NATIONAL POLITICAL ECONOMY

N A T IO N A L PO LITICA L ECONOMY
THE
NATIONAL
SYSTEM
OF
POLITICAL ECONOMY
BY
FR IED RICH
LIST
T R A N SL A T E D B Y
SA M P SO N S. L L O Y D
W IT H
AN IN T R O D U C T IO N
BY
J . S H I E L D N IC H O L S O N , D.Sc.
-PROFESSOR OF P O L IT IC A L ECONOMY, U N IV E R S IT Y OF EDINBURGH
NEW
LONGMANS,
39
IM P R E S S IO N
GREEN
PA T ER N O ST E R
ROW,
AND
LONDON
F O U R T H A V E N U E & 30t h S T R E E T , N E W YO R K
BOMBAY,
CALCUTTA,
AND
I 9I<3
[All rights reserved]
CO.
MADRAS
* E t lapatri e et rhumanitfi*
T R A N S L A T O R ’S P R E F A C E
EDITIO N.
TO
FIR ST
A b o u t five years ago, when the works of Friedrich List were
republished and widely circulated in Germany, the Berlin
correspondent of the ‘ Times * took occasion to comment on the
powerful influence which those works were then exercising in
that country in favour of the adoption of a protective com­
mercial policy.
It was this testimony to the practical influence of L is t ’s
economical theories which first attracted my attention to his
writings, and a perusal of them induced me to undertake the
translation of the following work, with a view to affording
English readers an opportunity of judging for themselves as
to the truth of his statements and the soundness of his argu­
ments.
The work consists of four parts— the History, the Theory,
the Systems, -and the Politics of National Economy. It is
important to bear in mind that all were written before 1844,
and the fourth part in particular treats of political circum­
stances and of commercial policies which have now for the
most part ceased to exist. The Corn Law s, the Navigation
L aw s, and the generally protectionist tariff of Great Britain
were then still unrepealed; the manufacturing industry of
Germany was still in its infancy, and the comparatively
moderate tariff of the German States still permitted England
to supply them with the greater part of the manufactured
goods which they required.
At first sight, therefore, it would seem an anachronism to
place before the reader of to-day a work having special re­
lation to a state of things which existed forty years ago.
The principles, however, enunciated by List are in their
main features as applicable at one time as at another, and
it will be found that they possess two especially powerful
claims to consideration at the present moment.
vi
TRANSLATOR’S PREFACE
In the first place, there is good reason for believing that
they have directly inspired the commercial policy of two of
the greatest nations of the world, Germ any and the United
States of America ; and in the next, they supply a definite
scientific basis for those protectionist doctrines which, al­
though acted upon by our English-speaking colonics and
held by not a few practical men as well as by some com­
mercial economists in this country, have hitherto been only
partially and inadequately formulated by English writers.
The fundamental idea of L is t ’s theory will be seen to be
the free import of agricultural products and raw materials
combined with an effective but not excessive protection (by
means of customs duties) of native manufacturing industry
against foreign competition. According to his views, the most
efficient support of native production of agricultural products
and raw materials is the maintenance within the nation of
flourishing manufacturing industry thus protected.
The
system which he advocates differs, therefore, on the one hand
from the unconditionally free import system of one-sided free
trade adopted by England, and on the other from the system
now apparently approved by Prince Bismarck, of imposing
protective duties on the import of food and raw materials as
well as on that of manufactured goods.
In fact, List draws a sharp line of demarcation between
what he deems a truly ‘ political ’ economy and the ‘ cosmopolitical ’ economy of Adam Smith and his followers
(English and foreign), and he vigorously defends a * national *
policy as opposed to the ‘ universal trade ’ policy which,
although nearly forty years have elapsed since its adoption
by England, has failed to commend itself in practice to
any other civilised country.
In combating what he regarded as the mischievous fal­
lacies of the cosmopolitical theory, List occasionally de­
nounces with considerable asperity the commercial supre­
macy then exercised by England. But, so far from being
an enemy of England, he was a sincere admirer of her
political institutions and a warm advocate of an alliance
between this country and Germany.
' England and G er­
many,’ he wrote, ‘ have a common political interest in the
Eastern Question, and by intriguing against the Customs
Union of Germany and against her commercial and eco­
nomical progress, England is sacrificing the highest political
T R A N S L A T O R ’S P R E F A C E
vii
objects to the subordinate interests of trade, and will cer­
tainly have to rue hereafter her short-sighted shopkeeper
policy.’ He further addressed to the English and Prussian
Governments a brief but forcible essay * On the Value and
Necessity of an Alliance between Great Britain and Ger­
many.’
In translating the work, my aim has been to render the
original as literally as possible. I have neither attempted
to abridge my author’s tautology nor to correct his style,
and where passages are emphasised by italics or capital
letters they are so in the original. Those, and they are
probably many in this country, who are prepared to accept
some or all of L is t ’s conclusions, will prefer to have his
theories and arguments stated in his own way, ungarbled
and unvarnished, while those who reject his doctrines may
perhaps still be interested in seeing the exact form in which
the intellectual founder of the German Zollverein gave his
opinions to the world.
18 8 5 .
CONTENTS.
PAOE
T R A N S L A T O R ’S P R E F A C E ...................................................
v
IN T R O D U C T O R Y E S S A Y ....................................................................................... xiii
B R I E F M E M O IR O F T H E A U T H O R ................................................................. xxix
SO M E E X T R A C T S FRO M T H E A U T H O R ’S P R E F A C E
F IR ST
.
,
. xxxix
BOOK.
THE HI S T OR Y .
CHAPTER
I. T
It a lia n s
he
.
.
.
.
3
II. T h e H a n s a r d s ......................................................................................................................... 1 0
I I I . T h e N e t h e r l a n d e r ................................................................................................ 2 2
IV . T
he
E
n g l i s h
.......................................................................................................................... 2g
V. T
he
S
pa n ia r d s
and
V I. T
he
F
r e n
Po
r t u g u e s e
........................................................................ 4 7
......................................................................................................................... 5 6
c h
V II. T h e G e r m a n s
.
62
V I I I . T h e R u s s i a n s ..........................................................................................................................73
IX.
X.
T
N
he
T
he
orth
T
A
m e r ic a n s
e a c h in g s
of
H
................................................................................................ 7 7
i s t o r y
SECO N D
TH E
X I.
........................................................... *
.
87
BOOK.
TH EO RY.
gj
P o li t i c a l and C o s m o p o litic a l Econom y
X II. T h e T h e o r y o f t h e P r o d u c t i v e P o w e r s a n d t h e T h e o r y
V
of
X III.
T
he
N
the
Pow
a l u e s
....................................................................................................................... 1 0 8
D
a tio n a l
C
ers
iv isio n
of
o n fe d e r a t io n
of
.
C
o m m e r c ia l
the
N
O pe r a t io n s
a tio n a l
P
and
r o d u c t iv e
................................................................................................
ix
X
CONTENTS
FAOE
X IV .
P riv a te
Econom y and
N a tio n a l
Econom y
.
.
XV. N a t i o n a l i t y an d t h e E co n o m y ok t h e N a tid n
X V I. P o p u l a r a n d S t a t e
and
F in a n c ia l
.
.
.
132
.
.
14 1
A d m in istra tio n — P o lit ic a l
E c o n o m y .................................................................................... 15 7
N a tio n a l
X V II. T h e M a n u f a c t u r i n g P o w e r a n d t h e P e r s o n a l , S o c i a l , a n d
P
P
o l it ic a l
P
r o d u c t iv e
ow ers
ok
N
the
.
a t io n
.
159
X V III. T h e M a n u f a c t u r i n g P o w e r a n d t h e N a t u r a l P r o d u c t i v e
P
ow ers
of
N
the
.....................................................................................1 7 0
a t i o n
X IX . T h e M a n u f a c t u r i n g P o w e r a n d t h e I n s t r u m e n t a l P o w e r s
(M
XX. T h e
C
a t e r ia l
a p it a l
M a n u fa ctu rin g
terest
N
the
Pow er
X X I. T h e M a n u f a c t u r i n g
C
of
.
a t io n
and
th e
.
.
.
18 1
A g ric u ltu ra l
In­
............................................................................................................................i g o
Pow er
X X II. T h e M a n u f a c t u r i n g
and
)
and
C om m erce
.
.
208
P o w e r and N a v ig a tio n — N a v a l P o w e r
................................................................................................. 2 1 5
o l o n is a t io n
X X III. T h e M a n u f a c t u r i n g P o w e r a n d t h e I n s t r u m e n t s o f C i r ­
........................................................................................................................... 2 1 8
c u la t io n
X X IV . T h e M a n u f a c t u r i n g P o w e r a n d t h e P r i n c i p l e o f S t e a d i ­
ness
and C
o n t in u it y
XXV. T h e M a n u fa c tu rin g
d u c tio n
X X V I. T h e
and
System
X X V II.
The
Pow er
W ork
and
of
C u sto m s
and
.
th e
C o n su m p tio n
E sta b lish in g
tu rin g
of
.
D u tie s
as
P ro te c tin g
.
.
.
.
In c e n tiv e s
to
Pro­
.
.
.
.
a
.
C h ie f
243
M eans
H om e
th e
236
of
M a n u fa c ­
P o w e r ...............................................................................................................2 4 7
System
of
C u sto m s
n o m ica l S c h
o
o
D u tie s
and
th e
P o p u la r
Eco­
....................................................................... 233
l
T H IR D BOOK.
TH E
X X V III.
XXIX .
T
T
N
he
a t io n a l
S ch o o l,
T
he
X X X I.
T
he
J
ean
S
th e
h y sio c r a t ic
S
ystem
B
of
S
V
or
A
of
In
ay
and
......................................................... 263
a l y
System )
g r ic u l t u r a l
alu es
S
It
(i n c o r r e c t l y
ystem
chool, t h e
a p t ist e
of
M e rc a n tile
P
by the
X X X II.
c o n o m ist s
I n d u st r ia l
he
XXX.
E
SYS TE MS .
E
h is
S
S
chool
.
S
.
the
.
rrectly
ystem
.
by
.
.
ystem
(in c o
xchange
d u st r ia l
term ed
.
)— A
.
.
.
274
term ed
S
dam
.
269
.
m it h
.
277
282
CONTENTS
Xi
FO URTH BOOK.
THE
P O L IT IC S .
PAGE
X X X III. T h e I n s u l a r S u p r e m a c y a n d t h e C o n t i n e n t a l P o w e r s —
N orth
X X X IV . T h e
A
In su la r
U
n io n
m e r ic a
and
F
Suprem acy
r a n c e
and
....................................................................2 9 3
th e
G erm an
C o m m e rc ia l
................................................................................................................................... 3 1 2
X X X V . C o n t i n e n t a l P o l i t i c s ..............................................................................................329
X X X V I. T h e C o m m e r c i a l P o l i c y
o f th e
A P P E N D IX A .
B
,
■
1)
C
.
•
M
D .
t
•
I N D E X ....................................................
G erm an C u sto m s
U n io n
,
34 1
................................................. 35i
................................................. 352
................................................................................. 354
................................................. 356
357
IN TRO D U CTO R Y E SSA Y .
As the demand for the re-publication of the work of Friedrich
List is to be assigned mainly to the interest aroused by the
fiscal controversy, the purpose of the Introduction which I
have been requested to write, will be best served by indicating
in the first place the bearing of the author's ideas and argu­
ments on the present situation in this country. Those who
expect to find an assortment of authoritative opinions which
can be aggressively and conclusively quoted against upholders
of the present system will surely be disappointed.
The
method of isolated extracts would probably be as favourable
to the supporters as to the opponents of ‘ free trade/
List maintained, for example, that England would have
gained by the' abolition of the Corn L aw s just after the
restoration of the general peace (in 18 15 ), but— these are
the words— ‘ 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 e g g s ’ (p. 297). Or, again, take this passage on re­
taliation: ‘ Thus it is Adam Smith who wants to introduce
the principle of retaliation into commercial policy— a prin­
ciple which would lead to the most absurd and most ruinous
measures, especially if the retaliatory duties, as Smith de­
mands, are to be repealed as soon as the foreign nation
agrees to abolish its restrictions ’ (p. 254).
Nor if we abandon the dangerous and unfair method of
isolated extracts, and look on List as the great critic and
xiii
xiv
INTRODUCTORY ESSAY
opponent of Adam Smith, can there be much doubt as to the
general results of the comparison of the Scotsman with the
German.
L ist has made the mistake so common with
popular writers, but inexcusable in the author of a systematic
work, of attributing to Adam Smith the extravagant dogmas
of his exponents. One would almost suppose that List had
never read Adam Smith himself, but had taken for granted
the Smithianismus bandied about in popular pamphlets. One
passage from L ist may suffice to illustrate the unfairness of
his rendering of Adam Smith. ‘ He [Adam Smith] entitles
his work, “ The Nature and Causes of the W ealth of Nations ”
(i.e. [on L i s t ’s interpretation] of all nations of the whole
human race). He speaks of the various systems of political
economy in a separate part of his work solely for the purpose
of demonstrating their non-efficiency, and of proving that
“ political ” or national economy must be replaced by “ cosmopolitical or world-wide economy.” Although here and there he
speaks of wars, this only occurs incidentally. T he idea of a
perpetual state of peace forms the foundation of all his argu­
m ents’ (p. 97). T he real Adam Smith wrote that the first
duty of the sovereign, that of protecting the society from the
violence and the invasion of other independent societies, can
be performed only by means of a military force. No nation,
he declared, ever gave up voluntarily the dominion of any
province how troublesome soever it might be to govern it.
1 To propose that Great Britain should voluntarily give up
all authority over her colonies, would be to propose such
a measure as never was and never will be adopted by any
nation.’ ‘ The art of war is certainly the noblest of all
arts.’ And in a passage too long for quotation, Adam Smith
maintained that even if the martial spirit of the people were
of no use towards the defence of the society, yet to prevent
that sort of mental mutilation, deformity, and wretchedness
which cowardice necessarily involves in it from spreading
themselves through the great body of the people, is a duty as
INTRODUCTORY ESSAY
xv
incumbent on the Government as the prevention of leprosy
or any other loathsome disease. The same Adam Smith
approved of bounties on the export of sail-cloth and gun­
powder so that the production at home might be encouraged
and a larger supply be available for war in case of need. *
Malthus, it may be observed incidentally, is another great
writer whom List has utterly misrepresented through relying
on popular dogma instead of going to the original source.
The account given by List of the ‘ errors of Malthus *
(p, 103 ct scq.) is curiously and perversely wrong.
When List is so weak on the history of economic theory,
it is not to be expected that his history of economic facts
and institutions should be above suspicion. On such im­
portant matters, for example, as the causes of the secession
of the American colonies and the influence of the Navigation
Acts, the opinions of List are not confirmed by the more
recent work of Dr. Cunningham and Professor Ashley.1
And without insisting on details, for it must be expected
that recent work in economic history should have upset many
old opinions, List is open to the general charge of exaggera­
tion. He is led away by preconceived ideas and induced to
build up systems of policy on too little evidence. Notably
as regards the industrial and commercial development of
England he lays far too much stress on the benefits derived <
from legislation and governmental action. He is too ready'
to assume that if an idea is good in theory it must also be
good in practice; but, as every student of history knows, the
wastage in ideas is as great as that in the ova of fishes—
millions of ova for one good herring.
List shows on occasion that he was aware of this liability
to over-emphasis. In his Preface he says authors of celebrity
must be refuted in energetic terms, and this must be his
1 C f. ’ E ngland and America, 1660 to 176 0 / in Economic Surveys, by
Professor A shley, and Dr. Cunningham ’s G row th o f E n g lish Industry and
Commerce, vol. ». (edition 1903).
xvi
INTRODUCTORY ESSAY
excuse if he appears to condemn in too strong language the
opinions and works of authors and whole schools. And in
the body of the work he occasionally reminds the reader
that the prosperity of nations depends on a multitude of
causes besides the commercial policy of governments. After
insisting, as usual with a good deal of exaggeration, on the
advantages England derived from trial by jury, and the early
abolition of the use of the L atin language in her L a w Courts
and State departments, and comparing the happy history of
England with the unhappy history of her neighbours on the
Continent, List exclaims, ‘ But who can say how much of
these happy results is attributable to the English national
spirit and to the constitution ; how much to E n g la n d ’s geo­
graphical position and circumstances in the p a s t ; or again,
how much to chance, to destiny, to fortune ? ’ (p. 42).
L i s t ’s habit of ‘ contradicting energetically’ is no doubt
to be ascribed largely to the fact that he was engaged for
the greater part of his life in political agitation. In this he
resembled Cobden, who also excelled in exaggeration. The
political agitator is like a person accustomed to shout to the
deaf one idea at a time and as loud as possible, and even
when a soft answer would be more suitable to the ears of
the unafflicted he shouts still.
If, then, L ist is open to these charges, wherein lie his
merits ?
W h y is L ist popularly regarded as the great
critic of the free-traders ?
In the first place, it may be allowed that the defects just
noticed are not constructive but superficial. The energetic
language, which is absurdly wrong as applied to Adam Smith,
is often just as applied to those who have tried to make his
arguments popular by leaving out the difficulties and the
qualifications.
Indeed L ist himself constantly speaks of
‘ the sch o o l’ alternatively with Adam Smith, and his
mistake consists in not knowing or remembering that the*
extreme popular dogmas on free trade are not countenanced.
INTRODUCTORY ESSAY
XVII
by Adam Smith. The principles on which List insists so
strongly may for the most part be considered as the natural
development of the modifications of what List calls cosmopolitical free trade, which are acknowledged throughout
the ‘ Wealth of Nations.’ It is clear from the passages
already cited that Adam Smith took it for granted that the
world consisted of nations, and that national interests were
not always harmonious.
And if further proof were needed, it is furnished in his great
chapter on colonial policy. He there distinguishes between
the advantages which Europe in general has derived from
the planting of new colonies and the particular advantages
derived by particular nations. What any one nation ought
to expect from her colonies is an increase of revenue or an
increase of military power. It is true he showed that the
various nations have sacrificed an absolute advantage to gain
a less relative advantage by the monopoly of their respective
colonial trades, but, on the other hand, he formulated the
most thorough scheme of Imperial Federation to convert the
‘ project of an empire * into a reality. From the British
standpoint Adam Smith is indeed more Nationalist than List i
himself; for whilst Adam Smith says the most visionary en­
thusiast would not propose the abandonment of the colonies,
List (p. 2 1 6 ; see also p. 143) calmly assumes that Canada
will secede as soon as she has reached the point of manufactur­
ing power attained by the United States when they seceded,
and that independent agricultural manufacturing commercial
states will also arise in the countries of temperate climate in
Australia in the course of time. But although Adam Smith
himself always adopted the national standpoint, his followers
of * the school ’ have in general assumed that what is best for*
all the nations as a whole, must ipso facto be best for each in*
dividual nation, or tfrat cosmopolitical jm d jiation al interest^
always coincide.) Against this extreme view L is t ’s central
doctrine is directed, 41 would indicate, as the distinguishing
b
XV111
INTRODUCTORY ESSAY
characteristic of my system, n a t i o n a l i t y . On the nature
of nationality, as the intermediate interest between those of
individualism and of entire humanity, my whole structure is
b a sed ’ (Preface, p. xliii.).
L is t ’s system is emphatically
and explicitly the national system of political economy.
Next in importance to his doctrine of nationality must be
placed his position on immaterial capital and productive
powers. Adam Sm ith had included under the fixed capital
of a nation the natural and acquired abilities of its inhabit­
ants, but for a long time both in theory and practice the term
‘ c a p ita l’ was narrowed down to purely material forms. If
this change of definition had been made merely in deference
to popular usage, in order to avoid confusion, no harm might
have ensued ; but, unfortunately, with their exclusion from
capital the immaterial productive forces and powers were
dropped from the popular arguments altogether. Apparently
the wealth of nations was supposed to depend principally on
the accumulation of material capital, which was necessary
to provide both the auxiliary aids to labour and its subsist*<ence. List did good service in showing that mere accumula­
tion is of minbr importance compared with the organisation
of the productive forces of society. * T h e present state of the
nations is the result of the accumulation of all discoveries,
inventions, improvements, perfections, and exertions of all
generations which have lived before u s ; they form the mental
capital o f the present human race, and every separate nation is
productive only in the proportion in which it has known how
to appropriate these attainments of former generations and
to increase them by its own acquirements, in which the
natural capabilities of its territory, its extent and geogra­
phical position, its population and political power, have been
able to develop as completely and symmetrically as possible
all sources of wealth within its boundaries, and to extend its
moral, intellectual, commercial, and political influence over
less advanced nations and especially over the affairs of the
world ’ (p. 11 3 ) .
INTRODUCTORY ESSAY
xix
Closely associated with these doctrines was the leading
idea that from the national standpoint of productive power
the cheapness of the moment might be far more than counter­
balanced by the losses of the future measured by the loss of
productive power. It follows that to buy at the time in the
cheapest market and to sell in the dearest may not always be
the wisest national policy.
The distinction between present and future advantage
from the national standpoint is fundamental throughout the
whole work.
As soon as it is clearly apprehended the
principle must be admitted, at least in theory, and the
difficulty is to discover in practice the cases that may be
brought under the rule. To Mill it seemed that there was
only one case ‘ in which, on mere principles of political
economy, protecting duties can be defensible,’ that is, ‘ when
they are imposed temporarily, especially in a young and
rising nation, in hopes of naturalising a foreign industry, in
itself perfectly suitable to the circumstances of the country.’
This case so jejunely treated by Mill (though the bare ad­
mission has exposed him to the fierce attacks of extreme
free-traders) is taken by List as one simple example cap­
able of much more extended application by analogy. List
maintains that in the early years of the nineteenth century
England had obtained the manufacturing and commercial \
supremacy of the world to such a degree that all the other/
nations were in danger of becoming mere providers of food!
and raw materials in return for her manufactures. To List!
it seemed that the continental nations (just as much as the
United States of America) must adopt protection until they
were strong enough to compete with England (p. 294). But ,r
List goes much farther.
He seeks for a wide inductive
generalisation based on the experience of nations. In the
chapter on the teachings of history the conclusion is reached
that nations must modify their systems according to the
measure of their own progress (p. 93). ? In the first stage they
b*
XX
INTRODUCTORY ESSAY
must adopt free trade with the more advanced nations as a
means of raising themselves from a state of barbarism and
of making advances in agriculture. In the second stage they
must resort to commercial restrictions to promote the growth
of manufactures, fisheries, navigation, and foreign trade. In
the last stage, ‘ after reaching the highest degree of wealth
and power,’ they must gradually revert to the principle of
free trade and of unrestricted competition in the home as
well as in foreign markets, so that their agriculturists,
manufacturers, and merchants may be preserved from
indolence and stimulated to retain the supremacy which
they have acquired.
W ritin g in 18 4 1, he concludes the
su rvey: ‘ In the first stage, we see Spain, Portugal, and the
Kingdom of Naples ; in the second, Germ any and the United
States of North America ; F rance apparently stands close
upon the boundary line of the last stage ; but Great Britain
alone at the present time has actually reached it ’ (p. 93).
T h is summary of historical tendencies is no doubt open
to the usual charge of hasty and imperfect generalisation,
but it shows very clearly the attitude of List towards protec­
tion. T he main use of protection is to promote the growth
of productive power in all the departments in which the
nation has the requisite natural resources.
The attitude of L ist towards protection is made still
clearer in the following passages, which fairly represent a
large part of his main arg u m e n t: * The power o f producing'
wealth is therefore infinitely more important than wealth
itself; it insures not only the possession and the increase of
what has been gained, but also the replacement of what has
been lost * (p. 108). ‘ T he prosperity of a nation is not,
as S a y believes, greater in the proportion in which it has
amassed more wealth (i.e. values of exchange), but in the
proportion in which it has more developed its powers of
production ’ (p. 117 ) . 1On L i s t ’s view there is no real oppo­
sition between free trade and protection, because neither is
INTRODUCTORY ESSAY
xxi
an end in itself, but simply a means to achieve a certain
end, namely, the greatest development of productive power
Which policy may be better at any time depends on the
stage of development of the nation in relation to the de­
velopment of other nations. For the time being a protective
duty involves a loss. But the present loss is justifiable if
in the future there will be a greater gain. ‘ It is true that
protective duties at first increase the price of manufactured
goods; but it is just as true, and moreover acknowledged
by the prevailing economical school, that in the course of
time, by the nation being enabled to build up a completely
developed manufacturing power of its own, those goods are
produced more cheaply at home than the price at which
they can be imported from foreign parts. If, therefore, a
sacrifice of value is caused by protective duties, it is made
good by the gain of a power of production, which not only
secures to the nation an infinitely greater amount of material
goods, but also industrial independence in case of war*
(p. 117).
The reference to economical independence in the last
phrase indicates that List did not consider that even as
regards productive power the advantage was to be measured
merely by the greater cheapness ultimately. As with Adam
Smith, ‘ defence is of much more importance than opulence.’
And with List the maxim is applied to all the industries that
may be considered of vital importance to a nation. An in­
teresting example is given in L is t’s account of the methods of
dumping (though the name is not used) practised by the
English against the manufacturers of the Continent and
America. ‘ Through their position as the manufacturing and
commercial monopolists of the world, their manufactories
from time to time fall into the state which they call “ glut,”
and which arises from what they call “ overtrading.” At such
periods everybody throws his stock of goods into the steamers.
. . . The English manufacturers suffer for the moment, but
xxu
INTRODUCTORY ESSAY
they are saved, and they compensate themselves later on by
better prices ’ (p. 119 ). T his is, of course, a simpler form of
dumping than the modern plan of continuous sale of goods
at lower prices abroad than at home, but the principle in­
volved is the same as regards the economic independence of
the nation. List goes on to show that by this E nglish method
of dealing with gluts the whole manufacturing power, the
system of credit, nay, the agriculture and generally the whole
economical system of the nations who are placed in free com­
petition with England, are shaken to their foundations.
L ist also insists on the importance, from the standpoint
of national productive power, of the development of both
manufactures and agriculture, as indeed of all industries, for
which the nation is by nature adapted. W hen L ist wrote,
dealing as he did mainly with the interests of other nations
as against England, he was most concerned to show that
without manufactures a nation must remain relatively un­
progressive, even as regards its agriculture.
* A nation
which possesses merely agriculture, and merely the most
indispensable industries, is in want of the first and most
necessary division of commercial operations among its in­
habitants, and of the most important half of its productive
powers, indeed it is in want of a useful division of com­
mercial operations even in the separate branches of agri­
culture itself ’ (p. 124).
‘ T he productive power of the
cultivator and of
the labourer in agriculture will always
be greater or smaller according to the degree in which
the exchange of agricultural produce for manufactures and
other products of various kinds can proceed more or less
readily.
That in
this respect the foreign trade of any
nation which is but little advanced can prove in the
highest degree beneficial, we have shown in another chapter
by the example of England.
But a nation which has
already made considerable advances in civilisation, in
possession of capital, and in population, will find the de­
INTRODUCTORY ESSAY
xxtu
velopment of a manufacturing power of its own infinitely
more beneficial to its agriculture than the most flourishing
foreign trade can be without such manufactures ’ (p. 127).
A number of reasons are assigned, but the final argument
is * especially because the reciprocal exchange between
manufacturing power and agricultural power is so much
greater, the closer the agriculturist and manufacturer are
placed to one another, and the less they are liable to be
interrupted in the exchange of their various products by
accidents of all kinds.’
This is the argument which was developed in theory by
Henry Sidgwick to show that ultimately the world at large
might gain by the temporary protection of the constituent
nations. And on the practical side it is this argument
which is most popular in the British colonies. The colonies
are protectionist because they wish to become complex in­
dustrial nations, and though it is the manufacturers who
gain in the first place by protection, it is claimed that
agriculture must also gain indirectly by the encouragement
to various bye-products.
Even as regards manufactures the benefit of protection is
limited by List to the educational or young industry stage of
development. When nations have attained to their full
powers protection is apt to check progress and lead to
decadence. The case of Venice is given as typical (p. 8).
Unrestricted freedom of trade was beneficial to the Republic
in the first years of her existence, but a protective policy was
also beneficial when she had attained to a certain stage of
power and wealth, and protection first became injurious to
her when she had attained the commercial supremacy of the
world, because the exclusion of competition led to indolence.
‘ Therefore, not the introduction of a protective policy, but
perseverance in maintaining it after the reasons for its in­
troduction had passed away, was really injurious to Venice/
As regards protection to agriculture, curiously enough List
xxiv
INTRODUCTORY ESSAY
confesses that he is in accord with the prevailing theory
— that is, extreme free trade (p. 175).
‘ W ith regard to
the interchange of raw products, the school is perfectly
correct in supposing that the most extensive liberty of
commerce is, under all circumstances, most advantageous
to the individual as well as to the entire State.
One
can, indeed, augment this production by restrictions ; but
the advantage obtained thereby is merely apparent. W e
only thereby divert, as the school says, capital and labour
into another and less useful channel.’ T he argument is
given at length and is on familiar lines.
Nor is L i s t ’s attitude towrards free trade merely negative.
It is not that protection should be abandoned when it
becomes useless, and that free trade is the absence of useless
restrictions, but positive virtue is ascribed to free trade as to
other forms of freedom. L ist was an enthusiast for freedom.
4T he real rise of the industry and the power of England
dates only from the days of the actual foundation of E n glan d’s
national freedom, while the industry and power of Venice, of
the Hanse Tow ns, of the Spanish and Portuguese, decayed
concurrently with their loss of freedom ’ (p. 87). In this pas­
sage the reference is to freedom in the larger political sense,
but in other places L ist extols the positive virtue of free trade
once a nation has attained its full maturity.
Protective
duties ought never to be so high as to strangle healthy com­
petition. 4 It may in general be assumed that where any
technical industry cannot be established by means of an
original protection of forty to sixty per cent, and cannot
continue to maintain itself under a continued protection of
twenty to thirty per cent, the fundamental conditions ol
manufacturing power are lacking ’ (p. 251). T h u s even in
the educative stage the duties are to be moderate (relatively
to the methods of production), and later on they are to be
abandoned altogether. ‘ In order to allow freedom of trade
to operate naturally, the less advanced nations must first be
INTRODUCTORY ESSAY
XXV
raised by artificial measures to that stage of cultivation to
which the English nation has been artificially elevated ’
(p. 107). List was also a great enthusiast for the political
union of kindred states, as exemplified in the case of Germany
and Italy, but he thought that the political union must always
precede the commercial union of the separate states (p. 102).
Although the corner-stone of L ist’s system is nationalism,
his ultimate ideal is universal free trade. His difference
with the laissez-faire school was that if under present con­
ditions universal free trade were adopted, it would simply
serve to subject the less advanced nations to the supremacy
of the predominant manufacturing commercial and naval
power (the England of his d ay); and in this way the develop­
ment of the nations would be checked, and in the end the
whole world would lose. The system of protection was the
only means in his view of bringing other nations to the
stage at which universal free trade would be possible and
desirable.
This brief survey of the leading ideas of L ist’s work con­
firms the suspicion, suggested by isolated extracts, that his
arguments, can only be brought to bear on the present con­
troversy in this country by appealing to his fundamental
ideas.
List, like every other great writer, was influenced
very much by the conditions under which he wrote and the
atmosphere in which he moved.
The predominance of
England in industry and commerce was in fact considerable,
and, according to the popular sentiment and jealousy of other
nations, was altogether overbearing. The problem with List
was to show the nations how they might upset this com­
mercial overlordship and attain to an equality with England.
The only method seemed to be that of temporary protection.
To-day the fear has been expressed that England may suc­
cumb to other nations. It is plain that the case is altered.
It would be absurd to argue that the manufactures of E n g ­
land must be protected until they have had time to grow u p ;
INTRODUCTORY ESSAY
they are no longer young ; if they are weak, the weakness is
that of age and not infancy.
Again, in L i s t ’s day the conditions of agriculture and the
means of transport were such that he himself argued in
reference to England that with the abolition of the Corn L a w s
and other restraints on the import of raw produce, ‘ it is
more than probable that thereby double and three times as
much land could have been brought into cultivation as
by unnatural restrictions’ (p. 175). T h e idea at the time
seemed reasonable that in the main every country must
rely on its own food supplies, that agriculture was naturally
protected, that the cultivator could resort to * other things,’
and that the growth of wealth through the increase of manu­
facturing power would increase the demand for these other
things. And for nearly a generation after the repeal of the
Corn L a w s this view seemed justified. But again the con­
ditions have changed; and it would be idle to quote the
authority of L ist regarding raw products, that under all cir­
cumstances the most extensive liberty of commerce is most
advantageous both to the individual and to the State.
Alike in agriculture and in manufactures the particular
opinions of List are either irrelevant or adverse as regards
the adoption by England of protection or retaliation, and even
as regards federation he thought that political must precede
commercial union. B u t the real value of L is t ’s work lies
in the principles and fundamental ideas. These ideas are
alw ays to be reckoned with ; they suggest questions which
the statesman must answer whatever the change in conditions.
T h e questions which our statesmen have to answer, suggested
by the ideas of L ist, are such as these : W ill the productive
powers of the nation suffice to maintain and increase its
present prosperity ?
Are the great national industries
threatened with no signs of decay, and if there is decay
where are substitutes to be looked for ? Is there any change
in the character of our trade which indicates a lower standard
xxvu
INTRODUCTORY ESSAY
of national life ? Is there any danger from foreign mono­
polies? Will retaliation promote the industrial development
of the nation ? 1 Is the Empire capable of closer and more
effective commercial and political union? And, lastly, there
is the practical question, how far a change in tariffs is likely
to prevent or remedy any of the evils of the present system ?
The work of List will give no cut-and-dried answers to
these questions, but it will suggest fruitful lines of inquiry
in the search for the answers. Finally, it may be said, just
as Adam Smith admitted exceptions to free trade, so List
admitted exceptions to protection. And in both authors the
exceptions in theory are so important that the divergence on
balance is not nearly so great as the reader might suppose.
L is t’s work would have gained in power and in popularity if,
instead of attacking Adam Smith for opinions which were
only held by his extreme successors, he had emphasised his
points of agreement with the original author.
J,
S
h ie l d
N
ic h o l s o n
.
1 ‘ T h e principle o f retaliation is reasonable and applicable only if it
coincides wilh the principle o f the indu strial development o f the nation, if it
serves as it were as an assistance to this object ’ (p. 255).
M E M O IR .1
F r i e d r i c h L i s t was born August 6, 1789, at Reutlingen in
Wiirtemberg, where his father, who, though not rich, was
highly respected, carried on business as a currier and held
several public appointments. At a very early age Friedrich
manifested a strong dislike for his father’s business, and
determined to strike out a career for himself.
For a few years he found employment in the Town
Clerks’ offices at Blaubeeren, Uim, and Tubingen ; and
after passing several Government examinations with dis­
tinction entered the Government Civil Service of Wiirtemberg, in which his promotion was so rapid that in 18 16 he
had risen to the post of Ministerial Under-Secretary. Von
Wangenheim, who was Minister at the time, seems to have
recognised his talents from the first, and cordially to have
welcomed the assistance of so able a coadjutor in promoting
his own projects of reform.
Among these was the establishment of a Chair of
Political Economy in the University of Tiibingen, an event
which elicited from List an able and comprehensive
pamphlet, in which he freely criticised the system of ad­
ministration in Wiirtemberg, and pointed out that certain
branches of knowledge in connection with the new Faculty,
which it was of special importance to cultivate, had hitherto
been almost entirely neglected. The pamphlet, in fact, was
rather a manifesto than an essay, and may be regarded as
L is t ’s first open declaration of that war against officialism
and red tape in which the rest of his life was to be spent.
Von Wangenheim showed his appreciation of the work
by appointing the author Professor of Practical Adminis­
tration (Staatspraxis) in the University, and encouraged him
1 Abridged from Friedrich L isf, ei?t Vorldufer und ein O ffe r f ur das Vater*
land. (Stuttgart, 1877.)
xxix
XXX
MEMOIR
to persevere in his advocacy of reform in the State adminis­
tration, of local representative government, and of freedom
of the press.
Unhappily, so far from being of any advantage to L ist,
the Minister’s approval of his efforts was fatal to himself.
The time was unpropitious for broaching schemes of reform
which the nobility and bureaucracy were incapable of dis­
tinguishing from revolution— the K ing himself was alarmed,
and the Minister had to resign.
T h is publication, however, was by no means L i s t ’s only
offence against the predominant official conservatism.
At
the close of the Napoleonic wars in 1 8 1 5 , Germ an diplo­
matists appear with one consent to have shut their eyes to
the industrial interests of the people.
T he Continental
blockade as long as it lasted operated as a strongly protec­
tive system in favour of Germ an home trade, particularly
in the case of the minor States. B u t on the removal of the
blockade, when the German ports were opened to foreign
manufactures at low duties, the trade of the various German
States with each other still remained restricted by a chain of
internal custom-houses along every frontier. T his state of
things naturally excited just and general discontent, and an
Association was formed for the abolition of these internal
customs dues. Of this Association, L ist accepted the P resi­
dency, a step which immediately brought down upon him the
censure of the Government and deprivation of his office.
H is fellow-townsmen at Reutlingen testified their confidence
in him by electing him their representative in the Wurtemberg National Legislative Assembly, but so unpardonable
was the crime which he had committed against those in
authority that his election w as cancelled by Ministerial veto.
Nothing daunted, however, List still devoted all his
energies to agitating for the abolition of these internal tariffs
and for the commercial union of alt the German States, from
which he foresaw that the political union of Germ any must
ultimately follow. He not only advocated these objects in
the press in the shape of letters, articles, and pamphlets, but
travelled, at a time when travelling w as both difficult and
expensive, to Berlin, Munich, Vienna, and other German
capitals, in order to make his views known to all the prin­
cipal statesmen and leaders of commerce. His pilgrimage,
however, produced but little practical result at the t i m e ; he
MEMOIR
XXXI
found that the heads of the commercial houses, as usual,
were timid, while Ministers, as usual, were jealous of any
‘ unauthorised ’ agitation for political objects.
A little later, in 1822, he was again elected as deputy
from his native town to the Representative Assembly of
Wurtemberg. But a powerful petition, which he was chiefly
instrumental in preparing, in favour of Commercial Union,
and of other needful reforms, was resented so strongly by the
King and his Ministers, that List was not only expelled from
the Assembly, but condemned to ten months’ imprisonment
in a fortress, with hard labour, and to pay the costs of the
proceedings against him.
To avoid the execution of this harsh sentence, he escaped
to Strasburg ; but after a brief stay, he was ordered by the
authorities to quit that city, at the instance of the Wiirtemberg Government. From Strasburg he went to Baden, but
only again to suffer the same indignity.
From Baden he
proceeded to Paris, where he was kindly welcomed by General
Lafayette, who invited him to visit the United States.
Instead, however, of at once accepting the invitation, his
intense love of his native country urged him to return to
Wurtemberg and appeal to the mercy of the King. His
appeal was made to deaf ears.
He was arrested and im­
prisoned in the State fortress of the Asberg, from which he
was only released after several months’ confinement, on con­
dition of renouncing his nationality as a Wurtemberger and
quitting the country at once. Once more he proceeded to
Strasburg, and once more his steps were dogged by the vin­
dictive animosity of the King of Wurtemberg, at whose re­
quest he was ordered by the French Government not to
remain in French territory.
He now determined to leave
Europe altogether for a time, and took refuge in the United
States, where he was again warmly welcomed by General
Lafayette, whose introductions secured him the friendship
of President Jackson, Henry Clay, Jam es Madison, Edward
Livingstone, and other influential American statesmen.
After an unsuccessful attempt to maintain himself by
purchasing and cultivating a small piece of land, he started
an American newspaper in the German language— the
* Adler.’ The tariff disputes between Great Britain and the
United States were at that time at their height, and L is t’s
friends urged him to write a series of popular articles on the
xxx ii
MEMOIR
subject in his journal.
H e accordingly published twelve
letters addressed to J . Ingersoll, President of the Pennsyl­
vanian * Association for the Promotion of Manufacturing
Industry.1 In these he attacked the cosmopolitan system of
free trade advocated by Adam Smith, and strongly urged the
opposite policy, based on protection to native industry,
pointing his moral by illustrations drawn from the existing
economical condition of the United States.
T he Association, which subsequently republished the
letters under the title of ' Outlines of a New System of
Political E c o n o m y ’ (Philadelphia, 1827), passed a series of
resolutions affirming that List, by his arguments, had laid the
foundation of a new and sound system of political economy,
thereby rendering a signal service to the United States, and
requesting him to undertake two literary works, one a scien­
tific exposition of his theory, and the other a more popular
treatise for use in the public schools, the Association binding
itself to subscribe for fifty copies of each, and to recommend
the Legislatures of all the other States to do the same.
T h e success of the 4Adler,’ coupled with the fortunate
discovery by himself of a new and important coalfield in
Pennsylvania, had now placed L ist in a position of com­
parative pecuniary ease ; but in spite of the ingratitude he
had experienced at home from the King and the governing
classes, his thoughts still turned to his native land. During
1828 and 1829 he warm ly advocated, in a number of essaysand articles, the formation of a national system of railways
throughout Germ any, and his desire to revisit Europe was
heightened by his anxiety to promote his new scheme.
President Jackso n accordingly, to whom L is t ’s views were
familiar, sent him on a mission to Paris with a view to
facilitating increased commercial intercourse between France
and the United States, and subsequently in 1830 appointed
him Consul for the United States at Plamburg. But the old
spirit, which six years before had met his proposals of political
reform with imprisonment and exile, was not yet dead. In
the eyes of the servile official German press, List was still the
‘ hero of revolution,’ and the American Minister, Van Buren,
had to inform him with deep regret that the Senate of H am ­
burg refused to ratify his appointment. Forbidden to revisit
his native Wiirtemberg, he again retired to Paris, where the
American representative, Rives, introduced him to a number
MEMOIR
XXX1I1
of influential friends. At this time Belgium had just gained
her independence, and a more favourable prospect seemed
opened for realising his plans both for a German national
system of railways, and for increasing, through Belgium, the
commercial intercourse between Germany and the United
States. After a brief visit to America, he returned to Europe
as United States’ Consul at Leipsic, in which capacity he
was able to urge his railway schemes on the Government
and people of Saxony, with such success that before long he
had the satisfaction of witnessing the formation of powerfut
companies for the formation of several German lines. Whilst
at Leipsic he also projected, and in great part wrote, two works
which exercised considerable influence on public opinion in
Germany—the ‘ Staats-Lexicon,’ published in 1834, and the
* Railway Journal,’ which appeared in 1835.
In the original survey of the railway from Halle to Cassel,
the line had been projected so as to avoid the towns of
Naumburg, Weimar, Gotha, Erfurt, and Eisenach. List ex­
posed the impolicy of this arrangement both on strategical
and commercial grounds, and by articles in the press and
personal remonstrances at some of the smaller German courts
succeeded in securing for these towns the benefit of railway
communication. For his exertions on this occasion he re­
ceived the personal thanks of the Duke of Gotha, an honorary
doctor’s degree from the University of Jena, and highly
gratifying assurances on all hands that he had ‘ saved ’ the
th ree Duchies of Weimar, Gotha, and Meiningen from a ‘ fatal
danger.’ These assurances were crowned by the munificent
gift of one hundred louis d’or, which List received with the
remark: ‘ So it appears that each of these “ sav ed ” princi­
palities estimates the value of its salvation at exactly 3 3 J
louis.’
In 1837, on his way to Paris, he visited Belgium, where
he was received with distinction, and renewed his acquaint­
ance with Dr. Kolb, who had shared his imprisonment in the
Asberg. Through Kolb’ s influence, List was persuaded to
accept a permanent literary engagement in connection with
the well-known ‘ Allgemeine Zeitung,’ which at once began
to devote greater space to questions affecting the material
interests of Germany, especially in relation to tariffs and com­
mercial law, and the commercial relations of Germany with
Austria. List made ample use of this excellent opportunity
xxxiv
MEMOIR
of promulgating his opinions by a series of articles, some of
which dealt more particularly with the commercial relations
of Germany and Belgium with the United States. He also
published his views in the columns of the Paris ‘ Constitutionnel ’ in 1839.
The agitation for the repeal of the Corn L a w s in England,
which aroused considerable interest throughout Europe, also
gave him an opportunity for expounding his views in favour
of a national protective policy and recommending its adoption
by Germany.
In pointing out the prejudicial influence which he believed
that restrictions on the importation of corn must necessarily
exercise on the fully established manufacturing power of
England, List argued that a national manufacturing power
can only be successfully established and maintained by a free
importation of raw materials combined with just protection
to native industry against the importation of foreign manu­
factures.
Among many other results expected from the repeal of
the E nglish Corn L aw s, it was anticipated that that measure
would lead to the abolition of the protective duties imposed
by Germany on foreign manufactures. But, according to
List, it is only when a nation has reached such a stage of
development that she can bear the strain of competition with
foreign manufactures without injury in any respect, that she
can safely dispense with protection to her own manufactures,
and enter on a policy of general free trade. This, in fact, is
the central idea of L i s t ’s theory, which in its economical
aspect he opposed to the cosmopolitical theory of Adam Smith
and J. B. Say, and in its political and national aspect to their
theory of universal freedom of trade. These views he main­
tained in many of his essays, more particularly in those ( On
Free Trade and Protection,’ and ‘ On the Nature and Value
of a National Manufacturing Industry.’ It was not until
L i s t ’s articles appeared that any public discussion of these
questions had taken place in Germany, and to him certainly
belongs the credit of having first awakened any general public
interest in them.
After leaving Leipsic, Augsburg became the permanent
residence of List and his family.
Here it was that he
completed the first part of his * National System of Political
Econom y,’ published in 18 4 1. A second part was intended
MEMOIR
XXXV
to comprise ‘ The Policy of the Future,’ and the third, ‘ The
Effect of Political Institutions on the Wealth and Power of
a Nation.’ A commercial treaty had been concluded between
England and Prussia on behalf of the German Zollverein, on
March 2, 1841, just about the time when L is t’s work appeared.
To this treaty List was bitterly opposed, and his denunciation
of it not only aroused the wrath of the official newspapers,
which reviled him as the ‘ German O’ Connell,’ but brought
him again into collision with ‘ the authorities.’ In his de­
spatch to Lord Aberdeen of Ju ly 13 , 1842, the English
Ambassador, Lord Westmoreland, complains of L is t’s pro­
ceedings, and describes him as ‘ a very able writer in the pay
of the German manufacturers.’ As the English Anti-CornL a w League had paid their lecturers and agitators, and as
the English Government had paid Dr. Bowring to agitate
in Germany, France, and Switzerland, in favour of English
commercial interests, Lord Westmoreland’s assumption that
List was also a paid agent was not unnatural, but it was
wholly without foundation. Whatever may have been the
value of L ist’s services on this occasion, they were at least
gratuitous.
As might have been expected, the ‘ National System ’
was vigorously attacked immediately on its publication; but
such was the demand for it that three editions were called
for within the" space of a few months, and translations of it
were published in French, Hungarian, and some other foreign
languages. The principal objection raised against it was that
the system it propounded was not one for the benefit of the
whole world, but simply for the benefit of Germany. This
List never sought to conceal. His avowed object was to free
Germany from the overwhelming manufacturing supremacy
of England, and on this subject some of his ablest opponents
admitted that his was the best practical essay. But List never
advocated a policy of prohibition. ‘ Any nation,’ he declares,
‘ which decides to abandon a policy of absolute freedom of
imports, must commence by imposing very moderate duties,
and reach the protective system which she has decided to
adopt by systematic degrees.’ And again : ‘ Any tariff system
which completely excludes foreign competition is injurious.’
But ‘ the productions of foreign manufacturing industry must
only be permitted to supply a part of the yearly national
consumption,’ and ‘ the maintenance of the foundation of
XXXVI
MEMOIR
the national industry at home must ever be the unvarying
object of a nation’s policy.’
In 1844 he published the fourth part of his principal work,
‘ T he P o litics’ (of national economy). In this, after a graphic
sketch of the negotiations and economical measures promoted
by Canning, Huskisson, Labouchere, and Poulett Thompson,
and censuring what he terms the ‘ crafty and spiteful com­
mercial policy of England,’ he advocates the establishment in
Germ any of thoroughly efficient transport facilities by river,
canal, and railway, under united management— the creation
of a German fleet and the adoption of a universal German flag
— the founding of German colonies abroad— national super­
vision of emigration— the establishment of efficient German
foreign consulates— of regular lines of German steamships—
and the negotiation of favourable commercial treaties with
the United States, Holland, and other countries.
T he contemptuous bitterness with which this work was
criticised by the English press, led many of L is t ’s country­
men to conclude that he had ‘ hit the right nail on the head,’
and thus increased the influence of his writings.
In 1843 he had added to his other numerous literary
labour s the editorship of the ‘ Zollvcreinsblatt,’ and con­
tinued to write in the ‘ Allgemeine Zeitung ’ and other news­
papers, on economical and commercial questions, particularly
on the development of the railway system in Germ any.
He visited Hungary, where he was honourably welcomed,
Kossuth alluding to him in public as ‘ the man who had best
instructed the nations as to their true national economical
interests.’
He received testimonials from the Spinners'
Association of Bohemia, the Congress of Manufacturers of
Leipsic, the Iron Manufacturers of the Rhine, and various
other public bodies. H e enjoyed the further satisfaction,
amidst the bitter opposition which he had to encounter, of
witnessing the conclusion of the treaty between the Zollverein
and Belgium on September I, 1844, for which he had worked
long and earnestly, both in the press and by personal visits
to Brussels, and by which, as he observed, ‘ the Zollverein
was enabled to carry on its foreign trade with as much facility
as if the ports of Holland and North Germ any were included
in it.’ Lastly, at an audience with the King of Wurtemberg,
he received a tardy acknowledgment of the injustice with
which he had formerly been treated in the w o rd s: ‘ My dear
MEMOIR
xxx vii
List, I bear you no ill-will. What a pity it is that twentyfour years ago we had not learnt to know each other as well
as we do n o w ! *
B y this time his almost ceaseless labours had seriously
undermined his health. He suffered from severe and fre­
quent headache, and his bodily weakness increased, but he
still continued his work. The repeal of the Corn Law s in
England was imminent, and List dreaded lest the measure
should enable England still further to encroach on German
manufacturing industry. In spite of his failing health, he
hastened to London in order that he might form a clear idea
on the spot of the state of public opinion, and the probable
effect of the impending change on the industrial interests of
Germany. He was received with courtesy by many who had
strongly opposed his policy, among others by Richard Cobden,
who jokingly asked him, * Have you actually come over here
in order to get yourself converted ? * His visit, however,
only left List more strongly convinced than ever of the earnest
determination of England to secure for herself the manu­
facturing supremacy of the entire Continent, and the corre­
sponding necessity for Germany to protect herself against it.
On his return from England his unfavourable symptoms
both mental and bodily became more alarming, in spite of
the affectionate care of his wife and family, to whom he was
tenderly attached. A journey to the Tyrol was undertaken
in the hope of restoring his shattered health, but it was
already too late. After a few days’ confinement to bed at
Kufstcin, on November 30, 1846, he left his lodging alone.
He did not return. A desponding letter addressed to his
friend Dr. Kolb was found in his room ; search was made,
and his remains were found under some newly fallen snow
under circumstances which left no doubt that in a moment of
mental aberration he had died by his own hand. A monu­
ment in the cemetery at Kufstein marks his last resting-place.
The news of his death was received with sincere and
general regret throughout Germany and wherever he was
known abroad. A subscription was set on foot to present
to his bereaved family a substantial testimonial in recognition
of his unselfish and devoted efforts to promote the unity, the
power, and the welfare of Germany. King Louis of Bavaria
was among the first to subscribe, as was also the Regent of
Wiirtemberg, that native land whose rulers formerly so under­
xxxviii
MEMOIR
valued and ill-treated her able and patriotic son. M any of
his most earnest political opponents joined in this endeavour
to do honour to his memory, and even urged that * it w as the
bounden duty of the German people to erect a statue to the
noble patriot/ an appeal which has since been responded
to by the erection of such a statue in his native town of
Reutlingen.
The commercial policy suggested by L is t has been in
great measure adopted by his native land.
T he internal
tariffs have long since disappeared ; under the Zollverein
German manufactures and commerce have enormously in­
creased ; vigorous steps are being taken to found German
colonies; an Imperial German flag floats over German ship­
ping; a German empire has united the German people. And
though to give effect to these great objects required the
efforts of later and mightier men, a measure of the credit
of them is surely due to the man who was long first and
foremost in their advocacy, to which he sacrificed health,
wealth, and ultimately his life.
L is t ’s talents were those of an original thinker, an able
and laborious writer, and an earnest and untiring political
agitator. F o r the latter career undoubtedly he was far more
fitted by nature than for the service of the State. His was
the thankless task of the political pioneer— the prophet who
is not permitted to witness the full realisation of his own
predictions, and whose message of a brighter future for his
country is disbelieved and resented by those who should have
been foremost to help him to hasten its advent.
SO M E E X T R A C T S
FROM T H E
A U T H O R ’S P R E F A C E TO T H E F I R S T E D IT I O N .
M o r e 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 pre­
pared 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 prin­
ciple 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 Con­
tinental 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 prinxnii
xl
E X T R A C T S FROM A U T H O R ’S P R E F A C E
ciples of free trade, just as those provinces had done. T his 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
cosmopolitical and political economy. I felt that Germ any
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.
In 18 1 9 all Germany teemed with schemes and projects
for new political institutions. Rulers and subjects, nobles
and plebeians, officers of State and men of learning, were
all occupied with them. Germany was like an estate which
had been ravaged by war, whose former owners on resuming
possession of it are about to arrange it afresh.
Some
wanted to restore everything exactly as it had been, down
to every petty d e ta il; others to have everything on a new
plan and with entirely modern implements ; while some, who
paid regard both to common sense and to experience,
desired to follow a middle course, which'might accommodate
the claims of the past with the necessities of the present.
Everywhere were contradiction and conflict of opinion, every­
where leagues and associations for the promotion of patriotic
objects. The constitution of the Diet itself was new, framed
in a hurry, and regarded by the most enlightened and
thoughtful diplomatists as merely an embryo from which a
more perfect state of things might be hoped for in the future.
One of its articles (the 19th) expressly left thedoor open for
the establishment of a national commercial system.
T his
article appeared to me to provide a basis on which the future
industrial and commercial prosperity of the German Father-
E X T R A C T S F R O M A U T H O R ’S P R E F A C E
xli
land might rest, and hence the idea arose of establishing
a league of German merchants and manufacturers for the
abolition of our internal tariffs and the adoption of a common
commercial policy for the whole of Germany.
How this
league took root, and led to united action between the nobleminded and enlightened rulers of Bavaria and Wurtemberg,
and later to the establishment of the German Zollverein, is
well known.
As adviser of this German commercial league, I had a
difficult position.
All the scientifically educated Govern­
ment employes, all the newspaper editors, all the writers on
political economy, had been trained up in the cosmopolitical
school, and regarded every kind of protective duty as a
theoretical abomination. They were aided by the interests
of England, and by those of the dealers in English goods in
the ports and commercial cities of Germany. It is notorious
what a powerful means of controlling public opinion abroad
is possessed by the English Ministry in their ‘ secret service
money ’ ; and they are not accustomed to be niggardly where
it can be useful to their commercial interests. An innumer­
able army of correspondents and leader-writers, from H am ­
burg and Bremen, from Leipzig and Frankfort, appeared in
the field to condemn the unreasonable desires of the German
manufacturers for a uniform protective duty, and to abuse
their adviser in -harsh and scornful terms ; such as, that he
was ignorant of the first principles of political economy as
held by the most scientific authorities, or else had not brains
enough to comprehend them. The work of these advocates
of the interests of England was rendered all the easier by the
fact that the popular theory and the opinions of German
learned men were on their side.
The contest was clearly being fought with unequal
weapons. On one side a theory thoroughly elaborated and
uncontradicted, a compact school, a powerful party which
had advocates in every legislature and learned society, but
above all the great motive power— money.
On the other
side poverty and want, internal divisions, differences of
opinion, and absolute lack of a theoretical basis.
In the course of the daily controversy which I had to
conduct, I was led to perceive the distinction between the
theory of values and the theory of the powers of production, and
beneath the false line of argument which the popular school
xlii
EXTRACTS FROM AUTHOR’S PREFACE
has raised out of the term capital. I learned to know the
difference between manufacturing power and agricultural power.
I hence discovered the basis of the fallacy of the arguments
of the school, that it urges reasons which arc only justly
applicable to free trade in agricultural products, as grounds
on which to justify free trade in manufactured goods. .1
began to learn to appreciate more thoroughly the principle of
the division of labour, and to perceive how far it is appli­
cable to the circumstances of entire nations. At a later period
I travelled through Austria, North Germ any, Hungary, Sw it­
zerland, France, and England, everywhere seeking instruction
from observation of the actual condition of those countries as
well as from written works. When afterwards I visited the
United States, I cast all books aside— they would only have
tended to mislead me. T he best work on political economy
which one can read in that modern land is actual life.
There one may see wildernesses grow into rich and mighty
S t a t e s ; and progress which requires centuries in Europe,
goes on there before one’s eyes, viz. that from the condition
of the mere hunter to the rearing of cattle— from that to
agriculture, and from the latter to manufactures and com­
merce. There one may see how rents increase by degrees
from nothing to important revenues.
There the simple
peasant knows practically far better than the most acute
savants of the old world how agriculture and rents can be
improved ; he endeavours to attract manufacturers and arti­
ficers to his vicinity. Nowhere so well as there can one learn
the importance of means of transport, and their effect on the
mental and material life of the people.
T hat book of actual life, I have earnestly and diligently
studied, and compared with the results of my previous
studies, experience, and reflections.
And the result has been (as I hope) the propounding of
a system which, however defective it may as yet appear, is
not founded on bottomless cosmopolitanism, but on the
nature of things, on the lessons of history, and on the re­
quirements of the nations. It offers the means of placing
theory in accord with practice, and makes political economy
comprehensible by every educated mind, by which previously,
owing to its scholastic bombast, its contradictions, and its
utterly false terminology, the sound sense of mankind had
been bewildered.
EX T R A C T S FROM AUTHOR'S PR E FA C E
xliii
I would indicate, as the distinguishing characteristic of
my system, n a t i o n a l i t y . On the nature of nationality, as
the intermediate interest between those of individualism and
of entire humanity, my whole structure is based. I hesitated
for some time whether I should not term mine the natural
system of political economy, but was dissuaded from so doing
by the remark of a friend, that under that title superficial
readers might suppose my book to be a mere revival of the
physiocratic system.
I have been accused by the popular school, of merely
seeking to revive the (so-called) ‘ mercantile ’ system. But
those who read my book will see that I have adopted in
my theory merely the valuable parts of that much-decried
system, whilst I have rejected what is false in i t ; that I have
advocated those valuable parts on totally different grounds
from those urged by the (so-called) mercantile school, namely,
on the grounds of history and of nature; also that I have
refuted for the first time from those sources the argu­
ments urged a thousand times by the cosmopolitical
school, and have exposed for the first time the false train
of reasoning which it bases on a bottomless cosmopolitanism,
on the use of terms of double meaning, and on illogical
arguments.
If I appear to condemn in too strong language the
opinions and the works of individual authors or of entire
schools, I have not done so from any personal arrogance.
But as I hold that the views which I have controverted are
injurious to the public welfare, it is necessary to contradict
them energetically. And authors of celebrity do more harm
by their errors than those of less repute, therefore they must
be refuted in more energetic terms.
T o candid and thoughtful critics I would remark (as
respects tautology and recapitulation), that everyone who
has studied political economy knows how in that science
all individual items are interwoven in manifold ways,
and that it is far better to repeat the same thing ten
times over, than to leave one single point in obscurity.
I have not followed the prevailing fashion of citing a
multitude of quotations.
But I may say that I have
read a hundred-fold more writings than those from which
I have quoted.
In writing this preface I am humbly conscious that much
x liv
E X T R A C T S FROM A U T H O R ’ S P R E F A C E
fault may be found with my work ; nay, that I myself might
even now do much of it better. B u t my sole encouragement
lies in the thought, that nevertheless much will be found in
my book that is new and true, and also somewhat that may
serve especialty to benefit my German Fatherland.
F IR S T B O O K
the hi s tory
C H A P T E R I.
THE
ITALIANS.
A t the revival o f civilisation in E u ro p e, no country w a s in so
favourable a position as Ita ly in respect to commerce and industry.
B a rb a rism had not been able entirely to eradicate the culture and
civilisation o f ancient Rom e. A genial climate and a fertile soil,
notw ithstanding an unskilful system of cultivation, yielded ab u n ­
dant nourishm ent for a num erous population. T h e most necessary
arts and industries remained as little destroyed as the municipal
institutions o f ancient Rom e. Prosperous coast fisheries served
everyw here as nurseries for seamen, and navigation along It a ly ’s
extensive sea-coasts abundantly compensated her lack of internal
m ean s of transport. H er proxim ity to Greece, A s ia Minor, and
E g y p t , and her maritime intercourse with them, secured for Italy
special ad van tag es in the trade with the E a s t which had previously,
though not extensively, been carried on through R u s s ia with the
countries of the North. B y m eans of this com mercial intercourse
Italy necessarily acquired those branches o f knowledge and those
arts and manufactures which Greece had preserved from the civil­
isation of ancient times.
F ro m the period of the emancipation o f the Italian cities by
Otho the G reat, they g ave evidence of what history has testified
alike in earlier and later times, nam ely, that freedom and industry
are inseparable com panions, even although not unfrequently the
one has come into existence before the other. I f com merce and
industry are flourishing anywhere, one m ay be certain that there
freedom is nigh at hand : if anywhere Freedom has unfolded her
banner, it is as certain that sooner or later Industry will there e s­
tablish h e rse lf; for nothing is more natural than that w hen man
has acquired material or mental wealth he should strive to obtain
guarantees for the transm ission o f his acquisitions to his successors,
or that when he has acquired freedom, he should devote all his
energies to improve his physical and intellectual condition.
F o r the first time since the downfall o f the free states o f anti­
quity w a s the spectacle again presented to the world by the cities
* *
3
4
THE HISTORY
o f Italy of free and rich com m unities. C ities and territories re­
ciprocally rose to a state o f prosperity and received a powerful
impulse in that direction from the Crusades. T h e transport o f
the C ru saders and their b a g g a g e and m aterial of w a r not only
benefited It a ly ’ s n avigatio n, it afforded also inducem ents and
opportunities for the conclusion o f ad v an tag eo u s com m ercial re­
lations with the E a s t for the introduction o f new industries, in:
ventions, and plants, and for acquaintance with n ew en joym en ts.
On the other hand, the oppressions o f feudal lordship were weakened
and diminished in manifold w a y s, ow in g to the sam e cause, tending
to the greater freedom o f the cities and o f the cultivation o f the soil.
N e x t after V enice and G en oa, F lorence becam e especially con­
spicuous for her m an ufactures and her m on etary e xch an ge b u si­
ness. A lread y, in the twelfth and thirteenth centuries, her silk
and woollen m an ufactures were very flo u rish in g ; the g uild s o f
those trades took part in the governm ent, and under their influ­
ence the Republic w a s constituted.
T h e woollen m anufacture
alone employed 200 m anufactories, which produced ann u ally 80,000
pieces of cloth, the raw material for w hich w a s imported from
Spain. In addition to these, raw cloth to the amount of 300,000
gold gulden w a s imported an n u ally from S p ain , F ra n c e , B e lg iu m ,
and G e rm an y , w hich, after being finished at F lorence, w a s ex­
ported to the L e v a n t
Florence conducted the b an k in g business
o f the whole of Italy, and contained eighty b an kin g estab lishm en ts.1
T h e annual revenue of her G overnm ent amounted to 300,000 gold
gulden (fifteen million francs o f our present money), considerably
more than the revenue o f the kingdom s o f N a p le s and A ra g o n at
that period, and more than that o f G re at B ritain and Ireland under
Queen E liz a b e th .2
W e thus see Ita ly in the twelfth and thirteenth centuries pos­
sessin g all the elements of national economical prosperity, and in
respect of both com merce and industry far in advance o f all other
nations. H er agriculture and her m anufactures served a s patterns
and as motives lor em ulation to other countries. H e r roads and
canals w ere the best in Eu rope. T h e civilised world is indebted
to her for banking institutions, the m ariner’ s com pass, im proved
naval architecture, the system o f exch an g e s, and a host o f the
most useful commercial custom s and com mercial law s, as well as
for a great part of its m unicipal and governm ental institutions.
H er commercial, marine, and naval power w ere by far the m ost
important in the southern seas. S h e w a s in possession of the
trade of the w o r ld ; for, with the exception of the unim portant
l De I'E clu se, Florence et ses Vicissitudes, pp. 23, 26, 32, 10 3 , 2 13 ,
2 Pechio, H h to ire de VEconomie P olitiq u e en Ita lie .
THE ITALIANS
5
portion of it carried on over the northern seas, that trade w a s con­
fined to the Mediterranean and the B lack Se a. S h e supplied all
nations with manufactures, with articles of luxury, and with tropical
products, and w a s supplied by them with raw materials.
One
thing alone w a s w an tin g to Ita ly to enable her to become what
E n g la n d has become in our days, and because that one thing w as
w an tin g to her, every other element of prosperity passed aw ay
from h e r ; she lacked national union and the power which springs
from it. T h e cities and ruling powers o f Italy did not act as m em ­
bers o f one body, but made w ar on and ravaged one another like
independent powers and states. W h ile these w ars raged exter­
nally, each com m onw ealth w as successively overthrown by the
internal conflicts between dem ocracy, aristocracy, and autocracy.
T h e se conflicts, so destructive to national prosperity, were stim u ­
lated and increased by foreign powers and their invasions, and by
the power o f the priesthood at home and its pernicious influence,
whereby the separate Italian com m unities were arrayed again st
one another in two hostile factions.
H o w Italy thus destroyed herself m ay he best learned from the
history o f her m aritim e states. W e first see A m alfi great and
powerful (from the eighth to the eleventh century).1 H er ships
covered the seas, and all the coin which passed current in Italy
and the L e v a n t w a s that of Am alfi.
S h e possessed the most
practical code o f m aritim e law s, and those law s were in force
in every port o f the M editerranean.
In the twelfth century her
naval power w a s destroyed by Pisa, P isa in her turn fell under
the attacks of Genoa, and G en oa herself, after a conflict of a hun­
dred ye ars, w a s compelled to succumb to Venice.
T h e fall o f Venice herself appears to h ave indirectly resulted
from this narrow-minded policy.
T o a league of Italian naval
powers it could not have been a difficult task, not merely to m ain ­
tain and uphold the preponderance o f Italy in Greece, A sia Minor, the
Archipelago, and E g y p t , but continually to extend and strengthen
i t ; or to curb the progress o f the T u rk s on land and repress
their piracies at sea, while contesting with the Portu gu ese the
p assage round the Cape o f Good Hope.
A s matters actually stood, however, Venice w a s not merely
left to her own resources, she found herself crippled by the external
attacks o f her sister states and o f the neighbouring E u ro p ean
powers.
1 Amalfi contained at the period o f her prosperity 50,000 inhabitants. F lavio
G uio, the inventor o f the m ariner's com pass, w as a citizen o f Am alfi. It w as at
the sack o f Am alfi by the Pisans (H 3 5 or 1 13 7 ) that that ancient book w as dis­
covered which later on became so injurious to the freedom and energies o f G erm any
— the Pandects.
6
TH E HISTORY
It could not have proved a difficult task to a well-organised
league of Italian military powers to defend the independence of
Italy against the aggression of the great monarchies. The at­
tempt to form such a league was actually made in 1526, but then
not until the moment of actual danger and only for temporary
defence. The luke-warmness and treachery of the leaders and
members of this league were the cause of the subsequent subjuga­
tion of Milan and the fall of the Tuscan Republic. From that
period must be dated the downfall of the industry and commerce
of Italy.1
In her earlier as well as in her later history Venice aimed at
being a nation for herself alone. So long as she had to deal only
with petty Italian powers or with decrepit Greece, she nad no dif­
ficulty in maintaining a supremacy in manufactures and commerce
through the countries bordering on the Mediterranean and Black
Seas. As soon, however, as united and vigorous nations appeared
on the political stage, it became manifest at once that Venice was
merely a city and her aristocracy only a municipal one. It is true
that she had conquered several islands and even extensive provinces,
but she ruled over them only as conquered territory, and hence (ac­
cording to the testimony of all historians) each conquest increased
her weakness instead of her power,
At the same period the spirit within the Republic by which she
had grown great gradually died away. The power and prosperity
of Venice—the work of a patriotic and heroic aristocracy which
had sprung from an energetic and liberty-loving democracy—main­
tained itself and increased so long as the freedom of democratic
energy lent it support, and that energy was guided by the patriotism,
the wisdom, and the heroic spirit of the aristocracy. But in pro­
portion as the aristocracy became a despotic oligarchy, destructive
of the freedom and energies of the people, the roots of power and
prosperity died away, notwithstanding that their branches and
leading stem appeared still to flourish for some time longer.2
‘ A nation which has fallen into slavery,’ says Montesquieu,*
1 H ence C harles V . w as the destroyer o f com m erce and industry in Italy, as
he w as also in the N etherlands and in Spain. H e w as the introducer o f nobility
by patent, and o f the idea that it w as disgraceful for the nobility to carry on com­
merce or m anufactures— an idea which had the most destructive influence on the
national industry. B efore his time the contrary idea prevailed; the M edici con­
tinued to be engaged in com merce long after they had become sovereign rulers.
Q*Quand les nobles, au lieu de verser leur sang pour la patrie, au lieu d'illustrer 1’etat par des victoires et de l'agran d ir par des conquetes, n’eurent plus
q u ‘i jouir des honneurs et d se partager des impdts on dut se demander pourquoi
il y avait huit ou neuf cents habitants de Venise qui se disaient proprietaires de
toute la Republique.1 (Daru, H isto ire de Venise, vol. iv. ch. xviii.J
1 E s p rit des L o is, p. 19 2.
THE ITALIANS
7
1 strives rather to retain w hat it possesses than to acquire m o r e ;
a free nation, on the contrary, strives rather to acquire than to
retain.’ T o this very true observation he m ight h ave added—
and because anyone strives only to retain without acquiring he
m ust come to grief, for every nation which m akes no forward pro­
g ress sinks lower and lower, and m ust ultimately fall. F a r from
'striving to extend their commerce and to make new discoveries,
the V en etian s never even conceived the idea of deriving benefit
from the discoveries made by other nations. T h a t they could be
excluded from the trade with the E a s t Indies by the discovery o f
the new commercial route thither, never occurred to them until
they actually experienced it. W h a t all the rest o f the world per­
ceived they would not b elieve; and when they began to find out
the injurious results o f the altered state of things, they strove to
m aintain the old commercial route instead of seeking to participate
in the benefits of the new one ; they endeavoured to maintain by
petty intrigues w hat could only be won by m aking wise use of the
altered circum stances by the spirit o f enterprise and by hardihood.
And when they at length had lost w hat they had possessed, and
the wealth o f the E a s t and W e s t Indies w as poured into Cadiz
and L isb o n instead o f into their own ports, like simpletons or
spendthrifts they turned their attention to alch e m y .1
In the times when the Republic grew and flourished, to be
inscribed in the Golden B o o k w a s regarded a s a reward for d is ­
tinguished exertions in commerce, in industry, or in the civil or
military service o f the State. On that condition this honour w a s
open to fo r e ig n e r s; for exam ple, to the most distinguished o f the
silk manufacturers who had im m igrated from Floren ce.2 B u t that
book w a s closed when men began to regard places o f honour and
State salaries as the fam ily inheritance of the patrician class. A t
a later period, when men recognised the necessity of g iv in g new
life to the impoverished and enfeebled aristocracy, the book w a s
reopened. B u t the chief title to inscription in it w a s no longer,
as in former times, to have rendered services to the State, but the
possession of wealth and noble birth. A t length the honour o f
being inscribed in the Golden Bo ok w as so little esteemed, that
1A. mere charlatan, M arco B rasadin o, who professed to have the art o f
m aking gold, w as welcom ed by the Venetian aristocracy as a saviour. (Daru,
H tstoire de Venise, vol. iii. ch. xix.)
2 Venice, as Holland and E n glan d subsequently did, made use o f every
opportunity o f attracting to h erself m anufacturing industry and capital from
foreign states. A lso a considerable number o f silk m anufacturers em igrated to
V enice from L u c ca , where already in the thirteenth century the m anufacture o f
velvets and brocades w as very flourishing, in consequence o f the oppression o f
the Lu cch ese tyrant Castruccio C astracani. (Sandu, H istoire de Venise, vol. i.
pp. 247-256.)
8
THE HISTORY
it remained open for a century with scarcely a n y additional
names.
I f we inquire of H istory what were the causes o f the downfall
of this Republic and of its commerce, she replies that they princi­
pally consisted in the folly, neglect, and cowardice of a worn-out
aristocracv, and in the apathy of a people who had sunk into
slavery. T h e commerce and m anufactures of Venice m ust h ave
declined, even if the new route round the C ape of Good H ope
had never been discovered.
T he cause of it, as of the fall of all the other Italian republics,
is to be found in the absence of national unity, in the dom ination
of foreign powers, in priestly rule at home, and in the rise of other
greater, more powerful, and more united nationalities in E u rop e.
If we carefully consider the com mercial policy o f V enice, w e
see at a glance that that o f modern com mercial and m an u factu rin g
nations is but a copy o f that of Venice, on ly on an enlarged (i.e.
a national) scale. B y navigation law s and custom s duties in each
case native v e sse ls and native m anufactures were protected ag ain st
those of foreigners, and the m axim thus early held good that it w a s
sound policy to import raw m aterials from other states and to e x ­
port to them manufactured g ood s.1
It has been recently asserted in defence of the principle of
absolute and unconditional free trade, that her protective policy
w as the cause of the downfall of Venice. T h a t assertion co m ­
prises a little truth with a great deal of error. I f we in vestigate
the history of Venice with an unprejudiced eye, w e find that in her
case, as in that of the great kingdom s at a later period, freedom o f
international trade as well as restrictions on it have been beneficial
or prejudicial to the power and prosperity of the State at different
epochs. Unrestricted freedom o f trade w as "beneficial to the R e ­
public in the first years of her existence ; for how otherwise could
she have raised herself from a mere fishing v illage to a com m ercial
pow er? But a protective policy w a s also beneficial to her w hen
she had arrived at a certain stage of power and wealth, for by
m eans o f it she attained to m an ufacturin g and com m ercial su­
premacy. Protection first became injurious to her when her m an u ­
facturing and com mercial power had reached that suprem acy,
because by it all competition with other nations became absolutely
excluded, and thus indolence w a s encouraged.
Therefore, not
the introduction o f a protective policy, but perseverance in m a in ­
taining it after the reasons for its introduction had passed a w a y ,
w a s really injurious to Venice.
Hence the argument to which we have adverted has this great
‘ Sistnomlt, I liit o ir t d tt Rtfm bhques Italtennts, Pt. I, p. 285.
THE ITALIANS
9
fault, that it takes no account of the rise of great nations under
hereditary monarchy.
Venice, although m istress of some pro­
vinces and islands, yet being all the time merely one Italian city,
stood in competition, at the period o f her rise to a m anufacturing
and com mercial power, m erely with other Italian cities ; and her
prohibitory com mercial policy could benefit her so long only as
whole nations with united power did not enter into competition
with her. B u t as soon a s that took place, she could only have
maintained her supremacy by placing h erself at the head of a
united Italy and by em bracing in her commercial system the whole
Italian nation. N o commercial policy w as ever clever enough to
m aintain continuously the commercial suprem acy o f a single city
over united nations.
F ro m the exam ple of Venice (so far as it m a y be adduced
again st a protective com mercial policy at the present time) neither
more nor less can be inferred than this— that a single city or a
sm all state cannot establish or maintain such a policy successfully
in competition with great states and k in g d o m s; also that an y
power which by m eans of a protective policy h a s attained a posi­
tion o f m anufacturing and commercial suprem acy, can (after she
has attained it) revert with advan tage to the policy o f free trade.
In the argu m en t before adverted to, as in every other when
international freedom o f trade is the subject o f discussion, we
meet with a misconception w hich has been the parent of much
error, occasioned by the m isuse o f the term ‘ freedom.’ Freedom
of trade is spoken of in the sam e term s as religious freedom and
municipal freedom. H ence the friends and advocates o f freedom
feel them selves especially bound to defend freedom in all its forms.
And thus the term free t r a d e ’ has become popular without draw ­
ing the necessary distinction between freedom o f internal trade
within the State and freedom o f trade between separate nations,
notw ithstanding that these two in their nature and operation are
as distinct as the heaven is from the earth. F o r while restrictions
on the internal trade of a state are com patible in only very few
cases with the liberty of individual citizens, in the case o f inter­
national trade the highest degree o f individual liberty m a y consist
with a high degree of protective policy. Indeed, it is even possible
that the greatest freedom of international trade m a y result in
national servitude, as we hope hereafter to show from the case of
Poland. In respect to this Montesquieu sa y s truly, ‘ Com m erce is
never subjected to greater restrictions than in free nations, and
never subjected to less ones than in those under despotic govern­
m e n t,’ 1
1E sprit des L o is , Hvre xx. cb. xii.
C H A P T E R II.
THE
HANSARDS.
T h e spirit o f industry, commerce, and liberty h a v in g attained full
influence in Italy, crossed the A lp s, perm eated G e r m a n y , and
erected for itself a new throne on the shores o f the northern seas,
the Em peror H en ry I,, the father o f the liberator o f the Italian
municipalities, promoted the founding of n ew cities and the en ­
largement o f older ones which w ere already partly established on
the sites of the ancient R o m an colonies and partly in the Im perial
domains.
L ik e the kin g s of F ran ce and E n g la n d at a later period, he and
his successors regarded the cities as the strongest counterpoise to
the aristocracy, as the richest source o f revenue to the State, a s a
new basis for national defence. B y m ean s of their com m ercial
relations with the cities o f Italy, their competition w ith Italian
industry, and their free institutions, these cities soon attained to a
high degree of prosperity and civilisation. L ife in com m on fellowcitizenship created a spirit o f progress in the arts and in m an u fac­
ture, as well as zeal to achieve distinction by w ealth and b y enter­
prise ; while, on the other hand, the acquisition o f m aterial w ealth
stimulated exertions to acquire culture and im provem ent in their
political condition.
Strong through the power of youthful freedom and o f flourish­
ing industry, but exposed to the attacks o f robbers by land and
sea, the maritime tow n s of Northern G e r m a n y soon felt the neces­
sity of a closer mutual union for protection and defence. W ith
this object H am b u rg and L u b eck formed a league in 1 2 4 1 , w hich
before the close of that century embraced all the cities o f a n y im ­
portance on the coasts of the B altic and N orth S e a s , or on the
banks of the Oder, the E lb e, the W e se r, and the R h in e (eightyfive in all). T h is contederation adopted the title of the * H a n s a , ’
which in the L o w G erm an dialect signifies a league.
Prom ptly comprehending w hat ad van tag es the industry o f in­
dividuals m ight derive from a union o f their forces, the H a n s a
lost no time in developing and establishin g a com m ercial policy
which resulted in a degree o f com mercial prosperity previously
THE HANSARDS
II
unexampled. P erceiving that w hatever power desires to create
and maintain an extensive maritime commerce, must possess
the m eans of defending it, they created a powerful navy ; being
further convinced that the naval power of any country is strong
or weak in proportion to the extent o f its mercantile marine and its
sea fisheries, they enacted a law that H an seatic goods should be
conveyed only on board H an seatic v essels, and established exten­
sive sea fisheries. T h e E n g lish navigation law s were copied from
those of the H an seatic L e a g u e , ju s t as the latter were an imitation
o f those of V e n ice .1
E n g la n d in that respect only followed the exam ple of those
who were her forerunners in acquiring suprem acy at sea.
Yet
the proposal to enact a navigation Act in the time of the L o n g
Parliam ent w a s then treated as a novel one. A dam Sm ith a p ­
pears in his com ment on this A c t 2 not to have known, or to have
refrained from stating, that already for centuries before that time
and on various occasions the attempt had been made to introduce
similar restrictions.
A proposal to that effect made by P a r lia ­
ment in 1 4 6 1 w as rejected by H enry V I ., and a similar one made
by J am es I. rejected by P a r l i a m e n t ; 3 indeed, long before these
two proposals (viz. in 1 3 8 1 ) such restrictions had been actually
imposed by Richard II., though they soon proved inoperative and
passed into oblivion. T h e nation w as evidently not then ripe for
such legislation. N avigation laws, like other m easu res for pro­
tecting native industry, are so rooted in the very nature of those
nations who feel them selves fitted for future industrial and com­
mercial greatness, that the United States of North America before
they had fully won their independence had already at the instance
of J a m e s Madison introduced restrictions on foreign shipping, and
undoubtedly with not less great results (as will be seen in a future
chapter) than E n g la n d had derived from them a hundred and fifty
years before.
T h e northern princes, impressed with the benefits which trade
with the H an sard s promised to yield to them — inasmuch as it g ave
them the m eans not only o f d isposing o f the surplus products o f
their own territories, and of obtaining in e xch an ge much better
manufactured articles than were produced at home, but also o f en­
riching their treasuries by m eans o f import and export du ties/ and
1 Anderson, O rigin o f Commerce, Pt. I. p. 46.
3 W ealth o f N ations, Rook IV . ch. ii.
8 Hum e, H istory o f E n g la n d , Part IV . ch. xxi.
4 T h e revenues o f the kings of E n glan d were derived at that time more from
export duties than from import duties. Freedom o f export and duties on imports
(viz. o f m anufactures) betoken at once an advanced state o f industry and an en­
lightened State adm inistration. T h e governm ents and countries o f the North
stood at about the sam e stage o f culture and statesm anship as the Sublim e Porte
12
THE HISTORY
of diverting to habits of industry their subjects who were addicted
to idleness, turbulence, and riot—considered it as a piece of good
fortune whenever the Hansards established factories on their ter­
ritory, and endeavoured to induce them to do so by granting them
privileges and favours of every kind. The kings of England were
conspicuous above all other sovereigns in this respect.
The trade of England (says Hume) was formerly entirely in
the hands of foreigners, but especially of the ‘ Easterlings 11 whom
Henry III. constituted a corporation, to whom he granted privi­
leges, and whom he freed from restrictions and import duties to
which other foreign merchants were liable. The English at that
time were so inexperienced in commerce that from the time of
Edward II. the Hansards, under the title of * Merchants of the
Steelyard,' monopolised the entire foreign trade of the kingdom.
And as they conducted it exclusively in their own ships, the ship­
ping interest of England was in a very pitiable condition.2
Some German merchants, viz. those of Cologne, after they
had for a long time maintained commercial intercourse with E ng­
land, at length established in London, in the year 1250, at the
invitation of the King, the factory which became so celebrated
under the name of ‘ The Steelyard ’—an institution which at first
was so influential in promoting culture and industry in England,
but afterwards excited so much national jealousy, and which for
375 years, until its ultimate dissolution, was the cause of such
warm and long-continued conflicts.
England formerly stood in similar relations with the Hanseatic
League to those in which Poland afterwards stood with the Dutch,
and Germany with the English ; she supplied them with wool,
tin, hides, butter, and other mineral and agricultural products, and
received manufactured articles in exchange. The Hansards con­
veyed the raw products which they obtained from England and
the northern states to their establishment at Bruges (founded in
1252), and exchanged them there for Belgian cloths and other
does in our day. T h e Sultan has, notably, only recen tly concluded com m ercial
treaties, by w hich he en gages not to tax exports o f raw m aterials and m an u fac­
tures higher than fourteen per cent, but im ports not higher than five per cent.
And there accordingly that system o f finance which professes to regard revenue
as its chief object continues in full operation. T h o se statesm en and public w riters
who follow or advocate that system ought to betake them selves to T u r k e y ; there
they m ight really stand at the head o f the tim es.
‘ T h e H ansards were form erly termed ‘ E a s te r lin g s ’ or E astern m erchants,
in E n gland, in contradistinction to those o f the W est, or the B elg ia n s and D utch.
From this term is derived ‘ ste rlin g ’ or ‘ pound ste rlin g ,’ an abbreviation o f the
word ‘ E asterlin g,’ because form erly all the coin in circulation in E n glan d w as
that o f the H anseatic Leagu e.
3 H um e, H istory o f E n g la n d y ch. xxxv.
THE HANSARDS
manufactures, and for Oriental products and manufactures which
came from Italy, which latter they carried back to all the countries
bordering on the northern seas,
A third factory of theirs, at N ovgorod in R u ssia (established
in 12 7 2 ), supplied them with furs, flax, hemp, and other raw pro­
ducts in exchange for manufactures. A fourth factory, at B e rg e n
in N o r w a y (also founded in 127 2 ), w a s occupied principally with
fisheries and trade in train oil and fish products.1
T h e experience of all nations in all tim es teaches us that
nations, so long as they remain in a state o f barbarism , derive
enorm ous benefit from free and unrestricted trade, by which they
can dispose o f the products o f the chase and those o f their pastures,
forests, and agriculture— in short, raw products of every k in d ;
obtaining in exchange better clothing m aterials, m achines, and
utensils, as well as the precious m etals— the great medium o f ex­
ch an ge — and hence that at first they regard free trade with a p ­
proval. B u t experience also sh o w s that those very nations, the
farther advances that they make for them selves in culture and in
industry, regard such a system of trade with a less favourable eye,
and that at last they come to regard it as injurious and as a hind­
rance to their further progress. Such w a s the case with the trade
between E n g la n d and the H an sard s.
A century had scarcely
elapsed from the foundation o f the factory o f the ‘ Steelyard ’ when
E d w a rd I I I , conceived the opinion that a nation m ight do so m e ­
thin g more useful and beneficial than to export raw wool and
import woollen cloth. H e therefore endeavoured to attract F le m ish
w e av e rs into E n g la n d by g ran tin g them all kinds of p r iv ile g e s;
and as soon as a considerable number of them had got to work, he
issued a prohibition again st w e arin g a n y articles made o f foreign
cloth.2
T h e wise m easu res of this king were seconded in the most
m arvellous manner by the foolish policy pursued by the rulers o f
other countries— a coincidence which has not unfrequently to be
noted in com mercial history. I f the earlier rulers o f F lan d e rs and
Brab an t did everythin g in their power to raise their native in­
dustry to a flourishing condition, the later ones did everythin g
that w as calculated to make the commercial and m anufacturing
classes discontented and to incite them to em igration.3
In the ye ar 1 4 1 3 the E n g lish woollen industry had already
made such progress that H u m e could write respecting that period,
1 G reat je a lo u sy prevailed at this time ag ain st foreign m erchants,
and a number o f restrictions were imposed on their trade, as, for
1 M . I. Sartorius, Gesckickte der H an sa.
2 1 1 Edw ard H I. cap. 5,
3 R ym er’s Fcedera, p. 496. D e W itte, Interest o f H o lla n d , p. 45.
14
THE HISTORY
instance, that they were required to la y out in the purchase ot
goods produced in E n g lan d the whole valu e w hich they realised
from articles which they imported into it.’ 1
Under Edw ard IV . this je a lo u sy o f foreign traders rose to
such a pitch that the importation o f foreign cloth, and o f m an y
other articles, w as absolutely prohibited.2
N otwithstanding that the king w a s afterw ards com pelled by
the H an sard s to remove this prohibition, and to reinstate them
in their ancient privileges, the E n g lis h woollen m anufacture ap­
pears to have been greatly promoted by it, a s is noted by H u m e
in treating of the reign of H e n ry V I I . , w ho cam e to the throne
half a century later than E d w a rd I V .
4T h e progress made in industry and the arts im posed limits,
in a much more effective w a y than the rigour of la w s could do, to
the pernicious habit of the nobility o f m ain ta in in g a great number
of servants. Instead o f v y in g with one another in the number
and valour of their retainers, the nobility w ere anim ated by an­
other kind of rivalry more in accordance with the spirit o f civilisa­
tion, inasmuch as they now sought to excel one another in the
beauty of their houses, the elegance of their equ ipages, and the
costliness of their furniture. A s the people could no longer loiter
about in pernicious idleness, in the service of their chieftains and
patrons, they became compelled, by learning som e kind o f h an d i­
work, to make them selves useful to the com m u n ity. L a w s were
again enacted to prevent the export of the precious m etals, both
coined and uncoined ; but as these were well know n to be inopera­
tive, the obligation w a s again imposed on foreign m erchants to
1 Hum e, H istory o f E n g la n d , chap. xxv.
3 E dw ard IV . cap. iv. T h e pream ble to this A ct is so ch aracteristic that
w e cannot refrain from quoting it verbatim.
* W hereas to the said Parliam ent, b y the artificers men and wom en inhabi­
tant and resident in the city o f London and in other cities, tow ns, boroughs and
villages within this realm and W ales, it has been piteously shew ed and com ­
plained, how that all they in general and every of them be greatly im poverished
and much injured and prejudiced of their w orld ly increase and livin g, by the
great multitude of divers chaffers and wares pertaining to their m ysteries and
occupations, being fully wrought and ready made to sale, as well by the hand o f
strangers being the kin g’s enem ies as others, brought into this realm and W ales
from beyond the sea, as well by merchant strangers as denizens or other persons,
whereof the greatest part is deceitful and nothing worth in regard o f any m an’s
occupation or profits, by occasion w hereof the said artificers cannot live by their
m ysteries and occupations, as they used to do in tim es past, but divers o f them
— as well householders as hirelings and other servants and apprentices— in great
number be at this day unoccupied, and do hardly live, in great idleness, poverty,
and ruin, whereby m any inconveniences have grow n before this time, and here­
after more are like to come (which G od defend), if due remedy be not in their
behalf provided.’
T H E HANSARDS
*5
lay out the whole proceeds of goods imported by them, in articles
o f E n g lish m anufacture.’ 1
In the time o f H e n ry V I I I . the prices o f all articles of food
had considerably risen, ow ing to the great number o f foreign
m anufacturers in Lon don ; a sure sign of the great benefit which
the home agricultural industry derived from the development of
home m anufacturing industry.
T h e king, however, totally m isju d g in g the causes and the
operation of this phenomenon, g ave ear to the unjust complaints
of the E n g lish against the foreign manufacturers, whom the
former perceived to have a lw a y s excelled them selves in skill,
industry, and frugality. A n order of the P r iv y Council decreed
the expulsion of 15,000 B e lg ian artificers, ‘ because they had made
all provisions dearer, and had exposed the nation to the risk o f a
fam ine.’ In order to strike at the root o f this evil, law s were
enacted to limit personal expenditure, to regulate the style o f
dress, the prices o f provisions, and the rate o f w ages. T h is policy
naturally w a s w arm ly approved by the H an sards, who acted to­
wards this kin g in the sam e spirit o f good-will which they had
previously displayed towards all those former kings o f E n g la n d
w hose policy had favoured their interests, and which in our days
the E n g lis h d isp lay towards the kings of P o rtu g a l— they placed
their ships of w ar at his disposition. D u rin g this k ing's whole
reign the trade of the H an sard s with E n g la n d w as very active.
T h e y possessed both ships and capital, and knew, not le ss cleverly
than the E n g lis h do in our days, how to acquire influence over
peoples and governm en ts who did not thoroughly understand
their own interests. O nly their argum en ts rested on quite a dif­
ferent basis from those of the trade monopolists of our day. T h e
H a n sa rd s based their claim to supply all countries with m anu­
factures on actual treaties and on immemorial possession o f the
trade, w hilst the E n g lis h in our day base a sim ilar claim on a
mere theory, which h as for its author one o f their own C u sto m ­
house officials. T h e latter demand in the nam e o f a pretended
science, w hat the former claimed in the nam e o f actual treaties
and of justice.
In the reign of E d w a rd V I . the P r iv y Council sought for and
found pretexts for abolishing the privileges of the * Merchants o f
the Steelyard.' T h e H an sard s made strong protests against this
innovation. B u t the P riv y Council persevered in its determina­
tion, and the step w a s soon followed by the m ost beneficial results
to the nation. T h e E n g lish merchants possessed great advan tages
Over the foreign ones, on account o f their position as dwellers in
1 Hum e, chap, xxvi.
i6
TH E HISTORY
the country, in the purchase o f cloths, wool, and other articles,
ad vantages which up to that time they had not so clearly per­
ceived a s to induce them to venture into competition with such a
w ealthy company. B u t from the time when all foreign m erchants
were subjected to the same com mercial restrictions, the E n g lis h
were stimulated to enterprise, and the spirit o f enterprise w a s
diffused over the whole kingdom .1
After the H an sard s had continued for some y e a r s to be entirely
excluded from a market which they had for three centuries pre­
v iou sly possessed a s exclusively as E n g la n d in our d a y s p o sse sses
the markets o f G e r m a n y and the United S ta te s, th ey were rein­
stated by Queen M ary in all their ancient p rivileg es o w in g to
representations made by the G erm an E m p e r o r.2 B u t their jo y
w as this time of short duration. B e in g earnestly desirous not
m erely of m aintaining these privileges, but of in creasin g them,
they made strong complaints at the b egin ning o f the reign o f
Elizabeth of the treatment to which they had been subjected under
E d w ard V I . and M ary. E lizabeth prudently replied that £ she
had no power to alter anything, but she would w illin g ly protect
them still in the possession o f those privileges and im m u nities
which they then possessed.’ T h is reply, how ever, did not satisfy
them at all. Som e time afterwards their trade w a s further s u s ­
pended, to the great advan tage o f the E n g lis h m erchants, w ho now
had an opportunity o f sh o w in g of w hat they were c a p a b le ; th ey
gained control over the entire export trade o f their ow n country,
and their efforts were crowned with com plete success. T h e y
divided them selves into ‘ staplers and merchant ad v e n tu re rs,’ the
former carrying on business in som e one place, the latter seeking
their fortune in foreign cities and states with cloth and other
E n g lish manufactures. T h is excited the je a lo u s y o f the H a n sa rd s
so greatly, that they left no m e a n s untried to draw down on the
E n g lish traders the ill opinion of other nations. A t length, on
A ugust i, 1597, they gained an imperial edict, by w hich all trade
within the G erm an E m p ire w as forbidden to E n g li s h m erchants.
T h e Queen replied (on J a n u a r y 13, 1598) by a proclam ation, in
consequence o f which she sought reprisals by seizin g sixty H a n ­
seatic vessels which were engaged in contraband trade w ith Spain.
In taking this step she had at first on ly intended, by restorin g the
vessels, to bring about a better und erstand in g w ith the H a n sa rd s.
B u t when she w as informed that a general H a n se a tic asse m b ly
w as being held in the city of L u b eck in order to concert m easu res
for harassin g the export trade o f E n g la n d , she cau sed all these
1 Hume, chap. x x x v ,; also S ir J . H ayw ard , L i f e an d R e ig n o f E d w a r d V I .
2 Hume, chap. x x x v ii.; H eylyn.
THE HANSARDS
17
v essels with their cargoes to be confiscated, and then released two
of them, which she sent to Liibeck with the m e ssag e that she felt
the greatest contempt for the H an seatic L e a g u e and all their pro­
ceedings and m easu res.1
T h u s Elizabeth acted towards these merchants, w ho had lent
their ships to her father and to so m an y E n g lish kings to fight
their battles; w ho had been courted by all the potentates o f
E u r o p e ; who had treated the kings o f D en m ark and Sw ed en as
their v a s sa ls for centuries, and invited them into their territories
and expelled them as they p le ase d ; who had colonised and civil­
ised all the south-eastern coasts o f the Baltic, and freed all se as
from piracy ; w h o not very long before had, with sword in hand,
compelled a king o f E n g la n d to recognise their p r iv ile g e s ; to
whom on more than one occasion E n g lish kin g s had given their
crowns in pledge for loans ; and who had once carried their cruelty
and insolence towards E n g la n d so far a s to drown a hundred
E n g lis h fishermen because they had ventured to approach their
fishing grounds. T h e H a n sa rd s, indeed, still possessed sufficient
power to have avenged this conduct of the Queen of E n g l a n d ;
but their ancient courage, their m igh ty spirit of enterprise, the
power inspired by freedom and by co-operation, had passed from
them.
T h e y dwindled gradually into pow erlessness until at
length, in 1630, their L e a g u e w a s formally dissolved, after they
had supplicated every court in Eu rope for import privileges, and
had everyw here been repulsed with scorn.
M any external causes, besides the internal ones which we have
to mention hereafter, contributed to their fall. D enm ark and
Sw ed en sought to aven ge them selves for the position of depend­
ence in which they had been so long held by the L e agu e , and
placed all possible obstructions in the w ay of its commerce. T h e
czars of R u ssia had conferred privileges on an E n g lish com pany.
T h e order of T eu tonic knights, who had for centuries been the
allies as well as (originally) the children of the Leagu e, declined
and w as dissolved. T h e Dutch and the E n g lis h drove them out
of all markets, and supplanted them in every court. F in a lly , the
discovery of the route to the E a s t Indies by the Cape of Good
Hope, operated m ost seriously to their disadvantage.
T h e se leaguers, who during the period of their m ight and
prosperity had scarcely deemed an alliance with the G erm an E m ­
pire as w orthy o f consideration, now in their time of need betook
them selves to the G erm an R e ich sta g and represented to that body
that the E n g lish exported an n u ally 200,000 pieces o f cloth, o f
which a great proportion went to G e rm a n y , and that the only
1 C am pbell’s L iv e s o f the A d m ira ls, vol. i. p. 386.
2
,g
THK HISTORY
hiriinft whereby the LeaR.ie cmild rcK.ui. its ancient privile,;e« in
Km dum l, was to prohibit the im port >of K iiK h n h clo th in to ( ie r
inm iy,
According to Anderson, a decree o f the U eiehstU K lo that
cllcct wun seriously contem plated, if not u ctim lly d ra w n lip, but
(loti author UHHerth tlmt (iilp in , the K iiK lis h a m b a s s a d o r to the
Krichstu);, contrived to prevent i I h hcinn passed.
A hundred and
lillv years after the fornml dissolution ol the llu n s c u tic D eai;uc,
no com pletely had all m em ory of it h form er (jrcutnesH disap peared
in the I lunsrutic cities that Ju s tu s M o ser asserts (in Home passa/pm Iiih works) lliat when he visited those cities, and n arrated to
their uicrchautH the power and (p e a ln e ss w h ich th e ir predecessors
had enjoyed, they would Hcarcely hclievc h im ,
H a m b u rg , lor
m erly the terror of piratcH in every sea, and ren ow n ed th ro u g h o u t
t luiMtrndom for the ncrviech w h ich who had rendered to c iv ilis a ­
tion m HiipprcHHin^ Hca-rohhcrs, had mink ho low th at idle had to
purchase Mufety for her vesuris hy payin j; an a n n u a l trib u te to
the pirates of Algiers.
A fterw ard s, w h e n the d o m in io n o f the
seas had passed into the hands o f the D u tch , a n o th e r p o licy b e ­
came prevalent in reference to piracy.
W h e n the 11 a use at ic
Leagu e w ere supreme at sea, the pirate w a s co nsid ered as the
enem y of the civilised world, and extirpated w h e re v e r th at w a s
possible.
T h e Dutch, on the contrary, regarded the co rs a irs of
itarhary ns uselul partisans, hy whose m eans the m a rin e c o m ­
merce of other nations could he destroyed in tim e s o f peace, to
the ad vantage ol the Dutch.
AnderHon a v a ils h im s e lf o f tile
(piotation ol an observation o f De W it t in fa vo u r o f th is p o licy
to make the laconic com m ent? * h'as cst et ah hosle d o ce ri,' a piece
of advice w hich, in spite ol its brevity, his co u n try m e n co m p re
bended and followed so w ell that the K n ^ lis h , to the d is g ra c e of
t h riatianity, tolerated even u ntil our days the a b o m in a b le d o in g s
of the sca-rohhcrs on the N o rth A frican coasts, u n til the F re n c h
performed the ^ rru l service to c iv ilis a tio n o f e x tirp a tin g th e m .1
I he comm erce of these llu n s c a tic cities w as not a notional
o n e ; it w as neither based on the cipial prep onderance and perfect
development ot internal pow ers ol production, nor su stain ed by
adequate political power,
T h e bonds w h ich held to g eth e r the
members ol the Leag u e were too lax, the s tr iv in g u nio n ); them
or predominant power and for separate in terests (or, as the S w is s
or the Am ericans would say, the canton al sp irit, the spirit ol
separate state ri^ht) was too predom inant, and superseded M a n
■cutic patriotism , w hich alone could have caused the g e n e ral
common weal of the Lea g u e to he considered before th e p riva te
'.a o IT Y i
^ * VP *w Ko l t r n .
u p l o t u o l tt w l l n i i t h l l c c i u n iio r L o r d K x t u u u t h ,
>‘ t* c a n t u i i t y l( * m > i r d , l h a
THE HANSARDS
19
interests o f individual cities. H e n c e arose jealou sies, and not
unfrequently treachery. T h u s Cologne turned to her own private
ad v a n ta g e the hostility o f E n g la n d tow ards the L e a g u e , and
H a m b u rg sought to utilise for her own advantage a quarrel which
arose between D en m ark and L u b e ck.
T h e H a n sea tic cities did not base their com merce on the pro­
duction and consum ption, the agriculture or the m anufactures, o f
the land to which their m erchants belonged. T h e y had neglected
to favour in a n y w a y the agricultural industry o f their own father­
land, while that o f foreign lands w a s greatly stimulated by their
com m erce. T h e y found it more convenient to purchase m a n u ­
factured goods in B e lg iu m , than to establish m anufactories in
their ow n country. T h e y encouraged and promoted the a g ric u l­
ture o f Poland, the sheep-farm ing of E n g la n d , the iron industry
o f Sw ed en , and the m an ufactures o f B e lg iu m , T h e y acted for
centuries on the m axim which the theoretical econom ists of our
day com m end to all nations for adoption— they ‘ bought only in
the cheapest m arket.’ B u t when the nations from w hom they
bought, and those to whom they sold, excluded them from their
m arkets, neither their own native agriculture nor their own m a n u ­
facturing industry w a s sufficiently developed to furnish em ploym ent
for their surplus com mercial capital. It consequently flowed over
into H ollan d and E n g la n d , and thus went to increase the industry,
the wealth, and the pow er of their e n e m i e s ; a striking proof that
mere private industry w hen left to follow its own course does not
a lw a y s promote the prosperity and the power of nations. In
their exclusive efforts to gain material wealth, these cities had
utterly neglected the promotion o f their political interests. D u rin g
the period of their power, they appeared no longer to belong at
all to the G e rm a n E m p ire.
It flattered these selfish, proud
citizens, within their circumscribed territories, to find th em selves
courted b y em perors, kin gs, and princes, and to act the part o f
sovereign s of the seas.
H o w e a sy would it h ave been for them
during the period of their m aritim e suprem acy, in combination
with the cities of North G e rm a n y , to have founded a powerful
L o w e r H o u se as a counterpoise to the aristocracy of the empire,
and by m ean s o f the imperial power to have thus brought about
national u n ity— to h ave united under one nationality the whole
sea-coast from Dunkirk to R i g a — and by these m ean s to have
won and m aintained for the G erm an nation suprem acy in m a n u ­
factures, com merce, and maritime power. B u t in fact, when the
sceptre o f the seas fell from their grasp, they had not sufficient
influence left to induce the G erm an R e ic h sta g to regard their
com m erce as a matter o f national concern. On the contrary, the
G erm an aristocracy did all in their power thoroughly to oppress
2 *
20
THE HISTORY
these humbled citizens. T h e ir inland cities fell g r a d u a lly under
the absolute dominion of the various princes, an d hence their
maritime ones were deprived of their inland con nections.
All these faults had been avoided by E n g la n d .
H e r m erchant
shipping and her foreign commerce rested on the solid b a sis of
her native agriculture and native industry ; her in tern al trade de­
veloped itself in ju st proportion to her foreign trade, and individual
freedom grew up without prejudice to national u n ity or to national
power: in her case the interests of the C ro w n , the aristocracy,
and the people became consolidated and united in the happiest
manner.
I f these historical facts are duly considered, can a n y o n e p os­
sibly maintain that the E n g lish could ever h ave so w id ely extended
their manufacturing power, acquired such an im m e a s u ra b ly great
commerce, or attained such overw helm in g n a v a l pow er, sav e by
means of the commercial policy which they adopted and pursued ?
N o ; the assertion that the E n g lish have attained to their present
commercial eminence and power, not by m ean s o f their com m ercial
policy, but in spite of it, appears to us to be one o f the g reatest
falsehoods promulgated in the present century.
Had the E n g lish left everything to itself— ‘ L a i s s e faire et
laisse aller,’ as the popular economical school rec o m m e n d s— the
merchants of the Steelyard would be still c a r r y in g on their trade
in London, the B elg ian s would be still m an u factu rin g cloth for
the English, E n glan d would have still continued to be the sheepfarm of the H an sards, ju st as Portugal became the v in e y a rd o f
England, and has remained so till our days, o w in g to the stratagem
of a cunning diplomatist. Indeed, it is more than probable that
without her commercial policy E n g la n d would never h a v e attained
to such a large measure of municipal and individual freedom as
she now possesses, for such freedom is the dau g h ter o f industry
and of wealth.
In view of such historical considerations, h o w h a s it happened
that Adam Smith has never attempted to follow the h isto ry o f
the industrial and commercial rivalry between the H a n se a tic
League and E n glan d from its origin until its close ? Y e t som e
passages in his work show clearly that he w a s not unacquainted
with the causes of the fall of the L e a g u e and its results. ‘ A
merchant, he says, ‘ is not necessarily the citizen o f a n y p a r ­
ticular country. It is in a great measure indifferent to him from
what place he carries on his trad e; and a v ery trifling d isg u st
will make him remove his capital, and together w ith it all the
industry which it supports, from one country to another. N o
part of it can be said to belong to any particular cou n try till it
has been spread, as it were, over the face o f that country, either
TH E HANSARDS
21
in buildings or in the la stin g im provem ent of lands. N o vestige
now rem ains o f the great wealth said to have been possessed by
the greater part o f the H a n se T o w n s except in the obscure h is­
tories o f the thirteenth and fourteenth centuries. It is even un­
certain where som e of them were situated, or to w hat towns in
Eu rope the L a tin n am es given to some o f them belong.’ 1
H o w strange that A dam Sm ith , h a v in g such a clear insight
into the secondary causes o f the downfall of the H an seatic L eagu e,
did not feel h im se lf compelled to exam ine into its prim ary c a u s e s !
F o r this purpose it would not h ave been at all necessary to have
ascertained the sites where the fallen cities had stood, or to which
cities belonged the L a tin nam es in the obscure chronicles. H e
need not even have consulted those chronicles at all. H is own
countrym en, Anderson, M acpherson, K in g, and H u m e, could have
afforded him the necessary explanation.
H ow , therefore, and for what reason could such a profound
inquirer permit h im se lf to abstain from an investigation at once
so interesting and so fruitful in re su lts? W e can see no other
reason than this— that it would h ave led to conclusions which
would have tended but little to support his principle o f absolute
free trade. H e would infallibly have been confronted with the
fact that after free com mercial intercourse with the H an sard s had
raised E n g lis h agriculture from a state of barbarism, the protective
com mercial policy adopted by the E n g lish nation at the expense
of the H an sard s, the B e lg ian s, and the Dutch helped E n g la n d to
attain to m anufacturing suprem acy, and that from the latter,
aided by her N a v ig a tio n A cts, arose her com mercial supremacy.
T h e s e facts, it would appear, A dam Sm ith w as not w illin g to
know or to a c k n o w le d g e ; for indeed they belong to the category
o f those inconvenient facts of which J . B . S a y observes that they
would have proved v ery adverse to his system .
1 Sm ith, W ealth o f N a tio n s, Book I I I . ch. iv.
C H A P T E R III.
TH E N ETH ERLAN D ERS.
I n respect to temperament and m an ners, to the origin and l a n ­
guage of their inhabitants, no less than to their political connection
and geographical position, H olland, F lan d ers, and B r a b a n t c o n ­
stituted portions of the G erm an E m p ire . T h e m ore frequent
visits of Charlem agne and his residence in the vic in ity o f these
countries m ust h ave exercised a m uch more powerful influence on
their civilisation than on that of more distant G e rm an territories.
Furthermore, Fland ers and B rab an t w ere specially favoured by
nature as respects agriculture and m anufactures, as H o lla n d w a s
as respects cattle-farming and commerce.
Nowhere in G e r m a n y ,w a s internal trade so pow erfully aided
by extensive and excellent sea and river navigatio n a s in these
maritime states. T h e beneficial effects o f these m ean s o f w a te r
transport on the improvement o f agriculture and on the grow th o f
the towns must in these countries, even at an early period, h ave
led to the removal of impediments which hindered their pro gre ss
and to the construction o f artificial canals. T h e prosperity o f
Flanders w as especially promoted by the circum stance that her
ruling Counts recognised the value of public security, o f good
roads, manufactures, and flourishing cities before all other G e r m a n
potentates. Favoured by the nature of their territory, they de­
voted themselves with zeal to the extirpation o f the robber k n ig hts
and of wild beasts. Active commercial intercourse between the
cities and the country, the extension o f cattle-farming, e sp ecially
of sheep, and of the culture of flax and hem p, n atu rally followed ;
and wherever the raw material is abundantly produced, and
security of property and o f intercourse is m aintained, labour and
skill for working up that material will soon be found. M e an w h ile
the Counts of Flanders did not w ait until chance should furnish
them with woollen w eavers, for history informs us that they im ­
ported such artificers from foreign countries.
Supported by the reciprocal trade o f the H an seatic L e a g u e
and of Holland, Flanders soon rose by her woollen m an u factu res
to be the central point of the commerce of the North, just a s
22
TH E NETHERLANDERS
23
V enice by her industry and her shipping had become the centre
o f the commerce o f the South. T h e merchant shipping, and re­
ciprocal trade o f the H an seatic L e a g u e and the Dutch, together
with the m anufacturing trade of F la n d e rs, constituted one great
whole, a real national industry. A policy of commercial restric­
tion could not in their case be deemed necessary, because as yet
no competition had arisen ag ain st the m anufacturing supremacy
o f F lan d ers. T h a t under such circumstances m anufacturing in­
du stry thrives best under free trade, the Counts o f F lan d ers under­
stood without h a v in g read A d am Smith. Quite in the spirit of
the present popular theory, Count Robert I I I . , when the K in g of
E n g la n d requested him to exclude the Scotch from the F le m ish
markets, replied, ‘ F la n d e rs has a lw a y s considered herself a free
market for all nations, and it does not consist with her interests
to depart from that principle.’
After F lan d e rs had continued for centuries to be the chief
m an ufacturin g country, and B ru g e s the chief market, o f Northern
Eu rope, their m anufactures and commerce passed over to the
neighbouring province o f B rab an t, because the Counts of F lan d e rs
would not continue to grant them those concessions to which in
the period of their great prosperity they had laid claim. A ntwerp
then became the principal seat of commerce, and L o u v a in the
chief m an u factu rin g city of Northern Europe. In consequence
o f this change of circum stances, the agriculture of B rab ant soon
rose to a high state of prosperity. T h e chan ge in early times
from p aym en t o f im posts in kind to their paym ent in money,
and, above all, the limitation of the feudal system , also tended
especially to its advantage.
