Sophisms of the Protectionists — 12 - Second Series Part 3

DEARNESS--CHEAPNESS.

I consider it my duty to say a few words in regard to the delusion caused by the words _dear_ and _cheap_.

At the first glance, I am aware, you may be disposed to find these remarks somewhat subtile, but whether subtile or not, the question is whether they are true.

For my part I consider them perfectly true, and particularly well adapted to cause reflection among a large number of those who cherish a sincere faith in the efficacy of protection.

Whether advocates of free trade or defenders of protection, we are all obliged to make use of the expression _dearness_ and _cheapness_.

The former take sides in behalf of _cheapness_, having in view the interests of consumers.

The latter pronounce themselves in favor of _dearness_, preoccupying themselves solely with the interests of the producer.

Others intervene, saying, _producer and consumer are one and the same_, which leaves wholly undecided the question whether cheapness or dearness ought to be the object of legislation.

In this conflict of opinion it seems to me that there is only one position for the law to take--to allow prices to regulate themselves naturally.

But the principle of "let alone" has obstinate enemies.

They insist upon legislation without even knowing the desired objects of legislation.

It would seem, however, to be the duty of those who wish to create high or low prices artificially, to state, and to substantiate, the reasons of their preference.

The burden of proof is upon them.

Liberty is always considered beneficial until the contrary is proved, and to allow prices naturally to regulate themselves is liberty.

But the _roles_ have been changed.

The partisans of high prices have obtained a triumph for their system, and it has fallen to defenders of natural prices to prove the advantages of their system.

The argument on both sides is conducted with two words.

It is very essential, then, to understand their meaning.

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

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

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

For instance, in France, to protect farmers, a law was passed imposing a duty of twenty-two per cent.

upon imported wools, and the result has been that native wools have been sold for much lower prices than before the passage of the law.

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

And this is not an isolated fact, for the price of wool has no special or peculiar nature which takes it out of the general law governing prices.

The same fact has been reproduced under analogous circumstances.

Contrary to all expectation, protection has frequently resulted in low prices, and free trade in high prices.

Hence there has been a deal of perplexity in the discussion, the protectionists saying to their adversaries: "These low prices that you talk about so much are the result of our system;" and the free traders replying: "Those high prices which you find so profitable are the consequence of free trade."

There evidently is a misunderstanding, an illusion, which must be dispelled.

This I will endeavor to do.

Suppose two isolated nations, each composed of a million inhabitants;

admit that, other things being equal, one nation had exactly twice as much of everything as the other--twice as much wheat, wine, iron, fuel, books, clothing, furniture, etc. It will be conceded that one will have twice as much wealth as the other.

There is, however, no reason for the statement that the _absolute prices_ are different in the two nations.

They possibly may be higher in the wealthiest nation.

It may happen that in the United States everything is nominally dearer than in Poland, and that, nevertheless, the people there are less generally supplied with everything; by which it may be seen that the abundance of products, and not the absolute price, constitutes wealth.

In order, then, accurately to compare free trade and protection the inquiry should not be which of the two causes high prices or low prices, but which of the two produces abundance or scarcity.

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

Let us look into the subject a little further.

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

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

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

The same is true of low prices.

One of the best established principles of political economy is that price is determined by the law of supply and demand.

The price is then affected by two conditions--the demand and the supply.

These conditions are necessarily subject to variation.

The relations of demand to supply may be exactly counterbalanced, or may be greatly disproportionate, and the variations of price are almost interminable.

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

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

Consequently there are two kinds of _dearness_ and two kinds of _cheapness_.

There is a bad dearness, which results from a diminution of the supply; for this implies scarcity and privation.

There is a good dearness--that which results from an increase of demand; for this indicates the augmentation of the general wealth.

There is also a good cheapness, resulting from abundance.

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

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

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

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

The effect of free trade is exactly the opposite.

Possibly it does not cause the cheapness which it promises; for it also has two tendencies, the one towards that desirable form of cheapness resulting from the increase of supply, or from abundance; the other towards that dearness consequent upon the increased demand and the development of the general wealth.

These two tendencies neutralize themselves as regards the _mere price_; but they concur in their tendency to ameliorate the condition of mankind.

In a word, under the protective system men recede towards a condition of feebleness as regards both supply and demand; under the free trade system, they advance towards a condition where development is gradual without any necessary increase in the absolute prices of things.

Price is not a good criterion of wealth.

It might continue the same when society had relapsed into the most abject misery, or had advanced to a high state of prosperity.

