FREE TRADE, TAXES, AND SUBSIDIES
Democratick Editorials: Essays in Jacksonian Political Economy
Plaindealer, January 28, 1837. Title added.
Mr. Cutting lately introduced a bill into the Assembly, which, it will be seen, has been passed in that house, for the more effectual punishment of crime. The first section of the bill is in the following words:
The keeping of a gambling house by any person in the city of New York, shall be, and hereby is declared, a misdemeanour, and indictable as such; and upon conviction thereof, the offender shall be subject to a fine, not exceeding five hundred dollars, or to imprisonment not exceeding one year, or both, in the discretion of the court before whom the same is tried.
We do not believe that a law of this kind is the best method of preventing gaming. There have always been laws against gaming in this city; yet they have slumbered on the statute book, mere dead letters, while gambling has been pursued with a degree of openness scarcely inferiour to that of the licensed gaming houses in New Orleans. Our readers are aware that we belong to that class of persons who do not believe in the omnipotence of law to effect every conceivable object of reformation. The law of publick opinion, if left free to act, would, in a vast multitude of cases, be found more efficient, than a penal statute. We believe that gaming is one of the vices which would be much more effectually restrained, if left entirely to the salutary influences of publick opinion, than it ever can be by legislative interference. If laws on the subject are highly penal, they are not enforced; and if slightly penal, they are ineffectual: and, in both cases, they forestall and render sluggish and inoperative the publick sentiment, which otherwise, we think, we would be found an active and efficient agent in restraining the vice.
A legislature is always badly set to work in manufacturing crime. To risk money in a wager is not a crime per se, whether the wager be on the result of a race, on the fate of a lottery ticket, on the turn of a dicebox, or on any other like contingency. It is folly, perhaps, in all cases, and it becomes crime and madness in some; but to draw the line between allowable folly and criminality, in a matter of this kind, is rather the office of publick opinion, than of the law.
But Mr. Cutting's bill does not go to the extent of punishing gaming, but merely to punish those who afford facilities to gamblers, to punish the keepers of gaming houses. It is one of the heaviest charges against the law, that it spreads a flimsy net to catch small offenders, while it weaves no meshes strong enough to hold the larger ones. The poor wretch who gets drunk on threepenny gin is sent to bridewell*69 or the watchhouse, while the judge who sentences him daily inebriates himself with impunity on Madeira or Champaigne. The keeper of the shilling faro table is lodged in prison, and mulcted in a heavy fine; while the dashing coterie of rich and fashionable blacklegs, who support their own hell, under the thin disguise of a club house, and nightly allure spendthrifts to their ruin, have passage free. Mr. Cutting knows dozens of conspicuous individuals in this city, who, to all intents and purposes, and to the worst intents and purposes, keep gambling houses, that would not be touched by his bill, if it should be passed into a law.
To suppress vice in part is perhaps better than not to suppress it at all; but the objection we urge to the proposed law, and to all such legislation, is that it does not really promote its ostensible object. If the legislature had spent as much time in framing penal statutes against intemperance, as it has wickedly spent, for years past, in framing grants of special charters, it could not possibly have effected the reform, in that respect, which publick opinion has accomplished. We would leave the vice of gambling to be corrected in the same way.
Notes for this chapter
That is, to prison.—Ed.
FREE TRADE, TAXES, AND SUBSIDIES
End of Notes
FREE TRADE POST OFFICE
Plaindealer, February 4, 1837. Text abridged and extract deleted.
A bill, it will be seen, is now before Congress, reported by the Post Office Committee, the object of which is to carry into effect the recommendation in the Postmaster General's last annual report, on the subject of epistolary communication between the inhabitants of this country and Great Britain....
...[I]t is not improbable that the bill will have been passed into a law before these remarks are presented to our readers. It is therefore with no expectation of arresting or changing, in the slightest degree, the course of action on the subject, that we choose it as the theme for our speculations in the present article; but merely because it may answer a useful purpose to invite the reader's mind to a consideration of what constitute the proper functions of political government, and how far the principle of unrestricted competition may be safely left to form its own laws and supply the wants of society.
Everybody must admit that the Post Office, as a branch of the Government, is an institution obviously and inevitably liable to the most prodigious abuses. Under the present system, there are some twelve or fifteen thousand postmasters, holding their appointments directly from one man, and removable at his mere will. Nearly all this numerous army of postmasters, at least a full myriad of them, have subordinates under their control; and if we include in the estimate the contractors, drivers, carriers, and the various other persons more or less dependent for support on the enormous system, it will probably yield an aggregate of not much less than half a million of persons under the immediate direction, to some extent, of a single individual, seated at the head of the federal government. Can any one be so blind as not to perceive, at a glance, that this is a monstrous power, at all times susceptible of being exerted, with the most dangerous effect, for the advancement of objects hostile to the true interests of the people? We do not ask the question with reference to the present, or the past, or any future administration, or with particular reference to any event which has occurred or is likely to occur; but simply in reference to the subject in the abstract, and to the aspect it presents under all the changes and fluctuations of party affairs.
