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Subject Area: Economics
Topic: Free Trade

ESSAY No. CXXXI. - 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. CXXXI.

november 14, 1832.

The forced consumption of Cotton in the United States, occasions a diminution of the foreign demand to a much greater extent.

THERE exists a practice, with the Tariff party, of advancing their cause by the enunciation of propositions which are true in themselves, but which convey erroneous or false impressions, owing to other correlative truths being left out of sight. Of this number is one which is now going the rounds of the newspapers, in the following words:

“It is calculated that, of the cotton raised in the Southern states, 150,000 bales are manufactured in the Middle and Eastern states.”

What is left out of sight here, is, that in order that this quantity of cotton may be manufactured in the Middle and Eastern states, the Southern states are prevented from selling double the quantity—that is, 300,000 bales of cotton—to foreign nations. If we are asked for the proof of this, we give it thus:

These 150,000 bales of cotton, which cost 10 cts. per pound, are converted into cloth, which sells for at least 40 cents per pound, as may be evident when it is known that a pound of cotton will make five yards of cloth worth 8 cents per yard. A bale of cotton weighs about 300 pounds, and the quantity contained in 150,000 bales is, consequently, 45,000,000 pounds—for which the manufacturers, at 10 cts. per pound, pay $4,500,000. But they sell the cloth made out of this cotton, to the amount of four times that sum—that is, to the amount of $18,000,000. Now let any one put the question to himself, and ask, whether foreign nations would not most gladly take double the quantity of cotton, from the Southern states, which our manufacturers take, if we would purchase of them cotton manufactures to the value of $18,000,000? And would they not, besides, give us their goods much cheaper? There is not a doubt but that the tariff enables the cotton manufacturers to get at least two cents per yard more for their fabrics, upon an average, than the same qualities could be procured for elsewhere. This increase of price is equal to ten cents on a pound of cloth containing five yards; and it would thus seem that the consumers of cotton cloth, in the United States, are positively no better off, by the existence of the domestic cotton manufacture, than they would be if they were to procure all they consume from abroad, and give the foreign manufacturer the raw material for nothing. This assertion may appear strange, but we will substantiate it by a very simple illustration:

A farmer has for sale a bushel of wheat, worth one dollar. He wants a yard of cloth, for which the American manufacturer asks $4, and will take his bushel of wheat in part payment, at one dollar. A foreigner will furnish him a yard of the same quality of cloth for $3. Now it is clear that, to the farmer, it makes no sort of odds whether he buys of the American manufacturer the yard of cloth at $4, and gives him the wheat, in part payment, at $1, or buys it of the foreigner at $3, and gives him the wheat for nothing. And yet, although there would be no difference to the farmer which bargain he made, although he can perceive that the latter one would be rank stupidity, and the former one lead to precisely the same result—yet, because the said former one is called the American System, he is bamboozled into the belief that it would amazingly be for his interest to give his wheat for a nominal price taken away from him at the very same instant, in the price he must pay for his cloth.

Between the case of the flour and the cotton, there is no difference; and, what is true of a bushel of wheat, is also true of 150,000 bales of cotton.