The Customs System and the Popular SchoolThe popular school does not discriminate (in respect of theoperation of protective duties) between natural or primitiveproducts and manufactured products.It perverts the fact that suchduties always operate injuriously on the production of primitive ornatural products, into the false conclusion that they exercise anequally detrimental influence on the production of manufacturedgoods.
The school recognises no distinction in reference to theestablishment of manufacturing industry in a State between thosenations which are not adapted for such industry and those which,owing to the nature of their territory, to perfectly developedagriculture, to their civilisation, and to their just claims forguarantees for their future prosperity for their permanence, andfor their power, are clearly qualified, to establish such anindustry for themselves.
The school fails to perceive that under a system of perfectlyfree competition with more advanced manufacturing nations, a nationwhich is less advanced than those, although well fitted formanufacturing, can never attain to a perfectly developedmanufacturing power of its own, nor to perfect nationalindependence, without protective duties.
It does not take into account the influence of war on thenecessity for a protective system; especially it does not perceivethat war effects a compulsory prohibitive system, and that theprohibitive system of the custom-house is but a necessarycontinuation of that prohibitive system which war has broughtabout.
It seeks to adduce the benefits which result from free internaltrade as a proof that nations can only attain to the highest degreeof prosperity and power by absolute freedom in international trade;whereas history everywhere proves the contrary.
It maintains that protective measures afford a monopoly toinland manufacturers, and thus tend to induce indolence; while,nevertheless, all the time internal competition amply suffices asa stimulus to emulation among manufacturers and traders.
It would have us believe that protective duties on manufacturedgoods benefit manufacturers at the expense of agriculturists;whereas it can be proved that enormous benefits accrue to homeagriculture from the existence of a home manufacturing power,compared to which the sacrifices which the former has to make tothe protective system are inconsiderable.
As a main point against protective duties, the popular schooladduces the expenses of the custom-house system and the evilscaused by contraband trade.These evils cannot be denied; but canthey be taken seriously into account in comparison of measureswhich exercise such enormous influence on the existence, the power,and the prosperity of the nation? Can the evils of standing armiesand wars constitute an adequate motive for the nation to neglectmeans of defence? If it is maintained that protective duties whichfar exceed the limit which offers an assured remuneration tosmuggling, serve merely to favour contraband trade, but not tobenefit home manufactures, that can apply only to ill-regulatedcustoms establishments, to countries of small extent and irregularfrontiers, to the consumption which takes place on the frontiers,and only to high duties on articles of luxury of no great aggregatebulk.
but experience everywhere teaches us that with well-orderedcustoms establishments, and with wisely devised tariffs, theobjects of protective duties in large and compact states cannot bematerially impeded by contraband trade.
So far as regards the mere expenses of the customs system, alarge portion of these would, if it were abolished, have to beincurred in the collection of revenue duties; and that revenueduties can be dispensed with by great nations, even the schoolitself does not maintain.
Moreover, the school itself does not condemn all protectiveduties.
Adam Smith allows in three cases the special protection ofinternal industry: firstly, as a measure of retaliation in case aforeign nation imposes restrictions on our imports, and there ishope of inducing it by means of reprisals to repeal thoserestrictions; secondly, for the defence of the nation, in casethose manufacturing requirements which are necessary for defensivepurposes could not under open competition be produced at home;thirdly, as a means of equalisation in case the products offoreigners are taxed lower than those of our home producers.J.B.
Say objects to protection in all these cases, but admits it in afourth case -- namely, when some branch of industry is expected tobecome after the lapse of a few years so remunerative that it willthen no longer need protection.
Thus it is Adam Smith who wants to introduce the principle ofretaliation into commercial policy -- a principle which would leadto the most absurd and most ruinous measures, especially if theretaliatory duties, as Smith demands, are to be repealed as soon asthe foreign nation agrees to abolish its restrictions.SupposingGermany made reprisals against England, because of the dutiesimposed by the latter on German corn and timber, by excluding fromGermany English manufactured goods, and by this exclusion calledartificially into existence a manufacturing power of her own; mustGermany then allow this manufacturing industry, created at immensesacrifice, to come to grief in case England should be induced toreopen her ports to German corn and timber? What folly.It wouldhave been ten times better than that if Germany had submittedquietly to all measures of restriction on the part of England, andhad discouraged the growth of any manufacturing power of her ownwhich might grow up notwithstanding the English importprohibitions, instead of stimulating its growth.