Chapter IX: Part II: Sophisms of Protection (2)

Now, then, be consistent, if you will not be just, and treat the poor carpenters as well as you treat yourself. Make a law which shall read: "It is forbidden to use beams or shingles which have not been fashioned by dull hatchets."

And you will immediately perceive the result.

Where we now strike an hundred blows with the ax, we shall be obliged to give three hundred. What a powerful encouragement to industry! Apprentices, journeymen and masters, we should suffer no more. We should be greatly sought after, and go away well paid. Whoever wishes to enjoy a roof must leave us to make his tariff, just as buyers of cloth are now obliged to submit to you.

As for those free trade theorists, should they ever venture to call the utility of this system in question we should know where to go for an unanswerable argument. Your investigation of 1834 is at our service. We should fight them with that, for there you have admirably pleaded the cause of prohibition, and of dull hatchets, which are both the same.

IV.

INFERIOR COUNCIL OF LABOR.

"What! You have the assurance to demand for every citizen the right to buy, sell, trade, exchange, and to render service for service according to his own discretion, on the sole condition that he will conduct himself honestly, and not defraud the revenue? Would you rob the workingman of his labor, his wages and his bread?"

This is what is said to us. I know what the general opinion is; but I have desired to know what the laborers themselves think. I have had an excellent opportunity of finding out.

It was not one of those _Superior Councils of Industry_ (Committee on the Revision of the Tariff), where large manufacturers, who style themselves laborers, influential ship-builders who imagine themselves seamen, and wealthy bondholders who think themselves workmen, meet and legislate in behalf of that philanthropy with whose nature we are so well acquainted.

No, they were workmen "to the manor born," real, practical laborers, such as joiners, carpenters, masons, tailors, shoemakers, blacksmiths, grocers, etc., etc., who had established in my village a _Mutual Aid Society_. Upon my own private authority I transformed it into an _Inferior Council of Labor_ (People's Committee for Revising the Tariff), and I obtained a report which is as good as any other, although unencumbered by figures, and not distended to the proportions of a quarto volume and printed at the expense of the State.

The subject of my inquiry was the real or supposed influence of the protective system upon these poor people. The President, indeed, informed me that the institution of such an inquiry was somewhat in contravention of the principles of the society. For, in France, the land of liberty, those who desire to form associations must renounce political discussions--that is to say, the discussion of their common interests. However, after much hesitation, he made the question the order of the day.

The assembly was divided into as many sub-committees as there were different trades represented. A blank was handed to each sub-committee, which, after fifteen days' discussion, was to be filled and returned.

On the appointed day the venerable President took the chair (official style, for it was only a stool) and found upon the table (official style, again, for it was a deal plank across a barrel) a dozen reports, which he read in succession.

The first presented was that of the tailors. Here it is, as accurately as if it had been photographed:

RESULTS OF PROTECTION--REPORT OF THE TAILORS.

_Disadvantages._ |_Advantages._ | 1. On account of the protective tariff, we pay | None. more for our own bread, meat, sugar, thread, | etc., which is equivalent to a considerable | 1. We have examined diminution of our wages. | the question in | every light, and 2. On account of the protective tariff, our patrons | have been unable to are also obliged to pay more for everything, and | perceive a single have less to spend for clothes, consequently we | point in regard to have less work and smaller profits. | which the protective | system is 3. On account of the protective tariff, clothes | advantageous to are expensive, and people make them wear longer, | our trade. which results in a loss of work, and compels us to | offer our services at greatly reduced rates. |

Here is another report:

EFFECTS OF PROTECTION--REPORT OF THE BLACKSMITHS.

_Disadvantages._ | _Advantages._ | 1. The protective system imposes a tax (which does | not get into the Treasury) every time we eat, drink, | warm, or clothe ourselves. | | 2. It imposes a similar tax upon our neighbors, and | hence, having less money, most of them use wooden | pegs, instead of buying nails, which deprives us of | labor. | | 3. It keeps the price of iron so high that it can | None. no longer be used in the country for plows, or gates,| or house fixtures, and our trade, which might give | work to so many who have none, does not even give | ourselves enough to do. | | 4. The deficit occasioned in the Treasury by those | goods _which do not enter_ is made up by taxes | on our salt. |

The other reports, with which I will not trouble the reader, told the same story. Gardeners, carpenters, shoemakers, boatmen, all complained of the same grievances.

I am sorry there were no day laborers in our association. Their report would certainly have been exceedingly instructive. But, unfortunately, the poor laborers of our province, all _protected_ as they are, have not a cent, and, after having taken care of their cattle, cannot go themselves to the _Mutual Aid Society_. The pretended favors of protection do not prevent them from being the pariahs of modern society.

