MrFanesays，’inthecourseofmyprofessionallife，asaCommissioneroftheCourtofBankruptcy，Ihavelearnedthatthemostunfortunatemanintheworldisaninventor。Thedifficultywhichaninventorfindsingettingatcapitalinvolveshiminallsortsofembarrassments，andheultimatelyisforthemostpartaruinedman，andsomebodyelsegetspossessionofhisinvention。’
ib。p。82。
7。IthasbeenfoundpossibletoeffectthisthroughtheLimitedLiabilityAct，byerectingthecapitalistandhisworkpeopleintoaLimitedCompany;asproposedbyMessrsBriggs。
8。ByanActoftheyear1852，calledtheindustrialandProvidentSocietiesAct，forwhichthenationisindebtedtothepublic—spiritedexertionsofMrSlaney，industrialassociationsofworkingpeopleareadmittedtothestatutoryprivilegesofFriendlySocieties。Thisnotonlyexemptsthemfromtheformalitiesapplicabletojoint—stockcompanies，butprovidesforthesettlementofdisputesamongthepartnerswithoutrecoursetotheCourtofChancery。TherearestillsomedefectsintheprovisionsofthisAct，whichhampertheproceedingsoftheSocietiesinseveralrespects;asispointedoutintheAlmanackoftheRochdaleEquitablePioneersfor1861。
9。InanoteappendedtohistranslationofM。Coquelin’spaper。
10。Fromavolumepublishedin1845，entitledCredittheLifeofCommerce，byMrJ。H。Elliot。
11。pp。50—1。
ThePrinciplesofPoliticalEconomybyJohnStuartMillBook5
Chapter10
OfInterferencesofGovernmentGroundedonErroneousTheories1。Fromthenecessaryfunctionsofgovernment，andtheeffectsproducedontheeconomicalinterestsofsocietybytheirgoodorilldischarge，weproceedtothefunctionswhichbelongtowhatIhavetermed，forwantofabetterdesignation，theoptionalclass;thosewhicharesometimesassumedbygovernmentsandsometimesnot，andwhichitisnotunanimouslyadmittedthattheyoughttoexercise。
Beforeenteringonthegeneralprinciplesofthequestion，itwillbeadvisabletoclearfromourpathallthosecases，inwhichgovernmentinterferenceworksillbecausegroundedonfalseviewsofthesubjectinterferedwith。Suchcaseshavenoconnexionwithanytheoryrespectingtheproperlimitsofinterference。Therearesomethingswithwhichgovernmentsoughtnottomeddle，andotherthingswithwhichtheyought;butwhetherrightorwronginitself，theinterferencemustworkforill，ifgovernment，notunderstandingthesubjectwhichitmeddleswith，meddlestobringaboutaresultwhichwouldbemischievous。Wewillthereforebeginbypassinginreviewvariousfalsetheories，whichhavefromtimetotimeformedthegroundofactsofgovernmentmoreorlesseconomicallyinjurious。
Formerwritersonpoliticaleconomyhavefounditneedfultodevotemuchtroubleandspacetothisdepartmentoftheirsubject。Ithasnowhappilybecomepossible，atleastinourowncountry，greatlytoabridgethispurelynegativepartofourdiscussions。Thefalsetheoriesofpoliticaleconomywhichhavedonesomuchmischiefintimespast，areentirelydiscreditedamongallwhohavenotlaggedbehindthegeneralprogressofopinion;andfewoftheenactmentswhichwereoncegroundedonthosetheoriesstillhelptodeformthestatute—book。AstheprinciplesonwhichtheircondemnationrestshavebeenfullysetforthinotherpartsofthisTreatise，wemayherecontentourselveswithafewbriefindications。
Ofthesefalsetheories，themostnotableisthedoctrineofProtectiontoNativeIndustry;aphrasemeaningtheprohibition，orthediscouragementbyheavyduties，ofsuchforeigncommoditiesasarecapableofbeingproducedathome。Ifthetheoryinvolvedinthissystemhadbeencorrect，thepracticalconclusionsgroundedonitwouldnothavebeenunreasonable。Thetheorywas，thattobuythingsproducedathomewasanationalbenefit，andtheintroductionofforeigncommoditiesgenerallyanationalloss。Itbeingatthesametimeevidentthattheinterestoftheconsumeristobuyforeigncommoditiesinpreferencetodomesticwhenevertheyareeithercheaperorbetter，theinterestoftheconsumerappearedinthisrespecttobecontrarytothepublicinterest;hewascertain，iflefttohisowninclinations，todowhataccordingtothetheorywasinjurioustothepublic。
Itwasshown，however，inouranalysisoftheeffectsofinter。nationaltrade，asithadbeenoftenshownbyformerwriters，thattheimportationofforeigncommodities，inthecommoncourseoftraffic，nevertakesplace，exceptwhenitis，economicallyspeaking，anationalgood，bycausingthesameamountofcommoditiestobeobtainedatasmallercostoflabourandcapitaltothecountry。Toprohibit，therefore，thisimportation，orimposedutieswhichpreventit，istorenderthelabourandcapitalofthecountrylessefficientinproductionthantheywouldotherwisebe;andcompelawaste，ofthedifferencebetweenthelabourandcapitalnecessaryforthehomeproductionofthecommodity，andthatwhichisrequiredforproducingthethingswithwhichitcanbepurchasedfromabroad。
Theamountofnationallossthusoccasionedismeasuredbytheexcessofthepriceatwhichthecommodityisproduced，overthatatwhichitcouldbeimported。Inthecaseofmanufacturedgoods，thewholedifferencebetweenthetwopricesisabsorbedinindemnifyingtheproducersforwasteoflabour，orofthecapitalwhichsupportsthatlabour。Thosewhoaresupposedtobebenefited，namely，themakersoftheprotectedarticles，（unlesstheyformanexclusivecompany，andhaveamonopolyagainsttheirowncountrymenaswellasagainstforeigners，）donotobtainhigherprofitsthanotherpeople。Allissheerloss，tothecountryaswellastotheconsumer。Whentheprotectedarticleisaproductofagriculture——thewasteoflabournotbeingincurredonthewholeproduce，butonlyonwhatmaybecalledthelastinstalmentofit——theextrapriceisonlyinpartanindemnityforwaste，theremainderbeingataxpaidtothelandlords。
