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Subject Area: Economics
Topic: Free Trade

ESSAY No. VII. - 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. VII.

january 23, 1830.

To benefit manufacturers, raw materials should be admitted free, or, at low duties. Incompatibility of the interests of the owners of iron mines, with those of blacksmiths, and other artificers in iron.

IN order to understand the true operation of the “American System” upon the different branches of industry, it is necessary to examine each by itself. The cunning and artifice by which the manufacturers, who are protected by enormous duties, have managed to impress the public with the idea that their cause is the common cause of all the manufacturers in the country, have been too successful, and the consequence has been, that many of those whose industry has always prospered under the most moderate rates of duty, have been persuaded that their interests would be promoted by granting to others a greater extent of protection than they themselves enjoyed. But this is not all: In some instances the boasted protection to the operative manufacturer, which has invested this “American System” with a great share of its popularity, has proved to be a sheer fraud. This has been especially the case with the manufacturers of iron, as has been most ably and most conclusively shewn by the blacksmith, whose communication was published in this paper on the 9th and 13th inst., and which would have done credit to any statesman in our legislative councils.*

To promote the interests of manufacturers, the raw material upon which they employ their labour should be always furnished at the lowest possible rate. This matter is so well understood in Great Britain, that wool is there admitted at one half penny per pound, if it cost less than one shilling, and one penny per pound if it cost above; cotton at a duty of six per cent., raw silk at one penny per pound, bar iron at six dollars sixty-seven cents per ton, pig iron at two dollars twenty-two cents per ton, hemp at twenty dollars seventy-five cents per ton, and flax at one penny per hundred weight. The British government understands too well the incompatibility which exists between the high prices of raw materials and the low prices of manufactured goods, to listen to the petition of the wool growers in favour of high duties on wool, and it knows that any attempts to enable the wool growing and the wool manufacturing interests to combine, would be fatal to both. The consequence therefore of their policy is, that raw materials can be purchased by the manufacturers of England, at a price so little above the prices which they bear at the places of their growth, that the fact in regard to many articles, of growing the raw material, has ceased to be an advantage worth speaking of.* The result therefore is, that Great Britain can manufacture cheaper than those countries which tax the raw materials, independent of the advantages she enjoys from abundance of capital and cheapness of labour.

Now what are the facts in reference to the United States? Why, for the sake of benefiting the producers of the raw materials, we have imposed so heavy a duty upon their importation, that the manufacturers have, in some cases, found that it more than counterbalances all the advantages they enjoy from the high duties imposed upon the manufactured articles. This is especially the case in the manufacture of iron. The duty upon bar iron is thirty-seven dollars per ton, which is less than the price that the English manufacturer has to pay for it, and as the duty upon many iron manufactures is but twenty-five per cent., the consequence is, that they can be imported and sold in the market at a less price per ton than the raw material can be imported for. This absurd result was very minutely and perspicuously explained in a petition from the iron manufacturers of Philadelphia, presented to the Congress of the United States prior to the passage of the last tariff law, and which was published at page 325 of the first volume of the Free Trade Advocate. Let such a duty therefore cease to be called a duty for the protection of the manufacturers of iron; it is a duty for their destruction; and can possibly benefit nobody but the owners of the land upon which the iron mines are located, who, by being authorized to levy a tax upon the consumers of bar iron, are enabled to pocket the amount, which would otherwise have gone into the pockets of the workmen, who have been deprived of the power of employing their industry in the fabrication of the raw material. That this is so, we refer to the petition above mentioned. It says: “We are completely shut out of our own market, by laws, we are told, that were made for our protection. Such articles as cost one penny and one penny and a half per pound to manufacture, which include all those articles which could be manufactured here to the best advantage, are now imported, and can be sold profitably at one hundred and seven dollars and twenty cents per ton, or two dollars and eighty cents less than the cost of the same quality of iron in most of our seaports.” A very important item, perhaps not thought of at the time by the petitioners, is the iron for rail roads, which, although in bars, is admitted under the denomination of manufactured iron, and is charged with but twenty-five per cent. This article can be imported at sixty dollars per ton, whilst the raw material of which it is made cannot be imported for less than eighty dollars.

What has taken place in regard to iron, has also taken place in reference to wool. The duty on that quality which cannot be raised in this country to advantage, is so high that the manufacturers say, that the duties on woollen fabrics, although ranging from forty-five to two hundred and twenty-five per cent., are not sufficient to protect them, and they consequently call out for more of the “American System.” Indeed, some of them say, that nothing short of prohibition will save them from ruin. We cannot however sympathise with this class of manufacturers, as we do with the manufacturers of iron. The “American System” was of their own seeking, whilst it was opposed by the others, as will appear from a reference to the cited petition, wherein it was expressly declared, that the petitioners were satisfied with the existing duties on manufactures of iron.

That the force of our remarks may be more apparent, we will quote the duties now payable in the United States upon the raw materials referred to. They are as follows:—

Wool, four cents per pound, and forty-five per cent., ad valorem besides.

Bar iron, thirty-seven dollars per ton.

Pig iron, twelve dollars and fifty cents per ton.

Hemp, fifty dollars per ton.

Flax, forty dollars per ton.

Upon cotton, the duty is three cents per pound, which, if any were imported, would be about thirty per cent., but this not being the case, it is a mere nominal duty.

[* ] John Sarchett, of Philadelphia, is the individual here alluded to.

[* ] This is a truth well known in reference to cotton. The English manufacturer is seldom obliged to pay more for it, than the American manufacturer of the Northern states, and what little difference does at times exist, is of trifling account.