The sacrifices which the protective system directly imposes on the national wealth consist in products, fewer of which with an equal straining (Anstrengung) of the productive forces of the country, are produced and enjoyed, than free trade would procure. But it is possible by its means to build up (bilden) new productive forces, to awaken slumbering ones from their sleep, which, in the long run, may be of much greater value than those sacrifices. Who would say that the cheapest education is always the most advantageous?[A3-4-1] Only by the development of industry also, does the nation's economy become mature.[A3-4-2] The merely agricultural state can attain neither to the same population nor the same energy of capital, to say nothing of the same skillfulness of labor, as the mixed agricultural and industrial state; nor can it employ its natural forces so completely to advantage.[A3-4-3] How many beds of coal, waterfalls, hours of leisure,[A3-4-4] and how much aptitude for the arts of industry, can be turned to scarcely any account in a merely agricultural state? If, therefore, the protective system could materially promote a national industry, or if it made such industry possible, for the first time, the sacrifice connected therewith, in the beginning, should be considered like the sacrifice of seed made by the sower;[A3-4-5] but this can be justified only on the three following conditions: that the seed is capable of germination; that the soil be fertile and properly cultivated, and the season favorable.[A3-4-6] [A3-4-7]
[A3-4-1] List, Nationales System der polit. Oekonomie, kap. 12, contrasts two owners of estates, each of whom has five sons, and can save 1,000 thalers a year. The one brings his sons up as tillers of the ground (Bauern = peasants) and puts his savings out at interest. The other, on the contrary, has two of his sons educated as rational (rationelle) agriculturists, and the others as intelligent industrial workers, and at a cost which prevents the possibility of his accumulating any more capital. Which of the two has cared better for the standing, wealth, etc. of his posterity; the adherent of the "theory of exchangeable values" or the adherent of the doctrine of "the productive forces?"
[A3-4-2] The rent of the land of Gr. Botton, in Lancashire, was estimated in 1692 at £169 per annum; in 1841, at £93,916. (H. Ashworth.)
[A3-4-3] The pottery district of Staffordshire was formerly considered very unfertile. It was industry that first showed how the rich and varied beds of clay at the surface, and the wealth of coal under them, could be fully utilized.
[A3-4-4] Blind free-traders always like to assume that every man capable of working always busies himself; whereas idleness frequently excuses the wasting of its time, by the plea that a remunerative market of the possible new products is improbable, or at least uncertain. Compare J. Möser, P. Ph., I, 4. Kröncke, Steuerwesen (1804), 324, 328 seq., and even the first German reviewers of Adam Smith in Roscher, Gesch. der N. Oek. in Deutschland, II, 599.
[A3-4-5] List calls attention to the case of the stenographic apprentice who writes more slowly for a time than he was wont to formerly.
[A3-4-6] Let us suppose that a country had hitherto produced $10,000,000 worth of corn, and that of this amount it had sent $1,000,000 worth into foreign countries as a counter-value for foreign manufactured articles. It now, by means of a protective tariff, establishes home manufactures, through the instrumentality of which a coal bed or water fall is turned to account. The workmen in the manufactories henceforth consume what was formerly exported. Of course such a change is not effected without loss; but this loss ceases as soon as the home industry becomes the equal of the foreign industry which was crowded out. And then the forces which have been made useful in the meantime appear as clear gain. List not unfrequently called special attention to the fact that a consumption of 70,000 persons engaged in home industries means as much to German agriculture as all that it exported to England from 1833 to 1836. (Zollvereinsblatt, 1843, No. 5.)
[A3-4-7] Adam Smith's free-trade doctrine has always been contradicted in Germany. Even in 1777, his first great reviewer, Feder, says that many foreign commodities can be dispensed with without damage; and that industries which indemnify the undertakers of them only after a time but which are then very useful to the community in general, would not be begun always without special favor shown them. (Roscher, Geschichte der National Oekonomie, II, p. 599.) Kröncke, Steuerwesen, 324 ff., speaks of attempts towards the education of industries by taxation-favors: "If of ten, only one succeeds, even that is to be considered a great gain." But modern protectionists base themselves chiefly on their interest in the independence of the country, precisely as the free-traders do on that of individual freedom. Ad. Müller, with his organic way of comprehending things, opposes the assumption of a merely mercantile world-market, in which all the merchants engaged in foreign trade constitute a species of republic. (Quesnay.) He also rejects on national grounds the universal freedom of trade as well as the universal empire akin to it; although as a means of opposing it, he suggests not so much a protective tariff as the intellectual cultivation of nationality in general. (Elemente der Staatskunst, 1809, II, 290, III, 215, II, 240, 258.) According to Sörgel (Memorial an den Kurfürst v. Sachsen, 1801,) commercial constraint (Handelszwang), by means of export and import duties, is useful in the childhood of manufactures, afterwards injurious, because the powerful incentive to perfection is wanting where no competition is to be feared (67). P. Kaufmann, the opponent of Smith's balance-theory, demands moderate protection against the otherwise irresistible advantages to already developed industrial nations. (Untersuchungen, 1829, I, 98 ff.) The principal advocate in this direction is Fr. List, with a great deal of sense for the historical, but with little historical erudition; and after the manner of an intelligent journalist, he reproaches the free-trade school with baseless cosmopolitanism, deadly materialism, and disorganizing