All laws made for the purpose of protecting the interests of individuals
or classes must mean, if they mean anything, to render the articles
which such classes deal in or produce dearer than they would otherwise
be if the public was left at liberty to supply itself with such
commodities in the manner which their own interests and choice would
dictate. In order to make them dearer it is absolutely necessary to make
them scarcer; for quantity being large or small in proportion to demand,
alone can regulate the price;--protection, therefore, to any commodity
simply means that the quantity supplied to the community shall be less
than circumstances would naturally provide, but that for the smaller
quantity supplied under the restriction of law the same sum shall be
paid as the larger quantity would command without such restriction.
Time was when the Sovereigns of England relied chiefly on the granting
of patents to individuals for the exclusive exercise of certain trades
or occupations in particular places, as the means of rewarding the
services of some, and as a provision for others of their adherents,
followers, and favourites, who either held the exclusive supply in their
own hands on their own terms, or who again granted to others under them
that privilege, receiving from them a portion of the gains. In the
course of time, however, the public began to discover that these
monopolies acted upon them directly as a tax of a most odious
description; that the privileged person found it needful always to keep
the supply short to obtain his high price (for as soon as he admitted
plenty he had no command of price)--that, in short, the sovereign, in
conferring a mark of regard on a favourite, gave not that which he
himself possessed, but only invested him with the power of imposing a
contribution on the public.
The public once awake to the true operation of such privileges, and
severely suffering under the injuries which they inflicted,
perseveringly struggled against these odious monopolies, until the
system was entirely abandoned, and the crown was deprived of the power
of granting patents of this class. But though the public saw clearly
enough that these privileges granted by the sovereign to individuals
operated thus prejudicially on the community, they did not see with
equal clearness that the same power transferred to, and exercised by,
Parliament, to confer similar privileges on classes; to do for a number
of men what the sovereign had before done for single men, would, to the
remaining portion of the community, be just as prejudicial as the abuses
against which they had struggled. That like the sovereign, the
Parliament, in protecting or giving privileges to a class, gave nothing
which they possessed themselves, but granted only the power to such
classes of raising a contribution from the remaining portion of the
community, by levying a higher price for their commodity than it would
otherwise command. As with individuals, it was equally necessary to make
scarcity to secure price, and that could only be done by restricting the
sources of supply by prohibiting, or by imposing high duties on, foreign
importations. Many circumstances, however, combined to render the use of
this power by Parliament less obvious than it had been when exercised by
the sovereign, but chiefly the fact that protection was usually granted
by imposing high duties, often in their effect quite prohibitory, under
the plea of providing revenue for the state. Many other more modern
excuses have been urged, such as those of encouraging native industry,
and countervailing peculiar burthens, in order to reconcile public
opinion to the exactions arising out of the system, all of which we
shall, on future occasions, carefully consider separately. But, above
all, the great reason why these evils have been so long endured has
been, that the public have believed that all classes and interests,
though perhaps not exactly to the same extent, have shared in
protection. We propose at present to confine our consideration to the
effects of protection,--first, on the community generally; and secondly,
on the individual classes protected.
