The Online Library of Liberty

A project of Liberty Fund, Inc.

• Preface.
• Advertisement.
• Letters, &c.
• Letter I.
• Letter II.
• Letter III.
• Letter IV.
• Letter V.
• Advertisement.
• Catechism of Political Economy; Or, Familiar Conversations On the Manner In Which Wealth Is Produced, Distributed, and Consumed.
• Chapter the First.: On the Composition of Wealth and the Use of Money.
• Chapter II.: On the Utility and Value of Products.
• Chapter III.: On Production.
• Chapter IV.: On the Operations Common to All the Species of Industry.
• Chapter V.: On Capital and Land.
• Chapter VI.: On the Formation of Capital.
• Chapter VII.: On the Manner In Which the Value of Products Is Established, and of the Charges of Production.
• Chapter VIII.: On the Profits of Industry, Capital, and Land; That Is, Income.
• Chapter IX.: On Wages, Interest, and Rent.
• Chapter X.: On Incomes Founded On Immaterial Products.
• Chapter XI.: On Consumption In General.
• Chapter XII.: On Private Consumption.
• Chapter XIII.: On Public Consumption.
• Chapter XIV.: On Public Property and Taxes.
• Chapter XV.: On Public Loans.
• Chapter XVI.: On Property, and the Nature of Riches.
• Chapter XVII.: On the Real and Nominal Price.
• Chapter XVIII.: On Money.
• Chapter XIX.: On Signs Representing Money.
• Chapter XX.: On Markets.
• Chapter XXI.: On Regulations Or Restraints of Industry.
• Chapter XXII.: On Importations, Duties, and Prohibitions.
• Chapter XXIII.: On Exportation.
• Chapter XXIV.: On Population.
• Chapter XXV.: On Colonies.
• Erratum.

CHAPTER XXII.

On Importations, Duties, and Prohibitions.

What does the word importation signify?

The purchasing abroad and introducing into a country foreign merchandise.

What do you mean by prohibitions?

Forbidding certain merchandize to be introduced into a country. Sometimes without prohibiting them entirely, they are made to pay duties on importation, which diminishes the quantity imported.

What results from an absolute prohibition?

An absolute prohibition forces the capital and industry which would have been devoted to this kind of commercial production, to apply itself to some production less advantageous.

Why less advantageous?

Because we should not engage in it but for the impossibility of directing our industry in the other mode. The prohibition would be superfluous, if the prohibited production* was not the most advantageous.

What happens when instead of an absolute prohibition a duty only is laid on the product imported?

The evil is then only partial, and consists in a dearness equal to the amount of the duty. The consumer pays for the product more than it is worth.

What does it signify if the consumer pays dearer for any thing, since the producer gains by it?

The producer does not profit by it; for what it sells for more goes in charges of production which are lost to every body; or in contributions consumed for the service of the state.

Why do you say that the charges of production are lost to every body? It appears to me that such of these charges as are composed of the profits paid to producers, are not charges lost, since the producers profit by them.

The producers are people who sell the service of their land, their capital and their industrious talents, whose gains are not the greater when all these services afford a product less abundant but dearer.

When any regulations render it necessary, in order to create a pound of sugar, to employ more of the services of the land, capital, and industry, the sugar is dearer without the producers being greater gainers. If they receive more values in payment, they have also furnished more values in services.

Do not the prohibitions and the duties, by compelling the creation of a product in the interior of a country, create the profits which are made in such a production?

It only causes the profits which would have been made on a commercial production, to be replaced by other profits, probably less lucrative, made on a manufactured production.

Is not that a good? Are not our capitals better employed in putting into activity our own national industry than that of foreigners?

Yes: but when we make the consumers, that is, the nation, pay dearer for certain products, simply to support a greater number of national producers, it is just as if a part of the nation was compelled to devote a portion of its income to maintain workshops of charity. Perhaps no population is truly desirable but that which industry left to itself can naturally support.

You have just considered the import duties in their influence on the income, on the riches of a nation, and you have proved that without augmenting the income of a nation, they cause it to pay dearer for the objects it consumes; which is equivalent to a real diminution of its income. But if the state is in want of these duties for the public expenses, are they more mischievous than any other kind of impost?

No; they are an impost on commercial production which procures us products from without, as the land tax is an impost on the products which come to us from the earth; as the personal contribution and licences are imposts on the interior manufactures. The effect of all these imposts is to increase the price of all products without augmenting the income of those who consume them. They are all useful in providing for the public expenses from which the nation derives advantage; but they never encourage production, nor augment the income of a country.

However favourable the suppression of the taxes which bear on industry and consumers might be, would it not be attended with some danger?

Yes, when the suppression is sudden. The laws, and in general the whole legislation of a country, have long since induced the particular employment of certain capitals in the productions in which they are actually engaged, and from which they cannot be withdrawn without losing a great part, and sometimes nearly the whole, of their value. For example, if on the faith of security from laws which had for a long time prohibited cotton goods, the manufacturers had laid out large sums in machinery fit for the manufacture of cotton goods only, and if, by a new law, foreign cottons might all at once be introduced at a cheaper rate, this law, though in fact favourable to the income of a country, since it is enabled to procure the same products at less expense, would be unfavourable to capitals, because it would reduce to nothing the value of all the capitals actually engaged in the production of cotton goods.

Besides, a part of the capital engaged in any kind of production is composed of the talents of the persons employed in this production; for the advances which apprenticeships require are a capital, and this capital is lost from the moment that the apprenticeship becomes useless. A new apprenticeship is necessary; that is, a new capital must be laid out. The loss of this kind of capital is the more painful, as it falls on the working class, who, in general, are little able to bear it.

And even in those cases in which a change in the legislation does not cause a total loss of capital, it always produces some evil. A building, by its arrangement and its situation, is convenient for a certain kind of industry; it loses part of its advantages if its destination must be changed. The simple change of the habitudes, the dependencies, and the connexions of producers, exposes them to serious losses. It is only with great circumspection, that even the most desirable ameliorations ought to be introduced; otherwise we are in danger of overturning many fortunes, and destroying the happiness of many families.

[* ]It must not be forgotten that, by the word production, we understand the action of commercial as well as of all other industry. Rice is to France or England, a product of commercial industry as much as wheat is a product of its agricultural industry.