The National System of Political Economy
By Friedrich List
MORE than thirty-three years have elapsed since I first entertained doubts as to the truth of the prevailing theory of political economy, and endeavoured to investigate (what appeared to me) its errors and their fundamental causes. My avocation (as Professor) gave me the motive to undertake that task–the opposition which it was my fate to meet with forcibly impelled me to pursue it further.My German contemporaries will remember to what a low ebb the well-being of Germany had sunk in 1818. I prepared myself by studying works on political economy. I made myself as fully acquainted as others with what had been thought and written on that subject. But I was not satisfied with teaching young men that science in its present form; I desired also to teach them by what economical policy the welfare, the culture, and the power of Germany might be promoted. The popular theory inculcated the principle of freedom of trade. That principle appeared to me to be accordant with common sense, and also to be proved by experience, when I considered the results of the abolition of the internal provincial tariffs in France, and of the union of the three kingdoms under one Government in Great Britain. But the wonderfully favourable effects of Napoleon’s Continental system, and the destructive results of its abolition, were events too recent for me to overlook; they seemed to me to be directly contradictory of what I previously observed. And in endeavouring to ascertain on what that contradiction was founded, the idea struck me that
the theory was quite true, but only so in case all nations would reciprocally follow the principles of free trade, just as those provinces had done. This led me to consider the nature of
nationality. I perceived that the popular theory took no account of
nations, but simply of the entire human race on the one hand, or of single individuals on the other. I saw clearly that free competition between two nations which are highly civilised can only be mutually beneficial in case both of them are in a nearly equal position of industrial development, and that any nation which owing to misfortunes is behind others in industry, commerce, and navigation, while she nevertheless possesses the mental and material means for developing those acquisitions, must first of all strengthen her own individual powers, in order to fit herself to enter into free competition with more advanced nations. In a word, I perceived the distinction between
political economy. I felt that Germany must abolish her internal tariffs, and by the adoption of a common uniform commercial policy towards foreigners, strive to attain to the same degree of commercial and industrial development to which other nations have attained by means of their commercial policy. [From the Preface to the First Edition]
J. Shield Nicholson, ed. Sampson S. Lloyd, trans.
First Pub. Date
London: Longmans, Green, and Co.
First published in German. First translated 1885.
The text of this edition is in the public domain. Picture of List courtesy of The Warren J. Samuels Portrait Collection at Duke University.
- Translators Preface to the First Edition
- Introductory Essay, by J. Shield Nicholson
- Extracts from the Authors Preface
- Book I, Chapter 1
- Book I, Chapter 2
- Book I, Chapter 3
- Book I, Chapter 4
- Book I, Chapter 5
- Book I, Chapter 6
- Book I, Chapter 7
- Book I, Chapter 8
- Book I, Chapter 9
- Book I, Chapter 10
- Book II, Chapter 11
- Book II, Chapter 12
- Book II, Chapter 13
- Book II, Chapter 14
- Book II, Chapter 15
- Book II, Chapter 16
- Book II, Chapter 17
- Book II, Chapter 18
- Book II, Chapter 19
- Book II, Chapter 20
- Book II, Chapter 21
- Book II, Chapter 22
- Book II, Chapter 23
- Book II, Chapter 24
- Book II, Chapter 25
- Book II, Chapter 26
- Book II, Chapter 27
- Book III, Chapter 28
- Book III, Chapter 29
- Book III, Chapter 30
- Book III, Chapter 31
- Book III, Chapter 32
- Book IV, Chapter 33
- Book IV, Chapter 34
- Book IV, Chapter 35
- Book IV, Chapter 36
- Appendix A
- Appendix B
- Appendix C
- Appendix D
THE system of the school suffers, as we have already shown in the preceding chapters, from three main defects: firstly, from boundless
cosmopolitanism, which neither recognises the principle of nationality, nor takes into consideration the satisfaction of its interests; secondly, from a dead
materialism, which everywhere regards chiefly the mere exchangeable value of things without taking into consideration the mental and political, the present and the future interests, and the productive powers of the nation; thirdly, from a
disorganising particularism and
individualism, which, ignoring the nature and character of social labour and the operation of the union of powers in their higher consequences, considers private industry only as it would develop itself under a state of free interchange with society (i.e. with the whole human race) were that race not divided into separate national societies.