TherestrictiveandprohibitorypolicywasoriginallygroundedonwhatiscalledtheMercantileSystem，whichrepresentingtheadvantageofforeigntradetoconsistsolelyinbringingmoneyintothecountry，gaveartificialencouragementtoexportationofgoods，anddiscountenancedtheirimportation。Theonlyexceptionstothesystemwerethoserequiredbythesystemitself。Thematerialsandinstrumentsofproductionwerethesubjectsofacontrarypolicy，directedhowevertothesameend;
theywerefreelyimported，andnotpermittedtobeexported，inorderthatmanufacturers，beingmorecheaplysuppliedwiththerequisitesofmanufacture，mightbeabletosellcheaper，andthereforetoexportmorelargely。Forasimilarreason，importationwasallowedandevenfavoured，whenconfinedtotheproductionsofcountries，whichweresupposedtotakefromthecountrystillmorethanittookfromthem，thusenrichingitbyafavourablebalanceoftrade。Aspartofthesamesystem，colonieswerefounded，forthesupposedadvantageofcompellingthemtobuyourcommodities，oratalleventsnottobuythoseofanyothercountry:inreturnforwhichrestriction，weweregenerallywillingtocomeunderanequivalentobligationwithrespecttothestapleproductionsofthecolonists。Theconsequencesofthetheorywerepushedsofar，thatitwasnotunusualeventogivebountiesonexportation，andinduceforeignerstobuyfromusratherthanfromothercountries，byacheapnesswhichweartificiallyproduced，bypayingpartofthepriceforthemoutofourowntaxes。Thisisastretchbeyondthepointyetreachedbyanyprivatetradesmaninhiscompetitionforbusiness。Noshopkeeper，Ishouldthink，evermadeapracticeofbribingcustomersbysellinggoodstothematapermanentloss，makingituptohimselffromotherfundsinhispossession。
TheprincipleoftheMercantileTheoryisnowgivenupevenbywritersandgovernmentswhostillclingtotherestrictivesystem。Whateverholdthatsystemhasovermen’sminds，independentlyoftheprivateinterestsexposedtorealorapprehendedlossbyitsabandonment，isderivedfromfallaciesotherthantheoldnotionofthebenefitsofheapingupmoneyinthecountry。Themosteffectiveoftheseisthespeciouspleaofemployingourowncountrymenandournationalindustry，insteadoffeedingandsupportingtheindustryofforeigners。Theanswertothis，fromtheprincipleslaiddowninformerchapters，isevident。Withoutrevertingtothefundamentaltheoremdiscussedinanearlypartofthepresenttreatise，respectingthenatureandsourcesofemploymentforlabour，itissufficienttosay，whathasusuallybeensaidbytheadvocatesoffreetrade，thatthealternativeisnotbetweenemployingourownpeopleandforeigners，butbetweenemployingoneclassandanotherofourownpeople。Theimportedcommodityisalwayspaidfor，directlyorindirectly，withtheproduceofourownindustry:thatindustrybeingatthesametimerenderedmoreproductive，since，withthesamelabourandoutlay，weareenabledtopossessourselvesofagreaterquantityofthearticle。Thosewhohavenotwellconsideredthesubjectareapttosupposethatourexportinganequivalentinourownproduce，fortheforeignarticlesweconsume，dependsoncontingencies——ontheconsentofforeigncountriestomakesomecorrespondingrelaxationoftheirownrestrictions，oronthequestionwhetherthosefromwhomwebuyareinducedbythatcircumstancetobuymorefromus;
andthat，ifthesethings，orthingsequivalenttothem，donothappen，thepaymentmustbemadeinmoney。Now，inthefirstplace，thereisnothingmoreobjectionableinamoneypaymentthaninpaymentbyanyothermedium，ifthestateofthemarketmakesitthemostadvantageousremittance;andthemoneyitselfwasfirstacquired，andwouldagainbereplenished，bytheexportofanequivalentvalueofourownproducts。But，inthenextplace，averyshortintervalofpayinginmoneywouldsolowerpricesaseithertostopapartoftheimportation，orraiseupaforeigndemandforourproduce，sufficienttopayfortheimports。Igrantthatthisdisturbanceoftheequationofinternationaldemandwouldbeinsomedegreetoourdisadvantage，inthepurchaseofotherimportedarticles;andthatacountrywhichprohibitssomeforeigncommodities，does，caeterisparibus，obtainthosewhichitdoesnotprohibit，atalesspricethanitwouldotherwisehavetopay。Toexpressthesamethinginotherwords;acountrywhichdestroysorpreventsaltogethercertainbranchesofforeigntrade，therebyannihilatingageneralgaintotheworld，whichwouldbesharedinsomeproportionbetweenitselfandothercountries——does，insomecircumstances，drawtoitself，attheexpenseofforeigners，alargersharethanwouldelsebelongtoitofthegainarisingfromthatportionofitsforeigntradewhichitsufferstosubsist。Buteventhisitcanonlybeenabledtodo，ifforeignersdonotmaintainequivalentprohibitionsorrestrictionsagainstitscommodities。
Inanycase，thejusticeorexpediencyofdestroyingoneoftwogains，inordertoengrossaratherlargershareoftheother，doesnotrequiremuchdiscussion:thegain，too，whichisdestroyed，being，inproportiontothemagnitudeofthetransactions，thelargerofthetwo，sinceitistheonewhichcapital，lefttoitself，issupposedtoseekbypreference。
Defeatedasageneraltheory，theProtectionistdoctrinefindssupportinparticularcases，fromconsiderationswhich，whenreallyinpoint，involvegreaterintereststhanmeresavingoflabour;theinterestsofnationalsubsistenceandofnationaldefence。ThediscussionsontheCornLawshavefamiliarizedeverybodywiththeplea，thatweoughttobeindependentofforeignersforthefoodofthepeople;andtheNavigationLawsweregrounded，intheoryandprofession，onthenecessityofkeepingupa’nurseryofseamen’forthenavy。OnthislastsubjectIatonceadmit，thattheobjectisworththesacrifice;
