Economic Sophisms

II. TWO PRINCIPLES OF MORALITY.

Having reached, if he has reached, the end of the last chapter, I fancy I hear the reader exclaim:

"Well, are we wrong in reproaching economists with being dry and cold? What a picture of human nature! What! Is spoliation, then, to be regarded as an inevitable, almost normal, force, assuming all forms, at work under all pretexts, by law and without law, jobbing and abusing things the most sacred, working on feebleness and credulity by turns, and making progress just in proportion as these are prevalent! Is there in the world a more melancholy picture than this?"

The question is not whether the picture be melancholy, but whether it is true. History will tell us.

It is singular enough that those who decry political economy (or economisme, as they are pleased to call it), because that science studies man and the world as they are, are themselves much further advanced in pessimism, at least as regards the past and the present, than the economists whom they disparage. Open their books and their journals; and what do you find? Bitterness, hatred of society, carried to such a pitch that the very word civilization is in their eyes the synonym of injustice, dis-order, and anarchy. They go the length even of denouncing liberty, so little confidence have they in the development of the human race as the natural result of its organization. Liberty! it is liberty, as they think, which is impelling us nearer and nearer to ruin.

True, these writers are optimists in reference to the future. For if the human race, left to itself, has pursued a wrong road for six thousand years, a discoverer has appeared, who has pointed out the true way of safety; and however little the flock may regard the pastor's crook, they will be infallibly led towards the promised land, where happiness, without any effort on their part, awaits them, and where order, security, and harmony are the cheap reward of improvidence.

The human race have only to consent to these reformers changing (to use Rousseau's expression) its physical and moral constitution.

It is not the business of political economy to inquire what society might have become had God made man otherwise than He has been pleased to make him. It may perhaps be a subject of regret that in the beginning, Providence should have forgotten to call to its counsels some of our modern organisateurs. And as the celestial mechanism would have been very differently constructed had the Creator consulted Alphonsus the Wise, in the same way had He only taken the advice of Fourrier, the social order would have had no resemblance to that in which we are forced to breathe, live, and move. But since we are here—since in eo vivimus, movemur, et minus—all we have to do is to study and make ourselves acquainted with the laws of the social order in which we find ourselves, especially if its amelioration depends essentially on our knowledge of these laws.

We cannot prevent the human heart from being the seat of insatiable desires.

We cannot so order it that these desires should be satisfied without labour.

We cannot so order it that man should not have as much repugnance to labour as desire for enjoyment.

We cannot so order it that from this organization there should not result a perpetual effort on the part of certain men to increase their own share of enjoyments at the expense of others; throwing over upon them, by force or cunning, the labour and exertion which are the necessary condition of such enjoyments being obtained.

It is not for us to go in the face of universal history, or stifle the voice of the past, which tells us that such has been the state of things from the beginning. We cannot deny that war, slavery, thraldom, priestcraft, government abuses, privileges, frauds of every kind, and monopolies, have been the incontestable and terrible manifestations of these two sentiments combined in the heart of man—desire of enjoyments, and repugnance to fatigue.

In the sweat of thy face shalt thou eat bread. Yes, but every one desires to have the greatest possible quantity of bread, with the least possible amount of sweat. Such is the testimony of history.

But let us be thankful that history also shows us that the diffusion of enjoyments and of efforts has a tendency to become more and more equal among men.

Unless we shut our eyes to the light of the sun, we must admit that society has in this respect made progress.

If this be so, there must be in society a natural and providential force, a law which repels more and more the principle of dishonesty, and realizes more and more the principle of justice.

We maintain that this force exists in society, and that God has placed it there. If it did not exist, we should be reduced, like Utopian dreamers, to seek for it in artificial arrangements, in arrangements which imply a previous alteration in the physical and moral constitution of man; or rather, we should conclude that the search was useless and vain, for the simple reason that we cannot understand the action of a lever without its fulcrum.