Between each individual and entire humanity, however, stands THE NATION, with its special language and literature, with its peculiar origin and history, with its special manners and customs, laws and institutions, with the claims of all these for existence, independence, perfection, and continuance for the future, and with its separate territory; a society which, united by a thousand ties of mind and of interests, combines itself into one independent whole, which recognises the law of right for and within itself, and in its united character is still opposed to other societies of a similar kind in their national liberty, and consequently can only under the existing conditions of the world maintain self-existence and independence by its own power and resources. As the individual chiefly obtains by means of the nation and in the nation mental culture, power of production, security, and prosperity, so is the civilisation of the human race only conceivable and possible by means of the civilisation and development of the individual nations.
Meanwhile, however, an infinite difference exists in the condition and circumstances of the various nations: we observe among them giants and dwarfs, well-formed bodies and cripples, civilised, half-civilised, and barbarous nations; but in all of them, as in the
individual human being, exists the impulse of self-preservation, the striving for improvement which is implanted by nature. It is the task of politics to civilise the barbarous nationalities, to make the small and weak ones great and strong, but, above all, to secure to them existence and continuance. It is the task of national economy to accomplish
the economical development of the nation, and to prepare it for admission into the universal society of the future.
A nation in its normal state possesses one common language and literature, a territory endowed with manifold natural resources, extensive, and with convenient frontiers and a numerous population. Agriculture, manufactures, commerce, and navigation must be all developed in it proportionately; arts and sciences, educational establishments, and universal cultivation must stand in it on an equal footing with material production. Its constitution, laws, and institutions must afford to those who belong to it a high degree of security and liberty, and must promote religion, morality, and prosperity; in a word, must have the well-being of its citizens as their object. It must possess sufficient power on land and at sea to defend its independence and to protect its foreign commerce. It will possess the power of beneficially affecting the civilisation of less advanced nations, and by means of its own surplus population and of their mental and material capital to found colonies and beget new nations.
A large population, and an extensive territory endowed with manifold national resources, are essential requirements of the normal nationality; they are the fundamental conditions of mental cultivation as well as of material development and political power. A nation restricted in the number of its population and in territory, especially if it has a separate language, can only possess a crippled literature, crippled institutions for promoting art and science. A small State can never bring to complete perfection within its territory the various branches of production. In it all protection becomes mere private monopoly. Only through alliances with more powerful nations, by partly sacrificing the advantages of nationality, and by excessive energy, can it maintain with difficulty its independence.
A nation which possesses no coasts, mercantile marine, or naval power, or has not under its dominion and control the mouths of its rivers, is in its foreign commerce dependent on other countries; it can neither establish colonies of its own nor form new nations; all surplus population, mental and material means, which flows from such a nation to uncultivated countries, is lost to its own literature, civilisation and industry, and goes to the benefit of other nationalities.
A nation not bounded by seas and chains of mountains lies open to the attacks of foreign nations, and can only by great sacrifices, and in any case only very imperfectly, establish and maintain a separate tariff system of its own.
Territorial deficiencies of the nation can be remedied either by means of hereditary succession, as in the case of England and Scotland; or by purchase, as in the case of Florida and Louisiana; or by conquests, as in the case of Great Britain and Ireland.
In modern times a fourth means has been adopted, which leads to this object in a manner much more in accordance with justice and with the prosperity of nations than conquest, and which is not so dependent on accidents as hereditary succession, namely, the union of the interests of various States by means of free conventions.
By its Zollverein, the German nation first obtained one of the most important attributes of its nationality. But this measure cannot be considered complete so long as it does not extend over the whole coast, from the mouth of the Rhine to the frontier of Poland, including
Denmark. A natural consequence of this union must be the admission of both these countries into the German Bund, and consequently into the German nationality, whereby the latter will at once obtain what it is now in need of, namely, fisheries and naval power, maritime commerce and colonies. Besides, both these nations belong, as respects their descent and whole character, to the German nationality. The burden of debt with which they are oppressed is merely a consequence of their unnatural endeavours to maintain themselves as independent nationalities, and it is in the nature of things that this evil should rise to a point when it will become intolerable to those two nations themselves, and when incorporation with a larger nationality must seem desirable and necessary to them.
Belgium can only remedy by means of confederation with a neighbouring larger nation her needs which are inseparable from her restricted territory and population.
