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Subject Area: Economics
Topic: Free Trade

ESSAY No. XC. - 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. XC.

march 16, 1831.

The Salt duty. Remarks on the speech of Mr. Maxwell in Congress. Congress not pledged to sustain the vested interests of the few, at the expense of the interests of the many.

MR. MAXWELL of Virginia, in his remarks on the subject of the salt duty, in the House of Representatives, used the following language:

“The amount of capital vested in the manufacture of salt, in the United States, is not less than $7,000,000, which, together with the difficulty experienced by the people of this country, during the last war, in obtaining the article, ought to admonish every one of the importance of having full information upon the subject, and of the propriety of legislating cautiously, lest the manufacturer of American salt be injured, and, in case of a war with a foreign nation, the same consequences result that have heretofore taken place.”

There is no greater error prevailing, on the subject of political economy, than in reference to what are called vested interests. There are some people who think, that, because capital has been invested in particular branches of business, the world is to remain stationary, and not to go on in the march of improvement, because it may injure the interests of those who are engaged in them. This is all idle talk. Every man who embarks in an enterprize, under a government like ours, where the laws are liable to perpetual changes, does so with a full knowledge of the risk he incurs. As to the idea of pledges, by the government, that particular duties will be adhered to, whether revenue is wanted or not, it is sheer nonsense, and is entitled to no more consideration, than would be an argument against changing the seat of justice in a county, if called for by the interests of the inhabitants. The owners of the tavern, store, and blacksmith’s shop, in the county-town, would no doubt think it unjust and cruel, and they would probably urge that, when they put up their buildings, they considered the legislature to be solemnly pledged never to injure their property by removing the court house and jail. But what would be the answer of the jurors and suitors? “The greatest good of the greatest number is to be consulted. Our aggregate loss, if we indulge you, will be greater than your aggregate loss if we do not, and this is the question which is to determine the expediency of the removal.”

This, in fact, is the true proposition which is to determine all questions of vested interests, where there has not been a solemn guarantee, for a term of years, by charter; and the expediency of a change must be determined by an account-current, placing on the debit side the loss to be sustained by the vested interests, and on the credit side the gain of the public. Now let us examine this salt question by this rule.

Mr. Maxwell supposes that the total value of the capital invested in Salt-works is $7,000,000. Of this amount, if it be correct, and we have no means of confirming or disproving it, a part has been expended in boring for salt-springs, in digging wells, and in constructing buildings, vats, and other necessary works. But a large portion of it must consist of the circulating capital employed by the proprietors, and which exists in the form of salt, or money, or promissory notes from purchasers, or book-debts. Whatever portion that amount may be, a gradual reduction of the duty could not in any event greatly diminish it; and, therefore, when the annihilation of capital is spoken of, that part which is circulating, it must be remembered, does not experience so great a depression as that part which is fixed, and which cannot be applied to any other purpose.

We shall not, however, in this argument, take advantage of this difference, but will undertake to prove, that, even if the removal of the entire duty on salt were to be attended with the absolute annihilation of all the salt-works, and the whole capital of $7,000,000, it would be a sacrifice from which more would be gained than lost. And we prove it thus:

The loss to the country, from the destruction of property worth $7,000,000, is equal to $420,000 per annum, that being the interest of the former sum, at six per centum, and that being a fair equivalent for the use of capital. The quantity of salt manufactured in the United States is estimated, we believe, at somewhere about 4,500,000 bushels, of 56 pounds. The increased price, upon this quantity, of 15 cents per bushel, occasioned by the duty, operates as a loss, to the consumers of salt, of $675,000 per annum. In other words, were it not for the duty on salt, its price would be 675,000 dollars per annum less than it now is; and, as this sum is greater than the loss that would be sustained by the entire sinking of $7,000,000, the result shows a clear gain to the community of $255,000 per annum.

In this statement we have left entirely out of view the additional saving which would result to the community, by the abolition of the duty on salt, in the reduction in the price of near 6,000,000 bushels of foreign salt, now imported, and which would amount to 1,200,000 more. We have also left out of view the saving to the country of a large quantity of provisions which are annually spoiled from a deficiency of salt, particularly in the western country, where the duty on salt adds so much to its price, that an inadequate quantity is very often used.

We are, however, far from believing that the removal of the entire duty on salt would have the effect of breaking up its domestic manufacture. Salt can be made at the New York works, at Salina, at twelve cents per bushel, were it not for the state tax, imposed upon its production, of twelve and a half cents. With this salt no foreign salt can possibly come into competition. As to the works in Pennsylvania, Virginia, and other parts of the western country, the distance from the seaboard operates as a natural protection; and, although the rents of the landlords, the profits of the manufacturers, and the wages of their labourers, would be reduced, yet we think it not at all likely that any but those of the weakest brine would be abandoned. On the seacoast the case is different. Where nothing stronger than the salt-water of the ocean is to be had, the manufacture would perhaps not stand against the competition of foreign salt, and the works would be abandoned. But, in this case, we have shown that the public would gain more than it would lose.

We think the proposition brought forward by Mr. Mallary, for repealing the law which provides for the reduction of the duty on salt from 15 to 10 cents per bushel, to take effect on the 31st of December next, was a highly injudicious step for the manufacturers of that article. We had thought the salt question settled last winter, for some years at least. We had supposed that the opponents of the Restrictive System were so far satisfied with the reduction then agreed upon, that they were not inclined to go further with that branch of industry, so as to compel the salt makers to be the scape goats to bear the sins of all the rest of the protected fraternity. How far that feeling of forbearance has been disturbed by the movement in question, we cannot with certainty say, but we cannot help thinking, that, had it not been for Mr. Mallary’s bill, the idea of a total repeal of the duty would not have been suggested, unless in connection with a very general reduction of duties. Upon certain people no experience confers the slightest degree of wisdom. “He loses all, that grasps too much,” is as true now as it ever was, and we predict that the day is not very distant, when the manufacturers, who are now weighing their monopolies against the Union, as it were, in a pair of scales, will bitterly deplore the high-handed, uncompromising, and stubborn course, which they are now pursuing, in the vain hope that they can permanently fix upon the necks of the freemen of this country a yoke of oppression and injustice, which has no sanction but in their avarice and thirst of unlawful gain.

And, whilst upon this subject, we take the liberty of referring the reader to an article in another part of our paper, copied from the Susquehannah Register, being the first article, opposed to any branch of the American System, that we have met with for a number of years, in a Pennsylvania country paper. The article is sound, instructive, and manly, and will, we trust, be followed up by others in the same strain.