What Is Free Trade? Part 6

I have been led to this discovery, not from accident, but from observation, and I will tell you how.

I had this question to determine:

"Why does any article made, for instance, at Montreal, bear an increased price on its arrival at New York?"

It was immediately evident to me that this was the result of _obstacles_ of various kinds existing between Montreal and New York.

First, there is _distance_, which cannot be overcome without trouble and loss of time; and either we must submit to these troubles and losses in our own person, or pay another for bearing them for us. Then come rivers, hills, accidents, heavy and muddy roads. These are so many _difficulties_ to be overcome; in order to do which, causeways are constructed, bridges built, roads cut and paved, railroads established, &c. But all this is costly, and the article transported must bear its portion of the expense. There are robbers, too, on the roads, sometimes, and this necessitates railway guards, a police force, &c.

Now, among these _obstacles_, there is one which we ourselves have lately placed, and that at no little expense, between Montreal and New York. This consists of men planted along the frontier, armed to the teeth, whose business it is to place _difficulties_ in the way of the transportation of goods from one country to another. These men are called custom-house officers, and their effect is precisely similar to that of rutted and boggy roads. They r.e.t.a.r.d and put obstacles in the way of transportation, thus contributing to the difference which we have remarked between the price of production and that of consumption; to diminish which difference, as much as possible, is the problem which we are seeking to resolve.

Here, then, we have found its solution. Let our tariff be diminished: we will thus have constructed a Northern railway which will cost us nothing. Nay, more, we will be saved great expenses, and will begin, from the first day, to save capital.

Really, I cannot but ask myself, in surprise, how our brains could have admitted so whimsical a piece of folly as to induce us to pay many millions to destroy the _natural obstacles_ interposed between the United States and other nations, only at the same time to pay so many millions more in order to replace them by _artificial obstacles_, which have exactly the same effect; so that the obstacle removed and the obstacle created, neutralize each other, things go on as before, and the only result of our trouble is a double expense.

An article of Canadian production is worth, at Montreal, twenty dollars, and, from the expenses of transportation, thirty dollars at New York. A similar article of New York manufacture costs forty dollars. What is our course under these circ.u.mstances?

First, we impose a duty of at least ten dollars on the Canadian article, so as to raise its price to a level with that of the New York one--the government, withal, paying numerous officials to attend to the levying of this duty. The article thus pays ten dollars for transportation, and ten for the tax.

This done, we say to ourselves: Transportation between Montreal and New York is very dear; let us spend two or three millions in railways, and we will reduce it one-half. Evidently the result of such a course will be to get the Canadian article at New York for thirty-five dollars, viz.:

20 dollars--price at Montreal.

10 " duty.

5 " transportation by railway.

-- 35 dollars--total, or market price at New York.

Could we not have attained the same end by lowering the tariff to five dollars? We would then have--

20 dollars--price at Montreal.

5 " duty.

10 " transportation on the common road.

-- 35 dollars--total, or market price at New York.

And this arrangement would have saved us the $2,000,000 spent upon the railway, besides the expense saved in custom-house surveillance, which would of course diminish in proportion as the temptation to smuggling would become less.

But it is answered: The duty is necessary to protect New York industry. So be it; but do not then destroy the effect of it by your railway. For if you persist in your determination to keep the Canadian article on a par with the New York one at forty dollars, you must raise the duty to fifteen dollars, in order to have:--

20 dollars--price at Montreal.

15 " protective duty.

5 " transportation by railway.

-- 40 dollars--total, at equalized prices.

And I now ask, of what benefit, under these circ.u.mstances, is the railway?

Frankly, is it not humiliating to the nineteenth century, that it should be destined to transmit to future ages the example of such puerilities seriously and gravely practised? To be the dupe of another, is bad enough; but to employ all the forms and ceremonies of representation in order to cheat oneself--to doubly cheat oneself, and that too in a mere numerical account--truly this is calculated to lower a little the pride of this _enlightened age_.

CHAPTER X.

RECIPROCITY.

We have just seen that all which renders transportation difficult, acts in the same manner as protection; or, if the expression be preferred, that protection tends towards the same result as all obstacles to transportation.

A tariff may be truly spoken of as a swamp, a rut, a steep hill; in a word, an _obstacle_, whose effect is to augment the difference between the price of consumption and that of production. It is equally incontestable that a swamp, a bog, &c., are veritable protective tariffs.

There are people (few in number, it is true, but such there are) who begin to understand that obstacles are not the less obstacles because they are artificially created, and that our well-being is more advanced by freedom of trade than by protection; precisely as a ca.n.a.l is more desirable than a sandy, hilly, and difficult road.

