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
IN all ages there have been cities or countries which have been pre-eminent above all others in industry, commerce, and navigation; but a supremacy such as that which exists in our days, the world has never before witnessed. In all ages, nations and powers have striven to attain to the dominion of the world, but hitherto not one of them has erected its power on so broad a foundation. How vain do the efforts of those appear to us who have striven to found their universal dominion on military power, compared with the attempt of England to raise her entire territory into one immense manufacturing, commercial, and maritime city, and to become among the countries and kingdoms of the earth, that which a great city is in relation to its surrounding territory: to comprise within herself all industries, arts, and sciences; all great commerce and wealth; all navigation and naval power—a world’s metropolis which supplies all nations with manufactured goods, and supplies herself in exchange from every nation with those raw materials and agricultural products of a useful or acceptable kind, which each other nation is fitted by nature to yield to her—a treasure-house of all great capital—a banking establishment for all nations, which controls the circulating medium of the whole world, and by loans and the receipt of interest on them makes all the peoples of the earth her tributaries. Let us, however, do justice to this Power and to her efforts. The world has not been hindered in its progress, but immensely aided in it, by England. She has become an example and a pattern to all nations—in internal and in foreign policy, as well as in great inventions and enterprises of every kind; in perfecting industrial processes and means of transport, as well as in the discovery and bringing into cultivation uncultivated lands, especially in the acquisition of the natural riches of tropical countries, and in the civilisation of barbarous races or of such as have retrograded into barbarism. Who can tell how far behind the world might yet remain if no England had ever existed? And if she now ceased to exist, who can estimate
how far the human race might retrograde? Let us then congratulate ourselves on the immense progress of that nation, and wish her prosperity for all future time. But ought we on that account also to wish that she may erect a universal dominion on the ruins of the other nationalities? Nothing but unfathomable cosmopolitanism or shopkeepers’ narrow-mindedness can give an assenting answer to that question. In our previous chapters we have pointed out the results of such denationalisation, and shown that the culture and civilisation of the human race can only be brought about by placing many nations in similar positions of civilisation, wealth, and power; that just as England herself has raised herself from a condition of barbarism to her present high position, so the same path lies open for other nations to follow: and that at this time more than one nation is qualified to strive to attain the highest degree of civilisation, wealth, and power. Let us now state summarily the maxims of State policy by means of which England has attained her present greatness. They may be briefly stated thus:
Always to favour the importation of productive power,
*100 in preference to the importation of goods.
Carefully to cherish and to protect the development of the productive power.
To import only raw materials and agricultural products, and to export nothing but manufactured goods.
To direct any surplus of productive power to colonisation, and to the subjection of barbarous nations.
To reserve exclusively to the mother country the supply of the colonies and subject countries with manufactured goods, but in return to receive on preferential terms their raw materials and especially their colonial produce.
To devote especial care to the coast navigation; to the trade between the mother country and the colonies; to encourage sea-fisheries by means of bounties; and to take as active a part as possible in international navigation.
To grant freedom in trade with the colonies and in navigation only so far as she can gain more by it than she loses.
To grant reciprocal navigation privileges only if the advantage is on the side of England, or if foreign nations can by that means be restrained from introducing restrictions on navigation in their own favour.
To grant concessions to foreign independent nations in respect of the import of agricultural products, only in case concessions in respect of her own manufactured products can be gained thereby.
In cases where such concessions cannot be obtained by treaty, to attain the object of them by means of contraband trade.
To make wars and to contract alliances with exclusive regard to her manufacturing, commercial, maritime, and colonial interests. To gain by these alike from friends and foes: from the latter by interrupting their commerce at sea; from the former by ruining their manufactures through subsidies which are paid in the shape of English manufactured goods.
These maxims were in former times plainly professed by all English ministers and parliamentary speakers. The ministers of George I. in 1721 openly declared, on the occasion of the prohibition of the importation of the manufactures of India, that it was clear that a nation could only become wealthy and powerful if she imported raw materials and exported manufactured goods. Even in the times of Lords Chatham and North, they did not hesitate to declare in open Parliament that it ought not to be permitted that even a single horse-shoe nail should be manufactured in North America. In Adam Smith’s time, a new maxim was for the first time added to those which we have above stated, namely, to conceal the true policy of England under the cosmopolitical expressions and arguments which Adam Smith had discovered, in order to induce foreign nations not to imitate that policy.