Let me make application of this doctrine in a few words: A farmer in the south of France supposes himself as rich as Croesus, because he is protected by law from foreign competition.

He is as poor as Job--no matter, he will none the less suppose that this protection will sooner or later make him rich.

Under these circumstances, if the question was propounded to him, as it was by the committee of the Legislature, in these terms: "Do you want to be subject to foreign competition?

yes or no," his first answer would be "No," and the committee would record his reply with great enthusiasm.

We should go, however, to the bottom of things.

Doubtless foreign competition, and competition of any kind, is always inopportune; and, if any trade could be permanently rid of it, business, for a time, would be prosperous.

But protection is not an isolated favor.

It is a system.

If, in order to protect the farmer, it occasions a scarcity of wheat and of beef, in behalf of other industries it produces a scarcity of iron, cloth, fuel, tools, etc. --in short, a scarcity of everything.

If, then, the scarcity of wheat has a tendency to increase the price by reason of the diminution of the supply, the scarcity of all other products for which wheat is exchanged has likewise a tendency to depreciate the value of wheat on account of a falling off of the demand;

so that it is by no means certain that wheat will be a mill dearer under a protective tariff than under a system of free trade.

This alone is certain, that inasmuch as there is a smaller amount of everything in the country, each individual will be more poorly provided with everything.

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

There is a certain province where the men are covered with rags, dwell in hovels, and subsist on chestnuts.

How can agriculture flourish there?

What can they make the earth produce, with the expectation of profit?

Meat?

They eat none.

Milk?

They drink only the water of springs.

Butter?

It is an article of luxury far beyond them.

Wool?

They get along without it as much as possible.

Can any one imagine that all these objects of consumption can be thus left untouched by the masses, without lowering prices?

That which we say of a farmer, we can say of a manufacturer.

Cloth-makers assert that foreign competition will lower prices owing to the increased quantity offered.

Very well, but are not these prices raised by the increase of the demand?

Is the consumption of cloth a fixed and invariable quantity?

Is each one as well provided with it as he might and should be?

And if the general wealth were developed by the abolition of all these taxes and hindrances, would not the first use made of it by the population be to clothe themselves better?

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

Now, no person can maintain that proposition.

And just this explains the admission which our opponents continually make to us: "You are right on principle."

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

APPENDIX.

We published an article entitled _Dearness-Cheapness_, which gained for us the two following letters.

We publish them, with the answers: "DEAR MR. EDITOR:--You upset all my ideas.

I preached in favor of free trade, and found it very convenient to put prominently forward the idea of _cheapness_.

I went everywhere, saying, "With free trade, bread, meat, woolens, linen, iron and coal will fall in price."

This displeased those who sold, but delighted those who bought.

Now, you raise a doubt as to whether _cheapness_ is the result of free trade.

But if not, of what use is it?

What will the people gain, if foreign competition, which may interfere with them in their sales, does not favor them in their purchases?"

MY DEAR FREE TRADER:--Allow us to say that you have but half read the article which provoked your letter.

We said that free trade acted precisely like roads, canals and railways, like everything which facilitates communications, and like everything which destroys obstacles.

Its first tendency is to increase the quantity of the article which is relieved from duties, and consequently to lower its price.

But by increasing, at the same time, the quantity of all the things for which this article is exchanged, it increases the _demand_, and consequently the price rises.

You ask us what the people will gain.

Suppose they have a balance with certain scales, in each one of which they have for their use a certain quantity of the articles which you have enumerated.

If a little grain is put in one scale it will gradually sink, but if an equal quantity of cloth, iron and coal is added in the others, the equilibrium will be maintained.

Looking at the beam above, there will be no change.

Looking at the people, we shall see them better fed, clothed and warmed.

"DEAR MR. EDITOR:--I am a cloth manufacturer, and a protectionist.

I

confess that your article on _dearness_ and _cheapness_ has led me to reflect.

It has something specious about it, and if well proven, would work my conversion."

MY DEAR PROTECTIONIST:--We say that the end and aim of your restrictive measures is a wrongful one--_artificial dearness_.

But we do not say that they always realize the hopes of those who initiate them.

It is certain that they inflict on the consumer all the evils of dearness.

It is not certain that the producer gets the profit.

Why?

Because if they diminish the supply they also diminish the _demand_.

This proves that in the economical arrangement of this world there is a moral force, a _vis medicatrix_, which in the long run causes inordinate ambition to become the prey of a delusion.

