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consider all duties upon foreign productions as unjust taxes upon the consumers of the commodities thus protected; the effect of which is, the collecting of capital in the hands of the few, (the manufacturers,) and the impoverishment of the great mass of the community.

§ 824. The effect of the system may be explained, thus: Foreign broadcloth of a certain quality may be bought for four dollars a yard; but cloth of a similar quality cannot be manufactured at home for less than five dollars a yard. In this case, no domestic cloth would be manufactured, because no man would manufacture it if he could not sell it for as much as it cost. But if the government should lay a duty of fifty per cent. on foreign cloths, those which had been bought for four dollars a yard, would now cost six dollars a yard; for if the importer paid the duty of two dollars a yard, he must add the same to the price of the cloth. But as the home article can be afforded for a less price, no foreign cloths would be imported, and whatever more than four dollars should be paid for domestic cloth, would be taken from the pocket of the consumer, for the benefit of the manufacturer.

§ 825. A private individual will employ his capital in such business as he finds to be most profitable; and with a part of his products, he will buy whatever he has occasion for. As has been observed, the hatter employs his whole capital in making hats; the tailor and shoemaker employ theirs in their respective trades; and each exchanges the products of his industry and capital for other things of which they may stand in need. And they do so, because they can purchase these necessaries with less labor than it would cost to make them, or produce them in any other way.

§ 826. As with individuals, so with nations: If a foriegn country can supply us with any commodity more cheaply than we can produce it, it is better for us to buy it with what we can produce to better advantage. The whole capital of a country will be employed in the business of production, and in such branches of industry as are most natu.

ting the effect of a protective duty. § 825, 826. Show the analo gy which is supposed to exist between the profitable employment of capital by individuals and that of nations. 827. In what case is it

ra, and afford the greatest profit. Therefore, to divert the capital and industry of a country from their natural channel, must render them less productive.

§ 827. Suppose that a certain amount of the capital of this country is invested in agriculture; and that one half of the products of this branch of industry will buy all the manufactured goods wanted for domestic consumption. Now if one half of the capital so invested in agriculture, were withdrawn from that department of industry, and employed in manufactures; and if it should not, in the latter employ, ment, produce an equal amount of goods, the nation must sustain a loss. If, to supply the people of the United States with cotton and woollen manufactures, it were necessary to employ fifty millions of dollars of capital, when thirty mil lions invested in agriculture would produce an equal amount of value, it would be economy to employ capital in the lat ter business, and exchange the products of agricultural, for those of manufacturing industry.

§ 828. Another disadvantage of the protective policy, according to economists, is, that by raising the price of cloth, a large portion of the consumers, those of the poorer classes, would be unable to purchase, and the demand for it will be lessened. Farther, if the price should be increased fifty per cent., two yards would cost as much labor as three yards did before the duty was laid. And, although the whole industry of the country will be employed in production, it will be less profitably employed than before. But as capitalists are protected, the loss necessarily falls upon the laborers, who are obliged not only to pay higher prices for the goods they buy, but also to work for lower wages than formerly.

§829. Hence the policy of economists is, to leave things to take their natural course. Let capital and industry be left entirely free from all interference on the part of the gov ernment. They will naturally be employed where they can

supposed that the withdrawal of capital from any branch of industry would be injurious to production? § 828. What is the supposed effect of protection upon the industrious and poorer classes? What effect upon production? § 829. What is supposed to be the result of leaving the capital and industry of the, country entirely free from govern. ment regulations?

be made most productive In a new country, where land is cheap and capital sma.l, agriculture is the natural and the most profitable employment. As a country increases in population, and the price of land becomes dear, the grow. ing capital of such country will naturally and gradually be invested in manufactures. And, in due time, the super. abundant capital will be extended to foreign commerce. Hence, it is presumed, that all efforts on the part of gov. ernment to increase production, by diverting the capital and industry of a nation from their wonted channel, not only fail of their intended object, but work a direct injury.

CHAPTER IX.

The Encouragement of Domestic Industry by Protective Duties, continued.