individualism. He distinguishes in the development of nations five different stages: hunter-life, shepherd-life, agriculture, the agricultural-manufacturing period, the agricultural-manufacturing-commercial period; and he demands that the state should lend its assistance in the transition from the third to the fourth stage, in the nursing or planting of manufacturing forces in connection, throughout, with the enfeebling of feudalism and bureaucracy, the increase of the middle class, with the power of public opinion, especially of the press, the strengthening of the national consciousness from within and without. Compare Roscher's review in the Gött. gelehrten A. 1842, No. 118 ff. As to how List resembles, and differs from Ad. Müller, see Roscher, Gesch. der N. O., II, 975 ff.; von Thünen's independent defense of a protective tariff; Isolirter Staat, II, 2, 81, 92 ff., 98; Leben, p. 255 seq. The socialist Marlo (Weltökonomie, I, ch. 9, 10) distinguishes common products (Gemeinprodukte) which may be obtained equally well in every properly developed country, and peculiar products (Sonderprodukte), like coffee, wine, etc. With respect to the former, he agrees with List; in regard to the latter, with Smith. A protective tariff exerts a constraint on consumers, compelling them to abridge their enjoyments somewhat, and to employ these now in the procuring of instruments of production, in the exercise of skill needed in production and the accumulation of capital. At the same time foreigners should be kept from utilizing home natural forces, and where possible, home manufactures should be helped to utilize foreign natural forces. Marlo, indeed, assumes, as one-sidedly as the followers of Smith do the contrary, that without the tariff the workmen in question would not be employed at all; but he is right in this, that the most fruitful employment of the forces of labor, and the keeping of them most completely busy, mutually replace each other. In France, even Ferrier, Du Gouvernement considéré dans ses Rapports avec le Commerce (1808), had defended the Napoleonic continental system. See Ganilh, the French List, Theorie de l'Economie politique (1822), who grades the branches of a nation's economy in a way the reverse of Adam Smith, and finds the protective system necessary for the less developed nations, to the end that they may not be confined to the most disadvantageous employments of capital (II, p. 192 ff.). Especially is a greater population made possible in this way (248 ff.). Similarly, Suzanne, Principes de l'E. polit., 1826. Further, H. Richelot, List's translator. M. Chevalier, who recommends free trade for France in our day so strongly, approves the system of Cromwell and Colbert for their own time, and for a long time afterwards (Examen du Système commercial, 1851, ch. 7): a view which Périn says is now shared by "all serious writers." (Richesse dans les Sociétés Chrétiennes, 1861, I, p. 510.) Demesnil-Marigny, Les libres Échangistes et les Protectionistes conciliés (1860), bases his protective system on this, chiefly, that it may greatly enhance the money-value of a nation's resources to the detriment of other nations, especially by the transformation of agricultural labor, estimated in money, into the much more productive labor of industry. The value in use of all the national resources[TN 131] is doubtless greatest where full freedom of trade obtains. In Russia, Cancrin demands that every nation should be to some extent independent in respect to all the chief wants to the production of which it has at least a middle (mittlere) opportunity; especially as all civilization, even the higher development of agriculture, must proceed from the cities. (Weltreichthum, 1821, 109 ff. Oekonomie der menschlichen Gesellschaften, 1845, 10, 235 ff.) America's most distinguished protectionist is Hamilton, Report on the Subject of Manufactures presented to the House of Representatives, December 5, 1791. Jefferson's saying, that the industry should settle by the side of agriculture, leads us to Carey, who repeats the same idea with wearying unwearisomeness; at first for the reason that the "machine of exchange" should not be allowed to become too costly; but afterwards rather from the Liebig endeavor to prevent the exhaustion of the soil. He describes, indeed, how the East Indian producer and consumer of cotton are united with one another by a pontoon bridge which leads over England. (Principles of Social Science, I, 378.) A good soil and good harbors are the greatest misfortune for a country like Carolina if free trade prevails, because it is turned into an agricultural country (I, 373). The people who, after the manner of the Irish, gradually export their soil, will end by exporting themselves. Carey would force colonies to demean themselves like old countries from the first. If corn be worth 25 cents in Iowa, and in Liverpool $1, for which 20 ells of calico are brought back, the Iowa farmer receives of this quantity about 4 ells. Hence it would be no injury to him were he to supply his want of cotton from a neighbor who produced it at a cost four times as great as the Englishmen. Analogies drawn from natural history, as, for instance, that every organism, the lower it is in the scale of existence, the greater is the homogeneity of its several parts; also a deep aversion for centralization, and hatred of England, coöperate in Carey's recommendation of the protective system, often called in the United States the "American system," in opposition to the "British," advocated by Webster against Calhoun and Clay against Jackson. John Stuart Mill, Principles, V, ch. 10, 1, allows a protective tariff temporarily, "in hopes of naturalizing a foreign industry in itself perfectly suitable to the circumstances of the country." Peel's colleague, G. Smythe, said, in 1847, at Canterbury, that as an American (citizen of a young country) or as a Frenchman (citizen of an old country with its industry undeveloped), he would be a protectionist. (Colton, Public Economy, p. 81.) Even Huskisson admitted, in 1826, that England in the seventeenth century had been very much advanced by its protective system; and that he would continue to vote even now for its maintenance, if there were no reprisals to fear.
SECTION V.
PROTECTION AS A POLICY.