It is not only the vast means of undue influence which the present system gives to a single federal officer, in enabling him, to some extent, directly to control the suffrages of a numerous body of organized dependents; but the facilities it furnishes for the rapid and simultaneous diffusion of political intelligence which it may be desired to circulate, for the obstruction of that of a contrary tenor, and for the exercise of all the arts of political espionage, also render the Post Office, as a branch of government, a dangerous institution. If this is a danger not necessary to be incurred; if the duties which it performs are a matter of trade which might safely be left to the laws of trade; and if the transmission of our letters and newspapers, from place to place, might be submitted, with salutary results, to the operation of the same principles which now secure the carrying of our merchandize and our persons, there are many who will readily admit that the free trade system, as tending to simplify the offices of government and restraining its powers, would be better than one of political regulation. We are ourselves strongly inclined to the belief, that if the clause in the federal charter which gives to Congress the control of the Post Office had never been inserted, a better system would have grown up under the mere laws of trade. The present system, let it be conducted as it may, can never, in the nature of things, be wholly free from political abuses, and is always in danger of being converted into a mere political machine. The abuses which are its inevitable incidents, will necessarily increase from year to year, as the population swells in numbers, and spreads over a wider surface. It must always, managed by political intermediaries and rapacious subordinates, be attended with a vast amount of unnecessary expense; and this expense must be drawn from the people by a method of taxation in utter violation of their equal rights.
Should the history of this Confederacy stretch out for ages, it will probably never exhibit to the world the spectacle of a chief magistrate combining more exalted qualities than distinguish him who now occupies that lofty station. Sincerer patriotism and more unbending integrity no man can ever possess. Sagacity, firmness, restless activity, and unceasing vigilance, are also among his characteristics. Yet even under his administration, what numerous and not unfounded complaints have vexed the ears of the people of the errors and mismanagement of the Post Offices! Much of the clamour, beyond all question, arose out of party motives, and had no reasonable foundation; but much, on the other hand, was prompted by real delinquency, and was little exaggerated beyond the warrant of truth. If these abuses have existed during the administration of Andrew Jackson, it is not probable that they will not recur under future Presidents. They are inseparable from the system. It is a government machine, cumbrous, expensive, and unwieldly, and liable to be perverted to the worst of uses.
On what principle is the line drawn which separates the matters which are left to the laws of trade, from those which are deemed to require political regulation? The Post Office is established for the purpose of facilitating intercourse by letter between different places. But personal intercourse, though less frequently necessary, is not less positively so, than communication by correspondence. The intertransmission of merchandize is as necessary as either. Why should the government confine its mediation to the mere carrying of our letters? Why not also transport our persons and our goods? These objects, it will be answered, are readily accomplished by the laws of trade, and may therefore properly be left to individual enterprise. But what constitutes this the precise point where the laws of trade become impotent, and where individual enterprise needs to be substituted by political control?
If the clause of the Constitution under which the Post Office establishment exists were struck from the instrument to-morrow, is any one weak enough to suppose that the activity of commerce would not soon supply a system of its own? Modes of conveyance would be instituted at once; they would speedily be improved by the rival efforts of competition; and would keep pace, step by step, with the public demand. It may be said that places far inland and thinly inhabited would suffer by the arrangement. The solitary squatter in the wilderness might not, it is true, hear the forest echoes daily awakened by the postman's horn, and his annual letter might reach him charged with a greater expense than he is now required to pay. But there is no place on the map which would not be supplied with mail facilities by paying a just equivalent; and if they are now supplied for less, it is because the burden of post office taxation is imposed with disproportional weight on the populous sections of the land. But there is no reason why the east should pay the expense of threading with the mail the thick wildernesses of the west, or of wading with it through the swamps and morasses of the south. This is a violation of the plainest principles of equal rights.
The subject of a free trade Post Office presents many considerations which it would be tedious to the reader to pursue to the end in all their ramifications. It is enough for the present that we lay before him a theme of meditation, which will exercise his ingenuity, and afford a not unprofitable incentive to thought. We open the mine, and leave him to trace its various veins of ore. Some of these lay obvious to view. The curse of office-hunting, for example, an inseparable incident of popular government, every year exercises, and in a ratio of prodigious increase, a pernicious influence on the political morals of the country. Under a free trade system of post office business this epidemic evil would necessarily be abated in a vast degree. But would you withdraw, it may be asked, the stimulus which our post office system, by extending mail routes through the wilderness, furnishes to emigration; which provokes a spirit of enterprise to explore the wilds of the west, and to plant colonies in the interminable woods and on the boundless prairies; which causes towns and villages to spring up where the wolf howled and the panther screamed but the week before; and covers with the activity of social life and industry the desert which, but for the impulse furnished by the government, would continue desolate and solitary for ages?
