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Subject Area: Economics
Topic: Free Trade

ESSAY No. LIV. - 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. LIV.

september 1, 1830.

The Monkey System. The case of robbing Peter to pay Paul, fairly stated.

THE following article is copied from the Georgia Journal: “The Monkey System.—The Examiner newspaper for October 4, tells us: ‘The monkeys of Exeter ’Change, in London, used to be confined in a row of narrow cages, each of which had a pan in the centre of its front, for the monkey’s food. When all the monkeys were supplied with their messes, it was observable that scarcely any one of them eat out of his own pan. Each thrust his arms through the bars, and robbed his right or left hand neighbour. Half what was so seized, was spilt and lost in the conveyance; and while one monkey was so unprofitably engaged in plundering, his own pan was exposed to similar depredations. The mingled knavery and absurdity was shockingly human.’

“We beg leave once for all to state, that we have adopted the preceding paragraph as a standing motto for our remarks on the ‘American System.’ It suits the purpose so well that we can’t dispense with it. It fits like a bug’s shirt, as they say. And we intend to keep it up until Clay and Niles and Carey, one and all of them, turn in and advocate our branch of it, called the Raccoon System.”

The analogy between the Monkey System and the American System, is as perfect as it is possible for an analogy to be. It is the robbing Peter of a dollar, paying Paul half-a-dollar, and throwing the other half into the sea, and then insisting upon it, that this operation is a positive gain to the joint concern of Peter, Paul, & Co. As there may however be some of our readers who cannot exactly see how this is, we will make it plain.

Paul is a manufacturer of woollen cloth at Pawtucket. Owing to the high rate of wages in this country, arising chiefly from the cheapness of good land in the Western states, which enables any man with a hundred dollars to buy himself a farm of eighty acres, and to become an independent freeholder, he cannot make a yard of coarse cloth at less than one dollar and a half, whilst a foreign manufacturer can furnish one of the same quality for one dollar. Peter is a working man, who gets his living by the sweat of his brow, and whose interest it is to get a coat in exchange for as little labour as he can, or, in other words, at the lowest possible price he can. Paul applies to Congress for a protecting duty to prevent Peter from buying his coat of the foreigner, which he would certainly do if Paul did not stand in his way. Paul tells Congress, that, although he can make the cloth at one dollar and a half per yard, yet that 50 cents duty on the foreign article will not be enough, because the foreigner can afford to pay that duty and undersell him, seeing that a dollar and a half gives him no profit. He says he ought to be protected by a duty of one dollar per yard, which is agreed to by Congress, and thus he is enabled to charge Peter two dollars for a yard of cloth, worth in reality only one dollar. Peter, in this case, is robbed of a dollar, but Paul pockets only half-a-dollar, the other half dollar having been lost in the increased cost of manufacturing, just as much as if it had been thrown into the sea.

That this loss does take place whenever a more costly mode of producing any thing is resorted to, is just as clear as that there is a gain, whenever a less expensive mode of producing is resorted to. If a farmer has found that ploughing his fields, instead of digging them, is a gain, he would not deny that his being compelled to lay aside the plough and to resort to spades, would be a loss. Would not any one consider a law, that should declare that all power looms and spinning jennies should be abandoned, and that nothing but the spinning wheel and old fashioned hand looms should be used, as decreeing a positive loss? And why? Because it would be pursuing a more laborious, and consequently a more expensive process of arriving at the same end. It matters not whether the cheaper production be carried on in a foreign country or not. Foreign articles cannot possibly be obtained but in exchange for domestic articles, and the consumption of foreign goods can only take place where an equal value of domestic goods has been exported. There is however this difference between them. Under the free trade system, Peter would have been compelled to work only one day for a yard of cloth, (supposing wages at a dollar a day,) but under the monkey system, he would be compelled to work two days, and he would very probably think this a hardship. “No,” says Paul, “it is good for you to have to work two days for a coat, instead of one, for thereby twice as much American industry is kept in motion.” “Granted,” says Peter, “but I might as well be occupied in turning a grindstone without having any thing to grind, for one of the days, under the monkey system, if the result of the two days’ work is no more than one would be under the free trade system.” It is thus demonstrable, that, under the American System, the produce of the labour of the whole people, is not as great as it would be under the free trade system, and consequently the share of the good things of this life which falls to the lot of each, is not as great. Like the monkeys of Exeter ’Change, each man, woman, and child, gets less than if each were to be content with what was in his own pan, and let his neighbour’s alone.