In the m eantim e the Dutch, who appeared more and more
upon the scene, with united power, as riv als to the H an seatic
L e a g u e , laid the foundation of their future power at sea. Nature
had conferred benefits on this sm all nation both by her frowns
and smiles. T h eir perpetual contests with the inroads of the sea
necessarily developed in them a spirit o f enterprise, industry, and
thrift, while the land which they had reclaimed and protected by
such indescribable exertions must have seemed to them a property
to w hich too much care could not be devoted. Restricted by
N atu re h erself to the pursuits of navigatio n, of fisheries, and the
production of meat, cheese, and butter, the Dutch were compelled
to supply their requirements o f grain, timber, fuel, and clothing
m aterials by their m arine-carrying trade, their exports o f dairy
produce, and their fisheries.
T h o se were the principal causes w h y the H a n sa rd s were at a
later period gradually excluded by the Dutch from the trade with
the north-eastern countries. T h e Dutch required to import far
z4
THE HISTORY
greater quantities of agricultural produce and o f tim ber than did
the H ansards, who were chiefly supplied w ith these articles by
the territories immediately adjoining their cities. A n d , further,
the vicinity to Holland of the B elg ian m a n u fa c tu rin g districts,
and of the Rhine with its extensive, fertile, and vine-clad banks,
and its stream navigable up to the m ou n tains o f S w itz e rla n d ,
constituted great advantages for the Dutch.
It may be considered as an axiom that the co m m e rce and
prosperity of countries on the sea coast is dependent on the
greater or less magnitude of the river territories w ith w h ic h they
have communication by water.1 I f we look at the m ap o f Italy,
we shall find in the great extent and fertility o f th e v a lle y o f the
Po the natural reason w h y the com merce o f V e n ic e so g re atly
surpassed that of Genoa or o f P isa . T h e trade o f H o lla n d h a s
its chief sources in the territories watered by the R h in e and its
tributary streams, and in the sam e proportion a s th ese territories
were much richer and more fertile than those w atered by the E lb e
and the W eser must the commerce of H ollan d exceed th a t o f the
Hanse T ow n s. T o the advantages above nam ed w a s added a n ­
other fortunate incident— the invention by P eter B o c k e ls o f the
best mode of salting herrings. T h e best mode o f c a tc h in g and
of ‘ bockelling ’ these fish (the latter term derived from the in­
ventor) remained for a long period a secret know n o n ly to the
Dutch, by which they knew how to prepare their h e rr in g s with
a peculiar excellence su rpassing those of all other p e rso n s e n g a g e d
in sea fishery, and secured for them selves a preference in the
markets as well as better prices.2 A nderson a lle g e s th at after
the lapse of centuries from the date o f these in v e n tio n s in H o l­
land, the E n glish and Scotch fishermen, n o tw ith sta n d in g their
enjoyment of a considerable bounty on export, could not find
purchasers for their herrings in foreign m arkets, e ve n at m uch
lower prices, in competition with the Dutch. I f w e bear in m ind
how great w as the consumption o f sea fish in all cou n tries before
the Reformation, we can well g iv e credit to the fact th at at a tim e
when the Hanseatic shipping trade had already begun to decline,
the Dutch found occasion for building 2,000 n ew v e s s e ls a n n u a lly .
From the period when all the B e lg ian and B a t a v ia n p ro vin ces
were united under the dominion of the H ou se o f B u r g u n d y , th ese
countries partly acquired the great benefit o f national u n ity, a
circumstance which must not be left out o f sig h t in connection
C c ? nst™ ction o f good roads, and still more o f ra ilw a y s, w h ich h as
taken place in quite recent times, has m aterially modified this axiom .
attr;hntaMS
recentty state^ that the excellence o f the D utch h errin gs is
ra«W« in
.u
t0 ^
suPerior m ethods above nam ed, but also to the
ic
ey are bockelled and exported bein g constructed o f oak
T H E NETHERLANDERS
25
with H o lla n d ’ s success in m aritim e trade in competition with the
cities of Northern G e rm a n y .
U nder the E m p e ro r Charles V.
the United N etherland s constituted a m a ss of power and capacity
which would have insured to their Im perial ruler suprem acy over
the world, both by land and at sea, far more effectually than all
the gold m ines on earth and all the papal favours and bulls could
h ave done, had he only comprehended the nature of those powers
and known how to direct and to m ake use of them.
H ad C harles V. cast a w a y from him the crown o f Sp ain as a
m an casts a w a y a burdensome stone which threatens to drag him
down a precipice, how different would have been the destiny o f the
Dutch and the G erm an peoples ! A s R u ler of the United N ether­
lands, as E m p e ro r of G erm an y, and as H ead of the Reform ation,
C harles possessed all the requisite means, both material and in­
tellectual, for establishin g the m ightiest industrial and commercial
empire, the greatest m ilitary and n aval power which had ever
existed— a m aritim e power which would h ave united under one
flag all the shipping from Dunkirk as far as R iga.
T h e conception o f but one idea, the exercise o f but one m a n ’s
will, were all that were needed to h ave raised G e rm a n y to the
position of the w ealthiest and m ightiest empire in the world, to
have extended her m an ufacturin g and com m ercial su prem acy over
every quarter o f the globe, and probably to h ave m aintained it
thus for m a n y centuries.
C harles V . and his morose son followed the exactly opposite
policy. P la c in g them selves at the head of the fanatical party,
they made it their chief object to hisp a n icise the N etherlands.
T h e result o f that policy is matter of history.
T h e northern
Dutch provinces, strong by m eans of the element over which they
were supreme, conquered their independence. In the southern
provinces industry, the arts, and commerce, perished under the
hand o f the executioner, save only where they m anaged to escape
that fate by e m igratin g to other countries. A m sterd am became
the central point of the w orld's commerce instead of Antwerp.
T h e cities o f H olland, which already at an earlier period, in con­
sequence o f the disturbances in B rab an t, had attracted a great
number o f B e lg ia n woollen w eavers, had now not room enough
to afford refuge to all the B e lg ian fugitives, o f w hom a great
num ber were consequently compelled to em igrate to E n g la n d and
to S a x o n y .
T h e stru ggle for liberty begot in H olland an heroic spirit at
sea, to w hich nothing appeared too difficult or too adventurous,
while on the contrary the spirit of fanaticism enfeebled the very
nerves o f Spain.
H olland enriched herself principally by p riv a ­
teering a g a in st S p ain , especially by the capture of the Sp an ish
26
THE HISTORY
treasure fleets. B y that means she carried on an en orm ou s c o n ­
traband trade with the Pen in sula and with B e lg iu m . A fte r the
union of Portugal with Spain, H olland becam e posse ssed o f the
most important Portuguese colonies in the E a s t In d ies, and
acquired a part of Brazil. U p to the first h a lf o f the seventeenth
century the Dutch surpassed the E n g lis h in respect o f m an u factures and of colonial possessions, o f com merce and o f n a v ig a tio n ,
as greatly as in our tim es the E n g lis h h ave surpassed the F re n c h
in these respects. B u t with the E n g li s h R e v o lu tio n a m ig h t y
change developed itself. T h e spirit o f freedom had becom e o n ly
a citizen spirit in Holland. A s in all mere m ercantile aristocracies,
all went on well for a t i m e ; so long as the preservation o f life
and limbs and of property, and mere m aterial a d v a n ta g e s, were
the objects clearly in view , they showed th em selv e s capab le o f
great deeds. But statesm an ship o f a more profound character
w as beyond their ken. T h e y did not perceive that the su p re m a c y
which they had won, could only be m aintained i f it w ere based
on a great nationality and supported by a m ig h ty national spirit.
On the other hand, those states which had developed their nation ­
ality on a large scale by m eans o f m onarchy, but w hich w ere yet
behindhand in respect of com merce and industry, becam e a n i­
mated by a sentiment of sham e that so sm all a cou n try as
Holland should act the part o f m aster over them in m an u factu res
and commerce, in fisheries, and n av al power. In E n g la n d this
sentiment w as accompanied by all the energy o f the new-born
Republic. T h e N avig ation L a w s were the challen ge g lo ve w h ich
the rising supremacy of E n g la n d cast into the face o f the re ig n in g
supremacy o f Holland. A nd when the conflict cam e, it becam e
evident that the E n g lis h nationality w a s of far larger calibre than
that of the Dutch. T h e result could not rem ain doubtful.
T h e example of E n g la n d w a s followed b y F ra n c e . Colbert
had estimated that the entire m arine transport trade em ployed
about 20,000 vessels, of which 16,000 w ere ow ned by the D utch
— a number altogether out of proportion for so sm all a nation. In
consequence of the succession of the B o u rb o n s to the S p a n is h
throne, France w as enabled to extend her trade over the P e n in su la
(to the great disadvantage o f the Dutch), and equ ally so in the
Levant. Sim ultaneously the protection by F ra n ce o f her native
manufactures, navigation, and fisheries, m ade im m ense inroads on
the industry and commerce o f H olland.
England had gained from H olland the greater part o f the trade
of the latter with the northern E u ro p ean states, her contraband
trade with Spain and the S p an ish colonies, and the greater part o f
her trade with the E a s t and W e s t Indies, and of her fisheries.
But the most serious blow w a s inflicted on her by the M ethuen
THE NETHERLANDERS
27
T re a ty o f 1 7 0 3 .
F ro m that the com merce o f H olland with
P o rtu gal, the Portuguese colonies, and the E a s t Indies, received
a deadly wound.
W h en H olland thus com menced to lose so large a portion of
her foreign trade, the sam e result took place which had previously
been experienced by the H an seatic cities and by V e n i c e : the
material and mental capital which could now find no em ploym ent
in H olland, w a s diverted by emigration or in the shape o f loans
to those countries which had acquired the suprem acy from H olland
which she had previously possessed.
I f Holland in union with B e lg iu m , with the R h en ish districts,
and with N orth G erm an y , had constituted one national territory,
it would have been difficult for E n glan d and F ran ce to have
w eakened her n aval power, her foreign commerce, and her internal
industry by w ars and by com mercial policy, as they succeeded in
doing. A nation such a s that would have been, could have placed
in competition with the commercial syste m s of other nations a
com m ercial system of her own. A nd if o w in g to the development
of the m anufactures of those other nations her industry suffered
some injury, her own internal resources, aided by founding colonies
abroad, would h ave abundantly made good that loss. H olland
suffered decline because she, a mere strip of sea coast, inhabited by
a sm all population of G erm an fishermen, sailors, merchants, and
dairy farmers, endeavoured to constitute herself a national power,
while she considered and acted towards the inland territory at her
back (of which she properly formed a part) as a foreign land.
T h e exam ple of H olland, like that of B elgium , of the H an seatic
cities, and of the Italian republics, teaches us that mere private
industry does not suffice to maintain the commerce, industry, and
wealth of entire states and nations, if the public circumstances
under which it is carried on are unfavourable to i t ; and further,
that the greater part of the productive powers of individuals are
derived from the political constitution of the governm ent and from
the power o f the nation. T h e agricultural industry o f B elgium
became flourishing again under A ustrian rule. W h e n united to
F ra n ce her m anufacturing industry rose again to its ancient
im m ense extent. H olland by h erself w a s never in a position to
establish and maintain an independent commercial system o f her
own in competition with great nations. B u t when by m eans o f
her union with B e lg iu m after the general peace (in 1 8 1 5 ) her in­
ternal resources, population, and national territory were increased
to such an extent that she could rank herself am on g the great
nationalities, and became possessed in herself o f a great m a ss and
v ariety of productive powers, we see the protective system estab­
lished also in the Netherlands, and under its influence agriculture,
TH E HISTORY
manufactures, and commerce make a rem arkable advance. T h i s
union has now been again dissolved (ow ing to causes w h ich lie
outside the scope and purpose o f our present work), and th u s the
protective system in Holland has been deprived o f the b asis on
which it rested, while in B e lg iu m it is still m aintained.
Holland is now maintained by her colonies and by her t r a n s ­
port trade with G erm any. B u t the next great n a v a l w a r m a y
easily deprive her of the fo rm e r; and the m ore the G e rm a n
Zollverein attains to a clear perception o f its interests, and to
the exercise o f its powers, the more clearly w ill it recogn ise the
necessity o f including H olland within the Z ollverein .
C H A P T E R IV.
TH E
ENGLISH.
In our account o f the H an seatic L e a g u e we have shown h ow in
E n g la n d agriculture and sheep farm in g have been promoted by
foreign tra d e ; how at a subsequent period, through the im m ig r a ­
tion of foreign artificers, fleeing from persecution in their native
land, and also ow in g to the fostering m easures adopted by the
British G overnm ent, the E n g lis h woollen m anufacturing industry
had grad u ally attained to a flourishing condition ; and how, as a
direct consequence of that progress in m anufacturing industry, as
well as of the wise and energetic m easures adopted by Queen
E liz a b e th , all the foreign trade which formerly had been m on o­
polised by foreigners had been successfully diverted into the hands
of the m erchants at home.
Before we continue our exposition o f the development o f
E n g lis h national econom y from the point where we left off in
Chapter I I ., we venture here to m ake a few rem arks a s to the
origin o f British industry.
T h e source and origin o f E n g la n d ’s industrial and com m ercial
g reatness m ust be traced m ain ly to the breeding o f sheep and to
the woollen manufacture.
Before the first appearance of the H a n sa rd s on British soil
the agriculture o f E n g la n d w as unskilful and her sheep farm in g
of little importance.
T h ere w a s a scarcity o f winter fodder for
the cattle, consequently a large proportion had to be slaughtered
in autum n, and hence both stock and manure w ere alike deficient.
J u s t as in all uncultivated territories— as formerly in G e rm a n y ,
and in the uncleared districts o f Am erica up to the present time—
hog breeding furnished the principal supply o f meat, and that for
obvious reasons. T h e pigs needed little care— foraged for them ­
selves, and found a plentiful supply of food on the w aste lands
and in the forests ; and by keeping only a moderate num ber o f
breeding so w s through the winter, one w a s sure in the follow ing
sprin g o f p o sse ssin g considerable herds.
B u t with the grow th o f foreign trade hog breeding diminished,
sheep farm in g assum ed larger proportions, and agriculture and
the breeding of horned cattle rapidly improved.
THE HISTORY
Hume, in his ‘ H istory of E n g la n d ,’ 1 g iv e s a v e r y interestin g
account of the condition of E n g lish agriculture at the b e g in n in g
of the fourteenth century :
‘ In the year 13 2 7 Lord Spencer counted upon 63 estate s in
his possession, 28,000 sheep, 1,000 oxen, 1,2 0 0 co w s, 560 horses,
and 2,000 h o g s : g iv in g a proportion o f 450 sheep, 35 head of
cattle, 9 horses, and 32 hogs to each estate .’
From this statement we m a y perceive h o w g re a tly , even in
these early days, the number of sheep in E n g la n d exceeded that
of all the other domestic anim als put together. T h e g re at a d v a n ­
tages derived by the E n g lis h aristocracy from the b u sin e ss o f
sheep fann in g g ave them an interest in ind ustry and in im p ro ved
methods of agriculture even at that early period, w h en noblem en
in most Continental states knew no better mode o f u tilisin g the
greater part of their possession s than by p reservin g large herds o f
deer, and when they knew no more honourable occupation than
h arassing the neighbouring cities and their trade by h ostilities o f
various kinds.
And at this period, as has been the case in H u n g a r y m ore
recently, the docks so greatly increased that m a n y estates could
boast of the possession of from 10,000 to 24,000 sheep. U n d e r
these circumstances it necessarily followed that, under the pro­
tection afforded by the m easu res introduced by Queen E liz a b e t h ,
the woollen manufacture, which had already progressed v e r y co n ­
siderably in the days o f former E n g lis h rulers, should rap id ly reach
a very high degree of prosperity.2
In the petition of the H an sard s to the Im perial D iet, mentioned
in Chapter II., which prayed for the enactm ent o f retaliatory
measures, E n g la n d ’s export o f cloth w a s estim ated at 200,000
pieces; while in the days of J a m e s I. the total v a lu e o f E n g li s h
cloths exported had already reached the prodigious am ou n t o f tw o
million pounds sterling, while in the ye ar 1 3 5 4 the total m o n e y
value of the wool exported had am ounted only to 277,000/., and
that of all other articles o f export to no more than 16,400/.
Down to the reign of the last-named monarch the great bulk of the
cloth manufactured in E n g la n d used to be exported to B e lg iu m
in the rough state and w as there dyed and dressed ; but o w in g to
the measures of protection and encouragem ent introduced under
J a m e s I. and Charles I. the art of d ressin g cloth in E n g la n d
attained so high a pitch o f perfection that thenceforward the im1 Hume, vol. ii, p. 1 4 3 .
w ° d° Uibt
deureeS Prohibiting the export o f w ool, not to mention the
restrictions placed on the trade in wool in m arkets near the coast, w ere vexatiou s
En^lish^nd^ a
tim£ tHey ° P erated beneficially in the prom otion of
Lnghsh industry, and in the suppression o f that o f the F lem in gs.
THE ENGLISH
31
portation o f the finer descriptions of cloth nearly ceased, while
only dyed and finely dressed cloths were exported.
In order fully to appreciate the importance o f these results of
the E n g lis h com mercial policy, it m ust be here observed that,
prior to the great development o f the linen, cotton, silk, and iron
manufactures in recent times, the manufacture of cloth constituted
by far the largest proportion of the medium of exchange in the
trade with all E u ropean nations, particularly with the northern
kin g dom s, as well as in the com mercial intercourse with the
L e v a n t and the E a s t and W e s t Indies. T o w hat a great extent
this w a s the case we m a y infer from the undoubted fact that as far
back as the d a y s of J a m e s I. the export of woollen m anufactures
represented nine-tenths o f all the E n g lis h exports put together.1
T h is branch of manufacture enabled E n g la n d to drive the
H an seatic L e a g u e out o f the m arkets of R u ssia , Sweden, N o rw ay,
and D enm ark, and to acquire for h erself the best part of the
profits attaching to the trade w ith the L e v a n t and the E a s t and
W e s t Indies. It w a s this industry that stimulated that of coal
m ining, which again g ave rise to an exten sive coasting trade and
the fisheries, both which, as constituting the basis of naval power,
rendered possible the p assin g of the fam ous N avig atio n L a w s
which really laid the foundation of E n g la n d ’s maritime supremacy.
It w a s round the woollen industry o f E n g la n d that all other
branches of manufacture g rew up a s round a com mon parent stem ;
and it thus constitutes the foundation o f E n g la n d ’ s greatn ess in
industry, commerce, and naval power.
A t the sam e time the other branches o f E n g li s h manufacture
were in no w a y neglected.
A lread y under the reign o f E lizabeth the importation o f m etal
and leather goods, and o f a great m an y other manufactured
articles, had been prohibited, while the im m igration of G erm an
m iners and metal w orkers w as encouraged. F o rm e rly ships had
been bought of the H a n sa rd s or were ordered to be built in the
B a ltic ports. B u t she contrived, by restrictions on the one hand
and encouragem ents on the other, to promote shipbuilding at
home.
T h e timber required for the purpose w a s brought to E n g la n d
from the B altic ports, whereby again a great impetus w a s given
to the B ritish export trade to those regions.
T h e herring fishery had been learned from the Dutch, w hale
fishing from the dw ellers on the shores o f the B a y of B i s c a y ; and
both these fisheries were now stimulated by m e a n s o f bounties.
J a m e s I. more particularly took a lively interest in the encourage­
1 H um e (in 1603),
M acpherson, H istoire du Commerce (in 16 5 1).
32
THE HISTORY
ment of shipbuilding and of fisheries. T h o u g h we m a y sm ile at
his unceasing exhortations to his people to eat fish, yet w e m u st
do him the justice to sa y that he v ery clearly perceived on w h at
the future greatness of E n g la n d depended.
I he im m igratio n into
En glan d , moreover, of the Protestant artificers w h o had been
driven from B e lg iu m and F ran ce by Ph ilip I I . and L o u i s X I V .
g ave to E n g la n d an incalculable increase o f industrial skill and
m anufacturing capital. T o these men E n g la n d ow e s her m a n u ­
factures of fine woollen cloth, her progress in the arts o f m a k in g
hats, linen, glass, paper, silk, clocks and w atches, as well a s a part
of her metal m an u factu re; branches o f industry w h ich she knew
how speedily to increase by m eans of prohibition and high duties.
T h e island kingdom borrowed from every cou n try o f the
Continent its skill in special branches of industry, and planted
them on E n g lish soil, under the protection o f her cu sto m s syste m .
Venice had to yield (am ongst other trades in articles o f luxury)
the art of g la ss manufacture, while P e rsia had to g iv e up the art
of carpet w e a v in g and dyeing.
Once possessed of any one branch o f industry, E n g la n d be­
stowed upon it sedulous care and attention, for centuries treating
it as a y o u n g tree which requires support and care. W h o e v e r is
not yet convinced that by m eans o f diligence, skill, and e co n o m y,
every branch of industry m ust become profitable in tim e— that in
any nation already advanced in agriculture and civilisation , by
m eans o f moderate protection, its infant m an ufactures, h o w e v e r
defective and dear their productions at first m a y be, can by
practice, experience, and internal competition readily attain ability
to equal in every respect the older productions o f their foreign
competitors ; whoever is ignorant that the success o f one p articu ­
lar branch of industry depends on that of several other b ranches,
or to w hat a high degree a nation can develop its productive
powers, if she takes care that each su cce ssiv e gen eration shall
continue the work of industry w h ere former g en erations h ave left
i t ; let him first study the history of E n g li s h ind ustry before he
ventures to frame theoretical system s, or to g iv e coun sel to
practical statesmen to w hose hands is g iv e n the pow er o f pro­
moting the weal or the w oe o f nations.
Under George I. E n g lis h statesm en had lon g ago clearly per­
ceived the grounds on w hich the g reatn ess o f the nation depends.
A t the opening of P arliam e n t in 1 7 2 1 , the K in g is made to sa y by
the Ministry, that ‘ it is evident that nothing so m uch contributes
to promote the public w ell-being as the exportation of m anufactured
goods and the importation o f foreign raw m a t e r i a l.' 1
1 ® ee Ustaritz, Theorie du Com m erce , ch. xxviii. T h u s w e see G eo rge I.
aid not want merely to export goods and import nothing but specie in return*,
THE ENGLISH
33
T h is for centuries had been the ru lin g m axim o f E n g lis h com­
mercial policy, a s formerly it had been that o f the commercial
policy o f the V enetian Republic. It is in force at this day ( 18 4 1)
ju st as it w as in the d ay s of Elizabeth . T h e fruits it has borne
lie revealed to the eyes o f the whole world. T h e theorists have
since contended that E n g la n d has attained to wealth and power
not by m eans of, but in spite of, her com mercial policy. A s well
m ight they argue that trees have grow n to vigou r and fruitfulness,
not by m eans of, but in spite of, the props and fences with which
they had been supported when they were first planted.
N o r does E n g lis h history supply less conclusive evidence o f
the intim ate connection su b sistin g between a nation’ s general
political policy and political economy. C le arly the rise and growth
o f m an ufactures in E n glan d , with the increase o f population re­
sulting from it, tended to create an active demand for salt fish and
for coals, which led to a great increase of the mercantile marine
devoted to fisheries and the coasting trade. B o th the fisheries
and the coastin g trade were previou sly in the hands of the Dutch.
Stim ulated by high custom s duties and by bounties, the E n g lis h
now directed their own energies to the fishery trade, and by the
N a v ig a tio n L a w s they secured chiefly to British sailors not only
the transport o f sea-borne coal, but the w hole o f the carryin g trade
by sea. T h e consequent increase in E n g la n d ’s mercantile marine
led to a proportionate augm entation of her naval power, which
enabled the E n g lis h to bid defiance to the Dutch fleet. Shortly
after the p a ssin g of the N a v ig a tio n L a w s , a n aval war broke out
between E n g la n d and Holland, whereby the trade of the Dutch
with countries beyond the E n g lis h Channel suffered alm ost total
suspension, while their shipping in the North S e a and the Baltic
w a s alm ost annihilated by E n g lis h privateers. H u m e estim ates
the num ber of Dutch vessels which thus fell into the hands of
E n g lis h cruisers at 1,600, while D aven an t, in his * Report on the
Public R e v e n u e ,’ assu re s us that in the course of the twentyeight y e ars next follow ing the p assin g of the E n g lis h N avig atio n
L a w s , the E n g lis h shipping trade had increased to double its
previous extent.1
A m o n g st the more important results o f the N avig atio n L a w s ,
the follow ing deserve special mention, v i z . :
1.
T h e expansion of the E n g lis h trade with all the northern
kingdom s, with G e r m a n y and B e lg iu m (export o f m anufactures
and import o f raw material), from which, according to A n d e rso n ’ s
which is stated as the fundamental principle o f the so-called * m ercantile system ,’
and which in any case would be absurd. W h at he desired w as to export manu­
factures and import raw m aterial.
1 H um e, vol. v. p. 39.
3
34
THE HISTORY
account, up to the ye ar 1603 the E n g lis h had been alm ost entirely
shut out by the Dutch.
.
2. A n immense extension o f the contraband trade with b p ain
and Portugal, and their W e s t Indian colonies.
3. A great increase o f E n g la n d ’s herring and w h ale fisheries,
which the Dutch had previously alm ost entirely m onopolised.
4. T h e conquest of the m ost important E n g lis h colony in the
W e s t Indies— Ja m a ic a — in 1655 ; and with that, the co m m an d of
the W est Indian sugar trade.
5. T h e conclusion of the M ethuen T re a ty ( 17 0 3 ) with Portu gal,
of which we have fully treated in the chapters devoted to S p a in
and Portugal in this work. B y the operation of this treaty the
Dutch and the G e rm an s were entirely excluded from the im portan t
trade with Portugal and her colonies : Portu gal sank into com plete
political dependence upon E n g la n d , while E n g la n d acquired the
means, through the gold and silver earned in her trade with
Portugal, of extending enorm ously her own com m ercial inter­
course with China and the E a s t Indies, and thereby su bsequ en tly
of layin g the foundation for her great Indian empire, and d is­
possessing the Dutch from their most important trading stations.
T h e two results last enumerated stand in intim ate connection
one with the other. And the skill is especially noteworthy with
which E n g lan d contrived to make these two countries— Portugal
and India— the instruments of her own future greatn ess. S p ain
and Portugal had in the main little to dispose of besides the
precious metals, while the requirements of the E a s t , with the
exception of cloths, consisted chiefly of the precious metals. S o
far everything suited most admirably. B u t the E a s t had prin­
cipally only cotton and silk m anufactures to offer in exch an ge ,
and that did not fit in with the principle o f the E n g lis h M in istr y
before referred to, nam ely, to export m anufactured articles and
import raw materials. H o w , then, did they act under the circum ­
stances ? Did they rest content with the profits accru ing from
the trade in cloths with P ortu gal and in cotton and silk m an u ­
factures with India ? B y no m eans. T h e E n g lis h M in isters saw
farther than that.
Had they sanctioned the free importation into E n g la n d o f
Indian cotton and silk goods, the E n g lis h cotton and silk m an u ­
factories must of necessity soon come to a stand,
India had not
only the advantage of cheaper labour and raw material, but also
the experience, the skill, and the practice o f centuries. T h e effect
o f these advantages could not fail to tell under a system o f free
competition.
B u t E n glan d w as u nw illin g to found settlements in A s ia in
order to become subservient to A s ia in m anufacturing industry.
THE ENGLISH
35
S h e strove for commercial suprem acy, and felt that o f two
countries m aintaining free trade between one another, that one
would be supreme which sold manufactured goods, while that one
would be subservient which could only sell agricultural produce.
In her North A m erican colonies E n g la n d had already acted on
those principles in disallow ing the manufacture in those colonies
o f even a single horseshoe nail, and, still more, that no horseshoe
nails made there should be imported into En glan d. H o w could
it be expected of her that she would give up her own market for
m anufactures, the basis of her future greatness, to a people so
num erous, so thrifty, so experienced and perfect in the old system s
o f manufacture as the H indoos ?
Accordingly, E n g lan d prohibited the import o f the goods dealt
in by her own factories, the Indian cotton and silk fabrics.1 T h e
prohibition w a s complete and peremptory. N ot so much as a
thread o f them would E n g la n d permit to be used. She would
have none o f these beautiful and cheap fabrics, but preferred to
consum e her ow n inferior and more costly stuffs. S h e w as, h ow ­
ever, quite w illin g to supply the Continental nations with the
far finer fabrics o f India at lower prices, and w illin g ly yielded to
them all the benefit o f that ch e a p n e ss; she herself would have
none o f it.
W a s E n g la n d a fool in so acting ? Most assuredly, according
to the theories o f A dam Sm ith and J . B . S a y , the T h e o ry of
Valu es. Por, according to them, E n g la n d should h ave bought
w hat she required where she could buy them cheapest and b e st:
it w a s an act of folly to manufacture for herself goods at a greater
cost than she could buy them at elsewhere, and at the sam e time
g ive a w a y that advan tage to the Continent.
T h e case is quite the contrary, according to our theory, which
we term the T h eo ry of the P o w ers of Production, and which the
E n g lish M inistry, without h avin g examined the foundation on
which it rests, yet practically adopted w-hen enforcing their m axim
o f im p o rtin g produce and ex p o rtin g fa b r ic s .
T h e E n g lis h M inisters cared not for the acquisition o f lowpriced and perishable articles o f manufacture, but for that of a
more costly but enduring m a n u fa ctu rin g p o w er.
T h e y have attained their object in a brilliant degree. A t this
d ay E n g la n d produces seventy million pounds’ worth o f cotton
and silk goods, and supplies all Europe, the entire world, India
itself included, with British manufactures. H er home production
exceeds by fifty or a hundred tim es the value o f her former trade
in Indian manufactured goods.
‘ Anderson for the year 1 7 2 1 .
3 *
36
THE HISTORY
W h a t would it h ave profited her had she been b u y in g for a
century the cheap goods o f Indian m an u factu re?
And what have they gained who purchased those goods so
cheaply of h er?
T h e E n g lis h have gained power, incalculable
power, while the others have gained the reverse o f power.
T h a t in the face of results like these, historically attested upon
unimpeachable evidence, A dam Sm ith should h ave expressed so
warped a ju dgm ent upon the N avig atio n L a w s , can on ly be a c ­
counted for upon the sam e principle on which we shall in another
chapter explain this celebrated au thor’ s fallacious con clu sions re­
specting commercial restrictions. T h e s e facts stood in the w a y
o f his pet notion of unrestricted free trade.
It w a s therefore
necessary for him to obviate the objection that could be adduced
again st his principle from the effects o f the N a v ig a tio n L a w s , by
drawing a distinction between their political objects and their
economical objects. H e maintained that, although the N a v ig a tio n
L a w s had been politically necessary and beneficial, yet that they
were economically prejudicial and injurious. H o w little this dis­
tinction can be justified by the nature o f th in g s or by experience,
we trust to m ake apparent in the course of this treatise.
J . B . S a y , though he m ight have know n better from the e x ­
perience o f N orth America, here too, a s in every instance w h ere
the principles of free trade and protection clash, goes still farther
than his predecessor. S a y reckons up w hat the cost o f a sailor to
the French nation is, ow ing to the fishery bounties, in order to sh ow
how wasteful and unrem unerative these bounties are.
T h e subject of restrictions upon navigation constitutes a for­
midable stumbling-block in the path o f the advocates o f unre­
stricted free trade, which they are only too glad to p a s s over in
silence, especially if they are m em bers o f the m ercantile co m ­
munity in seaport towns.
T h e truth of the matter is this. R estrictions on navigatio n
are governed by the sam e law as restrictions upon a n y other kind
o f trade. Freedom of navigation and the carryin g trade conducted
by foreigners are serviceable and welcom e to com m unities in the
early stages of their civilisation, so lo n g as their agriculture and
manufactures still rem ain undeveloped. O w in g to w an t o f capital
and of experienced seam en, they are w illin g to abandon n avigation
and foreign trade to other nations.
L a t e r on, however, when
they have developed their producing power to a certain point and
acquired skill in shipbuilding and n avigatio n, then they will desire
to extend their foreign trade, to carry it on in their own ships, and
become a naval power them selves. G rad u ally their own mercantile
marine grow s to such a degree that they feel them selves in a
position to exclude the foreigner and to conduct their trade to the
TH E ENGLISH
37
m ost distant places by m ean s o f their own vessels. T h en the
time has come when, by m eans o f restrictions on navigation, a
nation can successfully exclude the more w ealthy, more experienced,
and more powerful foreigner from participation in the profits of
that business. W h en the highest degree of progress in navigation
and m aritim e power has been reached, a new era w ill set in, no
d o u b t ; and such w a s that stage o f advancem ent which Dr.
P riestle y had in his mind when he wrote ‘ that the time m ay come
when it m a y be as politic to repeal this Act as it w as to m ake it.’ 1
T h e n it is that, by m eans o f treaties o f navigatio n based upon
equality of rights, a nation can, on the one hand, secure undoubted
ad v a n ta g e s as ag ain st less civilised nations, w ho will thus be de­
barred from introducing restrictions on navigatio n in their own
special b e h a lf; while, on the other hand, it will thereby preserve its
own seafaring population from sloth, and spur them on to keep
pace with other countries in shipbuilding and in the art o f n a v ig a ­
tion. W h ile engaged in her stru ggle for suprem acy, Venice w as
doubtless g reatly indebted to her policy o f restrictions on n a v ig a ­
tion ; but as soon as she had acquired suprem acy in trade, m an u ­
factures, and navigation, it w a s folly to retain them. F o r ow in g
to them she w a s left behind in the race, both as respects sh ip­
building, n avigatio n, and seam anship o f her sailors, with other
m aritim e and com mercial nations which were a d v an c in g in her
footsteps. T h u s E n g la n d by her policy increased her naval power,
and by m eans of her n aval power enlarged the range o f her
m an u factu rin g and com mercial powers, and ag ain , by the latter,
there accrued to her fresh accessions o f maritime strength and o f
colonial possessions. A dam Sm ith , when he m aintains that the
N a v ig a tio n L a w s h ave not been beneficial to E n g la n d in com ­
mercial respects, adm its that, in a n y case, these law s h ave in­
creased her power. A nd power is more important than wealth.
T h a t is indeed the fact. P o w e r is more important than wealth.
A nd w h y ? S im p ly because national power is a dynam ic force by
which new productive resources are opened out, and because the
forces of production are the tree on which wealth grow s, and
because the tree which bears the fruit is o f greater value than the
fruit itself. Pow er is of more importance than wealth because a
nation, by m eans of power, is enabled not only to open up new
productive sources, but to m aintain itself in possession o f former
and o f recently acquired wealth, and because the reverse o f power
— nam ely, feebleness— leads to the relinquishment o f all that we
p ossess, not o f acquired wealth alone, but o f our powers of pro­
duction, o f our civilisation, o f our freedom, nay, even of our
1 P riestley, Lectures on H istory and G en eral P o lic y , Pt. II. p. 289.
THE HISTORY
national independence, into the hands o f those w ho su rp ass us in
might, as is abundantly attested by the history o f the Italian re­
publics, o f the H anseatic L e a g u e , o f the B e lg ia n s , the D utch, the
Spaniards, and the Portuguese.
B u t how came it that, unmindful o f this la w o f altern atin g
action and reaction between political power, the forces o f pro­
duction and wealth, A dam S m ith could venture to contend that
the Methuen T re a ty and the A ct o f N a v ig a tio n had not been
beneficial to E n g la n d from a com mercial point o f v ie w ? W e
have shown how E n g la n d by the policy w hich she pursued
acquired power, and by her political power gained productive
power, and by her productive power gained wealth. L e t us now
see further how, as a result o f this policy, power has been added
to power, and productive forces to productive forces.
E n g la n d has got into her possession the keys of eve ry sea, and
placed a sentry over every nation : over the G e rm an s, H e lig o lan d ;
over the French, G u ern sey and J e r s e y ; over the in habitants o f
North Am erica, N o v a Scotia and the B e r m u d a s ; over Central
America, the island of J a m a i c a ; over all countries bordering on
the Mediterranean, Gibraltar, M alta, and the Ionian Isla n d s. S h e
possesses every important strategical position on both the routes
to India with the exception o f the Isth m u s of Su ez, which she
is striving to a cq u ire ; she dom inates the M editerranean by m e a n s
o f Gibraltar, the R ed S e a by Aden, and the P e r sia n G u l f by
Bushire and Karrack. S h e needs only the further acquisition o f
the Dardanelles, the Sou nd , and the Isth m u se s o f S u e z and
Pan am a, in order to be able to open and close at her pleasure
every sea and every m aritim e h igh w ay .
H e r n a v y alone sur­
passes the combined m aritim e forces o f all other countries, i f not
in number o f vessels, at a n y rate in fightin g strength.
H er m anufacturing capacity excels in im portance that o f all
other nations. A nd although her cloth m an ufactures h ave in­
creased more than tenfold (to forty-four and a h a lf millions) since
the days of Ja m e s I., we find the yield o f another branch o f
industry, which w as established on ly in the course o f the last
century, nam ely, the manufacture o f cotton, am o u n tin g to a m uch
larger sum, fifty-two and a h a lf m illions.1
Not content with that, E n g la n d is n o w attem ptin g to raise her
linen manufacture, which has been lon g in a backward state as
1 Th ese and the follow ing figures relating to E n glish statistics are taken
trom a paper written by M cQ ueen, the celebrated E n glish statistician, and
appearing m the Ju ly number o f T a i f s E d in b u rg h M aga zin e for the year i 8 * q
Possibly they m ay be somewhat exaggerated for the moment. B u t even i f so
present^ecade P
that the fi£ ures as stat^d will be reached w ithin the
THE ENGLISH
39
compared with that of other countries, to a sim ilar position,
possibly to a higher one than that o f the two above-named
branches of i n d u s t r y : it now am ounts to fifteen and a h a lf
m illions sterling. In the fourteenth century, E n g la n d w a s still
so poor in iron that she thought it necessary to prohibit the e x ­
portation of this indispensable m e t a l ; she now, in the nineteenth
century, m anufactures more iron and steel w ares than all the other
nations on earth (nam ely, thirty-one m illion s’ worth), while she pro­
duces thirty-four m illions in v a lu e o fc o a l and other minerals. T h ese
two su m s exceed by over sevenfold the value of the entire gold and
silver production of all other nations, which amount to about two
hundred and tw enty million francs, or nine millions sterling.
A t this day she produces more silk goods than all the Italian
republics produced in the Middle A g e s together, nam ely, thirteen
and a h a lf million pounds.
Industries which at the time o f
H en ry V I I I . and E lizabeth scarcely deserved classification, now
yield enormous su m s ; as, for instance, the g la ss, china, and
stoneware manufactures, representing eleven m illio n s; the copper
and brass m anufactures, four and a h alf millions ; the m an u ­
factures of paper, books, colours, and furniture, fourteen millions.
E n g la n d produces, moreover, sixteen m illio n s’ worth of leather
goods, besides ten m illio n s’ worth o f unenumerated articles. T h e
manufacture o f beer and spirituous liquors in E n g la n d alone
greatly exceeds in valu e the aggregate o f national production in
the d ay s of J a m e s I., nam ely, forty-seven millions sterling.
T h e entire m anufacturing production of the United K ingdom
at the present time, is estimated to amount to two hundred and
fifty-nine and a h a lf millions sterling.
A s a consequence, and m ain ly as a consequence, o f this
gigantic m an ufacturin g production, the productive power of a g ri­
culture has been enabled to yield a total value exceeding twice
that sum (five hundred and thirty-nine millions sterling).
It is true that for this increase in her power, and in her pro­
ductive capacity, E n g la n d is not indebted solely to her commercial
restrictions, her N avigation L a w s , or her commercial treaties, but
in a large measure also to her conquests in science and in the arts.
B u t how com es it, that in these days one million of E n g lish
operatives can perform the work o f hundreds of millions ? It
comes from the great demand for manufactured goods which by
her wise and energetic policy she has known how to create in
foreign lands, and especially in her colonies ; from the wise and
powerful protection extended to her home industries ; from the
great rewards which by m eans of her patent laws she has offered
to every new discovery ; and from the extraordinary facilities for
her inland transport afforded by public roads, canals, and railw ays.
40
TH E HISTORY
E n glan d has shown the world how powerful is the effect o f
facilities of transport in increasing the powers o f production, and
thereby increasing the wealth, the population, and the political
power of a nation. She has shown us w hat a free, industrious,
and well-governed com m unity can do in this respect w ithin the
brief space of h a lf a century, even in the midst o f foreign w ars.
T h a t which the Italian republics had previously accom plished in
these respects w as mere child's play. It is estimated that a s m uch
as a hundred and eighteen millions sterling have been expended
in E n glan d upon these m igh ty instrum ents o f the nation ’s pro­
ductive power.
En glan d, however, only com m enced and carried out these
works when her m anufacturing power began to g ro w strong.
Since then, it has become evident to all observers that that nation
only whose m anufacturing power begins to develop itse lf upon an
extensive scale is able to accom plish such w orks ; that only in a
nation which develops concurrently its internal m an u factu rin g
and agricultural resources will such costly engin es of trade rep ay
their c o s t ; and that in such a nation only w ill they properly fulfil
their purpose.
It must be admitted, too, that the enorm ous producing c a p a ­
city and the great wealth of E n g la n d are not the effect solely o f
national power and individual love o f gain. T h e people’s innate
love of liberty and of justice, the energy, the religious and m oral
character of the people, have a share in it. T h e constitution o f
the country, its institutions, the wisdom and power o f the G o v e r n ­
ment and of the aristocracy, have a share in it. T h e g eo g rap h ical
position, the fortunes of the country, nay, even good luck, h ave a
share in it.
It is not e a sy to say whether the material forces exert a g reater
influence over the m oral forces, or whether the m oral ou tw eig h
the material in their operation ; w hether the social forces act upon
the individual forces the more powerfully, or w hether the latter
upon the former. T h is much is certain, however, n am ely, that
between the two there su bsists an interchan ging sequence o f
action and reaction, with the result that the increase o f one
set of forces promotes the increase o f the other, and that the
enfeeblement of the one ever involves the enfeeblement o f the
other.
T h o se who seek for the fundam ental cau ses o f E n g la n d 's rise
and progress in the blending o f A n g lo -S a x o n with the N o rm an
blood, should first cast a glance at the condition o f the country
before the reign of E d w ard I I I . W h e re were then the diligence
and the habits of thrift of the nation ? T h o s e ag ain w ho w ou ld
look tor them in the constitutional liberties enjoyed by the people
THE ENGLISH
41
will do well to consider how H en ry V I I I . and E lizabeth treated
their Parliam en ts. W herein did E n g la n d ’ s constitutional freedom
consist under the T u dors ? A t that period the cities o f G e rm a n y
and Italy enjoyed a much greater amount o f individual freedom
than the E n g lish did.
Only one je w e l out of the treasure-house o f freedom w a s pre­
served by the A n g lo -S a x o n -N o rm a n race— before other peoples o f
G erm an ic origin ; and that w a s the germ from which all the
E n g lish ideas of freedom and ju stice h ave sprun g— the right o f
trial by ju ry.
W h ile in Italy the Pan dects were being unearthed, and the
exhum ed rem ains (no doubt of departed greatness and wisdom in
their day) were spreading the pestilence of the Codes am on gst
Continental nations, we tind the E n g lish B a ro n s declaring they
would not hear o f any chan ge in the law o f the land. W h a t
a store of intellectual force did they not thereby secure for the
generations to come ! H o w much did this intellectual force sub­
sequently influence the forces of material production !
H o w greatly did the early banishm ent o f the L a tin language
from social and literary circles, from the State departments, and
the courts of law in E n g la n d , influence the development o f the
nation, its legislation, law adm inistration, literature, and industry !
W h a t has been the ellect upon G e rm an y o f the long retention o f
the L a tin in conjunction with foreign Codes, and what has been
its effect in H u n g a ry to the present d a y ? W h a t an effect have
the invention o f gunpowder, the art of printing, the Reformation,
the discovery o f the new routes to India and o f America, had on
the growth o f E n g lis h liberties, of E n g lish civilisation, and o f
E n g lish industry ? Com pare with this their effect upon G e rm a n y
and France. In G e r m a n y — discord in the Em pire, in the pro­
vinces, even within the w alls o f c itie s; miserable controversies,
barbarism in literature, in the administration o f the State and o f
the l a w ; civil war, persecutions, expatriation, foreign invasion,
depopulation, desolation ; the ruin o f cities, the decay o f industry,
agriculture, and trade, o f freedom and civic institutions ; supre­
m acy o f the great nobles ; decay o f the imperial power, and o f
nation ality; severance o f the fairest provinces from the Em pire.
In F ra n c e — subjugation o f the cities and of the nobles in the
interest o f despotism ; alliance with the priesthood ag ain st in ­
tellectual freedom, but at the sam e time national unity and p o w e r;
conquest with its gain and its curse, but, as again st that, downfall
of freedom and of industry. In E n g la n d — the rise of cities, pro­
g re ss in agriculture, commerce, and m an u factu re s; subjection o f
the aristocracy to the law of the land, and hence a preponderating
participation by the nobility in the work o f legislation, in the
42
THE HISTORY
administration o f the State and o f the law, as also in the a d v a n ­
tages of industry ; development o f resources at home, and o f
political power abroad ; internal peace ; influence over all le ss
advanced com m unities ; limitation of the pow ers o f the C row n ,
but gain by the Crown in royal revenues, in splendour and
stability. Altogether, a higher degree o f w ell-being, civilisation ,
and freedom at home, and preponderating m ight abroad.
Bu t who can say how much of these happy results is attribut­
able to the E n g lish national spirit and to the constitution ; how
much to E n g la n d 's geographical position and circu m stances in the
p a s t ; or again, how much to chance, to destiny, to fortune ?
L e t Charles V. and H e n ry V I I I . chan ge places, and, in co n se ­
quence o f a villanous divorce trial, it is conceivable (the reader
will understand w h y we sa y ‘ c o n c e iv a b le ’ ) that G e r m a n y and the
Netherlands m ight h ave become w hat E n g la n d and Sp a in have
become. Place in the position o f E lizab e th , a w e ak w o m an a lly ­
ing herself to a Philip II., and how would it h ave fared with the
'power, the civilisation, and the liberties of G re at B ritain ?
I f the force of national character will alone account for e ve ry ­
thing in this m ighty revolution, must not then the greatest share
of its beneficial results h ave accrued to the nation from w hich
it sprang, namely, to G e r m a n y ? Instead o f that, it is ju s t the
G erm an nation which reaped nothing save trouble and w e a k n e ss
from this m ovem ent in the direction o f progress.
In no European kingdom is the institution o f an aristocracy
more judiciously designed than in E n g la n d for se cu rin g to the
nobility, in their relation to the C row n and the com m on alty, indi­
vidual independence, dignity, and stability ; to g ive them a P a r li a ­
mentary training and position ; to direct their energies to patriotic
and national aim s ; to induce them to attract to their own body the
'elite of the com m onalty, to include in their ranks eve ry com m oner
who earns distinction, whether by mental gifts, exceptional w ealth,
or great achievem ents ; and, on the other hand, to cast back
again am ongst the com m ons the surplus progeny o f aristocratic
descent, thus leading to the am alg am atio n o f the nobility and the
commonalty in future generations. B y this process the nobility
is ever receiving from the C o m m o n s fresh accession s o f civic and
patriotic energy, of science, learning, intellectual and m aterial
resources, while it is ever restoring to the people a portion o f the
culture and of the spirit o f independence peculiarly its own,
leaving its own children to trust to their own resources, and
supplying the com m onalty with incentives to renewed exertion.
In the case of the E n g lish lord, however large m a y be the nu m ber
of his descendants, only one can hold the title at a time. T h e
other members of the fam ily are com moners, w ho gain a livelihood
TH E ENGLISH
43
either in one o f the learned professions, or in the Civil Service, in
commerce, industry, or agriculture. T h e story goes that some
time ago one o f the first dukes in E n g la n d conceived the idea o f
inviting all the blood relations o f his house to a banquet, but he
w a s fain to abandon the design because their nam e w a s legion,
notw ithstanding that the fam ily pedigree had not reached farther
back than for a few centuries. It would require a whole volume
to show the effect of this institution upon the spirit of enterprise,
the colonisation, the m ight and the liberties, and especially upon
the forces of production o f this nation.1
T h e geographical position of E n g la n d , too, has exercised an
im m ense influence upon the independent development of the
nation. E n g la n d in its relation to the continent of Eu rope has
ever been a world by i t s e l f ; and w as a lw a y s exempt from the
effects o f the rivalries, the prejudices, the selfishness, the passions,
and the disasters o f her Continental neighbours. T o this isolated
condition she is m ainly indebted for the independent and un­
alloyed growth o f her political constitution, for the undisturbed
consum m ation o f the Reform ation, and for the secularisation o f
ecclesiastical property which has proved so beneficial to her in­
dustries. T o the sam e cause she is also indebted for that con­
tinuous peace, which, with the exception o f the period o f the civil
war, she has enjoyed for a series of centuries, and which enabled
her to dispense with standing arm ies, while facilitating the early
introduction o f a consistent custom s system .
B y reason of her insular position, E n glan d not only enjoyed
im m u nity from territorial w ars, but she also derived im m ense
ad van tag es for her m anufacturing su prem acy from the Continental
w ars. L a n d w a rs and devastations o f territory inflict manifold
injury upon the manufactures at the seat of hostilities ; directly,
by interfering with the farm er's work and destroying the crops,
which deprives the tiller of the soil of the m eans wherewithal to
purchase manufactured goods, and to produce raw material and
food for the m anufacturer ; indirectly, by often destroying the
manufactories, or at any rate ruining them, because hostilities
interfere with the importation of raw material and with the ex­
portation o f goods, and because it becomes a difficult matter to
procure capital and labour ju s t at the very time w h en the m asters
have to bear extraordinary im posts and h e avy taxation ; and
lastly, the injurious effects continue to operate even after the
cessation of the war, because both capital and individual effort are
ever attracted tow ards agricultural work and diverted from manu1 Before his lam ented death, the gifted author o f this remark, in his Letters
on E n g la n d , read the nobles of his native country a lesson in this respect which
they would do w ell to lay to heart.
44
THE HISTORY
factures, precisely in that proportion in w hich the w a r m a y h ave
injured the farmers and their crops, and thereby opened up a
more directly profitable field for the em ploym ent o f capital and
of labour than the m anufacturing industries would then afford.
W h ile in G erm an y this condition of thin gs recurred twice in e ve ry
hundred years, and caused G erm an m anufactures to retrograde,
those of E n glan d made uninterrupted progress. E n g li s h m a n u ­
facturers, as opposed to their Continental com petitors, enjoyed a
double and treble ad v an tag e w henever E n g la n d , by fitting out
fleets and armies, by subsidies, or by both these m e a n s com bined,
proceeded to take an active part in foreign wars.
W e cannot agree with the defenders o f unproductive expendi­
ture, nam ely, of that incurred by w a rs and the m ain ten an ce o f
large armies, nor with those w ho insist upon the p ositively bene­
ficial character of a public d e b t ; but neither do we believe that
the dominant school are in the right when they contend that all
consumption which is not directly reproductive— for instance,
that of w a r — is absolutely injurious w ithout qualification. T h e
equipment of armies, w ars, and the debts contracted for these
purposes, m ay, as the exam ple o f E n g la n d teaches, under certain
circumstances, very greatly conduce to the increase o f the pro­
ductive powers o f a nation. Strictly speaking, material w ealth
m ay h ave been consumed unproductively, but this consum ption
m ay, nevertheless, stimulate m anufacturers to extraordinary exer­
tions, and lead to new discoveries and im provem ents, e sp ecially
to an increase o f productive powers. T h is productive pow er then
becomes a permanent acquisition ; it will increase more and more,
while the expense of the w ar is incurred on ly once for a ll.1 A n d
thus it m ay come to pass, under favouring conditions such as
have occurred in E n glan d , that a nation has gained im m e asu rab ly
more than it has lost from that v ery kind o f expenditure w hich
theorists hold to be unproductive. T h a t such w a s really the case
with E n glan d , m a y b e shown by figures. F o r in the course o f the
war, that country had acquired in the cotton m anufacture alone a
1 England’ s national debt would not be so great an evil as it now appears to
us, if E nglan d’s aristocracy would concede that this burden should be borne by
the class who were benefited by the cost o f w ars, nam ely, by the rich. M cQ ueen
estim ates the capitalised value of property in the three kingdom s at 4,000 million
pounds sterling, and M artin estim ates the capital invested in the colonies at
about 2,600 millions sterling. H ence w e see that one-ninth part o f E n g lish ­
men’s private property would suffice to cover the entire national debt. N oth in g
could be more just than such an appropriation, or at least than the paym ent o f
the interest on the national debt out o f the proceeds o f an incom e tax. T h e
E n glish aristocracy, however, deem it more convenient to provide for this ch arge
by the imposition o f taxes upon articles o f consumption, b y which the existence
o f the working classes is em bittered beyond the point of endurance.
T H E ENGLISH
45
power o f production which yields ann u ally a much larger return
in value than the amount which the nation has to find to defray
the interest upon the increased national debt, not to mention the
vast developm ent of all other branches o f industry, and the addi­
tions to her colonial wealth.
M ost conspicuous w as the advan tage accruing to the E n g lis h
m anufacturing interest during the Continental w ars, when E n g ­
land maintained arm y corps on the Continent or paid subsidies.
T h e whole expenditure on these w a s sent, in the shape o f E n g lis h
manufactures, to the seat o f war, where these imports then m a ­
terially contributed to crush the already sorely suffering foreign
m anufacturers, and perm anently to acquire the market o f the
foreign country for E n g lis h m anufacturing industry. It operated
precisely like an export bounty instituted for the benefit of B ritish
and for the injury o f foreign m anufacturers.1
In this w ay , the industry of the Continental nations h a s ever
suffered more from the E n g lish as allies, than from the E n g lis h
as enemies. In support o f this statement we need refer on ly to
the Seven Y e a r s ’ W a r , and to the w ars a g a in st the F re n ch
R epu blic and E m pire.
Great, however, as have been the ad v an tag es heretofore m en­
tioned, they have been g reatly surpassed in their effect by those
which E n g la n d derived from im m igrations attracted by her politi­
cal, religious, and geographical conditions.
A s far back as the twelfth century political circum stances
induced F le m is h woollen w eavers to em igrate to W a le s . N ot
m an y centuries later exiled Italian s came over to Lon don to carry
on b u siness as money changers and bankers. T h a t from Flan d ers
and B rab an t entire bodies of manufacturers thronged to E n g la n d
at various periods, w e h ave shown in Chapter II. F ro m Spain
and Portu gal cam e persecuted J e w s ; from the H an se T o w n s , and
from Venice in her decline, merchants who brought with them
their ships, their knowledge o f business, their capital, and their
spirit of enterprise. Still more important were the im m igrations
of capital and o f manufacturers in consequence o f the R e fo rm a­
tion and the religious persecutions in S p ain , Portugal, France,
B e lg iu m , G erm an y, and Italy ; as also of m erchants and m an u ­
facturers from H olland in consequence of the stagnation of trade
and industry in that country occasioned by the Act o f N avig atio n
and the Methuen T re aty. E v e r y political movement, every w ar
upon the Continent, brought E n g la n d vast accessions of fresh
capital and talents, so long as she possessed the privileges of
freedom, the right o f asylu m , internal tranquillity and peace, the
1 See Appendix A.
46
THE HISTORY
protection of the law , and general well-being. So m ore recently
did the French Revolution and the w a rs o f the E m p ir e ; and so
did the political commotions, the revolutionary and reaction ary
m ovem ents and the w ars in Spain, in M exico, and in S o u th
Am erica. B y m eans o f her Patent L a w s , E n g la n d lon g m o n o ­
polised the inventive gen iu s o f every nation.
It is no more than
fair that E n glan d , now that she has attained the cu lm in a tin g point
o f her industrial growth and progress, should restore a g a in to the
nations o f Continental E u ro p e ’ a portion o f those productive forces
which she originally derived from them.
C H A P T E R V.
TH E SPANIARDS AND PORTUGUESE.
the E n g lish were busied for centuries in raisin g the
structure of their national prosperity upon the most solid founda­
tions, the Sp an iard s and the P o rtu gu ese made a fortune rapidly
by m ean s of their discoveries and attained to g reat wealth in a
very short space o f time. B u t it w a s only the wealth of a spend­
thrift who had won the first prize in a lottery, w hereas the wealth
o f the E n g lish m a y be likened to the fortune accumulated by the
diligent and s a v in g head o f a fam ily. T h e former m ay for a time
appear more to be envied than the latter on account of his lavish
expenditure and luxury ; but wealth in his case is only a m eans
for prodigality and m om en tary enjoym ent, w hereas the latter will
regard wealth chiefly as a m eans of la y in g a foundation for the
moral and material w ell-being of his latest posterity.
T h e Sp an iard s possessed flocks o f well-bred sheep at so early
a period that H e n ry I. o f E n g la n d w a s moved to prohibit the im ­
portation o f Sp a n ish wool in 1 1 7 2 , and that as far back as the
tenth and eleventh centuries Italian woollen m anufacturers used
to import the greater portion o f their wool supplies from Spain.
T w o hundred y e ars before that time the dwellers on the shores o f
the B a y o f B i s c a y had already distinguished them selves in the
manufacture o f iron, in navigatio n, and in fisheries. T h e y were
the first to carry on the w hale fishery, and even in the y e a r 1 6 1 9
they still so far excelled the E n g lis h in that business that they
were asked to send fishermen to E n g la n d to instruct the E n g lis h
in this particular branch o f the fishing trade.1
A lread y in the tenth century, under Abdulrahm an I I I . (9 12 to
950), the Moors had established in the fertile plains around V alen cia
extensive plantations o f cotton, sugar, and rice, and carried on
silk cultivation.
Cordova, Seville, and G ran ad a contained at
the time o f the M oors important cotton and silk m anufactories.8
W h il st
1 Anderson, vol. 1. p. 12 7 , vol. ii. p. 350.
2 M . G . Sim on, R ecu eil d'O bservations sur VA ngU terre. Memoires et Considerations sur le Commerce et Us Finances d 'E sp agn e. U starit2, Theorie et
P ra tiq u e da Commerce.
47
4S
THE HISTORY
Valencia, S e g o v ia , T oledo, and several other cities in C a s t il e
were celebrated for their woollen m an u factu res. S e v ille alon e at
an early period o f history contained a s m a n y as 16,000 loom s,
while the woollen m anufactories o f S e g o v ia in the ye ar 1 5 5 2
were em ployin g 13,0 0 0 operatives. Other branches o f in d u stry,
notably the manufacture o f arm s and o f paper, h ad become
developed on a sim ilar scale.
In C olbert's d a y the F re n c h
were still in the habit of procuring supplies o f cloth from
Sp ain .1 T h e Sp a n ish seaport tow n s were the seat o f an e x ten ­
sive trade and o f im portant fisheries, and up to the tim e o f
Philip I I . Spain possessed a m ost powerful n a v y .
In a w o rd ,
Spain possessed all the elem ents o f g re a tn e ss and prosperity,
when bigotry, in alliance w ith despotism , set to w ork to stifle the
high spirit o f the nation. T h e first com m encem en t o f this w ork
of darkness w a s the expulsion of the J e w s , and its c r o w n in g act
the expulsion of the M oors, whereby two m illions o f the m ost
industrious and well-to-do in habitants w ere driven out o f S p a in
with their capital.
W h ile the Inquisition w a s thus occupied in d r iv in g native
industry into exile, it at the sam e time effectually prevented
foreign manufacturers from settling down in the country. T h e
discovery o f A m e rica and o f the route round the C a p e o n ly
increased the wealth o f both kingdom s after a specious and
ephem eral fashio n— indeed, by these even ts a death-blow w a s
first given to their national industry and to their pow er. F o r
then, instead of exch an gin g the produce o f the E a s t an d W e s t
Indies again st hom e m anufactures, as the D utch and the E n g l i s h
subsequently did, the Span iards and P o rtu g u e se purchased m a n u ­
factured goods from foreign nations w ith the gold and the silv e r
which they had w ru n g from their colonies.2 T h e y tran sform ed
their useful and industrious citizens into slave-d ealers and colonial
tyrants : thus they promoted the in d u stry, the trade, and the
maritime power of the Dutch and E n g li s h , in w hom th ey raised
up rivals who soon g rew stro n g enough to destroy their fleets
and rob them of the sources of their w ealth. In v a in the k in g s
o f Spain enacted law s a g a in st the exportation o f specie and the
importation of manufactured goods. T h e spirit o f enterprise,
industry, and commerce can on ly strike root in the soil o f religious
1 Chaptal, D e VIndustrie Fran ^ a iset vol. ii. p. 245.
2 T h e chief export trade o f the Portuguese from C entral and Southern
Am erica consisted of the precious m etals. From 1748 to 17 5 3 , the exports
amounted to 18 millions o f piastres, S ee H um boldt’s B s s a i P o litiq u e su r le
Royaume de la N ouvelle E sp a g n e, vol. ii. p. 652. T h e goods trade with those
regions, as well as with the W est Indies, first assum ed important proportions b y
the introduction o f the sugar, coffee, and cotton planting.
THE SPANIARDS AND PORTUGUESE
49
and political liberty ; gold and silver will on ly abide where in ­
dustry knows how to attract and em ploy them.
P ortu gal, how ever, under the auspices o f an enlightened and
powerful minister, did m ake an attem pt to develop her m an u fac­
turing industry, the first results of which strike us with astonish­
ment.
T h a t country, like Spain, had possessed from time im ­
m emorial fine flocks of sheep. Strabo tells us that a fine breed
of sheep had been introduced into Portugal from A sia , the cost o f
which am ounted to one talent per head. W h e n the Count o f
E receira became minister in 1 6 8 1 , he conceived the design o f
establishing cloth manufactories, and of thus w orking up the
native raw material in order to supply the mother country and
the colonies with home-manufactured goods.
W ith that v ie w
cloth w orkers were invited from E n g la n d , and so speedily did the
native cloth manufactories flourish in consequence o f the protec­
tion secured to them, that three years later (in 1684) it became
practicable to prohibit the importation o f foreign cloths. F ro m
that period Portu gal supplied herself and her colonies with native
goods manufactured o f hom e-grown raw material, and prospered
e x c e e d ir g ly in so doing for a period of nineteen y e a rs, as attested
by the evidence o f E n g lis h writers th e m se lv e s.1
It is true that even in those d ays the E n g lish g ave proof o f
that ability which at subsequent times they have m a n a g e d to
bring to perfection. In order to evade the tariff restrictions o f P or­
tugal, they manufactured woollen fabrics, which sligh tly differed
from cloth though servin g the sam e purpose, and imported these
into P ortu gal under the designation o f woollen serges and woollen
druggets. T h is trick of trade w as, however, soon detected and
rendered innocuous by a decree prohibiting the importation of
such g ood s.2 T h e success of these m easures is all the more re­
m arkable because the country, not a very great while before, had
been drained of a large am ount of capital, which had found its
w a y abroad ow in g to the expulsion o f the J e w s , and w as suffer­
ing especially from all the evils of bigotry, of bad governm ent,
and o f a feudal aristocracy, which ground down popular liberties
and agriculture.3
In the year 170 3, after the death o f Count Ereceira, however,
the fam ous British am bassador Paul Methuen succeeded in per­
suading the P ortuguese G overnm ent that Portu gal would be
im m ensely benefited if E n g la n d were to permit the importation o f
P ortuguese w ines at a duty one-third less than the duty levied
upon w in e s o f other countries, in consideration o f P o rtu gal
adm ittin g E n g li s h cloths at the sam e rate o f import duty (viz.
1B r itis h M erchant, vol. in. p. 69.
4
2Ib id . p. 7 1,
3 Ib id. p. 76.
5°
THE HISTORY
twenty-three per cent.) which had been charged upon such g ood s
prior to the year 1684. It seem s as though on the part o f the
K in g the hope o f an increase in his cu stom s revenue, and on the
part of the nobility the hope o f an increased incom e from rents,
supplied the ch ief motives for the conclusion o f that com m ercial
treaty in which the Queen o f E n g la n d (Anne) styles the K in g of
Portugal 4her oldest friend and ally ’— on m uch the sa m e prin­
ciple as the Rom an Senate w a s form erly w ont to a p p ly such
designations to those rulers who had the m isfortune to be brou ght
into closer relations with that assem bly.
Directly after the conclusion o f this treaty, P o rtu g a l w a s
deluged with E n g lis h manufactures, and the first result o f this
inundation w a s the sudden and complete ruin o f the P o rtu gu e se
manufactories— a result which had its perfect counterparts in the
subsequent so-called E d en treaty with F ra n c e and in the a b ro g a ­
tion of the Continental system in G e rm a n y .
According to A nd erson’s testim ony, the E n g lis h , even in those
days, had become such adepts in the art of u nd erstating the valu e
of their goods in their custom-house bills of entry, that in effect
they paid no more than h a lf the duty chargeable on them b y the
tariff.1
4 After the repeal o f the prohibition,’ s a y s 4 T h e B r itish
M erchant,’ 4 we m anaged to carry a w a y so m uch o f their silver
currency that there remained but very little f o r th eir necessary
o cca sio n s; thereupon we attacked their gold.’ 2 T h i s trade the
E n g lish continued down to very recent tim es.
T h e y exported all
the precious metals w hich the Portu gu ese had obtained from their
colonies, and sent a large portion of them to the E a s t In d ie s and
to China, where, as we saw in C h apter IV ., they exch an ge d them
for goods which they disposed o f on the continent o f E u ro p e
again st raw materials. T h e ye arly exports o f E n g la n d to P o r tu ­
gal exceed the imports from that country by the am ou n t o f one
million sterling. T h is favourable balance of trade lowered the
rate of exchange to the extent o f fifteen per cent, to the d is ­
advantage of Portugal. 4T h e balance o f trade is more favo urab le
to us in our dealings with Portu gal than it is w ith a n y other
country,’ says the author o f 4 T h e B ritish M e r c h a n t ’ in his dedi­
cation to Sir P au l Methuen, the son of the fam ous m inister, ‘ and
our imports of specie from that country h ave risen to the su m o f
one and a half millions sterling, w hereas form erly they am ounted
only to 300,000// 3
All the merchants and political econom ists, a s w ell a s all the
1 Anderson, vol. Hi. p. 67.
* B r itis h M erch an t, vo l. in. p. 267.
>Ibtd. vol. in. pp. I 5 , 20) 33( 38, I I 0 , 253, 254.
P*
THE SPANIARDS AND PORTUGUESE
statesm en o f E n g la n d , have ever since eulogised this treaty as the
m asterpiece o f E n g lish commercial policy. Anderson himself,
who had a clear insight enough into all matters affecting E n g lis h
com mercial policy, and w ho in his w a y a lw a y s treats o f them with
great candour, calls it * an extrem ely fair and advan tageo us t r e a t y ; ’
nor could he forbear the n a ive exclam ation, ‘ M a y it endure for
ever and e v e r ! ’ 1
F o r A dam Sm ith alone it w a s reserved to set up a theory
directly opposed to this unanim ous verdict, and to maintain that
the Methuen T re a ty had in no respect proved a special boon to
British commerce. N ow , if an yth in g will suffice to show the
blind reverence with which public opinion has accepted the (partly
very paradoxical) v ie w s of this celebrated man, surely it is the fact
that the particular opinion above mentioned has hitherto been left
unrefuted.
In the sixth chapter o f his fourth book A dam Sm ith says, that
inasm uch a s under the Methuen T re a ty the wines of Portugal
were admitted upon paying on ly two-thirds o f the duty which w as
paid on those of other nations, a decided advan tage w as conceded
to the Portuguese ; w hereas the E n g lish , being bound to pay quite
as high a duty in P ortu gal on their exports of cloth as any other
nation, had, therefore, no special privilege granted to them by the
Portuguese. B u t had not the Portuguese been previously import­
ing a large proportion of the foreign goods which they required
from Fran ce, H olland, G erm an y, and Belg ium ? Did not the E n g ­
lish thenceforth exclu sively com m and the Portuguese market for a
manufactured product, the raw material for which they possessed
in their own country ? H ad they not discovered a method o f
reducing the P ortuguese custom s duty by on e-half? Did not the
course of exchange g iv e the E n g lis h consumer of Portuguese
w ines a profit of fifteen per cent. ? Did not the consumption o f
French and G erm an w in es in E n g la n d alm ost entirely cease ?
Did not the P ortuguese gold and silver supply the E n g lish with
the m ean s of bringin g vast quantities of goods from India and
o f d elu ging the continent of Iiurope with them ? W e re not the
P ortuguese cloth manufactories totally ruined, to the ad van tag e
o f the E n g lish ? Did not all the Portuguese colonies, especially
the rich one of Brazil, by this m eans become practically E n g lis h
colonies ? Certainly this treaty conferred a privilege upon Portu­
gal, but only in n a m e ; w hereas it conferred a privilege upon the
E n g lish in its actual operation and effects. A like tendency
underlies all subsequent treaties of commerce negotiated by the
E n g lis h .
B y profession they were alw a y s cosm opolites and
1 Anderson for the year 170 3.
52
THE HISTORY
philanthropists, while in their aim s and end eavou rs they were
alw a y s monopolists.
According to A dam S m ith ’ s second argu m en t, the E n g li s h
gained no particular ad v an tag es from this treaty, because they
were to a great extent obliged to send a w a y to other coun tries the
m oney which they received from the P o rtu g u e se for their cloth,
and with it to purchase goods there ; w h ereas it would h a v e been
far more profitable for them to make a direct e xch an g e o f their
cloths against such com modities as they m igh t need, and thus by
one exchange accom plish that which b y m ean s o f the trade w ith
Portugal they could on ly effect by two e xch an ges. R e a lly , but
for the very high opinion which we entertain o f the character and
the acumen of this celebrated savant, we should in the face o f this
argument be driven to despair either o f his candour or o f his
clearness o f perception. T o avoid doing either, nothing is left for
us but to bewail the w eak n ess of hu m an nature, to w hich A d a m
Sm ith has paid a rich tribute in the shape of these paradoxical,
alm ost laughable, argum ents am o n g other instances ; being e v i­
dently dazzled by the splendour o f the task, so noble in itself, o f
pleading a justification for absolute freedom o f trade.
In the argument ju s t named there is no more sound sen se or
logic than in the proposition that a baker, because he sells bread to
his customers for money, and with that m on ey buys flour from the
miller, does an unprofitable trade, because i f he had e xch an ged
his bread directly for flour, he would h ave effected his purpose by
a single act o f exchange instead of b y two such acts. It needs
surely no great amount of sag acity to a n sw e r such an allegation
by hinting that the miller m ight possibly not w an t so m uch bread
as the baker could supply him with, that the m iller m ig h t perhaps
understand and undertake baking him self, and that, therefore, the
baker s business could not go on at all w ithout these two a cts
o f exchange. Such in effect were the com m ercial conditions o f
Portugal and E n g la n d at the date of the treaty. P o rtu g al received
gold and silver from South A m erica in exchan ge for m anufactured
goods which she then exported to those regions ; but too indolent
or too shiftless to m anufacture these goods herself, she b o u g h t
them of the E n g lish in exchan ge for the precious m etals. T h e
latter employed the precious m etals, in so far as they did not
require them for the circulation at home, in exportation to Ind ia
or China, and bought goods there w hich they sold a g a in on the
European continent, whence they brought hom e agricultural pro­
duce, raw material, or precious m etals once again.
W e now ask, in the nam e o f com mon sense, w h o would h a v e
purchased of the E n g lish all those cloths which they exported to
Portugal, if the Portuguese had chosen either to m ake them at
TH E SPANIARDS AND PORTUGUESE
53
home or procure them from other countries ? T h e E n g lis h could
not in that case h ave sold them to P ortu gal, and to other nations
they were already selling as much as those nations would take.
Consequently the E n g li s h would h ave manufactured so much less
cloth than they had been disposing o f to the P ortuguese ; they
would h ave exported so much less specie to India than they had
obtained from Portugal. T h e y would h ave brought to Europe
and sold on the Continent ju s t that much less o f E a s t Indian
m erchandise, and consequently would have taken home with them
that much less of raw material.
Quite as untenable is A d am S m ith ’ s third argum ent that, if
P o rtu gu ese m oney had not flowed in upon them, the E n g lis h
m igh t have supplied their requirements o f this article in other
w a y s. Portugal, he conceived, must in any case have exported
her superfluous store o f precious metals, and these would have
reached E n g la n d through some other channel. W e here assu m e
that the P o rtu gu ese had manufactured their cloths for them selves,
had th em selves exported their superfluous stock of precious m etals
to India and China, and had purchased the return cargoes in other
co u n tries; and we take leave to ask the question whether under
these circum stances the E n g lish would h ave seen much of Portu­
guese m oney ? It would have been ju st the sam e if Portugal had
concluded a M ethuen T r e a t y with H olland or France. In both
these cases, no doubt, some little o f the money would have gone
over to E n g la n d , but only so much as she could h ave acquired by
the sale o f her raw wool. In short, but for the Methuen T re aty,
the m anufactures, the trade, and the shipping o f the E n g lis h
could never have reached such a degree of expansion as they
h ave attained to.
B u t w h atever be the estim ate formed o f the eflects o f the
M ethuen T r e a t y as respects E n glan d , this much at least appears
to be made out, that, in respect to Portugal, they have in no w a y
been such as to tempt other nations to deliver over their home
m arkets for manufactured goods to E n g lis h competition, for the
sake o f facilitating the exportation o f agricultural produce. A g r i­
culture and trade, commerce and navigation, instead of im proving
from the intercourse with E n glan d , went on sinking lower and
lower in Portugal. In vain did Pom bal strive to raise them, E n g lis h
competition frustrated all his efforts. A t the sam e time it must
not be forgotten that in a country like Portugal, where the whole
social conditions are opposed to progress in agriculture, industry,
and commerce, com mercial policy can effect but very little. N e ve r­
theless, the little which Pom bal did effect proves how much can
be done for the benefit of industry by a governm ent which is
anxiou s to promote its interests, if only the internal hindrances
54
T H E HISTORY
which the social condition of a country presen ts can first be re­
moved.
#
,
T h e sam e experience w a s made in S p a in in the r e ig n s o f
Philip V . and his two immediate successors.
In ad e q u ate as w a s
the protection extended to home industries under the B o u rb o n s,
and great as w a s the lack o f energy in fully enforcing the c u sto m s
laws, yet the remarkable anim ation which pervaded e v e ry branch
of industry and every district o f the country as the resu lt o f t r a n s ­
planting the commercial policy o f Colbert from F r a n c e to S p a in
w as unm istakable.1 T h e statem en ts o f U sta ritz and U l l o a 2 in
regard to these results under the then p re v a ilin g circu m stan ce s
are astonishing. F o r at that time w ere found e v e ry w h e re on ly
the most wretched mule-tracks, nowhere a n y well-kept inns, n o ­
where any bridges, can als, or river n av ig a tio n , e v e ry province w a s
closed again st the rest of S p a in by an internal cu sto m s cordon, at
every city g ate a royal toll w a s demanded, h ig h w a y robbery and
mendicancy were pursued as regular professions, the con traban d
trade w a s in the m ost flourishing condition, and the m ost g rin d ­
ing system of taxation existed ; these and such a s these the abovenamed writers adduce as the cau ses o f the decay o f ind ustry and
agriculture. T h e cau ses o f these e v ils— fanaticism , the greed and
the vices of the clergy, the privileges o f the nobles, the desp otism
of the G overnm ent, the w an t of enlighten m en t and freedom
am ongst the people— U staritz and U llo a dare not denounce.
A w orthy counterpart to the M ethuen T r e a t y with P o r t u g a l is
the A ssien to T r e a t y of 1 7 1 3 with Spain , under w hich pow er w a s
granted to the E n g lish to introduce each y e a r a certain n u m ber o f
African negroes into S p a n ish A m erica, and to v isit the harbou r o f
Portobello with one ship once a year, w h e re b y an opportu n ity w a s
afforded them o f sm u g g lin g im m e n se quantities o f g o o d s into
these countries.
W e thus find that in all treaties o f com m erce concluded by the
E n glish , there is a tendency to extend the sale of their m a n u fa c ­
tures throughout all the countries with w hom they negotiate, by
offering them apparent ad v a n ta g e s in respect of agricultural pro­
duce and raw m aterials. E v e r y w h e re their efforts are directed to
ruining the native m an u factu rin g power of those countries by
1 M acpherson, A nnals o f Commerce for the y ea rs 1 7 7 1 and 17 7 4 . T h e
obstacles thrown in the w ay o f the im portation o f foreign goods g re a tly pro­
moted the development o f Spanish m anufactures. B efore that tim e Spain h ad
been obtaining nineteen-twentieths o f her supplies o f m anufactured goods from
b-nglana. Brougham , In q u iry into the C olon ial P olicy o f the E uropean P o w e rs ,
P d l l 1* p . ^ 2 I |
d’ E s ^ a g n T * 2 ' The0rU du Commerce'
U lloa, R ita b lis s m e n t des M an ufactures
THE SPANIARDS AND PORTUGUESE
55
m e a n s o f cheaper goods and lon g credits. I f they cannot obtain
low tariffs, then they devote their exertions to defrauding the
custom -houses, and to o rg a n isin g a w holesale syste m of contra­
band trade. T h e former device, as we h ave seen, succeeded in
P o rtu gal, the latter in Spain. T h e collection o f import dues upon
the a d valorem principle has stood them in good stead in this
matter, for which reason of late they h ave taken so much pains to
represent the principle o f paying duty by w e igh t— a s introduced
by P r u s s ia — a s being injudicious.
C H AP TE R VI.
TH E FREN CH .
F r a n c e , too, inherited m an y a rem nant o f R o m a n civilisation . On
the irruption o f the G e rm an F ra n k s, w ho loved nothing but the
chase, and changed m an y districts a g ain into forests and w aste
which had been long under cultivation, alm ost e v e ry th in g w a s
lost again. T o the m onasteries, however, which su b seq u en tly be­
came such a great hindrance to civilisation, F ra n c e , like all other
European countries, is indebted for most of her p rogress in a g r i­
culture during the Middle A g e s. T h e inm ates o f religious houses
kept up no feuds like the nobles, nor harassed their v a s s a l s with
calls to military service, while their lands and cattle w ere less e x ­
posed to rapine and extermination. T h e cle rgy loved good livin g ,
were averse to quarrels, and sought to gain reputation and respect
by supporting the necessitous. H ence the old ad ag e ‘ It is good
to dwell under the crosier.’ T h e C ru sad es, the institution o f civic
com m unities and o f g uild s by L o u is IX , (S ain t L o u is), and the
proxim ity of Italy and F land ers, had considerable effect at an
early period in developing industry in F ran ce . Already' in the
fourteenth century, N orm an d y and B ritta n y supplied w oollen and
linen cloths for home consumption and for export to E n g la n d .
At this period also the export trade in w in e s and salt, chiefly
through the agen cy o f H an seatic m iddlem en, had become im ­
portant.
B y the influence o f F ra n c is I. the silk m an u factu re w a s intro­
duced into the South of F ran ce . H e n r y IV . favoured this industry,
as well as the manufacture o f g lass, linen, and w oo llens ; Richelieu
and Mazarin favoured the silk m anufactories, the velvet and
woollen manufactures of R ou en and Se d an , a s well as the fisheries
and navigation.
On no country did the discovery o f A m erica produce m ore
favourable effects than upon F ran ce . F ro m W e ste rn F r a n c e
quantities of corn were sent to S p ain .
M a n y peasants m igrated
every year from the Pyrenean districts to the north-east o f 'S p a in
in search of work. G reat quantities o f w in e and salt w ere e x ­
ported to the Spanish N etherlands, while the silks, the v e lv e ts, as
56
TH E FRENCH
57
also especially the articles o f luxury o f Fren ch manufacture, were
sold in considerable quantities in the N etherlands, E n g la n d ,
S p ain , and Portugal. O w in g to this cause a great deal o f Span ish
gold and silver got into circulation in F ra n ce at an early period.
B u t the p alm y d ay s of F ren ch industry first commenced with
Colbert.
A t the time o f M a z a rin ’ s death, neither m an ufacturin g industry,
com merce, navigation, nor the fisheries had attained to im port­
ance, while the financial condition o f the country w a s at its worst.
Colbert had the courage to grapple single-handed with an
undertaking which E n g la n d could only bring to a successful issue
by the persevering efforts o f three centuries, and at the cost o f two
revolutions.
F ro m all countries he obtained the most skilful
w orkm en, bought up trade secrets, and procured better machinery
and tools. B y a general and efficient tariff he secured the home
m arkets for native industry. B y abolishing, or by lim iting as
much a s possible, the provincial custom s collections, by the con­
struction of h ig h w a y s and canals, he promoted internal traffic.
T h e s e m easu res benefited agriculture even more than m an u fac­
tu rin g industry, because the num ber o f consum ers w a s thereby
doubled and trebled, and the producers were brought into e a sy and
cheap com m unication with the consum ers. H e further promoted
the interests of agriculture by low ering the am ounts o f direct im ­
posts levied upon landed property, by m itigating the severity of
the stringent m easures previously adopted in collecting the re­
venue, by equ alisin g the incidence of taxation, and lastly by intro­
ducing m easures for the reduction o f the rate o f interest. H e
prohibited the exportation o f corn only in tim es of scarcity and
high prices. T o the extension o f the foreign trade and the pro­
motion o f fisheries he devoted special attention. H e re-e stab lish e d
the trade with the L e v a n t, enlarged that with the colonies, and
opened up a trade w ith the North. Into all branches o f the
adm inistration he introduced the m ost stringent econom y and
perfect order. A t his death F ran ce possessed 50,000 loom s en ­
gaged in the m anufacture o f w oollens ; she produced an n u ally
silk m anufactures to the valu e o f 50 m illions o f francs. T h e
S tate revenues had increased by 28 millions o f francs. T h e k in g ­
dom w a s in possession o f flourishing fisheries, of an extensive
m ercantile marine, and a powerful n av y.1
A century later, the econom ists h ave sharply censured Colbert,
and maintained that this statesm an had been anxiou s to promote
the interests o f m anufactures at the expense o f agriculture : a re­
1 ‘ Eloge de Jean Baptiste Colbert, par Necker ’ (1773) ((Euvrcs Completes,
vol. xv.).
58
TH E HISTORY
proach which proves nothing more than that these authorities
were them selves incapable of appreciating the nature o f m an u fac­
turing industry.1
If, however, Colbert w a s in error in opposing periodical ob­
stacles to the exportation o f raw m aterials, yet by fostering the
growth and progress o f native industries he so g re a tly increased
the demand for agricultural produce that he g ave the agricultural
interest tenfold com pensation for a n y injury w hich he caused to it
by the above-named obstacles. If, contrary to the dictates o f
enlightened statesm an ship, he prescribed new processes o f m a n u ­
facture, and compelled the m anufacturers by penal e n actm en ts to
adopt them, it should be borne in m ind that these processes w e re
the best and the most profitable know n in his day, and that he
had to deal with a people w hich, sunk into the utm ost a p a th y by
reason o f a long despotic rule, resisted every innovation even
though it w a s an im provem ent.
T h e reproach, how ever, that F ra n c e had lost a large portion
of her native industry through C olbert’ s protective sy ste m , could
be levelled ag ain st Colbert only by that school w hich utterly
ignored the revocation o f the E d ic t o f N a n te s w ith its d isastro u s
consequences. In consequence o f these deplorable m e asu res, in
the course o f three ye ars after Colbert’ s death h a lf a m illion o f the
most industrious, skilful, and th rivin g inhabitants o f F r a n c e were
banished ; who, consequently, to the double in ju ry o f F ra n c e
which they had enriched, transplanted their ind ustry and their
capital to Sw itzerlan d, to every P rotestan t country in G e rm a n y ,
especially to P ru ssia, as also to H ollan d and E n g la n d . T h u s the
intrigues o f a bigoted courtesan ruined in three y e ars the able and
gifted w ork o f a whole generation, and cast F r a n c e back a g a in
into its previous state o f a p a t h y ; w h ile E n g la n d , under the zegis
o f her Constitution, and in vigorated by a R e volu tion w hich called
forth all the energies o f the nation, w a s p rosecu ting w ith in c re a s­
ing ardour and w ithout interm ission the w o rk com m enced by
Elizabeth and her predecessors.
T h e melancholy condition to w hich the ind ustry and the fin a n ­
1 See Q uesnay’s paper entitled, ‘ P hysiocratie, ou du G ouvernem ent le plus
avantageux au Genre H um ain (1768),’ N ote 5, ‘ sur la m axim e v iii.,’ w herein
Q uesnay contradicts and condem ns C olbert in two b rief pages, w hereas N ecker
devoted a hundred p ages to the exposition o f C olb ert’s system and o f w h at he
accom plished. It is hard to say w hether w e are to wonder most at the ign o r­
ance o f Q uesnay on m atters o f industry, h istory, and finance, or at the presum p­
tion with which he passes judgm ent upon such a man as C olbert w ithout
adducing grounds for it. Add to that, that this ignorant dream er w as not even
candid enough to mention the expulsion o f the H u g u e n o ts; nay, that he w a s
not ashamed to allege, contrary to all truth, that Colbert had restricted the trade
in corn between province and province by vexatious police ordinances,
THE FRENCH
59
ces of F ra n c e had been reduced by a lon g course o f m isgovernment, and the spectacle o f the great prosperity o f E n g la n d ,
aroused the em ulation o f F re n ch statesm en shortly before the
F ren ch R evolu tion . Infatuated with the hollow theory of the
econom ists, they looked for a rem edy, in opposition to Colbert’ s
policy, in the establishm ent o f free trade. It w a s thought that
the prosperity o f the country could be restored at one blow if a
better market were provided for Fren ch w in es and brandies in
E n g la n d , at the cost of perm itting the importation o f E n g lis h
m anufactures upon easy term s (a tw elve per cent. duty). E n g la n d ,
delighted at the proposal, w illin g ly granted to the Fren ch a
second edition of the M ethuen T re aty, in the shape o f the socalled E d en T r e a t y o f 17 8 6 ; a copy which w a s soon followed by
results not less ruinous than those produced by the Portuguese
original.
T h e E n g lis h , accustomed to the strong w in es o f the P en in sula,
did not increase their consumption to the extent which had been
expected, w h ilst the F re n ch perceived with horror that all they
had to offer the E n g li s h were sim p ly fashions and fancy articles,
the total value o f which w a s in s i g n ifi c a n t : w hereas the E n g lish
m anufacturers, in all articles o f prime necessity, the total am ount
o f which w a s enorm ous, could g re atly su rpass the Fren ch m a n u ­
facturers in cheapness o f prices, a s well as in quality o f their
goods, and in g ra n tin g o f credit. W h e n , after a brief competition,
the F ren ch m anufacturers w ere brought to the brink o f ruin, while
F re n ch w ine-grow ers had gained but little, then the French
G o v e rn m e n t sou ght to arrest the progress of this ruin by term in ­
atin g the treaty, but only acquired the conviction that it is much
easier to ruin flourishing m anufactories in a few ye ars than to
revive ruined m anufactories in a whole generation, E n g lis h co m ­
petition had engendered a taste for E n g lis h goods in France^ the
consequence o f which w a s an extensive and long-continued con­
traband trade which it w a s difficult to suppress. M ean w h ile it
w a s not so difficult for the E n g lis h , after the termination o f the
treaty, to accustom their palates again to the w ines o f the
P e n in su la .
N o tw ith stan d in g that the com m otions o f the Revolution and
the incessant w ars o f N apoleon could not h ave been favourable
to the prosperity o f F ren ch industry, notw ithstanding that the
Fren ch lost during this period most o f their m aritim e trade and
all their colonies, yet F re n ch m anufactories, solely from their
exclusive possession o f their hom e markets, and from the a b ro g a­
tion of feudal restrictions, attained during the E m p ire to a higher
degree o f prosperity than they had ever enjoyed under the pre­
ceding ancien regim e.
T h e sam e effects were noticeable in
C H A P T E R VII.
T H E G ERM A N S.
I n the chapter on the H an seatic L e a g u e w e s a w how , next in
order to Italy, G e rm an y had flourished, through exten siv e co m ­
merce, long before the other E u ropean states. W e h ave now to
continue the industrial history of that nation, after first tak in g a
rapid survey o f its earliest industrial circu m stances and their d e ­
velopment.
In ancient G erm an ia, the greater part o f the land w a s devoted
to pasturage and parks for gam e. T h e insign ificant and prim i­
tive agriculture w a s abandoned to serfs and to w om en. T h e sole
occupation of the freemen w a s warfare and the chase ; and that is
the origin of all the G e rm an nobility.
T h e G erm an nobles firmly adhered to this syste m throughout
the Middle A ges, oppressing agriculturists and opposing m a n u fa c ­
turing industry, while quite blind to the benefits which m ust h ave
accrued to them, as the lords o f the soil, from the prosperity o f both.
Indeed, so deeply rooted has the passion for their hereditary
favourite occupation ever continued with the G e rm an nobles, that
even in our days, long after they have been enriched by the p lo u g h ­
share and the shuttle, they still dream in le g islative a sse m b lie s
about the preservation o f gam e and the g am e law s, a s though the
wolf and the sheep, the bear and the bee, could dwell in peace
side by side ; as though landed property could be devoted at one
and the sam e time to gardening, timber g row in g, and scientific
farming, and to the preservation o f wild boars, deer, and hares.
German husbandry long remained in a barbarous condition,
notwithstanding that the influence o f towns and m on asteries on
the districts in their im m ediate vicinity could not be ignored.
T o w n s sprang up in the ancient R o m a n colonies, at the seats
of the temporal and ecclesiastical princes and lords, near m o n a s ­
teries, and, where favoured by the Em peror, to a certain extent
within their domains and inclosures, also on sites w here the
fisheries, combined with facilities for land and w ater transport,
offered inducements to them. T h e y flourished in m ost c a se s only
by supplying the local requirements, and by the foreign transport
62
THE GERMANS
63
trade. A n exten sive sy ste m o f n ative industry capable 01 supply­
ing an export trade could only h ave grown up by m ean s of exten ­
sive sheep farm in g and extensive cultivation o f flax. B u t flax
cultivation im plies a high standard o f agriculture, while extensive
sheep farm in g needs protection ag ain st w o lve s and robbers. Such
protection could not be maintained am id the perpetual feuds of
the nobles and princes between them selves and a g a in st the tow ns.
Cattle pastures served a lw a y s as the principal field for robbery ;
while the total exterm ination of beasts of prey w a s out o f the
question w ith those v a st tracts of forest which the nobility so
carefully preserved for their indulgence in the chase. T h e scan ty
number o f cattle, the insecurity o f life and property, the entire lack
of capital and of freedom on the part of the cultivators of the soil,
or o f a n y interest in agriculture on the part o f those who owned it,
necessarily tended to keep agriculture, and with it the prosperity
of the towns, in a very low state.
I f these circum stances are duly considered, it is e a sy to under­
stand the reason w h y F lan d ers and B rab an t under totally opposite
conditions attained at so early a period to a high degree o f liberty
and prosperity.
N otw ith stan d in g these impediments, the G erm an cities on the
B altic and the G erm an Ocean flourished, ow in g to the fisheries, to
navigation, and the foreign trade at sea ; in Southern G e r m a n y
and at the foot of the A lp s, ow in g to the influence of Italy, Greece,
and the transport trade by land ; on the Rhine, the E lb e, and the
D an ub e, b y m eans of viticulture and the wine trade, ow in g to the
exceptional fertility of the soil and the facilities of water com m u n i­
cation, w hich in the Middle A g e s w a s of still greater importance
than even in our d ays, because of the wretched condition o f the ,
roads and the general state of insecurity.
T h is diversity o f origin w ill explain the diversity characterising
the several confederations o f G erm an cities, such as the H anseatic,
the R h en ish , the Sw ab ian , the Dutch, and the Helvetic.
T h o u g h they continued powerful for a time ow in g to the
spirit o f youthful freedom which pervaded them, yet these leagues
lacked the internal guarantee o f stability, the principle o f unity,
the cement. Separated from each other by the estates o f the
nobility, by the serfdom of the population o f the country, their
union w a s doomed sooner or later to break down, ow in g to the
gradual increase and enrichment o f the agricultural population,
am on g w hom , through the power o f the princes, the principle o f
unity w a s maintained. T h e cities, inasm uch as they tended to
promote the prosperity o f agriculture, by so doing necessarily were
w o rk in g at their own effacement, unless they contrived to incor­
porate the agricultural classes or the nobility as m em b ers o f their
64
THE HISTORY
unions. F o r the accom plishm ent o f that object, h o w e v e r, they
lacked the requisite higher political instincts and know ledge. T h e ir
political vision seldom extended beyond their ow n city w a lls.
T w o only o f these confederations, Sw itzerlan d and the Se v e n
United Provinces, actually carried out this incorporation, and that
not as the result o f reflection, but because they w ere com pelled to
it, and favoured by circum stances, and for that reason those con­
federations still exist. T h e S w is s Confederation is n o th in g but a
conglomerate o f G erm an imperial cities, established and cem ented
together by the free populations occu pyin g the in te rv e n in g tracts
of country.
T h e rem aining leagues o f G e r m a n cities w ere ruined o w in g to
their contempt for the rural population, and from their absurd
burgher arrogance, which delighted in keeping that population in
subjection, rather than in raisin g them to their own level.
T h e se cities could only have attained u nity by m e a n s o f an
hereditary royal authority. B u t this authority in G e r m a n y lay in
the hands o f the princes, w ho, in order to avert restrain ts upon
their own arbitrary rule, and to keep both the cities and the m inor
nobles in subjection, were interested in resistin g the estab lishm en t
of an hereditary empire.
Hence the persevering adherence to the idea o f the Im p erial
Rom an Umpire am o n g st G erm an kings. O nly at the head o f
armies were the emperors rulers ; only when they w ent to w ar
were they able to bring together princes and cities under their
Danner.
Hence their protection o f civic liberty in G e r m a n y , and
their hostility to it and persecution of it in Italy.
T h e expeditions to R o m e not only weakened more and more
the kingly power in G e rm a n y , they w eakened those v e r y d y n a stie s
through which, within the E m p ire, in the heart of the nation, a
consolidated power m ight have grow n up. B u t w ith the extinction
of the House of H ohenstaufen the nucleus o f consolidated power
w as broken up into a thousand fragm ents.
T h e sense of the im possibility of consolidating the heart o f the
nation impelled the H ouse of H a p sb u rg , orig in ally so w e a k and
poor, to utilise the nation's vigour in founding a consolidated
hereditary monarchy on the south-eastern frontier o f the G e rm a n
Em pire, by subjugating alien races, a policy which in the north­
east w a s imitated by the M a rg ra v e s of Brandenburg. T h u s in
the south east and north-east there arose hereditary sovereign ties
founded upon the dominion over alien races, while in the two
western corners of the land two republics g rew into existence
which continually separated them selves more and more from the
parent nation ; and within, in the nation's heart, disintegration,
impotence, and dissolution continually progressed. T h e m isfo r­
THE GERMANS
tunes ot the G erm an nation were completed by the inventions of
gunpowder and o f the art of printing, the revival o f the R om an
law, the Reform ation , and lastly the discovery o f A m erica and of
the new route to India.
T h e intellectual, social, and economic revolution which we have
described produced divisions and disruption between the consti­
tuent members of the E m p ire, disunion between the princes, d is­
union between the cities, disunion even between the various guilds
of individual cities, and between neighbours o f every rank. T h e
energies o f the nation were now diverted from the pursuit o f in­
dustry, agriculture, trade, and navigation ; from the acquisition o f
colonies, the amelioration of internal institutions, in fact from
every kind o f substantial improvement, the people contended
about d o gm as and the heritage o f the Church.
A t the sam e time cam e the decline o f the H an seatic L e a g u e
and o f Venice, and with it the decline of G e r m a n y ’s wholesale
trade, and o f the power and liberties o f the G erm an cities both in
the north and in the south.
T h en came the T h irty Y e a r s ’ W a r with its devastations of all
territories and cities. Holland and Sw itzerlan d seceded, while
the fairest provinces of the E m p ire were conquered by France.
W h e re a s formerly single cities, such as Strasb u rg , N iirnberg,
A u gsb u rg , had surpassed in power entire electorates, they now
sank into utter impotence in consequence of the introduction of
standing arm ies.
I f before this revolution the cities and the royal power had
been more consolidated— if a king exclu sively belonging to the
G erm an nation had obtained a complete m astery of the R e fo rm a ­
tion, and had carried it out in the interests of the unity, power,
and freedom o f the nation— how very differently would the ag ri­
culture, industry, and trade o f the G e rm an s h ave been developed.
B y the side of considerations such as these, how pitiable and
unpractical seems that theory of political econom y which would
have us refer the material welfare of nations solely to the produc­
tion of individuals, w holly losing sight of the fact that the pro­
ducing power of all individuals is to a great extent determined by
the social and political circumstances o f the nation. T h e intro­
duction of the R o m an law weakened no nation so much as the
G erm an. T h e unspeakable confusion which it brought into the
legal status and relations o f private individuals, w as not the worst
o f its bad effects. More m ischievous w a s it by far, in that it
created a caste of learned men and ju rists differing from the people
in spirit and lan gu age, which treated the people as a class un­
learned in the law , as minors, which denied the authority o f all
sound hum an understanding, which everyw here set up secrecy in
5
66
TH E HISTORY
the room o f publicity* which* livin g in the m ost abject dependence
and living upon arbitrary power, everyw here advocated it and
defended its interests, everyw here gnawed at the roots o f liberty.
T h u s we see even to the beginning o f the eighteenth century in
G e rm a n y , barbarism in literature and lan gu ag e, barbarism in
legislation, State administration and adm inistration o f ju stic e ;
barbarism in agriculture, decline o f industry and o f all trade upon
a large scale, w an t of unity and of force in national cohesion ;
powerlessness and w eakn ess on all hands in dealing w ith foreign
nations.
One thing only the G e rm a n s had preserved ; that w a s their
aboriginal character, their love o f industry, order, thrift, and
moderation, their perseverance and endurance in research and in
business, their honest strivin g after im provem ent, and a consider­
able natural measure o f m orality, prudence, and circum spection.
T h is character both the rulers and the ruled had in com mon.
A fter the alm ost total decay of n ationality and the restoration o f
tranquillity, people began in som e individual isolated circles to
introduce order, improvement, and progress. N o w h e re w a s w it­
nessed more zeal in cherishing education, m an n ers, religion, art,
and science ; nowhere w a s absolute power exercised with greater
moderation or with more advan tage to general enlightenm ent,
order, and morality, to the reform o f abu ses and the ad van cem en t
of the common welfare.
T h e foundation for the revival o f G e rm an n atio n ality w a s u n ­
doubtedly laid by the G o v e rn m e n ts th em selves, by their con scien ­
tious devotion o f the proceeds o f the secularised Church lands to
the uses o f education and instruction, of art and science, o f
m orality and objects o f public utility. B y these m e a su re s light
made its w a y into the State adm inistration and the adm inistration
of justice, into education and literature, into agriculture, industry,*
and commerce, and above all am on gst the m a sse s. T h u s G e r ­
m any developed h e rse lf in a totally different w a y from all other
nations. E lse w h e re high mental culture rather g re w out o f the
evolution of the material powers of production, w h ilst in G e r m a n y
the growth of material powers of production w a s the outcome
chiefly of an antecedent intellectual development. H e n c e at the
present day the whole culture o f the G e rm a n s is theoretical.
H ence also those m an y unpractical and odd traits in the G e rm a n
character which other nations notice in us.
F o r the moment the G e rm a n s are in the position o f an indi­
vidual who, h avin g been formerly deprived of the use o f his lim bs,
first learned theoretically the arts o f stan d in g and w alkin g, of
eating and drinking, of lau ghin g and w eeping, and then only pro­
ceeded to put them in practice. H ence com es the G erm an predi-
THE GERMANS
67
lection for philosophic system s and cosmopolitan dreams. T h e
intellect, which w a s not allowed to stir in the affairs of this world,
strove to exercise itself in the realms o f speculation.
Hence, too,
we find that nowhere has the doctrine of A dam Sm ith and of his
disciples obtained a larger following than in G e rm an y ; nowhere
else have people more thoroughly believed in the cosmopolitan
m ag n an im ity o f M essrs. C an n in g and H u skisson.
F o r the first progress in m anufactures G e rm a n y is indebted to
the revocation of the E d ic t of N an te s and to the numerous re­
fugees who by that insane measure were driven to em igrate to
alm ost every part of G e rm an y , and established everywhere m an u ­
factures of wool, silk, je w e lle ry, hats, g la ss, china, gloves, and
industries of every kind.
T h e first G overn m ent m easures for the promotion o f m anufac­
tures in G e rm an y were introduced by A ustria and Pru ssia ; in
A ustria under Charles V I . and M aria T h ere sa, but even more
under Jo sep h I I .
Austria had formerly suffered enormously from
the banishm ent of the Protestants, her most industrious citizens ;
nor can it be exactly affirmed that she distinguished herself in the
immediate sequel by promoting enlightenm ent and mental culture.
A fterw ards, in consequence of a protective tariff, improved sheep
farming, better roads, and other encouragem ents, industry made
considerable strides even under Maria T heresa.
More energetically still w as this work pushed forward under
Jo sep h I I . and with im m ensely greater success. A t first, indeed,
the results could not be called important, because the Em peror,
according to his wont, w as too precipitate in these as in all his
other schemes of reform, and Austria, in relation to other states,
still occupied too backward a position. Here as elsewhere it be­
cam e evident that one might get ‘ too much of a good thing ’ at
.on ce, and that protective duties, in order to work beneficially and
not as a disturbing element upon an existing state of things, must
not be made too high at the commencement. B u t the longer that
system continued, the more clearly w a s its wisdom demonstrated.
T o that tariff A ustria is indebted for her present prosperous
industries and the flourishing condition of her agriculture.
T h e industry of Pru ssia had suffered more than that o f an y
other country from the devastations of the T h ir ty Y e a r s ’ W ar.
H er most important industry, the manufacture of cloth in the
M argrav ate of Brandenburg, w as almost entirely annihilated.
T h e majority of cloth workers had migrated to Saxo n y, while
E n g lis h imports at the time held every competition in check. T o
the advantage of P ru ssia now came the revocation o f the Edict of
N an te s and the persecution of the Protestants in the Palatinate
and in Salzburg. T h e great Elector saw at a glance what ElizaS *
68
THE HISTORY
beth before him had so clearly understood. In consequence o f the
m easures devised by him a great num ber o f the fu gitives directed
their steps to Pru ssia, fertilised the agricultural ind ustry of the
land, established a large num ber of m anufactures, and cultivated
science and art. A ll his successors followed in his footsteps, none
w ith more zeal than the g reat K in g — greater by his policy in
tim es o f peace than by his successes in war. S p ace is w a n tin g to
treat at length of the countless m easu res w hereby F red erick I I .
attracted to his dominions large num bers o f foreign ag ricu ltu rists,
brought tracts of w aste land into cultivation, and established the
cultivation of m eadow s, of cattle fodder, v eg etab les, potatoes, and
tobacco, improved sheep farm in g, cattle breeding, horse breeding,
the use of mineral manures, & c., by w hich m e a n s he created
capital and credit for the benefit o f the agricu ltu ral classes.
Still
more than by these direct m easu res he promoted indirectly the
interests of agriculture by m e a n s o f those branches o f m an ufacture
which, in consequence of the custom s tariff and the im proved
m eans of transport which he established, as well as the e sta b lish ­
ment o f a bank, made greater advances in P r u s s ia than in an y
other G e rm an state, n o tw ithstan ding that that c o u n try ’ s g e o ­
graphical position, and its division into several provinces separated
from one another, were much less favourable for the success o f
such m easures, and that the d isad van tag es o f a cu stom s cordon,
nam ely, the d a m a g in g effects o f a contraband trade, m u st be felt
more acutely there than in great states w h o se territories are co m ­
pact and well protected by boundaries o f seas, rivers, and ch ain s o f
m ountains.
A t the same tim e we are n ow ise an xiou s, under cover o f th is
eulogy, to defend the faults o f the syste m , such as, for e xam p le ,
the restrictions laid upon the exportation o f ra w m aterial. Still,
that in despite o f these faults the national industry w a s con sid er­
ably advanced by it, no enlightened and im partial historian w ould
venture to dispute.
T o every unprejudiced mind, unclouded b y false theories, it
must be clear that P r u s s ia gain ed her title to rank a m o n g st the
Kuropean powers not so much by her con quests a s b y her w ise
policy in promoting the interests o f agriculture, industry, and
trade, and by her progress in literature and s c ie n c e ; and all this
w a s the work of one great gen iu s alone.
And yet the C row n w a s not yet supported by the e n e rgy o f
free institutions, but s im p ly by an adm in istrative syste m , well
ordered and conscientious, but unquestionably tram melled by the
dead mechanical routine o f a hierarchical bureaucracy.
M eanwhile all the rest of G e rm a n y had for centuries been
under the influence of free trade— that is to say, the w h ole world
THE GERMANS
69
w a s free to export manufactured products into G erm an y, while no
one consented to admit G erm an manufactured goods into other
countries. T h is rule had its exceptions, but only a few.
It c an ­
not, however, be asserted that the predictions and the promises
o f the school about the great benefits of free trade have been
verified by the experience of this country, for everywhere the
m ovem ent w a s rather retrograde than progressive. Cities like
A u g sb u rg , N urnberg, M ayence, Cologne, &c., numbered no more
than a third or a fourth part o f their former population, and w ars
were often wished for merely for the sake of g ettin g rid of a
valu eless surplus o f produce.
T h e w ars came in the train of the Fren ch Revolution, and
with them E n g lis h subsidies together with increased E n g lish
competition.
Hence a new downward tendency in m anufactures
coupled with an increase in agricultural prosperity, which, h ow ­
ever, w as only apparent and transitory.
N ext followed N ap o le o n ’s Continental blockade, an event
w hich marked an era in the history o f both Germ an and French
industry, notwithstanding that Mons. J . B. S a y , A dam S m ith ’ s
m ost fam ous pupil, denounced it as a calam ity.
W h ate v e r
theorists, and notably the E n g lish , m a y urge again st it, this
much is clearly made out— and all who are conversant with
G erm an industry must attest it, for there is abundant evidence of
the fact in all statistical w ritings of that day— that, a s a result of
this blockade, G erm an manufactures o f all and every kind for the
first time began to make an important advance j 1 that then only
did the improved breeding of sheep (which had been commenced
some time before) become general and s u c c e s s fu l; that then only
w as activity displayed in im proving the m eans of transport. It is
true, on the other hand, that G e rm a n y lost the greater part o f her
former export trade, especially in linens. Y e t the gain w a s con­
siderably greater than the loss, particularly for the P ru ssian and
A ustrian m anufacturing establishm ents, which had previously
gained a start over all other manufactories in the G erm an states.
B u t with the return o f peace the E n g lish manufacturers ag ain
entered into a fearful competition with the G erm an ; for during
the reciprocal blockade, in consequence of new inventions and a
great and alm ost exclusive export trade to foreign lands, the
manufactories of the island had far outstripped that of G e rm a n y ;
and for this reason, as well as because of their large acquired
capital, the former were first in a position to sell at much lower
prices, to offer much superior articles, and to give much longer
1 T h e system must necessarily have affected Fran ce in a different manner
than G erm any, because G erm an y w as m ostly shut out from the Fren ch markets,
while the Germ an markets were all open to the French manufacturer.
7°
THE HISTORY
credit than the latter, which had still to battle with the difficulties
o f a first beginning. Consequently general ruin followed and
loud w ailin g s am on gst the latter, especially in the lower R h e n ish
provinces, in those regions which, h a v in g formerly belonged to
F ran ce, were now excluded from the Fren ch market. B e sid e s,
the P ru ssian custom s tariff had undergone m an y ch a n g e s in the
direction of absolute free trade, and no longer afforded a n y suffi­
cient protection again st E n g lis h competition. A t the sa m e time
the P ru ssian bureaucracy long strove a g a in st the c o u n try ’s cry
for help. T h e y had become too stro n g ly imbued w ith A d am
S m ith ’s theory at the universities to discern the w an t o f the times
with sufficient prom ptness. T h e re even still existed political
econom ists in P ru ssia who harboured the bold design o f re v iv in g
the long-exploded ‘ physiocratic ’ syste m . M e an w h ile the nature
o f thin gs here too proved a m ightier force than the power o f
theories. T h e cry o f distress raised by the m anufacturers, h ailin g
as it did from districts still ye arn in g after their former state of con­
nection with F ran ce, w hose sym pathies it w a s n e ce ssary to con­
ciliate, could not be safely disregarded too long. More and more
the opinion spread at the time that the E n g lis h G o v e rn m e n t w ere
favouring in an unprecedented m anner a scheme for g lu ttin g the
m arkets on the Continent with manufactured goods in order to
stifle the Continental m anufactures in the cradle. T h i s idea h as
been ridiculed, but it w a s natural enough that it should prevail,
first, because this g lu ttin g really took place in such a m an ner as
though it had been deliberately planned ; and, secondly, because
a celebrated member of Parliam ent, Mr. H e n r y B r o u g h a m (after­
w ards Lord B ro u g h am ), had openly said, in 1 8 1 5 , ‘ that it w a s
well worth while to incur a loss on the exportation o f E n g li s h
manufactures in order to stifle in the cradle the foreign m a n u fa c ­
tures.’ 1 T h is idea o f this lord, since so renowned a s a p hilan­
thropist, cosm opolist, and L ib e ral, w a s repeated ten y e a r s later
alm ost in the sam e words by Mr. H u m e , a m em ber o f P arlia m e n t
not less distinguished for liberalism , w hen he expressed a w ish
that * Continental m anufactures m ight be nipped in the bud.’
A t length the prayer of the P ru ssia n m anufacturers found a
hearing— late enough, indeed, as m ust be admitted w hen one
considers how painful it is to be w restlin g with death y e a r after
ye a r— but at last their cry w a s heard to real good purpose. T h e
Pru ssian customs tariff o f 1 8 1 8 answ ered, for the time in w hich it
w a s established, all the requirements of P ru ssia n industry, w it h ­
out in any w ay overdoing the principle o f protection or unduly
1 R eport o f the Committee o f Commerce an d M anufactures to the H ouse o f
Representatives o f the Congress o f the U nited States, Feb. 13 , 18 16 .
THE GERMANS
71
interfering with the country’s beneficial intercourse with foreign
countries. Its scale of duties w a s much lower than those o f the
E n g lish and French customs system s, and necessarily s o ; for in
this case there w as no question of a gradual transition from a
prohibitive to a protective system, but of a change from free trade
(so called) to a protective system. A nother great advantage o f
this tariff, considered as a whole, w as that the duties were mostly
levied according to the weight o f goods and not according to their
value. B y this m eans not only were sm u g glin g and too low
v alu ations obviated, but also the great object w as gained, that
articles of general consumption, which every country can most
easily manufacture for itself, and the manufacture o f which, be­
cause of their great total money value, is the most important of
a n y for the country, were burdened with the highest import duty,
while the protective duty fell lower and lower in proportion to the
fineness and costliness o f the goods, also as the difficulty of
m akin g such articles at home increased, and also as both the
inducements and the facilities for sm u g g lin g increased.