andthatacountryexposedtoinvasionbysea，ifitcannototherwisehavesufficientshipsandsailorsofitsowntosecurethemeansofmanningonanemergencyanadequatefleet，isquiterightinobtainingthosemeans，evenataneconomicalsacrificeinpointofcheapnessoftransport。WhentheEnglishNavigationLawswereenacted，theDutch，fromtheirmaritimeskillandtheirlowrateofprofitathome，wereabletocarryforothernations，Englandincluded，atcheaperratesthanthosenationscouldcarryforthemselves:whichplacedallothercountriesatagreatcomparativedisadvantageinobtainingexperiencedseamenfortheirshipsofwar。TheNavigationLaws，bywhichthisdeficiencywasremedied，andatthesametimeablowstruckagainstthemaritimepowerofanationwithwhichEnglandwasthenfrequentlyengagedinhostilities，wereprobably，thougheconomicallydisadvantageous，politicallyexpedient。ButEnglishshipsandsailorscannownavigateascheaplyasthoseofanyothercountry;maintainingatleastanequalcompetitionwiththeothermaritimenationsevenintheirowntrade。TheendswhichmayoncehavejustifiedNavigationLaws，requirethemnolonger，andaffordednoreasonformaintainingthisinvidiousexceptiontothegeneralruleoffreetrade。
Withregardtosubsistence，thepleaoftheProtectionistshasbeensooftenandsotriumphantlymet，thatitrequireslittlenoticehere。Thatcountryisthemoststeadilyaswellasthemostabundantlysuppliedwithfood，whichdrawsitssuppliesfromthelargestsurface。Itisridiculoustofoundageneralsystemofpolicyonsoimprobableadangerasthatofbeingatwarwithallthenationsoftheworldatonce;ortosupposethat，evenifinferioratsea，awholecountrycouldbeblockadedlikeatown，orthatthegrowersoffoodinothercountrieswouldnotbeasanxiousnottoloseanadvantageousmarket，asweshouldbenottobedeprivedoftheircorn。Onthesubject，however，ofsubsistence，thereisonepointwhichdeservesmoreespecialconsideration。Incasesofactualorapprehendedscarcity，manycountriesofEuropeareaccustomedtostoptheexportationoffood。Isthis，ornot，soundpolicy？Therecanbenodoubtthatinthepresentstateofinternationalmorality，apeoplecannot，anymorethananindividual，beblamedfornotstarvingitselftofeedothers。Butifthegreatestamountofgoodtomankindonthewhole，weretheendaimedatinthemaximsofinternationalconduct，suchcollectivechurlishnesswouldcertainlybecondemnedbythem。Supposethatinordinarycircumstancesthetradeinfoodwereperfectlyfree，sothatthepriceinonecountrycouldnothabituallyexceedthatinanyotherbymorethanthecostofcarriage，togetherwithamoderateprofittotheimporter。Ageneralscarcityensues，affectingallcountries，butinunequaldegrees。Ifthepriceroseinonecountrymorethaninothers，itwouldbeaproofthatinthatcountrythescarcitywasseverest，andthatbypermittingfoodtogofreelythitherfromanyothercountry，itwouldbesparedfromalessurgentnecessitytorelieveagreater。Whentheinterests，therefore，ofallcountriesareconsidered，freeexportationisdesirable。Tothesportingcountryconsideredseparately，itmay，atleastontheparticularoccasion，beaninconvenience:buttakingintoaccountthatthecountrywhichisnowthegiver，willinsomefutureseasonbethereceiver，andtheonethatisbenefitedbythefreedom，Icannotbutthinkthateventotheapprehensionoffoodriotersitmightbemadeapparent，thatinsuchcasestheyshoulddotootherswhattheywouldwishdonetothemselves。
IncountriesinwhichtheProtectiontheoryisdeclining，butnotyetgivenup，suchastheUnitedStates，adoctrinehascomeintonoticewhichisasortofcompromisebetweenfreetradeandrestriction，namely，thatprotectionforprotection’ssakeisimproper，butthatthereisnothingobjectionableinhavingasmuchprotectionasmayincidentallyresultfromatariffframedsolelyforrevenue。EveninEngland，regretissometimesexpressedthata’moderatefixedduty’wasnotpreservedoncorn，onaccountoftherevenueitwouldyield。Independently，however，ofthegeneralimpolicyoftaxesonthenecessariesoflife，thisdoctrineoverlooksthefact，thatrevenueisreceivedonlyonthequantityimported，butthatthetaxispaidontheentirequantityconsumed。Tomakethepublicpaymuchthatthetreasurymayreceivealittle，isnotaneligiblemodeofobtainingarevenue。Inthecaseofmanufacturedarticlesthedoctrineinvolvesapalpableinconsistency。Theobjectofthedutyasameansofrevenue，isinconsistentwithitsaffording，evenincidentally，anyprotection。Itcanonlyoperateasprotectioninsofarasitpreventsimportation;andtowhateverdegreeitpreventsimportation，itaffordsnorevenue。
Theonlycaseinwhich，onmereprinciplesofpoliticaleconomy，protectingdutiescanbedefensible，iswhentheyareimposedtemporarily（especiallyinayoungandrisingnation）inhopesofnaturalizingaforeignindustry，initselfperfectlysuitabletothecircumstancesofthecountry。Thesuperiorityofonecountryoveranotherinabranchofproduction，oftenarisesonlyfromhavingbegunitsooner。Theremaybenoinherentadvantageononepart，ordisadvantageontheother，butonlyapresentsuperiorityofacquiredskillandexperience。Acountrywhichhasthisskillandexperienceyettoacquire，mayinotherrespectsbebetteradaptedtotheproductionthanthosewhichwereearlierinthefield:andbesides，itisajustremarkofMrRae，thatnothinghasagreatertendencytopromoteimprovementsinanybranchofproduction，thanitstrialunderanewsetofconditions。Butitcannotbeexpectedthatindividualsshould，attheirownrisk，orrathertotheircertainloss，introduceanewmanufacture，andbeartheburthenofcarryingitonuntiltheproducershavebeeneducateduptothelevelofthosewithwhomtheprocessesaretraditional。Aprotectingduty，continuedforareasonabletime，mightsometimesbetheleastinconvenientmodeinwhichthenationcantaxitselfforthesupportofsuchanexperiment。Butitisessentialthattheprotectionshouldbeconfinedtocasesinwhichthereisgoodgroundofassurancethattheindustrywhichitfosterswillafteratimebeabletodispensewithit;norshouldthedomesticproducerseverbeallowedtoexpectthatitwillbecontinuedtothembeyondthetimenecessaryforafairtrialofwhattheyarecapableofaccomplishing。