We have no hesitation to answer in the most direct and unequivocal affirmative. All government bounties, of every shape and name, are as much opposed to our notions of the proper freedom of trade, as government restraints and penalties. We would withdraw all government stimulants, for they are bad things at best. But let no man suppose the progress of improvement would be thus retarded. Its direction might be changed; but its advance would be unobstructed. The country would continue to grow, from year to year, not less rapidly and more healthfully than now. Instead of the forcing system, which exhausts the soil, and brings forth only sickly and immature productions, we should merely adopt one of nature and of reason. We should merely leave water to flow in its proper channels, instead of endeavouring to compel its current, without reference to the laws of gravitation. The boundaries of population would still continue to enlarge, like ripples on a sheet of water, circle beyond circle; but they would not be forced into unnatural irregularities, and to shoot out this way and that, according to the schemes of politicians and speculators, who, through interested agents in the halls of Congress, should choose to open roads and penetrate with the mails into places which, if left to the natural course of things, would sleep for centuries in the unbroken solitude of nature.
The project now before Congress, to which we adverted in the outset of this article, is liable to no objection, in our view, except that it adds new complication, and gives greater extent and firmness to the post office system under its political organization, thus rendering more distant and feeble our present slight prospect of economic reform.
FREE TRADE, TAXES, AND SUBSIDIES
Plaindealer, February 11, 1837. Title added. Text abridged and extract deleted.
The New Yorker has no warrant for saying that, according to the opinions expressed by this journal, a reduction of the tariff to such an ad valorem duty as would merely supply the means of defraying the current expenses of the government "would be just no free trade at all." It would certainly not place trade in a state of absolute freedom; but it would be such an enlargement of its bounds, such a relaxation of its fetters, as might well deserve to be spoken of as comparative freedom. We are in favour of absolute freedom of trade in banking; yet we consider the limited repeal of the Restraining Law, although it does not restore to the community their natural rights, in their fullest integrity, a great triumph of free principles, nevertheless. We rejoice at every successive victory obtained, because it carries us nearer to the goal. In war, every advantage over your enemy is, to some extent, a triumph of the principles you maintain, though there may be other battles yet to fight, and other victories to achieve, before the whole object embraced in the ground of quarrel can be accomplished. In religion, every convert whom you bring to kneel at your altar is a triumph of your creed; though its perfect success is not established till the whole world acknowledges its truth. The same remark holds good in relation to science, to art, and to every variety of subject. The gradations of legislative interference with trade are innumerable. Any law which creates an intermediary condition between absolute freedom and absolute restriction is a fetter upon trade. But these fetters may be as light as the pinions on the heels of the feathered Mercury, or they may be as heavy as the chains which bound Prometheus to his rock.
It is a mistake to say that theoretick free trade consists in the equality of duties. It consists in levying no duties at all. It consists in leaving the parties to trade—the buyer and seller—perfectly unrestrained by the conditions of a third party. The amount of revenue necessary for the purposes of government should be derived through a system of taxation that would rest with equal proportional burden upon all, and not merely upon the consumers of foreign merchandize. The man who is clad in deerskins, whom the forest and lake supply with animal food, and whose own field yields him whatever else the necessities of nature demand, should no more be exempt from proportional taxation, than he who flaunts in silks, whose blood is warmed with the spices of the east and the wines of the south, and whose table groans beneath the weight of imported luxuries. Taxes, to the extent of the necessary expenses of government, laid by a rule of universal equality, are no infringement of the principles of free trade; because trade cannot exist without organized government, and organized government cannot be supported without taxation. But the moment government says to the citizens, you who are engaged in one branch of trade, or you who consume one description of commodity, shall pay taxes; and you who deal in another branch of traffick, or consume articles of a different description, shall not be taxed; it obviously violates the proper freedom of trade, as well as the great democratick principle of equal rights.
The New Yorker has very imperfectly acquainted itself with our views, if it is not aware that a system of bounties is as much opposed to them, as a system of prohibitory or protective duties. Would it be free trade if the government should say to the Postmaster, you may carry the New Yorker, and the other weekly newspapers, free of postage; but you must allow the Plaindealer one cent for every number which passes through your hands? Would this not be a direct interference on the part of the government with the weekly newspaper trade? Would it not be saying to those concerned in it, you shall not be left free to make your own terms with your subscribers, but shall be compelled to make such a charge as will enable you to meet an onerous and unjust tax, imposed on the whole community, for the special benefit of one exclusively privileged newspaper? When the government allows a bounty, it devotes, for the benefit of an individual or a class, money derived from the whole community, under the pretence that it was to be expended for the benefit of the whole. Such legislation is objectionable on precisely the same grounds of political justice and economy that may be urged against discriminating duties.
We do not "hesitate or turn recreant" in regard to any subject. We are for applying the principles of political economy to every possible subject which they embrace in their widest latitude of correct interpretation. But it is one thing to condemn political regulation, when, in a matter of trade, the government, as a third party, interferes between the other two, the buyer and seller; and another to withhold condemnation, when those political regulations are merely the rules which one of the two parties, the seller, sets down for his own guidance.*70
Notes for this chapter
Leggett here refers to the question of the federal government selling western land only to settlers. See "Sale of Publick Lands" and "The Meaning of Free Trade" above, p. 350 and p. 355.—Ed.
