Sophisms of the Protectionists Part 20

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 impoveris.h.i.+ng 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 compet.i.tion. 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 circ.u.mstances, 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 compet.i.tion? 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 compet.i.tion, and compet.i.tion 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. b.u.t.ter?

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 ma.s.ses, without lowering prices?

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

Cloth-makers a.s.sert that foreign compet.i.tion will lower prices owing to the increased quant.i.ty offered. Very well, but are not these prices raised by the increase of the demand? Is the consumption of cloth a fixed and invariable quant.i.ty? 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 ent.i.tled _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 compet.i.tion, 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, ca.n.a.ls and railways, like everything which facilitates communications, and like everything which destroys obstacles. Its first tendency is to increase the quant.i.ty of the article which is relieved from duties, and consequently to lower its price. But by increasing, at the same time, the quant.i.ty 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 quant.i.ty of the articles which you have enumerated. If a little grain is put in one scale it will gradually sink, but if an equal quant.i.ty 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.

Compet.i.tion 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 munic.i.p.al 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 compet.i.tion, 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 compet.i.tors 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 compet.i.tors, 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_!