Principles of Political Economy Part 50

Austrian prohibition for gla.s.s-makers, in 1752; for scythe-makers, in 1781. Colbert also approved of the imprisonment of manufacturers desirous to emigrate.

(Lettres, etc., II, 568 ff.) By 5 Geo. I., ch. 28, and 23 Geo. II., ch. 13, the soliciting of an artificer to emigrate to foreign countries is punished by one year's imprisonment and 500 fine; and even workmen who do not respond to a call home within six months lose all their reachable property in England, and their capacity to inherit there. Every emigrant had to certify that he was no artificer. The only effect of this law was that the emigration of artificers to the United States was made by the way of Canada; the poorer ones, at most, were kept back by the cost of this circuitous route.

Hence the law was repealed in 1825. Compare Edinb. Rev., x.x.xIX, p. 341 ff.]

[Footnote A3-7-4: The first English prohibition of the exportation of machinery was made in reference to the Lee stocking frame, in 1696, the second in 1750; whereupon others followed very rapidly after 1774. As late as 1825, prohibitions of the exportation of a large number of machines and of parts of machines were still in force; but the Board of Trade might dispense with them. Here it was considered whether a greater disadvantage was caused to the industries by permitting the exportation, or to the manufacturers of the machines by prohibiting it. _Porter_, Progress, I, 318 ff., recommends full freedom of exportation especially for the reason that Englishmen can now procure all new machines, and sell the old ones to foreign countries. On the other hand, a French manufacturer purchased old machines _parce que sous le systeme prohibitif je gagnerai encore de l'argent avec ces metiers_. (_Rau_, Lehrbuch, II, -- 209.) Similar cases in the United States.

_Cairnes_, Principles, p. 485.]

[Footnote A3-7-5: _Bandrillart_, Manuel, p. 299. Every nation needs, in order to become fully mature, an industry of some magnitude. But it may just as well be the silk industry as the cotton which shall lead to this maturity; and when the nation has much greater natural capacity for the former than for the latter, it would do well to reach its object by the shortest course.]

[Footnote A3-7-6: _Riehl_, die deutsche Arbeit, p. 102 ff., 107. Shakespeare, the most English of Englishmen, and yet the most universal of poets! During the last centuries of the middle ages most nations had come to have national and even local costumes which were in strong contrast with the universality of fas.h.i.+ons during the age of chivalry. This must have greatly contributed to the advancement of industry, even before the introduction of the state protective system.]

[Footnote A3-7-7: How much more convenient it is for the statesman, when he does not need to give any thought to the education of industry, is shown, especially by the great difficulty of striking precisely the proper height of a protective tariff. If too low, it fails of its object; and so, likewise, if too high; because then, in a very unpedagogical way, it lulls one into a lazy security. And how impossible it is to make the tariff vary with every variation in the cost of production, in price, etc.; as List desired it should, not, however, without a good deal of variation in his own views. (_Roscher_, Gesch. der N. O., II, 989 seq.) How greatly would not List have been obliged to limit his a.s.sumptions, if he had lived to see the universal exposition of 1862, at which English connoisseurs expressed their pleasure that England had not remained behind France and Germany in locomotive building? (Ausland, 19 Oct., 1862.) Hence _Schaffle_ opposes all protective duties as an educational measure, because the "protected"

cla.s.ses, by means of diets (_Landtage_), newspapers, etc. so greatly influence legislation; that is, the educator is influenced by the pupil! (System, 409 ff.) The usual calculation of the cost for home undertakers (_Unternehmer_) can always only strike the average, and hence it is too high for some and too low for others. (_Rau_, Lehrbuch, II, -- 214.) It frequently occurs that large manufacturers already existing desire a low protective tariff to facilitate their compet.i.tion with foreign countries, possible even without such tariff, but not high enough to encourage others to compete with them at home.]

SECTION VIII.

INDUSTRIAL-PROTECTIVE POLICY IN PARTICULAR.

If it be once established generally that an industry is to be artificially promoted, and if there be question only of a choice between the different measures to be adopted to thus promote it, moderate[A3-8-1] import duties are not only the most equable, least subject to abuse, but also attended by the greatest number of secondary advantages. Here the sacrifice is imposed on all the consumers of the "protected" commodity, that is, on the entire people, to the extent that they come in contact with the commodity in question. Export duties on raw materials, on the other hand, compel one single cla.s.s of the people to make sacrifices in order to advance the favored industry.[A3-8-2]

Export premiums for commodities on which labor has been expended are distinguished from import duties as the offensive from the defensive: the former promote the artificial trade, the trade which has gone beyond its natural basis, the latter curtail it.

