This is the starting point of his whole system, and is directly the opposite of that from which starts the modern English politico-economical school that professes to follow in his footsteps, as will now be shown. The pa.s.sage here given, which really const.i.tutes the base upon which rests the whole structure of Dr. Smith"s work, is regarded by Mr. McCulloch as "the most objectionable" one in it, and he expresses great surprise that "so acute and sagacious a reasoner should have maintained a doctrine so manifestly erroneous." "So far indeed," says that gentleman--
"Is it from being true that nature does much for man in agriculture, and nothing for manufactures, that the fact is more nearly the reverse. There are no limits to the bounty of nature in manufactures; but there are limits, and those not very remote, to her bounty in agriculture. The greatest possible amount of capital might be expended in the construction of steam-engines, or of any other sort of machinery, and, after they had been multiplied indefinitely, the last would be as prompt and efficient in producing commodities and saving labour as the first. Such, however, is not the case with the soil. Lands of the first quality are speedily exhausted; and it is impossible to apply capital indefinitely even to the best soils, without obtaining from it a constantly diminishing rate of profit."--_Principles of Political Economy_.
The error here results from the general error of Mr. Ricardo"s system, which places the poor cultivator among the rich soils of the swamps and river-bottoms, and sends his rich successors to the poor soils of the hills,--being directly the reverse of what has happened in every country of the world, in every county in England, and on every farm in each and all of those counties.[138] Had he not been misled by the idea of "the constantly increasing sterility of the soil," Mr.
McCulloch could not have failed to see that the only advantage resulting from the use of the steam-engine, or the loom, or any other machine in use for the conversion of the products of the earth, was, that it diminished the quant.i.ty of labour required to be so applied, and increased the quant.i.ty that might be given to the work of production.
It is quite true that wheelbarrows and carts, wagons and ships, may be increased indefinitely; but of what use can they possibly be, unless the things to be carried be first produced, and whence can those things be obtained except from the earth? The grist-mill is useful, provided there is grain to be ground, but not otherwise. The cotton-mill would be useless unless the cotton was first produced.
Agriculture _must_ precede manufactures, and last of all, says Dr.
Smith, comes foreign commerce.[139]
The reader has had before him a pa.s.sage from Mr. J.S. Mill, in which that gentleman says that "if the law [of the occupation of the land]
were different, almost all the phenomena of the production and distribution of wealth would be different from what they now are." In the days of Adam Smith it had not yet been suggested that men began by the cultivation of rich soils, and then pa.s.sed to poor ones, with constantly diminishing power to obtain food. Population, therefore, had not come to be regarded as "a nuisance" to be abated by any measures, however revolting, and imposing upon Christian men the necessity of hardening their hearts, and permitting their fellow-men to suffer every extremity of poverty and distress "short of absolute death," with a view to bring about a necessity for refraining to gratify that natural inclination which leads men and women to a.s.sociate in the manner tending to promote the growth of numbers and the development of the best feelings of the human heart. It was then considered right that men and women should marry, and increase of population was regarded as evidence of increased wealth and strength.
Dr. Smith, therefore, looked at the affairs of the world as they were, and be saw that the production of commodities not only preceded their conversion and exchange, but that in the work of production the earth aided man by increasing the _quant.i.ty_ of things to, be consumed; whereas labour applied in other ways could change them only in their _form_ or in their _place_, making no addition to their quant.i.ty. He, therefore, saw clearly that the nearer the spinner and the weaver came to the producer of food and wool, the more would be the quant.i.ty of food and cloth to be divided between them; and thus was he led to see how great an act of injustice it was on the part of his countrymen to endeavour to compel the people of the world to send their raw materials to them to be converted, at such vast loss of transportation. He had no faith in the productive power of ships or wagons. He knew that the barrel of flour or the bale of cotton, put into the ship, came out a barrel of flour or a bale of cotton, the weight of neither having been increased by the labour employed in transporting it from this place of production to that of consumption.