THE CAUSE OF HIGH PRICES, AND THE RIGHTS OF COMBINATION
End of Notes
MEEK AND GENTLE WITH THESE BUTCHERS
Plaindealer, February 18, 1837.
It will be seen, by our paragraph under the proper head, that Mr. Brady introduced a proposition into the Board of Aldermen last Wednesday evening, the object of which is graciously to permit all butchers to sell meat in their own shops, provided they take out a license, at an expense of fifty dollars, and enter into some sort of security that they will open only a single shop. This proposition is not to be considered as containing the views of its mover as to the degree of freedom which the citizen should be permitted to enjoy in the business of dealing in meat; for that individual has distinguished himself, for a good while past, as the earnest opponent of the unjust and arbitrary restraints and limitations which are imposed on that branch of traffic, giving a monopoly to a few, and forcing the citizen to pay a price much greater than would be asked, if competition were left free to regulate the supply to the demand. But the resolution of Mr. Brady was probably framed with reference to his prospect of success in any measure tending towards an enlargement of the bounds of the butchers' monopoly; and in that view of it he is entitled to thanks for the measure. But what a sorry picture does not this proceeding exhibit to us of the ignorance and tyranny of our municipal legislators! It is solicited, as a measure of freedom, that a free citizen, as free and intelligent as any member of the Common Council, may be permitted to follow a respectable and useful calling, provided he brings proof that he faithfully served the full term of apprenticeship to that branch of business, gives bonds that he will pursue it only within a specified limit, and pays into the public treasury a large sum of money for the gracious permission which the fathers of the city vouchsafe to him! Can any thing be a greater outrage of common sense than these stipulations? Can any thing be in more palpable and direct violation of the most obvious natural rights? Can any thing, even under the despotic government of Czars, Autocrats, and Grand Seignors, be more arbitrary, unequal, oppressive, and unjust? The prohibitions and restrictions within which butchers are circumscribed, may, with equal warrant of propriety, be drawn round other callings. There is as much reason why the Common Council should take upon themselves to regulate your private affairs, reader, or our own. They may, with equal grace, ordain that no carpenter, or tailor, or hatter, or shoemaker, shall open a shop, except he served a regular apprenticeship to the business, gives bonds that he will open but one, and pays a large bonus into the general coffers for "the blessings of liberty," in that case extended to him. Doctors, lawyers, merchants, and ministers of the gospel, are not less liable than butchers to this municipal supervision and control; and there is quite as much reason, in relation to every one of those vocations, why it should be limited and regulated by the Common Council, as there is in the case of butchers. We hope that among those who have undertaken this business on free trade principles, there are some citizens spirited enough to resist the present ordinances, and defy the inquisitorial power which attempts to tyrannize over them. We should like to see the question tried whether we are, in fact, mere serfs and vassals, holding our dearest privileges but by the sufferance of our municipal servants, or whether we are in truth freemen, possessed of certain inalienable rights, among which is that of pursuing, unmolested, and in our own way, any calling which does not interfere with the rights of others, subject only to the impositions of an equal tax.
THE CAUSE OF HIGH PRICES, AND THE RIGHTS OF COMBINATION
Plaindealer, March 4, 1837. Text abridged and extracts deleted or abridged.
The New Era does not differ from us in opinion as to the general and pervading cause of high prices. It considers the bank monopoly system as the fruitful mother of most of the financial ills under which the community labours, and looks to the complete enfranchisement of trade as the great legislative panacea which alone can effectually cure the complicated disorders of the body politick. But in regard to the late flour riot, it seems disposed to extenuate the conduct of the mob, on the ground that the merchants whose storehouse was invaded had actually monopolized an immense quantity of flour, having been enabled to do so by loans from the State Bank.
...We admit the facts of the New Era, at the same time that we reassert the opinion first expressed by us, that the riot was both causeless and disgraceful. In admitting its facts, however, we must not be understood as asserting them; for we know nothing, except from the statements of that journal, either as to the quantity of flour held by the mercantile house which it names, or the particular nature or source of its bank accommodations. But assuming that the New Era speaks only upon accurate information, we receive its allegations as true, and still refuse to mitigate the strength of our censure, or extenuate the conduct of the mob.
It is no offence against society for a flour dealer to purchase as much flour and grain as he thinks he can readily dispose of to advantage, or can afford to retain in his possession until the consumers shall accede to his demands. It is no offence against society to borrow funds to enable him to accomplish this object; and none to borrow them from a bank. And it is no offence against society for a bank to lend a flour dealer money, any more than it would be to lend it to any other person, in any other branch of business. Nay, if the purpose for which the money was required was communicated to the officers of the bank as the ground of the application, they might still lend it, without committing the slightest offence against society. The sole consideration which is obligatory upon the bank is that of the pecuniary responsibility of the borrower. The object for which the funds are required, further than as it affects that consideration, should not weigh with them a pin's weight.
