do, I have a right to accuse them, if not of playing upon words, at least of confounding them. Let me be permitted to exemplify my idea. Suppose that several New York speculators should determine to devote themselves to the production of oranges. They know that the oranges of Portugal can be sold in New York at one cent each, whilst on account of the boxes, hot-houses, &c., which are necessary to ward against the severity of our climate, it is impossible to raise them at less than a dollar apiece. They accordingly demand a duty of ninety-nine cents upon Portugal oranges. With the help of this duty, say they, the _conditions of production_ will be equalized. Congress, yielding as usual to this argument, imposes a duty of ninety-nine cents on each foreign orange. Now I say that the _relative conditions of production_ are in no wise changed. The law can take nothing from the heat of the sun in Lisbon, nor from the severity of the frosts in New York. Oranges continuing to mature themselves _naturally_ on the banks of the Tagus, and artificially upon those of the Hudson, must continue to require for their production much more labor on the latter than the former. The law can only equalize the _conditions of sale_. It is evident that while the Portuguese sell their oranges here at a dollar apiece, the ninety-nine cents which go to pay the tax are taken from the American consumer. Now look at the whimsicality of the result. Upon each Portuguese orange, the country loses nothing; for the ninety-nine cents which the consumer pays to satisfy the impost tax, enter into the treasury. There is improper distribution; but no loss. But upon each American orange consumed, there will be about ninety-nine cents lost; for while the buyer very certainly loses them, the seller just as certainly does not gain them; for, even according to the hypothesis, he will receive only the price of production, I will leave it to the protectionists to draw their conclusion. 4. _But freedom of trade equalizes these conditions as much as is possible._ I have laid some stress upon this distinction between the conditions of production and those of sale, which perhaps the prohibitionists may consider as paradoxical, because it leads me on to what they will consider as a still stranger paradox. This is: If you really wish to equalize the facilities of production, leave trade free. This may surprise the protectionists; but let me entreat them to listen, if it be only through curiosity, to the end of my argument. It shall not be long. I will now take it up where we left off. If we suppose for the moment, that the common and daily profits of each American amount to one dollar, it will indisputably follow that to produce an orange by _direct_ labor in America, one day's work, or its equivalent, will be requisite; whilst to produce the cost of a Portuguese orange, only one-hundredth of this day's labor is required; which means simply this, that the sun does at Lisbon what labor does at New York. Now is it not evident, that if I can produce an orange, or, what is the same thing, the means of buying it, with one-hundredth of a day's labor, I am placed exactly in the same condition as the Portuguese producer himself, excepting the expense of the transportation? It therefore follows that freedom of commerce equalizes the conditions of production direct or indirect, as much as it is possible to equalize them; for it leaves but the one inevitable difference, that of transportation. I will add that free trade equalizes also the facilities for attaining enjoyments, comforts, and general consumption; the last, an object which is, it would seem, quite forgotten, and which is nevertheless all-important; since, in fine, consumption is the main object of all our industrial efforts. Thanks to freedom of trade, we would enjoy here the results of the Portuguese sun, as well as Portugal itself; and the inhabitants of New York would have in their reach, as well as those of London, and with the same facilities, the advantages which nature has in a mineralogical point of view conferred upon Cornwall. 5. _Countries least favored by nature (countries not yet cleared of forests, for example) are those which profit most by mutual exchange._ The protectionists may suppose me in a paradoxical humor, for I go further still. I say, and I sincerely believe, that if any two countries are placed in unequal circumstances as to advantages of production, _the one of the two which is the less favored by nature, will gain more by freedom of commerce_. To prove this, I will be obliged to turn somewhat aside from the form of reasoning which belongs to this work. I will do so, however; first, because the question in discussion turns upon this point; and again, because it will give me the opportunity of exhibiting a law of political economy of the highest importance, and which, well understood, seems to me to be destined to lead back to this science all those sects which, in our days, are seeking in the land of chimeras that social harmony which they have been unable to discover in nature. I speak of the law of consumption, which the majority of political economists may well be reproached with having too much neglected. Consumption is the _end_, the final cause of all the phenomena of political economy, and, consequently, in it is found their final solution. No effect, whether favorable or unfavorable, can be vested permanently in the producer. His advantages and disadvantages, derived from his relations to nature and to society, both pass gradually from him; and by an almost insensible tendency are absorbed and fused into the community at large--the community considered as consumers. This is an admirable law, alike in its cause and its effects; and he who shall succeed in making it well understood, will have a right to say, "I have not, in my passage through the world, forgotten to pay my tribute to society." Every circumstance which favors the work of production is of course hailed with joy by the producer, for its _immediate effect_ is to enable him to render greater services to the community, and to exact from it a greater remuneration. Every circumstance which injures production, must equally be the source of uneasiness to him; for its _immediate effect_ is to diminish his services, and consequently his remuneration. This is a fortunate and necessary law of nature. The immediate good or evil of favorable or unfavorable circumstances must fall upon the producer, in order to influence him invisibly to seek the one and to avoid the other. Again: when an inventor succeeds in his labor-saving machine, the _immediate_ benefit of this success is received by him. This again is necessary, to determine him to devote his attention to it. It is also just; because it is just that an effort crowned with success should bring its own reward. But these effects, good and bad, although permanent in themselves, are not so as regards the producer. If they had been so, a principle of progressive and consequently infinite inequality would have been introduced among men. This good, and this evil, both therefore pass on, to become absorbed in the general destinies of humanity. How does this come about? I will try to make it understood by some examples. Let us go back to the thirteenth century. Men who gave themselves up to the business of copying, received for this service _a remuneration regulated by the general rate of the profits_. Among them is found one, who seeks and finds the means of rapidly multiplying copies of the same work. He invents printing. The first effect of this is, that the individual is enriched, while many more are impoverished. At the first view, wonderful as the discovery is, one hesitates in deciding whether it is not more injurious than useful. It seems to have introduced into the world, as I said above, an element of infinite inequality. Guttenberg makes large profits by this invention, and perfects the invention by the profits, until all other copyists are ruined. As for the public--the consumer--it gains but little, for Guttenberg takes care to lower the price of books only just so much as is necessary to undersell all rivals. But the great Mind which put harmony into the movements of celestial bodies, could also give it to the internal mechanism of society. We will see the advantages of this invention escaping from the individual, to become for ever the common patrimony of mankind. The process finally becomes known. Guttenberg is no longer alone in his art; others imitate him. Their profits are at first considerable. They are recompensed for being the first who made the effort to imitate the processes of the newly-invented art. This again was necessary, in order that they might be induced to the effort, and thus forward the great and final result to which we approach. They gain largely; but they gain less than the inventor, for _competition_ has commenced its work. The price of books now continually decreases. The gains of the imitators diminish in proportion as the invention becomes older; and in the same proportion imitation becomes less meritorious. Soon the new object of industry attains its normal condition; in other words, the remuneration of printers is no longer an exception to the general rules of remuneration, and, like that of copyists formerly, it is only regulated _by the general rate of profits_. Here then the producer, as such, holds
{'title': 'What Is Free Trade? by Frédéric Bastiat', 'source': 'Project Gutenberg', 'lang': 'en'}