Whether advocates of free trade or defenders3 of protection, we are all obliged to make use of the expression dearness and cheapness. The former take sides in behalf of cheapness, having in view the interests of consumers. The latter pronounce themselves in favor of dearness, preoccupying4 themselves solely5 with the interests of the producer. Others intervene, saying, producer and consumer are one and the same, which leaves wholly undecided the question whether cheapness or dearness ought to be the object of legislation.
In this conflict of opinion it seems to me that there is only one position for the law to take—to allow prices to regulate themselves naturally. But the principle of "let alone" has obstinate6 enemies. They insist upon legislation without even knowing the desired objects of legislation. It would seem, however, to be the duty of those who wish to create high or low prices artificially, to state, and to substantiate7, the reasons of their preference. The burden of proof is upon them. Liberty is always considered beneficial until the contrary is proved, and to allow prices naturally to regulate themselves is liberty. But the roles have been changed. The partisans8 of high prices have obtained a triumph for their system, and it has fallen to defenders of natural prices to prove the advantages of their system. The argument on both sides is conducted with two words. It is very essential, then, to understand their meaning.
It must be granted at the outset that a series of events have happened well calculated to disconcert both sides.
In order to produce high prices the protectionists have obtained high tariffs10, and still low prices have come to disappoint their expectations.
In order to produce low prices, free traders have sometimes carried their point, and, to their great astonishment11, the result in some instances has been an increase instead of a reduction in prices.
For instance, in France, to protect farmers, a law was passed imposing12 a duty of twenty-two per cent. upon imported wools, and the result has been that native wools have been sold for much lower prices than before the passage of the law.
In England a law in behalf of the consumers was passed, exempting13 foreign wools from duty, and the consequence has been that native wools have sold higher than ever before.
And this is not an isolated14 fact, for the price of wool has no special or peculiar15 nature which takes it out of the general law governing prices. The same fact has been reproduced under analogous16 circumstances. Contrary to all expectation, protection has frequently resulted in low prices, and free trade in high prices. Hence there has been a deal of perplexity in the discussion, the protectionists saying to their adversaries17: "These low prices that you talk about so much are the result of our system;" and the free traders replying: "Those high prices which you find so profitable are the consequence of free trade."
There evidently is a misunderstanding, an illusion, which must be dispelled18. This I will endeavor to do.
Suppose two isolated nations, each composed of a million inhabitants; admit that, other things being equal, one nation had exactly twice as much of everything as the other—twice as much wheat, wine, iron, fuel, books, clothing, furniture, etc. It will be conceded that one will have twice as much wealth as the other.
There is, however, no reason for the statement that the absolute prices are different in the two nations. They possibly may be higher in the wealthiest nation. It may happen that in the United States everything is nominally19 dearer than in Poland, and that, nevertheless, the people there are less generally supplied with everything; by which it may be seen that the abundance of products, and not the absolute price, constitutes wealth. In order, then, accurately20 to compare free trade and protection the inquiry21 should not be which of the two causes high prices or low prices, but which of the two produces abundance or scarcity22.
For observe this: Products are exchanged, the one for the other, and a relative scarcity and a relative abundance leave the absolute price exactly at the same point, but not so the condition of men.
Let us look into the subject a little further.
Since the increase and the reduction of duties have been accompanied by results so different from what had been expected, a fall of prices frequently succeeding the increase of the tariff9, and a rise sometimes following a reduction of duties, it has become necessary for political economy to attempt the explanation of a phenomenon which so overthrows23 received ideas; for, whatever may be said, science is simply a faithful exposition and a true explanation of facts.
This phenomenon may be easily explained by one circumstance which should never be lost sight of.
It is that there are two causes for high prices, and not one merely.
The same is true of low prices. One of the best established principles of political economy is that price is determined25 by the law of supply and demand.
The price is then affected26 by two conditions—the demand and the supply. These conditions are necessarily subject to variation. The relations of demand to supply may be exactly counterbalanced, or may be greatly disproportionate, and the variations of price are almost interminable.
They fall by reason of an augmentation of the supply or a diminution28 of the demand.
Consequently there are two kinds of dearness and two kinds of cheapness. There is a bad dearness, which results from a diminution of the supply; for this implies scarcity and privation. There is a good dearness—that which results from an increase of demand; for this indicates the augmentation of the general wealth.
There is also a good cheapness, resulting from abundance. And there is a baneful29 cheapness—such as results from the cessation of demand, the inability of consumers to purchase.