B u t this mode of charging the duty upon the weight would
o f course, for very obvious reasons, affect the trade with the
neighbouring Germ an states much more injuriously than the
trade with foreign nations. T h e second-rate and smaller G erm an
states had now to bear, in addition to their exclusion from the
Austrian, Fren ch, and E n g lish markets, almost total exclusion
from that o f Pru ssia, which hit them all the harder, since m an y
o f them were either totally or in great part hemmed in by Prussian
provinces.
J u s t in proportion as these measures pacified the Prussian
manufacturers, w as the loudness of the outcry against them on
the part of the manufacturers of the other G erm an states. Add to
that, that A u stria had shortly before imposed restrictions on the
importation o f G erm an goods into Italy, notably o f the linens o f
U pper Sw a b ia . Restricted on all sides in their export trade to
small strips o f territory, and further being separated from one
another by smaller internal lines o f customs duties, the m anufac­
turers of these countries wrere well-nigh in despair.
It w as this state o f urgent necessity which led to the formation
o f that private union of five to six thousand G erm an manufacturers
and merchants, which w a s founded in the year 1 8 1 9 at the spring
fair held in Frankfort-on-the-M ain, with the object o f abolishing
all the separate tariffs o f the various G erm an states, and on the
other hand of establishing a com mon trade and custom-house
system for the whole of G erm any.
T h is union w a s form ally organised. Its articles o f association
.were submitted to the Diet, and to all the rulers and governm ents
72
THE HISTORY
of the G erm an states for approval. In every G e rm an town a local
correspondent w as appointed ; each G erm an state had its provin­
cial correspondent. All the members and correspondents bound
them selves to promote the objects o f the union to the best o f their
ability. T h e city of N urnberg w a s selected as the head-quarters
o f the union, and authorised to appoint a central committee, which
should direct the business o f the union, under the advice o f an
assessor, for which office the author of this book w a s selected. In
a weekly journal of the union, bearing the title of ( O rgan des
deutschen Handels- und F ab rikan te n stan d e s,’ 1 the tran saction s
and measures of the central committee w ere made known, and
ideas, proposals, treatises, and statistical papers relating to the
objects o f the union were published. E a c h y e a r at the sp rin g fair
in Frankfort a general m eeting o f the union w a s held, at which
the central committee g ave an account o f its stew ardship.
After this union had presented a petition to the G e rm a n D iet
show ing the need and expediency of the m easures proposed by
their organisation, the central committee at N iirnberg com m enced
operations. D eputations were sent to every G e rm an Court, and
finally one to the C o n g re ss o f Plenipotentiaries held at V ie n n a in
1820. At this congress so much at least w as gained, that several
o f the second-class and sm aller G e rm an states agreed to hold a
separate congress on the subject at D arm stadt. T h e effect o f the
deliberations of this last-named con gress w a s, first, to bring about
a union between W u rte m b erg and B a v a r ia ; secondly, a union o f
some of the G erm an states and P ru ssia ; then a union between
the middle G erm an states ; lastly, and chiefly in consequence of
the exertions of F reiherr von Cotta to fuse the above-nam ed three
unions into a general cu stom s confederation, so that at this pre­
sent time, with the exception o f A u stria, the two M ecklenburgs,
H anover, and the H a n se T o w n s , the whole o f G e r m a n y is a s s o ­
ciated in a single custom s union, which has abolished the separate
customs lines am o n g st its members, and h a s established a uniform
tariff in common again st the foreigner, the revenue derived from
which is distributed p ro rata am o n g st the several states according
to their populations.
T he tariff o f this union is su bstantially the sam e a s that
established by P ru ssia in 1 8 1 8 ; that is to say, it is a moderate
protectionist tariff.
In consequence of this unification o f custom s, the industry,
trade, and agriculture of the G e rm an states form ing the union
have already made enorm ous strides.
1 Organ o f the Germ an Com m ercial and M an ufacturin g Interests.
C H A P T E R V III.
T H E R U S S IA N S .
R u s s i a owes her first progress in civilisation and industry to h e r
intercourse with Greece, to the trade o f the H an seatic T o w n s with
N ovgorod and (after the destruction of that town by Iv an W a s siljewitsch) to the trade which arose with the E n g lish and Dutch,
in consequence o f the discovery of the water com munication with
t h e coasts of the W h ite Sea.
But the great increase o f her industry, and especially o f her
civilisation, dates from the reign o f Peter the G reat. T h e history
of R u ssia during the last hundred and forty years offers a most
striking proof o f the great influence of national unity and political
circum stances on the economic welfare of a nation.
T o the imperial power which established and maintained this
union of innumerable barbaric hordes, R u ssia owes the foundations
of her manufactures, her vast progress in agriculture and popula­
tion, the facilities offered to her interior traffic by the construction
o f can als and roads, a very large foreign trade, and her standing
as a com mercial power.
R u s s i a ’s independent system o f trade dates, however, only
from the y e a r 1 8 2 1 .
U nder Catherine II. trade and manufactures had certainly
made some progress, on account o f the privileges she offered to
foreign artisans and manufacturers ; but the culture of the nation
w as still too imperfect to allow of its getting beyond the first stages
in the manufacture of iron, glass, linen, &c., and especially in
those branches o f industry in which the country w a s specially
favoured by its agricultural and mineral wealth.
Besides this, further progress in manufactures would not, at
that time, h ave been conducive to the economic interests o f the
nation. I f foreign countries had taken in paym ent the provisions,
raw material, and rude manufactures which R u ssia w a s able to
furnish— if, further, no w ars and exterior events had intervened,
R u s s ia by m eans o f intercourse with nations more advanced than
h erself would h ave been much more prosperous, and her culture
in general would in consequence o f this intercourse have made
73
74
THE HISTORY
greater progress than under the m an u factu rin g system . Hut w a r s
and the Continental blockade, and the com m ercial re g u la tio n s of
foreign nations, compelled her to seek prosperity in other w a y s
than by the export o f raw m aterials and the import o f m an u fac­
tures. In consequence o f these, the previous com m ercial relations
o f R u ssia by sea were disturbed. H e r overland trad e with the
western continent could not make up for these l o s s e s ; and she
found it necessary, therefore, to w ork up her raw m ate rials herself.
After the establishm ent o f the general peace, a desire arose to
return to the old system . T h e G overn m en t, and e ve n the E m ­
peror, were inclined to favour free trade. In R u s s i a , the w ritin g s
of Herr Storch enjoyed as high a reputation a s those o f M ons.
S a y in G erm any. People w ere not alarm ed by the first shocks
which the home m anufactories, which had arisen during the C o n ­
tinental blockade, suffered o w in g to E n g li s h com petition. T h e
theorists maintained that if these shocks could on ly be endured
once for all, the b lessin g s o f free trade would follow. A n d indeed
the circum stances of the com mercial world at the tim e w ere u n ­
com m only favourable to this transition. T h e failure o f crops in
W estern Eu rope caused a great export o f agricultural produce, by
which R u ssia for a long time gained am ple m e a n s to balance her
large importation o f manufactured goods.
B u t when this extraordinary dem and for R u s s ia n agricu ltu ral
produce had ceased, when, on the other hand, E n g la n d had im ­
posed restrictions on the import o f corn for the benefit o f her
aristocracy, and on that o f foreign timber for the benefit of
Canada, the ruin of R u s s i a ’ s home m an ufactories and the e x c e s ­
sive import of foreign m anufactures made itse lf doubly felt. A l ­
though people had formerly, with H e rr Storch, considered the
balance of trade as a chimera, to believe in the existence o f w hich
w as, for a reasonable and enlightened m an , no less o u trag eou s
and ridiculous than the belief in w itchcraft in the seventeenth
century had been, it w a s now seen with alarm that there m u st be
something of the nature of a balance o f trade as betw een inde­
pendent nations. T h e most enlightened and discerning state sm an
of R u ssia , Count Nesselrode, did not hesitate to con fess to this
belief. H e declared in an official circular o f 1 8 2 1 : * R u s s i a finds
herself compelled by circum stances to take up an independent
system of trade ; the products o f the empire h a v e found no foreign
market, the home m anufactures are ruined or on the point of being
so, all the ready m oney o f the country flow s tow ards foreign lands,
and the most substantial trading firm s are nearly ruined.’
T. he beneficial effects o f the R u s s ia n protective sy ste m contri­
buted no less than the injurious consequences o f the re-establishment of free trade had done to bring into discredit the principles
THE RUSSIANS
75
and assertions of the theorists. F oreig n capital, talent, and labour
flowed into the country from all civilised lands, especially from
E n g la n d and G erm an y, in order to share in the ad van tag es offered
by the home manufactories.
T h e nobility imitated the policy of the E m p ire at large. A s
they could obtain no foreign market for their produce, they
attempted to solve the'problem inversely by bringing the market
into proxim ity w ith/fhe produce— they established manufactories
on their estates. / I n consequence of the demand for fine wool
produced by the h e w ly created woollen manufactories, the breed
of sheep w as rapidly improved. F oreig n trade increased, instead
o f declining, particularly that with China, Persia, and other neigh­
bouring countries of A sia. T h e commercial crises entirely ceased,
and one need only read the latest reports of the R u ssian M inister
o f Com m erce to be convinced that R u ssia owes a large measure
o f prosperity to this system , and that she is increasing her national
wealth and power by enorm ous strides.
It is foolish for G e rm a n s to try to make little of this pro­
g re ss and to com plain of the injury which it has caused to the
north-eastern provinces o f G erm an y. E a c h nation, like each in­
dividual, has its own interests nearest at heart. R u s s ia is not
called upon to care for the welfare of G e rm an y ; G e rm an y must
care for G e rm a n y , and R u s s ia for R u ssia . It would be much
better, instead o f com plaining, instead o f hoping and w aitin g and
expecting the M essiah o f a future free trade, to throw the cosm o­
politan system into the fire and take a lesson from the exam ple o f
R u ssia.
T h a t E n g la n d should look w ith je a lo u sy on this commercial
policy of R u s s ia is very natural. B y its m eans R u s s ia has em an ­
cipated h erself from E n g la n d , and has qualified herself to enter
into competition with her in A sia. E v e n if E n g la n d m anufac­
tures more cheaply, this advantage will in the trade with Central
A s ia be outweighed by the proxim ity o f the R u ssia n E m p ire and
by its political influence. A lthou gh R u s s ia m ay still be, in com ­
parison with Eu rope, but a sligh tly civilised country, yet, as
compared with A sia, she is a civilised one.
M eantim e, it cannot be denied that the want o f civilisation
and political institutions w ill greatly hinder R u ssia in her further
industrial and commercial progress, especially i f the Imperial
G overn m ent does not succeed in harm onising her political con­
ditions with the requirements of industry, by the introduction o f
efficient municipal and provincial constitutions, by the gradual
limitation and final abolition of serfdom, by the formation o f an
educated middle class and a free peasant class, and by the com ­
pletion of m eans of internal transport and o f communication with
?6
THE HISTORY
Central A sia, T h e s e are the conquests to which R u s s ia is called
in the present century, and on them depends her further pro gre ss
in agriculture and industry, in trade, navigatio n and n a v a l power.
B u t in order to render reforms o f this kind possible and practic­
able, the R u ssia n aristocracy m u st first learn to feel that their
own material interests will be m ost promoted by them .
C H A P T E R IX.
T H E N O R T H A M E R IC A N S .
f t e r our historical exam ination of the com m ercial policy o f the
E u ropean nations, with the exception of those from which there is
nothing of importance to be learnt, we will cast a glance beyond
the A tlantic Ocean at a people of colonists which has been raisin g
itse lf alm ost before our eyes from the condition of entire depen­
dence on the mother country, and of separation into a number o f
colonial provinces h a v in g no kind o f political union between
them selves, to that o f a united, well-organised, free, powerful,
industrious, rich, and independent nation, which will perhaps in
the time o f our grandchildren exalt itself to the rank o f the first
n av al and com m ercial power in the world. T h e history of the
trade and industry o f North A m erica is more instructive for our
subject than a n y other can be, because here the course o f develop­
ment proceeds rapidly, the periods of free trade and protection
follow closely on each other, their consequences stand out clearly
and sharply defined, and the whole m achinery of national industry
and State adm inistration m o v es exposed before the eyes of the
spectator.
T h e N orth Am erican colonies were kept, in respect of trade
and industry, in such complete thraldom by the mother country,
that no sort of manufacture w a s permitted to them beyond do­
m estic manufacture and the ordinary handicrafts.
So late as the
y e ar 1 7 5 0 a hat m anufactory in the State of M assachu setts created
so great sensation and je a lo u sy in Parliam ent, that it declared all
kinds o f m anufactories to be ‘ common nuisances,' not excepting
iron works, notw ithstanding that the country possessed in the
greatest abundance all the requisite materials for the manufacture
of iron. E v e n more recently, nam ely, in 177 0 , the great C hatham ,
made uneasy by the first m anufacturing attempts o f the N e w
E n glan ders, declared that the colonies should not be permitted
to manufacture so much as a horseshoe nail.
T o A dam Sm ith belongs the merit o f h avin g first pointed out
the injustice o f this policy.
T h e m onopoly of all m anufacturing industry by the mother
A
77
7*
T H E HISTORY
country w a s one of the chief causes o f the A m e rican R e v o lu tio n ;
the tea duty m erely afforded an opportunity for its outbreak.
Freed from restrictions, in possession of all m aterial and intel­
lectual resources for m anufacturing work, and separated from that
nation from which they had previously been supplied with m a n u ­
factured goods, and to which they had been sellin g their produce,
and thus thrown with all their w a n ts upon their ow n resources,
m anufactures o f every kind in the N orth A m erican free states re­
ceived a m ighty stim ulus during the w ar of revolution, w hich in
its turn had the effect o f benefiting agriculture to such an extent
that, notw ithstanding the burdens and the devastation consequent
upon the then recent war, the value o f land and the rate o f w a g e s
in these states everyw here rose im m en sely. B u t as, after the
peace o f P aris, the faulty constitution of the free states m ade the
introduction o f a united com m ercial system im possible, and con ­
sequently E n g lis h m anufactured goods a g a in obtained free a d m is­
sion, competition with w hich the n ew ly established A m e rican
m anufactories had not strength enough to bear, the prosperity
w hich had arisen during the w ar van ish ed much more quickly
than it had grown up. A n orator in C o n g re ss said afterw ards of
this c r i s is : ‘ W e did buy, according to the advice o f modern
theorists, where we could bu y cheapest, and our m arkets w ere
flooded with foreign goods ; E n g li s h goods sold cheaper in our
seaport tow n s than in Liverp ool or Lon don , Our m anufacturers
were being ruined ; our m erchants, even those w h o th ough t to
enrich them selves by importation, becam e b a n k r u p t ; and all
these causes together w ere so detrim ental to agriculture, that
landed property became v ery gen erally w orth less, and conse­
quently bankruptcy becam e general even am o n g our la n d o w n e rs.’
T h is condition o f thin gs w a s by no m e a n s tem porary ; it lasted
from the peace o f P aris until the estab lishm en t of the federal con­
stitution, and contributed more than a n y other circu m stance to
b ring about a more intim ate union between the free states and to
impel them to g iv e to C o n g re ss full powers for the m ain ten an ce
o f a united com mercial policy.
C o n g re ss w a s inundated w ith
petitions from all the states— N e w Y o r k and Sou th C aro lin a not
excepted— in favour o f protective m e a su re s for internal in d u s t r y ;
,and W ash in gto n , on the d ay o f his inauguration, wore a suit of
home-manufactured cloth, ‘ in order,’ said a con tem porary N e w
Y o rk journal, ‘ in the sim ple and im pressive m an ner so peculiar to
this great man, to g iv e to all his successors in office and to all
future legislators a m em orable lesson upon the w a y in which the
welfare o f this country is to be prom oted.’ A lth ou gh the first
A m erican tariff (1789) levied only light duties on the im portation
o f the most important manufactured articles, it ye t worked so
TH E NORTH AMERICANS
79
beneficially from the very first years o f its introduction that
W ash in g to n in his * M e s s a g e ' in 1 7 9 1 w a s able to congratulate
the nation on the flourishing condition of its m anufactures, a g ri­
culture, and trade.
T h e inadequacy o f this protection w as, however, soon a p p a r e n t ;
for the effect of the slight import duties w as easily overcom e by
E n g lish manufacturers, w h o had the a d v an tag e of im proved
methods of production. C on gress did certainly raise the duty on
the most important manufactured articles to fifteen per cent., but
this w a s not till the year 1804, w hen it w as compelled, ow in g to
deficient custom s receipts, to raise more revenue, and long after the
inland m anufacturers had exhausted every argum ent in favour o f
h avin g more protection, while the interests opposed to them were
equally strenuous upon the ad v a n ta g e s o f free trade and the
injurious effects o f high import duties.
In striking contrast with the slight progress which had, on the
whole, been made by the m anufacturers of the country, stood the
improved condition of its navigatio n, which since the y e a r 1789,
upon the motion of J a m e s M adison, had received effectual protec­
tion. F ro m a tonnage o f 200,000 in 17 8 9 their m ercantile m arine
had increased in 18 0 1 to more than 1,000,000 tons. U nd er the
protection of the tariff of 1804, the m an u factu rin g interest of the
United States could ju s t barely maintain itself a g a in st the E n g lis h
m anufactories, which were continually being improved, and had
attained a colossal magnitude, and it would doubtless h ave had to
succumb entirely to E n g lis h competition, had it not been for the
help of the em bargo and declaration of war of 1 8 1 2 .
In conse­
quence of these events, ju st as at the time o f the W a r o f In d ep en ­
dence, the Am erican m anufactories received such an extraordinary
im petus that they not only sufficed for the home dem and, but
soon began to export as well.
A ccording to a report of the C o m ­
mittee on T rad e and M anufactures to C on gress in 1 8 1 5 , 100,000
hands were employed in the woollen and cotton m anufactures
alone, w hose yearly production amounted to the value o f more
than sixty million dollars. A s in the d ays o f the W a r o f Ind epen­
dence, and as a necessary consequence o f the increase in m an u ­
facturing power, there occurred a rapid rise in all prices, not only
of produce and in w a g e s , but also of landed property, and hence
universal prosperity am on gst landowners, labourers, and all en­
gaged in internal trade.
After the peace of Ghent, C on gress, w arned by the experience
of 1786, decreed that for the first year the previous duties should
be doubled, and during this period the country continued to p ros­
per. Coerced, however, by powerful private interests which were
opposed to those of the manufacturers, and persuaded by the argu-
8o
T H E HISTORY
merits of theorists, it resolved in the y e ar 1 8 1 6 to m ake a considerable
reduction in the import duties, whereupon the sam e eftects o f
external competition reappeared which had been experienced from
178 6 to 1789, viz. ruin o f m anufactories, u n saleab ility o f produce,
fall in the value o f property, and general c a lam ity a m o n g lan d­
owners.
After the country had for a second tim e enjoyed in
w ar time the blessin g s o f peace, it suffered, for a second time,
greater evils through peace than the m ost d e v astatin g w a r could
have brought upon i t
It w a s only in the y e a r 18 2 4 , after the
effects of the E n g lis h corn law s had been m ade m an ife st to the
full extent o f their u nw ise tendency, thus com pellin g the a g r i­
cultural interest o f the central, northern, and w estern states to
make common cause with the m an u factu rin g interest, that a so m e ­
w hat higher tariff w a s passed in C on gress, w hich, how ever, as Mr.
H uskisson im m ediately brought forward cou n teractin g m e asu res
.vith the view of p a r a ly sin g the effects o f this tariff on E n g li s h
competition, soon proved insufficient, and had to be supplem ented
by the tariff of 18 2 8 , carried through C o n g re ss after a violent
struggle.
R ecen tly published official s t a t i s t i c s 1 o f M a ssa c h u se tts g iv e a
tolerable idea of the start taken by the m an u fac tu re s o f the
United States, especially in the central and northern states o f
the U nion, in consequence o f the protective system , and in spite
of the subsequent modification o f the tariff of 1828. In the ye a r
18 3 7 , there w ere in this S ta te (M assach u se tts) 282 cotton m ills
and 5 6 5 ,0 3 1 spindles in operation, e m p lo y in g 4,997 m a le and
r 4»757 female h a n d s ; 3 7 ,2 7 5 ,9 1 7 pounds o f cotton were worked
up, and 126,000,000 y a rd s of textile fabrics m anufactured, o f the
value of 13 ,0 5 6 ,6 5 9 dollars, produced by a capital o f 1 4 ,3 6 9 ,7 1 9
dollars.
In the woollen m anufacture there w ere 19 2 mills, 5 0 1 m achin es,
and 3 ,6 12 male and 3,485 female operatives em ployed , w h o w orked
up 10,858,988 pounds of wool, and produced 1 1 , 3 1 3 , 4 2 6 y a r d s of
cloth, of the value of 10,399,807 dollars on a w o rk in g capital of
5,770,750 dollars.
16,689,877 pairs o f shoes and boots w ere m anufactured (large
quantities of shoes being exported to the w estern states), to the
value of 14,642,520 dollars.
T h e other branches o f m anufacture stood in relative proportion
to the above.
1Statistical T able o f M assachusetts f o r the Y e a r en din g A p r il 1 , 18 3 7 , by J .
P . B igelo w , Secretary o f the Com m onw ealth (Boston , 1838).
N o A m erican
state but M assachusetts possesses sim ilar statistical abstracts. W e ow e those
here relerred to, to G overnor E verett, distinguished alike as a scholar, an author,
and a statesman.
THE NORTH AMERICANS
81
T h e combined value of the m anufactures of the State (de­
ducting shipbuilding) amounted to over 86 million dollars, with
a w orking capital of about 60 million dollars.
T h e number of operatives (men) w as 1 1 7 , 3 5 2 ; and the total
number of inhabitants o f the State (in 1837) w a s 7 0 1 , 3 3 1 .
M isery, brutality, and crime are unknown am on g the m a n u ­
facturing population here. On the contrary, am on g the numerous
male and female factory w orkers the strictest morality, cleanliness,
and neatness in dress, e x i s t ; libraries are established to furnish
them with useful and instructive books ; the work is not e x h au st­
ing, the food nourishing and good. Most o f the wom en save a
d ow ry for th em selv e s.1
T h is last is evidently the effect o f the cheap prices o f the co m ­
mon necessaries o f life, light taxation, and an equitable custom s
tariff. L e t E n g la n d repeal the restrictions on the import of a g r i­
cultural produce, decrease the existing taxes on consumption by
one-half or two-thirds, cover the loss by an income tax, and her
factory w orkers will be put into the sam e position.
N o nation has been so misconstrued and so misjudged as
respects its future destiny and its national economy as the United
State s of North Am erica, by theorists as well as by practical men.
A dam Sm ith and J . B . S a y had laid it down that the United
State s were, ‘ like P o la n d ,1 destined for agriculture. T h is co m ­
parison w a s not very flattering for the union o f some dozen o f
new, aspiring, youthful republics, and the prospect thus held out to
them for the future not very encouraging. T h e above-mentioned
theorists had demonstrated that N ature herself had singled out
the people o f the United State s exclusively for agriculture, so
long as the richest arable land w a s to be had in their country
for a mere trifle.
G reat w a s the commendation which had been
bestowed upon them for so willingly acquiescing in N atu re ’s
ordinances, and thus su pplying theorists with a beautiful example
o f the splendid w orking of the principle of free trade. T h e school,
however, soon had to experience the mortification o f losing this
cogent proof of the correctness and applicability of their theories
in practice, and had to endure the spectacle of the United States
seeking their nation’s welfare in a direction exactly opposed to
that of absolute freedom o f trade.
A s this youthful nation had previously been the very apple o f
the eye of the schoolmen, so she now became the object o f the
heaviest condemnation on the part of the theorists o f every nation
in E u ro p e. It w a s said to be a proof of the slight progress o f
1 T h e Am erican papers o f Ju ly 1839 report that in the m anufacturing town
of Low ell alone there are over a hundred workwom en who have each over a
thousand dollars deposited to their credit in the savings bank.
6
82
THE HISTORY
the N e w W orld in political knowledge, that while the E u ro p ean
nations were strivin g with the m ost honest zeal to render u niversal
free trade possible, while E n g la n d and F r a n c e especially were
actually engaged in endeavouring to m ake im portant ad v a n c e s to­
w ards this great philanthropic object, the United S t a te s o f North
A m e rica were seeking to promote their national prosperity by a
return to that long-exploded mercantile system w hich had been
clearly refuted by theory. A country like the U n ited S t a t e s , in
which such m easu reless tracts o f fruitful land still rem ained u n ­
cultivated and where w a g e s ruled so high, could not utilise its
material wealth and increase o f population to better purpose than
in agriculture ; and w hen this should h ave reached com plete de­
velopment, then m an ufactures would arise in the natural course
of events without artificial forcing. B u t by an artificial d e v e lo p ­
ment of m anufactures the United S t a te s would injure not o n ly
the countries which had lon g before enjoyed civilisation , but
them selves m ost o f all.
W ith the A m erican s, how ever, sound com m on sen se, and the
instinct o f what w a s ne ce ssary for the nation, w ere more potent
than a belief in theoretical propositions.
T h e a rg u m e n ts o f the
theorists w ere thoroughly investigated, and strong doubts enter­
tained o f the infallibility of a doctrine w hich its own disciples were
not w illin g to put in practice.
T o the argu m en t concerning the still uncultivated tracts o f fruit­
ful land, it w a s answ ered that tracts o f such land in the populous,
well-cultivated states of the U nion w hich were ripe for m an u fac tu r­
ing industry, were as rare as in G re at B rita in ; that the surplus
population of those states would h ave to m igrate at g re at expense
to the w est, in order to bring tracts o f land o f that description into
cultivation, thus not on ly an n u ally ca u sin g the eastern states large
losses in material and intellectual resources, but also, in asm u ch as
such em igration would transform custom ers into com petitors, the
value of landed property and agricultural produce would thereby
he lessened. It could not be to the ad v an tag e of the U nion that
all waste land b elon gin g to it should be cultivated up to the
Pacific Ocean before either the population, the civilisation , or the
m ilitary power o f the old states had been fully developed. On
the contrary, the cultivation of distant v irgin lands could confer
no benefit on the eastern states u n less they th em selv e s devoted
their attention to m an ufacturin g, and could exchan ge their m a n u ­
factures again st the produce o f the west. Pe o p le went still fu r t h e r :
W a s not E n g la n d , it w as asked, in m uch the sam e position ? H a d
not E n g la n d also under her dominion v a s t tracts o f fertile land
still uncultivated in Can ada, in A u stralia, and in other quarters oi
the world ? W a s it not alm ost as e a s v fnr EnfflanH tn tranunlant
THE NORTH AMERICANS
83
her surplus population to those countries as for the North A m e ri­
cans to transplant theirs from the shores of the Atlantic to the
banks of the Missouri ? I f so, w hat occasion had E n g la n d not
only continuously to protect her home manufactures, but to strive
to extend them more and more ?
T h e argum ent o f the school, that with a high rate o f w ag e s in
agriculture, m anufactures could not succeed by the natural course
o f things, but only by being forced like hothouse plants, w a s found
to be partially well-founded ; that is to say, it w a s applicable only
to those manufactured goods which, being sm all in bulk and weight
as compared to their value, are produced principally by hand labour,
but w a s not applicable to goods the price of which is less influenced
by the rate o f w ag es, and as to which the disadvantage of higher
w a g e s can be neutralised by the use o f machinery, by water power
a s yet unused, by cheap raw materials and food, by abundance o f
cheap fuel and building materials, by light taxation and increased
efficiency of labour.
Besides, the A m erican s had long ago learnt from experience
that agriculture cannot rise to a high state o f prosperity unless
the exchange of agricultural produce for manufactures is g u ar­
anteed for all future time ; but that, when the agriculturist lives
in A m erica and the m anufacturer in E n g la n d , that exchange is
not unfrequently interrupted by w ars, com mercial crises, or foreign
tariffs, and that consequently, if the national w ell-being is to rest
on a secure foundation, ‘ the m anufacturer,’ to use Jeffe rso n ’s
words, ‘ m ust come and settle down in close proxim ity to the
agriculturist.’
A t length the A m erican s came to realise the truth that it
behoves a great nation not exclu sively to set its heart upon the
enjoym ent of proximate material ad vantages ; that civilisation
and power— more important and desirable possessions than mere
material wealth, as A dam Sm ith h im self a llo w s— can only be
secured and retained by the creation o f a m anufacturing power
o f its own ; that a country which feels qualified to take and to
maintain its place am on gst the powerful and civilised nations o f
the earth m ust not shrink from any sacrifice in order to secure
such p ossession s for i t s e l f ; and that at that time the Atlantic
states were clearly' the region marked out for such possessions.
It w a s on the shores o f the Atlantic that European settlers
and European civilisation first set a firm foot. Here, at the first,
were populous, w ealthy, and civilised states created ; here w as the
cradle and seat of their sea fisheries, coasting trade, and naval
p o w e r ; here their independence w a s won and their union founded.
T h ro u g h these states on the coast the foreign trade of the Union
is carried on ; through them it is connected w ith the civilised
6 *
84
TH E HISTORY
world ; through them it acquires the surplus population, m aterial,
capital, and mental powers of E u r o p e ; upon the civilisation, power,
and wealth of these sea-board states depend the future civilisation ,
power, wealth, and independence o f the whole nation and its future
influence over less civilised com m unities. Su p p o se that the popu­
lation of these A tlantic states decreased instead of g ro w in g larger,
that their fisheries, coasting trade, shipping engaged in foreign trade
and foreign trade itself, and, above all, their general prosperity,
were to fall off or rem ain stationary instead o f p r o g re ssin g , then
we should see the resources o f civilisation o f the w hole nation, the
guarantees for its independence and external power, d im inish too
in the sam e degree. It is even conceivable that, w ere the w hole
territory of the United State s laid under cultivation from sea to
sea, covered with agricultural states, and densely populated in the
interior, the nation itse lf m igh t nevertheless be left in a low grade
as respects civilisation, independence, foreign power, and foreign
trade. T h ere are certainly m an y nationalities w ho are in such a
position and w hose shipping and n aval power are n il, though
p o sse ssin g a num erous inland population !
I f a power existed that cherished the project o f keeping down
the rise of the A m erican people and brin g in g them under su b je c­
tion to itself industrially, com m ercially, or politically, it could only
succeed in its aim by try in g to depopulate the A tlan tic states o f
the Union and driving all increase o f population, capital, and
intellectual power into the interior. B y that m eans it would not
only check the further growth o f the n ation 's n a v a l power, but
m ight also indulge the hope o f g ettin g possession in tim e o f the
principal defensive strategical positions on the A tlantic coast and
at the mouths o f the rivers. T h e m ean s to this end would not be
difficult to i m a g i n e ; it would only be necessary to hinder the de­
velopm ent o f m an u factu rin g power in the A tlan tic states and to
insure the acceptance of the principle o f absolute freedom o f foreign
trade in A m erica.
I f the A tlantic states do not become m an ufacturers, they will
not only be unable to keep up their present degree o f civilisation ,
but they must sink, and sink in every respect. W ith o u t m a n u ­
factures how are the towns a lo n g the A tlan tic coast to p ro sp er?
N ot by the forwarding o f inland produce to E u ro p e and o f E n g lis h
manufactured goods to the interior, for a v e r y few thousand people
would be sufficient to tran sact this bu siness. H o w are the fisheries
to prosper ?
T he m ajority of the population w ho h ave m oved
inland prefer fresh meat and fresh-w ater fish to salted ; they re­
quire no train oil, or at least but a sm all quantity. H o w is the
coasting trade along the A tlantic sea-board to th riv e ? A s the
largest portion of the coast states are peopled b y cultivators o f
THE NORTH AMERICANS
85
land who produce for them selves all the provisions, building
materials, fuel, &c. which they require, there is nothing along the
coast to sustain a transport trade.
H o w are foreign trade and
shipping to distant places to increase? T h e country has nothing
to offer but w hat less cultivated nations p ossess in superabundance,
and those m anufacturing nations to which it sends its produce
encourage their own shipping.
H o w can a naval power arise
when fisheries, the coasting trade, ocean navigation, and foreign
trade decay ? H o w are the A tlantic states to protect them selves
a g ain st foreign attacks without a naval p o w er? H o w is agricul­
ture even to thrive in these states, when by m eans of canals,
railw ays, &c. the produce o f the much more fertile and cheaper
tracts o f land in the west which require no m anure, can be carried
to the east much more cheaply than it could be there produced upon
soil exhausted long ago ? H o w under such circumstances can
civilisation thrive and population increase in the eastern states,
when it is clear that under free trade with E n g la n d all increase of
population and of agricultural capital must flow to the west ? T h e
present state of V irg in ia g iv e s but a faint idea of the condition
into which the A tlantic states would be thrown by the absence o f
m anufactures in the e a s t ; for V irginia, like all the southern states
on the Atlantic coast, at present takes a profitable share in provid­
ing the Atlantic states with agricultural produce.
A ll these things bear quite a different complexion, ow in g to
the existence o f a flourishing manufacturing power in the Atlantic
states. N o w population, capital, technical skill and intellectual
power, flow into them from all European countries; now the
demand for the manufactured products o f the Atlantic states in­
creases sim ultaneously with their consumption of the raw m aterials
supplied by the west. N o w the population o f these states, their
wealth, and the number and extent o f their towns increase in
equal proportion with the cultivation of the western virgin la n d s ;
now, on account of the larger population, and the consequently
increased demand for meat, butter, cheese, milk, garden produce,
oleaginous seeds, fruit, &c., their own agriculture is in cre asin g ;
now the sea fisheries are flourishing in consequence of the larger
demand for salted fish and train o i l ; now quantities o f provisions,
building materials, coal, &c, are being conveyed alon g the coast
to furnish the w a n ts of the m anufacturing p o p u latio n ; now the
m anufacturing population produce a large quantity of commodities
for export to all the nations o f the earth, from whence result pro­
fitable return freights ; now the nation’s n aval power increases
by m eans of the coasting trade, the fisheries, and navigation to
distant lands, and with it the guarantee o f national independence
and influence over other nations, particularly over those o f South
86
TH E HISTORY
A m e r ic a ; now science and art, civilisation an d literature, are im ­
p ro vin g in the eastern states, whence they are b e in g diffused
am o n gst the western states.
T h e s e were the circum stances w hich induced the U nited S ta te s
to lay restrictions upon the importation of foreign m anufactured
goods, and to protect their native m anufactures.
W ith w hat
am ount of success this has been done, we h ave show n in the
preceding pages. T h a t without such a policy a m an u fac tu rin g
power could never h ave been m aintained su cce ssfu lly in the
A tlantic states, we m ay learn from their own experience and from
the industrial history of other nations.
T h e frequently recurring com m ercial crises in A m e rica have
been very often attributed to these restrictions on im portation of
foreign goods, but w ithout reasonable grounds. T h e earlier as
well as the later experience o f N orth A m e rica sh o w s, on the co n ­
trary, that such crises h ave never been more frequent and destruc­
tive than when com m ercial intercourse w ith E n g la n d w a s least
subject to restrictions. Com m ercial crises a m o n g st agricultural
nations, w ho procure their supplies o f m an u factu red goods from
foreign markets, arise from the disproportion between im ports
and exports. M anufacturing nations richer in capital than a g r i ­
cultural states, and ever anxious to increase the q u antity o f their
exports, deliver their goods on credit and encourage consum ption.
In fact, they m ake advances upon the com in g h arvest. B u t if
the harvest turn out so poor that its value falls gre atly below that
o f the goods previously co n su m e d ; or i f the h arve st prove so
rich that the su pply o f produce meets with no adequate dem and
and falls in p r i c e ; while at the sam e time the m arkets still con­
tinue to be overstocked with foreign goods— then a com m ercial
crisis will occur by reason of the disproportion e x istin g betw een
the m eans of p aym en t and the quantity o f goods previou sly con ­
sumed, as also by reason o f the disproportion between su p p ly and
demand in the m arkets for produce and m anufactured goods.
T h e operations o f foreign and native banks m a y increase and
promote such a crisis, but they cannot create it.
In a future
chapter we shall endeavour more closely to elucidate this subject.
CHAPTER X.
T H E T E A C H IN G S O F H IS T O R Y .
E v e r y w h e r e and at all tim es has the well-being o f the nation
been in equal proportion to the intelligence, morality, and industry
of its c itiz e n s; according to these, wealth has accrued or been
diminished f but industry and thrift, invention and enterprise, on
the part of individuals, have never as yet accomplished au gh t of
im portance where they were not sustained by municipal liberty,
by suitable public institutions and laws, by the State adm inistra­
tion and foreign policy, but above all by the unity and power, o f
the nation.
H istory everyw here show s us a powerful process o f reciprocal
action between the social and the individual powers and conditions.
In the Italian and the H anseatic cities, in Holland and E n g lan d ,
in Fran ce and America, we find the powers of production, and
consequently the wealth of individuals, grow ing in proportion to
the liberties enjoyed, to the degree of perfection of political and
social institutions, while these, on the other hand, derive material
and stim ulus for their further improvement from the increase o f
the material wealth and of the productive power o f individuals.
T h e real rise of the industry and power of E n glan d dates only
from the days of the actual foundation o f E n g la n d ’s national free­
dom, while the industry and power o f Venice, of the H an se T o w n s,
o f the Spanish and Portuguese, decayed concurrently with their
loss of freedom.
H ow ever industrious, thrifty, inventive, and
intelligent, individual citizens m ight be, they could not make up
ifor the lack of free institutions. H istory also teaches that indi­
v id u a ls derive the greater part of their productive powers from the
^social institutions and conditions under which they are placed.
T h e influence of liberty, intelligence, and enlightenm ent over
the power, and therefore over the productive capacity and wealth
of a nation, is exemplified in no respect so clearly as in n a v ig a ­
tion. Of all industrial pursuits, navigation most dem ands energy,
personal courage, enterprise, and endurance ; qualifications that can
only flourish in an atmosphere of freedom. In no other calling
do ignorance, superstition, and prejudice, indolence, cowardice,
»7
88
TH E HISTORY
effeminacy, and w eakness produce such d isastrou s co n se q u e n c es;
nowhere else is a sense of self-reliance so indispensable.
H en ce
history cannot point to a single exam ple o f an enslaved people
taking a prominent part in navigation. T h e H ind oos, the Chinese,
and the Ja p a n e s e have ever strictly confined their efforts to canal
and river navigation and the coasting trade. In ancient E g y p t
maritim e navigation w a s held in abhorrence, probably because
priests and rulers dreaded lest by m ean s o f it the spirit o f freedom
and independence should be encouraged.
T h e freest and m ost
enlightened states of ancient G reece were also the m ost powerful
at s e a ; their naval power ceased with their freedom, and h o w ev er
much history m ay narrate of the victories o f the k in g s o f M a c e ­
donia on land, she is silent a s to their victories at sea.
W h e n were the R o m a n s powerful at sea, and w h en is no th in g
more heard of their fleets ? W h e n did Ita ly lay down the la w in
the Mediterranean, and since w hen h a s her v ery co astin g trade
fallen into the hands o f foreigners ? U p o n the S p a n is h n a v y the
Inquisition had passed sentence o f death lon g ere the E n g li s h and
the Dutch fleets had executed the decree. W ith the co m in g into
power o f the mercantile oligarchies in the H a n se T o w n s , power
and the spirit o f enterprise took leave o f the H a n se a tic L e a g u e .
O f the Sp a n ish N etherland s only the m aritim e provinces
achieved their freedom, w hereas those held in subjection by the
Inquisition had even to subm it to the clo sin g of their rivers. T h e
E n g lis h fleet, victorious over the D utch in the Channel, n o w took
possession o f the dominion o f the seas, w hich the spirit o f freedom
had assign ed to E n g la n d long b e fo r e ; and ye t H o llan d , down to
our own d ays, has retained a large proportion o f her m ercantile
marine, w hereas that o f the S p an iard s and the P o rtu g u e se is
alm ost annihilated.
In vain w ere the efforts o f a great individual
minister now and then under the despotic k in g s o f F r a n c e to create
a fleet, for it in variably w en t a g ain to ruin.
B u t how is it that at the present d ay we w itn e ss the g ro w in g
strength of French navigation and n av al pow er?
H a r d ly had the
independence of the U nited S t a te s o f N orth A m e rica come to life,
when we find the A m e rican s contending with renown a g a in st the
giant fleets of the mother country. B u t w h at is the position o f
the Central and South A m erican nations ? S o lon g a s their fla g s
w av e not over every sea, but little dependence can be placed upon
the effectiveness of their republican forms o f governm en t.
Con­
trast these with T e x a s , a territory that h a s scarcely attained to
political life, and yet already claim s its share in the realm o f
Neptune.
B u t navigation is merely one part o f the industrial power o f a
nation a part which can flourish and attain to im portance only
TH E TEACHINGS OF HISTORY
89
in conjunction with all the other com plementary parts. E v e r y ­
where and at all times we see navigation, inland and foreign trade,
and even agriculture itself, flourish only where manufactures have
reached a high state of prosperity. B u t if freedom be^ an indis­
pensable condition for the prosperity of navigation, how much
more m ust it be so for the prosperity of the m anufacturing power,
for the growth of the entire producing power o f a nation ? H istory
contains no record of a rich, commercial, and industrial com m unity
that w a s not at the sam e time in the enjoym ent of freedom.
M anufactures everyw here first brought into operation improved
m ean s of transport, improved river navigation, improved highw ays,
steam navigation and railw ays, which constitute the fundamental
elem ents of improved syste m s o f agriculture and o f civilisation.
H isto ry teaches that arts and trades migrated from city to
city, from one country to another.
Persecuted and oppressed
at home, they took refuge in cities and in countries where free­
dom, protection, and support were assured to them. In this w ay
they migrated from Greece and A s ia to I t a l y ; from Italy to G e r­
m an y, Flanders, and B r a b a n t ; and from thence to Holland and
E n g la n d .
E v e ry w h e re it w as w an t o f sense and despotism that
drove them aw ay , and the spirit of freedom that attracted them.
B u t for the folly o f the Continental governm ents, E n g la n d would
have had difficulty in attaining suprem acy in industry. B u t does
it appear more consistent with wisdom for us in G e rm an y to wait
patiently until other nations are impolitic enough to drive out
their industries and thus compel them to seek a refuge with us, or
that we should, without w aitin g for such contingencies, invite
them by proffered ad van tag es to settle down am on gst u s ?
It is true that experience teaches that the wind bears the seed
from one region to another, and that thus w aste moorlands have
been transformed into dense forests; but would it on that account
be w ise policy for the forester to wait until the wind in the course
of a g e s effects this transformation ?
Is it unw ise on his part if by sow ing and planting he seeks to
attain the same object within a few decades ? H istory tells us
that whole nations have successfully accomplished that which we
see the forester do ? S in g le free cities, or small republics and con­
federations of such cities and states, limited in territorial possessions,
of sm all population and insignificant military power, but fortified by
the energy o f youthful freedom and favoured by geographical posi­
tion a s well as by fortunate circumstances and opportunities, flour­
ished by m eans o f m anufactures and commerce long before the
great m o n arch ies; and by free commercial intercourse with the
latter, by which they exported to them manufactured goods and
imported raw produce in exchange, raised them selves to a high
go
T H E HISTORY
degree of wealth and power. T h u s did V enice, the H a n s e T o w n s ,
the B e lg ia n s and the Dutch.
N or w a s this system of free trade less profitable at first to the
'great m onarchies them selves, with w hom these sm aller co m m u n i­
ties had commercial intercourse. F o r, h a v in g regard to the w ealth
o f their natural resources and to their undeveloped social condition,
the free importation o f foreign m anufactured goods and the ex­
portation of native produce presented the surest and m ost effectual
m eans of developing their own powers o f production, o f instillin g
habits o f industry into their subjects w h o w ere addicted to idleness
: and turbulence, of inducing their lan dow ners and nobles to feel an
interest in industry, o f a ro u sin g the dorm an t spirit o f enterprise
am ongst their m erchants, and especially o f raisin g their ow n c iv il­
isation, industry, and power.
T h e se effects were learned gen erally by G re at B r ita in from the
trade and m an ufacturin g industry o f the Ita lia n s, the Hansards,g>
the B e lg ia n s, and the Dutch. B u t h a v in g attained to a certain
grade of development by m eans o f free trade, the g re at m on archies
perceived that the highest degree o f civilisation, power, and w ealth
can only be attained by a com bination of m an u fac tu re s and com ­
merce with agriculture. T h e y perceived that their n e w ly established
native m anufactures could never hope to succeed in free competij*
tion with the old and long-established m an u factu res o f foreigners i
that their native fisheries and native m ercantile m arine, the founda­
tions o f their n aval power, could never m ake su ccessfu l progress j
without special privileges ; and that the spirit o f enterprise o f
their native m erchants would a lw a y s be kept down by the o ver­
w h elm in g reserves of capital, the greater experience and sa g a c ity
of the foreigners. H ence they sought, by a sy ste m o f restrictions,
privileges, and encouragem ents, to tran sp lan t on to their n ative >
soil the wealth, the talents, and the spirit o f enterprise o f the
foreigners. T h is policy w a s pursued w ith gre ater or lesser, with
speedier or more tardy success, j u s t in proportion as the m easu res
adopted were more or less ju d icio u sly adapted to the object in
view, and applied and pursued with more or less e n e rgy and
perseverance.
E n glan d, above all other nations, h a s adopted this policy.
Often interrupted in its execution from the w an t o f intelligence
and self-restraint on the part o f her rulers, or o w in g to internal
commotions and foreign w ars, it first assu m ed the character o f a
settled and practically efficient policy under E d w a r d V I . , E l i z a ­
beth, and the revolutionary period. F o r h o w could the m e asu res
of Edw ard I I I . work satisfactorily when it w a s not till under H e n r y
V I . that the law permitted the carriage o f corn from one E n g lis h
county to another, or the shipm ent o f it to foreign p a r t s ; w h e n
THE TEACHINGS OF HISTORY
still under H en ry V I I . and H en ry V I I I . all interest on money,
even discount on bills, w as held to be usury, and when it w as still
thought at the time that trade might be encouraged by fixing by
law at a low figure the price of woollen goods and the rate of
w ag e s, and that the production o f corn could be increased by pro­
hibiting sheep farm ing on a large scale ?
And how much sooner would E n g la n d ’ s woollen manufactures
and maritime trade have reached a high standard o f prosperity
had not H en ry V I I I . regarded a rise in the prices of corn as an
'evil ; had he, instead of driving foreign workmen by w holesale
from the kingdom , sought like his predecessors to augm ent their
dum ber by encouraging their im m igratio n ; and had not H enry
V I I . refused his sanction to the A ct of N a vig atio n as proposed by
Parliam ent ?
In Fran ce we see native manufactures, free internal intercourse,
foreign trade, fisheries, navigation, and naval power— in a word,
all the attributes of a great, m ighty, and rich nation (which it had
cost E n g la n d the persevering efforts of centuries to acquire)—
called into existence by a great genius within the space of a few
years, as it were by a m agician's w a n d ; and afterwards all of
•them yet more speedily annihilated by the iron hand of fanaticism
land despotism.
W e see the principle o f free trade contending in vain under
unfavourable conditions again st restriction powerfully enforced;
the H an seatic L e a g u e is ruined, while Holland sinks under the
blows of E n g la n d and France.
T h at a restrictive com mercial policy can be operative for good
*only so far as it is supported by the progressive civilisation and
free institutions of a nation, we learn from the decay of Venice,
Sp ain , and Portugal, from the relapse of F ran ce in consequence o f
the revocation o f the Edict of N antes, and from the history o f
E n g la n d , in which country liberty kept pace at all times with the
advance of industry, trade, and national wealth.
T h a t, on the contrary, a h ighly advanced state o f civilisation,
with or without free institutions, unless supported by a suitable
system o f com mercial policy, will prove but a poor guarantee for
a nation’ s economic progress, m ay be learnt on the one hand
from the history of the North A m erican free states, and on the
other from the experience of G erm any.
Modern G erm an y , lacking a system of vigorous and united
commercial policy, exposed in her home markets to competition
with a foreign m anufacturing power in every w a y superior to her
own, while excluded at the sam e time from foreign markets by
arbitrary and often capricious restrictions, and very far indeed
from m akin g that progress in industry to which her degree o f
92
T H E HISTORY
culture entitles her, cannot even m aintain her previou sly acquired
position, and is made a convenience o f (like a colony) by that
very nation which centuries ago w a s worked upon in like m an ner
by the m erchants o f G erm an y, until at last the G e rm a n states
have resolved to secure their home m arkets for their ow n in ­
dustry, by the adoption of a united vig o ro u s syste m o f com m ercial
policy.
T h e North A m erican free states, who, m ore than a n y other
nation before them, are in a position to benefit by freedom o f
trade, and influenced even from the v e r y cradle o f their indepen­
dence by the doctrines o f the cosm opolitan school, are strivin g
more than a n y other nation to act on that principle. B u t o w in g
to w a rs with G re at B ritain , w e find that nation twice compelled
to m anufacture at home the goods w h ich it previou sly purchased
under free trade from other countries, and twice, after the con­
clusion o f peace, brought to the brink o f ruin by free com petition
with foreigners, and thereby adm onished o f the fact that under
the present conditions o f the world every g re at nation m ust seek
the guarantees of its continued prosperity and independence, before
all other things, in the independent and uniform developm en t o f
its own powers and resources.
T h u s history show s that restrictions are not so m uch the in­
ventions o f mere speculative minds, as the natural con sequ ences
o f the diversity of interests, and o f the striv in g s o f nations after
independence or overpow ering ascend ency, and thus o f national
emulation and w ars, and therefore that they cannot be dispensed
with until this conflict o f national interests shall cease, in other
words until all nations can be united under one and the sam e
system o f law. T h u s the question as to whether, and how, the
variou s nations can be brought into one united federation, and
how the decisions o f law can be invoked in the place o f m ilitary
force to determine the differences w hich arise between independent
nations, has to be solved concurrently with the question how u n i­
versal free trade can be established in the place o f separate national
commercial system s,
T h e attempts which have been made by single nations to intro­
duce freedom of trade in face o f a nation which is predom inant in
industry, wealth, and power, no less than distinguished for an
exclusive tariff sy ste m — as P o rtu g a l did in 1 7 0 3 , F ra n ce in 1786,
North Am erica in 17 8 6 and 1 8 1 6 , R u s s ia from 1 8 1 5 till 1 8 2 1 , and
a s G e rm an y has done for centuries— go to sh o w us that in this
w a y the prosperity o f individual nations is sacrificed, w ithout
benefit to mankind in general, solely for the enrichm ent o f the
predominant m anufacturing and com m ercial nation. Sw itzerlan d
(as we hope to show in the sequel) constitutes an exception, w hich
THE TEACHINGS OF HISTORY
93
proves ju st as much as it proves little for or again st one or the
other system.
Colbert appears to us not to h ave been the inventor of that
system which the Italians have named after him ; for, as we have
seen, it w as fully elaborated by the E n g lish long before his time.
Colbert only put in practice what France, if she wished to fulfil
her destinies, w as bound to carry out sooner or later. I f Colbert
is to be blamed at all, it can only be charged against him that he
attempted to put into force under a despotic government a system
which could subsist only after a fundamental reform of the political
conditions.
But against this reproach to Colbert’ s memory it m ay very
well be argued that, had his system been continued by wise
princes and sagacious ministers, it would in all probability have
removed by m eans o f reforms all those hindrances which stood
in the w ay of progress in manufactures, agriculture, and trade,
as well as of national free d o m ; and Fran ce would then have
undergone no revolution, but rather, impelled along the path o f
development by the reciprocating influences of industry and free­
dom, she m ight for the last century and a half have been success­
fully competing with En glan d in manufactures, in the promotion
of her internal trade, in foreign commerce, and in colonisation,
as well as in her fisheries, her navigation, and her naval power.
F in a lly , history teaches us how nations which have been
endowed by N ature with all resources which are requisite for the
attainment of the highest grade o f wealth and power, m ay and
must— without on that account forfeiting the end in v ie w — modify
their syste m s according to the measure of their own p rogress:
in the first stage, adopting free trade with more advanced nations
a s a m eans of raising them selves from a state of barbarism, and
of m aking advances in agriculture ; in the second stage, promot­
ing the growth of manufactures, fisheries, navigation, and foreign
trade by m eans of commercial restrictions ; and in the last stage,
after reaching'the highest degree of wealth* and power, by gradu­
ally reverting to the principle o f free trade and of unrestricted
competition in the home as well as in foreign markets, that so
their agriculturists, manufacturers, and merchants m ay be pre­
served from indolence, and stimulated to retain the supremacy
which" They have acquired. In the first stage, we see Spain,
Portugal, and the Kingdom o f N aples ; in the second, G erm an y
and the United States of North A m e r ic a ; Fran ce apparently
stands close upon the boundary line o f the last s t a g e ; but Great
Britain alone at the present time has actually reached it.
SECOND BOOK
THE
THEORY
C HAPTER XL
POLITICAL AND COSMOPOLITICAL ECONOMY.
B e f o r e Q uesnay and the French economists there existed only
^ practice of political economy which w a s exercised by the State
officials, administrators, and authors who wrote about matters of
administration, occupied them selves exclusively with the ag ri­
culture, manufactures, commerce, and navigation of those countries
to which they belonged, without analysin g the causes o f wealth,
or taking at all into consideration the interests of the whole human
race.
Q uesnay (from whom the idea o f universal free trade originated)
w as the first who extended his investigations to the whole human
trace, without taking into consideration the idea of the nation. H e
calls his work * Physiocratie, ou du Gouvernem ent le plus avantageux au Genre H u m ain ,’ his demands being that we must imagine
that the merchants o f a ll nations fo rm e d one com m ercial republic.
Q uesnay undoubtedly speaks o f cosm opolitical economy, i.e. of
that science which teaches how the entire human race m ay attain
prosperity ; in opposition to political economy, or that science
which limits its teaching to the inquiry how a g iven nation can
obtain {under the existing conditions o f the world) prosperity,
civilisation, and power, by m eans of agriculture, industry, and
commerce.
Adam S m i t h 1 treats his doctrine in a similarly extended sense,
by m aking it his task to indicate the cosmopolitical idea of the
absolute freedom o f the commerce of the whole world in spite of
the gross m istakes made by the physiocrates against the very
nature of things and against logic. Adam Smith concerned him ­
self as little as Q uesnay did with true political economy, i.e. that
policy which each separate nation had to obey in order to make
progress in its economical conditions. He entitles his work, * T h e
N ature and C au ses of the W ealth o f N a t i o n s ’ (i.e. of all nations
of the whole human race). H e speaks of the various system s of
political economy in a separate part of his work solely for the pur1 It is alleged that Adam Smith intended to have dedicated his great work to
Q uesnay.— T r . (See L ife o f Sm ith, published by T . and J . Allm an. 1825.)
7
*
97
98
T H E THEORY
pose o f dem onstrating their non-efficiency, and o f p rovin g that
* political * or n a tio n a l econom y m ust be replaced by ‘ cosm opolitical or world-wide econ om y.’ A lth ou gh here and there he
speaks of w ars, this only occurs incidentally.
T h e idea o f a
perpetual state o f peace form s the foundation o f all his argu m en ts.
M oreover, according to the explicit rem arks o f his biographer,
D u gald Stew art, his investigatio n s from the com m en cem en t are
based upon the principle that ‘ m ost o f the State reg u lation s fon
the promotion o f public prosperity are u n n ec e ssary, and a nation*
in order to be transform ed from the low est state o f barbarism into
a state of the highest possible prosperity needs n o thing but bear­
able taxation, fair adm inistration o f ju stice , and peace ' A d a m I
Sm ith naturally understood under the word ‘ peace ’ the * perpetual
universal p e a c e ’ o f the Abbe St. Pierre.
J . B . S a y openly dem an ds that w e should im ag in e the existence
o f a u n iv ersa l rep u b lic in order to comprehend the idea o f general
free trade. T h is writer, w h o se efforts were m a in ly restricted to
the formation o f a system out of the m aterials w hich A d am S m ith
had brought to light, s a y s explicitly in the sixth volu m e (p. 288)
of his * E co n o m ie politique p r a tiq u e ’ : ' W e m a y take into our
consideration the economical interests o f the fam ily with the father
at its head ; the principles and ob servation s referring thereto will
constitute p r iv a te econom y.
T h o s e principles, h ow ever, which
h ave reference to the interests o f whole nations, w hether in them ­
selves or in relation to other nations, form p u b lic economy
(l’economie publique).
P o lit ic a l econom yt lastly, relates to the
interests o f all nations, to hum an society in g en era l
It m ust be rem arked here, that in the first place S a y recognises
the existence of a national econom y or political econ om y, under
the nam e ' economie publique,’ but that he now here treats o f the
latter in his w o r k s ; secondly, that he attributes the nam e p o litic a l
economy to a doctrine which is evidently o f cosm opolitical n a tu r e ;
and that in this doctrine he in variably m erely sp e ak s o f an econom y
which has for its sole object the interests o f the w hole hum an
society, without regard to the separate interests o f distinct nations.
T h is substitution o f term s m ig h t be passed over if S a y , after
h avin g explained w hat he calls political econ om y (which, how ever,
is nothing else but cosmopolitical or world-wide econ om y, or
economy o f the whole hu m an race), had acquainted us with the
principles o f the doctrine which he calls ‘ econom ie pu bliq u e,’
which however is, properly speaking, nothing else but the econ om y
o f g iven nations, or true political economy.
In defining and developing this doctrine he could scarcely
forbear to proceed from the idea and the nature o f the nation, and
to show w hat material modifications the ‘ econom y o f the whole
POLITICAL AND COSMOPOLITICAL ECONOMY
99
human ra c e ' must undergo by the fact that at present that race
is still separated into distinct nationalities each held together by
common powers and interests, and distinct from other societies of
the sam e kind which in the exercise of their natural liberty are
opposed to one another. However, by g iv in g his cosmopolitical
econom y the nam e p o litic a l, he dispenses with this explanation,
effects by means of a transposition of terms also a transposition
o f m eaning, and thereby m asks a series of the gravest theoretical
errors.
All later writers have participated in this error. Sism ondi also
calls political economy explicitly ‘ L a science qui se charge du
bonheur de Tesp^ce hu m aine.’ A dam Sm ith and his followers
teach us from this m ainly nothing more than what Q uesnay and
his followers had taught us already, for the article o f the ‘ Revue
M ethod iqu e’ treating of the physiocratic school states, in almost
the sam e w o r d s: * The w ell-b ein g o f the in d iv id u a l is dependent
altogether on the w e ll-b ein g o f the whole hum an raced
T h e first o f the North Am erican advocates o f free trade, as
understood by A dam S m ith — T h o m a s Cooper, President of Col­
umbia College— denies even the existence of n ationality; he calls
the nation ‘ a gram m atical invention/ created only to save peri­
phrases, a nonentity, which has no actual existence save in the
heads of politicians. Cooper is moreover perfectly consistent with
respect to this, in fact much more consistent than his predecessors
and instructors, for it is evident that as soon as the existence of
nations with their distinct nature and interests is recognised, it
becomes necessary to modify the economy of human society in
accordance with these special interests, and that if Cooper intended
to represent these modifications as errors, it w as very wise on his
part from the beginning to disown the very existence o f nations.
F o r our own part, we are far from rejecting the theory o f
cosm opolitical economy, as it has been perfected by the prevailing
school; we are, however, o f opinion that political economy, or as
S a y calls it ‘ economie publique/ should also be developed scien­
tifically, and that it is alw a y s better to call things by their proper
nam es than to give them significations which stand opposed to
the true import o f words.
I f we wish to remain true to the law s of logic and o f the
nature o f things, we must set the economy of individuals against
the economy of societies, and discriminate in respect to the latter
between true political or national economy (which, em anating from
the idea and nature o f the nation, teaches how a given nation in
the present state of the world and its own special national relations
can maintain and improve its economical conditions) and cosm o­
political economy, which originates in the assum ption that all
7 *
IOO
TH E THEORY
nations o f the earth form but one society liv in g in a perpetual
state o f peace.
If, as the prevailin g school requires, w e a ssu m e a u n ive rsal
union or confederation o f all nations a s the guaran tee for an e v e r­
lastin g peace, the principle o f international free trade se e m s to be
perfectly justified. T h e less every individual is restrained in pur­
suing his own individual prosperity, the greater the num ber and
w ealth o f those with w h o m he h a s free intercourse, the greater
the area over which his individual activity can exercise itself, the
easier it w ill be for him to utilise for the increase o f his prosperity
the properties given him by nature, the know ledge and talents
which he has acquired, and the forces o f nature placed at his dis­
posal. A s with separate individuals, so is it also the case w ith
individual com m unities, provinces, and countries.
A simpleton
only could m aintain that a union for free com m ercial intercourse
between th em selves is not as ad v an tag eo u s to the different states
included in the United S t a te s o f N orth A m erica, to the variou s
departm ents o f F ra n c e , and to the v ario u s G e rm an allied states,
a s would be their separation by internal provincial cu stom s tariffs.
In the union o f the three kin g d om s o f G re at B ritain and
Ireland the world w itnesses a great and irrefragable exam ple of
the im m easu rab le efficacy o f free trade between united nations. [
L e t us only suppose all other nations of the earth to be united in
a sim ilar m anner, and the m ost vivid im agin ation w ill not be able
to picture to itself the sum o f prosperity and good fortune w h ich t
the whole hu m an race would thereby acquire.
U n q u estion ab ly the idea o f a universal confederation and a
perpetual peace is com mended both by com m on sense and religion.1 !.
I f single com bat between individuals is at present considered to
be contrary to reason, how much more m u st com bat between two
nations be sim ilarly condemned ? T h e proofs w hich social econom y
can produce from the history of the civilisation o f m ankind o f the
reasonableness o f bringin g about the union o f all m ankind under
the law of right, are perhaps those which are the clearest to sound
hum an understanding.
H isto ry teaches that w h erever ind ivid u als are engaged in
w ars, the prosperity o f m ankind is at its low est stage, and that it
increases in the sam e proportion in which the concord o f m ankind
increases. In the prim itive state o f the h u m an race, first unions
1 The Christian religion inculcates perpetual peace. B u t until the prom ise,
•T h e re shall be o n e fo ld and one s h e p h e r d has been fulfilled, the principle o f
the Quakers, however true it be in itself, can scarcely be acted upon. T h ere is
no better proof for the D ivine origin o f the Christian religion than that its
doctrines and promises are in perfect agreem ent with the dem ands o f both the
m aterial and spiritual well-being of the human race,
POLITICAL AND COSMOPOLITICAL ECONOMY
10I
of families took place, then towns, then confederations o f towns,
then union of whole countries, finally unions of several states
under one and the sam e government. I f the nature of things
has been powerful enough to extend this union (which commenced
with the family) over hundreds of millions, we ought to consider
that nature to be powerful enough to accomplish the union of all
nations. I f the human mind were capable of comprehending the
advantages o f this great union, so ought we to venture to deem it
capable of understanding the still greater benefits which would
result from a union of the whole human race. M any instances
indicate this tendency in the spirit of the present times. W e need
only hint at the progress made in sciences, arts, and discoveries,
in industry and social order. It m ay be already foreseen with
certainty, that after a lapse of a few decades the civilised nations
of the earth will, by the perfection o f the m eans of conveyance, be
united as respects both material and mental interchange in as
close a manner as (or even closer than) that in which a century
ago the various counties of E n glan d were connected. Continental
governm ents possess already at the present moment in the tele­
graph the means of com municating with one another, almost as
if they were at one and the same place. Powerful forces previously
unknown have already raised industry to a degree of perfection
hitherto never anticipated, and others still more powerful have
already announced their appearance. B u t the more that industry
advances, and proportionately extends over the countries o f the
earth, the smaller will be the possibility of wars. T w o nations
equally well developed in industry could mutually inflict on one
another more injury in one week than they would be able to make
good in a whole generation. B u t hence it follows that the same
new forces which h ave hitherto served particularly for production
will not withhold their services from destruction, and will princi­
pally favour the side of defence, and especially the European
Continental nations, while they threaten the insular State with
the loss of those advantages which have been gained by her
insular position for her defence. In the congresses of the great
European powers Europe possesses already the embryo of a future
congress o f nations. T h e endeavours to settle differences by
protocol are clearly already prevailing over those which obtain
justice by force o f arms. A clearer insight into the nature of
wealth and industry has led the w iser heads o f all civilised nations
to the conviction that both the civilisation of barbarous and semibarbarous nations, and of those whose culture is retrograding, as
well as the formation of colonies, offer to civilised nations a field
for the development of their productive powers which promises
them much richer and safer fruits than mutual hostilities by wars
10 2
THE THEORY
or restrictions on trade. T h e farther we advance in this percep­
tion, and the more the uncivilised countries come into contact
w ith the civilised ones by the progress m ade in the m eans of
transport, so much more will the civilised countries com prehend
that the civilisation of barbarous nations, o f those distracted by
internal anarchy, or which are oppressed by bad g o ve rn m e n t, is
a task which offers to all equal a d v a n ta g e s— a duty incum bent on
them all alike, but one which can only be accom plished by unity.
T h a t the civilisation o f all nations, the culture o f the whole
globe, forms a task imposed on the w hole h u m an race, is evident
from those unalterable law s o f nature by w h ich civilised nations
are driven on with irresistible power to extend or transfer their
powers o f production to less cultivated countries. W e see e v e r y ­
where, under the influence of civilisation, population, pow ers o f
mind, m aterial capital attain in g to such dim en sion s that they
m ust necessarily flow over into other less civilised countries. I f
the cultivable area o f the country no lon ger suffices to sustain the
population and to em ploy the agricultural population, the re­
dundant portion o f the latter seeks territories suitable for cu ltiva­
tion in distant l a n d s ; if the talents and technical abilities o f a
nation h ave become so num erous as to find no longer sufficient
rew ards within it, they em igrate to places w here they are more
in demand ; if in consequence o f the accum ulation o f m aterial
capital, the rates o f interest fall so considerably that the sm aller
capitalist can no longer live on them, he tries to invest his m on e y
more satisfactorily in less w e alth y countries.
A true principle, therefore, underlies the sy ste m o f the popular,
school, but a principle which m ust be recognised and applied by
science if its design to enlighten practice is to be fulfilled, an idea
w hich practice cannot ignore w ithout g ettin g a s t r a y ; on ly the
school has omitted to take into consideration the nature o f nation­
alities and their special interests and conditions, and to brin g these
into accord with the idea o f universal union and an e ve rla stin g
peace.
The p o p u la r school has assum ed as being a ctu a lly in existence
a state o f things w h ich has y e t to come into existen ce. It a ssu m e s
the existence o f a u niversal union and a state o f perpetual peace,
and deduces therefrom the great benefits of free trade. In this
m an ner it confounds effects with causes. A m o n g the provinces
and states which are already politically united, there exists a state
of perpetual p eace; from this political union o rig in ates their
com m ercial union, and it is in consequence o f the perpetual peace
thus maintained that the com m ercial union has become so ben e­
ficial to them. All exam ples which history can show are those
in which the political union has led the w a y , and the com m ercial
POLITICAL AND COSMOPOLITICAL ECONOMY
103
1union h as followed.1 N o t a single instance can be adduced in
which the latter has taken the lead, and the former has grown
up from it. T h a t , however, under the existing conditions of the
world, the result o f general free trade would not be a universal
republic, but, on the contrary, a universal subjection of the less
advanced nations to the supremacy of the predominant m an u ­
facturing, commercial, and naval power, is a conclusion for which
the reasons are very strong and, according to our view s, irrefrag­
able. A universal republic (in the sense of Henry IV . and of the
Abbe St. Pierre), i.e. a union of the nations of the earth whereby
they recognise the sam e conditions of right am on g themselves
and renounce self-redress, can only be realised if a large number
of nationalities attain to as nearly the same degree as possible of
industry and civilisation, political cultivation, and power. Only
with the gradual formation of this union can free trade be de­
veloped, only as a result of this union can it confer on all nations
the sam e great advantages which are now experienced by those
provinces and states which are politically united. T h e system
/of protection, inasmuch as it forms the only m eans of placing
those nations which are far behind in civilisation on equal terms
with the one predominating nation (which, however, never received
at the hands of N ature a perpetual right to a monopoly of m anu­
facture, but which merely gained an advance over others in point
o f time), the system of protection regarded from this point o f v iew
appears to be the most efficient m eans of furthering the final
union of nations, and hence also o f promoting true freedom o f
■tfade. And national economy appears from this point o f view
to be that science which, correctly appreciating the existing
interests and the individual circumstances of nations, teaches how
every separate nation can be raised to that stage of industrial
development in which union with other nations equally well
developed, and consequently freedom of trade, can become
possible and useful to it.
T h e popular school, however, has mixed up both doctrines
with one an o th er; it has fallen into the g rave error o f ju d g in g
o f the conditions of nations according to purely cosmopolitical
principles, and of ignoring from merely political reasons the
cosmopolitical tendency o f the productive powers.
Only by ignoring the cosmopolitical tendency of the productive
powers could M althus be led into the error of desiring to restrict
the increase o f population, or C halm ers and T orrens maintain
^ h i s statem ent w as probably accurate up to the period when L ist wrote,
but a notable exception to it m ay now be adduced. T h e com mercial union
o f the various Germ an states under the Zollverein preceded by m any years
their political union under the Em pire, and powerfully promoted it.— T r .
jo4
T H E THEORY
more recently the strange idea that au gm en tatio n o f capital and
unrestricted production are evils the restriction o f w h ich the w el­
fare o f the com m unity im peratively dem ands, or S ism o n d i declare
that m anufactures are th in g s injurious to the co m m u n ity . T h eir
theory in this case resem bles S a tu rn , w h o devou rs his own
children— the sam e theory w hich allo w s that from the increase of
population, o f capital and m achinery, d ivision o f labour takes
place, and explains from this the w elfare o f society, fin ally con­
siders these forces a s m onsters w hich threaten the prosperity o f
nations, because it m erely regards the present conditions of indi­
vidual nations, and does not take into consideration the conditions
o f the whole globe and the future p ro g re ss o f m ankind.
It is not true that population in creases in a large r proportion
than production of the m eans o f su b siste n c e ; it is at le ast foolish
to assu m e such disproportion, or to attem pt to prove it by artificial
calculations or sophistical argu m e n ts, so lon g as on the globe a
m ass o f natural forces still lies inert by m e a n s o f w h ich ten times
or perhaps a hundred tim es m ore people than are n o w liv in g can
be sustained. It is mere narrow -m indedn ess to consider the
present extent o f the productive forces a s the test o f how m an y
persons could be supported on a g iven area o f land. T h e savage,
the hunter, and the fisherm an , according to h is ow n calculation,
would not find room enough for one m illion p erson s, the shepherd
not for ten m illions, the raw agricu ltu rist not for one hundred
m illions on the whole g lo b e ; and ye t two hundred m illio n s are
living at present in E u ro p e alone. T h e culture o f the potato and
o f food-yielding plants, and the more recent im p ro ve m e n ts made
in agriculture generally, h ave increased tenfold the productive
powers o f the hum an race for the creation o f the m e a n s o f sub­
sistence. In the Middle A g e s the yield o f w h e a t of an acre o f
land in E n g la n d w a s fourfold, to-day it is ten to t w e n ty fold, and
in addition to that five tim es more land is cultivated. In m an y
Eu ro p ean countries (the soil o f w hich p o sse sse s the s a m e natural
fertility as that o f E n g la n d ) the yield at present does not exceed
lfourfold. W h o w ill venture to set further lim its to the discoveries,
'in ve n tio n s, and im pro vem en ts o f the hu m an race ? A gricu ltu ral
chem istry is still in its i n f a n c y ; w ho can tell that to-morrow, by
m ean s of a new invention or discovery, the produce o f the soil
m a y not be increased five or ten fold ? W e a lre a d y p o sse ss, in
the artesian well, the m e a n s o f con vertin g unfertile w a s t e s into
rich corn field s; and w h a t unkn ow n forces m a y not ye t be hiduTen
in the interior of the earth ? L e t us m erely su ppose that threough
a new discovery we w ere enabled to produce heat e v e r y w h e r e very
ch e ap ly, and without the aid o f the fuels at present know n t; what
spaces o f land could thus be utilised for cultivation , and iun what
POLITICAL AND COSMOPOLITICAL ECONOMY
Io$
an incalculable degree w ould the yield o f a given area of land be
increased ? I f M alth u s’ doctrine appears to us in its tendency
narrow-minded, it is also in the methods by which it could act an
unnatural one, which destroys morality and power, and is simply
horrible. It seeks to destroy a desire which nature uses as the
most active m eans for inciting men to exert body and mind, and
to awaken and support their nobler feelings— a desire to which
hum anity for the greater part owes its progress. It would elevate
the most heartless egotism to the position o f a l a w ; it requires
us to close our hearts again st the starvin g man, because if we
hand him food and drink, another m ight starve in his place in
thirty y e a r s ’ time. It substitutes cold calculation for sympathy.
T h is doctrine tends to convert the hearts o f men into stones,
B u t w hat could be finally expected o f a nation w hose citizens
should carry stones instead of hearts in their b o so m s? W hat
else than the total destruction o f all morality, and with it of all
productive forces, and therefore of all the wealth, civilisation, and
power of the nation ?
I f in a nation the population increases more than the production
o f the m eans of subsistence, i f capital accum ulates at length tc
such an extent as no longer to find investm ent, if machinery
throws a number o f operatives out o f work and manufactured
goods accumulate to a large excess, this m erely proves, thal
nature will not allow industry, civilisation, wealth, and powei
to fall exclu sively to the lot of a single nation, or that a large
portion of the globe suitable for cultivation should be merel)
inhabited by wild anim als, and that the largest portion o f the
human race should remain sunk in savagery, ignorance, anc
poverty.
W e have shown into w hat errors the school has fallen by
ju d g in g the productive forces of the human race from a political
point of view ; we have now also to point out the m istakes which
it has committed by regarding the separate interests of nations
from a cosmopolitical point of view.
I f a confederation of all nations existed in reality, as is the
. case with the separate states constituting the U nion o f North
Am erica, the excess of population, talents, skilled abilities, anc
material capital would flow over from E n g la n d to the Continental
states, in a sim ilar m anner to that in which it travels from the
eastern states o f the A m erican Union to the western, providec
that in the Continental states the sam e security for persons and
property, the same constitution and general laws prevailed, anc
that the E n g lish G overnm ent w as made subject to the unitec
w ill of the universal confederation.
U nder these supposition;
there would be no better w a y o f raising all these countries tc
T H E THEORY
the sam e stage o f wealth and cultivation as E n g la n d than free
^trade. T h i s is the argum ent o f the school. B u t h o w would it
tally with the actual operation o f free trade under the existin g
conditions of the w orld ?
T h e B rito n s a s an independent and separate nation would
henceforth take their national interest as the sole guide o f their
policy. T h e E n g lis h m a n , from predilection for his la n g u a g e ,
for his law s, regulations, and habits, w ould w h e n e v e r it w a s
possible devote his powers and his capital to develop his own
native industry, for which the system o f free trade, by extending
the market for E n g li s h m an u factu res over all countries, would
offer him sufficient o p p o r tu n it y ; he would not readily take a
fancy to establish m an ufactures in F ra n c e or G e rm a n y . A ll
excess o f capital in E n g la n d would be at once devoted to trad in g
with foreign parts of the world. I f the E n g lis h m a n took it into
his head to em igrate, or to invest his capital elsew here than in
E n g la n d , he would a s he now does prefer those m ore distant
countries where he would find already e x istin g his la n g u a g e ,
his law s, and regulations, rather than the benighted countries
o f the Continent. A ll E n g la n d would thus be developed into
one im m ense m an u factu rin g city.
A sia , A frica, and A u stralia
would be civilised by E n g la n d , and covered with new states
modelled after the E n g lis h fashion. In tim e a world o f E n g li s h
states would be formed, under the presidency o f the m other state,
in w hich the E u ropean Continental nations w ould be lost as u n im ­
portant, unproductive races. B y this arran ge m e n t it would fall
to the lot of F ran ce , together with S p a in and P o rtu g a l, to supply
this E n g lis h world w ith the choicest w in e s, and to drink the
bad ones herself: at m ost F ra n c e m igh t retain the m an ufacture
o f a little millinery. G e r m a n y would scarcely h ave more to supply
this E n g lis h world with than children's to ys, wooden clocks, and
philological w ritin g s, and som etim es also an au x ilia ry corps, who
m ight sacrifice th em selves to pine a w a y in the deserts o f A s ia or
Africa, for the sake of exten din g the m an u factu rin g and co m ­
mercial suprem acy, the literature and lan gu ag e o f E n g la n d . It
would not require m a n y centuries before people in this E n g lis h
world would think and speak o f the G e r m a n s and F re n c h in the
sam e tone a s we speak at present o f the A siatic nations.
T ru e political science, how ever, regards such a result o f u n i­
versal free trade a s a very unnatural one ; it w ill argu e that had
universal free trade been introduced at the time o f the H a n se a tic
L e a g u e , the G erm an nationality instead o f the E n g li s h would
h ave secured an advance in com m erce and m anufacture over all
other countries.
It would be m ost unjust, even on cosm opolitical grounds, n o w }
POLITICAL AND COSMOPOLITICAL ECONOMY
1C>7
^ to resign to the E n g lish all the wealth and power of the earth,
merely because by them the political system of commerce w as
first established and the cosmopolitical principle for the most part
4ignored. In order to allow freedom o f trade to operate naturally,
the less advanced nations must first be raised by artificial m easures
to that stage of cultivation to which the E n g lish nation has been
artificially elevated.
In order that, through that cosmopolitical
tendency of the powers o f production to which we have alluded,
the more distant parts o f the world m ay not be benefited and
enriched before the neighbouring European countries, those na­
tions which feel them selves to be capable, ow in g to their moral,
intellectual, social, and political circumstances, of developing a
m anufacturing power o f their own must adopt the system o f
protection as the most effectual m eans for this purpose.
The
effects of this system for the purpose in view are of two k in d s :/
in the first place, by gradually excluding foreign manufactured
articles from our markets, a surplus would be occasioned in
foreign nations, o f workm en, talents, and capital, which must
seek em ploym ent ab ro ad ; and secondly, by the premium which
our system o f protection would offer to the immigration into our
country o f workmen, talents, and capital, that excess of productive
power would be induced to find employment with us, instead of
em igratin g to distant parts o f the world and to colonies. Political
science refers to history, and inquires whether E n glan d has not in
former times drawn from G erm an y , Italy, Holland, F ran ce, Spain,
and Portugal by these m eans a m ass o f productive power. She
a s k s : W h y does the cosmopolitical school, when it pretends to
weigh in the balance the ad van tag es and the disadvantages of
the system o f protection, utterly ignore this great and remarkable
instance of the results o f that system ?
C H A P T E R XII.
T H E T H E O R Y O F T H E P O W E R S O F P R O D U C T IO N A N D T H E
TH EO RY OF V A LU ES.
dam
S m i t h ’ s celebrated work is entitled, ‘ T h e N a tu re and
C au ses of the W e a lth o f N a tio n s .7 T h e founder o f the p rev ailin g
economical school h a s therein indicated the double point o f v ie w
from which the econom y o f nations, like that o f private separate
individuals, should be regarded.
The causes o f w ealth are so m e th in g totally different from
w ealth its e lf. A person m a y p o sse ss wealth, i.e. e xch an geab le
v a l u e ; if, however, he does not p o sse ss the power o f producing
objects o f more value than he con su m es, he w ill become poorer.
A person m a y be p o o r ; if he, how ever, p o sse sse s the power o f
producing a larger am ount o f valu ab le articles than he co n su m e s,
he becom es rich.
i
The p o w e r o f p ro d u c in g w ealth is therefore infinitely more
'im portant than w ealth i t s e l f ; it in su res not only the p ossession
and the increase o f w hat has been gained, but also the rep lace­
ment o f w hat has been lost.
T h i s is still more the case with
entire nations (who cannot live out o f mere rentals) than with
private individuals.
G e r m a n y has been devastated in every
century by pestilence, by fam ine, or by civil or foreign w a rs ; she
1 has, nevertheless, a lw a y s retained a great portion o f her pow ers
of production, and has thus quickly reattained som e degree o f
.prosperity; while rich and m ig h ty but despot- and priest-ridden
Spain, notw ithstan ding her com parative e n joym en t o f internal
peace,1 has sunk deeper into poverty and m isery. T h e sam e sun
still shines on the Sp an iard s, they still p o sse ss the sam e area o f
territory, their m ines are still as rich, they are still the sam e
people as before the discovery of A m erica, and before the intro­
duction of the In q u isitio n ; but that nation has g ra d u a lly lost
her powers of production, and h a s therefore become poor and
miserable.
T h e W a r of Independence o f the U nited S t a te s of
A
1 T h is is true respecting Spain up to the period o th e r invasion by N apoleon,
but not subsequently. Our author’ s conclusions are, however, scarcely in va li­
dated by that exception.— T r .
1 08
PRODUCTION AND VALUES
Am erica cost that nation hundreds o f millions, but her powers
of production were immeasurably strengthened by gaining inde­
pendence, and it w as for this reason that in the course of a few
years after the peace she obtained im m easurably greater riches
than she had ever possessed before.
I f we compare the state
of Fran ce in the year 1809 with that of the year 1839, what a
difference in favour o f the la t te r ! Nevertheless, France has in the
interim lost her sovereignty over a large portion o f the European
co n tin e n t; she has suffered two devastating invasions, and had
to p ay milliards of money in w ar contributions and indemnities.
It w as impossible that so clear an intellect as A dam Sm ith
possessed could altogether ignore the difference between wealth
and its causes and the overw helm ing influence of these causes *
on the condition o f nations. In the introduction to his work, he
s a y s in clear words in e ffe c t: ‘ Lab ou r forms the fund from which
every nation derives its wealth, and the increase of wealth depends
first on the prod u ctive p o w e r of labour, nam ely, on the degree of f
skill, dexterity, and ju d g m en t with which the labour of the nation
is generally applied, and secondly, on the proportion between the
num ber of those employed productively and the number o f those
who are not so employed.' From this we see how clearly Sm ith
in general perceived that the condition o f nations is principally ^
dependent on the sum of their prod u ctive pow ers.
.
It does not, however, appear to be the plan o f nature that
com p lete sciences should spring already perfected from the brain
p f individual thinkers.
It is evident that Sm ith w as too e x ­
clusively possessed by the cosmopolitical idea of the physiocrats,
‘ universal freedom of trade,’ and by his own great discovery, ‘ the
division of labour,’ to follow up the idea o f the importance to a
nation o f its pow ers o f production . H ow ever much science m ay
be indebted to him in respect of the rem aining parts of his work,
the idea ‘ division o f la b o u r ’ seemed to him his most brilliant
thought. It w a s calculated to secure for his book a name, and for
h im self posthum ous fame.
H e had too much worldly wisdom not to perceive that whoever
w ishes to sell a precious jewel does not bring the treasure to market
most profitably by burying it in a sack o f wheat, however useful
the grains of wheat m ay be, but better by exposing it at the fore­
front. H e had too much experience not to know that a debutant
(and he w as this as regards political economy at the time o f the
publication o f his work) who in the first act creates a fu r o r e is
easily excused if in the following ones he only occasionally raises
him self above m ediocrity; he had every motive for m aking the
introduction to his book, the doctrine of division o f labour. Sm ith
has not been mistaken in his calcu lation s; his first chapter has
1 10
T H E THEORY
made the fortune o f h is book, and founded his authority as an
economist.
H ow ever, w e on our part believe o u rselves able to prove that
I ju st this zeal to put the im portant discovery * d iv is io n o f la b o u r ’
I in an ad v an tag eo u s light, has hindered A d a m S m ith from follow ­
i n g up the idea ‘ p ro d u c tiv e p o w e r ’ (which h a s been expressed by
(h im in the introduction, and also frequently afterwards, althou gh
1 m erely incidentally) and from exhib iting his doctrines in a much
! more perfect form. B y the great valu e w hich he attached to his
idea ‘ d iv is io n o f la b o u r ’ he h a s evid en tly been misled into
representing labour itse lf as the ‘ f u n d ’ o f all the w ealth o f
nations, although he h im s e lf clearly perceives and also states
that the productiveness o f labour p rin cipally depends on the
degree of skill and ju d g m e n t with w hich the labour is performed.
W e ask, can it be deemed scientific rea so n in g i f w e a ssig n as
the cau se o f a phenom enon that w hich in itse lf is the result o f
a num ber o f deeper ly in g cau ses ? It cannot be doubted that
all wealth is obtained by m e a n s o f m ental and bodily exertions
(labour), but ye t from that circu m stance no reaso n is indicated
from w hich useful conclusions m a y be d r a w n ; for history teaches
that whole nations have, in spite o f the exertions and o f the thrift
o f their citizens, fallen into poverty and m isery. W h o e v e r desires
to know and investigate h ow one nation from a state o f poverty
and barbarism h a s attained to one o f w ealth and prosperity, and
how another h a s fallen from a condition o f w e alth and well-being
into one o f poverty and m isery, h a s a lw a y s , after rec e iv in g the
information that labour is the cau se o f w ealth and idleness the
cause o f poverty (a rem ark w hich K in g So lo m o n made lon g before
A d am Sm ith), to put the further question, w h a t are the cau se s o f
labour, and w h at the cau se s o f id le n e ss?
It would be more correct to describe the lim bs o f m en (the
head, hands, and feet) a s the cau ses o f w ealth (we should thus at
least approach far nearer to the truth), and the question then
presents itself, w h at is it that induces these heads, a r m s, and
hands to produce, and calls into activity these exertions ? W h a t
else can it be than the spirit w hich an im ate s the individuals, the
social order which renders their e n e rg y fruitful, and the p ow ers
o f nature which they are in a position to m ake use o f? T h e
more a m an perceives that He m u st provide for the future, the
more his intelligence and feelings incite him to secure the future
o f his nearest connections, and to promote their w e l l - b e i n g ;
the more he has been from his youth accustom ed to forethought
and activity, the more his nobler feelings h ave been developed,
and body and mind cultivated, the finer e x a m p le s that he h as
witnessed from his youth, the more opportunities he h a s had
PRODUCTION AND VALUES
hi
for utilising his mental and bodily powers for the improvement
of his condition, also the less he has been restrained in his legi­
timate activity, the more successful his past endeavours have
been, and the more their fruits have been secured to him, the
more he has been able to obtain public recognition and esteem
by orderly conduct and activity, and the less his mind suffers
from prejudices, superstition, false notions, and ignorance, so
much the more will he exert his mind and limbs for the object
of production, so much the more will he be able to accomplish,
and so much the better will he make use of the fruits of his
labour.
H ow ever, most depends in all these respects on the
conditions of the society in which the individual has been brought
lip,'and turns upon this, whether science and arts flourish, and
public institutions and law s tend to promote religious character,
morality and intelligence, security for person and for property,
freedom and ju s tic e ; whether in the nation all the factors o f
material prosperity, agriculture, manufactures, and trade, have
been equally and harmoniously cultivated ; whether the power o f
the nation is strong enough to secure to its individual citizens
progress in wealth and education from generation to generation,
and to enable them not merely to utilise the natural powers o f
their own country to their fullest extent, but also, by foreign trade
and the possession of colonies, to render the natural powers of
foreign countries serviceable to their own.
Adam Sm ith has on the whole recognised the nature of these
powers so little, that he does not even assign a productive char­
acter to the mental labours of those who maintain law s and
order, and cultivate and promote instruction, religion, science,
and art. H is investigations are limited to that human activity
which creates material values. W ith regard to this, he certainly
recognises that its productiveness depends on the * skill and
ju d g m e n t ’ with which it is exercised; but in his investigations
a s to the causes of this skill and judgm ent, he does not go farther
than the division of labour, and that he illustrates solely by ex­
c h a n g e , augmentation of material capital, and extension of markets.
H is doctrine at once sinks deeper and deeper into materialism,
p articu larism , and individualism. I f he had followed up the idea
‘ prod u ctive p o w e r,' without allow ing his mind to be dominated
by the idea of 'v a l u e , ’ ‘ exchangeable v alu e,’ he would have been
led to perceive that an independent theory o f the *prod u ctive
p o w e r,' must be considered by the side of a * theory o f v a lu e s ' in
order to explain the economical phenomena. B u t he thus fell
into the mistake of explaining mental forces from material cir­
cum stances and conditions, and thereby laid the foundation for
all the absurdities and contradictions from which his school (as
11 2
T H E THEORY
w e propose to prove) suffers up to the present day, and to which
alone it m ust be attributed that the doctrines o f political econ om y
are those which are the least accessible to the most intelligent
minds. T h a t S m it h ’s school teaches nothing else than the theory
o f valu es, is not only seen from the fact that it bases its doctrine
everyw here on the conception of ‘ value o f e x c h a n g e ,’ but also
from the definition which it g iv e s o f its doctrine. It is (sa y s J .
B . S a y ) that science which teaches how riches, or exchan geable
values, are produced, distributed, and consumed.
T h is is un­
doubtedly not the science which teaches how the pro d u c tiv e p o w ers
are awakened and developed, and how they become depressed and
destroyed.
M 'C u lloch calls it explicitly ‘ the science o f v a lu e s/
and recent E n g lis h writers ‘ the science o f ex ch a n g e*
E x a m p le s from private econ om y w ill best illustrate the
difference between the theory o f productive powers and the
theory o f valu es.
L e t us suppose the case o f two fathers of fam ilies, both being
landed proprietors, each of w hom s a v e s y e a r ly 1,000 thalers and
has five sons. T h e one puts out his sa v in g s at interest, and
keeps his sons at com m on hard w ork, while the other em p lo y s
his sa v in g s in educating two of his sons as skilful and intelligent
.landowners, and in enab lin g the other three to learn a trade after
(their respective t a s t e s ; the former acts according to the theory o f
values, the latter according to the theory o f productive powers.
T h e first at his death m ay prove much richer than the second in
imere exchan geable value, but it is quite otherw ise as respects
productive powers. T h e estate o f the latter is divided into two
parts, and every part will by the aid o f improved m an ag e m e n t
yield a s much total produce a s the whole did before ; while the
rem ain in g three sons h ave by their talents obtained abundant
m ean s of m aintenance. T h e landed property o f the former will
be divided into five parts, and every part will be worked in as
bad a m anner as the whole w a s heretofore. In the latter fam ily
a m a s s of different mental forces and talents is aw aken ed and
cultivated, w hich will increase from generation to generation,
every succeeding generation p o sse ssin g more power o f obtaining
material wealth than the preceding one, while in the former fam ily
stupidity and poverty m ust increase with the diminution o f the
shares in the landed property. S o the slaveholder increases by
slavebreeding the sum of his valu es o f e xch an ge, but he ruins the
productive forces o f future generations. All expenditure in the .
instruction of youth, the promotion o f ju stice, defence o f nations,
&c. is a consumption o f present v alu es for the behoof of the
productive powers. T h e greatest portion o f the consum ption o f I
a nation is used for the education o f the future generation, for
PRODUCTION AND VALUES
promotion and nourishment o f the future national productive
powers.
T h e Christian religion, m onogam y, abolition of slavery and
of vassalag e , hereditability of the throne, invention of printing, o f
the press, of the postal system , of money, w eights and measures,
of the calendar, o f watches, o f police, the introduction of the
principle of freehold property, o f m eans o f transport, are rich
sources of productive power. T o be convinced of this, we need
only compare the condition of the European states with that o f
the A siatic ones. In order duly to estimate the influence which
liberty of thought and conscience has on the productive forces o f
nations, we need only read the history of E n g la n d and then that
o f Spain. T h e publicity of the administration of justice, trial by
ju r y , parliam entary legislation, public control of State adm in istra­
tion, self-administration of the com m onalties and municipalities,
liberty o f the press, liberty o f association for useful purposes,
impart to the citizens o f constitutional states, as also to their
public functionaries, a degree of energy and power which can
hardly be produced by other means.
W e can scarcely conceive
of any law or any public legal decision which would not exercise
a greater or smaller influence on the increase or decrease of the
productive power o f the nation.1
I f we consider merely bodily labour as the cause of wealth,
how can we then explain w hy modern nations are incomparably
richer, more populous, more powerful, and prosperous than the
nations of ancient times ? T h e ancient nations employed (in pro­
portion to the whole population) infinitely more hands, the work
w a s much harder, each individual possessed much more land, and
yet the m asse s were much worse fed and clothed than is the case
in modern nations.
In order to explain these phenomena, we
must refer to the progress which has been made in the course of
the last thousand years in sciences and arts, domestic and public
regulations, cultivation of the mind and capabilities of production.
T h e present state o f the nations is the result of the accumulation
o f all discoveries, inventions, improvements, perfections, and*
exertions o f all generations which have lived before u s ; they form]
the m ental ca p ita l o f the present human race, and every separate,^
nation is productive only in the proportion in which it has known
how to appropriate these attainm ents of former generations and
to increase them by its own acquirements, in which the natural
capabilities o f its territory, its extent and geographical position,
1 S a y states in his Economie P olitique P ra tiq u e, vol. iii. p. 242, ‘ L e s lois ne
peuvent pas creer des richesses.' C ertainly they cannot do this, but they create
productive power, which is more important than riches, i.e. than possession of
values o f exchange.
8
H 4
T H E THEORY
its population and political power, h ave been able to develop as
com pletely and sym m etrically a s possible all sources o f w ealth
w ithin its boundaries, and to extend its m oral, intellectual, c o m ­
m ercial, and political influence over less advanced nations and
e specially over the affairs o f the world.
T h e popular school o f econom ists would h a v e us believe that
politics and political pow er cannot be taken into consideration in
political economy. So far as it m ak e s only v alu es and exch an ge
the subjects of its in v estigatio n s, this m a y be c o r r e c t ; w e can
define the ideas of valu e and capital, profit, w a g e s , and r e n t ; w e
can resolve them into their elem ents, and speculate on w h a t m a y
influence their rising or falling, &c. w ithout thereby ta k in g into
account the political circu m stances o f the nation. C le arly, h o w ­
ever, these matters appertain as much to private econ om y as to
the econ om y of whole nations. W e h ave m erely to consider the
history o f V enice, of the H an seatic L e a g u e , o f P o rtu g a l, H olland,
and E n g la n d , in order to perceive w hat reciprocal influence m aterial
w ealth and political pow er exercise on each other.
T h e school also a lw a y s falls into the stra n g e st inconsistencies
w h e n ev e r this reciprocal influence forces itse lf on their con sid era­
tion, L e t us here o n ly call to mind the rem arkable dictum of
A d a m S m ith on the E n g li s h N a v ig a tio n L a w s . 1
T h e popular school, inasm u ch as it does not duly consider the
nature o f the powers o f production, and does not take into account
the conditions o f nations in their a g g re g ate , disregards especially
the im portance o f d evelopin g in an equal ratio agriculture, m a n u ­
factures and commerce, political power and internal wealth, and
disregards esp ecially the valu e o f a m an u factu rin g power belon g­
ing specially to the nation and fully developed in all its branches.
It com m its the error of placin g m an u factu rin g pow er in the sam e
category w ith agricultural power, and o f sp e ak in g o f labour, natural
power, capital, &c. in general term s w ithout considering the differ­
ences which exist between them. It does not perceive that between
a State devoted m erely to agriculture and a State p o sse ssin g both
agriculture and m anufactures, a m uch greater difference exists than
between a pastoral State and an agricultural one. In a condition
of m erely agricultural industry, caprice and slav ery, superstition
and ignorance, w an t o f m ean s of culture, o f trade, and o f transport,
poverty and political w e a k n e ss exist. In the m erely agricultural
State only the least portion o f the mental and bodily powers
existing in the nation is aw akened and developed, and only the
least part of the powers and resources placed by nature at its
disposal can be made use of, while little or no capital can be
accumulated.
1 W ealth o f N a tio n s, Book IV . chap. ii.
PRODUCTION AND VALUES
L e t us compare Poland with E n g la n d : both nations at one
time were in the sam e stage of culture ; and now what a difference.
Manufactories and manufactures are the mothers and children of
municipal liberty, of intelligence, of the arts and sciences, of in­
ternal and external commerce, of navigation and improvements in
transport, o f civilisation and political power. T h e y are the chief
m eans of liberating agriculture from its chains, and o f elevating
it to a commercial character and to a degree of art and science, by
which the rents, farm in g profits, and w a g e s are increased, and
greater value is given to landed property. T h e popular school
has attributed this civilising power to foreign trade, but in that it
has confounded the mere exchanger with the originator. Foreign
manufactures furnish the goods for the foreign trade, which the
latter conveys to us, and which occasion consumption of products
and raw materials which we give in exchange for the goods in lieu
o f m oney payments.
If, however, trade in the manufactures o f far distant lands
exercises admittedly so beneficial an influence on our agricultural
industry, how much more beneficial must the influence be of those
m anufactures which are bound up with us locally, commercially,
and politically, which not only take from us a small portion, but
the largest portion of their requirements of food and of raw
materials, which are not made dearer to us by great costs o f
transport, our trade in which cannot be interrupted by the chance
of foreign m anufacturing nations learning to supply their own
w an ts them selves, or by w ars and prohibitory import duties ?
W e now see into wrhat extraordinary mistakes and contradic­
tions the popular school has fallen in m aking material wealth or
value of exchange the sole object of its investigations, and by
regarding mere bodily labour a s the sole productive power.
T h e m an who breeds pigs is, according to this school, a pro­
ductive member of the community, but he who educates men is
a mere non-productive. T h e maker of bagpipes or jew s-h arp s for
sale is a productive, while the great composers and virtuosos are
non-productive simply because that which they play cannot be
brought into the market. T h e physician who saves the lives o f
his patients does not belong to the productive class, but on the
contrary the ch em ist’s boy does so, although the values of ex­
change (viz. the pills) which he produces m ay exist only for a few
iminutes before they pass into a valueless condition. A N ewton,
a W att, or a Kepler is not so productive a s a donkey, a horse, or
a draught-ox (a class o f labourers who h ave been recently intro­
duced by M 'Culloch into the series of the productive members of
hum an society).
W e must not believe that J . B . S a y has remedied this defect
8 *
T H E THEORY
in the doctrine o f A d am S m ith by his fiction o f * im m a teria l
g o o d s ' or produ cts; he has thus m erely so m e w h at varnished
over the folly o f its results, but not raised it out o f its intrinsic
absurdity. T h e mental (im m aterial) producers are m erely pro­
ductive, according to his view s, because th ey are rem unerated
w ith v a lu e s o f exchan ge, and because their attain m en ts h ave
been obtained by sacrificing v a lu e s of exchange, and not because
they produce p ro d u c tiv e p o w e rs .l T h e y m erely seem to him an
accum ulated capital. M ‘ Culloch goes still fu rth e r; he s a y s that
m an is as much a product o f labour a s the m achine which he
produces, and it appears to him that in all econom ical in v e s t ig a ­
tions he m ust be regarded from this point o f view . H e thinks
that S m ith com prehended the correctness o f this principle, only
he did not deduce the correct conclusion from it. A m o n g other
thin gs he d ra w s the conclusion that eating and drin kin g are pro­
ductive occupations. T h o m a s Cooper v a lu e s a clever A m erican
law ye r at 3,000 dollars, w hich is about three tim es as m uch as
the valu e of a strong slave.
T h e errors and contradictions o f the p re v a ilin g school to w hich
w e h ave drawn attention, can be e a sily corrected from the stan d ­
point o f the theory o f the p ro d u c tiv e po w ers. C e rtain ly those w h o
fatten p ig s or prepare pills are productive, but the instructors of
y o u th s and o f adults, virtu oso s, m u sician s, p h ysician s, ju d g e s,
and adm inistrators, are productive in a much h igher degree. T h e
former prod u ce va lu es o f ex ch a n g e, and the latter p ro d u c tiv e
p o w e rs , som e by en ab lin g the future generation to become pro­
ducers, others by furthering the m o rality and religio us character
o f the present generation, a third by e nn obling and raisin g the
powers o f the hu m an mind, a fourth by p rese rvin g the productive
powers of his patients, a fifth by rendering hu m an rig h ts and
justice secure, a sixth by con stituting and protecting public se ­
curity, a seventh by his art and by the enjoym ent which it occasion s
fitting men the better to produce v a lu e s o f exchange.
In the
doctrine of mere valu es, these pro d u cers o f the p ro d u c tiv e p o w ers
can of course on ly be taken into consideration so far as their
services are rewarded by v a lu e s o f e xch an ge ; and this m an ner
o f regarding their services m a y in some instances h ave its practical
use, as e.g. in the doctrine o f public taxes, inasm u ch a s these have
to be satisfied by valu es o f exchange. B u t w h en ever our con­
1 From the great number o f passages wherein J . B . S a y explains this view ,
w e m erely quote the new est— from the sixth volum e o f Econotnie P o litiq u e
P ra tiq u e , p. 307 : ' L e talent d'un avocat, d ’un m£decin, qui a £t£ acquis au
prix de quelque sacrifice et qui produit un revenu, est une valeur capitale, non
transm issible a la v6rit£, m ais qui reside n^anm oins dans un corps visible, celui
de la personne qui le possede.*
PRODUCTION AND VALUES
1*7
sideration is given to the nation (as a whole and in its international
relations) it is utterly insufficient, and leads to a series of narrow­
minded and false views.
T h e prosperity of a nation is not, a s S a y believes, greater in
the proportion in which it has am assed more wealth (i.e. values
o f exchange), but in the proportion in which it has more developed
its pow ers o f prodziction. A lthough law s and public institutions
do not produce immediate values, they nevertheless produce pro­
ductive powers, and S a y is mistaken if he m aintains that nations
have been enabled to become wealthy under all forms of g overn ­
ment, and that by m eans of law s no wealth can be created. T h e ,
foreign trade of a nation must not be estimated in the w ay in '
which individual m erchants ju d g e it, solely and only according to
the theory o f v alu es (i.e. by regarding merely the gain at any
particular moment of some material a d v a n t a g e ) ; the nation is
bound to keep steadily in view all these conditions on which its
present and future existence, prosperity, and power depend.
T h e nation must sacrifice and give up a measure of material ‘
property in order to gain culture, skill, and powers o f united
production; it must sacrifice some present ad vantages in order
to insure to itself future ones.
If, therefore, a m anufacturing
power developed in all its branches forms a fundamental condi­
tion o f all higher advances in civilisation, material prosperity,
and political power in every nation (a fact which, we think, we
have proved from h is to r y ) ; if it be true (as we believe we can
prove) that in the present conditions o f the world a new unpro­
tected m anufacturing power cannot possibly be raised up under
free competition with a power which has long since grown in
strength and is protected on its own territory ; how can anyone
possibly undertake to prove by argum ents only based on the
mere theory o f values, that a nation ought to buy its goods like
individual merchants, at places where they are to be had the
cheapest— that we act foolishly if we manufacture anything at
all which can be got cheaper from abroad— that we ought to
place the industry of the nation at the mercy of the self-interest
o f individuals— that protective duties constitute monopolies, which
are granted to the individual home manufacturers at the expense
(of the nation ? It is true that protective duties at first increase
T he price of manufactured goods ; but it is ju st as true, and m ore­
over acknowledged by the prevailing economical school, that in
the course o f time, by the nation being enabled to build up a
completely developed m anufacturing power of its own, those goods
are produced more cheaply at home than the price at which they
can be imported from foreign parts. If, therefore, a sacrifice of
value is caused by protective duties, it is made good by the gain
i i
8
T H E THEORY
o f a p o w e r o f p ro d u c tio n } w hich not only secures to the nation an
niKnitely greater am ount o f m aterial goods, but also industrial
independence in case o f w ar. T h ro u g h industrial independence
and the internal prosperity derived from it the nation obtains
the m eans for successfully carryin g on foreign trade and for
extending its m ercantile m a r in e ; it increases its civilisation,
perfects its institutions internally, and stren gth en s its external
power. A nation capable of developin g a m an u fac tu rin g power,
i f it m akes use o f the system o f protection, th u s acts quite in the
sa m e spirit as that landed proprietor did w h o by the sacrifice o f
some m aterial wealth allow ed som e o f his children to learn a pro­
ductive trade.
Into w h at m istakes the p rev ailin g economical school has fallen
by ju d g in g conditions according to the mere theory o f valu es
which ought properly to be ju d g ed according to the theory o f
pow ers o f production, m a y be seen v e r y clearly by the ju d g m e n t
/which J . B . S a y p a sse s upon the bounties w h ich foreign countries
som etim es offer in order to facilitate exportation ; he m ain tain s
that ‘ these a re presents m ade to o u r nation.* N o w if we suppose
that F ra n ce considers a protective duty o f tw en ty-five per cent,
sufficient for her not yet perfectly developed m an ufactures, while
E n g la n d were to gran t a bounty on exportation o f thirty per cent.,
w h at would be the consequence o f the ‘ p r e s e n t ’ w hich in this
m anner the E n g li s h would m ake to the F r e n c h ? T h e F ren ch
con sum ers would obtain for a few y e ars the m anufactured articles
which they needed m uch cheaper than hitherto, but the F re n ch
m anufactories would be ruined, and m illions o f m en be reduced to
b e g g a ry or obliged to em igrate, or to devote th e m se lv e s to a g ri­
culture for em ploym ent. U n d e r the m ost favourable circu m ­
stances, the present con sum ers and cu stom ers o f the F re n ch
agriculturists would be converted into com petitors with the latter,
agricultural production would be increased, and the consum ption
lowered. T h e n e ce ssary consequence w ould be dim inution in
valu e of the products, decline in the valu e o f property, national
poverty and national w e a k n e ss in F ran ce . T h e E n g li s h ‘ present ’
in mere value would be dearly paid for in lo ss o f p o w e r ; it would
seem like the present which the S u ltan is w on t to m ake to his
pash as by sending them valuable silken cords.
Since the time w h en the T r o ja n s w ere ‘ p re se n te d 1 b y the
G re e k s with a wooden horse, the acceptance o f ' presents ’ from
other nations h a s become for the nation w hich receives them a
very questionable transaction.
T h e E n g li s h h ave g iven the
Continent presents o f im m ense valu e in the form o f subsidies,
but the Continental nations h ave paid for them dearly b y the loss
o f power. T h e s e subsidies acted like a bounty on exportation in
PRODUCTION AND VALUES
119
favour of the E n g lish , and were detrimental to the German
m anufactories.1 I f E n glan d bound herself to-day to supply the
G erm ans gratuitously for years with all they required in m an u ­
factured articles, we could not recommend them to accept such an
offer. I f the E n g lish are enabled through new inventions to pro­
duce linen forty per cent, cheaper than the G e rm an s can by using
the old process, and if in the use of their new process they merely
obtain a start of a few years over the G erm ans, in such a case,
were it not for protective duties, one of the most important and
oldest branches of G erm an y's industry will be ruined.
It will
be as if a limb of the body o f the Germ an nation had been lost.
And w ho would be consoled for the loss of an arm by knowing
that he had nevertheless bought his shirts forty per cent,
cheaper ?
I f the E n g lish very often find occasion to offer presents to
foreign nations, very different are the forms in which this is done;
it is not unfrequently done against their w i l l ; alw ays does it be­
hove foreign nations well to consider whether or not the present
should be accepted. Throu gh their position as the manufacturing
and commercial monopolists of the world, their manufactories from
time to time fall into the state which they call ‘ g lu t,’ and which
arises from what they call ‘ overtrading.’ A t such periods every­
body throw s his stock o f goods into the steamers.
After the
elapse of eight days the goods are offered for sale in H am burg,
Berlin, or Frankfort, and after three weeks in N ew York, at fifty
per cent, under their real value. T h e E n glish manufacturers suffer
for the moment, but they are saved, and they compensate them ­
selves later on by better prices.
T h e Germ an and American
manufacturers receive the blows which were deserved by the
E n g li s h — they are ruined. T h e E n g lish nation merely sees the
fire and hears the report o f the explosion ; the fragm ents fall
down in other countries, and if their inhabitants complain of
bloody heads, the intermediate merchants and dealers say, ‘ T h e
crisis has done it all ! ’ I f we consider how often by such crises
the whole m anufacturing power, the system of credit, nay the
agriculture, and generally the whole economical system of the
nations who are placed in free competition with E n g la n d , are
shaken to their foundations, and that these nations have after­
w ard s notwithstanding richly to recompense the E n g lish m anu­
facturers by higher prices, ought we not then to become very
sceptical as to the propriety of the commercial conditions of
nations being regulated according to the mere theory o f values
and according to cosmopolitical principles ?
T h e prevailing
1 See Appendix A ,
120
TH E THEORY
economical school has never deemed it expedient to elucidate
the cau ses and effects of such com m ercial crises.
T h e g re at statesm en o f all modern nations, alm o st without
exception, h ave com prehended the great influence o f m an u factu res
and m anufactories on the wealth, civilisation, and pow er o f nations,
and the necessity o f protecting them . E d w a r d I I I . com prehended
this like E lizab e th ; Fred erick the G re at like J o s e p h I I . ; W a s h ­
ington like Napoleon. W ith o u t entering into the depths o f the
theory, their foreseeing m ind s com prehended the nature of industry
in its entirety, and appreciated it correctly. It w a s reserved for
the school o f p h ysiocrats to regard this nature from another point
o f v iew in consequence o f a sop h istical line o f reaso n in g . T h e ir
castle in the air has d is a p p e a r e d ; the more modern econom ical
school itse lf has destroyed i t ; but even the latter h a s also not
disentangled itse lf from the original errors, but h a s m erely ad­
vanced so m e w h at farther from them . S in ce it did not recognise
the difference between productive pow er and m ere v a lu e s o f ex­
chan ge, and did not in v e stig a te the former independently o f the
latter, but subordinated it to the theory o f v a lu e s o f exch an ge , it
w a s im possib le for that school to arrive at the perception h ow
g re a tly the nature o f the agricu ltu ral productive pow er differs
from the nature o f the m an u factu rin g productive power. It does
tnot discern that through the d evelopm ent o f a m an u factu rin g
ind ustry in an agricultural nation a m a s s o f m ental and bodily
powers, o f natural pow ers and natural resources, and o f instru m en tal
pow ers too (which latter the p rev ailin g school term s ‘ capital ’), is
brought to bear, and brought into use, w hich had not p rev io u sly
been active, and would never h ave come into a ctivity but for the
formation and developm ent o f an internal m an u factu rin g p o w e r ;
im a g in e s that by the e sta b lish m e n t o f m an u fac tu rin g in d u stry
these forces m u st be taken a w a y from agriculture, and transferred
to m anufacture, w h e re a s the latter to a great extent is a perfectly
new and additional power, w hich, very far indeed from in cre asin g
at the expense o f the agricultural interest, is often the m e a n s o f
helpin g that interest to attain a h igher degree o f prosperity and
development.
CH A P TE R XIII.
T H E NATION AL DIVISION OF COM M ERCIAL OPERATIONS AND
T H E CO NFEDERATIO N OF T H E NATIONAL PRODUCTIVE
FO RCES.
h e school is indebted to its renowned founder for the discovery
o f that natural law which it calls ‘ d ivisio n o f l a b o u r but neither
A dam Sm ith nor any of his successors have thoroughly investi­
gated its essential nature and character, or followed it out to its
most important consequences.