As it is admitted that protection ought, if granted at all, to be given
to all alike, it would follow that the whole produce of the country
would be raised to an artificial price; and if this were the case, as
far as regarded the exchange or transactions among members of the same
community, the effect would be merely nominal, of no advantage to any
one, and of little disadvantage beyond the enormous public expense
needed to prevent people cheating each other by smuggling and bringing
in the cheaper foreign article;--but such a community must forego all
notion or idea of a foreign trade;--they must have no desires to be
gratified beyond themselves, and they must have within themselves the
independent means of supplying every want. For even if the law be strong
enough to maintain an artificial high price at home, it has no power of
making other countries pay that price; and if everything we possessed
commanded a higher price at home than other countries could supply the
same for, we should have nothing which we could exchange for the produce
of other countries, and thus no more foreign trade could exist, than in
a poor country which had no surplus produce. It is therefore essential
that every country should bear in mind, in adopting a system of
protection to manufactures or other produce, that they thereby
effectually debar themselves from all foreign trade to neutral countries
in such articles; for if they require high duties at home to protect
them from the produce of other countries, which could only come at
considerable expense to compete with them at home, how can they
withstand that competition when they meet on the same terms in every
respect in a neutral market? How effectually has France stayed her
export linen trade by raising the duties and the price of linen yarn,
and by that act, intended as a blow to English trade, given the linen
manufacturers of this country a greater advantage over France in the
markets of the world than ever. How idle are the efforts of the Belgian
government to establish depôts and factories for the sale of their
manufactures in St Thomas add other places, while the manufacturers in
Ghent are only able to maintain their home trade, by high protective
duties, against English, French, and German goods, and still cry out for
greater protection!
It is, however, abundantly plain, that the state of a country above
described could not long exist, when industry and intelligence were in
the course of producing wealth; for if there be one law in nature more
distinct than another, it is, that while the productions of every
country are less or more limited to particular things, the wants of man
extend to every possible variety of products over the whole world, as
soon as his means can command them. As a country advances in wealth, it
will have more and more surplus produce, which under wise laws would
always consist of such things as it could produce with greatest facility
and profit, whether from the loom or the soil. This surplus produce
would be exchanged for the productions of other climates, but it must be
quite clear, as soon as we arrive at this stage, that the power of the
law to protect price altogether ceases. The surplus exported must sell
in the markets of the world, in competition with the same article
produced under the cheapest circumstances, and that article in the home
market can command only the same price.
Thus the whole attempt to protect all interests equally would
immediately fail; every article produced in excess, and exported, would
command only the lowest prices of open markets, and the fancied
protection of the law would be void; while everything produced in
deficiency, and of which we required to import a portion to make up the
needful supply, would continue to be protected above the natural price
of the world to any extent of import duty that the law imposed upon the
quantity required to make up the deficiency.
Thus, for example, we export a large portion of the woollen, and the
largest portion of the cotton goods which we manufacture, to all parts
of the world, which we must sell at least as cheap as they can be bought
in any other country. The same articles can only command the same price
in the home market, and though the law imposed an import duty, by way of
pretended protection, to any extent, upon similar foreign goods, it
would not have the effect of raising the price one fraction. On the
other hand, we do not produce as much wool or food as we consume, and
have every year to import large quantities of each to make up the
deficiency. Whatever duty, therefore, is put on the import of the
quantity thus required, will enable the producers at home to maintain
their price so much above the natural level of the world. By this state
of things the country at large is injured in two distinct and prominent
ways:--first,--those articles which we can make in excess, and export,
must ever be the chief means of absorbing the increasing capital and
labour of the country; and the impediment thrown in our way, of
importing those things which we have in deficiency, must necessarily
check our power of extending the demand for the produce of such
increasing labour and capital; and, secondly,--the price of such
articles as we produce in deficiency, will always be maintained much
above the level of the world, to the great disadvantage of the other
great class of producers, the price of whose labour, and whose profits,
will be regulated by competition with those who have food, &c., at the
lowest price.
So much as to the effect on the community at large. We will now shortly
consider the effect on individual interests, which are thought to enjoy
protection, and we believe we can show that there never was a condition
so fraught with mischief and disappointment, with such unmitigated
delusion, deception, and exposure to ruin, than is to be found in every
case where protection operates. We think it can be clearly shown _that
such occupations can never be more profitable; that they must usually be
less profitable; and that they are always more exposed to vicissitudes
than any other class_.