It is a very common clever device that when anyone has attained the summit of greatness, he kicks away the ladder by which he has climbed up, in order to deprive others of the means of climbing up after him. In this lies the secret of the cosmopolitical doctrine of Adam Smith, and of the cosmopolitical tendencies of his great contemporary William Pitt, and of all his successors in the British Government administrations.
Any nation which by means of protective duties and restrictions on navigation has raised her manufacturing power and her navigation
to such a degree of development that no other nation can sustain free competition with her, can do nothing wiser than to throw away these ladders of her greatness, to preach to other nations the benefits of free trade, and to declare in penitent tones that she has hitherto wandered in the paths of error, and has now for the first time succeeded in discovering the truth.
William Pitt was the first English statesman who clearly perceived in what way the cosmopolitical theory of Adam Smith could be properly made use of, and not in vain did he himself carry about a copy of the work on the Wealth of Nations. His speech in 1786, which was addressed neither to Parliament nor to the nation, but clearly to the ears of the statesmen of France, who were destitute of all experience and political insight, and solely intended to influence the latter in favour of the Eden Treaty, is an excellent specimen of Smith’s style of reasoning. By nature he said France was adapted for agriculture and the production of wine, as England was thus adapted to manufacturing production. These nations ought to act towards one another just as two great merchants would do who carry on different branches of trade and who reciprocally enrich one another by the exchange of goods.
*102 Not a word here of the old maxim of England, that a nation can only attain to the highest degree of wealth and power in her foreign trade by the exchange of manufactured products against agricultural products and raw materials. This maxim was then, and has remained since, an English State secret; it was never
again openly professed, but was all the more persistently followed. If, however, England since William Pitt’s time had really cast away the protective system as a useless crutch, she would now occupy a much higher position than she does, and she would have got much nearer to her object, which is to monopolise the manufacturing power of the whole world. The favourable moment for attaining this object was clearly just after the restoration of the general peace. Hatred of Napoleon’s Continental system had secured a reception among all nations of the Continent of the doctrines of the cosmopolitical theory. Russia, the entire North of Europe, Germany, the Spanish peninsula, and the United States of North America would have considered themselves fortunate in exchanging their agricultural produce and raw materials for English manufactured goods. France herself would perhaps have found it possible, in consideration of some decided concessions in respect of her wine and silk manufactures, to depart from her prohibitive system.
Then also the time had arrived when, as Priestley said of the English navigation laws,
it would be just as wise to repeal the English protective system as it had formerly been to introduce it.
The result of such a policy would have been that all the surplus raw materials and agricultural produce from the two hemispheres would have flowed over to England, and all the world would have clothed themselves with English fabrics. All would have tended to increase the wealth and the power of England. Under such circumstances the Americans or the Russians would hardly have taken it into their heads in the course of the present century to introduce a protective system, or the Germans to establish a customs union. People would have come to the determination with difficulty to sacrifice the advantages of the present moment to the hopes of a distant future.
But Providence has taken care that trees should not grow quite up to the sky. Lord Castlereagh gave over the commercial policy of England into the hands of the landed aristocracy, and these killed the hen which had laid the golden eggs. Had they permitted the English manufactures to monopolise the markets of all nations, Great Britain would have occupied the position in respect to the world which a manufacturing town does in respect to the open country; the whole territory of the island of England would have been covered with houses and manufactories, or devoted to pleasure gardens, vegetable gardens, and orchards; to the production of milk and of meat, or of the cultivation of market produce, and generally to such cultivation as only can be carried on in the neighbourhood of great cities. The production of these things would have become much more lucrative for English agriculture
than the production of corn, and consequently after a time the English landed aristocracy would have obtained much higher rents than by the exclusion of foreign grain from the home market. Only, the landed aristocracy having only their present interests in view, preferred by means of the corn laws to maintain their rents at the high rate to which they had been raised by the involuntary exclusion of foreign raw materials and grain from the English market which had been occasioned by the war; and thus they compelled the nations of the Continent to seek to promote their own welfare by another method than by the free exchange of agricultural produce for English manufactures, viz. by the method of establishing a manufacturing power of their own. The English restrictive laws thus operated quite in the same way as Napoleon’s Continental system had done, only their operation was somewhat slower.