He saw clearly that to place the consumer by the side of the producer was to economize labour and aid production, and therefore to increase the power to trade. He was, therefore, in favour of the local application of labour and capital, by aid of which towns should grow up in the midst of producers of food; and he believed that if "human inst.i.tutions" had not been at war with the best interests of man, those towns would "nowhere have increased beyond what, the improvement and cultivation of the territory in which they were situated could support." Widely different is all this from the system which builds up London, Liverpool, Manchester, and Birmingham, to be the manufacturing centres of the world, and urges upon all nations the adoption of a system looking directly to their maintenance and increase!
Directly opposed in this respect to Dr. Smith, Mr. McCulloch has unbounded faith in the productive power of ships and wagons. To him--
"It is plain that the capital and labour employed in carrying commodities from where they are to be produced to where they are to be consumed, and in dividing them into minute portions so as to fit the wants of consumers, are really as productive as if they were employed in agriculture or in manufactures."--_Principles_, 166.
The man who carries the food adds, as he seems to think, as much to the quant.i.ty to be consumed as did the one who ploughed the ground and sowed the seed; and he who stands at the counter measuring cloth adds as much to the quant.i.ty of cloth as did he who produced it. No benefit, in his view, results from any saving of the labour of transportation or exchange. He has, therefore, no faith in the advantage to be derived from the local application of labour or capital. He believes that it matters nothing to the farmer of Ireland whether his food be consumed on the farm or at a distance from it--whether his gra.s.s be fed on the land or carried to market--whether the manure be returned to the land or wasted on the road--whether, of course, the land be impoverished or enriched. He is even disposed to believe that it is frequently more to the advantage of the people of that country that the food there produced should be divided among the labourers of France or Italy than among themselves.[140]
He believes in the advantage of large manufacturing towns at a distance from those who produce the food and raw materials of manufacture; and that perfect freedom of trade consists in the quiet submission of the farmers and planters of the world to the working of a system which Dr. Smith, regarded as tending so greatly to "the discouragement of agriculture," that it was the main object of his work to teach the people of Britain that it was not more unjust to others than injurious to themselves.
In a work just issued from the press, Mr. McCulloch tells his readers that--
"For the reasons now stated, a village built in the immediate vicinity of a gentleman"s seat generally declines on his becoming an absentee. That, however, is in most cases any thing but an injury.
The inhabitants of such villages are generally poor, needy dependants, dest.i.tute of any invention, and without any wish to distinguish themselves. But when the proprietors are elsewhere, they are forced to trust to their own resources, and either establish some sort of manufacture, or resort to those manufacturing and commercial cities where there is _always_ a ready demand for labourers, and where every latent spark of genius is sure to be elicited. Although, therefore, it be certainly true that absenteeism has a tendency to reduce the villages which are found in the neighbourhood of the residences of extensive proprietors, it is not on that account prejudicial to the country at large, but the reverse."[141]
It is here seen that the people who own large estates are supposed to be surrounded by "poor and needy dependants," who are to be stimulated to exertion by the pressure of want, and that this pressure is to be produced by the absenteeism of the proprietor. We have here the master administering the lash to his poor slave, and the only difference between the English master and the Jamaica one appears to be, that absenteeism in the one case forces the poor labourer to seek the lanes and alleys of a great city, and in the other causes him to be worked to death. The slavery of Ireland, Jamaica, and India is a natural consequence of the absenteeism of the great land-owners; and the larger the properties, the greater must be the tendency to absenteeism, centralization, and slavery; and yet Mr. McCulloch a.s.sures his readers that
"The advantage of preserving large estates from being frittered down by a scheme of equal division is not limited to its effects on the younger children of their owners. It raises universally the standard of competence, and gives new force to the springs which set industry in motion. The manner of living in great landlords is that in which every one is ambitious of being able to indulge; and their habits of expense, though somewhat injurious to themselves, act as powerful incentives to the ingenuity and enterprise of other cla.s.ses, who never think their fortunes sufficiently ample unless they will enable them to emulate the splendour of the richest landlords; so that the custom of primogeniture seems to render all cla.s.ses more industrious, and to augment at the same time the ma.s.s of wealth and the scale of enjoyment."--_ Principles_.
