Part 13

A tariff, then, may be regarded in the same light as a marsh, a rut, an obstruction, a steep declivity--in a word, it is an obstacle, the effect of which is to augment the difference between the price which the producer of a commodity receives, and the price which the consumer pays for it. In the same way, it is undoubtedly true that marshes and quagmires are to be regarded in the same light as protective tariffs.

There are people (few in number, it is true, but there are such people) who begin to understand that obstacles are not less obstacles because they are artificial, and that our mercantile prospects have more to gain from liberty than from protection, and exactly for the same reason which makes a canal more favourable to traffic than a steep, roundabout, and inconvenient road.

But they maintain that this liberty must be reciprocal. If we remove the barriers we have erected against the admission of Spanish goods, for example, Spain must remove the barriers she has erected against the admission of ours. They are, therefore, the advocates of commercial treaties, on the basis of exact reciprocity, concession for concession; let us make the sacrifice of buying, say they, to obtain the advantage of selling.

People who reason in this way, I am sorry to say, are, whether they know it or not, protectionists in principle; only, they are a little more inconsistent than pure protectionists, as the latter are more inconsistent than absolute prohibitionists.

The following apologue will demonstrate this:--

STULTA AND PUERA. There were, no matter where, two towns called Stulta and Puera. They completed at great cost a highway from the one town to the other. When this was done, Stulta said to herself, "See how Puera inundates us with her products; we must see to it." In consequence, they created and paid a body of obstructives, so called because their business was to place obstacles in the way of traffic coming from Puera. Soon afterwards, Puera did the same.

At the end of some centuries, knowledge having in the interim made great progress, the common sense of Puera enabled her to see that such reciprocal obstacles could only be reciprocally hurtful. She therefore sent a diplomatist to Stulta, who, laying aside official phraseology, spoke to this effect: "We have made a highway, and now we throw obstacles in the way of using it. This is absurd. It would have been better to have left things as they were. We should not, in that case, have had to pay for making the road in the first place, nor afterwards have incurred the expense of maintaining obstructives. In the name of Puera, I come to propose to you, not to give up opposing each other all at once--that would be to act upon a principle, and we despise principles as much as you do--but to lessen somewhat the present obstacles, taking care to estimate equitably the respective sacrifices we make for this purpose." So spoke the diplomatist. Stulta asked for time to consider the proposal, and proceeded to consult, in succession, her manufacturers and agriculturists. At length, after the lapse of some years, she declared that the negotiations were broken off.

On receiving this intimation, the inhabitants of Puera held a meeting. An old gentleman (they always suspected he had been secretly bought by Stulta) rose and said: The obstacles created by Stulta injure our sales, which is a misfortune. Those which we have ourselves created injure our purchases, which is another misfortune. With reference to the first, we are powerless; but the second rests with ourselves. Let us, at least, get quit of one, since we cannot rid ourselves of both evils. Let us suppress our obstructives without requiring Stulta to do the same. Some day, no doubt, she will come to know her own interests better.

A second counsellor, a practical, matter-of-fact man, guiltless of any acquaintance with principles, and brought up in the ways of his forefathers, replied: "Don't listen to that Utopian dreamer, that theorist, that innovator, that economist, that Stultomaniac."

We shall all be undone if the stoppages of the road are not equalized, weighed, and balanced between Stulta and Puera. There would be greater difficulty in going than in coming, in exporting than in importing. We should find ourselves in the same condition of inferiority relatively to Stulta, as Havre, Nantes, Bordeaux, Lisbon, London, Hamburg, and New Orleans, are with relation to the towns situated at the sources of the Seine, the Loire, the Garonne, the Tagus, the Thames, the Elbe, and the Mississippi, for it is more difficult for a ship to ascend than to descend a river. (A Voice: Towns at the embouchures of rivers prosper more than towns at their source.) This is impossible. (Same Voice: But it is so.) Well, if it be so, they have prospered contrary to rules. Reasoning so conclusive convinced the assembly, and the orator followed up his victory by talking largely of national independence, national honour, national dignity, national labour, inundation of products, tributes, murderous competition. In short, he carried the vote in favour of the maintenance of obstacles; and if you are at all curious on the subject, I can point out to you countries, where you will see with your own eyes Road-makers and Obstructives working together on the most friendly terms possible, under the orders of the same legislative assembly, and at the expense of the same taxpayers, the one set endeavouring to clear the road, and the other set doing their utmost to render it impassible.