When Canning and Huskisson came into office, the landed aristocracy had already tasted too much of the forbidden fruit for it to be possible to induce them by reasons of common sense to renounce what they had enjoyed. These statesmen found themselves in the difficult position of solving an impossible problem—a position in which the English ministry still finds itself. They had at one and the same time to convince the Continental nations of the advantages of free trade, and also maintain the restrictions on the import of foreign agricultural produce for the benefit of the English landed aristocracy. Hence it was impossible that their system could be developed in such a manner that justice could be done to the hopes of the advocates of free trade on both continents. With all their liberality with philanthropical and cosmopolitical phrases which they uttered in general discussions respecting the commercial systems of England and other countries, they nevertheless did not think it inconsistent, whenever the question arose of the alteration of any particular English duties, to base their arguments on the principle of protection.
Huskisson certainly reduced the duties on several articles, but he never omitted to take care that at that lower scale of duty the home manufactories were still sufficiently protected. He thus followed pretty much the rules of the Dutch water administration. Wherever the water on the outside rises high, these wise authorities erect high dykes; wherever it rises less, they only build lower dykes. After such a fashion the reform of the English commercial policy which was announced with so much pomp reduced itself to a piece of mere politico-economical jugglery. Some persons have adduced the lowering of the English duty on silk goods as a piece of English liberality, without duly considering
that England by that means only sought to discourage contraband trade in these articles to the benefit of her finances and without injury to her own silk manufactories, which object it has also by that means perfectly attained. But if a protective duty of 50 to 70 per cent. (which at this day foreign silk manufacturers have to pay in England, including the extra duty
*103) is to be accepted as a proof of liberality, most nations may claim that they have rather preceded the English in that respect than followed them.
As the demonstrations of Canning and Huskisson were specially intended to produce an effect in France and North America, it will not be uninteresting to call to mind in what way it was that they suffered shipwreck in both countries. Just as formerly in the year 1786, so also on this occasion, the English received great support from the theorists, and the liberal party
in France, carried away by the grand idea of universal freedom of trade and by Say’s superficial arguments, and from feelings of opposition towards a detested Government and supported by the maritime towns, the wine growers, and the silk manufacturers, the liberal party clamorously demanded, as they had done in the year 1786, extension of the trade with England as the one true method of promoting the national welfare.
For whatever faults people may lay to the charge of the Restoration, it rendered an undeniable service to France, a service which posterity will not dispute; it did not allow itself to be misled into a false step as respects commercial policy either by the stratagems of the English or by the outcry of the liberals. Mr. Canning laid this business so much to heart that he himself made a journey to Paris in order to convince Monsieur Villèle of the excellence of his measures, and to induce him to imitate them. M. Villèle was, however, much too practical not to see completely through this stratagem; he is said to have replied to Mr. Canning, ‘If England in the far advanced position of her industry permits greater foreign competition than formerly, that policy corresponds to England’s own well-understood interests. But at this time it is to the well-understood interests of France that she should secure to her manufactories which have not as yet attained perfect development, that protection which is at present indispensable to them for that object. But whenever the moment shall have arrived when French manufacturing industry can be better promoted by permitting foreign competition than by restricting it, then he (M. Villèle) would not delay to derive advantage from following the example of Mr. Canning.’
Annoyed by this conclusive answer, Canning boasted in open Parliament after his return, how he had hung a millstone on the neck of the French Government by means of the Spanish intervention, from which it follows that the cosmopolitan sentiments and the European liberalism of Mr. Canning were not spoken quite so much in earnest as the good liberals on the Continent might have chosen to believe. For how could Mr. Canning, if the cause of liberalism on the Continent had interested him in the least, have sacrificed the liberal constitution of Spain to the French intervention owing to the mere desire to hang a millstone round the neck of the French Government? The truth is, that Mr. Canning was every inch an Englishman, and he only permitted himself to entertain philanthropical or cosmopolitical sentiments, when they could prove serviceable to him in strengthening and still further extending the industry and commercial supremacy of England, or in throwing dust into the eyes of England’s rivals in industry and commerce.