The modern system tends necessarily to the consolidation of land, and the more completely that object can be attained, the greater must, be "the splendour of the richest landlords," the greater the habits of expense among the few, the greater their power to absent themselves, the greater the power of the rapacious middleman or agent, the greater the poverty and squalor of "the poor and needy dependants," and the greater the necessity for seeking shelter in the cellars of Manchester, the wynds of Glasgow, or the brothels of London and Liverpool; but the larger must be the supply of the commodity called "cheap labour." In other words, slaves will be more numerous, and masters will he more able to decide on what shall be the employment of the labourer, and what shall be its reward.
Adam Smith knew nothing of all this. He saw that capital was always best managed by its owner, and therefore had no faith in a universal system of agencies. He saw that the little proprietor was by far the greatest improver, and he had no belief in the advantage of great farmers surrounded by day-labourers. He believed in the advantage of making twelve exchanges in a year in place of one, and he saw clearly that the nearer the consumer could come to the producer the larger and more profitable would be commerce. He therefore taught that the workman should go to the place where, food being abundant, moderate labour would command much food. His successors teach that the food should come to the place where, men being abundant and food scarce, much labour will command little food, and that when population has thus been rendered superabundant, the surplus should go abroad to raise more food for the supply of those they left behind. The one teaches the concentration of man, and the _local_ division of labour.
The other, the dispersion of man, and the _territorial_ division of labour. They differ thus in every thing, except that they both use the _word_ free trade--but with reference to totally distinct ideas. With the one, COMMERCE has that enlarged signification which embraces every description of intercourse resulting from the exercise of "man"s natural inclination" for a.s.sociation, while with the other TRADE has reference to no idea, beyond that of the mere pedler who buys in the cheapest market and sells in the dearest one. The system of the one is perfectly harmonious, and tends toward peace among men. The other is a ma.s.s of discords, tending toward war among the men and the nations of the earth.
As ordinarily used, the word Commerce has scarcely any signification except that of trade with distant men, and yet that is the least profitable commerce that can be maintained,--as the reader may satisfy himself if he will reflect that when the miller and the farmer are near neighbours they divide between them all the flour that is made, whereas, when they are widely separated, a third man, the carrier, intervenes between them and takes a large portion of it, leaving less to be divided between those who raise the wheat and those who convert it into flour. The more perfect the power of a.s.sociation the greater must be the power to maintain commerce, for _every act of a.s.sociation is an act of commerce_, as it is proposed now to show, beginning at the beginning, in the family, which long precedes the nation. Doing so, we find the husband exchanging his services in the raising of food and the materials of clothing, for those of his wife, employed in the preparation of food for the table, and the conversion of raw materials into clothing,--and here it is we find the greatest of all trades. Of all the labour employed on the farms and in the farm-houses of the Union, we should, could we have an accurate statement, find that the proportion of its products exchanged beyond their own limits, scarcely exceeded one-third, and was certainly far less than one-half, the remainder being given to the raising of food and raw materials for their own consumption, and the conversion of that food and those materials into the forms fitting them for their own uses.
At the next step we find ourselves in the little community, of which the owner of this farm const.i.tutes a portion; and here we find the farmer exchanging his wheat with one neighbour for a day"s labour--the use of his wagon and his horse for other days of labour--his potatoes with a third for the shoeing of his horse, and with a fourth for the shoeing of himself and his children, or the making of his coat. On one day he or his family have labour to spare, and they pa.s.s it off to a neighbour to be repaid by him in labour on another day. One requires aid in the spring, the other in the autumn; one gives a day"s labour in hauling lumber, in exchange for that of another, employed in mining coal or iron ore. Another trades the labour that has been employed in the purchase of a plough for that of his neighbour which had been applied to the purchase of a cradle. Exchanges being thus made on the spot, from hour to hour and from day to day, with little or no intervention of persons whose business is trade, their amount is large, and, combined with those of the family, equals probably four-fifths of the total product of the labour of the community, leaving not more than one-fifth to be traded off with distant men; and this proportion is often greatly diminished as with increasing population and wealth a market is made on the land for the products of the land.