Premiums, advances without interest, gifts of machinery etc., to persons engaged in industry would operate very usefully under an omniscient government.[A3-8-3] But they generally fall to the lot not of the most skillful manufacturers, but of the most acceptable supplicants, who now are doubly dangerous to the former as compet.i.tors.[A3-8-4] The same is true to a still greater extent of monopolies granted to undertakings which it is intended to promote.[A3-8-5] They require, at least, to be vigilantly superintended in case of sale from one person to another; otherwise the individual to whom they were first granted is very apt to withdraw with the capitalized value of the privilege accorded, and his successors, loaded with a heavy debt in the nature of a mortgage, to derive no advantage from it.[A3-8-6]

Further, import duties, besides the fiscal advantage which they afford, have the police advantage that they may, like quarantine provisions, prevent somewhat the inroads of many economic diseases: thus, for instance, gluts of the market, and still more, the severe chronic disease of ruinously low wages.[A3-8-7] But only very moderate hopes from protective duties should be entertained in all such respects as these.[A3-8-8]

Prohibition proper operates, as a rule, very disastrously.[A3-8-9] It spoils those engaged in industry by a feeling of too great security (mortals' chiefest enemy: Shakespeare). It may even lead to complete monopoly, when the industry requires very large means and the country is small. The inducement to smuggling is peculiarly great here. But even duties, so high that they far exceed the insurance premium of smuggling, can be of very little advantage either to industry or to the exchequer.

They can only promote the smuggling trade. However, the repeal of an import prohibition or the abolition of a tariff approaching to a prohibition should be announced long enough in advance to enable the capital invested in the protected industry to be withdrawn without too heavy a loss.

[Footnote A3-8-1: In general, _Maser_ was in favor of _Colbert_, and opposed to _Mirabeau_. (P. Ph. II, 26.) He ridicules the prohibitions of the exportation of raw material by saying that not only flax-seed, flax-yarn, but also the linen, must remain in the country. As Raphael Mengs once enn.o.bled four ells of linen to a value of 10,000 ducats, a hundred Mengs should be sent for, to the end that all the linen should be exported painted. (v. 25.)]

[Footnote A3-8-2: _Rau_, Lehrbuch, II, -- 214, would prefer to tolerate state premiums (politically so dangerous), rather than protective duties, because, in the case of the former, the magnitude of the a.s.sumed sacrifice may be exactly estimated in advance. Similarly, _Bastiat_, Sophismes, ch. 5.]

[Footnote A3-8-3: Many striking examples in _List's_ Zollvereinsblatt, 1843, No. 47.]

[Footnote A3-8-4: Under _Colbert_, the granting of a monopoly had frequently no effect but to ruin an already existing rural industry in the interest of a city manufactory. Thus, in the case of lace, in Bourges and Alencon, and soap in the south, etc. The upshot of the matter in some places was simply that the carriers on of industry on a small scale were allowed to carry on their industries in consideration of a payment made to the owners of the privilege. (Journ. des Econ., 1857, II, 290.) The King of Denmark bought back, in 1756, at a high price, industrial privileges which his predecessors had granted gratis. (_Justi_, Polizeiwissensch., -- 444.) The Colbert monopoly of the Hollander v. Robais (1665), who was the first to manufacture fine cloths in France, was not abolished until 1767. (Encycl. Mech. Arts et Manuf., II, 345.)]

[Footnote A3-8-5: Thus, for instance, in 1863, the apothecary shops of the governmental district of Breslau had a value of 2,791,227 thalers, of which the land and inventories of stock were only 29 per cent. The concessions represented 71 per cent. The sick, in the entire state of Prussia, were obliged to contribute 1,780,000 thalers a year to compensate these monopolists. Compare _Brefeld_, Die Apotheken, Schutz oder Freiheit? (1863).]

[Footnote A3-8-6: _Hermann_, in his review of Donniges'

System des freien Handels und der Schutzzolle (Munch. G. A.