In fact, no great sagacity was needed on the part of M. Villèle to perceive the snare which had been laid for him by Mr. Canning. In the experience of neighbouring Germany, who after the abolition of the Continental system had continually retrograded farther and farther in respect of her industry, M. Villèle possessed a striking proof of the true value of the principle of commercial freedom as it was understood in England. Also France was prospering too well under the system which she had adopted since 1815, for her to be willing to attempt, like the dog in the fable, to let go the substance and snap at the shadow. Men of the deepest insight into the condition of industry, such as Chaptal and Charles Dupin, had expressed themselves on the results of this system in the most unequivocal manner.
Chaptal’s work on French industry is nothing less than a defence of the French commercial policy, and an exposition of its results as a whole and in every particular. The tendency of this work is expressed in the following quotation from it. ‘Instead of losing ourselves in the labyrinth of metaphysical abstractions, we maintain above all that which exists, and seek above all to make it perfect. Good customs legislation is the bulwark of manufacturing industry. It increases or lessens import duties according to circumstances; it compensates the disadvantages of higher wages of labour and of higher prices of fuel; it protects arts and industries in their cradle until they at length become strong enough to bear foreign competition; it creates the industrial independence of France and enriches the nation through labour, which, as I have already often remarked, is the chief source of wealth.’
Charles Dupin had, in his work ‘On the Productive Powers of France, and on the Progress of French Industry from 1814 to 1847,’ thrown such a clear light on the results of the commercial policy which France had followed since the Restoration, that it was impossible that a French minister could think of sacrificing this work of half a century, which had cost such sacrifices, which was so rich in fruits, and so full of promise for the future, merely for the attractions of a Methuen Treaty.
The American tariff for the year 1828 was a natural and necessary result of the English commercial system, which shut out from the English frontiers the North American timber, grain, meal, and other agricultural products, and only permitted raw cotton to be received by England in exchange for her manufactured goods. On this system the trade with England only tended to promote the agricultural labour of the American slaves, while on
the other hand, the freest, most enlightened, and most powerful States of the Union found themselves entirely arrested in their economical progress, and thus reduced to dispose of their annual surplus of population and capital by emigration to the waste lands of the West. Mr. Huskisson understood this position of affairs very well. It was notorious that the English ambassador in Washington had more than once correctly informed him of the inevitable consequence of the English policy. If Mr. Huskisson had really been the man that people in other countries supposed him to be, he would have made use of the publication of the American tariff as a valuable opportunity for making the English aristocracy comprehend the folly of their corn laws, and the necessity of abolishing them. But what did Mr. Huskisson do? He fell into a passion with the Americans (or at least affected to do so), and in his excitement he made allegations—the incorrectness of which was well known to every American planter—and permitted himself to use threats which made him ridiculous. Mr. Huskisson said the exports of England to the United States amounted to only about the sixth part of all the exports of England, while the exports of the United States to England constituted more than half of all their exports. From this he sought to prove that the Americans were more in the power of the English than the latter were in that of the former; and that the English had much less reason to fear interruptions of trade through war, cessation of intercourse, and so forth, than the Americans had. If one looks merely at the totals of the value of the imports and exports, Huskisson’s argument appears sufficiently plausible; but if one considers the nature of the reciprocal imports and exports, it will then appear incomprehensible how Mr. Huskisson could make use of an argument which proves the exact opposite of that which he desired to prove. All or by far the greater part of the exports of the United States to England consisted of raw materials, whose value is increased tenfold by the English, and which they cannot dispense with, and also could not at once obtain from other countries, at any rate not in sufficient quantity, while on the other hand all the imports of the North Americans from England consisted of articles which they could either manufacture for themselves or procure just as easily from other nations. If we now consider what would be the operation of an interruption of commerce between the two nations according to the theory of values, it will appear as if it must operate to the disadvantage of the Americans; whereas if we judge of it according to the theory of the productive powers, it must occasion incalculable injury to the English. For by it two-thirds of all the English cotton manufactories would come to a standstill and fall into ruin. England
would lose as by magic a productive source of wealth, the annual value of which far exceeds the value of her entire exports, and the results of such a loss on the peace, wealth, credit, commerce, and power of England would be incalculable. What, however, would be the consequences of such a state of things for the North Americans? Compelled to manufacture for themselves those goods which they had hitherto obtained from England, they would in the course of a few years gain what the English had lost. No doubt such a measure must occasion a conflict for life and death, as formerly the navigation laws did between England had Holland. But probably it would also end in the same way as formerly did the conflict in the English Channel. It is unnecessary here to follow out the consequences of a rivalry which, as it appears to us, must sooner or later, from the very nature of things, come to a rupture. What we have said suffices to show clearly the futility and danger of Huskisson’s argument, and to demonstrate how unwisely England acted in compelling the North Americans (by means of her corn laws) to manufacture for themselves, and how wise it would have been of Mr. Huskisson had he, instead of trifling with the question by such futile and hazardous arguments, laboured to remove out of the way the causes which led to the adoption of the American tariff of 1828.