This little community forms part of a larger one, styled a nation, the members of which are distant hundreds or thousands of miles from each other, and here we find difficulties tending greatly to limit the power to trade. The man in lat.i.tude 40 may have labour to sell for which he can find no purchaser, while he who lives in lat.i.tude 50 is at the moment grieving to see his crop perish on the ground for want of aid in harvest. The first may have potatoes rotting, and his wagon and horses idle, while the second may need potatoes, and have his lumber on his hands for want of means of transportation--yet distance forbids exchange between them.
Again, this nation forms part of a world, the inhabitants of which are distant tens of thousands of miles from each other, and totally unable to effect exchanges of labour, or even of commodities, except of certain kinds that will bear transportation to distant markets.
Commerce tends, therefore, to diminish in its amount with every circ.u.mstance tending to increase the necessity for going to a distance, and to increase in amount with every one tending to diminish the distance within which it must be maintained. As it now stands with the great farming interest of the Union, the proportions are probably as follows:--
Exchanges in the family................... 55 per cent.
" in the neighbourhood............ 25 "
" in the nation................... 15 "
" with other nations.............. 5 "
--- Total.................................... 100
It will now be obvious that any law, domestic or foreign, tending to interfere with the exchanges of the family or the neighbourhood, would be of more serious importance than one that should, to the same extent, affect those with the rest of the nation, and that one which should affect the trade of one part of the nation with another, would be more injurious than one which should tend to limit the trade with distant nations. j.a.pan refuses to have intercourse with either Europe or America, yet this total interdiction of trade with a great empire is less important to the farmers of the Union than would be the imposition of a duty of one farthing a bushel upon the vegetable food raised on their farms to be consumed in their families.
The great trade is the home trade, and the greater the tendency to the performance of trade at home the more rapid will be the increase of prosperity, and the greater the power to effect exchanges abroad. The reason of this is to be found in the fact that the power of production increases with the power of combined exertion, and all combination is an exchange of labour for labour, the exchange being made at home. The more exchanges are thus effected the smaller is the number of the men, wagons, ships, or sailors employed in making them, and the greater the number of persons employed in the work of production, with increase in the quant.i.ty of commodities produced, and the _power_ to exchange grows with the power to produce, while the power to produce diminishes with every increase in the _necessity_ for exchange. Again, when the work of exchange is performed at home, the power of combination facilitates the disposal of a vast amount of labour that would otherwise be wasted, and an infinite number of things that would otherwise have no value whatever, but which, combined with the labour that is saved, are quite sufficient to make one community rich by comparison with another in which such savings cannot be effected.
Virginia wastes more labour and more commodities that would have value in New England, than would pay five times over for all the cloth and iron she consumes.
Again, the quant.i.ty of capital required for effecting exchanges tends to diminish as commerce comes nearer home. The ship that goes to China performs no more exchanges in a year than the ca.n.a.l-boat that trades from city to city performs in a month; and the little and inexpensive railroad car pa.s.sing from village to village may perform almost twice as many as the fine packet-ship that has cost ninety or a hundred thousand dollars. With the extension of the home trade, labour and capital become, therefore, more productive of commodities required for the support and comfort of man, and the wages of the labourer and the profits of the capitalist tend to increase, and commerce tends still further to increase. On the other hand, with the diminution of the power to effect exchanges at home, labour and capital become less productive of commodities; the wages of the labourer and the profits of the capitalist tend to decrease, and trade tends still further to diminish. All this will be found fully exemplified among ourselves on a comparison of the years 1835-36 with 1841-42, while the contrary and upward tendency is exemplified by the years 1845-6 and 7, as compared with 1841-2.