Pray, notice, sir, that one of the elements of the prosperity of each special branch of industry is the general prosperity.

The rent of a house is not merely in proportion to what it has cost, but also to the number and means of the tenants.

Do two houses which are precisely alike necessarily rent for the same sum?

Certainly not, if one is in Paris and the other in Lower Brittany.

Let us never speak of a price without regarding the _conditions_, and let us understand that there is nothing more futile than to try to build the prosperity of the parts on the ruin of the whole.

This is the attempt of the restrictive system.

Competition always has been, and always will be, disagreeable to those who are affected by it.

Thus we see that in all times and in all places men try to get rid of it.

We know, and you too, perhaps, a municipal council where the resident merchants make a furious war on the foreign ones.

Their projectiles are import duties, fines, etc. , etc. Now, just think what would have become of Paris, for instance, if this war had been carried on there with success.

Suppose that the first shoemaker who settled there had succeeded in keeping out all others, and that the first tailor, the first mason, the first printer, the first watchmaker, the first hair-dresser, the first physician, the first baker, had been equally fortunate.

Paris would still be a village, with twelve or fifteen hundred inhabitants.

But it was not thus.

Each one, except those whom you still keep away, came to make money in this market, and that is precisely what has built it up.

It has been a long series of collisions for the enemies of competition, and from one collision after another, Paris has become a city of a million inhabitants.

The general prosperity has gained by this, doubtless, but have the shoemakers and tailors, individually, lost anything by it?

For you, this is the question.

As competitors came, you said: The price of boots will fail.

Has it been so?

No, for if the _supply_ has increased, the _demand_ has increased also.

Thus will it be with cloth; therefore let it come in.

It is true that you will have more competitors, but you will also have more customers, and richer ones.

Did you never think of this when seeing nine-tenths of your countrymen deprived during the winter of that superior cloth that you make?

This is not a very long lesson to learn.

If you wish to prosper, let your customers do the same.

When this is once known, each one will seek his welfare in the general welfare.

Then, jealousies between individuals, cities, provinces and nations, will no longer vex the world.

VI. TO ARTISANS AND LABORERS.

Many papers have attacked me before you.

Will you not read my defense?

I am not mistrustful.

When a man writes or speaks, I believe that he thinks what he says.

What is the question?

To ascertain which is the more advantageous for you, restriction or liberty.

I believe that it is liberty; they believe it is restriction; it is for each one to prove his case.

Was it necessary to insinuate that we are the agents of England?

You will see how easy recrimination would be on this ground.

We are, they say, agents of the English, because some of us have used the English words _meeting_, _free trader_!

And do not they use the English words _drawback_ and _budget_?

We imitate Cobden and the English democracy!

Do not they parody Bentinck and the British aristocracy?

We borrow from perfidious Albion the doctrine of liberty.

Do not they borrow from her the sophisms of protection?

We follow the commercial impulse of Bordeaux and the South.

Do not they serve the greed of Lille, and the manufacturing North?

We favor the secret designs of the ministry, which desires to turn public attention away from the protective policy.

Do not they favor the views of the Custom House officers, who gain more than anybody else by this protective _regime_?

So you see that if we did not ignore this war of epithets, we should not be without weapons.

But that is not the point in issue.

The question which I shall not lose sight of is this: _Which is better for the working-classes, to be free or not to be free to purchase from abroad?

_ Workmen, they say to you, "If you are free to buy from abroad these things which you now make yourselves, you will no longer make them.

You will be without work, without wages, and without bread.

It is then for your own good that your liberty be restricted."

This objection recurs in all forms.

They say, for instance, "If we clothe ourselves with English cloth, if we make our plowshares with English iron, if we cut our bread with English knives, if we wipe our hands with English napkins, what will become of the French workmen--what will become of the _national labor_?"

Tell me, workmen, if a man stood on the pier at Boulogne, and said to every Englishman who landed: If you will give me those English boots, I will give you this French hat; or, if you will let me have this English horse, I will let you have this French carriage; or, Are you willing to exchange this Birmingham machine for this Paris clock?

or, again, Does it suit you to barter your Newcastle coal for this Champagne wine?

I ask you whether, supposing this man makes his proposals with average judgment, it can be said that our _national labor_, taken as a whole, would be harmed by it?

Would it be more so if there were twenty of these people offering to exchange services at Boulogne instead of one; if a million barters were made instead of four; and if the intervention of merchants and money was called on to facilitate them and multiply them indefinitely?

