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Subject Area: Economics
Topic: Free Trade

ESSAY No. XXIII. - 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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ESSAY No. XXIII.

march 3, 1830.

Indifference of the public as to indirect taxes. Doctrine that paying high prices for commodities is beneficial to labourers, shewn to be erroneous. Extraordinary blindness of persons who live on fixed incomes, in relation to the protective system.

ONE of the strangest anomalies which has ever been presented in this country, is the aversion of the people to pay direct taxes for the support of government, and their entire willingness to pay indirect ones, which are to go to the support of individuals. The man who would rebel at a land tax of ten dollars, if payment were demanded by a tax gatherer, will most cheerfully pay a hundred dollars, if the collector of the tax is the custom-house. Now we cannot see why the mode of collection should make so great a difference as is here expressed. Undoubtedly the collection of the revenue by duties on imported commodities, is much the most convenient and satisfactory to the public at large, but this convenience may be too dearly paid for.

The fact however, is, the people generally do not know that they pay a tax when they consume a foreign commodity. The family which consumes a barrel of sugar in a year, does not know that it pays a tax on it of five dollars, and the same sum on a bag of coffee. Nor does the gentleman who wears a suit of broadcloth know that he pays a tax on it of twenty dollars, and that he cannot put a carpet on his floor without paying a tax for the privilege, of from ten to a hundred dollars. The farmer does not know, that if he consumes on his farm in ploughs, chains, hooks, harrows, hinges, axes, spades, shovels, and the various other articles necessary for his business, 5 cwt. of iron in a year, he pays a tax of $9.25. The labouring man, who works from morning till night for a scanty subsistence, does not know, that for every square yard of flannel or green baize or cloth he purchases for clothing, for his family, he pays a tax equal to more than the first cost of some qualities of those articles in England, and to twice the cost of others. We wonder why the benevolent societies of the different cities do not take up this subject, and see the poor restored to their rights. It would be a thousand times more to their interest, than the various expedients resorted to, to extend partial and temporary relief; for, it is very clear, that many of those who become chargeable, would be able to escape pauperism, by being timely relieved from an oppressive burthen. It is the last hair that breaks the camel’s back. It is often the deficiency of a dollar or two, that throws the poor man behind hand, and prevents him from ever again obtaining his original position in the race to wards competency. This is known to every body. Many a merchant even could trace his misfortunes to the want at some period of a very small sum, which, throwing him on the list of borrowers, has eventually driven him into losses and sacrifices that could never afterwards be repaired. How important then, is it, that no unnecessary, partial and unjust system of taxation should prevail, to bring about such a state of things!

The common argument against these positions is, that although it be true, that people pay more for foreign commodities under high duties, than under low duties, yet that they get more for their labour. Never was there a greater fallacy advanced than this. The opposite result, on the contrary, is the truth. They get less for their labour, and upon the plain principle, that as every body else has to pay a higher price than they would have to pay, were the duties low, for the articles of which they stand in need, the means of every body to purchase the labour of others is proportionally diminished. That this is so, will be manifest to any one who reflects for a moment upon an individual case. Can any man, who has to pay a tax of ten dollars, afford to employ as many persons as if he paid none? If not, then it will be seen that a tax equal only to five dollars per head of the population of the United States, for the support of manufactures, would diminish the consuming power of the community to the extent of sixty millions of dollars, and, consequently, diminish the demand for labour in an equal ratio.

But there is one class of persons, who are so clearly injured by the American System, that we are at a loss to account for the total blindness they exhibit in regard to their interests. We allude to those who live upon fixed incomes, whether they are derived from salaries, stocks, public funds, ground rents, mortgages, or annuities. No one will pretend to say, that their revenues are increased by the imposition of high duties; and when we know, that a family which expends $2000 per annum, cannot pay less than $100 in taxes on their consumption, not for the support of government, but for the support of persons who are carrying on a losing trade, which cannot be sustained without contributions from the people, we are really astonished at the quiescence with which they submit to be fleeced. There is many an individual, who is at this day prevented from giving his children a good education, because the money which he ought to appropriate to that object, is extorted from his pocket, in order to enable some manufacturer to make the fabrics of which he stands in need, at double the price at which they could be procured from others. How long will this delusion last?