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SECTION I.: NATURE OF THE PROHIBITORY SYSTEM. - Jeremy Bentham, The Works of Jeremy Bentham, vol. 3 [1843]

Edition used:

The Works of Jeremy Bentham, published under the Superintendence of his Executor, John Bowring (Edinburgh: William Tait, 1838-1843). 11 vols. Vol. 3.

Part of: The Works of Jeremy Bentham, 11 vols.

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SECTION I.

NATURE OF THE PROHIBITORY SYSTEM.

Just as the period was expiring, beyond which, according to the Spanish constitution, the Cortes had no power to continue their sittings—at a moment when affairs the most urgent, and interests the most important, necessarily distracted and divided their attention—the outline of a law was precipitated through its several stages, prohibiting manufactured woollens, cottons, linens, and silks, and attaching heavy duties to the introduction of many other manufactured articles.* So hurried was this measure, that its details were obliged to be referred to the finance minister; and so unexpected, that all the correspondence which communicated to this country the first news of the decree, breathed nothing but surprise or disappointment, regret or anger. Yet there can be no doubt the real, as the averred object was, to give encouragement and increase to the manufacturing branch of national industry, by compelling the employment of home productions, in lieu of those which Spain had been accustomed to receive from other manufacturing countries. It was certainly not intended to do mischief to those countries, either by interfering with their trade, by lessening their wealth, or by exciting their feelings of hostility. It was, indeed, neither more nor less than an application of the system of factitious encouragement of the domestic production in the indirect mode; that is, by discouragement applied to the same articles when produced by foreign countries.

The expediency of such a measure may be conveniently considered in two points of view:—the general, in its application to all countries; the particular, as especially affecting Spain.

It may be laid down as a universal maxim, that the system of commercial restriction is always either useless or mischievous; or rather mischievous in every case, in a less degree, or in a greater degree. In the judgment of the purchaser, or the consumer, the goods discouraged must be either better than those which are protected, or not: if not better (of course better for a fixed equivalent,) they will not be bought, even though no prohibition exist: here then is usefulness, or mischief in the lesser degree. But the case, and the only probable case, in which the fictitious encouragement will be applied, is that where the goods excluded are better, or in other words cheaper, than those sought to be protected: here is unqualified mischief, mischief in the greater degree.

It may be desirable here to explain that the word better, when used, means better at the same price—i. e. cheaper. Price is, in truth, a more convenient standard, because an unfluctuating and determinate standard; quality not. Better, means, then, that in the opinions of the purchasers or the consumers, the article is more advantageous, or more agreeable; and it is better in the proportion in which it is more advantageous or agreeable.

This premised, we proceed more satisfactorily to consider the results of a prohibitory law of this sort in all the points of view of which it is susceptible.

When, in the view of favouring home commodities, a prohibition inhibiting the introduction of foreign rival commodities is obtained, that prohibition is either obeyed or disobeyed: obeyed, if the home article be purchased instead of the foreign one, or if neither the one nor the other be purchased; disobeyed, if instead of the home article, the foreign one be purchased. In the case of such prohibition, obedience takes place in some instances; disobedience in other instances.

Case I. The prohibition obeyed, and the purpose answered, by the purchase and use of the home article instead of the rival foreign article.—The price paid for the home article is greater than would have been paid for the rival foreign article, had the prohibition not existed; if not, the prohibition would be without an object. What, then, is the result to the consumer? The difference between the one price and the other; the injury or loss which he sustains, is equivalent to the imposition of a tax of the same amount.

But the pocket into which the produce of this sort of tax goes, whose is it? that of the public? No! but that of the individual producer of the article thus taxed. To the people at large, without diminishing the amount of other taxes, the effect is no other—the benefit no greater, than that of a tax to the same amount would be, if, instead of being conveyed into the national treasury, it were pocketed by the individual collectors.

