every thing at once, and we will not undertake to assert that the best selection has not been made, although the cases of coffee and hemp (concerning which we have not entered into any minute exami nation) would certainly appear to be less urgent than those which we have mentioned. When taxation is so enormously high, as in the case of tobacco, a beginning might certainly be made with little or no loss to the revenue; and we cannot understand the reasoning of the Chancellor of the Exchequer when he asserts, that to reduce the duties on this article to a less amount than 50 per cent. would afford no benefit to the consumer*. The benefit to the consumer would be at least proportionate to the amount of duties reduced. There remains an observation, with respect to a certain class of commodities, to which we trust that the attention of the Chancellor of the Exchequer will be called. It is often usual to impose a duty upon the manufacture, and afterwards to return this duty on exportation, under the name of a drawback. Now there are some articles of which a considerable proportion of the whole amount are intended for exportation, and it is manifest, that in this case a considerable loss is occasioned, not only by the expense of first collecting, and afterwards refunding the duties, but also by a larger amount of capital being thus required, in order to carry on the business. This is the case with printed goods, on which not less than two-thirds of the duties received are returned in the shape of a drawback. A motion for the repeal of the beer duties was made in the course of the session by Mr. Maberly. It appears that the consumption of beer has increased but very little for the last century, whence we may conclude, either that the duty must be too high, or that there must be something peculiarly disadvantageous in the mode of its collection. The late reduction of the duty on spirits also forms an additional argument in favour of the abolition of the beer duties. But it is not so much of their absolute amount that we complain, as of their unequal pressure on the different classes of the community. The fact is, that there ex-system. But at the same time we would ists a tax to the amount of 20s. a quarter on malt, and another tax of 35s. upon beer; so that, in truth, the rich man, who possesses the means of brewing his own beer, contributes only 20s. towards the revenue, whilst the poor man, who is obliged to purchase his beer at a publichouse, pays 55s. Such a mode of taxation is, at any rate, unjust; and we can see no reason why the whole of the duty might not be imposed upon the malt. Nor can we understand the Chancellor of the Exchequer when he asserts, that if this were done "the consumer, although "he would have the satisfaction of pay"ing more, would himself pay nothing "less +." It may be true, that the relief to the poorer classes might not be so great as is supposed; but surely all that would be lost by the one class must necessarily be gained by the other. In concluding our observations we will repeat, that we are disposed to give Mr. Robinson full credit for the change of system which he has introduced, and for the sound principles which have in general guided his conduct. We are not amongst those, who (to use his own expression) would ride a willing horse to death, or who, because every thing is. not accomplished which they might have hoped for, would pass over without commendation, the improvements which have indisputably been effected in our financial warn him, that much yet remains to be done, and that until he has applied his principles more universally, many of his measures will be attended with only partial suc cess, his motives will be liable to misrepresentation, and his conduct will be subject to the charge of inconsistency. We trust, therefore, that he will proceed firmly, but cautiously, with the good work which he has before him, and that he will thus acquire not a mere temporary popularity, but a permanent and honourable reputation, founded upon the merit of having been the first to reduce to practice those sound principles which are the only secure basis of national prosperity. II. HAVING investigated, in the preceding section, the best means of raising a revenue for the purposes of government, we propose, in the remainder of this essay, to examine the propriety of imposing those duties for the protection of manufactures and the benefit of trade, which form so conspicuous a feature in our commercial regulations. The various branches of political economy, in spite of the analytical nature of the science, are so interwoven with each other, that no single part can be understood without a previous knowledge of the whole. This peculiarity, which constitutes the great difficulty of discussing any separate division of the science, without obscurity or diffuseness, will oblige us, for the sake of avoiding both these faults, to refer to some of our previous reasonings, connected with the present question. The principal questions to be considered, with a view, not only to Mr. Huskisson's measures of last session, but to the adoption of a system of unrestricted trade, are two: 1. The means of facilitating the importation of such foreign commodities, as have been hitherto produced at home, under the protection of restrictive or prohibitory duties: and, 2. The means of discouraging the production of such domestic