XI. NOMINAL PRICES.

Do you desire to be in a situation to decide between liberty and protection? Do you desire to appreciate the bearing of an economic phenomenon? Inquire into its effects upon the abundance or scarcity of commodities, and not upon the rise or fall of prices. Distrust nominal prices;* and they will only land you in an inextricable labyrinth.

* I have translated the expression des prix absolus, nominal prices, or actual money prices, because the English economists do not, so far as I remember, make use of the term absolute price.--See post, chap. v. of second series, where the author employs the expression in this sense.-- Translator.

M. Matthieu de Dombasle, after having shown that protection raises prices, adds--

"The enhancement of price increases the expense of living, and consequently the price of labour, and each man receives, in the enhanced price of his products, compensation for the higher prices he has been obliged to pay for the things he has occasion to buy. Thus, if every one pays more as a consumer, every one receives more as a producer."

It is evident that we could reverse this argument, and say--"If every one receives more as a producer, every one pays more as a consumer."

Now, what does this prove? Nothing but this, that protection displaces wealth uselessly and unjustly. In so far, it simply perpetrates spoliation.

Again, to conclude that this vast apparatus leads to simple compensations, we must stick to the "consequently" of M. de Dombasle, and make sure that the price of labour will not fail to rise with the price of the protected products. This is a question of fact which I remit to M. Moreau de Jonnés, that he may take the trouble to find out whether the rate of wages advances along with the price of shares in the coal-mines of Anzin. For my own part, I do not believe that it does; because, in my opinion, the price of labour, like the price of everything else, is governed by the relation of supply to demand. Now, I am convinced that restriction diminishes the supply of coal, and consequently enhances its price; but I do not see so clearly that it increases the demand for labour, so as to enhance the rate of wages; and that this effect should be produced is all the less likely, because the quantity of labour demanded depends on the disposable capital. Now, protection may indeed displace capital, and cause its transference from one employment to another, but it can never increase it by a single farthing.

But this question, which is one of the greatest interest and importance, will be examined in another place.* I return to the subject of nominal price; and I maintain that it is not one of those absurdities which can be rendered specious by such reasonings as those of M. de Dombasle.

Put the case of a nation which is isolated, and possesses a given amount of specie, and which chooses to amuse itself by burning each year one half of all the commodities that it possesses. I undertake to prove that, according to the theory of M. de Dombasle, it will not be less rich.

In fact, in consequence of the fire, all things will be doubled in price, and the inventories of property, made before and after the destruction, will show exactly the same nominal value. But then what will the country in question have lost? If John buys his cloth dearer, he also sells his corn at a higher price; and if Peter loses on his purchase of corn, he retrieves his losses by the sale of his cloth. "Each recovers, in the extra price of his products, the extra expense of living he has been put to; and if everybody pays as a consumer, everybody receives a corresponding amount as a producer."

All this is a jingling quibble, and not science. The truth, in plain terms, is this: that men consume cloth and corn by fire or by using them, and that the effect is the same as regards price, but not as regards wealth, for it is precisely in the use of commodities that wealth or material prosperity consists.

In the same way, restriction, while diminishing the abundance of things, may raise their price to such an extent that each party shall be, pecuniarily speaking, as rich as before. But to set down in an inventory three measures of corn at 20s., or four measures at 15s., because the result is still sixty shillings,--would this, I ask, come to the same thing with reference to the satisfaction of men's wants?

It is to this, the consumer's point of view, that I shall never cease to recall the protectionists, for this is the end and design of all our efforts, and the solution of all problems.**

* See post, ch. v., second series.--Translator.

** To this view of the subject the author frequently reverts. It was, in his eyes, all important; and, four days before his death, he dictated this recommendation:--"Tell M. de F. to treat economical questions always from the consumer's point of view, for the interest of the consumer is identical with that of the human race."--Editor.

I shall never cease to say to them: Is it, or is it not, true that restriction, by impeding exchanges, by limiting the division of labour, by forcing labour to connect itself with difficulties of climate and situation, diminishes ultimately the quantity of commodities produced by a determinate amount of efforts? And what does this signify, it will be said, if the smaller quantity produced under the régime of protection has the same nominal value as that produced under the régime of liberty? The answer is obvious. Man does not live upon nominal values, but upon real products, and the more products there are, whatever be their price, the richer he is.

In writing what precedes, I never expected to meet with an anti-economist who was enough of a logician to admit, in so many words, that the wealth of nations depends on the value of things, apart from the consideration of their abundance. But here is what I find in the work of M. de Saint-Chamans (p. 210):--