Part 35

So that, as regards price, these two tendencies neutralize each other; and this is the reason why the restrictive system, restraining, as it does, demand and supply at one and the same time, does not in the long run realize even that dearness which is its object.

But, as regards the condition of the population, these causes do not at all neutralize each other; on the contrary, they concur in making it worse.

The effect of freedom of trade is exactly the opposite. In its general result, it may be that it does not realize the cheapness it promises; for it has two tendencies, one towards desirable cheapness through the extension of supply, or abundance; the other towards appreciable dearness by the development of demand, or general wealth. These two tendencies neutralize each other in what concerns nominal price, but they concur in what regards the material prosperity of the population.

In short, under the restrictive system, in as far as it is operative, men recede towards a state of things, in which both demand and supply are enfeebled. Under a system of freedom, they progress towards a state of things in which both are developed simultaneously, and without necessarily affecting nominal prices. Such prices form no good criterion of wealth. They may remain the same whilst society is falling into a state of the most abject poverty, or whilst it is advancing towards a state of the greatest prosperity.

We shall now, in a few words, show the practical application of this doctrine.

A cultivator of the south of France believes himself to be very rich, because he is protected by duties from external competition. He may be as poor as Job; but he nevertheless imagines that sooner or later he will get rich by protection. In these circumstances, if we ask him the question which was put by the Odier Committee in these words,--

"Do you desire--yes or no--to be subject to foreign competition?" His first impulse is to answer "No," and the Odier Committee proudly welcome his response.

However, we must go a little deeper into the matter. Unquestionably, foreign competition--nay, competition in general--is always troublesome; and if one branch of trade alone could get quit of it, that branch of trade would for some time profit largely.

But protection is not an isolated favour; it is a system. If, to the profit of the agriculturist, protection tends to create a scarcity of corn and of meat, it tends likewise to create, to the profit of other industries, a scarcity of iron, of cloth, of fuel, tools, etc.,--a scarcity, in short, of everything.

Now, if a scarcity of corn tends to enhance its price through a diminution of supply, the scarcity of all other commodities for which corn is exchanged tends to reduce the price of corn by a diminution of demand, so that it is not at all certain that ultimately corn will be a penny dearer than it would have been under a system of free trade. There is nothing certain in the whole process but this--that as there is upon the whole less of every commodity in the country, each man will be less plentifully provided with everything he has occasion to buy.

The agriculturist should ask himself whether it would not be more for his interest that a certain quantity of corn and cattle should be imported from abroad, and that he should at the same time find himself surrounded by a population in easy circumstances, able and willing to consume and pay for all sorts of agricultural produce.

Suppose a department in which the people are clothed in rags, fed upon chesnuts, and lodged in hovels. How can agriculture flourish in such a locality? What can the soil be made to produce with a well-founded expectation of fair remuneration? Meat? The people do not eat it. Milk? They must content themselves with water. Butter? It is regarded as a luxury. Wool? The use of it is dispensed with as much as possible. Does any one imagine that all the ordinary objects of consumption can thus be put beyond the reach of the masses, without tending to lower prices as much as protection is tending to raise them?

What has been said of the agriculturist holds equally true of the manufacturer. Our manufacturers of cloth assure us that external competition will lower prices by increasing the supply. Granted; but will not these prices be again raised by an increased demand? Is the consumption of cloth a fixed and invariable quantity? Has every man as much of it as he would wish to have? And if general wealth is advanced and developed by the abolition of all these taxes and restrictions, will the first use to which this emancipation is turned by the population not be to dress better?

The question,--the constantly-recurring question,--then, is not to find out whether protection is favourable to any one special branch of industry, but whether, when everything is weighed, balanced, and taken into account, restriction is, in its own nature, more productive than liberty.

Now, no one will venture to maintain this. On the contrary, we are perpetually met with the admission, "You are right in principle."

If it be so, if restriction confers no benefit on individual branches of industry without doing a greater amount of injury to general wealth, we are forced to conclude that actual money prices, considered by themselves, only express a relation between each special branch of industry and industry in general, between supply and demand; and that, on this account, a remunerative price, which is the professed object of protection, is rather injured than favoured by the system.