The United States and
Canada, the more their population increases, and the more the protective system of the United States is developed, so much the more will they feel themselves drawn towards one another, and the less will it be possible for England to prevent a union between them.
As respects their economy, nations have to pass through the following stages of development: original barbarism, pastoral condition, agricultural condition, agricultural-manufacturing condition, and agricultural-manufacturing-commercial condition.
The industrial history of nations. and of none more clearly than that of England, proves that the transition from the savage state to the pastoral one, from the pastoral to the agricultural, and from agriculture to the first beginnings in manufacture and navigation, is effected most speedily and advantageously by means of free commerce with further advanced towns and countries, but that a perfectly developed manufacturing industry, an important mercantile marine, and foreign trade on a really large scale, can only be attained by means of the interposition of the power of the State.
The less any nation’s agriculture has been perfected, and the more its foreign trade is in want of opportunities of exchanging the excess of native agricultural products and raw materials for foreign manufactured goods, the deeper that the nation is still sunk in barbarism and fitted only for an absolute monarchical form of government and legislation, the more will free trade (i.e. the exportation of agricultural products and the importation of manufactured goods) promote its prosperity and civilisation.
On the other hand, the more that the agriculture of a nation, its industries, and its social, political, and municipal conditions, are thoroughly developed, the less advantage will it be able to derive for the improvement of its social conditions, from the exchange of native agricultural products and raw materials for foreign manufactured goods, and the greater disadvantages will it experience from the successful competition of a foreign manufacturing power superior to its own.
Solely in nations of the latter kind, namely, those which possess all the necessary mental and material conditions and means for establishing a manufacturing power of their own, and of thereby attaining the highest degree of civilisation, and development of material prosperity and political power, but which are retarded in their progress by the competition of a foreign manufacturing Power which is already farther advanced than their own—only in such nations are commercial restrictions justifiable for the purpose of establishing and protecting their own manufacturing power; and even in them it is justifiable only until that manufacturing power is strong enough no longer to have any reason to fear foreign competition, and thenceforth only so far as may be necessary for protecting the inland manufacturing power in its very roots.
The system of protection would not merely be contrary to the principles of cosmopolitical economy, but also to the rightly understood advantage of the nation itself, were it to exclude foreign competition at once and altogether, and thus isolate from other nations the nation which is thus protected. If the manufacturing Power to be protected be still in the first period of its development,
the protective duties must be very moderate, they must only rise gradually with the increase of the mental and material capital, of the technical abilities and spirit of enterprise of the nation. Neither is it at all necessary that all branches of industry should be protected in the same degree. Only the most important branches require special protection, for the working of which much outlay of capital in building and management, much machinery, and therefore much technical knowledge, skill, and experience, and many workmen are required, and whose products belong to the category of the first necessaries of life, and consequently are of the greatest importance as regards their total value as well as regards national independence (as, for example, cotton, woollen and linen manufactories, &c.). If these main branches are suitably protected and developed, all other less important branches of manufacture will rise up around them under a less degree of protection. It will be to the advantage of nations in which wages are high, and whose population is not yet great in proportion to the extent of their territory, e.g. in the United States of North America, to give less protection to manufactures in which machinery does not play an important part, than to those in which machinery does the greater part of the work, providing that those nations which supply them with similar goods allow in return free importation to their agricultural products.
The popular school betrays an utter misconception of the nature of national economical conditions if it believes that such nations can promote and further their civilisation, their prosperity, and especially their social progress, equally well by the exchange of agricultural products for manufactured goods, as by establishing a manufacturing power of their own. A mere agricultural nation can never develop to any considerable extent its home and foreign commerce, its inland means of transport, and its foreign navigation, increase its population in due proportion to their well-being, or make notable progress in its moral, intellectual, social, and political development: it will never acquire important political power, or be placed in a position to influence the cultivation and progress of less advanced nations and to form colonies of its own. A mere agricultural State is an infinitely less perfect institution than an agricultural-manufacturing State. The former is always more or less economically and politically dependent on those foreign nations which take from it agricultural products in exchange for manufactured goods. It cannot determine for itself how much it will produce; it must wait and see how much others will buy from it. These latter, on the contrary (the agricultural-manufacturing States), produce for themselves large quantities of raw materials and provisions, and supply merely the deficiency
by importation from the purely agricultural nations. The purely agricultural nations are thus in the first place dependent for their power of effecting sales on the chances of a more or less plentiful harvest in the agricultural-manufacturing nations; in the next place they have to compete in these sales with other purely agricultural nations, whereby their power of sale, in itself very uncertain, thus becomes still more uncertain. Lastly, they are exposed to the danger of being totally ruined in their trading with foreign manufacturing nations by wars, or new foreign tariff regulations whereby they suffer the double disadvantage of finding no buyers for their surplus agricultural products, and of failing to obtain supplies of the manufactured goods which they require. An agricultural nation is, as we have already stated, an individual with
one arm, who makes use of a foreign arm, but who cannot make sure of the use of it in all cases; an agricultural-manufacturing nation is an individual who has
of his own always at his disposal.