Theonlywriter，ofanyreputationasapoliticaleconomist，whonowadherestotheProtectionistdoctrine，MrH。C。Carey，restsitsdefence，inaneconomicpointofview，principallyontworeasons。Oneis，thegreatsavingincostofcarriage，consequentonproducingcommoditiesatorveryneartotheplacewheretheyaretobeconsumed。Thewholeofthecostofcarriage，bothonthecommoditiesimportedandonthoseexportedinexchangeforthem，heregardsasadirectburthenontheproducers，andnot，asisobviouslythetruth，ontheconsumers。
Onwhomsoeveritfalls，itis，withoutdoubt，aburthenontheindustryoftheworld。Butitisobvious（andthatMrCareydoesnotseeit，isoneofthemanysurprisingthingsinhisbook）
thattheburthenisonlyborneforamorethanequivalentadvantage。Ifthecommodityisboughtinaforeigncountrywithdomesticproduceinspiteofthedoublecostofcarriage，thefactprovesthat，heavyasthatcostmaybe，thesavingincostofproductionoutweighsit，andthecollectivelabourofthecountryisonthewholebetterremuneratedthanifthearticlewereproducedathome。Costofcarriageisanaturalprotectingduty，whichfreetradehasnopowertoabrogate:andunlessAmericagainedmorebyobtaininghermanufacturesthroughthemediumofhercornandcottonthanshelosesincostofcarriage，thecapitalemployedinproducingcornandcottoninannuallyincreasedquantitiesfortheforeignmarket，wouldturntomanufacturesinstead。Thenaturaladvantagesattendingamodeofindustryinwhichthereislesscostofcarriagetopay，canatmostbeonlyajustificationforatemporaryandmerelytentativeprotection。Theexpensesofproductionbeingalwaysgreatestatfirst，itmayhappenthatthehomeproduction，thoughreallythemostadvantageous，maynotbecomesountilafteracertaindurationofpecuniaryloss，whichitisnottobeexpectedthatprivatespeculatorsshouldincurinorderthattheirsuccessorsmaybebenefitedbytheirruin。Ihavethereforeconcededthatinanewcountryatemporaryprotectingdutymaysometimesbeeconomicallydefensible;oncondition，however，thatitbestrictlylimitedinpointoftime，andprovisionbemadethatduringthelatterpartofitsexistenceitbeonagraduallydecreasingscale。Suchtemporaryprotectionisofthesamenatureasapatent，andshouldbegovernedbysimilarconditions。
TheremainingargumentofMrCareyinsupportoftheeconomicbenefitsofProtectionism，appliesonlytocountrieswhoseexportsconsistofagriculturalproduce。Heargues，thatbyatradeofthisdescriptiontheyactuallysendawaytheirsoil:thedistantconsumersnotgivingbacktothelandofthecountry，ashomeconsumerswoulddo，thefertilizingelementswhichtheyabstractfromit。Thisargumentdeservesattentiononaccountofthephysicaltruthonwhichitisfounded;atruthwhichhasonlylatelycometobeunderstood，butwhichishenceforthdestinedtobeapermanentelementinthethoughtsofstatesmen，asitmustalwayshavebeeninthedestiniesofnations。TothequestionofProtectionism，however，itisirrelevant。ThattheimmensegrowthofrawproduceinAmericatobeconsumedinEurope，isprogresssivelyexhaustingthesoiloftheEastern，andevenoftheolderWesternStates，andthatbotharealreadyfarlessproductivethanformerly，iscredibleinitself，evenifnooneborewitnesstoit。ButwhatIhavealreadysaidrespectingcostofcarriage，istruealsoofthecostofmanuring。FreetradedoesnotcompelAmericatoexportcorn:shewouldceasetodosoifitceasedtobetoheradvantage。As，then，shewouldnotpersistinexportingrawproduceandimportingmanufactures，anylongerthanthelabourshesavedbydoingsoexceededwhatthecarriagecosther，sowhenitbecamenecessaryforhertoreplaceinthesoiltheelementsoffertilitywhichshehadsentaway，ifthesavingincostofproductionweremorethanequivalenttothecostofcarriageandofmanuretogether，manurewouldbeimported;andifnot，theexportofcornwouldcease。Itisevidentthatoneofthesetwothingswouldalreadyhavetakenplace，iftherehadnotbeennearathandaconstantsuccessionofnewsoils，notyetexhaustedoftheirfertility，thecultivationofwhichenablesher，whetherjudiciouslyornot，topostponethequestionofmanure。Assoonasitnolongeranswersbettertobreakupnewsoilsthantomanuretheold，Americawilleitherbecomearegularimporterofmanure，orwill，withoutprotectingduties，growcornforherselfonly，andmanufacturingforherself，willmakehermanure，asMrCareydesires，athome。（1*）
Fortheseobviousreasons，IholdMrCarey’seconomicargumentsforProtectionismtobetotallyinvalid。Theeconomic，however，isfarfrombeingthestrongestpointofhiscase。
AmericanProtectionistsoftenreasonextremelyill;butitisaninjusticetothemtosupposethattheirProtectionistcreedrestsuponnothingsuperiortoaneconomicblunder。Manyofthemhavebeenledtoit，muchmorebyconsiderationforthehigherinterestsofhumanity，thanbypurelyeconomicreasons。They，andMrCareyattheirhead，deemitanecessaryconditionofhumanimprovementthattownsshouldabound;thatmenshouldcombinetheirlabour，bymeansofinterchange——withnearneighbours，withpeopleofpursuits，capacities，andmentalcultivationdifferentfromtheirown，sufficientlycloseathandformutualsharpeningofwitsandenlargingofideas——ratherthanwithpeopleontheoppositesideoftheglobe。Theybelievethatanationallengagedinthesame，ornearlythesame，pursuit——anationallagricultural——cannotattainahighstateofcivilizationandculture。Andforthisthereisagreatfoundationofreason。Ifthedifficultycanbeovercome，theUnitedStates，withtheirfreeinstitutions，theuniversalschoolingandtheiromnipresentpress，arethepeopletodoit;