The fashionable doctrine of our day is, however, that the prosperity of a nation is to be measured by the amount of its trade with people, who are distant, as manifested by custom-house returns, and not by the quant.i.ty of exchanges among persons who live near each other, and who trade without the intervention of ships, and with little need of steamboats or wagons. If the trade of a neighbourhood be closed by the failure of a furnace or a mill, and the workman be thus deprived of the power to trade off the labour of himself or his children, or the farmer deprived of the power to trade off his food, consolation is found in the increased quant.i.ty of exports--_itself, perhaps, the direct consequence of a diminished ability to consume at home_. If ca.n.a.l-boats cease to be built, the nation is deemed to be enriched by the subst.i.tution of ocean steamers requiring fifty times the capital for the performance of the same quant.i.ty of exchanges. If the failure of mills and furnaces causes men to be thrown out of employment, the remedy is to be found, not in the revisal of the measures that have produced these effects, but in the exportation of the men themselves to distant climes, thus producing a necessity for the permanent use of ships instead of ca.n.a.l-boats, with diminished power to maintain trade, and every increase of this _necessity_ is regarded as an evidence of growing wealth and power.
The whole tendency of modern commercial policy is to the subst.i.tution of the distant market for the near one. England exports her people to Australia that they may there grow the wool that might he grown at home more cheaply; and we export to California, by hundreds of thousands, men who enjoy themselves in hunting gold, leaving behind them untouched the real gold-mines--those of coal and iron--in which their labour would be thrice more productive. The reports of a late Secretary of the Treasury abound in suggestions as to the value of the distant trade. Steam-ships were, he thought, needed to enable us to obtain the control of the commerce of China and j.a.pan. "With our front on both oceans and the gulf," it was thought, "we might secure this commerce, and with it, in time, command the trade of the world."
England, not to be outdone in this race for "the commerce of the world," adds steadily to her fleet of ocean steamers, and the government contributes its aid for their maintenance, by the payment of enormous sums withdrawn from the people at home, and diminishing the home market to thrice the extent that it increases the foreign one. The latest accounts inform us of new arrangements about to be made with a view to compet.i.tion with this country for the pa.s.senger traffic to and within the tropics, while the greatest of all trades now left to British ships is represented to be the transport of British men, women, and children, so heavily taxed at home for the maintenance of this very system that they are compelled to seek an asylum abroad. In all this there is nothing like freedom of trade, or freedom of man; as the only real difference between the freeman and the slave is, that the former exchanges himself, his labour and his products, while the latter must permit another to do it for him.
Mr. McCulloch regards himself as a disciple of Adam Smith, and so does Lord John Russell. We, too, are his disciple, but in _The Wealth of Nations_, can find no warrant for the system advocated by either. The system of Dr. Smith tended to the production of that natural freedom of trade, each step toward which would have been attended with improvement in the condition of the people, and increase in the _power to trade_, thus affording proof conclusive of the soundness of the doctrine; whereas every step in the direction now known as free trade is attended with deterioration of condition, and _increased necessity_ for trade, with _diminished power_ to trade. Those who profess to be his followers and suppose that they are carrying out his principles, find results directly the reverse of their antic.i.p.ations; and the reason for this may readily be found in the fact that the English school of political economists long since repudiated the whole of the system of Dr. Smith, retaining of it little more than _the mere words_ "free trade."
The basis of all commerce is to be found in production, and therefore it was that Dr. Smith looked upon agriculture, the science of production, as the first pursuit of man, and manufactures and commerce as beneficial only to the extent that they tended to aid agriculture and increase the quant.i.ty of commodities to be converted or exchanged, preparatory to their being consumed. He held, therefore, that the return to labour would be greater in a trade in which exchanges could be made once a month than in another in which they could only be made once in a year, and he was opposed to the system then in vogue, because it had, "in all cases," turned trade,
"From a foreign trade of consumption with a neighbouring, into one with a more distant country; in many cases, from a direct foreign trade of consumption, into a round-about one; and in some cases, from all foreign trade of consumption, into a carrying trade. It has in all cases, therefore," he continues, "turned it from a direction in which it would have maintained a greater quant.i.ty of productive labour, into one in which it can maintain a much smaller quant.i.ty."