T h e expression * d iv isio n o f la b o u r ' is an indefinite one, and
must necessarily produce a false or indefinite idea.
It is 1 d iv isio n O f la bo u r ’ if one savage on one and the same
day goes hunting or fishing, cuts down wood, repairs his w ig w am ,
and prepares arrows, nets, and clothes; but it is also ‘ d iv isio n
la b o u r ' if (as Adam Sm ith mentions as an example) ten different
persons share in the different occupations connected with the
manufacture of a pin : the former is an objective, and the latter
a subjective division o f lab ou r; the former hinders, the latter
furthers production.
T h e essential difference between both is,
that in the former instance one person divides his work so as to
produce various objects, while in the latter several persons share
in the production of a single object.
Both operations, on the other hand, m ay be called with equal
correctness a union o f la b o u r ; the savage unites various tasks
in his person, while in the case o f the pin manufacture various
persons are united in one work o f production in common.
T h e essential character of the natural law from which the
popular school explains such important phenomena in social
economy, is evidently not merely a d iv isio n o f la b o u r, but a
d iv isio n o f different com m ercial operations between several in d i­
v id u a ls , and at the same time a confederation or union o f va rio u s
en ergies, in telligences, an d pow ers on b e h a lf o f a common p ro d u c ­
tion. T h e cause of the productiveness of these operations is not
merely that d iv is io n , but essentially this union. Adam Sm ith
well perceives this him self when he states, ‘ T h e necessaries o f
life of the lowest members of society are a product of jo in t labour
131
T
122
T H E THEORY
and o f the co-operation o f a num ber o f in d iv id u a ls.’ 1 W h a t a
pity that he did not follow out this idea (which he so clearly
expresses) o f un ited labour.
I f we continue to consider the exam ple o f the pin m an ufacture
adduced by A d a m S m ith in illustration o f the a d v a n t a g e s o f
division o f labour, and seek for the cau ses o f the phenomenon
that ten persons united in that m an u factu re can produce an
infinitely larger num ber o f pins than i f eve ry one carried on the
entire pin m anufacture separately, w e find that the division o f com ­
mercial operations w ithout com bin ation o f the p ro d u c tiv e p o w ers
tow ards one common object could but little further this production.
In order to create such a result, the different ind ivid u als m ust
co-operate bodily as well a s m entally, and w ork together. T h e
one w ho m akes the heads o f the pins m u st be certain o f the
co-operation o f the one w h o m ak e s the points if he does not w an t
to run the risk o f producing pin heads in vain.
T h e labour
operations of all m u st be in the proper proportion to one another,
the workmen m ust live as near to one another as possible, and
their co-operation m u st be insured. L e t us suppose e.g. that
every one of these ten w orkm en live s in a different c o u n t r y ; how
often m igh t their co-operation be interrupted by w a r s, interrup­
tions o f transport, com m ercial crises, & c . ; h ow g re a tly w ould the
cost of the product be increased, and con sequ ently the ad van tag e
o f the division o f operation d i m i n i s h e d ; and w ould not the
separation or secession o f a single person from the union, throw
all the others out o f w ork ?
T h e popular school, because it has regarded the division o f
operation alone as the essence o f this natural law , has com mitted
the error o f a p p ly in g it m erely to the separate m an u facto ry or
farm ; it h a s not perceived that the sam e la w exten ds its action
especially over the w hole m a n u fa c tu rin g and a g r ic u ltu ra l p o w e r ,
over the w hole economy o f the n a tio n .
A s the pin m an u factory only prospers by the confederation of
the productive force of the individuals, so does eve ry kind o f
manufacture prosper on ly by the confederation o f its productive
forces with those o f all other kinds o f manufacture. F o r the
success of a m achine m an u factory, for instance, it is n e ce ssary
that the m ines and metal w o rk s should furnish it with the n ecessary
materials, and that all the hundred different sorts o f m an u factories
which require m achines, should buy their products from it. W i t h ­
out machine m anufactories, a nation would in time o f w a r be
exposed to the danger o f losin g the greater portion o f its m a n u ­
facturing power.
1 W ealth o f N a tio n s, B ook I. chap. i.
COMMERCIAL OPERATIONS AND PRODUCTIVE FORCES 123
In like manner the entire manufacturing industry of a State in
connection with its agricultural interest, and the latter in connection
with the former, will prosper the more the nearer they are placed
to one another, and the less they are interrupted in their mutual
exchanges with one another. T h e advantages of their confedera­
tion under one and the sam e political Pow er in times of war, oi
national differences, of commercial crises, failure of crops, &c., are
not less perceptible than are the ad vantages of the union of the
persons belonging to a pin manufactory under one and the same
roof.
Sm ith affirms that the division of labour is less applicable to
agriculture than to manufactures.1 Sm ith had in view only the
separate manufactory and the separate farm. H e has, however,
neglected to extend his principle over whole districts and provinces.
N owhere has the division of commercial operations and the con­
federation o f the productive powers greater influence than where
every district and every province is in a position to devote itself
exclusively, or at least chiefly, to those branches of agricultural
production for which they are mostly fitted by nature. In one
district corn and hops chiefly thrive, in another vines and fruit,
in a third timber production and cattle rearing, &c. I f every dis­
trict is devoted to all these branches o f production, it is clear that
its labour and its land cannot be nearly so productive as if every
separate district were devoted m ainly to those branches of pro­
duction for which it is specially adapted by nature, and as if it
exchanged the surplus of its own special products for the surplus
produce of those provinces which in the production o f other neces­
saries of life and raw materials possess a natural advantage equally
peculiar to them selves. T h is division of commercial operations,
this confederation of the productive forces occupied in agriculture,
can only take place in a country which has attained the greatest
development of all branches of manufacturing in d u stry; for in
such a country only can a great demand for the greatest variety
of products exist, or the demand for the surplus of agricultural
productions be so certain and considerable that the producer can
feel certain of disposing of any quantity of his surplus produce
during this or at least during next year at suitable p r ic e s ; in such
a country only can considerable capital be devoted to speculation
in the produce of the country and holding stocks of it, or great
improvements in transport, such as canals and railway system s,
lines of steamers, improved roads, be carried out p ro fitab ly; and
only by means of thoroughly good m eans of transport can every
district or province convey the surplus of its peculiar products to
1 W ealth o f N ations, B ook I. chap. i.
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T H E THEORY
all other provinces, even to the m ost distant ones, and procure in
return supplies o f the peculiar products o f the latter. W h e re
everybody supplies h im se lf with w hat he requires, there is but
little opportunity for exchan ge, and therefore no need for costly
facilities of transport.
W e m ay notice how the au gm en tatio n o f the pow ers o f pro­
duction in consequence of the separation o f occu pations and the
co operation of the powers o f individuals b e g in s in the separate
m anufactory and extends to the united nation. T h e m an u factory
prospers so much the more in proportion as the com m ercial opera­
tions are divided, the more clo sely the w orkm en are united, and
the more the co-operation o f each person is insured for the whole,
T h e productive powers o f eve ry separate m an u fac to ry are also
increased in proportion as the whole m an u factu rin g pow er o f the
country is developed in all its branches, and the more intim ately
it is united with all other branches o f industry. T h e agricultural
power of production is so much greater the more intim ately a
m an u factu rin g power developed in all its branches is united locally,
com m ercially, and politically with agriculture. In proportion as
the m an ufacturin g power is th u s developed will the division o f the
com m ercial operations and the co-operation o f the productive
powers in agriculture also develop th em selv e s and be raised to
the highest stage o f perfection. T h a t nation w ill therefore possess
most productive power, and will con sequ ently be the richest, which
h as cultivated m an u factu rin g industry in all branches within its
territory to the highest perfection, and w h o se territory and a g ri­
cultural production is large enough to su pply its m an u factu rin g
population with the largest part o f the necessaries o f life and raw
materials which they require.
L e t us now consider the opposite side o f this argu m en t. A
nation which p o sse sses merely agriculture, and m erely the m ost
indispensable industries, is in w an t o f the first and most n ecessary
division of com m ercial operations am o n g its inh abitan ts, and of
the most important h a lf of its productive powers, indeed it is in
want of a useful division o f com m ercial operations even in the
separate branches of agriculture itself. A nation thus imperfect
will not only be m erely h a lf as productive as a perfect nation, but
with an equal or even with a much larger territory, with an equal
or a much larger population, it will perhaps scarcely obtain a fifth,
probably scarcely a tenth, part o f that material w ealth which a
perfect nation is able to p rocu re; and this for the sam e reason
ow in g to which in a very com plicated m an u factory ten persons
produce not merely ten tim es more, but perhaps thirty tim es more,
than one person, or a man with one arm cannot m erely w ork h alf
as little, but infinitely less, than a m an w ith two arm s. T h i s loss
COMMERCIAL OPERATIONS AND PRODUCTIVE FORCES
125
in productive power will be so much greater, the more that the
m anufacturing operations can be furthered by machinery, and the
less that machinery can be applied in agriculture. A part of the
productive power which the agricultural nation thus loses, will
fall to the lot of that nation which exchanges its manufactured
goods for agricultural products. T h is will, however, be a positive
loss only in case the agricultural nation has already reached that
stage of civilisation and political development which is necessary
for the establishm ent of a m anufacturing power. I f it has not yet
attained that stage, and still remains in a barbarous or half-civilised
state, if its agricultural power of production has not yet developed
itself even from the most primitive condition, if by the importation
of foreign fabrics and the exportation o f raw products its prosperity
nevertheless increases considerably from ye ar to year, and its
mental and social powers continue to be awakened and increased,
if such commerce as it can thus carry on is not interrupted by
foreign prohibition o f importation of raw products, or by w ars, or
if the territory of the agricultural nation is situated in a tropical
climate, the gain on both sides will then be equal and in conformity
with the law s o f nature, because under the influence of such an
exchange of the native products for foreign fabrics, a nation so
situated will attain to civilisation and development o f its productive
powers more quickly and safely than when it has to develop them
entirely out of its resources. If, however, the agricultural nation
has already reached the culm inating point o f its agricultural develop­
ment, as far as that can be attained by the influence of foreign
commerce, or if the m anufacturing nation refuses to take the pro­
ducts o f the agricultural nation in exchange for its manufactured
goods, and if nevertheless, ow ing to the successful competition of
the manufacturing nation in the markets of the agricultural nation,
no manufactures can spring up in the latter, in such a case the
agricultural productive power o f the agricultural nation is exposed
to the danger o f being crippled.
B y a c rip p led state o f agricu ltu re we mean that state of things
in which, from want o f a powerful and steadily developing m an u ­
facturing industry, the entire increase of population tends to throw
itself on agriculture for employment, consumes all the surplus
agricultural production of the country, and as soon as it has con­
siderably increased either has to emigrate or share with the a g ri­
culturists already in existence the land immediately at hand, till
the landed property of every family has become so small that it
produces only the most elementary and necessary portion of that
fam ily’s requirements of food and raw materials, but no considerable
surplus which it might exchange with the manufacturers for the
manufactured products which it requires. Under a normal develop­
126
TH E THEORY
ment o f the productive powers o f the S ta te , the greater part o f the
increase of population o f an agricultural nation (as soon a s it has
attained a certain degree of culture) should transfer itse lf to m a n u ­
facturing industry, and the excess o f the agricultural products
should partly serve for su p p lyin g the m an u factu rin g population
with provisions and raw m aterials, and partly for procuring for
the agriculturists the m anufactured goods, m achin es, and utensils
which the}7 require for their consum ption, and for the increase of
their own production.
I f this state o f thin gs sets in at the proper time, agricultural
and industrial productive power will increase reciprocally, and
indeed a d in fin itu m . T h e dem and for agricu ltu ral products on
the part of the industrial population w ill be so great, that no
greater num ber of labourers w ill be diverted to agriculture, nor
any greater division o f the e x istin g land be m ade, than is neces­
sary to obtain the greatest possible su rplus produce from it. In
proportion to this surplus produce the population occupied in
agriculture will be enabled to con su m e the products o f the w ork­
men employed in m an ufacturin g. A continuous increase o f the
agricultural surplus produce w ill occasion a con tinu ou s increase
o f the dem and for m an u factu rin g w orkm en. T h e e xce ss o f the
agricultural population will therefore con tin u ally find w ork in the
m anufactories, and the m an u factu rin g population w ill at length
not only equal the agricultural population in num bers, but will
far exceed it. T h i s latter is the condition o f E n g la n d ; that which
w e formerly described is that o f part o f F r a n c e and G e rm a n y .
E n g la n d w a s principally brought to this natural division o f in­
dustrial pursuits between the two g re at branches o f industry,
by m ean s o f her flocks o f sheep and woollen m anufactures,
which existed there on a large scale m uch sooner than in other
countries.
In other countries agriculture w a s crippled m ain ly
by the influence of feudalism and arbitrary power. T h e po sse s­
sion of land g ave influence and power, m erely because by it a
certain number o f retainers could be m aintained w hich the feudal
proprietor could m ake use of in his feuds.
T h e m ore v a s sa ls
he possessed, so m an y more w arriors he could m uster. It w a s
besides impossible, o w in g to the rudeness of those tim es, for the
landed proprietor to consum e his income in a n y other m an n er
than by keeping a large num ber o f servants, and he could not
pay these better and attach them to his own person more surely
than by g iv in g them a bit o f land to cultivate under the con­
dition of rendering him personal service and o f p a y in g a sm aller
tax in produce. T h u s the foundation for e xce ssive division of
the soil w as laid in an artificial m a n n e r ; and if in the present
day the G overn m en t seeks by artificial m e a n s to alter that
COMMERCIAL OPERATIONS AND PRODUCTIVE FORCES 127
system, in so doing it is m erely restoring the original state o f
things.
In order to restrain the continued depreciation of the agricul­
tural power o f a nation, and gradually to apply a remedy to that
evil in so far as it is the result of previous institutions, no better
means exists (apart from the promotion o f emigration) than to
establish an internal manufacturing power, by which the increase
of population m ay be gradually drawn over to the latter, and a
greater demand created for agricultural produce, by which conse­
quently the cultivation of larger estates m ay be rendered more
profitable, and the cultivator induced and encouraged to gain from
his land the greatest possible am ount of surplus produce.
T he productive power of the cultivator and o f the labourer
in agriculture will alw a y s be greater or smaller according to the
degree in which the exchange of agricultural produce for m anu­
factures and other products of various kinds can proceed more
or less readily. T h a t in this respect the foreign trade of an y
nation which is but little advanced can prove in the highest de­
gree beneficial, we have shown in another chapter by the example
of E n g la n d . B u t a nation which has already made considerable
advances in civilisation, in possession of capital, and in popula­
tion, will find the development o f a manufacturing power o f its
own infinitely more beneficial to its agriculture than the most
flourishing foreign trade can be without such manufactures,
because it thereby secures itself against all fluctuations to which
it m ay be exposed by war, by foreign restrictions on trade, and
by commercial crises, because it thereby saves the greatest part
of the costs of transport and commercial charges incurred in
exporting its own products and in importing manufactured
articles, because it derives the greatest advantages from the
improvements in transport which are called into existence by its
own m anufacturing industry, while from the same cause a m ass
of personal and natural powers hitherto unemployed will be
developed, and especially because the reciprocal exchange betiueen
m anufacturing p o w e r and a g ric u ltu ra l p o w e r is so much g rea te r,
the closer the a g ric u ltu rist and m anufacturer are p la ced to one
another, an d the less they are lia b le to be interrupted in the
exchange o f their various products by accidents o f a ll kinds.
In m y letters to Mr. Charles J . Ingersoll, President o f the
Society for Prom oting A rts and Industries in Philadelphia, o f
the year 1828 (entitled, ‘ Outlines o f a N ew System of Political
E co n o m y ’), I tried to explain the advantages of a union o f the
manufacturing power with agriculture in one and the same
country, and under one and the same political power, in the
following manner.
Su pposin g you did not understand the art
128
T H E THEORY
of grin d in g corn, w h ich has certainly been a great art in its t im e ;
su pposin g further that the art o f b ak in g bread had rem ained un­
known to you, as (according to A nderson ) the real art o f saltin g
herrings w a s still unknown to the E n g li s h in the seventeenth
c e n tu r y ; supposin g, therefore, that you had to send you r corn
to E n g la n d to be ground into flour and baked into bread, how
large a quantity o f your corn would not the E n g li s h retain as pay
for the grindin g and b a k in g ; h o w m uch o f it would the carters,
seam en, and m erchants consum e, w h o would h a v e to be em ployed
in exporting the corn and im porting the bread ; and h o w much
would come back into the hands of those w ho cultivated the corn ?
T h e re is no doubt that by such a process the foreign trade would
receive a considerable im petus, but it is v e r y doubtful w h ether
this intercourse would be specially a d v a n ta g e o u s to the welfare
and independence o f the nation. C o n sid e r o n ly in case of a w ar
breakin g out between you r country (the U nited S tate s) and G reat
B rita in , w hat would be the situation of those w h o produced corn
for the E n g lis h m ills and bakehouses, and on the other hand the
situation o f those w ho had become accustom ed to the taste o f the
E n g li s h bread.
J u s t a s, however, the economical prosperity of
the corn-cultivating interest requires that the corn m illers should
live in its vicinity, so also does the prosperity of the farm er e s ­
pecially require that the m anufacturer should live close to him , so
also does the prosperity o f a flat and open country require th at a
prosperous and industrial town should exist in its centre, and so
does the prosperity o f the w hole agriculture o f a cou n try require
that its ow n m an u factu rin g power should be developed in the
high est possible degree.
L e t us com pare the condition o f agriculture in the v ic in ity of
a populous town w ith its condition w h en carried on in distant
provinces. In the latter case the farm er can on ly cultivate for
sale those products which can bear a lon g transport, and which
cannot be supplied at cheaper prices and in better qu ality from
districts ly in g nearer to those w h o purchase them .
A larger
portion o f his profits w ill be absorbed by the costs o f transport.
H e w ill find it difficult to procure capital which he m a y em ploy
usefully on his farm. F r o m w an t o f better e x a m p le s and m e a n s
o f education he will not readily be led to av ail h im se lf o f new
processes, o f better im plem ents, and of new m ethods o f cultivation.
T h e labourer him self, from w an t o f good exam ple, o f stim u lu s to
exertion, and to emulation in the exercise o f h is productive powers,
w ill only develop those powers inefficiently, and w ill indulge h im ­
s e lf in loitering about and in idleness.
On the other hand, in the proxim ity o f the town, the farm er
is in a position to use every patch o f land for those crops w hich
COMMERCIAL OPERATIONS AND PRODUCTIVE FORCES 129
best suit the character of the soil. He will produce the greatest
variety o f things to the best advantage. Garden produce, poultry,
egg s, milk, butter, fruit, and especially articles which the farmer
residing at a distance considers insignificant and secondary things,
will bring to the farmer near the town considerable profit. W hile
the distant farmer h as to depend m ainly on the mere breeding o f
cattle, the other will make much better profits from fattening
them, and will thereby be led to perfect his cultivation o f root
crops and fodder. He can utilise with much profit a number of
things which are o f little or no use to the distant farm er; e.g.
stone, sand, water power, &c.
T h e most numerous and best
m achines and im plem ents as well as all means for his instruction,
are close at hand.
It will be easy for him to accumulate the
capital necessary for the im provem ent of his farm.
Landed
proprietors and workmen, by the m eans of recreation which the
town affords, the emulation w hich it excites am ong them, and the
facility of m aking profits, will be incited to exert all their mental
and bodily powers for the improvement of their condition. And
precisely the sam e difference exists between a nation which unites
agriculture and manufactures on its own territory, and a nation
which can only exchange its own agricultural products for foreign
manufactured goods.
T h e whole social state o f a nation will be chiefly determ ined by
the p rin c ip le o f the variety a n d d iv isio n o f occupations an d the co­
operation o f its productive po w ers. W h a t the pin is in the pin
manufactory, that the national well-being is to the large society
which we term ‘ the nation,’ The most im portant d iv isio n o f oc­
cupations in the nation is that between the m ental an d m aterial
ones. Both are m utually dependent on one another. T h e more
the mental producers succeed in promoting morality, religion, en­
lightenment, increase o f knowledge, extension of liberty and o f
perfection of political institutions— security of persons and property
within the State, and the independence and power of the nation
externally— so much greater will be the production o f material
wealth. On the other hand, the more goods that the material
producers produce, the more will m ental production be capable o f
being prom oted.
The most im portant d iv isio n o f occupations, an d the most
im portant co-operation o f p rod u ctive pow ers in m aterial production,
is that o f a gricu ltu re an d m anufacture. Both depend mutually
upon one another, as we have shown.
A s in the pin manufactory, so also in the nation does the pro­
ductiveness of every individual— o f every separate branch of
production— and finally of the whole nation depend on the exer­
tions o f all individuals standing in proper relation to one another.
9
13°
TH E THEORY
W e call this relation the balance or the harm ony o f the p ro d u c tiv e
p o w ers. It is possible for a nation to p o sse ss too m a n y philo­
sophers, philologers, and literati, and too few skilled artisans,
m erchants, and seamen. T h i s is the consequence o f h ig h ly
advanced and learned culture which is not supported by a h igh ly
advanced m an u factu rin g power and by an e x ten siv e internal and
external t r a d e ; it is as if in a pin m a n u fac to ry far more pin heads
w ere manufactured than pin points. T h e su rp lu s pin heads in
such a nation a r e : a m a ss o f u se le ss books, subtle theoretical
sy ste m s, and learned con troversies, th ro u g h w hich the m ind o f
the nation is more obscured than cu ltivated, and is w ith d raw n
from useful occupations ; con sequ ently its productive pow ers are
retarded in their p ro g re ss alm ost a s m uch as i f it possessed too
m an y priests and too few instructors o f youth, too m a n y soldiers
and too few politicians, too m a n y a d m in istrato rs and too few
ju d g e s and defenders o f ju stice and right.
A n ation w h ich only ca rries on a g r ic u lt u r e , is an in d iv id u a l
w ho in his m a teria l pro d u ctio n la ck s one a rm . C o m m e rce is
m erely the m edium o f e x c h a n g e betw een the agricu ltu ral and the
m an u factu rin g power, and between their separate branches. A
nation which e x c h a n g e s agricu ltu ral products for foreign m an u ­
factured goods is an individual with one arm , w hich is supported
by a foreign arm. T h i s support m a y be useful to it, but not so
useful as i f it p ossessed two a rm s itself, and this because its
activity is dependent on the caprice of the foreigner. In p o sse s­
sion o f a m an u factu rin g power o f its ow n , it can produce as m uch
provisions and raw m ate rials as the hom e m a n u fac tu re rs can
c o n s u m e ; but i f dependent upon foreign m an u factu rers, it can
merely produce a s much surplus a s foreign nations do not care to
produce for th em selv e s, and w hich they are obliged to bu y from
another country.
A s between the different districts o f one and the sa m e country,
so does the division o f labour and the co-operation of the pro­
ductive powers operate between the v ario u s nations o f the earth.
T h e former is conducted by internal or n ational, the latter by
international com merce. T h e international co-operation o f pro­
ductive powers is, h ow ever, a v e r y im perfect one, in asm u ch a s it
m a y be frequently interrupted b y w ars, political regulations,
com mercial crises, &c. A lth o u g h it is the m ost im portan t in one
sense, inasm uch as by it the v ario u s nations o f the earth are
connected with one another, it is n evertheless the least im portant
with regard to the prosperity o f a n y separate nation w hich is
already far advanced in civilisation . T h i s is admitted by w riters
o f the popular school, w ho declare that the hom e m arket o f a
nation is without com parison more im portant than its foreign
COMMERCIAL OPERATIONS AND PRODUCTIVE FORCES
131
market. It follows from this, that it is the interest o f every great
nation to make the n ation al confederation of its productive powers
the main object o f its exertions, and to consider their international
confederation as second in importance to it.
Both in ternation al and nation al d iv isio n o f la bo u r are chiefly
determined by climate and by N ature herself. W e cannot pro­
duce in every country tea as in China, spices as in J a v a , cotton as
in Lo u isian a, or corn, wool, fruit, and manufactured goods as in
the countries o f the temperate zone. It would be folly for a
nation to attempt to supply itself by m eans of national division o f
labour (i.e. by home production) with articles for the production o f
which it is not favoured by nature, and which it can procure
better and cheaper by m eans of international division of labour
(i.e. through foreign commerce).
And ju st as much does it
betoken a want o f national intelligence or national industry if a
nation does not employ all the natural powers which it possesses
in order to satisfy its own internal wants, and then by means of
the surplus of its own productions to purchase those necessary
articles which nature has forbidden it to produce on its own
territory.
T h e countries of the world most favoured by nature, with
regard to both national and international division of labour, are
evidently those whose soil brings forth the most common neces­
saries of life of the best quality and in the largest quantity, and
whose climate is most conducive to bodily and mental exertion,
and these are the countries o f the temperate zone ; for in these
countries the m anufacturing power especially prospers, by m eans
o f which the nation not merely attains to the highest degree of
mental and social development and of political power, but is also
enabled to make the countries o f tropical climates and of inferior
civilisation tributary in a certain measure to itself. T h e countries
o f the temperate zone therefore are above all others called upon to
bring their own national division of labour to the highest perfec­
tion, and to use the international division of labour for their
enrichment.
C H A P T E R XIV.
PRIVATE ECONOMY AND N A T IO N A L ECONOMY.
W e h ave proved h istorically that the unity o f the nation form s
the fundam ental condition o f la stin g national p r o s p e r ity ; and w e
h a v e show n that on ly w here the interest o f ind ivid u als h a s been
subordinated to those o f the nation, and w here su ccessive g e n e ra­
tions h ave striven for one and the sam e object, the nations h a v e
been brought to harm on iou s developm en t o f their productive
powers, and how little private industry can prosper w ithout the
united efforts both o f the in d iv id u als w h o are liv in g at the time,
and o f successive g en erations directed to one com m on object.
W e h ave further tried to prove in the last chapter h ow the law o f
union o f powers exhibits its beneficial operation in the individual
m an u factory, and how it acts with equal pow er on the ind ustry o f
whole nations. In the present chapter we h a v e now to dem on ­
strate how the popular school has concealed its m isu n d erstan d in g
o f the national interests and o f the effects o f national union o f
powers, by confounding the principles o f private econ om y with
those of national economy.
1 W h a t is prudence in the conduct o f eve ry private fa m ily ,’
s a y s A dam S m it h ,1 ‘ can scarce be folly in that of a great k in g d o m /
E v e r y individual in pu rsu in g his own interests n e cessarily pro­
m otes thereby also the interests o f the com m u nity. It is evident
that every individual, inasm u ch as he k n o w s his own local cir­
cu m stances best and p a y s m ost attention to his occupation, is far
better able to ju d g e than the statesm an or legislator how his
capital can m ost profitably be invested.
H e w h o would venture
to give advice to the people how to in v est their capital w ould not
m erely take upon h im se lf a useless task, but would also a ssu m e
to h im se lf an authority w hich belon gs solely to the producer, and
which can be entrusted to those persons least o f all w ho consider
th em selves equal to so difficult a task. A dam S m ith concludes
from t h is : 'R e s t r ic t io n s on trade imposed on the be h alf o f the
internal industry of a country, are mere f o l l y ; every nation, like
1 IWaJ t h o f N ation s, B ook IV . chap. ti.
132
PRIVATE ECONOMY AND NATIONAL ECONOMY
*33
every individual, ought to buy articles where they can be procured
the cheapest; in order to attain to the highest degree of national
prosperity, we have simply to follow the maxim of letting things
alone (laisser faire et laisser aller).’ Sm ith and S a y compare a
nation which seeks to promote its industry by protective duties,
to a tailor who w an ts to make his own boots, and to a bootmaker
who would impose a toll on those who enter his door, in order to
promote his prosperity. A s in all errors of the popular school, so
also in this one does T h o m a s Cooper go to extremes in his book 1
which is directed again st the American system of protection.
‘ Political econom y,’ he alleges, ‘ is almost synonym ous with the
private economy of all individuals ; p o litics are no essential in­
gredient of p o litic a l economy ; it is folly to suppose that the com ­
munity is something quite different from the individuals of whom
it is composed. E v e r y individual knows best how to invest his
labour and his capital. T h e wealth of the com munity is nothing
else than the aggregate o f the wealth of all its individual members ;
and if every individual can provide best for himself, that nation
must be the richest in which every individual is most left to him ­
se lf.’ T h e adherents of the Am erican system of protection had
opposed them selves to this argument, which had formerly been
adduced by importing merchants in favour of free t r a d e ; the
Am erican navigation law s had greatly increased the carrying
trade, the foreign commerce, and fisheries of the United S t a te s ;
and for the mere protection of their mercantile marine millions
had been annually expended on their fleet ; according to his theory
those law s and this expense also would be as reprehensible as
protective duties.
‘ In any case ,’ exclaim s Mr. Cooper, ‘ no
commerce by sea is worth a naval w a r ; the merchants m ay be
left to protect them selves,’
T h u s the popular school, which had begun by ignoring the
principles of nationality and national interests, finally comes to
the point o f altogether denying their existence, and of leaving
individuals to defend them as they m ay solely by their own in­
dividual powers.
How?
Is the wisdom o f private economy, also wisdom in
national economy ? Is it in the nature o f individuals to take/
[ into consideration the w ants of future centuries, as those concern;
: the nature of the nation and the S t a te ? L e t us consider only
the first beginning of an American town ; every individual left to
h im self would care merely for his own wants, or at the most for
(those of his nearest successors, whereas all individuals united in
one com munity provide for the convenience and the wants of the
1 Lectures on P o litic a l Econom y, by Thom as Cooper, pp. i, 15 , ig, 1 1 7 .
r 34
T H E THEORY
m ost distant g e n e r a t io n s ; th ey subject the present generation for
this object to privations and sacrifices which no reasonable person
could expect from individuals. Can the individual further take
into consideration in prom oting his private econ om y, the defence
o f the country, public security, and the thousand other objects,
which can only be attained by the aid o f the w hole co m m u n ity ?
D oes not the State require individuals to limit their private liberty
according to w hat these objects require ? D oes it not even re­
quire that they should sacrifice for these som e part of their
earn ings, o f their mental and bodily labour, nay, even their own
life ? W e must first root out, as Cooper does, the very ideas o f
‘ State ’ and ‘ nation ’ before this opinion can be entertained.
N o ; that m a y b e w isdom in national econ om y w hich would
be folly in private economy, and vice v e r s a , and o w in g to the
v e r y sim ple reason, that a tailor is no nation and a nation no
tailor, that one fam ily is som ethin g v e r y different from a co m ­
m u n ity o f m illions o f fam ilies, that one house is som eth in g very
different from a large national territory. N o r does the individual
m erely by u nd erstand in g his ow n interests best, and b y striv in g
to further them, if left to his own devices, a lw a y s further the
interests o f the com m u n ity.
W e ask those w h o occupy the
benches o f justice, w hether they do not frequently h ave to send
individuals to the tread-mill on account o f their exce ss o f in­
v en tive power, and o f their all too g reat industry.
R obbers,
thieves, sm u g g le rs, and cheats know their own local and personal
circum stances and conditions extrem ely w ell, and p a y the m ost
active attention to their b u siness ; but it by no m ean s follow s
therefrom, that society is in the best condition w here such in­
dividuals are least restrained in the exercise o f their priv ate
industry.
In a thousand case s the power o f the S ta te is compelled to
impose restrictions on private in d u stry.1 It prevents the sh ip ­
owner from tak in g on board s la v e s on the w e st coast o f A frica,
and taking them over to A m erica. It im poses regu lation s as to
the building of steam ers and the rules o f navigatio n at sea, in
order that passe n g ers and sailors m a y not be sacrificed to the
avarice and caprice o f the captain s.
In E n g la n d certain rules
h ave recently been enacted with regard to shipbuilding, because
an infernal union between assu ran ce com panies and shipow ners
h a s been brought to light, w hereby y e a r ly thousands o f hum an
lives and millions in v alu e w ere sacrificed to the avarice o f a few
persons. In N orth A m erica m illers are bound under a penalty to
pack into each cask not less than 198 lbs. o f good flour, and for
1 S ee A ppendix B-
PRIVATE ECONOMY AND NATIONAL ECONOMY
135
all market goods market inspectors are appointed, although in no
other country is individual liberty more highly prized. E v e r y ­
where does the State consider it to be its duty to guard the public
against danger and loss, as in the sale of necessaries of life, so
al so in the sale of medicines, &c.
Hut the cases which we have mentioned (the school will reply)
concern unlawful dam ages to property and to the person, not the
honourable exchange of useful objects, not the harm less and use­
ful industry of private individuals ; to impose restrictions on these
latter the State has no right whatever. O f course not, so long as
they remain harmless and u s e f u l; that which, however, is h a rm ­
less and useful in itself, in general commerce with the world, can
become dangerous and injurious in national internal commerce,
and vice versa . In time of peace, and considered from a cosm o­
politan point o f view, privateering is an injurious profession; in
time o f war, Governm ents favour it. T h e deliberate killing of a
human being is a crime in time of peace, in w ar it becomes a duty.
T ra d in g in gunpowder, lead, and arm s in time of peace is allowed ;
but whoever provides the enemy with them in time of war, is
punished as a traitor.
F or sim ilar reasons the State is not merely justified in im ­
posing, but bound to impose, certain regulations and restrictions
jo n commerce (which is in itself harmless) for the best interests
■of the nation. B y prohibitions and protective duties it does not
give directions to individuals how to employ their productive
powers and capital (as the popular school sophistically a lle g e s ) ;
it does not tell the one, ‘ Y o u must invest your money in the
building of a ship, or in the erection o f a m a n u fa c t o r y ;’ or the
other, ‘ Y o u must be a naval captain or a civil e n g in e e r ;' it
leaves it to the ju dgm ent o f every individual how and where to
invest his capital, or to what vocation he will devote himself. It
merely says, ‘ It is to the advantage of our nation that we m an u ­
facture these or the other goods o u r s e lv e s ; but as by free co m ­
petition with foreign countries we can never obtain possession of
this advantage, we have imposed restrictions on that competition,
so far as in our opinion is necessary, to give those am on g us
who invest their capital in these new branches of industry, and
those who devote their bodily and mental powers to them, the
requisite guarantees that they shall not lose their capital and
shall not m iss their vocation in life ; and further to stimulate
foreigners to come over to our side with their productive powers.
In this manner, it does not in the least degree restrain private
industry ; on the contrary, it secures to the personal, natural, and
moneyed powers of the nation a greater and wider field of activity.
It does not thereby do something which its individual citizens
T H E THEORY
could understand better and do better than i t ; on the contrary,
it does som ethin g which the individuals, even if they understood
it, would not be able to do for them selves.
T h e allegation o f the school, that the syste m o f protection
occasions unjust and anti-econom ical encroachm ents by the power
o f the State a g a in st the em ploym en t of the capital and industry
o f private individuals, appears in the least favourable light if w e
consider that it is the fo r e ig n com m ercial regu lation s which allow
such encroachm ents on o u r private industry to take place, and
that only by the aid o f the system o f protection are we enabled
to counteract those injurious operations of the foreign com m ercial
policy- I f the E n g li s h shut out our corn from their markets,
w hat else are they doing than com pellin g our agricu ltu rists to
grow so m uch less corn than th ey would h ave sent out to E n g ­
land under sy ste m s o f free importation ? I f they put such h e a v y
duties on our wool, our w in e s, or our timber, that our export trade
to E n g la n d w h olly or in great m easu re ceases, w h a t else is there­
b y effected than that the power o f the E n g lis h nation restricts
proportionately our branches o f production ? In these case s a
direction is eviden tly g iven by fo r e ig n leg isla tio n to ou r capital
and o u r personal productive powers, which but for the regu lation s
m ade by it they would scarcely h ave followed. It follow s from
this, that were we to disown g iv in g , by m e a n s o f o u r own le g is la ­
tion, a direction to our own national industry in accordance with
our own national interests, we could not prevent foreign n ation s
from regu latin g our national ind ustry after a fashion which c o r r e ­
sponds with their ow n real or presumed a d v an tag e, and which in
a n y case operates d isa d v a n ta g e o u sly to the d evelopm ent o f our
ow n productive powers. B u t can it p o ssib ly be w ise r on our part,
and more to the a d v a n ta g e o f those w h o n a tio n ally belong to us,
for us to allow our private industry to be regulated by a foreign
national L e g isla tu re , in accordance with foreign national interests,
rather than regulate it by m e a n s o f our ow n L e g isla tu re and in
accordance with our own interests ? D o e s the G e rm an or
A m erican agricu ltu rist feel h im s e lf less restricted if he h a s to
stud y every ye ar the E n g li s h A c ts o f P arlia m e n t, in order to
ascertain w hether that body d e e m s it ad v a n ta g e o u s to encourage
or to im pose restrictions on his production o f corn or wool, than
i f his own L e g isla tu re im p oses certain restrictions on him in
respect o f foreign m anufactured goods, but at the sam e tim e
insu res him a market for all his products, o f w hich he can never
ag ain be deprived by foreign legislation ?
,
I f the school m ain tain s that protective duties secure to the
hom e manufacturers a m onopoly to the d isad van tag e o f the home
consum ers, in so doing it m ak e s use o f a w e ak argu m e n t. F o r
PRIVATE ECONOMY AND NATIONAL ECONOMY
137
as every individual in the nation is free to share in the profits of
the home market which is thus secured to native industry, this
is in no respect a private monopoly, but a privilege, secured to
all those who belong to our nation, as again st those who nation­
ally belong to foreign nations, and which is the more righteous
and ju st inasmuch as those who nationally belong to foreign
nations possess them selves the very sam e monopoly, and those
who belong to us are merely thereby put on the same footing
with them. It is neither a privilege to the exclusive advantage
o f the producers, nor to the exclusive disadvantage of the con­
su m e rs; for if the producers at first obtain higher prices, they
run great risks, and have to contend a g a in st those considerable
losses and sacrifices which are alw a y s connected with all begin­
nings in manufacturing industry. B u t the consumers have ample
security that these extraordinary profits shall not reach unreason­
able limits, or become perpetual, by means of the competition at
home which follows later on, and which, as a rule, a lw a y s lowers
prices further than the level at which they had steadily ranged
under the free competition of the foreigner. If the agriculturists,
who are the most important consum ers to the manufacturers,
must also pay higher prices, this disadvantage will be am p ly
repaid to them by increased dem ands for agricultural products,
and by increased prices obtained for the latter.
It is a further sophism, arrived at by confounding the theory
o f mere values with that of the powers o f production, when the
popular school infers from the doctrine, ‘ that the w ealth o f the
nation is m erely the aggregate o f the w ealth o f a ll in d iv id u a ls in
it , and that the p riv a te interest o f every in d iv id u a l is better able
than a ll State regulations to incite to production an d accum ulation
o f w e a l t h the conclusion that the national industry would prosper
best if only every individual were left undisturbed in the occupa’ tion of accum ulating wealth. T h a t doctrine can be conceded
without the conclusion resulting from it at which the school
desires thus to a r riv e ; for the point in question is not (as we
have shown in a previous chapter) that of immediately increasing
by commercial restrictions the amount o f the values o f exchange
in the nation, but o f increasing the amount o f its productive
pow ers. B u t that the aggregate o f the productive powers of the
nation is not synonym ous with the aggregate o f the productive
powers of all individuals, each considered separately— tjiat the
total amount o f these powers depends chiefly on social and
political conditions, but especially on the degree in which the
nation has rendered effectual the division o f labour and the con­
federation o f the powers of production within itself— we believe
we have sufficiently demonstrated in the preceding chapters.
THE THEORY
T h is system everyw here takes into its consideration only
individuals w ho are in free unrestrained intercourse amon*; them ­
selves, and w h o are contented if w e le av e everyon e to pursue his
own private interests according to his ow n private natural inclina­
tion. T h is is evidently not a system o f national econ om y, but
a system o f the private econ om y o f the hu m an race, as that would
constitute itself were there no interference on the part o f an y
G overn m ent, were there no w ars, no hostile foreign tariff restric­
tions. N ow here do the advocates o f that system care to point
out by w h at m ean s those nations which are now prosperous have
raised them selves to that stage o f power and prosperity which w e
see them m aintain, and from w hat cau ses others h ave lost that
degree of prosperity and power w hich they form erly maintained.
W e can only learn from it how in private industry, natural ability,
labour and capital, are combined in order to bring into exch an ge
valu able products, and in w hat m an ner these latter are distributed
am on g the hu m an race and consum ed by it. B u t w h at m eans
are to be adopted in order to bring the natural powers belon gin g
to a n y individual nation into activity and valu e, to raise a poor
and w e ak nation to prosperity and power, cannot be gathered
from it, because the school totally ign o rin g politics, ignores the
special conditions o f the nation, and concerns itse lf m erely about
the prosperity o f the whole h u m an race. W h e re v e r international
com m erce is in question, the native individual is throughout
sim p ly pitted a g a in st the foreign i n d iv id u a l; e x a m p le s from the
private dealings o f separate m erchants are throughout the only
ones adduced— goods are spoken o f in general term s (without
considering w hether the question is one o f raw products or o f
m anufactured articles)— in order to prove that it is e q u ally for the
benefit o f the nation w hether its exports and im ports con sist of
m oney, o f raw m aterials, or o f m anufactured goods, and whether
or not they balance one another. I f we, for exam ple, terrified at
the com m ercial crises which prevail in the U nited S t a te s of
N orth A m e rica like native epidemics, consult this theory a s to
the m eans of a v ertin g or dim in ish in g them , it leaves us utterly
without comfort or instruction ; nay, it is indeed im possib le for
us to investigate these phenom en a scientifically, because, under
the penalty o f being taken for m uddleheads and ig n o ra m u se s, w e
must not even utter the term ‘ balance o f tra d e ,’ w h ile this term
is, notw ithstanding, made use o f in all legislative assem blies, in
all bureaux of adm inistration, on every exchan ge. F o r the sake
o f the welfare o f hum anity, the belief is inculcated on us that
exports a lw a y s balance th em selv e s spontaneou sly by i m p o r t s ;
notw ithstanding that we read in public accounts how the B a n k
of E n g la n d com es to the a ssistan ce o f the nature o f t h i n g s ;
PRIVATE ECONOMY AND NATIONAL ECONOMY
139
notw ithstanding that corn law s exist, which make it somewhat
difficult for the agriculturist of those countries which deal with
En glan d to pay with his own produce for the manufactured goods
which he consumes.
T h e school recognises no distinction between nations which
have attained a higher degree o f economical development, and
those which occupy a lower stage. E veryw h e re it seeks to ex­
clude the action of the power o f the State ; everywhere, according
to it, will the individual be so much better able to produce, the
less the power of the State concerns itself for him. In fact, ac­
c o r d in g to this doctrine savage nations ought to be the most
productive and wealthy of the earth, for nowhere is the individual
left more to h im self than in the sav ag e state, nowhere is the
action o f the power of the State less perceptible.
Statistics and history, however, teach, on the contrary, that
the necessity for the intervention o f legislative power and adm inis­
tration is everyw here more apparent, the further the economy o f
the nation is developed. A s individual liberty is in general a
Igood thing so long only as it does not run counter to the interests
o f society, so is it reasonable to hold that private industry can
only lay claim to unrestricted action so Long as the latter consists
cwith the well-being of the nation. But whenever the enterprise
,and activity of individuals does not suffice for this purpose, or
in any case where these might become injurious to the nation,
there does private industry rightly require support from the whole
power of the nation, there ought it for the sake of its own interests
to submit to legal restrictions.
I f the school represents the free competition o f all producers
as the most effectual m eans for promoting the prosperity of the
human race, it is quite right from the point o f view which it
assum es. On the hypothesis of a universal union, every restricUion on the honest exchange of goods between various countries
_§eems unreasonable and injurious. B u t so long as other nations
subordinate the interests of the human race as a whole to their
\ national interests, it is folly to speak of free competition am ong
the individuals of various nations. T h e argum ents of the school
in favour of free competition are thus only applicable to the ex­
change between those who belong to one and the sam e nation.
Elvery great nation, therefore, must endeavour to form an ag gre ­
gate within itself, which will enter into commercial intercourse
with other similar ag gregates so far only as that intercourse is
suitable to the interests of its own special community. T h ese
interests of the com m unity are, however, infinitely different from
the private interests of all the separate individuals o f the nation,
if each individual is to be regarded as existing for h im self alone
140
TH E THEORY
and not in the character o f a m em ber o f the national com m unity,
i f w e regard (as S m ith and S a y do) ind ivid u als as mere producers
and consum ers, not citizens o f states or m em b ers o f n a t io n s ; for
a s such, mere individuals do not concern th e m se lv e s for the
prosperity o f future g en eratio n s— they deem it foolish (as Mr.
Cooper really dem onstrates to us) to m ake certain and present
sacrifices in order to endeavour to obtain a benefit which is as
ye t uncertain and ly in g in the v a st field o f the future (if even it
p o sse ss an y valu e at a l l ) ; they care but little for the continuance
o f the nation— they would expose the ships of their m erchants to
become the prey o f e v e ry bold pirate— they trouble th em selv e s but
little about the power, the honour, or the glory o f the nation, at
the m ost they can persuade th em selv e s to m ake som e material
sacrifices for the education o f their children, and to g iv e them the
opportunity o f learning a trade, provided a lw a y s that after the
lapse o f a few y e a rs the learners are placed in a position to earn
their own bread.
Indeed, according to the prevailin g theory, so an alo g o u s is
national econ om y to private econ om y that J . B . S a y , w here (ex­
ceptionally) he allo w s that internal industry m a y be protected by
the State, m akes it a condition o f so doing, that e v e ry probability
m u st exist that after the lapse o f a f e w y e a r s it will attain inde­
pendence, ju s t as a s h o e m a k e r s apprentice is allow ed o n ly a few
y e a r s ’ time in order to perfect h im s e lf so far in his trade as to do
without parental assistan ce.
CH A P TE R XV.
N ATIO N ALITY AND THE ECONOMY OF THE NATION.
T h e system of the school suffers, as we have already shown in
* the preceding chapters, from three main defects : firstly, from
boundless cosm opolitanism , which neither recognises the principle
o f nationality, nor takes into consideration the satisfaction of its
interests ; secondly, from a dead m a terialism , which everywhere
regards chiefly the mere exchangeable value o f things without
taking into consideration the mental and political, the present and
the future interests, and the productive powers of the n a t io n ;
thirdly, from a d iso rg a n isin g p a rticu la rism and in d iv id u a lis m ,
which, ignoring the nature and character o f 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
t h e n a t i o n , with its special lan gu age and literature, with its
peculiar origin and history, with its special manners and customs,
law s and institutions, with the claims o f 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. A s the indi­
vidual 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
m eans of the civilisation and development of the individual nations.
M eanwhile, however, an infinite difference exists in the condi­
tion and circumstances of the various nations: we observe am ong
them giants and dwarfs, well-formed bodies and cripples, civilised,
half-civilised, and barbarous nations ; but in all of them, as in the
T H E THEORY
individual hum an being, exists the im pulse o f self-preservation,
the striv in g for im provem ent which is im planted by nature, It is
the task o f politics to civilise the barbarous nationalities, to make
the sm all and w e ak ones great and stron g, but, above all, to
secure to them existence and continuance.
It is the task o f
national econom y to accom plish the econom ical develo pm en t o f the
n a tio n , and to prepare it for adm ission into the u n iversal society
o f the future.
A nation in its norm al state p o sse sse s one com m on la n g u a g e
and literature, a territory endowed with m anifold natural re­
sources, e xten siv e, and with convenient frontiers and a num erous
population. A gricu ltu re, m an u fac tu re s, com m erce, and n a v i g a ­
tion must be all developed in it proportionately ; arts and
sciences, educational e stab lishm en ts, and u n iversal cultivation
m ust stand in it on an equal footing with m aterial production.
Its constitution, law s, and institutions m ust afford to those w ho
belong to it a h igh degree o f security and liberty, and m u st
promote religion, m orality, and p ro sp e rity ; in a word, m u st h ave
the w e ll-b e in g o f its citizens a s their object.
It m u st possess
sufficient power on land and at sea to defend its independence and
to protect its foreign com merce.
It w ill p o sse ss the power of
beneficially affecting the civilisation of less advanced nations, and
by m ean s o f its own surplus population and o f their mental and
material capital to found colonies and beget n ew nations.
A large population, and an exten sive territory endowed with
m anifold national resources, are essen tial requirem en ts o f the
norm al n a t i o n a li t y ; they are the fu nd am ental conditions o f
m en tal cultivation as well as o f m aterial d evelopm ent and
political power. A nation restricted in the num ber o f its popu­
lation and in territory, e sp ec ially if it has a separate la n g u a g e ,
can on ly p o sse ss a crippled literature, crippled in stitu tions for
p ro m o tin g art and science. A sm all S t a te can ne v e r bring to
com plete perfection within its territory the v ario u s branches o f
production. In it all protection becom es mere private m on opoly.
O nly through a lliances w ith more powerful nations, by partly
sacrificin g the a d v a n ta g e s o f nation ality, and by e x c e ssiv e e n ergy,
can it m aintain w ith difficulty its independence,
A nation w h ich p o sse sse s no co asts, m ercantile m arin e , or
n aval power, or has not under its dominion and control the
m o u t h s of its rivers, is in its foreign com m erce dependent on
other c o u n tries; it can neither e stab lish colonies o f its ow n nor
form new n a t i o n s ; all surplus population, m ental and m aterial
m e a n s , w hich flow s from such a nation to uncultivated countries,
is lo s t to its own literature, civilisation and ind ustry, and g o es to
the benefit of other nationalities.
N ATIO NALITY AND THE ECONOMY OF THE NATION
143
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 tarill system of its own.
Territorial deficiencies of the nation can be remedied either hy
means o f hereditary succession, as in the case o f E n glan d and
S c o t la n d ; or by purchase, as in the case of Florida and
L o u is ia n a ; or by conquests, as in the case of Great Britain and
Ireland.
In modern times a fourth m eans has been adopted, which
leads to this object in a manner much more in accordance with
justice and with the prosperity o f nations than conquest, and
which is not so dependent on accidents as hereditary succession,
nam ely, the union of the interests o f various State s by m eans o f
free conventions.
B y its Zollverein, the G erm an nation first obtained one o f the
most important attributes of its nationality.
B u t this measure
cannot be considered complete so long as it does not extend over
the whole coast, from the mouth o f the Rhine to the frontier of
Poland, including H o lla n d and D enm ark.
A natural conse­
quence of this union must be the admission of both these
countries into the G erm an Bund, and consequently into the
Germ an nationality, whereby the latter will at once obtain what it
is now in need of, nam ely, fisheries and naval power, maritime
commerce and colonies. Besides, both these nations belong, as
respects their descent and whole character, to the Germ an
nationality. T h e burden of debt with which they arc oppressed
is merely a consequence of their unnatural endeavours to maintain
them selves 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 them selves, and when incorpora­
tion with a larger nationality must seem desirable and necessary
to them.
Belgium can only remedy by m eans of confederation with a
neighbouring larger nation her needs which are inseparable from
her restricted territory and population.
The U n ited States and
C a n a d a , the more their population increases, and the more the
protective system of the United States is developed, so much the
more will they feel them selves drawn towards one another, and
the less will it be possible for E n glan d to prevent a union between
them.
A s respects their economy, nations have to pass through the
follow ing stages o f d e v e lo p m e n t: original barbarism, pastoral
condition, agricultural condition, agricultural-manufacturing con­
dition, and agricultural-manufacturing'Commercial condition.
144
T H E THEORY
T h e industrial history o f nations, and o f none more cle arly
than that o f E n g la n d , proves that the transition from the s a v a g e
state to the pastoral one, from the pastoral to the agricultural, and
from agriculture to the first b e g in n in g s in m anufacture and n a v i­
gation, is effected m ost speedily and a d v a n ta g e o u sly by m e a n s o f
free com merce with further advanced tow n s and countries, but that
a perfectly developed m an u factu rin g industry, an im portant m e r­
cantile m arine, and foreign trade on a really large scale, can on ly
be attained by m eans o f the interposition o f the pow er o f the
State.
T h e less a n y nation ’s agriculture h a s been perfected, and the
more its foreign trade is in w a n t of opportunities o f e x c h a n g in g
the excess of native agricu ltu ral products and ra w m ate rials for
foreign m anufactured goods, the deeper that the nation is still
sunk in barbarism and fitted only for an absolute m onarchical
form o f g overnm en t and legislation, the more w ill free trade (i.e.
the exportation of agricultural products and the im portation o f
m anufactured goods) promote its prosperity and civilisation .
On the other hand, the more that the agriculture o f a nation,
its industries, and its social, political, and m unicipal conditions,
are thorou ghly developed, the less a d v a n ta g e will it be able to
derive for the im pro vem en t o f its social conditions, from the ex­
chan ge of native agricu ltu ral products and ra w m ate rials for
foreign m anufactured goods, and the gre ater d isa d v a n ta g e s will
it experience from the successful com petition o f a foreign m a n u ­
facturing power superior to its own.
S o le ly in nations of the latter kind, n am e ly , those w hich p o sse ss
all the necessary m ental and m aterial conditions and m e a n s for
estab lishin g a m an u factu rin g power o f their own, and o f thereby
attaining the h igh e st degree o f civilisation , and d evelopm ent o f
material prosperity and political power, but w hich are retarded in
their progress by the competition of a foreign m a n u fa c tu rin g P o w e r
which is already farther advanced than their o w n — only in such
nations are com m ercial restrictions ju stifiab le for the purpose o f
establishin g and protecting their own m a n u fa c tu rin g p o w e r ; and
even in them it is ju stifiab le only until that m an u factu rin g pow er
is strong enough no longer to h a v e a n y reason to fear foreign
competition, and thenceforth only so far as m a y be necessary for
protecting the inland m an u factu rin g power in its v e r y roots.
T h e system of protection would not m erely be contrary to the
principles of cosm opolitical econ om y, but also to the rightly under­
stood advan tage o f the nation itself, w ere it to exclude foreign
competition at once and altogether, and thus isolate from other
nations the nation which is th u s protected. I f the m an u fac tu rin g
P ow er to be protected be still in the first period o f its developm ent,
NATIONALITY AND THE ECONOMY OF THE NATION
145
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 o f 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 o f capital in building and m anagem ent, much
machinery, and therefore much technical knowledge, skill, and
experience, and m any workmen are required, and whose products
belong to the category of the first necessaries of life, and con se­
quently are of the greatest importance as regards their total value
as well a s regards national independence (as, for example, cotton,
woollen and linen manufactories, &c.). I f these main branches
are suitably protected and developed, all other less important
branches o f manufacture will rise up around them under a less
degree of protection. It will be to the advantage of nations in
which w ag e s are high, and whose population is not yet great in
proportion to the extent of their territory, e.g. in the United S tates
of North Am erica, to give less protection to manufactures in
which m achinery does not play an important part, than to those
in which m achinery does the greater part o f the work, providing
that those nations which supply them with similar goods allow in
return free importation to their agricultural products.
T h e popular school betrays an utter misconception o f the
nature o f 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 establish­
ing a manufacturing power of their own. A mere agricultural
nation can never develop to a n y considerable extent its home and
foreign commerce, its inland means o f transport, and its foreign
navigation, increase its population in due proportion to their w ell­
being, or make notable progress in its moral, intellectual, social,
t and political d e v e lo p m e n t: it will never acquire important political
power, or be placed in a position to influence the cultivation and
progress o f 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. T h e former is alw ays
more or less economically and politically dependent on those
foreign nations which take from it agricultural products in e x ­
change 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. T h ese latter, on the contrary (the agriculturalmanufacturing States), produce for them selves large quantities o f
raw materials and provisions, and supply merely the deficiency
10
146
TH E THEORY
by importation from the purely agricultural nations. T h e purely
agricultural nations are thus in the first place dependent for their
power o f effecting sales on the chan ces o f a more or less plentiful
h arvest in the agricu ltu ral-m anu factu ring n a t i o n s ; in the next
place they h ave to compete in these sales with other purely
agricultural nations, w h e re b y their pow er o f sale, in itse lf v e ry
uncertain, thus becomes still more uncertain. L a s t ly , th ey are
exposed to the dan ger o f being totally ruined in their trad in g with
foreign m an u factu rin g nations by w a r s, or new foreign tariff r e g u ­
lations w hereby they suffer the double d isa d v a n ta g e o f finding no
buyers for their surplus agricultural products, and o f failin g to
obtain supplies o f the m anufactured goods w hich they require. A n
agricultural nation is, as w e h ave already stated, an individual with
one arm , w ho m ak e s use of a foreign arm, but w ho cannot m ak e sure
o f the use o f it in all c a s e s ; an a g ricu ltu ral-m an u factu rin g nation
is an individual w ho h as tw o arm s o f his o w n a lw a y s at his disposal.
It is a fundam ental error o f the school w hen it represents the
sy ste m o f protection as a mere device o f sp ecu lative politicians
w hich is contrary to nature. H is to ry is there to prove that
protective regu lation s originated either in the natural efforts o f
nations to attain to prosperity, independence, and power, or in
consequence of w a rs and o f the hostile com m ercial legislation o f
p red om inatin g m an u fac tu rin g nations.
T h e idea o f independence and power originates in the v e r y
idea o f * the n atio n .’ T h e school never takes th is into con sid era­
tion, because it does not m ake the econ om y o f the separate nation,
but the econ om y o f society g en erally, i.e. o f the w h ole h u m an
race, the object of its investigatio n s. I f we im agin e , for instance,
that all nations were united b y m e a n s o f a u niversal confederation,
their individual independence and power would cease to be an
object o f regard. T h e security for the independence o f every
nation would in such a case rest on the legal provision s o f the
u niversal society, ju s t as e.g. the security o f the independence o f
the states o f R hod e Island and D e la w a re lies in the union o f all
the free states con stituting the A m e rican U n io n . S in c e the first
foundation of that U n io n it h a s never y e t occurred to an y o f these
sm aller states to care for the e n larg em en t of its own political
power, or to consider its independence less secured than is that o f
the largest states of the U n ion .
In proportion, h ow ever, as the principle o f a u n iversal con ­
federation of nations is reasonable, in ju s t the sam e degree would
a g iven nation act con trary to reason if, in anticipation o f the
g reat ad van tag es to be expected from such a union, and from a
state o f universal and perpetual peace, it w ere to regulate the
principles o f its national policy a s though this u niversal confedera­
NATIONALITY AND THE ECONOMY OF THE NATION
I47
tion of nations existed already. W e ask, would not every sane
person consider a government to be insane which, in consideration
o f 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? B u t such a government would be
doing nothing different in principle from w hat the popular school
requires from governm ents when, because o f the advantages which
would be derivable from general free trade, it urges that they
should abandon the ad vantages derivable from protection.
W a r has a ruinous effect on the reciprocal commercial rela­
tions between nation and nation. T h e agriculturist living in one
country is by it forcibly separated from the manufacturer living in
another country. W hile, however, the manufacturer (especially
if he belongs to a nation powerful at sea, and carrying on exten­
sive commerce) readily finds compensation from the agriculturists
o f his own country, or from those of other accessible agricultural
countries, the inhabitant of the purely agricultural country suffers
doubly through this interruption o f intercourse.
T h e market for his agricultural products will fail him entirely,
and he will consequently lose the means of p ayin g for those
manufactured goods which have become necessaries to him ow in g
to previously existing trad e ; his power both o f production and
consumption will be diminished.
If, however, one agricultural nation whose production and
consumption are thus diminished by war has already made con­
siderable advances in population, civilisation, and agriculture,
manufactures and factories will spring up in it in consequence of
the interruption of international commerce by war. W a r 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. T h e conviction gains ground in it, that it is called
to pass from the condition of a mere agricultural State to the con­
dition of an agricultural-manufacturing State, and in consequence
o f this transition, to attain to the highest degree of prosperity,
civilisation, and power. B u t if after such a nation has already
made considerable progress in the manufacturing career which
w as 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 w ar new interests have been formed, which would be destroyed
by re-establishing the former commercial interchange.1 T h e former
1 Vide W ealth o f N ations, Book IV . chap. ii,
10 *
(T r.)
148
T H E THEORY
agricultural nation w ill feel, that in order to resum e the sale o f its
agricultural products to the foreigner, it would h ave to sacrifice
its own m an u factu rin g ind ustry which h a s in the m ean w h ile been
c r e a te d ; the m an u factu rin g nation w ill feel that a portion o f its
hom e agricultural production, which h a s been formed during the
w ar, would a g a in be destroyed by free im portation. B o th , th ere ­
fore, try to protect these interests by m e a n s o f im p o sin g duties on
imports. T h i s is the history o f com m ercial politics during the
last fifty years.
It is w ar that has called into existence the more recent sy ste m s
o f p ro te ctio n ; and we do not hesitate to assert, that it would h ave
been to the interest o f the m an u factu rin g nations o f the second
and third rank to retain a protective policy and further develop it,
even if E n g la n d after the conclusion o f peace had not com m itted
the m onstrous m istake o f im p o sin g restrictions on the im p o rta ­
tion o f necessaries o f life and o f raw m aterials, and con sequ ently
o f a llo w in g the m otives which had led to the system o f protection
in the tim e o f the war, to continue du ring peace. A s an uncivilised
nation, h a v in g a barbarous syste m o f agriculture, can m ake pro­
g re ss only by com m erce w ith civilised m an u factu rin g nations, so
after it h a s attained to a certain degree o f culture, in no other w a y
can it reach the h igh e st g rad e of prosperity, civilisation , and
power, than by p o sse ssin g a m an u fac tu rin g industry o f its ow n .
A w ar which leads to the ch an ge o f the purely agricu ltu ral S tate
into an agricu ltu ral-m an u factu rin g S ta te is therefore a b lessin g
to a nation, ju s t as the W a r of Independence of the U nited S tate s
o f N orth A m erica, in spite o f the enorm ous sacrifices w hich it
required, has become a b le ssin g to all future gen erations. B u t a
peace which throw s back into a purely agricultural condition a
nation w hich is fitted to develop a m an u factu rin g power o f its
own, becomes a curse to it, and is in com p arab ly more injurious
to it than a war.
It is fortunate for the m an u fac tu rin g P o w e rs o f the second and
third rank, that E n g la n d after the restoration o f the gen eral peace
h a s h erself imposed a limit to her m ain tendency (of m on opolisin g
the m anufacturing m arket o f the w h ole earth), by im p o sin g restric­
tions on the importation o f foreign m e a n s o f subsistence and raw
materials. C ertain ly the E n g lis h ag ricu ltu rists, w h o had enjoyed
a monopoly of su p p lyin g the E n g lis h m arket with products d u ring
the war, would of course have painfully felt the foreign com peti­
tion, but that only at fir s t ; at a later period (as we w ill sh ow
more particularly elsewhere), these lo sse s would h ave been m ade
up to them tenfold b y the fact that E n g la n d had obtained a
m onopoly of m an u factu rin g for the w hole world. B u t it would
have been still more injudicious if the m an u factu rin g nations o f
NATIONALITY AND THE ECONOMY OF THE NATION
149
the second and third rank, after their own manufacturing power
had ju st been called into existence, in consequence of w ars lasting
for twenty-five years, and after (in consequence of twenty-five
y e a r s ’ exclusion of their agricultural products from the E n g lish
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 E n g lish
m anufactures— if (we say) these nations, after h avin g endured
the sacrifices of half a century, were to give up the immense ad­
v an tage s of possessin g a m anufacturing power of their own, and
were to descend once more from the high state of culture, pros­
perity, and independence, which is peculiar to agricultural-m anu­
facturing countries, to the low position of dependent agricultural
nations, merely because it now pleases the E n g lish nation to
perceive its error and the closely impending advances of the
Continental nations which enter into competition with it.
Su pposin g also that the manufacturing interest of E n g la n d
should obtain sufficient influence to force the H ouse of L o rd s,
which chiefly consists of large landed proprietors, and the H ouse
of Com m ons, composed m ostly of country squires, to make con­
cessions in respect of the importation of agricultural products,
who would guarantee that after a lapse of a few years a new T o ry
m inistry would not under different circumstances again pass a
new Corn L a w ? W h o can guarantee that a new naval war or
a new Continental system m ay not separate the agriculturists of
the Continent from the manufacturers of the island kingdom,
and compel the Continental nations to recommence their m an u ­
facturing career, and to spend their best energies in overcoming
its prim ary 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 Sisyp h u s, for ever to
erect manufactories in time of war in order to allow them to fall
to ruin in time of peace.
T o 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 nation­
ality, and left entirely out of consideration the effects o f war on
the commercial intercourse between separate nations.
H ow 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
r 5°
T H E THEORY
products. T h is dem and is no uncertain o n e ; it is not dependent
on foreign com m ercial regulations or foreign com m ercial fluctua­
tions, on foreign political com m otions or w a rs, on foreign in ­
ventions and im provem ents, or on foreign h a r v e s t s ; the native
agriculturist has not to share it with other nations, it is certain
to him every year. H o w ev e r the crops o f other nations m ay
turn out, w h atever m isu n d erstan d in gs m a y sp rin g up in the
political world, he can depend on the sale o f his own produce,
and on ob taining the m anufactured goods which he needs at
suitable and regular prices. On the other hand, eve ry im p ro ve ­
ment o f the native agriculture, eve ry new method o f culture, acts
as a stim ulant on the native m an u factu re, because eve ry a u g ­
mentation o f n ative agricultural production m ust result in a
proportionate au gm en tation of native m a n u fa c tu rin g production.
T h u s , by m e a n s o f this reciprocal action, p rogress is insured for
all time to both these m ain sources o f the n atio n ’ s strength and
support.
P o lit ic a l power not m erely secures to the nation the increase
o f its prosperity by foreign com m erce and by colonies abroad, it
also secures to it the possession o f internal prosperity, and secures
to it its own existence, which is far more im portant to it than
mere material wealth, E n g la n d h a s obtained political pow er by
m e a n s of her n avigatio n la w s ; and by m e a n s of political power
she h a s been placed in a position to extend her m an u factu rin g
power over other nations.
Poland, however, w a s struck out o f
the list o f nations because she did not p o sse ss a v ig orou s middle
class, w hich could only h a v e been called into existence by the
establishm ent of an internal m an u factu rin g power.
T h e school cannot deny that the internal m arket o f a nation
is ten tim es more important to it than its external one, even
where the latter is in the m ost flourishing condition ; but it has
omitted to draw from this the conclusion, w hich is v ery obvious,
that it is ten tim es more important to cultivate and secure the
home market, than to seek for wealth abroad, and that o n ly in
those nations w hich h ave developed their internal industry to a
high degree can foreign com merce attain importance.
T h e school has formed its estim ate o f the nature and character
of the market on ly from a cosm opolitical, but not from a political
point of view. Most of the m aritim e countries of the Eu rop ean
continent are situated in the natural m arket district o f the m a n u ­
facturers of Lon don , L iv e rp o o l, or M a n c h e s t e r; on ly v ery few o f
the inland m anufacturers o f other nations can, under free trade,
m aintain in their own seaports the sam e prices as the E n g lis h
manufacturers. T h e possession of larger capital, a larger hom e
m arket of their own, which enables them to m anufacture on a
N ATIONALITY AND THE ECONOMY OF THE NATION
151
larger scale and consequently more cheaply, greater progress in
manufacture itself, and finally cheaper sea transport, give at the
present time to the E n g lish manufacturers advantages over the
manufacturers of other countries, which can only be gradually
diverted to the native industry of the latter by m eans o f long and
continuous protection ot their home market, and through per­
fection of their inland m eans of transport. T h e market o f 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 circum­
stances, nor ignore and misrepresent it, in order to promote
cosmopolitical objects.
T h o se objects can only be attained by
paying regard to nature, and by tryin g to lead the separate nations
in accordance with it to a higher aim. W e m ay see w hat small
success has hitherto attended the doctrines o f the school in
practice. T h is is not so much the fault of practical statesmen, by
whom the character of the national circumstances has been com ­
prehended tolerably correctly, as the fault of the theories them ­
selves, the practice of which (inasmuch as they are opposed to all
experience) must necessarily err. H a v e those theories prevented
nations (like those of South America) from introducing the pro­
tectionist system, which is contrary to the requirements o f their
national circum stances? 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
o f 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 ? 1 H a s this theory
prevented the finer manufactured goods, which are essentially
articles of luxury, from being comprehended am on g objects re­
quiring protection, while it is nevertheless clear that these can be
exposed to competition without the least danger to the prosperity
of the nation? N o ; 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. B u t it can and must
effect great reforms as soon as it consents to base itself on that
nature.
1 See Appendix C,
TH E THEORY
It w ill first o f all establish a benefit exten din g to all nations,
to the prosperity and progress o f the w hole hu m an race, i f it
show s that the prevention of free trade in natural products and
raw m aterials causes to the nation itse lf which prevents it the
greatest d isad van tag e, and that the syste m o f protection can be
ju stified solely and only for the purpose o f the in d u s tr ia l d e v e lo p ­
ment o f the nation. It m a y then, by thus b asin g the syste m o f
protection as regards m an u factu res on correct principles, induce
nations which at present adopt a rigidly prohibitive sy ste m , as
e.g. the F ren ch , to g iv e up the prohibitive syste m by degrees.
T h e m anufacturers w ill not oppose such a c h an g e as soon a s
they become convinced that the theorists, v ery far from p lan n in g
the ruin o f existing m an ufactures, consider their preservation and
their further developm ent as the b asis o f eve ry sensible c o m ­
mercial policy.
I f the theory will teach the G e r m a n s, that they can further
their m an u factu rin g power a d v a n ta g e o u sly only by protective
duties previously fixed, and on a g rad u ally in creasin g scale at
first, but afterw ards g rad u ally d im in ish in g , and that under all
circu m stances partial but carefully limited foreign com petition is
really beneficial to their own m an u factu rin g progress, it w ill
render far better service in the end to the cause o f free trade than
i f it sim ply helps to stran gle G e rm an industry.
T h e theory m ust not expect from the United S ta te s o f N orth
A m e rica that they are to sacrifice to free com petition from the
foreigner, those m an ufactures in which they are protected by
cheap raw m aterials and provisions, and by m achine power. It
w ill, h ow ever, meet no contradiction if it m ain tain s that the
U nited S ta te s, as long a s w a g e s are disproportionately h igh er
there than in the older civilised S ta te s, can best promote the de­
velopm ent o f their productive powers, their civilisation and political
power, by a llo w in g the free import as much as possible o f those
m anufactured articles in the cost o f which w a g e s are a principal
element, provided that other countries adm it their agricultural
products and raw m aterials.
T h e theory o f free trade will then find adm ission into S p a in ,
P ortu gal, N ap le s, T u rk e y, E g y p t , and all barbarous and h a lf­
civilised or hot countries. In such countries as these the foolish
idea w ill not be held a n y longer, of w a n tin g to establish (in their
present state of culture) a m an u factu rin g power o f their own by
m e a n s o f the system o f protection.
E n g la n d will then g iv e up the idea that she is design ed to
monopolise the m an u factu rin g power o f the whole world. S h e
w ill no longer require that F ran ce , G e rm a n y , and N orth A m erica
should sacrifice their own m an ufactures in consideration o f the
NATIONALITY AND THE ECONOMY OF THE NATION
153
concession by E n g la n d of permitting the import, duty free, o f
agricultural products and raw materials. She will recognise the
legitim acy of protective system s in those nations, although she
will herself more and more favour free t r a d e ; the theory havin g
taught her that a nation which has already attained manufactur­
ing supremacy, can only protect its own manufacturers and
merchants against retrogression and indolence, by the free im­
portation o f m eans of subsistence and raw materials, and by the
competition o f foreign manufactured goods.
E n g lan d 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 m aintaining the strictest
prohibitory system ; she will herself permit competition without
regard to the foreign system s o f 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, E n glan d will be
able to compensate herself for the losses which she suffers from
foreign system s o f protection, in respect of her export trade in
manufactures of every-day use, by a greater export of goods o f
finer quality, and b y opening, establishing, and cultivating new
markets for her manufactures.
She will endeavour to bring about peace in Spain, in the E a s t ,
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 A sia and Africa, in order that powerful and
civilised governm ents m ay be formed in them, that security o f
persons and o f property m a y be introduced into them, for the
construction in them o f roads and canals, the promotion o f edu­
cation and civilisation, morality and industry, and for rooting out
fanaticism, superstition, and idleness. I f concurrently with these
endeavours she abolishes her restrictions on the importation o f
provisions and raw materials, she will increase her exports of
manufactures im m ensely, and much more successfully than by con- *
tinually speculating on the ruin o f the Continental manufactories.
If, however, these operations of civilisation on the part o f
E n glan d 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 a s the latter will alw ays excite the ju st je alo u sy of other
nations, and give them a motive for opposing the exertions o f
En glan d. It is evident that this selfish policy is the cause w h y
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the influence o f the civilised pow ers on the civilisation of such
countries as we h ave specified has been hitherto so unim portant.
E n g la n d ought therefore to introduce into the law o f nations the
m axim : that in all such countries the com m erce o f all m an u factu r­
ing nations should h ave equal rights. E n g la n d w ould thereby not
m erely secure the aid o f all civilised powers in her ow n w ork o f
civilisation, but also no d isa d v a n ta g e would result to her ow n
com m erce if sim ilar experim ents o f civ ilisation w ere undertaken
by other m an u factu rin g nations. On account o f their superiority
in all branches o f m an u factu re and com merce, the E n g lis h would
eve ryw he re a lw a y s obtain the greatest share of the exports to such
markets.
T h e striv in g and c e a se le ss intrigues o f the E n g li s h a g a in st the
m an u factu res o f other nations m ig h t still be ju stifie d , if a worldm an ufacturin g m onopoly were ind ispensab le for the prosperity o f
E n g la n d , i f it could not be proved by evidence th at the nations
w hich aspire, after the exam ple o f E n g la n d , to attain to a large
m an u factu rin g power can very well attain their object w ithout the
hum iliation of E n g la n d ; that E n g la n d need not become poorer
than she is because others become ric h er; and that nature offers
sufficient m ean s for the creation in G e r m a n y , F ra n c e , and N orth
A m e rica (without detriment to the prosperity o f E n g la n d ), of a
m an u factu rin g pow er equal to that of the E n g lis h ,
W it h regard to this, it must further be remarked, that e ve ry
nation which g ain s entire p o sse ssio n o f its own hom e m arket for
m an ufactures, g a in s in the course o f time, b y its hom e production
and consum ption o f m anufactured goods, infinitely more than the
nation w hich has hitherto provided the former with m anufactured
goods loses by being excluded ; because a nation w hich m a n u ­
factures for itself, and w hich is perfectly developed in its e con om i­
cal conditions, becomes more than proportionately richer and
more populous, con sequ ently is enabled to con su m e infinitely
more fabrics, than it could import w h ile depending on a foreign
m an u factu rin g nation for its su pply.
A s respects the exportation o f m an u factu red g oods, how ever,
the countries o f the tem perate zone (being specially fitted by nature
for m anufacturing) h ave a special field for their efforts in su p p ly in g
the consum ption of the countries o f the torrid zone, w hich latter
provide the former w ith colonial produce in e x c h a n g e for their
manufactured goods. T h e con su m ption o f m anufactured goods
by the countries o f the torrid zone, h ow ever, is partly determ ined
by their ability to produce a su rplus o f the articles peculiar to their
climate, and partly accord in g to the proportion in w hich the
countries o f the tem perate zone a u g m e n t their dem and for the
products o f the torrid zone.
N ATIO NALITY AND THE ECONOMY OF THE NATION
155
I f 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 tim es greater than hitherto, and that the countries
of the temperate zone can consume five or ten tim es more o f these
articles than hitherto, it will be simultaneously proved that the
countries o f 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.
T h e capability o f the Continental nations to increase their
consumption o f colonial produce thus considerably, is indicated by
the increase of consumption in E n g lan d for the last fifty y e a r s ;
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.
O f the possibility o f augm enting the productions o f the torrid
zone, H olland in Sum atra and J a v a , and E n g la n d in the E a s t
Indies, have given us during the last five years irrefragable proofs.
E n g la n d has quadrupled her importation o f sugar from the E a s t
Indies from 18 35 to 1839 ; her importation of coffee has increased
even in a still larger proportion, while the importation of E a s t
India cotton is also greatly increasing. In one word, the latest
E n g lish papers (February, 1840) announced with great rejoicing
that the capability of the E a s t Indies for the production o f these
articles is unlimited, and that the time is not far distant when
E n g lan d will make herself independent of the importation o f these
articles from America and the W e st Indies. Holland on her part
is already embarrassed for m eans of sale o f her colonial products,
and seeks actively for new markets.
L e t us further remember
that North America continues to augm ent her cotton production
— that in T e x a s a State has risen up which without doubt will
become possessed of the whole of Mexico, and will make out o f
that fertile country a territory such as the Southern States of the
North American Union now are.
W e m ay well im agine that
order and law , industry and intelligence, will extend them selves
gradually over the South American States from P an am a to Cape
Horn, then over the whole o f Africa and A sia, and augm ent every­
where production and a surplus of products; and we m ay then
comprehend without difficulty that here there is room enough for
more than one nation for the sale of manufactured goods.
B y calculating the area of the land which has up to this time
been actually used for the production of colonial produce, and
com paring 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.
H ow , then, could E n glan d be able to monopolise the m anu­
TH E THEORY
facturing m arkets of all countries w hich yield colonial produce, if
she is able to su p p ly her o w n entire requirem ents o f such produce
by m e a n s o f im portation from the E a s t Ind ies alone ?
How
can E n g la n d indulge the hope o f selling m anufactured goods to
countries w hose colonial products she cannot take in e xch an g e ?
Or how can a great dem and for colonial produce sp rin g up in the
continent o f E u ro p e, i f the Continent is not enabled by its m a n u ­
facturing production to pay for, and thus to con su m e, these goods ?
It is therefore evident, that k e e pin g down the m a n u fac tu rin g
industry of the Continent, though it certainly hinders the progress
o f the Continental nations, does not in the least further the pros­
perity o f E n g la n d .
It is further clear, that, at present, as well a s for som e long
time to com e, the countries o f the torrid z o n e w ill offer to all
nations w hich are fitted for m a n u fa c tu rin g production abu n dan t
m aterials for exchan ge.
L a s t ly , it is evident that a w orld -m anu factu rin g m on op oly such
a s is at present established by the free com petition o f E n g lis h
m anufactured goods on the E u ro p e a n and A m e rican continents is
not in the least more conducive to the w elfare o f the h u m an race
than the syste m o f protection, which aim s at developin g the n ia n u | fa c tu rin g p o w e r o f the w hole tem perate zone, for the benefit o f the
\a g ric u ltu re o f the ivhole to rrid zone.
T h e advance which E n g la n d has made in m an u factu res, n a v i­
gation, and com m erce, need therefore not d iscou rage a n y other
nation w hich is fitted for m an u factu rin g production, by the pos­
session o f suitable territory, o f national pow er and intelligence,
from entering into the lists with E n g l a n d ’ s m a n u fa c tu rin g supre­
m acy. A future is appro achin g for m an u factu res, com m erce, and
navigatio n w hich will su rp ass the present as m uch a s the present
su rp asse s the past. L e t us on ly have the courage to believe in
a great national future, and in that belief to m arch onward. B u t
above all th in g s we m u st h a v e enough national spirit at once to
plant and protect the tree, which w ill yield its first richest fruits
only to future generations. W e m ust first gain p o sse ssio n o f the
hom e market o f our own nation, at least as respects articles o f
general necessity, and try to procure the products o f tropical
countries direct from those countries which allo w us to pay for
them with our own m anufactured goods. T h i s is esp ecially the
task which the G e rm a n com m ercial union h a s to solve, if the
G e rm an nation is not to rem ain far behind the F re n ch and N orth
A m e rican s, nay, far behind even the R u s s ia n s .
CHAPTE R XVI.
POPULAR AND S T A T E FIN A N C IA L ADMINISTRATION, PO LITICAL
AND NATIONAL ECONOMY.
T h a t which has reference to the raising, the expending, and the
administration o f the material m eans of government of a com ­
munity {the fin a n c ia l economy o f the S ta te)} must necessarily be
distinguished everywhere from those institutions, regulations,
laws, and conditions on which the economy of the individual
subjects of a State is dependent, and by which it is regulated ;
i.e. from the economy o f the people. T h e necessity for this dis­
tinction is apparent in reference to all political communities,
whether these comprise a whole nation or merely fractions of a
nation, and whether they are small or large.
In a confederated State, the financial economy of the State is
again divided into the financial economy of the separate states
and the financial economy of the entire union.
The economy o f the people becomes identical with n ational
economy where the State or the confederated State embraces a
whole nation fitted for independence by the number of its popu­
lation, the extent of its territory, by its political institutions,
civilisation, wealth, and power, and thus fitted for stability and
political influence.
T h e economy of the people and national
economy are, under these circumstances, one and the same. T h e y
constitute with the financial economy of the State the political
economy of the nation.
B u t, on the other hand, in States whose population and territory
merely consist of the fra c tio n o f a nation or of a national territory,
which neither by complete and direct union, nor by means o f
a federal union with other fractions, constitutes a whole, we can
only take into consideration an * economy o f the people ’ which is
directly opposed to * private economy or to ‘ financial economy of
the S t a te .’
In such an imperfect political condition, the objects and re­
quirements o f a great nationality cannot be taken into considera­
tion ; especially is it impossible to regulate the economy of the
people with reference to the development of a nation complete in
*57
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itself, and with a v ie w to its independence, perm anence, and power.
H ere politics m ust n e cessarily rem ain excluded from econom y,
here can one only take account o f the natural la w s o f social
econ om y, as these would develop and shape th em selv e s if no
large united nationality or national eco n o m y existed anyw here.
It is from this standpoint that that science h a s been cultivated
in G e r m a n y which w a s form erly called * S ta te ad m in istratio n ,’
then ‘ national e c o n o m y ,’ then ‘ political e c o n o m y ,’ then ‘ popular
a d m in istratio n ,’ w ithout an y o n e h a v in g clearly apprehended the
fundam ental error o f these sy ste m s.
T h e true conception and real character o f national econ om y
could not be recogn ised because no econ om ically united nation
w a s in existence, and because for the distinct and definite term
‘ n ation ’ men had eve ryw he re substituted the general and v a g u e
term * s o c i e t y an idea w hich is a s applicable to entire h u m a n ity ,
or to a sm all country, or to a sin gle tow n , as to the nation.
C H A P TE R XVII.
T H E M AN U FA C TU R IN G POWER AND T H E PERSONAL, SOCIAL,
AND PO L IT IC A L PRO D UCTIVE POW ERS OF T H E NATION.
| I n a country devoted to mere raw agriculture, dullness of mind,
aw kw ardness of body, obstinate adherence to old notions, customs,
methods, and processes, w ant of culture, of prosperity, and o f
(liberty, prevail. T h e spirit of striving for a steady increase in
mental and bodily acquirements, o f emulation, and o f liberty,
characterise, on the contrary, a State devoted to m anufactures
and commerce.
T h e cause of this difference lies partly in the different kind of
social habits and o f education which respectively characterise
these two classes of people, partly in the different character of
their occupation and in the things which are requisite for it. T h e
\agricultural population lives dispersed over the whole surface of
the co u n try; and also, in respect to mental and material inter­
course, agriculturists are widely separated from one another.
One agriculturist does almost precisely w hat the other d o e s; the
one produces, as a rule, w hat the other produces. T h e surplus
produce and the requirements of all are almost a lik e ; everybody
is him self the best consumer of his own products; here, therefore,
little inducement exists for mental intercourse or material ex­
c h a n g e . T h e agriculturist has to deal less with his fellow-men
^than with inanimate nature. Accustomed to reap only after a
long lapse of time where he has sown, and to leave the success
of his exertions to the will of a higher power, contentment with
little, patience, resignation, but also negligence and mental lazi­
ness, become to him a second nature. A s his occupation keeps
him apart from intercourse with his fellow-men, so also does the
conduct of his ordinary business require but little mental exertion
and bodily skill on his part. H e learns it by imitation in the
narrow circle of the fam ily in which he w as born, and the idea
that it m ight be conducted differently and better seldom occurs to
him. From the cradle to the g rave he m oves alw ays in the same
limited circle of men and of circumstances. E x a m p le s of special
prosperity in consequence o f extraordinary mental and bodily
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T H E THEORY
exertions are seldom brought before his eyes. T h e possession o f
m e a n s or a state o f poverty are transm itted by inheritance in the
occupation of mere agriculture from generation to generation, and
alm ost all that power which originates in em ulation lies dead.
T h e nature o f m an u factu res is fu n d am e n tally different from
that of agriculture. D raw n tow ards one another by their b u si­
ness, m an u factu rers live on ly in society, and con sequ ently only
in com m ercial intercourse and by m ean s o f that intercourse. T h e
m anufacturer procures from the market all that he requires o f the
necessaries o f life and raw m aterials, and only the sm allest part
o f his own products is destined for his ow n consum ption. I f the
agriculturist expects a b le ssin g on his exertions chiefly from
nature, the prosperity and existence o f the m anufacturer m ain ly
depend on his com m ercial intercourse. W h ile the ag ricu ltu rist
does not know the purchasers o f his produce, or at a n y rate need
h ave little an xiety as to d isp o sin g o f it, the v e r y existence o f the
m anufacturer depends on his custom ers.
T h e prices o f raw
m aterials, o f the necessaries o f life and w a g e s , o f goods and o f
m oney, v a r y in ce ssan tly ; the m anufacturer is never certain how
h is profits will turn out. T h e favour of nature and mere o rd in ary
industry do not guarantee to him existence and prosperity a s they
do to the ag ric u ltu rist; both these depend entirely upon his ow n
intelligence and activity. H e m u st strive to gain more than
enou gh in order to be certain of h a v in g enough o f w h at is a b ­
solutely necessary ; he m ust end eavou r to become rich in order
not to be reduced to poverty. I f he goes on so m e w h at faster than
others, he t h r iv e s ; if he goes slow er, he is certain o f ruin. H e
m u st a lw a y s buy and sell, e xch an ge and m ake b arg ain s, E v e r y ­
w here he has to deal with men, with ch a n g in g circu m stances,
with la w s and r e g u la tio n s ; he h a s a hundred tim es more oppor­
tunity for developing his mind than the agriculturist. In order
to qualify h im se lf for conducting his bu sin ess, he m u st become
acquainted with foreign men and foreign c o u n t r i e s ; in order to
establish that bu siness, he m u st m ake u nusual efforts. W h ile
the agriculturist sim ply h a s to do with his own neighbourhood,
the trade o f the m anufacturer extends itself over all countries and
parts o f the world. T h e desire to gain the respect o f his fellowcitizens or to retain it, and the continual competition o f his rivals,
w hich perpetually threaten his existence and prosperity, are to
him a sharp stim u lu s to uninterrupted activity, to ce ase le ss pro­
gress. T h o u s a n d s o f e xam p le s prove to him, that by extraordin­
a ry performances and exertions it is possible for a m an to raise
h im se lf from the low est degree o f w ell-b ein g and position to
the highest social rank, but that, on the other hand, by m ental
inactivity and negligence, he can sink from the m ost respectable
MANUFACTURING ETC. POWERS OF THE NATION
161
to the meanest position. T h e se circumstances produce in the
manufacturer an energy which is not observable in the mere
agriculturist.
I f we regard manufacturing occupations as a whole, it must
be evident at the first glance that they develop and bring into
action an incomparably greater variety and higher type o f mental
qualities and abilities than agriculture does. A dam Sm ith cer­
tainly expressed one of those paradoxical opinions which (accord­
ing to Dugald Stewart, his biographer) he w as very fond of, when
he maintained that agriculture requires more skill than manufac­
tures and commerce. W ithout entering into the investigation
whether the construction of a clock requires more skill than the
m anagem ent of a farm, we have merely to observe that all ag ri­
cultural occupations are of the same kind, while in manufactures
a thousand-fold variety exists. It must also not be forgotten, that
for the purpose of the present comparison, agriculture must be
regarded as it exists in the primitive state, and not as it has been
improved by the influence of manufactures. If the condition o f
E n g lish agriculturists appeared to Adam Sm ith much nobler than
the condition of E n glish manufacturers, he had forgotten that the
(condition of the former has been thus ennobled through the injfluence of manufactures and commerce.
It is evident that by agriculture merely personal qualities o f
the same kind are put into requisition, and merely those which
combine bodily power and perseverance in executing raw and
manual labour with the simple idea of order; while manufactures
require a thousand fold variety o f mental ability, skill, and ex­
perience. T h e demand for such a variety of talents makes it
easy for every individual in a manufacturing State to find an
occupation and vocation corresponding with his individual abilities
and taste, while in an agricultural State but little choice exists.
In the former mental gifts are infinitely more priced than in the
latter, where as a rule the usefulness of a man is determined ac­
cording to his bodily strength. T h e labour of the weak and the
cripple in the former is not unfrequently valued at a much higher
rate than that of the strongest man is in the latter. E v e r y power,
even the smallest, that of children and women, of cripples and old
men, finds in manufactures employment and remuneration.
Manufactures are at once the offspring, and at the same time
the supporters and the nurses, of science and the arts. W e m ay
observe how little the condition of raw agriculture puts sciences
and arts into requisition, how little of either is necessary to pre­
pare the rude implements which it employs. It is true that
agriculture at first had, by yielding rents of land, made it possible
for men to devote them selves to science and a r t ; but without
11
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T H E THEORY
m anufactures they h ave a lw a y s rem ained private treasures, and
h ave only extended their beneficial effects in a v ery slig h t degree
to the m a sse s. In the m an u factu rin g S ta te the ind ustry o f the
m a sse s is enlightened by science, and the sciences and arts are
supported by the ind ustry o f the m a sse s. T h e r e scarcely e xists
a m an u factu rin g b u siness which has not relations to p h ysics,
m echanics, chem istry, m athem atics, or to the art o f design , & c.
N o progress, no new discoveries and inventions, can be made in
these sciences by w hich a hundred industries and processes could
not be improved or altered. In the m an u factu rin g S tate, therefore,
sciences and arts m ust necessarily become popular. T h e n ecessity
for education and instruction, through w ritin g s and lectures by a
num ber o f persons w ho h ave to bring into practice the results o f
scientific in v estigatio n s, induces men o f special tale n ts to devote
th em selv e s to instruction and authorship. T h e com petition o f
such talents, o w in g to the large dem and for their efforts, creates
both a division and co-operation o f scientific activity , which has
a m ost beneficial influence not m erely on the further p rogress o f
science itself, but also on the further perfection of the arts and o f
industries.
T h e effects o f these im pro vem en ts are soon after­
w ard s extended even to agriculture. N o w h e re can more perfect
agricultural m achin e s and im plem ents be found, nowhere is a g ri­
culture carried on with so much intelligence, a s in countries where
industry flourishes.
U n d er the influence o f m anufactures, ag ricu l­
ture itse lf is raised to a skilled industry, an art, a science.
T h e sciences and industry in com bination h ave produced that
great m aterial power which in the new state of society has re­
placed with tenfold benefits the slave labour o f ancient times, and
which is destined to exercise on the condition o f the m a s s e s , on
the civ ilisation o f barbarous countries, on the peopling o f u n in ­
habited lands, and on the power o f the nations of prim itive culture,
such an im m easu rab le influence— nam ely, the p o w e r o f m a c h in e ry .
A m an u factu rin g nation h a s a hundred tim es more opportuni­
ties o f a p p lyin g the pow er o f m achinery than an agricu ltu ral
nation. A cripple can accom plish b y directing a steam engin e a
hundred tim es more than the stron gest m an can with his m ere
hand.
T h e power o f m achinery, com bined with the perfection o f
transport facilities in modern tim es, affords to the m an u factu rin g
State an im m ense superiority over the mere agricultural State.
It is evident that can als, ra ilw a y s, and steam n avigatio n are called
into existence only by m e a n s o f the m a n u fa c tu rin g p o w e r , and can
only by m ean s of it be extended over the w hole surface o f the
country. In the mere agricultural State, w h ere everyb ody pro­
duces for h im se lf the greater part of w hat he requires, and con su m es
MANUFACTURING ETC. POWERS OF THE NATION
163
h im self the greater part of w hat he produces, where the individuals
am on g them selves can only carry on a small amount of goods and
passenger traffic, it is impossible that a sufficiently large traffic in
either goods or passengers can take place to defray the costs of
the erection and maintenance of the machinery of transport.
N e w inventions and improvements in the mere agricultural
State are of but little value. T h ose who occupy them selves with
such things in such a State fall themselves, as a rule, a sacrifice
to their investigations and endeavours, while in the manufacturing
State there is no path which leads more rapidly to wealth and
position than that of invention and discovery. T h u s, in the
manufacturing State genius is valued and rewarded more highly
than skill, and skill more highly than mere physical force. In
the agricultural State, however, excepting in the public service,
the reverse is almost the rule.
A s, however, manufactures operate beneficially on the develop­
ment of the mental powers of the nation, so also do they act on
the development of the physical power of labour, by affording to
the labourers means of enjoyment, inducements to exert their
powers, and opportunities for m aking use of them. It is an u n ­
disputed observation, that in flourishing manufacturing States
the workman, irrespective of the aid which he obtains from better
machinery and tools, accomplishes a far larger day’ s work than
in mere agricultural countries.
Moreover, the circumstance that in manufacturing States the
value of time is recognised much more than in agricultural States,
affords proof of the higher standing in the former of the power o f
labour. T h e degree of civilisation of a nation and the value of
its labour power cannot be estimated more accurately than ac­
cording to the degree of the value which it attributes to time.
T h e savage lies for d ay s idle in his hut. H o w can the shepherd
learn to estimate the value of time, to whom time is sim ply a
burden which his pastoral pipe or sleep alone makes tolerable to
him ? H o w can a slave, a serf, a peasant, subject to tributes of
forced labour, learn to value time, he to whom labour is penalty,
and idleness gain ? N ations only arrive at the recognition of the
value of time through industry. At present time gained brings
gain of p r o fit ; loss of time, loss o f profit. T h e zeal of the m an u ­
facturer to utilise his time in the highest possible degree imparts
itself to the agriculturist. Through the increased demand for
agricultural products caused by manufactures, the rent and there­
fore the value o f land is raised, larger capital is employed in cul­
tivating it, profits are increased, a larger produce must be obtained
from the soil in order to be able to provide for the increased rent
and interest of capital, and for the increased consumption. One
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TH E THEORY
is in a position to offer higher w a g e s , but one also requires more
w o rk to be done. T h e w o rk m an begin s to feel that he p o sse sse s
in his bodily pow ers, and in the skill with w hich he uses them ,
the m e a n s o f im p ro vin g h is condition. H e begin s to com prehend
w h y the E n g lis h m a n says, ‘ T im e is m o n e y .’
O w in g to the isolation in w hich the agricu ltu rist live s, and to
his limited education, he is but little capable o f ad d in g a n y th in g
to general civilisation or le arn in g to estim ate the v alu e o f political
institutions, and m uch less still to take an active part in the ad­
m inistration o f public affairs and o f ju stic e , or to defend his liberty
and rights. H e n c e he is m o stly in a state o f dependence on the
landed proprietor. E v e r y w h e r e m erely agricu ltu ral n atio n s h ave
lived in slav ery, or oppressed by despotism , feu dalism , or priest­
craft. T h e mere e xclu sive possession o f the soil g a v e the despot,
the oligarch y, or the priestly caste a pow er over the m a s s o f the
agricultural population, o f w h ich the latter could not rid th e m ­
selves of their own accord.
U n d er the pow erful influence o f habit, e v e ry w h e re a m o n g
m erely agricu ltu ral nations h a s the yoke w hich brute force or
superstition and priestcraft imposed upon them so g row n into
their v e r y flesh, that they com e to regard it a s a n e ce ssary c o n ­
stituent o f their own body, a s a condition o f their v ery existence.
On the other hand, the separation and v arie ty o f the o pera­
tions o f b u sin e ss, an d the confederation o f the productive pow ers,
press w ith irresistible force the v ario u s m an u factu re rs tow ard s
one another. F rictio n produces sp arks o f the mind, a s well a s
those o f natural fire. M ental friction, how ever, on ly e x ists w h ere
people live together closely, where frequent contact in com m ercial,
scientific, social, civil, and political m atters exists, w here there is
large interchange both of goods and ideas. T h e more m en live
together in one and the sam e place, the more eve ry one o f these
men depends in his b u sin e ss on the co-operation o f all others, the
m ore the b u sin ess o f eve ry one o f these ind ivid u als requires
know ledge, circum spection, education, and the less that o b stin acy,
law lessn e ss, oppression and arro g a n t opposition to ju stice inter­
fere with the exertions o f all these ind ivid u als and w ith the objects
at w hich they aim , so m uch the more perfect will the civil in stitu ­
tions be found, so m uch large r w ill be the degree o f liberty enjoyed,
so much more opportunity w ill be g iven for self-im provem ent and
for co-operation in the im pro vem en t o f others. T h ere fo re liberty
and civilisation h ave everyw here and at all tim e s em anated from
t o w n s ; in ancient tim es in G reece and I t a l y ; in the Middle A g e s
in Italy, G e rm a n y , B e lg iu m , and H ollan d ; later on in E n g la n d ,
and still more recently in N orth A m e rica and F ra n c e .
B u t there are two kinds o f tow ns, one o f w hich w e m a y term
MANUFACTURING ETC. POWERS OF THE NATION
165
the productive, the other the consuming kind. There are towns
which work up raw materials, and pay the country districts for
these, as well as for the m eans of subsistence which they require,
by m eans of manufactured goods. T h ese are the manufacturing
towns, the productive ones. T h e more that these prosper, the
more the agriculture of the country prospers, and the more powers
that agriculture unfolds, so much the greater do those m anufac­
turing towns become. B u t there are also towns where those live
who simply consume the rents o f the land. In all countries which
are civilised to some extent, a large portion o f the national income
is consumed as rent in the towns. It would be false, however,
were we to maintain as a general principle that this consumption
is injurious to production, or does not tend to promote it. F o r
the possibility of securing to oneself an independent life by the
acquisition of rents, is a powerful stimulus to economy and to the
utilisation of savin gs in agriculture and in agricultural im prove­
ments. Moreover, the man who lives on rents, stimulated by the
inclination to distinguish h im self before his fellow-citizens, sup­
ported by his education and his independent position, will promote
civilisation, the efficiency of public institutions, of State adm inis­
tration, science and art. B u t the degree in which rent influences
in this manner the industry, prosperity, and civilisation of the
nation will alw a y s depend on the degree of liberty which that
nation has already obtained. T h a t inclination to become useful
to the commonwealth by voluntary activity, and to distinguish
oneself before one’ s fellow-citizens, will only develop itself in
countries where this activity leads to public recognition, to public
esteem, and to offices of honour, but not in countries where every
attempt to gain public esteem and every manifestation o f inde­
pendence is regarded by the ruling power with a jealous eye. In
such countries the man o f independent income will give himself
up to debauchery and idleness, and because in this manner he
brings useful industry into contempt, and injures the morality as
well as the industrious impulse of the nation, he will radically
imperil the nation’s productive power. E v e n if under such con­
ditions the manufactures o f towns are to some extent promoted
by the consumption of the rentier, such manufactures are never­
theless to be regarded as barren and unsound fruits, and especially
they will aid very little in promoting the civilisation, prosperity,
and liberty of the nation. Inasm uch a s a sound manufacturing
industry especially tends to produce liberty and civilisation, it
m a y also be said that through it rent itself is redeemed from
form ing a fund for idleness, debauchery, and immorality, and is
converted into a fund for promoting mental culture, and conse­
quently that through it the merely consum ing towns are changed
TH E THEORY
into productive towns. A nother elem ent by w hich the co n su m in g
tow n s are supported is, the consum ption o f the public servan ts
and o f the S ta te adm inistration. T h e s e also m a y occasion som e
apparent prosperity in a tow n ; but w hether such con sum ption
especially prom otes or is injurious to the productive power, pros­
perity, and institutions o f the nation, depends altogether on the
question how far the functions of the con su m ers tend to promote
or to injure those powers.
F ro m this the reason is evident w h y in m ere agricu ltu ral
S tate s large tow n s can exist, which, alth ou gh they contain a large
num ber o f w ealth y in h abitan ts and m anifold trades, exercise only
a v ery inconsiderable influence on the civilisation , liberty, and
productive pow er o f the nation. T h e persons e n g ag e d in those
trades ne ce ssarily participate in the v ie w s o f their c u s t o m e r s ;
they are to be regarded in a great m easu re as mere dom estic s e r ­
v a n t s o f the rentiers and public em ployes.
In contrast to great
lu xu ry in those to w n s, poverty, m ise ry , n arrow -m in d ed n ess, and
a slav ish disposition are found a m o n g the in h abitan ts o f the su r­
rounding country districts. A prosperous effect o f m an u factu res
on the civilisation , the im pro vem en t o f public institutions, and
the liberty o f the nation, is o n ly perceptible i f in a country a
m an u factu rin g power is established w hich, quite independently o f
the rentiers and public se rv an ts, w orks for the large m a s s o f the
agricultural population or for export trade, and co n su m es the pro­
ducts o f that population in large quantities for w o rk in g up in
m anufacture and for subsistence. T h e more such a sound and
h e alth y m an u factu rin g power increases in strength, the m ore wilt
it draw to its side the m an u fac tu rin g pow er which originated in
the consum ption above nam ed, and also the rentiers and public
servants, and the more also w ill the public institutions be regu ­
lated with a v ie w to the interest o f the com m on w ealth .
L e t us consider the condition o f a large tow n in w hich the
m an u factu rers are num erous, independent, lovers o f liberty, edu ­
cated, and w ealthy, w h ere the m e rch an ts participate in their
interests and position, where the rentiers feel th e m se lv e s c o m ­
pelled to gain the respect o f the public, w here the public s e rv a n ts
are subject to the control o f public opinion, w h ere the men o f
science and art work for the public at large, and draw from it
their m eans o f subsistence ; let us consider the m a s s o f mental
and material m ean s w hich are com bined together in such a narrow
space, and further h o w clo sely this m a ss o f power is united through
the law o f the division o f the operations o f b u sin ess and the c o n ­
federation of p o w e r s ; we m a y note ag ain how quickly e ve ry
im provem ent, every p rogress in public institutions, and in social
and economical conditions, on the one hand, and how, on the
MANUFACTURING ETC. POWERS OF THE NATION
167
other hand, every retrogression, every injury of the public interests,
must be felt by this m a s s ; then, again, how easily this mass,
living in one and the same place, can come to an agreement as to
their common objects and regulations, and what enormous means
it can concentrate on the spot for these purposes; and finally, in
what a close union a community so powerful, enlightened, and
liberty-loving, stands in relation to other similar communities in the
sam e nation— if we duly consider all these things, we shall easily
be convinced that the influence on the maintenance and im ­
provement of the public welfare exercised by an agricultural
population living dispersed over the whole surface of the country
(however large its aggregate number may be) will be but slight
in comparison with that of towns, whose whole power (as we
have shown) depends upon the prosperity of their manufactures
and of those trades which are allied to and dependent on
them.
T h e predominating influence o f the towns on the political and
municipal conditions of the nation, far from being disadvantageous
to the rural population, is of inestimable advantage to it. T h e
advantages which the towns enjoy make them feel it a duty to
raise the agriculturists to the enjoyment o f similar liberty, culti­
vation, and prosperity; for the larger the sum of these mental
and social ad vantages is am on g the rural population, the larger
will be the amount of the provisions and raw materials which
they send into the towns, the greater also will be the quantity of
the manufactured goods which they purchase from the towns,
and consequently the prosperity o f the towns. T h e country de­
rives energy, civilisation, liberty, and good institutions from the
towns, but the towns insure to them selves the possession of
liberty and good institutions by raising the country people to
be partakers of these acquisitions. Agriculture, which hitherto
merely supported landowners and their servants, now furnishes
the commonwealth with the most independent and sturdy de­
fenders of its liberty.
In the culture of the soil, also, every
class is now able to improve its position.
T h e labourer can
raise h im self to become a farmer, the farmer to become a landed
proprietor. T h e capital and the means of transport which in­
dustry creates and establishes now give prosperity to agriculture
everywhere.
Serfdom, feudal burdens, laws and regulations
which injure industry and liberty, disappear. T he landed pro­
prietor will now derive a hundred times more income from his
forest possessions than from his hunting. Those who formerly
from the miserable produce of serf labour scarcely obtained the
m eans o f leading a rude country life, whose sole pleasure con­
sisted in the keeping of horses and dogs and chasing gam e, who
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T H E THEORY
therefore resented every in frin gem en t o f these pleasu res as a
crime a g a in st their dign ity a s lords o f the soil, are now enabled
by the au gm en tation o f their rents (the produce o f free labour) to
spend a portion o f the y e a r in the towns* T here, through the
d ram a and music, through art and reading, their m a n n e rs are
softened ; they learn by intercourse with artists and learned men
to esteem mind and talents. F r o m mere N im ro d s they become
cultivated men. T h e aspect o f an industrious com m u n ity, in
which everybody is strivin g to im prove his condition, aw a k e n s in
them also the spirit o f im provem ent. T h e y pursue instruction
and new ideas instead o f s t a g s and hares. R e tu rn in g to the
country, they offer to the m iddle and sm all farm er e xam p le s
w orthy o f imitation, and they g ain his respect instead o f his
curse.
T h e more ind ustry and agricu ltu re flourish, the le ss can the
h u m an mind be held in chains, and the more are we compelled
to g iv e w a y to the spirit of toleration, and to put real m orality
and religious influence in the place o f com pulsion o f conscience.
E v e r y w h e re h a s ind ustry g iv e n birth to t o le r a n c e ; e ve ryw h e re
h a s it converted the p riests into teachers o f the people and into
learned men. E v e r y w h e r e h a v e the cultivation o f national la n ­
g u a g e and literature, h ave the civ ilisin g arts, and the perfection
o f m unicipal institutions kept equal pace with the developm ent
o f m an ufactures and com m erce. It is from m an u factu res that
the n ation 's capability o rig in ates o f ca rry in g on foreign trade
with less civilised nations, o f in cre asin g its m ercantile m arine, of
estab lish in g a n av al power, and by founding colonies, o f u tilisin g
its surplus population for the further au gm en tatio n o f the national
prosperity and the national power.
C o m p arativ e statistics show that by the com plete and relative ly
equal cultivation o f m an ufactures and agriculture in a nation en­
dowed w ith a sufficiently large and fertile territory, a population
twice or three tim es as large can be m aintained, and maintained,
m oreover, in a far higher degree o f w ell-b ein g than in a country
devoted exclu sive ly to agriculture. F r o m this it follow s that all
the mental powers o f a nation, its State revenues, its m aterial and
mental m eans o f defence, and its security for national indepen­
dence, are increased in equal proportion by estab lish in g in it a
m an u factu rin g power..
A t a time where technical and m echan ical science exercise such
im m ense influence on the m ethods o f warfare, w here all w arlike
operations depend so much on the condition o f the national re­
venue, where successful defence g re a tly depends on the q u estions,
whether the m a ss o f the nation is rich or poor, intelligent or
MANUFACTURING ETC. POWERS OF THE NATION
169
stupid, energetic or sunk in a p a t h y ; whether its sym pathies are
given exclusively to the fatherland or partly to foreign co u n tries;
whether it can muster m an y or but few defenders of the country
— at such a time, more than ever before, must the value o f m an u ­
factures be estimated from a political point o f view.
C H A P T E R XVIII.
T H E M A N U F A C T U R IN G PO W ER AND T H E N A T U R A L
P R O D U C T IV E P O W ER S OF T H E NATION.
T h e m ore th at m a n an d the c o m m u n i t y perfect th e m s e lv e s , th e
m o re are th ey e n a b le d to m a k e u s e o f the n a tu r a l p o w e r s w h ic h
are w ith in th eir reach for the a c c o m p li s h m e n t o f th eir o b je c ts , and
the m o re d o e s the sp h e r e o f w h a t is w ith in their reach e xten d
itself.
T h e hunter does not em ploy the thousandth part, the shepherd
1 not the hundredth part, o f those natural a d v a n ta g e s w hich sur­
round him. T h e sea, foreign clim ates and countries, yield him
either none, or at least on ly an inconsiderable am ou n t o f e n jo y ­
ment, assistan ce, or stim u lan ts to exertion.
In the case o f a people in a prim itive agricultural condition, a
large portion o f the e xistin g natural resources lies yet unutilised,
and m an still continues limited to his nearest surroundings. T h e
greater part o f the w ater power and w ind power which exists, or
t a n be obtained, is u n e m p lo y e d ; the variou s m ineral products
which the m anufacturers so well understand how to utilise profit­
ably, lie dead ; variou s sorts of fuel are w asted or regarded (as,
for instance, peat turf) as a mere hindrance to cultivation ; stone,
sand, and lime are used but little a s building m a t e r ia ls ; fjie
rivers, instead o f being m e a n s o f freight and transport for m an , or
o f fertilising the neighbouring fields, are allow ed to devastate the
’ country by floods ; w arm er clim ates and the sea yield to the a g r i­
cultural country but few of their products.
In fact, in the agricultural State, that power o f nature on
'w h i c h production especially depends, the natural fertility o f the
soil, can only be utilised to a sm aller extent so lon g as agriculture
is not supported by m an u factu rin g industry.
E v e r y district in the agricultural S ta te m ust itse lf produce as
much of the thin gs necessary to it as it requires to use, for it can
neither effect considerable sales o f that w hich it h a s in e xce ss to
other districts, nor procure that w hich it requires from other d is­
tricts. A district m a y be ever so fertile and adapted for the culture
o f plants yielding oil, dyein g m aterials, and fodder, ye t it m u st
17 0
MANUFACTURING ETC. POWERS OF THE NATION
171
plant forests for fuel, because to procure fuel from distant mountain
districts, over wretched country roads, would be too expensive.
L an d which if utilised for the cultivation of the vine and for garden
produce could be made to yield three to four times more returns
must be used for cultivating corn and fodder. H e who could most
profitably devote h im self solely to the breeding of cattle must also
fatten them : on the other hand, he who could most profitably
devote him self merely to fattening stock, must also carry on cattle
breeding. H ow advantageous it would be to make use o f mineral
manures (gypsum , lime, marl), or to burn peat, coal, &c. instead
of wood, and to bring the forest lands under cultivation; but in
such a State there exists no m eans o f transport by means of
which these articles can be conveyed with advantage for more
than very short distances. W h a t rich returns would the meadows
in the valleys yield, if irrigation works on a large scale were
established— the rivers now merely serve to wash down and carry
aw a y the fertile soil.
T h rou g h the establishm ent of manufacturing power in an
agricultural State, roads are made, railw ays constructed, canals
excavated, rivers rendered navigable, and lines of steamers estab­
lished. B y these not merely is the surplus produce of the a g ri­
cultural land converted into machinery for yielding income, not
merely are the powers o f labour of those who are employed by it
brought into activity, not only is the agricultural population
enabled to obtain from the natural resources which it possesses
an infinitely greater return than before, but all minerals, all metals,
which heretofore were lying idle in the earth are now rendered
useful and valuable. Articles which could formerly only bear a
freight of a few miles, such as salt, coals, stone, marble, slate,
g ypsu m , lime, timber, bark, &c., can now be distributed over the
surface o f an entire kingdom. Hence such articles, formerly quite
valueless, can now assum e a degree of importance in the statistical
returns of the national produce, which far surpasses the total of
the entire agricultural production in previous times. N ot a cubic
foot of water-fall will then exist which is not made to perform
some service; even in the most distant districts of a manufactur­
ing country, timber and fuel will now become valuable, o f which
previously no one knew how to make an y use.