butwhetherthisispossibleornotisstillaproblem。Sofar，however，asitisanobjecttochecktheexcessivedispersionofthepopulation，MrWakefieldhaspointedoutabetterway;tomodifytheexistingmethodofdisposingoftheunoccupiedlands，byraisingtheprice，insteadofloweringit，orgivingawaythelandgratuitously，asislargelydonesincethepassingoftheHomesteadAct。TocuttheknotinMrCarey’sfashion，byProtectionism，itwouldbenecessarythatOhioandMichiganshouldbeprotectedagainstMassachusettsaswellasagainstEngland:forthemanufactoriesofNewEngland，nomorethanthoseoftheoldcountry，accomplishhisdesideratumofbringingamanufacturingpopulationtothedoorsoftheWesternfarmer。
BostonandNewYorkdonotsupplythewantoflocaltownstotheWesternprairies，anybetterthanManchester;anditisasdifficulttogetbackthemanurefromtheoneplaceasfromtheother。
ThereisonlyonepartoftheProtectionistschemewhichrequiresanyfurthernotice:itspolicytowardscolonies，andforeigndependencies;thatofcompellingthemtotradeexclusivelywiththedominantcountry。Acountrywhichthussecurestoitselfanextraforeigndemandforitscommodities，undoubtedlygivesitselfsomeadvantageinthedistributionofthegeneralgainsofthecommercialworld，Since，however，itcausestheindustryandcapitalofthecolonytobedivertedfromchannels，whichareprovedtobethemostproductive，inasmuchastheyarethoseintowhichindustryandcapitalspontaneouslytendtoflow;thereisaloss，onthewhole，totheproductivepowersoftheworld，andthemothercountrydoesnotgainsomuchasshemakesthecolonylose。If，therefore，themothercountryrefusestoacknowledgeanyreciprocityofobligation，sheimposesatributeonthecolonyinanindirectmode，greatlymoreoppressiveandinjuriousthatthedirect。Butif，withamoreequitablespirit，shesubmitsherselftocorrespondingrestrictionsforthebenefitofthecolony，theresultofthewholetransactionistheridiculousone，thateachpartylosesmuch，inorderthattheothermaygainalittle。
2。NexttothesystemofProtection，amongmischievousinterferenceswiththespontaneouscourseofindustrialtransactions，maybenoticedcertaininterferenceswithcontracts。OneinstanceisthatoftheUsuryLaws。Theseoriginatedinareligiousprejudiceagainstreceivinginterestonmoney，derivedfromthatfruitfulsourceofmischiefinmodernEurope，theattemptedadaptationtoChristianityofdoctrinesandpreceptsdrawnfromtheJewishlaw。InMahomedannationsthereceivingofinterestisformallyinterdicted，andrigidlyabstainedfrom:andSismondihasnoticed，asoneamongthecausesoftheindustrialinferiorityoftheCatholic，comparedwiththeProtestantpartsofEurope，thattheCatholicChurchinthemiddleagesgaveitssanctiontothesameprejudice;whichsubsists，impairedbutnotdestroyed，whereverthatreligionisacknowledged。Wherelaworconscientiousscruplespreventlendingatinterest，thecapitalwhichbelongstopersonsnotinbusinessislosttoproductivepurposes，orcanbeappliedtothemonlyinpeculiarcircumstancesofpersonalconnexion，orbyasubterfuge。
Industryisthuslimitedtothecapitaloftheundertakers，andtowhattheycanborrowfrompersonsnotboundbythesamelawsorreligionasthemselves。InMussulmancountriesthebankersandmoneydealersareeitherHindoos，Armenians，orJews。
Inmoreimprovedcountries，legislationnolongerdiscountenancesthereceiptofanequivalentformoneylent;butithaseverywhereinterferedwiththefreeagencyofthelenderandborrower，byfixingalegallimittotherateofinterest，andmakingthereceiptofmorethantheappointedmaximumapenaloffence。Thisrestriction，thoughapprovedbyAdamSmith，hasbeencondemnedbyallenlightenedpersonssincethetriumphantonslaughtmadeuponitbyBenthaminhis’LettersonUsury’，whichmaystillbereferredtoasthebestextantwritingonthesubject。
LegislatorsmayenactandmaintainUsuryLawsfromoneoftwomotives:ideasofpublicpolicy，orconcernfortheinterestofthepartiesinthecontract;inthiscase，ofonepartyonly，theborrower。Asamatterofpolicy，thenotionmaypossiblybe，thatitisforthegeneralgoodthatinterestshouldbelow。Itishoweveramisapprehensionofthecauseswhichinfluencecommercialtransactions，tosupposethattherateofinterestisreallymadelowerbylaw，thanitwouldbemadebythespontaneousplayofsupplyanddemand。Ifthecompetitionofborrowers，leftunrestrained，wouldraisetherateofinteresttosixpercent，thisprovesthatatfivetherewouldbeagreaterdemandforloans，thanthereiscapitalinthemarkettosupply。
Ifthelawinthesecircumstancespermitsnointerestbeyondfivepercent，therewillbesomelenders，whonotchoosingtodisobeythelaw，andnotbeinginaconditiontoemploytheircapitalotherwise，willcontentthemselveswiththelegalrate:butothers，findingthatinaseasonofpressingdemand，moremaybemadeoftheircapitalbyothermeansthantheyarepermittedtomakebylendingit，willnotlenditatall;andtheloanablecapital，alreadytoosmallforthedemand，willbestillfurtherdiminished。Ofthedisappointedcandidatestherewillbemanyatsuchperiods，whomusthavetheirnecessitiessuppliedatanyprice，andthesewillreadilyfindathirdsectionoflenders，whowillnotbeaversetojoininaviolationofthelaw，eitherbycircuitoustransactionspartakingofthenatureoffraud，orbyrelyingonthehonouroftheborrower。Theextraexpenseoftheroundaboutmodeofproceeding，andanequivalentfortheriskofnon—paymentandoflegalpenalties，mustbepaidbytheborrower，overandabovetheextrainterestwhichwouldhavebeenrequiredofhimbythegeneralstateofthemarket。Thelawswhichwereintendedtolowerthepricepaidbyhimforpecuniaryaccommodation，endthusingreatlyincreasingit。Theselawshavealsoadirectlydemoralizingtendency。