Condy Raguet lays out a set of basic principles of free trade among which is the idea that governments cannot create wealth by means of legislation and that individuals are better judges of the best way to use their capital and labor than governments (1835)

29 June, 2009

Condy Raguet lays out a set of basic principles of free trade among which is the idea that governments cannot create wealth by means of legislation and that individuals are better judges of the best way to use their capital and labor than governments (1835)

The American free trader Condy Raguet began a series of articles in the Philadelphia paper Banner of the Constitution in 1829 in which he listed the basic principles of free trade and its benefits to consumers

That individuals are better judges of the most advantageous mode of employing their labour and capital, than governments—
That wealth cannot be created by the mere enactment of laws—
That commerce is an exchange of equivalents not merely beneficial to one of the parties which carries it on, but to both, by enabling each to exchange with the other, those products which it can furnish upon the most favourable terms—
That commerce must be reciprocal, and consequently, that when one nation restricts its trade with another, and says, “I will not buy,” she declares in the same words, “I will not sell.”
That as far as foreign nations refuse to take our productions, they ipso facto, and without requiring any laws on our part to enforce a retaliation, absolutely deprive us of the power to take their productions—
That it is an error, to suppose that free trade is only advantageous when adopted by all nations, and that the interests of a country are to be promoted by counter restrictions.

The full passage from which this quotation was taken can be be viewed below (front page quote in bold):

Be this, however, as it may, it is manifest, that, let the ground be much or little, which has been gained by the advocates of untrammelled industry, that ground ought not to be lost through any relaxation of effort. The moment is propitious for pushing on the conquest, and whilst the champions who are placed within the walls of the capitol, are waging war in the front of the battle, let ours be the humbler task of skirmishing with the outposts. Nothing is wanted to overthrow the whole delusion which has been imposed upon the American people as a wise and judicious course of policy, but a dispassionate and unprejudiced examination of its real character, when divested of the false theories upon which it is built. Such an examination would shew—

That individuals are better judges of the most advantageous mode of employing their labour and capital, than governments—

That wealth cannot be created by the mere enactment of laws—

That commerce is an exchange of equivalents not merely beneficial to one of the parties which carries it on, but to both, by enabling each to exchange with the other, those products which it can furnish upon the most favourable terms—

That commerce must be reciprocal, and consequently, that when one nation restricts its trade with another, and says, “I will not buy,” she declares in the same words, “I will not sell.”

That as far as foreign nations refuse to take our productions, they ipso facto, and without requiring any laws on our part to enforce a retaliation, absolutely deprive us of the power to take their productions—

That it is an error, to suppose that free trade is only advantageous when adopted by all nations, and that the interests of a country are to be promoted by counter restrictions—

That commerce being an exchange of domestic products for foreign products, gives employment to domestic industry, inasmuch as foreign products can only be paid for with domestic products—

That all high duties exclude a portion, or the whole, of the articles upon which they are laid, by raising their price to the consumer, or, what is the same thing, by preventing the price from falling as low as it would otherwise fall, were it not for the duty, as is the case now, with all articles made of wool, cotton, iron, and many other things—

That this enhanced price is a real tax upon the consumer, which goes into the pocket of the favoured monopolist, not always, indeed, increasing his wealth, but preventing his loss from being as great as it would be, did the high duty not exist—

That the great fall which has taken place since the year 1816, in many articles of manufacture, has resulted chiefly from the great improvements in labour-saving machinery which have progressed not only in this country but in Europe, and which in England have advanced so rapidly, that we are informed, in late papers, that an article for the manufacture of which, 2s. 6d. used formerly to be paid, can now be had, materials and all, for 5d.—

That the complaint of the manufacturers that the duties are not high enough, is positive proof that foreign fabrics can be imported cheaper than they can be made at home, and, consequently, that there is a want of consistency in the conduct of those who assert that the tariff system brings down prices, whilst, at the same time, they demand more duties, and thus appear to court their own ruin—

That all artificial modes of raising prices, or, of preventing them from falling, are oppressions upon the poor and labouring classes, inasmuch as they are compelled to pay for the necessaries of life a higher price than they would otherwise have to pay, whilst the demand for their labour is diminished, from the circumstance that their employers, being themselves also obliged to give more for the articles of which they stand in need, have less means of giving employment to others than they would otherwise possess—

That all restrictive laws retard the gradual increase of capital, by rendering the producing faculties of the community less productive, and thus prevent that rapid accumulation of wealth, in which alone is to be found the means of affording employment to an increasing population—

That restrictive laws, by compelling people to abandon pursuits in which they find it their interest to labour, and to follow others, which are only made profitable to them by laying contributions upon all the rest of the community, operate precisely like laws which should compel A, without an equivalent, to contribute to the support of B, who has not even the merit of being entitled to such support, as a public pauper—

That restrictive laws operate upon the body politic as cords and bandages do upon the body natural, and equally diminish the power of production—

That restrictive laws operate precisely in the same manner as a law would operate, which should enact that a man with two hands should only labour with one—that a farmer who could work with a plough, should dig with a spade—that the owner of a cotton factory who has mules and spindles, should spin with the distaff—that a wood-cutter should chop trees with a dull axe instead of a sharp one—or, that a taylor should sew with a blunt needle instead of a sharp-pointed one—and, finally,

That the term “American System,” is a misnomer for what is nothing but the antiquated “British System,” and that its employment, for political party purposes, is a fraud upon the honest and patriotic feeling of the nation, devised for the purpose of appealing to the prejudices of the people upon a subject, upon which their understandings alone should be addressed.

These, and many other truths of similar import, we shall undertake to establish in this paper, to the satisfaction, we trust, of any individual who holds himself subject to the rule, that conclusions, logically drawn from premises, are not liable to be rejected or admitted at the pleasure of the reader, but must be admitted as data for subsequent arguments.

In the discussion of questions of political economy, it is manifest that much abstract reasoning, as in other sciences, is necessary for a complete understanding of them. Such reasoning, however, is only adapted to the studies of comparitively few, such, for example, as those who are selected for their supposed wisdom in the science of government, to make laws for the nation. The great mass of readers have neither a taste nor an inclination for severe investigation, and, on this account, whilst we must not lose sight of the duty of offering up a regular repast for those who delight in strong food, we shall study, as much as possible, the palate of those who can only digest a modorate and diluted portion of scientific truth.