Political Economy by J.C.L. Simonde de Sismondi (1815)
By labour man drew his first wealth from the earth, but scarcely had he satisfied his primitive wants, when desire made him conceive other enjoyments, not to be obtained without the aid of his fellows. Exchanges began. They extended to whatever had any value, to whatever could produce any; they comprised mutual services and labour, no less than the fruit of labour; and gave room to the formation and increase of a new kind of wealth, which was no longer measured by the wants of him who produced it, but by the wants of all those with whom he might transact exchanges, - with whom he might carry on commerce; and hence we have named it commercial wealth.
The solitary man was used to labour for his own wants, and his consumption was the measure of his production; he fitted out a place to produce him provisions for a year, for two years perhaps; but afterwards he did not indefinitely augment it. It was enough to renew the process, so as to maintain himself in the same condition; and, if he had time to spare, he laboured at acquiring some new enjoyment, at satisfying some other fancy. Society has never done any thing by commerce, except sharing among all its members what the isolated man would have prepared solely for himself. Each labours, in like manner, to provide for all, during a year, two years, or more; each labours, afterwards, to keep up this provision, according as consumption destroys a part of it; and since the division of labour and the improvement of arts allow more and more work to be done, each, perceiving that he has already provided for the reproduction of what has been consumed, studies to awaken new tastes and new fancies which he may satisfy.
But when a man laboured for himself alone, he never dreamt of those fancies, till he had provided for his wants; his time was his revenue; his time formed also his whole means of production. There was no room to fear, that the one would not be exactly proportioned to the other; that he would ever work to satisfy an inclination that he did not feel, or which he valued less than a want. But when trade was introduced, and each no longer laboured for himself, but for an unknown person, the different proportions subsisting between the desire and what could satisfy it, between the labour and the revenue, between production and consumption, were no longer equally certain; they were independent of each other, and every workman was obliged to regulate his conduct by guessing on a subject, concerning which the most skilful had nothing but conjectural information.
The isolated man's knowledge of his own means and his own wants, required to be replaced by a knowledge of the market, for which the social man was labouring; of its demands and its extent.
The number of consumers, their tastes, the extent of their consumption, and their income, regulate the market for which every producer labours. Each of these four elements is variable, independently of the rest, and each of their variations accelerates or retards the sale. The number of consumers may decrease, not only by sickness or war, but also by obstacles which policy may place in the way of their communication, or by the avarice of new sellers. Their tastes may be changed by fashion: an extraordinary consumption of one kind of merchandize, brought about by some public calamity, may have reduced them to be frugal in all the rest; and finally, their income may diminish without a diminution of their number, and with the same wants, the same means of satisfying them may no longer exist. Such revolutions in the market are difficult to know with precision, difficult to calculate; and their obscurity is greater for each individual producer, because he but imperfectly knows the number and means of his rivals, the merchants, who are to sell in competition with him. But one single observation serves him, instead of all them: he compares his price with that of the buyer, and this comparison, according to the profit or loss which it offers him, is a warning to increase or diminish his production, for the following year.
The producer establishes his price according to what the merchandise has cost, including his profit, which ought to be proportional to what might be obtained in any other kind of industry. The price must be sufficient to repay the workmen's wages, the rent of the land, or the interest on the fixed capitals employed in production, the raw materials wrought by him, with all the expenses of transport, and all the advances of money. When all these reimbursements, calculated at the mean rate of the country, are themselves repaid by the last purchaser, the production may continue on the same footing. If the profits rise above the mean rate, the producer will extend his enterprizes; he will employ new hands and fresh capital, and, striving to benefit by this extraordinary profit, he will soon reduce it to the common level. If the buyer, on the other hand, pays a price too low for compensating all the producer's reimbursements, the latter will, of course, seek to reduce his production, but this change will not be so easy as the other. The workmen employed by him, rather than abandon what gains their bread, consent to work at a lower price; for less even than the necessaries of life. Fixed capitals, moreover, cannot be put to another use; he will content himself with a smaller profit, and continue to work with them till they produce next to nothing. Lastly, the manufacturer himself must live by his industry, and never willingly abandons it: he is ever disposed to attribute the decline of his last year's trade to accidental causes; and the less he has gained, the less is he willing to retire from business. Thus production continues almost always longer than demand, unless the manufacturer has, of his own accord, renounced his business to attempt a new one.