Knowingthedifficultyofdetectinganillegalpecuniarytransactionbetweentwopersons，inwhichnothirdpersonisinvolved，solongasitistheinterestofbothtokeepthesecret，legislatorshaveadoptedtheexpedientoftemptingtheborrowertobecometheinformer，bymakingtheannulmentofthedebtapartofthepenaltyfortheoffence;thusrewardingmenforfirstobtainingthepropertyofothersbyfalsepromises，andthennotonlyrefusingpayment，butinvokinglegalpenaltiesonthosewhohavehelpedthemintheirneed。Themoralsenseofmankindveryrightlyinfamizesthosewhoresistanotherwisejustclaimonthegroundofusury，andtoleratessuchapleaonlywhenresortedtoasthebestlegaldefenceavailableagainstanattemptreallyconsideredaspartakingoffraudorextortion。Butthisveryseverityofpublicopinionrenderstheenforcementofthelawssodifficult，andtheinflictionofthepenaltiessorare，thatwhenitdoesoccuritmerelyvictimizesanindividual，andhasnoeffectongeneralpractice。
Insofarasthemotiveoftherestrictionmaybesupposedtobe，notpublicpolicy，butregardfortheinterestoftheborrower，itwouldbedifficulttopointoutanycaseinwhichsuchtendernessonthelegislator’spartismoremisplaced。A
personofsanemind，andoftheageatwhichpersonsarelegallycompetenttoconducttheirownconcerns，mustbepresumedtobeasufficientguardianofhispecuniaryinterests。Ifhemaysellanestate，orgrantarelease，orassignawayallhisproperty，withoutcontrolfromthelaw，itseemsveryunnecessarythattheonlybargainwhichhecannotmakewithoutitsintermeddling，shouldbealoanofmoney。Thelawseemstopresumethatthemoney—lender，dealingwithnecessitouspersons，cantakeadvantageoftheirnecessities，andexactconditionslimitedonlybyhisownpleasure。Itmightbesoiftherewereonlyonemoney—lenderwithinreach。Butwhenthereisthewholemoniedcapitalofawealthycommunitytoresortto，noborrowerisplacedunderanydisadvantageinthemarketmerelybytheurgencyofhisneed。Ifhecannotborrowattheinterestpaidbyotherpeople，itmustbebecausehecannotgivesuchgoodsecurity:andcompetitionwilllimittheextrademandtoafairequivalentfortheriskofhisprovinginsolvent。Thoughthelawintendsfavourtotheborrower，itistohimaboveallthatinjusticeis，inthiscase，donebyit。Whatcanbemoreunjustthanthatapersonwhocannotgiveperfectlygoodsecurity，shouldbepreventedfromborrowingofpersonswhoarewillingtolendmoneytohim，bytheirnotbeingpermittedtoreceivetherateofinterestwhichwouldbeajustequivalentfortheirrisk？Throughthemistakenkindnessofthelaw，hemusteithergowithoutthemoneywhichisperhapsnecessarytosavehimfrommuchgreaterlosses，orbedriventoexpedientsofafarmoreruinousdescription，whichthelaweitherhasnotfounditpossible，orhasnothappened，tointerdict。
AdamSmithratherhastilyexpressedtheopinion，thatonlytwokindsofpersons，’prodigalsandprojectors’，couldrequiretoborrowmoneyatmorethanthemarketrateofinterest。Heshouldhaveincludedallpersonswhoareinanypecuniarydifficulties，howevertemporarytheirnecessitiesmaybe。Itmayhappentoanypersoninbusiness，tobedisappointedoftheresourcesonwhichhehadcalculatedformeetingsomeengagement，thenon—fulfilmentofwhichonafixeddaywouldbebankruptcy。
Inperiodsofcommercialdifficulty，thisistheconditionofmanyprosperousmercantilefirms，whobecomecompetitorsforthesmallamountofdisposablecapitalwhich，inatimeofgeneraldistrust，theownersarewillingtopartwith。UndertheEnglishusurylaws，nowhappilyabolished，thelimitationsimposedbythoselawswerefeltasamostseriousaggravationofeverycommercialcrisis。Merchantswhocouldhaveobtainedtheaidtheyrequiredataninterestofsevenoreightpercentforshortperiods，wereobligedtogive20or30percent，ortoresorttoforcedsalesofgoodsatastillgreaterloss。ExperiencehavingobtrudedtheseevilsonthenoticeofParliament，thesortofcompromisetookplace，ofwhichEnglishlegislationaffordssomanyinstances，andwhichhelpstomakeourlawsandpolicythemassofinconsistencythattheyare。Thelawwasreformedasapersonreformsatightshoe，whocutsaholeinitwhereitpincheshardest，andcontinuestowearit。Retainingtheerroneousprincipleasageneralrule，Parliamentallowedanexceptioninthecaseinwhichthepracticalmischiefwasmostflagrant。Itlefttheusurylawsunrepealed，butexemptedbillsofexchange，ofnotmorethanthreemonthsdate，fromtheiroperation。Someyearsafterwardsthelawswererepealedinregardtoallothercontracts，butleftinforceastoallthosewhichrelatetoland。Notaparticleofreasoncouldbegivenformakingthisextraordinarydistinction:butthe’agriculturalmind’wasofopinionthattheinterestonmortgages，thoughithardlyevercameuptothepermittedpoint，wouldcameuptoastillhigherpoint;andtheusurylawsweremaintainedthatthelandlordsmightastheythought，beenabledtoborrowbelowthemarketrate，asthecorn—lawswerekeptupthatthesameclassmightbeabletosellcornabovethemarketrate。Themodestyofthepretensionwasquiteworthyoftheintelligencewhichcouldthinkthattheendaimedatwasinanywayforwardedbythemeansused。
