[A2-6-12] The expression "most favored" is not always strictly construed. Thus, for instance, France granted the right of coast-sailing proper (cabotage) only to Spain. States frequently promise only: s'appliquer réciproquement toute faveur en matière de commerce et de navigation qu'ils accorderaient à un autre état gratuitement ou avec compensation.
[A2-6-13] Napoleon III. had a preference for commercial treaties, because these, as acts of foreign politics, lay in the plenitude of his imperial power (art. 6 of the constitution of 1852; senatus consultum of Dec. 23, 1852), while in legislation, his free trade tendencies were limited by popular representation. And so also Prussia, by its commercial treaty with him (1862), was actually freed from the hindrances which the free veto of the Zollverein-conferences would have opposed to its reform. Opposition to the treaty-form because too binding. (Chaptal, De l'Industrie Française, II, 242 ff.) The free-trade party lauds it precisely on this account. See the report of the Leipzig Chamber of Commerce for 1874-75, p. 41.]
APPENDIX III.
THE INDUSTRIAL PROTECTIVE SYSTEM AND INTERNATIONAL FREE TRADE.
THE INDUSTRIAL PROTECTIVE SYSTEM AND INTERNATIONAL FREE TRADE.
SECTION I.
PROXIMATE ECONOMIC EFFECTS OF THE INDUSTRIAL PROTECTIVE SYSTEM.
That the principal measures which the mercantile system recommended, artificially to increase a nation's wealth, could not produce the immediate effects expected of them, has been shown, especially from the natural history of money. Their proximate economic consequences necessarily consisted in this, that they diverted the existing productive forces of the nation from their places of application (Verwendungsplätzen) hitherto, to others which the government thought more advantageous.
A. If home producers are in a condition to offer their commodities as good and as cheap as foreigners, all protection of the former by import duties, or even by prohibitions, is superfluous. The home producer has, as a rule, not only the advantage of the smaller cost of freight to the place of consumption,[A3-1-1] but that of being earlier informed, because of his proximity to consumers, of a change in their tastes.[A3-1-2] If, indeed, foreigners could supply us better and cheaper, and if they are kept from supplying our market only by artificial means, the state compels our consumers to a sacrifice of enjoyment;[A3-1-3] and such a sacrifice as is not fully compensated for by the profit made by the favored producers in any manner. The latter are generally soon compelled by home competition to arrange their prices in accordance with the rate of profit usual in the country. If they had no "protection" they would simply employ their productive forces in other branches of production; and in those in which they were equal or even superior to foreign competitors. By means of the products thus obtained, the people might then get in exchange all those commodities from foreign countries, the production of which it is, according to the laws of the division of labor, better to leave to foreign countries.[A3-1-4] Since one nation can lastingly pay another nation only with its own products, any limitation of imports must, under otherwise equal circumstances, be attended by a corresponding limitation of exports.[A3-1-5] Directly, therefore, these hindrances to importation produce no increase, but only a change in the direction (Umlenkung) of the national forces of capital and labor; an increase, only in case that foreign producers are thereby caused to transfer their productive forces within our limits;[A3-1-6] which may certainly be considered the greatest triumph of the protective system. Hence it is absurd when an equal extension of "protection" to all the branches of a nation's economy is demanded, as it is so frequently, in the name of justice. There is here no real protection whatever, analogous, for instance, to the protection afforded by the judge, but a favor which can be accorded to no one without injuring some one else.[A3-1-7]
[A3-1-1] It is of course different in the working (Verarbeitung) of foreign raw material. Much also depends on the situation of the industrial provinces. For instance, manufactured articles can reach the interior of Spain and the Western states of the American Union only after they have passed the industrial coast-regions of both countries. In Russia, on the other hand, the center is the principal industrial region; and hence the coast may be actually nearer to foreign than to home manufacturers. Similarly, in France, at least for iron and coal. Compare Adam Smith, W. of N., II, p. 279 Bas.