Let us try, then, to describe the beneficent force which tends gradually to surmount the mischievous and injurious force to which we have given the name of spoliation, and the presence of which is only too well explained by reasoning, and established by experience.

Every injurious or hurtful act has necessarily two terms: the point whence it comes, and the point to which it tends—the terminus a quo, and the terminus ad quern—the man who acts, and the man acted upon; or, in the language of the schoolmen, the agent and the patient.

We may be protected, then, from an injurious act in two ways: by the voluntary abstention of the agent; or by the resistance of the patient.

These two moral principles, far from running counter to each other, concur in their action, namely, the religious or philosophical moral principle, and the moral principle which I shall venture to term economic.

The religious moral principle, in order to ensure the suppression of an injurious act, addresses its author, addresses man in his capacity of agent, and says to him: "Amend your life; purify your conduct; cease to do evil; learn to do well; subdue your passions; sacrifice self-interest; oppress not your neighbour, whom it is your duty to love and assist; first of all, be just, and be charitable afterwards." This species of moral principle will always be esteemed the most beautiful and touching, that which best displays the human race in its native majesty, which will be most extolled by the eloquent, and call forth the greatest amount of admiration and sympathy.

The economic moral principle aspires at attaining the same result; but addresses man more especially in the capacity of patient. It points out to him the effects of human actions, and by that simple explanation, stimulates him to react against those who injure him, and honour those who are useful to him. It strives to disseminate among the oppressed masses enough of good sense, information, and well-founded distrust, to render oppression more and more difficult and dangerous.

We must remark, too, that the economic principle of morality does not fail to act likewise on the oppressor. An injurious act is productive of both good and evil; evil for the man who is subject to it, and good for the man who avails himself of it; without which indeed it would not have been thought of. But the good and the evil are far from compensating each other. The sum total of evil always and necessarily preponderates over the good; because the very fact that oppression is present entails a loss of power, creates dangers, provokes reprisals, and renders, costly precautions necessary. The simple explanation of these effects, then, not only provokes reaction on the part of the oppressed, but brings over to the side of justice all whose hearts are not perverted, and disturbs the security of the oppressors themselves.

But it is easy to understand that this economic principle of morality, which is rather virtual than formal; which is only, after all, a scientific demonstration, which would lose its efficacy if it changed its character; which addresses itself not to the heart, but to the intellect; which aims at convincing rather than persuading; which does not give advice, but furnishes proofs; whose mission is not to touch the feelings, but enlighten the judgment, which obtains over vice no other victory than that of depriving it of support; it is easy, I say, to understand why this principle of morality should be accused of being dry and prosaic.

The reproach is well founded in itself, without being just in its application. It just amounts to saying that political economy does not discuss everything, that it does not comprehend everything—that it is not, in short, universal science. But who ever claimed for it this character, or put forward on its behalf so exorbitant a pretension?

The accusation would be well founded only if political economy presented its processes as exclusive, and had the presumption, if we may so speak, to deny to philosophy and religion their own proper and peculiar means of working for the cultivation and improvement of man.

Let us admit, then, the simultaneous action of morality, properly so called, and of political economy; the one branding the injurious act in its motive, and exposing its unseemliness, the other discrediting it in our judgment, by a picture of its effects.

Let us admit even that the triumph of the religious moralist, when achieved, is more beautiful, more consoling, more fundamental But we must at the same time acknowledge that the triumph of the economist is more easy and more certain.

In a few lines, which are worth many large volumes, J. B. Say has said that, to put an end to the disorder introduced into an honourable family by hypocrisy there are only two alternatives: to reform Tartuffe, or sharpen the wits of Orgon. Molière, that great painter of the human heart, appears constantly to have regarded the second of these processes as the more efficacious.

It is the same thing in real life, and on the stage of the world.

Tell me what Cæsar did, and I will tell you what the character was of the Romans of his time.

Tell me what modern diplomacy accomplishes, and I will tell you what is the moral condition of the nations among whom it is exercised.

We should not be paying nearly two milliards [£80,000,000 sterling] of taxes, if we did not empower those who live upon them to vote them.