In order to prove to the North Americans how advantageous to them the trade of England was, Mr. Huskisson pointed out the extraordinary increase in the English importations of cotton, but the Americans also knew how to estimate this argument at its true value. For the production of cotton in America had for more than ten years previously so greatly exceeded the consumption of, and the demand for, this article from year to year, that its prices had fallen in almost the same ratio in which the export had increased; as may be seen from the fact that in the year 1816 the Americans had obtained for 80,000,000 pounds of cotton 24,000,000 dollars, while in the year 1826 for 204,000,000 pounds of cotton they only obtained 25,000,000 dollars.
Finally, Mr. Huskisson threatened the North Americans with the organisation of a wholesale contraband trade by way of Canada. It is true that under existing circumstances an American protective system can be endangered by nothing so seriously as by the means indicated by Mr. Huskisson. But what follows from that? Is it that the Americans are to lay their system at the feet of the English Parliament, and await in humility whatever the latter may be pleased to determine from year to year respecting their national industry? How absurd! The only consequence would be that the Americans would annex Canada and include it in their Union, or else assist it to attain independence as soon as ever the
Canadian smuggling trade became unendurable. Must we not, however, deem the degree of folly absolutely excessive if a nation which has already attained industrial and commercial supremacy, first of all compels an agricultural nation connected with her by the closest ties of race, of language, and of interest, to become herself a manufacturing nation, and then, in order to hinder her from following the impulse thus forcibly given to her, compels her to assist that nation’s own colonies to attain independence?
After Huskisson’s death, Mr. Poulett Thompson undertook the direction of the commercial affairs of England; this statesman followed his celebrated predecessor in his policy as well as in his office. In the meantime, so far as concerned North America, there remained little for him to do, for in that country, without special efforts on the part of the English, by means of the influence of the cotton planters and the importers, and by the aid of the Democratic party, especially by means of the so-called Compromise Bill in 1832, a modification of the former tariff had taken place, which, although it certainly amended the excesses and faults of the former tariff, and also still secured to the American manufactories a tolerable degree of protection in respect of the coarser fabrics of cotton and woollen, nevertheless gave the English all the concessions which they could have desired without England having been compelled to make any counter concessions.
Since the passing of that Bill, the exports of the English to America have enormously increased. And subsequently to this time they greatly exceed the English imports from North America, so that at any time it is in the power of England to draw to herself as much as she pleases of the precious metals circulating in America, and thereby to occasion commercial crises in the United States as often as she herself is in want of money. But the most astonishing thing in this matter is that that Bill had for its author Henry Clay, the most eminent and clearsighted defender of the American manufacturing interest. For it must be remembered that the prosperity of the American manufacturers which resulted from the tariff of 1828 excited so greatly the jealousy of the cotton planters, that the Southern States threatened to bring about a dissolution of the Union in case the tariff of 1828 was not modified. The Federal Government, which was dominated by the Democratic party, had sided with the Southern planters from purely party and electioneering motives, and also managed to get the agriculturists of the Middle and Western States, who belonged to that party, to adopt the same views.
These last had lost their former sympathy with the manufacturing interest in consequence of the high prices of produce which had prevailed, which, however, were the result for the most
part of the prosperity of the home manufactories and of the numerous canals and railways which were undertaken. They may also have actually feared that the Southern States would press their opposition so far as to bring about a real dissolution of the Union and even civil war. Hence it became the party interests of the Democrats of the Central and Eastern States not to alienate the sympathies of the Democrats of the Southern States. In consequence of these political circumstances, public opinion veered round so much in favour of free trade with England, that there was reason to fear that all the manufacturing interests of the country might be entirely sacrificed in favour of English free competition. Under such circumstances the Compromise Bill of Henry Clay appeared to be the only means of at least partially preserving the protective system. By this Bill part of the American manufactures, viz. those of finer and more expensive articles, was sacrificed to foreign competition, in order to preserve another class of them, viz. the manufacture of articles of a coarser and a less expensive character. In the meantime all appearances seem to indicate that the protective system in North America in the course of the next few years will again raise its head and again make new progress. However much the English may desire to lessen and mitigate the commercial crises in North America, however large also may be the amount of capital which may pass over from England to North America in the form of purchases of stock or of loans or by means of emigration, the existing and still increasing disproportion between the value of the exports and that of imports cannot possibly in the long run be equalised by those means. Alarming commercial crises, which continually increase in their magnitude, must occur, and the Americans must at length be led to recognise the sources of the evil and to determine to put a stop to them.