If the transaction then, in none of its particular features, was an offence against society, it could not become such in its aggregate aspect. The people might well deplore that they had so long permitted their legislative servants to go on, chartering one monopoly after another, until the whole money business of the community, instead of being left open to the wholesome influence of unbounded competition, was placed under the exclusive control of a comparatively few specially privileged individuals, having the power to regulate, according to the dictates of folly or cupidity, the precise channels in which the streams of credit shall flow. But they would surely have no right to assail, either the bank, for lending its money to whom it pleased, or the borrower, for availing himself of its disposition in his favour. To do so would be a causeless outrage; since neither of the parties had transcended its clear, indisputable rights.
The mere fact that the merchants whose warehouse was attacked had more flour on hand than all the other dealers, only shows that they conducted the business on a larger scale. If they asked higher prices than other dealers, they would obtain no custom. If their influence over other dealers caused them all to raise their prices to the same level, and that was above the general level of value, in other places, as fixed by the relations of supply and demand, or any other cause, they would but provoke immediate competition from abroad; for it is the nature of all commodities of traffick to flow upwards to the highest level, as much so as it is the nature of water to flow downwards to the lowest. But if we suppose, for the sake of the argument, (a thing that would not be possible in fact) that the influence of these same flour dealers extended to every other flour dealer in the country, and their prices fixed the universal standard of price: or, to simplify the matter still more, if we suppose that they were the sole owners of all the flour in the United States, they would still have a right to fix their own price; and whatever that might be, it would afford—great extenuation, we admit—but no justification of a riot.
We take this extreme hypothesis to illustrate our views. Publick opinion in this country is the supreme law. Publick opinion, expressed without tumult, would, in the case supposed, supply an adequate remedy for the evil; but expressed through the means of tumult would defeat the very end proposed. Publick opinion, in such a case, would make a spontaneous, unanimous, and irresistible call on the legislative agents of the community, to take the subject of grievance into their own hands. The flour of a single monopolist, which he was holding from a starving people, would be seized by due process of law; it would be "private property taken for publick use;" and "a just compensation," estimated by an equitable comparison of the amount of supply with the amount of demand, would be awarded to the owner. In such a case, the conservative principle, the universal principle of self-preservation, which resides in communities, not less than in individuals, would be fairly called into exercise. It would be an analogous instance with those which are perpetually occurring in times of warfare, but of much stronger obligation. It would be adequate to the end proposed, the relief of the community, according to some just scheme of supplying their wants; whereas, should an unruly mob attempt to achieve the same object by the means of tumult, the effort would but end in the destruction, or most partial and unequal distribution, of the food for which they were famishing, and thus aggravate distress, and place it beyond the reach of alleviation.
Thus, even in the extremest hypothesis which can be framed, we pronounce sentence against tumult. But in the case which really occurred there does not seem to have been the slightest provocation. It does not appear that the flour dealers, whose premises were invaded, had given the smallest occasion of offence to the community. They had a large quantity of flour, and held it at a high price. But they had not "monopolized" flour, even so far as this city is concerned, and according to the New Era's own showing—which "proclaims fearlessly" the names of half a dozen extensive dealers in flour, whose stores were "jammed to bursting, on every floor, with barrels of flour collected from our native mills and fields," and which promises to name more. If the persons singled out as the objects of mob vengeance charged more than others for their flour, purchasers would only have to leave them, and draw their supply from some of those bursting storehouses. If they all charged alike, the fact would be evidence of one of two things: either that the price was fixed by the relation of the supply to the demand, or by combination. If by combination, rivalry would be provoked from abroad, and this would relieve the community. But the New Era may answer that the combination was universal. The burden of proof for such a position would rest upon itself; but we do not hesitate to meet it. Our answer then is, that a universal combination to sustain prices at the point fixed by the relations of supply and demand is perfectly justifiable: and a universal combination to raise them above that point is impossible in the nature of things. The extent and diversity of the interests engaged in the traffick, the varieties of character, and the natural rivalry of trade, forbid it. Even where the parties to such a league or compact are few, and all centered in one narrow circle of business, it is found impracticable to maintain it for any length of time. There are continual violations of faith; there are continual evasions of the terms of agreement, under the impulse of that strong, natural, irradicable spirit of competition which constitutes the mainspring of trade. Despite all the covenants that might be entered into, the price of flour would inevitably adjust itself according the demand, as compared with the supply; according to that principle which furnishes the universal scale of value, the instant price transcends the absolute cost of production under the most favourable circumstances.
It is a happy thing for mankind that this principle does thus invariably operate; because it furnishes a warning to the improvident, checks the profusion of the wasteful, teaches frugality to the extravagant, and arouses a wholesome spirit of economy and foresight in the whole population. If an inadequate supply were not instantly revealed by the tell-tale index of price, a community might run on in profusion and wastefulness, until famine suddenly seized them in his bony clutch. But the mercury in the chrystal tube does not more surely indicate the temperature of the air, than the price of any general staple of a country does the relation of supply and demand. It not only furnishes a warning against thoughtless improvidence at the present time, but supplies a stimulus to competition for the time to come, and induces enterprise to engage in that field which had been imperfectly cultivated before. The events of this year will teach a useful lesson, to be practised the next. Agriculture, admonished of its folly in deserting the plough, to follow in the deluded train of crazy speculation, will return, with renewed industry, to its proper toil. Our fields will smile again with waving harvests; our rivers will glisten with the snowy canvass that wafts the products of the teeming earth to the marts of commerce; and labour will go cheerfully about his work, full fed on nourishing food, which the abundance of supply will have placed amply within his means.