The buyer's price, an the other hand, is fixed by competition. He does not inquire what the article costs, but what are the terms on which he may obtain another to serve in its stead; he addresses himself to various merchants, who offer him the same commodity, and bargains with him who will sell the cheapest; or else he considers which will suit him best, among several articles of a different nature, but capable of being substituted for each other. As each is occupied solely with his own private interest, each tends to the same object: all the buyers, on one hand, all the sellers on the other, act as if in concert: the sums asked, and the sums offered, are brought to an equilibrium, and the mean price is established.
The seller's price should enable him to reproduce the article sold, with a profit, under the same condition, in the same place. His market, therefore, extends to every country where the mean price established by commerce is no smaller than his. His production is not limited by the consumption of neighbors or countrymen; it is regulated by the whole number of those who, whatever country they inhabit, find an advantage in purchasing his goods, or for whom his producing price is not superior to the buying price. It is this which properly constitutes the extent of market.
As the division of labour incessantly augments its productive powers, and the increase of capitals daily obliges the merchant to seek new employment for industry, and try new manufactures, the producer feels no interest more pressing than that of extending his market. If he cannot find new places of sale, it will neither suit him to enlarge his manufactory, when his capital has been increased by saving, nor to improve his fabrication by performing more work with the same machinery, or the same number of hands. The whole progress of his fortune depends on the progress of his sale.*
Among the causes which augment this sale, the first is the discovery of such an economy in labour as may enable the manufacturer to sell cheaper than his brethren, and to get possession of their custom: he will sell more, but they will sell less. The consumers will make a light saving; yet, if both are subjects of the same state, the difference in regard to the national interest will not be great. The distress of those producers, who have lost their custom, and who, probably, will lose a considerable part of their capital by selling their wares too cheap, and abandoning their former machinery, will perhaps counterbalance the profit of purchasers.
As policy is wont to comprise the obligation of social duties within the circle of our countrymen, the mutual rivalship of foreign producers has more openly displayed itself. They have striven to exclude each other from the markets, where they came in competition, by selling at a cheaper rate. Every national discovery, which allows the producers of one country to sell cheaper than those of other countries, inevitably increases the former's production at the latter's expense; and the profit of this saving is shared between producers who extend their market, and consumers who provide for their wants at a smaller expense. Yet if a single manufacturer has succeeded in making this saving, which extends his market; or if the exclusive use of it is secured to him by patent, his countrymen. also manufacturers, against whom he has made this successful competition, must support all the loss of it, whilst himself and the foreign consumer share all the profit. In an age, when communication among different counties is easy, when all the sciences are applied to all the arts, discoveries are soon divined and copied, and a nation cannot long retain an advantage in manufacturing which it owes but to a secret; so that the market, extended for a moment by a fall in the price, is very soon shut up; and if the general consumption is not increased, the production is not so either.
Sale is extended also, and in a more lasting manner, when the cheapness of the thing produced brings it within the reach of a new class of consumers; a very sensible diminution of the price may often produce this effect. Thus glass windows were at one time confined to palaces; they are found at the present time in the meanest huts. Consumption is in that case truly increased; each nation gains doubly by it; manufacturers have extended their labour; the poor have acquired a new enjoyment.
The increase of population, and of national wealth, contributes to extend the market, in a manner still more advantageous. Yet every conceivable increase of population and of wealth, does not, of necessity, extend the market; it is only such an increase as attends the increased comforts of the most numerous class. When cultivation on the great scale has succeeded cultivation on the small, more capital is perhaps absorbed by land, and re-produced by it; more wealth than formerly may be diffused among the whole mass of agriculturists, but the consumption of one rich farmer's family, united to that of fifty families of miserable hinds, is not so valuable for the nation, as that of fifty families of peasants, no one of which was rich, but none deprived of an honest competence. So also in towns, the consumption of a manufacturer worth a million, under whose orders are employed a thousand workmen, reduced to the bare necessaries of life, is not so advantageous for the nation, as that of a hundred manufacturers far less rich, who employ each but ten workmen far less poor. It is very true, that ten thousand pounds of income, whether they belong to a single man, or to a hundred, are all equally destined for consumption, but this consumption is not of the same nature. A man, however rich, cannot employ for his use an infinitely greater number of articles than a poor man, but he employs articles infinitely better; he requires work far better finished, materials far more precious, and brought from a far greater distance. It is he who especially encourages the perfection of certain workmen, that finish a small number of objects with extreme skill; it is he who pays them an exorbitant wage. It is he also that especially rewards such workmen as we have named unproductive, because they procure for him nothing but fugitive enjoyments, which can never by accumulation form part of the national wealth; and whilst the effect of increasing capital is generally to concentrate labour in very large manufactories, the effect of great opulence is almost entirely to exclude the produce of those large manufactories from the consumption of the opulent man. The diffusion of wealth, therefore, still more than its accumulation, truly constitutes national prosperity, because it keeps up the kind of consumption most favourable for national re-production.
