First, The _Philadelphian_ has sense enough to feel, that the war must
advance the price of goods from the Colonies, in a due proportion to the
general increase in prices of all that is carried there. In _Europe_,
on the contrary, people are not only strangers to the idea of that
universal chain, but they are so convinced, or rather so persuaded,
that _the Colonies were created, and do actually exist, for the sole
pleasure and interest of their respective metropolises_, that no
imaginable means are spared to lessen the price of their products in the
mother country who receives them, in order that _this tender mother_
may sell them at a cheaper rate in the foreign markets; but, ye mother
countries! your colonists are also your children, foreigners are only
your brethren.—It must be owned, however, that the coffee, indigo, and
cottons, of _Jamaica_, _Grenada_, _Guadaloupe_, _St. Domingo_, &c. are
no more the _territorial commodities_ of _England_, and of _France_,
than the corn and other productions of those two kingdoms; and that the
arguments adduced in regard to the colonies, are, as _Montaigne_ says,
_of a piece_ with that by which they prove, that, THE CHEAPER THE CORN,
THE MORE BRILLIANT IS THE COMMERCIAL COMPETITION.—_Were not Nature by
her underhand work constantly fighting, with some advantage, against the
dreams of speculators, to what pitch of misery would not agriculture be
reduced in all parts of the world!_
Secondly, War has been productive, in the United States of _America_, of
the same effects which attend it every where else, viz. an augmentation
in the price of every thing.
Thirdly, The increase of nearly _cent. per cent._ assigned to the
staves, does not determine the general advance of _American_ goods;
the excessive, but instantaneous price of one article only, denotes an
extraordinary demand for that object, and the actual impossibility of
answering that demand; the level, so necessary in all prices, naturally
returns as soon as the medium of the demand is known, and has determined
the number of hands necessary to supply it: now it cannot be doubted, but
that the goods in _America_ must have advanced in price, much more than
any where else, because the expences of the Colonies have been, during
the war, relatively speaking, much more considerable than any where else,
considering the discredit inseparable from the precariousness of their
situation. But the difference between their inland _common_ prices, and
those of _Europe_, was so great (this will presently be seen), that they
may increase them enough to pay off the interest of their national debt,
and yet keep the _European_ prices at a distance.
Fourthly, The United States are now a foreign nation in regard to
_Jamaica_, which belongs to _England_; yet this consideration does not
render them so far unjust, as to shake off the burden of their taxes,
and fix it on the inhabitants of _Jamaica_; they only make them nominal
partners in that burden, (if the expression may be allowed), without any
inconvenience arising therefrom to either of the parties.
Fifthly, They have the true notion of an equitable trade, founded on the
continuation of former relations between goods and goods; a principle
from which I only draw inferences relative to the national debt, and
which suffices to destroy all the _hideousness_ of that phantom.
Sixthly, They do not pretend, with the _Europeans_, that the increase in
the national prices, can in any thing affect their exportation; but they
have found, that being obliged to sell dearer, it was their duty to offer
very frankly to pay also dearer for whatever they wanted in return.
Seventhly, They do not entertain the least doubt on what _seems_ to be
unknown in _Europe_, namely, that the real benefit of a voyage can be
found only in the price which the returns will meet with, when arrived
in the country where the voyage is to terminate.
Eighthly, In the union, and in the execution of these different points,
centers the little mystery, by means of which Nature has hitherto filled
up by slow degrees, and by which the _American_ proposes, without
thinking so to do, to fill up with more dispatch, those little _furrows_
of taxes, the very name of which is now a bugbear, but would cease to
be so, if the manner in which they are planned, imposed, and above all,
collected, did not prolong and increase the real and momentary evil,
which will ever be inseparable from them.
Ninthly, It is singular enough, that the _European_ cultivator should be
taught by the _American_ trader, _the necessity and the justice_ of an
increase of price in the _productions_ of the earth, _proportionable_,
says the honest _Philadelphian_, _to that which is to be met with in the
price of the productions of industry_:—_It would be unreasonable_, says
he, _to expect the goods of ~Jamaica~ at the old prices, when those of
~Philadelphia~ have advanced so considerably_.—Nay, say the _European_
manufacturers, since our goods, by means of the taxes, have increased
10 _per cent._ it follows necessarily that the price of wheat, sugar,
indigo, &c. should fall in the same proportion, in order _that the trade
in competition may be supported abroad;—had not Nature, by her underhand
work, constantly fought with some advantage against the dreams of
speculators, and against the much more dreadful surreptions of cupidity,
to what pitch of misery would not agriculture be reduced in all parts of
the world!_
The following estimates may be of some service; their utility is
independent of the absolute precision of the facts on which they are
founded; one may, as occasion requires, extend or contract the compasses.