Through the introduction of manufactures, a demand for a
quantity of articles of food and raw materials is created, to the
production of which certain districts can be far more profitably
devoted than to the growth of corn (the usual staple article of
rude agricultural countries). T h e demand which now springs up
for milk, butter, and meat adds a higher value to the existing
pasture land, and leads to the breaking up of fallows and the
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TH E THEORY
erection o f w orks o f irrigation. T h e dem and for fruit and garden
produce converts the former bare agricu ltu ral land into vegetab le
g ard en s and orchards.
T h e loss w hich the mere agricu ltu ral State su stain s by not
m a k in g use of these natural powers, is so m uch the greater the
more it is fitted by nature for ca rry in g on m an ufactures, and the
more its territory is adapted for the production o f raw m aterials
and natural pow ers which m an u factu rers specially r e q u ire ; that
loss will therefore be the greatest in m ou n tain ou s and hilly
countries less suitable for agriculture on the w hole, but which
offer to m an ufactures plenty o f w ater power, o f m in erals, timber,
and stone, and to the farm er the opportunity o f cu ltivatin g the
products which are specially required by the m anufacturer.
Cou n tries w ith a tem perate clim ate are (alm ost w ithout ex­
ception) adapted for factories and m an u factu rin g ind ustry. T h e
moderate tem perature o f the air prom otes the developm ent and
exertion o f pow er far more than a hot tem perature.
B u t the
severe season o f the ye ar, which ap p e ars to the superficial ob­
server a s an u nfavourable effect o f nature, is the m ost powerful
promoter o f habits o f energetic activity, o f forethought, order, and
econ om y. A m an w ho h a s the prospect before him o f s ix m on ths
in w hich he is not m erely unable to obtain a n y fruits from the
earth, but also requires special provisions and clo th in g m aterials
for the su sten ance o f h im s e lf and his cattle, and for protection
a g a in st the effects o f cold, m u st necessarily become far more in­
dustrious and econom ical than the one w h o m erely requires pro­
tection from the rain, and into w h o se mouth the fruits are ready to
drop du ring the w hole year. D ilige n c e, econ om y, order, and fore­
thought are at first produced by necessity, afterw ard s by habit,
and by the steady cultivation o f those virtues.
M o rality goes
hand in hand w ith the exertion o f o n e ’s powers and econ om y, and
im m orality w ith idleness and e x t r a v a g a n c e : each are reciprocally
fertile sources, the one o f power, the other o f w e ak n ess.
A n agricultural nation, which inhabits a cou n try o f tem perate
clim ate, leaves therefore the richest part o f its natural resources
unutilised.
T h e school, in asm u ch as, in ju d g in g the influences o f clim ate
on the production o f w e alth , it h a s not distin gu ish ed between
agriculture and m an u factu rin g industry, h a s fallen into the
g ra v e st errors in respect to the a d v a n ta g e s and d isa d v a n ta g e s
o f protective regulations, w hich w e cannot here omit th orou gh ly
to expose, although w e h a v e already made m ention o f them in
general term s elsewhere.
In order to prove that it is foolish to seek to produce e v e r y ­
thin g in one and the sa m e country, the school a sk s the question ;
MANUFACTURING ETC. POWERS OF THE NATION
173
whether it would be reasonable if we sought to produce wine by
growing grapes in Scottish and E n g lish greenhouses? It is of
course possible to produce wine in this manner, only it would be
of much worse quality and more expensive than that which
E n glan d and Scotland could procure in exchange for their manu­
factured goods. T o anyone who either is unwilling or unable to
penetrate more deeply into the nature of things, this argument is
a striking one, and the school is indebted to it for a large portion
o f its popu larity; at any rate am ong the French vine growers
and silk manufacturers, and am ong the North American cotton
planters and cotton merchants. Regarded in the light o f day,
however, it is fundamentally false, since restrictions on com­
mercial intercourse operate quite differently on the productive
power o f agriculture than they do on the productive power of
m anufacturing industry.
L e t us first see how they operate on agriculture.
I f Fran ce rejects from her frontiers Germ an fat cattle, or corn,
w hat will she effect thereby ? In the first place, G erm any will
thereby be unable to buy French wines.
France will therefore
have to use those portions of her soil which are fitted for the
cultivation of the vine less profitably in proportion as this de­
struction of commercial interchange lessens her exportation of
wines. So m any fewer persons will be exclusively occupied with
the cultivation of the vine, and therefore so much less native agri­
cultural products will be required, which these persons would
have consumed, who would have otherwise devoted themselves
exclusively to vine culture. T h is will be the case in the produc­
tion of oil as well as in that of wine. France will therefore alw ays
lose in her agricultural power on other points much more than
she gains on one single point, because by her exclusion of the
Germ an cattle she protects a trade in the rearing and fattening of
cattle which had not been spontaneously developed, and for which,
therefore, probably the agriculture of those districts where this
branch o f industry has had to be artificially developed is not
adapted.
T h u s will it be if we consider Fran ce merely as an
agricultural State opposed to G erm any as a merely agricultural
State, and if we also assum e that Germ any will not retaliate on
that policy by a similar one. T h is policy, however, appears still
more injurious if we assume that G erm any, as she will be com­
pelled to out of regard to her own interests, adopts similarly re­
strictive measures, and if we consider that France is not merely
an agricultural, but also a manufacturing State. G erm any will,
nam ely, not merely impose higher duties on French wines, but on
all those French products which G erm any either produces herself,
or can more or less do without, or procure elsewhere; she will
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TH E THEORY
further restrict the importation o f those m anufactured goods w hich
she cannot at present produce with special benefit, but w hich she
can procure from other places than from F ran ce . T h e d is a d v a n ­
tag e w hich F ra n ce h a s brought upon h e rse lf by those restrictions,
thus appears twice or three tim es greater than the a d v a n ta g e . It
is evident that in F ra n c e on ly so m a n y persons can be em ployed
in the cultivation o f the vine, in the cultivation o f olives, and in
m an u factu rin g industry, a s the m e a n s o f subsistence, and raw
m aterials which F r a n c e either produces h e rse lf or procures from
abroad, are able to support and em ploy. B u t we h ave seen that
the restriction o f im portation h a s not increased the agricultural
production, but h a s m erely transferred it from one district to
another. I f free course had been permitted to the in terchan ge o f
products, the im portation of products and raw m aterials, and c o n ­
sequently the sale of w ine, oil, and m anufactured goods, w ould
h ave continually increased, and con sequ ently the num ber of
persons em ployed in the cultivation o f the vin e and olives, and in
m a n u fa c tu r e s; w h ile w ith the in cre asin g traffic, on the one hand,
the m ean s o f subsistence and ra w m ate rials, and, on the other
hand, the dem and for her m anufactured products, would have
augm ented. T h e a u g m en tatio n o f this population would h ave
produced a larger dem and for those p ro visio n s and raw m ate rials
w hich cannot e a sily be imported from abroad, and for w hich the
native agriculture p o s s e s s e s a natural m on op oly ; the native a g r i ­
culture therefore would th u s h ave obtained a far gre ater profit.
T h e dem and for those agricultural products for w hich the character
o f the F re n ch soil is specially adapted, w ould be much more con­
siderable under this free interchange than that produced artificially
by restriction. One agricu ltu rist w ould not h ave lost w h at another
g a i n e d ; the w hole agricu ltu re o f the cou n try w ould h ave gained,
but still more the m an u factu rin g industry. T h ro u g h restriction,
the agricu ltu ral power of the country therefore is not increased,
but lim ite d ; and besides this, that m an u fac tu rin g pow er is a n n ih i­
lated which would h ave g row n up from the au gm en tation o f the
internal agriculture, as well as from the foreign im portation o f
provisions and raw m aterials. A ll that has been attained through
the restriction is an increase o f prices in fa v o u r of the a g ric u l­
turists o f one district at the expense o f the agricu ltu rists o f
another district, but above all, at the expense o f the total pro­
ductive force o f the country.
T h e d isa d v a n ta g e s o f such restrictions on the interchange o f
products are still more clearly brought to light in the case o f
E n g la n d than in that of F ran ce . T h ro u g h the corn la w s, on
doubt, a quantity of unfertile land is brought under c u ltiv a tio n ;
but it is a question w hether these lands would not h ave been
MANUFACTURING ETC. POWERS OF THE NATION
1 75
brought under cultivation without them. T h e more woo!, timber,
cattle, and corn that E n glan d would have imported, the more
manufactured goods would she have sold, the greater number of
workmen would have been enabled to live in E n glan d , the higher
would the prosperity of the working classes have risen. England
would probably have doubled the number of her workmen. E v e r y
single workman would have lived better, would have been better
able to cultivate a garden for his pleasure and for the production
o f useful vegetables, and would have supported h im self and his
family much better. It is evident that such a large augmentation
of the working population, as well as of its prosperity and of the
amount of what it consumed, would have produced an enormous
demand for those products for which the island possesses a natural
monopoly, and it is more than probable that thereby double and
three times as much land could have been brought into cultivation
than by unnatural restrictions. T h e proof of this m ay be seen in
the vicinity of every large town.
H ow ever large the m ass o f
products m ay be which is brought into this town from distant
districts for miles around it, one cannot discover a single tract
of land uncultivated, however much that land m ay have been
neglected by nature. I f you forbid the importation into such a
town of corn from distant districts, you thereby merely effect a
diminution o f its population, of its manufacturing industry, and
its prosperity, and compel the farmer who lives near the town
to devote him self to less profitable culture.
It will be perceived that thus far we are quite in accord with
the prevailing theory.
W ith regard to the interchange of raw
products, the school is perfectly correct in supposing that the most
extensive liberty o f commerce is, under all circumstances, most
advantageous to the individual as well as to the entire State.1
One can, indeed, augm ent this production by restrictions ; but the
advantage obtained thereby is merely apparent. W e only thereby
divert, as the school says, capital and labour into another and less
useful channel.
But the manufacturing productive power, on the
contrary, is governed by other laws, which have, unfortunately,
entirely escaped the observation of the school.
I f restriction on the importation of raw products hinder (as we
have seen) the utilisation of the natural resources and powers of
a State, restrictions on the importation of manufactured goods, on
the contrary', call into life and activity (in the case of a populous
country already far advanced in agriculture and civilisation) a
m ass of natural p o w e rs; indeed, without doubt, the greater h alf
of all natural powers, which in the merely agricultural State lie
1 See Appendix C.
176
T H E THEORY
idle and dead for ever. If, on the one hand, restrictions on the
importation o f r a w products are a hindrance to the developm ent not
only o f the m an u factu rin g, but also o f the agricultural productive,
powers o f a State, on the other hand, an internal m an u fac tu rin g
productive power produced by restrictions on the importation of
foreign m an ufactures, stim u lates the whole agricultural productive
powers o f a State to a degree which the m ost flourishing foreign
trade is n ever able to do. I f the im portation o f raw products
m akes the foreign country dependent on us and takes from it the
m e a n s o f m an u factu rin g for itself, so in like m anner, by the i m ­
portation o f foreign m an ufactures, are we rendered dependent on
the foreign country, and the m e a n s are taken from us o f m a n u ­
facturing for ourselves. I f the im portation o f products and raw
m aterials w ith d ra w s from the foreign country the m aterial for the
e m ploym ent and support o f its population and diverts it to our
nation, so does the importation o f m anufactured fabrics take from
us the opportunity o f in cre asin g our own population and of p ro ­
v id in g it with em ploym ent. I f the importation of natural products
and ra w m aterials increases the influence o f our nation on the
affairs o f the world and g iv e s u s the m e a n s o f ca rry in g on co m ­
merce with all other nations and countries, so by the im portation
o f m anufactured fabrics are we chained to the m o st advanced
m an u factu rin g nation, w hich can rule over us alm ost a s it pleases,
a s E n g la n d rules over P o rtu gal. In short, history and statistics
alike prove the correctness o f the dictum expressed by the m inisters
o f G eorge I. : that nations are richer and more powerful the more
they export m anufactured g oods, and import the m ean s o f su b ­
sistence and raw m aterials. In fact, it m a y be proved that entire
nations h ave been ruined m erely because they h ave exported only
m ean s o f subsistence and raw m aterials, and h ave imported o n ly
m anufactured goods. M on tesq uieu ,1 w h o understood better than
anyone either before or after him h o w to learn from H is to ry the
lessons w hich she im parts to the leg islator and politician, h as
w ell perceived this, alth ou gh it w a s im possib le for him in h is
tim es, when political econ om y w a s a s y e t but little studied, clearly
to unfold the cau ses o f it.
In contradiction to the groun dless
system o f the physiocratic school, he m aintained that Poland
would be more prosperous if she g a v e up altogether foreign co m ­
merce, i.e. if she established a m an u factu rin g power o f her own,
and worked up and con su m ed her ow n raw m a te ria ls and m e an s
o f subsistence. O nly by the developm ent o f an internal m a n u ­
facturing power, by free, populous, and industrious cities, could
P olan d obtain a stron g internal organ isation , national industry,
1E s p rit des L o is , L iv re X X . ch ap. x xiii.
MANUFACTURING ETC. POWERS OF THE NATION
177
liberty, and wealth ; only thus could she maintain her independence
and political superiority over less cultivated neighbours. Instead
of foreign manufactured goods she should have introduced (as
E n glan d did at one time, when she w as on the same footing as
regards culture with Poland) foreign manufacturers and foreign
m anufacturing capital.
H er aristocracy, however, preferred to
export the paltry fruits of serf labour to foreign markets, and to
obtain in return the cheap and fine goods made by foreign
countries.
T h eir successors now m ay answ er the q u estio n :
whether it is advisable for a nation to buy the fabrics o f a foreign
country so long as its own native manufactures are not yet
sufficiently strengthened to be able to compete in prices and
quality with the foreigner.
T h e aristocracy of other countries
m ay bear her fete in mind whenever they are instigated by feudal
inclinations; they m ay then cast a glance at the E n glish aristo­
cracy in order to inform them selves as to what is the value to the
great landed proprietors of a strengthened manufacturing power,
of free municipal institutions, and of wealthy towns.
W ithout here entering on an inquiry whether it would have
been possible for the elective kings o f Poland, under the circum­
stances under which they were placed, to introduce such a com ­
mercial system as the hereditary kings of En glan d have gradually
developed and established, let us imagine that it had been done by
them : can we not perceive what rich fruits such a system would
have yielded to the Polish nation ? B y the aid of large and in­
dustrious towns, the crown would have been rendered hereditary,
the nobility would have been obliged to make it convenient to take
part in legislation in a House of Peers, and to emancipate their
se rfs; agriculture would have developed itself, as it has developed
itself in E n g l a n d ; the Polish nobility would now be rich and re­
sp e cted ; the Polish nation would, even if not so respected and
influential in the affairs of the world as the E n g lish nation is,
would have long ago become so civilised and powerful as to extend
its influence over the less cultivated E a st. W ithout a m a n u ­
facturing power she has become ruined and partitioned, and were
she not so already she must have become so. O f its own accord
and spontaneously no manufacturing power w as developed in h e r ;
it could not be so, because its efforts would have been a lw a y s
frustrated by further advanced nations.
W ithout a system o f
protection, and under a system of free trade with further advanced
nations, even if Poland had retained her independence up to the
present time, she could never have carried on anything more than
a crippled agriculture; she could never have become rich, power­
ful, and outwardly influential.
B y the circumstance that so m any natural resources and
12
I 7S
T H E THEORY
natural pow ers are converted b y the m an u fac tu rin g pow er into
productive capital is the fact chiefly to be accounted for, that pro­
tective regulations act so powerfully on the au gm en tation of
national w ealth. T h i s prosperity is not a false ap pearan ce, like
the effects o f restrictions on the trade in mere natural products, it
is a reality. T h e y are natural pow ers which are otherw ise quite
dead— natural resources w hich are otherw ise quite v a lu eless,
which an agricultural nation calls to life and renders v alu a b le by
e stab lishin g a m an u factu rin g pow er o f its own.
It is an old observation, that the hu m an race, like the variou s
breeds o f a n im a ls, is improved m e n tally and bodily by c r o s s i n g s ;
that m an , if a few fam ilies a lw a y s interm arry a m o n g st one
another, ju s t as the plant if the seed is a lw a y s sow n in the sam e
soil, g ra d u ally degenerates. W e seem obliged to attribute to this
law of nature the circum stance that a m o n g m a n y wild or half-wild
tribes in A frica and A s ia , w hose num bers are limited, the men
choose their w iv e s from foreign tribes. T h e fact w hich experience
show s, that the oligarchies of sm all m unicipal republics, w ho con­
tinually interm arry a m o n g th em selv e s, g rad u ally die out or v isib ly
degenerate, ap p ears sim ilarly attributable to such a natural law.
It is undeniable that the m ix in g of two quite different races results,
alm ost w ithout exception, in a powerful and fine future p r o g e n y ;
and this observation extends to the m ix in g o f the white race w ith
the black in the third and the fourth gen eration. T h is ob servation
seem s to confirm more than a n y other th in g the fact, that those
nations which h ave em anated from a c ro ssin g o f race frequently
repeated and com p risin g the w hole nation, h ave su rp asse d all
other nations in power and e n e rgy o f the mind and character, in
intelligence, bodily strength, and personal b e a u ty .1
1 A ccording to C hardin, the G uebres, an unm ixed tribe o f the old P ersian s,
are an u gly, deform ed, and clum sy race, like all nations o f M ongol descent,
while the Persian nobility, w hich for centuries h as interm arried with G eo rgian
and C ircassian w om en, is distingu ished for beauty and strength. Dr. Pritchard
rem arks that the unm ixed C elts of the Scottish H igh lan d s are far behind the
Scottish L ow lan d ers (descendants o f Saxo n s and Celts) in height, bodily power,
and fine figure. P allas m akes sim ilar observations resp ectin g the descendants
o f the R u ssian s and T a rta rs in com parison with the unm ixed tribes to which
they are related. A zara affirm s that the descendants of the Span iard s and the
natives of P arag u ay are a much more handsom e and powerful race o f men
than their ancestors on both sides. T h e advantages o f the crossin g o f race are
not only apparent in the m ixing o f different nations, but also in the m ixin g of
different fam ily stocks in one and the sam e nation. T h u s the C reole n egroes
far surpass those negroes who h ave sprung from unmixed tribes, and who have
com e direct from A frica to A m erica, in mental gifts as w ell as in bodily pow er.
T h e Caribbeans, the only Indian race w hich chooses regu larly its wom en from
neighbouring tribes, are in every respect superior to all other A m erican tribes.
MANUFACTURING ETC. POWERS OF THE NATION
179
W e think we m ay conclude from this that men need not
necessarily be such dull, clum sy, and unintellectual beings as we
perceive them to be when occupied in crippled agriculture in small
villages, where a few families have for thousands o f years inter­
married only with one a n o th e r ; where for centuries it has occurred
to no one to make use of an implement of a new form, or to adopt
a new method of culture, to alter the style of a single article of
clothing, or to adopt a new id e a; where the greatest art consisted,
not in exerting one’s bodily and mental powers in order to obtain
as much enjoyment as possible, but to dispense with as much of
it as possible.
T h is condition o f things is entirely changed (and for the best
purposes of the improvement o f race of a whole nation) by estab­
lishing a manufacturing power. W h ile a large portion of the
increase of the agricultural population goes over into the m an u ­
facturing com m unity, while the agricultural population o f various
districts becomes mixed by m arriages between one another and
with the manufacturing population, the mental, moral, and physical
stagnation o f the population is broken up. T h e intercourse which
manufactures and the commerce between various nations and
districts which is based upon them bring about, brings new blood
into the whole nation as well as into separate communities and
families.
T h e development of the manufacturing power has no less im­
portant an influence on the improvement of the breeds of cattle.
Everyw h ere, where woollen manufactures have been established,
the race of sheep has quickly been improved. O wing to a greater
demand for good meat, which a numerous manufacturing popula­
tion creates, the agriculturist will endeavour to introduce better
breeds of cattle. T h e greater demand for ‘ horses of luxury ' is
followed by the improvement o f the breeds o f horses. W e shall
then no longer see those wretched primitive breeds of cattle,
horses, and sheep, which h avin g resulted from the crippled state
of agriculture and everywhere from neglect of crossing of breeds,
exhibit a side spectacle worthy of their clum sy owners.
H ow much do the productive powers of the nations already
owe to the importation o f foreign breeds of anim als and to the
improvement of the native breeds ; and how much has yet to be
done in this r e s p e c t ! All the silkworm s o f Europe are derived
from a few eggs, which (under Constantine) were brought to C o n ­
stantinople in hollow sticks, by Greek monks from China, where
their exportation w as strictly prohibited. France is indebted to
I f this is a law o f nature, the rise and progress which the cities o f the Middle
A ges displayed shortly after their foundation, as well as the energy and fine
bodily appearance of the American people, are hence partly explained
i8 o
T H E THEORY
the importation o f the T h ib e t g oat for a beautiful product o f her
industry. It is v ery much to be regretted, that hitherto the breed­
in g and im p ro vin g o f a n im als h a s been chiefly carried on in order
to satisfy the requirem ents o f luxury, and not in order to promote
the w elfare o f the large m a sse s. T h e descriptions o f travellers
show that in som e countries o f A s ia a race o f cattle has been seen
w hich com bines considerable drau ght power w ith g re at sw iftn e ss
o f pace, so that they can be used with a lm o st the sam e ad v a n ta g e
as horses for riding and driving.
W h a t im m e n se a d v a n ta g e s
would such a breed o f cattle confer on the sm aller a g ricu ltu rists o f
E u ro p e ! W h a t an increase in m e a n s o f su bsisten ce, productive
power, and convenience, would the w o rk in g c la sse s thereby obtain !
B u t even far more than b y im proved breeds, and im portation from
one country into another of v ario u s a n im a ls, h a s the productive
power o f the h u m an race been increased by the im p ro vem en t and
importation o f trees an d plants. T h i s is at once evident, if w e
com pare the original p lan ts as th ey h ave sp ru n g from the bosom
o f nature, with their im proved species.
H o w little do the prim itive
plants o f the v ario u s species o f corn and o f fruit trees, o f edible
v eg e tab le s and o f the olive, resem ble in form and utility their im ­
proved offspring ! W h a t m a s s e s o f m e a n s o f no u rish m en t, o f
enjoym ent, and comfort, and w h a t opportunities for the useful
application o f hu m an pow ers, h ave been derived from them ! T h e
potato, the beet-root, the cultivation o f root crops for cattle, to­
gether w ith the im proved sy s t e m s o f m a n u rin g and im pro ved
agricultural m achines, h ave increased ten-fold the returns o f a g ri­
culture, as it is at present carried on by the A siatic tribes.
Science has alread y done m uch with regard to the d isco v e ry of
n ew plants and the im p ro ve m e n t o f them ; but g o v e r n m e n ts h ave
not yet devoted to this im portant object so m uch attention a s they
ought to h ave done, in the interests o f econ om y. Q uite recently,
species of g r a s s are said to h ave been discovered in the s a v a n n a s
o f N orth A m erica, w hich from the poorest soil yield a higher
produce than any fodder plants, w hich are as yet k n o w n to us, do
from the richest soil. It is v e r y probable that in the wild regions
o f A m e rica, A sia , A frica, and A u stra lia , a q u an tity o f p lan ts still
veg e tate u se le ssly, the tran splan tation and im pro vem en t o f w hich
m ight infinitely a u g m e n t the prosperity o f the in h abitan ts o f tem ­
perate clim ates.
It is clear that m ost o f the im p ro ve m e n ts and tran sportation s
of a n im a ls and v e g e ta b le s, m ost of the new discoveries w hich are
made with respect to them , a s well as all other progress, in v e n ­
tions, and discoveries, are chiefly calculated to benefit the countries
of the tem perate xon e, and o f those m ost o f all, the m an u fac tu rin g
countries.
CHAPTE R XIX.
T H E M AN U FAC TU R IN G POWER AND T H E IN S T R U M E N T A L
POW ERS (M ATERIAL CAPITAL) OF T H E NATION.
T h e nation d erives its productive pow er from the m en tal and
ph y sica l p o w ers o f the i n d i v i d u a ls ; from their social, m unicipal,
and political con d itio n s and i n s t i t u t io n s ; from the natural re­
so urces placed at its d isp o sal, or from the in s tr u m e n ts it p o s se s s e s
a s the m aterial products o f form er m en tal and bodily exertions
(m aterial, ag ric u ltu ral, m a n u fa c tu rin g , and com m ercial capital).
I n the la st two chapters w e h a v e dealt with the influence of
m a n u fa c tu re s on the three first-nam ed so urces o f the n ational
productive p o w ers ; the present and the fo llo w in g chapter are d e ­
voted to the d em o n stration o f its influence on the one last nam ed.
T h a t which we understand by the term ‘ instrum ental pow ers *
is called £ca p ita l ’ by the school. It m atters but little by what word
an object is signified, but it matters very much (especially with
regard to scientific investigations) that the word selected should
alw a y s indicate one and the same object, and never more or less.
A s often, therefore, as different branches of a matter are discussed,
the necessity for a distinction arises. T h e school now under­
stands by the term * ca p ita l ’ not merely the material, but also all
mental and social means o f and aids to production. It clearly
ought, therefore, to specify wherever it speaks of capital, whether
the material capital, the material instruments of production, or the
mental capital, the moral and physical powers which are inherent
in individuals, or which individuals derive from social, municipal,
and political conditions, are meant.
T h e omission o f this dis­
tinction, where it ought to be drawn, must necessarily lead to
false reasoning, or else serve to conceal false reasoning. M ean­
while, however, as it is not so much our business to found a new
nomenclature as to expose the errors committed under the cover
of an inexact and inadequate nomenclature, we will adopt the
term ‘ c a p ita l/ but distinguish between mental and material
capital, between material, agricultural, manufacturing, and com­
mercial capita], between private and national capital.
Adam Sm ith (by means of the common expression, capital)
181
182
T H E THEORY
urges the fo llo w in g arg u m e n t a g a in st the protective com m ercial
policy w hich is adopted to the presen t d ay by all his fo llo w e rs :
‘ A country can indeed by m e a n s o f such (protective) regu lation s
produce a special description o f m an u factu res sooner than w ithout
them ; and this special kind o f m an u factu res w ill be able to yield
after som e time a s cheap or still cheaper productions than the
foreign country. B u t alth ou gh in this m an ner w e can succeed in
directing national industry sooner into those ch an n els into w hich
it would later h ave flowed o f its ow n accord, it does not in the
least follow that the total am o u n t o f industry or o f the incom es o f
the co m m u n ity can be increased by m e a n s o f such m easu res. T he
in d u stry o f the com m unity ca n only he a u g m en ted in p ro p o rtio n as
its c a p ita l in creases, a n d the c a p ita l o f the com m unity can only
in crease in accordance w ith the s a v in g s w h ich it g r a d u a lly m akes
fro m its in com e. N o w , the im m ediate effect o f these m easu res is
to decrease the incom e o f the co m m u n ity . B u t it is certain that
that which decreases that incom e cannot increase the c a p ita l
more quickly than it w ould h a v e been increased by itself, if it, as
w ell as industry, had been left free/ 1
A s a proof o f this argu m en t, the founder o f the school adduces
the w e ll-k n o w n exam ple, refuted by us in the previous chapter,
h o w foolish it w ould be to plant the vin e in Scotland.
In the sa m e chapter he state s, the a n n u a l incom e o f the co m ­
m u n ity is n o thing else but the va lu e in exch a n g e o f those objects
w hich the national industry produces an n u a lly .
In the above-nam ed a rg u m e n t lies the c h ie f proof o f the school
a g a in st the protective com m ercial policy.
It a d m its that by
m e asu res o f protection m an u factories can be estab lished and
enabled to* produce m an u factu red goods as cheap or even cheaper
than they can be obtained from abroad ; but it m a in ta in s that the
im m ediate effect o f these m e asu res is to decrease the incom e o f
the co m m u n ity (the v alu e in e xch an g e o f those th in g s w h ich the
national industry produces an n u ally). It thereby w e a k e n s its
power of acq u iring capital, for capital is formed by the s a v in g s
w hich the nation m akes out o f its ann u al incom e ; the total o f the
capital, however, determ in es the total of the national industry,
and the latter can o n ly increase in proportion to the former. It
therefore w e ak e n s its ind ustry by m e a n s o f those m e asu res— by
producing an industry which, in the nature o f th in gs, i f they had
been left to their own free course would h ave originated o f its own
accord.
It is firstly to be remarked in opposition to this reaso n in g , that
A d a m S m ith h a s m erely taken the word c a p ita l in that sense in
1 W ealth o f N ations, Book I V . chap. ii.
MANUFACTURING ETC. POWERS OF THE NATION
183
which it is necessarily taken by rentiers or merchants in their
book-keeping and their balance-sheets, nam ely, as the grand total
of their values of exchange in contradistinction to the income
accruing therefrom.
He has forgotten that he h im self includes (in his definition of
capital) the mental and bodily abilities of the producers under this
term.
H e wrongly maintains that the revenues of the nation are
dependent only on the sum of its material capital. H is own work,
on the contrary, contains a thousand proofs that these revenues
are chiefly conditional on the sum of its mental and bodily powers,
and on the degree to which they are perfected, in social and politi­
cal respects (especially by means of more perfect division of labour
and confederation of the national productive powers), and that
although measures o f protection require sacrifices of material
goods for a time, these sacrifices are made good a hundred-fold
in powers, in the ability to acquire values of exchange, and are
consequently merely reproductive outlay by the nation.
He has forgotten that the ability of the whole nation to in­
crease the sum of its material capital consists mainly in the
possibility of converting unused natural powers into material
capital, into valuable and income-producing instruments, and that
in the case of the merely agricultural nation a m ass of natural
powers lies idle or dead which can bequickened into activity only
by manufactures, l i e has not considered the influence of m an u ­
factures on the internal and external commerce, on the civilisation
and power of the nation, and on the maintenance of its indepen*
dence, as well as on the capability arising from these of gain in g
material wealth.
He has e.g. not taken into consideration what a m ass of capital
the En glish have obtained by means of colonisation (Martin esti­
mates the amount of this at more than two and ahalf milliards of
pounds sterling).
He, who nevertheless elsewhere proves so clearly that the
capital employed in intermediate commerce is not to be regarded
as belonging to any given nation, so long as it is not equally
embodied in that nation’s land, has here not duly considered that
the nationalisation of such capital is most effectually realised by
favouring the nation’s inland manufactures.
He has not taken into account, that by the policy o f favouring
native manufacture a m ass of foreign capital, mental as well as
material, is attracted into the country.
He falsely maintains that these manufactures have originated
in the natural course of things and of their own accord; notwith­
standing that in every nation the political power interferes to give
184
T H E THEORY
to this so-called natural course an artificial direction for the
nation’s own special ad van tag e.
H e h a s illustrated his argu m en t, founded on an am b ig u o u s
expression and con sequ ently fu n d am en tally w ro n g , by a fu n d a ­
m e n tally w ron g exam ple, in seekin g to prove that because it
would be foolish to produce w in e in Scotland by artificial m ethods,
therefore it would be foolish to establish m an u factu res by artificial
methods.
H e reduces the process o f the formation o f capital in the
nation to the operation o f a private rentier, w h o se incom e is
determined by the valu e o f his m aterial capital, and w h o can on ly
increase his incom e by s a v in g s w hich he ag ain turns into capital.
H e does not consider that this theory o f s a v in g s, w hich in the
m erchant’ s office is quite correct, if followed by a whole nation
m u st lead to poverty, barb arism , pow erlessn ess, and decay of
national progress.
W h e re everyone s a v e s and econ om ises as
m uch a s he p o ssib ly can, no m otive can e xist for production.
W h e r e everyon e m erely takes th o u g h t for the accum ulation o f
v alu es o f exch an g e , the mental pow er required for production
v an ish es. A nation c o n sistin g o f such insan e m isers w ou ld g iv e
up the defence o f the nation from fear o f the e x p e n se s o f w ar, and
w ould only learn the truth after all its property had been sacrificed
to foreign extortion, that the w ealth o f nations is to be attained in
a m an n e r different to that of the private rentier.
T h e private rentier him self, a s the father o f a fam ily, m u st
follow a totally different theory to the shopkeeper theory o f the
m aterial v a lu e s o f e xch an g e which is here set up. H e m u st at
least expend on the education o f h is heirs as much v alu e of e x ­
c h an g e as w ill enable them to ad m in ister the property w hich is
som e day to fall to their lot.
T h e building up o f the m aterial national capital takes place in
quite another m an n e r than by mere s a v in g a s in the case o f the
rentier, nam ely, in the sam e m an n e r a s the buildin g up o f the
productive pow ers, chiefly by m e a n s o f the reciprocal action be­
tween the m ental and m aterial national capital, and between the
agricultural, m an u factu rin g, and com m ercial capital.
T h e augm en tation o f the national m aterial capital is dependent
on the augm en tation o f the national m ental capital, and vice versd.
T h e formation o f the m aterial agricu ltu ral capital is dependenton
the formation o f the m aterial m an u factu rin g capital, and vice versd.
T h e material com m ercial capital acts everyw here as an inter­
m ediary, helping and co m p en satin g between both.
In the uncivilised state, in the state o f the hunter and the
fisher, the powers o f nature yield alm ost eve ryth in g, capital is
alm ost n i l . F oreig n com m erce increases the latter, but also in so
MANUFACTURING ETC. POWERS OF THE NATION
185
doing (through fire-arms, powder, lead) totally destroys the pro­
ductiveness of the former. T h e theory of savin gs cannot profit
the hunter; he must be ruined or become a shepherd.
In the pastoral state the material capital increases quickly, but
only so far as the powers of nature afford spontaneously nourish­
ment to the cattle. T h e increase of population, however, follows
closely upon the increase of flocks and herds and of the means o f
subsistence. On the one hand, the flocks and herds as well as
pastures become divided into smaller shares ; on the other hand,
foreign commerce offers inducements to consumption. It would
be in vain to preach to the pastoral nation the theory of savings ;
it must sink into poverty or pass over into the agricultural State.
T o the agricultural nation is open an immense, but at the
same time limited, field for enriching itself by utilising the dor­
mant powers of nature.
T h e agriculturist for him self alone can save provisions, improve
his fields, increase his cattle ; but the increase of the means o f
subsistence alw ays follows the increase of population. T he m a­
terial capital (namely, cultivated land and cattle), in proportion as
the former becomes more fertile and the latter increase, becomes
divided among a larger number of persons. Inasm uch, however,
as the surface of the land cannot be increased by industry, and
the land cannot be utilised up to the measure o f its natural capa­
city, for want of means of transport, which (as we showed in the
preceding chapter) must remain imperfect in such a state o f
things owing to lack of intercourse; and as moreover the merely
agricultural nation is mostly in want of those instruments, intelli­
gence, motives to exertion, and also of that energy and social
development which are imparted to the nation through manu­
factures and the commerce which originates from them, the mere
agricultural population soon reaches a point in which the increase
of material agricultural capital can no longer keep pace with the
increase of population, and where consequently individual poverty
increases more and more, notwithstanding that the total capital of
the nation is continually increasing.
In such a condition the most important product of the nation
consists of juen, who, as they cannot find sufficient support in
their own country, emigrate to other countries. It can be but
little consolation to such a country, that the school regards man
as an accumulated capital ; for the exportation of men does not
occasion return freights, but, on the contrary, causes the unpro­
ductive export of considerable amounts of material values(in the
shape o f implements, utensils, money, &c.).
It is clear that in such a state of things, where the national
division of labour is not properly developed, neither industry nor
i86
T H E THEORY
econom y can bring about the au gm en tation o f the m aterial capital
(material enrichm ent o f individuals).
T h e agricultural country is, o f course, rarely quite without a n y
foreign commerce, and foreign com m erce, as far as it extends, also
supplies the place o f internal m an u factu res w ith regard to the
augm en tation o f capital, inasm u ch a s it places the m anufacturer
of the foreign country in com m ercial relation with the agriculturist
o f the hom e country. T h is , how ever, takes place on ly partially
and very im perfectly : firstly, because this com m erce extends
m erely to special staple products, and chiefly only to those d is­
tricts which are situated on the sea-coast and on n av ig ab le rivers ;
and secondly, because it is in a n y case but a very irregular one,
and is liable to be frequently interrupted by w a r s, fluctuations in
trade and c h a n g e s in com m ercial legislation, by specially rich
h arv e sts, and by foreign im portations.
T h e au gm en tatio n o f the m aterial agricu ltu ral capital can only
take place on a large scale, with reg u larity and continuously, if a
com pletely developed m an u fac tu rin g pow er is established in the
m idst o f the agriculturists.
B y far the greatest portion o f the m aterial capital o f a nation
is bound to its land and soil. In eve ry nation the valu e o f landed
property, of d w e llin g h o u se s in rural districts and in tow n s, o f
w orkshops, m an u factories, w aterw orks, mines, &c. am o u n ts to
from two-thirds to nine-tenths o f the entire p ro p erty o f the Jiation
It m ust therefore be accepted as a rule, that all that increases or
decreases the valu e o f the fixed property, increases or decreases
the total o f the m aterial capital o f the nation. N o w , it is evident
that the capital v alu e o f land o f equal natural fertility is incom ­
parably larger in the proxim ity of a sm all town than in remote
districts ; that this valu e is in com parab ly large r still in the n e ig h ­
bourhood o f a larg e town than in that o f a sm all one ; and that
in m an u factu rin g nations these v a lu e s are beyond all co m p ari­
son greater than in mere agricu ltu ral nations. W e m a y observe
(inversely) that the valu e o f the d w ellin g houses and m a n u fa c tu r­
in g buildings in tow ns, and th at of building land, rises or falls (as
a rule) in the sam e ratio in which the com m ercial intercourse o f
the town with the agricu ltu rists is extended or restricted, or in
which the prosperity o f these agricu ltu rists p rogresses or recedes.
F ro m this it is evident that the au gm en tation o f the agricultural
capital is dependent on the au gm en tation o f the m an u factu rin g
c a p i t a l ; and (inversely) the latter on the form er.1
„
'C o m p a re the follow ing paragraph, which appeared in the Tim es during
1883;
* M a n u f a c t u r e s a n d A g r i c u l t u r e . — T h e statistician of the A gricultural
D epartm ent of the U nited S tates has show n in a recent report that the valu e o f
MANUFACTURING ETC. POWERS OF THE NATION
187
T h is reciprocal action is, however, in the case of the change
from the agricultural state into the manufacturing state much
stronger on the part of manufacture than on the part o f agricul­
ture. F o r as the increase o f capital which results from the change
from the condition of the mere hunter to the pastoral condition is
chiefly effected by the rapid increase of flocks and herds, as the
increase o f capital resulting from the change from the pastoral
condition into the agricultural condition is chiefly effected by the
rapid increase in cultivated land and in surplus produce, so, in the
event of a change from the agricultural condition into the m anu­
facturing condition, is the augmentation of the material capital o f
the nation chiefly effected by those values and powers which are
devoted to the establishment of manufactures, because thereby a
m ass o f formerly unutilised natural and mental powers are con­
verted into mental and material capital. F a r from hindering the
sav in g of material capital, the establishm ent of manufactures is
the first thing which affords to the nation the means of em ploying
its agricultural sav in g s in an economical manner, and it is the
first means by which the nation can be incited to agricultural
economy.
In the legislative bodies o f North America it has often been
mentioned that corn there rots in the ear from w ant of sale,
because its value will not pay the expense of harvesting it. In
H u n g a r y it is asserted that the agriculturist is almost choked
with excess ot produce, while manufactured goods are three to
four times dearer there than in England. G erm any even can re­
farm lands decreases in exact proportion as the ratio o f agriculture to other
industries increases. T h at is, where all the labour is devoted to agriculture, the
land is worth less than where only half of the people are farm labourers, and
where only a quarter o f them are so engaged the farm s and their products are
still more valuable. It is, in fact, proved by statistics that diversified industries
are o f the greatest value to a State, and that the presence o f a m anufactory
near a farm increases the value o f the farm and its crops. It is further estab­
lished that, dividing the United States into four sections or classes, with r e ­
ference to the ratio o f agricultural workers to the whole population, and putting
those States having less than 30 per cent, o f agricultural labourers in the first
class, all having over 30 and less than 50 in the second, those between 50 and
70 in the third, and those having 70 or more in the fourth, the value o f farms is
in inverse ratio to the agricultural population ; and that, whereas in the purely
agricultural section, the fourth class, the value o f the farm s per acre is only
$5 28c., in the next class it is § 13 03c., in the third $22 2 1c ., and in the manu­
facturing districts $40 g ic . T h is shows an enormous advantage for a mixed
district. Y et not only is the land more valuable— the production per acre is
greater, and the w ages paid to farm hands larger. M anufactures and varied
industries thus not only benefit the manufacturers, but are o f equal benefit and
advantage to the farm ers as well.
The latter would, therefore, do well to
abandon their prejudice against factories, which really increase the value o f their
property instead of depreciating it.’— T r .
T H E THEORY
m em ber such tim es. In agricultural S ta te s, therefore, all surplus
agricultural produce is not m aterial capital.
B y m eans of m anu­
factures it first becom es com m ercial capital by being w arehoused,
and then by being sold to the m an u factu rers it is turned into m a n u ­
facturing capital. W h a t m a y be unutilised stock in the hand of
the agriculturist, becom es productive capital in the hand o f the
m anufacturer, and vice versa.
Production renders con su m ption possible, and the desire to
consum e incites to production. T h e m ere ag ricu ltu ral nation is
in its consum ption dependent on foreign conditions, and if these
are not favourable to it, that production dies out w hich would
have arisen in consequence of the desire to consum e. B u t in that
nation which com bines m an u factu res with agricu ltu re in its terri­
tory, the reciprocal inducem ent con tin u ally exists, and therefore,
also, there will be continuous increase o f production and with it
au gm en tation o f capital on both sides.
A s the a g ricu ltu ral-m an u factu rin g nation is (for the reaso ns
w hich w e h ave alread y given) a lw a y s in com parab ly richer in
m aterial capital than the m ere agricu ltu ral nation (which is e v i­
dent at a glance), so in the former the rate o f interest is a lw a y s
m uch lower, and larger capital and more favourable conditions are
at the disposal of m en of enterprise, than in the purely agricultural
nation. It follow s that the former can a lw a y s victoriously c o m ­
pete with the n e w ly formed m an u facto rie s in the agricu ltu ral
nation ; that the agricu ltu ral nation rem ain s con tin u ally in debt
to the m a n u fa c tu rin g nation, and that in the m ark e ts o f the
former continual fluctuations in the prices o f produce and m a n u ­
factured goods and in the valu e o f m o n e y take place, w hereby the
accum ulation of m aterial w ealth in the purely agricu ltu ral nation
is no less endangered than its m orality and its habits o f econ om y.
T h e school distin gu ish es fixed capital from circu latin g capital,
and classes under the former in a m ost rem arkable m an n e r a
multitude o f th in g s which are in circulation w ithout m a k in g a n y
practical application w h a te v e r o f th is distinction. T h e on ly case
in which such a distinction can be o f value, it p a sse s by without
notice. T h e m aterial a s w ell as the mental capital is (nam ely)
bound in a great m easu re to agriculture, to m an u factu res, to
com merce, or to special branches o f either— n ay often, indeed, to
special localities. F r u it trees, when cut down, are clearly not o f
the sam e value to the m an u factu rer (if he uses them for w ood­
work) as they are to the agricu ltu rist (if he uses them for the
production of fruit). Sheep, if, a s has already frequently happened
in G e r m a n y and N orth A m e rica, they h ave to be slaughtered in
m asse s, h ave evidently not the v alu e w hich they would p o sse ss
when used for the production o f wool, V in e y a r d s h ave (as such)
MANUFACTURING ETC. POWERS OF THE NATION
189
a value which, if used as arable fields, they would lose. Ships, if
used for timber or for firewood, have a much lower value than
w hen they serve as m eans of transport. W h a t use can be made
of manufacturing buildings, water-power, and machinery if the
spinning industry is ruined ? In like manner individuals lose, as
a rule, the greatest part of their productive power, consisting in
experience, habits, and skill, when they are displaced. T he school
g ives to all these objects and properties the general name of
capital, and would transplant them (by virtue of this terminology)
at its pleasure from one field of employment to another. J . B.
S a y thus advises the E n g lish to divert their manufacturing capital
to agriculture. H o w this wonder is to be accomplished he has
not informed us, and it has probably remained a secret to E n g lish
statesmen to the present day. S a y has in this place evidently
confounded private capital with national capital. A manufacturer
or merchant can withdraw his capital from manufactures or from
* commerce by selling his works or his ships and buying landed
property with the proceeds, A whole nation, however, could not
effect this operation except by sacrificing a large portion o f its
material and mental capital. T h e reason w h y the school so de­
liberately obscures things which are so clear is apparent enough.
I f things are called by their proper nam es, it is easily com­
prehended that the transfer o f the productive powers of a nation
from one field of employment to another is subject to difficulties
and hazards which do not a lw a y s speak in favour of 1free trade,’
but very often in favour o f national protection.
C H A P T E R XX.
T H E M A N U F A C T U R IN G PO W ER AN D T H E A G R I C U L T U R A L
IN TE R EST.
I f protective duties in favo u r o f hom e m an u fac tu re s proved dis­
a d v a n ta g e o u s to the con su m ers o f m an u factu red goods and served
o n ly to enrich the m an u factu rer, this d isa d v a n ta g e would especi­
ally be felt by the landed proprietor and the ag ricu ltu rist, the most
num erous and im portant c la ss o f those con su m ers. B u t it can be
proved that even this c la ss d erives far greater a d v a n t a g e s from the
estab lishm en t o f m an u factu res, than the m an u fac tu re rs th em selv e s
do ; for by m e a n s o f these m an u fac tu re s a dem and for greater
v arie ty and for larger q u antities o f agricu ltu ral products is created,
the valu e in e x c h a n g e o f these products is raised, the agriculturist
is placed in a position to utilise his land and his p ow ers of labour
m ore profitably. H ence em an ate s an increase o f rent, o f profits, and
w a g e s ; and the au gm en tation o f rents and capital is followed by an
increase in the se llin g value o f land and in the w a g e s o f labour.
T h e sellin g valu e o f landed property is n o th in g e lse than
capitalised rent ; it is dependent, on the one hand, on the am ount
and the valu e o f the rent, but, on the other hand, and chiefly, on
the quantities o f m ental and m aterial capital e x istin g in the nation.
E v e r y individual and social im p ro vem en t, esp ecially e ve ry
au gm en tation o f productive pow er in the nation, but, m ost o f all,
of the m an u factu rin g power, raises the am ou n t o f rents, while at
the sam e time it le sse n s the proportion w hich rent bears to the
g ro ss produce.
In an agricu ltu ral nation little developed and
scan tily peopled, e.g. in P o lan d , the proportion of rent am o u n ts
to one-half or one third the g ro ss produce ; in a well-developed,
populous, and w e alth y nation, e.g. E n g la n d , it only am o u n ts to
one-fourth or one-fifth part o f that produce. N e v e rth e le ss, the
actual worth o f this s m a lle r proportion is disproportionately
greater than the worth o f that larger proportion— in m on ey valu e
especially, and still more in m an u factu red goods. F o r the fifth.
part o f tw enty-five bu shels (the a v e r a g e produce o f w h e a t in
E n g la n d ) equals five bu shels ; the th ird part, how ever, o f nine
bu shels (the av e ra g e produce o f w h eat in P oland) am o u n ts only to
three b u s h e ls ; further, these five b u sh els in E n g la n d are worth
on an a v e r a g e 255. to 3 0 s. ; w h ile these three b u sh els in the
MANUFACTURING POWER—AGRICULTURAL INTEREST
191
interior of Poland are at the most worth 8s. to gs. ; and finally,
manufactured goods in E n glan d are at least twice as cheap as in
Poland : consequently the E n g lish landed proprietor is able to
buy for his 30s. o f money-rent ten yards of cloth, but the Polish
landowner for his gs, of rent can obtain scarcely two yards, from
which it is evident that the E n g lish landed proprietor by the fifth
part of the gross produce is as rentier three times, and as con­
sumer of manufactured goods five times, better off than the
Polish landowner is by the third part of his gross produce. Bu t
that farmers and agricultural labourers also must in E n glan d
(especially as consumers of manufactured goods) be disproportion­
ately better off than in Poland, is shown by the fact that out of
the produce o f twenty-five bushels in En glan d twenty bushels go
for sowing, for cultivation of the field, w ages, and profits : h alf
of which (or ten bushels) devoted to the last two items have an
average value of 605. or twenty yards of cloth (at 35. per yard),
while from the produce of nine bushels in Poland only six bushels
go for sowing, cultivation of the field, profit, and wages, half of
which, or three bushels, devoted to the last two items, have
merely a value of 10.9. to 12s. or three and a half yards of cloth.
Rent is a chief means of usefully employing material capital.
Its price, therefore, depends also on the quantity of the capital
existing in the nation and the proportion of the supply of it to the
demand. B y the surplus of the capital which accumulates in a
manufacturing nation as the result of its home and foreign com­
merce, by the low rate of interest which there exists, and the
circumstance that in a manufacturing and commercial nation a
number of individuals who have become w ealthy are alw ays
seeking to invest their surplus capital in land, the selling price
o f a given amount of rent of land is alw a y s disproportionately
higher in such a nation than in the mere agricultural nation. In
Poland the rent of land is sold at ten or twenty y e a rs’ purchase ;
in E n glan d at thirty or forty y e a rs’ purchase.
In the proportion in which the selling value of the rent of land
is higher in the manufacturing and commercial nation than in the
agricultural nation, so also is the selling value of the land itself
higher in the former than in the latter. F o r land of equal natural
fertility in each country, the value is in En glan d ten to twenty
tim es higher than in Poland.
T h a t manufactures have an influence on the amount of rent,
and therefore on the value in exchange of the land, is a fact which
A dam Sm ith certainly notices at the conclusion o f the ninth
chapter of his first book, but only incidentally and without bring­
ing the vast importance o f manufactures in this respect properly
to light. He there distinguishes those causes which influence
directly the augmentation of rent (such as the improvement of the
192
T H E THEORY
land itself, the increase in the num ber and the v alu e o f the cattle
m aintained upon it) from those cau se s w hich h ave on ly an in d irect
influence on that au gm en tation , a m o n g w hich latter he classe s
m an u factu res. In this m a n n e r he places the m a in cause o f the
augm entation o f the rent and o f the v a lu e o f land (nam ely, the
m anufactures) in the background so that it is scarcely perceptible;
while he places the im pro vem en t o f the land itse lf and the increase
o f cattle, w hich are th e m se lv e s for the m o st part the result of
m an u factu res and o f the com m erce proceeding from them , as the
c h ief cause, or at least as an equal cau se, o f that augm entation.
A d a m S m ith and his follow ers h a v e not recognised by any
m e a n s to its full extent the v a lu e o f m an u fac tu re s in this respect.
W e h ave rem arked that in con sequence o f m an u factu res and
o f the com m erce connected w ith them , the v a lu e o f land o f equal
natural fertility in E n g la n d is ten to tw e n ty tim es greater than in
Poland. I f w e now com pare the total produce o f the E n g lis h
m an u fac tu rin g production and o f the E n g li s h m an u factu rin g
capital with the total produce o f the E n g li s h agricultural pro­
duction and o f the E n g li s h agricu ltu ral capital, w e shall find that
the g re atest part o f the wealth o f the nation s h o w s itse lf in the
th u s increased valu e o f landed property.
M a c Q u e e n 1 h a s prepared the fo llo w in g estim ate o f the national
w e alth and national incom e o f E n g la n d :
I. N
a t io n a l
C
a p it a l
.
1 . In agriculture, lands, m ines, and fisheries .
.
.
.
W o rk in g capital in cattle, im plem ents, stocks, and m oney
H ousehold furniture and u ten sils o f the agricu ltu rists
2.
T o this add increase since 18 3 5 (in which year this
estim ate w a s ma d e ) .
.
.
.
.
.
T h en in town buildings o f a ll kinds, and in m anu­
facturing build in gs .
.
.
.
.
.
In ships
.
.
.
.
.
.
.
.
In bridges, canals, and railw ays .
.
.
.
In horses which are not used in agricultu re .
.
.
2,604 mill.
655
,,
52
„
3.3“
00
rM
In vested in m anufactures and c o m m e rc e :
M an u factu res, and hom e trade in m anufactured
goods
.
.
.
.
.
.
.
.
T ra d e in colonial goods
.
.
.
.
.
F o re ig n trade in m anufactured goods .
.
II
16 }
m ill.
>1
>1
206
r*
12
n
605
33i
218 mill.
m ill.
>1
118
20
7 7 6 } m ill.
A m ount o f the w hole national capital (exclusive o f the capital
invested in the colonies, in foreign loans, and in the E n g lish
public f u n d s ) ............................................................................................... 4 ,3 0 5 } mill.
1 G en eral S tatistics o f the B r itis h E m p ir e
Lon d on , 18 36 .
MANUFACTURING POWER—AGRICULTURAL INTEREST
II.
G
ross
N
ational
P
193
roduction.
1. Of agriculture, mines, and fisheries .
.
.
.
.
539 mill.
2. M anufacturing p r o d u c t i o n ................................................... 259 £ „
79§£ ..
F ro m this estimate it m ay be seen :
1. T h a t the value of the land devoted to agriculture amounts
to |4j of the whole E n g lish national property, and is about twelve
times more than the value o f the whole capital invested in m anu­
factures and in commerce.
2. T h a t the whole capital invested in agriculture amounts to
over three-fourths of the E n g lish national capital.
3. T h at the value of the whole fixed property in E n g la n d ,
nam ely :
O f the land, &c.
.
.
.
.
.
.
.
Of houses in towns, and m anufacturing buildings
Of canals and railw ays
.
.
.
.
.
.
.
.
.
.
2,604 mill.
605
M
118
,,
3,327
-
is therefore equal to more than three-fourths of the whole E n glish
national capital.
4. T h a t the manufacturing and commercial capital, inclusive
of ships, docs not altogether amount to more than 2 4 1^ millions,
and therefore to only about -(L of the E n glish national wealth.
5. T h a t the whole E n g lish agricultural capital, with 3 , 3 1 1
millions, yields a gross income of 539 millions, consequently
about 16 per cent. ; while manufacturing and commercial capital,
amounting to 2 18 millions, gives a gross annual production of
259,*, millions or of 120 per cent.
It must here, above all things, be noted that the 2 18 millions
m anufacturing capital, with an annual production of 259L millions,
constitute the chief reason w h y the En glish agricultural capital
could have attained to the enormous amount of 3 , 3 1 1 millions,
and its annual produce to the sum of 539 millions. B y far the
greatest part of the agricultural capital consists in the value of
land and cattle. Manufactures, by doubling and trebling the
population of the country, by furnishing the means for an immense
foreign commerce, for the acquisition and exploration of a number
of colonies, and for a large mercantile marine, have increased in
the same proportion the demand for means of subsistence and
raw materials, have afforded to the agriculturist at once the means
and the motive for satisfying this increased demand, have in­
creased the exchangeable value of these products, and thus caused
the proportionate increase in the amount and the selling value of
the rent of land, consequently of the land itself. W ere these
T3
194
T H E THEORY
2 1 8 m illions o f m an u factu rin g and com m ercial capital destroyed,
w e should see not m erely the 259^- m illions m a n u fa c tu rin g produc­
tion, but also the g re atest part o f the 3 , 3 1 1 m illion s agricultural
capital, and consequently o f the 539 m illio n s agricultural pro­
duction, disappear. T h e E n g li s h national production would not
m e re ly lose 259^ m illions (the v alu e o f its m a n u fa c tu rin g produc­
tion), but the valu e of land w ould decline to the v alu e which it has
in Poland, i.e. to the tenth or tw entieth part o f its present value.
F ro m this it follow s that all capital w hich is devoted by the
agricultural nation in a profitable m an n e r to m an u factu res, in­
creases in the course o f tim e the v alu e o f the land tenfold.
E xp erien ce and statistics e v e ryw h e re confirm this statem ent.
E v e r y w h e r e it h a s been seen that in con sequence o f the estab­
lishm ent o f m an u factu res the valu e o f land and also that o f the
stock o f capital rapidly increases. L e t an y o n e com pare these
v a lu e s in F ra n c e (in 178 9 and in 1840), in N orth A m e rica (in 1820
and in 1830 ), or in G e r m a n y (in 1 8 3 0 and in 1840), h o w they have
corresponded w ith a less developed or a more fully developed
condition o f m anufactures, and he w ill find our observation e v e r y ­
w h ere confirmed.
T h e reason for this appearan ce lies in the increased power of
production in the nation, which em an ate s from the regu lar division
of labour and from the strengthened confederation of the national
powers, also from a better use o f the m ental and natural powers
placed at the disposal o f the nation, and from foreign com m erce.
T h e s e are the v e r y sam e cau ses and effects w hich we m ay
perceive in respect to im proved m e a n s o f t r a n s p o r t ; w hich not
m erely yield in th e m se lv e s a revenue, and th rou g h it a return for
the capital spent upon them , but also pow erfu lly promote the
d evelopm ent o f m an u factu res and agriculture, w h e re b y th ey in ­
crease in the course o f time the v a lu e o f the landed property
within their districts to tenfold the valu e o f the actual m aterial
capital which has been em ployed in creatin g them. T h e a g ricu l­
turist, in com parison w ith the undertaker o f such w o rk s (im proved
m ean s of transport), has the great a d v a n ta g e o f being quite sure o f
his tenfold gain on his invested capital and o f obtaining this profit
w ithout m a k in g a n y sacrifices, while the contractor for the w orks
m ust stake his whole capital. T h e position o f the agricu ltu rist is
equ ally favourable as com pared w ith that o f the erector o f new
m anufactories.
If, how ever, this effect o f m an ufactures on agricultural produc­
tion, on rent, and therefore on the valu e o f landed property, is so
considerable and ad v a n ta g e o u s for all w h o are interested in a g ri­
cu ltu re; how, then, can it be m aintained that protective m easu res
w ou ld favour m an u factu res m erely at the cost o f the ag ricu ltu rists ?
MANUFACTURING POWER—AGRICULTURAL INTEREST
195
T h e material prosperity of agriculturists, as well as o f all other
private persons, principally depends on the point that the value o f
what they produce shall exceed the value of what they consume.
It, therefore, is not so important to them that manufactured goods
should be cheap, as especially that a large demand for various
agricultural products should exist, and that these should bear a
high value in exchange. N ow , if measures of protection operate
so that the agriculturist gains more by the improvement o f the
market for his own produce than he loses by the increase of the
prices of such manufactured goods as he requires to buy, he can­
not rightly be described as making a sacrifice in favour of the
manufacturer. T h is effect is, however, alw ays observable in the
case o f all nations who are capable of establishing a manufacturing
power of their own, and in their case is most apparent during the
first period of the rise of the native manufacturing industry; since
just at that time most of the capital transferred to manufacturing
industry is spent on the erection of dwelling houses and manufac­
tories, the application of water power, &c., an expenditure which
chiefly benefits the agriculturist. H ow ever much in the beginning
the advantages of the greater sale of agricultural produce and of
its increased value outweighs the disadvantage of the increased
price of manufactured goods, so must this favourable condition
a lw a y s increase further to the advantage of the agriculturists, be­
cause the flourishing of the manufactories alw ays tends in the
course o f time continually more and more to increase the prices
obtainable for agricultural produce and to lessen the prices o f
manufactured goods.
Further, the prosperity o f the agriculturist and landed pro­
prietor is especially dependent on the circumstance that the value
of the instrument from which his income is derived, namely, his
landed property, at least maintains its former position. T h is is
not merely the chief condition of his prosperity, but frequently o f
his entire economical existence.
F o r instance, it frequently
happens that the annual production of the agriculturist exceeds
his consumption, and nevertheless he finds him self ruined. T h is
occurs if while his landed property is encumbered with money
debts, the general credit becomes flu ctu atin g ; if on one side the
demand for money capital exceeds the supply of it, and on the
other hand the supply o f land exceeds the demand. In such cases
a general withdrawal of money loans and a general offer of land
for sale arises, and consequently land becomes almost valueless,
and a large number of the most enterprising, active, and economi­
cal land cultivators are ruined, not because their consumption has
exceeded their production, but because the instrument of their
production, their landed property, has lost in their hands a con-
13 *
196
T H E THEORY
siderable portion o f its value, in con sequence o f cau se s over which
th ey had no c o n t r o l; further, because their credit h a s thereby be­
com e destroyed ; and finally, because the am ou n t o f the m oney
debts with which their landed property is encum bered is no longer
in proportion to the m o n e y valu e o f their p o sse ssio n s, which has
become depressed by the general w o rth le ssn e ss o f landed property.
Su ch crises h ave occurred in G e r m a n y and N o rth A m e rica during
the last fifty y e a rs more than once, and in this m a n n e r a large
proportion o f the G e rm a n nobility find t h e m se lv e s no longer in
p o sse ssio n o f property or landed estate, w ith ou t h a v in g clearly
perceived that they really ow e this fate to the policy adopted by
their brothers in E n g la n d , the T o r i e s w h o m th ey regard a s so
well disposed. T h e condition o f the agricu ltu rist and landed pro­
prietor is, how ever, totally different in cou n tries w h ere m an u fac­
tures flourish v ig o ro u sly. T h e re , w h ile the productive capabilities
o f the land and the prices o f produce are increased, he not merely
g a in s the am oun t by w h ich the v alu e of his production exceeds
the valu e o f his consum ption ; he g ain s, a s landed proprietor, not
only an increase o f a nn u al rent, but the am ou n t o f capital repre­
sented by the increase o f rent. H is property doubles and trebles
itse lf in valu e, not because he w o rk s m ore, im p ro v e s his fields
more, or sa v e s more, but because the v alu e o f his property has
been increased in consequence o f the e sta b lish m e n t o f m a n u fa c ­
tures. T h i s effect affords to him m e a n s and inducem ent for greater
mental and bodily exertions, for im pro vem en t o f his land, for the
increase o f his live stock, and for greater econ om y, n o tw ith stan d ­
in g increased consum ption. W i t h the increase in the valu e o f his
land his credit is raised, and with it the cap ab ility o f procuring the
m aterial capital required for his im pro vem ents.
A d am S m ith p a sse s over these conditions of the e xch an geab le
value o f land in silence, J . B . S a y , on the contrary, believes that
the exch an geable valu e o f land is o f little im portance, inasm u ch
as, w hether its v alu e be high or low , it a lw a y s serves e q u ally well
for production. It is sad to read from an author w h o m his G e r ­
m an tran slators regard a s a u n iversal national au thority, such
fun d am en tally w ro n g v ie w s about a m atter which affects so deeply
the prosperity o f nations. W e , on the con trary, believe it essential
to m aintain that there is no surer test o f national p rosperity than
the rising and fallin g of the v alu e o f the land, and that fluctuations
and crises in that are to be classed a m o n g the m ost ruinous o f all
p lag u e s that can befall a country.
Into this erroneous v ie w the school h a s also been led by its
predilection for the theory o f free trade (as it desires the latter
term to be understood).
F o r now here are fluctuations and crises
in the valu e and price o f land greater than in those purely a g r i ­
MANUFACTURING POWER—AGRICULTURAL INTEREST
197
cultural nations which are in unrestricted commercial intercourse
with rich and powerful manufacturing and commercial nations.
Foreign commerce also, it is true, acts on the increase of rent
and the value of land, but it does so incomparably less decidedly,
uniformly, and permanently, than the establishment of home
manufactures, the continuous regular increase o f manufacturing
production, and the exchange of home manufacturing products for
home agricultural products.
S o long as the agricultural nation still possesses a large
quantity of uncultivated or badly cultivated land, so long as it
produces staple articles which are readily taken by the richer
manufacturing nation in exchange for manufactured goods, so
long as these articles are easy of transport, so long also as the
demand for them is lasting and capable of annual increase at a
rate corresponding with the growth of the productive powers of
the agricultural nation, and so long as it is not interrupted by
w ars or foreign tariff regulations, under such circumstances foreign
commerce has a powerful effect on the increase of rents and on
the exchangeable value of land. B u t as soon as any one of these
conditions fails or ceases to operate, foreign commerce m ay become
the cause of national stagnation, nay frequently o f considerable
and long-continued retrogression.
T h e fickleness of foreign demand has the most baneful effect
of all in this respect, if in consequence of wars, failure of crops,
diminution of importation from other parts, or owing to any other
circumstances and occurrences, the manufacturing nation requires
larger quantities especially of the necessaries of life or raw
materials, or of the special staple articles referred to, and then if
this demand again to a great extent ceases, in consequence of the
restoration of peace, o f rich harvests, of larger importation from
other countries, or in consequence of political measures. I f the
demand lasts merely for a short time, some benefit m ay result
from it to the agricultural nation ; but if it last for years or a
series of years then all the circumstances o f the agricultural
nation, the scale of expenditure of all private establishments, will
have become regulated by it. T h e producer becomes accustomed
to a certain scale of consumption ; and certain enjoyments, which
under other circumstances he would have regarded as luxuries,
become necessaries to him. R e ly in g on the increased yield and
value of his landed property, he undertakes improvements in
cultivation, in buildings, and makes purchases which otherwise
he would never have done. Purchases and sales, contracts of
letting land, loans, are concluded according to the scale of in­
creased rents and values. T h e State itself does not hesitate to
increase its expenses in accordance with the increased prosperity
198
T H E THEORY
of* private persons.
B u t if this dem and afterw ards suddenly
ceases, disproportion between production and consum ption fol­
l o w s ; disproportion between the decreased v a lu e s o f land and the
m o n e y encu m brances upon it which continue undim inished in
a m o u n t ; disproportion between the m o n e y rent payab le under the
leases, and the m on ey produce o f the land w hich h a s been taken
on lease ; disproportion between national incom e and national
expenditure ; and in consequence o f these disproportions, bank­
ruptcy, e m barrassm en t, discou ragem en t, retrogression in the econo­
m ical as well as in the m e n tal and political d evelopm ent o f the
nation. A gricu ltu ral prosperity w ould under these circum stances
act like the stim u lan t o f opium or stron g drink, stim u la tin g merely
for a m om ent, but w e a k e n in g for a w hole lifetime. It would be
like F ra n k lin 's flash o f lig h tn in g , w hich for a m om en t displayed
the objects in a sh in in g ligh t, but on ly to th row them back into
deeper darkness.
A period o f tem porary and p a s s in g prosperity in agriculture is
a far greater m isfortune than uniform and la stin g poverty. I f
prosperity is to bring real benefit to in d iv id u als an d nations, it
m u st be continuous.
It, how ever, becom es continuous only in
case it increases g rad u ally, and in case the nation p ossesses
g u a ra n te e s for this increase and for its duration. A low er value
o f land is in com parab ly better than fluctuations in its valu e ; it is
on ly a gradual but stead y increase in that valu e th at affords to the
nation la stin g prosperity. A n d on ly by the p o sse ssio n o f a m a n u ­
factu ring power o f their own, can w ell-developed nations possess
a n y guarantee for the stead y and perm anent increase o f that
value.
T o h o w very sm all an extent clear ideas prevail a s to the effect
o f a hom e m an u fac tu rin g pow er on the rent and v alu e o f land in
com parison w ith the effect which foreign trade h a s on them, is
sh o w n most plain ly b y the circu m stance that the proprietors o f
v in e y a rd s in F ra n c e still a lw a y s believe that th ey are in ju riou sly
affected by the F re n ch sy ste m o f protection, and dem and the
greatest possible freedom o f com m erce w ith E n g la n d in hopes o f
thereby in cre asin g their rents.
D r. B o w r in g , in his report o f the com m ercial relations e x ist ­
in g between E n g la n d and F r a n c e , the fundam ental tendency o f
w hich is to show the benefit to F ra n c e w hich a larger im portation
o f E n g li s h fabrics and a con sequ ently in creasin g exportation o f
F re n ch w ines would occasion, has adduced facts from w hich the
m ost strikin g proof a g a in st his ow n argu m en t can be brought.
Dr. B o w r in g quotes the im portation o f F re n ch w in e s into the
N eth erlan d s ( 2 , 5 1 5 , 1 9 3 g allo n s, 1829) a g a in s t the an n u al im por­
tation into E n g la n d (4 3 1,5 0 9 gallons) to prove how g re atly the
MANUFACTURING POWER—AGRICULTURAL INTEREST
199
sale o f French wines in E n glan d could be increased by freer
commercial interchange between the two countries.
N ow supposing (although it is more than improbable that the
sale of French wines in En glan d would not find obstacles in the
predilection existing there for spirituous liquors, for strong beer,
and for the strong and cheap wines of Portugal, Spain, Sicily,
Teneriffe, Madeira, and the Cape)— supposing that E n glan d really
w as to extend her consumption of French wines to the same pro­
portion as that of the Netherlands, she would certainly (calculating
according to her population) be able to increase her consumption
to five or six million gallons (i.e. to from ten to fifteen fold her
present a m o u n t) ; and from a superficial point of view this cer­
tainly appears to promise great advantage to France, and to the
French vineyard proprietors.
If, however, we investigate this matter to the bottom, we
obtain another result. B y as much freedom of trade as is pos­
sible— we will not say complete freedom of trade, although the
tatter would have to be accepted according to the principle enunci­
ated, and to Bow ring's argum ents— it can scarcely be doubted that
the En glish would draw to themselves a large part of the French
market for manufactured goods (especially as regards the manu­
factures of woollens, cotton, linen, iron, and pottery). On the
most moderate estimate we must assum e, that in consequence of
this decreased French manufacturing production one million fewer
inhabitants would live in the French towns, and that one million
fewer persons would be employed in agriculture for the purpose of
supplying the citizens of those towns with raw material and neces­
saries of life. N ow , Dr. B o w rin g him self estimates the consump­
tion of the country population in France at 16^ gallons per head,
and that of the town population at double that quantity, or 33
gallons per head. T h u s in consequence of the diminution of the
home manufacturing power effected by free trade, the internal
consumption o f wines would decrease by 50 million gallons, while
the exportation of wine could only increase by 5 or 6 million
gallons. Such a result could scarcely be to the special advantage
of the French proprietors of vineyards, since the internal demand
for wines would necessarily suffer ten times more than the external
demand could possibly gain.
In one word : it is evident as respects the production of wine,
as also in that of meat, of corn, and of raw materials and pro­
visions generally, that in the case of a great nation well fitted to
establish a manufacturing power of its own, the internal manufac­
turing production occasions ten to twenty times more demand for
the agricultural products of temperate climates, consequently acts
ten to twenty times more effectually on the increase of the rent and
200
T H E THEORY
exchan geable valu e o f real estate, than the m ost flourishing exporta­
tion o f such products can do. T h e m ost c o n vin c in g proof o f this
m a y also be seen in the am ou n t o f rents and the exch an ge ab le value
o f land near large tow ns, as com pared with their am ou n t and value
in distant provinces, even though these latter are connected w ith the
capita] by good roads and conveniences for com m ercial intercourse.
T h e doctrine o f rent can either be considered from the point o f
v ie w o f v a lu e s or from the point o f view of p ro d u c tiv e p o w e rs ; it
can further be considered w ith respect m erely to private rela­
tions, n am ely, the relations between landed proprietor, farm er, and
labourer, or w ith especial regard to the social and national rela­
tions and conditions. T h e school has taken up this doctrine
chiefly from the sole point o f v ie w o f private econom y.
S o far as
w e know, for instance, n o thing has been adduced by it to show
how the consum ption o f the rents o f the nation is the more a d v a n ­
ta g e o u s the more it takes place in the p roxim ity of the place
w hence it is derived, but h ow n everth eless in the v ario u s S ta te s
that consum ption takes place principally at the seat o f the so v e ­
reign (e.g. in absolute m on arch ies m ostly in the national m etro­
polis), far a w a y from the provinces w h ere it is produced, and
therefore in a m an n e r the least a d v a n ta g e o u s to agriculture, to
the m ost useful industries, and to the developm ent o f the m ental
powers of the nation. W h e r e the la n d o w n in g aristocracy possess
no rights and no political influence u n le ss they live at the Court,
or occupy offices o f S tate, and w h ere all public power and influence
is centralised in the national m etropolis, lan d o w n e rs are attracted
to that central point, w h ere a lm o st e x clu sive ly they can find the
m eans o f sa tisfy in g their am bition, and opportunities for spending
the income o f their landed property in a p leasan t m a n n e r ; and
the more that m ost lan dow n ers get accustom ed to live in the
capital, and the le ss that a residence in the provinces offers to
each individual opportunities for social intercourse and for m ental
and material e n jo y m en ts o f a more refined character, the more
will provincial life repel him and the m etropolis attract him. T h e
province thereby loses and the m etropolis g a in s alm ost all those
m e a n s o f mental im pro vem en t w hich result from the sp e n d in g of
rents, especially those m an u factu res and mental producers w hich
would h ave been m aintained by the rent. T h e m etropolis under
those circum stances, indeed, ap p e ars extrem ely attractive because
it unites in itse lf all the talents o f the intellectual w orkers and the
greatest part o f the m aterial trades w h ich produce articles o f
lu xu ry. B u t the provinces are thereby deprived o f those m ental
pow ers, o f those m aterial m e an s, and especially o f those industries,
w hich chiefly enable the agricu ltu rist to undertake agricu ltu ral
im pro vem ents, and stim u late him to effect them.
MANUFACTURING POWER—AGRICULTURAL INTEREST
201
In these circumstances lies to a great extent the reason why
in France, especially under absolute monarchy, alongside o f a
metropolis surpassing in intellect and splendour all towns of the
European continent, agriculture made but slight progress, and the
provinces were deficient in mental culture and in useful industries.
Hut the more that the landed aristocracy gains in independence of
the Court, and in influence in legislation and administration, the
more that the representative system and the system of adm inis­
tration grants to the towns and provinces the right of administer­
ing their own local affairs and of taking part in the legislation and
government of the State, and consequently the more that respect
and influence can be attained in the provinces and by living there,
so much the more will the landed aristocracy, and the educated
and well-to-do citizens, be drawn to those localities from which
they derived their rents, the greater also will be the influence o f
the expenditure of those rents on the development of the mental
powers and social institutions, on the promotion of agriculture,
and on the development of those industries which are useful to
the great m asses of the people in the province.
T h e economical conditions of E n glan d afford proof of this
observation. T he fact that the En glish landed proprietor lives for
the greatest portion of the year on his estates, promotes in m ani­
fold w ays the improvement of E n g lish agriculture : directly, be­
cause the resident landowner devotes a portion of his rent to
undertaking on his own account improvements in agriculture, or
to supporting such improvements when undertaken by his
tenants ; indirectly, because his own consumption tends to sup­
port the manufactures and agencies of mental improvement and
civilisation existing in the neighbourhood. From these circum­
stances it can further partly be explained w hy in G erm any and in
Switzerland, in spite of the want of large towns, o f important
m eans of transport, and of national institutions, agriculture and
civilisation in general are in a much higher condition than in
France.
B u t the great error into which in this matter Adam Smith and
his school have fallen is that which we have already before indi­
cated, but which can be here more clearly shown, viz. that he did
not clearly recognise the influence of manufactures on the increase
of rents, on the market value of landed property itself, and on the
agricultural capital, and did not state this by any means to its full
extent, but, on the contrary, has drawn a comparison between
agriculture and manufactures in such a manner that he would
make it appear that agriculture is far more valuable and important
to a nation than manufactures, and that the prosperity resulting
from it is far more lasting than the prosperity resulting from the
202
T H E THEORY
latter. A dam S m ith in so doing m erely sanctioned the erroneous
v ie w o f the physiocratic school, althou gh in a so m e w h at modified
m anner.
H e w a s eviden tly misled by the circum stance that— as
w e h ave already dem onstrated by the statistical conditions o f
E n g la n d — the material agricultural capital is (even in the richest
m an u fac tu rin g country) ten to tw enty tim es more im portan t than
the material m an u factu rin g c a p ita l; in fact, even the annual a g r i ­
cu ltu ra l p ro d u ctio n far exceeds in valu e the total m a n u fa c tu rin g
ca p ita l. T h e sam e circum stance m a y also h ave induced the
physiocratic school to over-estim ate the valu e of agriculture in
com parison with m an ufactures. Su p erficially considered, it cer­
tain ly appears as if agricu ltu re enriches a country ten tim es more,
and con sequ ently deserves ten tim es more consideration, and is
ten tim es more im portant to the State than m an u factu res. T h is ,
h ow ever, is m erely apparent. I f w e in v estig ate the cau ses o f this
agricu ltu ral prosperity to their basis, w e find them p rin cipally in
the existence o f m an u factu res.
It is those 2 1 8 m illions o f m a n u ­
facturing capital which h ave principally called into existence those
3 , 3 1 1 m illions o f agricu ltu ral capital. T h e sam e consideration
holds good a s respects m ean s o f t r a n s p o r t ; it is the m on ey e x ­
pended in con stru ctin g them w hich has made those lands which
are within the reach o f the can als more v alu ab le. I f the m ean s o f
transport alo n g a can al be destroyed, we m a y use the w ater which
h a s been hitherto em ployed for transport, for irrig atin g m e ad o w s
— apparen tly, therefore, for in cre asin g agricultural capital and
agricu ltu ral rents, & c. ; but even su p p o sin g that by such a pro­
cess the v alu e o f these m e a d o w s rose to m illions, this alteration,
apparen tly profitable to agriculture, w ill n e v e rth e le ss lower the
total valu e o f the landed property w hich is within reach o f the
canal ten tim es more.
Considered from this point o f v ie w , from the circu m stan ce that
the total m an u factu rin g capital o f a country is so sm all in com ­
parison w ith its total agricu ltu ral capital, con clu sion s m u st be
draw n o f a totally different character from those w hich the present
and preceding school h ave draw n from it. T h e m ain te n an ce and
au gm en tation o f the m an u factu rin g pow er seem now, even to the
agriculturist, the more v alu able, the less capital as com pared with
agriculture it requires to absorb in itself and to put into circu la­
tion. Y e s , it m ust now become evident to the agriculturist, and
especially to the rent-ow ners and the landed proprietors o f a
country, that it w ould be to their interest to m aintain and develop
an internal m an u factu rin g power, even had they to procure the
requisite capital without hope o f direct recom pense ; ju s t a s it is
to their interest to construct c an als, ra ilw a y s , and roads even if
these undertakings yield no real nett profit. L e t us ap p ly the
MANUFACTURING FOVVfeR—AGRICULTURAL INTEREST
203
foregoing considerations to those industries which lie nearest and
are most necessary to agriculture, e.g. flour mills ; and there will
be no room for doubt as to the correctness o f our views. C o m ­
pare, on the one hand, the value of landed property and rent in
a district where a mill is not within reach of the agriculturist,
with their value in those districts where this industry is carried on
in their very midst, and we shall find that already this single
industry has a considerable effect on the value of land and on
rent ; that there, under similar conditions o f natural fertility, the
total value ot the land has not merely increased to double, but to
ten or twenty times more than the cost of erecting the mill
amounted to ; and that the landed proprietors would have ob­
tained considerable advantage by the erection o f the mill, even if
they had built it at their common expense and presented it to the
miller. T h e latter circumstance, in fact, takes place every day in
the backwoods of North America, where, in cases when an indi­
vidual has not adequate capital to erect such works entirely at his
own expense, the landowner gladly helps him by contributing
labour, by team work, free gifts o f timber, &c. In fact, the same
thing also occurred, although in another form, in countries of
earlier civilisation ; here must undoubtedly be sought the origin
of m an y ancient feudal * common mill ' rights.
A s it is in the case of the corn mill, so is it in those of saw,
oil, and plaster mills, so is it in that of iron works ; everywhere
it can be proved that the rent and the value of landed property
rise in proportion as the property lies nearer to these industries,
and especially according as they are in closer or less close com­
mercial relations with agriculture.
And w hy should this not be the case with woollen, flax, hemp,
paper, and cotton mills ? W h y not with all manufacturing indus­
tries ? W e see, at least, everywhere that rent and value of landed
property rise in exactly the same proportion with the proximity of
that property to the town, and with the degree in which the town
is populous and industrious. I f in such com paratively small dis­
tricts we calculate the value of the landed property and the capital
expended thereon, and, on the other hand, the value o f the capital
employed in various industries, and compare their total amount,
we shall find everywhere that the former is at least ten times
larger than the latter. B u t it would be folly to conclude from this
that a nation obtains greater ad vantages by investing its material
capital in agriculture than in manufactures, and that the former is
in itself more favourable to the augmentation o f capital than the
latter. T h e increase o f the material agricultural capital depends for
the most part on the increase of the material manufacturing c a p ita l;
and nations which do not recognise this truth, however much
204
T H E THEORY
they m a y be favoured by nature in agriculture, w ill not only not pro­
g ress, but w ill retrograde in w ealth, population, culture, and power.
W e see, n evertheless, how the proprietors o f rent and of
landed property not unfrequently regard those fiscal and political
regulations w hich aim at the estab lish m en t o f a n ative m an u fac­
turing power as p rivileg es which serve m erely to enrich the m an u ­
facturers, the burden o f w hich they (the landed interest) have
exclu sively to bear. T h e y , w ho at the b e g in n in g o f their agricul­
tural operations so clearly perceived w h a t great a d v a n ta g e s they
m ig h t obtain if a corn mill, a sa w m ill, or an iron w ork were
established in their neighbourhood, that th ey th e m se lv e s submitted
to the greatest sacrifices in order to contribute tow ards the erec­
tion o f such w orks, can no longer, w hen their interests as ag ricu l­
turists h ave so m e w h at im proved, com prehend w h at immense
a d v a n ta g e s the total agricu ltu ral interest o f the cou n try would
derive from a perfectly developed national ind ustry o f its ow n, and
how its own a d v a n ta g e dem ands that it should subm it to those
sacrifices w ith ou t w hich this object cannot be attained.
It there­
fore happens, that, on ly in a few and on ly in v e r y well-educated
nations, the mind of each separate landed proprietor, though it is
gen e rally keenly enough alive to those interests w hich lie close at
hand , is sag acio u s en ou g h to appreciate those greater ones which
are m an ife st to a more extended v iew .
It m u st not, m oreover, be forgotten that the popular theory
h a s m ate rially contributed to confuse the opinions o f landed pro­
prietors. S m ith and S a y endeavoured e v e ry w h e re to represent
the exertions of m an u factu rers to obtain m e a su re s o f protection as
in spiratio ns o f mere self-interest, and to praise, on the contrary,
the g en e ro sity and d isinterested ness o f the landed proprietors,
w h o are far from claim in g a n y such m e a su res for th em selves. It
appears, how ever, that the landed proprietors h ave m erely become
mindful o f and been stim ulated to the virtue of disinterestedness,
which is so h ig h ly attributed to them , in order to rid them selves
o f it. F o r in the greatest n u m ber of, and in the m ost important,
m a n u fac tu rin g states, these lan dow n ers h a v e also recently de­
manded and obtained m e a su re s o f protection, alth o u gh (as we
h ave shown in another place) it is to their ow n g re atest injury.
I f the landed proprietors form erly m ade sacrifices to establish a
national m an u factu rin g pow er o f their ow n , th ey did w h at the
agriculturist in a country place does w hen he m a k e s sacrifices in
order that a corn mill or an iron forge m a y be estab lished in his
vicinity. I f the landed proprietors n o w require protection also for
their agriculture, they do w h at those form er landed proprietors
would have done if, after the mill has been erected b y their aid,
they required the m iller to help in cu ltivatin g their fields. W ith -
MANUFACTURING POWER—AGRICULTURAL INTEREST
205
out doubt that would be a foolish demand. Agriculture can only
progress, the rent and value of land can only increase, in the ratio
in which manufactures and commerce flourish ; and manufactures
cannot flourish if the importation of raw materials and provisions
is restricted. T h is the manufacturers everywhere felt. F o r the
fact, however, that the landed proprietors notwithstanding ob­
tained measures of protection in most large states, there is a
double reason. F irstly , in states h avin g representative g overn ­
ment, the landowner's influence is paramount in legislation, and
the manufacturers did not venture to oppose them selves perseveringly to the foolish demand of the landowners, fearing lest they
m ight thereby incline the latter to favour the principles of free
trad e; they preferred to agree with the landed proprietors.
It w as then insinuated by the school to the landed proprietors
that it is just as foolish to establish manufactures by artificial
means as it would be to produce wine in cold climates in green­
houses ; that manufactures would originate in the natural course
of things of their own accord; that agriculture affords incompar­
ably more opportunity for the increase of capital than manufac­
tures ; that the capital of the nation is not to be augmented by
artificial measures ; that law s and State regulations can only in­
duce a condition o f things less favourable to the augmentation
o f wealth. F in a lly , where the admission could not be avoided
that manufactures had an influence over agriculture, it w as sought
at least to represent that influence to be as little and as uncertain
as possible, In any case (it w a s said) if manufactures had an
influence over agriculture, at least everything is injurious to agri­
culture that is injurious to manufactures, and accordingly m anu­
factures also had an influence on the increase of the rent of land,
But, on the other hand, the increase
but merely an in direct one.
of population and of cattle, the improvements in agriculture, the
perfection of the means of transport, &c. had a direct influence on
the increase of rent. T h e case is the same here in reference to
this distinction between direct and indirect influence as on m any
other points where the school draws this distinction (e.g. in re­
spect of the results of mental culture), and here also is the
example already mentioned by us ap p licab le; it is like the fruit of
the tree, which clearly (in the sense of the school) is an indirect
result, inasmuch as it grow s on the twig, which again is a fruit of
the branch, this again is a fruit of the trunk, and the latter a fruit
of the root, which alone is a direct product of the soil.
Or would
it not be ju st as sophistical to speak of the population, the stock
of cattle, the m eans of transport, Arc. as direct causes ; but o f
manufactures, on the contrary, as an indirect cause of the augm en­
tation of rents, while, nevertheless, one’s very eyesight teaches
206
T H E THEORY
one in every large m an u factu rin g country th at m an u factu res them ­
se lv e s are a ch ief cau se o f the a u g m en tatio n o f population, of the
stock o f cattle, and of m ean s o f tran sport, &c. ? A n d would it be
logical and ju s t to co-ordinate these effects o f m an u fac tu re s with
their cause— in fact, to put these resu lts o f m an u factu res at the
head as main cau se s, and to put the m an u fac tu re s th em selv e s as
an indirect (consequently, alm ost as a secondary,) cau se behind the
former ? A n d w hat else can h a v e induced so deeply in v e stig a tin g
a gen iu s as A d a m S m ith to m ak e use o f an arg u m e n t so perverted
and so little in accordance with the actual nature o f things, than
a desire to put especially into the shade m an u factu res, and their
influence on the prosperity and the p o w e r o f the nation, and on the
au gm en tation o f the rent and the v alu e o f the land ? A n d from
w hat other m otive can this h ave taken place than a w ish to avoid
e xp lan atio n s w h o se resu lts would speak too loudly in favo u r o f the
system o f protection ? T h e school has been e sp e c ia lly unfortu­
nate since the time o f A d a m S m ith in its in v e stig a tio n s a s to the
nature o f rent. R icardo, and after him M ill, M ‘ Culloch, and
others, are o f opinion that rent is paid on account of the natural
productive fertility inherent in the land itself- R icard o h a s based
a whole system on this notion. I f he had m ade an excursion to
C an ad a, he would h ave been able to m ak e o b se rv atio n s there in
eve ry v alle y , on every hill, w hich would h ave convinced him that
his theory is based on sand. A s he, h ow ever, o n ly took into
account the circu m stan ce s o f E n g la n d , he fell into the erroneous
idea that these E n g li s h fields and m e ad o w s for w h o se pretended
natural productive capability such h an d so m e rents are now paid,
h ave at all tim e s been the sam e fields and m eadow s. T h e original
natural productive cap ab ility o f land is e vid en tly so unim portant,
and affords to the person u sin g it so sm all an exce ss o f products,
that the rent derivab le from it alone is not w orth m entioning.
A ll C a n a d a in its o riginal state (inhabited m erely by hunters)
would yield in m eat and skins scarcely enou gh incom e to p a y the
salary o f a sin gle O xonian professor o f political econom y. T h e
natural productive cap ab ility o f the soil in M alta c o n sists o f rocks,
w hich would scarcely h a v e yielded a rent at a n y time.
If we
follow up with the m in d ’ s eye the course o f the civilisation o f
whole n ations, and o f their con version from the condition o f hunters
to the pastoral condition, and from this to that o f agricu ltu rists,
& c ., we m a y e asily convince o u rselves that the rent e veryw here
w as origin ally n il, and that it rose eve ryw he re w ith the progress
of civilisation , o f population, and with the increase o f m ental and
material capital. B y com p arin g the mere agricu ltu ral nation with
the agricultural, m an ufacturin g, and com m ercial nation, it w ill be
seen that in the latter tw enty tim es more people live on ren ts than
MANUFACTURING POWER—AGRICULTURAL INTEREST
207
in the former. According to M arshal’s statistics of Great Britain,
for example, in England and Scotland 16,537,398 human beings
were living in 1 8 3 1 , am ong whom were 1 , 1 1 6 , 3 9 8 rentiers. W e
could scarcely find in Poland on an equal space of land the
twentieth part of this number. I f we descend from generals to
particulars and investigate the origin and cause of the rental o f
separate estates, we find everywhere that it is the result of a pro­
ductive capability which has been bestowed on it not spontane­
ously by nature, but chiefly (directly or indirectly) through the
mental and material labour and capital employed thereon and
through the development of society. W e see, indeed, how pieces
of land yield rents which the hand of men has never stirred by
cultivation, as, for instance, quarries, sand pits, pasture g rou n d s;
but this rent is merely the effect of the increase o f culture, capital,
and population in the vicinity. W e see, on the other hand, that
those pieces of land bring most rent whose natural productive
capability has been totally destroyed, and which serve for no
other use than for men to cat and drink, sit, sleep, or walk, work,
or enjoy themselves, teach or be taught upon, viz. building sites.
T h e basis of rent is the exclusive benefit or advantage which
the ground yields to that individual at whose exclusive disposal it
is placed, and the greatness of this benefit is determined especially
according to the amount of available mental and material capital
in the com munity in which he is placed, and also according to the
opportunity which the special situation and peculiar character of
the property and the utilisation of capital previously invested
therein affords to the person exclusively possessing the property
for obtaining material values, or for satisfying mental and bodily
requirements and enjoyments.
Kent is the interest of a capital which is fixed to a natural
fund, or which is a capitalised natural fund. T he territory, however,
of that nation which has merely capitalised the natural funds devoted
to agriculture, and which does so in that imperfect manner which
is the case in mere agriculture, yields incomparably less rent than
the territory of that nation which combines agricultural and m anu­
facturing industry on its territory. T h e rentiers of such a country
live mostly in the same nation which supplies the manufactured
goods. But when the nation which is far advanced in agriculture
and population establishes a manufacturing industry of its own, it
capitalises (as we have already proved in a formerchapter) notmerely
those powers of nature which are specially serviceable for m anu­
factures and were hitherto unemployed, but also the greatest part
of the manufacturing powers serving for agriculture. T h e increase
of rent in such a nation, therefore, infinitely exceeds the interest of
the material capital required to develop the manufacturing power.
C H A P T E R XXI.
T H E M ANUFACTURING POWER AND COMMERCE.
W e h a v e hitherto m erely spoken o f the relations between a g ri­
culture and m an u factu res, because they form the fundam ental
ingredients o f the national production, and because, before obtain­
in g a clear v ie w o f their m utual relations, it is im possible to
com prehend correctly the actu al function and position of com ­
merce.
C o m m e rc e is also certain ly productive (as the school
m a i n t a i n s ) ; but it is so in quite a different m a n n e r from a g r i ­
culture and m an u factu res. T h e s e latter a c tu a lly produce goods,
com m erce on ly brings about the e xch an ge of the goods between
ag ricu ltu rists and m an u factu rers, between producers and con­
su m e rs. F r o m this it follow s that com m erce m u st be regulated
accord in g to the interests and w a n ts o f agriculture and m an u fac­
tures, not vice versa.
B u t the school h a s exactly reversed th is last dictum by adopt­
in g a s a favourite e xp re ssio n the s a y in g o f old G o u rn e y , ‘ L a i s s e z
faire, laisse z p a sse r,' an expression w h ich sounds no less a g re e ­
ably to robbers, ch eats, and th ie v e s than to the m erchant, and is
on that accou n t rather doubtful as a m axim .
T h is p erversity o f
su rren d erin g the interests o f m an u fac tu re s and agriculture to the
d e m a n d s o f com m erce, w ithout reservation , is a natural conse­
quence o f that th eo ry w hich e v e ryw h e re m e re ly takes into con­
sideration present v a lu e s , but now here the pow ers that produce
them , and reg ard s the w hole w orld a s but one in d iv is ib le rep u b lic
o f m erchants. T h e school does not discern that the m erchant m a y
be acco m p lishin g h is purpose (viz. gain o f v a lu e s by exchan ge) at
the expense o f the ag ricu ltu rists and m an u factu rers, at the e x ­
pense o f the n a tio n ’ s productive pow ers, and indeed o f its inde-,
pendence.
It is all the sa m e to him ; and accord in g to the
character of his b u sin e ss and occupation, he need not trouble
h im s e lf much resp e ctin g the m an n e r in w hich the goods imported
or exported by him act on the m orality, the prosperity, or the
pow er o f the nation. H e im ports poison s a s read ily a s m edicines.
H e e n e rvates w hole nations through opium and spirituous liquors.
W h e th e r he by his im p o rtatio n s and s m u g g lin g s b rin g s occupation
208
THE MANUFACTURING POWER AND COMMERCE
209
and sustenance to hundreds of thousands, or whether they are
thereby reduced to beggary, does not signify to him as a man of
business, if only his own balance is increased thereby. T h en if
those who have been reduced to want bread seek to escape the
misery in their fatherland by emigrating, he can still obtain profit
by the business of arranging their emigration. In the time of w ar
he provides the enemy with arms and ammunition. H e would, if
it were possible, sell fields and meadows to foreign countries, and
when he had sold the last bit of land would place h im self on board
his ship and export himself.
It is therefore evident that the interest of individual merchants
and the interest of the commerce of a whole nation are widely
different things. In this sense Montesquieu has well said, * I f
the State imposes restrictions on the individual merchant, it does
so in the interest of commerce, and his trade is nowhere more
restricted than in free and rich nations, and nowhere less so than
in nations governed by despots.’ 1
Commerce emanates from
manufactures and agriculture, and no nation which has not
brought within its own borders both these main branches of
production to a high state of development can attain (in our days)
to any considerable amount of internal and external commerce.
In former times there certainly existed separate cities or leagues
of cities which were enabled by means of foreign manufacturers
and foreign agriculturists to carry on a large exchange trade; but
since the great agricultural manufacturing' commercial states have
sprung up, we can no longer think of originating a mere exchange
trade such as the H an se T o w n s possessed. In any case such a
trade is of so precarious a character, that it hardly deserves con­
sideration in comparison with that which is based on the nation’s
own production.
T h e most important objects of internal commerce are articles
of food, salt, fuel, and building material, clothing materials, then
agricultural and manufacturing utensils and implements, and the
raw materials o f agricultural and mining production which are
necessary for manufactures.
T h e extent of this internal inter­
change is beyond all comparison greater in a nation in which
manufacturing industry has attained a high stage of development
than in a merely agricultural nation. A t times in the latter the
agriculturist lives chiefly on his own productions. F ro m want of
much demand for various products and lack of means of transport,
he is obliged to produce for h im self all his requirements without
regard to what his land is more specially fitted to produce; from
want of means of exchange he must manufacture h im self the greater
1 E sp rit dcs L o is , Book X X . chap. xii.
14
210
T H E THEORY
part o f the m anufactured articles which he requires. F u e l, bu ild­
ing m aterials, provisions, and m ineral products can find on ly a
v e r y limited m arket because o f the absen ce o f im proved m e a n s o f
transport, and hence cannot serve as articles for a distant trade.
O w in g to the limited m arket and the limited dem and tor such
products, no inducem ent for storin g them or for the accum ulation
o f capital exists.
H ence the capital devoted by mere agricultural
nations to internal com m erce is alm ost n i l ; hence all articles o f
production, w hich depend esp ecially on good or bad w e ath e r, are
subject to extraordin ary fluctuation in p r ic e s ; hence the d an g e r o f
scarcity and fam in e is therefore greater the more an y nation restricts
itself to agriculture.
T h e internal com njerce o f a nation m a in ly arise s in consequence
of and in proportion to the a ctiv ity o f its internal m an ufactures, o f
the im proved m ean s o f transport called forth by them , and o f the
increase o f population, and attains an im portance w h ich is ten to
tw enty fold greater than the internal trade o f a m erely agricu ltu ral
nation, and five to ten fold that o f the m ost flou rishing foreign
trade. I f an y o n e will com pare the internal com m erce o f E n g la n d
with that o f P o lan d or S p a in , he w ill find this observation con­
firmed.
T h e foreign com m erce o f agricu ltu ral nations o f the tem perate
zone, so lo n g a s it is limited to p ro visio n s and ra w m aterials,
cannot attain to im portance.
F ir s t ly , because the exports o f the agricu ltu ral nation are
directed to a few m an u factu rin g nations, which th e m se lv e s carry
on agriculture, and w hich indeed, because o f their m an u factu res
and their extended com m erce, carry it on on a m uch m ore perfect
system than the m ere agricu ltu ral nation ; that export trade is
therefore neither certain nor uniform. T h e trade in mere products
is a lw a y s a m atter o f extraordinary speculation, w h o se benefits
fall m ostly to the specu latin g m erchants, but not to the ag ricu l­
turists or to the productive pow er o f the agricu ltu ral nation.
Secon dly, because the e xch an g e o f agricu ltu ral products for
foreign m anufactured goods is liable to be g re atly interrupted by
the com m ercial restrictions o f foreign states and by w a rs.
T h ir d ly , because the export o f mere products chiefly benefits
countries w hich are situated near sea coasts and the b an k s o f
navigab le rivers, and does not benefit the inland territory, which
constitutes the greater part o f the territory o f the agricultural
nation.
F o u rth ly and finally, because the foreign m an u factu rin g nation
m a y find it to its interest to procure its m e a n s o f subsistence and
raw m aterials from other countries and n e w ly formed colonies.
T h u s the export o f G erm an wool to E n g la n d is dim inished by
THE MANUFACTURING POWER AND COMMERCE
211
importations into E n glan d from Australia ; the exports of French
and Germ an wines to En glan d by importations from Spain, P or­
tugal, Sicily, the Spanish and Portuguese islands, and from the
Cape ; the exports of Prussian timber by importations from Canada.
In fact, preparations have already been made to supply E n glan d
with cotton chiefly from the E a s t Indies. I f the E n g lish succeed
in restoring the old commercial route, if the new State of T e x a s
becomes strong, if civilisation in Syria and E g y p t, in Mexico and
the South American states progresses, the cotton planters o f the
United States will also begin to perceive that their own internal
market will afford them the safest, most uniform, and constant
demand.
In temperate climates, by far the largest part of a nation’s
foreign commerce originates in its internal manufactures, and can
only be maintained and augmented by means of its own manufac­
turing power.
T h o se nations only which produce all kinds of manufactured
goods at the cheapest prices, can have commercial connections
with the people of all climates and of every degree of civ ilisatio n ;
can supply all requirements, or if they cease, create new o n e s;
can take in exchange every kind of raw materials and means of
subsistence. Such nations only can freight ships with a variety
of objects, such as are required by a distant market which has no
internal manufactured goods of its own. Only when the export
freights them selves suffice to indemnify the voyage, can ships be
loaded with less valuable return freights.
T h e most important articles o f importation of the nations o f
the temperate zone consist in the products of tropical climates, in
sugar, coffee, cotton, tobacco, tea, dye stuffs, cacao, spices, and
generally in those articles which are known under the name of
colonial produce. B y far the greatest part of these products is
paid for with manufactured goods.
In this interchange chiefly
consists the cause of the progress o f industry in manufacturing
countries of the temperate zone, and of the progress of civilisation
and production in the countries of the torrid zone. T h is consti­
tutes the division of labour, and combination of the powers o f
production to their greatest extent, as these never existed in
ancient times, and as they first originated from the Dutch and
E n g lish .
Before the discovery of the route round the Cape, the E a s t
still far surpassed Europe in manufactures. Besides the precious
m etals and small quantities of cloth, linen, arms, iron goods, and
some fabrics of luxury, European articles were but little used there.
T h e transport by land rendered both inward and outward convey­
ance expensive. T h e export of ordinary agricultural products and
212
T H E THEORY
com m on m anufactured goods, even if they had been produced in
exce ss, in e xch an ge for the silks and cotton stuffs, su gar, and
spices, o f the E a s t , could not be hoped for. W h a t e v e r we m ay,
therefore, read of the im portance o f Oriental com m erce in those
tim es, m ust a lw a y s be understood r e l a t i v e ly ; it w a s im portant
on ly for that time, but unim portan t com pared w ith w h at it is now.
T h e trade in the products o f the torrid zone becam e more im ­
portant to E u ro p e through the acquisition o f larger quantities o f
the precious m etals in the interior and from A m erica, and through
the direct intercourse with the E a s t by the route round the Cape.
It could not, h ow ever, attain to u n ive rsal im portance as lon g as
the E a s t produced more m an u factu red goods than she required.
T h i s com m erce attained its present im portance through the
colonisation o f E u r o p e a n s in the E a s t and W e s t In d ie s, and in
N orth and Sou th A m e rica through the tran splan tation o f the
su g a r cane, o f the coffee tree, o f cotton, rice, indigo, & c., through
the transportation o f negroes a s s la v e s to A m e r ic a and the W e s t
In d ie s, then through the successful com petition o f the E u ro p ean
with the E a s t Ind ian m an u factu rers, and esp ecially through the
extension o f the D u tch and E n g li s h so v ere ig n ty in foreign parts
o f the world, while these nations, in contrast to the S p a n ia rd s and
P o rtu gu e se , so u gh t and found their a d v a n ta g e more in the e x ­
ch an ge of m anufactured goods for colonial goods, than in extortion.
T h i s com m erce at present e m p lo y s the m ost im portant part o f
the larg e sh ipp in g trade and o f the com m ercial and m an u fac tu rin g
capital o f E u r o p e which is em ployed in foreign c o m m e rc e ; and all
the hundreds o f m illions in v alu e o f such products which are tra n s­
ported an n u a lly from the countries o f the torrid zone to those of
the tem perate zone are, w ith but little exception, p a id f o r in
m a n u fa c tu red goods.
T h e e x c h a n g e o f colonial products for m anufactured goods is
o f m anifold use to the productive powers o f the countries o f the
tem perate zone. T h e s e articles serve either, a s e.g. su gar, coffee,
tea, tobacco, partly a s stim u lan ts to agricu ltu ral and m an u fac­
turing production, partly as actual m e a n s o f n o u rish m e n t; the
production o f the m an u factu red goods w hich are required to p ay
for the colonial products, occupies a larger num ber o f m an u fac­
turers ; m anufactories and m an u factu rin g b u sin e ss can be c o n ­
ducted on a much larger scale, and con sequ ently more profitably ;
this commerce, ag ain , e m p lo y s a larger num ber of ships, o f s e a ­
men, and m e r c h a n t s ; and through the m anifold increase o f the
population thus occasioned, the dem and for native agricultural
products is again v ery g re atly increased.
In consequence o f the reciprocal operation w hich g o e s on be­
tween m an u factu rin g production and the productions o f the torrid
THE MANUFACTURING POWER AND COMMERCE
213
zone, the En glish consume on an average two to three times more
colonial produce than the French, three to four times more than
the Germ ans, five to ten times more than the Poles.
Moreover, the further extension of which colonial production
is still capable, m ay be recognised from a superficial calculation
o f the area which is required for the production of those colonial
goods which are at present brought into commerce.
If we take the present consumption o f cotton at ten million
centners, and the average produce of an acre (40,000 square feet)
only at eight centners, this production requires not more than i j
million acres of land. If we estimate the quantity of sugar brought
into commerce at 1 4 million centners, and the produce of an acre
at 10 centners, this total production requires merely 1 l. million
acres.
I f we assum e for the remaining articles (coffee, rice, indigo,
spices, &c.) as much as for these two main articles, all the co­
lonial goods at present brought into commerce require no more
than seven to eight million acres, an area which is probably not
the fiftieth part of the surface of the earth which is suitable for the
culture of such articles.
T h e E n glish in the E a s t Indies, the French in the Antilles,
the Dutch in J a v a and Sum atra, have recently afforded actual
proof of the possibility of increasing these productions in an ex­
traordinary manner.
En glan d, especially, has increased her imports o f cotton from
the E ast Indies fourfold, and the En glish papers confidently
maintain that Great Britain (especially if she succeeds in getting
possession of the old commercial route to the E a st Indies) could
procure all her requirements of colonial products in the course of
a few years from India. T h is anticipation will not appear e x a g ­
gerated if we take into consideration the immense extent of the
E n g lish E a st Indian territory, its fertility, and the cheap w ages
paid in those countries.
W hile En glan d in this manner gains advantage from the E a s t
Indies, the progress in cultivation of the Dutch in the islands will
increase ; in consequence o f the dissolution of the Turkish Em pire
a great portion of Africa and the west and middle of A sia will
become productive; the T ex an s will extend North American culti­
vation over the whole of M exico; orderly governments will settle
down in South America and promote the yield of the immense
productive capacity of these tropical countries.
I f thus the countries of the torrid zone produce enormously
greater quantities of colonial goods than heretofore, they will
supply them selves with the means of taking from the countries
o f the temperate zone much larger quantities of manufactured
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g o o d s ; and from the large r sale o f m an u factu red goods the m a n u ­
facturers will be enabled to co n su m e large r q u antities o f colonial
goods. In consequence o f this increased production, and increase
o f the m ean s of exchange, the com m ercial intercourse between the
agricu ltu rists o f the torrid zone and the m an u factu re rs of the
tem perate zone, i.e. the great com m erce of the world, w ill increase
in future in a far larger proportion than it h a s done in the course
o f the last century.
T h i s present increase, and that yet to be anticipated, o f the
now g reat com m erce of the world, has its origin partly in the great
progress o f the m an u fac tu rin g p ow ers o f production, partly in the
perfection o f the m e a n s o f transport by w ater and by land, partly
in political e v e n ts and d evelopm ents.
T h ro u g h m ac h in e ry and new inven tion s the imperfect m a n u ­
facturing ind ustry o f the E a s t h a s been destroyed for the benefit
o f the E u ro p ea n m an u fac tu rin g power, and the latter enabled to
su pply the countries o f the torrid zone with large q u an titie s o f
fabrics at the cheapest p r ic e s ; and thus to g iv e them m otives for
au g m e n tin g their ow n pow ers o f labour and production.
In consequence o f the great im p ro v e m e n ts in m ean s o f t ra n s­
port, the countries o f the torrid zone h ave been brought infinitely
nearer to the countries o f the tem perate zone ; their m utual co m ­
m ercial intercourse h a s infinitely increased through dim inution
o f risk, o f time em ployed and o f freights, and through greater
r e g u la r it y ; and it will increase infinitely more as soon as steam
n a v ig atio n h a s become general, and the sy s t e m s of r a ilw a y s e x ­
tend th e m se lv e s to the interior o f A s ia , A frica, and S o u th A m erica.
T h ro u g h the secession o f S o u th A m e r ic a from S p a in and
P o rtu g a l, and through the dissolution o f the T u r k is h E m p ir e ,
a m a s s o f the m ost fertile territories o f the earth h ave been
liberated, w hich now aw ait with lo n g in g desire for the civilised
nations o f the earth to lead them in peaceful concord a lo n g the
path o f the security o f la w and order, o f civilisation and prosperity ;
and w hich require n o thing more than that m anufactured goods
should be brought to them , and their own productions taken in
exchange.
One m a y see that there is sufficient room here for all countries
o f E u ro p e and N orth A m e rica w hich are fitted to develop a m an u fac­
turing power o f their own, to brin g their m a n u fa c tu rin g production
into full activity, to au g m en t their ow n con su m ption o f the pro­
ducts o f tropical countries, and to extend in the sam e proportion
their direct com m ercial intercourse with the latter.
CHAPTE R XXII.
T H E M ANU FACTURIN G POWER AND NAVIGATION, NAVAL
POWER AND COLONISATION.
M a n u f a c t u r e s as the basis of a large home and foreign commerce
are also the fundamental conditions of the existence of any con­
siderable mercantile marine. Since the most important function
o f inland transport consists in supplying manufacturers with fuel
and building materials, raw materials and means of subsistence,
the coast and river navigation cannot well prosper in a merely
agricultural State. T h e coast navigation, however, is the school
and the depot of sailors, ships' captains, and of shipbuilding, and
hence in merely agricultural countries the main foundation for
any large maritime navigation is lacking.
International commerce consists principally (as we have shown
in the previous chapter) in the interchange of manufactured goods
for raw materials and natural products, and especially for the pro­
ducts of tropical countries. But the agricultural countries of the
temperate zone have merely to offer to the countries of the torrid
zone what they them selves produce, or what they cannot make
use of, namely, raw materials and articles of fo o d ; hence direct
commercial intercourse between them and the countries o f the
torrid zone, and the ocean transport which arises from it, is not
to be expected. T heir consumption of colonial produce must be
limited to those quantities for which they can pay by the sale of
agricultural products and raw materials to the manuiacturing and
commercial nations ; they must consequently procure these articles
second-hand. In the commercial intercourse between an agricul­
tural nation and a manufacturing commercial nation, however,
the greatest part of the sea transport must fall to the latter, even
if it is not in its power by means of navigation laws to secure the
lion’s share to itself.
Besides internal and international commerce, sea fisheries oc­
cupy a considerable number of ships ; but again from this branch
of industry, as a rule, nothing or very little falls to the agricultural
nation; as there cannot exist in it much demand for the produce
of the sea, and the manufacturing commercial nations are, out of
215
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TH E THEORY
regard to the m ain ten an ce o f their n a v a l pow er, accustom ed to
protect their hom e m arket e x clu sive ly for their ow n sea fisheries.
T h e fleet recruits its sailors and pilots from the private mer­
cantile m arine, and experience h a s a s ye t a lw a y s t a u g h t that able
sailors cannot be q u ickly drilled like land troops, but m ust be
trained up by se rv in g in the co astin g and international navigatio n
and in sea fisheries. T h e n a v a l power o f n atio n s w ill therefore
a lw a y s be on the sam e footin g with these b ra n c h e s o f m aritim e
industry, it w ill con sequ ently in the case o f the m ere agricultural
nation be alm ost n il.
T h e h ig h e st m e a n s o f d evelopm ent o f the m an u factu rin g
power, o f the internal and external com m erce proceeding from
it, o f a n y considerable coast and sea n av ig a tio n , of exten siv e sea
fisheries, and con sequ ently o f a respectable n a v a l power, are
colonies.