And observe this: Prohibition30 causes at the same time both the dearness and the cheapness which are of a bad nature; a bad dearness, resulting from a diminution of the supply (this indeed is its avowed31 object), and a bad cheapness, resulting from a diminution of the demand, because it gives a false direction to capital and labor32, and overwhelms consumers with taxes and restrictions33.
So that, as regards the price, these two tendencies neutralize35 each other; and for this reason, the protective system, restricting the supply and the demand at the same time, does not realize the high prices which are its object.
But with respect to the condition of the people, these two tendencies do not neutralize each other; on the contrary, they unite in impoverishing36 them.
The effect of free trade is exactly the opposite. Possibly it does not cause the cheapness which it promises; for it also has two tendencies, the one towards that desirable form of cheapness resulting from the increase of supply, or from abundance; the other towards that dearness consequent upon the increased demand and the development of the general wealth. These two tendencies neutralize themselves as regards the mere24 price; but they concur37 in their tendency to ameliorate the condition of mankind. In a word, under the protective system men recede38 towards a condition of feebleness as regards both supply and demand; under the free trade system, they advance towards a condition where development is gradual without any necessary increase in the absolute prices of things.
Price is not a good criterion of wealth. It might continue the same when society had relapsed into the most abject39 misery40, or had advanced to a high state of prosperity.
Let me make application of this doctrine42 in a few words: A farmer in the south of France supposes himself as rich as Cr?sus, because he is protected by law from foreign competition. He is as poor as Job—no matter, he will none the less suppose that this protection will sooner or later make him rich. Under these circumstances, if the question was propounded43 to him, as it was by the committee of the Legislature, in these terms: "Do you want to be subject to foreign competition? yes or no," his first answer would be "No," and the committee would record his reply with great enthusiasm.
We should go, however, to the bottom of things. Doubtless foreign competition, and competition of any kind, is always inopportune; and, if any trade could be permanently44 rid of it, business, for a time, would be prosperous.
But protection is not an isolated favor. It is a system. If, in order to protect the farmer, it occasions a scarcity of wheat and of beef, in behalf of other industries it produces a scarcity of iron, cloth, fuel, tools, etc.—in short, a scarcity of everything.
If, then, the scarcity of wheat has a tendency to increase the price by reason of the diminution of the supply, the scarcity of all other products for which wheat is exchanged has likewise a tendency to depreciate45 the value of wheat on account of a falling off of the demand; so that it is by no means certain that wheat will be a mill dearer under a protective tariff than under a system of free trade. This alone is certain, that inasmuch as there is a smaller amount of everything in the country, each individual will be more poorly provided with everything.
The farmer would do well to consider whether it would not be more desirable for him to allow the importation of wheat and beef, and, as a consequence, to be surrounded by a well-to-do community, able to consume and to pay for every agricultural product.
There is a certain province where the men are covered with rags, dwell in hovels, and subsist46 on chestnuts47. How can agriculture flourish there? What can they make the earth produce, with the expectation of profit? Meat? They eat none. Milk? They drink only the water of springs. Butter? It is an article of luxury far beyond them. Wool? They get along without it as much as possible. Can any one imagine that all these objects of consumption can be thus left untouched by the masses, without lowering prices?
That which we say of a farmer, we can say of a manufacturer. Cloth-makers assert that foreign competition will lower prices owing to the increased quantity offered. Very well, but are not these prices raised by the increase of the demand? Is the consumption of cloth a fixed48 and invariable quantity? Is each one as well provided with it as he might and should be? And if the general wealth were developed by the abolition49 of all these taxes and hindrances50, would not the first use made of it by the population be to clothe themselves better?
Therefore the question, the eternal question, is not whether protection favors this or that special branch of industry, but whether, all things considered, restriction34 is, in its nature, more profitable than freedom?
Now, no person can maintain that proposition. And just this explains the admission which our opponents continually make to us: "You are right on principle."
If that is true, if restriction aids each special industry only through a greater injury to the general prosperity, let us understand, then, that the price itself, considering that alone, expresses a relation between each special industry and the general industry, between the supply and the demand, and that, reasoning from these premises51, this remunerative52 price (the object of protection) is more hindered than favored by it.
We published an article entitled Dearness-Cheapness, which gained for us the two following letters. We publish them, with the answers:
"Dear Mr. Editor:—You upset all my ideas. I preached in favor of free trade, and found it very convenient to put prominently forward the idea of cheapness. I went everywhere, saying, "With free trade, bread, meat, woolens53, linen54, iron and coal will fall in price." This displeased55 those who sold, but delighted those who bought. Now, you raise a doubt as to whether cheapness is the result of free trade. But if not, of what use is it? What will the people gain, if foreign competition, which may interfere56 with them in their sales, does not favor them in their purchases?"
