What Is Free Trade? Part 3

What has been said of printing, can be extended to every agent for the advancement of labor--from the nail and the mallet, up to the locomotive and the electric telegraph. Society enjoys all, by the abundance of its use, its consumption; and it _enjoys all gratuitously_. For as their effect is to diminish prices, it is evident that just so much of the price as is taken off by their intervention, renders the production in so far _gratuitous_. There only remains the actual labor of man to be paid for; and the remainder, which is the result of the invention, is subtracted; at least after the invention has run through the cycle which I have just described as its destined course. I send for a workman; he brings a saw with him; I pay him two dollars for his day's labor, and he saws me twenty-five boards. If the saw had not been invented, he would perhaps not have been able to make one board, and I would none the less have paid him for his day's labor. The _usefulness_, then, of the saw, is for me a gratuitous gift of nature, or rather, is a portion of the inheritance which, _in common_ with my brother men, I have received from the genius of my ancestors. I have two workmen in my field; the one directs the handle of a plough, the other that of a spade. The result of their day's labor is very different, but the price is the same, because the remuneration is proportioned, not to the usefulness of the result, but to the effort, the [time, and] labor given to attain it.

I invoke the patience of the reader, and beg him to believe, that I have not lost sight of free trade: I entreat him only to remember the conclusion at which I have arrived: _Remuneration is not proportioned to the usefulness of the articles brought by the producer into the market, but to the [time and] labor required for their production._[B]

[Footnote B: It is true that [time and] labor do not receive a uniform remuneration; because labor is more or less intense, dangerous, skilful, &c., [and time more or less valuable.] Compet.i.tion establishes for each category a price current: and it is of this variable price that I speak.]

I have so far taken my examples from human inventions, but will now go on to speak of natural advantages.

In every article of production, nature and man must concur. But the portion of nature is always gratuitous. Only so much of the usefulness of an article as is the result of human labor becomes the object of mutual exchange, and consequently of remuneration. The remuneration varies much, no doubt, in proportion to the intensity of the labor, of the skill, which it requires, of its being _a-propos_ to the demand of the day, of the need which exists for it, of the momentary absence of compet.i.tion, &c. But it is not the less true in principle, that the a.s.sistance received from natural laws, which belongs to all, counts for nothing in the price.

We do not pay for the air we breathe, although so useful to us, that we could not live two minutes without it. We do not pay for it, because nature furnishes it without the intervention of man's labor.

But if we wish to separate one of the gases which compose it for instance, to fill a balloon, we must take some [time and] labor; or if another takes it for us, we must give him an equivalent in something which will have cost us the trouble of production. From which we see that the exchange is between efforts, [time and] labor. It is certainly not for hydrogen gas that I pay, for this is everywhere at my disposal, but for the work that it has been necessary to accomplish in order to disengage it; work which I have been spared, and which I must refund. If I am told that there are other things to pay for, as expense, materials, apparatus, I answer, that still in these things it is the work that I pay for. The price of the coal employed is only the representation of the [time and] labor necessary to dig and transport it.

We do not pay for the light of the sun, because nature alone gives it to us. But we pay for the light of gas, tallow, oil, wax, because here is labor to be remunerated;--and remark, that it is so entirely [time and] labor and not utility to which remuneration is proportioned, that it may well happen that one of these means of lighting, while it may be much more effective than another, may still cost less. To cause this, it is only necessary that less [time and] human labor should be required to furnish it.

When the water-boat comes to supply my ship, were I to pay in proportion to the _absolute utility_ of the water, my whole fortune would not be sufficient. But I pay only for the trouble taken. If more is required, I can get another boat to furnish it, or finally go and get it myself. The water itself is not the subject of the bargain, but the labor required to obtain the water. This point of view is so important, and the consequences that I am going to draw from it so clear, as regards the freedom of international exchanges, that I will still elucidate my idea by a few more examples.

The alimentary substance contained in potatoes does not cost us very dear, because a great deal of it is attainable with little work. We pay more for wheat, because, to produce it, Nature requires more labor from man. It is evident that if Nature did for the latter what she does for the former, their prices would tend to the same level. It is impossible that the producer of wheat should permanently gain more than the producer of potatoes. The law of compet.i.tion cannot allow it.

