The Online Library of Liberty

A project of Liberty Fund, Inc.

• Foreword
• Part One: the Doctrine of Equal Rights
• True Functions of Government
• The Reserved Rights of the People
• Objects of the Evening Post
• Reply to the Charge of Lunacy
• The Legislation of Congress
• Religious Intolerance
• Direct Taxation
• The Course of the Evening Post
• Chief Justice Marshall
• Prefatory Remarks
• The Sister Doctrines
• The True Theory of Taxation
• Strict Construction
• Legislative Indemnity For Losses From Mobs
• The Despotism of the Majority
• Morals of Legislation
• The Morals of Politics
• Part Two: Separation of Bank and State
• Bank of United States
• Small Note Circulation
• The Monopoly Banking System
• Uncurrent Bank Notes
• Fancy Cities
• Causes of Financial Distress
• Why Is Flour So Dear?
• Thoughts On the Causes of the Present Discontents
• Strictures On the Late Message
• The Value of Money
• The Way to Cheapen Flour
• The Money Market and Nicholas Biddle
• The Pressure—the Cause of It—and the Remedy
• Connexion of State With Banking
• The Crisis
• The Bankrupt Banks
• What We Must Do, and What We Must Not
• “the Foresight of Individual Enterprise”
• The Safety Fund Bubble
• Separation of Bank and State
• The Remedy For Broken Banks
• “blest Paper Credit”
• Questions and Answers
• The True and Natural System
• The Bugbear of the Bank Democrats
• Bank and State
• Theory and Practice
• Separation of Bank and State
• “specie Basis”
• The Natural System
• The Credit System and the Aristocracy
• The Divorce of Politicks and Banking
• Part Three: Abolition Insolence
• Riot At the Chatham-street Chapel
• Governor Mcduffie’s Message
• The Abolitionists
• Reward For Arthur Tappan
• The Anti-slavery Society
• Abolitionists
• Slavery No Evil
• Progress of Fanaticism
• An Argument Against Abolition Refuted
• Commencement of the Administration of Martin Van Buren
• The Question of Slavery Narrowed to a Point
• “abolition Insolence”
• Part Four: the Division of Political Classes
• Despotism of Andrew Jackson
• The Division of Parties
• Rich and Poor
• The Street of the Palaces
• American Nobility
• The Inequality of Human Condition
• A Bad Beginning
• The Whig Embassy to Washington, and Its Result
• Right Views Among the Right Sort of People
• Newspaper Nominations
• Foreign “paupers”
• Part Five: the Principles of Free Trade
• Monopolies: I
• “a Little Free-trade Crazy”
• Asylum For Insane Paupers
• Monopolies: Ii
• Revolutionary Pensioners
• Joint-stock Partnership Law
• The Ferry Monopoly
• Free Trade Post Office
• Stock Gambling
• Weighmaster General
• State Prison Monopoly
• Corporation Property
• Regulation of Coal
• Free Ferries and an Agrarian Law
• Thanksgiving Day
• Municipal Docks
• Associated Effort
• The Coal Question
• The Corporation Question
• Free Trade Weights and Measures
• Associated Effort
• Sale of Publick Lands
• Manacles Instead of Gyves
• The Meaning of Free Trade
• Gambling Laws
• Free Trade Post Office
• Free Trade, Taxes, and Subsidies
• Meek and Gentle With These Butchers
• The Cause of High Prices, and the Rights of Combination
• Omnipotence of the Legislature
• Part Six: Literary Property
• Rights of Authors
• The Rights of Authors
• Right of Property In the Fruits of Intellectual Labour

THE MEANING OF FREE TRADE

Plaindealer,

January 28, 1837.

Title added.

