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Subject Area: Economics
Topic: Free Trade

ESSAY No. LXI. - 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. LXI.

october 20, 1830.

The doctrine of American cotton fabrics meeting successfully the British cotton fabrics in foreign markets, shewn to be fallacious, as regards exports to Buenos Ayres.

WE have upon various occasions exposed the absurdity of the doctrine that our manufacturers can meet successfully the British, in foreign markets, with those articles which they find it necessary to protect by high duties, for fear that they shall be beaten out of the home market. We have urged, that if a foreigner can make cotton fabrics so much cheaper than our manufacturers can make them, that he can afford to send them to this country, to pay freight, insurance, and commissions upon them, and a moderate duty besides, and undersell us at our own factory doors, it is preposterous to suppose that we can ourselves incur all those expenses, and meet him successfully in foreign markets. And yet there are men with minds of such obliquity, that they cannot see a truth so self-evident as this. They insist upon it, that the mere fact of our exporting cotton fabrics, is proof that we carry on a successful competition, and seem to forget that we also export to the value of sixteen millions of dollars per annum of foreign productions, saddled with the expenses of importation, and yet no one would contend that, with those articles, we can meet the producers of them abroad upon terms of perfect equality. The simple fact is, that our commerce with the West Indies and South America, is an irregular hap-hazard trade, founded upon the maxim, “hit or miss—luck’s all.” The markets with which we trade are fluctuating, sometimes high and sometimes low, and the consequence is, that a good voyage may sometimes be made with articles that are in demand, even though they cost in this country higher than they could be bought for in Europe. Our success in this trade is due to our geographical position, more than to any thing else.

But the question is not, do we export cotton goods? but, do we export them to a profit? As to this point, we are inclined to believe that, if we could get a sight of the accounts of sales of what go to South America, nine out of ten invoices would exhibit what the merchants call a Flemish account. This, however, is difficult to prove. Merchants do not like to tell their losses. When they do, nobody believes them, but every one supposes it to be a manœuvre to deter him from shipping to a profitable market; and besides all this, the currencies of Brazil, Monte Video, Buenos Ayres, Chili, and perhaps Peru, are so variously depreciated, that there is a sort of mystification about prices, that renders it pretty difficult to come at the truth. Fortunately, however, we are enabled to throw some light on this subject. We have now before us a letter recently received, addressed to us by an American gentleman at Buenos Ayres, which we think will open the eyes of some of those who have suffered themselves to be blinded, upon this subject of exports. It is as follows:

“Buenos Ayres, May 30, 1830.

“There is now on hand in this place probably near one thousand bales of American cottons, some of which have been here since December and January last, and most of the holders would gladly sell them for any thing near cost and charges, for the market is so completely stocked with British goods of a like description, that there is no probable chance of any speedy improvement in price. The importation of brown cottons, from the 16th Sept., 1828, to the 1st of Nov., 1829, was estimated at 1,683,669 yards of American, and 808,618 1-2 yards of British, since when, the importation of the latter has been proportionably much greater, and are now sold at such prices as almost to exclude the American (without greater sacrifice) from the market. It is said that the loss to the manufacturers is very great, and that the commission houses here being in advance, they are obliged to be sold for whatever they will bring; but if this is the case, it is certainly strange policy that they should be continually manufactured, and sent here, when a certain loss must be calculated upon. It is therefore, I think, fair to suppose, that something that we are not aware of, gives to the manufacturer a sufficient advantage to cover this ostensible loss. However, be it as it may, the effect is equally ruinous to the holder of cottons from the United States. The civil discords which now so unhappily distract this country, destroying in a measure the intercourse with the interior, shut up what was heretofore a very considerable market for these articles: nor is there now any prospect of a speedy arrangement of these differences; for the leaders of the various factions, seeking rather their own aggrandizement, than the public good, know no distinction between individual hatred and political difference, and have plunged the country in an anarchy, than which any regular government would be preferable; for the excesses committed by the different factions are such as would not be credited at home, where we have not yet learned personally to hate the man who may differ from us in his political views.”

From an intelligent merchant largely concerned in the Pacific trade, we last year learned, that the shippers of cotton goods to South America were chiefly the manufacturers themselves, and, if we recollect aright, we were also told that the chief part of them were shipped by the manufacturers of the middle States, who, finding that they were undersold in the domestic market by the New England manufacturers, had resorted to shipments as the only mode of getting clear of their surplus.

To those who are captivated by the sound of numbers, the quantity of domestic cottons imported into Buenos Ayres in thirteen months and a half, at a period immediately following a war of two years and upwards, during which time the river Plate was blockaded, will no doubt appear to be very great, and they will be disposed to exclaim, “Long live the American System.” To those however, who are accustomed to analyze, and to examine things before they swallow them, it will be sufficient to say, that 1,683,669 yards of cotton goods were worth at Providence, (R. I.) according to a late statement published in the papers, headed “Importation of cotton into Providence,” nine cents per yard, that is $151,530.21; that this quantity, as appears from the same statement, would require less than 1200 bales of raw cotton to make it, and, finally, that to export the whole quantity and to import the proceeds of the sales, would not require more than the bulk of one ship.