Again, if by a happy miracle the fertility of all arable lands were to be increased, it would not be the agriculturist, but the consumer, who would profit by this phenomenon; for the result of it would be abundance and cheapness. There would be less labor incorporated into an acre of grain, and the agriculturist would be therefore obliged to exchange it for less labor incorporated into some other article. If, on the contrary, the fertility of the soil were suddenly to deteriorate, the share of nature in production would be less, that of labor greater, and the result would be higher prices.

I am right then in saying that it is in consumption, in mankind, that at length all political phenomena find their solution. As long as we fail to follow their effects to this point, and look only at _immediate_ effects, which act but upon individual men or cla.s.ses of men _as producers_, we know nothing more of political economy than the quack does of medicine, when instead of following the effects of a prescription in its action upon the whole system, he satisfies himself with knowing how it affects the palate and the throat.

The tropical regions are very favorable to the production of sugar and coffee; that is to say, Nature does most of the business and leaves but little for labor to accomplish. But who reaps the advantage of this liberality of Nature? NOT THESE REGIONS, for they are forced by compet.i.tion to receive remuneration simply for their labor.

It is MANKIND who is the gainer; for the result of this liberality is _cheapness_, and cheapness belongs to the world.

Here in the temperate zone, we find coal and iron ore on the surface of the soil; we have but to stoop and take them. At first, I grant, the immediate inhabitants profit by this fortunate circ.u.mstance. But soon comes compet.i.tion, and the price of coal and iron falls, until this gift of nature becomes gratuitous to all, and human labor is only paid according to the general rate of profits.

Thus, natural advantages, like improvements in the process of production, are, or have, a constant tendency to become, under the law of compet.i.tion, the common and _gratuitous_ patrimony of consumers, of society, of mankind. Countries, therefore, which do not enjoy these advantages, must gain by commerce with those which do; because the exchanges of commerce are between _labor and labor_, subtraction being made of all the natural advantages which are combined with these labors; and it is evidently the most favored countries which can incorporate into a given labor the largest proportion of these _natural advantages_. Their produce representing less labor, receives less recompense; in other words, is _cheaper_. If then all the liberality of Nature results in cheapness, it is evidently not the producing, but the consuming country, which profits by her benefits.

Hence we may see the enormous absurdity of the consuming country, which rejects produce precisely because it is cheap. It is as though we should say: "We will have nothing of that which Nature gives you.

You ask of us an effort equal to two, in order to furnish ourselves with produce only attainable at home by an effort equal to four. You can do it because with you Nature does half the work. But we will have nothing to do with it; we will wait till your climate, becoming more inclement, forces you to ask of us a labor equal to four, and then we can treat with you _upon an equal footing_!"

A is a favored country; B is maltreated by Nature. Mutual traffic then is advantageous to both, but princ.i.p.ally to B, because the exchange is not between _utility_ and _utility_, but between _value_ and _value_.

Now A furnishes a greater _utility in a similar value_, because the utility of any article includes at once what Nature and what labor have done; whereas the value of it only corresponds to the portion accomplished by labor. B then makes an entirely advantageous bargain; for by simply paying the producer from A for his labor, it receives in return not only the results of that labor, but in addition there is thrown in whatever may have accrued from the superior bounty of Nature.

We will lay down the general rule.

Traffic is an exchange of _values_; and as value is reduced by compet.i.tion to the simple representation of labor, traffic is the exchange of equal labors. Whatever Nature has done towards the production of the articles exchanged, is given on both sides _gratuitously_; from whence it necessarily follows, that the most advantageous commerce is transacted with those countries which are the least favored by Nature.

The theory of which I have attempted in this chapter to trace the outlines, deserves a much greater elaboration. But perhaps the attentive reader will have perceived in it the fruitful seed which is destined in its future growth to smother Protectionism, at once with the various other isms whose object is to exclude the law of COMPEt.i.tION from the government of the world. Compet.i.tion, no doubt, considering man as producer, must often interfere with his individual and _immediate_ interests. But if we consider the great object of all labor, the universal good, in a word, Consumption, we cannot fail to find that Compet.i.tion is to the moral world what the law of equilibrium is to the material one. It is the foundation of true gratification, of true Liberty and Equality, of the equality of comforts and condition, so much sought after in our day; and if so many sincere reformers, so many earnest friends to public right, seek to reach their end by _commercial legislation_, it is only because they do not yet understand _commercial freedom_.

