Front Page Titles (by Subject) ESSAY No. XXXV. - The Principles of Free Trade
The Online Library of Liberty
A project of Liberty Fund, Inc.
ESSAY No. XXXV. - Condy Raguet, The Principles of Free Trade 
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).
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.
The text is in the public domain.
Fair use statement:
This material is put online to further the educational goals of Liberty Fund, Inc. Unless otherwise stated in the Copyright Information section above, this material may be used freely for educational and academic purposes. It may not be used in any way for profit.
ESSAY No. XXXV.
may 1, 1830.
Internal Improvements. True influence of, upon the wealth of nations.
IT is one of the easiest things in the world to make a speech on Internal Improvements, which shall captivate the great mass of the people, and lead them to believe that the orator is perfect master of the whole subject. It consists in nothing more than laying down general propositions which no body can dispute, and then in insisting upon it, that those propositions are precisely applicable to the particular improvement under consideration. Mr. Hemphill, in his speech on the Buffalo and New Orleans road bill, gives us a specimen of this sort of reasoning. He says, “A thorough and judicious execution of internal improvement would enliven the whole country. The advantages of such public works are so universally acknowledged, that it would be time mis-spent to go into any reasoning on the subject. The results have been the same in all ages, and nations.” Now no one will dispute that a “judicious” execution of internal improvement would enliven the country; but Mr. Hemphill, in the whole course of his speech, has not advanced a single argument, to shew what is meant by the term “judicious;” and he has left the matter, notwithstanding his exertions to prove that the road in question was entitled to that appellation, as open as the question of a “judicious tariff” has been left by others.
We ourselves are advocates of a “judicious tariff;” but what we mean by judicious, is a tariff that shall consult the interests of the whole people and not of a particular part of them, and which will impose no more taxes on the nation, than what are required for the support of an economical government. We are also the friends of a “judicious execution of internal improvements,” and as we probably differ from Mr. Hemphill in the acceptation of that term, as much as we do from Mr. Niles or Mr. Carey, in relation to a “judicious tariff,” we will point out the grounds of that difference, in as brief and intelligible a way as we can, waiving the question of constitutionality, and treating the subject as an economical one.
That turnpike roads, rail roads, and canals, have an important influence when judiciously located, upon the prosperity of a country, is too palpable to admit of dispute. They are labour-saving machines in commerce, as steam-engines are in manufactures, and, by diminishing the expense of transportation, they enable the consumers of produce and merchandize to supply themselves at a cheaper rate than before. Still, however, although this position is incontrovertible, yet it by no means follows that roads and canals ought to be indefinitely multiplied; and it is from a want of an acquaintance with the science of political economy, which points out the rule which is to determine between what is a judicious and what is not a judicous expenditure of money on internal improvements, that so much mischief has already been done, and that so much more is threatened.
Suppose the question were put to a farmer whether a good road to market was not desirable to him, what would be his reply? Clearly, an affirmative one. Suppose the further question were put to him, how much he would contribute towards the making of such a road, what would then be his answer? It would probably be this, and if he were a man of sense it would certainly be this: “I will contribute such sum as will be likely to bring back to me a pecuniary return at least equal to all the pecuniary disadvantage I shall sustain by parting with my capital.” In fact, this is the only sound mode of calculation upon such a subject, and it is the mode so plainly pointed out by common sense, that every individual farmer acts upon it as if by instinct. And the mode in which he comes at his conclusion, is by a sort of account current between the advantages he should obtain from the improvement, and the disadvantage he would sustain from parting with his capital. He would first ascertain, as near as he could, the quantity of produce which he would have to send to market, and would then compare the cost of its transportation under his existing facilities, with the cost under the proposed improvement. If the difference should be very considerable, he would be disposed to contribute largely; but he would take care to be assured, before he parted with his money, that he should gain quite as much annually, as the annual income derived from his capital, whether that were employed in loans, or in his agricultural business.
The road here spoken of, the reader will remember, is a road which collects no tolls, but in the construction of which a capital is expended, without any other return to the contributors than what they may derive in the saving of transportation on their products. And the reason why we have supposed such a road is, that the true nature of what are called internal improvements may be exhibited. The test of the utility, or, if the reader pleases, “the judicious execution” of these, whether they be turnpikes, rail roads, or canals, is entirely the same. The only criterion which can be employed is, whether or no the diminution of the expense of transporting all the persons and commodities which would pass over its surface, would be greater than, equal to, or less than, the income which could be derived by the constructors from the employment of the same capital in other pursuits. If the diminution would be greater, the improvement would be beneficial; if it would be equal, the improvement would be indifferent; and if it would be less, the improvement would be positively injurious; and for the same reason that it would be injurious to a farmer to expend a hundred dollars from which he could derive six dollars per annum, in the construction of a road, which would enable him to save by transportation only five dollars.
The foregoing is the view of the question of internal improvements as a purely economical one. And it must moreover be recollected, that the calculations must have reference to the very moment at which the capital is expended. Many persons are apt to suppose, that a loss would not be experienced, if it could be shewn that, in a few years, the necessary saving would be as great as the income lost by the expenditure. This is an error. The compound interest of capital must always be added to the cost of a work in order to ascertain its true cost; and as money doubles at compound interest of six per cent. in less than twelve years, a work which costs a million of dollars to day, will stand the nation in two millions at the expiration of eleven years and about eight months. It could easily be shewn, we think, that the capital wasted, near forty years ago, in an abortive, because premature attempt, to cut a canal from Philadelphia, by the way of Reading, to the Susquehanna, if it had been saved and accumulated, would have been more than sufficient to complete the work at the present day, which has been accomplished by a vast expenditure of new capital.
It will be observed, that in this examination of the subject, we have kept the economical question separate from all other incidental ones, of which there are a number, which, in the minds of many people are so confusedly mixed up with the true one, that they cannot see the latter in its proper light. The rise in the value of land, the convenience of travelling, the comfort of a good road to those who live on its route, giving employment to labourers, and various other considerations, all enter into the account with some people, and convey to their minds the idea of some magnificent, indescribable aggregate of benefits, which captivate them to such a degree that they think with Mr. Hemphill, “that it would be time mis-spent to go into any reasoning on the subject.” Now we do not think so. We think that the subject is precisely such a one as calls more loudly for going into reasoning upon it than any other, with a single exception, now before the nation; for notwithstanding all the speeches which have been made in favour of roads and canals, at this and former sessions of Congress, very little has been adduced to shew the scientific grounds upon which they are to be justified.