If, instead of the prohibition in question, a tax to the same amount had been imposed on the rival foreign article, the produce, instead of being thus given to the collectors, would have been conveyed into the public purse, and by the whole amount have operated as a saving to the people, in diminution of the contribution that would otherwise have been exacted through other channels. Not to the whole amount, it may be said; for in case of the tax, the expense of collection would have been to be deducted. Yes, to the whole amount; for the expense of enforcing the prohibition would assuredly be as much as, probably more than, the expense of collecting the tax.

Case II. The prohibition obeyed; the rival foreign article not purchased, but the home article not purchased.—Here, though the law is obeyed, the purpose of it is not answered.

This will be the effect, insomuch as the advance of price caused by the prohibition deprives the consumer of the power of purchasing it: the home article too bad in quality; the foreign too dear, from the excess of price produced by the risk of evading the prohibition. The home article is then neglected, in consequence of the disgust produced by its comparative bad quality—the foreign is not purchased, on account of its dearness; which dearness is the result of the prohibiting law.

In this case, though no loss in a pecuniary form is produced to those who, antecedently to the prohibition, were accustomed to purchase and to enjoy the article in question—though no loss in a tangible and measurable form is suffered,—yet in the form of comfort—in the form of that wonted enjoyment on which the article depends for the whole of its value, the loss is not less real, and the loss is incalculable.

True it is, that whatsoever the consumers in question would have expended, but for the prohibition, on the articles in question, is left in their hands unexpended, to be employed in other articles; and therefore the loss is not total. True; but there is a loss: a loss is implied in their being compelled to purchase articles which they would not otherwise have chosen. The amount of loss is not within the reach of calculation; but where it is possible to erect a comparative standard of price or quality between the goods which would be purchased but for the prohibition, and those which are purchased on account of the prohibition, the loss presents itself in a tangible and measurable shape.

Case III. The prohibition disobeyed: the purpose not answered; the home article not purchased for consumption; the rival and foreign article purchased and consumed, notwithstanding the prohibition.—Then not only is the law disobeyed, but its purpose is more manifestly frustrated than in either of the foregoing cases.

Under our present supposition, the price of the foreign article to the purchaser and consumer cannot but be raised above the current price it held before the prohibition; for the prohibition cannot be evaded without extra labour employed, and risk incurred, by those engaged in the conveyance of it from the hands by which it is exported from the foreign country to the hands of the consumer;—and fraudulent labour is of all labour the most costly. Here, too, in respect of the loss and burthen to the consuming purchaser, the difference between the price of the foreign article when allowed, and the foreign article when prohibited, has, by the whole amount of it, the effect—the bad effect—of a tax: and by every increase given to the severity, or in any other way to the efficiency of the law, a correspondent increase is given to the amount and burthensomeness of this unproductive substitute to a government tax.

And into whose pockets is the produce of this worse than useless, this baneful substitute to a tax, conveyed? Into the pockets of the public? No! Into the pockets of the home-producers, whom, at the expense of all their fellow-countrymen, its endeavours are thus employed to serve? No! but into the pockets of those whose labours are employed, whose lives and liberty hazarded, in effectually causing the prohibitory law to be disobeyed, and the design of it frustrated.

The persons for whom this favour is intended,—what title have they, what title can they ever have, to such a preference—to a benefit to which a correspondent injury, not to say injustice, to others,—an injury, an injustice to such an extent,—is unavoidably linked?

And in point of numbers, what are the favoured when compared with the disfavoured? Answer: The few; the few always served, or meant to be served, at the expense of the many.

This one observation attaches inevitable and unanswerable condemnation to the measure, unless it can be shown that the sum of profit to the few is more than equivalent to the sum of loss to the many.

But in favour of such a supposition no reason whatever presents itself. If any one believes he can discover such a reason—if any one imagines it falls within the possibilities of the case, to him it belongs to produce it.