It is a fundamental error of the school when it represents the system of protection as a mere device of speculative politicians which is contrary to nature. History is there to prove that protective regulations originated either in the natural efforts of nations to attain to prosperity, independence, and power, or in consequence of wars and of the hostile commercial legislation of predominating manufacturing nations.
The idea of independence and power originates in the very idea of ‘the nation.’ The school never takes this into consideration, because it does not make the economy of the separate nation, but the economy of society generally, i.e. of the whole human race, the object of its investigations. If we imagine, for instance, that all nations were united by means of a universal confederation, their individual independence and power would cease to be an object of regard. The security for the independence of every nation would in such a case rest on the legal provisions of the universal society, just as e.g. the security of the independence of the states of Rhode Island and Delaware lies in the union of all the free states constituting the American Union. Since the first foundation of that Union it has never yet occurred to any of these smaller states to care for the enlargement of its own political power, or to consider its independence less secured than is that of the largest states of the Union.
In proportion, however, as the principle of a universal confederation of nations is reasonable, in just the same degree would a given nation act contrary to reason if, in anticipation of the great advantages to be expected from such a union, and from a state of universal and perpetual peace, it were to regulate the principles of its national policy as though this universal confederation
of nations existed already. We ask, would not every sane person consider a government to be insane which, in consideration of the benefits and the reasonableness of a state of universal and perpetual peace, proposed to disband its armies, destroy its fleet, and demolish its fortresses? But such a government would be doing nothing different in principle from what the popular school requires from governments when, because of the advantages which would be derivable from general free trade, it urges that they should abandon the advantages derivable from protection.
War has a ruinous effect on the reciprocal commercial relations between nation and nation. The agriculturist living in one country is by it forcibly separated from the manufacturer living in another country. While, however, the manufacturer (especially if he belongs to a nation powerful at sea, and carrying on extensive commerce) readily finds compensation from the agriculturists of his own country, or from those of other accessible agricultural countries, the inhabitant of the purely agricultural country suffers doubly through this interruption of intercourse.
The market for his agricultural products will fail him entirely, and he will consequently lose the means of paying for those manufactured goods which have become necessaries to him owing to previously existing trade; his power both of production and consumption will be diminished.
If, however, one agricultural nation whose production and consumption are thus diminished by war has already made considerable advances in population, civilisation, and agriculture, manufactures and factories will spring up in it in consequence of the interruption of international commerce by war. War acts on it like a prohibitive tariff system. It thereby becomes acquainted with the great advantages of a manufacturing power of its own, it becomes convinced by practical experience that it has gained more than it has lost by the commercial interruptions which war has occasioned. The conviction gains ground in it, that it is called to pass from the condition of a mere agricultural State to the condition of an agricultural-manufacturing State, and in consequence of this transition, to attain to the highest degree of prosperity, civilisation, and power. But if after such a nation has already made considerable progress in the manufacturing career which was opened to it by war, peace is again established, and should both nations then contemplate the resumption of their previously existing commercial intercourse, they will both find that during the war new interests have been formed, which would be destroyed by re-establishing the former commercial interchange.
*79 The former
agricultural nation will feel, that in order to resume the sale of its agricultural products to the foreigner, it would have to sacrifice its own manufacturing industry which has in the meanwhile been created; the manufacturing nation will feel that a portion of its home agricultural production, which has been formed during the war, would again be destroyed by free importation. Both, therefore, try to protect these interests by means of imposing duties on imports. This is the history of commercial politics during the last fifty years.
