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Subject Area: Economics
Topic: Free Trade

ESSAY No. XXXVI. - 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. XXXVI.

may 5, 1830.

Report of the Committee on Agriculture to the House of Representatives, recommending protection to the growth of silk. Impolicy of, shewn. Absurdity of the common notion about the balance of trade.

THE Committee on Agriculture of the House of Representatives has made a report on the subject of the culture of silk in the United States, and like all the modern documents, which recommend Congress to appropriate the public money for the purpose of inducing people to do, what the same documents invariably say it is for their interest to do, it is founded upon the errors of the old mercantile theory, now better known in this country under the appellation of the American System. When we see a gentleman so eminent as the chairman of that committee, in that profession which of all the liberal pursuits qualifies its votaries for clear and logical reasoning, advance such fallacious positions as some of those contained in the report referred to, we are at a loss to conjecture by what process of the mind he could have been brought to their belief. It is true the report does not recommend high duties upon foreign silks to encourage their domestic manufacture, but it goes one step towards it, and if that stop be not cut short at the threshold, we shall see re-acted the whole scene of devastation which has followed in the footsteps of the cotton and woollen protective systems. It recommends an “appropriation of a small and insignificant sum of money,” to be granted to Mr. D’Homergue, a French gentleman who understands the art of reeling silk from the cocoons, to remain in this country for the purpose of teaching that operation to others. Now we unhesitatingly say, that if Mr. D’Homergue, who has been in this country for a year, or near it, who has published essays upon essays upon the culture of silk, and who has had constant intercourse with the most conspicuous supporters of the protecting system, has not been able to convince any one or more individuals that it was their interest to avail themselves of his talents and skill by raising “a small and insignificant sum of money,” we do not see how it can be shewn to be the duty of the government to interfere in this matter, even supposing it had the constitutional right, any more than that it is its duty to appropriate money for the purpose of inducing foreigners to introduce into the country any other species of skill.

But let us look at the arguments. “The importation of silk, during the year which ended on the 30th of September, 1828, amounted to $8,463,563, of which $1,274,461 were exported; but in the same year, the exportation of bread-stuffs from the country amounted only to $5,414,665, leaving a balance against us of nearly two millions.” Here we have again revived the old exploded doctrine of the balance of trade. Now if this statement of the case is a logical one, it implies that bread-stuffs constitute the fund out of which we pay for our silks, or otherwise why should they be selected from a mass of fifty millions of exports, any more than cotton or tobacco? The proposition then would stand thus:—If we export bread-stuffs, worth $5,414,665, and, in exchange therefor, procure silks worth $7,189,102, (the value imported after deducting those exported,) we are losers by the operation of nearly 2,000,000 dollars. This, to be sure, would be strange reasoning, but it is the reasoning of the committee; from which we differ in opinion, inasmuch as it appears to us that the very opposite result would have been proved, viz., that we had gained near two millions of dollars by the trade.

If a farmer in Ohio, where a barrel of flour is worth three dollars, sends it to New Orleans where it sells for five, and there purchases with the money ten bushels of salt, which at home are worth ten dollars, he is, according to the American System doctrines, going fast to ruin. The balance of trade is against him. He imports to a greater amount than he exports. He is losing money, and if he long perseveres in such a course, he will be drained of his last dollar. Now if such a doctrine were seriously advanced, there is not in the whole country a single individual with an intellect so obtuse as not to see its absurdity; and yet the moment this fallacy is predicated of a nation instead of an individual, the moment it is dignified with the title of the great doctrine of the balance of trade, and is mystified by volumes of statistical tables, the whole nation loses sight of common sense, and insists upon it, that a country which exports fifty millions of dollars worth of produce, and imports sixty millions of dollars worth of foreign goods, purchased with the proceeds of the sales, is getting ruined. How plain it is to be seen, that in the case of the Ohio farmer, his trade has been profitable, instead of having been injurious to him; for although he does not get the whole of the difference between the three dollars and the ten dollars, the Ohio prices of his flour and salt, yet he gets a part of it, the rest having been paid for freight, insurance, porterage, and commissions. The case is the same with national imports and exports; and as produce cannot be sent abroad, nor foreign goods be imported, without similar expenses, and as our custom-house returns always give the value of the domestic articles at home, before the expenses on them begin, and the value of the foreign article after the expenses have been incurred, it follows, as a necessary consequence, that the aggregate value of imports must be greater than the aggregate value of exports, or else the nation must be carrying on a losing trade.

The committee say they “regard the general culture of silk as of vast national advantage in many points of view. If zealously undertaken and prosecuted, it will in a few years furnish an article of export of great value, and thus the millions paid by the people of the United States for silk stuffs, will be compensated for by the sale of our raw silk.” Now this may be true, or it may not be true. It is quite possible that the culture of silk, in some parts of the United States, may become a profitable branch of business. But if it ever does become a more profitable branch of industry than those which now exist, it can only be by its introduction in the natural way. No forcing can render it so. The raising of silk worms requires very little capital, or skill, and is within the capability of almost every man, woman and child in the country. But it is a great error to suppose, as the committee does, that the culture of silk “will detract nothing from agricultural or manufacturing labour.” This is one of the great fallacies of the American System. It supposes that the labour of the people can be made to produce all which is now produced, and eight millions of dollars worth of silk besides. It is true, that there are at this moment in some of our cities, people who are suffering because they have been deprived of employment, owing to the destruction of commerce by the tariff system; yet it is not true, that, throughout the country, any great attention could be paid to the cultivation of silk worms, without interfering with other labours; for, as far as we have had an opportunity of judging of agricultural life, we have never seen an industrious farmer who could truly say that he had nothing to do.

But if the culture of silk shall shew itself to be a profitable branch of business, people will gradually fall into it without legislative aid; and there are no doubt now going on investigations, prompted by individual interest, which will soon introduce into the country, in the proper way, all the regular skill requisite for the filature of the cocoons—and this would be much more beneficial than any interference of the government, seeing that such interference would look like a warranty of the experiment, and in consequence of it, thousands of people might be induced to plant orchards of mulberry trees where they had better plant wheat and corn.

The committee further “anticipate, that, at a period not remote, when we shall be in possession of the finest material produced in any country, the manufacture of silk stuffs will necessarily be introduced into the United States.” That attempts will be made to force the manufacture of silk stuffs in this country, is quite possible, but that it will ever be introduced in the natural course of things, so long as Western lands can be had for one dollar and a quarter an acre, we do not believe. The mere possession of a raw material, when a great deal of human labour is requisite to convert it into a fabric, is of very little account. This is especially the case with an article of so great value as raw silk. The freight and expenses of transporting such a commodity to France or England, would not be two per cent., and the mere fact of raising it, would give us therefore no advantage worth naming. Even in the bulky article of cotton, the freight alone upon which is ten to fifteen per cent., the advantage we enjoy is of so trifling an account, that it requires protecting duties of from 50 to 175 per cent. to shut out of our market goods made with our own cotton. With silk the matter would be the same; and we should say that those who seriously look forward to the day, when American labour will be able to enter into competition with British, French, and Chinese labour, must anticipate a more rapid increase of our population than we have ever thought possible, and a greater extent of misery and poverty than we have ever considered likely to visit the people of this country, or than we hope will ever be their portion.