Sept. und Octbr., 1847) calls attention to the point that a decrease of the cost of production, by merely lowering wages, is no gain to the national resources, but only an altered distribution of them, for the most part a very unfavorable one. But when a nation is advancing on this road, it may strengthen its exportation by such means, as it might granting export premiums at the expense of the workmen. This would lead, on the supposition of entire freedom of trade, to a corresponding depression of the lower cla.s.ses in other countries; and against such contagion a protective tariff may operate in a manner similar to the quarantine. This is much exaggerated by _Colton_, Public Economy of the United States (1849), p. 65, 178. America needs a protective tariff more than any other nation, because of its dear workmen and capital. In Europe, the upper cla.s.ses rob labor of its product, while in America, labor itself enjoys its products. Free trade would lower America to the level of Europe.]

[Footnote A3-8-7: Severe crisis in the woolen industries of America in 1874 ff., spite of an enormously high protective tariff. The financial utility of a protective tariff can be scarcely great, because the intention of the tariff to permit as little as possible to be imported, and of the tax to levy as much as possible, are irreconcilable.]

[Footnote A3-8-8: Frederick II., in 1766, forbade the importation of 490 different commodities which, up to that time, had only paid high duties. (_Mirabeau_, Monarchie, Pr., II, 168.) In 1835, France still had 58 import and 25 export prohibitions.

They might, by way of exception, become necessary, in case a foreign state should desire to make our protective duties illusory by export premiums. But the exportation of Prussian cotton stuffs, for instance, has increased, with a moderate tariff, much more than the Austrian, with full prohibition.

The English silk manufactures were, so long as the prohibition continued, inferior to the French, even in respect to the machinery system. (_McCulloch_, Statist., I, 681.)]

[Footnote A3-8-9: In the case of circulating capital this is generally done rapidly. The machines would have worn out, and care is taken not to renew them. Buildings also can, for the most part, serve other purposes. The most difficult thing of all is for the ma.s.ses of men, gathered together at the princ.i.p.al seats of industry, artificially created, to distribute themselves. Between the two rules: "No leap, but gradual transition," and "cut the dog's tail off at once, not piecemeal," the right mean is struck in the abolition of a prohibitive protection, when, what it is intended to do, is announced long in advance without maintaining vain hopes, and a long s.p.a.ce of time is left to enable people to make their arrangements accordingly. This plan was followed in a model manner in reference to the English silk prohibition, under Huskisson. It was announced as early as 1824 that protective duties of 30 per cent. would on the 5th of July, 1826, take the place of the prohibition. The duty on raw silk was immediately reduced from 4 sh. to 3d. per pound, and after a time, even to 1d., which so increased the demand that the number of spindles rapidly increased from 780,000 to 1,180,000. During the 10 years from 1824, the importation of raw and twisted silk amounted to about 1,941,000 pounds, and in the 10 years after, to 4,164,000 pounds. The English exports of silk wares had before 1824 a value of 350,000 to 380,000; in 1830, of over 521,000; in 1854, of almost 1,700,000; in 1863, of 3,147,000. Compare _Porter_, Progress, I, 255 ff. On the other hand, Austria was over-hasty when it went over from the prohibition of foreign silk stuffs to duties of 180 florins per cwt. (Oest.

Weltausstellungsbericht von 1867, IV, 140.)]

SECTION IX.

WHAT INDUSTRIES ONLY SHOULD BE FAVORED.

That as a rule only such industries should be favored which, by reason of the natural capacities of the country and of the people, have a good prospect of being able soon to dispense with the favors accorded, would be self-evident were it not for the fact that it has been ignored a thousand times in practice.[A3-9-1] It is especially necessary to take the natural station (_Standort_)[A3-9-2] as well as the natural succession of the different branches of industry into consideration.