But they still say, this liberty ought to be reciprocal. If we take off our taxes in favor of Canada, while Canada does not do the same towards us, it is evident that we are duped. Let us, then, make _treaties of commerce_ upon the basis of a just reciprocity; let us yield where we are yielded to; let us make the _sacrifice_ of buying that we may obtain the advantage of selling.

Persons who reason thus, are (I am sorry to say), whether they know it or not, governed by the protectionist principle. They are only a little more inconsistent than the pure protectionists, as these are more inconsistent than the absolute prohibitionists.

I will ill.u.s.trate this by a fable:

There were, it matters not where, two towns, N*w Y*rk and M*ntr**l, which, at great expense, had a road built, which connected them with each other. Some time after this was done, the inhabitants of N*w Y*rk became uneasy, and said: "M*ntr**l is overwhelming us with its productions; this must be attended to." They established, therefore, a corps of _Obstructors_, so called, because their business was to place obstacles in the way of the convoys which arrived from M*ntr**l. Soon after, M*ntr**l also established a corps of Obstructors.

After some years, people having become more enlightened, the inhabitants of M*ntr**l began to discover that these reciprocal obstacles might possibly be reciprocal injuries. They sent, therefore, an amba.s.sador to N*w Y*rk, who (pa.s.sing over the official phraseology) spoke much to this effect: "We have built a road, and now we put obstacles in the way of this road. This is absurd. It would have been far better to have left things in their original position, for then we would not have been put to the expense of building our road, and afterwards of creating difficulties. In the name of M*ntr**l I come to propose to you not to renounce at once our system of mutual obstacles, for this would be acting according to a principle, and we despise principles as much as you do; but to somewhat lighten these obstacles, weighing at the same time carefully our respective _sacrifices_." The amba.s.sador having thus spoken, the town of N*w Y*rk asked time to reflect; manufacturers, office-seekers, congressmen, and custom-house officers, were consulted; and at last, after some years' deliberation, it was declared that the negotiations were broken off.

At this news, the inhabitants of M*ntr**l held a council. An old man (who it has always been supposed had been secretly bribed by N*w Y*rk) rose and said: "The obstacles raised by N*w Y*rk are injurious to our sales; this is a misfortune. Those which we ourselves create, injure our purchases; this is a second misfortune. We have no power over the first, but the second is entirely dependent upon ourselves. Let us then at least get rid of one, since we cannot be delivered from both.

Let us suppress our corps of Obstructors, without waiting for N*w Y*rk to do the same. Some day or other she will learn to better calculate her own interests."

A second counsellor, a man of practice and of facts, uncontrolled by principles and wise in ancestral experience, replied: "We must not listen to this dreamer, this theorist, this innovator, this Utopian, this political economist, this friend to N*w Y*rk. We would be entirely ruined if the embarra.s.sments of the road were not carefully weighed and exactly equalized between N*w Y*rk and M*ntr**l. There would be more difficulty in going than in coming; in exportation than in importation. We would be with regard to N*w Y*rk, in the inferior condition in which Havre, Nantes, Bordeaux, Lisbon, London, Hamburg, and New Orleans, are, in relation to cities placed higher up the rivers Seine, Loire, Garonne, Tagus, Thames, Elbe, and Mississippi; for the difficulties of ascending must always be greater than those of descending rivers."

"(A voice exclaims: 'But the cities near the mouths of rivers have always prospered more than those higher up the stream.')

"This is not possible."

"(The same voice: 'But it is a fact.')

"Well, they have then prospered _contrary to rule_."

Such conclusive reasoning staggered the a.s.sembly. The orator went on to convince them thoroughly and conclusively by speaking of national independence, national honor, national dignity, national labor, overwhelming importation, tributes, ruinous compet.i.tion. In short, he succeeded in determining the a.s.sembly to continue their system of obstacles, and I can now point out a certain country where you may see road-workers and Obstructors working with the best possible understanding, by the decree of the same legislative a.s.sembly, paid by the same citizens; the first to improve the road, the last to embarra.s.s it.

CHAPTER XI.

ABSOLUTE PRICES.

If we wish to judge between freedom of trade and protection, to calculate the probable effect of any political phenomenon, we should notice how far its influence tends to the production of _abundance_ or _scarcity_, and not simply of _cheapness_ or _dearness_ of price. We must beware of trusting to absolute prices: it would lead to inextricable confusion.

Mr. Protectionist, after having established the fact that protection raises prices, adds:

"The augmentation of price increases the expenses of life, and consequently the price of labor, and every one finds in the increase of the price of his produce the same proportion as in the increase of his expenses. Thus, if everybody pays as consumer, everybody receives also as producer."