Withregardtothe’prodigalsandprojectors’spokenofbyAdamSmith;nolawcanpreventaprodigalfromruininghimself，unlessitlayshimorhispropertyunderactualrestraint，accordingtotheunjustifiablepracticeoftheRomanLawandsomeoftheContinentalsystemsfoundedonit。Theonlyeffectofusurylawsuponaprodigal，istomakehisruinrathermoreexpeditious，bydrivinghimtoadisreputableclassofmoney—dealers，andrenderingtheconditionsmoreonerousbytheextrariskcreatedbythelaw。Asforprojectors，（aterm，initsunfavourablesense，ratherunfairlyappliedtoeverypersonwhohasaproject）;suchlawsmayputavetoupontheprosecutionofthemostpromisingenterprise，whenplanned，asitgenerallyis，byapersonwhodoesnotpossesscapitaladequatetoitssuccessfulcompletion。Manyofthegreatestimprovementswereatfirstlookedshylyonbycapitalists，andhadtowaitlongbeforetheyfoundonesufficientlyadventuroustobethefirstinanewpath:manyyearselapsedbeforeStephensoncouldconvinceeventheenterprisingmercantilepublicofLiverpoolandManchester，oftheadvantageofsubstitutingrailwaysforturnpikeroads;andplansonwhichgreatlabourandlargesumshavebeenexpendedwithlittlevisibleresult（theepochintheirprogresswhenpredictionsoffailurearemostrife）maybeindefinitelysuspended，oraltogetherdropped，andtheoutlayalllost，if，whentheoriginalfundsareexhausted，thelawwillnotallowmoretoberaisedonthetermsonwhichpeoplearewillingtoexposeittothechancesofanenterprisenotyetsecureofsuccess。
3。Loansarenottheonlykindofcontract，ofwhichgovernmentshavethoughtthemselvesqualifiedtoregulatetheconditionsbetterthanthepersonsinterested。Thereisscarcelyanycommoditywhichtheyhavenot，atsomeplaceortime，endeavouredtomakeeitherdearerorcheaperthanitwouldbeiflefttoitself。Themostplausiblecaseforartificiallycheapeningacommodity，isthatoffood。Thedesirablenessoftheobjectisinthiscaseundeniable。Butsincetheaveragepriceoffood，likethatofotherthings，conformstothecostofproduction，withtheadditionoftheusualprofit;ifthispriceisnotexpectedbythefarmer，hewill，unlesscompelledbylaw，producenomorethanherequiresforhisownconsumption:andthelaw，therefore，ifabsolutelydeterminedtohavefoodcheaper，mustsubstitute，fortheordinarymotivestocultivation，asystemofpenalties。Ifitshrinksfromdoingthis，ithasnoresourcebutthatoftaxingthewholenation，togiveabountyorpremiumtothegrowerorimporterofcorn，thusgivingeverybodycheapbreadattheexpenseofall:inrealityalargesstothosewhodonotpaytaxes，attheexpenseofthosewhodo;oneoftheformsofapracticeessentiallybad，thatofconvertingtheworkingclassesintounworkingclassesbymakingthemapresentofsubsistence。
Itisnothoweversomuchthegeneraloraveragepriceoffood，asitsoccasionalhighpriceintimesofemergency，whichgovernmentshavestudiedtoreduce。Insomecases，asforexamplethefamous’maximum’oftherevolutionarygovernmentof1793，thecompulsoryregulationwasanattemptbytherulingpowerstocounteractthenecessaryconsequencesoftheirownacts;toscatteranindefiniteabundanceofthecirculatingmediumwithonehand，andkeepdownpriceswiththeother;athingmanifestlyimpossibleunderanyregimeexceptoneofunmitigatedterror。Incaseofactualscarcity，governmentsareoftenurged，astheywereintheIrishemergencyof1847，totakemeasuresofsomesortformoderatingthepriceoffood。Butthepriceofathingcannotberaisedbydeficiencyofsupply，beyondwhatissufficienttomakeacorrespondingreductionoftheconsumption;
andifagovernmentpreventsthisreductionfrombeingbroughtaboutbyariseofprice，thereremainsnomodeofeffectingitunlessbytakingpossessionofallthefood，andservingitoutinrations，asinabesiegedtown。Inarealscarcity，nothingcanaffordgeneralrelief，exceptadeterminationbythericherclassestodiminishtheirownconsumption。Iftheybuyandconsumetheirusualquantityoffood，andcontentthemselveswithgivingmoney，theydonogood。Thepriceisforcedupuntilthepoorestcompetitorshavenolongerthemeansofcompeting，andtheprivationoffoodisthrownexclusivelyupontheindigent，theotherclassesbeingonlyaffectedpecuniarily。Whenthesupplyisinsufficient，somebodymustconsumeless，andifeveryrichpersonisdeterminednottobethatsomebody，alltheydobysubsidizingtheirpoorcompetitorsistoforceupthepricesomuchthehigher，withnoeffectbuttoenrichthecorn。dealers，theveryreverseofwhatisdesiredbythosewhorecommendsuchmeasures。Allthatgovernmentscandointheseemergencies，istocounselageneralmoderationinconsumption，andtointerdictsuchkindsofitasarenotofprimaryimportance。Directmeasuresatthecostofthestate，toprocurefoodfromadistance，areexpedientwhenfrompeculiarreasonsthethingisnotlikelytobedonebyprivatespeculation。Inanyothercasetheyareagreaterror。Privatespeculators，willnot，insuchcases，venturetocompetewiththegovernment;andthoughagovernmentcandomorethananyonemerchant，itcannotdonearlysomuchasallmerchants。
4。Governments，however，areoftenerchargeablewithhavingattempted，toosuccessfully，tomakethingsdear，thanwithhavingaimedbywrongmeansatmakingthemcheap。Theusualinstrumentforproducingartificialdearnessismonopoly。Toconferamonopolyuponaproducerorleader，oruponasetofproducersordealersnottoonumeroustocombine，istogivethemthepoweroflevyinganyamountoftaxationonthepublic，fortheirindividualbenefit，whichwillnotmakethepublicforegotheuseofthecommodity。Whenthesharersinthemonopolyaresonumerousandsowidelyscatteredthattheyarepreventedfromcombining，theevilisconsiderablyless:buteventhenthecompetitionisnotsoactiveamongalimitedasamonganunlimitednumber。Thosewhofeelassuredofafairaverageproportioninthegeneralbusiness，areseldomeagertogetalargersharebyforegoingaportionoftheirprofits。A
limitationofcompetition，howeverpartial，mayhavemischievouseffectsquitedisproportionedtotheapparentcause。Themereexclusionofforeigners，fromabranchofindustryopentothefreecompetitionofeverynative，hasbeenknown，eveninEngland，torenderthatbranchaconspicuousexceptiontothegeneralindustrialenergyofthecountry。ThesilkmanufactureofEnglandremainedfarbehindthatofothercountriesofEurope，solongastheforeignfabricswereprohibited。Inadditiontothetaxleviedfortheprofit，realorimaginary，ofthemonopolists，theconsumerthuspaysanadditionaltaxfortheirlazinessandincapacity。Whenrelievedfromtheimmediatestimulusofcompetition，producersanddealersgrowindifferenttothedictatesoftheirultimatepecuniaryinterest;preferringtothemosthopefulprospects，thepresenteaseofadheringtoroutine。