That the present price of flour is the result of the inadequacy of the crop, and not of combination, is a fact perfectly demonstrable, notwithstanding all the allegations which have been uttered to the contrary. It is but little beyond the general average of price; which, in itself, is convincing proof. But independent of this, all the elements which enter into the computation are of a notorious character. The amount of flour raised in the entire country is ascertainable from publick sources, and to a surprising degree of accuracy. The amounts exported and imported are likewise readily ascertained; together with the average amount of consumption by the stationary population, and the average increase of consumers. If a consideration of these elements shows that there is not in existence that quantity of flour which will be in demand before another crop can be brought into market, the price naturally and necessarily adjusts itself according to the scale of deficiency. The effect of this probably is to place flour immediately and entirely beyond the reach of one class of purchasers; and each successive rise diminishes the number of competitors. We may easily carry out the process in our minds, until the stock should be diminished to the last loaf, and none but the wealthiest could enter into the rivalry which the precious food would occasion. In all this, we cannot perceive that immediate injustice is done to any portion of society; while the remote effects of the rise of price in proportion to the diminution of supply are of the happiest kind in averting a recurrence of the evil.
But let us suppose that other views prevailed, and that the dealers in flour were compelled to dispose of it at the same rates which were asked during the most abundant seasons. And let us suppose, too, that this forced cheapness had not the natural effect of causing thoughtless and wasteful expenditure. Still, the time would soon come when the entire stock would be exhausted, and the whole community alike would be without that description of food. It would be very hard that they should be without flour; but whom could they blame? Whom should the mob attack? What description of rights of property should now become the object of outrage? The exhaustion of flour was occasioned by the deficiency of the crop; the deficiency of the crop by the withdrawal of labour from agriculture to other pursuits; the withdrawal of labour by the rage for speculation; the rage for speculation by the sudden expansion of the paper currency; and the sudden expansion of the paper currency by exclusive legislation. Shall any of these intermediate causes of the evil, or shall the great first cause, legislative folly and rapacity, become the object of tumult and violence? Clearly no! The people have the matter perfectly in their control, by the mere influence of peaceful opinion, expressed in the constituted modes. The duty of the press, then, is neither to justify nor extenuate outrage; but to point out, calmly and dispassionately, the prolifick fountain of the evils which oppress the people, and to arouse the publick mind to such action as shall put an end, utterly and forever, to that entire system of exclusive legislation, which is in direct hostility to the rights of man, to the fundamental maxims of our government, and to the great cause of social order and happiness.
The right to combine we have heretofore treated as an indispensable attribute of the freedom of trade; but the New Era contests the position, in an article devoted exclusively to that topick. We copy it entire.*71
...The notions here expressed against the right to combine, are entertained by other intelligent journals, and very extensively among thinking men in the community. Yet we are satisfied that they are founded in errour, and that their natural tendency, if made a motive of political action, will be to institute the most oppressive and intolerable evils of legislation. The position which we maintain is, that men have a perfect natural right to do by combination, what they have a right to do by separate, unconcerted action; and that any laws to limit or abridge that right are necessarily arbitrary and tyrannous. Nay more, we are disposed to regard the principle of combination as the great natural bulwark of the rights of the poor and the oppressed, and, indeed, in many cases, as the only means which weakness has of resisting the aggressions of power, simplicity of craft, and unprotected labour, of the grasping selfishness of the rich.
The instances which are adduced in the foregoing article are easily answered. No man has a right to combine with others to do what he has not a right to do by separate action. He would not, therefore, have a right to combine to obstruct the streets, because he would not have a right to do so in his own individual person. His right to stand in the street from morning to night rests on the fact that his doing so does not obstruct it. But if you suppose a case where the standing in the street becomes a positive inconvenience to the publick, the individual so blocking up the way would be liable to be removed as a nuisance, and punished for committing it. The instance of the beleaguered city comes within that category of cases over which society, in its corporate capacity, has absolute control. The property of the flour dealers, in such an event, would be taken, not because of their combination, but because it was necessary to the publick preservation. It would be taken in virtue of that power which is inherent in all governments, of taking private property for publick use, when the exigences of state requires it. The case of the tailors, so far as they were punished merely for combination, was an exceedingly hard one, and violently outraged the universal publick sense of justice. So fa[r] as punishment was awarded to them for a breach of the peace, in attempting to overawe others by coercive measures, it was fully deserved. Two persons have a natural right to combine; but they have no right to compel a third to join their combination, or punish him for refusing to do so.
