“It may perhaps give that gentleman [Mr. Rose of the Treasury] pleasure to be informed that the net revenue arising from the customs in Scotland is at least four times greater than it was seven or eight years ago. It has been increasing rapidly these four or five years past, and the revenue of this year has over-leaped by at least one half the revenue of the greatest former year. I flatter myself it is likely to increase still further.”
Whatever force the argumentum ad officium might have in a country (if such there be) where customs officials are sworn supporters of the commercial policy of the Government, it has none in reference to Great Britain, and less than none if regard be had to the circumstances of Smith’s appointment. There is no reason for supposing that Lord North had any particular liking for protection, though as the instrument of the king’s war policy he had an insatiable craving for revenue, and in pursuit thereof adopted, as we shall see, several taxes of a non-protective character suggested by Smith in the first edition of his treatise. Further, when the above letter was written Pitt was already, under the inspiration of this very customs official, initiating a free trade policy, and was actually preparing the great commercial treaty with France which he was to carry into effect a few months later. A patriotic Scotsman might well delight in his country’s rapid recovery from the disastrous effects of the war, and the author of Pitt’s policy would naturally anticipate an increase of prosperity with an expansion of imports and a growth of the revenues under his charge.
Moreover, there is happily extant a relic of the correspondence which Smith carried on as financial adviser to ministers. In the year 1778 Ireland was in a terrible plight. In addition to all the evils of a minority rule, she suffered as a whole from a commercial persecution by the predominant partner. Her trade had been deliberately and malevolently throttled by the superior legislature of Great Britain. At that time Irish wool could be exported to no country save Great Britain. Irish woollens could only be exported from specified ports in Ireland to specified ports in Great Britain. All export of Irish glass was absolutely prohibited. Worst of all, she was not allowed to send her staple article—cattle—or even salt provisions to the English market. And she was excluded from the colonial trade.
Even so cool a political hand as Henry Dundas (then Lord Advocate), writing to Smith at the end of October 1779, confessed that he has been shocked at the tone and temper of the House of Commons in its dealings with Ireland’s prayers for elementary justice. But the Irish Parliament was now demanding free trade in tones too peremptory to be ignored, for they were backed by a threatening display of armed force. Dundas saw little objection to acceding to some of the requisitions; but he had no very clear grasp of the economics of the situation, and being in correspondence with Eden, the Secretary of the Board of Trade, he wanted an expert opinion from the Seer of Edinburgh. Smith replies that the Irish demand should be satisfied, first, because it is just; second, because it will be for the benefit of English consumers; and lastly, because English manufacturers will suffer so much less than the nation, and the national revenue, will gain. Dundas had seemed to be rather afraid that with cheaper labour and lower taxes the Irish manufacturers might be able to undersell their British competitors. Smith pointed out that they had neither the skill nor the stock [capital] to enable them to do so; “and though both may be acquired in time, to acquire them completely will require more than a century.” Besides, Ireland had neither coal nor wood; “and though her soil and climate are perfectly suited for raising the latter, yet to raise it to the same degree as in England will require more than a century.”
Before he can say precisely what the Irish Parliament means by a free trade, he must see the heads of the proposed bill. If it is only freedom to export, nothing could be more just and reasonable. If it is freedom to import, subject only to their own customs’ duties, that again is perfectly reasonable, though it would “interfere a little with some of our paltry monopolies.” If they wish to be allowed to trade freely with the American and African plantations, that also should be conceded. It would interfere with some monopolies, but would do no harm to Great Britain. Lastly, they might mean to demand a free trade with Great Britain. “Nothing, in my opinion, would be more highly advantageous to both countries than this mutual freedom of trade. It would help to break down that absurd monopoly which we have most absurdly established against ourselves in favour of almost all the different classes of our own manufacturers.” Dundas had hinted that the two Parliaments might be reconciled by a proper distribution of loaves and fishes. Smith did not shrink at all from promoting a good policy by what was then the ordinary method of promoting a bad policy:—
“Whatever the Irish mean to demand in this way, in the present situation of our affairs I should think it madness not to grant it. Whatever they may demand, our manufacturers, unless the leading and principal men among them are properly dealt with beforehand, will probably oppose it. That they may be so dealt with I know from experience, and that it may be done at little expense and with no great trouble. I could even point to some persons who, I think, are fit and likely to deal with them successfully for this purpose. I shall not say more upon this till I see you, which I shall do the first moment I can get out of this Town.”
A week later Smith repeated his argument with some additions and modifications in a letter of November 8th to Lord Carlisle, who then presided over the Board of Trade. He maintains that “a very slender interest of our own manufacturers is the foundation of all these unjust and oppressive restraints,” and ridicules “the watchful jealousy of the monopolists, alarmed lest the Irish, who have never been able to supply completely even their own market with glass or woollen manufactures, should be able to rival them in foreign markets.”
When he passes from commercial considerations to the larger aspects of freedom and good government, his wisdom is no less manifest. What Ireland most wants, he writes, are order, police, and a regular administration of justice, both to protect and to restrain the inferior ranks of people: “articles more essential to the progress of industry than both coal and wood put together, and which Ireland must continue to want as long as it continues to be divided between two hostile nations, the oppressors and the oppressed, the Protestants and the Papists.” He then points out that what the monopolists dread (the prosperity of another country) is not an evil but a good:—“Should the industry of Ireland, in consequence of freedom and good government, ever equal that of England, so much the better would it be not only for the whole British Empire, but for the particular province of England. As the wealth and industry of Lancashire does not obstruct but promote that of Yorkshire, so the wealth and industry of Ireland would not obstruct but promote that of England.” For exactly the same reasons he wanted free trade with France, and with the whole world. If it is good for one man to trade freely with another, for a town with a town, and for a county with a county, how can it be otherwise than good for countries to trade freely together? An economist who strikes at the last proposition should hail Smith’s humorous project of a tariff which would secure Scotland a vintage as well as a harvest.
Much more might be said upon a subject that enters into the politics of every State, and vitally affects the welfare of every struggling toiler in the universe. But the purpose of this chapter will be fulfilled if it restores to Adam Smith his identity as the protagonist in a great contest, as the champion of the right to trade with all the world, against those who stand for privileges, monopolies, and tariffs. According to Bagehot, Smith’s name can no more be dissociated from free trade than Homer’s from the siege of Troy. “So long as the doctrines of protection exist—and they seem likely to do so, as human interests are what they are, and human nature is what it is—Adam Smith will always be quoted as the great authority on Anti-Protectionism, as the man who first told the world the truth, so that the world could learn and believe it.”