Now, let one country buy of another at wholesale to sell again at retail, or at retail to sell again at wholesale, it will always be found, if the matter is followed out to the end, that _commerce consists of mutual barter of products for products, of services for services_.

If, then, _one barter_ does not injure the _national labor_, since it implies as much _national labor given_ as _foreign labor received_, a hundred million of them cannot hurt the country.

But, you will say, where is the advantage?

The advantage consists in making a better use of the resources of each country, so that the same amount of labor gives more satisfaction and well-being everywhere.

There are some who employ singular tactics against you.

They begin by admitting the superiority of freedom over the prohibitive system, doubtless in order that they may not have to defend themselves on that ground.

Next they remark that in going from one system to another there will be some _displacement_ of labor.

Then they dilate upon the sufferings which, according to themselves, this _displacement_ must cause.

They exaggerate and amplify them; they make of them the principal subject of discussion; they present them as the exclusive and definite result of reform, and thus try to enlist you under the standard of monopoly.

These tactics have been employed in the service of all abuses, and I must frankly admit one thing, that it always embarrasses even the friends of those reforms which are most useful to the people.

You will understand why.

When an abuse exists, everything arranges itself upon it.

Human existences connect themselves with it, others with these, then still others, and this forms a great edifice.

Do you raise your hand against it?

Each one protests; and notice this particularly, those persons who protest always seem at the first glance to be right, because it is easier to show the disorder which must accompany the reform than the order which will follow it.

The friends of the abuse cite particular instances; they name the persons and their workmen who will be disturbed, while the poor devil of a reformer can only refer to the _general good_, which must insensibly diffuse itself among the masses.

This does not have the effect which the other has.

Thus, supposing it is a question of abolishing slavery.

"Unhappy people," they say to the colored men, "who will feed you?

The master distributes floggings, but he also distributes rations."

It is not seen that it is not the master who feeds the slave, but his own labor which feeds both himself and master.

When the convents of Spain were reformed, they said to the beggars, "Where will you find broth and clothing?

The Abbot is your providence.

Is it not very convenient to apply to him?"

And the beggars said: "That is true.

If the Abbot goes, we see what we lose, but we do not see what will come in its place."

They do not notice that if the convents gave alms they lived on alms, so that the people had to give them more than they could receive back.

Thus, workmen, a monopoly imperceptibly puts taxes on your shoulders, and then furnishes you work with the proceeds.

Your false friends say to you: If there was no monopoly, who would furnish you work?

You answer: This is true, this is true.

The labor which the monopolists procure us is certain.

The promises of liberty are uncertain.

For you do not see that they first take money from you, and then give you back a _part_ of it for your labor.

Do you ask who will furnish you work?

Why, you will give each other work.

With the money which will no longer be taken from you, the shoemaker will dress better, and will make work for the tailor.

The tailor will have new shoes oftener, and keep the shoemaker employed.

So it will be with all occupations.

They say that with freedom there will be fewer workmen in the mines and the mills.

I do not believe it.

But if this does happen, it is _necessarily_ because there will be more labor freely in the open air.

For if, as they say, these mines and spinning mills can be sustained only by the aid of taxes imposed on _everybody_ for their benefit, these taxes once abolished, _everybody_ will be more comfortably off, and it is the comfort of all which feeds the labor of each one.

Excuse me if I linger at this demonstration.

I have so great a desire to see you on the side of liberty.

In France, capital invested in manufactures yields, I suppose, five per cent.

profit.

But here is Mondor, who has one hundred thousand francs invested in a manufactory, on which he loses five per cent.

The difference between the loss and gain is ten thousand francs.

What do they do?

They assess upon you a little tax of ten thousand francs, which is given to Mondor, and you do not notice it, for it is very skillfully disguised.

It is not the tax gatherer who comes to ask you your part of the tax, but you pay it to Mondor, the manufacturer, every time you buy your hatchets, your trowels, and your planes.

Then they say to you: If you do not pay this tax, Mondor can work no longer, and his employes, John and James, will be without labor.

If this tax was remitted, would you not get work yourselves, and on your own account too?

And, then, be easy, when Mondor has no longer this soft method of obtaining his profit by a tax, he will use his wits to turn his loss into a gain, and John and James will not be dismissed.

Then all will be profit _for all_.

You will persist, perhaps, saying: "We understand that after the reform there will be in general more work than before, but in the meanwhile John and James will be on the street."

To which I answer: First.

When employment changes its place only to increase, the man who has two arms and a heart is not long on the street.

Second.