It is war that has called into existence the more recent systems of protection; and we do not hesitate to assert, that it would have been to the interest of the manufacturing nations of the second and third rank to retain a protective policy and further develop it, even if England after the conclusion of peace had not committed the monstrous mistake of imposing restrictions on the importation of necessaries of life and of raw materials, and consequently of allowing the motives which had led to the system of protection in the time of the war, to continue during peace. As an uncivilised nation, having a barbarous system of agriculture, can make progress only by commerce with civilised manufacturing nations, so after it has attained to a certain degree of culture, in no other way can it reach the highest grade of prosperity, civilisation, and power, than by possessing a manufacturing industry of its own. A war which leads to the change of the purely agricultural State into an agricultural-manufacturing State is therefore a blessing to a nation, just as the War of Independence of the United States of North America, in spite of the enormous sacrifices which it required, has become a blessing to all future generations. But a peace which throws back into a purely agricultural condition a nation which is fitted to develop a manufacturing power of its own, becomes a curse to it, and is incomparably more injurious to it than a war.
It is fortunate for the manufacturing Powers of the second and third rank, that England after the restoration of the general peace has herself imposed a limit to her main tendency (of monopolising the manufacturing market of the whole earth), by imposing restrictions on the importation of foreign means of subsistence and raw materials. Certainly the English agriculturists, who had enjoyed a monopoly of supplying the English market with products during the war, would of course have painfully felt the foreign competition, but that only at first; at a later period (as we will show more particularly elsewhere), these losses would have been made up to them tenfold by the fact that England had obtained a monopoly of manufacturing for the whole world. But it would have been still more injudicious if the manufacturing nations of
the second and third rank, after their own manufacturing power had just been called into existence, in consequence of wars lasting for twenty-five years, and after (in consequence of twenty-five years’ exclusion of their agricultural products from the English market) that power has been strengthened so far that possibly it only required another ten or fifteen years of strict protection in order to sustain successfully free competition with English manufactures—if (we say) these nations, after having endured the sacrifices of half a century, were to give up the immense advantages of possessing a manufacturing power of their own, and were to descend once more from the high state of culture, prosperity, and independence, which is peculiar to agricultural-manufacturing countries, to the low position of dependent agricultural nations, merely because it now pleases the English nation to perceive its error and the closely impending advances of the Continental nations which enter into competition with it.
Supposing also that the manufacturing interest of England should obtain sufficient influence to force the House of Lords, which chiefly consists of large landed proprietors, and the House of Commons, composed mostly of country squires, to make concessions in respect of the importation of agricultural products, who would guarantee that after a lapse of a few years a new Tory ministry would not under different circumstances again pass a new Corn Law? Who can guarantee that a new naval war or a new Continental system may not separate the agriculturists of the Continent from the manufacturers of the island kingdom, and compel the Continental nations to recommence their manufacturing career, and to spend their best energies in overcoming its primary difficulties, merely in order at a later period to sacrifice everything again at the conclusion of peace.
In this manner the school would condemn the Continental nations for ever to be rolling the stone of Sisyphus, for ever to erect manufactories in time of war in order to allow them to fall to ruin in time of peace.
To results so absurd as these the school could never have arrived had it not (in spite of the name which it gives to the science which it professes) completely excluded politics from that science, had it not completely ignored the very existence of nationality, and left entirely out of consideration the effects of war on the commercial intercourse between separate nations.
How utterly different is the relation of the agriculturist to the manufacturer if both live in one and the same country, and are consequently really connected with one another by perpetual peace. Under those circumstances, every extension or improvement of an already existing manufactory increases the demand for agricultural
products. This demand is no uncertain one; it is not dependent on foreign commercial regulations or foreign commercial fluctuations, on foreign political commotions or wars, on foreign inventions and improvements, or on foreign harvests; the native agriculturist has not to share it with other nations, it is certain to him every year. However the crops of other nations may turn out, whatever misunderstandings may spring up in the political world, he can depend on the sale of his own produce, and on obtaining the manufactured goods which he needs at suitable and regular prices. On the other hand, every improvement of the native agriculture, every new method of culture, acts as a stimulant on the native manufacture, because every augmentation of native agricultural production must result in a proportionate augmentation of native manufacturing production. Thus, by means of this reciprocal action, progress is insured for all time to both these main sources of the nation’s strength and support.