We should not have been landed in all the difficulties and charges to which the African question has given rise, had we had our eyes open to the fact that two and two make four, in political economy, as well as in arithmetic.

M. Guizot would not have felt himself authorized to say that France is rich enough to pay for her glory, if France had never been smitten with the love of false glory.

The same statesman would never have ventured to say that liberty is too precious a thing for France to stand higgling about its price, had France only reflected that a heavy budget and liberty are incompatible.

It is not by monopolists, but by their victims, that monopolies are maintained.

In the matter of elections, it is not because there are parties who offer bribes that there are parties open to receive them, but the contrary; and the proof of this is, that it is the parties who receive the bribes who, in the long run, defray the cost of corruption. Is it not their business to put an end to the practice?

Let the religious principle of morality, if it can, touch the hearts of the Tartuffes, the Cæsars, the planters of colonies, the sinecurists, the monopolists, etc. The clear duty of political economy is to enlighten their dupes.

Of these two processes, which exercises the more efficacious influence on social progress? I feel it almost unnecessary to say, that I believe it is the second; and I fear we can never exempt mankind from the necessity of learning first of all defensive morality.

After all I have heard and read and observed, I have never yet met with an instance of an abuse which had been in operation on a somewhat extensive scale, put an end to by the voluntary renunciation of those who profit by it.

On the other hand, I have seen many abuses put down by the determined resistance of those who suffered from them.

To expose the effects of abuses, then, is the surest means of putting an end to them. And this holds especially true of abuses like the policy of restriction, which, whilst inflicting real evils on the masses, are productive of nothing to those who imagine they profit by them but illusion and deception!

After all, can the kind of morality we are advocating of itself enable us to realize all that social perfection which the sympathetic nature of the soul of man and its noble faculties authorize us to look forward to and hope for? I am far from saying so. Assume the complete diffusion of defensive morality, it resolves itself simply into the conviction that men's interests, rightly understood, are always in accord with justice and general utility. Such a society, although certainly well ordered, would not be very attractive. There would be fewer cheats simply because there would be fewer dupes. Vice always lurking in the background, and starved, so to speak, for want of support, would revive the moment that support was restored to it.

The prudence of each would be enforced by the vigilance of all; and reform, confining itself to the regulation of external acts, and never going deeper than the skin, would fail to penetrate men's hearts and consciences. Such a society would remind us of one of those exact, rigorous, and just men, who are ready to resent the slightest invasion of their rights, and to defend themselves on all sides from attacks. You esteem them; you perhaps admire them; you would elect them as deputies; but you would never make them your friends.

But the two principles of morality I have described, instead of running counter to each other, work in concert, attacking vice from opposite directions. Whilst the economists are doing their part, sharpening the wits of the Orgons, eradicating prejudices, exciting just and necessary distrust, studying and explaining the true nature of things and of actions, let the religious moralist accomplish on his side his more attractive, although more difficult, labours. Let him attack dishonesty in a hand-to-hand fight; let him pursue it into the most secret recesses of the heart; let him paint in glowing colours the charms of beneficence, of self-sacrifice, of devotion; let him open up the fountains of virtue, where we can only dry up the fountains of vice. This is his duty, and a noble duty it is. But why should he contest the utility of the duty which has devolved upon us?

In a society which, without being personally and individually virtuous, would nevertheless be well ordered through the action of the economic principle of morality (which means a knowledge of the economy of the social body), would not an opening be made for the work of the religious moralist?

Habit, it is said, is a second nature.

A country might still be unhappy, although for a long time each man may have been unused to injustice through the continued resistance of an enlightened public. But such a country, it seems to me, would be well prepared to receive a system of teaching more pure and elevated. We get a considerable way on the road to good, when we become unused to evil. Men can never remain stationary. Diverted from the path of vice, feeling that it leads only to infamy, they would feel so much the more sensibly the attractions of virtue.