Previous to the last war the common price of wheat was, upon an average,
in _America_ about 20_s._ sterling _per_ quarter, (vide Mr. _A. Young’s
Political Arithmetic_).
If in _England_ a population of 9,000,000 of industrious inhabitants,
yields a landed revenue of 60,000,000_l._ sterling, the wheat being
there at 40_s._ _per_ quarter, a population of 3,000,000 of industrious
inhabitants in _America_, where wheat sells at 20_s._ a quarter, ought
to produce _at least_ a landed revenue of 10,000,000_l._ sterling; I
say _at least_, first, because the land is new, and produces as much,
with less culture; and secondly, because that part of the inhabitants
employed in agriculture in _England_, constitute only one third of the
whole population, and that in all probability, above two thirds of the
_Americans_ are employed in works of husbandry. It may therefore be
presumed, that their landed revenue exceeds 20,000,000, instead of the
10 which I have set down; but this surplus of 10,000,000, only serves to
make good both the national and foreign industry, which is to balance
it, and pay off the taxes: so that, in whatever light my _thesis_ be
considered, every error turns to their advantage.
In limiting their landed revenue to 10,000,000, their wheat remaining at
20_s._ _per_ quarter; let everyone judge what load of taxes they could
bear, before the price of their wheat and other territorial productions,
should come up to that of the same commodities of _Europe_, even
including the expences for the export of their surplusage.
Let every one judge also of the necessity of their bankruptcy, the idea
of which has been so fondly cherished by some low-minded people, and the
narrative of which, they feared perhaps themselves, would unavoidably
stain the first pages of the history of their political existence.
The last war, it is said, has loaded them with an interest of 1,000,000
_per annum_. Would a tax of 10 _per cent._ on every article, or rather
on the total of the produce of national, as well as foreign industry,
_consumed within the country_, be productive of any other effect, but
that of increasing the prices nearly as much? and would the cultivators
of wheat and other productions of the earth, have occasion for any other
expedient to pay the tax, _without being at any expence, without any one
being aggrieved, (provided they should raise in the same proportion
the price of labour attending cultivation)_ but that of advancing, in
the mean time, the price of their wheat, and other productions of the
earth, from 10 to 11 or 12, from 20 to 22 or 24?—This is the case in my
first _hypothesis_, with this difference, that the 21,000,000 interest,
mentioned therein, represented highways, havens, canals, public schools,
&c. and that the interest of 1,000,000, in the United States, will
represent the establishment of their independence. Such a monument is,
in my opinion, too precious to admit a thought of destroying it by a
reimbursement,—_a reimbursement palpably useless so soon as the price of
every thing is restored to a level with the interest of any national loan
whatever_.
They have committed some errors; more will follow: they know not what to
fix upon; nor will they know for some time, perhaps for a long time.—Is
there a State in _Europe_ that can reproach them with any false step, of
which that very same State did not set the precedent at some period of
its history?⸺But with their principle concerning exportation, a principle
founded on justice and evidence, they have already perceived that the
necessitated price of 22 or 24, instead of 20, must be felt in their
country alone; and if their commodities exported for the purpose of
procuring such articles for their home consumption, as they stand in need
of, continue still to yield them the same quantity of those articles of
consumption, as were obtained before the war, will they not perceive that
the home prices, which the re-action of the taxes shall have set upon the
whole of their productions, establish in the country an exact balance of
those new prices at which the taxes will oblige them to sell the articles
to be imported?
Compelled by necessity to have recourse to paper-money, will it be long
before they are made sensible, that nothing more than internal credit is
wanted to make this paper equal to coin, and answer all its purposes for
ever, if they should be thus wisely inclined,—if this measure should be
found the only means of curbing effectually the cupidity of those with
whom they shall have occasion to trade?
Will it be long before they perceive, that this credit will follow close
upon the solidity of public engagements,—a solidity demonstrated by the
evidence of the inutility of a base and infamous robbery?
Will it be long before they feel that all the actual wealth of a State,
its real wealth, is nothing more or less than the mass of its present
industry; that all its _possible_ wealth can arise only from the sum
of all its _possible_ labour; that the greatest riches are only the
greatest sum of labour? that if this labour is a bitter pill, the gold
and silver in which it is wrapped up, are only (like honours, titles,
dignities, fame, esteem, &c.) different kinds of powders, which sweeten
the taste of it to those who are ignorant of its value, to those who know
not how necessary labour is to support every day, without being weary,
and sometimes without regret, the wretched burthen of our lives; and
in fine, that paper, _once got into credit_, can, in this respect, be
an ample substitute for gold and silver ... but how many circumstances,
where gold and silver cannot supply the want of credit?
