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Subject Area: Economics
Topic: Free Trade

ESSAY No. XXVI. - 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. XXVI.

march 6, 1830.

The American System adopted in Kentucky. Absurdity of, shewn in a reference to the proceedings of a public meeting at Versailles, in that state. Circle described by the money received by the graziers of the Western country in exchange for live stock. Individuals, as well as nations, are enabled to sell, because they buy.

WE present our readers below, with the proceedings of a meeting of mechanics and citizens of the town of Versailles, in Woodford county, Kentucky, held in October last, adopting the principles laid down by the American System, which teach, that it is good policy for a nation to deal as little as possible with foreigners. The address of the committee appointed by the meeting, will be found to be in perfect accordance with the leading features of the restrictive policy. It denies that any reasoning is required, “to prove that it is the interest of Kentuckians to encourage and use Kentucky manufactures in preference to the manufactures of our sister states, and particularly the manufactures of foreign nations,”—insists upon it, that trade with the Eastern and Northern states drains them of their money; and asserts that Kentucky, by the present course, will become more impoverished than other states possessing fewer natural advantages.

From this movement in the West, which appears to have been preceded by one in Shelby county, where “the true Kentucky policy” seems to have first been proclaimed, it strikes us that the shoe begins to pinch in that quarter of the country, as it has already done in so many other sections of the union. It is well known to the community, that Kentucky is an agricultural state, and that amongst her articles of export are thousands of horses, cattle and hogs, which are driven into the Carolinas and Georgia, where they are sold for money. It is also known, that during the last year a spirit of retaliation against Kentucky, for the active part taken by her Representatives in Congress in favour of the system so injurious to the Southern states, was manifested by the latter in a refusal to purchase the usual supply of animals. This refusal could not but have resulted in great inconvenience and loss to many of the drovers and raisers of stock, who, in their turn, must have fallen short in their payments to the merchants and mechanics at home; or, at all events, have been deprived of a part of the capital with which they had usually carried on their business. It is impossible that any great interruption to trade, domestic or foreign, can ever take place, without shewing its effects throughout the whole community upon which the interruption operates; and if the drovers of Kentucky, last year carried back from the Southern states only two or three hundred thousand dollars less than the amount which they had usually received for the same number of animals, numerous embarrassments must have been felt in the grazing districts. The real causes however of embarrassment, and what is called scarcity of money, are not always apparent to those who are only indirectly reached by the sinking of capital, and the chances are ten to one that some erroneous one will be assigned.

This has clearly been the case in Philadelphia, in reference to the American System. Every step taken in that wretched policy, has operated upon that commercial city, precisely in the same manner as a decree abolishing certain employments. Ship-builders, boat-builders, riggers, sail-makers, rope-makers, plumbers, smiths, painters, stevidores, clerks, porters, and all others who gain their livelihood by commerce and navigation, are thrown out of employment, and swell the ranks of the competitors in other species of labour, whilst their wives and daughters are compelled to seek employment with their needle, in channels already filled up with a due proportion of seamstresses. These people, from their station in life, are most of them incapable of judging of the real cause of their sufferings, and can very readily be made to believe, that the falling off of commerce, which they behold, is the result of the refusal of foreign nations to buy of us, when it is in fact owing to our own folly in refusing to buy of them, and thereby putting it out of their power to buy of us; for nations if they cannot sell, cannot buy.

In the Kentucky address there is visible the same species of erroneous reasoning. The committee seem to suppose, that whether the people of Kentucky consume the manufactures of the North and East or not, there will be the same demand at the South, for the productions which they sell for money. This is a great error. The money drawn out of Carolina for horses and cattle in one year, is the same money which is drawn out the next. If a bundle of bank notes, or a bag of dollars could have made a speech at the Versailles meeting, it would have been pretty much in the following terms:—“I am by nature a wanderer, and can no more be compelled to remain in Kentucky, than the water of the Ohio can be made to stop at the falls. My late owner brought me from Carolina, where I was exchanged for a drove of hogs. On my arrival in this state, I was handed over to a storekeeper, who to-morrow is going to send me to a manufacturer in Massachusetts, to pay his bill for domestic goods, purchased six months ago. I shall not long remain in that quarter. The crop of cotton will begin to be ready for shipment, from Charleston, about the first of November, and I shall be sent there to buy cotton, to make more domestic goods. There I shall fall into the hands of a factor, who will send me into the country as a remittance to some planter, and before another year is over, I will be back here again as the price of a drove of horses. Therefore you can readily see, that if any impediment is put in the way of my going to the Eastern manufacturer, no more cattle can be sold in Carolina, because the Carolina planter will not get his usual supply of cash from the North, inasmuch as the Eastern manufacturer can only buy cotton, because the Kentucky merchant buys his manufactured goods.” This is the real operation of the internal trade of this country, as far as it is carried on by money, and not by the intervention of bills of exchange; and if it were possible for Kentucky to carry the American System to the extent recommended by the meeting of Versailles, she would find a corresponding falling off in her exports of live stock. The circle which we have mentioned, as performed by the money brought into Kentucky for her produce exported, is just as regularly described as that of the earth around the sun.

We rejoice to see such proceedings as those alluded to. Their entire absurdity will strike the common sense of the public, and lead them to reflect upon the miserable condition to which we should be brought, if the system were carried out to its full extent—if not only every state, but every county, every township, nay every individual family, should resolve to manufacture within itself, all the articles required to supply its wants. And here we will take occasion to remark, that the idea inculcated by the address, that shoes, hats, saddlery, tin ware and many articles made of iron, are much cheaper in Kentucky (quality considered) than when imported, is of a somewhat dubious character to us, who hold the doctrine that people are the best judges of their own interests. If, however, this is not true of those for whom the address was intended, the manifest remedy would have been to have addressed their understandings, and not their prejudices—to have convinced them that Kentucky manufactures were cheaper and better than foreign, and there would then have been no necessity for the cultivation of those bad passions of jealousy and ill will, which must always exist, where one party is persuaded that he is “tributary” to another. By such a course too, the liberal doctrines of free trade would have been inculcated, instead of the selfish fallacies of the restrictive system; for, by the principles of an enlightened political economy, it is enjoined upon all to buy of those who can furnish at the cheapest rate, any article of a given quality.