SUPPLEMENT.*

* What follows appeared in the Libre Échange of 1st August 1847.--Editor.

The article which we have published under the title of Dearness, Cheapness, has brought us several letters. We give them, along with our replies:--

Mr Editor,--You upset all our ideas. I endeavoured to aid the cause of free trade, and found it necessary to urge the consideration of cheapness. I went about everywhere, saying, "When freedom of trade is accorded, bread, meat, cloth, linen, iron, fuel, will go on falling in price." This displeased those who sell, but gave great pleasure to those who buy these commodities. And now you throw out doubts as to whether free trade will bring us cheapness or not. What, then, is to be gained by it? What gain will it be to the people if foreign competition, which may damage their sales, does not benefit them in their purchases?

Mr Free-trader,--Allow us to tell you that you must have read only half the article which has called forth your letter. We said that free trade acts exactly in the same way as roads, canals, railways, and everything else which facilitates communication by removing obstacles. Its first tendency is to increase the supply of the commodity freed from duty, and consequently to lower its price. But by augmenting at the same time the supply of all other commodities for which this article is exchanged, it increases the demand, and the price by this means rises again. You ask what gain this would be to the people? Suppose a balance with several scales, in each of which is deposited a certain quantity of the articles you have enumerated. If you add to the corn in one scale it will tend to fall; but if you add a little cloth, a little iron, a little fuel, to what the other scales contained, you will redress the equilibrium. If you look only at the beam, you will find nothing changed. But if you look at the people for whose use these articles are produced, you will find them better fed, clothed, and warmed.

Mr Editor,--I am a manufacturer of cloth, and a protectionist. I confess that your article on dearness and cheapness has made me reflect. It contains something specious which would require to be well established before we declare ourselves converted.

Mr Protectionist,--We say that your restrictive measures have an iniquitous object in view, namely, artificial dearness. But we do not affirm that they always realize the hopes of those who promote them. It is certain that they inflict on the consumer all the injurious consequences of scarcity. It is not certain that they always confer a corresponding advantage on the producer. Why? Because if they diminish the supply, they diminish also the demand.

This proves that there is in the economic arrangement of this world a moral force, a vis medieatrix, which causes unjust ambition in the long run to fall a prey to self-deception.

Would you have the goodness, Sir, to remark that one of the elements of the prosperity of each individual branch of industry is the general wealth of the community. The value of a house is not always in proportion to what it has cost, but likewise in proportion to the number and fortune of the tenants. Are two houses exactly similar necessarily of the same value? By no means, if the one is situated in Paris and the other in Lower Brittany. Never speak of price without taking into account collateral circumstances, and let it be remembered that no attempt is so bootless as to endeavour to found the prosperity of parts on the ruin of the whole. And yet this is what the policy of restriction pretends to do.

Consider what would have happened at Paris, for example, if this strife of interests had been attended with success.

Suppose that the first shoemaker who established himself in that city had succeeded in ejecting all others; that the first tailor, the first mason, the first printer, the first watchmaker, the first physician, the first baker, had been equally successful. Paris would at this moment have been still a village of 1200 or 1500 inhabitants. It has turned out very differently. The market of Paris has been open to all (excepting those whom you still keep out), and it is this freedom which has enlarged and aggrandized it. The struggles of competition have been bitter and long continued, and this is what has made Paris a city of a million of inhabitants. The general wealth has increased, no doubt; but has the individual wealth of the shoemakers and tailors been diminished? This is the question you have to ask. You may say that according as the number of competitors increased, the price of their products would go on falling. Has it done so? No; for if the supply has been augmented, the demand has been enlarged.

The same thing will hold good of your commodity, cloth; let it enter freely. You will have more competitors in the trade, it is true; but you will have more customers, and, above all, richer customers. Is it possible you can never have thought of this, when you see nine-tenths of your fellow-citizens underclothed in winter, for want of the commodity which you manufacture?