The manufacturer's market may, in the last place, be extended, by what forms the noblest wish of a statesman, the progress of civilization, comfort, security, and happiness, among barbarous nations. Europe has arrived at such a point, that, in all its parts, there is to be found an industry, a quantity of fabrication, superior to its wants; but if false policy did not incessantly induce us to arrest the progress of civilization among our neighbours; if Egypt had been left in the hands of a people requiring the arts of Europe; if Turkey were extricated from the oppression under which it groans; if our victories over the inhabitants of Barbary had been profitably employed in giving back the coasts of Africa to social life; if Spain had not again been yielded to a despotism which destroys and ruins her population; if the independents of America were protected, so that they might be allowed to enjoy the advantages which nature offers them; if the Hindoos, subject to Europe, were amalgamated with Europeans; if Franks were encouraged to settle among them, in place of being repelled, - consumption would increase in these different counties, rapidly enough to employ all this super-abundant labour, which Europe at present knows not how to dispose of, and to terminate this distress in which the poor are plunged.
The more superior the buyer's price is to the seller's, the more profit does trade give to be shared among the trader, and all those whom he employs in the transport and distribution of his goods; the manufacturer, and all those whom he employs in the production of them. Hence one of the great and constant objects of governments has been, to increase this difference, that their manufacturers might be enabled to produce cheap, and so find many buyers, and to sell dear to such as could not buy elsewhere, and so gain a large profit. The progress of society generally enables nations to produce cheaper; the almost ever injudicious protection of government often gives them means of selling dearer.
The low price of workmanship is the first cause of manufacturing profit; but this low price is never a national advantage, except when it is produced by superiority of climate, greater fertility of soil, or abundance of provision. On the contrary, when it arises from the difficulty of communication, which prevents cultivators from reaping all the profit of their wares, it can only be regarded as a private advantage, acquired at the expense of the national advantage. When the low price of workmanship arises from the poverty of day-labourers, forced by competition to content themselves with what is necessary for life; though commerce may profit by the circumstance, it is nothing better than a national calamity.
Abundance of capital, and the consequence of this, a low price of interest, likewise doubly contribute to diminish the price of production. With more capital, the manufacturer and merchant transact their purchases and sales at a more favourable moment; they are not pressed by either operation, or compelled to provide for the print by a sacrifice of future advantage. Executing all kinds of labour more on the great scale, they save time, and all those incidental charges, which are the same for a great and for a small sum. But as to the saving made by the merchant on the interest of money, it is made at the expense of a particular class, deriving their revenue from trade; it does not enrich the nation any more than the diminution of wages enriched it; it only gives to one what it takes from another.
The increasing division of labour forms, as we have seen, the chief cause of increase in its productive powers; each makes better what he is constantly engaged in making, and when, at length, his whole labour is reduced to the simplest operation, he comes to perform it with such ease and rapidity, that the eye cannot make us comprehend how the address of man should arrive at such precision and promptitude. Often also this division leads to the discovery, that as the workman is now worth nothing more than a machine, a machine may in fact supply his place. Several important inventions in mechanics applied to the arts, have thus sprung from the division of labour; but, by the influence of this division, man has lost in intelligence all that he has gained in the power of producing wealth.
It is by the variety of its operations that our soul is unfolded; it is to procure citizens that a nation wishes to have men, not to procure machines At for operations a little more complicated than those performed by fire or water. The division of labour has conferred a value on operations so simple, that children, from the tenderest age, are capable of executing them; and children, before having developed any of their faculties, before having experienced any enjoyment of life, are accordingly condemned to put a wheel in motion, to turn a spindle, to empty a bobbin. More lace, more pins, more threads, and cloth of cotton or silk, are the fruit of this great division of labour; but how dearly have we purchased them, if it is by this moral sacrifice of so many millions of human beings!