In our last number but one, we replied to some questions put to us by a weekly contemporary print, the New Yorker, on the subject of the conditions proposed, in Mr. Walker’s land bill, to be annexed to the sale of publick lands. The views we there expressed do not meet the approbation of our querist, who enters into a discussion of them at so great a length, as forbids alike our copying the article entire, and our replying to all the points of the argument. Some of them, however, shall receive such attention as our limits permit us to bestow. Our definition of free trade, that it consists in the buyer and seller being left to make their own bargain, does not seem to satisfy the New Yorker, which confesses that it has heretofore looked on the term as expressive of a much wider signification. We quote the passage:

“Free trade,” says our enlightener, “we take to consist in the buyer and seller being left to make their own bargain.” Indeed! In the plenitude of our ignorance we had given a much wider signification to the phrase. Let us illustrate: Suppose on the next day that the new tariff bill before the House of Representatives is under discussion in Committee of the Whole, Mr. C. C. Cambreleng should propose an increase of the duty on iron imported to one hundred per cent, except iron intended for the construction of railroads, which should be admitted free of duty. There would doubtless be evinced what is called a “sensation,” and some member, ignorant, like us, of the true import of the term, might accuse the honourable gentleman of an abandonment or violation of the principles of free trade, for his consistent support of which he has long been distinguished. “You mistake,” replies the commercial representative, with a compassionating smile; “free trade consists in the buyer and seller being allowed to make their own bargain; and as I propose no restriction of this liberty, my free trade consistency is unimpeachable.” The caviller, rebuked, instructed, and satisfied, would of course humbly acknowledge his errour. Now, if it be true that free trade has no further import than this, we must of course stand corrected. But we have hitherto understood that the law which authorizes so many pilots and no more to conduct vessels into the harbour of New York, (though allowing shipmasters to “make their own bargains”) and the law which forbids the keeping of offices of discount and deposite by individuals or voluntary associations (though allowing depositors and the banks to “make their own bargains”) are violations of the principle of free trade. As such, we have advocated their unqualified repeal; and we have thought the strenuous and efficient hostility of the Plaindealer to these and many kindred restrictions was based on a like conviction. We appeal, then, to the common sense of the reader to bear us out in the assertion that the passage of a law restricting the sales of publick lands to those only who would bind themselves to settle upon and cultivate the same, would be a measure of the same generick kind with those which, under such sounding titles as “the American system,” “protection to domestick industry,” &c. &c. have encountered the unremitting and ardent hostility of the editor of the Plaindealer for years past. It is a system of cobbling, and forcing, and discriminating, designed to supersede one of real and palpable free trade.

And again, after expatiating at some length on the difficulties which it supposes would be experienced in carrying the provisions of Mr. Walker’s land bill into effect, and the presumed evil consequences which would result from them, the New Yorker says:

We do not assert that the Plaindealer sees all this as we do; but we do believe that it cannot give an hour’s consideration to this system of restriction to actual settlers without being convinced that it is not a free trade system. It surely cannot believe that an act providing that a blacksmith might buy publick lands, but a physician must not—that a Kentuckian might have lands at fifty cents per acre, while a Pennsylvanian should not have them at any price—would be consistent with the broad and distinctive principles which it has hitherto maintained. And yet it affirms as much in its sweeping assertion that it would be no violation of the principles of free trade for the government to make any conditions it thought proper.

If Mr. Cambreleng should be guilty of the silly conduct which the New Yorker has taken for one of its illustrative hypotheses, he certainly would commit a very egregious violation of the plainest principles of free trade; simply because he would not, in that case, leave the buyer and seller free to make their own bargain, but would seek to thrust a prodigious legislative barrier between them. The buyers, in the case supposed, are the workers and consumers of iron in this country; and the sellers are those who deal in the article in Great Britain. The trade between them is free, when no legislative hindrances, of any kind, are interposed by a third party. Congress, in this case, is that third party; and the buyer and seller are not left alone to make their bargain; but the third party steps in with its conditions, which are of as imperative obligation on the purchaser, as those of the seller.