Political power not merely secures to the nation the increase of its prosperity by foreign commerce and by colonies abroad, it also secures to it the possession of internal prosperity, and secures to it its own existence, which is far more important to it than mere material wealth. England has obtained political power by means of her navigation laws; and by means of political power she has been placed in a position to extend her manufacturing power over other nations. Poland, however, was struck out of the list of nations because she did not possess a vigorous middle class, which could only have been called into existence by the establishment of an internal manufacturing power.
The school cannot deny that the internal market of a nation is ten times more important to it than its external one, even where the latter is in the most flourishing condition; but it has omitted to draw from this the conclusion, which is very obvious, that it is ten times more important to cultivate and secure the home market, than to seek for wealth abroad, and that only in those nations which have developed their internal industry to a high degree can foreign commerce attain importance.
The school has formed its estimate of the nature and character of the market only from a cosmopolitical, but not from a political point of view. Most of the maritime countries of the European continent are situated in the natural market district of the manufacturers of London, Liverpool, or Manchester; only very few of the inland manufacturers of other nations can, under free trade, maintain in their own seaports the same prices as the English manufacturers. The possession of larger capital, a larger home market of their own, which enables them to manufacture on a
larger scale and consequently more cheaply, greater progress in manufacture itself, and finally cheaper sea transport, give at the present time to the English manufacturers advantages over the manufacturers of other countries, which can only be gradually diverted to the native industry of the latter by means of long and continuous protection of their home market, and through perfection of their inland means of transport. The market of the inhabitants of its coasts is, however, of great importance to every nation, both with reference to the home market, and to foreign commerce; and a nation the market of whose coasts belongs more to the foreigner than to itself, is a divided nation not merely in economical respects, but also in political ones. Indeed, there can be no more injurious position for a nation, whether in its economical or political aspect, than if its seaports sympathise more with the foreigner than with itself.
Science must not deny the nature of special national circumstances, nor ignore and misrepresent it, in order to promote cosmopolitical objects. Those objects can only be attained by paying regard to nature, and by trying to lead the separate nations in accordance with it to a higher aim. We may see what small success has hitherto attended the doctrines of the school in practice. This is not so much the fault of practical statesmen, by whom the character of the national circumstances has been comprehended tolerably correctly, as the fault of the theories themselves, the practice of which (inasmuch as they are opposed to all experience) must necessarily err. Have those theories prevented nations (like those of South America) from introducing the protectionist system, which is contrary to the requirements of their national circumstances? Or have they prevented the extension of protectionism to the production of provisions and raw materials, which, however, needs no protection, and in which the restriction of commercial intercourse must be disadvantageous under all circumstances to both nations—to that which imposes, as well as to that which suffers from such restrictions?
*80 Has this theory prevented the finer manufactured goods, which are essentially articles of luxury, from being comprehended among objects requiring protection, while it is nevertheless clear that these can be exposed to competition without the least danger to the prosperity of the nation? No; the theory has till now not effected any thorough reform, and further will never effect any, so long as it stands opposed to the very nature of things. But it can and must effect great reforms as soon as it consents to base itself on that nature.
It will first of all establish a benefit extending to all nations, to the prosperity and progress of the whole human race, if it shows that the prevention of free trade in natural products and raw materials causes to the nation itself which prevents it the greatest disadvantage, and that the system of protection can be justified solely and only for the purpose of the
industrial development of the nation. It may then, by thus basing the system of protection as regards manufactures on correct principles, induce nations which at present adopt a rigidly prohibitive system, as e.g. the French, to give up the prohibitive system by degrees. The manufacturers will not oppose such a change as soon as they become convinced that the theorists, very far from planning the ruin of existing manufactures, consider their preservation and their further development as the basis of every sensible commercial policy.
If the theory will teach the Germans, that they can further their manufacturing power advantageously only by protective duties previously fixed, and on a gradually increasing scale at first, but afterwards gradually diminishing, and that under all circumstances partial but carefully limited foreign competition is really beneficial to their own manufacturing progress, it will render far better service in the end to the cause of free trade than if it simply helps to strangle German industry.