The employment of machinery in place of men, has contributed generally to lessen the price of production. At the renovation of arts and civilization, there was so much work to be done, and so few hands to do it; oppression had so far reduced the poor class; there remained so much uncultivated land in the country; so many ill-supplied trades in towns; and sovereigns required so many soldiers for war, that it seemed workmanship could never be economized enough, since an artisan, sent away from one trade, would always find ten others ready to receive him. Circumstances are not now the same; our labour is scarcely sufficient for the labourers. We shall endeavour, in another place, to explain the cause of this fact; in the mean time, surely none will maintain that it can be advantageous to substitute a machine for a man, if this man cannot find work elsewhere; or that it is not better to have the population composed of citizens than of steam-engines, even though the cotton cloth of the first should be a little dearer than that of the second.
The application of science to art is not limited to the invention of machinery; its result is the discovery of raw materials, dyeing ingredients, preservative methods more sure and economical. It has produced better work at a cheaper rate; it has protected the health of labourers, as well as their produce; and its effect in augmenting wealth has almost always been beneficial to humanity.
Finally, the different quarters of the globe possess advantages of climate, soil, exposure, which not only render the subsistence of man more easy or cheaper, but also place within his reach certain raw materials, which other nations cannot procure at the same price. Hence results in their favour a kind of monopoly, which they exercise over others, and of which it is rare that they do not take advantage. There is also, in some degree, a natural advantage in the superiority of the people itself, in certain climates; the bounty of nature seems to have reserved for those who inhabit them a superiority of industry, intelligence, strength of body, or constancy in labour, which do not even require to be developed by education.
But other qualities, other virtues, which appear to contribute more effectually still to the increase of riches, as well as to the happiness of society - the love of order, economy, sobriety, justice - are almost always the work of public institutions. Religion, education, government, and principles of honour, change the nature of men; and as they make good or bad citizens of them, they advance or retard their approach to the object proposed by political economy.
But governments have rarely been satisfied with such advantages as the trade of their states might owe to nature, or to the progress of society. They have attempted to favour the increase of commercial wealth; and their different expedients have most frequently tended to assist the merchant in selling dear, rather than producing cheap. With the latter object, however, we have seen the exportation of raw materials prohibited, the rate of interest fixed, and laws enacted to lower the wages of labour.
These three expedients had a common fault, that of sacrificing one class to another, and founding the profit of trade, not on the advantage of consumers, but on the loss of cultivators, capitalists, or workmen; so that its profits, far from being an increase of the national wealth, were a displacement of it. The raw materials on which the arts operate, are all, or nearly all, produced by agriculture or at least drawn from the ground; hence they form part of the proprietor's or the cultivator's wealth. If some advantage did not arise from exporting them, nobody would think of forbidding them to be exported. This prohibition indicates sufficiently, that the persons who produced them were better paid, or gained more by selling them to strangers; and the law restricts their market, in opposition to the principle which we have pointed out above, as the foundation of commercial interest; the principle of obtaining for each article of produce the highest possible price. From such prohibitions to export, there must result, first, a diminution in the price of the raw material, for its price is no longer kept up by free trade; secondly, a diminution in the quantity produced, because it is regulated by the interior demand; and lastly, a deterioration of its quality, for a calling which is ill rewarded, is likewise ill attended to. This, therefore, is one of the most injudicious means of favouring trade; and at the same time, it sacrifices the income of all those who contribute to produce the raw material. Whatever trade gains from them, cannot be considered as adding aught to the national revenue.
To fix the interest of money, or to suppress it altogether, as some legislators have attempted, has, generally been the consequence of religious prejudices, and of mad attempts to adapt the Jewish legislation to modern Europe. The effect of these laws, so opposite to the general interest, has always been either to force contractors to envelop themselves in a secrecy which they must require payment for, and may use as a snare for the unsuspiciousness of others; or else to force capitalists to employ, in other counties, that capital which they could not lend in their own neighborhood, with the same safety and advantage. But the very end which legislators proposed was bad; a diminution in the rent of the national capital, is a national evil; it is a loss of part of the revenue. Most frequently, indeed, this evil is the sign of an advantage greatly superior to it, namely, the increase of capitals themselves; but, in forcibly producing the sign, we cannot at all forcibly produce the thing, any more than by turning round the pointers of a watch we can alter the flight of time.
