Front Page Titles (by Subject) Chapter XXI: THE MANUFACTURING POWER AND COMMERCE. - The National System of Political Economy
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Chapter XXI: THE MANUFACTURING POWER AND COMMERCE. - Friedrich List, The National System of Political Economy 
The National System of Political Economy by Friedrich List, trans. Sampson S. Lloyd, with an Introduction by J. Shield Nicholson (London: Longmans, Green and Co., 1909).
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THE MANUFACTURING POWER AND COMMERCE.
WE have hitherto merely spoken of the relations between agriculture and manufactures, because they form the fundamental ingredients of the national production, and because, before obtaining a clear view of their mutual relations, it is impossible to comprehend correctly the actual function and position of commerce. Commerce is also certainly productive (as the school maintains); but it is so in quite a different manner from agriculture and manufactures. These latter actually produce goods, commerce only brings about the exchange of the goods between agriculturists and manufacturers, between producers and consumers. From this it follows that commerce must be regulated according to the interests and wants of agriculture and manufactures, not vice versâ.
But the school has exactly reversed this last dictum by adopting as a favourite expression the saying of old Gourney, 'Laissez faire, laissez passer,' an expression which sounds no less agreeably to robbers, cheats, and thieves than to the merchant, and is on that account rather doubtful as a maxim. This perversity of surrendering the interests of manufactures and agriculture to the demands of commerce, without reservation, is a natural consequence of that theory which everywhere merely takes into consideration present values, but nowhere the powers that produce them, and regards the whole world as but one indivisible republic of merchants. The school does not discern that the merchant may be accomplishing his purpose (viz. gain of values by exchange) at the expense of the agriculturists and manufacturers, at the expense of the nation's productive powers, and indeed of its independence. It is all the same to him; and according to the character of his business and occupation, he need not trouble himself much respecting the manner in which the goods imported or exported by him act on the morality, the prosperity, or the power of the nation. He imports poisons as readily as medicines. He enervates whole nations through opium and spirituous liquors. Whether he by his importations and smugglings brings occupation and sustenance to hundreds of thousands, or whether they are thereby reduced to beggary, does not signify to him as a man of business, if only his own balance is increased thereby. Then if those who have been reduced to want bread seek to escape the misery in their fatherland by emigrating, he can still obtain profit by the business of arranging their emigration. In the time of war he provides the enemy with arms and ammunition. He would, if it were possible, sell fields and meadows to foreign countries, and when he had sold the last bit of land would place himself on board his ship and export himself.
It is therefore evident that the interest of individual merchants and the interest of the commerce of a whole nation are widely different things. In this sense Montesquieu has well said, 'If the State imposes restrictions on the individual merchant, it does so in the interest of commerce, and his trade is nowhere more restricted than in free and rich nations, and nowhere less so than in nations governed by despots.'87 Commerce emanates from manufactures and agriculture, and no nation which has not brought within its own borders both these main branches of production to a high state of development can attain (in our days) to any considerable amount of internal and external commerce. In former times there certainly existed separate cities or leagues of cities which were enabled by means of foreign manufacturers and foreign agriculturists to carry on a large exchange trade; but since the great agricultural manufacturing commercial states have sprung up, we can no longer think of originating a mere exchange trade such as the Hanse Towns possessed. In any case such a trade is of so precarious a character, that it hardly deserves consideration in comparison with that which is based on the nation's own production.
The most important objects of internal commerce are articles of food, salt, fuel, and building material, clothing materials, then agricultural and manufacturing utensils and implements, and the raw materials of agricultural and mining production which are necessary for manufactures. The extent of this internal interchange is beyond all comparison greater in a nation in which manufacturing industry has attained a high stage of development than in a merely agricultural nation. At times in the latter the agriculturist lives chiefly on his own productions. From want of much demand for various products and lack of means of transport, he is obliged to produce for himself all his requirements without regard to what his land is more specially fitted to produce; from want of means of exchange he must manufacture himself the greater part of the manufactured articles which he requires. Fuel, building materials, provisions, and mineral products can find only a very limited market because of the absence of improved means of transport, and hence cannot serve as articles for a distant trade.
Owing to the limited market and the limited demand for such products, no inducement for storing them or for the accumulation of capital exists. Hence the capital devoted by mere agricultural nations to internal commerce is almost nil; hence all articles of production, which depend especially on good or bad weather, are subject to extraordinary fluctuation in prices; hence the danger of scarcity and famine is therefore greater the more any nation restricts itself to agriculture.