The theory must not expect from the United States of North America that they are to sacrifice to free competition from the foreigner, those manufactures in which they are protected by cheap raw materials and provisions, and by machine power. It will, however, meet no contradiction if it maintains that the United States, as long as wages are disproportionately higher there than in the older civilised States, can best promote the development of their productive powers, their civilisation and political power, by allowing the free import as much as possible of those manufactured articles in the cost of which wages are a principal element, provided that other countries admit their agricultural products and raw materials.
The theory of free trade will then find admission into Spain, Portugal, Naples, Turkey, Egypt, and all barbarous and half-civilised or hot countries. In such countries as these the foolish idea will not be held any longer, of wanting to establish (in their present state of culture) a manufacturing power of their own by means of the system of protection.
England will then give up the idea that she is designed to monopolise the manufacturing power of the whole world. She will no longer require that France, Germany, and North America should sacrifice their own manufactures in consideration of the
concession by England of permitting the import, duty free, of agricultural products and raw materials. She will recognise the legitimacy of protective systems in those nations, although she will herself more and more favour free trade; the theory having taught her that a nation which has already attained manufacturing supremacy, can only protect its own manufacturers and merchants against retrogression and indolence, by the free importation of means of subsistence and raw materials, and by the competition of foreign manufactured goods.
England will then follow a practice totally opposed to her present commercial policy, instead of lecturing, as hitherto, other nations to adopt free trade, whilst herself maintaining the strictest prohibitory system; she will herself permit competition without regard to the foreign systems of protection. She will defer her hopes of the general adoption of free trade, until other nations have no longer to fear that the ruin of their manufactories would result from free competition.
Meanwhile, and until that period has arrived, England will be able to compensate herself for the losses which she suffers from foreign systems of protection, in respect of her export trade in manufactures of every-day use, by a greater export of goods of finer quality, and by opening, establishing, and cultivating new markets for her manufactures.
She will endeavour to bring about peace in Spain, in the East, and in the states of Central and South America, and will use her influence in all the barbarous and half-civilised countries of Central and South America, of Asia and Africa, in order that powerful and civilised governments may be formed in them, that security of persons and of property may be introduced into them, for the construction in them of roads and canals, the promotion of education and civilisation, morality and industry, and for rooting out fanaticism, superstition, and idleness. If concurrently with these endeavours she abolishes her restrictions on the importation of provisions and raw materials, she will increase her exports of manufactures immensely, and much more successfully than by continually speculating on the ruin of the Continental manufactories.
If, however, these operations of civilisation on the part of England are to be successful as respects barbarous and half-civilised nations, she must not act in an exclusive manner, she must not endeavour by special commercial privileges, such as, for instance, she has managed to procure in Brazil, to monopolise these markets, and to shut out other nations from them. Such a policy as the latter will always excite the just jealousy of other nations, and give them a motive for opposing the exertions of England. It is evident that this selfish policy is the cause why
the influence of the civilised powers on the civilisation of such countries as we have specified has been hitherto so unimportant. England ought therefore to introduce into the law of nations the maxim: that in all such countries the commerce of all manufacturing nations should have equal rights. England would thereby not merely secure the aid of all civilised powers in her own work of civilisation, but also no disadvantage would result to her own commerce if similar experiments of civilisation were undertaken by other manufacturing nations. On account of their superiority in all branches of manufacture and commerce, the English would everywhere always obtain the greatest share of the exports to such markets.
The striving and ceaseless intrigues of the English against the manufactures of other nations might still be justified, if a world-manufacturing monopoly were indispensable for the prosperity of England, if it could not be proved by evidence that the nations which aspire, after the example of England, to attain to a large manufacturing power can very well attain their object without the humiliation of England; that England need not become poorer than she is because others become richer; and that nature offers sufficient means for the creation in Germany, France, and North America (without detriment to the prosperity of England), of a manufacturing power equal to that of the English.
With regard to this, it must further be remarked, that every nation which gains entire possession of its own home market for manufactures, gains entire possession of its own home market for manufactures, gains in the course of time, by its home production and consumption of manufactured goods, infinitely more than the nation which has hitherto provided the former with manufactured goods loses by being excluded; because a nation which manufactures for itself, and which is perfectly developed in its economical conditions, becomes more than proportionately richer and more populous, consequently is enabled to consume infinitely more fabrics, than it could import while depending on a foreign manufacturing nation for its supply.