T h e m other nation su pplies the colonies w ith manufactured
goods, and obtains in return their su rplus produce o f agricultural
products and raw m a t e r ia ls ; this in terch an ge g iv e s a ctivity to its
m an u fac tu re s, a u g m e n ts thereby its population and the demand
for its internal agricu ltu ral products, and e n larg es its mercantile
m arine and n av al power.
T h e superior pow er o f the mother
country in population, capital, and en terp risin g spirit, obtains
through colonisation an a d v a n ta g e o u s outlet, w hich is ag ain made
good with interest by the fact that a considerable portion of those
w h o h ave enriched th em selv e s in the colony brin g back the capital
w hich they h a v e acquired there, and pour it into the lap o f the
m oth er nation, or expend their incom e in it.
A gricu ltu ral nations, w hich already need the m e a n s o f form ing
colonies, also do not p o sse ss the pow er o f utilisin g and m aintain­
in g them. W h a t the colonies require, cannot be offered by them,
and w h at th ey can offer the colony itse lf posse sses.
T h e e xch an g e o f m an u factu red goods for natu ral products is
the fu nd am ental condition on w hich the position o f the present
colonies continues.
On that account the U n ited S t a te s o f North
A m e rica seceded from E n g la n d a s soon a s they felt the n ecessity
and the power o f m a n u fa c tu rin g for th em selv e s, o f c a r r y in g on for
th em selves nav igatio n and com m erce with the countries o f the
torrid zone ; on that account C a n a d a w ill also secede after she
h a s reached the sa m e point, on that account independent agri­
cultural m an u factu rin g com m ercial S ta te s w ill also arise in the
countries o f tem perate clim ate in A u s tr a lia in the course o f time.
B u t this e xch an ge between the countries o f the tem perate zone
and the countries o f the torrid zone is based upon natural cau ses,
and will be so for all time. H e n c e In d ia has g iv e n up her m an u ­
factu ring pow er w ith her independence to E n g l a n d ; hence all
THE MANUFACTURING POWER AND NAVIGATION
217
Asiatic countries of the torrid zone will pass gradually under the
dominion of the manufacturing commercial nations of the tem­
perate zo n e; hence the islands of the torrid zone which are at
present dependent colonies can hardly ever liberate them selves
from that condition ; and the States of South America will alw ays
remain dependent to a certain degree on the manufacturing com ­
mercial nations.
En glan d owes her immense colonial possessions solely to her
surpassing manufacturing power. I f the other European nations
wish also to partake of the profitable business of cultivating waste
territories and civilising barbarous nations, or nations once civil­
ised but which are again sunk in barbarism, they must commence
with the development of their own internal manufacturing powers,
of their mercantile marine, and of their naval power. And should
they be hindered in these endeavours by E n g la n d ’s manufacturing,
commercial, and naval supremacy, in the union of their powers
lies the only means of reducing such unreasonable pretensions to
reasonable ones.
C H A P T E R XXIII.
T H E M A N U F A C T U R IN G P O W E R AND T H E I N S T R U M E N T S OF
C IR C U L A T IO N .
I f th e e x p e rie n c e o f the la s t t w e n t y - f i v e y e a r s h a s c o n firm e d , a s
b e in g p a r t ly correct, the p r in c ip le s w h ic h h a v e been set up b y the
p r e v a i li n g t h e o r y in c o n tr a d ic tio n to th e id e a s o f th e so -c a lle d
‘ m e r c a n t i l e ’ s y s t e m on the c ir c u la tio n o f the p r e c io u s m e t a ls and
on the b a la n c e o f trad e, it h a s , on th e o th e r h a n d , b r o u g h t to lig h t
im p o r ta n t w e a k p o in ts in t h a t t h e o r y r e s p e c t i n g t h o s e s u b je c ts .
E xp e rie n c e h a s proved repeatedly (and e sp ec ially in R u s s i a
and N orth A m erica) that in agricu ltu ral nations, w hose m an u fac­
turing m arket is exposed to the free com petition o f a nation w hich
h a s attained m an u fac tu rin g su p re m ac y, the valu e o f the im porta­
tion o f m an u factu red goods exceeds frequently to an enorm ous
exten t the v alu e o f the agricultural products w hich are exported,
and that thereby at tim es su dd en ly an extraordin ary exportation
o f precious m e tals is occasioned, w hereby the e co n o m y o f the a g ri­
cultural nation, esp ecially i f its internal in terch an ge is chiefly
based on paper circulation, falls into con fu sion , and national
c a la m itie s are the result.
T h e popular theory m ain tain s that i f w e provide o u rselves with
the precious m e tals in the sam e m an n e r as eve ry other article, it
is in the m ain indifferent w hether large or sm all q u antities ot
precious m etals are in circulation, a s it m e re ly depends on the
relation o f the price o f a n y article in e xch an g e w h e th er that article
shall be cheap or d e a r ; a d eran g em en t in the rate o f e x c h a n g e acts
sim p ly like a prem ium on a large r exportation o f goods from that
country, in favo u r o f w hich it oscillates from tim e to tim e : conse­
quently the stock o f m etallic m on ey and the balance between the
imports and exports, as well as all the other econ om ical circu m ­
stances o f the nation, w ould regu late th e m se lv e s in the safest and
best m an ner by the operation o f the natural course o f things.
T h i s argu m e n t is perfectly correct as respects the in te rn a l in­
terchange o f a nation ; it is dem onstrated in the com m ercial inter­
course between town and tow n, between tow n and country districts,
between province an-d province, a s in the union between S ta te and
2 18
THE MANUFACTURING POWER AND CIRCULATION
219
State. A ny political economist would be deserving of pity who
believed that the balance of the mutual imports and exports be­
tween the various states of the American Union or the German
Zollverein, or between England, Scotland, and Ireland, can be
regulated better through State regulations and law s than through
free interchange. On the hypothesis that a similar union existed
between the various states and nations of the earth, the argument
of the theory of trusting to the natural course of things would be
quite consistent. Nothing, however, is more contrary to experi­
ence than to suppose under the existing conditions of the world
that in international exchange things act with similar effect.
T h e imports and exports of independent nations are regulated
and controlled at present not by what the popular theory calls the
natural course of things, but mostly by the commercial policy and
the power of the nation, by the influence of these on the conditions
o f the world and on foreign countries and peoples, by colonial
possessions and internal credit establishm ents, or by war and
peace. Here, accordingly, all conditions shape them selves in an
entirely different manner than between societies which are united
by political, legal, and administrative bonds in a state of unbroken
peace and of perfect unity of interests.
Let us take into consideration as an example the conditions
between En glan d and North America, I f En glan d from time to
time throws large m asses of manufactured goods on to the North
American m a r k e t; if the B a n k of En glan d stimulates or restricts,
in an extraordinary degree, the exports to North America and the
credit granted to her by its raising or lowering its discount rates ;
if, in addition to and as a consequence o f this extraordinary glut
of the American market for manufactured goods, it happens that
the E n glish manufactured goods can be obtained cheaper in North
America than in En glan d, nay, sometimes much below the cost
price of production ; if thus North America gets into a state of
perpetual indebtedness and of an unfavourable condition of e x ­
change towards England, yet would this disorganised state of
things readily rectify itself under a state of perfectly unrestricted
exchange between the two countries.
North America produces
tobacco, timber, corn, and all sorts of means of subsistence very
much cheaper than En glan d does. T h e more E n glish m anufac­
tured goods go to North America, the greater are the means and
inducements to the American planter to produce commodities of
value sufficient to exchange for them ; the more credit is given to
him the greater is the impulse to procure for him self the means
of discharging his liabilities; the more the rate of exchange on
En glan d is to the disadvantage of North America, the greater is
the inducement to export American agricultural products, and
220
T H E THEORY
hence the more successful w ill be the com petition o f the A m erican
agricu ltu rist in the E n g l i s h produce market.
In consequence o f these exportations the a d v e rse rate o f e x ­
ch an ge would speedily rectify i t s e l f ; indeed, it could not even
reach an y very unfavou rab le point, because the certain anticipa­
tion in N o rth A m e rica that the ind eb ted ness w hich had been con ­
tracted through the large im portation o f m an u factu red goods in
the course o f the present year, w ould equalise its e lf through the
surplus production and increased exports o f the co m in g year,
would be followed by e asie r accom m od ation in the m on ey m arket
and in credit.
Su ch w ould be the state o f th in g s i f the in terch an ge between
the E n g li s h m an u factu rer and the A m e rican ag ricu ltu rist were as
little restricted a s the in terch an ge betw een the E n g li s h m an u fac­
turer and the Irish agricu ltu rist is. B u t th ey are and m ust be
d iffe re n t: i f E n g la n d im p o se s a duty on A m e ric a n tobacco of
from five hundred to one thousand per c e n t .; i f she renders the
im portation o f A m e ric a n tim ber im p o ssib le b y her tariffs, and
ad m its the A m e rica n m e a n s o f su bsisten ce on ly in the event of
fam ine, for at present the A m e rican agricu ltu ral production cannot
balan ce itse lf with the A m e ric a n consum ption o f E n g li s h m a n u ­
factured goods, nor can the debt incurred for those goods be
liquidated by agricu ltu ral p r o d u c t s ; at present the A m e ric a n e x ­
ports to E n g la n d are limited by n arrow bounds, w h ile the E n g lis h
exports to N orth A m e rica are practically u n lim ite d ; the rate o f
e xch an g e between both countries under such circu m stan ce s cannot
equalise itself, and the indebtedness o f A m e r ic a to w ard s E n g la n d
m u st be discharged b y exports o f bullion to the latter country.
T h e s e exports o f bullion, how ever, as they underm ine the
A m e rican sy ste m o f paper circulation, n e c e ssa rily lead to the
ruin of the credit o f the A m e rican ban k s, and therew ith to general
revolu tions in the prices o f landed property and o f the goods in
circulation, and esp ecially to those general con fu sion s o f prices
and credit w hich deran g e and overturn the econ om y o f the nation,
and with which, w e m a y observe, that the N o rth A m e rican free
S t a te s are visited w h e n ev e r they h a v e found th e m se lv e s unable to
restore a balance between their im ports and their exports b y State
tariff regulation s.
It cannot afford a n y great consolation to the N o rth A m erican
that in consequence o f bankruptcies and dim inished consum ption,
the im ports and exports between both countries are at a later
period restored to a tolerable proportion to one another. F o r the
destruction and co n vu lsio n s o f com m erce and in credit, a s well as
the reduction in consum ption, are attended with d isa d v a n ta g e s to
the welfare and h a p p in e ss o f ind ivid u als and to public order, from
THE MANUFACTURING POWER AND CIRCULATION
221
which one cannot very quickly recover and the frequent repetition
of which must necessarily leave permanently ruinous consequences.
Still less can it afford any consolation to the North Americans,
if the popular theory maintains that it is an indifferent matter
whether large or small quantities of precious metals are in circula­
tion ; that we exchange products merely for products ; whether
th is exchange is made by means of large or small quantities of
metallic circulation is of no importance to individuals. T o the
producer or proprietor it certainly m ay be of no consequence
whether the object of his production or of his possession is worth
100 centimes or 100 francs, provided a lw ays that he can procure
with the 100 centimes as large a quantity of objects of necessity
and of enjoyment as he can with the 100 francs. But low or high
prices are thus a matter o f indifference only in case they remain
on the same footing uninterruptedly for a long period of time.
If, however, they fluctuate frequently and violently, disarrange­
ments arise which throw the economy of every individual, as well
as that of society, into confusion. W hoever has purchased raw
materials at high prices, cannot under low prices, by the sale of
his manufactured article, realise again that sum in precious metals
which his raw materials have cost him. W hoever has bought at
high prices landed property and has left a portion of the purchase
money as a mortgage debt upon it, loses his ability of payment
and his property; because, under diminished prices, probably the
value of the entire property will scarcely equal the amount of the
mortgage. W h oever has taken leases of property under a state
of high prices, finds him self ruined by the decrease in prices, or
at least unable to fulfil the covenants of his leases. T he greater
the rising and falling of prices, and the more frequently that fluc­
tuations occur, the more ruinous is their effect on the economical
conditions of the nation and especially on credit. But nowhere
are these disadvantageous effects of the unusual influx or efflux of
precious metals seen in a more glaring light than in those countries
which are entirely dependent on foreign nations in respect of their
manufacturing requirements and the sale of their own products,
and whose commercial transactions are chiefly based on paper
circulation.
It is acknowledged that the quantity of bank notes which a
country is able to put into and to maintain in circulation, is de­
pendent on the largeness of the amount of metallic money which it
possesses. E v e r y bank will endeavour to extend or limit its paper
circulation and its business in proportion to the amount of precious
metals lying in its vaults. I f the increase in its own money capital
or in deposits is large, it will give more credit; and through this
credit, increase the credit given by its debtors, and by so doing raise
222
TH E THEORY
the am ou n t o f consum ption and prices ; e sp e c ia lly those of landed
property. If, on the con trary, an efflux o f precious m etals is per­
ceptible, such a ban k will limit its credit, and thereby occasion
restriction o f credit and co n su m p tio n by its debtors, and by the
debtors o f its debtors, and so on to those w h o b y credit are en­
g aged in b rin g in g into con su m ption the imported manufactured
goods. In such countries, therefore, the w h ole sy ste m o f credit,
the m arket for goods and products, and esp ecially the money
valu e o f all landed property, is throw n into confusion by any
u nusual drain o f m etallic m on ey.
T h e cau se o f the latest a s well a s o f form er A m e rican com­
m ercial crises, h a s been alleged to exist in the A m e rican banking
and paper system . T h e truth is that the b an k s h ave helped to
brin g about these crises in the m an n e r above nam ed, but the main
cau se o f their occurrence is that since the introduction of the * com­
prom ise 1 bill the v alu e o f the E n g l i s h m an u factu red goods has far
su rp asse d the v a lu e o f the exported A m e ric a n products, and that
thereby the U n ited S t a te s h a v e becom e indebted to the E n g lish
to the am ou n t o f several hundreds o f m illio n s for which they
could not pay in products. T h e p ro o f that these crises are occa­
sioned by disproportionate im portation is, that they h ave alw ays
taken place w h e n e v e r (in con sequence o f peace h a v in g set in or
o f a reduction being m ade in the A m e rican cu sto m s duties) im­
portation o f m an u factu red goods into the U nited S ta te s has been
u n u s u a lly large , and that they h ave never occurred as long as the
im p o rts o f goods h a v e been prevented by cu sto m s duties on im ­
ports from exce e d in g the v alu e o f the exports o f produce.
T h e blam e for these crises h a s further been laid on the large
capital w hich h a s been expended in the U n ite d S t a te s in the con­
struction o f ca n a ls and ra ilw a y s , and w hich h a s m o stly been pro­
cured from E n g la n d by m e a n s o f loans. T h e truth is that these
lo an s h ave m erely a ssiste d in d e la y in g the crises for several years,
and in in cre a sin g it w hen it a r o s e ; but these v e r y loans them ­
selves h a v e evid en tly been incurred through the inequ ality which
h ad arisen between the im ports and exports, and but for that in­
e q u a lity w ould not h ave been made and could not h ave been made.
W h ile N o rth A m e rica becam e indebted to the E n g li s h for
large su m s through the large im portation o f m anufactured goods
w h ic h could not be paid for in produce, but only in the precious
m e ta ls, the E n g l i s h w ere enabled, and in consequence o f the un­
equal rates o f e xch an g e and interest found it to their ad van tag e,
to h a v e this balance paid for in A m e rican r a ilw a y , can al, and bank
stocks, or in A m e ric a n State paper.
T h e more the import o f m an u factu red goods into A m erica
su rp asse d her exports in produce, and the g re a te r th at the demand
THE MANUFACTURING POWER AND CIRCULATION
223
for such paper in E n glan d became, the more were the North
A m ericans incited to embark in public enterprises ; and the more
that capital w as invested in such enterprises in North America,
the greater w as the demand for E n glish manufactured goods, and
at the sam e time the disproportion between the American imports
and exports.
I f on the one hand the importation of E n g lish manufactured
goods into North America w as promoted by the credit given by
the American banks, the B a n k of E n glan d on the other side
through the credit facilities which it gave and by its low rates of
discount operated in the same direction. It has been proved by
an official account of the E n g lish Committee on T rade and M anu­
factures, that the B a n k of En glan d lessened (in consequence of
these discounts) the cash in its possession from eight million
pounds to two millions. It thereby on the one hand weakened
the effect of the American protective system to the advantage of
the E n glish competition with the American manufactories ; on
the other hand it thus offered facilities for, and stimulated, the
placing of American stocks and State paper in En glan d. F o r as
long as money could be got in E n glan d at three per cent, the
American contractors and loan procurers who offered six per cent,
interest had no lack of buyers of their paper in England.
T h ese conditions of exchange afforded the appearance of much
prosperity, although under them the American manufactories were
being gradually crushed.
F o r the American agriculturists sold a
great part o f that surplus produce which under free trade they
would have sold to England, or which under a moderate system
of protection of their own manufactories they would have sold
to the working men employed therein, to those workmen who
were employed in public works and who were paid with E n g lish
capital. Such an unnatural state of things could not, however,
last long in the face of opposing and divided national interests,
and the break up of it w as the more disadvantageous to North
America the longer it w as repressed.
A s a creditor can keep
the debtor on his legs for a long time by renewals o f credit, but
the bankruptcy of the debtor must become so much the greater
the longer he is enabled to prolong a course of ruinous trading by
means of continually augmented credit from the creditor, so w as
it also in this case.
T h e cause of the bankruptcy in America w as the unusual ex­
port of bullion which took place from En glan d to foreign countries
in consequence of insufficient crops and in consequence of the
Continental protective systems. W e say in consequence ot the
Continental protective system s, because the E n g lish — if the E u r o ­
pean Continental m arkets had remained open to them— would
224
T H E THEORY
h ave covered their extrao rd in ary im portations o f corn from the
Con tinen t chiefly by m ean s of extrao rd in ary export o f E n g lis h
m anufactured goods to the Continent, and because the E n g lis h
bullion— even had it flown o v er for a tim e to the continent— would
a g ain h ave found its w a y back to E n g la n d in a short time in con­
sequence o f the a u g m en te d export o f m an u factu red goods. In
such a c a se the C o n tin e n ta l m an u factories would undoubtedly
h ave fallen a sacrifice to the E n g lis h - A m e ric a n com m ercial opera­
tions.
A s m atte rs stood, h ow ever, the B a n k o f E n g la n d could only
help itse lf by lim itin g its credit and in cre asin g its rate o f discount.
In consequence o f this m e asu re not on ly the dem and for more
A m e rican stocks and State paper fell o ff in E n g la n d , but also such
paper as w a s alread y in circulation n o w forced itse lf more on the
m arket. T h e U n ited S t a te s w ere thereby not m erely deprived of
the m e a n s o f c o v e rin g their current deficit by the further sale o f
paper, but p aym e n t o f the w hole debt they had contracted in the
course o f m a n y y e a r s with E n g la n d by m e a n s o f their sa le s o f
stocks and S ta te paper becam e liable to be dem anded in m oney.
It now appeared that the cash circulation in A m e rica really be­
longed to the E n g lis h .
It appeared yet further that the E n g li s h
could dispose o f that ready m o n e y on w h o se possession the whole
bank and paper sy ste m o f the U nited S t a te s w a s based, accordin g
to their own inclination.
If, how ever, th ey disposed o f it, the
A m e rican bank and paper sy ste m w ould tum ble down like a house
built o f cards, and with it the foundation would fall whereon
rested the prices of landed property, co n seq u en tly the econom ical
m e a n s o f existen ce o f a g re at num ber o f private persons.
T h e A m e rican ban ks tried to avoid their fall by su spen ding
specie p a y m e n ts, and indeed this w a s the o n ly m ean s o f at least
m o d ify in g i t ; on the one hand they tried by this m e a n s to gain
time so as to decrease the debt o f the U nited S t a t e s through the
yield o f the n ew cotton crops and to pay it off by d egrees in this
m a n n e r ; on the other hand they hoped by m e a n s o f the reduction
o f credit occasioned by the su spen sion to lessen the im ports of
E n g li s h m anufactured goods and to equ alise them in future with
their own c o u n tr y ’ s exports.
H o w far the exportation o f cotton can afford the m e a n s of
balan cin g the im portation o f m anufactured goods is, however,
very doubtful, I; or more than tw e n ty y e a rs the production o f
this article h a s con stan tly outstripped the con su m ption , so that
with the increased production the prices h ave fallen more and
more. H ence it hap p en s that, on the one hand, the cotton manuiacturers are exposed to severe com petition with linen m an u fac­
tures, perfected a s these are by gre atly im proved m ac h in e ry ; while
THE MANUFACTURING POWER AND CIRCULATION
225
the cotton planters, on the other hand, are exposed to it from the
planters of T e x a s, E g y p t, Brazil, and the E a s t Indies.
It must, in any case, be borne in mind that the exports of
cotton of North Am erica benefit those States to the least extent
which consume most of the E n g lish manufactured goods.
In these States, namely, those which derive from the c u ltiv a ­
tion of corn and from cattle-breeding the chief means of procuring
manufactured goods, a crisis of another kind now manifests itself.
In consequence of the large importation of E n g lish manufactured
goods the American manufactures were depressed. All increase
in population and capital w as thereby forced to the new settlements
in the west. E v e r y new settlement increases at the commence­
ment the demand for agricultural products, but yields after the
lapse of a few years considerable surplus of them. T h is has
already taken place in those settlements. T h e W estern States
will therefore pour, in the course of the next few years, into the
Eastern States considerable surplus produce, by the newly con­
structed canals and r a i l w a y s ; while in the Eastern States, in
consequence of their manufactories being depressed by foreign
competition, the number of consumers has decreased and must
continually decrease. From this, depreciation in the value of
produce and of land must necessarily result, and if the Union
does not soon prepare to stop up the sources from which the
above-described money crises emanate, a general bankruptcy o f
the agriculturists in the corn-producing States is unavoidable.
T h e commercial conditions between E n glan d and North
Am erica which we have above explained, therefore teach :
(1) T h a t a nation which is far behind the E n g lish in capital
and manufacturing power cannot permit the E n glish to obtain a
predominating competition on its manufacturing market without
becoming permanently indebted to them ; without being rendered
dependent on their money institutions, and drawn into the whirl­
pool o f their agricultural, industrial, and commercial crises.
(2) T h a t the E n glish national bank is able by its operations to
depress the prices of E n glish manufactured goods in the American
markets which are placed under its influence— to the advantage of
the E n glish and to the disadvantage o f the American manufac­
tories.
(3) T h a t the E n g lish national bank could effect by its opera­
tions the consumption by the North Americans, for a series ot
years, of a much larger value o f imported goods than they would
be able to repay by their exportation of products, and that the
A m ericans had to cover their deficit during several years by the
exportation of stocks and State paper.
(4) T h a t under such circ u m stan c es the A m e r ic a n s carried on
15
226
T H E THEORY
their internal in terch an ge and their ban k and p aper-m o n ey sy ste m
w ith ready m on ey, w hich the E n g li s h ban k w a s able to d raw to
itse lf for the m ost part b y its own operations w h e n e v e r it felt
inclined so to do.
(5) T h a t the fluctuations in the m o n e y m arket under all cir­
c u m stan c es act on the econ om y of the n a tio n s in a h ig h ly d isa d ­
v a n t a g e o u s m an n e r, e sp e c ia lly in countries w h ere an exten siv e
bank and p aper-m o n ey syste m is based on the p o sse ssio n o f cer­
tain q u antities o f the precious m etals.
(6) T h a t the flu ctu ations in the m o n e y m arket and the crises
which result therefrom can on ly be prevented, and that a solid
b a n k in g sy ste m can o n ly be founded and m ain tain e d , if the im ­
ports o f the cou n try are placed on a footin g of equ ality to the
exports.
(7) That this equality can less easily be maintained in propor­
tion as foreign manufactured goods can successfully compete in the
home manufacturing markets, and in proportion as the exportation
o f native agricultural proditcts is limited by foreign commercial
restrictions ; fin a lly , that this equality can less easily be disturbed
in proportion as the nation is independent o f foreign nations fo r
its supply o f manufactured goods^ and fo r the disposal o f its own
produce.
T h e s e doctrines are a ls o confirm ed b y the experience o f R u s s ia .
W c m a y rem em ber to w h a t c o n v u lsio n s public credit in the
R u s s ia n E m p ir e w a s subjected a s lon g as the m arket there w a s
open to the o v e r w h e lm in g c o n sig n m e n ts o f E n g li s h m anufactured
g oods, and that since the introduction o f the tariff o f 1 8 2 1 no
sim ilar con vu lsion has occurred in R u ssia .
T h e popu lar theory h a s e vid en tly fallen into the opposite ex­
trem e to the errors o f the so-called m ercantile syste m .
It would
be o f course false if w e m aintained that the w ealth o f nations
con sisted m e re ly in precious m e t a l s ; that a nation can only be­
com e w e a lth y i f it exports more goods than it im ports, and if
hence the balance is discharged by the im portation o f precious
metals.
Hut it is also erron eous if the popular theory m ain tain s,
under the e x istin g conditions of the world, that it does not sign ify
how m uch or how little precious m etals circulate in a n a t io n ; that
the fear o f p o s s e s s in g too little o f the precious m e tals is a frivolous
one, that we ought rather to further their exportation than favour
their im portation, &c. & c. T h i s m an n e r o f reaso n in g would only
be correct in case we could consider all nations and cou n tries as
united under one and the sa m e syste m of l a w ; if no com m ercial
restrictions o f a n y kind a g a in st the exportation o f our products
existed in those nations for w h o se m an u factu red goods we can
Only repay with the productions of our agricu ltu re ; if the ch an ges
fH E MANUFACTURING POWER AND CIRCULATION
227
wrought by war and peace caused no fluctuations in production
and consumption, in prices, and on the money m arket; if the
great credit institutions do not seek to extend their influence over
other nations for the special interest o f the nation to which they
belong. B u t as long as separate national interests exist, a wise
State policy will advise every great nation to guard itself by its
commercial system against extraordinary money fluctuations and
revolutions in prices which overturn its whole internal economy,
and it will attain this purpose only by placing its internal manu­
facturing production in a position of proper equality with its
internal agricultural production and its imports with its exports.
T h e prevailing theory has evidently not sufficiently discrimi­
nated between the mere possession of the precious metals and the
power of disposition of the precious metals in international inter­
change. E v e n in private exchange, the necessity of this distinction
is clearly evident. No one wishes to keep money by him, every­
one tries to remove it from the house as soon as possible; but
everybody at the same time seeks to be able to dispose at any
time of the sums which he requires. T h e indifference in regard to
the actual possession of ready money is manifested everywhere in
proportion to wealth. T h e richer the individual is, the less he
cares about the actual possession of ready money if only he is
able at any hour to dispose of the ready cash lying in the safes
of other individuals ; the poorer, however, the individual is, and
the smaller his power of disposing of the ready money lying in
other people’s hands, the more anxiously must he take care to
have in readiness what is required. T h e same is the case with
nations which are rich in industry or poor in industry. I f E n glan d
cares but little as a rule about how great or how small a quantity
of gold or silver bars are exported out of the country, she is per­
fectly well aware that an extraordinary export of precious metals
occasions on the one hand a rise in the value of money and in
discount rates, on the other hand a fall in the prices of fabrics,
and that she can regain through larger exportation of fabrics or
through realisation of foreign stocks and State paper speedy pos­
session of the ready money required for her trade.
E n glan d
resembles the rich banker who, without having a thaler in his
pocket, can draw for any sum he pleases on neighbouring or more
distant business connections. If, however, in the case of merely
agricultural nations extraordinary exports of coin take place, they
are not in the same favourable position, because their means of
procuring the ready money they require are very limited, not
merely on account of the small value in exchange of their products
and agricultural values, but also on account o f the hindrances
which foreign laws put in the w ay of their exportation. T h e y
228
T H E THEORY
resem ble the poor m an w h o can draw no bills on his bu siness
friends, but w h o is draw n upon if the rich m a n gets into a n y
difficulty ; w h o can , therefore, not even call w h a t is actu ally in
his h an d s, h is own.
A nation ob tains the p o w e r o f d isp o sitio n o f the am oun t of
read y m o n e y w h ich is a lw a y s required for its internal trade, m ainly
through the p o sse ssio n or the production o f those goods and v a lu e s
w h o se facility o f e xch an ge ap p ro ach e s m ost n e arly to that o f the
precious m etals.
T h e d iv e rsity o f this property o f the facility o f e x c h a n g e in
respect to the v a rio u s articles o f co m m e rce and o f property, has
been a s little taken into consideration by the popular school of
e con om ists in j u d g i n g o f intern ational com m erce, a s the power of
disposition o f the precious m etals. I f w e consider in th is respect
the v ario u s articles o f v a lu e e x istin g in private interchange, w e
perceive th at m a n y o f them are fixed in such a w a y that their
v alu e is e x ch an g e ab le on ly on the spot w h ere th ey are, and that
even there their e x c h a n g e is attended with g re at costs and diffi­
culties.
T o that c la s s b elon g more than three-fourths o f all
national property— n a m e ly , im m o v a b le properties and fixed plant
and instrum ents.
H o w e v e r large the landed property o f an in­
divid u al m a y be, he cannot send his fields and m e a d o w s to town
in order to obtain m o n e y or goods for them. H e can , indeed,
raise m o r tg a g e s on such p rop erty, but he m ust first find a lender
on them ; and the further from his estate th at such an individual
resid es, the s m a lle r w ill be the probability o f the b orrow er’s re­
qu irem en ts b e in g satisfied.
N e x t after property th u s fixed to the locality, the greatest part
o f ag ricu ltu ral products (exceptin g colonial produce and a few less
v alu a b le articles) h a v e in regard to intern ational intercourse the
least facility for exch an ge . T h e g re a te st part o f these v alu es, as
e.g. building m a te ria ls and wood for fuel, bread stuffs, & c., fruit,
and cattle, can on ly be sold w ithin a reaso nable distance o f the
place w here they are produced, and if a great su rp lu s o f them
e x ists they h ave to be w areh ou sed in order to become realisable.
S o far as such products can be exported to foreign countries their
sale a g a in is limited to certain m a n u fa c tu rin g and com m ercial
nations, and in th ese also their sale is g e n e ra lly lim ited by duties
on im portation and is affected by the larger or sm aller produce o f
the pu rc h asin g n a tio n ’s own h a rv e sts. T h e inland territories o f
North A m e rica m ig h t be com pletely overstocked with cattle and
products, but it would not be possible for th em to procure through
exportation o f this e x c e ss considerable am o u n ts o f the precious
m etals from South A m e rica, from E n g la n d , or from the E u ro p ean
continent. T h e valu able m an u factu red goods o f com m on use, on
THE MANUFACTURING POWER AND CIRCULATION
229
the other hand, possess incomparably greater facilities for e x ­
change. T h e y find at ordinary times a sale in all open markets
of the world ; and at extraordinary crises they also find a sale (at
lower prices) in those markets whose protective tariffs are calcu­
lated to operate adversely merely in ordinary times. T h e power
of exchange of these articles clearly approaches most nearly to
that of the precious metals, and the experience of E n glan d shows
that if in consequence of deficient harvests money crises occur,
the increased exportation of fabrics, and of foreign stocks and
State paper, quickly rectifies the balance. T h e latter, the foreign
stocks and State paper, which are evidently the results of former
favourable balances of exchange caused by exportations of fabrics,
constitute in the hands of the nation which is rich in manufactur­
ing industry so many bills which can be drawn on the agricultural
nation, which at the time o f an extraordinary demand for the
precious metals are indeed drawn with loss to the individual owner
of them (like the manufactured goods at the time of money crises),
but, nevertheless, with immense advantage to the maintenance of
the economical conditions of that nation which is rich in m anu­
facturing industry.
H ow ever much the doctrine of the balance of trade m ay have
been scorned by the popular school, observations like those above
described encourage us nevertheless to express the opinion that
between large and independent nations something of the nature
o f a balance of trade must e x i s t ; that it is dangerous for great
nations to remain for a long period at very considerable disadvan­
tage in respect of this balance, and that a considerable and lasting
efflux of the precious metals must alw ays be followed as a con­
sequence by important revolutions in the system of credit and in
the condition of prices in the interior of the nation. W e are
far from w ish in g in these remarks to revive the doctrine of the
balance of trade as it existed under the so-called ‘ mercantile
syste m ,’ and to maintain that the nation ought to impose obstacles
in the w ay of the exportation of precious metals, or that we must
keep a specially exact account with each individual nation, or that
in the commerce between great nations a few millions difference
between the imports and exports is of great moment. W h a t we
deny is merely this ; that a great and independent nation, as
A dam Sm ith m aintains at the conclusion of his chapter devoted
to this subject,1 * m ay continually import every year considerably
larger values in products and fabrics than it exports ; that the
quantities of precious metals existing in such a nation m ay de­
crease considerably from year to year and be replaced by paper
1W ealth o f N ations, Book IV . chapter iik
230
T H E THEORY
circulation in the in te rio r; m oreover, that such a nation m a y
a llo w its indebtedness tow ards another nation continually to in­
crease and expand, and at the sam e tim e n e v e rth e le ss m ake pro­
g re s s from ye ar to y e a r in p ro sp erity .’ 1
T h is opinion, expressed by A d a m S m ith and m aintained since
that tim e by his school, is alone that which w e here characterise
as one that h a s been contradicted a hundred tim es by experience,
a s one that is con trary in the v e r y nature of th in g s to com m on
sense, in one word (to retort upon A d a m S m ith his ow n energetic
expression) a s ‘ an a b su r d ity /
It m ust be well understood that w e are not sp e a k in g here of
countries w hich carry on the production o f the precious m etals
th e m se lv e s at a profit, from w hich therefore the export o f these
articles h a s quite the character o f an export o f m anufactured goods.
W e are also not sp e a k in g o f that difference in the balance o f trade
w hich m u st n e c e ssa rily arise if the nation rates its exports and
im ports at those prices w hich they h ave in their ow n seaport
tow n s. T h a t in such a case the am ou n t o f im ports o f eve ry nation
m u st exceed its exports by the total am ou n t o f the nation ’ s own
com m ercial profits (a circu m stan ce w hich sp e ak s to its a d v a n ta g e
rath er than to its d isad van tag e), is clear and indisputable. Still
less do w e m ean to den y the extraordinary case s w h ere the greater
exportation rather denotes loss o f valu e than gain , a s e.g. if pro­
perty is lost b y shipw reck. T h e popular school h a s made clever
use o f all those delu sions a risin g from a shopkeeper-like calculation
and com parison o f the valu e o f the e x c h a n g e s a risin g from the
e xports and im ports, in order to m ake us disbelieve in the d is­
a d v a n ta g e s w hich result from a real and en orm ou s disproportion
between the exports and im ports o f a n y g reat and independent
nation, even though such disproportion be not perm anent, which
sh o w s itse lf in such im m e n se s u m s as for instance in the case of
F r a n c e in 17 8 6 and 17 8 9 , in that of R u s s i a in 18 2 0 and 1 8 2 1 , and
in that o f the U nited S t a t e s o f N o rth A m e rica after the ‘ C o m ­
promise B i l l . ’
F in a lly , we desire to speak (and this m u st be specially noted)
not o f colonies, not o f dependent countries, not of sm all states or
o f single independent to w n s, but o f entire, great, independent
nations, w hich p o sse ss a com m ercial syste m o f their own, a
national syste m o f agriculture and industry, a national syste m o f
m on ey and credit.
It eviden tly con sists with the character o f colonies that their
exports can su rpass their im ports con sid erab ly an d continuously,
w ithout thereby in v o lv in g a n y conclusion a s to the decrease or
1 See A ppen dix D ,
THE MANUFACTURING POWER AND CIRCULATION
231
increase of their prosperity. T h e colony alw ays prospers in the
proportion in which the total amount of its exports and imports
increases year by year. I f its export of colonial produce exceeds
its imports of manufactured goods considerably and lastingly, the
main cause o f this may be that the landed proprietors of the
colony live in the mother country, and that they receive their
income in the shape of colonial goods, in produce, or in the money
which has been obtained for them. If, however, the exports of
fabrics to the colony exceed the imports o f colonial goods con­
siderably, this m ay be chiefly due to the fact that by emigrations
or loans from year to year large masses of capital go to the colony.
T h is latter circumstance is, of course, of the utmost advantage to
the prosperity o f the colony. It can continue for centuries and
yet commercial crises under such circumstances may be infrequent
or impossible, because the colony is endangered neither by wars
nor by hostile commercial measures, nor by operations o f the
national bank of the mother country, because it possesses no in­
dependent system of commerce, credit, and industry peculiar to it­
self, but is, on the contrary, supported and constantly upheld by the
institutions of credit and political measures of the mother country.
Such a condition existed for more than a century with advan­
tage between North America and En glan d, exists still between
E n glan d and Canada, and will probably exist for centuries between
E n g la n d and Australia.
T h is condition becomes fundamentally changed, however, from
the moment in which the colony appears as an independent nation
with every claim to the attributes of a great and independent
nationality— in order that it m ay develop a power and policy of
its own and its own special system of commerce and credit. T h e
former colony then enacts law s for the special benefit of its own
navigation and naval power— it establishes in favour of its own
internal industry a customs tariff of its own ; it establishes a
national bank of its own, &c., provided nam ely that the new
nation thus passin g from the position of a colony to independence
feels itself capable, by reason of the mental, physical, and eco­
nomical endowments which it possesses, of becoming an industrial
and commercial nation. T h e mother country, in consequence,
places restrictions, on its side, on the navigation, commerce, and
agricultural production of the former colony, and acts, by its in­
stitutions of credit, exclusively for the maintenance of its own
national economical conditions.
B u t it is precisely the instance of the North American colonies
a s they existed before the American W a r of Independence by
which A dam Sm ith seeks to prove the above-mentioned highly
paradoxical opinion : that a country can continually increase its
*32
T H E THEORY
exportation o f gold and silver, decrease its circulation of the
precious m etals, extend its paper circulation, and increase its debts
contracted w ith other nations w h ile e n jo y in g sim u ltan e o u sly
stead ily in cre a sin g prosperity ; A d a m S m ith has been v e r y care­
ful not to cite the exam p le o f two nations w hich h ave been in­
dependent o f one ano ther for som e time, and w h o se interests of
n a v ig a tio n , com m erce, industry, and agriculture are in com petition
with those o f other riv al n ations, in proof o f his opinion— he
m erely sh o w s us the relation o f a colony to its m other country.
I f he had lived to the present tim e and o n ly written his book now,
he w ould h ave been v ery careful not to cite the exam p le o f North
A m e rica, as this exam p le p ro ve s in our d a y s ju s t the opposite o f
w h a t he attem pts by it to dem onstrate.
U n d er such circu m stan ces, h ow ever, it m a y be urged ag ain st
us that it w ould be inco m p arab ly more to the a d v a n ta g e o f the
U n ited S t a te s if th ey returned a g a in to the position o f an E n g lis h
colony. T o this we a n sw e r, y e s , provided a lw a y s that the U nited
S t a te s do not know h o w to utilise their national independence so
a s to cultivate and develop a national in d u stry o f their ow n , and a
self-su pportin g sy ste m o f com m erce and credit w hich is ind epen­
dent o f the world outside. B u t (it m a y be urged) is it not evident
that if the U nited S ta te s had continued to exist a s a B ritish colony,
no E n g li s h com law w ould ever h ave been p a s s e d ; that E n g la n d
w ould never h ave im posed such high duties on A m e rican tobacco ;
that continual q u antities o f tim ber w ould h ave been exported from
the U n ited S t a te s to E n g l a n d ; that E n g la n d , far from ever en­
tertain in g the idea o f prom otin g the production o f cotton in
other countries, w ould h a v e endeavoured to g iv e the citizens o f
the U n ite d S t a te s a m on opoly in th is article, and to m aintain it ;
that con sequ ently com m ercial crises such a s h ave occurred w ithin
the last decades in N o rth A m e ric a , w ould h a v e been im p o ssib le ?
Y e s ; if the U n ited S t a te s do not m an u factu re, i f they do not
found a durable syste m o f credit o f their ow n ; i f they do not
desire or are not able to develop a n av al power. B u t then, in
that case, the citizens o f B o sto n h ave throw n the tea into the sea
in vain ; then all their d eclam ation as to independence and future
national g re atn e ss is in v ain : then indeed w ould they do better if
they re-enter a s soon a s possible into dependence on E n g la n d as
her colony. In th at event E n g la n d w ill favo u r them instead of
im p o sin g restrictions on them ; she w ill rather im pose restrictions
on those w h o com pete with the N orth A m e r ic a n s in cotton culture
and corn production, & c . than raise up w ith all possible e n ergy
com petitors a g a in st them . T h e B a n k o f E n g la n d w ill then estab­
lish branch ban ks in the U nited S t a te s , the E n g li s h G o v e rn m e n t
w ill promote em igration and the export of capital to A m erica, and
THE MANUFACTURING POWER AND CIRCULATION
233
through the entire destruction of the American manufactories, as
well as by favouring the export of American raw materials and
agricultural produce to En glan d, take maternal care to prevent
commercial crises in North America, and to keep the imports and
exports of the colony alw ays at a proper balance with one another.
In one word, the American slaveholders and cotton planters will
then realise the fulfilment of their finest dreams. In fact, such a
position has already for some time past appeared to the patriotism,
the interests, and requirements of these planters more desirable
than the national independence and greatness of the United States.
Only in the first emotions of liberty and independence did they
dream of industrial independence. T h e y soon, however, grew
cooler, and for the last quarter of a century the industrial pros­
perity of the middle and eastern states is to them an abomination ;
they try to persuade the Congress that the prosperity of America
depends on the industrial sovereignty of En glan d over North
America. W h a t else can be meant by the assertion that the
United States would be richer and more prosperous if they again
went over to En glan d as a colony ?
In general it appears to us that the defenders of free trade
would argue more consistently in regard to money crises and the
balance of trade, as well as to manufacturing industry, if they
openly advised all nations to prefer to subject themselves to the
E n glish as dependencies of En glan d, and to demand in exchange
the benefits of becoming E n g lish colonies, which condition o f
dependence would be, in economical respects, clearly more favour­
able to them than the condition of half independence in which
those nations live who, without maintaining an independent
system of industry, commerce, and credit of their own, neverthe­
less alw ays want to assume towards En glan d the attitude of
independence. Do not we see what Portugal would have gained
if she had been governed since the Methuen T reaty by an E n glish
viceroy— if E n glan d had transplanted her laws and her national
spirit to Portugal, and taken that country (like the E a s t Indian
limpire) altogether under her w ings ? Do not we perceive how
advantageous such a condition would be to G erm an y— to the
whole European continent ?
India, it is true, has lost her manufacturing power to England,
but has she not gained considerably in her internal agricultural
production and in the exportation of her agricultural products ?
H ave not the former wars under her Nabobs ceased ? Are not
the native Indian princes and kings extremely well off? H ave
they not preserved their large private revenues ? Do not they
find them selves thereby completely relieved of the weighty cares
o f government ?
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TH E THEORY
M oreover, it is w o rth y of notice (though it is so after the
m an ner of those who, like A d a m S m ith , m ake their strong points
in m ain ta in in g paradoxical opinions) that this renowned author,
in spite of all his a rg u m e n ts a g a in st the existence of a balance o f
trade, m ain tain s, nevertheless, the existence o f a th in g which he
calls the balance between the con su m ption and production of
a nation, w hich, h ow ever, w hen brought to light, m ean s nothing
else but our actual balance o f trade. A nation w hose exports and
im ports tolerably well balance each other, m a y rest assured that,
in respect of its national interchan ge, it does not consum e much
more in valu e than it produces, w h ile a nation w hich for a series
o f y e ars (as the United S ta te s o f A m e rica h ave done in recent
years) im ports larger quantities in valu e of foreign m anufactured
goods than it exports in v alu e o f products o f its own, m a y rest
assu red that, in respect to international interchange, it consum es
con sid erably large r quantities in v alu e o f foreign goods than it
produces at home. F o r w h at else did the crises o f F ra n c e (1786178 9 ), o f R u s s ia ( 1 8 2 0 - 1 8 2 1 ) , and of the U n ited S t a t e s since 18 3 3 ,
prove ?
In concluding this chapter we m u st be perm itted to put a few
questions to those w ho consider the w hole doctrine o f the balance
o f trade as a mere exploded fallacy.
H o w is it that a decidedly and con tinu ou sly d isad van tag eo u s
balance o f trade h a s a lw a y s and w ith ou t exception been accom ­
panied in those countries to w hose detrim ent it existed (with the
exception o f colonies) by internal com m ercial crises, revolutions
in prices, financial difficulties, and general bankruptcies, both in
the public institutions o f credit, and a m o n g the individual mer­
ch an ts, m an ufacturers, and a g ricu ltu rists ?
H o w is it that in those nations w hich p ossessed a balance of
trade decidedly in their favour, the opposite ap p earan ces have
a lw a y s been observed, and that com m ercial crises in the countries
with which such nations were connected com m ercially, h a v e only
affected such nations d etrim en tally for periods w hich passed a w a y
very quickly ?
H o w is it that since R u s s i a has produced for h e rse lf the
greatest part o f the m an u factu red goods w hich she requires, the
balance o f trade h a s been decidedly and la stin g ly in her favour,
that since that tim e n o thing h a s been heard o f econom ical con­
v u lsio n s in R u s s ia , and that since that tim e the internal prosperity
o f that em pire has increased y e a r by y e a r ?
H o w is it that in the U n ite d S t a te s o f N orth A m e rica the
sam e effects h ave a lw a y s resulted from sim ilar c au se s ?
H o w is it that in the U nited S t a te s o f N orth A m erica, under
the large im portation o f m an u factu red goods w hich followed the
THE MANUFACTURING POWER AND CIRCULATION
235
1Compromise B ill,’ the balance of trade w as for a series of years
so decidedly adverse to them, and that this appearance w as ac­
companied by such great and continuous convulsions in the in­
ternal economy of that nation ?
H ow is it that we, at the present moment, see the United
States so glutted with primitive products of all kinds (cotton,
tobacco, cattle, corn, &c.) that the prices of them have fallen
everywhere one-half, and that at the same time these states are
unable to balance their exports with their imports, to satisfy their
debt contracted with En glan d, and to put their credit again on
sound footing ?
H ow is it, if no balance of trade exists, or if it does not signify
whether it is in our favour or not, if it is a matter of indifference
whether much or little of the precious metals flows to foreign
countries, that En glan d in the case of failures of harvests (the
only case where the balance is adverse to her) strives, with fear
and trembling, to equalise her exports with her imports, that she
then carefully estimates every ounce of gold or silver which is
imported or exported, that her national bank endeavours most
anxiously to stop the exportation of precious metals and to pro­
mote their importation— how is it, we ask, if the balance of trade
is an ‘ exploded fallacy,’ that at such a time no E n glish newspaper
can be read wherein this ‘ exploded f a lla c y ’ is not treated as a
matter of the most important concern to the nation ?
H ow is it that, in the United States of North America, the
same people who before the Compromise Bill spoke of the balance
of trade as an exploded fallacy, since the Compromise Bill cannot
cease speaking of this exploded fallacy as a matter of the utmost
importance to their country ?
H o w is it, if the nature of things itself alw ays suffices to
provide every country with exactly the quantity of precious metals
which it requires, that the B an k of En glan d tries to turn this socalled nature of things in her own favour by limiting her credits
and increasing her rates of discount, and that the American banks
are obliged from time to time to suspend their cash payments till
the imports of the United States are reduced to a tolerably even
balance with the exports?
C H A P T E R XXIV.
T H E M A N U F A C T U R IN G PO W ER AND T H E P R I N C I P L E OF
S T A B I L I T Y AN D C O N T I N U IT Y OF WORK.
I f w e in v estig ate the origin and p rogress o f individual branches
o f industry, we shall find that they h ave on ly g rad u ally become
p ossessed o f im proved m ethods o f operation, m achinery, buildings,
a d v a n ta g e s in production, experiences, and skill, and o f all those
k n ow led g es and con nections w h ich insure to them the profitable
purchase o f their ra w m ate rials and the profitable sale o f their
products. W e m a y rest assu red that it is (as a rule) incom parab ly
easier to perfect and extend a b u sin e ss a lre ad y estab lished than to
found a new one. W e see eve ryw he re old b u sin e ss e stab lish m en ts
that h a v e lasted for a series o f g en erations worked w ith greater
profits than new ones. W e observe that it is the more difficult to
set a new b u sin ess g o in g in proportion a s few er branches o f in ­
dustry o f a sim ilar character already exist in a nation ; because, in
that case, m aste rs, forem en, and w orkm en m u st first be either
trained up at hom e or procured from abroad, and because the
profitableness of the b u sin ess h a s not been sufficiently tested to
g iv e capitalists confidence in its success. I f we com pare the con­
ditions o f distinct c la sse s o f in d u stry in a n y nation at various
periods, we e v e ry w h e re find, that w h en special c a u se s had not
operated to injure them, they h ave m ade rem arkable progress, not
on ly in regard to ch eap n ess o f prices, but also with respect to
q u antity and q u ality, from generation to generation. On the other
hand, w e observe th at in con sequence o f external injurious causes,
such a s w a r s and devastation o f territory, & c ., or op p ressive tyran ­
nical or fanatical m e a su re s o f g o ve rn m e n t and finance (as e.g.
the revocation o f the E d ic t o f N an te s), w h ole nations h ave been
throw n back for centuries, either in their entire in d u stry or in
certain branches o f it, and h ave in this m a n n e r been far outstripped
by nations in com parison w ith w hich they had p rev io u sly been far
advanced.
One can see at a g la n ce that, a s in all h u m a n in stitu tions so
also in industry, a law o f nature lies at the root o f im portan t
a ch ie v e m e n ts w h ich has much in com m on w ith the natural law o f
2^6
THE MANUFACTURING POWER AND WORK
237
the division o f labour and of the confederation of the productive
forces, whose principle, namely, consists in the circumstance that
several generations following one another have equally united
their forces towards the attainment of one and the same object,
and have participated in like manner in the exertions needed to
attain it.
It is the same principle which in the cases o f hereditary king­
doms has been incomparably more favourable to the maintenance
and increase of the power of the nation than the constant changes
of the ruling families in the case of electoral kingdoms.
It is partly this natural law which secures to nations who have
lived for a long time past under a rightly ordered constitutional
form of government, such great successes in industry, commerce,
and navigation.
Only through this natural law can the effect of the invention
o f printing on human progress be partially explained. Printing
first rendered it possible to hand down the acquisitions of human
knowledge and experience from the present to future generations
more perfectly and completely than could be done by oral tradition.
T o the recognition of this natural law is undoubtedly partly
attributable the division of the people into castes, which existed
am ong the nations of antiquity, and also the law o f the old
E g y p tia n s— that the son must continue to follow the trade or
profession of his father. Before the invention and general dis­
semination of printing took place, these regulations m ay have
appeared to be indispensable for the maintenance and for the
development of arts and trades.
Guilds and trade societies also have partly originated from this
consideration. F o r the maintenance and bringing to perfection of
the arts and sciences, and their transfer from one generation to
another, we are in great measure indebted to the priestly castes of
ancient nations, to the monasteries and universities.
W h a t power and what influence have the orders of priesthood
and orders of knights, as well as the papal chair, attained to, by
the fact that for centuries they have aspired to one and the same
aim, and that each successive generation has alw ays continued to
work where the other had left off.
T h e importance of this principle becomes still more evident in
respect to material achievements.
Individual cities, monasteries, and corporations have erected
works the total cost of which perhaps surpassed the value of their
whole property at the time. T h e y could only obtain the means
for this by successive generations devoting their savin gs to one
and the same great purpose.
L e t us consider the canal and dyke system of Holland ; it
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T H E THEORY
co m p rise s the labours and s a v in g s o f m a n y generations. O nly
to a series o f gen eratio n s is it possible to com plete sy ste m s of
national tran sport or a com plete syste m o f fortifications and de­
fen sive w orks.
T h e sy ste m o f S ta te credit is one o f the finest creations of
m ore recent sta te sm a n sh ip , and a b le ssin g for nations, inasm u ch
a s it serves a s the m ean s o f d iv id in g a m o n g several generations
the costs o f those ach ie ve m e n ts and exertions o f the present
generation w hich are calculated to benefit the n ation ality for all
future tim es, and w hich g u aran te e to it continued existence,
g ro w th , g re a tn e ss, power, and increase o f the pow ers o f pro­
duction ; it becomes a curse on ly if it se rv e s for u se le ss national
expenditure, and thus not m erely does not further the p rogress of
future generations, but deprives them beforehand of the m e a n s of
u n d ertakin g great national w orks, or a lso i f the burden o f the
p a y m e n t o f interest o f the national debt is throw n on the con­
su m p tio n s o f the w o rk in g cla sse s instead o f on capital.
State debts are bills w hich the present generation d raw s on
future ones. T h i s can take place either to the special a d v a n ta g e
o f the present generation or the special a d v a n ta g e o f the future
one, or to the com m on a d v a n ta g e o f both. In the first case on ly
is this system an objectionable one.
B u t all c a se s in w hich the
object in v ie w is the m aintenance and promotion o f the g re atn e ss
and w elfare o f the nation ality, so far a s the m e a n s required for
the purpose su rp ass the powers o f the present generation, belon g
to the last category.
N o expenditure o f the present generation is so decidedly and
sp ecially profitable to future g e n e ratio n s as that for the im p ro ve ­
m ent o f the m e a n s o f transport, e sp ec ially because such under­
t a k in g s a s a rule, besides in c re a sin g the pow ers o f production of
future gen eratio n s, do also in a co n stan tly in cre asin g ratio not
m erely pa y interest on the cost in the course o f time, but also
yield dividends. T h e present gen eration is, therefore, not m erely
entitled to throw on to future gen eratio n s the capital ou tlay o f
these w o rk s and fair interest on it (as lon g a s th ey do not yield
sufficient income), but further acts u n ju stly tow ards itse lf and to
the true fu nd am ental principles o f national econ om y, i f it takes the
burden or even a n y considerable part o f it on its own shoulders.
I f in our consideration o f the subject o f the continuity o f
national industry w e revert to the main branches w hich constitute
it, w e m a y perceive, that while this continuity h a s an im portant
influence on agriculture, ye t that interruptions to it, in the case of
that industry, are m uch le ss decided and m uch less injurious when
they occur, also that their evil consequences can be m uch more
e asily and q u ickly made good than in the case o f m anufactures.
THE MANUFACTURING POWER AND WORK
239
How ever great m ay be any dam age or interruption to agricul­
ture, the actual personal requirements and consumption of the
agriculturist, the general diffusion of the skill and knowledge re­
quired for agriculture, and the simplicity of its operations and of
the implements which it requires, suffice to prevent it from coming
entirely to an end.
E v e n after devastations by war it quickly raises itself up again.
Neither the enemy nor the foreign competitor can take aw ay the
main instrument of agriculture, the land ; and it needs the op­
pressions of a series of generations to convert arable fields into
uncultivated waste, or to deprive the inhabitants o f a country of
the capability of carrying on agriculture.
On manufactures, however, the least and briefest interruption
has a crippling effect; a longer one is fatal. The more art and
talent that any branch of manufacture requires, the larger the
amounts ot capital which are needful to carry it on, the more
completely this capital is sunk in the special branch of industry
in which it has been invested, so much the more detrimental will
be the interruption. B y it machinery and tools are reduced to the
value of old iron and fire-wood, the buildings become ruins, the
workmen and skilled artificers emigrate to other lands or seek
subsistence in agricultural employment. T h u s in a short time a
complex combination of productive powers and of property be­
comes lost, which had been created only by the exertions and
endeavours o f several generations.
Ju s t as by the establishment and continuance of industry one
branch of trade originates, draws after it, supports and causes to
flourish many others, so is the ruin of one branch of industry
alw ays the forerunner of the ruin of several others, and finally o f
the chief foundations of the manufacturing power of the nation.
T h e conviction of the great effects produced by the steady
continuation of industry and of the irretrievable injuries caused
by its interruption, and not the clamour and egotistical demands
of manufacturers and traders for special privileges, has led to the
idea of protective duties for native industry.
In cases where the protective duty cannot help, where the
manufactories, for instance, suffer from want of export trade,
where the Government is unable to provide any remedy for its
interruption, we often see manufacturers continuing to produce at
an actual loss. T h e y want to avert, in expectation of better times,
the irrecoverable injury which they would suffer from a stoppage
of their works.
B y free competition it is often hoped to oblige the competitor
to discontinue work which has compelled the manufacturer or
merchant to sell his products under their legitimate price and
240
THU.
1 H r l.U K i
often at an actual loss. T h e object is not m erely to prevent the
interruption o f our ow n industry, but also to force others to dis­
continue theirs in the hope later on of being able by better prices
to recoup the lo sse s which h ave been suffered.
In a n y case s triv in g after m on opoly form s part o f the very
nature o f m an u factu rin g industry.
T h i s circu m stan ce tends to
ju s tify and not to discredit a protective policy ; for this striving,
w hen restricted in its operation to the hom e m arket, tends to pro­
mote cheaper prices and im p ro ve m e n ts in the art o f production,
and th u s increases the national p r o s p e r it y ; w h ile the sam e thing,
in case it presses from w ithout with o v e rw h e lm in g force on the
internal ind ustry, w ill occasion the interruption o f w o rk and d o w n ­
fall o f the internal national industry.
T h e circu m stance that there are no lim its to m an u factu rin g
production (especially since it has been so extraordin arily aided
and promoted by m achinery) except the lim its o f the capital which
it p o sse sse s and its m e a n s o f effecting sales, enab les that particular
nation w h ose m an u factu rin g industry h a s continued for a century,
which has accum ulated im m e n se capitals, extended its com m erce
all over the world, dom inated the m on ey m arket by m e a n s o f large
institutions o f credit (w hose operations are able to depress the
prices o f fabrics and to induce m erchants to export), to declare
a w a r o f exterm ination a g a in st the m an u factu rers of all other
countries.
U n d er such circu m stan ces it is quite im possible that
in other nations, ‘ in the natural course o f th in g s ’ (as A d am
Sm ith exp re sse s him self), m erely in consequence o f their progress
in agriculture, im m en se m an u factu res and w o rk s should be estab­
lished, or that those m an u factu res w hich h a v e originated in con­
sequence o f the com m ercial interruptions caused by w a r should be
able, ‘ in the natural course o f th in g s,' to continue to m aintain
th em selv e s. T h e reason for this is the sam e as that w h y a child
or a boy in w r e stlin g with a stron g m an can scarcely be victorious
or even offer steady resistance. T h e m an u factories w hich con­
stitute the com m ercial and industrial su p re m ac y (of E n g la n d )
h ave a thousand a d v a n t a g e s over the n e w ly born or h alf-gro w n
m anufactories o f other nations. T h e former, for instance, can
obtain skilled and experienced w orkm en in the greatest num ber
and at the cheapest w a g e s , the best technical m en and foremen,
the m ost perfect and the cheapest m ac h in e ry, the g re atest benefit
in b u y in g and se llin g a d v a n t a g e o u s l y ; further, the cheapest
m ean s o f tran sport, as respects raw m aterials and also in respect
of tran sporting goods w hen sold, more extended credit for the
m anufacturers w ith b an k s and m on ey institu tion s at the low est
rates o f interest, gre ater com m ercial experience, better tools,
buildings, arran gem en ts, connections, such a s can on ly be ac-
THE MANUFACTURING POWER AND WORK
241
quired and established in the course of generations; an enormous
home market, and, w hat is equally good, a colonial market equally
enormous. Hence under all circumstances the En glish m an u ­
facturers can feel certainty as to the sale of large quantities of
manufactured products by vigorous efforts, and consequently pos­
sess a guarantee for the continuance of their business and abundant
means to sell on credit for years to come in the future, if it is re­
quired to acquire the control of a foreign market. I f we enumerate
and consider these advantages one after another, we m ay easily
be convinced that in competition with such a power it is simply
foolish to rest our hopes on the operation of ‘ the natural course of
t h in g s ’ under free competition, where, as in our case, workmen
and technical men have in the first place yet to be trained, where
the manufacture of machinery and proper means of transport are
merely in course of erection, where even the home market is not
secured to the manufacturer— not to mention any important export
market, where the credit that the manufacturer can obtain is under
the most fortunate circumstances limited to the lowest point, where
no man can be certain even for a day that, in consequence of
E nglish commercial crises and bank operations, masses of foreign
goods m ay not be thrown on the home market at prices which
scarcely recoup the value of the raw materials of which they are
made, and which bring to a stand for years the progress o f our
own manufacturing industries.
It would be in vain for such nations to resign themselves to
a state of perpetual subordination to the E n glish manufacturing
supremacy, and content themselves with the modest determination
to supply it with w hat it m ay not be able to produce for itself or
to procure elsewhere. E v e n by this subordination they will find
no permanent benefit. W h at benefit is it to the people of the
United States, for instance, that they sacrifice the welfare of their
finest and most cultivated states, the states of free labour, and
perhaps their entire future national greatness, for the advantage
of supplying E n g lan d with raw cotton ? Do they thereby restrict
the endeavours of E n glan d to procure this material from other
districts of the world ? In vain would the G erm ans be content to
obtain their requirements of manufactured goods from E n glan d
in exchange for their fine sheep’s w o o l ; they would by such a
policy hardly prevent Australia from flooding all Europe with fine
wool in the course of the next twenty years.
Such a condition of dependence appears still more deplorable
when we consider that such nations lose in times of war their
means of selling their agricultural products, and thereby the means
of purchasing the manufacturing products of the foreigner. At
such times all economical considerations and system s are thrust
16
242
T H E THEORY
into the background. It is the principle o f self-m aintenance, of
self-defence, w hich counsels the nations to w ork up their a g ricu l­
tural products th em selves, and to dispense with the m anufactured
goods o f the enem y. W h a t e v e r losses m a y be involved in adopting
such a w ar-prohib itive syste m , cannot be taken into account during
such a state o f thin gs. H o w e v e r great the exertions and the sacri­
fices m a y h ave been by which the agricultural nation during the
tim e o f w a r has called into existence m an u factu res and works, the
com petition o f the m an u fac tu rin g su p rem acy w hich sets in on the
recurrence of peace w ill ag ain destroy all these creation s of the
tim es o f n ecessity. In short, it is an eternal alternation o f erect­
in g and d e stro yin g , o f prosperity and ca la m ity , which those
nations h ave to undergo w ho do not strive to insure, through
realisation o f their national division o f labour and through the
confederation o f their ow n pow ers o f production, the benefits o f the
continuation o f their own industries from generation to generation.
CHAPTER XXV.
T H E M ANU FACTURIN G POWER AND T H E IN D UCEM EN T TO
PRODUCTION AND CONSUMPTION.
I n society man is not merely productive owing to the circum­
stance that he directly brings forth products or creates powers of
production, but he also becomes productive by creating induce­
ments to production and to consumption, or to the formation o f
productive powers.
T h e artist by his works acts in the first place on the ennobling
and refinement of the human spirit and on the productive power
of society ; but inasmuch as the enjoyment of art presupposes the
possession of those material means whereby it must be purchased,
the artist also offers inducements to material production and to
thrift.
B o oks and newspapers act on the mental and material pro­
duction by g ivin g information ; but their acquisition costs money,
and so far the enjoyment which they afford is also an inducement
to material production.
T h e education o f youth ennobles s o c ie ty ; but what great
exertions do parents make to obtain the means of g iv in g their
children a good education !
W h a t immense performances in both mental and material pro­
duction arise out of the endeavour to move in better society !
W e can live as well in a house made of boards as in a villa,
we can protect ourselves for a few florins against rain and cold as
well as by means of the finest and most elegant clothing. Orna­
ments and utensils of gold and silver add no more to comfort
than those of iron and tin ; but the distinction connected with the
possession of the former acts as an inducement to exertions of the
body and the mind, and to order and thrift ; and to such induce­
ments society owes a large part of its productiveness. E v e n the
man living on his private property who merely occupies himself
with preserving, increasing, and consuming his income, acts in
manifold w a y s on mental and material production : firstly, by sup­
porting through his consumption art and science, and artistic
trades ; next, by discharging, as it were, the function of a preserver
16 *
243
244
T H E THEORY
and au g m e n te r o f the m aterial capital o f s o c ie ty ; finally, by in­
citing through his display all other classe s o f society to emulation.
A s a w hole school is encouraged to exertions by the offer o f prizes,
alth ou gh on ly a few become w in n e rs o f the principal prizes, so
does the possession o f large property, and the appearan ce and
display connected w ith it, act on civil society. T h i s action o f
course ceases w hen the great property is the fruit o f usurpation,
o f extortion, or fraud, or w h ere the p o sse ssio n o f it an d the enjoy­
m ent of its fruits cannot be op e n ly displayed.
M a n u fa c tu r in g production y ie ld s either productive in stru m e n ts
or the m e a n s o f s a t is fy in g the necessities o f life and the m ean s o f
d isp lay. T h e last two a d v a n ta g e s are frequently com bined. T h e
v ario u s ranks o f so cie ty are e v e ry w h e re d istin gu ish ed by the
m an n e r in w hich and w here they live, and h ow they are furnished
and clothed, by the co stlin e ss o f their e q u ip a g e s and the quality,
num ber, and external appearan ce o f their se rv a n ts. W h e r e the
com m ercial production is on a low scale, this distinction is but
sligh t, i.e. alm ost all people live bad ly and are poorly clothed,
em ulation is now here observable. It o rig in ates and in creases
accord in g to the ratio in w hich industries flourish. In flou rish in g
m an u fac tu rin g countries alm o st everyon e lives and d resses well,
alth ou gh in the qu ality o f m an u factu red goods w hich are con­
sum ed the m ost m anifold degrees o f difference take place. N o
one w h o feels that he h a s a n y pow er in him to w o rk is w illin g
to appear o u tw ard ly needy. M a n u fa c tu rin g ind ustry, therefore,
furthers production by the co m m u n ity by m e a n s of ind ucem ents
w hich agriculture, w ith its m ean dom estic m an u factu re, its pro­
ductions of r a w m a te ria ls and p ro visio n s, can not offer.
T h e r e is o f course an im portant difference between variou s
m o d e s o f liv in g , and eve ryo n e feels som e inducem ent to eat and
drink w e l l ; but w e do not dine in p u b lic ; and a G e r m a n proverb
s a y s strik in gly, ' M a n sieht m ir a u f den K r a g e n , nicht a u f den
M a g e n ’ (One looks at m y shirt collar, not at m y stomach). I f w e
are accustom ed from you th to rough and sim ple fare, w e seldom
w ish for better. T h e con su m ption o f provision s also is restricted
to v ery narrow lim its w here it is confined to articles produced in
the im m ediate neighbourhood.
T h e s e lim its are extended in
countries of tem perate clim ate, in the first instance, b y procuring
the products of tropical clim ates. B u t as respects the q u antity
and the quality o f these products, in the e n jo y m e n t o f w hich the
w h ole population o f a cou n try can participate, they can on ly be
procured (as we h ave show n in a form er chapter) by m e a n s of
foreign com merce in m anufactured goods.
C olonial products, so far as th ey do not c o n sist o f raw
m aterials for m an u factu rin g purposes, evid en tly act m ore as
MANUFACTURING POWER—PRODUCTION—CONSUMPTION
245
stimulants than necessary means of subsistence. No one will
deny that barley coffee without sugar is as nutritious as mocha
coffee with sugar ■ and admitting also that these products contain
some nutritious matter, their value in this respect is nevertheless
so unimportant that they can scarcely be considered as substitutes
for native provisions. W ith regard to spices and tobacco, they are
certainly mere stimulants, i.e. they chiefly produce a useful effect
on society only so far as they augment the enjoyments of the
m asses, and incite them to mental and bodily labour.
In m an y countries very erroneous notions prevail among those
who live by salaries or rents, respecting what they are accustomed
to call the luxurious habits of the lower classes ; such persons are
shocked to observe that labourers drink coffee with sugar, and
regret the times when they were satisfied with g r u e l; they deplore
that the peasant has exchanged his poor clothing of coarse homespun for woollen cloth ; they express fears that the maid-servant
will soon not be distinguishable from the lady of the house ; they
praise the legal restrictions on dress of previous centuries. B u t if
we compare the result of the labour of the workman in countries
where he is clad and nourished like the well-to-do man with the
result of his labour where he has to be satisfied with the coarsest
food and clothing, we shall find that the increase of his comfort in
the former case has been attained not at the expense of the general
welfare, but to the advantage of the productive powers o f the
community. T h e d ay’s work of the workman is double or three
tim es greater in the former case than in the latter. Attempts to
regulate dress and restrictions on luxury have destroyed whole­
some emulation in the large m asses of society, and have merely
tended to the increase o f mental and bodily idleness.
In any case products must be created before they can be con­
sumed, and thus production must necessarily generally precede
consumption. In popular and national practice, however, con­
sumption frequently precedes production. Manufacturing nations,
supported by large capital and less restricted in their production
than mere agricultural nations, make, as a rule, advances to the
latter on the yield of future crops ; the latter thus consume before
they produce— they produce later on because they have previously
consumed. T h e same thing manifests itself in a much greater
degree in the relation between town and country : the closer the
manufacturer is to the agriculturist, the more will the former offer
to the latter both an inducement to consume and means for con­
sumption, the more also will the latter feel him self stimulated to
greater production.
A m on g the most potent stimulants are those afforded by the
civil and political institutions of the country.
W here it is not
246
T H E THE O RY
possible to raise o n e se lf b y hon est exertions and by prosperity
from one class o f society to another, from the lo w e st to the h i g h e s t ;
w h ere the p o sse sso r n e cessarily hesitates to sh o w his property
publicly or to enjoy the fruits o f it because it w ould expose his
property to risk, or lest he should be accused of arrogance or
im propriety ; w here person s e n g aged in trade are excluded from
public honour, from tak in g part in adm in istration , legislation, and
j u r i e s ; w h ere d istin gu ished ach ie ve m e n ts in agriculture, industry,
and com m erce do not lead a lso to public esteem and to social and
civil distinction, there the m ost im portant m o tive s for co n su m p ­
tion as well a s for production are w an tin g .
E v e r y law , eve ry public regu lation , has a stre n g th en in g or
w e a k e n in g effect on production or on con su m ption or on the
productive forces.
T h e g ra n tin g o f patent p riv ileg e s offers a prize to inventive
m inds.
T h e hope o f o b tain in g the prize aro u ses the mental
pow ers, and g iv e s them a direction to w ard s industrial im p ro ve ­
m ents. It b rin g s honour to the in v e n tiv e m ind in society, and
roots out the prejudice for old cu stom s and m odes o f operation so
inju riou s a m o n g uneducated nations. It provides the m an w h o
m erely p o sse sse s mental faculties for n ew in ven tion s w ith the
m aterial m e a n s w hich he requires, in asm u ch as capitalists are
th u s incited to support the inventor, by being assu red o f particip a­
tion in the anticipated profits.
P rotective duties act a s stim u lan ts on all those branches o f
internal ind ustry the produce o f w hich foreign countries can pro­
vide better than the hom e country, but o f the production o f which
the hom e cou n try is capable. T h e y g u aran te e a rew ard to the
m an o f enterprise and to the w o rk m a n for acq u irin g n ew k n o w ­
ledge and skill, and offer to the inland and foreign capitalist
m e a n s for in v e s t in g his capital for a definite and certain tim e in a
sp ecially rem u nerative m an ner.
CHAPTER XXVI,
CUSTOMS D U T IE S AS A C H IE F MEANS OF E S T A B L IS H IN G AND
PROTECTING T H E IN T E R N A L MANUFACTURING POWER.
I t is not part of our plan to treat of those means of promoting
internal industry whose efficacy and applicability are nowhere
called in question. T o these belong e.g. educational establish­
ments (especially technical schools), industrial exhibitions, offers
o f prizes, transport improvements, patent laws, &c. ; in short,
all those law s and institutions by means of which industry is
furthered, and internal and external commerce facilitated and
regulated. W e have here merely to speak of the institution of
customs duties as a means for the development of industry.
According to our system, prohibitions of, or duties on, exports
can only be thought of as exceptional things • the imports of
natural products must everywhere be subject to revenue duties
only, and never to duties intended to protect native agricultural
production. In manufacturing states, articles of luxury from
w arm climates are chiefly subject to duties for revenue, but not
the common necessaries of life, as e.g. corn or fat cattle ; but the
countries of w arm er climate or countries of smaller population or
limited territory, or countries not yet sufficiently populous, or such
as are still far behind in civilisation and in their social and
political institutions, are those which should only impose mere
revenue duties on manufactured goods.
R even u e duties of every kind, however, should everywhere be
so moderate as not essentially to restrict importation and consump­
tion ; because, otherwise, not only would the internal productive
power be weakened, but the object of raising revenue be defeated.
Measures of protection are justifiable only for the purpose o f
furthering and protecting the internal manufacturing power, and
only in the case of nations which through an extensive and com ­
pact territory, large population, possession of natural resources,
far advanced agriculture, a high degree of civilisation and political
development, are qualified to maintain an equal rank with the
principal agricultural manufacturing commercial nations, with the
greatest naval and military powers.
247
248
T H E THEORY
Protection can be afforded, either by the prohibition o f certain
m anufactured articles, or b y rates o f d u ty w hich am oun t wholly,
or at least partly, to prohibition, or b y m oderate im port duties.
N o n e o f these kinds o f protection are in v a ria b ly beneficial or
in v a ria b ly objectionable ; and it depends on the special circum ­
stances o f the nation and on the condition o f its in d u stry w hich o f
these is the right one to be applied to it.
W a r e xe rcise s a great influence on the selection o f the precise
sy ste m o f protection, in asm u ch a s it effects a com pu lsory pro*
hibitive system . In tim e o f w ar, e x c h a n g e between the belligerent
parties ce ase s, and e v e ry nation m u st endeavour, w ithout regard
to its econ om ical conditions, to be sufficient to itself. H ence, on
the one hand, in the less advanced m a n u fa c tu rin g nations co m ­
m ercial in d u stry, on the other hand, in the m ost advanced m a n u ­
facturing nation agricu ltu ral production, becom es stim ulated in an
e xtraordinary m an n er, indeed to such a degree th at it appears
advisable to the less advan ced m a n u fa c tu rin g nation (especially if
w a r h a s continued for several ye a rs) to a llo w the exclu sion which
w a r h a s occasioned o f th ose m an u factu red articles in which it
cannot ye t freely com pete w ith the m ost advan ced m an u factu rin g
nation, to continue for som e tim e during peace.
F ra n c e and G e r m a n y w ere in this condition after the general
peace.
I f in 1 8 1 5 F r a n c e had allow ed E n g li s h competition, as
G e r m a n y , R u s s ia , and N orth A m e r ic a did, she would also h ave
experienced the sa m e fate ; the g re a te st part o f her m anufactories
which had sp ru n g up du rin g the w a r w ould h a v e com e to g r ie f;
the p rogress w hich h a s since been made in all bran ch es o f m a n u ­
facture, in im p ro v in g the intern al m e a n s o f tran sport, in foreign
com m erce, in steam river and sea n a v ig a tio n , in the increase in
the v alu e o f land (w hich, by the w a y , has doubled in v alu e during
this tim e in F ran ce ), in the a u g m e n ta tio n o f popu lation and o f the
S t a t e ’ s revenu es, could not h ave been hoped for. T h e m a n u fa c ­
tories o f F r a n c e at that tim e were still in their childhood ; the
country p o sse sse d but fe w ca n a ls ; the m in es had been but little
worked ; political co n vu lsio n s and w a r s had not ye t permitted
considerable capital to accu m u late, sufficient technical cu ltivation
to exist, a sufficient num ber o f really qualified w orkm en or an in­
dustrial and en terp risin g spirit to h ave been called into e x ist e n c e ;
the m ind o f the nation w a s still turned more to w ard s w a r than
to w ard s the arts o f peace ; the sm all capital w hich a state o f w ar
perm itted to accu m u late, still flowed p rin cipally into agriculture,
which had declined v e r y m uch indeed. T h e n , for the first tim e,
could F ra n c e perceive w h at p ro g re ss E n g la n d had m ade during
the w a r ; then, for the first tim e, w a s it possible for F r a n c e to
import from E n g la n d m ac h in e ry, artificers, w o rk m e n , capital, and
CUSTOMS DUTIES AND MANUFACTURING POWER
249
the spirit o f enterprise; then, to secure the home market ex­
clusively for the benefit of home industry, demanded the exertion
of her best powers, and the utilisation of all her natural resources.
T h e effects of this protective policy are very e v id e n t ; nothing but
blind cosmopolitanism can ignore them, or maintain that France
would have, under a policy of free competition with other nations,
made greater progress. Does not the experience of G erm any, the
United States of America, and R u ssia, conclusively prove the
contrary ?
I f we maintain that the prohibitive system has been useful to
F ran ce since 18 1 5 , we do not by that contention wish to defend
either her mistakes or her excess of protection, nor the utility or
necessity of her continued maintenance of that excessive protective
policy. It w as an error for France to restrict the importation of
raw materials and agricultural products (pig-iron, coal, wool, corn,
cattle) by import duties ; it would be a further error if France,
after her manufacturing power has become sufficiently strong and
established, were not willing to revert gradually to a moderate
system of protection, and by permitting a limited amount of com­
petition incite her manufacturers to emulation.
In regard to protective duties it is especially important to dis­
criminate between the case of a nation which contemplates passing
from a policy of free competition to one of protection, and that of
a nation which proposes to exchange a policy of prohibition for
one of moderate protection ; in the former case the duties imposed
at first must be low, and be gradually increased, in the latter they
m ust be high at first and be gradually diminished.
A nation which has been formerly insufficiently protected by
customs duties, but which feels itself called upon to make greater
progress in manufactures, must first of all endeavour to develop
those manufactures which produce articles of general consumption.
In the first place the total value of such industrial products is
incomparably greater than the total value of the much more
expensive fabrics of luxury. T he former class of manufactures,
therefore, brings into motion large m asses o f natural, mental, and
personal productive powers, and g iv e s— by the fact that it requires
large capital— inducements for considerable saving of capital, and
for bringing over to its aid foreign capital and powers of all kinds.
T h e development of these branches of manufacture thus tends
powerfully to promote the increase of population, the prosperity of
home agriculture, and also especially the increase of the trade
with foreign countries, inasmuch as less cultivated countries
chiefly require manufactured goods of common use, and the
countries o f temperate climates are principally enabled bv the
production of these articles to carry on direct interchange with the
250
T H E THEORY
countries o f tropical clim ates. A cou n try e.g . w hich has to import
cotton y a r n s and cotton g o o d s cannot carry on direct trade with
E g y p t , L o u is ia n a , or B r a z il, because it can n ot su pply those
countries with the cotton goods w hich they require, and cannot
take from them their ra w cotton. F u rth e rm o re , these articles, on
account o f the m ag n itu d e o f their total valu e, serve especially to
equalise the exports o f the nation tolerab ly well w ith its imports,
and a lw a y s to retain in the nation the am o u n t o f circulating
m edium w hich it requires, or to provide it w ith the sam e. T h u s
it is by the prosperity and preservation o f these im portant branches
o f industry that the industrial independence o f the nation is gained
and m aintained, for the disturbance o f trade resu ltin g from w a rs is
o f little im portance i f it m e re ly hinders the p u rch ase of expensive
articles o f lu xu ry, but, on the other hand, it a lw a y s o ccasion s great
calam ities if it is attended by scarcity and rise in price o f common
m anufactured goods, and by the interruption o f a previou sly con­
siderable sale o f ag ricu ltu ral products. F in a lly , the e vasio n of
cu sto m s duties by s m u g g lin g and false declarations o f valu e is
m uch le ss to be feared in the case o f these articles, and can be
m uch more e a sily prevented than in the case o f co stly fabrics of
lu xu ry.
M an u factu res an d m an u factories are a lw a y s p lan ts of slow
grow th , and e v e r y protective d u ty w hich suddenly breaks off
form erly e x istin g com m ercial connections m u st be detrimental to
the nation for w h o se benefit it is professedly introduced, Such
duties ou g ht only to be increased in the ratio in w hich capital,
technical abilities, and the spirit o f enterprise are in creasin g in
the nation or are being attracted to it from abroad, in the ratio in
which the nation is in a condition to utilise for itse lf its su rplus of
raw m ate rials and natural products w hich it had p rev io u sly ex­
ported. It is, h ow ever, of special im portan ce th at the scale by
which the im port du ties are increased should be determ ined be­
forehand, so that an assu re d rem uneration can be offered to the
capitalists, artificers, and w o rk m e n , w h o are found in the nation
or w h o can be attracted to it from abroad. It is ind ispensab le to
m ain tain these scales o f duty in v io la b ly , and not to dim inish them
before the appointed tim e, because the v e r y fear o f a n y such
breach o f prom ise w ould a lre a d y destroy for the m ost part the
effect of that assu ra n ce o f rem uneration.
T o w h at extent import duties should be increased in the case
o f a ch an ge from free com petition to the protective syste m , and
h ow much they ou g ht to be dim inished in the case o f a ch an ge
from a syste m o f prohibition to a m oderate sy ste m o f protection,
cannot be determined theoretically : that depends on the special
conditions a s well a s on the relative con dition s in w h ich the less
CUSTOMS DUTIES AND MANUFACTURING POWER
251
advanced nation is placed in relation to the more advanced ones.
T h e United States of North America e.g. have to take into special
consideration their exports of raw cotton to En glan d, and of agri­
cultural and maritime products to the E n glish colonies, also the
high rate of w ages existing in the United S t a te s ; whereby they
again profit by the fact that they can depend more than any other
nation on attracting to themselves En glish capital, artificers, men
of enterprise, and workmen.
It may in general be assumed that where any technical in­
dustry cannot be established by means of an original protection of
forty to sixty per cent, and cannot continue to maintain itself
under a continued protection of twenty to thirty per cent, the
fundamental conditions of manufacturing power are lacking.
T h e causes of such incapacity can be removed more or less
readily : to the class more readily removable belong want of
internal means of transport, want o f technical knowledge, of
experienced workmen, and of the spirit of industrial enterprise ;
to the class which it is more difficult to remove belong the lack of
industrious disposition, civilisation, education, morality, and love
o f justice on the part of the people ; want of a sound and vigorous
system of agriculture, and hence of material c a p ita l; but especially
defective political institutions, and want of civil liberty and o f
security of justice ; and finally, want of compactness of territory,
whereby it is rendered impossible to put down contraband trade.
T h o se industries which merely produce expensive articles of
luxury require the least consideration and the least amount o f
protection ; firstly, because their production requires and assumes
the existence o f a high degree of technical attainment and s k i l l ;
secondly, because their total value is inconsiderable in proportion
to that of the whole national production, and the imports of them
can be readily paid for by means of agricultural products and raw
materials, or with manufactured products of common use ; further,
because the interruption of their importation occasions no impor­
tant inconvenience in time of war ; lastly, because high protective
duties on these articles can be most readily evaded by sm uggling.
N ations which have not yet made considerable advances in
technical art and in the manufacture of machinery should allow
all complicated machinery to be imported free of duty, or at least
only levy a small duty upon them, until they themselves are in a
position to produce them as readily as the most advanced nation.
Machine manufactories are in a certain sense the manufacturers
of manufactories, and every tax on the importation of foreign
machinery is a restriction on the internal manufacturing power.
Since it is, however, of the greatest importance, because of its
great influence on the whole manufacturing power, that the nation
T H E THEORY
should not be dependent on the ch an ces and c h a n g e s of w ar in
respect o f its m ac h in e ry, this particular branch o f m an u factu re has
v e r y special claim s for the direct support o f the S ta te in case it
should not be able under m oderate im port duties to meet com­
petition. T h e S t a te should at least e n co u rag e an d directly support
its hom e m an u factories o f m achin ery, so far a s their m aintenance
and developm ent m a y be n e c e ssa r y to provide at the com m ence­
m ent o f a tim e o f w a r the m ost n e c e ssa ry requirem ents, and under
a lon ger interruption by w a r to serve a s pattern s for the erection
o f new m achin e factories.
D r a w b a c k s can accord in g to our sy ste m o n ly be entertained in
cases w h ere h alf-m an ufactu red g o o d s w h ich are still imported from
abroad, a s for instance cotton y a rn , m u st be subjected to a con­
siderable protective duty in order to enable the cou n try grad u ally
to produce them itself.
B o u n tie s are objectionable a s p e rm an e n t m e a su re s to render
the exports and the com petition o f the n ativ e m anufactories
possible w ith the m an u facto rie s o f further advan ced nations in
neutral m a r k e t s ; but they are still m ore objectionable a s the
m e a n s o f g e ttin g p o sse ssio n o f the inland m ark e ts for m a n u ­
factured goods o f n atio n s w h ich h a v e th e m s e lv e s alread y made
p ro g re ss in m an ufactures. Y e t there are c a se s w here they are to
be ju stified a s tem p orary m e a n s o f en co u rag em e n t, nam ely, where
the slu m b erin g spirit o f enterprise o f a nation m erely requires
stim u lu s and a ssista n c e in the first period o f its r ev ival, in order
to e voke in it a powerful and la s t in g production and an export
trade to countries w hich th e m se lv e s do not p o sse ss flourishing
m an u factu re s. B u t even in these case s it ou g ht to be considered
w hether the S t a te w ould not do better b y m a k in g a d v a n c e s free o f
interest and g r a n tin g special p riv ile g e s to ind ivid u al m en o f enter­
prise, or w h eth er it would not be still m ore to the purpose to
promote the form ation o f co m p an ies to carry into effect such
p rim ary experim ental ad ven tu res, to ad v an ce to such co m p an ies a
portion o f their requisite share capital out o f the S ta te treasury,
and to a llo w to the private persons ta k in g sh ares in ithem a pre­
ferential interest on their invested capital. A s in stan ces o f the
case s referred to, w e m a y m ention experim ental u n d e rtak in gs in
trade and n a v ig a tio n to distant countries, to w hich the com m erce
o f private persons h a s not ye t been extended ; the e stab lish m en t
o f lines o f steam ers to distant c o u n tr ie s ; the fo u n d in g o f new
colonies, &c.
CHAPTER XXVII.
THE CUSTOMS SYSTEM AND THE POPULAR SCHOOL.
T h e popular school does not discriminate (in respect of the opera­
tion of protective duties) between natural or primitive products
and manufactured products. It perverts the fact that such duties
a lw ays operate injuriously on the production of primitive or natural
products, into the false conclusion that they exercise an equally
detrimental influence on the production of manufactured goods.
T h e school recognises no distinction in reference to the es­
tablishment of manufacturing industry in a State between those
nations which are not adapted for such industry and those which,
owing to the nature of their territory, to perfectly developed ag ri­
culture, to their civilisation, and to their ju st claims for guarantees
for their future prosperity, for their permanence, and for their
power, are clearly qualified to establish such an industry for them­
selves.
T h e school fails to perceive that under a system of perfectly
free competition with more advanced manufacturing nations, a
nation which is less advanced than those, although well fitted for
manufacturing, can never attain to a perfectly developed m anu­
facturing power of its own, nor to perfect national independence,
without protective duties.
It does not take into account the influence o f war on the
necessity for a protective s y s t e m ; especially it does not perceive
that war effects a compulsory prohibitive system, and that the
prohibitive system of the custom-house is but a necessary con­
tinuation of that prohibitive system which war has brought about.
It seeks to adduce the benefits which result from free internal
trade as a proof that nations can only attain to the highest degree
o f prosperity and power by absolute freedom in international
trad e; whereas history everywhere proves the contrary.
It maintains that protective measures afford a monopoly to
inland manufacturers, and thus tend to induce indolence ; while,
nevertheless, all the time internal competition amply suffices as a
stimulus to emulation am ong manufacturers and traders.
It would have us believe that protective duties on manufactured
253
254
THE THEORY
goods benefit m an u fac tu re rs at the e x p e n s e o f agriculturists;
w h e re a s it can be proved that e n o r m o u s b en efits accrue to home
agriculture from the e xisten ce o f a h o m e m an u fac tu rin g power,
com pared to w hich the sacrifices w h ic h the form er h a s to make to
the protective syste m are in con sid erab le.
A s a m ain point a g a in st protective duties, the popular school
adduces the e x p e n se s o f the cu sto m -h o u se s y s t e m and the evils
caused by contraband trade. T h e s e e v ils c an n o t be den ied; but
can they be taken se rio u sly into accou n t in comparison of
m e asu res w hich exercise such e n o rm o u s influence on the exis­
tence, the power, and the p ro sp e rity o f the nation ? C an the evils
o f sta n d in g a r m ie s and w a r s con stitu te an adequ ate motive for
the nation to neglect m e a n s o f defence ? I f it is m aintained that
protective duties w h ic h far exceed the lim it w hich offers an
assured rem u neration to s m u g g lin g , serve m e re ly to favour con­
traband trade, but not to benefit h om e m an u fac tu re s, that can
a pply o n ly to ill-regulated c u s to m s e sta b lish m e n ts, to countries of
sm all extent and irre g u la r frontiers, to the con su m ption which
takes place on the frontiers, and o n ly to h ig h duties on articles of
lu xu ry o f no great a g g r e g a t e bulk.
B u t experience e v e ry w h e re te a c h e s u s th at w ith well-ordered
cu sto m s e sta b lish m e n ts, and w ith w i s e ly d e v ise d tariffs, the
objects o f protective duties in larg e an d c o m p a c t states cannot
be m a te ria lly impeded b y co n trab an d trade.
S o far a s reg ard s the m ere e x p e n s e s o f the c u s to m s system, a
large portion o f these w ou ld, i f it w e re abo lish ed, h ave to be in­
curred in the collection o f reven u e du ties ; and th at revenue duties
can be dispensed with b y g re at n a tio n s, e ve n the school itself does
not m aintain.
M oreover, the school i t s e lf does not con d em n all protective
duties.
A d am S m ith a llo w s in three c a s e s the sp ecial protection of
internal i n d u s t r y : firstly, a s a m e a s u r e o f re ta lia tio n in case a
foreign nation im p o se s restric tio n s on our im p o rts, and there is
hope of inducing it b y m e a n s o f r e p r is a ls to repeal those restric­
t i o n s ; secondly, for the defence o f the n a tio n , in case those manu­
facturing requirem ents w h ic h are n e c e ssa ry for d efensive purposes
could not under open com petition be produced at hom e ; thirdly,
a s a m eans o f eq u a lisa tio n in case the products o f foreigners are
taxed lower than those o f our h o m e producers. J . B . S a y objects
to protection in all these c a s e s , but a d m its it in a fourth case—
nam ely, when som e branch o f in d u stry is expected to become after
the lapse of a few y e a r s so rem u n e ra tiv e th at it w ill then no longer
need protection.
T h u s it is A d a m S m ith w h o w a n t s to introduce the principle of
THE CUSTOMS SYSTEM AND THE POPULAR SCHOOL
255
retaliation into commcrcfal policy— a principle which would lead to
the most absurd and most ruinous measures, especially if the re­
taliatory duties, as Sm ith demands, are to be repealed as soon as
the foreign nation agrees to abolish its restrictions.
Supposing
Germany made reprisals against England, because o f the duties
imposed by the latter on German corn and timber, by excluding
from Germ any English manufactured goods, and by this exclusion
called artificially into existence a manufacturing power o f her own
must Germany then allow this manufacturing industry, created at
immense sacrifice, to come to grie f in case England should 1l
induced to reopen her ports to German corn and timber ? VVh.o
folly ! It would have been ten times better than that i f German
had submitted quietly to all measures o f restriction on the part o:
England, and had discouraged the growth o f any manufacturin
power o f her own which m ight grow up notwithstanding llu
English import prohibitions, instead o f stimulating its growth
T h e principle o f retaliation is reasonable and applicable o n !,
if it coincides with the principle o f the industrial development * j
the nati on, if it serves as it were as an assistance to this object.
Yes, it is reasonable and beneficial that other nations should
retaliate against the English import restrictions on their agricu!
tural products, by im posing restrictions on the importation ot
manufactured goods, but only when those nations are qualified t
establish a m anufacturing pow er o f their own and to maintain u
fo r all times.
B y the second exception, Adam Smith really justifies not
merely the necessity of protecting such manufactures as suppE
the immediate requirements o f war, such as, for instance, manu­
factories o f arms and powder, but the whole system o f protection
as we understand it; for by the establishment in the nation o f
a manufacturing power o f its own, protection to native industry
tends to the augmentation o f the nation's population, o f its material
wealth, o f its machine power, o f its independence, and o f all mental
powers, and, therefore, o f its means o f national defence, in an in­
finitely higher degree than it could do by merely manufacturing
arms and powder.
T h e same must be said o f Adam Smith*s third exception. I f
the burden o f taxation to which our productions are subjected,
affords a just ground for im posing protective duties on the less
taxed products o f foreign countries, w hy should not also the other
disadvantages to which our manufacturing industry is subjected
in comparison with that o f the foreigner afford just grounds for
protecting our native industry against the overw helm ing com ­
petition o f foreign industry ?
J. B. Say has d early perceived the contradictory character o f
256
T H E THEORY
this exception, but the exception substituted by him is no b e t t e r ;
for in a nation qualified by nature and by its degree o f culture to
e stab lish a m a n u fa c tu rin g power o f its o w n , alm o st eve ry branch
o f ind ustry m u st become rem u n erative under continued and power­
ful protection ; and it is ridiculous to allo w a nation m erely a f e w
y e a rs for the task o f b rin g in g to perfection one g reat branch of
national ind ustry or the w h ole ind ustry o f the nation ; ju s t as
a sh o e m a k e r's apprentice is allow ed o n ly a fe w y e a r s to learn
sh o e m a k in g .
In its eternal d e clam atio n s on the im m e n se a d v a n t a g e s o f
absolute freedom o f trade, and the d isa d v a n ta g e s o f protection,
the popular school is accustom ed to rely on the e x a m p le s o f a few
n a t i o n s ; that o f S w it z e r la n d is quoted to prove that industry can
prosper w ith ou t protective duties, and that absolu te liberty o f inter­
national com m erce form s the safest b asis o f national prosperity.
T h e fate o f S p a in is quoted to exhibit to all nations w hich seek
aid and p reservation in the protective s y s te m , a frightful exam ple
o f its ruinous effects. T h e c a se o f E n g la n d , w h ich , a s we have
show n in a form er chapter, affords such an excellent e x a m p le for
im itation to all nations w hich are capab le o f de v e lo p in g a m a n u ­
factu rin g power, is adduced b y these theorists m e re ly to support
their allegation that cap ab ility for m a n u fa c tu rin g production is
a natural gift e x c lu s iv e ly peculiar to certain countries, like the
capab ility to produce B u r g u n d y w in e s ; and that nature h a s be­
stow ed on E n g la n d , above all other countries o f the earth, the
d e stin y and the ability to devote h e rs e lf to m a n u fa c tu rin g industry
and to an e x ten siv e com m erce.
L e t u s now take these e x a m p le s more clo sely into considera­
tion.
A s for S w it z e r la n d , it m u st be rem arked in the first place
that she does not constitute a nation, a t least not one o f norm al
m agnitu d e w h ich can be ranked as a great nation, but is merely
a con glom eration o f m u n icip alities.
P o s s e s s i n g no sea-coast,
hem m ed in between three g re a t nations, she lacks all inducement
to strive to obtain a n ative com m ercial m arine, or direct trade
w ith tropical c o u n t r i e s ; she need pay no regard to the estab lish ­
m ent o f a n av al power, or to fou nd in g or acq u irin g colonies.
S w itzerlan d laid the foundation o f her presen t v e r y moderate
degree o f prosperity at the tim e w h e n she still belonged to
the G e rm a n E m p ire .
S in ce that tim e, she h a s been alm ost
en tirely free from internal w a rs, her capital h a s been permitted
to increase from gen eration to gen eratio n, a s scarcely a n y o f
it w a s required b y her m unicipal g o ve rn m e n ts for d isch argin g
their e xp en ses. A m id the d e v astatio n s occasioned by the des­
potism , fan aticism , w a r s, and revolutions, with w hich E u r o p e w a s
THE CUSTOMS SYSTEM AND THE POPULAR SCHOOL
257
perturbed during the last centuries, Switzerland offered an asylum
to all who desired to transfer their capital and talents to another
country than their own, and thus acquired considerable wealth
from abroad.
G erm any has never adopted strong commercial
restrictions against Switzerland, and a large part of the m anu­
factured products of the latter has obtained a market in Germany.
Moreover, the industry of Switzerland w as never a national one,
one comprising the production of articles of common use, but
chiefly an industry in articles of luxury, the products of which
could be easily smuggled into the neighbouring countries or trans­
ported to distant parts of the world. Furthermore, her territory
is most favourably situated for intermediate trade, and in this
respect is in some measure privileged.
A gain, their excellent
opportunity o f becoming acquainted with the languages, laws,
institutions, and circumstances of the three nations which adjoin
her must have given the S w is s important advantages in inter­
mediate commerce and in every other respect. Civil and religious
liberty and universal education have evoked in the S w iss, activity
and a spirit of enterprise which, in view of the narrow limits o f
their country’s internal agriculture, and of her internal resources
for supporting her population, drove the S w iss to foreign countries,
where they amassed wealth, by means of military service, by com­
merce, by industries of every kind, in order to bring it home to
their fatherland. I f under such special circumstances they m an ­
aged to acquire mental and material resources, in order to develop
a few branches of industry for producing articles of luxury, if these
industries could maintain them selves without protective duties by
sales to foreign countries, it cannot thence be concluded that great
nations could follow a similar policy under wholly different circum­
stances. In her small national expenditure Switzerland possesses
an advantage which great nations could only attain if they, like
Switzerland, resolved themselves into mere municipalities and
thus exposed their nationality to foreign attacks.
T h a t S p a in acted foolishly in preventing the exportation of
the precious metals, especially since she herself produced such a
large excess o f these articles, must be admitted by every reason­
able person. It is a mistake, however, to attribute the decline o f
the industry and national well-being of Spain to her restrictions
against the importation o f manufactured goods. I f Spain had not
expelled the Moors and Je w s , and had never had an Inquisition ; if
Charles V . had permitted religious liberty in S p a i n ; if the priests
and monks had been changed into teachers of the people, and their
immense property secularised, or at least reduced to what w as
actually necessary for their m ain te n an ce ; if, in consequence of
these measures, civil liberty had gained a firm footing, the feudal
17
258
T H E THEORY
n o b ility had been reformed and the m o n a rc h y limited ; if, in a
w ord, S p a in had politically developed h e rs e lf in consequence of a
R e fo rm a tio n , a s E n g la n d did, an d if the sa m e spirit had extended
to her colonies, a prohibitive an d protective policy w ould h ave had
sim ilar effects in S p a in a s it had in E n g la n d , and this all the more
because at the tim e of C h a r le s V . the S p a n ia r d s w ere more ad­
vanced th an the E n g l i s h and F r e n c h in eve ry respect, and the
N e th e rla n d s on ly (of all countries) occupied a more advanced
position than S p a in , w h o se industrial and com m ercial spirit might
h a v e been transferred to S p a in b y m e a n s o f the protective policy,
provided that the institu tion s and conditions o f S p a in were such
a s w ou ld h ave invited foreign tale n ts and capital to her shores,
instead o f d riv in g her ow n n ativ e tale n ts and capital into foreign
countries.
T o w h a t cau se s E n g la n d ow e s her m a n u fa c tu r in g and com­
m ercial su p re m a c y , we h ave sh o w n in our fifth chapter.
It is e sp ec ially o w in g to her civil, m e n ta l, and religio us liberty,
to the nature and excellence o f her political institu tion s, that the
com m e rcial policy o f E n g la n d h a s been enabled to m ake the most
o f the natural riches o f the cou n try, and fully to develop the pro­
ductive pow ers o f the nation.
B u t w h o w ould den y that other
n atio n s are capable o f r a is in g t h e m se lv e s to the sa m e degree of
liberty ? W h o would venture to m ain tain th at nature has denied
to other n atio n s the m e a n s w h ich are requisite for m anufacturing
ind ustry ?
In the latter respect the great natu ral w ealth in coal and iron
w h ich E n g la n d p o sse sses has often been adduced a s a reason w hy
the E n g l i s h are sp e cially destined to be a m a n u fa c tu rin g nation.
It is true that in this respect E n g la n d is g re a tly favoured by
nature ; but a g a in st this it m a y be stated that even in respect of
these natu ral products, nature h a s not treated other countries
m e re ly like a stepm other ; for the m o st part the w a n t o f good
tran sport facilities is the c h ie f obstacle to the full utilisation of
these products by other n a t i o n s ; that other countries possess
en orm ou s u n em p loyed w a te r pow er, w h ich is cheaper than steam
pow er ; that w h e re it is n e c e ssa ry they are able to counterbalance
the w a n t o f coal b y the use o f other f u e l s ; th at m a n y other
cou n tries p o s s e s s in exh au stib le m e a n s for the production o f iron,
an d that they are a lso able to procure these raw m a te ria ls from
abroad b y com m ercial exchan ge.
In conclusion, w e m u st not om it here to m ak e m ention o f com­
m e rc ia l treaties based on m u tu al co n ce ssio n s o f duties. T h e school
objects to these con ven tions a s u n n e c e ssa ry and detrimental,
w h e r e a s they appear to us as the m ost effective m e a n s o f g ra d u a lly
d im in is h in g the respective restrictions on trade, an d o f leading
THE CUSTOMS SYSTEM AND THE POPULAR SCHOOL
259
the nations of the world gradually to freedom of international in­
tercourse. O f course, the specimens of such treaties which the
world has hitherto seen, are not very encouraging for imitation.
W e have shown in former chapters what injurious effects the
Methuen T reaty has produced in Portugal, and the E d en Treaty
has produced in France. It is on these injurious effects of re­
ciprocal alleviation of duties, that the objections of the school to
commercial treaties appear principally to be founded. Its prin­
ciple of absolute commercial liberty has evidently experienced a
practical contradiction in these cases, inasmuch as, according to
that principle, those treaties ought to have operated beneficially
to both contracting nations, but not to the ruin of the one, and to
the immense advantage of the other. If, however, we investigate
the cause of this disproportionate effect, we find that Portugal and
France, in consequence of those conventions, abandoned in favour
ol En glan d the progress they had already made in manufacturing
industry, as well as that which they could expect to make in it in
the future, with the expectation of increasing by that means their
exportation of natural products to En glan d ; that, accordingly,
both those nations have declined, in consequence of the treaties
thus concluded, from a higher to a lower standpoint of industrial
development. From this, however, it merely follows that a nation
acts foolishly if it sacrifices its manufacturing power to foreign
competition by commercial treaties, and thereby binds itself to
remain for all future time dependent on the low standpoint of
merely agricultural industry ; but it does not in the least follow
from this, that those treaties are also detrimental and objection­
able whereby the reciprocal exchange of agricultural products and
raw materials, or the reciprocal exchange of manufactured products,
is promoted.
W e have previously explained that free trade in agricultural
products and raw materials is useful to all nations at all stages of
their industrial developm ent; from this it follows that every com­
mercial treaty which mitigates or removes prohibitions and restric­
tions on freedom of trade in such articles must have a beneficial
effect on both contracting nations, as e.g. a convention between
France and En glan d whereby the mutual exchange of wines and
brandies for pig-iron and coal, or a treaty between France and
G erm an y whereby the mutual exchange o f wine, oil, and dried
fruit, for corn, wool, and cattle, were promoted.
According to our former deductions, protection is only bene­
ficial to the prosperity of the nation so far as it corresponds with
the degree of the nation’s industrial development. E v e ry e xag ­
geration of protection is detrimental ; nations can only obtain a
perfect manufacturing power by degrees. On that account also,
17 *
T H E TH E O RY
tw o nations w h ich stand at different s t a g e s o f industrial cultiva­
tion, can with m utual benefit m ak e reciprocal co n ce ssio n s by treaty
in respect to the e xch an ge o f their v a rio u s m a n u fa c tu r in g products.
T h e le ss advanced nation can, w h ile it is not ye t able to produce
for itse lf w ith profit finer m an u factu red g o o d s, such as fine cotton
and silk fabrics, neverth eless su p p ly the fu rther advan ced nation
with a portion o f its requirem en ts o f coarser m an u factu red goods.
S u ch treaties m ig h t be still m ore a llo w a b le an d beneficial be­
tw een n atio n s w h ich stand at about the s a m e d eg ree o f industrial
d evelopm ent, between w h ich , therefore, com petition is not over­
w h e lm in g , destructive, or repressive, nor te n d in g to g iv e a mono­
poly o f e v e r y th in g to one side, but m e re ly acts, a s com petition in
the inland trade does, as an incen tive to m u tu al em ulation, per­
fection, and ch e a p e n in g o f production. T h i s is the case w ith most
o f the C o n tin e n tal nations.
F r a n c e , A u s tr ia , and the G erm an
Z o llv e r e in m igh t, for instance, anticipate o n ly v e r y prosperous
effects from m o d e rate ly lo w reciprocal protective duties.
Also,
between these countries and R u s s i a m u tu al co n c e ssio n s could be
m ade to the a d v a n t a g e o f all sides. W h a t they all h a v e to fear
at this time is solely the prepon derating com petition o f En glan d.
T h u s it appears a lso from this point o f v ie w , that the suprem ­
a c y o f that island in m a n u fa c tu re s, in trade, in n av ig atio n , and
in her colonial em pire, con stitutes the g re atest e x istin g impedi­
m ent to all nations d ra w in g nearer to one a n o t h e r ; although it
m u st be at the s a m e tim e adm itted th at E n g la n d , in strivin g for
this su p re m a c y , h a s im m e a s u ra b ly increased, and is still daily
in creasin g, the productive pow er o f the entire h u m an race.
T H IR D B O O K
T H E
S Y S T E M S
CHAPTER XXVIII.
T H E N A T IO N A L E C O N O M IS T S O F I T A L Y .
I t a l y has been the forerunner of all modern nations, in the theory
as well as in the practice of Political Economy. Count Pechio
has given us a laboriously written sketch of that branch of Italian
literature; only his book is open to the observation, that he has
clung too slavishly to the popular theory, and has not duly set
forth the fundamental causes of the decline of I t a ly ’s national
industry— the absence of national unity, surrounded as she w as
by great nationalities united under hereditary monarchies ; further,
priestly rule and the downfall of municipal freedom in the Italian
republics and cities.
I f he had more deeply investigated these
causes, he could not have failed to apprehend the special tendency
of the ‘ Prince ’ of Macchiavelli, and he would not have passed that
author by with merely an incidental reference to him.1
Through a remark of Pechio, that Macchiavelli in a letter to
his friend Guicciardini (in 1525) had proposed a union of all the
Powers of Italy against the foreigner, and that as that letter w as
communicated to Pope Clement V I I . he had thus exercised con­
siderable influence in the formation of the ‘ H oly L eagu e ’ (in
1526), we were led to imagine that the same tendency must under­
lie the ‘ Prince.’ A s soon as we referred to that work, we found
our anticipation confirmed at first sight. T he object of the ‘ Prince ’
(written in 1 5 1 3 ) w as clearly to impress the Medici with the idea,
that they were called upon to unite the whole of Italy under one
sovereignty ; and to indicate to them the means whereby that end
might be attained. T h e title and form of that book, as though its
general intention w as to treat of the nature of absolute govern­
ment, were undoubtedly selected from motives of prudence. It
only alludes incidentally to the various hereditary Princes and
their governm ents.
E veryw h ere the author has in view only
1 D uring a journey in G erm any which the author undertook while this work
w as in the press, he learned for the first time that Doctors Von Ranke and
G ervinus have criticised M acchiavelli’ s Prince from the same point of view as
himself.
263
i
111u nvn'twwn
mm Ifellen umirperr I'rlnolpelitle* muni he overthrown. dyne*
(Im*» rietflroved, III* feudal mUlocrmiy brought mirier mi Injection,
l/harty In llie republic* rooted out, The virtue* of Heaven end fh*
loiilm** of hell, wUriom and audacity. valour end treachery, good
Ini time end chance, mn*l ell he called forth, made nee of, and
mad by (he Hamper, in order to found en Italian empire, Anri to
lid* wnl e aecrel le eondried to him, the power of wnlch hee been
ibmoughly merie menlfeet three hundred yeere later e national
himv nmel he created, to whom victory mnet he eeenreri by new
djacfplm* end hy newly invented erme end memenvree.1
Ir the general character of life argmnente leevee room for doubt
nit to the apecial hlee of Ihle enthor, Much riouht will he removed
h y hie leet chapter,
There he plainly declare* thet foreign in
tmwlon* end fnternel dlvlefone ere the funriemenlel cauaee of ell
the evlle prevailing in Itely t the! the llotiae of the Medici, under
wlmee dominion were (forlunelely) Tuacany end the Htetee of the
<Imreh, were called hy Providence Iteelf to accomptiah thet great
wmltj Ihet the preaent wee the heet time end opportunity lm
lotioniiclng e new
the! now e new Moeee nmel arlec i >
didiver hie people from the bondage of ICgypt, thet nothing i».r.
humif mi e Prince more diellmriion end feme then greet eot< ■
l« 1***,*
That anyone mey reed between the llnee the tendency of
>
h'Mik In the olhei chapter* eleo, mey he heet eeen hy the maun* ■
io wltlt'h the miiIhor In hie ninth chapter apeak* of the Htetee <d
iht' (■hutch
It le merely en Irony when lie eeye, 'T h e prie*i&
I'tmeeNeed leude hut did not govern them, they held lordehlpe hut
did not defend them j Iheee heppteet of ell terrllnrlee were directly
i<otietded hy (tori'* Providence, It would he preeuinptlon to uttei •>
•lillidem minii* them,1 lie clearly hy thU language meant It to be
umleretonil without eeyiug eo in plein wordei Title rmmtry pin
‘’Wile mi epeulel Impediment to e lurid gmii|iierur, eepei telly to a
Medici whoee reletlve ommpie* the Papal chair.
1KvwythMu liter Meeelrievelll tiee written, whether hetnt* 01 ehei the |ml>
iinOitin uf IliM7V0oe, ItmtMMtee tltet he wee revolving lu lite mhtd
of iht*
Mud. (tow thheiwlee him It he MRttlaliuut, why he< e vIvIIInh, e man nf teiiein,
hm auiheiutHtlor etui Utete tifflHal, wlut had itever home erote, rImihIi! have mcmi
1‘iwl iitlueeU kmHiiH'lt In NtMtlyloe the art tit wet, end Ihet he rIhihM heve heel!
