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5: Blows Directed Against Commerce: Customs Dues, Tolls - Étienne Bonnot, Abbé de Condillac, Commerce and Government Considered in their Mutual Relationship [1776]

Edition used:

Commerce and Government Considered in their Mutual Relationship, translated by Shelagh Eltis, with an Introduction to His Life and Contribution to Economics by Shelagh Eltis and Walter Eltis (Indianapolis: Liberty Fund, 2008).

About Liberty Fund:

Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals.


5

Blows Directed Against Commerce: Customs Dues, Tolls

The four nations which we postulated in the previous chapter are now four monarchies, whose monarchs rival each other in the ambition to be rich and powerful: but sadly they do just what is needed to be neither the one nor the other. They are in a deluded state from which they cannot escape. Because each of them believes he has nothing to fear from his neighbours, and even sees that he has sometimes made himself feared, they believe that they are all equally powerful, or near enough. The same faults that they repeat, copying each other, hold them in a balance of weakness, which they take for a balance of power: their great maxim is that one must weaken one’s enemies. There you have the essence of policy which must give them turn by turn the upper hand; furthermore they have no maxim for obtaining real strength.

One of them, to increase his income, conceived of putting taxes on all foreign merchandise that enters his states; and to that end he established customs and tolls. The others also set up customs and tolls.

Some time later he persuaded himself that the income would increase further if he placed taxes on the goods leaving his kingdom; so he placed them and the others set them following his example.

When it was no longer permissible to export or to import anything, unless one had paid in advance a certain tax, everything became more expensive in these four monarchies by virtue of the taxes imposed; and this increase in price which first of all reduced consumption, and then production, suddenly slowed down trade. There were manufacturers who, not being able to be certain of selling, no longer worked. Those who continued in their business worked less, and the ploughmen neglected every surplus which was becoming useless to them. So it is that customs duties and tolls injured agriculture, the arts and trade, and reduced to beggary a large number of citizens who had previously lived by their work.

Free trade between these four kingdoms would have caused the surplus of all to flow back from one to the other; and each sovereign would have based his power on a numerous people made wealthy by the arts and by agriculture.

That is not how our four monarchs saw things. On the contrary they doubled taxes because they thought they were doubling income, which they did not double. They tripled and quadrupled taxes; and they did not understand how, far from having more income, they had less. They did not see that they had caused consumption to fall.

Trade languished, and they thought they had found the reason. How, people said in the four monarchies, could our manufactures not fall since we are in the habit of preferring articles made abroad to those which are made at home? So one of the monarchs conceived of subjecting imports to new taxes and of suppressing some of those which he had placed on exports. But the three others, who were no less crafty, did the same, and trade did not pick up anywhere.

There was a great profit in defrauding the duties at tolls and customs, and people defrauded them. So it was forbidden in the four kingdoms, under severe penalties, to sell foreign goods for which one had not paid the tax imposed. But people carried on selling fraudulently: they simply sold at a higher price, compensating for the risks to which they were exposed. The traders who committed this fraud were called smugglers.

It was necessary to spread troops on all frontiers to stop the smuggling, which was not prevented. So there you have the four monarchies armed in time of peace in order to stop all trade between themselves.

Under the pretence of levying the sovereign’s rights, employees in the customs and tolls committed a great deal of harassment; and the government, which protected them, seemed to be in league with them, to compel all the traders to become smugglers.

These employees were large in number; men armed with the intent to prevent fraud were in even greater number. All these men consumed a large part of the customs duties and tolls dues at the expense of the state, and yet they were so many citizens taken away from crafts and agriculture.