Will it be long before they become sensible, that they are clogged in
no part of their legislation, by those preposterous maxims which can
be justified only by the circumstances that gave them birth, by those
tyrannical regulations which owed their success wholely to the ignorance
of their cotemporaries, by that chaos of contradictory regulations,
all of which became perhaps necessary by degrees, after the first was
extorted by cupidity?[6]
_Under what Point of View Premiums and other Encouragements of
Exportation may be considered._
The principles of the _Americans_ concerning exportation, lead us to the
examination of the doctrine of premiums.
If the want of objects, capable of exercising advantageously the industry
of a numerous and active people, should compel government, _on account
of some difficulties unconquerable by art and nature_, to apply that
industry to some other object, on which it would be impossible to support
abroad the competition of another nation, that is, to offer equally with
the latter an even quantity of labour of one sort, for an even quantity
of labour of a different one, there is no doubt but, in such a case,
a certain premium, to maintain the competition with the country most
partially favoured by art and nature, would prove, of all institutions,
the most judicious and the most humane; it would be a kind of indirect
tax in favour of laborious indigence; a tax, much more eligible than
many others, which, though destined to the relief of wretchedness, often
increase it, by checking the efforts of industry, by even providing a
resource for idleness, and sometimes an alluring, a comfortable prospect
for debauchery.
It was represented to a Prince truly worthy of the throne he fills,
that a manufactory, in which 8 or 900 persons were constantly employed,
stood him in 4 or 5,000 crowns more than it produced. _How!_ (replied
the Sovereign) _does it cost me no more than 4 or 5,000 crowns to feed a
thousand beggars, and keep them constantly at work? It is a cheap bargain
indeed!_ The most subtle of all ministers of state could make no other
reply to such an answer, than to propose some means, equally effectual,
and calculated to attain, at a cheaper rate, the two most important ends
that a prince can have in view, _destroying beggary, and_, in a manner,
_creating labour_.
There are, no doubt, some other circumstances, which may also justify
premiums on exportation; for instance, the wheat intended for
exportation, is an indispensable article amongst the necessaries of life:
it constitutes one third, sometimes the half of a nation’s riches; it is
_essential_ that it be not in such quantity as to fall in price, because
the disparagement of its value would discourage the cultivator; yet it is
advantageous that there should be, upon a medium, a little more than is
wanted, in order to keep it at the medium price it ought to fetch, that
_one may have it in his power to purchase that which another wants to
sell_. The first thing therefore to be examined is, whether the medium
price, at which it must be kept, in order to equipoise the quantity of
national industry which it must represent, be not so considerable,
First, By reason of some prohibitory act, forbidding the exportation of
other productions of the earth, which, by this means, become cheaper than
they were before this act took place, oblige the cultivator to advance
his price in the others, that the whole may be raised to the level of
industry:
Secondly, By reason of some other premiums on exportation, granted to
various branches of the national industry, which, on that very account,
are grown not only much dearer within the nation, but have also enhanced
the price of all other corresponding commodities, by withdrawing from
them, hands which would have increased their quantity:
Thirdly, In consequence of some prohibitions or restrictions equivalent
thereto, which afford to the national manufacturer the means of selling
his goods 10 _per cent._ dearer than he could do, if such reasonable
duties were laid upon foreign industry, as would leave national industry
in possession of the advantages, which she has a right to, and deprive
her only of the iniquitous privilege of ransoming those by whom she is
fostered:
Fourthly, By the effect of those bodies corporate, (_corporations_)
which, if justly appreciated, are but so many private conspiracies
against the public, whom they strip of the benefit of _national_
competition, after having wrested from them the advantages of _foreign_
competition, which would soon have been followed by the former,
_infinitely more important than the other_.
If the result of the proposed enquiry should show, that one of these
four causes, or rather all of them together, have entirely perverted the
natural price of every article in the nation, it seems to me that it
would be worth the attention of the legislature to examine also, whether
the repeal of all premiums, prohibitions, restrictions, and other devices
of the various passions of the human heart, either to clash against each
other, or to balance their respective injustice, would not prove adequate
to the only aim which we may reasonably wish to attain, I mean that of
_keeping, at the least expence, a just equilibrium between national
agriculture and industry, by securing to both, at the least expence, all
the advantages which they have a right to expect from the agriculture and
industry of other nations_.