What I would especially remark is the good sense with which our villagers have perceived not only the direct evil results of protection, but also the indirect evil which, affecting their patrons, reacts upon themselves.

This is a fact, it seems to me, which the economists of the school of the _Moniteur Industriel_ do not understand.

And possibly some men, who are fascinated by a very little protection, the agriculturists, for instance, would voluntarily renounce it if they noticed this side of the question. Possibly, they might say to themselves: "It is better to support one's self surrounded by well-to-do neighbors, than to be protected in the midst of poverty." For to seek to encourage every branch of industry by successively creating a void around them, is as vain as to attempt to jump away from one's shadow.

V.

DEARNESS--CHEAPNESS.

I consider it my duty to say a few words in regard to the delusion caused by the words _dear_ and _cheap_. At the first glance, I am aware, you may be disposed to find these remarks somewhat subtile, but whether subtile or not, the question is whether they are true. For my part I consider them perfectly true, and particularly well adapted to cause reflection among a large number of those who cherish a sincere faith in the efficacy of protection.

Whether advocates of free trade or defenders of protection, we are all obliged to make use of the expression _dearness_ and _cheapness_. The former take sides in behalf of _cheapness_, having in view the interests of consumers. The latter pronounce themselves in favor of _dearness_, preoccupying themselves solely with the interests of the producer. Others intervene, saying, _producer and consumer are one and the same_, which leaves wholly undecided the question whether cheapness or dearness ought to be the object of legislation.

In this conflict of opinion it seems to me that there is only one position for the law to take--to allow prices to regulate themselves naturally. But the principle of "let alone" has obstinate enemies. They insist upon legislation without even knowing the desired objects of legislation. It would seem, however, to be the duty of those who wish to create high or low prices artificially, to state, and to substantiate, the reasons of their preference. The burden of proof is upon them. Liberty is always considered beneficial until the contrary is proved, and to allow prices naturally to regulate themselves is liberty. But the _roles_ have been changed. The partisans of high prices have obtained a triumph for their system, and it has fallen to defenders of natural prices to prove the advantages of their system. The argument on both sides is conducted with two words. It is very essential, then, to understand their meaning.

It must be granted at the outset that a series of events have happened well calculated to disconcert both sides.

In order to produce _high prices_ the protectionists have obtained high tariffs, and still low prices have come to disappoint their expectations.

In order to produce _low prices_, free traders have sometimes carried their point, and, to their great astonishment, the result in some instances has been an increase instead of a reduction in prices.

For instance, in France, to protect farmers, a law was passed imposing a duty of twenty-two per cent. upon imported wools, and the result has been that native wools have been sold for much lower prices than before the passage of the law.

In England a law in behalf of the consumers was passed, exempting foreign wools from duty, and the consequence has been that native wools have sold higher than ever before.

And this is not an isolated fact, for the price of wool has no special or peculiar nature which takes it out of the general law governing prices. The same fact has been reproduced under analogous circumstances. Contrary to all expectation, protection has frequently resulted in low prices, and free trade in high prices. Hence there has been a deal of perplexity in the discussion, the protectionists saying to their adversaries: "These low prices that you talk about so much are the result of our system;" and the free traders replying: "Those high prices which you find so profitable are the consequence of free trade."

There evidently is a misunderstanding, an illusion, which must be dispelled. This I will endeavor to do.

Suppose two isolated nations, each composed of a million inhabitants; admit that, other things being equal, one nation had exactly twice as much of everything as the other--twice as much wheat, wine, iron, fuel, books, clothing, furniture, etc. It will be conceded that one will have twice as much wealth as the other.

There is, however, no reason for the statement that the _absolute prices_ are different in the two nations. They possibly may be higher in the wealthiest nation. It may happen that in the United States everything is nominally dearer than in Poland, and that, nevertheless, the people there are less generally supplied with everything; by which it may be seen that the abundance of products, and not the absolute price, constitutes wealth. In order, then, accurately to compare free trade and protection the inquiry should not be which of the two causes high prices or low prices, but which of the two produces abundance or scarcity.

For observe this: Products are exchanged, the one for the other, and a relative scarcity and a relative abundance leave the absolute price exactly at the same point, but not so the condition of men.

Let us look into the subject a little further.

Since the increase and the reduction of duties have been accompanied by results so different from what had been expected, a fall of prices frequently succeeding the increase of the tariff, and a rise sometimes following a reduction of duties, it has become necessary for political economy to attempt the explanation of a phenomenon which so overthrows received ideas; for, whatever may be said, science is simply a faithful exposition and a true explanation of facts.

This phenomenon may be easily explained by one circumstance which should never be lost sight of.

It is that there are _two causes_ for high prices, and not one merely.

The same is true of low prices. One of the best established principles of political economy is that price is determined by the law of supply and demand.