Attempts on the part of government to fix the rate of wages, to make workmen labour at a lower price, are ever the most impolitic and the most unjust of these partial laws. If government should propose, as an object, the advantage of any one class in the nation at the expense of the rest, this class ought to be precisely the class of day-labourers. They are more numerous than any other; and to secure their happiness is to make the greatest portion of the nation happy. They have fewer enjoyments than any other; they obtain less advantage than any other from the constitution of society; they produce wealth, and themselves obtain scarcely any share of it. Obliged to struggle for subsistence with their employers, they are not a match for them in strength. Masters and workmen are indeed mutually necessary to each other; but the necessity weighs daily on the workman; it allows respite to his master. The first must work that he may live, the second may wait and live for a time without employing workmen. Hence in the riots and combinations of workmen for obtaining an increase of wages, their conduct is often violent and tumultuous, and often merits the chastisement which it never fails to receive; but scarcely an instance exists, where justice has not been upon their side.
The expedients invented by governments to assist their merchants in selling dear, are numerous. Some tend to diminish the number of producers in a market of given extent, and therefore to force buyers to raise their price; such are apprenticeships, corporations, monopolies granted to companies, prohibitions to import, exclusive governments of colonies, and favours obtained by treaties of commerce; others, such as bounties and drawbacks, are destined really to extend the market; though, by securing to the manufacturer a profit at the government's expense, not the consumer's.
The regulations of apprenticeships and the statutes of corporations, were destined, it is said, to hinder ignorant workmen from following any trade which they did not yet understand; they were forced to devote a determinate number of years to learn it, and afterwards to gain admission into a body which always made obstacles to the entrance of new comers, and limited their number. The pretence of thus watching over the training of artisans cannot be made good. It has often been proved, that rivalship alone gives that training, whilst a long apprenticeship blunts the mind and discourages industry; but the true, though secret object, to diminish the number of those exercising a trade, was attained. The corporate body exercised a kind of monopoly against the consumer; it took care at all times to keep the supply below the demand. The merchant doubtless gained more; but he gained on a smaller production. There was less work done, less increase of capital, less population supported; and as to the merchant's extraordinary profit, it was compensated by an equal loss to the consumer, who was obliged to pay, not according to his own advantage or convenience, but according to the arbitrary caprice of a corporation which gave laws to him.
In all trading counties, a more or less exclusive monopoly has been granted, on certain occasions, to some associations of merchants, under the name of Trading Companies. The avowed motive for sacrificing the whole class to this privileged number was the particular nature of the trade thus subjected to a monopoly, which trade it was said could not be supported except by very extensive funds; but governments had often a secret motive besides; and this was, the sum of money for which the merchants bought their privilege. A company's monopoly has never failed to heighten the price for the consumer, to diminish production and consumption, to give the national capital a false direction; sometimes by attracting it prematurely to a branch of trade which was not yet suitable, sometimes by repelling it when fruitlessly seeking an employment. But although companies obtained the desired privilege of buying cheap and selling dear, by nature they are so ill suited for economy and trading speculations, that although amazingly rich, and sometimes sovereigns of counties, these companies, their administrators having no immediate interest in the prosperity of their trust, have almost all been robbed, and very few of them have not ended in bankruptcy.
These different expedients for the protection of commerce, are now generally decried, though almost all governments yet agree in repelling from their states the produce of foreign manufactories, or at least in loading it with heavy duties, to give the national produce an advantage. The prohibitive system of custom-house duties plainly gives to a growing manufactory an advantage equivalent to the largest bounty. Perhaps this manufactory scarcely produces the hundredth part of what the nation consumes of such commodities; but the hundred purchasers must compete with each other to obtain the one seller's preference, and the ninety-nine rejected by him will be compelled to obtain goods by smuggling. In this case, the nation's loss will be as a hundred; its gain as one. Whatever advantage may arise from giving a new manufacture to a nation, certainly there are few which deserve such a sacrifice and even these might always be set a-going by less expensive means. Besides, we must also take into account the weighty inconveniences of establishing the vexatious system of duties, of covering the frontiers with an army of customhouse officers, and with another not less dangerous army of smugglers, and thus of training the subjects to disobedience. We must remember, above all, that it is not the interest of a nation to produce every thing indifferently; that it ought to confine its efforts to such goods or commodities as it can manufacture at the cheapest rate; or to such as, whatever price they cost, are essential to its safety. It ought to be recollected that each merchant knows his own business better than government can do; that the whole nation's productive power is limited; that in a given time, it has but a given number of hands, and a given quantity of capital; that by forcing it to enter upon a kind of work which it did not previously execute, we almost always at the same time force it to abandon a kind of work which it did execute: whilst the most probable result of such a change is the abandonment of a more lucrative manufacture for another which is less so, and which personal interest had designedly overlooked.