Society must perhaps pass through this prosaic state of transition, in which men practise virtue from motives of prudence, in order to rise afterwards to that fairer and more poetic region where such calculating motives are no longer wanted.

III. THE TWO HATCHETS.

Petition of Jacques Bonhomme, Carpenter, to M. Cunin-Gridaine, Minister of Commerce.

Monsieur le Fabricant-Ministre,

I am a carpenter to trade, as was St Joseph of old; and I handle the hatchet and adze, for your benefit.

Now, while engaged in hewing and chopping from morning to night upon the lands of our Lord the King, the idea has struck me that my labour may be regarded as national, as well as yours.

And, in these circumstances, I cannot see why protection should not visit my woodyard as well as your workshop.

For, sooth to say, if you make cloths I make roofs; and both, in their own way, shelter our customers from cold and from rain.

And yet I run after customers; and customers run after you. You have found out the way of securing them by hindering them from supplying themselves elsewhere, while mine apply to whomsoever they think proper.

What is astonishing in all this? Monsieur Cunin, the Minister of State, has not forgotten M. Cunin, the manufacturer—all quite natural. But, alas! my humble trade has not given a Minister to France, although practised, in Scripture times, by far more august personages.

And in the immortal code which I find embodied in Scripture, I cannot discover the slightest expression which could be quoted by carpenters, as authorizing them to enrich themselves at the expense of other people.

You see, then, how I am situated. I earn fifteen pence a day, when it is not Sunday or holiday. I offer you my services at the same time as a Flemish carpenter offers you his, and, because he abates a halfpenny, you give him the preference.

But I desire to clothe myself; and if a Belgian weaver presents his cloth alongside of yours, you drive him and his cloth out of the country.

So that, being forced to frequent your shop, although the dearest, my poor fifteen pence go no further in reality than fourteen.

Nay, they are not worth more than thirteen! for in place of expelling the Belgian weaver at your own cost (which was the least you could do), you, for your own ends, make me pay for the people you set at his heels.

And as a great number of your co-legislators, with whom you are on a marvellously good footing, take each a halfpenny or a penny, under pretext of protecting iron, or coal, or oil, or corn, I find, when everything is taken into account, that of my fifteen pence, I have only been able to save seven pence or eight pence from pillage.

You will no doubt tell me that these small halfpence, which pass in this way from my pocket to yours, maintain workpeople who reside around your castle, and enable you to live in a style of magnificence. To which I will only reply, that if the pence had been left with me, the person who earned them, they would have maintained workpeople in my neighbourhood.

Be this as it may, Monsieur le Ministre-fabricant, knowing that I should be but ill received by you, I have not come to require you, as I had good right to do, to withdraw the restriction which you impose on your customers. I prefer following the ordinary course, and I approach you to solicit a little bit of protection for myself.

Here, of course, you will interpose a difficulty. "My good friend," you will say, "I would protect you and your fellow-workmen with all my heart; but how can I confer customhouse favours on carpenter-work? What use would it be to prohibit the importation of houses by sea or by land?"

That would be a good joke, to be sure; but, by dint of thinking, I have discovered another mode of favouring the children of St Joseph; which you will welcome the more willingly, I hope, as it differs in nothing from that which constitutes the privilege which you vote year after year in your own favour.

The means of favouring us, which I have thus marvellously discovered, is to prohibit the use of sharp axes in this country.

I maintain that such a restriction would not be in the least more illogical or more arbitrary than the one to which you subject us in the case of your cloth.

Why do you drive away the Belgians? Because they sell cheaper than you. And why do they sell cheaper than you? Because they have a certain degree of superiority over you as manufacturers.

Between you and a Belgian, therefore, there is exactly the same difference as in my trade there would be between a blunt and a sharp axe.

And you force me, as a tradesman, to purchase from you the product of the blunt hatchet?

Regard the country at large as a workman who desires, by his labour, to procure all things he has want of, and, among others, cloth.

There are two means of effecting this.

The first is to spin and weave the wool.

The second is to produce other articles, as, for example, French clocks, paper-hangings, or wines, and exchange them with the Belgians for the cloth wanted.

