Part 6
A poor vine-dresser of the Gironde had trained with fond enthusiasm a slip of vine, which, after much fatigue and much labour, yielded him, at length, a tun of wine; and his success made him forget that each drop of this precious nectar had cost his brow a drop of sweat. "I shall sell it," said he to his wife, "and with the price I shall buy stuff sufficient to enable you to furnish a trousseau for our daughter." The honest countryman repaired to the nearest town, and met a Belgian and an Englishman. The Belgian said to him: "Give me your cask of wine, and I will give you in exchange fifteen parcels of stuff." The Englishman said: "Give me your wine, and I will give you twenty parcels of stuff; for we English can manufacture the stuff cheaper than the Belgians." But a Customhouse officer, who was present, interposed, and said: "My good friend, exchange with the Belgian if you think proper, but my orders are to prevent you from making an exchange with the Englishman." "What!" exclaimed the countryman; "you wish me to be content with fifteen parcels of stuff which have come from Brussels, when I can get twenty parcels which have come from Manchester?" "Certainly; don't you see that France would be a loser if you received twenty parcels, instead of fifteen?" "I am at a loss to understand you," said the vine-dresser, "And I am at a loss to explain it," rejoined the Customhouse official; "but the thing is certain, for all our deputies, ministers, and journalists agree in this, that the more a nation receives in exchange for a given quantity of its products, the more it is impoverished." The peasant found it necessary to conclude a bargain with the Belgian. The daughter of the peasant got only three-quarters of her trousseau; and these simple people are still asking themselves how it happens that one is ruined by receiving four instead of three; and why a person is richer with three dozens of towels than with four dozens.
IX. IMMENSE DISCOVERY.
At a time when everybody is bent on bringing about a saving in the expense of transport--and when, in order to effect this saving, we are forming roads and canals, improving our steamers, and connecting Paris with all our frontiers by a network of railways--at a time, too, when I believe we are ardently and sincerely seeking a solution of the problem, _how to bring the prices of commodities, in the place where they are to be consumed, as nearly as possible to the level of their prices in the place where they were produced_,--I should think myself wanting to my country, to my age, and to myself, if I kept longer secret the marvellous discovery which I have just made.
The illusions of inventors are proverbial, but I am positively certain that I have discovered an infallible means of bringing products from every part of the world to France, and _vice versa_ at a considerable reduction of cost.
Infallible, did I say? Its being infallible is only one of the advantages of my invention.
It requires neither plans, estimates, preparatory study, engineers, mechanists, contractors, capital, shareholders, or Government aid!
It presents no danger of shipwreck, explosion, fire, or collision!
It may be brought into operation at any time!
Moreover--and this must undoubtedly recommend it to the public--it will not add a penny to the Budget, but the reverse. It will not increase the staff of functionaries, but the reverse. It will interfere with no man's liberty, but the reverse.
It is observation, not chance, which has put me in possession of this discovery, and I will tell you what suggested it.
I had at the time this question to resolve:
"Why does an article manufactured at Brussels, for example, cost dearer when it comes to Paris?"
I soon perceived that it proceeds from this: That between Paris and Brussels _obstacles_ of many kinds exist. First of all, there is _distance_, which entails loss of time, and we must either submit to this ourselves, or pay another to submit to it. Then come rivers, marshes, accidents, bad roads, which are so many _difficulties_ to be surmounted. We succeed in building bridges, in forming roads, and making them smoother by pavements, iron rails, etc. But all this is costly, and the commodity must be made to bear the cost. Then there are robbers who infest the roads, and a body of police must be kept up, etc.
Now, among these _obstacles_ there is one which we have ourselves set up, and at no little cost, too, between Brussels and Paris. There are men who lie in ambuscade along the frontier, armed to the teeth, and whose business it is to throw _difficulties_ in the way of transporting merchandise from the one country to the other. They are called Customhouse officers, and they act in precisely the same way as ruts and bad roads. They retard, they trammel commerce, they augment the difference we have remarked between the price paid by the consumer and the price received by the producer--that very difference, the reduction of which, as far as possible, forms the subject of our problem.
That problem is resolved in three words: Reduce your tariff.
You will then have done what is equivalent to constructing the Northern Railway without cost, and will immediately begin to put money in your pocket.
In truth, I often seriously ask myself how anything so whimsical could ever have entered into the human brain, as first of all to lay out many millions for the purpose of removing the _natural obstacles_ which lie between France and other countries, and then to lay out many more millions for the purpose of substituting _artificial obstacles_, which have exactly the same effect; so much so, indeed, that the obstacle created and the obstacle removed neutralize each other, and leave things as they were before, the residue of the operation being a double expense.
