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Subject Area: Economics
Topic: Free Trade

ESSAY No. LIII. - 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. LIII.

september 1, 1830.

The settled policy doctrine at war with the march of improvement. Absurdity of supposing that the vested interests of individuals should be preferred to the great interests of the community.

AMONGST the advocates of the tariff system, there is a class of individuals whom we have sometimes distinguished by the appellation of settled policy men, and in reference to whose theory we propose to say a few words. These individuals are at heart believers in all the doctrines of free trade, but having attached themselves to a particular party, or to a particular candidate for the Presidency, or, considering their own political elevation to depend upon supporting the policy called for by a majority of their constituents, have thought proper to desert the standard of what they know to be the truth. In doing this, however, they have met with difficulties not easily surmounted. A conscientious man, who considers himself subject to the law of political as well as moral honesty, cannot at his pleasure turn and twist important principles, so as to adapt them to his interest; and hence has originated the necessity for some expedient, which should have the double effect of blinding the eyes of the public, and, to a certain extent, those of the individual himself. This expedient is, to justify the support of the tariff upon the ground, not that it is founded upon true principles of political economy, but that, having been once adopted, it ought to be adhered to.

Any one who reflects for a moment, can see the mischievous tendency of such a doctrine. It is a doctrine calculated to perpetuate error, and is at war with all the lights of the age, and with the advancement of human knowledge. It would be as strong a warranty for the perpetuation of the blue laws of Connecticut, did they still exist, or for the drowning of witches, had that once settled policy not been abandoned, as for the continuance of the tariff. But, say its advocates, regard must be had to the vested interests of those who have embarked in manufactures, upon the faith of the laws of 1816, ’24, and ’28. And why so? we would ask. Was any pledge given by the law of 1816, that even the comparatively moderate duties of that day would be rendered perpetual? So far from it, that law expressly declared, that the duty of twenty-five per cent. imposed upon cotton and woollen fabrics, was only to continue three years, and was then to be reduced to twenty per cent.; and, even so late as 1818, when the stipulation for three years was cancelled, it was only by prolonging the temporary character of the protection for seven additional years. There is not therefore a shadow of justice in any claim set up by those who embarked in the cotton and woollen manufactures prior to 1824, since the then existing laws positively declared, that their protective operation was to cease in 1826. Can any thing be clearer than this? Laws exist, declaring that a certain duty of 25 per cent. shall continue until “the thirtieth of June, one thousand eight hundred and twenty-six,” upon cotton and woollen fabrics, and shall then be reduced to twenty per cent. With these laws staring them in the face, speaking a language not susceptible of misconstruction, some hundreds of individuals invest their capitals in manufacturing establishments, and then, with a hardihood and effrontery not easily to be imagined, come forward and say, we are entitled to an eternal tax upon the industry of the country, because we embarked in manufactures upon the faith of the laws.

But it may be said by the settled policy men, we allude more especially to that class of people who did not engage in manufactures until the temporary character of the protecting laws was laid aside by its entire omission in the act of 1824. And pray, was there any stipulation in that act, which guarantied duties forever; of 50 to 175 per cent. upon coarse cottons, of 45 to 225 per cent. upon woollen goods, and of 100 to 180 per cent. upon iron? Did not the act bear upon its face the character of a law for raising revenue, with the two-fold design of supporting the government and of paying off the national debt? And how could such a law be presumed to be intended to be continued after the entire discharge of the debt? No inference in favour of perpetuity can certainly be drawn either from the body of the law, or from its title, and it can therefore only be regarded as upon the footing of all other general laws, that is, to last as long as the interests of the country, as understood by Congress, should require. Does then the passage of such a law involve any pledge, that it will never be altered so as to give a claim for indemnity to those who have embarked in a lottery, with the full knowledge, that in a popular government there can be no settled legislative policy? We think not, and to make this matter more clear, we will illustrate it by an analogous case or two.

The state of Pennsylvania within the last twenty years has granted acts of incorporation for the construction of a turnpike road from Harrisburg to Pittsburg. These laws have induced thousands of individuals to embark their capitals in that undertaking. Within the last five years, the Legislature of Pennsylvania has ascertained that the general welfare of the state would be promoted by the construction of a canal from Harrisburg to Pittsburg, and she accordingly embarks in the enterprise. The effect of this improvement will be as complete an annihilation of the turnpike road as a productive capital to the stockholders, as if it had been swallowed up by an earthquake, inasmuch as it is hardly probable that its receipts from tolls, after the completion of the canal, will be more than adequate to keep it in repair. Now, would it be sound reasoning to say, that the state should not have undertaken the construction of this canal, from regard to the vested interests of those who had shown their patriotic enterprise in constructing the road? However much we may regret the individual loss attendant upon such improvements, yet all speculations must needs be entered upon, subject to all the risks, seen and not seen, which may occur by a change of policy, or the discovery of new lights, or from any other cause. Without such risk, no enterprise can be imagined at the present day. A canal may be superseded by a rail road to-morrow—a rail road placed on the ground, may be superseded by one raised in the air. Not a machine is invented, but may be improved upon; and no doubt one great source of the distress existing amongst manufacturers, arises from the interests vested in old machiney, which is rendered useless and valueless by new discoveries. And shall the march of improvement be arrested because the owners of the old-fashioned hand looms and spinning wheels will have no further occasion for those antiquated instruments? Between this case and that of the tariff, there is a perfect analogy. The tariff system is a system which holds on to old notions. It says, that the turnpike road is better than the canal; that old machinery is preferable to the newly-invented; that wheelbarrows are to be preferred to horse-carts for the conveyance of burthens. And how does it say so? Why, by declaring that dear things are better than cheap things; for, to render things cheap, is the great end and object of all improvements.

Again. A law is passed by a state, for locating the seat of justice in a new county. A courthouse and jail are built, and houses are erected for the lawyers, judges, tavernkeepers, black smiths, merchants, and the hundreds of others, who remove thither for no other reason but that it is the county town. After a while, the centre of population requires a new location. Those whose property is to be deserted, cry out “vested interests;” we are to be ruined; we embarked our property upon the faith of the laws, &c. Must the county town remain as before, to the great inconvenience of the people, merely to save from loss those who had built houses in it? If this be true doctrine, great injustice was done to the people of Lancaster, when the seat of the State Government of Pennsylvania was removed to Harrisburg, and still greater to the city of Philadelphia, from which it had before been removed.

Again. The time may possibly arrive, at which the location of the seat of the Federal Government at Washington may become unsatisfactory. But a city containing dwelling houses for twenty thousand inhabitants has sprung up, altogether in consequence of that location, on a spot which, otherwise, at this day, might have been an unproductive farm or two. Millions of dollars have been invested in public and private buildings, and a removal of the government to any other place would annihilate the value of property now worth an immense sum. Would it be pretended, that because of these vested interests, the Seat of Government should never be removed? We think not, and for the very simple reason, that the greatest good of the greatest number is always to be consulted by all governments, and because every man who has built a house at Washington, has built it with a-full knowledge of the possibility that it may some day lose a part of its value, if not the whole, by a transfer of the government to some other quarter.

Our limits will not allow us to go further, at this time, but we shall in our next continue the subject, and endeavour to drive the settled policy men out of the corner in which they have been penned up, and from which they continue to cry out, “Although we believe in the doctrine of free trade, yet we are of opinion that, as a pure question of political economy, it would be unwise, after millions of dollars have been invested in manufactures, to withdraw the protection now extended to them, inasmuch as by such withdrawal, more would be lost than gained.”