Of these two processes, the one which gives the best result may be represented by the sharp axe, and the other by the blunt one.

You do not deny that at present, in France, we obtain a piece of stuff by the work of our own looms (that is the blunt axe) with more labour than by producing and exchanging wines (that is the sharp axe). So far are you from denying this, that it is precisely because of this excess of labour (in which you make wealth to consist) that you recommend, nay, that you compel the employment of the worse of the two hatchets.

Now, only be consistent, be impartial, and if you mean to be just, treat the poor carpenters as you treat yourselves.

Pass a law to this effect:

"No one shall henceforth be permitted to employ any beams or rafters, but such as are produced and fashioned by blunt hatchets."

And see what will immediately happen.

Whereas at present we give a hundred blows of the axe, we shall then give three hundred. The work which we now do in an hour will then require three hours. What a powerful encouragement will thus be given to labour! Masters, journeymen, apprentices! our sufferings are now at an end. We shall be in demand; and, therefore, well paid. Whoever shall henceforth desire to have a roof to cover him must comply with our exactions, just as at present whoever desires clothes to his back must comply with yours.

And should the theoretical advocates of free trade ever dare to call in question the utility of the measure, we know well where to seek for reasons to confute them Your Inquiry of 1834 is still to be had. With that weapon, we shall conquer; for you have there admirably pleaded the cause of restriction, and of blunt axes, which are in reality the same thing.

IV. LOWER COUNCIL OF LABOUR.

What! you have the face to demand for all citizens a right to sell, buy, barter, and exchange; to render and receive service for service, and to judge for themselves, on the single condition that they do all honestly, and comply with the demands of the public treasury? Then you simply desire to deprive our workmen of employment, of wages, and of bread?"

This is what is said to us. I know very well what to think of it; but what I wish to know is, what the workmen themselves think of it.

I have at hand an excellent instrument of inquiry. Not those Upper Councils of Industry, where extensive proprietors who call themselves labourers, rich shipowners who call themselves sailors, and wealthy shareholders who pass themselves off for workmen, turn their philanthropy to account in a way which we all know.

No; it is with workmen, who are workmen in reality, that we have to do—joiners, carpenters, masons, tailors, shoemakers, dyers, blacksmiths, innkeepers, grocers, etc., etc.,—and who, in my village, have founded a friendly society.

I have transformed this friendly society, at my own hand, into a Lower Council of Labour, and instituted an inquiry which will be found of great importance, although it is not crammed with figures, or inflated to the bulk of a quarto volume, printed at the expense of the State.

My object was to interrogate these plain, simple people as to the manner in which they are, or believe themselves to be, affected by the policy of protection. The president pointed out that this would be infringing to some extent on the fundamental conditions of the Association. For in France, this land of liberty, people who associate give up their right to talk politics—in other words, their right to discuss their common interests. However, after some hesitation, he agreed to include the question in the order of the day.

They divided the assembly into as many committees as there were groups of distinct trades, and delivered to each committee a schedule to be filled up after fifteen days' deliberation.

On the day fixed, the worthy president (we adopt the official style) took the chair, and there were laid upon the table (still the official style) fifteen reports, which he read in succession.

The first which was taken into consideration was that of the tailors. Here is an exact and literal copy of it:—

EFFECTS OF PROTECTION.—REPORT OF THE TAILORS.

Inconveniences.

1st, In consequence of the policy of protection, we pay dearer for bread, meat, sugar, firewood, thread, needles, etc., which is equivalent in our case to a considerable reduction of wages.

2d, In consequence of the policy of 'protection, our customers also pay dearer for everything, and this leaves them less to spend upon clothing; whence it follows that we have less employment, and, consequently, smaller returns.

3d, In consequence of the policy of protection, the stuffs which we make up are dear, and people on that account wear their clothes longer, or dispense with part of them. This, again, is equivalent to a diminution of employment, and forces us to offer our services at a lower rate of remuneration.