CHAPTER V.

OUR PRODUCTIONS ARE OVERLOADED WITH INTERNAL TAXES--

This is but a new wording of the Sophism before noticed. The demand made is, that the foreign article should be taxed, in order to neutralize the effects of the internal tax, which weighs down domestic produce. It is still then but the question of equalizing the facilities of production. We have but to say that the tax is an artificial obstacle, which has exactly the same effect as a natural obstacle, i.e. the increasing of the price. If this increase is so great that there is more loss in producing the article in question at home than in attracting it from foreign parts by the production of an equivalent value of something else--_laissez faire_. Individual interest will soon learn to choose the lesser of two evils. I might refer the reader to the preceding demonstration for an answer to this Sophism; but it is one which recurs so often, that it deserves a special discussion.

I have said more than once, that I am opposing only the theory of the protectionists, with the hope of discovering the source of their errors. Were I disposed to enter into controversy with them, I would say: Why direct your tariffs princ.i.p.ally against England, a country more overloaded with taxes than any in the world? Have I not a right to look upon your argument as a mere pretext? But I am not of the number of those who believe that prohibitionists are guided by interest, and not by conviction. The doctrine of Protection is too popular not to be sincere. If the majority could believe in freedom, we would be free. Without doubt it is individual interest which weighs us down with tariffs; but it acts upon conviction. "The will (said Pascal) is one of the princ.i.p.al organs of belief." But belief does not the less exist because it is rooted in the will and in the secret inspirations of egotism.

We will return to the Sophism drawn from internal taxes.

The government may make either a good or a bad use of taxes; it makes a good use of them when it renders to the public services equivalent to the value received from them; it makes a bad use of them when it expends this value, giving nothing in return. To say in the first case that they place the country which pays them in more disadvantageous conditions for production, than the country which is free from them, is a Sophism. We pay, it is true, so many millions for the administration of justice, and the maintenance of order, but we have justice and order; we have the security which they give, the time which they save for us; and it is most probable that production is neither more easy nor more active among nations, where (if there be such) each individual takes the administration of justice into his own hands. We pay, I grant, many millions for roads, bridges, ports, steamships; but we have these steamships, these ports, bridges, and roads; and unless we maintain that it is a losing business to establish them, we cannot say that they place us in a position inferior to that of nations who have, it is true, no budget of public works, but who likewise have no public works. And here we see why (even while we accuse taxes of being a cause of industrial inferiority) we direct our tariffs precisely against those nations which are the most taxed. It is because these taxes, well used, far from injuring, have ameliorated the _conditions of production_ to these nations. Thus we again arrive at the conclusion that the protectionist Sophisms not only wander from, but are the contrary--the very ant.i.thesis--of truth.

As to unproductive taxes, suppress them if you can; but surely it is a most singular idea to suppose, that their evil effect is to be neutralized by the addition of individual taxes to public taxes. Many thanks for the compensation! The State, you say, has taxed us too much; surely this is no reason that we should tax each other!

A protective duty is a tax directed against foreign produce, but which returns, let us keep in mind, upon the national consumer. Is it not then a singular argument to say to him, "Because the taxes are heavy, we will raise prices higher for you; and because the State takes a part of your revenue, we will give another portion of it to benefit a monopoly?"

But let us examine more closely this Sophism so accredited among our legislators; although, strange to say, it is precisely those who keep up the unproductive taxes (according to our present hypothesis) who attribute to them afterwards our supposed inferiority, and seek to re-establish the equilibrium by further taxes and new clogs.

It appears to me to be evident that protection, without any change in its nature and effects, might have taken the form of a direct tax, raised by the State, and distributed as a premium to privileged industry.

Let us admit that foreign iron could be sold in our market at $16, but not lower; and American iron at not lower than $24.

In this hypothesis there are two ways in which the State can secure the national market to the home producer.

The first, is to put upon foreign iron a duty of $10. This, it is evident, would exclude it, because it could no longer be sold at less than $26; $16 for the indemnifying price, $10 for the tax; and at this price it must be driven from the market by American iron, which we have supposed to cost $24. In this case the buyer, the consumer, will have paid all the expenses of the protection given.

