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Subject Area: Economics
Topic: Free Trade

ESSAY No. V. - Condy Raguet, The Principles of Free Trade [1835]

Edition used:

The Principles of Free Trade illustrated in a series of short and familiar Essays originally published in the Banner of the Constitution, 2nd ed. (Philadelphia, 1840).

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


ESSAY No. V.

january 16, 1830.

Incompatibility of the interests of the wool growers, with those of the wool manufacturers.

IN the New-York Morning Herald a series of essays has been published, “On the policy of manufacturing in this country,” which have proceeded as far as No. 11. Those which we have seen, have contended most strenuously for the protecting system, but have advanced nothing by way of argument, different from the ordinary language of the great body of American System writers. The author, however, is evidently a sensible man, and practically acquainted with the details of manufacturing, and he has, in some of his essays, stated a number of facts which are well worth preserving.

In his eleventh essay he has pointed out the absolute incompatability of the interests of the wool growers and the wool manufacturers. He has shewn that, whilst the interests of the farmer are to be promoted by the high price of wool, the interests of the latter require that the raw material of their fabric should be at a low price; and he has ascribed the great imperfection of the present tariff law and its oppressive influence upon the manufacturers, to the erroneous information given by themselves to the committee of Congress, prior to its passage. We have copied in our paper of to-day this whole essay. It may be regarded as testimony of an important nature, coming from a party which can have no interest in making such an admission. The real fact is, that, not only in relation to the woollens, but also to the iron manufacture, an attempt has been made to reconcile discordant interests. If high duties are imposed upon raw materials to encourage the domestic production, just in proportion to those duties must be the discouragement of the manufacturers, and these duties may even be so high, that the foreign fabric can be imported, ready made, cheaper than the raw material. This we know to be the case in regard to some manufactures of iron. But why did the woollen manufacturers consent to the high duties on wool? Simply because they could in no other way secure a majority in Congress in favour of their protection. The farmers of the middle and Western states knew too well that high duties upon manufactures were a tax upon consumers, and they would not therefore willingly consent to this tax, unless a compromise could be effected, by which they should receive a part or the whole of it back again, in the form of a high price for wool. The compromise, however, failed of its object. To insure a monopoly, it is essential that a limited quantity only, of the commodity protected, can be produced. The gold diggers of North Carolina might enjoy the benefit of a monopoly, if Congress could impose a prohibitory duty upon gold, because that metal is only to be found in small quantities. But to attempt to create a monopoly for the growing of wool, when every man in the land can keep sheep, would not be less absurd, than an attempt to create a monopoly for the raising of wheat. This important truth appears to have been lost sight of by our legislature, as well as by our farmers, and the effects of their impolicy have been felt far and wide. Of all the capitals which are employed in production, a capital invested in living animals is the most likely to bring ruin on its proprietor, when the business is overdone. Steam engines may be stopped—machinery may be suspended, and factories may be closed when there is no demand for cloth—and all that the proprietor loses, is the rent of his buildings, and his water power, the interest on his capital, and the deterioration of his machinery, from its standing idle. In the case of sheep, the matter is different. They must be fed, or killed off. In either case, they may occasion a total loss; and as in the case of their being slaughtered, they will sell for no more than the price of the cheapest meat, which, including skin, fleece and all, in many places, does not exceed one dollar a head, all the surplus paid for a flock, is a capital annihilated for the owner. A vast extent of losses of this kind has already been experienced in New-England and elsewhere, and the probability is, that, before the business is over, some millions of dollars will have been lost to the farmers by this process.

But the question is, will the farmers consent to forego all the benefits of the American System, in favour of the manufacturers? Will they agree to pay the whole tax of supporting, not merely the wool manufacturers, but those of cotton and iron and glass, and all the rest who are favoured by the protecting laws, if they are to see no way by which they are to be remunerated in part, for such an enormous burthen? We think not, and we therefore consider it likely that the wool manufacturers will be held to the terms of the original compact. Finding then that no remedy is presented in this quarter, they may appeal for a total prohibition, which would be accomplished by striking out the one dollar minimum from the existing law. Such a measure would seal their doom. Smuggling would then take the entire place of lawful importations, and the market price of woollen fabrics, instead of being controlled, as it now is, by the rate of lawful importations, would settle down to the rates of smuggling.