It thus lies in the very nature of things, that the number of the advocates of the protective system must again increase, and those of free trade again diminish. Hitherto, the prices of agricultural produce have been maintained at an unusually high level, owing to the previous prosperity of the manufactories, through the carrying out of great public undertakings, through the demand for necessaries of life arising from the great increase of the production of cotton, also partially through bad harvests. One may, however, foresee with certainty, that these prices in the course of the next few years will fall as much below the average as they have hitherto ranged above it. The greater part of the increase of American capital has since the passing of the Compromise Bill been devoted to agriculture, and is only now beginning to become productive. While thus agricultural production has unusually
increased, on the other hand the demand for it must unusually diminish. Firstly, because public works are no more being undertaken to the same extent; secondly, because the manufacturing population in consequence of foreign competition can no more increase to an important extent; and thirdly, because the production of cotton so greatly exceeds the consumption that the cotton planters will be compelled, owing to the low prices of cotton, to produce for themselves those necessaries of life which they have hitherto procured from the Middle and Western States. If in addition rich harvests occur, then the Middle and Western States will again suffer from an excess of produce, as they did before the tariff of 1828. But the same causes must again produce the same results; viz. the agriculturists of the Middle and Western States must again arrive at the conviction, that the demand for agricultural produce can only be increased by the increase of the manufacturing population of the country, and that that increase can only be brought about by an extension of the protective system. While in this manner the partisans of protection will daily increase in number and influence, the opposite party will diminish in like proportion until the cotton planters under such altered circumstances must necessarily come to the conviction that the increase of the manufacturing population of the country and the increase of the demand for agricultural produce and raw materials both consist with their own interests if rightly understood.
Because, as we have shown, the cotton planters and the Democrats in North America were striving most earnestly of their own accord to play into the hands of the commercial interests of England, no opportunity was offered at the moment on this side for Mr. Poulett Thompson to display his skill in commercial diplomacy.
Matters were quite in another position in France. There people still steadily clung to the prohibitive system. There were indeed many State officials who were disciples of theory, and also deputies who were in favour of an extension of commercial relations between England and France, and the existing alliance with England had also rendered this view to a certain extent popular. But how to attain that object, opinions were less agreed, and in no respect were they quite clear. It seemed evident and also indisputable that the high duties on the foreign necessaries of life and raw materials, and the exclusion of English coal and pig-iron, operated very disadvantageously to French industry, and that an increase in the exports of wines, brandy, and silk fabrics would be extremely advantageous to France.
In general, people confined themselves to universal declamation
against the disadvantages of the prohibitive system. But to attack this in special cases did not appear at the time to be at all advisable. For the Government of July had their strongest supporters among the rich bourgeoisie, who for the most part were interested in the great manufacturing undertakings.
Under these circumstances Mr. Poulett Thompson formed a plan of operations which does all honour to his breadth of thought and diplomatic adroitness. He sent to France a man thoroughly versed in commerce and industry, and in the commercial policy of France, well known for his liberal sentiments, a learned man and a very accomplished writer, Dr. Bowring, who travelled through the whole of France, and subsequently through Switzerland also, to gather on the spot materials for arguments against the prohibitive system and in favour of free trade. Dr. Bowring accomplished this task with his accustomed ability and adroitness. Especially he clearly indicated the before-mentioned advantages of a freer commercial intercourse between the two countries in respect of coal, pig-iron, wines, and brandies. In the report which he published, he chiefly confined his arguments to these articles; in reference to the other branches of industry he only gave statistics, without committing himself to proofs or propositions how these could be promoted by means of free trade with England.