My Dear Free Trader:—Allow us to say that you have but half read the article which provoked your letter. We said that free trade acted precisely57 like roads, canals and railways, like everything which facilitates communications, and like everything which destroys obstacles. Its first tendency is to increase the quantity of the article which is relieved from duties, and consequently to lower its price. But by increasing, at the same time, the quantity of all the things for which this article is exchanged, it increases the demand, and consequently the price rises. You ask us what the people will gain. Suppose they have a balance with certain scales, in each one of which they have for their use a certain quantity of the articles which you have enumerated58. If a little grain is put in one scale it will gradually sink, but if an equal quantity of cloth, iron and coal is added in the others, the equilibrium59 will be maintained. Looking at the beam above, there will be no change. Looking at the people, we shall see them better fed, clothed and warmed.
"Dear Mr. Editor:—I am a cloth manufacturer, and a protectionist. I confess that your article on dearness and cheapness has led me to reflect. It has something specious60 about it, and if well proven, would work my conversion61."
My Dear Protectionist:—We say that the end and aim of your restrictive measures is a wrongful one—artificial dearness. But we do not say that they always realize the hopes of those who initiate62 them. It is certain that they inflict63 on the consumer all the evils of dearness. It is not certain that the producer gets the profit. Why? Because if they diminish the supply they also diminish the demand.
This proves that in the economical arrangement of this world there is a moral force, a vis medicatrix, which in the long run causes inordinate64 ambition to become the prey65 of a delusion.
Pray, notice, sir, that one of the elements of the prosperity of each special branch of industry is the general prosperity. The rent of a house is not merely in proportion to what it has cost, but also to the number and means of the tenants66. Do two houses which are precisely alike necessarily rent for the same sum? Certainly not, if one is in Paris and the other in Lower Brittany. Let us never speak of a price without regarding the conditions, and let us understand that there is nothing more futile67 than to try to build the prosperity of the parts on the ruin of the whole. This is the attempt of the restrictive system.
Competition always has been, and always will be, disagreeable to those who are affected by it. Thus we see that in all times and in all places men try to get rid of it. We know, and you too, perhaps, a municipal council where the resident merchants make a furious war on the foreign ones. Their projectiles68 are import duties, fines, etc., etc.
Now, just think what would have become of Paris, for instance, if this war had been carried on there with success.
Suppose that the first shoemaker who settled there had succeeded in keeping out all others, and that the first tailor, the first mason, the first printer, the first watchmaker, the first hair-dresser, the first physician, the first baker69, had been equally fortunate. Paris would still be a village, with twelve or fifteen hundred inhabitants. But it was not thus. Each one, except those whom you still keep away, came to make money in this market, and that is precisely what has built it up. It has been a long series of collisions for the enemies of competition, and from one collision after another, Paris has become a city of a million inhabitants. The general prosperity has gained by this, doubtless, but have the shoemakers and tailors, individually, lost anything by it? For you, this is the question. As competitors came, you said: The price of boots will fail. Has it been so? No, for if the supply has increased, the demand has increased also.
Thus will it be with cloth; therefore let it come in. It is true that you will have more competitors, but you will also have more customers, and richer ones. Did you never think of this when seeing nine-tenths of your countrymen deprived during the winter of that superior cloth that you make?
When this is once known, each one will seek his welfare in the general welfare. Then, jealousies70 between individuals, cities, provinces and nations, will no longer vex71 the world.