But if indeed we were fettered by the errors of past centuries, it would
then be necessary to grant, _in the fullest extent_, the wished-for
premium on the most important article; do nothing more for the present,
but refuse new ones to all the rest; watch attentively the favourable
minute for the restoration of natural order, and forward it, perhaps, by
convincing every one, that the most necessary of all premiums would have
proved useless, had it not been preceded by prohibitions, restrictions,
corporations, &c. _the end of which is as manifestly unjust, as their
effects are injurious to all but those who sue for them_; and that, in
fine, a premium granted under a circumstance the most likely to justify
such a measure, is not, as several people have hitherto imagined, a
necessary means of maintaining elsewhere a foreign competition, but a
very inadequate compensation for that foreign competition of which we are
deprived in so many respects.
_On the Influence of the various Kinds of Taxation upon National Prices._
If I mistake not, I have proved that it is indifferent to agriculture
and industry, whether the prices rise or fall, provided it be always in
a due and reciprocal proportion. Nor is it less indifferent, whether the
increase proceeds from taxes, from monopoly, or from accession of wealth,
and whether the decrease be brought about by the extirpation of monopoly,
or by the triumph of smuggling; so long as the prices balance each other,
no one can be injured however loud people may be in their clamours; it
is impossible to shut one’s eyes against the evidence of such a point.
Why then should we deny the consequence which naturally follows, of the
harmlessness of taxes in themselves, the impossibility of their producing
in any one’s situation, any thing beyond a momentary sensation, _when
they are laid with discernment_; and the futility of either fears or
hopes entertained of their ending at last in a national bankruptcy?
Yet, “to enjoy, is to obey,” says Pope:—To make the best use we can of
the creation, is the thanksgiving the most worthy of the Creator.—There
is not a man therefore who ought not to repine at seeing the general rate
of prices increase in vain, since this very rise compels us to lavish,
in coin, a considerable quantity of those two precious metals, gold and
silver, which would prove more agreeable, if turned into plate, or even
into small pocket-statues, designed for the private worship of those
who would blush only in public, for this kind of idolatry. I should
like therefore to examine, in regard to prices, what is _natural_, what
_necessary_, and what _forced_; in order to find out what might be saved,
if people would attend only to the necessary average.
In the first period of Societies, when they knew of no other want in
the State but personal service when it was necessary and possible, the
common price of the articles then in circulation, was determined by
the quantity of coin _then_ existing in the nation: this is what may
be justly termed the _natural price_. At this present time, when money
is substituted to personal service, and supplies so advantageously its
place; when each representation of an extra service leaves on every
article, the stamp of a seal, which, without adding to the real or
relative value of _any thing_, increases nevertheless the nominal value
of _every thing_;—at this present time, when every nation has all the
industry necessary to procure the coin wanted for this over-charge,
_it is the price, which this very over-charge sets upon the different
objects, that regulates and attracts the quantity of silver to correspond
therewith_; and this price, which may be called _necessary_, is often
evidently _forced_: I say, _evidently_, because, in the state of general
correspondence, or, if you will, of that happy dependence wherein all
the States of _Europe_ stand reciprocally towards each other at this
hour, when we see in one country the same objects, of the same quality,
wrought with equal skill, 15 _per cent._ dearer than any where else, who
can doubt but a part of that difference, of that extraordinary price,
proceeds from taxes, and the other from monopoly? But what part belongs
to this, what part to the other? This is not so easily found out; 1st,
because the part which is the work of monopoly, solely depends on the
moderation of the monopolist, who never fails pleading the taxes for
excuse; and, 2dly, because that part, which proceeds from the taxes,
depends not only on the tax itself, but also on the manner of laying
it, and on the effect which it is likely to produce in the minds of the
people who are to support it. Such a tax as will make a slow, and only a
trifling sensation in the prices of the _French_ markets, will occasion
all at once a considerable one in those of _England_: I shall hereafter
state my reasons for this conjecture.
I am as little qualified to investigate all these different questions, as
those which I have ventured hitherto to touch upon; I shall persevere,
nevertheless, with that freedom which I derive from the purity of my
intentions, and with that diffidence which must follow the consciousness
of a capacity so unequal to the task.—I shall first of all adapt to
_England_, and then to _France_, the reflexions suggested to me by some
hundreds of suppositions, which had engrossed my time before I had
perused _Young’s Political Arithmetic_, and the work of Mr. _Necker_,
which has but lately fallen into my hands.