The second means would be to lay upon the public an Internal Revenue tax of $10, and to give it as a premium to the iron manufacturer. The effect would in either case be equally a protective measure. Foreign iron would, according to both systems, be alike excluded; for our iron manufacturer could sell at $14, what, with the $10 premium, would thus bring him in $24. While the price of sale being $14, foreign iron could not obtain a market at $16.

In these two systems the principle is the same; the effect is the same. There is but this single difference; in the first case the expense of protection is paid by a part, in the second by the whole of the community. I frankly confess my preference for the second system, which I regard as more just, more economical, and more legal.

More just, because, if society wishes to give bounties to some of its members, the whole community ought to contribute; more economical, because it would banish many difficulties, and save the expenses of collection; more legal, because the public would see clearly into the operation, and know what was required of it.

But if the protective system had taken this form, would it not have been laughable enough to hear it said: "We pay heavy taxes for the army, the navy, the judiciary, the public works, the debt, &c. These amount to more than 200 millions. It would therefore be desirable that the State should take another 200 millions to relieve the poor iron manufacturers."

This, it must certainly be perceived, by an attentive investigation, is the result of the Sophism in question. In vain, gentlemen, are all your efforts; you cannot give money to one without taking it from another. If you are absolutely determined to exhaust the funds of the taxable community, well; but, at least, do not mock them; do not tell them, "We take from you again, in order to compensate you for what we have already taken."

It would be a too tedious undertaking to endeavor to point out all the fallacies of this Sophism. I will therefore limit myself to the consideration of it in three points.

You argue that the United States are overburdened with taxes, and deduce thence the conclusion that it is necessary to protect such and such an article of produce. But protection does not relieve us from the payment of these taxes. If, then, individuals devoting themselves to any one object of industry, should advance this demand: "We, from our partic.i.p.ation in the payment of taxes, have our expenses of production increased, and therefore ask for a protective duty which shall raise our price of sale:" what is this but a demand on their part to be allowed to free themselves from the burden of the tax, by laying it on the rest of the community? Their object is to balance, by the increased price of their produce, the amount which they pay in taxes. Now, as the whole amount of these taxes must enter into the Treasury, and the increase of price must be paid by society, it follows that (where this protective duty is imposed) society has to bear, not only the general tax, but also that for the protection of the article in question. But, it is answered, let _everything_ be protected. Firstly, this is impossible; and, again, were it possible, how could such a system give relief? _I_ will pay for you, _you_ will pay for me; but not the less still there remains the tax to be paid.

Thus you are the dupes of an illusion. You determine to raise taxes for the support of an army, a navy, judges, roads, &c. Afterwards you seek to disburden from its portion of the tax, first one article of industry, then another, then a third; always adding to the burden of the ma.s.s of society. You thus only create interminable complications.

If you can prove that the increase of price resulting from protection, falls upon the foreign producer, I grant something specious in your argument. But if it be true that the American people paid the tax before the pa.s.sing of the protective duty, and afterwards that it has paid not only the tax but the protective duty also, truly I do not perceive wherein it has profited.

But I go much further, and maintain that the more oppressive our taxes are, the more anxiously ought we to open our ports and frontiers to foreign nations, less burdened than ourselves. And why? _In order that we may_ SHARE WITH THEM, _as much as possible, the burden which we bear._ Is it not an incontestable maxim in political economy, that taxes must, in the end, fall upon the consumer? _The greater then our commerce, the greater the portion which will be reimbursed to us, of taxes incorporated in the produce which we will have sold to foreign consumers; whilst we on our part will have made to them only a lesser reimburs.e.m.e.nt, because (according to our hypothesis) their produce is less taxed than ours._

CHAPTER VI.

BALANCE OF TRADE.

Our adversaries have adopted a system of tactics, which embarra.s.ses us not a little. Do we prove our doctrine? They admit the truth of it in the most respectful manner. Do we attack their principles? They abandon them with the best possible grace. They only ask that our doctrine, which they acknowledge to be true, should be confined to books; and that their principles, which they allow to be false, should be established in practice. If we will give up to them the regulation of our tariffs, they will leave us triumphant in the domain of literature.