If the prohibitive system gives a very powerful, though very expensive encouragement to rising manufactures, it can offer, in regard to such, no advantage to those which are already prosperous; the sacrifice at least which it imposes on consumers, is entirely useless. If the manufacture was destined for exportation, government, by granting a monopoly of the interior market, causes it to abandon its ancient habits to assume others which probably are less advantageous. Every manufacture destined for exportation gives proof of not fearing the competition of foreigners. From the moment that it can support competition abroad, notwithstanding the expense of transport, it has still less reason to dread this competition in the very place of production. Thus nothing is more common than to see goods prohibited which never could have been imported with advantage, and which gained credit solely by being so prohibited.
By the prohibitive system, governments had proposed to increase the number and productive powers of their manufactures. It is doubtful if they rightly knew the price they paid for this advantage, and the prodigious sacrifices they imposed on consumers, their subjects, to bring into existence an unborn class of producers; but they succeeded much more rapidly even than speculators on political economy expected. For a time they excited the bitterest complaints on the part of consumers; but even these complaints ceased afterwards, because sacrifices in fact had also ceased, and manufactures so powerfully encouraged, had soon provided with profusion for the national wants. But this emulation of all governments to establish manufactures every where, has produced two strange and unexpected effects on the commercial system of Europe; one is the disproportionate increase of production without any relation to consumption; the other is the effort of each nation to live isolated, to suffice for itself, and refuse every kind of foreign trade.
Before governments had been seized with this manufacturing ardour, the establishment of a new manufacture had always to struggle with a crowd of national habits and prejudices, which form as it were the vis inertiae of the human mind. To overcome this force, it was necessary to offer speculators a very manifest advantage; hence a new species of industry could scarcely arise without a distinct previous demand, and the market was always found before the manufacture destined to occupy it. Governments, in their zeal, have not proceeded upon this principle; they have ordered stockings and hats beforehand, reckoning that legs and heads would be found afterwards. They have seen their people well and economically clothed by strangers, and yet have caused them to produce clothes in the country itself. During war, this new production was not capable of being too exactly appreciated; but when peace came, it was found that all things had been made in double quantity; and the readier the mutual communication of states had become, the more embarrassed were they to dispose of all their works executed without orders.
Consumers who at the beginning had been satisfied, afterwards found themselves called to unexpected gains, because merchants, eager to recover their funds, were forced to sell a very great quantity of goods with loss. Manufacturers gave the signal for these sacrifices; resigning themselves to a cruel loss of their capital, they induced extensive merchants to furnish themselves with goods beyond their custom or ability, in order to profit by what appeared a good opportunity. Several of the latter have been forced to experience a similar loss, before their excessive supply could be introduced to the shops of retail dealers; and these again before they could make them be accepted by consumers. A universal embarrassment was felt by manufacturers, merchants, and retailers, and this was followed by the annihilation of the capital destined to support industry. The fruit of long saving and long labour was lost in a year. Consumers have gained certainly, but their gain is scarcely perceptible even to themselves. By laying up a stock of goods for several years to profit by their cheapness, they have also included themselves in the general embarrassment, and still farther retarded the period when the balance can be re-established between consumption and production.
According to the former organization of Europe, all states did not make pretences to all kinds of industry. Some had attached themselves to agriculture, others to navigation, others to manufactures; and the condition of these latter, even in prosperous times, could not have appeared so worthy of envy as to demand prodigious efforts to attain it. A miserable and degraded population almost always produced these rich stuffs; these elegant ornaments, this furniture which it was never destined to enjoy and if the men who directed these unhappy workmen sometimes raised immense fortunes, those fortunes were as frequently destroyed. The development of nations proceeds naturally in all directions; it is scarcely ever prudent to obstruct it, but it is no less dangerous to hasten it; and the governments of Europe, by having of all hands attempted to force nations, are at the present day loaded with a population, which they have created by requiring superfluous labour, and which they know not how to save from the horrors of famine.
The existence of this manufacturing population, and the duty of providing for its wants, have constrained governments to alter the aim of their legislation. Formerly, in the real spirit of the mercantile system, they encouraged manufactures, in order to sell much to foreigners, and grow rich at their expense; now, perceiving that a prohibitive system is every where adopted, or like to be adopted, they cannot any longer count on the custom of strangers, and therefore study to find, in their own kingdom, consumers for their own workmen; in other words, to become isolated and sufficient for themselves. The system of policy at present, more or less strictly followed by all the nations of Europe, destroys all the advantages of commerce; it hinders each nation from profiting by the superiorities due to its climate, to its soil, to its situation, to the peculiar character of its people; it arms man against man, and breaks the tie which was destined to sooth national prejudices, and accelerate the civilization of the world.