The price is then affected by two conditions--the demand and the supply. These conditions are necessarily subject to variation. The relations of demand to supply may be exactly counterbalanced, or may be greatly disproportionate, and the variations of price are almost interminable.

Prices rise either on account of augmented demand or diminished supply.

They fall by reason of an augmentation of the supply or a diminution of the demand.

Consequently there are two kinds of _dearness_ and two kinds of _cheapness_. There is a bad dearness, which results from a diminution of the supply; for this implies scarcity and privation. There is a good dearness--that which results from an increase of demand; for this indicates the augmentation of the general wealth.

There is also a good cheapness, resulting from abundance. And there is a baneful cheapness--such as results from the cessation of demand, the inability of consumers to purchase.

And observe this: Prohibition causes at the same time both the dearness and the cheapness which are of a bad nature; a bad dearness, resulting from a diminution of the supply (this indeed is its avowed object), and a bad cheapness, resulting from a diminution of the demand, because it gives a false direction to capital and labor, and overwhelms consumers with taxes and restrictions.

So that, _as regards the price_, these two tendencies neutralize each other; and for this reason, the protective system, restricting the supply and the demand at the same time, does not realize the high prices which are its object.

But with respect to the condition of the people, these two tendencies do not neutralize each other; on the contrary, they unite in impoverishing them.

The effect of free trade is exactly the opposite. Possibly it does not cause the cheapness which it promises; for it also has two tendencies, the one towards that desirable form of cheapness resulting from the increase of supply, or from abundance; the other towards that dearness consequent upon the increased demand and the development of the general wealth. These two tendencies neutralize themselves as regards the _mere price_; but they concur in their tendency to ameliorate the condition of mankind. In a word, under the protective system men recede towards a condition of feebleness as regards both supply and demand; under the free trade system, they advance towards a condition where development is gradual without any necessary increase in the absolute prices of things.

Price is not a good criterion of wealth. It might continue the same when society had relapsed into the most abject misery, or had advanced to a high state of prosperity.

Let me make application of this doctrine in a few words: A farmer in the south of France supposes himself as rich as Croesus, because he is protected by law from foreign competition. He is as poor as Job--no matter, he will none the less suppose that this protection will sooner or later make him rich. Under these circumstances, if the question was propounded to him, as it was by the committee of the Legislature, in these terms: "Do you want to be subject to foreign competition? yes or no," his first answer would be "No," and the committee would record his reply with great enthusiasm.

We should go, however, to the bottom of things. Doubtless foreign competition, and competition of any kind, is always inopportune; and, if any trade could be permanently rid of it, business, for a time, would be prosperous.

But protection is not an isolated favor. It is a system. If, in order to protect the farmer, it occasions a scarcity of wheat and of beef, in behalf of other industries it produces a scarcity of iron, cloth, fuel, tools, etc.--in short, a scarcity of everything.

If, then, the scarcity of wheat has a tendency to increase the price by reason of the diminution of the supply, the scarcity of all other products for which wheat is exchanged has likewise a tendency to depreciate the value of wheat on account of a falling off of the demand; so that it is by no means certain that wheat will be a mill dearer under a protective tariff than under a system of free trade. This alone is certain, that inasmuch as there is a smaller amount of everything in the country, each individual will be more poorly provided with everything.

The farmer would do well to consider whether it would not be more desirable for him to allow the importation of wheat and beef, and, as a consequence, to be surrounded by a well-to-do community, able to consume and to pay for every agricultural product.

There is a certain province where the men are covered with rags, dwell in hovels, and subsist on chestnuts. How can agriculture flourish there? What can they make the earth produce, with the expectation of profit? Meat? They eat none. Milk? They drink only the water of springs. Butter? It is an article of luxury far beyond them. Wool? They get along without it as much as possible. Can any one imagine that all these objects of consumption can be thus left untouched by the masses, without lowering prices?

That which we say of a farmer, we can say of a manufacturer. Cloth-makers assert that foreign competition will lower prices owing to the increased quantity offered. Very well, but are not these prices raised by the increase of the demand? Is the consumption of cloth a fixed and invariable quantity? Is each one as well provided with it as he might and should be? And if the general wealth were developed by the abolition of all these taxes and hindrances, would not the first use made of it by the population be to clothe themselves better?

Therefore the question, the eternal question, is not whether protection favors this or that special branch of industry, but whether, all things considered, restriction is, in its nature, more profitable than freedom?

Now, no person can maintain that proposition. And just this explains the admission which our opponents continually make to us: "You are right on principle."

If that is true, if restriction aids each special industry only through a greater injury to the general prosperity, let us understand, then, that the price itself, considering that alone, expresses a relation between each special industry and the general industry, between the supply and the demand, and that, reasoning from these premises, this _remunerative price_ (the object of protection) is more hindered than favored by it.