As respects the exportation of manufactured goods, however, the
countries of the temperate zone (being specially fitted by nature for manufacturing) have a special field for their efforts in supplying the consumption of the countries of the torrid zone, which latter provide the former with colonial produce in exchange for their manufactured goods. The consumption of manufactured goods by the countries of the torrid zone, however, is partly determined by their ability to produce a surplus of the articles peculiar to their climate, and partly according to the proportion in which the countries of the temperate zone augment their demand for the products of the torrid zone.
If it can now be proved, that in the course of time the countries of the torrid zone can produce sugar, rice, cotton, coffee, &c. to an extent five or ten times greater than hitherto, and that the countries of the temperate zone can consume five or ten times more of these articles than hitherto, it will be simultaneously proved that the countries of the temperate zone can increase their exportation of manufactured goods to the countries of the torrid zone by from five to ten times their present total quantity.
The capability of the Continental nations to increase their consumption of colonial produce thus considerably, is indicated by the increase of consumption in England for the last fifty years; in reference to which it must further be borne in mind, that that increase would probably have become very much greater still were it not for the excessive taxes on consumption.
Of the possibility of augmenting the productions of the torrid zone, Holland in Sumatra and Java, and England in the East Indies, have given us during the last five years irrefragable proofs. England has quadrupled her importation of sugar from the East Indies from 1835 to 1839; her importation of coffee has increased even in a still larger proportion, while the importation of East India cotton is also greatly increasing. In one word, the latest English papers (February, 1840) announced with great rejoicing that the capability of the East Indies for the production of these articles is unlimited, and that the time is not far distant when England will make herself independent of the importation of these articles from America and the West Indies. Holland on her part is already embarrassed for means of sale of her colonial products, and seeks actively for new markets. Let us further remember that North America continues to augment her cotton production—that in Texas a State has risen up which without doubt will become possessed of the whole of Mexico, and will make out of that fertile country a territory such as the Southern States of the North American Union now are. We may well imagine that order and law, industry and intelligence, will extend themselves gradually over the South American States from Panama to Cape Horn, then over the whole of Africa and Asia, and augment everywhere production and a surplus of products; and we may then comprehend without difficulty that here there is room enough for more than
one nation for the sale of manufactured goods.
By calculating the area of the land which has up to this time been actually used for the production of colonial produce, and comparing it with the entire area which is fitted by nature for such production, we shall find that at present scarcely the fiftieth part of the land fitted for this production is actually used.
How, then, could England be able to monopolise the manufacturing
markets of all countries which yield colonial produce, if she is able to supply her own entire requirements of such produce by means of importation from the East Indies alone? How can England indulge the hope of selling manufactured goods to countries whose colonial products she cannot take in exchange? Or how can a great demand for colonial produce spring up in the continent of Europe, if the Continent is not enabled by its manufacturing production to pay for, and thus to consume, these goods?
It is therefore evident, that keeping down the manufacturing industry of the Continent, though it certainly hinders the progress of the Continental nations, does not in the least further the prosperity of England.
It is further clear, that, at present, as well as for some long time to come, the countries of the torrid zone will offer to all nations which are fitted for manufacturing production abundant materials for exchange.
Lastly, it is evident that a world-manufacturing monopoly such as is at present established by the free competition of English manufactured goods on the European and American continents is not in the least more conducive to the welfare of the human race than the system of protection, which aims at developing
the manufacturing power of the whole temperate zone, for the benefit of
the agriculture of the whole torrid zone.
The advance which England has made in manufactures, navigation, and commerce, need therefore not discourage any other nation which is fitted for manufacturing production, by the possession of suitable territory, of national power and intelligence, from entering into the lists with England’s manufacturing supremacy. A future is approaching for manufactures, commerce, and navigation which will surpass the present as much as the present surpasses the past. Let us only have the courage to believe in a great national future, and in that belief to march onward. But above all things we must have enough national spirit at once to plant and protect the tree, which will yield its first richest fruits only to future generations. We must first gain possession of the home market of our own nation, at least as respects articles of general necessity, and try to procure the products of tropical countries direct from those countries which allow us to pay for them with our own manufactured goods. This is especially the task which the German commercial union has to solve, if the German nation is not to remain far behind the French and North Americans, nay, far behind even the Russians.
Wealth of Nations, Book IV. chap. ii, (TR.)