*0-1mto wdte e WHit* uptut tt widen emitted the wooder of the iiimkI diMiueidRlied
uMldleiN nt liU ttme t
* Ihn tetlvlt the (Ite e t In ItU g e lh M a rrA H M o J treete of the J V U i * ee elnuriy e
Ki ieutiltv neetlee ott the ilghlR eon untie* of iirtiuwe Meoeretly.
tte ie (I ir te<
MMiltetde thet he, w hile HOMtienltttlue M aeHlifavelli im apler hy uheutei, never
HwnllHite the le it mi tw etityiRU th tthenlei, whlnh heeie the heedlM * , 1A NtintnuiiiH
in hen Ite lv ttMiii the PuielgnerRi 1etui htRteed o f tt luRertR e vhetuet whtvh le nut
hihMIhmu lit M et'Vlllevelll'R w u r* w ith the heNdliie, M tu the ifUTeieut Mud* uf
I I >|(mIl.tllnHR, eittl Utt t lt l |tl*t lOwmttMH hll tt t »>- I <*.»!I...... I W i , *
t h e n a t io n a l e c o n o m ists o f i t a l y
265
B u t how can we explain the advice which Macchiavelli gives
to his proposed usurper respecting the republics, considering his
own republican sentiments ? And must it be solely attributed to
a design on his part to ingratiate him self with the Prince to whom
his book is dedicated, and thus to gain private advantages, when
he, the zealous republican, the great thinker and literary genius,
the patriotic martyr, advised the future usurper utterly to destroy
the freedom of the Italian republics ? It cannot be denied that
Macchiavelli, at the time when he wrote the ‘ Prince,' w as lan­
guishing in poverty, that he regarded the future with anxiety, that
he earnestly longed and hoped for employment and support from
the Medici. A letter which he wrote on October 10, 1 5 1 3 , from
his poor dwelling in the country to his friend Bettori, at Florence,
places that beyond doubt.1
Nevertheless, there are strong reasons for believing that he by
this book did not merely design to flatter the Medici, and to gain
private advantage, but to promote the realisation of a plan of
usurpation ; a plan which w as not opposed to his republicanpatriotic ideas, though according to the moral ideas of our day it
must be condemned as reprehensible and wicked. H is writings
and his deeds in the service o f the State prove that Macchiavelli
w a s thoroughly acquainted with the history of all periods, and
with the political condition of all States. B u t an eye which could
see so far backwards, and so clearly what w as around it, must
also have been able to see far into the future. A spirit which
even at the beginning of the sixteenth century recognised the
advantage of the national arm ing of Italy, must also have seen
that the time for small republics w as past, that the period for
great monarchies had arrived, that nationality could, under the
circumstances then existing, be won only by means of usurpation,
and maintained only by despotism, that the oligarchies as they
then existed in the Italian republics constituted the greatest obstacle
to national unity, that consequently they must be destroyed, and
that national freedom would one day grow out of national unity.
Macchiavelli evidently desired to cast aw a y the worn-out liberty
of a few cities as a prey to despotism, hoping by its aid to acquire
national union, and thus to insure to future generations freedom
on a greater and a nobler scale.
T h e earliest work written specially on Political Eco n om y in
Italy, is that of Antonio Serra of N ap le s (in 1 6 13 ) , on the means
of providing ‘ the K in g d o m s ’ with an abundance of gold and
silver.
1 F irst published in the work, P m iie r i intorno alio scopo d i Nicolo M acchiav e lli net libro * I I P r i n c i p e M ilano, 18 10 .
266
T H E SYSTEMS
J . B . S a y and M 'C u llo c h appear to* h a v e seen and read only
the title of this b o o k : they each p a s s it o v er with the remark
that it m e re ly treats o f m o n e y ; and its title certain ly sh o w s that
the author laboured under the error o f con sid erin g the precious
m e tals a s the sole con stituen ts o f w ealth.
I f th ey had read farther
into it, and duly considered its con ten ts, th e y m ig h t perhaps have
derived from it som e w h o leso m e lesso n s. A n to n io S e rra , although
he fell into the error o f co n sid e rin g an abun dan ce o f gold and silver
a s the token s o f w e alth , n e v e rth e le ss e x p re sse s h im s e lf tolerably
clearly on the ca u s e s o f it.
H e certain ly pu ts m in in g in the first place a s the direct source
o f the precious m e t a l s ; but he treats v e r y ju s t l y of the indirect
m e a n s o f a cq u irin g them . A gricu ltu re, m an u fac tu re s, commerce,
and n a v ig a tio n , are, accord in g to him , the c h ie f sources o f national
w ealth. T h e fertility o f the soil is a sure source o f p rosperity;
m a n u fa c tu re s are a still m ore fruitful source, for several reasons,
but chiefly because they con stitute the foundation o f an extensive
com m erce. T h e produ ctiven ess o f these sources depends on the
characteristic q u alification s o f the people (viz. w h eth er they are
ind ustriou s, active, en terprisin g , thrifty, and so forth), also on the
nature and circu m stan ce s o f the locality (whether, for instance, a
city is w ell situated for m aritim e trade). B u t above all these
cau se s, S e r r a ran ks the form o f g o v e rn m e n t, public order, m uni­
cipal liberty, political g u aran te e s, the stability o f the law s. * N o
country can p ro sp er/ s a y s he, ‘ w h e re each su cce ssive ruler enacts
n ew la w s, hence the S t a te s o f the H o ly F a t h e r cannot be so pros­
perous a s those coun tries w h o se g o v e r n m e n t a n d legislation are
m ore stable. In con trast w ith the form er, one m a y observe in
V e n ice the effect w h ich a s y s t e m o f order and legislation , which
has continued for centuries, h a s on the public w e lfa r e .’ T h i s is
the quin tessen ce o f a s y s t e m o f Political E c o n o m y w hich in the
m ain , n o tw ith sta n d in g that its object ap p e ars to be on ly the
acquisition o f the precious m e ta ls, is rem arkab le for its sound and
natural doctrine. T h e w ork o f J . B . S a y , alth ou gh it com prises
ideas and m atter on P o litic al E c o n o m y o f w hich A n to n io Serra
had in his d a y no forekn ow led ge, is far inferior to S e r r a ’ s on the
m ain points, and esp ecially as respects a due e stim ate o f the effect
o f political circu m stan ce s on the wealth o f nations. H a d S a y
studied S e rra instead o f la y in g his w o rk aside, he could h ardly have
m aintained (in the first page o f h is sy ste m o f Political E co n o m y )
that * the constitution o f countries cannot be taken into account in
respect to Political E c o n o m y ; that the people h a v e become rich,
and become poor, under eve ry form o f g o v e r n m e n t; that the only
im p ortan t point is, that its ad m in istration should be g o o d .’
W e are far from desirin g to m ain tain the a bsolute preferable-
THE NATIONAL ECONOMISTS OF ITALY
267
ness of any one form of government compared with others. One
need only cast a glance at the Southern States of America, to be
convinced that democratic forms of government among people
who are not ripe for them can become the cause of decided retro­
gression in public prosperity. One need only look at Russia, to
perceive that people who are yet in a low degree of civilisation are
capable of m aking most remarkable progress in their national
well-being under an absolute monarchy. B u t that in no w ay
proves that people have become rich, i.e. have attained the highest
degree of economical well-being, under all forms of government.
History rather teaches us that such a degree of public well-being,
namely, a flourishing state of manufactures and commerce, has
been attained in those countries only whose political constitution
(whether it bear the name of democratic or aristocratic republic, or
limited monarchy) has secured to their inhabitants a high degree
of personal liberty and of security of property, whose administra­
tion has guaranteed to them a high degree of activity and power
successfully to strive for the attainment of their common objects,
and of steady continuity in those endeavours.
F or in a state of
highly advanced civilisation, it is not so important that the ad­
ministration should be good for a certain p e rio d , but that it should
be continuously and conform ably good ; that the next administra­
tion should not destroy the good work of the former one ; that a
thirty y e a r s ’ administration o f Colbert should not be followed by
a Revocation of the Edict of Nantes, that for successive centuries
one should follow one and the same system, and strive after one
and the same object.
Only under those political constitutions in
which the national interests are represented (and not under an
absolute Government, under which the State administration is
necessarily alw ays modified according to the individual will of the
ruler) can such a steadiness and consistency of administration be
secured, as Antonio Serra rightly observes. On the other hand,
there are undoubtedly certain grades of civilisation in which the
administration by absolute power m ay prove far more favourable
to the economical and mental progress of the nation (and generally
is so) than that of a limited monarchy. W e refer to periods of
slavery and serfdom, of barbarism and superstition, of national
disunity, and of caste privileges. For, under such circumstances,
the constitution tends to secure not only the interests of the
nation, but also the continuance of the prevailing evils, whereas
it is the interest and the nature of absolute government to destroy
the latter, and it is also possible that an absolute ruler m ay arise
o f distinguished power and sagacity, who may cause the nation to
make advances for centuries, and secure to its nationality exist­
ence and progress for all future time.
268
T H E SYSTEMS
It is con sequ ently o n ly a conditional co m m o n p lac e truth on the
faith o f w hich J . B . S a y w ould exclude politics from his doctrine.
In eve ry c a se it is the c h ie f desideratum that the adm inistration
should be good ; but the efficiency o f the ad m in istration depends
on the form o f g o v e rn m e n t, and that form o f g o v e rn m e n t is clearly
the best w h ich m ost p rom otes the m oral and m aterial welfare and
the future p ro g re ss o f a n y g iv e n nation. N a tio n s h ave m ade some
p ro gre ss under all form s o f g o v e rn m e n t.
B u t a h ig h degree of
econom ical de v e lo p m e n t h a s on ly been attained in those nations
w h o s e form o f g o v e rn m e n t h a s been such a s to secure to them a
high degree o f freedom and pow er, o f stead in ess o f la w s and of
policy, and efficient institutions.
A n to n io S e r r a sees the nature o f t h in g s a s it actu ally exists,
and not through the spectacles o f p rev io u s s y ste m s, or o f some
one principle w h ich he is determ ined to advocate and carry out.
H e draw s a co m p ariso n betw een the Condition o f the various
S t a te s o f It a ly , and perceives that the g re a te st degree o f w ealth is
to be found w h ere there is e x ten siv e com m erce ; that exten sive
com m erce e x ists w h ere there is a well-developed m an u factu rin g
power, but that the latter is to be found w h e re there is municipal
freedom.
T h e o p in io n s o f B e c c a ria are pervaded by the false doctrines
o f the p h ysiocratic school. T h a t au th o r indeed either discovered,
or derived from A ristotle, the principle o f the d ivision o f labour,
either before, or co n te m p o ran eo u sly with, A d a m S m ith ; he, h o w ­
ever, carries it farther than A d a m S m ith , in a sm u ch as he not only
ap p lies it to the d ivision o f the w o rk in a sin g le m an u fac to ry, but
sh o w s that the public w elfare is prom oted b y the division o f
occupation a m o n g the m em b ers o f the co m m u n ity . A t the same
tim e he does not hesitate, w ith the p h y sio c r a ts, to assert that
m an u fa c tu re s are non-productive.
T h e v ie w s o f the g re at p h ilosophical ju r is t , F ila n g ie r i, are
about the n a rro w e st o f all. Im b u ed w ith false cosm opolitan ism ,
he con sid ers that E n g la n d , b y her protective policy, h a s m erely
g iv e n a prem iu m to contraband trade, and w eaken ed her own
com m erce.
Verri, a s a practical s ta te sm a n , could not err so w id ely a s that.
H e adm its the n e ce ssity o f protection to n ative in d u stry a g ain st
foreign c o m p e t itio n ; but did not or could not see that such a
policy is conditional on the g re a tn e s s an d u nity o f the nationality.
CHAPTER XXIX.
T H E IN D U S T R I A L S Y S T E M ( F A L S E L Y T E R M E D B Y T H E S C H O O L
‘ T H E M E R C A N T I L E S Y S T E M ’).
A t the period when great nationalities arose, owing to the union
of entire peoples brought about by hereditary monarchy and by
the centralisation of public power, commerce and navigation,
and hence wealth and naval power, existed for the most part (as
we have before shown) in republics of cities, or in leagues of such
republics.
T h e more, however, that the institutions of these
great nationalities became developed, the more evident became
the necessity of establishing on their own territories these main
sources of power and of wealth.
Under the conviction that they could only take root and
flourish under municipal liberty, the royal power favoured muni­
cipal freedom and the establishment of guilds, both which it
regarded as counterpoises against the feudal aristocracy, who
were continually striving for independence, and alw ays hostile
to national unity. But this expedient appeared insufficient, for
one reason, because the total of the advantages which individuals
enjoyed in the fre e cities and republics w as much greater than
the total of those advantages which the monarchical governments
were able to offer, or chose to offer, in their own municipal c it ie s ;
in the second place, because it is very difficult, indeed impossible,
for a country which has alw ays been principally engaged in a g ri­
culture, successfully to displace in free competition those countries
which for centuries have acquired supremacy in manufactures,
commerce, and navigation ; lastly, because in the great monarchies
the feudal institutions acted as hindrances to the development of
their internal agriculture, and consequently to the growth of their
internal manufactures. Hence, the nature of things led the great
monarchies to adopt such political measures as tended to restrict
the importation of foreign manufactured goods, and foreign com­
merce and navigation, and to favour the progress of their own
manufactures, and their own commerce and navigation.
Instead o f raising revenue as they had previously done by
duties on the raw materials which they exported, they were hence260
270
THE SYSTEMS
forth p rin cipally levied on the imported m an u factu red goods.
T h e benefits offered by the latter policy stim u late d the merchants,
seam en, and m an u fac tu re rs o f more h ig h ly civilised cities and
countries to im m igrate with their capital into the great monarchies,
and stim ulated the spirit o f enterprise o f the su bjects o f the latter.
T h e grow th o f the national ind ustry w a s followed by the growth
o f the national freedom. T h e feudal aristo cracy found it necessary
in their ow n interest to m ak e con cessio n s to the industrial and
com m ercial population, as well as to those e n g ag e d in agriculture ;
hence resulted p rogress in ag ricu ltu re a s w ell as in native industry
and n ative com m erce, w h ich had a reciprocally favo urab le influence
on those two other factors o f national w e alth . W e h ave shown
how E n g la n d , in con sequ ence o f th is sy ste m , and favoured by the
R e form ation , made forward p ro g re ss from cen tu ry to century in
the d evelopm ent o f her productive pow er, freedom , and might.
W e h a v e stated h o w in F r a n c e th is sy ste m w a s followed for some
tim e w ith su ccess, but h ow it cam e to g r ie f there, because the
in stitu tions o f fe u d alism , o f the priesthood, and o f the absolute
m o n arch y, had not ye t been reformed. W e h a v e also show n how
the P o lish n ation ality succum bed, because the elective syste m o f
m o n a rc h y did not p o sse ss influence and stead in e ss enough to
brin g into existence pow erful m unicipal institu tions, and to reform
the feudal aristocracy.
A s a result o f th is policy, there w a s
created in the place o f the com m ercial and m an u fac tu rin g city,
and o f the agricu ltu ral province w h ich chiefly existed outside the
political influence o f that city, the agricu ltu ral-m an u factu rin g com m ercial S t a t e ; a nation com plete in itself, an harm onious
and com pact w h ole, in w h ich , on the one hand, the formerly
p r e v a ilin g differences between m o n a rc h y , feudal aristocracy, and
citizenhood g a v e place to one h a rm o n io u s accord, and, on the
other h an d , the clo sest union and reciprocally beneficial action
took place between agricu ltu re, m an u fac tu re s, and com m erce.
T h i s w a s an im m e a su ra b ly m ore perfect c o m m o n w e alth than the
p rev io u sly e x istin g one, because the m a n u fa c tu r in g pow er, which
in the m unicipal republic had been confined to a narrow range,
no w could extend its e lf o v er a w id er sp h ere; because n o w all
e x istin g resources w ere placed at its d is p o s i t i o n ; because the
division o f labour and the confederation o f the productive powers
in the different bran ch es o f m an u factu res, a s well as in a g ric u l­
ture, were m ade effectual in an infinitely gre ater degree ; because
the num erous cla sse s o f a g ricu ltu rists becam e politically and
com m ercially united with the m an u factu re rs an d m erchants, and
hence perpetual concord w a s m ain tain ed between t h e m ; the
reciprocal action between m a n u fa c tu rin g and com m ercial power
w a s perpetuated and secured for e v e r ; and finally, the agricul-
THE INDUSTRIAL SYSTEM
turists were made partakers of all the advantages o f civilisation
arising from manufactures and commerce.
T h e agriculturalmanufacturing-commercial State is like a city which spreads over
a whole kingdom, or a country district raised up to be a city. In
the same proportion in which material production w as promoted
by this union, the mental powers must necessarily have been
developed, the political institutions perfected, the State revenues,
the national military power, and the population, increased.
Hence we see at this day, that nation which first of all perfectly
developed the agricultural, manufacturing, and commercial State,
standing in these respects at the head of all other nations.
T he Industrial System w as not defined in writing, nor w as it
a theory devised by authors, it w as simply acted upon in practice,
until the time of Stewart, who deduced it for the most part from
the actual English practice, ju st as Antonio Serra deduced his
system from a consideration of the circumstances of Venice.
Stew art's treatise, however, cannot be considered a scientific
work. T he greater part of it is devoted to money, banking, the
paper circulation— commercial crises— the balance of trade, and
the doctrine of population ;— discussions from which even in our
day much m ay be learned, but which are carried on in a very
illogical and unintelligible way, and in which one and the same
idea is ten times repeated.
T h e other branches of political
economy are either superficially treated, or passed over altogether.
Neither the productive powers, nor the elements of price, are
thoroughly discussed.
E veryw here the author appears to have
in view only the experiences and circumstances of England. In
a word, his book possesses all the merits and demerits of the
practice of England, and of that of Colbert. T h e merits of the
Industrial System as compared with later ones, a r e :
1. T h a t it clearly recognises the value of native manufactures
and their influence on native agriculture, commerce, and navi­
gation, and on the civilisation and power o f the nation ; and
expresses itself unreservedly to that effect.
2. T h at it indicates what is in general the right means where­
by a nation which is qualified for establishing a manufacturing
power, may attain a national industry.1
3. T h a t it is based on the idea of ‘ the nation,1 and regarding
S t e w a r t says (Book I. chapter x x ix .): 'I n order to promote industry, a
nation must act as well as permit, and protect. Could ever the woollen manu­
facture have been introduced into France from the consideration of the great
advantage which England had drawn from it, if the king had not undertaken the
support o f it by granting m any privileges to the undertakers, and by laying strict
prohibitions on all foreign cloths ? Is there any other w ay of establishing a new
manufacture anywhere ? ’
272
T H E SYSTEMS
the n atio n s as individual entities, e v e ry w h e re ta k e s into account
the national interests and national conditions.
On the other hand, this syste m is ch arge ab le w ith the follow in g
c h ie f f a u l t s :
1 . T h a t it does not g en e rally recogn ise the fu nd am ental prin­
ciple o f the industrial d evelopm ent o f the nation and the conditions
under w hich it can be brou ght into operation.
2. T h a t it co n se q u e n tly would m islead peoples w h o live in a
clim ate unsuited for m an u fac tu rin g , an d sm all an d uncivilised
states and peoples, into the adoption o f the protective system .
3. T h a t it a lw a y s seeks to a p p ly protection to agriculture, and
e sp ec ia lly to the production o f raw m ate rials— to the injury of
ag ricu ltu re — w h e re a s ag ricu ltu ral ind ustry is sufficiently protected
a g a in st foreign com petition by the nature o f t h in g s .1
4. T h a t it seeks to favour m an u fac tu re s u n ju stly by im p o sin g
restrictions on the export o f ra w m aterials, to the detriment of
agriculture.
5. T h a t it does not teach the nation w hich h a s a lre ad y a t­
tained m a n u fa c tu rin g and com m ercial su p re m ac y to preserve her
o w n m a n u fac tu re rs and m e rch an ts from indolence, by perm itting
free com petition in her ow n m arkets.
6. T h a t in the e x c lu siv e pursuit o f the political object, it
ig n o re s the cosm opolitical relations o f all nations, the objects o f
the w h ole h u m an race ; an d hence would m islead g o v e rn m e n ts
into a prohibitory system , w h ere a protective one w ould am p ly
suffice, or im p o sin g duties w hich are practically prohibitory, w hen
m od erate protective duties w ould better a n s w e r the purpose.
F in a lly :
7. T h a t chiefly o w in g to his utterly ig n o rin g the principle o f
c o sm o p o lita n ism , it does not reco gn ise the future union o f all
nations, the estab lish m en t o f perpetual peace, and o f u niversal
freedom o f trade, a s the goal tow ards w h ich all nations h ave to
strive, and more and more to approach.
T h e subsequent schools have, how ever, fa lse ly reproached this
sy ste m for con sid erin g the precious m etals a s the sole con stituen ts
o f w e alth , w h e r e a s they are m erely m erch an d ise like all other
articles o f v a l u e ; an d that hence it w ould follow that we ou ght
to sell a s much a s p ossible to other nations and to bu y from them
a s little as possible.
A s respects the form er objection, it cannot be tru ly alleged o f
either C o lb e rt’ s ad m in istration or o f that o f the E n g l i s h since
G e o r g e I. that th ey h ave attached an u n reason ab le degree o f im ­
portance to the im portation o f the precious m etals.
1 See Appendix C.
THE INDUSTRIAL SYSTEM
273
T o raise their own native manufactures, their own navigation,
their foreign trade, was the aim of their commercial p o lic y ;
which indeed w as chargeable with many mistakes, but which on
the whole produced important results. W e have observed that
since the Methuen T reaty (17 0 3) the E n glish have annually
exported great quantities of the precious metals to the E a st
Indies, without considering these exports as prejudicial.
T he Ministers of George I. when they prohibited (in 1 7 2 1 )
the importation of the cotton and silk fabrics of India did not assign
as a reason for that measure that a nation ought to sell as much
as possible to the foreigner, and buy as little as possible from him ;
that absurd idea w as grafted on to the industrial system by a
subsequent school ; what they asserted was, that it is evident that
a nation can only attain to wealth and power by the export of
its own manufactured goods, and by the import from abroad of
raw materials and the necessaries of life. E n glan d has followed
this maxim of State policy to the present day, and by following
it has become rich and mighty ; this maxim is the only true one
for a nation which has been long civilised, and which has already
brought its own agriculture to a high degree of development.
iS
C H A P T E R XXX.
T H E PHYSIOCRATIC OR A G R IC U L T U R A L SYSTEM.
H a d the g re at enterprise o f Colbert been perm itted to succeed—
had not the R e v o c a tio n o f the E d ic t o f N a n t e s , the love of
splendour an d fa lse am b ition o f L o u is X I V . , and the debauchery
and e x tra v a g a n c e o f h is su ccessors, nipped in the bud the seeds
w h ich C olbert had s o w n — i f co n se q u e n tly a w e a lt h y m a n u fa c tu r­
in g and com m ercial interest had arisen in F r a n c e , i f by good
fortune the e n o rm o u s properties o f the F re n ch cle rg y had been
g iv e n over to the public, i f these e ve n ts had resulted in the
form ation o f a powerful low er house o f P arlia m e n t, by w h o se
influence the feudal aristo cracy had been reform ed— the physiocratic s y s t e m w ou ld h ardly h a v e ever com e to light.
That
s y s t e m w a s e vid e n tly deduced from the then e x is t in g circu m ­
sta n ce s o f F ra n c e , and w a s on ly ap p licable to those circu m ­
stances.
A t the period o f its introduction the g re ater part o f the landed
property in F r a n c e w a s in the h a n d s o f the cle rgy and the
nobility.
It w a s cultivated by a p e a sa n try la n g u is h in g under a
state o f serfdom and person al o p p ression , w h o w ere sunk in
su perstition, ign oran ce, indolence, an d poverty. T h e o w n ers o f
the land, w h o constituted its productive in stru m e n ts, were
devoted to frivolou s p u rsu its, and had neither m ind for, nor
interest in, agricu ltu re. T h e actual cu ltivators had neither the
m en tal nor m aterial m e a n s for ag ricu ltu ral im p ro v e m e n ts. T h e
oppression o f feudalism on agricu ltu ral production w a s increased
b y the in satiab le d e m a n d s m ade b y the m o n arc h y on the pro­
ducers, w hich w ere m ade more intolerable by the freedom from ?
taxation enjoyed by the cle rg y an d nobility. U n d e r such circu m ­
stan ce s it w a s im possib le that the m ost im portan t bran ch es o f
trade could succeed, those n a m e ly w h ich depend on the pro­
du ctiven ess o f n ative agriculture, an d the con su m ption o f the
g reat m a s s e s o f the p e o p le ; those o n ly could m a n a g e to thrive
w hich produced articles o f lu xu ry for the use o f the privileged
classe s. T h e foreign trade w a s restricted by the inability o f the
m aterial producers to con su m e a n y considerable q u an tity o f the
THE PHYS10CRATIC OR AGRICULTURAL SYSTEM
^75
produce of tropical countries, and to pay for them by their own
surplus produce; the inland trade w as oppressed by provincial
customs duties.
Under such circumstances, nothing could be more natural
than that thoughtful men, in their investigations into the causes
of the prevailing poverty and misery, should have arrived at the
conviction, that national welfare could not be attained so long as
agriculture w as not freed from its fetters, so long as the owners
of land and capital took no interest in agriculture, so long as the
peasantry remained sunk in personal subjection, in superstition,
idleness, and ignorance, so long as taxation remained un­
diminished and w as not equally borne by all classes, so long as
internal tariff restrictions existed, and foreign trade did not
flourish.
B u t these thoughtful men (we must remember) were either
physicians to the K in g and his Court, Court favourites, or con­
fidants and friends of the aristocracy and the clergy, they could
not and would not declare open war against either absolute
power or against clergy and nobility. There remained to them
but one method of disseminating their views, that of concealing
their plan of reform under the obscurity of a profound system,
just as, in earlier as well as later times, ideas of political and
religious reform have been embedded in the substance of philo­
sophical system s. Follow ing the philosophers of their own age
and country, who, in view of the total disorganisation of the
national condition of France, sought consolation in the wider
field of philanthropy and cosmopolitanism (much as the father of
a family, in despair at the break-up of his household, goes to seek
comfort in the tavern), so the physiocrats caught at the cosmo­
politan idea of universal free trade, as a panacea by which all
, prevailing evils might be cured. When they had got hold of this
point of truth by exalting their thoughts above, they then directed
them beneath, and discovered in the ‘ nett reven u e’ o f the soil a
basis for their preconceived ideas. Thence resulted the funda­
mental maxim of their system, ‘ the soil alone yields nett revenue,
therefore agriculture is the sole source of wealth.
T h at is a
doctrine from which wonderful consequences might he inferred—
first feudalism must fall, and if requisite, landowning itself; then
all taxation ought to be levied on the land, as being the source o f
all wealth ; then the exemption from taxation enjoyed by the
nobility and clergy must cease; finally the manufacturers must
be deemed an unproductive class, who ought to pay no taxes, but
also ought to have no State-protection, hence custom-houses
must be abolished.
In short, people contrived by means of the most absurd
18 *
276
T H E SYSTEMS
ar g u m e n ts and con ten tion s to prove th ose g re at tru ths *which
they had determined beforehand to prove.
O f the nation, and its special c ircu m sta n ce s and condition in
relation to other nations, no further account w a s to be taken, for
that is clear from the ‘ E n c y c lo p e d ic M e th o d iq u e ,’ which sa y s,
‘ T h e w elfare o f the individual is conditional on the w e lfare o f the
entire h u m an race ,’
H e re , therefore, no account w a s taken o f
a n y nation, o f a n y w a r , o f a n y foreign com m ercial m easu res :
history and experience m u st be either ign ored or m isrepresented.
T h e great m erit o f th is s y s t e m w as, th a t it bore the a p p e ar­
ance o f an attack m ade on the policy o f C olbert and on the
p riv ile g e s o f the m an ufacturers, for the benefit o f the la n d o w n e rs ;
w h ile in reality its blow s told w ith m ost effect on the special
p riv ile g e s o f the latter. Poo r Colbert had to bear all the blam e of
the su fferin gs o f the F r e n c h a g ricu ltu rists, w h ile nevertheless
e veryo n e knew th at F r a n c e posse ssed a great ind ustry for the first
tim e since C o lb e rt’ s a d m in is t r a t i o n ; an d that e ve n the dullest
intellect w a s a w are th at m an u fac tu re s con stitute the chiet m eans
for p ro m o tin g agriculture and com m erce. T h e R e v o c a tio n o f the
E d ic t o f N a n t e s — the w an to n w a r s o f L o u i s X I V . — the profligate
expenditu re o f L o u i s X V . — w e r e utterly ignored by these philo­
sophers,
Q u e sn a y in his w r itin g s h a s adduced, and replied to, point by
point, the objection s w h ich w ere urged a g a in s t his s y s te m . One
is a sto n ish ed at the m a s s o f sound se n se w h ich he puts into the
mouth o f his opponen ts, and at the m a s s o f m y stica l absurdity
w hich he opposes to those objection s by w a y o f argum ent.
N o t w ith s t a n d in g , all that a b su rd ity w a s accepted a s w isd o m by
the con tem poraries o f this reformer, because the tendency o f his
s y ste m accorded w ith the circu m stan ce s o f F r a n c e at that time,
and w ith the ph ilan th rop ic an d co sm o p o litan ideas prevalent in
th at centu ry.
CHAPTER XXXI.
T H E S Y ST EM OF V A L U E S OF EXCHANGE (F A L S E L Y TERM ED
BY T H E SCHOOL, T H E ‘ IN D U S T R IA L ' SYSTEM ) — ADAM
SMITH.
A dam S m i t h ’ s doctrine is, in respect to national and Internationa
conditions, m erely a continuation o f the physiocratic system
L ik e the latter, it ign ores the v e r y nature o f nationalities, seeks
alm o st entirely to exclude politics and the power o f the State,
presupposes the existence o f a state o f perpetual peace and of
un iversal union, underrates the v alu e o f a national m an u factu rin g
power, and the m e a n s o f o b tain in g it, and d em a n d s absolute
freedom o f trade.
Adam Smith fell into these fundamental errors in exactly the
same w ay as the physiocrats had done before him, namely, by
regarding absolute freedom in international trade as an axiom
assent to which is demanded by common sense, and by not
investigating to the bottom how far history supports this idea.
Dugald Stewart (Adam Sm ith’s able biographer) informs us
that Smith, at a date twenty-one years before his work was
published in 1776 (viz. in 1755), claimed priority in conceiving
the idea of universal freedom of trade, at a literary party at which
he w as present, in the following w o r d s :
‘ Man is usually made use o f by statesmen and makers of
projects, as the material for a sort of political handiwork. T h e
project makers, in their operations on human affairs, disturb
Nature, whereas people ought simply to leave her to herself to
act freely, in order that she m ay accomplish her objects. In
order to raise a State from the lowest depth of barbarism to the
highest degree o f wealth, all that is requisite is peace, moderate
taxation, and good administration of justice ; everything else will
follow of its own accord in the natural course of things. All
governments which act in a contrary spirit to this natural course,
which seek to divert capital into other channels, or to restrict the
progress of the community in its spontaneous course, act contrary
to nature, and, in order to maintain their position, become op­
pressive and tyrannical.’
277
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T H E SYSTEMS
A d a m S m ith set out from this fu nd am ental idea, and to prove
it and to illustrate it w a s the sole object o f all his later works.
H e w a s confirmed in this idea by Q u e sn a y , T u r g o t , and the other
coryphaei o f the physiocratic school, w h o se acqu ain tan ce he had
m ade in a visit to F r a n c e in the y e a r 17 6 5 .
S m ith eviden tly considered the idea o f freedom o f trade as an
intellectual d isco v e ry w h ich w ould constitute the foundation o f
his literary fame. H o w natural, therefore, it w a s that he should
endeavour in his w ork to put aside and to refute e v e ry th in g that
stood in the w a y o f that idea ; that he should consider him self
a s the professed advocate o f absolute freedom o f trade, and that
he thought and wrote in that spirit.
H o w could it be expected, that with such preconceived
o p inions, S m ith should ju d g e o f men and o f th in gs, o f history
and statistics, o f political m e a su res and o f their authors, in an y
other light than as they confirmed or contradicted his fundam ental
principle ?
In the p a s s a g e above quoted from D u g a ld Stew art, A d am
S m i t h ’s w hole system is com prised as in a nutshell. T h e power
o f the State can and ou g ht to do nothing, except to allo w ju stic e
to be adm inistered, to im pose as little taxation as possible.
S t a te sm e n w h o attem pt to found a m an u fac tu rin g pow er, to
promote n av igatio n , to extend foreign trade, to protect it by n aval
pow er, and to found or to acquire colonies, are in his opinion
project m ak e rs w h o o n ly hinder the p rogress o f the com m u n ity.
F o r him no n ation exists, but m erely a co m m u n ity , i.e. a nu m ber
o f in d iv id u als d w ellin g together. T h e s e ind ivid u als know best
for th e m se lv e s w h a t branches o f occupation are m ost to their
a d v a n ta g e , and they can best select for th e m se lv e s the m e an s
w hich prom ote their prosperity.
T h i s entire nullification o f n ationality and o f S ta te power, this
exaltation o f ind ivid u alism to the position o f author o f all effective
p ow er, could be m ade plau sible o n ly by m a k in g the m ain object
o f in v estig atio n to be not the pow er w hich effects, but the th in g
effected, n a m e ly , m aterial w e alth , or rather the v alu e in e xch a n g e
w hich the th in g effected p o sse sse s.
M aterialism m u st com e to
the aid of in d iv id u alism , in order to conceal w h a t an enorm ous
am o u n t o f pow er accru es to ind ivid u als from nationality, from
national unity, and from the national confederation o f the pro­
ductive powers. A bare theory o f v a lu e s m u st be made to p ass
current as national econ om y, because ind ivid u als alone produce
v a lu e s, and the S tate, incapable o f cre atin g v a lu e s, m u st limit
its operations to callin g into activity, protecting, and p rom otin g
the productive powers o f individuals. In this com bination, the
quintessence o f political econ om y m a y be stated a s follow s, v i z . :
THE SYSTEM OF VALUES OF EXCHANGE
279
Wealth consists in the possession of objects o f exchangeable
v a lu e ; objects of exchangeable value are produced by the labour
of individuals in combination with the powers of nature and with
capital.
B y the division of labour, the productiveness of the
labour is increased ; capital is accumulated by savin gs, by pro­
duction exceeding consumption.
T h e greater the total amount
of capital, so much the greater is the division of labour, and hence
the capacity to produce.
Private interest is the most effectual
stimulus to labour and to economy.
Therefore the highest
wisdom of statecraft consists in placing no obstacle in the w ay
o f private industry, and in caring only for the good administration
of justice. And hence also it is folly to induce the subjects of a
State, by means of State legislative measures, to produce for
themselves anything which they can buy cheaper from abroad.
A system so consistent as this is, which sets forth the elements
of wealth, which so clearly explains the process of its production,
and apparently so completely exposes the errors of the previous
schools, could not fail, in default of any other, to meet with ac­
ceptance.
T h e mistake has been simply, that this system at
bottom is nothing else than a system of the p riv a te economy o f
a ll the in d iv id u a l persons in a country, or o f the in d iv id u a ls o f the
whole human race, as that economy w ould develop and shape itself,
under a state o f things in which there were no distinct nations,
n ationalities, or n atiojial interests— no distinctive p o litica l consti­
tutions or degrees o f civilisa tio n — no w ars or national anim osities ;
that it is nothing more than a theory of v a lu e s; a mere shop­
keeper’s or individual merchant’ s theory— not a scientific doctrine,
showing how the productive powers of an entire nation can be
called into existence, increased, maintained, and preserved— for
the special benefit of its civilisation, welfare, might, continuance,
and independence.
T h is system regards everything from the shopkeeper’ s point
of view.
T h e value of anything is wealth, according to it, so
its sole object is to gain values.
T he establishment o f powers
of production, it leaves to chance, to nature, or to the providence
o f God (whichever you please), only the State must have nothing
at all to do with it, nor must politics venture to meddle with the
business of accumulating exchangeable values.
It is resolved
to buy wherever it can find the cheapest articles— that the home
manufactories are ruined by their importation, matters not to it.
I f foreign nations give a bounty on the export of their m anu­
factured goods, so much the better; it can buy them so much
the cheaper. In its view no class is productive save those who
actually produce things valuable in exchange. It well recognises
how the division of labour promotes the success of a business in
28 o
TH E SYSTEMS
detail, but it h a s no perception o f the effect o f the division of
labour a s affecting a w h ole nation. It k n o w s that on ly by indi­
vidual e co n o m y can it increase its capital, and that on ly in pro­
portion to the increase in its capital can it extend its individual
t r a d e s ; but it sets no v alu e on the in crease o f the productive
pow er, w h ich resu lts from the e sta b lish m e n t o f n ativ e m a n u ­
factories, or on the foreign trade and national pow er which arise
out o f that increase. W h a t m a y becom e o f the entire nation in
the future, is to it a m atte r o f perfect indifference, so lon g as
p rivate in d iv id u als can gain w e a lth .
It ta k e s notice m erely of
the rent yielded by land, but p ays no reg ard to the v a lu e o f landed
p r o p e r t y ; it does not perceive th at the g re a te st part o f the wealth
o f a nation c o n sists in the v alu e o f its land and its fixed property.
F o r the influence o f foreign trade on the valu e and price o f landed
property, and for the flu ctu ation s and c a la m itie s thence a risin g ,
it cares not a straw . In short, this sy ste m is the strictest and
m ost con sisten t * m ercantile s y s t e m / and it is incom prehensible
h o w th at term could h a v e been applied to the sy ste m o f Colbert,
the m ain ten dency o f w hich is to w a rd s an ‘ in d ustrial syste m *— i.e.
a sy ste m w hich h a s solely in v ie w the founding o f a national
in d u stry— a national com m erce— w ith ou t re g a rd in g the tem porary
g a in s or lo sse s o f v a lu e s in exchange.
N o tw ith sta n d in g , w e w ou ld by no m e a n s den y the great m erits
o f A d a m S m ith .
H e w a s the first w h o su cce ssfu lly applied the
an a ly tica l m ethod to political econ om y.
B y m e a n s o f that
method and an u n u su al degree o f s a g a c it y , he th rew light on the
m ost im portan t branches o f the science, w h ich w ere p rev io u sly
alm o st w h o lly obscure.
B efo re A d a m S m it h on ly a practice
existed ; his w o rk s rendered it p o ssib le to con stitute a science
o f political e co n o m y, and he h a s contributed a g re ater am ount
o f m a te ria ls for that object than all his p red ecessors or su ccessors.
B u t th at v e r y peculiarity o f his m ind b y w h ich , in a n a ly s in g
the v ario u s constituent p arts o f political eco n o m y, he rendered
such im portant service, w a s the cau se w h y he did not take a
co m p re h e n sive v ie w o f the c o m m u n ity in its e n t i r e t y ; that he
w a s unable to com bine individual interests in one h arm o n io u s
w h o l e ; that he would not consider the nation in preference to
m ere ind ivid u als ; that out o f m ere a n x ie t y for the freedom o f
action o f the individual producers, he lost sig h t o f the interests
o f the entire nation. H e w h o so cle arly perceived the benefits
o f the d ivision o f labour in a sin g le m a n u fa c to ry , did not perceive
that the sam e principle is applicable w ith equal force to entire
provin ces and nations.
W ith this opinion, that w h ich D u g a ld S t e w a r t s a y s o f him
exactly agrees. S m ith could ju d g e individual traits o f character
THE SYSTEM OF VALUES OF EXCHANGE
281
with extraordinary acu ten ess; but if an opinion w as needed as
to the entire character of a man or of a book, one could not be
sufficiently astonished at the narrowness and obliquity ot his
views.
N a y , he w as incapable of forming a correct estimate
of the character of those with whom he had lived for many years
in the most intimate friendship. ‘ T h e portrait,1 says his bio­
grapher, ‘ w as ever full of life and expression, and had a strong
resemblance to the original if one compared it with the original
from a certain point of v ie w ; but it never gave a true and perfect
representation according to all its dimensions and circumstances.’
CH A PT ER XXXII.
T H E SYSTEM
O F V A L U E S O F E X C H A N G E (C O N T IN U E D )— JE A N
B A P T IS T E S A Y A N D H IS SC H O O L.
T h i s author on the w h o le h a s m erely end eavou red to syste m atise ,
to elucidate, and to p op u larise, the m a t e ria ls w h ich A d a m Sm ith
had gathered to ge th er after an irre gu lar fashion. In that he has
perfectly succeeded, in a s m u c h a s he p o sse sse d in a high degree
the gift o f s y s t e m a tis a t io n an d elucidation. N o t h in g new or
o riginal is to be found in h is w r itin g s , s a v e o n ly th at he asserted
the pro d u ctive n e ss o f m en tal lab o u rs, w h ich A d a m S m ith denied.
O nly, this v ie w , w h ich is quite correct acc o rd in g to the theory o f
the productive pow ers, sta n d s opposed to the th eo ry o f e x c h a n g e ­
able v alu es, and hence S m ith is cle a r ly m ore co n sisten t than S a y .
M e n ta l labourers produce directly no e x c h a n g e a b le v a l u e s ; nay,
more, th ey d im in ish by their co n su m p tio n the total am ou n t o f
m aterial productions and s a v in g s , and hence the total o f m aterial
w ealth. M oreover, the ground on w hich S a y from his point o f
v ie w includes m en tal labourers a m o n g the productive class, viz.
because they are paid w ith e x ch a n g e a b le v a lu e s, is an utterly
b a s e le s s one, in a sm u ch a s those v a lu e s h a v e been already pro­
duced before th ey reach the h a n d s o f the m e n tal labou rers ; their
p o sse sso r alon e is c h an g e d , but by that c h a n g e their am ou n t is
not increased. W e can o n ly term m en tal lab ou rers productive if
w e regard the productive p ow ers o f the nation, and not the m ere
possession o f e x c h a n g e a b le v a lu e s, as national wealth. S a y found
h im s e lf opposed to S m ith in this respect, e xactly as S m ith had
found h im self opposed to the p h y sio cra ts.
In order to include m an u fac tu re rs a m o n g the productive class,
S m ith had been obliged to en larg e the idea o f w h a t con stitutes
w e alth ; and S a y on his part had no other alte rn a tiv e than either
to adopt the absurd v ie w that m ental labourers are not productive,
as it w as handed down to him by A d a m S m ith , or else to enlarge
the idea o f w ealth as A d a m S m ith had done in opposition to the
ph ysiocrats, n am ely, to m ak e it com prise productive p o w e r ; and
to argu e, national w ealth does not co n sist in the p o sse ssio n o f
e x c h an g e ab le v alu es, but in the p o sse ssio n o f pow er to produce,
282
THE SYSTEM OF VALUES OF EXCHANGE
283
just as the wealth of a fisherman does not consist in the possession
of fish, but in the ability and the means of continually catching fish
to satisfy his wants.
It is noteworthy, and, so far as we are aware, not generally
known, that Jean Baptiste S a y had a brother whose plain clear
common sense led him clearly to perceive the fundamental error
of the theory of values, and that J . B. S a y him self expressed to
his doubting brother doubts as to the soundness o f his own
doctrine.
L o u is S a y wrote from Nantes, that a technical language had
become prevalent in political economy which had led to much
false reasoning, and that his brother Jean him self was not free
from it.1 According to Louis Say, the wealth of nations does
not consist in material goods and their value in exchange, but in
the ability continuously to produce such goods. T he exchange
theory of Smith and J , B. S a y regards wealth from the narrow
point of view of an individual merchant, and this system, which
would reform the (so-called) mercantile system, is itself nothing
else than a restricted mercantile system .2 T o these doubts and
objections J . B. S a y replied to his brother that £ his (J. B. S a y ’s)
method (method ?) (viz. the theory of exchangeable values) was
certainly not the best, but that the difficulty was, to find a better.’ 3
W h a t ! difficult to find a better ? Had not brother Louis, then,
found one? No, the real difficulty was that people had not the
requisite acuteness to grasp and to follow out the idea which the
brother had (certainly only in general terms) expressed; or rather,
perhaps, because it w as very distasteful to have to overturn the
already established school, and to have to teach the precise opposite
of the doctrine by which one had acquired celebrity. T h e only
original thing in J . B. S a y ’ s writings is the form of his system,
viz. that he defined political economy as the science which shows
how m aterial wealth is produced , d istrib u ted, and consum ed. It
w as by this classification and by his exposition of it that J. B. S a y
made his success and also his school, and no w o n d e r: for here
1 Louis S ay, Etudes sur la Richesse des Nations, Preface, p. iv.
2 The following are the actual words of Louis S a y (p. 10 ): 'L a richesse ne
consiste pas dans les choses qui satisfont nos besoins ou nos gofits, mais dans le
pouvoir d’en jouir annuellem ent.’ And further (pp. 14 to 15) ; ‘ L e faux systeme
mercantil, fond£ sur la richesse en m£taux pr^cieux, a etd remplac£ par un autre
fonde sur la richesse en valeurs v^nales ou ^changeables, qui consiste a n’^valuer
ce qui compose la richesse d’une nation que comme le fait un imarchand.’ And
(note, p. 14 ) : ' L ’£cole moderne qui refute le systeme mercantil a elle-meme
cre6 un systeme qui lui-meme doit etre appel6 le systeme m ercantil.’
J Etudes sur la Richesse dcs Nations, p. 36 (quoting J . B , S a y 's words):
' Que cette m^thode etait loin d ’etre bonne, mais que la difficulty etait d’en
irouver une m eilleure.1
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T H E SYSTEMS
e v e ry th in g la y ready to h is h a n d ; he k n e w h o w to explain so
clearly and in telligibly the special process o f production, and the
individual pow ers e n g aged in i t ; he could set forth so lucidly
(within the lim its o f his o w n narrow circle) the principle o f the
d ivision o f labour, and so clearly expound the trade o f individuals.
E v e r y w o rk in g potter, e v e ry huckster could understand him, and
do so the more readily, the less J . B . S a y told him that w a s new
or u nknow n. F o r that in the w ork o f the potter, h a n d s and skill
(labour) m u st be com bined w ith clay (natural m aterial) in order
by m ean s o f the potter's w h eel, the oven , and fuel (capital), to
produce pots (valu ab le products or v a lu e s in e xch an g e ), had been
w ell know n lon g before in e v e ry respectable potter’s workshop,
o n ly th ey had not know n h o w to describe these th in g s in scientific
la n g u a g e , and by m e a n s o f it to g en e ra lise upon them . A lso there
w ere probably v ery few h u cksters w h o did not know before J . B.
S a y ’s time, that by e xch an g e both p arties could g ain v alu es in
e x ch a n g e , and that i f a n y o n e exported 1,0 0 0 th alers’ worth of
g o o d s, and got for them 1 ,5 0 0 th a le r s ’ w orth o f other goods from
abroad, he would g ain 500 thalers.
It w a s also w ell k n o w n before, that w o rk leads to wealth, and
idleness to b e g g a r y ; that private self-interest is the m o st powerful
stim u lu s to active in d u stry ; and th at he w h o d esires to obtain
y o u n g chickens, m u st not first eat the e g g s . C e r ta in ly people
had not know n before that all this w a s political econ om y ; but
they were delighted to be initiated w ith so little trouble into the
deepest m y ste rie s of the science, and th u s to get rid o f the hateful
duties w h ich m ake our favourite lu xu ries so dear, and to get per­
petual peace, u n iversal brotherhood, and the m ille n n iu m into the
b arg ain . I t is also no cau se for surprise that so m a n y learned
m en and S ta te officials ranked th e m se lv e s a m o n g the adm irers o f
S m ith and S a y ; for the principle o f * laissez faire et la isse z aller ’
d em an d s no sa g a c it y from a n y s a v e those w h o first introduced
and expounded i t ; authors w h o succeeded them had n o th in g to
do but to reiterate, em bellish, and elucidate their a r g u m e n t ; and
w h o m ig h t not feel the w is h an d h a v e the ability to be a great
state sm an , if all one had to do w a s to fold o n e ’ s h an d s in one’s
b o so m ?
It is a stran ge peculiarity o f these s y s t e m s , that one
need on ly adopt their first propositions, an d let o n e se lf be led
credulously and con fid in gly b y the h an d by the author, th rou g h a
few chapters, and one is lost. W e m u st s a y to M . J e a n B a p tiste
S a y at the outset that p o litic a l eco n o m y is not, in our opinion,
th at science w hich teaches o n ly h o w v a lu e s in e x c h a n g e are pro­
duced by individuals, distributed a m o n g th e m , and co n su m e d by
them ; we say to him that a sta te sm a n w ill k n o w and m u st know ,
over and above that, how the productive p o w e rs o f a whole
THE SYSTEM OF VALUES OF EXCHANGE
285
nation can be awakened, increased, and protected, and how on the
other hand they are weakened, laid to sleep, or utterly destroyed;
and how by means of those national productive powers the national
resources can be utilised in the wisest and best manner so as to
produce national existence, national independence, national pros­
perity, national strength, national culture, and a national future.
T h is system (of Say) has rushed from one extreme view — that
the State can and ought to regulate everything— into the opposite
extreme— that the State can and ought to do nothing : that the
individual is everything, and the State nothing at all. T he opinion
of M, S a y as to the omnipotence of individuals and the impotence
of the State verges on the ridiculous. W here he cannot forbear
from expressing a word o f praise on the efficacy of Colbert’s
measures for the industrial education of France, he exclaims, 1 One
could hardly have given p riv a te persons credit for such a high
degree of w isdo m .’
I f we turn our attention from the system to its author, we see
in him a man who, without a comprehensive knowledge of history,
without deep insight into State policy or State administration,
without political or philosophical view s, with merely one idea
adopted from others in his head, rummages through history,
politics, statistics, commercial and industrial relations, in order to
discover isolated proofs and facts which may serve to support his
idea. I f anyone will read his remarks on the Navigation L a w s,
the Methuen Treaty, the system of Colbert, the Eden Treaty, &c.
he will find this judgm ent confirmed. It did not suit him to
follow out connectedly the commercial and industrial history of
nations. T h at nations have become rich and mighty under pro­
tective tariffs he admits, only in his opinion they became so in
spite of that system and not in consequence of i t ; and he requires
that we should believe that conclusion on his word alone. He
maintains that the Dutch were induced to trade directly with the
E a s t Indies, because Philip II. forbade them to enter the harbour
of P o r t u g a l; as though the protective system would justify that
prohibition, as though the Dutch would not have found their w ay
to the E a s t Indies without it. W ith statistics and politics M.
S a y is as dissatisfied as with h is to r y ; with the former because no
doubt they produce the inconvenient facts which he says ' have so
often proved contradictory of his system ’— with the latter because
he understood nothing at all of it. He cannot desist from his
warnings against the pitfalls into which statistical facts m ay m is­
lead us, or from reminding us that politics have nothing to do
with political economy, which sounds about as wise as if anyone
were to maintain that pewter must not be taken into account in
the consideration of a pewter platter.
286
TH E SYSTEMS
F ir s t a m erchant, then a m anufacturer, then an unsuccessful
politician, S a y laid hold o f political econ om y ju s t a s a m an g ra sp s
at som e new u ndertakin g w h en the old one cannot go on an y
longer. W e h ave his o w n con fession on record, that he stood in
doubt at first w hether he should advocate the (so-called) mercantile
sy ste m , or the system o f free trade.
H atred o f the Continental
sy ste m ( o f N ap o le o n ) w hich had ruined his m an u factory, and
a g a in st the au th or o f it w h o had turned him out o f the m ag istracy,
determined him to e sp ou se the cau se o f absolute freedom o f trade.
T h e term * freedom ' in w h a te v e r connection it is used has for
fifty y e a r s past exercised a m ag ical influence in F ra n c e .
Hence
it happened that S a y , under the E m p ir e a s well a s under the
R estoration , belonged to the O pposition, and that he incessan tly
advocated econ om y. T h u s his w ritin g s became popular for quite
other reaso n s than w hat they contained. O therw ise would it not
be in com p reh en sible that their popularity should h ave continued
after the fall o f N apoleon, at a period w hen the adoption of S a y ' s
syste m would in evitably h ave ruined the F ren ch m a n u fa c tu r e rs?
H i s firm adherence to the cosm opolitical principle under such cir­
c u m sta n c e s proves how little political insight the m an had.
How
little he knew the world, is sh o w n by his firm belief in the c o sm o ­
political tendencies o f C a n n in g and H u sk isso n . O ne th in g only
w a s lacking to his fame, that neither L o u i s X V I I I . nor C h arle s X .
m ade him m in ister o f com m erce and o f finance.
In that case
h isto ry would h a v e coupled his nam e with that o f Colbert, the one
a s the creator o f the national industry, the other a s its destroyer.
N e v e r h a s any author with such sm all m aterials exercised
such a wide scientific terrorism as J . E . S a y ; the sligh te st doubt
as to the infallibility o f his doctrine w a s branded a s obscurantism ;
and even men like C h aptal feared the a n a th e m a s o f this politicoeconom ical P op e.
C h ap taT s w ork on the ind ustry o f F ran ce ,
from the b e g in n in g to the end, is nothing else than an exposition
o f the effects o f the F ren ch protective sy ste m ; he states that ex­
pressly ; he s a y s distinctly that under the e x istin g circu m stan ces
o f the world, prosperity for F r a n c e can only be hoped for under
the syste m o f protection. A t the sam e tim e C h ap tal end eavou rs
by an article in praise of free trade, directly in opposition to the
w hole tendency o f his book, to solicit pardon for his heresy from
the school o f S a y .
S a y imitated the P a p a c y even so far as to its
* In d e x .’
H e certainly did not prohibit heretical w ritin g s indi­
v id u ally by nam e, but he w a s stricter s t i l l ; he prohibits all, the
non-heretical as well a s the heretical ; he w a r n s the y o u n g
students o f political econ om y not to read too m a n y books, as they
m igh t thus too e asily be m isled into errors ; they ought to read
only a few, but those good books, which m e a n s in other words,
THE SYSTEM OF VALUES OF EXCHANGE
287
‘ Y o u ought only to read me and Adam Sm ith, no others.’ Bu t
that none too great sym pathy should accrue to the immortal
father of the school from the adoration o f his disciples, his suc­
cessor and interpreter on earth took good care, for, according to
S a y , Adam Sm ith ’s books are full of confusion, imperfection, and
contradictions; and he clearly gives us to understand that one
can only learn from h im self ‘ how one ought to read Adam
S m ith .’
Notwithstanding, when S a y w as at the zenith of his fame,
certain young heretics arose who attacked the basis of his
system so effectually and so boldly, that he preferred privately
to reply to them, and meekly to avoid any public discussion.
A m on g these, T an n egu y du Chatel (more than once a minister
of State) w as the most vigorous and the most ingenious.
‘ Selon vous, mon cher critique,’ said S a y to Du Chatel in
a private letter, ‘ il ne reste plus dans mon economie politique
que des actions sans motifs, des faits sans explication, une chaine
de rapports dont les extremites manquent et dont les anneaux les
plus importants sont brises. J e partage done I'infortune d’Adam
Sm ith, dont un de nos critiques a dit qu’il avait fait retrograder
l ’economie politique.*1 In a postscript to this letter he remarks
very naively, ‘ D an s le second article que vous annoncez, il est
bien inutile de revenir sur cette polemique, p a r laquelle nous
pouvions bien ennuyer le p u b lic .’
At the present day the school o f Sm ith and S a y has been
exploded in France, and the rigid and spiritless influence of the
T heory of Exchan geable Values has been succeeded by a revolu­
tion and an anarchy, which neither M. R ossi nor M. Blanqui are
able to exorcise.
T h e Saint-Sim onians and the Fourrierists,
with remarkable talent at their head, instead of reforming the
old doctrines, have cast them entirely aside, and have framed
for themselves a Utopian system.
Quite recently the most
ingenious persons among them have been seeking to discover
the connection of their doctrines with those of the previous schools,
and to make their ideas compatible with existing circumstances.
Important results m ay be expected from their labours, especially
from those of the talented Michel Chevalier. T h e amount of
truth, and of what is practically applicable in our day, which
their doctrines contain, consists chiefly in their expounding the
p rin cip le o f the confederation and the harmony o f the productive
pow ers. T heir annihilation of individual freedom and indepen­
dence is their weak side; with them the individual is entirely
absorbed in the community, in direct contradiction to the T heory
; S ay , Cours complet d'Economie politique p ratiqu e, vii. p, 378.
288
T H E SYSTEMS
o f E x c h a n g e a b le V a lu e s , accord in g to w hich the individual ou ght
to be e v e ry th in g and the S t a te no th in g.
It m a y be that the spirit o f the world is tending to the rea lisa ­
tion o f the state o f th in g s which these sects dream o f or p ro g n o s­
ticate ; in a n y case, h ow ever, I believe that m an y centuries m ust
e lap se before that can be possible.
It is g iv e n to no mortal to
estim ate the p rogress o f future centuries in discoveries and in
the condition o f society.
E v e n the m ind o f a P la to could not
h ave foretold that after the lap se o f th o u sa n d s o f y e a r s the instru­
m en ts which do the w ork o f society w ould be constructed o f iron,
steel, and brass, nor could that o f a Cicero h a v e foreseen that the
prin tin g press would render it possible to extend the representative
sy ste m over w hole k in g d o m s, perhaps o v er w hole quarters o f the
globe, and o v er the entire h u m an race. If m e a n w h ile it is g iv e n to
o n ly a few great m in d s to foresee a few in stan ces o f the progress of
future th o u san d s o f y e a rs, ye t to eve ry a g e is a ssig n ed its own
special task.
B u t the task o f the a g e in w hich w e live appears not
to be to break up m an kin d into Eou rrierist ‘ p h alan ste re s,' in order
to g iv e each individual a s n early a s possible an equal share of
m en tal and bodily e n jo y m e n ts, but to perfect the productive
pow ers, the m ental culture, the political condition, and the power
o f w h o le nationalities, and by e q u a lisin g them in these respects
a s far as is possible, to prepare them beforehand for u n iversal
union.
F o r even if we adm it that under the e x istin g circu m ­
sta n ce s o f the w orld the im m ediate object w hich its ap ostles
had in v ie w could be attained by each * phalanstere,' w h a t would
be its effect on the power and independence of the nation ? And
w ould not the nation which w a s broken up into ‘ p h alan ste re s,’
run the risk o f being conquered by som e less advanced nation
w hich continued to live in the old w a y , and ol thus h a v in g its
prem ature institu tion s destroyed together with its entire nation­
a lity ? A t present the T h e o r y o f E x c h a n g e a b le V a lu e s has so
com pletely lost its influence, that it is alm ost e x c lu siv e ly occupied
w ith inquiries into the nature o f K ent, and that R ic a rd o in his
‘ P rin cip le s o f Political E c o n o m y ’ could write, ‘ T h e c h ie f object
of political e co n o m y is to determ ine the la w s by w hich the pro­
duce o f the soil ou g ht to be shared betw een the lan dow ner, the
farm er, and the lab ou rer.’
W h ile som e p e rso n s are firm ly convinced that this science is
com plete, and that n o th in g essential can further be added to it,
those, on the other hand, w h o read these w r itin g s w ith philosophi­
cal or practical insight, m a in ta in , that a s y e t there is no political
e co n o m y at all, that that science h a s ye t to be constructed ; that
until it is so, w h a t g o e s b y its nam e is m e re ly an astro lo g y , but that
it is both possible and desirable out o f it to produce an astro n o m y.
THE SYSTEM OF VALUES OF EXCHANGE
289
F in ally, we must remark, in order not to be misunderstood,
that our criticism of the writings alike of J , B. S a y and of his
predecessors and successors refers only to their national and
international bearing; and that we recognise their value as
expositions o f subordinate doctrines. It is evident that an author
m ay form very valuable view s and inductions on individual
branches of a science, while all the while the basis o f his system
m ay be entirely erroneous.
FO U R TH BOOK
T HE
POLITICS
19
CHAPTER XXXIII.
T H E IN S U L A R S U P R E M A C Y A N D T H E C O N T IN E N T A L P O W E R S N O R T H A M E R IC A A N D F R A N C E .
In all ages there have been cities or countries which have been
pre-eminent above all others in industry, commerce, and naviga­
tion ; 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.
H ow 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 En glan d to raise her entire territory into one
immense manufacturing, commercial, and maritime city, and to
become am ong 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. L et us, however, do
justice to this Power and to her efforts. T h e 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 in­
ternal 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 o f the
natural riches of tropical countries, and in the civilisation of bar­
barous races or of such as have retrograded into barbarism. W h o
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 esti-
294
TH E POLITICS
m ate h o w far the h u m an race m ig h t retrograde ? L e t us then
con gratulate ou rselve s on the im m e n se p ro gre ss o f that nation,
and w ish her prosperity for all future time.
B u t ought we on that
account also to w ish that she m a y erect a u n iversal dom inion on
the ruins o f the other n ation alities ? N o th in g but un fath om able
co sm o p o litan ism or sh op keep ers’ narrow -m ind edn ess can g iv e an
a s s e n tin g a n s w e r to that question.
In our previous ch apters we
h ave pointed out the resu lts o f such den ationalisatio n, and shown
that the culture and civ ilisatio n o f the h u m an race can on ly be
brought about by p lacin g m a n y nations in sim ilar positions o f
civilisation , w e alth , and p o w e r ; that ju s t a s E n g la n d h e rse lf h as
raised h e rse lf from a condition o f barbarism to her present high
position, so the sa m e path lies open for other nations to follow :
and that at this time more than one nation is qualified to strive to
attain the h ig h e st degree o f civilisation , w e alth , and power. L e t
us n o w state su m m a r ily the m a x im s o f S ta te policy by m e a n s of
w h ich E n g la n d h a s attained her present g re a tn e ss. T h e y m a y be
briefly stated thus :
A lw a y s to favo u r the im portation o f productive p ow er,1 in p re ­
ference to the im portation o f goods.
C are fu lly to cherish and to protect the d evelopm ent o f the pro­
ductive power.
T o import on ly raw m a te ria ls and agricu ltu ral products, and to
export n o th in g but m an u factu red goods.
T o direct a n y su rplus o f productive pow er to colonisation, and
to the subjection o f barbarous nations.
T o reserve e x c lu siv e ly to the m other cou n try the su p p ly o f the
colonies and subject cou n tries w ith m an u factu red goods, but in
return to receive on preferential term s their raw m ate rials and
e sp e c ia lly their colonial produce.
T o devote especial care to the coast n a v i g a t io n ; to the trade
between the m oth er cou n try and the colonies ; to encourage seafisheries by m e a n s o f b o u n tie s; and to take as active a part as
possible in intern ational n av ig atio n .
B y these m e a n s to found a n a v a l su p re m ac y, and b y m e an s
1 E v e n a part o f the production o f w ool in E n g la n d is due to the observan ce
o f this m axim . E d w ard I V . im ported under special privileges 3,000 head o f
sheep from Spain (where the export o f sheep w as prohibited), and distributed
them am ong variou s parishes, with a com m and th at for seven y e a rs none w ere
to be slaughtered or castrated . (E s s a i sur le. Commerce d 'A n g le te rre , tom e i. p.
379.) A s soon as the object o f these m easures had been attained, E n g lan d re­
w ard ed the Span ish G overnm en t for the special p rivileges gran ted by the latter,
b y prohibiting the im port o f Span ish w ool. T h e efficacy o f th is prohibition
(how ever unjust it m ay be deem ed) can a s little be denied as that o f the pro­
h ibitions of the im port o f w ool b y C h arles I I . (16 7 2 and 1674).
INSULAR SUPREMACY AND CONTINENTAL POWERS
295
o f it to extend foreign commerce, and continually to increase her
colonial possessions.
T o 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.
T o grant concessions to foreign independent nations in respect
of the import of agricultural products, only in case concessions in
respect of Fier 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.
T o make w ars and to contract alliances with exclusive regard
to her manufacturing, commercial, maritime, and colonial interests.
T o gain by these alike from friends and foes : from the latter by
interrupting their commerce at se a ; from the former by ruining
their manufactures through subsidies which are paid in the shape
of En glish manufactured goods.1
T hese m axim s were in former times plainly professed by all
E n g lish ministers and parliamentary speakers. T he ministers
of George I. in 1 7 2 1 openly declared, on the occasion of the pro­
hibition of the importation of the manufactures of India, that it
w as clear that a nation could only become wealthy and powerful
if she imported raw materials and exported manufactured goods.
E v en 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 m anu­
factured in North America. In Adam Sm ith’s time, a new
maxim w as 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 aw ay 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 Sm ith, and of the cosmopolitical tendencies o fh is great
contemporary W illiam Pitt, and of all his successors in the British
Government administrations.
A ny nation which by means of protective duties and restrictions
on navigation has raised her manufacturing power and her naviga­
1 See Appendix A.
296
T H E POLITICS
tion to such a degree o f d evelopm ent that no other nation can
su sta in free com petition w ith her, can do n o th in g w ise r than to
th ro w a w a y th ese ladders o f her g re a tn e ss, to preach to other
n atio n s the benefits o f free trade, and to declare in penitent tones
that she h a s hitherto w an dered in the p aths o f error, an d h a s now
for the first tim e succeeded in d isc o v e rin g the truth.
W illia m P itt w a s the first E n g l i s h sta te sm a n w h o clearly per­
ceived in w h a t w a y the co sm o p o litical theory o f A d a m S m ith
could be properly m ad e use of, and not in v a in did he h im se lf
carry abo ut a copy o f the w o rk on the W e a lt h o f N a tio n s.
H is
speech in 17 8 6 , w hich w a s add ressed neither to P a r lia m e n t nor
to the nation, but cle arly to the e a rs o f the sta te sm e n o f F ra n c e ,
w h o w ere destitute o f all experience an d political in sig h t, and
so le ly intended to influence the latter in favo u r o f the E d e n T r e a t y ,
is an excellent specim en o f S m i t h ’s style o f r easo n in g . B y nature
he said F r a n c e w a s adapted for agricu ltu re and the production of
w ine, as E n g la n d w a s th u s adapted to m a n u fa c tu r in g production.
T h e s e n atio n s ou g ht to act to w a r d s one a n o th e r j u s t a s two great
m e rch an ts w ou ld do w h o carry on different branches o f trade and
w h o recip rocally enrich one an o th er by the e x c h a n g e o f g o o d s.1
N o t a word here o f the old m a x im o f E n g l a n d , th at a nation can
o n ly attain to the h ig h e st degree o f w e a lth and pow er in her
foreign trade by the e x c h a n g e o f m an u factu red products a g a in s t
ag ricu ltu ral products and ra w m ate rials. T h i s m a x im w a s then,
an d h a s rem ain e d since, an E n g l i s h S t a t e s e c r e t; it w a s never
1 F ra n c e , said P itt, h as a d va n tag es above E n g la n d in resp ect o f clim ate and
other natural g ifts, and therefore ex cels E n g la n d in its ra w p ro d u c e ; on the
other hand, E n g lan d h as the ad va n tag e o ver F ra n c e in its artificial products.
T h e w in es, brandies, oils, and v in e g a rs o f F ra n c e , esp ecially the first tw o, are
articles o f such im portan ce and o f such valu e, that the valu e o f our natural pro­
ducts cannot be in the least com pared w ith them . B u t, on the other hand, it is
eq u ally certain th at E n g la n d is the exclu sive producer o f som e kin ds o f m anu­
factured goods, and that in resp ect o f other kin ds she p o ssesses such ad van tages
that she can defy w ithout doubt a ll the com petition o f F ra n c e . T h is is a
reciprocal condition and a basis on w h ich an ad van tag eo u s com m ercial treaty
b etw een both nations should be founded. A s each o f them h as its peculiar
staple com m odities, and each p ossesses th at w h ich is lack in g to the other, so
both should deal with one another like tw o great m erch an ts w h o are en gaged
in different branches o f trade, and b y a reciprocal exch an ge o f their goo d s can
at once becom e useful to one another. L e t us further o n ly call to mind on this
point the w ealth o f the cou ntry w ith w h ich w e stand in the position o f neighbours,
its great population, its v icin ity to u s, and the consequent qu ick and regular
exch an ge. W h o could then h esitate a m om ent to g iv e his ap p ro val to the
system o f freedom , and w ho w ould not earn estly and im p atien tly w ish for the
utm ost possible expedition in estab lish in g it ? T h e possession o f such an e x ­
ten sive and certain m arket m ust g iv e quite an extrao rd in ary im pulse to our trade,
and the cu stom s revenue w h ich w ou ld then be diverted from the h an d s o f the
sm u ggler into the S tate revenue w ou ld benefit our finan ces, and th us tw o m ain
sp rin gs o f B ritish w ealth and o f B ritish power w ou ld be m ade more productive.
INSULAR SUPREMACY AND CONTINENTAL POWERS
297
again openly professed, but w as all the more persistently followed.
If, however, England since W illiam Pitt’s time had really cast
aw ay 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 manu­
facturing power of the whole world. T he favourable moment for
attaining this object was clearly ju st 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, Germ any, the Spanish peninsula, and the United States
of North America would have considered themselves fortunate in
exchanging their agricultural produce and raw materials for En glish
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
E n glish navigation laws, it w ould be ju s t as wise to repeal the
lin g tish protective system as it had fo rm erly been to introduce it.
T h e result of such a policy would have been that all the sur­
plus raw materials and agricultural produce from the two hemi­
spheres would have flowed over to England, and all the world
would have clothed themselves with E n g lish fabrics. All would
have tended to increase the wealth and the power o f England.
Under such circumstances the Americans or the R u ssians 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 deter­
mination with difficulty to sacrifice the advantages of the present
moment to the hopes of a distant future.
Put Providence has taken care that trees should not grow quite
up to the sky. Lord Castlcreagh 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 per­
mitted the En glish 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 c o u n try ; the whole territory of the island of England ’
would have been covered with houses and manufactories, or de­
voted 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 o f great cities. T h e production of these
things would have become much more lucrative for En glish agri­
T H E POLITICS
culture than the production o f corn, and co n se q u e n tly after a time
the E n g li s h landed aristocracy w ould h a v e obtained m uch higher
rents than by the exclusion o f foreign grain from the hom e market.
O nly, the landed a risto cracy h a v in g o n ly their present interests
in v ie w , preferred by m e a n s o f the corn la w s to m ain tain their
rents at the h igh rate to w h ich they had been raised by the in­
v o lu n ta ry exclusion o f foreign ra w m ate rials and g rain from the
E n g li s h m arket w hich had been occasioned by the w a r ; and thus
they com pelled the n atio n s o f the C o n tin e n t to seek to promote
their ow n w e lfare by ano ther m ethod than by the free e xch an ge of
ag ricu ltu ral produce for E n g li s h m an u factu res, viz. by the method
o f e sta b lish in g a m a n u fa c tu rin g p o w e r o f their ow n . T h e E n g li s h
restrictive la w s thus operated quite in the sa m e w a y a s N a p o le o n ’s
C on tinen tal sy ste m had done, on ly their operation w a s so m e w h at
slow er.
W h e n C a n n in g and H u s k is s o n cam e into office, the landed
aristo cracy had alread y tasted too m uch o f the forbidden fruit
for it to be p ossible to induce them by reaso n s o f com m on sense
to renounce w h a t they had enjoyed.
T h e s e state sm e n found
t h e m se lv e s in the difficult position o f so lv in g an im possib le
problem — a position in w hich the E n g l i s h m in istry still finds
itself.
T h e y had at one and the sam e tim e to con vince the
C on tinen tal nations o f the a d v a n t a g e s o f free trade, and also
m ain tain the restrictions on the im port o f foreign agricu ltu ral
produce for the benefit o f the E n g li s h landed aristocracy. H en ce
it w a s im p o ssib le that their sy ste m could be developed in such a
m an n e r that ju s tic e could be done to the hopes o f the ad vocates
o f free trade on both con tinen ts. W i t h all their liberality with
philanth ropical and cosm opolitical p h rase s w hich they uttered
in general d isc u ssio n s resp e ctin g the com m ercial sy s t e m s o f
E n g la n d and other countries, they n everth eless did not think
it in con sisten t, w h e n e v e r the question arose o f the alteration o f
a n y particular E n g l i s h duties, to base their a rg u m e n ts on the
principle o f protection.
H u sk isso n certain ly reduced the duties on several articles, but
he never omitted to take care that at that low er scale o f duty the
hom e m an u facto rie s w ere still sufficiently protected.
H e thus
followed pretty m uch the rules o f the D u tch w a te r a d m in istra­
tion. W h e r e v e r the w a te r on the outside rises high, these w ise
authorities erect high d y k e s ; w h e re ve r it rises less, th ey only
build lower dykes. A fte r such a fash io n the reform o f the E n g lis h
com m ercial policy w hich w a s announced w ith so m uch pomp
reduced itse lf to a piece o f m ere politico-econom ical ju g g le r y .
S o m e persons h ave adduced the lo w e rin g o f the E n g li s h duty
on silk goods a s a piece o f E n g l i s h liberality, w ith o u t duly con-
INSULAR SUPREMACY AND CONTINENTAL POWERS
2gg
sidering 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 m anu­
facturers have to pay in England, including the extra d u t y 1) 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.
A s 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 w ay
it w as that they suffered shipwreck in both countries. J u s t as
formerly in the year 1786, so also on this occasion, the E n glish
received great support from the theorists, and the liberal party
‘ Since List wrote these lines, the duties which foreign silk manufacturers
had to pay on the import o f their goods into England have been totally abol­
ished. The results of their abolition may be learned from Mr. W ardle’s report
on the English silk trade, as follows : London, in 1825, contained 24,000 looms
and 60,000 operatives engaged in silk manufacture. At the present time these
have dwindled to 1,200 looms and less then 4,000 operatives, In Coventry,
in 18 6 1, the ribbon trade is stated to have given subsistence to 40,600 persons;
while at the present time probably not more than 10,000 persons are supported
by it, and the power-Iooms at work in Coventry have decreased from r,8oo to
600. In Derby the number o f operatives employed in silk manufacture has
decreased from 6,650 (in 1850) to 2,400 at present. In the Congleton district
they have decreased from 5,186 (in i860) to 1,530 (in 1884) ; while of the forty
silk-throwsters’ works which that district contained (in 1855) only twelve now
remain, with ‘ about Lhree-fourths o f their machinery em ployed.’ In Manchester
this trade has practically died out, while at Middleton the industry is ‘ simply
ruined.’ These results (stated by Mr. Wardle) m ay account for the decrease
in England’s imports o f raw silk, from 8,000,000 pounds (in 1871) to less than
3.000.000 pounds.
On the other hand, since L ist wrote, the United States o f America have
increased and steadily maintained a considerable protective duty on the impor­
tation of foreign silk manufactures. The results o f that policy were publicly
stated by Mr. Robert P. Porter (member of the United States’ T ariff Commis­
sion), 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/. in i860 to more than 8,000,000/. in 1880.
'Y e t 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 m aterial.’ After
reference to the earthenware and plate-glass manufactures, Mr. Porter adds :
‘ T h e testimony before the T ariff 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 a n d b e l i e v e in i t . ’ — T
ranslato r.
300
T H E POLITICS
in F ra n c e , carried a w a y b y the g ran d idea o f u n ive rsal freedom
o f trade and b y S a y ’ s superficial a r g u m e n ts, an d from feelings of
opposition to w ard s a detested G o v e rn m e n t and supported b y the
m aritim e to w n s, the w in e g ro w e rs, and the silk m anufacturers,
the liberal p a rty cla m o ro u sly dem anded, as th ey h ad done in the
y e a r 178 6 , exten sion o f the trade with E n g la n d a s the one true
m ethod o f p ro m o tin g the national welfare.
F o r w h a te v e r faults people m a y la y to the ch arge o f the
R e sto ra tio n , it rendered an undeniable service to F r a n c e , a service
w h ich p o sterity w ill not d is p u t e ; it did not allo w itself to be
m isled into a false step as resp ects com m e rcial policy either by
the s tra ta g e m s o f the E n g l i s h or by the ou tcry o f the liberals.
M r. C a n n in g laid this b u sin e ss so m uch to heart th at he him self
m ad e a jo u r n e y to P a r is in order to con vince M o n sie u r Villfele of
the excellence o f h is m e asu res, an d to induce him to im itate them.
M . V ill£le w a s , h o w e v e r, m u ch too practical not to see completely
through th is s t r a t a g e m ; he is said to h a v e replied to Mr.
C a n n in g , ‘ I f E n g la n d in the far advan ced position o f her industry
p erm its g re ater foreign com p etition than form erly, that policy
correspon ds to E n g l a n d ’ s ow n w ell-understood interests. B u t
at this tim e it is to the w ell-understood interests o f F r a n c e that
she should secure to her m an u fac to rie s w h ich h a v e not as yet
attained perfect d evelopm ent, th at protection w h ic h is at present
indispen sab le to th em for th at object. B u t w h e n e v e r the m om ent
shall h a v e arrived w h en F r e n c h m a n u fa c tu r in g ind ustry can be
better promoted b y p e rm ittin g foreign com petition than by re­
strictin g it, then he (M . V illele) w ould not d e la y to derive
a d v a n t a g e from fo llo w in g the e x a m p le o f M r. C a n n i n g .’
A n n o y e d by th is con clu sive a n sw e r, C a n n i n g boasted in open
P a r lia m e n t after his return, h o w he had h u n g a m illstone on the
neck o f the F re n c h G o v e rn m e n t b y m e a n s o f the S p a n is h inter­
ven tion , from w h ic h it fo llo w s that the co sm o p o litan sentim ents
and the E u r o p e a n lib e ralism o f M r. C a n n i n g w ere not spoken
quite so m uch in earn est as the good lib e rals on the Continent
m ig h t h a v e chosen to believe. F o r h o w could Mr. C a n n in g , if
the cau se o f liberalism on the C o n tin e n t had interested him in
the least, h a v e sacrificed the liberal constitution o f S p a in to the
F r e n c h intervention o w in g to the m ere desire to h a n g a m illstone
round the neck o f the F re n c h G o v e rn m e n t ? T h e truth is, that
Mr. C a n n in g w a s eve ry inch an E n g li s h m a n , and he on ly per­
mitted h im s e lf to entertain p h ilanthropical or cosm opolitical senti­
m e n ts, w h en they could prove serviceable to him in stren g th en in g
and still further exten d in g the in d u stry an d com m ercial su prem acy
o f E n g la n d , or in th ro w in g dust into the e y e s o f E n g l a n d ’s rivals
in industry and com merce.
INSULAR SUPREMACY AND CONTINENTAL POWERS
301
In fact, no great sagacity w as needed on the part of M. Villele
to perceive the snare which had been laid for him by Mr. Canning.
In the experience o f neighbouring G erm any, who after the
abolition of the Continental system had continually retrograded
farther and farther in respect of her industry, M. Villele possessed
a striking proof of the true value of the principle of commercial
freedom as it w as understood in England. A lso France was
prospering too well under the system which she had adopted
since 18 1 5 , 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 o f industry, such as Chaptal
and Charles Dupin, had expressed themselves on the results o f
this system in the most unequivocal manner.
ChaptaTs 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. T he 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 circum stances; it compensates the disadvantages of
higher w ag es 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 in­
dustrial independence of Fran ce and enriches the nation through
labour, which, as I have already often remarked, is the chief source
o f wealth.’ 1
Charles Dupin had, in his work ( On the Productive Pow ers
of France, and on the Progress of French Industry from 1 8 1 4 to
1 8 4 7 ,’ thrown such a clear light on the results of the commercial
policy which France had followed since the Restoration, that it
w a s impossible that a French minister could think of sacrificing
this work of half a century, which had cost such sacrifices, which
w as so rich in fruits, and so full of promise for the future, merely
for the attractions o f a Methuen T reaty.
The American tariff for the year 1828 w as a natural and neces­
sary result of the En glish commercial system, which shut out
from the E n g lish frontiers the North American timber, grain,
meal, and other agricultural products, and only permitted raw
cotton to be received by En glan d in exchange for her manufactured
goods. On this system the trade with E n glan d only tended to
promote the agricultural labour of the American slaves, while on
1 Chaptal, D e VIndustrie Fran^nise vol. ii., p. 147.
3°2
T H E POLITICS
the other hand, the freest, m ost en lighten ed , and m ost powerful
S t a te s o f the U n io n found t h e m s e lv e s en tirely arrested in their
econom ical progress, an d th u s reduced to dispose o f their annual
su rplus o f population and capital by e m igratio n to the w a ste lands
o f the W e s t.
M r. H u s k is s o n understood this position o f affairs
v e r y w ell.
It w a s notorious that the E n g l i s h a m b a ssa d o r in
W a s h in g t o n had more than once correctly inform ed him o f the
inevitable con sequence o f the E n g l i s h policy. I f M r. H u sk isso n
had really been the m an that people in other countries supposed
him to be, he w ould h a v e m ade use of the publication o f the
A m e r ic a n tariff a s a v alu a b le opportunity for m a k in g the E n g li s h
a risto c ra c y com prehend the folly o f their corn la w s, and the
n e ce ssity o f a b o lis h in g them . B u t w h a t did Mr. H u sk isso n d o ?
H e fell into a passio n w ith the A m e r ic a n s (or at least affected to
do so), and in h is excitem en t he m ade a lle g a tio n s— the incorrect­
n e ss o f w hich w a s w ell k n o w n to e v e ry A m e rican p lanter—-and
perm itted h im s e lf to use th reats w h ich m ad e him ridiculous. M r.
H u s k is s o n said the exports o f E n g la n d to the U n ite d S tate s
am o u n te d to on ly about the sixth part o f all the exp o rts o f E n g ­
land, w h ile the exports o f the U n ited S t a t e s to E n g la n d co n sti­
tuted more than h a lf o f all their exports. F r o m this he so u g h t to
prove th at the A m e r ic a n s w ere more in the pow er o f the E n g li s h
than the latter w ere in that o f the fo r m e r ; and that the E n g li s h
had m uch less reason to fear interru ptions o f trade through w ar,
cessation o f intercourse, and so forth, than the A m e r ic a n s had.
I f one looks m erely at the totals o f the v a lu e o f the im ports and
exports, H u s k i s s o n ’ s a rg u m e n t a p p e a rs sufficiently p la u s i b l e ; but
if one con sid ers the nature o f the reciprocal im ports and exports,
it w ill then ap p e ar in com prehensible h ow Mr. H u s k is s o n could
m ak e use o f an a rg u m e n t w hich pro ve s the exact opposite o f that
w h ich he desired to prove. A ll or by far the greater part o f the
exports o f the U n ited S t a te s to E n g la n d consisted o f ra w m aterials,
w h o s e v a lu e is increased tenfold by the E n g li s h , and which they
can n ot dispen se w ith, and also could not at once obtain from
other cou n tries, at a n y rate not in sufficient quantity, w h ile on the
other hand all the im p o rts o f the N o rth A m e ric a n s from E n g la n d
con sisted o f articles w h ich th ey could either m an u factu re for th e m ­
se lv e s or procure j u s t a s e a s ily from other nations.
I f w e now
consider w h a t w ould be the operation o f an interruption o f co m ­
m erce between the tw o nations accord in g to the theory o f v alu es,
it w ill ap p e ar a s i f it m u st operate to the d isa d v a n ta g e o f the
A m e r ic a n s ; w h e r e a s i f w e ju d g e o f it accord in g to the theory of
the productive pow ers, it m u st occasion incalculable injury to the
E n g lis h .
F o r b y it tw o-thirds o f all the E n g l i s h cotton m a n u ­
factories w ould com e to a standstill and fall into ruin. E n g la n d
INSULAR SUPREMACY AND CONTINENTAL POWERS
303
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 E n glan d would be incalculable. W hat, however, would
be the consequences of such a state of things for the North
A m ericans?
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 En glish had lost. No
doubt such a measure must occasion a conflict for life and death,
as formerly the navigation laws did between E n glan d and Holland.
B u t probably it would also end in the same way as formerly did
the conflict in the En glish 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. W h at we have said suffices to show clearly the futility
and danger of H uskisson’s argument, and to demonstrate how
unwisely En glan d 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 E n glan d was, Mr. Huskisson pointed out the
extraordinary increase in the En glish importations of cotton, but
the Americans also knew how to estimate this argument at its
true value.
F or the production of cotton in America had for
more than ten years previously so greatly exceeded the consump­
tion 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 m ay be seen from the fact that in the year 1 8 1 6 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.
Fin ally, Mr. Huskisson threatened the North Americans with
the organisation of a wholesale contraband trade by w ay 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
E n glish Parliament, and await in humility whatever the latter
m ay be pleased to determine from year to year respecting their
national industry? H ow 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
T H E POLITICS
C a n a d ia n s m u g g li n g trade becam e unendurable. M u s t w e not,
how ever, deem the degree o f folly a b so lu te ly e x ce ssive i f a nation
w h ic h h a s a lr e a d y attained industrial and com m ercial su prem acy,
first o f all com pels an ag ricu ltu ral nation connected with her by
the clo se st ties o f race, o f la n g u a g e , and o f interest, to become
h e r s e lf a m a n u fa c tu rin g nation, and then, in order to hinder her
from fo llo w in g the im p u lse th u s forcibly g iv e n to her, com pels
her to a s s is t that n a tio n 's ow n colonies to attain ind epend ence?
A fte r H u s k i s s o n ’ s death, Mr. P o u le tt T h o m p s o n undertook the
direction o f the co m m ercial affairs o f E n g la n d ; th is statesm an
followed his celebrated predecessor in his policy a s w ell as in his
office.
In the m e an tim e , so far a s concerned N o rth A m e rica,
there rem ained little for him to do, for in that country, without
special efforts on the part o f the E n g l i s h , b y m e a n s o f the in­
fluence o f the cotton plan ters and the im porters, and by the aid o f
the D e m o cratic p arty, e sp e c ia lly by m e a n s o f the so-called C o m ­
p rom ise B ill in 1 8 3 2 , a m odification o f the form er tariff had taken
place, w hich, alth o u g h it ce rta in ly am ended the e x c e sse s and faults
o f the form er tariff, and also still secured to the A m e rican m a n u ­
factories a tolerable degree o f protection in respect o f the coarser
fabrics o f cotton and w oo llen , n e v e rth e le ss g a v e the E n g li s h all
the c o n c e ssio n s w h ich t h e y could h a v e desired w ith ou t E n g la n d
h a v in g been com pelled to m a k e a n y counter con cessio ns.
S in c e the p a s s in g o f that B i ll, the exp o rts o f the E n g l i s h to
A m e r ic a h a v e e n o r m o u s ly increased. A n d su b se q u en tly to th is
tim e th ey g re a tly exceed the E n g l i s h im ports from N orth A m e rica,
so that at a n y tim e it is in the p o w e r o f E n g l a n d to d ra w to her­
s e lf a s m u ch a s she p le ase s o f the precious m e t a ls circu latin g in
A m e rica, and thereby to occasion com m ercial crises in the U nited
S t a te s as often a s she h e rs e lf is in w a n t o f m o n e y . B u t the m ost
a s t o n is h in g th in g in this m atte r is th at th at B ill had for its author
H e n r y C la y , the m o st e m in e n t and cle arsig h ted defender o f the
A m e ric a n m a n u fa c tu rin g interest. F o r it m u st be rem embered
that the p rosperity o f the A m e ric a n m an u fac tu re rs w h ich resulted
from the ta riff o f 1 8 2 8 excited so g re a tly the je a lo u s y o f the cotton
planters, that the S o u th e rn S t a t e s threatened to b rin g about a
dissolution o f the U n io n in case the tariff o f 1 8 2 8 w a s not modified.
T h e F e d e ra l G o v e rn m e n t, w h ich w a s do m in ated b y the D e m o ­
cratic party, had sided w ith the S o u th e rn p lan te rs from purely
party and election eering m otives, and a lso m a n a g e d to g et the
ag ricu ltu rists o f the M iddle and W e s te r n S t a te s , w h o belonged
to that party, to adopt the sa m e v ie w s.
T h e s e last had lost their form er s y m p a t h y w ith the m a n u ­
factu rin g interest in con sequ en ce o f the h ig h prices o f produce
w hich had prevailed, which, h o w e v e r, w ere the result for the m ost
INSULAR SUPREMACY AND CONTINENTAL POWERS
305
part of the prosperity o f the home manufactories and of the numer­
ous canals and railways which were undertaken. T h ey 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 En glan d, that there
w as reason to fear that all the manufacturing interests of the
country might be entirely sacrificed in favour of En glish free
competition. Under such circumstances the Compromise Bill o f
H enry C lay appeared to be the only means of at least partially
preserving the protective system. B y this Bill part of the
Am erican manufactures, viz. those of finer and more expensive
articles, w as 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 En glish may
desire to lessen and mitigate the commercial crises in North
America, however large also m ay be the amount of capital which
m ay pass over from E n glan d 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. Alarm ing 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 agri­
cultural produce have been maintained at an unusually high level,
owing to the previous prosperity o f the manufactories, through
the carrying out of great public undertakings, through the demand
for necessaries of life arising from the great increase of the pro­
duction 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. T h e 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. W hile thus agricultural production has un­
3 °6
T H E POLITICS
u su a lly increased, on the other h an d the dem an d for it m u st
u n u su a lly d im in ish . F ir s t ly , be cau se public w o rk s are no m ore
b e in g undertaken to the sa m e e x t e n t ; secon dly, because the
m a n u fa c tu rin g population in con sequ en ce o f foreign com petition
can no m ore in crease to an im portan t e x t e n t ; and thirdly, because
the production o f cotton so g re a tly exceeds the co n su m p tio n that
the cotton planters w ill be com pelled, o w in g to the lo w prices o f
cotton, to produce for t h e m se lv e s those n e ce ssa ries o f life w h ich
th ey h a v e hitherto procured from th e M iddle and W e s t e r n State s.
I f in addition rich h a r v e s t s occur, then the M iddle and W e ste r n
S t a t e s w ill a g a in suffer from an exce ss o f produce, a s they did
before the ta riff o f 18 2 8 .
B u t the sam e c a u se s m u st a g a in pro­
duce the sa m e resu lts ; viz. the a g ricu ltu rists o f the M iddle and
W e s t e r n S t a t e s m u st a g a in arriv e at the con viction, that the
dem and for ag ricu ltu ral produce can o n ly be increased by tbe
increase o f the m a n u fa c tu rin g popu lation o f the cou n try, and that
th at in crease can o n ly be brou ght abo ut by an exten sio n o f the
protective sy ste m . W h il e in th is m a n n e r the p a r tisa n s o f pro­
tection w ill d a ily in crease in n u m b e r and influence, the opposite
p arty w ill d im in ish in like proportion until the cotton planters
under such altered c ircu m sta n ce s m u st n e c e ssa rily com e to the
conviction th at the increase o f the m a n u fa c tu rin g population o f
the cou n try and the in crease o f the dem and for ag ricu ltu ral pro­
duce and ra w m ate rials both co n sist w ith their ow n in tere sts if
r ig h tly understood.
B e c a u s e , a s w e h a v e sh o w n , the cotton plan ters and the
D e m o c ra ts in N o rth A m e r ic a w e re s t riv in g m o st e arn e stly o f
their ow n accord to p la y into the h a n d s o f the com m ercial in­
tere sts o f E n g l a n d , no opportu n ity w a s offered at the m om en t
on this side for M r. P o u le tt T h o m p s o n to d isp lay h is skill in
c o m m e rc ial d ip lo m acy.
M a tte rs w ere quite in an o th er position in F ra n c e .
There
people still stead ily c lu n g to the prohib itive system . T h e r e w ere
indeed m a n y S t a te officials w h o w ere disciples o f th eo ry, and
a lso deputies w h o w e re in favo u r o f an exten sio n o f com m ercial
relations betw een E n g la n d and F ra n c e , and the e x ist in g alliance
w ith E n g la n d had also rendered this v ie w to a certain extent
popular.
B u t h o w to attain that object, o p in io n s w ere le ss
agreed, and in no respect w ere th ey quite clear.
It seemed
evident and also ind ispu table that the h ig h duties on the foreign
n e ce ssaries o f life and raw m ate ria ls, and the e xclu sio n o f E n g l i s h
coal and pig-iron, operated v e r y d is a d v a n ta g e o u s ly to F re n c h
industry, and that an in crease in the exports o f w in e s , brandy,
and silk fabrics would be e xtre m e ly a d v a n ta g e o u s to F ra n ce .
In gen eral, people confined t h e m se lv e s to u n iv e r sa l declama-
INSULAR SUPREMACY AND CONTINENTAL POWERS
307
tion 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. F o r the Government of Ju ly 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 Thom pson 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 com­
mercial policy o f 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.
Bo w rin g accomplished this task with his accustomed ability and
adroitness. E specially 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 a r tic le s; in reference to the other branches of industry
he only gave statistics, without committing him self to proofs or
propositions how these could be promoted by means of free trade
with England.
Dr. B o w rin g 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 w as to be expected from the contemplated negotia­
tions with France. T h is instruction was perfectly adapted for
calm ing the apprehensions respecting the views o f En glan d enter­
tained by the French woollen and cotton manufacturing interests
which had become so powerful.
According to Mr. Thom pson,
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 im portant articles.' These
less important articles are certainly not enumerated in the instruc­
tion, but the subsequent experience of France has completely
brought to light what Mr. Thom pson meant by it, for at the time
of the writing of this instruction the exports of linen ya m and
linen fabrics of En glan d to France were included in the term Mess
important.’
T h e French Government, moved by the representations and
3o 8
T H E POLITICS
e x p la n a tio n s o f the E n g l i s h G o v e rn m e n t an d its a g e n ts, and w ith
the intention o f m a k in g to E n g l a n d a c o m p a ra tiv e ly u n im portan t
con cessio n , w hich would u ltim a te ly p ro ve a d v a n t a g e o u s to F ra n c e
herself, low ered the du ty on linen y a r n and linen fabrics to such
an extent that they no lon ger g a v e a n y protection to F re n c h
in d u stry in face o f the g re at im p ro v e m e n ts w hich the E n g li s h had
m ade in these branches o f m an u factu re, so that even in the next
few y e a r s the export o f these articles from E n g la n d to F ra n c e in ­
creased e n o rm o u sly ( 18 3 8 , 32 ,0 0 0 ,0 0 0 fr a n c s ) ; and that F ra n c e
stood in d an ger, o w in g to the start w h ich E n g la n d had th u s ob­
tained, o f lo sin g its entire linen in d u stry, a m o u n tin g to m a n y
hundred m illio n s in v alu e, w h ich w a s o f the g re atest im portance
for her ag ricu ltu re an d for the w elfare o f her entire rural population,
u n le ss m e a n s could be found to put a check on the E n g li s h co m ­
petition by in cre asin g the duties.
T h a t F r a n c e w a s duped b y M r. P o u le tt T h o m p s o n w a s clear
en ou g h . H e had a lre a d y clearly seen in the y e a r 1 8 3 4 w h a t an
im p u lse the linen m an u factu re o f E n g la n d w ou ld receive in the
next few y e a r s in con sequ en ce o f the n ew in v e n tio n s w h ich had
been m ad e there, and in th is negotiation he had calculated on the
ign oran ce o f the F re n c h G o v e rn m e n t resp e ctin g these in v en tio n s
and their n e c e ssa r y co n seq u en ces. T h e a d v o c a te s o f this lo w erin g
o f duties n o w indeed end eavou red to m a k e the w orld believe that
by it th ey o n ly desired to m ak e a co n cessio n to the B e lg i a n linen
m an u factu res. B u t did that m a k e a m e n d s for their lack o f ac­
qu ain tan ce with the a d v a n c e s m ad e by the E n g li s h , and their lack
o f fo resig h t a s to the n e c e s s a r y co n se q u e n c es ?
B e that a s it m ay , this m uch is cle arly dem onstrated, that it
w a s n e c e ssa r y for F r a n c e to protect h e rs e lf still more, under
p e n alty o f lo s in g the g re ater part o f her linen m a n u fa c tu r in g for
the benefit o f E n g la n d ; and that the first and m ost recent experi­
m ent o f the in crease of freedom o f trade betw een E n g la n d and
F r a n c e re m a in s a s an indelible m em o rial o f E n g l i s h craft and o f
F re n c h inexperience, a s a n e w M e th u e n T r e a t y , a s a second E d e n
T reaty.
B u t w h a t did Mr. P o u le tt T h o m p s o n do w h e n he per
ceived the c o m p la in ts o f the F r e n c h linen m an u fac tu re rs and the
inclination o f the F re n c h G o v e rn m e n t to repair the m istak e w hich
had been m ade ? H e did w h a t Mr. H u s k is s o n had done before
him , he indulged in threats, he threatened to exclude F r e n c h w in e s
and silk fabrics. T h i s is E n g l i s h cosm o p o litan ism . F r a n c e m ust
g iv e up a m a n u fa c tu rin g ind ustry o f a th o u san d y e a r s ’ standing,
bound up in the clo sest m a n n e r w ith the entire eco n o m y o f her
low er c la s s e s and e sp ec ially w ith her agriculture, the products o f
w hich m ust be reckoned a s c h ie f necessaries o f life for all cla sse s,
and o f the entire am o u n t o f between three and four hundred
INSULAR SUPREMACY AND CONTINENTAL POWERS
309
millions, in order thereby to purchase the privilege of exporting
to E n glan d 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 w a r ; in case viz. that France could no more
export to En glan d 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.
I f 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 indepen­
dence and power of the State, and to expose the erroneous argu­
ments of the popular theory. T h e 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. W e 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. En glan d at the present day offers the most striking
proof of this. I f 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 B elg ian s, the Dutch, and the inhabitants of the North of
France for a thousand years past. T h e E n glish , 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 Lord s Castlereagh
and Liverpool adduced proof in Parliament, that without protec­
tion it w as impossible for the Irish linen manufactures to sustain
competition with those o f G erm any. At present, however, we
3 io
T H E POLITICS
see h o w the E n g l i s h threaten to m on op olise the linen m an u factu re
o f the w h o le o f E u r o p e , in con sequ en ce o f their in ven tion s, not­
w it h s ta n d in g that th e y w ere for a hundred y e a r s the w orst m a n u ­
facturers o f linen in all E u ro p e , j u s t a s th ey h a v e m onopolised
for the last fifty y e a r s the cotton m a r k e ts o f the E a s t Ind ies,
n o tw ith sta n d in g that one hundred y e a r s p re v io u sly th ey could
not even com pete in their ow n m arket w ith the In d ia n cotton
m an u factu rers. A t this m o m en t it is a m a tte r o f dispu te in F ra n c e
h o w it h ap p e n s th at E n g la n d h a s la t e ly m ad e su ch im m ense
p ro gre ss in the m a n u fa c tu re o f linen, a lth o u g h N a p o le o n w a s
the first w h o offered su ch a g re a t rew ard for the in ven tion o f a
m achin e for sp in n in g cotton, and th at the F r e n c h m ac h in ists
an d m a n u fac tu re rs had been e n g a g e d in this trade before the
E n g li s h . T h e inq u iry is m ade w h e th e r the E n g l i s h or the F re n c h
p o sse sse d m ore m e ch an ic al talent. A ll k in d s o f e xp la n a tio n s are
offered except the true an d the n atu ral one.
It is absu rd to attri­
bute sp e cially to the E n g l i s h g re a te r m e ch an ic al talent, or greater
skill and p e rse v e ran ce in in d u stry, than to the G e r m a n s or to the
F re n c h .
B e fo re the tim e o f E d w a r d I I I . the E n g l i s h w ere the
g re atest bullies and good-for-nothing ch aracte rs in E u r o p e ; cer­
ta in ly it ne v e r occurred to them to c o m p are t h e m se lv e s w ith the
It a lia n s and B e l g i a n s or w ith the G e r m a n s in respect to m e ch an i­
cal talent or ind ustrial s k i l l ; but since then their G o v e rn m e n t h as
taken their education in hand , and th u s th ey h a v e by degrees
m a d e such p ro g re ss th at th ey can dispu te the p alm o f industrial
skill w ith their in stru ctors. I f the E n g l i s h in the last tw en ty
y e a r s h a v e m ad e more rapid p r o g r e ss in m a c h in e r y for linen
m an u factu re than other n atio n s, and e sp e c ia lly the F re n c h , h a v e
done, th is h a s o n ly occurred b ecau se, firstly, th e y had attained
g re a te r e m in e n c e in m ech an ical skill ; secon dly, that th ey were
further ad v an ce d in m a c h in e r y for s p in n in g and w e a v in g cotton,
w h ic h is so sim ilar to th at for s p in n in g and w e a v in g l i n e n ;
thirdly, that in con sequ ence o f their p rev io u s co m m ercial policy,
th ey had becom e p o sse sse d o f m ore cap ital than the F r e n c h ;
fourthly, th at in con sequ en ce o f that com m ercial policy their home
m arket for linen goods w a s far m ore e x te n siv e than that o f the
F r e n c h ; and la stly , that their protective duties, com bined w ith
the circu m stan ce s a b o v e nam ed, afforded to the m ech an ical talent
o f the nation gre ater stim u lu s an d m ore m e a n s to devote itse lf to
perfecting this branch o f ind ustry.
T h e E n g l i s h h a v e th u s g iv e n a strik in g co n firm atio n o f the
o p in io n s w hich w e in an o th er place h a v e propounded and e x ­
p lain ed— that all ind ivid u al b ran c h es o f in d u stry h a v e the closest
reciprocal effect on one a n o t h e r ; that the p e rfe ctin g o f one
b ranch p repares and p rom otes the p e rfe ctin g o f all o t h e r s ; that
INSULAR SUPREMACY AND CONTINENTAL POWERS
311
no one o f them can be neglected without the effects of that
neglect being felt by a l l ; that, in short, the whole manufacturing
power o f a nation constitutes an inseparable whole.
O f these
opinions they have by their latest achievements in the linen
industry offered a striking confirmation.
CH A P T ER XXXIV.
T H E IN S U L A R S U P R E M A C Y A N D T H E G E R M A N C O M M E R C IA L
U N IO N .
W h a t a g re a t n ation is at the presen t d a y w ith o u t a vigorous
c o m m ercial p o licy, an d w h a t she m a y b ecom e by the adoption of
a v ig o r o u s co m m e rc ia l p o licy, G e r m a n y h a s learnt for herself
du rin g the last tw e n ty y e a r s . G e r m a n y w a s th at w h ich F ran k lin
once said o f the S t a te o f N e w J e r s e y , 4 a cask w h ic h w a s tapped
and drained b y its n e igh b o u rs on e v e r y sid e .’
E n g la n d , not
contented w ith h a v i n g ruined for the G e r m a n s the gre ater part of
their ow n m a n u fa c to rie s and supplied th em w ith enorm ous
q u antities o f cotton and w oo llen fabrics, excluded from her ports
G e r m a n g rain an d tim ber, n a y from tim e to tim e also even
G e r m a n w oo l.
T h e r e w a s a tim e w h e n the export o f m an u ­
factured goods from E n g la n d to G e r m a n y w a s ten tim es greater
than that to her h ig h ly extolled E a s t In d ian E m p ir e .
N e v e rth e ­
less the a ll-m o n o p o lisin g islan d ers w ould not e ve n g ran t to the
poor G e r m a n s w h a t th e y conceded to the conquered Hindoos,
viz. to p a y for the m an u factu red g o o d s w h ich th e y required by
agricu ltu ral produce.
In v a in did the G e r m a n s hu m ble them ­
se lv e s to the position o f h e w e rs o f wood an d d ra w e r s o f w ater for
the B r ito n s.
T h e latter treated them w o r s e than a subject
people.
N a tio n s , like in d iv id u a ls, i f th ey at first on ly permit
th e m se lv e s to be ill-treated by one, soon becom e scorned by all,
and finally becom e an object o f d erision to the v e r y children.
F r a n c e , not contented with e x p o r tin g to G e r m a n y enorm ous
quantities o f wine, oil, silk, and m illinery, g ru d ged the G e r m a n s
their exports o f cattle, g ra in , and f l a x ; y e s , even a sm all m ari­
tim e province form erly p o sse sse d b y G e r m a n y and inhabited by
G e r m a n s , w hich h a v i n g becom e w e a lth y and powerful by m e an s
o f G e r m a n y , at all tim e s w a s o n ly able to m ain tain itse lf with
and by m e a n s o f G e r m a n y , barred for h a l f a gen eratio n G e r ­
m a n y ’s greatest river b y m e a n s o f contem ptible verb al quibbles.
T o All up the m easu re o f this con tem pt, the doctrine w a s taught
from a hundred professorial chairs, that nations could o n ly attain
to w ealth and pow er by m e a n s o f u n ive rsal free trade. T h u s it
INSULAR SUPREMACY AND THE GERMAN UNION
313
w a s ; but how is it n o w ? G erm any has advanced in prosperity
and industry, in national self-respect and in national power, in
the course of ten years as much as in a century. And how has
this result been achieved ? It w as certainly good and beneficial
that the internal tariffs were abolished which separated Germans
from G e r m a n s ; but the nation would have derived small comfort
from that if her home industry had thenceforth remained freely
exposed to foreign competition. It w as especially the protection
which the tariff of the Zollverein secured to manufactured articles
of common use, which has wrought this miracle. L et us freely
confess it, for Dr. B o w r in g 1 has incontrovertibly shown it, that
the Zollverein tariff has not, as >ras before asserted, imposed
merely duties for revenue— that it has not confined itself to duties
of ten to fifteen per cent, as Huskisson believed— let us freely
admit that it has imposed protective duties of from twenty to
sixty per cent, as respects the manufactured articles of common
use.
B u t what has been the operation of these protective duties?
Are the consumers paying for their German manufactured goods
twenty to sixty per cent, more than they formerly paid for foreign
ones (as must be the case if the popular theory is correct), or are
these goods at all worse than the foreign on es? Nothing of the
sort.
Dr, B o w rin g him self adduces testimony that the manu­
factured goods produced under the high customs tariff are both
better and cheaper than the foreign ones.2 The internal competi­
tion and the security from destructive competition by the foreigner
has wrought this miracle, of which the popular school knows
nothing and is determined to know nothing. T h u s, that is not
true, which the popular school maintains, that a protective duty
increases the price of the goods of home production by the amount
of the protective duty. F o r a short time the duty may increase
the price, but in every nation which is qualified to carry on manu­
facturing industry the consequence of the protection will be, that
the internal competition will soon reduce the prices lower than
they had stood at when the importation w as free.
B u t has agriculture at all suffered under these high duties ?
Not in the le a st; it has gained— gained tenfold during the last
ten years. T h e demand for agricultural produce has increased.
T h e prices of it everywhere are higher. It is notorious that solely
in consequence of the growth of the home manufactories the value
of land has everywhere risen from fifty to a hundred per cent.,
that everywhere higher w ages are being paid, and that in all direc1 Report on the German Z o llverein to L o rd Viscount Palm erston, by John
Bow ring, 1H40,
-S e e statement o f R . B . Porter, note to p. 299.
3*4
TH E POLITICS
tions im p ro v e m e n ts in the m e a n s o f tra n sp o rt a re either being
effected or projected.
S u c h brilliant resu lts a s these m u st n e c e ssa r ily e nco urage us
to proceed farther on the sy ste m w h ich w e h a v e com m enced to
follow. O ther S t a te s o f the U n io n h a v e a lso proposed to take
s im ilar step s, but h a v e not yet carried th em into e f f e c t ; w hile, as
it would ap p e ar, so m e other S t a t e s o f the U n io n o n ly expect to
attain prosperity solely by the abolition o f the E n g l i s h duties on
g rain and tim ber, an d while (as it is alleged ) there are still to be
found influential m en w h o believe in the cosm op olitical system
and d istru st their o w n experience.
Dr. B o w r i n g 's report gives
us m ost im portant e x p la n a tio n s on these points a s well a s on the
circu m stan ce s of the G e r m a n C o m m e rc ia l U n io n and the tactics
of the E n g li s h G o v e rn m e n t.
L e t u s e n d eav o u r to th row a little
light on this report.
E irst o f all, we h a v e to con sid er the point o f v ie w from which
it w a s written.
M r. L a b o u c h e re , P re sid e n t o f the B o a rd o f T rad e
under the M e lb o u rn e M in istr y , had sent Dr. B o w r in g to G e rm a n y
for the sam e p u rp o se a s that for w h ic h M r. P o u le tt T h o m p so n
had sent him to P r a n c e in the ye ar 18 3 4 . J u s t as it w a s intended
to m isle ad the F r e n c h by c o n c e ssio n s in respect o f w in e s and
bran d ies to open their h om e m arket to E n g l i s h m anufactured
g oods, so it w a s intended to m isle a d the G e r m a n s to do the sam e
by c o n c e ssio n s in respect o f g rain and tim b e r ; o n ly there w a s a
great difference between the tw o m is s io n s in this respect, that the
co n cessio n w h ich w a s to be offered to the F re n c h had to fear no
opposition in E n g la n d , while that w h ich had to be offered to the
G e r m a n s had first to be fought for in E n g la n d herself.
H e n c e the ten dency o f these tw o reports w a s o f n e ce ssity o f
quite a different character. T h e report on the co m m ercial relations
between F r a n c e and E n g la n d w a s written e x c lu siv e ly for the
F re n c h ; to them it w a s n e c e ssa ry to represent that Colbert had
accom plished n o th in g sa tisfa cto ry th rou gh his protective re g u la ­
t io n s ; it w a s n e c e ssa ry to m ak e people believe that the Eden
T r e a t y w a s beneficial to F ran ce , and that N a p o le o n 's Continental
s y s te m , a s well a s the then e x is t in g F re n c h prohibitive system ,
had been extre m e ly injurious to her.
In short, in th is case it w a s
ne ce ssary to stick clo sely to the theory o f A d a m S m ith ; and the
good resu lts o f the protective sy ste m m ust be com pletely and
uneq u ivocally denied. T h e task w a s not quite so sim p le with the
other report, for in this, one had to ad d ress the E n g li s h land­
o w n ers and the G e r m a n G o v e r n m e n t s at one and the sa m e time.
T o the former it w a s n e ce ssary to s a y : S e e , there is a nation
which h a s a lre ad y in con sequence o f protective reg u lation s made
en orm ou s ad v a n c e s in her in d ustry, and w h ich , in p o sse ssio n o f
INSULAR SUPREMACY AND THE GERMAN UNION
315
all necessary means for doing so, is m aking rapid steps to mo­
nopolise her own home market and to compete with En glan d in
foreign markets. T h is, you Tories in the House of Lords— this,
you country squires in the House of Commons, is your wicked
doing. T h is has been brought about by your unwise corn l a w s ;
for by them the prices of provisions and raw materials and the
w ages of labour have been kept low in Germany. B y them the
Germ an manufactories have been placed in an advantageous
position compared to the En glish ones. Make haste, therefore,
you fools, to abolish these corn laws. B y that means you will
doubly and trebly damage the German m anufactories: firstly, be­
cause the prices of provisions and raw materials and the wages
of labour will be raised in Germ any and lowered in E n g la n d ;
secondly, because by the export of German grain to England the
export of E n g lish manufactured goods to Germ any will be pro­
moted ; thirdly, because the German Commercial Union has de­
clared that it is disposed to reduce their duties on common cotton
and woollen goods in the same proportion in which England
facilitates the import of German grain and timber. T hus we
Britons cannot fail once more to crush the German manufactories.
But the question cannot wait. E v e ry year the manufacturing
interests are gaining greater influence in the German U n io n ; and
if you delay, then your corn-law abolition will come too late. It
will not be long before the balance will turn. Very soon the
Germ an manufactories will create such a great demand for agri­
cultural produce that Germ any will have no more surplus corn to
sell to foreign countries. W h at concessions, then, are you willing
to offer to the German Governments to induce them to lay hands
on their own manufactories in order to hinder them from spinning
cotton for themselves, and from encroaching upon your foreign
markets in addition ?
