CHAPTER XI. ABSOLUTE PRICES.

 If we wish to judge between freedom of trade and protection, to calculate the probable effect of any political phenomenon, we should notice how far its influence tends to the production of abundance or scarcity, and not simply of cheapness or dearness of price. We must beware of trusting to absolute prices: it would lead to inextricable confusion.
 
Mr. Protectionist, after having established the fact that protection raises prices, adds:
 
"The augmentation of price increases the expenses of life, and consequently the price of labor, and every one finds in the increase of the price of his produce the same proportion as in the increase of his expenses. Thus, if everybody pays as consumer, everybody receives also as producer."
 
It is evident that it would be easy to reverse the argument, and say: If everybody receives as producer, everybody must pay as consumer.
 
Now what does this prove? Nothing whatever, unless it be that protection transfers riches, uselessly and unjustly. Spoliation does the same.
 
Again, to prove that the complicated arrangements of this system give even simple compensation, it is necessary to adhere to the "consequently" of Mr. Protectionist, [91] and to convince oneself that the price of labor rises with that of the articles protected. This is a question of fact. For my own part I do not believe in it, because I think that the price of labor, like everything else, is governed by the proportion existing between the supply and the demand. Now I can perfectly well understand that restriction will diminish the supply of produce, and consequently raise its price; but I do not as clearly see that it increases the demand for labor, thereby raising the rate of wages. This is the less conceivable to me, because the sum of labor required depends upon the quantity of disposable capital; and protection, while it may change the direction of capital, and transfer it from one business to another, cannot increase it one penny.
 
This question, which is of the highest interest, we will examine elsewhere. I return to the discussion of absolute prices, and declare that there is no absurdity which cannot be rendered specious by such reasoning as that which is commonly resorted to by protectionists.
 
Imagine an isolated nation possessing a given quantity of cash, and every year wantonly burning the half of its produce; I will undertake to prove by the protective theory that this nation will not be the less rich in consequence of such a procedure. For, the result of the conflagration must be, that everything would double in price. An inventory made before this event, would offer exactly the same nominal value as one made after it. Who, then, would be the loser? If John buys his cloth dearer, he also sells his corn at a higher price; and if Peter makes a loss on the purchase of [92] his corn, he gains it back by the sale of his cloth. Thus "every one finds in the increase of the price of his produce, the same proportion as in the increase of his expenses: and thus if everybody pays as consumer, everybody also receives as producer."
 
All this is nonsense, and not science.
 
The simple truth is, that whether men destroy their corn and cloth by fire, or by use, the effect is the same as regards price, but not as regards riches, for it is precisely in the enjoyment of the use, that riches—in other words, comfort, well-being—exist.
 
Restriction may in the same way, while it lessens the abundance of things, raise their prices, so as to leave each individual as rich, numerically speaking, as when unembarrassed by it. But because we put down in an inventory three bushels of corn at $1, or four bushels at 75 cents, and sum up the nominal value of each inventory at $3, does it thence follow that they are equally capable of contributing to the necessities of the community?
 
To this truthful and common-sense view of the phenomenon of consumption it will be my continual endeavor to lead the protectionists; for in this is the end of all my efforts, the solution of every problem. I must continually repeat to them that restriction, by impeding commerce, by limiting the division of labor, by forcing it to combat difficulties of situation and temperature, must in its results diminish the quantity produced by any fixed quantum of labor. And what can it benefit us that the smaller quantity produced under the protective system bears the same nominal value as the greater quantity produced under the free [93] trade system? Man does not live on nominal values, but on real articles of produce; and the more abundant these articles are, no matter what price they may bear, the richer is he.
 
The following passage occurs in the writings of a French protectionist:
 
"If fifteen millions of merchandise sold to foreign nations, be taken from our ordinary produce, calculated at fifty millions, the thirty-five millions of merchandise which remain, not being sufficient for the ordinary demand, will increase in price to the value of fifty millions. The revenue of the country will thus represent fifteen millions more in value.... There will then be an increase of fifteen millions in the riches of the country; precisely the amount of the importation of money."
 
This is droll enough! If a country has made in the course of the year fifty millions of revenue in harvests and merchandise, she need but sell one-quarter to foreign nations, in order to make herself one-quarter richer than before! If then she sold the half, she would increase her riches by one-half; and if the last hair of her wool, the last grain of her wheat, were to be changed for cash, she would thus raise her product to one hundred millions, where before it was but fifty! A singular manner, certainly, of becoming rich. Unlimited price produced by unlimited scarcity!
 
To sum up our judgment of the two systems, let us contemplate their different effects when pushed to the most exaggerated extreme.
 
According to the protectionist just quoted, the French would be quite as rich, that is to say, as well provided [94] with everything, if they had but a thousandth part of their annual produce, because this part would then be worth a thousand times its natural value! So much for looking at prices alone.
 
According to us, the French would be infinitely rich if their annual produce were infinitely abundant, and consequently bearing no value at all.