Advantages.

None.

Note.—After all our inquiries, deliberations, and discussions, we have been quite unable to discover that in any respect whatever the policy of protection has been of advantage to our trade.

Here is another report:—

EFFECTS OF PROTECTION.—REPORT OF THE BLACKSMITHS.

Inconveniences.

1st, The policy of protection imposes a tax upon us every time we eat, drink, or warm or clothe ourselves, and this tax does not go to the treasury.

2d, It imposes a like tax upon all our fellow-citizens who are not of our trade, and they, being so much the poorer, have recourse to cheap substitutes for our work, which deprives us of the employment we should otherwise have had. None.

3d, It keeps up iron at so high a price, that it is not employed in the country for ploughs, grates, gates, balconies, etc.; and our trade, which might furnish employment to so many other people who are in want of it, no longer furnishes employment to ourselves.

4th, The revenue which the treasury fails to obtain from commodities which are not imported is levied upon the salt we use, postages, etc.

All the other reports (with which it is unnecessary to trouble the reader) are to the same tune. Gardeners, carpenters, shoemakers, clogmakers, boatmen, millers, all give vent to the same complaints.

I regret that there are no agricultural labourers in our association. Their report would assuredly have been very instructive.

But, alas! in our country of the Landes, the poor labourers, protected though they be, have not the means of joining an association, and, having insured their cattle, they find they cannot themselves become members of a friendly society. The boon of protection does not hinder them from being the parias of our social order. What shall I say of the vine-dressers?

What I remark, especially, is the good sense displayed by our villagers in perceiving not only the direct injury which the policy of protection does them, but the indirect injury, which, although in the first instance affecting their customers, falls back, par ricochet, upon themselves.

This is what the economists of the Moniteur Industriel do not appear to understand.

And perhaps those men whose eyes a dash of protection has fascinated, especially our agriculturists, would be willing to give it up, if they were enabled to see this side of the question.

In that case they might perhaps say to themselves, "Better far to be self-supported in the midst of a set of customers in easy circumstances, than to be protected in the midst of an impoverished clientèle."

For to desire to enrich by turns each separate branch of industry by creating a void round each in succession, is as vain an attempt as it would be for a man to try to leap over his own shadow.

V. DEARNESS-CHEAPNESS.

I think it necessary to submit to the reader some theoretical remarks on the illusions to which the words dearness and cheapness give rise. At first sight, these remarks may, I feel, be regarded as subtle, but the question is not whether they are subtle or the reverse, but whether they are true. Now, I not only believe them to be perfectly true, but to be well fitted to suggest matter of reflection to men (of whom there are not a few) who have sincere faith in the efficacy of a protectionist policy.

The advocates of Liberty and the defenders of Restriction are both obliged to employ the expressions, dearness, cheapness. The former declare themselves in favour of cheapness with a view to the interest of the consumer; the latter pronounce in favour of dearness, having regard especially to the interest of the producer. Others content themselves with saying, The producer and consumer are one and the same person; which leaves undecided the question whether the law should promote cheapness or dearness.

In the midst of this conflict, it would seem that the law has only one course to follow, and that is to allow prices to settle and adjust themselves naturally. But then we are attacked by the bitter enemies of laissez faire. At all hazards they want the law to interfere, without knowing or caring in what direction. And yet it lies with those who desire to create by legal intervention an artificial dearness or an unnatural cheapness, to explain the grounds of their preference. The onus probandi rests upon them exclusively. Liberty is always esteemed good, till the contrary is proved; and to allow prices to settle and adjust themselves naturally, is liberty.

But the parties to this dispute have changed positions. The advocates of dearness have secured the triumph of their system, and it lies with the defenders of natural prices to prove the goodness of their cause. On both sides, the argument turns on two words; and it is therefore very essential to ascertain what these two words really mean.

But we must first of all notice a series of facts which are fitted to disconcert the champions of both camps.

To engender dearness, the restrictionists have obtained protective duties, and a cheapness, which is to them inexplicable, has come to deceive their hopes.