All this is directly the reverse of what is taught by the modern British economists; and we have thus two distinct schools, that of Adam Smith and that of his successors. The one taught that labour directly applied to production was most advantageous, and that by bringing the consumer to take his place by the side of the producer, production and the consequent power to trade would be increased. The other teaches, that every increase of capital or labour applied to production must be attended with diminished return, whereas ships and steam-engines may be increased _ad infinitum_ without such diminution: the necessary inference from which is, that the more widely the consumer and the producer are separated, with increased necessity for the use of ships and engines, the more advantageously labour will be applied, and the greater will be the power to trade. The two systems start from a different base, and tend in an opposite direction, and yet the modern school claims Dr. Smith as founder. While teaching a theory of production totally different, Mr. McCulloch informs us that "the fundamental principles on which the _production_ of wealth depends" were established by Dr. Smith, "beyond the reach of cavil or dispute."
The difference between the two schools may be thus ill.u.s.trated: Dr.
Smith regarded commerce as forming a true pyramid, thus--
Exchanges abroad.
Exchanges at home.
Conversion into cloth and iron.
Production of food and other raw materials.
This is in exact accordance with what we know to be true; but according to the modern school, commerce forms an inverted pyramid, thus--
Exchanges with distant men.
Exchanges at home.
Conversion.
Production.
The difference between these figures is great, but not greater than that between two systems, the one of which regards the earth as the great and perpetually improving machine to which the labour of man may be profitably applied, while the other gives precedence to those very minute and perpetually deteriorating portions of it which go to the construction of ships, wagons, and steam-engines. An examination of these figures will perhaps enable the reader to understand the cause of the unsteadiness observed wherever the modern system is adopted.
It will be easy now to see why it is that the commercial policy of England has always been so diametrically opposed to that advocated by the author of _The Wealth of Nations_. He saw clearly that the man and the easily transported spindle should go to the food and the cotton, and that, when once there, "they were there for ever; whereas the bulky food and cotton might be transported to the man and the spindle for a thousand years, and that the necessity for transportation in the thousand and first would be as great as it had been in the first; and that the more transportation was needed, the less food and cloth would fall to the share of both producer and consumer. His countrymen denied the truth of this, and from that day to the present they have endeavoured to prevent the other nations of the world from obtaining machinery of any kind that would enable them to obtain the aid of those natural agents which they themselves regard as more useful than the earth itself. "The power of water," says Mr. McCulloch--
"And of wind, which move our machinery, support our ships, and impel them over the deep--the pressure of the atmosphere, and the elasticity of steam, which enables us to work the most powerful engines, are they not the spontaneous gifts of nature? Machinery is advantageous only because it gives us the means of pressing some of the powers of nature into our service, and of making them perform the princ.i.p.al part of what, we must otherwise have wholly performed ourselves. In navigation is it possible to doubt that the powers of nature--the buoyancy of the water, the impulse of the wind, and the polarity of the magnet--contribute fully as much as the labours of the sailor to waft our ships from one hemisphere to another? In bleaching and fermentation the whole processes are carried on by natural agents. And it is to the effects of heat in softening and melting metals, in preparing our food, and in warming our houses, that we owe many of our most powerful and convenient instruments, and that those northern climates have been made to afford a comfortable habitation."--_Principles_, 165.
This is all most true, but what does it prove in regard to British policy? Has not its object been that of preventing the people of the world from availing themselves of the vast deposites, of iron ore and of fuel throughout the earth, and thus to deprive them of the power to call to their aid the pressure of the atmosphere and the elasticity of steam? Has it not looked to depriving them of all power to avail themselves of the natural agents required in the processes of bleaching and fermentation, in softening woods, and melting metals, and was not that the object had in view by a distinguished statesman, since Chancellor of England, when he said, that "the country could well afford the losses then resulting from the exportation of manufactured goods, as its effect would be to smother in the cradle the manufactures of other nations?" Has not this been the object of every movement of Great Britain since the days of Adam Smith, and does not the following diagram represent exactly what would be the state of affairs if she could carry into full effect her desire to become "the workshop of the world?"
British ships/ Producers of raw materials / Consumers of cloth and iron Europe, Asia, Africa > < in="" europe,="" asia,="" africa="" america="" north="" and="" south="" america="" and="" rails="">