The internal commerce of a nation mainly arises in consequence of and in proportion to the activity of its internal manufactures, of the improved means of transport called forth by them, and of the increase of population, and attains an importance which is ten to twenty fold greater than the internal trade of a merely agricultural nation, and five to ten fold that of the most flourishing foreign trade. If anyone will compare the internal commerce of England with that of Poland or Spain, he will find this observation confirmed.
The foreign commerce of agricultural nations of the temperate zone, so long as it is limited to provisions and raw materials, cannot attain to importance.
Firstly, because the exports of the agricultural nation are directed to a few manufacturing nations, which themselves carry on agriculture, and which indeed, because of their manufactures and their extended commerce, carry it on on a much more perfect system than the mere agricultural nation; that export trade is therefore neither certain nor uniform. The trade in mere products is always a matter of extraordinary speculation, whose benefits fall mostly to the speculating merchants, but not to the agriculturists or to the productive power of the agricultural nation.
Secondly, because the exchange of agricultural products for foreign manufactured goods is liable to be greatly interrupted by the commercial restrictions of foreign states and by wars.
Thirdly, because the export of mere products chiefly benefits countries which are situated near sea coasts and the banks of navigable rivers, and does not benefit the inland territory, which constitutes the greater part of the territory of the agricultural nation.
Fourthly and finally, because the foreign manufacturing nation may find it to its interest to procure its means of subsistence and raw materials from other countries and newly formed colonies.
Thus the export of German wool to England is diminished by importations into England from Australia; the exports of French and German wines to England by importations from Spain, Portugal, Sicily, the Spanish and Portuguese islands, and from the Cape; the exports of Prussian timber by importations from Canada. In fact, preparations have already been made to supply England with cotton chiefly from the East Indies. If the English succeed in restoring the old commercial route, if the new State of Texas becomes strong, if civilisation in Syria and Egypt, in Mexico and the South American states progresses, the cotton planters of the United States will also begin to perceive that their own internal market will afford them the safest, most uniform, and constant demand.
In temperate climates, by far the largest part of a nation's foreign commerce originates in its internal manufactures, and can only be maintained and augmented by means of its own manufacturing power.
Those nations only which produce all kinds of manufactured goods at the cheapest prices, can have commercial connections with the people of all climates and of every degree of civilisation; can supply all requirements, or if they cease, create new ones; can take in exchange every kind of raw materials and means of subsistence. Such nations only can freight ships with a variety of objects, such as are required by a distant market which has no internal manufactured goods of its own. Only when the export freights themselves suffice to indemnify the voyage, can ships be loaded with less valuable return freights.
The most important articles of importation of the nations of the temperate zone consist in the products of tropical climates, in sugar, coffee, cotton, tobacco, tea, dye stuffs, cacao, spices, and generally in those articles which are known under the name of colonial produce. By far the greatest part of these products is paid for with manufactured goods. In this interchange chiefly consists the cause of the progress of industry in manufacturing countries of the temperate zone, and of the progress of civilisation and production in the countries of the torrid zone. This constitutes the division of labour, and combination of the powers of production to their greatest extent, as these never existed in ancient times, and as they first originated from the Dutch and English.
Before the discovery of the route round the Cape, the East still far surpassed Europe in manufactures. Besides the precious metals and small quantities of cloth, linen, arms, iron goods, and some fabrics of luxury, European articles were but little used there. The transport by land rendered both inward and outward conveyance expensive. The export of ordinary agricultural products and common manufactured goods, even if they had been produced in excess, in exchange for the silks and cotton stuffs, sugar, and spices, of the East, could not be hoped for. Whatever we may, therefore, read of the importance of Oriental commerce in those times, must always be understood relatively; it was important only for that time, but unimportant compared with what it is now.
The trade in the products of the torrid zone became more important to Europe through the acquisition of larger quantities of the precious metals in the interior and from America, and through the direct intercourse with the East by the route round the Cape. It could not, however, attain to universal importance as long as the East produced more manufactured goods than she required.
This commerce attained its present importance through the colonisation of Europeans in the East and West Indies, and in North and South America through the transplantation of the sugar cane, of the coffee tree, of cotton, rice, indigo, &c., through the transportation of negroes as slaves to America and the West Indies, then through the successful competition of the European with the East Indian manufacturers, and especially through the extension of the Dutch and English sovereignty in foreign parts of the world, while these nations, in contrast to the Spaniards and Portuguese, sought and found their advantage more in the exchange of manufactured goods for colonial goods, than in extortion.
This commerce at present employs the most important part of the large shipping trade and of the commercial and manufacturing capital of Europe which is employed in foreign commerce; and all the hundreds of millions in value of such products which are transported annually from the countries of the torrid zone to those of the temperate zone are, with but little exception, paid for in manufactured goods.