To create cheapness, the free-traders have occasionally succeeded in securing liberty, and, to their astonishment, an elevation of prices has been the consequence.

For example, in France, in order to favour agriculture, a duty of 22 per cent has been imposed on foreign wool, and it has turned out that French wool has been sold at a lower price after the measure than before it.

In England, to satisfy the consumer, they lowered, and ultimately removed, the duty on foreign wool; and it has come to pass that in that country the price of wool is higher than ever.

And these are not isolated facts; for the price of wool is governed by precisely the same laws which govern the price of everything else. The same result is produced in all analogous cases. Contrary to expectation, protection has, to some extent, brought about a fall, and competition, to some extent, a rise of prices.

When the confusion of ideas thence arising had reached its height, the protectionists began saying to their adversaries, "It is our system which brings about the cheapness of which you boast so much." To which the reply was, "It is liberty which has induced the dearness which you find so useful."*

At this rate, would it not be amusing to see cheapness become the watch-word of the Rue Hauteville, and dearness the watchword of the Rue Choiseul?

Evidently there is in all this a misconception, an illusion, which it is necessary to clear up; and this is what I shall now endeavour to do.

Put the case of two isolated nations, each composed of a million of inhabitants. Grant that, coteris paribus, the one possesses double the quantity of everything,—corn, meat, iron, furniture, fuel, books, clothing, etc.,—which the other possesses.

It will be granted that the one is twice as rich as the other.

And yet there is no reason to affirm that a difference in actual money prices** exists in the two countries. Nominal prices may perhaps be higher in the richer country. It may be that in the United States everything is nominally dearer than in Poland, and that the population of the former country should, nevertheless, be better provided with all that they need; whence we infer that it is not the nominal price of products, but their comparative abundance, which constitutes wealth. When, then, we desire to pronounce an opinion on the comparative merits of restriction and free-trade, we should not inquire which of the two systems engenders dearness or cheapness, but which of the two brings abundance or scarcity.

For, observe this, that products being exchanged for each other, a relative scarcity of all, and a relative abundance of all, leave the nominal prices of commodities in general at the same point; but this cannot be affirmed of the relative condition of the inhabitants of the two countries.

Let us dip a little deeper still into this subject.

When we see an increase and a reduction of duties produce effects so different from what we had expected, depreciation often following taxation, and enhancement following free trade, it becomes the imperative duty of political economy to seek an explanation of phenomena so much opposed to received ideas; for it is needless to say that a science, if it is worthy of the name, is nothing else than a faithful statement and a sound explanation of facts.

Now the phenomenon we are here examining is explained very satisfactorily by a circumstance of which we must never lose sight.

Dearness is due to two causes, and not to one only.

The same thing holds of cheapness.

It is one of the least disputed points in political economy that price is determined by the relative state of supply and demand.

There are then two terms which affect price—supply and demand. These terms are essentially variable. They may be combined in the same direction, in contrary directions, and in infinitely varied proportions. Hence the combinations of which price is the result are inexhaustible.

High price may be the result, either of diminished supply, or of increased demand.

Low price may be the result of increased supply, or of diminished demand.

Hence there are two kinds of dearness, and two kinds of cheapness.

There is a dearness of an injurious kind, that which proceeds from a diminution of supply, for that implies scarcity, privation (such as has been felt this year* from the scarcity of corn); and there is a dearness of a beneficial kind, that which results from an increase of demand, for the latter presupposes the development of general wealth.

In the same way, there is a cheapness which is desirable, that which has its source in abundance; and an injurious cheapness, that has for its cause the failure of demand, and the impoverishment of consumers.

Now, be pleased to remark this; that restriction tends to induce, at the same time, both the injurious cause of dearness, and the injurious cause of cheapness: injurious dearness, by diminishing the supply, for this is the avowed object of restriction; and injurious cheapness, by diminishing also the demand; seeing that it gives a false direction to labour and capital, and fetters consumers with taxes and trammels.

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.*