articles, as have been hitherto produced, either for home consumption or exportation, under the protection of bounties, privileges, &c. rent in those of superior productiveness. In truth, there is no difference between the phenomena which attend the working of mines and the cultivation of land, except that the produce of the latter being indispensable, the universal rate of profit is regulated by the cost of growing corn on the least fertile soil, and not by the cost of raising ore from the least productive mine. An attention to the different effects produced by importation duties on those articles, which may be said, by a phrase not strictly accurate, to yield a rent, and those of which the price is wholly compounded of wages and profits, is peculiarly necessary in the present instance, not only to understand the causes of the different operations which we think likely to ensue in some of Mr. Huskisson's measures, but also to acquire just ideas upon the mode of protecting home manufactures and the ultimate emancipation of trade. On this principle we cannot but approve of the admission of foreign iron, copper, and tin, under a duty, which really protects the mass of home producers and owners of British mines, precisely as a duty on foreign corn would protect the British farmer and landlord. In our remarks on the Colonial Trade In the instance we allude to the remedy bill, we have analysed, at some length, adopted is at once simple and rapid; a the effect of importation duties*. We gradual diminution of the duty will gracontended, that a partial admission of dually remove the evil, whilst it injures foreign commodities into any country few, ruins none, and benefits many. We cannot be effected by such means; and must not omit to mention that the short that where greater facilities for production debate on this subject presents the exist abroad, importation duties can never agreeable instance of one of the most exact as a medium between the prohibition tensive iron masters (Mr. Alderman of a foreign, and the destruction of a Thompson) defending a measure, prohome branch of manufacture. Though ductive of at least some temporary injury this be strictly true in the case of manu- to himself; an act, however, as little apfactures, in which there exists no inequa-preciated as it is raret. In the present lity in the facilities of production-in which, unless a man can afford to produce at a given cost, he cannot afford to produce at all;-the proposition admits of qualification in respect to those commodities which yield a rent. Thus, it is well known, that the free admission of corn would only throw out of cultivation the land yielding the least return, and diminish to that extent the amount of rent paid on the superior soils. Mines also, inasmuch as they are unequally productive, are in the some situation as land: it is the increased demand that forces a recurrence to inferior mines, and creates a * Ante, p. 634. instance, at least, it was unaccompanied by any similar example. Nay, it did not prevent Sir H. Vivian from contending that the importation of South American copper, would destroy the value of the Cornish mines: an argument, which, to say nothing of its inaccuracy as to the fact, is only admissible on the supposition, that the productiveness of all those mines is exactly the same, and that the least valuable of the mines now wrought in South America is more productive than the richest in Cornwall. In all cases, therefore, where a rise in the price of a commodity is the effect of + Ante, p. 356. . See ante, p. 373. a diminished facility of producing it-a rise in price which is always followed by a rise in rent-if the foreign commodity of the same kind be excluded, or burdened with a high duty, a gradual reduction of the duty, whilst it removes the evil, alleviates, if it does not prevent the injury attendant on a sudden repeal of the restriction; as it throws but a small part of the class engaged in producing the commodity out of employment at every successive step in the reduction of the importation duty, and dislodges or impairs but a small portion of capital. But with manufacturers, the difficulty is greater. A diminution of importation duty on a foreign article, however gradual, will not, as we have already seen*, produce any effect at all, without destroying the domestic manufacture. The means, then, by which this evil may be prevented, or at least in a great measure diminished, is the great desideratum; and although it is not without diffidence that we hazard a suggestion, we think it right to state our opinion; especially as we are fully assured of the fallaciousness of Mr. Huskisson's plan of protecting duties on importation. If a commodity of home production must be sold at a certain price, in order that the producer may realize the usual rate of profit; we say, that the admission of the same commodity from abroad under any duty (it matters not how great) which should enable the foreign to undersell the British dealer, would have the effect of driving the latter from the market. If the duty were so high as to prevent the foreign from selling at a less price than the British dealer, the foreign dealer would have no motive for entering the market at all; and such a duty would be tantamount to a prohibition: but if the duty would allow him to undersell, then, as there cannot be two prices in the same market, and as his prices