According to the natural progress of increasing wealth, when capitals are yet inconsiderable, it is certainly desirable to direct them rather to some neighbouring branch of trade, than to one which is very remote; and as the trade of exportation and importation gives foreigners one half of its profit, and the natives another, a country which has little capital may desire to employ it entirely in the trade of its interior, or for its own use; and the more so, because if the market is near the producer, the same capital will be several times renewed in a given period, whilst another capital, destined for a foreign market, will scarcely accomplish a single renewal. But the capitalist's interest will always direct him with certainty, in such cases to do what suits the country best; because his profit is proportioned to the need there is of it, and consequently to the direction in which the public demand carries him.
Besides, nations, on reckoning up their produce and their wants, almost constantly forget that neighboring foreigners are much more convenient and more advantageous producers and consumers than distant countrymen. The relation of markets on the two banks of the Rhine is much more important, both for the German and the French merchant, than the relation of markets between the Palatinate and Brandenburgh is for the former, or between Alsace and Provence for the latter.
The ardour, with which all governments have excited every species of production, by means of their restrictive system, has brought about such a disproportion between labour and demand, that perhaps it has become necessary for every state to think first, not of the comfort, but of the existence of its subjects, and to maintain those barriers which have been so imprudently erected. An important part of the population might, perhaps, be cut off by penury, in the course of a few years; and it is reasonable that each state should seek to preserve itself and those depending on it from such a calamity. Yet, we cannot without pain, behold the rivetting of this anti-social system, and the abandonment of that ancient spirit of commerce, which triumphed over barbarism, and taught hostile hordes to know and esteem each other.
Governments, after having attempted to give the national producers a monopoly in their own country, have sometimes endeavoured to procure them a similar advantage in foreign countries, by treaties of commerce. Such actions, always subordinate to policy, granted to a favoured nation an exemption from some part of the duties required from others, on consideration of some reciprocal advantage. It cannot be doubted that such an exemption was advantageous to the nation in whose favour it was granted; but, on the other hand, it was just as disadvantageous to the nation granting it; and when a treaty of commerce bore a concession of mutual exemption, each state should have discovered, that a monopoly granted to its producers was too dearly purchased by a monopoly granted to foreigners, against its consumers: and the more so, as there existed no kind of relation between the two favoured branches of trade. Some show of reason may be discovered, why the consumers of cloth should be taxed for the advantage of cloth manufacturers; but there is no shallow of reason why the consumers of wine in England should experience a loss, in compensation for an advantage to the sellers of goods in Portugal.
No treaty of commerce can fully satisfy the greediness of merchants desiring a monopoly; and therefore governments invented the fanatic expedient of creating in a colony a nation expressly to be purchasers from their merchants. The colonists were prohibited from establishing any manufacture at home, that so they might be more dependent on the mother country. They were carefully prevented from following any species of foreign trade; they were subjected to regulations the most vexatious, and contrary to their own interests; not for the mother country's good, but for the good of a small number of merchants. The infinite advantages attached to a new country, where every kind of labour is profitable, because every thing is yet to do, enabled colonies to prosper, although they were continually sacrificed. As their raw produce was fit for a distant trade, they had it in their power to support a most unequal exchange, in which nothing was taken from them that the buyer could procure at home; but their rapid increase itself bears witness against the system which has founded them; they have prospered by a system diametrically opposite to that followed by the mother country. The exportation of all raw produce, the importation of all wrought produce, has been encouraged in colonies, and have presented to such as believe in the existence, and calculate the state, of a commercial balance, a result as disadvantageous for themselves, as it was advantageous for the mother country. Doubtless, their oppression gave the latter all the profits of a monopoly; yet, in a very circumscribed market; whilst the free trade of all Europe, with all its colonies, would have been more advantageous for both, by infinitely extending the market of the one, and accelerating the progress of the other. What justice and policy should have taught, force will obtain, and the colonial system cannot long continue.