The position that, because money is an article of merchandize, the chartered money-changers have an unlimited right either to retain it in their own hands, or to ask what terms they please for it, is unsound; simply because such conduct would be in positive violation of their charters, and would forfeit all the privileges—abundantly large—which they really do possess under them. If the position were asserted of those who deal in money without a charter, it would undoubtedly be true, putting the usury laws out of question, as we trust they will, before many years, be put out of existence. But the New Era is mistaken in this: that the evil of which it complains, in terms not stronger than are warranted by its enormity, is chargeable to a combination of the banks, or any subordinate combination to which the banks supply the means of mischief. It is chargeable to those who institute those banks, who confer on them their special and exclusive privileges, and shut up all competition in the narrow and tyrannous bounds of ignorant and unjust legislation. We do not by any means deny that, if the whole monetary power of the country, or the whole and exclusive right of pursuing any other important branch of business, were conferred, by the supreme legislative authority, on a limited number of associations or individuals, a combination among those associations or individuals might be productive of the most disastrous effects. But we should charge those effects, not to the principle of combination, but to the hideous and paralysing principle of monopoly legislation. We should attempt to remedy the evil, not by erecting ineffectual dams and barriers against the desolating tide where it was hurrying along in swollen and irresistable fury, inundating the land with its waters of bitterness, but by tracing it to its source, and demolishing the monstrous impediments placed there by ignorance and fraud, to prevent its winding through its thousand natural channels, and force the whole volume with destructive rapidity in one particular direction. The principle of combination should not be charged with those evils which result from legislative restrictions upon competition. Let the New Era try the question by instances in which that principle alone operates, unmixed with legislative interference, in the shape either of bounties or impositions, and we think it will arrive at the same conclusion with ourselves.
We concede to our opponent, fully and freely, and have often so argued before, that combinations, for the most part, are exceedingly silly, and end in loss and discomfiture to those who combine. But this is a matter for the parties to judge of for themselves, and does not affect the question of right. The owners of all the packets to Liverpool, for example, have a perfect right to combine, and fix their own terms of freight and passage. If their combination was so regulated as not to require more for freight or passage than a fair return upon their investment of capital, they would not, by combining, provoke competition, any more than if each individual acted separately and for himself. Neither would the publick have any reason to complain. But the moment this combination produced the natural effect of increasing the demands beyond a just compensation, or diminishing the excellence of the accommodations, the public would complain, and the complaint, exciting the attention of ever ready enterprise, would lead rival competitors to establish opposition lines of packets. It would be precisely the same with money and credit, if those who deal, or who would deal in money and credit, instead of being circummured in the narrow limits of a pernicious system of legislation, were left solely to the government of the laws of trade. A few capitalists of vast wealth might combine together to raise the rate of usance; but all capital could not possibly be drawn into such a league, and competition would speedily demolish the baseless fabrick of avarice and cupidity. Even if such a league could be so extended as to embrace all the capital in the country, it would only provoke competition from abroad; and if it could be so extended as to embrace all the capital in the world, it would only provoke labour to form a counter combination.
What is combination? It is a mere league of trade between two or more individuals. It is a modified form of partnership. Every partnership is, indeed, a combination, and much more positive and stable, than those temporary and imperfect compacts now under consideration. The New Era would not deny the right of two or more individuals to form a partnership for any purpose of trade. Yet such a partnership might embrace the capitalists in the business of lending money; or the coal merchants in the business of selling coal; or the flour dealers in the business of selling flour. Where then would be the remedy of the community? In those simple principles which always govern trade. In the simple fact, that profit is the object of trade, and that, in order to insure it, price must bear a just proportion to the relations of supply and demand.
Combination is one of the great means by which the highest interests of society are promoted. What is it that raises the wages of the printers in your office to something like a tolerable equivalent for their patient toil? Is it the spontaneous liberality of their employers? Is it individual action? If they trusted to the efficacy of either of these, we fear their labour would be sadly unrequited. No, it is combination. It is the influence of associated effort and mutual coöperation. What is it that increases the pittance of the day labourer in some sort of proportion with the monstrous advance of other things, and enables him scantily to appease the cravings of hunger? It is combination, less effectual, in his case, because planned with less intelligence, and acted upon with less obedience to the terms of the compact, but still of sufficient efficacy to mitigate the evils which he would otherwise endure. What is it that has, in a great degree, banished the curse of intemperance from the land, and snatched myriads of human beings from all the complicated horrours it entails? Again we say, combination, the bulwark of the rights of the poor and lowly, and a powerful instrument in the hands of the good. It is an efficient weapon against the oppressor; but, like the sword bestowed by the good genius in the fairy tale, it shivers into fragments when drawn against the oppressed.
Notes for this chapter
OMNIPOTENCE OF THE LEGISLATURE
End of Notes
OMNIPOTENCE OF THE LEGISLATURE
Plaindealer, April 1, 1837.
In one of George Colman's metrical oddities,*72 that writer advances the bold opinion that,
—What's impossible can't be,
This seems, however, to be a great mistake. The wisdom of modern legislation is continually performing impossibilities. The laws of physics and metaphysics, of mind and matter, are every day abrogated by the laws of man, and the march of improvement is so rapid, that it would scarcely be surprising if the whole system of things should shortly be taken wholly under the control of our lawgivers.