would and must be lower, there would be nothing to prevent him from furnishing the whole supply and depriving the British dealer of his custom. The supposition upon which importation duties have been imposed, seems to be, that they would limit the foreign supply. That, in fact, is precisely what is wanted, although it will not be effected by importation duties. It would, however, be effected by fixing the quantity, See ante, p. 634. in which the imported article should be allowed to enter the British market. The effect of a partial admission of a foreign commodity on prices in the British market, whatever might be the difference in the comparative costs of production, at home and abroad, would depend entirely upon the quantity of the article admitted. For instance, suppose the home demand for silk to require a supply of 10,000 pieces a-year, which the home producer could not afford to bring into the market at a lower price than 60s. per piece; if a small quantity, for instance 500 pieces, of silk were admitted from a foreign country, where the cost of production was lower than at home, the effect would be a general fall in the price of the commodity: there would be a supply of, or the power of supplying 19,500 pieces, and a demand only for 10,000+. The fall in price would displace so much capital at home as night be necessary for the production of 500 pieces of silk; but as soon as that capital should be displaced, and the supply restored to its former level, prices would also rise to their former rate, and 500 pieces of silk might thenceforth be constantly imported every year without producing any further effect on prices. By this operation a twentieth part of the capital would be turned over to more productive employments, at a comparatively small loss to the owner, and, of course, none to the public. In the course of time 500 additional pieces of foreign silk might be let in with a similar effect, and by further repetitions of this operation-by a gradual increase of the quantity imported, and a corresponding decrease of the quantity produced at home, the transfer of the whole capital employed in the domestic manufacture, might be effected without ruin to its employer or injury to the la bourer by the sudden change which attends an unlimited importation. It may be urged, that as the supply furnished by the home producer was ade quate to the demand, the supply from abroad, however limited in quantity, would produce a glut, and thereby depress the price of silk as much as an unlimited admission of foreign produce, under an importation duty: the cases, however, are distinct; a glut is but temporary, and the removal of a small portion of capital We suppose the demand invariable, for the convenience of the argument. would speedily raise the price of the article to its former level, since the foreign supply alone would be inadequate to meet the demand. Not so in the case of the unlimited admission of foreign silk; the transfer of the whole capital embarked in the home manufacture would not alter the price, which in that case would be regulated by the cost of production to the foreign trader, as in the former case by the cost of production to the home producer. This tion: such a duty would emulate, in Such, then, we conceive to be the safe and proper mode of introducing a system of free trade with regard to those domestic articles which have heretofore been guarded by prohibitory duties from the competition of the foreign dealer. We shall not enter, in this place, into a de by Mr. Huskisson, as the subjects of his act of last session; which, indeed (with the exception of the metals, and those we have already noticed), present but little matter for remark. We have been more anxious to expound the principle upon which all such changes should be made, than to criticise the particular instances comprised in Mr. Huskisson's measures of last session. Beneficial effects also might be anticipated from the foreknowledge of such admission; which, as it would suggest the probable occurrence of the glut,would induce all persons, having favourable opportunities, to transfer their capital; leaving to those who were either unable or unwilling to withdraw from their business, an unaltered price and undiminished profits; while, on the other hand, a fore-tailed consideration of the cases selected knowledge of the unlimited admission of foreign silk, subject to a duty, would be of no avail: since it would induce all to transfer their capital as speedily as possible, and would be followed by nearly the same effect as the actual appearance of the article in the market. Add to this, that, in the case of an admission limited in quantity, the Government, having the power of regulating the admission, might assist the producer or consumer, according to the exigency of the case, by lessening or increasing its amount at their own discretion; in which respect, the market-price of silk would afford a perfect guide. We trust we have said enough to shew the beneficial results of a limitation in the quantity of imports, as compared with an importation duty. The object might be attained by the warehousing system, from which so much benefit has been derived to our restricted trade; precisely as in the case of foreign corn, of which, when the price is lowered by a sudden influx, the surplus is warehoused, in a manner too well known to need any description here. It