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1
delusion
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| n.谬见，欺骗，幻觉，迷惑 | |
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perfectly
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| adv.完美地，无可非议地，彻底地 | |
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defenders
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| n.防御者( defender的名词复数 )；守卫者；保护者；辩护者 | |
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preoccupying
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| v.占据（某人）思想，使对…全神贯注，使专心于( preoccupy的现在分词 ) | |
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solely
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| adv.仅仅，唯一地 | |
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obstinate
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| adj.顽固的，倔强的，不易屈服的，较难治愈的 | |
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substantiate
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| v.证实；证明...有根据 | |
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partisans
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| 游击队员( partisan的名词复数 )； 党人； 党羽； 帮伙 | |
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tariff
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| n.关税，税率；(旅馆、饭店等)价目表，收费表 | |
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tariffs
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| 关税制度； 关税( tariff的名词复数 )； 关税表； （旅馆或饭店等的）收费表； 量刑标准 | |
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astonishment
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| n.惊奇，惊异 | |
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imposing
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| adj.使人难忘的，壮丽的，堂皇的，雄伟的 | |
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exempting
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| 使免除[豁免]( exempt的现在分词 ) | |
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isolated
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| adj.与世隔绝的 | |
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peculiar
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| adj.古怪的，异常的；特殊的，特有的 | |
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analogous
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| adj.相似的；类似的 | |
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adversaries
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| n.对手，敌手( adversary的名词复数 ) | |
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dispelled
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| v.驱散，赶跑( dispel的过去式和过去分词 ) | |
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nominally
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| 在名义上，表面地； 应名儿 | |
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accurately
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| adv.准确地，精确地 | |
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inquiry
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| n.打听，询问，调查，查问 | |
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scarcity
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| n.缺乏，不足，萧条 | |
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overthrows
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| n.推翻，终止，结束( overthrow的名词复数 )v.打倒，推翻( overthrow的第三人称单数 )；使终止 | |
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mere
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| adj.纯粹的；仅仅，只不过 | |
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determined
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| adj.坚定的；有决心的 | |
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affected
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| adj.不自然的，假装的 | |
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Augmented
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| adj.增音的 动词augment的过去式和过去分词形式 | |
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diminution
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| n.减少；变小 | |
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baneful
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| adj.有害的 | |
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prohibition
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| n.禁止；禁令，禁律 | |
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avowed
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| adj.公开声明的，承认的v.公开声明，承认( avow的过去式和过去分词) | |
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labor
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| n.劳动，努力，工作，劳工；分娩；vi.劳动，努力，苦干；vt.详细分析；麻烦 | |
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restrictions
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| 约束( restriction的名词复数 )； 管制； 制约因素； 带限制性的条件（或规则） | |
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restriction
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| n.限制，约束 | |
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neutralize
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| v.使失效、抵消，使中和 | |
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impoverishing
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| v.使（某人）贫穷( impoverish的现在分词 )；使（某物）贫瘠或恶化 | |
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concur
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| v.同意，意见一致，互助，同时发生 | |
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recede
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| vi.退(去)，渐渐远去；向后倾斜，缩进 | |
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abject
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| adj.极可怜的，卑屈的 | |
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misery
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| n.痛苦，苦恼，苦难；悲惨的境遇，贫苦 | |
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prosper
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| v.成功，兴隆，昌盛；使成功，使昌隆，繁荣 | |
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doctrine
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| n.教义；主义；学说 | |
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propounded
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| v.提出（问题、计划等）供考虑[讨论]，提议( propound的过去式和过去分词 ) | |
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permanently
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| adv.永恒地，永久地，固定不变地 | |
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depreciate
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| v.降价，贬值，折旧 | |
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subsist
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| vi.生存，存在，供养 | |
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chestnuts
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| n.栗子( chestnut的名词复数 )；栗色；栗树；栗色马 | |
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fixed
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| adj.固定的，不变的，准备好的；(计算机)固定的 | |
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abolition
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| n.废除，取消 | |
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hindrances
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| 阻碍者( hindrance的名词复数 )； 障碍物； 受到妨碍的状态 | |
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premises
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| n.建筑物，房屋 | |
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52
remunerative
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| adj.有报酬的 | |
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woolens
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| 毛织品，毛料织物； 毛织品，羊毛织物，毛料衣服( woolen的名词复数 ) | |
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linen
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| n.亚麻布，亚麻线，亚麻制品；adj.亚麻布制的，亚麻的 | |
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55
displeased
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| a.不快的 | |
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56
interfere
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| v.(in)干涉，干预；(with)妨碍，打扰 | |
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precisely
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| adv.恰好，正好，精确地，细致地 | |
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58
enumerated
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| v.列举，枚举，数( enumerate的过去式和过去分词 ) | |
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equilibrium
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| n.平衡，均衡，相称，均势，平静 | |
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specious
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| adj.似是而非的；adv.似是而非地 | |
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conversion
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| n.转化，转换，转变 | |
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initiate
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| vt.开始，创始，发动；启蒙，使入门；引入 | |
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inflict
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| vt.(on)把…强加给，使遭受，使承担 | |
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inordinate
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| adj.无节制的；过度的 | |
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prey
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| n.被掠食者，牺牲者，掠食；v.捕食，掠夺，折磨 | |
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tenants
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| n.房客( tenant的名词复数 )；佃户；占用者；占有者 | |
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futile
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| adj.无效的，无用的，无希望的 | |
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projectiles
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| n.抛射体( projectile的名词复数 )；（炮弹、子弹等）射弹，（火箭等）自动推进的武器 | |
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baker
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| n.面包师 | |
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jealousies
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| n.妒忌( jealousy的名词复数 )；妒羡 | |
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vex
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| vt.使烦恼，使苦恼 | |
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