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Subject Area: Economics
Topic: Free Trade

ESSAY No. XCV. - 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. XCV.

march 30, 1831.

The consumption of foreign commodities gives employment to home industry as much as the consumption of domestic products.

THE fallacy which the restrictionists use to the most advantage, is the one that asserts, that, by importing and consuming foreign commodities, we afford encouragement to foreign industry, to the disadvantage of our own—that, in fact, it is taking the bread out of the mouths of our own citizens, and giving it to foreigners. This position, which possesses at first sight a plausibility, makes such a strong appeal to the feelings of the great mass of the people, who believe that “charity begins at home,” that it is taken for granted by nine persons out of ten, who are not inclined to take the trouble of thinking on the subject. Nothing, however, can be more erroneous than this belief, as we have often shown in this journal—but as our opponents are constantly harping upon it as an incontrovertible doctrine, it becomes necessary for us to repeat, over and over again, the same arguments, in the hope that some new mode of presenting the question may catch hold of the minds of some, who have heretofore been proof against the force of reason. In a labour like that which we have undertaken to perform, great patience is required; and although we suppose that the great body of our readers understand all these hackneyed subjects, yet there are others, who read our paper, who must be fed with milk, because they cannot yet digest meat.

When foreign commodities are imported, they are not paid for, or they are paid for. This is a proposition which no one can dispute.

If they are not paid for, they are a clear gain to the country, and are as much a benefit to the nation as any gratuity would be to an individual from another individual. No one would think it other than a public gain if it were to rain dollars, or broadcloths, or muslins, or hardware, provided they did not fall on the people and break their heads. Nor could any one consider it other than advantageous to us, if the British or the French should pour into the country whole cargoes of their fabrics, and give them to us for nothing. This is also a proposition which none but an idiot would dispute. To be sure we do not often have an opportunity of experiencing such benefits. Foreigners are very much like ourselves. They have no idea of giving a quid, without receiving a quo; and hence it may be taken as an incontrovertible truth, that, with the exception of the comparatively small amount which insolvent merchants owe to foreigners, the nation pays for every thing it imports from abroad.

The next question is, how are foreign goods paid for? They are paid for, either—

First. With merchandise, shipped directly to the country from which the foreign imports are received; or,

Secondly. With bills of exchange, drawn upon shipments of produce to other foreign countries; or,

Thirdly. With merchandise procured with American produce in foreign countries, and carried to the countries from which we import; or,

Fourthly. With gold and silver.

Now, whether the payment be made in the one mode or the other, the value given is precisely equal to the value received; and hence it is that commerce is an exchange of equivalents as estimated in the foreign markets where the foreign goods are purchased. All that remains, then, to be seen, is, whether this trade can possibly be carried on without affording as much employment to domestic industry as to foreign industry; for, if it cannot be, the position we are combating must be abandoned as untenable.

If payment be made in the first mode, it is self-evident that it cannot be done without employing domestic industry to a value equal to the foreign. No man can ship a cargo of flour to the West Indies, of tobacco to France, of cotton to England, in exchange for sugar, silks, or woollen cloths, without affording employment to the industry of the agriculturists who produce those articles, equal in value to the industry of those foreigners who produce the commodities received in return.

The same principle is equally true of the second mode. No merchant can ship a cargo to Holland, and there sell it for bills on England, without affording employment to domestic industry equal to the value of that employed in producing the articles paid for with the bills.

It is equally true of the third mode. A cargo of iron or hemp, purchased in Russia, with a cargo of sugar, purchased in Brazil with a cargo of flour, cannot be imported without affording employment to the domestic industry of those who produced the flour, equal in value to the industry of those who produced the iron or hemp.

Nor is there the slightest difference in regard to the fourth mode. Gold and silver are as much articles of merchandise as iron and lead, and, excepting the quantity produced in the Southern states, of the latter metal, which is directly the produce of American industry, they are, and can only be, procured in exchange for the products of domestic industry. So that, viewing the matter as we may, it is impossible to give it any other aspect than the true one, which is, that foreign goods cannot possibly be consumed without giving employment to domestic industry equal in value to the foreign industry employed in their production. Indeed this principle is so plain, that no man can fail to see it, and we defy all the sophistry of the most ingenious champions of the restrictive school to controvert it. If any such will venture to enter upon the task, we will cheerfully open our columns to their communications. We have never yet refused to publish an article from an opponent. Our object is the investigation of truth—and, if a similar disposition was prevalent with the generality of editors, the nation could not long be humbugged by such nonsense as is passed off upon the people for science and political philosophy. Would any man believe that it is positively in defence of such absurdities as the one we have just refuted, that a party in this country is willing to hazard the very existence of the Union? And yet the fact is even so—for there is not a dogma of the American System that stands upon any stronger ground than this.