There is nothing to hinder the State from reserving some of its funds to avoid stoppages of labor in the transition, which I do not myself believe will occur.

Third.

Finally, if to get out of a rut and get into a condition which is better for all, and which is certainly more just, it is absolutely necessary to brave a few painful moments, the workmen are ready, or I know them ill.

God grant that it may be the same with employers.

Well, because you are workmen, are you not intelligent and moral?

It seems that your pretended friends forget it.

It is surprising that they discuss such a subject before you, speaking of wages and interests, without once pronouncing the word _justice_.

They know, however, full well that the situation is _unjust_.

Why, then, have they not the courage to tell you so, and say, "Workmen, an iniquity prevails in the country, but it is of advantage to you and it must be sustained."

Why?

Because they know that you would answer, No. But it is not true that this iniquity is profitable to you.

Give me your attention for a few moments and judge for yourselves.

What do they protect in France?

Articles made by great manufacturers in great establishments, iron, cloth and silks, and they tell you that this is done not in the interest of the employer, but in your interest, in order to insure you wages.

But every time that foreign labor presents itself in the market in such a form that it may hurt _you_, but not the great manufacturers, do they not allow it to come in?

Are there not in Paris thirty thousand Germans who make clothes and shoes?

Why are they allowed to establish themselves at your side when cloth is driven away?

Because the cloth is made in great mills owned by manufacturing legislators.

But clothes are made by workmen in their rooms.

These gentlemen want no competition in the turning of wool into cloth, because that is _their_ business; but when it comes to converting cloth into clothes, they admit competition, because that is _your_ trade.

When they made railroads they excluded English rails, but they imported English workmen to make them.

Why?

It is very simple; because English rails compete with the great rolling mills, and English muscles compete only with yours.

We do not ask them to keep out German tailors and English laborers.

We ask that cloth and rails may be allowed to come in.

We ask justice for all, equality before the law for all.

It is a mockery to tell us that these Custom House restrictions have _your_ advantage in view.

Tailors, shoemakers, carpenters, millers, masons, blacksmiths, merchants, grocers, jewelers, butchers, bakers and dressmakers, I challenge you to show me a single instance in which restriction profits you, and if you wish, I will point out four where it hurts you.

And after all, just see how much of the appearance of truth this self-denial, which your journals attribute to the monopolists, has.

I believe that we can call that the _natural rate of wages_ which would establish itself _naturally_ if there were freedom of trade.

Then, when they tell you that restriction is for your benefit, it is as if they told you that it added a _surplus_ to your _natural_ wages.

Now, an _extra natural_ surplus of wages must be taken from somewhere; it does not fall from the moon; it must be taken from those who pay it.

You are then brought to this conclusion, that, according to your pretended friends, the protective system has been created and brought into the world in order that capitalists might be sacrificed to laborers!

Tell me, is that probable?

Where is your place in the Chamber of Peers?

When did you sit at the Palais Bourbon?

Who has consulted you?

Whence came this idea of establishing the protective system?

I hear your answer: _We_ did not establish it.

We are neither Peers nor Deputies, nor Counselors of State.

The capitalists have done it.

By heavens, they were in a delectable mood that day.

What!

the capitalists made this law; _they_ established the prohibitive system, so that you laborers should make profits at their expense!

But here is something stranger still.

How is it that your pretended friends who speak to you now of the goodness, generosity and self-denial of capitalists, constantly express regret that you do not enjoy your political rights?

From their point of view, what could you do with them?

The capitalists have the monopoly of legislation, it is true.

Thanks to this monopoly, they have granted themselves the monopoly of iron, cloth, coal, wood and meat, which is also true.

But now your pretended friends say that the capitalists, in acting thus, have stripped themselves, without being obliged to do it, to enrich you without your being entitled to it.

Surely, if you were electors and deputies, you could not manage your affairs better; you would not even manage them as well.

If the industrial organization which rules us is made in your interest, it is a perfidy to demand political rights for you; for these democrats of a new species can never get out of this dilemma; the law, made by the present law-makers, gives you _more_, or gives you _less_, than your natural wages.

If it gives you _less_, they deceive you in inviting you to support it.

If it gives you _more_, they deceive you again by calling on you to claim political rights, when those who now exercise them, make sacrifices for you which you, in your honesty, could not yourselves vote.

Workingmen, God forbid that the effect of this article should be to cast in your hearts the germs of irritation against the rich.

If mistaken _interests_ still support monopoly, let us not forget that it has its root in _errors_, which are common to capitalists and workmen.