Judge Soule, of our state legislature, has lately made a great step towards that consummation. He has introduced a bill to fix the value of money, under every variety of financial circumstances, at precisely seven per cent. a year, and he has framed its provisions with such profound sagacity, that money lenders and money borrowers will never attempt to evade them. This will be glad news to those who are at present paying three per cent. a month.
The notable project of Judge Soule provides that bonds, bills, notes, assurances, all other contracts or securities whatsoever, and all deposites of goods or other things whatsoever, whereupon or whereby there shall be received or taken, or secured or agreed to be reserved or taken, any greater sum, or greater value, for the loan or forbearance of any money, goods or other things in action, than the legal rate of seven per cent. per annum, shall be void; and any bond, bill, note, assurance, pledge, conveyance, contract, and all evidences of debt whatsoever, which may have been sold, transferred, assigned or indorsed upon, for or upon which any greater interest, discount or consideration may have been reserved, obtained or taken than is provided in the first section of the said title shall be absolutely null and void; and no part of any such contract, security or evidence of debt, shall be collectable in any court of law or equity. It also declares every violation of the provisions of the act to be a misdemeanor, subjecting the person offending to fine or imprisonment, or both.
There was a certain philosopher who spent his life in bottling moonbeams. Judge Soule seems to belong to the same school.
The Astronomer in Rasselas,*73 by a long and attentive study of the heavenly bodies, at length discovered the secret of their governments, and qualified himself to direct their courses, and regulate the seasons. "I have possessed for five years," said he to Imlac, "the regulation of the weather and the distribution of the seasons: the sun has listened to my dictates, and passed from tropic to tropic by my direction; the clouds, at my call, have poured their waters, and the Nile has overflowed at my command; I have restrained the rage of the dog-star and mitigated the fervours of the crab. I have administered this great office with exact justice, and made the different nations of the earth an impartial dividend of rain and sunshine. What must have been the misery of half the globe, if I had limited the clouds to particular regions, or confined the sun to either side of the equator!"
Judge Soule has now taken upon himself an office not less important in the financial system, than that of the learned astronomer in the planetary. He is for dividing the rain and sunshine of the money-market with an impartial hand, and giving equal portions to borrower and lender. In doing this he perhaps may be thought to carry the principle of equality to an undue extent, since it places all borrowers on a level, whatever the difference in the nature of the security they offer, or in the precariousness of the objects to which the loan is to be applied. But Judge Soule is too much of a philosopher to regard such slight circumstances of difference. He looks down on the money-market from such a height as reduces both bulls and bears to uniformity of stature.
The Astronomer, in Rasselas, confessed that there was one thing, in the system of nature, over which he had not been able to obtain complete control. "The winds alone," said he, "of all the elemental powers, have hitherto refused my authority, and multitudes have perished by equinoctial tempests, which I found myself unable to prohibit or restrain." We are afraid that the astronomer's worthy prototype in our legislature will also find there is likewise one thing which is beyond his authority. Judge Soule will yet discover, we imagine, that the interest on money is as variable as the winds, and that as the latter sometimes whisper in zephyrs and sometimes rave in tempests, so the former, in spite of all his efforts will sink down and almost die away, and at others swell and rage to the tune of three per cent. a month.
It is a matter of astonishment to us that any man, having sense enough to recommend him to his constituents for a seat in the legislature, can be so blind as not to see that usury laws are essentially and necessarily unjust and arbitrary. The value of money depends on a thousand very varying contingencies, as much so as the value of any other commodity. A failure of our chief articles of export, either as to quantity or price, immediately increases the demand for money, and at the same time decreases the security of the borrower. An abundant crop and large prices have, as certainly, the opposite result. This is a difference which affects whole communities. The differences which distinguish individual borrowers are not less obvious. One has ample security to offer; another has none. One needs money to aid him in a pursuit which promises certain profit; another needs it to prosecute an enterprise of exceeding hazard, which, if successful, promises a large return, but if unsuccessful, leaves no hope of re-payment. One borrower, has health, activity and prudence; another is infirm, indolent and rash. Judge Soule is for making up a Procrustean bed for all alike, without reference to the variety of form and stature. We recommend him to the muse of Croaker, as a fit subject for poetic honours, and in the meanwhile apply to him a stanza addressed by that writer to a great leveller in another line:*74
Come, star-eyed maid, Equality!
Notes for this chapter
George Colman (the younger) was an English playwright and author of comic verse whose Poetical Works were published in their first American edition in 1834.—Ed.
Rasselas (1759) is a tale by the English critic and essayist Samuel Johnson.—Ed.
"Croaker" was a pseudonym used by Joseph Rodman Drake and Fitz-Greene Halleck for a series of satirical poems which appeared in the Evening Post in 1819. The stanza quoted is from "The National Paintings: Col. Trumbull's 'The Declaration of Independence' "; by Drake.—Ed.
RIGHTS OF AUTHORS
End of Notes
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