Half manufactured articles of foreign raw material should not be protected until the entire manufactured article has completely outgrown protection; which condition manifests itself most clearly by a strong, independent exportation of the article.[A3-9-3] The celebrated tariff controversy between the cotton spinners and the weavers in the Zollverein was probably without any conscious plan, but certainly to the well-being of German industry, settled essentially in accordance with these principles. In such struggles of the different stages of a branch of production with one another, it is necessary not only mechanically to weigh the number of workmen, the amount of capital, etc., on both sides, but also organically the capacity for development and the influence of both sides on the entire national life.[A3-9-4] Half-manufactured articles of a very superior quality should not be kept away, since by promoting commodities of the first quality they have an educational influence on the whole industry. Thus, in the case of the duties on iron, it should not be forgotten, that they enhance the price of all instruments of industry.[A3-9-5] Just as objectionable are protective duties for machines or for intellectual elements of training.[A3-9-6]

[Footnote A3-9-1: _Torrens_ calls an industry which can, in the long run, bear no compet.i.tion: "A parasitical formation, wanting the vital energies while permitted to remain, and yet requiring for its removal a painful operation." (Budget, p. 49.) Especially frequent in the case of luxury--industries in which the court was interested. The oysters which were sent for to Venice under Leopold I., in order to stock the artificial beds in the garden of the president of the Exchequer reached Vienna, dead. (_Mailath_, Gesch., IV, 384.) As to how Elizabeth, and Catharine II. in Russia, desired to compel the cultivation of silk, and caused the peasantry to be levied like recruits for that purpose; as to how the latter pet.i.tioned against it in a thousand ways, and endeavored to destroy the silk worms, mulberry trees, etc., see _Pallas_, Reise durch das sudliche Russland, I, 154 ff. Frederick II.'s silk-protection is characterized mainly by the order for church-inspectors to keep tables (_Tabellen_) concerning it, and to look after clergymen's and teachers' knowledge of the cultivation of silk. Tragico-comic endeavors of the Shah Nasreddin to establish manufactories in Persia: _Pollak_, Persien, II, 138 ff. One of the princ.i.p.al effects of the Mexican protective system, since 1827, was the establis.h.i.+ng of manufactories on the coast only to cover up smuggling.

(_Wappaus_, Mexiko, 83 ff.)]

[Footnote A3-9-2: When Holland stunted its bleach-yards by high duties on linen, an industry in which it must always remain behind many other nations, was favored at the expense of another for which it possesses incomparable advantages.]

[Footnote A3-9-3: Even before _Colbert's_ time, French jewelry was prepared from Italian gold wire, and exported in great quant.i.ties. The mere rumor that it was contemplated to impose heavy duties on gold wire, provoked plans for the removal of the industry from Geneva to Avignon.

(_Farbonnais_, F. de Fr., I, 275.) When France protects its raw silk, it makes the purchase of raw material in Italy cheaper to all its compet.i.tors.]

[Footnote A3-9-4: According to _L. Kuhne_ (Preuss.

Staatszeitung, 17 Decbr., 1842), the cotton yarn consumption of Germany amounted to 561,000 cwt. per annum, of which the home spin-houses yielded 194,000 cwt. Weaving employed 311,500 workmen with 32,250,000 thalers wages, spinning only 16,300 workmen with a little over 1,000,000 thalers wages.

Even if the entire yarn-want (_Garnbedarf_) were spun in the interior, yet spinning would stand to weaving only as 1:5 in the number of workmen, and as 1:8 in the amount of wages.

Hence the tariff of the Zollverein defended by Prussia, placed the tariff on tissues (_Gewebe_) 25 times as high as on yarn, while their prices stood to each other as 1:3-4.

_List_ (Zollvereinsblatt, 1844, No. 40 ff.) objected that only by spinning industries of its own could Germany's cotton-tissue industries become independent; since it was a very different thing to procure the material to be worked from the many mutually competing cotton countries, rather than from an intermediate hand; and indeed, from the most powerful industrial country of the world. (Compare, however, _Faucher's_ Vierteljahrsschrift, 1863, Bd. I.) Besides, there is the great importance of the spinning industries, in order to come into immediate connection with America, the most rapidly growing market, to influence Holland, and also to advance navigation and the manufacture of machinery. In opposition to _Kuhne's_ calculation, _List_ says: A man who lost eyes, ears, fingers and toes, would undergo only a small loss of weight.]

[Footnote A3-9-5: Special calculations on this matter in _Junghanns_, Fortschritt des Zollvereins (1849), I, 179.]

[Footnote A3-9-6: Frederick II. threatened the prosecution of one's studies at a foreign university with a lifelong exclusion from all civil and ecclesiastical offices; and, in the case of the n.o.bility, even with the confiscation of their property. (_Mylius_, C. C. M. _Contin_, IV, 191, Noviem C. C., I, 97.)]