§ 830. THE preceding chapter contains the views of some of the most distinguished writers on political economy, ir relation to the effects of the attempts of public authority to increase the prosperity and wealth of a nation, by encour. aging domestic industry by protective duties. The theory of these economists has, however, been rejected by a major. ity of the statesmen of the principal European nations, and of this country; and as this theory has been hitherto con. travened by the established policy of the most prosperous commercial nations, it is thought proper to state the argu. ments and reasons by which this policy is supported; as the question whether the protese system shall be abandoned or perpetuated in thru try, must be decided by those who are to be our fu 1 re legislators.

§ 81 Says Mr. Say, With respect to the wild or antiquated Leories so often produced and reproduced by authors who possess neither sufficiently extensive nor well-digested

§ 830. Does the theory of economists noticed in the preceding chap ter comport with the practice of nations? § 832. What has been the

icformation to entitle them to form a sound judgment, the most effectual method of refuting them is to display the true doctrines of the science with still greater clearness, and to leave to time the care of disseminating them. We other. wise should be involved in interminable controversies, affording no instruction to the enlightened part of society, and inducing the uninformed to believe, that nothing is suscepti. ble of proof, inasmuch as every thing is made the subject of argument and disputation."

§ 832. The ability of this writer is universally acknowl. edged; but, although he displays most of the doctrines of political economy with great clearness, the subject under consideration is one on which statesmen of the highest eminence differ from him. The doctrine of protection is doubtless one of the "antiquated theories" alluded to in the above quotation. They are, however, theories which have been carried into practice by nations enjoying the highest degree of prosperity; and as this prosperity is so extensively attributed to the policy of encouraging domestic industry by protective duties, the opinions of these statesmen are deemed worthy of a place in this work.

§ 833. The advocates of protection do not admit that the tax on importations is a loss to the consumer to the amount of the duty paid. They admit that the duty im posed on a foreign product generally causes a rise in the price of such product; but they maintain, that this rise will continue but a short time; and that the advantages which are derived by the community from the encouragement given to industry, overbalance all the inconvenience and loss that may have been occasioned by the imposition of the duty. This is accounted for on natural principles, and proved by facts.

§834. First, the conducting of a new business is generally attended with some disadvantage, for the want of the requisite skill and economy: but these are readily acquired by a short experience. Secondly, when any business is effectually protected, it draws into it many adventurers; large

policy of the most prosperous nations? § 833. What effect do the friends of production ascribe to protective duties? § 834. Upon what principles is the reduction of the prices of protected products a

investments of capital are made in it; the market is speedi ly filled with its products by the numerous producers; and each, not only desirous, but obliged to sell, will offer his goods at such prices as will ensure their sale. Thus, with the progressive improvements in machinery, and increase of skill in manufacturing, the productiveness of this branch of industry increases, and prices fall.

§ 835. But the friends of the protective system maintain, that the nominal price of a domestic commodity may remain above the price at which the foreign could be purchased were it free of duty, and yet the consumer may find the domestic the cheapest. The cheapness of a commodity depends upon the means and ability of the consumer to pay for it. If the farmer, for instance, cannot sell what he produces, he cannot buy. If foreign nations will not receive our products in exchange for their own, we cannot buy of them at any price. And as that is the cheapest which costs the least amount of labor, a domestic product, at a much higher nominal price, may be cheaper than the foreign. When the demand for a commodity is not equal to the amount produced, the price must fall; and if there be no demand for it, the production must be abandoned altogether.

§836. By the encouragement of manufactures, a de. mand for agricultural products is created at home. This home market so raises the price of the produce of the soil, as to enable the farmer to pay a higher price than before. This market is made by drawing off a portion of the capital and labor of the country from agriculture, and investing them in another branch of industry. By this means, the number of producers of agricultural products is compara. tively diminished, while the number of consumers of these products is greatly increased: and thus the consumption and production of the country are in a measure equalized.

§837. Suppose three fourths of the people of the United States to be engaged in agriculture, and the remaining one

counted for? § 835. Is the cheapness of an article invariably determined by the amount of its nominal price? Why not? § 836. What effect has the encouragement of manufactures upon the market for agricultural products? How is this accounted for? § § 837. What would be the effect of a superabundance of agricultural products upon

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