may be considered as a further recommendation of the plan for limiting the quantity of those imports in which a perfectly free trade would be immediately ruinous to the home producer, that such imports might be charged with a duty, during the time of their limited admission, which would be wholly free from the usual objections to custom-house duties. In fact, it would be free from all objec Passing over, therefore, the articles of greater importance, of which we fully approve the selection, whatever we may think of the plan upon which the reform is conducted; we may remark, that with regard to many other articles of less importance, Mr. Huskisson seems to have pursued a very judicious course. Such has been the extravagant jealousy of the British manufacturers, and the ignorance of the legislature, that it is difficult to name any article of foreign production which has not been set down in the book of rates, and charged with an importation duty. For greater certainty, and to avoid the possibility of danger from the untaxed admission of any spe cies of foreign manufactured produce, there was a sweeping clause at the end 66 66 of that book," which provided that all goods, wares, and merchandize, either in part or wholly manufactured, which should not have been enumerated in the book of rates, should pay an importation duty of 501. per cent. on their estimated value; and by a further clause, a duty of 201. per cent. was imposed upon all non-enumerated articles which were manufactured neither wholly nor in part. With respect to these articles, Mr. Huskisson said, that "He proposed to reduce the duty on manufactured articles, not enumerated, from 501. to 201. and on articles unmanufactured, from 201. to 101. per cent. The result of these alterations would be, that upon foreign manufactured articles generally, where the duty was imposed to protect our own manufactures, and not for the purpose of collecting revenue, that duty would, in no instance, exceed 301. per cent. If the article were not manufactured much cheaper or much better abroad than at home, such a duty was ample for protection. If it were manufactured so much cheaper, or so much better abroad, as to render 301. per cent. insufficient, his answer was, firstthat a greater protection was only a premium to the smuggler; and, secondly, that there was no wisdom in attempting to bolster up a competition, which this degree of protection would not sustain. ward of the smuggler, and let the consumer have the better and cheaper article, without the painful consciousness that he was consulting his own convenience at the expense of daily violating the laws of his country" (ante, p. 368). Let the state have the tax, which was now the re We have here selected a few of the most glaring instances; but, were we to particularize all, it would be necessary to copy four-fifths of the whole table. Were all duties abolished on commodities yielding a revenue under 100,000l., the finances of the state would be but slightly impaired, while the convenience to trade and the advantage to the consumers would more than repay the sacrifice. We shall now proceed to consider the second of the two questions with which we commenced this section ;-the question regarding Bounties. There can be no doubt that, in cases like these, the duty should be wholly removed. In almost all such cases, the protection to any home manufacture is merely imaginary, and the duty is nearly As the system of Bounties is founded unproductive for the purpose of revenue. on the assumption that certain peculiar Its only effect is to reader the custom-branches of industry are more beneficial house accounts more complex, and to generate a race of smugglers. to the country than certain others, it will But these are not the only instances in the fallaciousness of that opinion. Withbe useful to point out, in a few words, which our custom laws bear marks of out insisting further on a subject that having been framed by persons wholly admits of elaborate proof, it may be ignorant of the principles of trade. While shortly stated, that every permanent inthe principal revenue is received from crease of population is preceded by an inscarcely 20 articles, the list of enumecrease in the capital of the country. rated commodities, which pay duties, oc- The rapid progress of population in all cupies the space of 34 folio pages. Of so new countries, and wherever capital augcopious a catalogue it is evident that the ments rapidly, is a proof that to whatever greater part cannot be in very great re-extent the accumulation of capital may quest; and thus the Government enhances the price of such commodities to the small class of their consumers, not to mention the delay, vexation, and loss, which must frequently attend the collec tion of such duties. Thus, for instance, there are duties on produce a demand for labour, to that extent a supply of labourers will speedily appear. the only danger to be apprehended is from The danger is all on one side: the too rapid increase of people as compared with the permanent demand for labour, and the consequent suffering and degradation which must ensue to the labouring class from a diminution of wages. The community, then, is only benefitted by a constant augmentation of capital, which can solely arise from savings out of the profits of capital. + Vide Finance Accounts for the Year ending Jan. 1825, p. 39, et seq. |