The loss sustained by those on whom the burthen of the measure most immediately presses—who are, as it were, in actual contact with the measure, is not the only loss. Antecedently to the prohibition, the articles now prohibited were furnished by foreign producers, to whom home articles to an amount regarded as a fair equivalent were supplied in return, and were in fact the means of purchasing. Deprived now of the means of paying for the goods of the country which issues the prohibition, the foreign producer is driven from the market. And here, on the very face of the transaction, is another set of men on whom a burthen is imposed—or, which is the same thing, to whom a profit is denied—equivalent at least to the expected benefit, supposing it received, and at whatever calculation it may be taken.

Here, then, in addition to the injury done to the universal interest, is an injury done to a particular interest, equal to the benefit contemplated to the other particular interest for whom the prohibition was made.

Not so, it may be objected—not so; for what they before purchased with the prohibited goods, they will continue to purchase with other not-prohibited goods, or with money, which is still better.

Vain, however, is this objection. In money perhaps they would have paid for these our goods, rather than have gone for the like to some other country; in money they would have paid for them, could they have got it. But they could not have got it except by selling their goods. If they have sold their goods and realized their profit, why should they bring the money they have produced to you?

But they will pay in other goods. If we want those goods, and can pay for them, and will allow them to be brought to us, we shall have them in any case, whether the others be prohibited or not: so that the question remains as it was before.

This is the point at which any person who, being determined to justify the prohibitory system at all events, though at the same time conscious of its unjustifiability, would be apt to attempt a diversion by leading the debate into the subject of the balance of trade. But, without going into the details of that controversy, a demonstration of the reality of the loss, founded on universal experience, may satisfy even the malâ fide adversary.

After having been accustomed to sell the whole or a part of his produce to this or that particular customer, no man who knows that that customer is prevented from sending the only goods he was used to send in return, but would understand himself, feel himself, to have sustained a loss. A loss he would necessarily sustain, and by the whole value of the goods, supposing him not to find another customer—and if a less advantageous customer than before, the loss, though less in amount, not less real in fact: and if in the case in question it be alleged, that in the room of every person so prevented by the prohibition from giving for the goods the usual equivalent, another customer comes of course—he who makes the allegation that such a second customer comes of course, is bound to produce him—to provide him—for his argument at least.

The general result would be more clearly perceived from an individual case in point:—Spain sells to England wine, wool, oil, fruits, &c.; she takes in return a great variety of manufactured and other articles. On a sudden, a prohibitory degree is passed;—Spain is no longer allowed to buy the foreign manufactured articles. Of the surplus of Spanish produce not sold and consumed at home, a great proportion was bought for England in return for the English articles sent to Spain. Where are the Spaniards now to find customers for that produce? Not from England; for they have deprived England of the means of buying: not from other countries, at least from those to whom the same prohibitions apply.

Add to these necessary ill consequences the probable ill consequences produced by counter restrictions and prohibitions against your goods, in countries the introduction of whose goods you restrict or prohibit, and the quantum of loss or suffering will be greatly increased.

Thus, then, must the question be finally put:—The burthen to those who are injured,—what is its amount? The benefit to those who are meant to be favoured,—what is its amount?

Persons, human feelings, pounds, shillings, and pence, in English, in Spanish reals of Vellon—to all these subjects must the arithmetical calculation be applied, before we can come to any just and well-grounded conclusion:—and when there are two parties to the question—two contending parties—the arithmetical operation must be applied with equal correctness to both sides of the account; otherwise it will be no more an honest account, than if, in a statement of account between A and B, all the items on one side were omitted.

Yet, in the account kept of the pretended or supposed encouragements in question, the unreciprocal operation is the sort of operation that is performed—that has been commonly performed.

[* ]This injudicious and baneful decree is singularly illustrative of the extreme absurdity of that part of the constitution which only allows the Cortes to sit for three, or at most four months of the year. Whether they have little or much to do, they are compelled to employ the same time about it. They are to be treated, as an able Portuguese Journalist observes, like babies, who must be put to bed at a fixed hour whether they are sleepy or not.

The writer takes it for granted that the decree exists, though neither he, nor any individual he has seen, is able to speak to the fact of its publication.