Apersonwhoisalreadythriving，seldomputshimselfoutofhiswaytocommenceevenalucrativeimprovement，unlessurgedbytheadditionalmotiveoffearlestsomerivalshouldsupplanthimbygettingpossessionofitbeforehim。
Thecondemnationofmonopoliesoughtnottoextendtopatents，bywhichtheoriginatorofanimprovedprocessisallowedtoenjoy，foralimitedperiod，theexclusiveprivilegeofusinghisownimprovement。Thisisnotmakingthecommoditydearforhisbenefit，butmerelypostponingapartoftheincreasedcheapnesswhichthepublicowetotheinventor，inordertocompensateandrewardhimfortheservice。Thatheoughttobebothcompensatedandrewardedforit，willnotbedenied，andalsothatifallwereatonceallowedtoavailthemselvesofhisingenuity，withouthavingsharedthelaboursortheexpenseswhichhehadtoincurinbringinghisideaintoapracticalshape，eithersuchexpensesandlabourswouldbeundergonebynobodyexceptveryopulentandverypublic—spiritedpersons，orthestatemustputavalueontheservicerenderedbyaninventor，andmakehimapecuniarygrant。Thishasbeendoneinsomeinstances，andmaybedonewithoutinconvenienceincasesofveryconspicuouspublicbenefit;butingeneralanexclusiveprivilege，oftemporaryduration，ispreferable;becauseitleavesnothingtoanyone’sdiscretion;becausetherewardconferredbyitdependsupontheinvention’sbeingfounduseful，andthegreatertheusefulnessthegreaterthereward;andbecauseitispaidbytheverypersonstowhomtheserviceisrendered，theconsumersofthecommodity。Sodecisive，indeed，aretheseconsiderations，thatifthesystemofpatentswereabandonedforthatofrewardsbythestate，thebestshapewhichthesecouldassumewouldbethatofasmalltemporarytax，imposedfortheinventor’sbenefit，onallpersonsmakinguseoftheinvention。Tothis，however，ortoanyothersystemwhichwouldvestinthestatethepowerofdecidingwhetheraninventorshouldderiveanypecuniaryadvantagefromthepublicbenefitwhichheconfers，theobjectionsareevidentlystrongerandmorefundamentalthatthestrongestwhichcanpossiblybeurgedagainstpatents。ItisgenerallyadmittedthatthepresentPatentLawsneedmuchimprovement;butinthiscase，aswellasinthecloselyanalogousoneofCopyright，itwouldbeagrossimmoralityinthelawtoseteverybodyfreetouseaperson’sworkwith。outhisconsent，andwithoutgivinghimanequivalent。
Ihaveseenwithrealalarmseveralrecentattempts，inquarterscarryingsomeauthority，toimpugntheprincipleofpatentsaltogether;attemptswhich，ifpracticallysuccessful，wouldenthronefreestealingundertheprostitutednameoffreetrade，andmakethemenofbrains，stillmorethanatpresent，theneedyretainersanddependentsofthemenofmoney—bags。
5。Ipasstoanotherkindofgovernmentinterference，inwhichtheendandthemeansarealikeodious，butwhichexistedinEnglanduntilnotmorethanagenerationago，andinFranceuptotheyear1864。Imeanthelawsagainstcombinationsofworkmentoraisewages;lawsenactedandmaintainedforthedeclaredpurposeofkeepingwageslow，asthefamousStatuteofLabourerswaspassedbyalegislatureofemployers，topreventthelabouringclass，whenitsnumbershadbeenthinnedbyapestilence，fromtakingadvantageofthediminishedcompetitiontoobtainhigherwages。Suchlawsexhibittheinfernalspiritoftheslavemaster，whentoretaintheworkingclassesinavowedslaveryhasceasedtobepracticable。
Ifitwerepossiblefortheworkingclasses，bycombiningamongthemselves，toraiseorkeepupthegeneralrateofwages，itneedshardlybesaidthatthiswouldbeathingnottobepunished，buttobewelcomedandrejoicedat。Unfortunatelytheeffectisquitebeyondattainmentbysuchmeans。Themultitudeswhocomposetheworkingclassaretoonumerousandtoowidelyscatteredtocombineatall，muchmoretocombineeffectually。Iftheycoulddoso，theymightdoubtlesssucceedindiminishingthehoursoflabour，andobtainingthesamewagesforlesswork。Theywouldalsohavealimitedpowerofobtaining，bycombination，anincreaseofgeneralwagesattheexpenseofprofits。Butthelimitsofthispowerarenarrow;andweretheytoattempttostrainitbeyondthoselimits，thiscouldonlybeaccomplishedbykeepingapartoftheirnumberpermanentlyoutofemployment。Assupportfrompubliccharitywouldofcourseberefusedtothosewhocouldgetworkandwouldnotacceptit，theywouldbethrownforsupportuponthetradesunionofwhichtheyweremembers;andtheworkpeoplecollectivelywouldbenobetteroffthanbefore，havingtosupportthesamenumbersoutofthesameaggregatewages。Inthisway，however，theclasswouldhaveitsattentionforciblydrawntothefactofasuperfluityofnumbers，andtothenecessity，iftheywouldhavehighwages，ofproportioningthesupplyoflabourtothedemand。
Combinationstokeepupwagesaresometimessuccessful，intradeswheretheworkpeoplearefewinnumber，andcollectedinasmallnumberoflocalcentres。Itisquestionableifcombinationseverhadthesmallesteffectonthepermanentremunerationofspinnersorweavers;butthejourneymentype。founders，byaclosecombination，areable，itissaid，tokeepuparateofwagesmuchbeyondthatwhichisusualinemploymentsofequalhardnessandskill;andeventhetailors，amuchmorenumerousclass，areunderstoodtohavehad，tosomeextent，asimilarsuccess。Ariseofwages，thusconfinedtoparticularemployments，isnot（likeariseofgeneralwages）defrayedfromprofits，butraisesthevalueandpriceoftheparticulararticle，andfallsontheconsumer;thecapitalistwhoproducesthecommoditybeingonlyinjuredinsofarasthehighpricetendstonarrowthemarket;