Dr. Bowring acted in precise accordance with the instructions given to him by Mr. Poulett Thompson, which were framed with uncommon art and subtlety, and which appear at the head of his report. In these Mr. Thompson makes use of the most liberal expressions. He expresses himself, with much consideration for the French manufacturing interests, on the improbability that any important result was to be expected from the contemplated negotiations with France. This instruction was perfectly adapted for calming the apprehensions respecting the views of England entertained by the French woollen and cotton manufacturing interests which had become so powerful. According to Mr. Thompson, it would be folly to ask for important concessions respecting these.
On the other hand, he gives a hint how the object might more easily be attained in respect of ‘
less important articles. These less important articles are certainly not enumerated in the instruction, but the subsequent experience of France has completely brought to light what Mr. Thompson meant by it, for at the time of the writing of this instruction the exports of linen yarn and linen fabrics of England to France were included in the term ‘less important.’
The French Government, moved by the representations and
explanations of the English Government and its agents, and with the intention of making to England a comparatively unimportant concession, which would ultimately prove advantageous to France herself, lowered the duty on linen yarn and linen fabrics to such an extent that they no longer gave any protection to French industry in face of the great improvements which the English had made in these branches of manufacture, so that even in the next few years the export of these articles from England to France increased enormously (1838, 32,000,000 francs); and that France stood in danger, owing to the start which England had thus obtained, of losing its entire linen industry, amounting to many hundred millions in value, which was of the greatest importance for her agriculture and for the welfare of her entire rural population, unless means could be found to put a check on the English competition by increasing the duties.
That France was duped by Mr. Poulett Thompson was clear enough. He had already clearly seen in the year 1834 what an impulse the linen manufacture of England would receive in the next few years in consequence of the new inventions which had been made there, and in this negotiation he had calculated on the ignorance of the French Government respecting these inventions and their necessary consequences. The advocates of this lowering of duties now indeed endeavoured to make the world believe that by it they only desired to make a concession to the Belgian linen manufactures. But did that make amends for their lack of acquaintance with the advances made by the English, and their lack of foresight as to the necessary consequences?
Be that as it may, this much is clearly demonstrated, that it was necessary for France to protect herself still more, under penalty of losing the greater part of her linen manufacturing for the benefit of England; and that the first and most recent experiment of the increase of freedom of trade between England and France remains as an indelible memorial of English craft and of French inexperience, as a new Methuen Treaty, as a second Eden Treaty. But what did Mr. Poulett Thompson do when he perceived the complaints of the French linen manufacturers and the inclination of the French Government to repair the mistake which had been made? He did what Mr. Huskisson had done before him, he indulged in threats, he threatened to exclude French wines and silk fabrics. This is English cosmopolitanism. France must give up a manufacturing industry of a thousand years’ standing, bound up in the closest manner with the entire economy of her lower classes and especially with her agriculture, the products of which must be reckoned as chief necessaries of life for all classes, and of the entire amount of between three and four hundred
millions, in order thereby to purchase the privilege of exporting to England some few millions more in value of wines and silk manufactures. Quite apart from this disproportion in value, it must be considered in what a position France would be placed if the commercial relations between both nations became interrupted in consequence of a war; in case viz. that France could no more export to England her surplus products of silk manufactures and wines, but at the same time suffered from the want of such an important necessary of life as linen.
If anyone reflects on this he will see that the linen question is not simply a question of economical well-being, but, as everything is which concerns the national manufacturing power, is still more a question of the independence and power of the nation.