A Belgian product is worth at Brussels 20 francs, and the cost of carriage would raise the price at Paris to 30 francs. The same article made in Paris costs 40 francs. And how do we proceed?
In the first place, we impose a duty of 10 francs on the Belgian product, in order to raise its cost price at Paris to 40 francs; and we pay numerous officials to see the duty stringently levied, so that, on the road, the commodity is charged 10 francs for the carriage, and 10 francs for the tax.
Having done this, we reason thus: The carriage from Brussels to Paris, which costs 10 francs, is very dear. Let us expend two or three hundred millions [of francs] in railways, and we shall reduce it by one half. Evidently, all that we gain by this is that the Belgian product would sell in Paris for 35 francs, viz.
20 francs, its price at Brussels. 10 " duty. 5 " reduced carriage by railway. Total, 35 francs, representing cost price at Paris.
Now, I ask, would we not have attained the same result by lowering the tariff by 5 francs? We should then have--
20 francs, the price at Brussels. 5 " reduced duty. 10 " carriage by ordinary roads. Total, 35 francs, representing cost price at Paris.
And by this process we should have saved the 200 millions which the railway cost, plus the expense of Customhouse surveillance, for this last would be reduced in proportion to the diminished encouragement held out to smuggling.
But it will be said that the duty is necessary to protect Parisian industry. Be it so; but then you destroy the effect of your railway.
For, if you persist in desiring that the Belgian product should cost at Paris 40 francs, you must raise your duty to 15 francs, and then you have--
20 francs, the price at Brussels. 15 " protecting duty. 5 " railway carriage. Total, 40 francs, being the equalized price.
Then, I venture to ask, what, under such circumstances, is the good of your railway?
In sober earnestness, let me ask, is it not humiliating that the nineteenth century should make itself a laughing-stock to future ages by such puerilities, practised with such imperturbable gravity? To be the dupe of other people is not very pleasant, but to employ a vast representative apparatus in order to dupe, and double dupe, ourselves--and that, too, in an affair of arithmetic--should surely humble the pride of this _age of enlightenment_.
X. RECIPROCITY.
We have just seen that whatever increases the expense of conveying commodities from one country to another--in other words, whatever renders transport more onerous--acts in the same way as a protective duty; or if you prefer to put it in another shape, that a protective duty acts in the same way as more onerous transport.
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):--
"If fifteen millions' worth of commodities, sold to foreigners, are taken from the total production, estimated at fifty millions, the thirty-five millions' worth of commodities remaining, not being sufficient to meet the ordinary demand, will increase in price, and rise to the value of fifty millions. In that case the revenue of the country will represent a value of fifteen millions additional.... There would then be an increase of the wealth of the country to the extent of fifteen millions, exactly the amount of specie imported."
This is a pleasant view of the matter! If a nation produces in one year, from its agriculture and commerce, a value of fifty millions, it has only to sell a quarter of it to the foreigner to be a quarter richer! Then if it sells the half, it will be one-half richer! And if it should sell the whole, to its last tuft of wool and its last grain of wheat, it would bring up its revenue to 100 millions. Singular way of getting rich, by producing infinite dearness by absolute scarcity!
Again, would you judge of the two doctrines? Submit them to the test of exaggeration.
According to the doctrine of M. de Saint-Chamans, the French would be quite as rich--that is to say, quite as well supplied with all things--had they only a thousandth part of their annual products, because they would be worth a thousand times more.
According to our doctrine, the French would be infinitely rich if their annual products were infinitely abundant, and, consequently, without any value at all.*
* See _post_, ch. v. of second series of _Sophismes_; and ch. vi. of _Harmonies Economiques_.
XII. DOES PROTECTION RAISE THE RATE OF WAGES?
An atheist, declaiming one day against religion and priestcraft, became so outrageous in his abuse, that one of his audience, who was not himself very orthodox, exclaimed, "If you go on much longer in this strain, you will make me a convert."
In the same way, when we see our beardless scribblers, our novel-writers, reformers, fops, amateur contributors to newspapers, redolent of musk, and saturated with champagne, stuffing their portfolios with radical prints, or issuing under gilded covers their own tirades against the egotism and individualism of the age--when we hear such people declaim against the rigour of our institutions, groan over the proletariat and the wages system, raise their eyes to Heaven, and weep over the poverty of the working classes (poverty which they never see but when they are paid to paint it),--we are likewise tempted to exclaim, "If you go on longer in this strain, we shall lose all interest in the working classes."