All this the writer o f the report w as compelled to make clear
to the landowners in Parliament. T he forms of the British State
administration permit no secret Government reports. Dr, Bowring’s report must be published, must therefore be seen by the
Germ ans in translations and extracts. Hence one must use no
expressions which might lead the Germans to a perception of their
true interests. Therefore to every method which w as adapted to
influence Parliament, an antidote must be added for the use of the
Germ an Governments. It must be alleged, that in consequence
of the protective system much German capital had been diverted
into improper channels. T h e agricultural interests of Germ any
would be damaged by the protective system. T h at interest for its
part ought only to turn its attention to foreign markets; agri­
culture w as in G erm any by far the most important productive
3
l6
T H E POLITICS
in d u stry, for three-fourths o f the in h ab itan ts o f G e r m a n y were
e n g a g e d in it. It w a s m ere n o n se n se to talk about protection for
the p r o d u c e r s ; the m a n u fa c tu r in g in terest its e lf could on ly thrive
under foreign com petition : public opinion in G e r m a n y desired
freedom o f trade.
In te llige n c e in G e r m a n y w a s too u niversal for
a desire for h ig h duties to be entertained. T h e m ost enlightened
m en in the cou n try w ere in fa v o u r o f a reduction o f duties on
c o m m o n w oollen and cotton fabrics, in case the E n g lis h duties on
corn a n d tim b e r w ere red u ced .
In short, in this report tw o e n tire ly different v oices speak,
w hich con tradict one an o th er like tw o opponen ts. W h ic h of the
tw o m u st be deem ed the true o n e— that w hich sp e ak s to the Parlia­
m ent, or th at w h ich sp e ak s to the G e r m a n G o v e rn m e n t s ? There
is no difficulty in deciding th is point, for e v e r y t h in g which Dr,
B o w r in g adduces in order to induce P a r lia m e n t to low er the import
duties on g rain and tim ber is supported by statistical facts, calcula­
tions, and evidence ; w h ile e v e r y t h in g th at he adduces to dissuade
the G e r m a n G o v e r n m e n t s from the protective sy ste m is confined
to m ere superficial a sse rtio n s.
L e t u s consider in detail the a r g u m e n ts b y w h ich Dr, B o w r in g
p ro ve s to the P a r lia m e n t that in case a ch eck is not put to the
p r o g r e ss o f the G e r m a n protective sy ste m in the w a y which he
pointed out, the G e r m a n m ark e t for m an u fac tu re d goods must
become irrecoverab ly lost to E n g la n d .
T h e G e r m a n people is rem ark ab le , s a y s D r . B o w r in g , for
tem peran ce, thrift, in d u stry, and in tellig e n ce , and e n jo y s a system
o f u n iv e rsa l education.
E x c e lle n t p olytech n ic schools diffuse
technical instruction th ro u g h o u t the entire country.
T h e art o f d e sign is e sp e c ia lly m u ch m ore cu ltivated there than
in E n g la n d . T h e g re at an n u al in cre ase o f its population, of its
head o f cattle, an d e sp e c ia lly o f sheep, p ro ve s w h a t p rogress a g ri­
culture there h a s ach ie ve d .
( T h e report m a k e s no mention o f
the im p ro v e m e n t in the v a lu e o f property, though that is an im­
portant feature, nor o f the in crease in the v a lu e o f produce.) T h e
w a g e s o f lab ou r h a v e risen th irty per cent, in the m an u factu rin g
districts. T h e cou n try p o s s e s s e s a g re a t am o u n t o f w a te r power,
as ye t unused, w hich is the ch e a p e st o f all m otive pow ers. Its
m in in g ind ustry is e v e r y w h e r e flo u rish in g , more than at any
previous tim e. F r o m 1 8 3 2 up to 1 8 3 7 the im p o rts o f raw cotton
h a v e increased from 1 1 8 , 0 0 0 centn ers to 240,000 c e n t n e r s ; the
im ports o f cotton yarn from 17 2 ,0 0 0 centners to 32 2 ,0 0 0 c e n tn e rs;
the exports o f cotton fabrics from 26,000 centners to 75,000 cent­
ners ; the num ber o f c o tto n -w e av in g loom s in P r u s s ia from 22,000
in 18 2 5 to 32,0 0 0 in 1 8 3 4 ; the im ports o f ra w w ool from 99,000
centners to 19 5 ,0 0 0 centners ; the exp o rts o f the sa m e from roo,ooo
INSULAR SUPREMACY AND THE GERMAN UNION
317
centners to 122,000 centners ; the imports of woollen articles from
15.000 centners to 18,000 centners; the exports of the same from
49.000 centners to 69,000 centners.
T he manufacture of linen cloths contends with difficulty against
the high duties in England, France, and Italy, and has not in­
creased. On the other hand, the imports of linen yarn have in­
creased from 30,000 centners in 1832 to 86,000 centners in 1835,
chiefly through the imports from England, which are still increas­
ing. T he consumption of indigo increased from 12,000 centners
in 1 8 3 1 to 24,000 centners in 1837 ; a striking proof of the progress
of Germ an industry. T he exports of pottery have been more than
doubled from 1832 to 1836. T h e imports of stoneware have
diminished from 5,000 centners to 2,000 centners, and the exports
of it increased from 4,000 centners to 18,000 centners. The
imports of porcelain have diminished from 4,000 centners to 1,000
centners, and the exports of it have increased from 700 centners to
4.000 centners. T h e output of coal has increased from 6,000,000
Prussian tons in 18 32 to 9,000,000 in 1836. In 1 8 1 6 there were
8,000,000 sheep in P r u s s ia ; and in 1837, 15,000,000.
In Saxon y in 1 8 3 1 there were 14,000 stocking-weaving m a­
ch in es; in 1836, 20,000. From 18 3 1 to 1837, the number of
manufactories for spinning woollen yarn and of spindles had
increased in Saxon y to more than double their previous number.
Everyw h ere machine manufactories had arisen, and many of these
were in the most flourishing condition.
In short, in all branches of industry, in proportion as they
have been protected, G erm any has made enormous advances,
especially in woollen and cotton goods for common use, the im ­
portation of which from En glan d had entirely ceased. At the
sam e time Dr. Bow ring admits, in consequence of a trustworthy
opinion which had been expressed to him, ‘ that the price of the
Prussian stuffs w as decidedly lower than that of the E n g l i s h ;
that certainly in respect of some of the colours they were in­
ferior to the best English tints, but that others were perfect and
could not be surpassed; that in spinning, weaving, and all pre­
paratory processes, the German goods were fully equal to the
British, but only in the finish a distinct inferiority might be ob­
served, but that the want of this would disappear after a little
time.’
It is very easy to understand how by means of such representa­
tions as these the En glish Parliament may at length be induced
to abandon its corn laws, which have hitherto operated as a pro­
tective system to Germany. But it appears to us utterly incom­
prehensible how the German Union, which has made such
enormous advances in consequence of the protective system,
T H E POLITICS
should be induced b y th is report to depart from a sy ste m which
h a s yielded them such excellen t resu lts.
It is v e r y w ell for Dr. B o w r i n g to a ssu re us th at the home
in d u stry o f G e r m a n y is b e in g protected at the e xp en se o f the
a g ricu ltu rists, B u t h o w can w e attach a n y credence to his a ssu r ­
ance, w h en w e see, on the co n tra ry , th at the dem and for agri­
cultural produce, prices o f produce, the w a g e s of labour, the rents,
the v a lu e o f property, h a v e e v e r y w h e r e con sid erab ly risen, without
the ag ricu ltu rist h a v i n g to p a y m ore than he did before for the
m an u factu red g o o d s w h ic h he req u ires ?
It is v e r y w e ll for D r . B o w r i n g to g iv e us an e stim ate show ing
that in G e r m a n y three p e rso n s are e n g a g e d in agricu ltu re to every
one in m an u fac tu re s, but th at sta te m e n t c o n v in c e s us that the
n u m ber o f G e r m a n s e n g a g e d in m a n u fa c tu r in g is not y e t in proper
proportion to the n u m ber o f G e r m a n a g ricu ltu rists.
A nd we
cannot see by w h a t other m e a n s th is disproportion can be equal­
ised, than by in c r e a s in g the protection on those branches of
m an u factu re w h ic h are still carried on in E n g la n d for the supply
o f the G e r m a n m ark e t b y p e rso n s w h o c o n su m e E n g l i s h instead
o f G e r m a n ag ricu ltu ral produce.
It is all v e r y w ell for Dr.B o w r in g to a sse rt th at G e r m a n agricu ltu re m u s t o n ly direct its
attention to foreign cou n tries i f it d e sires to increase its sale of
p r o d u c e ; but th at a g re a t dem an d for a g ricu ltu ral produce can
o n ly be attained by a flo u rish in g hom e m a n u fa c tu r in g P ow er is
ta u g h t us not alone by th e experience o f E n g l a n d , but D r. B o w r in g
h i m s e lf im plicitly a d m its this, b y the ap p re h e n sio n which he
e x p re sse s in h is report, th at i f E n g la n d d e la y s for som e time to
abo lish her corn la w s, G e r m a n y w ill then h a v e no su rp lu s o f either
corn or tim ber to sell to foreign countries.
D r . B o w r in g is ce rtain ly rig h t w h e n he a s s e rt s th at the ag ri­
cultural interest in G e r m a n y is still the pred om in an t one, but
ju s t for the v e r y reason th a t it is p red o m in an t it m u st (as we
h a v e sh o w n in form er ch apters), by p ro m o tin g the m anufacturing
interests, seek to place itse lf in a ju s t proportion w ith them , be­
cau se the prosperity o f agricu ltu re depends on its b ein g in equal
proportion w ith the m a n u fa c tu rin g interest, but not on its own
preponderance over it.
F u rth e r, the au th or o f the report ap p e ars to be u tterly steeped
in error w h e n he m a in ta in s that foreign com petition in G erm an
m arkets is n e ce ssary for the G e r m a n m a n u fa c tu r in g interest itself,
because the G e r m a n m a n u fa c tu re rs, a s soon as th ey are in a posi­
tion to su p p ly the G e r m a n m a rk e ts, m u st com pete with the
m an u factu rers o f other cou n tries for the d isp o sal o f their surplus
produce, w hich com petition th ey can on ly su stain b y m e a n s of
cheap production. B u t cheap production w ill not con sist with
INSULAR SUPREMACY AND THE GERMAN UNION
31 9
the existence of the protective system, inasmuch as the object of
that system is to secure higher prices to the manufacturers.
T h is argument contains as m any errors and falsehoods as
words. Dr. Bo w rin g cannot deny that the manufacturer can offer
his products at cheaper prices, the more he is enabled to manu­
facture— that, therefore, a manufacturing Power which exclusively
possesses its home market can work so much the cheaper for
foreign trade. T h e proof of this he can find in the same tables
which he has published on the advances made by German
ind ustry; for in the same proportion in which the German manu­
factories have acquired possession of their own home market, their
export o f manufactured goods has also increased. T h u s the recent
experience of Germ any, like the ancient experience of England,
show s us that high prices o f manufactured goods are by no means
a necessary consequence of protection.
Fin ally, Germ an industry is still very far from entirely supply­
ing her home market.
In order to do that, she must first
manufacture for herself the 13,0 0 0 centners of cotton fabrics, the
18,000 centners of woollen fabrics, the 500,000 centners of cotton
yarn, thread, and linen yarn, which at present are imported from
En glan d.
If, however, she accomplishes that, she will then
import 500,000 centners more raw cotton than before, by which
she will carry on so much the more direct exchange trade with
tropical countries, and be able to pay for the greater part if not
the whole of that requirement with her own manufactured goods.
W e must correct the view of the author of the report, that
public opinion in G erm any is in favour of free trade, by stating
that since the establishment of the Commercial Union people
have acquired a clearer perception of what it is that England
usually understands by the term ‘ free trade,’ for, as he himself
says, ‘ Since that period the sentiments of the German people
have been diverted from the region of hope and of fantasy to that
of their actual and material interests.’ T he author of the report
is quite right when he says that intelligence is very greatly
diffused am ongst the German people, but for that very reason
people in Germ any have ceased to indulge in cosmopolitical
dreams. People here now think for themselves— they trust their
own conclusions, their own experience, their own sound common
sense, more than one-sided system s which are opposed to all
experience. T h ey begin to comprehend w hy it was that Burke
declared in confidence to Adam Smith ‘ that a nation must not be
governed according to cosmopolitical systems, but according to
knowledge of their special national interests acquired by deep
research.’
People in G erm any distrust counsellors who blow
both cold and hot out of the same mouth. People know also how
320
T H E POLITICS
to e stim a te at their proper v a lu e the interests and the advice of
those w h o are our in d ustrial com petitors.
F in a lly , people in
G e r m a n y b ear in m in d a s often a s E n g l i s h offers are under
d iscu ssio n the w e ll-k n o w n proverb o f the p rese n ts offered by the
Danaidce.
F o r these v e r y re a so n s w e m a y doubt th a t influential G erm an
state sm e n h a v e se rio u sly g iv e n g ro u n d s for hope to the author of
the report, th at G e r m a n y is w illin g to aban don her protective
policy for the benefit o f E n g l a n d , in e x c h a n g e for the pitiful
co n cessio n o f p e rm issio n to e xport to E n g la n d a little grain and
timber.
A t a n y rate public opinion in G e r m a n y would greatly
h e sitate to consider such sta te sm e n to be thoughtfu l ones.
In
order to m e rit th a t title in G e r m a n y in the presen t day, it is not
e n o u g h that a m a n should h a v e th o ro u g h ly learned superficial
p h ra se s an d a r g u m e n ts o f the c o sm o p o litical school.
People
require that a sta te sm a n should be w ell acquain ted with the
p ow ers and the req u ire m e n ts o f the nation, and, w ith ou t troubling
h im s e lf w ith sch o lastic s y s t e m s , should d e v e lo p the former and
sa tisfy the latter.
B u t th at m a n w ould b etray an unfathom able
ig n o ran ce o f those p o w e rs and w a n ts , w h o did not k n o w what
en o rm o u s exe rtio n s are requisite to raise a national industry to
th at stag e to w h ich the G e r m a n in d u stry h a s a lre ad y atta in e d ;
w h o c an n o t in spirit foresee the g r e a t n e s s o f its future ; w h o could
so g rie v o u s ly d isap p o in t the confidence w h ich the G erm an
in d ustrial c la s s e s h a v e reposed in their G o v e rn m e n ts, and so
d e e p ly w ou n d the spirit o f en terprise in the n ation ; w h o w a s
in cap ab le o f d is t in g u is h in g betw een the lofty position which is
occupied by a m a n u fa c tu r in g nation o f the first rank, and the
inferior position o f a cou n try w h ich m e re ly exports corn and
t im b e r ; w h o is not intelligent e n o u g h to e stim a te h o w precari­
o u s a foreign m arket for g rain and tim ber is even in ordinary
tim es, h o w e a sily c o n ce ssio n s o f this kind can be a g a in revoked,
and w h a t c o n v u lsio n s are in v o lv e d in an interruption o f such a
trade, occasion ed b y w a r s or hostile c o m m e rc ial r e g u la t io n s ;
w h o , finally, h a s not learned from the e x a m p le o f other great
state s how g re a tly the existence, the independence, an d the power
o f the nation depend s on its p o sse ssio n o f a m a n u fa c tu rin g power
o f its o w n , developed in all its branches.
T r u ly one m u st g re a tly u n d er-estim ate the spirit o f nationality
and o f u nity w h ich h a s arisen in G e r m a n y since 18 3 0 , if one
believed, as the au th or o f the report does (p. 26), that the policy
o f the C o m m e rc ial U n io n will follow the sep arate in tere sts of
P r u s s ia , because tw o-thirds o f the population o f the U n io n are
P ru ssia n .
B u t P r u s s i a ’s interests dem and the export o f grain
and tim ber to E n g l a n d ; the am ou n t o f her capital devoted to
INSULAR SUPREMACY AND THE GERMAN UNION
321
manufactures is u nim portant; Prussia will therefore oppose every
system which impedes the import of foreign manufactures, and
all the heads of departments in Prussia are of that opinion.
Nevertheless the author of the report says at the beginning of
his report: ‘ T h e German Customs Union is an incarnation of
the idea of national unity which widely pervades this country.
I f this Union is well led, it must bring about the fusion of all
German interests in one common league. T h e experience of its
benefits has made it popular. It is the first step towards the
nationalisation of the German people. B y means of the common
interest in commercial questions, it has paved the w ay for political
nationality, and in place of narrow-minded views, prejudices, and
customs, it has laid down a broader and stronger element of
Germ an national existence.’ N ow , how does the opinion agree
with these perfectly true prefatory observations, that Prussia will
sacrifice the independence and the future greatness of the nation
to a narrow regard to her own supposed (but in any case only
momentary) private interest— that Pru ssia will not comprehend
that G erm any must either rise or fall with her national commercial
policy, as Pru ssia herself must rise or fall with Germany ? How
does the assertion that the Prussian heads of departments are
opposed to the protective system, agree with the fact that the
high duties on ordinary woollen and cotton fabrics emanated
from Prussia herself? And must we not be compelled to con­
jecture from these contradictions, and from the fact that the
author of the report paints in such glowing colours the condition
and the progress of the industry of Saxony, that he himself is
desirous of exciting the private jealousy of Prussia ?
Be that as it may, it is very strange that Dr. Bow ring attaches
such great importance to the private statements of heads o f
departments, he an En glish author who ought to be well aware
of the power of public opinion— who ought to know that in our
days the private views of heads of departments even in uncon­
stitutional states count for very little if they are opposed to public
opinion, and especially to the material interests of the whole
nation, and if they favour retrograde steps which endanger the
whole nationality. T he author of the report also feels this well
enough himself, when he states at page 98 that the Prussian
Government has sufficiently experienced, as the En glish G overn­
ment has done in connection with the abolition o f the English
corn laws, that the views of public officials cannot everywhere
be carried into effect, that hence it might be necessary to consider
whether German grain and timber should not be admitted to the
E n g lish markets even without previous concessions on the part of
the Germ an Union, because by that very means the w ay might
322
T H E POLITICS
be paved for the a d m issio n o f the E n g l i s h m an u factu red goods
into the G e r m a n m arket. T h i s v ie w is in a n y case a correct one.
D r . B o w r in g sees cle a r ly that the G e r m a n in d u stry would never
h a v e been stren g th en ed but for th ose l a w s ; that consequently
the abolition o f the corn la w s w o u ld not o n ly check the further
a d v a n c e s o f G e r m a n in d u stry, but m u st cau se it a g a in to retro­
gra d e g re a tly , provided a lw a y s th at in th at case the Germ an
cu sto m s le g isla tio n re m a in s u n chan ge d .
I t is o n ly a pity that
the B r itis h did not perceive the s o u n d n e s s o f this argum ent
tw e n ty y e a r s a g o ; but n o w , after that the le g isla tio n o f E n g la n d
h a s itse lf u ndertaken the divorce o f G e r m a n ag ricu ltu re from
E n g li s h m a n u fa c tu re s, after th at G e r m a n y h a s pu rsu ed the path
o f perfectin g her in d u stry for tw e n ty y e a r s , and h a s m ade enor­
m o u s sacrifices for this object, it w o u ld betoken political blindness
if G e r m a n y w ere no w , o w in g to the abo lition o f the E n g l i s h corn
la w s, to a b sta in in a n y degree from p u rs u in g her great national
career. Ind eed , w e are firm ly con vin ced that in such a .case it
w o u ld be n e c e ssa r y for G e r m a n y to in crease her protective duties
in the sa m e proportion in w h ic h the E n g l i s h m an u fac to rie s would
derive a d v a n t a g e from the ab olition o f the corn la w s a s compared
w ith th ose o f G e r m a n y . G e r m a n y can for a lo n g tim e follow no
other policy in respect to E n g la n d than that o f a less advanced
m a n u fa c tu r in g n ation w h ic h is s t r iv in g w ith all her power to
raise h e rs e lf to an equal position w ith the m ost ad v an ce d m an u ­
factu rin g nation.
E v e r y other policy or m e a su re than that,
in v o lv e s the im p e rillin g o f the G e r m a n n atio n ality.
I f the E n g ­
lish are in w a n t o f foreign corn or tim ber, then th e y m a y get it in
G e r m a n y or w h e re else t h e y p le a se . G e r m a n y w ill not on that
account a n y the less protect the a d v a n c e s in in d u stry w hich she
h a s m ade up to th is tim e, or striv e a n y the less to m ake future
ad v an c e s.
I f the B r itis h w ill h a v e n o th in g to do with| G erm an
g rain and tim ber, so m u ch the better.
I n th a t case the industry,
the n a v ig a tio n , the foreign trade o f G e r m a n y w ill raise their heads
so m uch the quicker, the G e r m a n intern al m e a n s o f transport
w ill be so m u ch the sooner com pleted, the G e r m a n nationality
w ill so m uch the m ore ce rta in ly rest on its natural foundation.
P e r h a p s P r u s s ia m a y not in this w a y so soon be able to sell the
corn and tim ber o f her B a ltic p ro v in c e s at h ig h prices a s if the
E n g li s h m arkets w ere su d d e n ly opened to her.
B u t th rou g h the
com pletion o f the internal m e a n s o f tran sport, and through the
internal dem and for a g ricu ltu ral produce created b y the m an u ­
factories, the sa le s o f those p ro vin c es to the interior o f G e r m a n y
w ill increase fast en ou g h , and e v e r y benefit to these provinces
w h ich is founded on the h o m e d e m an d for a g ricu ltu ral produce
will be gain ed by th e m for all future time. T h e y w ill never more
INSULAR SUPREMACY AND THE GERMAN UNION
323
have to oscillate as heretofore between calamity and prosperity
from one decade to another. B u t further, as a political power
Pru ssia will gain a hundred-fold more in concentrated strength in
the interior of Germ any by this policy than the material values
which she sacrifices for the moment in her maritime provinces, or
rather invests for repayment in the future.
T h e object of the En glish ministry in this report is clearly to
obtain the admission into G erm any of ordinary En glish woollen
and cotton fabrics, partly through the abolition or at least modifi­
cation of charging duties by weight, partly through the lowering
of the tariff, and partly by the admission of the German grain and
timber into the E n glish market. B y these means the first breach
can be made in the German protective system. T h ese articles o f
ordinary use (as we have already shown in a former chapter) are
by far the most important, they are the fundamental element of
the national industry. Duties of ten per cent, ad valorem , which
are clearly aimed at by England, would, with the assistance of the
usual tricks of under declaration of value, sacrifice the greater part
of the Germ an industry to En glish competition, especially if in
consequence of commercial crises the En glish manufacturers were
sometimes induced to throw on the market their stocks of goods
at any price. It is therefore no exaggeration if we maintain that
the tendency of the E n glish proposals aims at nothing less than
the overthrow of the entire German protective system, in order to
reduce Germ any to the position of an En glish agricultural colony.
W ith this object in view, it is impressed on the notice of Prussia
how greatly her agriculture might gain by the reduction of the
E n g lish corn and timber duties, and how unimportant her m anu­
facturing interest is. W ith the same view, the prospect is offered
to Pru ssia of a reduction of the duties on brandy. And in order
that the other states m ay not go quite empty away, a five per
cent, reduction of the duties on Nuremberg wares, children’s toys,
eau de Cologne, and other trifles, is promised. T hat gives satis­
faction to the small German states, and also does not cost much.
T h e next attempt will be to convince the German govern­
ments, by means of this report, how advantageous to them it
would be to let En glan d spin cotton and linen yarns for them.
It cannot be doubted that hitherto the policy adopted by the
Union, first of all to encourage and protect the printing of cloths
and then weaving, and to import the medium and finer yarns,
has been the right one. B u t from that it in nowise follows that
it would continue to be the right one for all time. T he tariff
legislation must advance as the national industry advances if it is
rightly to fulfil its purpose. W e have already shown that the
spinning factories, quite apart from their importance in them­
3 24
T H E POLITICS
se lv e s , ye t are the source o f further in calc u lab le benefits, inasm uch
a s th ey place u s in direct c o m m e rc ial co m m u n ica tio n with the
cou n tries o f w a r m clim ate , and hence th at th e y exercise an incal­
culable influence on our n a v ig a t io n an d on our export o f manu­
factures, an d th at th e y benefit our m a n u fa c to rie s o f m achinery
m ore th an a n y other branch o f m an u fac tu re . In a sm u c h as it
cannot be doubted th at G e r m a n y c an n o t be hindered either by
w a n t o f w ate r p o w e r an d o f ca p a b le w o r k m e n , or by lack of
m aterial cap ital or in te llig e n c e , from c a r r y in g on for h e rse lf this
g re at and fruitful in d u stry, so w e c an n o t see w h y w e should not
g ra d u a lly protect the sp in n in g o f y a r n s from one num ber to
ano ther, in such a w a y th at in the course o f five to ten y e a r s we
m a y be able to spin for o u r se lv e s the g re a te r part o f w hat we
require.
H o w e v e r h i g h ly one m a y e stim a te the a d v a n t a g e s of
the exp ort o f g r a in and timber, th ey c an n o t n e a rly equal the
benefits w h ich m u s t accrue to us from the s p in n in g m anufacture.
Indeed, w e h a v e no h e sitatio n in e x p r e s s in g the b e lie f that it
could be in co n te sta b ly proved, b y a calc u latio n o f the consum p­
tion o f ag ricu ltu ral products and tim b er w h ic h would be created
by the sp in n in g in d u stry , th at from this branch o f m anufacture
alon e far gre ater ben efits m u s t accrue to the G e r m a n landowners
than the foreign m arket w ill e ve r or can e ve r offer them .
D r. B o w r i n g doubts th at H a n o v e r , B r u n s w ic k , the two Meckle n b u rg s, O lden bu rg, and the H a n s e T o w n s w ill jo in the Union,
u n le ss the latter is w illin g to m a k e a radical reduction in its
im port duties. T h e latter p rop osal, h o w e v e r, can n ot be seriously
considered, be cau se it w ould be im m e a s u r a b ly w o r s e than the evil
w h ich b y it, it is desired to rem edy.
Our confidence in the p ro sp erity o f the future o f G e r m a n y is,
h o w e v e r, by no m e a n s so w e a k a s th at o f the au th o r o f the report.
J u s t as the R e v o lu tio n of J u l y h a s proved beneficial to the G e r­
m a n C o m m e rc ia l U n io n , so m u st the n e xt g reat gen eral con vu l­
sion m ak e an end o f all the m in or h e sitatio n s b y w h ich these
sm all state s h a v e hitherto been w ith h e ld from y ie ld in g to the
g re ater req u irem en ts o f the G e r m a n nation ality. O f w h a t value
the com m ercial u n ity h a s been to the n atio n ality, and o f what
v a lu e it is to G e r m a n g o v e r n m e n ts, quite a p art from mere
m aterial interests, h a s been recently for the first tim e v e r y stron gly
dem onstrated, w h e n the desire to acquire the R h i n e frontier has
been loudly exp ressed in F r a n c e .
F r o m day to d ay it is n e ce ssary th a t the g o v e r n m e n ts and
peoples o f G e r m a n y should be m ore convinced th at national unity
is the rock on w h ic h the edifice o f their w elfare, their honour,
their pow er, their present secu rity and existence, an d their future
g re a tn e ss, m u st be founded. T h u s from d a y to d a y the ap o sta sy
INSULAR SUPREMACY AND THE GERMAN UNION
325
o f these small maritime states will appear more and more, not
only to the states in the Union, but to these small states them­
selves, in the light of a national scandal which must be got rid of
at any price. Also, if the matter is intelligently considered, the
material advantages of joining the Union are much greater for
those states themselves than the sacrifice which it requires. T h e
more that manufacturing industry, that the internal means of
transport, the navigation, and the foreign trade of Germany,
develop themselves, in that degree in which under a wise com­
mercial policy they can and must be developed in accordance with
the resources of the nation, so much the more will the desire
become more vigorous on the part of those small states directly
to participate in these advantages, and so much the more will
they leave off the bad habit of looking to foreign countries for
blessings and prosperity.
In reference to the H anse T o w n s especially, the spirit of
imperial citizenship o f the sovereign parish of Ham burg in no
w a y deters us from our hopes. In those cities, according to the
testimony of the author of the report himself, dwell a great
number of men who comprehend that Hamburg, Bremen, and
Lubeck are and must be to the German nation that which London
and Liverpool are to the E n glish, that which New York, Boston,
and Philadelphia are to the Americans— men who clearly see that
the Commercial Union can offer advantages to their commerce
with the world which far exceed the disadvantages of subjection
to the regulations of the Union, and that a prosperity without any
guarantee for its continuance is fundamentally a delusion.
W h a t sensible inhabitant of those seaports could heartily
congratulate him self on the continual increase of their tonnage,
on the continual extension of their commercial relations, if he
reflected that two frigates, which coming from Heligoland could
be stationed at the mouths of the W eser and the Elbe, would
be in a position to destroy in twenty-four hours this work o f
a quarter of a century? But the Union will guarantee to these
seaports their prosperity and their progress for all future time,
partly by the creation o f a fleet of its own and partly by al­
liances. It will foster their fisheries, secure special advantages
to their shipping, protect and promote their foreign commercial
relations, by effective consular establishments and by treaties.
Partly by their means it will found new colonies, and by their
means carry on its own colonial trade. F or a union of States
comprising thirty-five millions of inhabitants (for the Union will
comprise that number at least when it is fully completed), which
owing to an annual increase of population of one and a half per
cent, can easily spare annually two or three hundred thousand
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T H E POLITICS
person s, w h o se provin ces abound w ith w ell-in form ed and cultivated
in h ab itan ts w h o h ave a pecu liar p ro p en sity to seek their fortune
in distant countries, people w h o can take root an y w h e re and make
t h e m se lv e s at h om e w h e re v e r unoccupied land is to be cultivated,
are called upon by N a tu r e h e rs e lf to place t h e m se lv e s in the first
rank o f n atio n s w h o colonise and diffuse civ ilisatio n .
T h e feelin g o f the n e c e s s ity for such a perfect completion of
the C o m m e rc ia l U n io n is so u n iv e r sa lly entertained in G erm any,
that hence the au th or o f the report could not help remarking,
‘ M ore coasts, m ore h arb o u rs, m ore n a v ig a tio n , a U n io n flag, the
p o sse ssio n o f a n a v y and o f a m ercantile m arine, are w ish e s very
g en e ra lly entertained by the su pporters o f the C o m m e rc ial Union,
but there is little prospect at present o f the U n io n m a k in g head
a g a in s t the in cre a sin g fleet o f R u s s i a and the com m ercial marine
o f H o lla n d and the H a n s e T o w n s . ’ A g a i n s t them certainly not,
but so m uch the more w ith them and by m e a n s o f them . It lies
in the v ery nature o f e v e ry pow er to seek to divide in order to rule.
A fte r the au th or o f the report h a s sh o w n w h y it would be foolish
on the part o f the m aritim e state s to jo in th e U n io n , he desires
also to separate the g re a t se a p o rts from the G e r m a n national
body for all tim e, in a sm u ch as he sp e a k s to u s o f the warehouses
o f A lto n a w hich m u st becom e d a n g e r o u s to the w are h o u ses of
H a m b u r g , a s th ou g h such a g re a t c o m m e rc ial em pire could not
find the m e a n s o f m a k in g the w a r e h o u s e s o f A lto n a serviceable to
its objects. W e w ill not follow the au th or through his acute in­
ferences from th is p o i n t ; we w ill o n ly say, that if they were applied
to E n g la n d , they w ould prove that L o n d o n and L iv e rp o o l would
increase their com m e rcial prosperity in an extrao rd in ary degree if
th e y w ere separated from the body o f the E n g l i s h nation. T h e
spirit w h ich und erlies these a r g u m e n ts is u n m ista k a b ly expressed
in the report o f the E n g li s h con su l at R o tte rd a m . ‘ F o r the co m ­
m ercial interests o f G r e a t B r i t a i n ,’ s a y s M r. A le x a n d e r Ferrier
at the end o f h is report, ‘ it a p p e a rs o f the g re atest possible import­
ance that no m e a n s should be left untried to preven t the aforesaid
states, and a lso B e lg i u m , from e n te rin g the Z o llv e r e in , for reasons
w h ich are too clear to need a n y e x p o sitio n .’ W h o could possibly
blam e M r. F e rr ie r for sp e a k in g thus, or Dr. B o w r i n g for speakin g
thus, or the E n g l i s h m in iste r s for a c tin g a s the oth ers sp e a k ?
T h e national instinct o f E n g la n d sp e a k s and acts th rou g h them.
B u t to expect prosperity and b le ssin g to G e r m a n y from proposals
w hich proceed from such a source a s that, w ould ap p e a r to exceed
even a decent degree o f national good nature. ‘ W h a te v e r m ay
h a p p e n ,’ adds M r. F e r r ie r to the w ord s a b o v e quoted, ‘ H olland
m u s t at all tim es be considered a s the m ain ch an n el for the
com m ercial relation s o f S o u th G e r m a n y w ith other countries,’
INSULAR SUPREMACY AND THE GERMAN UNION
327
Clearly Mr. F errier understands by the term ‘ other countries,
merely England ; clearly he means to say that if the Finglish
manufacturing supremacy should lose its means of access to
Germany or the North Sea and the Baltic, Holland would still
remain to it as the great means of access by which it could pre­
dominate over the markets for manufactured goods and colonial
produce of the south of Germany.
But we from a national point of view say and maintain that
Holland is in reference to its geographical position, as well as in
respect to its commercial and industrial circumstances, and to
the origin and language of its inhabitants, a German province,
which has been separated from Germ any at a period of German
national disunion, without whose reincorporation in the German
Union Germany may be compared to a house the door of which
belongs to a stranger: Holland belongs as much to Germ any as
Brittany and Normandy belong to France, and so long as Holland
is determined to constitute an independent kingdom of her own,
Germany can as little attain independence and power as France
would have been enabled to attain these if those provinces had
remained in the hands of the English. T h at the commercial
power of Holland has declined, is owing to the unimportance
of the country. Holland will and must also, notwithstanding the
p'osperity o f her colonies, continue to decline, because the nation
ii too weak to support the enormous expense of a considerable
nrilitary and naval power. Through her exertions to maintain
h;r nationality Holland must become more and more deeply
involved in debt. Notwithstanding her great colonial prosperity,
sae is and remains all the same a country dependent on England,
and by her seeming independence she only strengthens the E n g ­
lish supremacy. T h is is also the secret reason why En glan d at
the congress of Vienna took under her protection the restoration
o f the Dutch seeming independence. T h e case is exactly the
same as with the Hanse Tow n s. On the side of England,
Holland is a satellite for the English fleet— unite it with Germany,
she is the leader of the German naval power. In her present
position Holland cannot nearly so well derive profit from her
colonial possessions as if they became a constituent part of the
G erm an Union, especially because she is too weak in the ele­
ments which are necessary for colonisation— in population and
in mental powers. Further than this, the profitable development
of her colonies, so far as that has hitherto been effected, depends
for the most part on German good nature, or rather on the non­
acquaintance of the Germ ans with their own national commercial
interests; for while all other nations reserve their market for
colonial produce for their own colonies and for the countries
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subject to them , the G e r m a n m arket is the o n ly one w h ich rem ain s
open to the D u tch for the d isp o sal o f their su rp lu s colonial pro­
duce, A s soon a s the G e r m a n s clearly co m p re h e n d th at those
from w h o m th ey pu rchase colonial produce m u st be m ade to
und erstand th at th ey on their part m u st p u rch ase m anufactured
g o o d s from G e r m a n y under differentially favo u rab le treatment,
then the G e r m a n s w ill also cle arly see that they h a v e it in their
pow er to com pel H o lla n d to jo in the Z o llv e re in .
T h a t union
would be o f the g re a te st a d v a n t a g e to both countries.
G e rm a n y
w ou ld g iv e H o lla n d the m e a n s not o n ly o f d e r iv in g profit from
her colonies far better th an at presen t, but a lso to found and to
acqu ire n ew colonies. G e r m a n y w ou ld g ra n t special perferential
p riv ileg e s to the D u tch a n d H a n s e a t ic sh ip p in g , an d grant special
preferential p riv ile g e s to D u tch colonial produce in the G e rm a n
m arkets. H o lla n d and the H a n s e T o w n s , in return, would pre­
fe re n tially e xport G e r m a n m an u fac tu re s, an d preferentially e m p loy
their su rp lu s capital in the m an u fac to rie s and the agriculture o f
the interior o f G e r m a n y .
H o lla n d , as she h a s su n k from her e m in en ce a s a com m ercial
pow er because she, the m ere fraction o f a nation, w an ted to make
h e rse lf p a ss a s an entire nation ; because she so u g h t her a d v a n ­
t a g e in the oppression and the w e a k e n in g o f the productive powers
o f G e r m a n y , instead o f b a s in g her g re a t n e s s on the p ro sp erity cf
the coun tries w h ich lie behind her, w ith w h ich e v e ry m aritim e
state m u st stand or f a l l ; because she so u gh t to becom e g re at by
her sep aration from the G e r m a n nation instead o f b y her union
w ith i t ; H o lla n d can on ly a g a in attain to her an c ie n t state o f pros­
perity by m e a n s o f the G e r m a n U n io n and in the clo sest connec­
tion w ith it. O n ly by th is un ion is it p ossible to constitute an
agricu ltu ral m a n u fa c tu r in g co m m ercial n atio n a lity o f the first
m agnitu d e.
D r. B o w r in g g ro u p s in his ta b le s the im p o rts and exports o f
the G e r m a n C u s t o m s U n io n w ith the H a n s e T o w n s an d H ollan d
and B e lg iu m all together, and from th is g ro u p in g it clearly
ap p e ars h o w g re a tly all these countries are dependent on the E n g ­
lish m a n u fa c tu rin g in d u stry, and h o w im m e a su ra b ly th e y m ig h t
g ain in their entire productive pow er by union. H e e stim a te s the
im ports o f these countries from E n g la n d at 1 9 , 8 4 2 , 1 2 1 / . sterlin g
o f official v alu e, or 8,550,347/. o f declared value, but the exports o f
those coun tries to E n g la n d (on the other hand) at o n ly 4,8 0 4 ,4 9 1/.
s t e r li n g ; in w hich, b y the w a y , are included the g re at qu an tities
o f J a v a coffee, cheese, butter, &c. w h ich E n g la n d im ports from
H o lla n d . T h e s e totals sp e ak v o lu m e s. W e thank the D octor for
h is statistical g ro u p in g to g e th er— w ou ld that it m ig h t betoken a
speedy political g ro u p in g .
CHAPTER XXXV.
CONTINENTAL POLITICS.
h e highest ultimate aim o f rational politics is (as we have shown
in our Second Book) the uniting of all nations under a common
law of right, an object which is only to be attained through the
greatest possible equalisation o f the most important nations of
the earth in civilisation, prosperity, industry, and power, by the
conversion of the antipathies and conflicts which now exist
between them into sympathy and harmony. But the solution of
this problem is a work of immensely long duration. A t the present
time the nations are divided and repelled from one another by
manifold c a u s e s ; chief am ong these are conflicts about territory.
A s yet, the apportionment o f territory to the European nations
does not correspond to the nature of things. Indeed, even in
theory, people are not yet agreed upon the fundamental conditions
o f a just and natural apportionment of territory. Some desire
that their national territory should be determined according to the
requirements o f their metropolis without regard to language,
commerce, race, and so forth, in such a w ay that the metropolis
should be situated in the centre and be protected as much as
possible against foreign attacks. T h ey desire to have great rivers
for their frontiers. Others maintain, and apparently with greater
reason, that sea-coasts, mountains, language, and race, constitute
better frontiers than great rivers. There still are nations who
are not in possession of those mouths of rivers and sea-coasts
which are indispensable to them for the development o f their
commerce with the world and for their naval power.
I f every nation w as already in possession of the territory which
is necessary for its internal development, and for the maintenance
of its political, industrial, and commercial independence, then
every conquest of territory would be contrary to sound policy,
because by the unnatural increase of territory the jealousy of the
nation which is thus encroached upon would be excited and kept
alive, and consequently the sacrifices which the conquering nation
would have to make for retaining such provinces would be im­
measurably greater than the advantages accruing from their
T
329
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T H E POLITICS
p o sse ssio n . A ju s t and w ise ap p o rtio n m en t o f territory is, how ever,
at this d a y not to be th o u g h t of, be cau se th is qu estion is com pli­
cated by m anifold in tere sts o f ano ther nature. A t the sam e time
it m u st not be ign ored that rectification o f territory m u st be
reckoned a m o n g the m ost im portan t req u irem en ts o f the nations,
th at s t riv in g to attain it is le g itim ate , th at indeed in m a n y cases
it is a ju stifia b le reason for w ar.
F u r t h e r ca u se s o f a n tip a th y betw een the n atio n s are, at the
presen t tim e, the d iv e rsity o f their in tere sts in respect to m a n u ­
factu re s, com m erce, n a v ig a tio n , n a v a l p ow er, and colonial p os­
s e ssio n s, a lso the difference in their d e g ree s o f civ ilisatio n , of
religion, and o f political condition.
A ll these interests are
c o m p lic ate d in m an ifold w a y s th ro u g h the in tere sts o f d y n a stie s
and p ow ers.
T h e c au se s o f a n tip a th y are, on the other hand , cau se s of
s y m p a t h y . T h e less powerful nations s y m p a t h is e a g a in s t the
m o st pow erful, those w h o se ind epend ence is e n d an g ere d sym path ise a g a in s t the a g g r e s s o r s , territorial p ow ers a g a in s t n aval
s u p re m a c y , th o se w h o s e in d u stry and co m m e rce are defective
s y m p a t h is e a g a in s t th o se w h o are s t r iv in g for an industrial and
c o m m e rc ial m on o p o ly, the h alf-civilised a g a in s t the civilised,
those w h o are su bjects o f a m o n a rc h y a g a in s t th o se w h o se
g o v e r n m e n t is e n tirely or p a rtia lly dem ocratic.
N a t io n s at th is tim e pu rsu e their ow n in tere sts and s y m p a t h ie s
b y m e a n s o f a llia n c e s o f th o se w h o are like-m inded and h a v e like
in tere sts a g a in s t the in tere sts an d ten dencies w h ic h conflict w ith
theirs. A s , h ow ever, these interests and ten dencies conflict w ith
one an o th er in v a rio u s w a y s , these allian ces are liable to ch an ge .
T h o s e n a tio n s w h o are friends to-day m a y be e n e m ie s to-m orrow ,
and vice v e r s a , a s soon a s e ve r so m e one o f the g re at interests or
p rin ciples is at stake by w h ic h th ey feel t h e m se lv e s repelled from
or draw n to w a r d s one an o th er.
P o litic ia n s h a v e lo n g felt th at the e q u alisatio n o f the nations
m u st be their u ltim ate aim . T h a t w h ic h people call the m a in ten ­
ance o f the E u ro p e a n b a la n ce o f p o w e r h a s a l w a y s been no th in g
else than the e n d e a v o u r s o f the le ss pow erful to im p o se a check
on the e n cro a c h m e n ts o f the m ore pow erful. Y e t politics h ave
not seldom confounded their p ro xim ate object w ith their ultim ate
one, and vice v e r s a .
T h e p ro xim ate ta sk o f politics a lw a y s c o n sists in cle arly per­
c e iv in g in w h a t respect the alliance an d e q u alisatio n o f the
different interests is at the m o m en t m o st p re ssin g , and to strive
th at until th is e q u alisatio n is attained all other q u estio n s m a y be
suspended and kept in the background.
W h e n the d ynastic, m on arch ic, and aristocratic interests o f
CONTINENTAL POLITICS
33T
Europe allied themselves a g a i n s t the revolutionary tendencies of
1789, disregarding all considerations regarding power and com­
merce, their policy w as a correct one.
It was ju st as correct when the French Empire introduced the
tendency of conquest in place of that of revolution.
Napoleon sought by his Continental system to establish a
Continental coalition against the predominant naval and com­
mercial power of England ; but in order to succeed, it was
necessary for him, first of all, to take aw ay from the Continental
nations the apprehension of being conquered by France. He
failed, because on their part the fear of his supremacy on land
greatly outweighed the disadvantages which they suffered from
the naval supremacy.
W ith the fall of the French Empire, the object of the great
alliance ceased. From that time forth, the Continental powers
were menaced neither by the revolutionary tendencies nor by the
lust o f conquest of France. E n g la n d ’s predominance in manu­
factures, navigation, commerce, colonial possessions, and naval
power, had, on the other hand, enormously increased during the
conflicts against the Revolution and against the French conquest.
From that time forth, it became the interest of the Continental
powers to ally themselves with France against the commercial
and naval predominance. Solely from fear of the skin of the
dead lion, the Continental powers did not heed sufficiently the
living leopard who had hitherto fought in their ranks. The Holy
Alliance w as a political error.
T h is error also brought about its own punishment through the
revolution of Italy, T he Holy Alliance had unnecessarily called
into life a counter force which no longer existed, or which at least
would not for a long time have revived again. Fortunately for
the Continental powers, the dynasty of Ju ly contrived to appease
the revolutionary tendency in France.
France concluded the
alliance with England in the interests of the dynasty of Ju ly and
of strengthening the constitutional monarchy.
England con­
cluded it in the interest of the maintenance of her commercial
supremacy.
T he Franco-English alliance ceased as soon as ever the dynasty
of Ju ly and the constitutional monarchy in France felt themselves
to be sufficiently firmly established; but, on the other hand, the
interests of France in respect of naval power, navigation, com­
merce, industry, and foreign possessions came again more to the
front. It is clear that France has again an equal interest with the
other Continental powers in these questions, and the establishing
of a Continental alliance against the naval predominance of E n g ­
land appears to be becoming a question of the day, provided the
33
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T H E POLITICS
d y n a s t y o f J u l y can succeed in c re a tin g perfect u nity o f will be­
tw een the different o rg a n s o f S t a te ad m in istratio n , also to thrust
into the backgrou n d those territorial q u estio n s w hich are excited
by the rev o lu tio n a ry ten dencies, an d e n tirely to ap p ease in the
m in d s o f the m on arc h ic al C on tin en tal p ow ers the fear o f the
ten dencies o f F r a n c e to w a rd s revolution an d a g g r e s sio n .
N o th in g , h o w e v e r, at this tim e so g r e a t ly im pedes a closer
union o f the con tin en t o f E u r o p e a s the fact that the centre o f it
still ne v e r ta k e s the position for w h ich it is n atu ra lly fitted. In ­
stead o f b e in g a m ed iator betw een the e ast and the w e st o f that
con tinen t, on all q u estio n s o f a r ra n g e m e n t o f territory, o f the
principle o f their con stitu tio n s, o f national independence and
pow er, for w h ich it is qualified by its g e o g ra p h ic a l position, by its
federal constitution w h ich exclu d es all apprehension o f a g g re ssio n
in the m in d s o f n e ig h b o u rin g n atio n s, b y its relig io u s toleration,
and its cosm opolitical ten dencies, and fin a lly b y its civ ilisatio n
and the e le m e n ts o f pow er w h ic h it p o sse sse s, this central part o f
E u r o p e co n stitu te s at present the apple o f discord for w h ich the
e a s t and the w est contend, w h ile each p arty hopes to d raw to its
o w n side this m iddle p ow er, w h ic h is w eaken ed b y w a n t o f
national u n ity, and is a lw a y s u n c ertain ly w a v e r in g hither and
thither.
If, on the other hand , G e r m a n y could constitute itse lf w ith the
m a ritim e territories w h ich appertain to it, w ith H o lla n d , B e lg iu m ,
and S w itz e r la n d , as a pow erful com m e rcial and political w h o le —
if this m ig h t y n atio n al body could fuse rep re se n tative institu tions
w ith the e x ist in g m on arch ical, d ynastic, and aristocratic interests,
so far a s these are com patible w ith one an o th er— then G e r m a n y
could secure peace to the continent o f E u r o p e for a lo n g tim e, and
at the sa m e tim e constitute h e rse lf the central point o f a durable
C o n tin e n tal alliance.
T h a t the n a v a l pow er o f E n g la n d g re a tly exceeds that o f all
other n atio n s, if not on the num ber o f ships, ye t certain ly in fig h t ­
in g p ow er— that hence the nations w h ich are le ss powerful at sea
can o n ly m atch E n g la n d at sea b y u n itin g their o w n n a v a l power,
is clear. F r o m hence it follow s, that eve ry nation w hich is less
pow erful at sea h a s an in terest in the m ain te n an ce and p rosp erity
o f the n av al pow er o f all other nations w h o are sim ila rly w e a k at
s e a ; and further, th at fraction s o f other nations w hich, hitherto
divided, h a v e posse ssed either no n a v a l pow er w h a te v e r or on ly
an u nim portan t one, should constitute t h e m s e lv e s into one united
n a v a l power. In regard to E n g la n d , F r a n c e and N o rth A m e ric a
su stain loss i f the n a v a l pow er o f R u s s i a declines, and vice versa .
T h e y all gain, i f G e r m a n y , H olland, and B e lg iu m constitute to­
gether a com m on n a v a l p o w e r ; for w h ile separated these last are
CONTINENTAL POLITICS
333
mere satellites to the supremacy of England, but if united they
strengthen the opposition to that supremacy of all nations at sea.
None of these less powerful nations possesses a mercantile
marine which exceeds the requirements of its own international
trade— none of these nations possesses a manufacturing power
which would maintain important preponderance over that of the
others. None of them, therefore, has any ground to fear the
competition of the others. On the other hand, all have a common
interest in protecting themselves against the destructive competi­
tion of England. Hence it must be to the interests of all that the
predominating manufacturing power of England should lose those
means of access (Holland, Belgium , and the Hanse Towns) by
means of which England has hitherto dominated the markets of
the Continent,
Inasmuch a s the products of tropical climates are chiefly paid
for by the manufactured products of temperate climates, and hence
the consumption of the former depends on the sale of the latter,
therefore every manufacturing nation should endeavour to establish
direct intercourse with tropical countries. And thus, if all manu­
facturing nations of the second rank understand their own interests
and act accordingly, no nation will be permitted to maintain a
predominant amount of colonial possessions in tropical countries.
If, for instance, England could succeed in the object for which she
is at present striving, viz. to produce in India the colonial produce
which she requires— in that case England could only carry on
trade with the W est Indies to the extent to which she was able to
sell to other countries the colonial produce which she now obtains
from the W e st Indies in exchange for her manufactured goods.
If, however, she could not dispose of these to other countries, then
her W e st Indian possessions would become useless to her. She
would then have no other option than either to let them go free,
or to surrender the trade with them to other manufacturing
countries. Hence it follows that all manufacturing nations less
powerful at sea have a common interest in following this policy
and in reciprocally supporting one another in it, and it follows
further that no one of these nations would lose by the accession
of Holland to the German Commercial Union, and through the
closer connection of G erm any with the Dutch colonies.
Since the emancipation of the Spanish and Portuguese colonies
in South America and the W est Indies, it is no longer indispen­
sably necessary that a manufacturing nation should possess colonies
of its own in tropical climates in order to put itself in a position to
carry on directly the exchange of manufactured goods against
colonial produce. A s the markets of these emancipated tropical
countries are free, every manufacturing nation which is able to
334
T H E POLITICS
com pete in these free m a rk e ts can carry on direct trade w ith them.
B u t these free tropical countries can o n ly produce g re at quantities
o f colonial products, and o n ly co n su m e g re at q u an titie s o f m a n u ­
factured goods, i f p rosperity and m o ra lity , peace and repose,
law ful order and relig io u s tolerance, prevail w ith in them . A ll
n a tio n s not powerful at sea, e sp e c ia lly those w h o p o sse ss no
colonies, or o n ly u n im p o rtan t on es, h a v e hence a com m on interest
in b rin g in g about such a state o f th in g s b y their united power.
T o E n g la n d , w ith her c o m m e rc ial s u p re m a c y , the circu m stan ces
o f these countries can n ot m a tte r so m u ch because she is suffi­
cien tly supplied, or at least h opes to becom e sufficiently supplied,
with colonial produce from her ow n e x c lu s iv e and subject m arkets
in the E a s t and W e s t Ind ies. F r o m this point o f v ie w also we
m u st p artly ju d g e resp e ctin g the e x tre m e ly im portan t question o f
sla v e r y . W e are v e r y far from ig n o rin g th at m uch philanthropy
and good m o tive lies at the root o f the zeal w ith w h ich the object
o f the em an cipation o f the n eg ro es is pursued by E n g la n d , and
that th is zeal does g re a t h on o u r to the c h aracte r o f the E n g lis h
nation.
B u t at the s a m e tim e, i f w e con sid er the im m ediate
effects o f the m e a su res adopted by E n g la n d in reference to this
matter, w e c an n o t get rid o f the idea that also m uch political
m o tive and com m ercial interest are m in g led with it. T h e s e
effects a r e : ( i) T h a t b y the sudden e m an c ip atio n o f the blacks,
th rou gh their rapid tran sition from a condition o f disorder and
c a re le s s n e s s little rem oved from that o f w ild a n im a ls to a high
degree o f individual independence, the yield o f tropical produce o f
S o u th A m e r ic a and the W e s t In d ie s w ill be e xtre m e ly dim inished
and u ltim a te ly reduced to n o th in g , a s the e x a m p le o f S t . D o m in g o
in co n te stab ly sh o w s, in a sm u c h a s there since the e xp u lsio n o f the
F re n c h and S p a n ia r d s the production h a s g r e a t ly decreased from
y e a r to y e a r, and con tinu es to do so. (2) T h a t the free negro es
co n tin u a lly seek to obtain an in crease in their w a g e s , w h ilst they
lim it their labour to the su p p ly o f their m ost in d isp en sab le w a n ts ;
that hence their freedom m e re ly leads to id leness. (3) T h a t , on
the other hand, E n g la n d p o s s e s s e s in the E a s t In d ie s am ple
m e a n s for s u p p ly in g the w h o le w orld w ith colonial products. It
is w ell k n o w n that the H in d o o s, o w in g to great in d u stry and
g re at m oderation in their food and other w a n ts , e sp ec ially in
con sequ ence o f the precepts o f their religion, w h ich forbid the use
o f a n im al food, are e x c e s s iv e ly frugal. T o these m u st be added
the w a n t o f capital a m o n g the n a tiv e s, the g re at fruitfuln ess o f
the soil in v eg e tab le products, and the restriction o f c aste and the
g re at com petition o f th o se in w a n t o f w ork.
T h e result o f all this is, th at w a g e s in In d ia are in c o m p a ra b ly
low er than in the W e s t In d ie s and S o u th A m e rica, w h e th er the
CONTINENTAL POLITICS
335
plantations there are cultivated by free blacks or by sla v e s; that
consequently the production of India, after trade has been set free
in that country, and wiser principles of administration have
prevailed, must increase at an enormous rate, and the time is
no longer distant when En glan d will not only be able to supply
all her own requirements of colonial produce from India, but also
export great quantities to other countries. Hence it follows that
En glan d cannot lose through the diminution of production in the
W e st Indies and South America, to which countries other nations
also export manufactured goods, but she will gain if the colonial
production in India becomes preponderant, which market E n g ­
land exclusively supplies with manufactured goods. (4) Finally,
it m ay be asserted, that by the emancipation of the slaves
England desires to hang a sword over the head of the North
American slave states, which is so much the more menacing to
the Union the more this emancipation extends and the wish is
excited among the negroes of North America to partake of similar
liberty.
T he question if rightly viewed must appear a philanthropical experiment of doubtful benefit towards those on whose
behalf it w as undertaken from motives of general philanthropy,
but must in any case appear to those nations who rely on the
trade with South America and the W est Indies as not advan­
tageous to t h e m ; and they m ay not unreasonably inquire:
W hether a sudden transition from slavery to freedom may not
prove more injurious to the negroes themselves than the main­
tenance of the existing state o f t h in g s? — whether it may not be
the task of several generations to educate the negroes (who are
accustomed to an almost animal state of subjection) to habits of
voluntary labour and thrift ?— whether it might not better attain
the object if the transition from slavery to freedom was made by
the introduction of a mild form of serfdom, whereby at first some
interest might be secured to the serf in the land which he
cultivates, and a fair share of the fruits of his labour, allowing
sufficient rights to the landlord in order to bind the serf to habits
of industry and order?— whether such a condition would not be
more desirable than that of a miserable, drunken, lazy, vicious,
mendicant horde called free negroes, in comparison with which
Irish misery in its most degraded form may be deemed a state of
prosperity and civilisation ?
If, however, we are required to
believe that the zeal of the English to make everything which
exists upon earth partakers of the same degree of freedom which
they possess themselves, is so great and irrepressible that they
must be excused if they have forgotten that nature makes no
advances by leaps and bounds, then we must venture to put the
questions: W hether the condition of the lowest caste of the
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T H E POLITICS
H in d o o s is not m u ch more w retched and in tolerab le than that
o f the A m e r ic a n n e g ro es ?— and h o w it h a p p e n s that the philan­
thropic spirit o f E n g la n d h a s n ever been excited on b e h a lf o f these
m ost m ise rab le o f m an kin d ?— h o w it h a p p e n s that E n g lis h
leg islation h a s never interven ed for their benefit ?— how it
hap p e n s that E n g la n d h a s been a ctive en ou g h in deriving
m e a n s for her o w n en rich m e n t out o f this m ise rab le state of
th in g s, w ith o u t th in k in g o f a n y direct m e a n s o f am e lio ra tin g it?
T h e E n g li s h - I n d i a n policy leads u s to the E a s t e r n question.
I f we can d is m is s from the politics o f the d a y all that which
at this m o m en t h a s reference to territorial conflicts, to the
d yn astic, m o n arch ic, aristocratic, and relig io u s interests, and to
the c ircu m sta n ce s o f the v a rio u s pow ers, it c an n o t be ignored
that the C o n tin e n ta l p o w e rs h a v e a g re a t national economic
interest in c o m m o n in the E a s t e r n question. H o w e v e r su cce ss­
ful the present e n d e a v o u rs o f the p o w e rs m a y be to keep this
question in the backgrou n d for a tim e, it w ill con tin u ally again
com e to the front w ith renew ed force.
It is a conclusion long
arrived at by all thoughtfu l m en, that a nation so thorou ghly
u nderm ined in her relig io u s, m o ral, social, and political founda­
tion s as T u r k e y is, is like a corpse, w h ic h m a y indeed be held up
for a tim e b y the su pport o f the liv in g , but m u st none the less
p a ss into corruption.
T h e case is quite the s a m e with the
P e r s ia n s as w ith the T u r k s , w ith the C h in e se and H indoos
and all other A s ia t ic people. W h e r e v e r the m o u ld e rin g c iv ilisa ­
tion o f A s ia co m es into con tact w ith the fresh atm o sp h e re o f
E u r o p e , it fa lls to a to m s ; and E u r o p e w ill soon er or later find
h e rs e lf under the n e ce ssity o f ta k in g the w h o le o f A s ia under
her care and tutelage, a s a lre ad y In d ia h a s been so taken in
ch a rg e by E n g l a n d . In th is utter c h a o s o f cou n tries and peoples
there e x ists no sin g le n atio n a lity w h ich is either w o r t h y or capable
o f m a in te n a n c e and regeneration. H e n c e the entire d issolu tion o f
the A s ia t ic n ation alities ap p e ars to be inevitable, and a reg e n e ra­
tion o f A s ia o n ly p ossible b y m e a n s o f an infu sion o f E u ro p e a n
v ital power, b y the g en e ral introduction o f the C h ristia n religion
and o f E u r o p e a n m oral la w s and order, b y E u r o p e a n im m igratio n ,
and the introduction o f E u r o p e a n s y s t e m s o f g o v e rn m e n t.
I f w e reflect on the course w hich such a regeneration m igh t
p o ssib ly pursue, the first con sid eration th at strikes one is that
the greater part o f the E a s t is rich ly provided b y nature w ith
resources for su p p ly in g the m a n u fa c tu r in g n a tio n s o f E u ro p e
w ith g re a t q u an titie s o f r a w m a te ria ls and n e c e ssa r y articles o f
e v e r y kind, but e sp e c ia lly for p rodu cing tropical products, and in
e x c h a n g e for these for o p e n in g unlim ited m ark e ts to E u r o p e a n
m an ufacturers. F r o m th is circu m stan ce, n atu re ap p e ars to h ave
CONTINENTAL POLITICS
337
given an indication that this regeneration, as generally is the case
with the civilisation of barbarous peoples, must proceed by the
path of free exchange of agricultural produce against manufactured
goods. F o r that reason the principle must be firmly maintained
above all by the European nations, that no exclusive commercial
privileges must be reserved to any European nation in any part
of A sia whatever, and that no nation must be favoured above
others there in any degree. It would be especially advantageous
to the extension of this trade, if the chief commercial emporiums
of the E ast were constituted free cities, the European population
of which should have the right of self-government in consideration
of an annual payment of tax to the native rulers. But European
agents should be appointed to reside with these rulers, after the
example of English policy in India, whose advice the native rulers
should be bound to follow in respect of the promotion of public
security, order, and civilisation.
All the Continental powers have especially a common interest
that neither of the two routes from the Mediterranean to the Red
Sea and to the Persian G u lf should fall into the exclusive posses­
sion of England, nor remain impassable owing to Asiatic barbar­
ism. T o commit the duty of protecting these important points
to Austria, would insure the best guarantees to all European
nations.
Further, the Continental powers in general have a common
interest with the United States in maintaining the principle that
* free ships cover free goods,’ and that only an effectual blockade
of individual ports, but not a mere proclamation of the blockade
of entire coasts, ought to be respected by neutrals. Finally, the
principle of the annexation of wild and uninhabited territories
appears to require revision in the common interest of the Conti­
nental powers. People ridicule in our days the fact that the H oly
Father formerly undertook to make presents of islands and parts
of the globe, nay even to divide the world into two parts with a
stroke of the pen, and to apportion this part to one man and that
to another. Can it, however, be deemed much more sensible to
acknowledge the title to an entire quarter of the globe to vest in
the man who first erected somewhere on the earth a pole adorned
with a piece of silk ? That in the case of islands of moderate
size the right of the discoverer should be respected, may be
admitted consistently with common sense ; but when the question
arises as to islands which are as large as a great European king­
dom (like N ew Zealand) or respecting a continent which is larger
than the whole of Europe (like Australia), in such a case by
nothing less than an actual occupation by colonisation, and
then only for the actually colonised territory, can a claim to ex22
338
T H E PO LITICS
e lu siv e p o sse ssio n be adm itted c o n siste n tly w ith com m on sense.
A n d it is not clear w h y the G e r m a n s and the F r e n c h should not
h a v e the right to found colonies in th ose p arts o f the world at
p o in ts w h ich are distant from the E n g l i s h station s.
I f w e on ly consider the e n o rm o u s interests w h ich the nations of
the C on tin en t h a v e in co m m o n , a s opposed to the E n g l i s h m aritim e
s u p re m a c y , w e shall be led to the con viction that n o th in g is so
n e c e ssa ry to these nations as union, and n o th in g is so ruinous to
them as C o n tin e n tal w a rs. T h e h isto ry o f the last century also
teach es u s that eve ry w a r w hich the p o w e rs o f the C o n tin e n t h ave
w a g e d a g a in s t one another h a s h ad for its in v a ria b le result to in­
crease the in d u stry , the w e alth , the n a v ig a tio n , the colonial p o s­
se ssio n s, and the p o w e r o f the in su la r su p re m a c y .
H e n c e , it can n ot be denied that a correct v ie w o f the w a n ts
and in tere sts o f the C on tin en t underlaid the C o n tin e n tal system
o f N a p o le o n , a lth o u g h it m u st not be ignored th at N apoleon
desired to g iv e effect to this idea (right in itself) in a m anner
w h ich w a s co n trary to the independence and to the interests o f the
other C o n tin e n tal pow ers. T h e C o n tin e n tal sy ste m o f N apoleon
suffered from three capital defects. In the first place, it sought
to e stab lish , in the place o f the E n g l i s h m aritim e su p re m ac y, a
F r e n c h C o n tin e n tal s u p r e m a c y ; it so u g h t the h u m iliation, or
destruction and dissolu tion, o f other n atio n alitie s on the Continent
for the benefit o f F r a n c e , instead o f b a s in g its e lf on the elevation
and e q u alisatio n o f the other C o n tin e n ta l nations.
F u rth e rm o re ,
F r a n c e followed h e rse lf an e x c lu s iv e com m ercial policy a g ain st
the other countries o f the C o n tin e n t, w h ile she claim ed for h erself
free com petition in those cou n tries. F i n a l l y , the sy ste m alm ost
e n tirely destroyed the trade betw een the m a n u fa c tu r in g countries
o f the C o n tin e n t and tropical countries, and found its e lf compelled
to find a rem ed y for the destruction o f th is intern ational trade by
the use o f substituted article s.1
T h a t the idea o f this C o n tin e n tal s y s t e m w ill e ve r recur, that
the n e ce ssity o f r e a lisin g it w ill the more forcibly im p re ss itse lf
on the C o n tin e n tal nations in proportion a s the preponderance o f
E n g la n d in in d u stry, w e a lth , and pow er further increases, is already
v e r y clear, and w ill co n tin u ally b ecom e m ore evident.
B u t it is
not less certain that an a llian c e o f the C o n tin e n tal nations can
on ly h a v e a good result i f F r a n c e is w ise en ou g h to avoid the
errors o f N ap o le o n . H e n c e , it is foolish o f F r a n c e i f she raises
(contrary to all ju stic e , an d to the actu al nature o f circu m stan ces)
claim s for exten sion o f frontiers at the e xp e n se o f G e r m a n y , and
1 T h is fact is confirm ed b y M ad. Ju n o t, in M cm oires de la D uchess d 'A b r a n t h ,
— [T R A N S L A T O R , ]
CONTINENTAL POLITICS
339
thereby compels other nations of the Continent to ally themselves
with England.
It is foolish of France if she speaks of the Mediterranean Sea
as of a French lake, and seeks to acquire exclusive influence in
the Levan t and in South America.
An effective Continental system can only originate from the
free union oi the Continental powers, and can succeed only in
case it has for its object (and also effects) an equal participation
in the advantages which result from it, for in that way only, and
in no other, can the maritime powers of second rank command
respect from the predominant power of England in such a w ay
that the latter without any recourse to the force of arms will con­
cede all the just requirements of the less powerful states. Only
by such an alliance as that will the Continental manufacturing
powers be able to maintain their relations with tropical countries,
and assert and secure their interests in the E a st and the W est.
In any case the British, who are ever too anxious for su­
premacy, must feel it hard when they perceive in this manner how
the Continental nations will reciprocally raise their manufactur­
ing power by mutual commercial concessions and by treaties;
how they will reciprocally strengthen their navigation and their
naval pow er; how they will assert their claim to that share for
which they are fitted by nature in civilising and colonising bar­
barous and uncultivated countries, and in trade with tropical
regions. Nevertheless, a glance into the future ought sufficiently
to console the Britons for these anticipated disadvantages.
F or the same causes which have raised Great Britain to her
present exalted position, will (probably in the course of the next
century) raise the United States of America to a degree of in­
dustry, wealth, and power, which will surpass the position in
which En glan d stands, as far as at present England excels little
Holland. In the natural course of things the United States will
increase their population within that period to hundreds of millions
of souls ; they wili diffuse their population, their institutions,
their civilisation, and their spirit over the whole of Central and
South America, just as they have recently diffused them over the
neighbouring Mexican province. T h e Federal Union will com­
prise all these immense territories, a population of several hundred
millions of people will develop the resources of a continent which
infinitely exceeds the continent of Europe in extent and in natural
wealth. T he naval power of the western world will surpass that
of Great Britain, as greatly as its coasts and rivers exceed those
of Britain in extent and magnitude.
T h u s in a not very distant future the natural necessity which
now imposes on the French and Germ ans the necessity of estab­
34°
T H E PO LITICS
lis h in g a C o n tin e n tal a llian c e a g a in s t the B r itis h su p re m ac y, will
im pose on the B r it is h the n e c e ssity o f e s ta b lis h in g a E u rop ean
coalition a g a in s t the su p re m a c y o f A m e r ic a . T h e n w ill G reat
B r it a in be com pelled to seek and to find in the leadership o f the
united p o w e rs o f E u r o p e protection, se cu rity, a n d com pen sation
a g a in s t the p red om in an ce o f A m e r ic a , an d an e q u iv alen t for her
lost su p re m ac y.
It is therefore good for E n g l a n d th at she should practise
resign ation b e tim e s, th at she should b y tim e ly ren u n ciation s gain
the friend ship o f E u r o p e a n C o n tin e n ta l p o w e rs, that she should
accustom h e rs e lf b e tim e s to the idea o f b e in g o n ly the first a m o n g
eq u als.
CHAPTER XXXVI.
THE COMMERCIAL POLICY OF THE GERMAN ZOLLVEREIN.
I f any nation whatever is qualified for the establishment of a
national manufacturing power, it is Germ any ; by the high rank
which she maintains in science and art, in literature and education,
in public administration and m institutions of public utility; by
her morality and religious character, her industry and domestic
economy ; by her perseverance and steadfastness in business oc­
cu p atio n s; as also by her spirit of invention, by the number and
vigour of her population ; by the extent and nature of her terri­
tory, and especially by her highly advanced agriculture, and her
physical, social, and mental resources.
If any nation whatever has a right to anticipate rich results
from a protective system adapted to her circumstances, for the
progress of her home manufactures, for the increase of her foreign
trade and her navigation, for the perfecting of her internal means
of transport, for the prosperity o f her agriculture, as also for the
maintenance of her independence and; the increase of her power
abroad, it is Germany.
Y es, we venture to assert, that on the development of the
German protective system depend the existence, the independence,
and the future of the German nationality. Only in the soil of
general prosperity does the national spirit strike its roots, produce
fine blossoms and rich fruits; only from the unity of material
interests does mental power arise, and only from both of these
national power.
B u t of what value are all our endeavours,
whether we are rulers or subjects, nobles or simple citizens,
learned men, soldiers, or civilians, manufacturers, agriculturists,
or merchants, without nationality and without guarantees f o r the
continuance o f our nationality ?
Meanwhile, however, the German protective system only ac­
complishes its object in a very imperfect manner, so long as
G erm any does not spin for herself the cotton and linen yarn
which she req u ires; so long as she does not directly import from
tropical countries the colonial produce which she requires, and
pay for it with goods of her own m anufacture; so long as she
3+i
342
T H E POLITICS
d o es not ca rry on this trade w ith her o w n s h i p s ; so lo n g as she
h a s no m e a n s o f protecting her o w n fla g ; so lo n g a s she possesses
no perfect syste m o f tran sport b y river, c an al, or r a ilw a y ; so long
a s the G e r m a n Z o llv e r e in does not include all G e r m a n maritime
territories and also H o lla n d and B e lg i u m . W e h a v e treated these
su b je c ts c ir c u m sta n tia lly in v a rio u s places in th is book, and it is
o n ly n e c e s s a r y for us here to recap itu late w h a t w e h a v e already
t h u s treated.
I f w e im port ra w cotton from E g y p t , B r a z il, and North
A m e ric a , w e in that case p a y for it in our ow n m anufactured
g o o d s ; if, on the other hand, w e im port cotton y a r n from E n g ­
lan d, w e h a v e to p a y the v alu e o f it in raw m a te ria ls and articles
o f food w hich w e could m ore a d v a n t a g e o u s ly w o rk up or consum e
o u rse lv e s, or else w e m u st p a y for it in specie w h ich we have
acquired else w h e re , and w ith w h ich w e could more ad v a n ta g e o u sly
p u rch ase foreign ra w m a te ria ls to w o rk up for o u rselves, or colonial
produce for our ow n con su m ption .
In the s a m e w a y the introduction o f sp in n in g linen yarn by
m a c h in e r y offers u s the m e a n s not o n ly o f in c r e a s in g our home
co n su m p tio n o f linen, and o f p e rfe ctin g our agriculture, but also
o f e n o rm o u sly in c re a sin g our trade w ith tropical countries.
F o r the tw o abo ve-n am ed b ran c h es o f industry, a s w ell a s for
the m an u fac tu re o f w o o lle n s, w e are a s fa v o u r a b ly circum stanced
a s a n y other nation, by an am o u n t o f w a te r pow er hitherto not
utilised, b y ch e ap n e c e ssa rie s o f life, an d b y low w a g e s. W h a t
w e lack is s im p ly and solely a g u a r a n te e for our cap ita lists and
a r tis a n s by w h ic h th ey m a y be protected a g a in s t lo ss o f capital
and w a n t o f w ork. A m od erate p ro tective d u ty o f about tw entyfive per cent, d u rin g the next five ye ars, w h ich could be m a in ­
tained for a few y e a r s at that rate and then be low ered to fifteen
to t w e n ty per cent., ou g ht co m p le te ly to acc o m p lish this object.
E v e r y arg u m e n t w h ich is adduced b y the su p p o rte rs o f the theory
o f v a lu e s a g a in s t such a m e a su re , h a s been refuted by us. On
the other hand, w e m a y add a further a r g u m e n t in favo u r o f that
m e a su re , that these g re at b ran c h es o f in d u stry e sp e c ia lly offer us
the m e a n s for e s ta b lis h in g e x t e n s iv e m ac h in e m an u fac to rie s and
for the de v e lo p m e n t o f a race o f co m p ete n t technical in stru ctors
and practical forem en.
In the trade in colonial produce G e r m a n y , a s F r a n c e and
E n g la n d h a v e done, h a s to follow the principle— th at in respect
to the p u rc h ase o f the colonial produce w h ich w e require, we
should g iv e a preference to th o se tropical cou n tries w hich purchase
m an u factu red g o o d s from us ; or, in short, that w e sh o u ld buy fr o m
those w h o buy f r o m us. T h a t is the case in reference to our trade
with the W e s t In d ie s and to N o rth and S o u th A m e rica,
COMMERCIAL POLICY OF THE GERMAN ZOLLVEREIN
343
B u t it is not yet the case in reference to our trade with H o l­
land, which country supplies us with enormous quantities of her
colonial produce, but only takes in return disproportionately small
quantities of our manufactured goods.
At the same time Holland is naturally directed to the market
of Germ any for the disposal of the greater part of her colonial
produce, inasmuch as En glan d and Fran ce derive their supplies
o f such produce for the most part from their own colonies and
from subject countries (where they exclusively possess the market
for manufactured goods), and hence they only import small quan­
tities of Dutch colonial produce.
Holland has no important manufacturing industry of her own,
but, on the other hand, has a great productive industry in her
colonies, which has recently greatly increased and may yet be
immeasurably further increased. But Holland desires of G erm any
that which is unfair, and acts contrary to her own interests if
rightly understood, inasmuch as she desires to dispose of the
greater part of her colonial produce to Germany, while she desires
to supply her requirements of manufactured goods from any
quarter she likes best. T h is is, for Holland, an only apparently
beneficial and a short-sighted policy ; for if Holland would give
preferential advantages to German manufactured goods both in
* the mother country and in her colonies, the demand in Germ any
for Dutch colonial produce would increase in the same proportion
in which the sale of German manufactured goods to Holland and
her colonies increased, or, in other words, Germ any would be able
to purchase so much the more colonial produce in proportion as
she sold more manufactured goods to Holland ; Holland would
be able to dispose of so much more colonial produce to Germany
as she purchased from Germ any manufactured goods. T h is re­
ciprocal exchange operation is, at present, rendered impracticable
by Holland if she sells her colonial produce to Germ any while
she purchases her requirements in manufactured goods from
England, because En glan d (no matter how much o f manufactured
goods she sells to Holland) will alw ays supply the greater part of
her own requirements of colonial produce from her own colonies,
or from the countries which are subject to her.
Hence the interests of Germany require that she should either
demand from Holland a differential duty in favour of G erm any’s
manufacturing production, by which the latter can secure to her­
self the exclusive market for manufactured goods in Holland and
her colonies, or, in case of refusal, that Germany should impose
a differential duty on the import of colonial produce in favour of
the produce of Central and South America and of the free markets
of the W est Indies.
344
T H E POLITICS
T h e a b o ve -n am e d policy w ou ld con stitute the m o st effective
m e a n s o f ind ucin g H o lla n d to jo in the G e r m a n Z o llv e re in .
A s m atte rs n o w stand, G e r m a n y h a s no reason for sacrificing
her ow n m an u facto rie s o f beetroot s u g a r to the trade with H ol­
land ; for o n ly in case G e r m a n y can pay for her req u irem en ts of
this article by m e a n s o f her ow n m an u fac tu re d g o o d s, is it more
to her a d v a n t a g e to su p p ly that req u ire m e n t b y an e x c h a n g e trade
w ith tropical countries, than b y p rodu cing it h e r s e lf at home.
H e n c e the attention o f G e r m a n y should be at once chiefly
directed to the exten sio n o f her trade w ith N o rth e rn , Central,
and S o u th A m e ric a , and with the free m a rk e ts o f the W e s t Indies.
In con nection w ith th at, the fo llo w in g m e a su r e s, in addition to
that a b o v e ad verted to, a p p e a r d e s i r a b l e : the estab lish m en t o f
a reg u lar service o f s te a m s h ip s betw een the G e r m a n se ap o rts and
the prin cipal ports o f th o se countries, the prom otion o f em igration
thither, the co n firm atio n an d e x te n sio n o f frie n d ly relations be­
tween them and the Z o llv e r e in , and e s p e c ia lly th e prom otion of
the civ ilisa tio n o f those cou n tries.
R e ce n t experience h a s a b u n d a n tly t a u g h t us h o w e n o rm o u sly
com m erce on a larg e scale is prom oted b y a reg u lar service o f
ste a m sh ip s.
F r a n c e and B e lg i u m are a lre ad y tre a d in g in the
footsteps o f E n g la n d in this respect, a s th ey w e ll perceive that
eve ry n ation w h ich is be h in d h an d in th is m ore perfect m e an s
o f tran sport m u st retrograde in her foreign trade. T h e G e rm a n
se ap o rts also h a v e a lre ad y rec o gn ise d t h i s ; a lre ad y one public
c o m p a n y h a s been co m p le te ly form ed in B r e m e n for building
tw o or three ste a m v e s s e ls for the trade w ith the U n ite d State s.
T h i s , h ow ever, is clearly an insu fficient provision. T h e c o m ­
m ercial interests o f G e r m a n y require not o n ly a reg u lar service
o f steam v e s s e ls w ith N o rth A m e r ic a , e sp e c ia lly w ith N e w Y o rk ,
B o sto n , C h a rle sto n , and N e w O rlean s, but a lso w ith C u b a, S a n
D o m in g o , and C en tral and S o u t h A m e r ic a . G e r m a n y o u g h t to
be behind no other nation in respect to these latter lines o f steam
n av igatio n .
It m u st ce rtain ly not be ign ored that the m e an s
w hich are required for these ob jects w ill be too g re a t for the
spirit o f enterprise, and p erh aps also for the p o w e r o f the G e r m a n
seaports, and it s e e m s to us they can on ly be carried into effect
by m e a n s o f liberal su b sid ie s on the part o f the states o f the
Z o llve re in . T h e prospect o f such su b sid ie s a s w ell as o f differ­
ential duties in favo u r o f G e r m a n sh ip p in g , ou g ht at once to
constitute a stro n g m otive for these se ap o rts to becom e included
in the C om m e rcial U n io n . W h e n one con sid ers h o w g re a t ly
the exp o rts o f m an u fac tu re d g o o d s and the im p o rts o f colonial
produce, an d co n se q u e n tly a lso the c u s to m s revenue, o f the states
o f the Z o llv e re in w ou ld be increased by such a m e asu re, one
COMMERCIAL POLICY OF THE GERMAN ZOLLVERE1N
345
cannot doubt that even a considerable expenditure for this object
must appear as only a reproductive investment of capital from
which rich returns are to be expected.
Through the increase of the means of intercourse of Germ any
with the above-named countries, the emigration of Germans to
those countries and their settlement there as citizens would be no
less promoted; and by that means the foundation would be laid
for future increase of commerce with them. F or this object the
states of the Zollverein ought to establish everywhere consulates
and diplomatic agencies, by means of which the settlement and
undertakings of German citizens could be promoted, and especially
to assist those states in every practicable w ay in giving stability to
their governments and improving their degree of civilisation.
W e do not share in the least the opinion of those who think
that the tropical countries of America offer less advantages to
Germ an colonisation than those of temperate climate in North
America. However great, as we have openly confessed, is our
attachment for the last-named country, and however little we are
able or desire to deny that an individual German emigrant who
possesses a little capital has greater hope of permanently making
his fortune in Western North America, we must nevertheless
here express our opinion that emigration to Central and South
America, if it were well led and undertaken on a large scale,
oilers in a national point o f view much greater advantages for
G erm any than emigration to North America. W hat good is it if
the em igrants to North America become ever so prosperous ?
In their personal relation they are lost for ever to the German
nationality, and also from their material production Germany
can expect only unimportant fruits. It is a pure delusion if
people think that the German language can be maintained by
the Germ ans who live in the interior of the United States, or
that after a time it may be possible to establish entire German
states there.
W e once ourselves entertained this illusion, but
after ten years' observation in the country itself, on the spot,
we have entirely given it up. It lies in the very spirit of every
nationality, and above all in that of the United States, to a s ­
similate itself in language, literature, administration, and legis­
lation ; and it is good that that is so. However many Germ ans
may now be living in North America, yet certainly not one
of them is living there whose great-grandchildren will not greatly
prefer the En glish language to the German, and that for the
very natural reason that the former is the language of the
educated people, of the literature, the legislation, the administra­
tion, the courts of justice, and the trade and commerce of the
country. T h e same thing can and will happen to the Germans
346
T H E POLITICS
in N o rth A m e r ic a a s h a p p e n e d to the H u g u e n o ts in G e rm a n y
and the F re n c h in L o u is ia n a .
T h e y n a tu r a lly m u st and will
be a m a lg a m a t e d w ith the p red o m in an t popu lation : som e a little
soon er, others a little later, a cc o rd in g a s th ey dw ell m ore or less
to g e th er w ith fellow -cou n trym en .
S t ill le ss dependence can be placed on an active intercourse
betw een G e r m a n y an d the G e r m a n e m ig r a n t s to the w est of
N o rth A m e ric a . T h e first settler is a lw a y s com pelled by neces­
sity to m ak e for h i m s e lf the g re a t e r part o f h is articles o f clothing
and u t e n s i l s ; an d these cu sto m s, w h ic h orig in ated from mere
n e ce ssity , con tinu e for the m o s t part to the second and third
gen eratio n.
H e n c e it is th at N o rth A m e r ic a itse lf is a country
w h ic h m a k e s pow erfu l efforts in m a n u fa c tu r in g in d u stry, and will
co n tin u a lly strive m ore and m ore to g a in p o sse ssio n o f her home
m arket for m an u factu red g o o d s, for her ow n ind ustry.
On the other hand, w e w ou ld on th at account by no m eans
m ain tain that the A m e ric a n m ark e t for m an u fac tu re d goods is not
a v e r y im p ortan t one, and well w o rth y o f reg ard , e sp ec ially for
G erm any.
On the co n trary, w e are o f opinion th a t for m an y
articles o f lu x u r y and for m a n u fa c tu re d articles w h ich are e a sy of
tran sp o rt, an d in w h ich the w a g e s o f lab ou r con stitu te a chief
elem en t o f the price, that m ark e t is on e o f the m ost im portant,
and m u st from y e a r to y e a r, a s respects the articles above named,
b ecom e m ore im p o rtan t for G e r m a n y . W h a t w e contend is only
this, that those G e r m a n s w h o e m ig r a te to the w e s t o f North
A m e r ic a g iv e no im p o rtan t a s s is ta n c e in in c r e a s in g the demand
for G e r m a n m an u factu red g o o d s, an d th at in reference to that
object e m ig ra tio n to C e n tral and S o u t h A m e r ic a requires and
d e se rv e s v e r y m uch m ore direct e n co u ra g e m e n t.
T h e ab o ve-m en tio n ed cou n tries, in clu d in g T e x a s , are for the
m o st part adapted for r a is in g colonial produce.
T h e y can and
w ill ne v e r m ak e g r e a t p r o g r e ss in m a n u fa c tu r in g in d u stry. H ere
there is an e n tirely n e w and rich m a rk e t for m an u factu red goods
to a c q u i r e ; w h o e v e r h a s here e stab lish e d firm c o m m e rc ial rela­
tion s, m a y rem ain in p o sse ssio n o f th em for all future time.
T h e s e coun tries, w ith ou t sufficient m o ral p o w e r o f their ow n to
raise th e m se lv e s to a h ig h e r g rad e o f c iv ilisa tio n , to introduce
well-ordered s y s t e m s o f g o v e rn m e n t, and to endue them with
sta b ility , w ill m ore and m ore co m e to the con viction th at they
m u st be aided from outside, n a m e ly , by im m ig ra tio n .
In these
q u arters the E n g l i s h and F re n c h are hated on accou n t o f their
arrog an ce, and o w in g to je a lo u s y for n atio n al independence— the
G e r m a n s for the opposite reaso n s are liked. H e n c e the state s o f
the Z o llv e re in o u g h t to devote the clo se st attention to these
countries.
COMMERCIAL POLICY OF THE GERMAN ZOLLVEREIN
347
A vigorous German consular and diplomatic system ought to
be established in these quarters, the branches of which should
enter into correspondence with one another.
Y o u n g explorers
should be encouraged to travel through these countries and make
impartial reports upon them. Y o u n g merchants should be en­
couraged to inspect them— young medical men to go and practise
there.
Companies should be founded and supported by actual
share subscription, and taken under special protection, which
companies should be formed in the German seaports in order to
buy large tracts of land in those countries and to settle them with
German colonists— companies for commerce and navigation,
whose object should be to open new markets in those countries
for German manufactures and to establish lines of steamships—
mining companies, whose object should be to devote German
knowledge and industry to winning the great mineral wealth of
those countries. In every possible w ay the Zollverein ought to
endeavour to gain the good-will of the population and also of the
governm ents of those countries, and especially to promote by that
means public security, means of communication, and public
order; indeed, one ought not to hesitate, in case one could by
that means put the governments of those countries under obliga­
tion to us, also to assist them by sending an important auxiliary
corps.
A similar policy ought to be followed in reference to the E ast
— to European Turkey and the Lower Danubian territories.
Germ any has an immeasurable interest that security and order
should be firmly established in those countries, and in no direction
so much as in this is the emigration of Germans so easy for
individuals to accomplish, or so advantageous for the nation. A
man dwelling by the Upper Danube could transport himself to
Moldavia and W allachia, to Servia, or also to the south-western
shores of the Black Sea, for one-fifth part of the expenditure of
money and time which are requisite for his emigration to the
shores of L ake Erie. W h at attracts him to the latter more than
to the former is, the greater degree of liberty, security, and order
which prevails in the latter. B u t under the existing circumstances
of T u rkey it ought not to be impossible to the German states, in
alliance with Austria, to exercise such an influence on the im­
provement of the public condition of those countries, that the
German colonist should no longer feel himself repelled from them,
especially if the governments themselves would found companies
for colonisation, take part in them themselves, and grant them
continually their special protection.
In the meantime it is clear that settlements of this kind could
only have a specially beneficial effect on the industry of the states
348
T H E PO LITICS
o f the Z o llv e r e in , i f no o b stacles w ere placed in the w a y o f the
e x c h a n g e o f G e r m a n m an u fac tu re d g o o d s for the agricultural
produce o f the colonists, and if that e x c h a n g e w a s promoted by
cheap and rapid m e a n s o f co m m u n ica tio n .
H e n c e it is to the
interest o f the sta te s o f the Z o llv e r e in , that A u s tr ia should
facilitate a s m u ch a s p ossible the th rou g h traffic on the Danube,
an d that steam n a v ig a tio n on the D a n u b e should be roused to
v ig o r o u s a c tiv ity — c o n se q u e n tly that it should at the outset be
actu a lly su bsid ised by the G o v e r n m e n t s .
E s p e c ia lly , n o th in g is so desirable as that the Z o llv e r e in and
A u s tr ia at a later period, after the in d u stry o f the Z o llv e r e in states
h a s been better developed and h a s been placed in a position of
greater e q u a lity to th at o f A u s t r ia , should m ake, by m e a n s o f a
treaty, reciprocal co n c e ssio n s in respect to their m anufactured
products.
A fte r the con clu sion o f such a tre aty, A u s t r ia w ou ld h ave an
equal interest w ith the state s o f the Z o llv e r e in in m a k in g the
T u r k i s h p ro v in c e s av a ila b le for the benefit o f their m a n u fac tu rin g
in d u stry and o f their foreign com m erce.
In anticipation o f the in clu sio n in the Z o llv e r e in o f the
G e r m a n seaports and H o lla n d , it w ou ld be desirable that P r u ssia
sh ou ld n o w m a k e a co m m e n c e m e n t b y the adoption o f a G e rm an
co m m ercial flag, and by la y in g the foundation for a future G e rm an
fleet, an d th at sh e should try w h e th er and h ow G e r m a n colonies
can be founded in A u str a lia , N e w Z e a la n d , or in or on other
isla n d s o f A u s t r a la s ia .
T h e m e a n s for such a tte m p ts an d c o m m e n c e m e n ts, and for
the u n d e rta k in g s and su b v e n tio n s w h ich w e h a v e p rev io u sly
recom m en ded as desirable, m u s t be acquired in the sa m e w a y
in w h ich E n g la n d and F r a n c e h a v e acquired the m e a n s o f sup­
portin g their foreign co m m erce and their co lo n isatio n and o f
m a in ta in in g their pow erful fleets, n a m e ly , b y im p o s in g duties
on the im p o rts o f colonial produce.
U n ite d action, order, and
e n e r g y could be infused into these m e a su re s o f the Zo llverein ,
i f the Z o llv e r e in state s w ould a s s ig n the direction o f them in
respect to the N o rth and tra n sm a rin e affairs to P r u s s ia , and in
respect to the D a n u b e and O riental affairs to B a v a r ia .
An
addition o f ten per cent, to the present im port du ties on m a n u ­
factu res and colonial produce w o u ld a t presen t place one m illion
and a h a l f per a n n u m at the d isp osal o f the Z o llv e r e in . A nd
as it m a y be expected w ith ce rtain ty, a s a result o f the continual
in crease in the export o f m an u fac tu re d g o o d s, th at in the course
o f tim e co n su m p tio n o f colonial produce in the state s o f the
Z o llv e r e in w ill increase to double and treble its p resen t am ou n t,
and co n seq u en tly their cu sto m s reven u e w ill increase in like
COMMERCIAL POLICY OF THE GERMAN ZOLLVEREIN
349
proportion, sufficient provision will be made for satisfying the
requirements above mentioned, if the states o f the Zollverein
establish the principle that over and above the addition o f ten
per cent, a part also o f a ll fu tu re increase in im port duties should
be placed at the disposal of the Prussian Government to be ex­
pended for these objects.
A s regards the establishment o f a German transport system,
a n d especially of a German system o f railways, we beg to refer to
a work of our own which specially treats of that subject. T h is
great enterprise will pay for itself, and all that is required of the
Governm ents can be expressed in one word, and t h a t i s — e n e r g y .
APPENDICES.
A P P E N D I X A.
L i s t ’s a lle g a tio n as to th is effect o f th e p e cu n ia ry su b sid ies gran ted b y
E n g la n d to h e r a llie s on th e C o n tin en t w ould a p p e a r to h av e som e
fo u n d atio n in fa c t : a n y c a p ita l tra n s fe rre d b y one co u n try to an o th er
(o th e r th an by a m ere tra n s fe r o f e x istin g se c u ritie s b etw een w e a lth y
S ta te s ) m ust in th e long run be effected ch ie fly in co m m o d ities. It is
p ro b ab le th at the la rg e lo an s m ade by E n g lis h c a p ita lis ts to foreign
S ta te s (n o tab ly from 18 5 0 to 18 7 0 ) resu lted in te m p o ra ry e x tra dem an d
for B ritis h p ro d u cts, w h ich h elp ed to c a u se the in c re a se o f our p ro sp e rity
‘ by le a p s and b o u n d s.5 S o fa r th e y m a y h ave op erated a s ‘ b o u n tie s ’ to
B r it is h p ro d u c ers, in the m a n n er in w h ich L is t m a in ta in s th at th e su b ­
s id ie s did. B u t the su b sid ies b ein g a b so lu te g ifts fo r s e rv ic e s in w ar,
an d th e su b se q u e n t lo an s to re p u d ia tin g or b an k ru p t S ta te s b ein g p ra c ti­
c a lly (alth o u g h in v o lu n tary ) g ifts, produced no in te re st retu rn in futu re
y e a rs . T h e E n g lis h nation h a s paid h e a v ily (in the in c re a se to th e
n a tio n a l debt) fo r a n y te m p o ra ry benefit afforded to E n g lis h m a n u ­
fa c tu r e rs by th e ‘ b o u n tie s ’ o f w h ich L is t co m p lain s. A n d E n g lish
h o ld ers o f fo reign S ta te bon ds h a v e paid no le ss h e a v ily for the te m ­
p o ra ry ‘ le a p s and b o u n d s ’ b y w h ich B ritish m a n u fa ctu rin g in d u stry
m a y h a v e a d v a n c e d in m ore re cen t tim es, o w in g to th e lo a n s .—
T
ran slato r
.
35i
A PPEN DIX B.
T h e f o llo w in g i n s ta n c e s ( a m o n g o th e rs ) in w h ic h th e S t a t e has, w ith
g e n e r a l a s s e n t o f the public, in te r fe re d w ith th e lib e r t y o f in d iv id u a ls in
r e s p e c t to t h e ir s e p a r a t e actio n , a r e ad d u c e d b y the la te M r. J u s t i c e B y les.
T h e S t a t e p r o v id e s d e fe n c e s a g a in s t e x te r n a l a g g r e s s io n .
It c o n d u c ts t r e a t ie s w ith fo reig n n ation s.
It p r e s e r v e s in te rn a l p e a ce an d order.
It is th e c o r n e r- s to n e o f f a m i l y ties, f a m i l y d u tie s , f a m il y affection,
f a m i l y e d u catio n , b y r e g u l a t i n g a n d e n fo r c in g th e m a r r i a g e c on tract.
It in s titu te s a n d p r o t e c ts p r o p e r ty .
It r e g u l a t e s th e t r a n s m i s s i o n o f p ro p erty .
It e n fo r c e s th e r e p a i r o f h i g h w a y s b y th e s e v e r a l d is t r ic ts th rou gh
w h ic h t h e y p a s s , or b y th o s e w h o use th em .
I t o b lig e s e a c h c o u n ty to m a k e a n d r e p a ir its ow n b rid g e s .
I t m a in t a in s p o r t s and h a r b o u rs .
I t s u r v e y s a n d lig h t s th e s e a c o a s t s o f th e re a lm .
I t c o in s m o n ey , an d p ro h ib its in te r fe re n c e w ith th is m o n o p o ly.
It r e g u la t e s th e issu e o f p r o m i s s o r y n o tes p a y a b l e to bearer.
It p r o v id e s a u n ifo rm s y s t e m o f w e ig h t s an d m e a s u r e s , and p roscrib es
th e use o f a n y other.
It a s s u m e s the d istrib u tio n o f in te llig e n c e b y post.
B y th e p aten t a n d c o p y r i g h t la w s it g i v e s b o u n tie s on th e exertion
o f the i n v e n tiv e fa c u ltie s , in th e s h a p e o f a monopoly for a lim ited period.
B y r e q u ir in g a p u b lic s p e cific a tio n , e x p l a n a t o r y o f e v e r y patented
d i s c o v e r y o r in v en tio n , it t a k e s c a r e t h a t th e s e c r e t s h a ll not be hidden
fro m the p u b lic o r die w ith th e in ven tor.
I t im p o ses a b rid le on th e a c q u is itio n o f p r o p e r t y b y c o rp o ra te
bodies.
It p r o t e c ts th e p ublic h e a lt h b y th e p ro h ib itio n o f n u is a n c e s of
t h o u s a n d s o f kinds, and b y m a k in g p r o v is io n for t h e ir re m o v a l.
B y th e q u a r a n tin e l a w s it p r e v e n t s th e im p o rta tio n o f c o n ta g io u s
d is e a s e s .
It p r o v id e s for th e c le a n lin e s s o f to w n s.
It r e g u la t e s the f a r e s o f h a c k n e y c a r r i a g e s and c o n t r o ls th e d rivers.
I t forb id s i n o c u la t io n for th e s m a ll-p o x , a n d a r t i f i c i a l ly p ro m o tes
v a c c in a tio n .
I t a s s u m e s t h e d is t r ib u t io n o f i n s o l v e n t s ’ e s t a t e s .
It p r o v id e s for th e m a i n t e n a n c e o f th e poor.
I t forb id s p e r p e t u it i e s b y a v o id in g all a t te m p t s to tie up p ro p e rty
b e y o n d a life o r liv e s in b e in g an d t w e n t y - o n e y e a r s a f t e r w a r d s .
T h o u g h it t o l e r a t e s all re lig io n s , it does not l e a v e th e v irtu e and
352
APPENDIX B
353
happiness of the multitude without the support and direction of an
established faith and worship.
In the above cases G overnm ent interferes on behalf of the public.
But there are others in which it does so to protect the helplessness or
inexperience of individuals. T h u s :
It shields infants by avoiding their contracts and protecting their
persons and p rop erty;
And married women ;
And persons of unsound m in d;
And in m an y w ays the helpless labouring poor.
It forbids the truck system.
It regulates the employment of women and children in mines and
factories.
It controls pawnbrokers— grinding the tooth of usury, and securing
facilities for redemption.
It prohibits and punishes, as we have seen, the use of unjust weights
and m easures ;
And the sale of unwholesome provisions ;
And the adulteration of coffee, tobacco, snuff, beer, tea, cocoa,
chocolate, and pepper.
T o guard against fraud, it directs the form and manner in which
w ills shall be executed.
I f a man gives a money bond with a penalty if the money is not
repaid at a day prefixed, the State forbids the penalty to be enforced.
A purchaser of gold or silver articles cannot tell whether they are
real gold and silver or not, or how much of the weight is precious metal,
and how much is alloy. T h e State steps in to his assistance, and r e ­
quires the a s s a y mark of a public officer.
A man buys a pocket of hops. He cannot alw ays open it to see
whether it is of the growth alleged or of uniform quality. T h e State
interferes and m akes it penal to mark or pack falsely.
A n attorney sends in his bill. T h e client cannot tell whether the
charges are usual and fair. T h e State intervenes and provides a public
officer who is empowered, not only to correct, but also to punish over­
charges.
T h e State compels the professional education of medical men and
attorneys.
Th e above are but some instances of the mode in which n early all
governm ents have found it for the advantage of the community to inter­
pose.
W h a t is the interposition of G ov e rn m en t?
S im ply the concentrated action of the wisdom and power of the
whole society on a given p o in t ; a mutual agreement by all, that certain
things shall be done or not done for the general benefit.— ‘ Sophisms of
Free Trade e x a m in e d b y a B arrister (the late Mr. Ju s tice Byles), 1870.
A PPEN D IX C.
T h a t L i s t sh o u ld r e je c t th e id e a o f p r o t e c tiv e d u tie s on c o rn an d ag r ic u l­
tu r a l p rod u ce a s b e in g in a n y d e g r e e b e n e ficia l to a c o u n t r y like G e r m a n y ,
is e a s y to u n d e rsta n d .
H e r a g r i c u l t u r e at th e tim e w h en he w ro te ( 1 8 4 1 )
not o n ly a m p l y p r o v id e d fo r th e w a n t s o f h e r p o p u la tio n , but yielded
then , a n d h a d y ie ld e d fo r a lon g p r e v i o u s p erio d , a la r g e a n d s te a d y
s u r p lu s for e x p o r t to o th e r c o u n t r ie s .
N o o th e r E u r o p e a n n ation could
p r o fita b ly e x p o r t s u c h p r o d u c e to her, w h ile th e h ig h r a t e s o f freight
then p r e v a le n t and th e n o n -e x is te n c e o f o c e a n s te a m t r a n s p o r t ren d ere d
s u c h ex p o rt to h e r from m o re d is ta n t c o u n tr ie s im p o s s ib le .
W h e t h e r , a s a m e re q u e s tio n o f p o lic y , th e free im p o rta tio n o f a g r i ­
c u lt u r a l p rod u ce be a p p r o v e d or not, h is c o n t e n tio n , th u s laid down b y
him a s a so rt o f u n i v e r s a l a x io m , but a p p a r e n t ly b a s e d on th e c i r c u m ­
s t a n c e s o f h is o w n c o u n t r y an d tim e, c a n s c a r c e l y be d e e m e d co n siste n t
w ith so m e o t h e r a r g u m e n t s on w h ic h h is g e n e r a l t h e o r y o f n ation al
e c o n o m y is b a sed .
N o r c a n it be d e e m e d ( o f it s e lf) c o n c lu s iv e as a
solution o f th e q u estio n w h ic h is p r e s e n te d to G r e a t B r i t a i n at the
p r e s e n t tim e, viz. w h e th e r , u n d e r c ir c u m s t a n c e s in w h ic h th e n e c e s s a r y
r e s u lt o f a p o lic y o f u n r e s t r ic te d im p o rta tio n o f a g r ic u lt u r a l p rodu ce is
to t h r o w a la r g e p o rtio n o f th e la n d o f th e n a tio n out o f c u ltiv atio n , to
d ep riv e th o s e w h o c u lt iv a t e d it o f t h e i r a c c u s t o m e d e m p lo y m e n t, and to
r e n d e r t h e n atio n d e p e n d e n t fo r th e m a j o r p a r t o f its food on foreign
s u p p lie s, th e n a t io n ’s be st i n te r e s ts a r e m o s t e ffe c tu a lly p rom oted b y
su ch a p o lic y , or b y on e o f s u c h m o d e r a t e p r o t e c tio n o f n a t iv e a g r i ­
cu ltu re a s m a y r e ta in in c u lt iv a t io n th e n a t io n a l lan d , an d g r e a t ly lessen
th e n a t io n ’s d e p e n d e n c e fo r its food on fo reig n im p o r ta tio n . H i s con ­
ten tion le a d s r a t h e r to th e i n fe r e n c e t h a t w h a t m a y be good for one
n atio n m a y be u n d e s ir a b le for a n o t h e r w h i c h e x is t s u n d e r v e r y different
con d ition s, an d still m o r e to s h o w t h a t w h a t m a y be b e n e fic ia l to a
peop le a t one s ta g e o f t h e i r n a t io n a l h i s t o r y m a y be in ju r io u s at an o th e r
tim e — an op in ion w h ic h th e p r e s e n t G e r m a n G o v e r n m e n t a p p e a r s to
s a n c t io n b y its r e c e n t r e v e r s io n to a p r o t e c tio n is t p o lic y a s r e s p e c t s the
im p o rt o f a g r i c u l t u r a l p ro d u ce.
A p o lic y o f m o d e r a te p r o t e c tio n a p p e a r s to be a d v o c a t e d b y those
w h o a p p r o v e it a s a so rt o f m u t u a l a s s u r a n c e to th e in d u s t r io u s p r o ­
d u c e rs o f th e n atio n a g a i n s t th e c o m p e titio n in its ow n m a r k e ts o f p ro­
d u c e rs w h o do not b e lo n g to th e n ation . It is fu r t h e r a d v o c a t e d a s a n
im p o st le v ie d on the fo reig n p r o d u c in g c o m p e t ito r in th e s h a p e o f a
c o n trib u tio n b y him to the r e v e n u e o f t h e n atio n w h ic h im p o s e s it, and
a s the con d ition on w h ic h he is p erm itted to c o m p e te in the m a rk e ts o f
th e l a t t e r n atio n w ith th e n a t iv e p r o d u c e r s , w h o a r e s u b je c te d to m uch
t a x a tio n to w h ic h the fo r e ig n e r does not o t h e r w is e c o n trib u te. It is
354
APPENDIX C
355
noteworthy that Adam Smith him self expresses approval of protective
duties for the latter purpose in case the foreign imported products are
believed to be subjected to less taxation than similar home products.
(‘ W ealth of N ations/ Book IV. chapter ii.)
I f those views can be deemed sound in their application to m anu­
facturing industry, our author does not appear to have clearly stated
the reasons why that industry which, as he admits, is the most im­
portant of any, and which employs more capital and population than
any other, should not (if its successful prosecution requires it) receive
moderate protection as well as manufacturing industry.
W hether, however, the principle of protective duties (either generally
or limited in their application to manufacturing industry alone) be ad­
mitted or not, two inferences seem to be fairly deducible from the teac h ­
ing of Adam Smith and not to be disproved by that of L i s t : firstly, that
if the home agriculturist is required (in the interest of the nation) to
be exposed to free competition by the foreigner in the home market, he
is entitled to be relieved from all such taxation, whether local or
imperial, as at all specially or disproportionately oppresses h i m ;
secondly, that differential duties are justifiable on imports from those
nations who impose restrictions on our export to them as compared with
imports from those nations who impose no such restrictions.— T r a n s ­
la to r.
23 *
A PPEN DIX D.
T h e e x a m p le o f G r e a t B r i t a i n d u r in g th e last few y e a r s m a y be deemed
b y m a n y to fu rn ish a r e fu ta tio n o f L i s t ' s d o c tr in e on th is point. T h e
e x c e s s o f h e r r e c o r d e d im p o r ts o v e r h e r re c o r d e d e x p o r ts h a s in creased
from 58,000,000 in 18 6 9 to 12 1,0 0 0 ,0 0 0 in 18 8 3 .
T h e in d u ctio n o f a c c u r a t e c o n c lu s io n s a s to th e b e n eficia l or in­
j u r i o u s effects o f th is s ta te o f t h in g s on th e n a t io n a l w e lfa r e , and con se­
q u e n t ly on t h e g e n e r a l tru th or e r r o r o f L i s t ' s a lle g a t io n , is rendered
difficult c h ie fly b y tw o c o n s i d e r a t io n s — first, b y th e c ir c u m s t a n c e that
G r e a t B r i t a i n p o s s e s s e d up to a fe w y e a r s ago, an d still p o s s e s s e s to a
c o n s id e r a b le exten t, la r g e a m o u n ts o f c a p it a l i n v e s te d ab road , the
d iv id e n d s or in te r e s t on w h ic h , i f not r e in v e s t e d th ere, n e c e s s a r i l y tend
to in c r e a s e h e r total re c o rd e d im p o rts. T h e s e c o n d is, t h a t w e h a v e no
s ta tis t ic a l r e t u r n s o f B r i t i s h h o m e p ro d u c tio n or c o n s u m p t io n o f m a n u ­
fa c t u r e d g o o d s, and o n l y im p e r f e c t o n es o f h e r a g r ic u lt u r a l production.
H e n c e it is im p o s s ib le a c c u r a t e l y to d e te r m in e to w h a t ex ten t G r e a t
B r i t a i n ’s p r e s e n t e n o r m o u s e x c e s s o f im p o r ts r e p r e s e n t s m e r e l y the
a n n u a l in t e r e s t on p r e v i o u s l y a c q u ir e d c a p it a l, an d to w h a t extent, on
the o th e r h a n d , it r e p r e s e n t s the s u b stitu tio n o f th e p r o d u c ts o f foreign
lab o u r in h e r o w n m a r k e ts fo r th o s e o f h e r h o m e in d u s tr y .
T o th e ex te n t to w h ic h th e fo r m e r o f t h e s e tw o e le m e n ts can be
p ro v e d to exist, th e e x c e s s o f im p o r ts so a c c o u n t e d fo r is (in the case
o f E n g l a n d ) s p e c ia l and a b n o r m a l, an d p r o v e s n o t h in g a d v e r s e to the
g e n e r a l tru th o f L i s t ’s a lle g a tio n .
B u t ev en i f it be c o r r e c t (an d it is difficult to b e lie v e th a t it can be
so) t h a t th e e x c e s s in v a lu e o f ou r im p o r ts (less c a r r y i n g profits) is
w h o lly a c c o u n t e d fo r b y e a r n in g s on c a p it a l in v e s te d a b r o a d (w hich
e a r n in g s r e a c h u s in im p o rte d co m m o d itie s), it w o u ld a p p e a r that, i f the
d irec t effect o f su c h e a r n in g s so im p orted is to s u p p la n t an d d im in ish
p ro d u ctio n at hom e, t h e r e is a c o u n t e r v a i li n g n a t io n a l loss, w h ic h g o es
fa r to n e u tra lis e th e a lle g e d n a t io n a l be n efit o f s u c h e x c e s s o f im ports.
S u p p o s in g , for in s ta n c e , th a t th e n atio n as a w hole p o s s e s s e s
1,000,000,000?. s te r lin g in v e s te d a b r o a d in v a r i o u s w a y s r e a lis in g an
a n n u a l in com e o f 50,000,000/. s te rlin g , t h a t profit, i f not r e in v e s t e d ab ro ad ,
no doubt r e a c h e s us in im p o rte d c o m m o d itie s an d p e r m e a t e s th rou gh
th e c o m m u n i t y ; but w h en s u c h c o m m o d itie s m a in l y c o n s is t o f g o o d s or
p ro d u c e w h ic h s u p p la n t h o m e p ro d u ctio n s, w e a r e th en to a g r e a t exten t
lo sers.
W e r e such profit to re a c h u s o n ly in g o o d s w h ic h we c a n n o t produce,
or in r a w m a t e r ia ls req u ired for m a n u fa c t u r e s , it m ig h t all be deem ed
n a tio n a l gain ; but w h en it r e a c h e s us in th e s h a p e o f food or other
a r t i c l e s w h ic h cou ld be p ro d u ced at ho m e, an d o n ly t r a n s fe r s ou r custom
from n a tiv e to foreig n p r o d u c e r s , th e g a in is q u e s t io n a b le ev en for the
p re s e n t, and (v iew ed p r o s p e c t iv e ly ) w o u ld a p p e a r to in v o lv e ab solu te
d a n g e r to the c o m m u n it y . — T r a n s l a t o r .
356
INDEX.
Ad
valorem
7 L 323
and specific duties, 55,
Agriculture, s t a t e of English, in a . d .
1327, 30
— co-existence of, with manufactur­
ing power in same country most
desirable, 127, 147, 193, 204, 254
— recovers more quickly than manu­
facturing industry from interrup­
tions, 239
— doctrines o f the French physio­
crats respecting, 275
— beneficially affected by protection
of manufacturing industry, 3 13
— needs no protection, 173
Agricultural land, value of, increases
in proportion to the increase o f
manufacturing industry, 186 note
Agricultural state (purely) a less per­
fect institution than an agricultural
manufacturing state, 145, 147,14 9 *
159, 163
— natural resources of, necessarily
undeveloped, 17 1
— population of, tends to outstrip
their material agricultural capital,
185
— rates of interest in, are higher
than in agricultural manufacturing
nations, 187
Alchemy resorted to by the Venetians
in their decline, 7
Amalfi, power of, in eighth century,
5 and note
America, discovery of, favourably
affected France, 56
its effect on Spain and Portugal, 48
— North, English colonies, prohibi­
tion o f manufactures in, by E n g ­
land, 77, 295
Annexation of unoccupied territories,
ought not to be monopolised, 337
Antwerp, a principal centre o f com­
merce in early Middle Ages, 23
Artificers, foreign, immigration of,
into England encouraged, 13, 29,
3 Ti 32, 45
expelled by Henry V I I I., 15
Asiatic nationalities, decay of, 336
Assiento treaty, the, 54
Austria, first promoter of manufac­
tures in Germany, 67
— closer commercial relations of,
with Zollverein desirable, 348
e c c a r i a (Italian economist), 268
Balance of power in Europe, 330
— trade, doctrine of, not entirely
erroneous, 218
questions for those who doubt
doctrine of, 234
Bank