It seems indeed as if the spirit of invention had set itself the task, in this perfecting of the linen manufacture, to make the nations comprehend the nature of the manufacturing interest, its relations with agriculture, and its influence on the independence and power of the State, and to expose the erroneous arguments of the popular theory. The school maintains, as is well known, that every nation possesses special advantages in various branches of production, which she has either derived from nature, or which she has partly acquired in the course of her career, and which under free trade compensate one another. We have in a previous chapter adduced proof that this argument is only true in reference to agriculture, in which production depends for the most part on climate and on the fertility of the soil, but that it is not true in respect to manufacturing industry, for which all nations inhabiting temperate climates have equal capability provided that they possess the necessary material, mental, social, and political qualifications. England at the present day offers the most striking proof of this. If any nations whatever are specially adapted by their past experience and exertions, and through their natural qualifications, for the manufacture of linen, those are the Germans, the Belgians, the Dutch, and the inhabitants of the North of France for a thousand years past. The English, on the other hand, up to the middle of the last century, had notoriously made such small progress in that industry, that they imported a great proportion of the linen which they required, from abroad. It would never have been possible for them, without the duties by which they continuously protected this manufacturing industry, even to supply their own markets and colonies with linen of their own manufacture. And it is well known how Lords Castlereagh and Liverpool adduced proof in Parliament, that without protection it was impossible for the Irish linen manufactures to sustain competition with those of Germany. At present, however, we
see how the English threaten to monopolise the linen manufacture of the whole of Europe, in consequence of their inventions, notwithstanding that they were for a hundred years the worst manufacturers of linen in all Europe, just as they have monopolised for the last fifty years the cotton markets of the East Indies, notwithstanding that one hundred years previously they could not even compete in their own market with the Indian cotton manufacturers. At this moment it is a matter of dispute in France how it happens that England has lately made such immense progress in the manufacture of linen, although Napoleon was the first who offered such a great reward for the invention of a machine for spinning cotton, and that the French machinists and manufacturers had been engaged in this trade before the English. The inquiry is made whether the English or the French possessed more mechanical talent. All kinds of explanations are offered except the true and the natural one. It is absurd to attribute specially to the English greater mechanical talent, or greater skill and perseverance in industry, than to the Germans or to the French. Before the time of Edward III. the English were the greatest bullies and good-for-nothing characters in Europe; certainly it never occurred to them to compare themselves with the Italians and Belgians or with the Germans in respect to mechanical talent or industrial skill; but since then their Government has taken their education in hand, and thus they have by degrees made such progress that they can dispute the palm of industrial skill with their instructors. If the English in the last twenty years have made more rapid progress in machinery for linen manufacture than other nations, and especially the French, have done, this has only occurred because, firstly, they had attained greater eminence in mechanical skill; secondly, that they were further advanced in machinery for spinning and weaving cotton, which is so similar to that for spinning and weaving linen; thirdly, that in consequence of their previous commercial policy, they had become possessed of more capital than the French; fourthly, that in consequence of that commercial policy their home market for linen goods was far more extensive than that of the French; and lastly, that their protective duties, combined with the circumstances above named, afforded to the mechanical talent of the nation greater stimulus and more means to devote itself to perfecting this branch of industry.
The English have thus given a striking confirmation of the opinions which we in another place have propounded and explained—that all individual branches of industry have the closest reciprocal effect on one another; that the perfecting of one branch prepares and promotes the perfecting of all others; that
no one of them can be neglected without the effects of that neglect being felt by all; that, in short, the whole manufacturing power of a nation constitutes an inseparable whole. Of these opinions they have by their latest achievements in the linen industry offered a striking confirmation.
Essai sur le Commerce d’Angleterre, tome i. p. 379.) As soon as the object of these measures had been attained, England rewarded the Spanish Government for the special privileges granted by the latter, by prohibiting the import of Spanish wool. The efficacy of this prohibition (however unjust it may be deemed) can as little be denied as that of the prohibitions of the import of wool by Charles II. (1672 and 1674).
On the other hand, since List wrote, the United States of America have increased and steadily maintained a considerable protective duty on the importation of foreign silk manufactures. The results of that policy were publicly stated by Mr. Robert P. Porter (member of the United States’ Tariff Commission), in a speech in 1883, to have been as follows:
Five thousand persons were employed in silk manufacture in the United States before the Morill tariff (1861). In 1880 their number had increased to 30,000. The value of silk manufactures produced in the States increased from 1,200,000
l. in 1860 to more than 8,000,000
l. in 1880. ‘Yet the cost of the manufactured goods to the consumer, estimated on a gold basis, has steadily declined at a much greater rate than the cost of the raw material.’ After reference to the earthenware and plate-glass manufactures, Mr. Porter adds: ‘The testimony before the Tariff Commission showed unquestionably that the competition in the United States had resulted in a reduction in the cost to the American consumer. In this way, gentlemen, I contend, and am prepared to prove statistically, that protection, so far as the United States are concerned, has
in every case ultimately
benefited the consumer; and on this ground I defend it and believe in it.’—TRANSLATOR.
De l’Industrie Française vol. ii., p. 147.