They never can be more profitable, because capital and enterprise will
always be attracted to any occupation which offers a larger profit than
the usual rate, till it is reduced to a level with others; they will
usually be less profitable, indeed always in a community of increasing
numbers, because the price being maintained by restriction above the
price of the world, prevents an extension of such trades in the same
proportion as those who naturally belong to them, and look to them for
occupation, increase in numbers: they will be exposed to greater
vicissitudes, because, being confined to the supply of only one market,
any accidental circumstance, which either increases the usual supply, or
diminishes the usual demand, will cause an infinitely greater depression
than if they were in a condition to avail themselves of the markets of
the whole world, over which they could spread an accidental and unusual
surplus.
Thus, previous to 1824, the silk manufacturers of this country were
protected to a greater extent than any other trade, and the price of
silk goods was maintained much above the rate of other countries; our
silk trade was therefore necessarily confined almost exclusively to the
home market and our colonies, and though they had a monopoly of those
markets, it was at the cost of exclusion (on account of higher price)
from all other markets.
Notwithstanding this monopoly, the silk manufacturers could never
command at any time larger _profits_ than other trades; for had they
done so, competition would have increased until the rate was reduced to
the common level of the country: on the contrary, the tendency was for
profits and rates of wages to be smaller than in other great
manufacturing branches, requiring equal capital and skill; because, with
the increasing numbers who belonged to the silk trade,--the sons of
manufacturers and of weavers, who naturally, in the first instance, look
to the trade of their parents for their occupation,--the trade did not
proportionably increase, from the fact of our being unable to extend our
exports; and, lastly, it was exposed to much greater vicissitudes than
other trades; for when, either from a temporary change of fashion or
taste, or from a temporary stagnation of trade in this country, the
accustomed demand was lessened, the silk manufacturers were unable to
obtain any relief by extending their trade in the great neutral markets
of the world, being excluded by price, and the whole surplus quantity
remained a dead weight on this market only; whereas other branches of
manufactures, practically enjoying no protection, in the case of
depressed trade at home, had an opportunity of immediate relief, by
spreading the surplus thereby created, at a very trifling sacrifice,
over the wide markets which they supplied.
In this way the extent and duration of the vicissitudes and depressions
in the silk trade were without parallel in any other; but since 1824,
since this trade has been placed in a natural position by the removal of
monopoly, the whole aspect of it has changed, and these peculiar evils
have all disappeared.
Then again with regard to the products of land, which the law attempts
to protect more highly than any other. Here again, though the price to
the community is maintained much above the prices of other countries, no
one person connected with raising the produce can command a higher rate
of profit, or higher wages for labour, than other trades having no
protection whatever; for if they did, competition would soon reduce them
to the same level; but, on the contrary, the wages, of agricultural
labourers, and the profits of farmers, are always rather below than
above the common rate, and simply from this fact, that the children of
farm labourers, and of farmers, who first naturally look to the pursuits
of their parents for a trade or occupation, increase in numbers without
any corresponding extension of the means of employment, and the
competition among them is therefore always greater than in other trades
which have the power of extension; and the vicissitudes to which the
farmer is exposed are notoriously greater than any other trade. His rent
and expenses throughout are fixed by an artificial price of produce,
which price can only be maintained as long as a certain scarcity exists;
but the moment the markets are plentifully supplied, either from a want
of demand owing to a depression of trade, or from the result of a good
harvest, he finds that plenty takes out of his hand all control of
price, which quickly sinks to the natural rate.
With a free trade the farmer would never be exposed to such reverses. In
that state, if the demand and price increased, it would be checked by an
increase of imports from other countries; if the demand and price
diminished, that would also be checked by a reduction or cessation of
the usual imports, and, if necessary, by an export of any surplus which
pressed upon the market;--and, if our space allowed, it would not be
difficult to show that, with prices at the natural rate, all parties
connected with land would not only be in a safer but a much better
condition.
No cautious man who well understands the subject will ever hazard his
capital in any trade exposed to so many evils and to so much uncertainty
as restriction and protection infallibly introduce into it:--but the
great error which misleads all men in cherishing such trades is, that
they mistake _high prices_ for _high profits_, which usually, instead of
being synonymous terms, are quite the reverse.