In the other case adduced, that of the pilots, the errour is the same. The buyers are those who have occasion for the services of pilots; and the sellers are those who have such services to dispose of. The trade between them would be free, if each party were left to make its own bargain, without legal limitation or restraint. But the legislature is a third party, and says to those needing the aid of the pilots, you shall not be free to make your own bargain, but, will you, nill you, you must take a pilot of my appointing, or at all events, whether you take one or not, you must pay as if the service were actually rendered. And it says to the pilots, you shall not be left free to charge that rate which the demand for your services and the amount of free competition might warrant, but you shall always, be the circumstances what they may, and be the service relatively worth more or less, have liberty to charge, and power to enforce your demand, according to certain immutable rates, which are hereby established. This is not free trade, because this is not leaving the buyer and seller free to make their own bargain. They are both under the necessity of deferring to a third party, who makes the bargain for them.

So also in the other case which has been chosen as of analogous force, that of the law which forbids all except specially chartered corporations from keeping offices of discount and deposite. It is an errour to say that the depositors and the banks are free to make their own bargains. The depositors are not free, because the law restricts them to a certain limited number of companies, and says, in effect, you shall not deposite your money except with A, B, or C, and none but A, B, and C, are authorized to discount your note. You shall not, therefore, make your own bargain; but you shall be subject to the conditions which the shutting up of the business of discount and deposite in such narrow bounds, by counteracting the effect of competition, will necessarily impose upon you. Here, as in the other cases, a third party interposes between buyer and seller; and consequently they are not free to make their own bargain, or, in other words, their rights of free trade are violated.

Our antagonist is mistaken in supposing that we should consider a law in relation to the publick lands, exactly and particularly designating the classes and descriptions of persons who might and who might not buy those lands, a violation of the principles of free trade. We should certainly consider it a very absurd law, but absurd on different grounds from those imputed. There are many modes in which government may abuse its powers besides by violating the principles of free trade; as there are many ways in which a man may commit crime, without taking the life of a fellow being. If a person should be proved guilty of forgery, the jury would hardly be instructed to bring in a verdict of wilful murder; and so, if the government should impose very silly conditions upon itself with regard to the publick lands, we should not pronounce it guilty of violating the freedom of trade. The government has the sole and absolute right of disposal of the publick lands, under but one limitation: that of disposing of them for the general welfare. The conditions which it imposes upon itself, or the terms which it annexes to the sale, may be unwise, and subversive of the professed object; but cannot properly be considered a violation of free trade, any more than could the conduct of the proprietor of the New Yorker, if he refused to sell his paper except to a particular class of purchasers, or to none, except for their own exclusive use, and on the express condition that they would not resell. If a third party, the legislature for example, imposed these conditions, they would be a violation of free trade, inasmuch as they would come between buyer and seller, and would not leave them free to make their own bargain. But it is no more a violation of free trade for the seller to say, I will not sell except on certain terms, than for the buyer to say, I will not buy, except at a certain price.

The New Yorker, it seems, is less of a monopolist than we had been led to suppose. It says:

Having uniformly advocated the unqualified repeal of the Restraining Law, the removal of all kindred restraints, and the reform of our banking system generally, we feel that we are unjustly ranked with the advocates of chartered monopolies. All the restriction on banking we desire is, simply the restriction of the right of issuing paper as money to those alone (whether individuals or companies) who shall establish before a proper tribunal that they are unquestionably able to redeem a certain amount of paper whenever called upon, and such a constant supervision over them as shall ensure their continued solvency. As to insurance, we do not regard such a supervision as so necessary, but we think it would be found salutary. We want no charters, (unless the above is a charter,) no distribution of stock, no exclusive privileges, no restrictions, except the restriction of the power of coining paper money to those who are able to redeem it.

This shows, whatever erroneous notions the New Yorker may entertain as to the definition of the term free trade, that it has made greater advances towards the thing, than many journals which make a more boastful display of their economick knowledge. We trust a little further investigation will satisfy it that the salutary restrictions, which it is now in favour of having imposed by legislative authority, would be much more certainly and efficiently imposed by the laws of free trade. They would be the natural and necessary consequence of unrestricted competition.