Governments, in the last place, to favour commerce, have granted it bounties and drawbacks. A bounty is a reward which the state decrees to the manufacturer, on account of his goods, which comes to him in the shape of profit. A drawback is a restitution of all the taxes, which a piece of goods had paid, granted to it at the moment of its exportation. A drawback is perfectly just and reasonable. It leaves the national producer, in the foreign market, on a footing of equality with all his rivals, whilst, if beforehand be had paid a tax in his own country, he could not have sustained the competition. Bounties are the strangest encouragements which a government can give. They may be justified when granted for the fabrication of an article, the production of which it is necessary to procure at any price: but when granted on exported goods, as often happens, government pays merchants, at the expense of its own subjects, that foreigners may buy cheaper than them.
Thus, nearly all the favours which governments confer on trade and manufactures, are contrary even to sound policy or justice; and, judging of them by the law of profit and loss, we should infer, that all this attention, bestowed by government on trade, had done more ill than good. But political economy is, in great part, a moral science. After having calculated the interests of men, it ought also to foresee what will act upon their passions. Ruled, as they are, by self-interest, pointing out their advantage will not be sufficient to determine their pursuit of it. Nations have sometimes need of being shaken, as it were, to be roused from their torpor. The small weight which would suffice to incline the balance, with a calculating people, is not sufficient when that balance is rusted by prejudice and long continued habits. In such a case, a skilful administration must occasionally submit to allow a real and calculable loss, in order to destroy an old custom, or change a destructive prepossession. When rooted prejudices have abandoned to disrespect every useful and industrious profession, when a nation thinks there can be no dignity except in noble indolence; when even men of science themselves, carried away by public opinion, blush at the useful applications made of their discoveries, and in such applications see nothing but what they call the cookery of their sciences; it perhaps becomes necessary to grant favours, altogether extraordinary, to the industry which it is necessary to create, to fix incessantly the thoughts of a too lively people on the career of fortune which lies before them, intimately to connect the discoveries of science with those of art, and to excite the ambition of those who have always lived in idleness, by fortunes so brilliant as, at length, to make them think of what may be accomplished by their wealth and their activity.
It is true, the mercantile capital of a nation is limited in a given time, and those who dispose of it, always desiring to put it out to the greatest advantage, have no need of any new stimulant to augment it, or turn it into the channels where it best produces profit. But all the capital of a nation is not mercantile. Inclination to idleness, which public institutions have fostered among certain nations, not only binds men, but also fetters fortunes. The same indolence, which makes those people lose their time, makes them also lose their money. The annual revenue of territorial fortunes forms of itself an immense capital, which may be added to or deducted from the sum devoted to support industry. In southern counties, the whole revenue of the nobility was annually dissipated in useless pomp; but to recall the heads of noble families into activity has likewise been found sufficient to give them habits of economy. The great French or Italian proprietor, becoming manufacturer has, at once, given a useful direction to the revenue of his land, by adding his own activity to that of a nation becoming more industrious, and added likewise all the power of his wealth, which formerly lay unemployed.
The torpor of a nation may sometimes be so great, that the clearest demonstration of advantages, which it might derive from a new species of industry, shall never induce it to make the attempt. Example, alone, can then awake self-interest. French industry has found, in the single little state of Lucca, more than ten new branches, to employ itself upon, with great advantage both for the country and those who engaged in them. The most absolute liberty was not sufficient to direct attention to these objects. The zeal and activity of the princess Eliza, who called into her little sovereignty several head-manufacturers, who furnished them with money and houses, who brought the produce of their shops into fashion, has founded a more durable prosperity in a decaying city, and restored to a beneficent activity much capital and intellect, which, but for her, would forever have remained unemployed.
When government means to protect commerce, it often acts with precipitation, in complete ignorance of its true interests; almost always with despotic violence, which tramples under foot the greater part of private arrangements; and almost always with an absolute forgetfulness of the advantage of consumers, who, as they form by far the most numerous class, have more right than any other to confound their well-being with that of the nation. Yet it must not be inferred, that government never does good to trade. It is government which can give habits of dissipation or economy; which can attach honour or discredit to industry and activity; which can turn the attention of scientific men to apply their discoveries to the arts: government is the richest of all consumers; it encourages manufactures by the mere circumstance of giving them its custom. If to this indirect influence it join the care of rendering all communications easy; of preparing roads, canals, bridges; of protecting property, of securing a fair administration of justice; if it do not overload its subjects with taxation in levying the taxes, it adopt no disastrous system, - it will effectually have served commerce, and its beneficial influence will counterbalance many false measures, many prohibitory laws, in spite of which, and not by reason of which, commerce will continue to increase under it.
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