The exchange of colonial products for manufactured goods is of manifold use to the productive powers of the countries of the temperate zone. These articles serve either, as e.g. sugar, coffee, tea, tobacco, partly as stimulants to agricultural and manufacturing production, partly as actual means of nourishment; the production of the manufactured goods which are required to pay for the colonial products, occupies a larger number of manufacturers; manufactories and manufacturing business can be conducted on a much larger scale, and consequently more profitably; this commerce, again, employs a larger number of ships, of seamen, and merchants; and through the manifold increase of the population thus occasioned, the demand for native agricultural products is again very greatly increased.
In consequence of the reciprocal operation which goes on between manufacturing production and the productions of the torrid zone, the English consume on an average two to three times more colonial produce than the French, three to four times more than the Germans, five to ten times more than the Poles.
Moreover, the further extension of which colonial production is still capable, may be recognised from a superficial calculation of the area which is required for the production of those colonial goods which are at present brought into commerce.
If we take the present consumption of cotton at ten million centners, and the average produce of an acre (40,000 square feet) only at eight centners, this production requires not more than 1¼ million acres of land. If we estimate the quantity of sugar brought into commerce at 14 million centners, and the produce of an acre at 10 centners, this total production requires merely 1½ million acres.
If we assume for the remaining articles (coffee, rice, indigo, spices, &c.) as much as for these two main articles, all the colonial goods at present brought into commerce require no more than seven to eight million acres, an area which is probably not the fiftieth part of the surface of the earth which is suitable for the culture of such articles.
The English in the East Indies, the French in the Antilles, the Dutch in Java and Sumatra, have recently afforded actual proof of the possibility of increasing these productions in an extraordinary manner.
England, especially, has increased her imports of cotton from the East Indies fourfold, and the English papers confidently maintain that Great Britain (especially if she succeeds in getting possession of the old commercial route to the East Indies) could procure all her requirements of colonial products in the course of a few years from India. This anticipation will not appear exaggerated if we take into consideration the immense extent of the English East Indian territory, its fertility, and the cheap wages paid in those countries.
While England in this manner gains advantage from the East Indies, the progress in cultivation of the Dutch in the islands will increase; in consequence of the dissolution of the Turkish Empire a great portion of Africa and the west and middle of Asia will become productive; the Texans will extend North American cultivation over the whole of Mexico; orderly governments will settle down in South America and promote the yield of the immense productive capacity of these tropical countries.
If thus the countries of the torrid zone produce enormously greater quantities of colonial goods than heretofore, they will supply themselves with the means of taking from the countries of the temperate zone much larger quantities of manufactured goods; and from the larger sale of manufactured goods the manufacturers will be enabled to consume larger quantities of colonial goods. In consequence of this increased production, and increase of the means of exchange, the commercial intercourse between the agriculturists of the torrid zone and the manufacturers of the temperate zone, i.e. the great commerce of the world, will increase in future in a far larger proportion than it has done in the course of the last century.
This present increase, and that yet to be anticipated, of the now great commerce of the world, has its origin partly in the great progress of the manufacturing powers of production, partly in the perfection of the means of transport by water and by land, partly in political events and developments.
Through machinery and new inventions the imperfect manufacturing industry of the East has been destroyed for the benefit of the European manufacturing power, and the latter enabled to supply the countries of the torrid zone with large quantities of fabrics at the cheapest prices; and thus to give them motives for augmenting their own powers of labour and production.
In consequence of the great improvements in means of transport, the countries of the torrid zone have been brought infinitely nearer to the countries of the temperate zone; their mutual commercial intercourse has infinitely increased through diminution of risk, of time employed and of freights, and through greater regularity; and it will increase infinitely more as soon as steam navigation has become general, and the systems of railways extend themselves to the interior of Asia, Africa, and South America.
Through the secession of South America from Spain and Portugal, and through the dissolution of the Turkish Empire, a mass of the most fertile territories of the earth have been liberated, which now await with longing desire for the civilised nations of the earth to lead them in peaceful concord along the path of the security of law and order, of civilisation and prosperity; and which require nothing more than that manufactured goods should be brought to them, and their own productions taken in exchange.
One may see that there is sufficient room here for all countries of Europe and North America which are fitted to develop a manufacturing power of their own, to bring their manufacturing production into full activity, to augment their own consumption of the products of tropical countries, and to extend in the same proportion their direct commercial intercourse with the latter.
[87.] Esprit des Lois, Book XX. chap. xii.