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products and manufactured products。 It perverts the fact that such



duties always operate injuriously on the production of primitive or



natural products; into the false conclusion that they exercise an



equally detrimental influence on the production of manufactured



goods。



    The school recognises no distinction in reference to the



establishment of manufacturing industry in a State between those



nations which are not adapted for such industry and those which;



owing to the nature of their territory; to perfectly developed



agriculture; to their civilisation; and to their just claims for



guarantees for their future prosperity for their permanence; and



for their power; are clearly qualified; to establish such an



industry for themselves。



    The school fails to perceive that under a system of perfectly



free competition with more advanced manufacturing nations; a nation



which is less advanced than those; although well fitted for



manufacturing; can never attain to a perfectly developed



manufacturing power of its own; nor to perfect national



independence; without protective duties。



    It does not take into account the influence of war on the



necessity for a protective system; especially it does not perceive



that war effects a compulsory prohibitive system; and that the



prohibitive system of the custom…house is but a necessary



continuation of that prohibitive system which war has brought



about。



    It seeks to adduce the benefits which result from free internal



trade as a proof that nations can only attain to the highest degree



of prosperity and power by absolute freedom in international trade;



whereas history everywhere proves the contrary。



    It maintains that protective measures afford a monopoly to



inland manufacturers; and thus tend to induce indolence; while;



nevertheless; all the time internal competition amply suffices as



a stimulus to emulation among manufacturers and traders。



    It would have us believe that protective duties on manufactured



goods benefit manufacturers at the expense of agriculturists;



whereas it can be proved that enormous benefits accrue to home



agriculture from the existence of a home manufacturing power;



compared to which the sacrifices which the former has to make to



the protective system are inconsiderable。



    As a main point against protective duties; the popular school



adduces the expenses of the custom…house system and the evils



caused by contraband trade。 These evils cannot be denied; but can



they be taken seriously into account in comparison of measures



which exercise such enormous influence on the existence; the power;



and the prosperity of the nation? Can the evils of standing armies



and wars constitute an adequate motive for the nation to neglect



means of defence? If it is maintained that protective duties which



far exceed the limit which offers an assured remuneration to



smuggling; serve merely to favour contraband trade; but not to



benefit home manufactures; that can apply only to ill…regulated



customs establishments; to countries of small extent and irregular



frontiers; to the consumption which takes place on the frontiers;



and only to high duties on articles of luxury of no great aggregate



bulk。



    but experience everywhere teaches us that with well…ordered



customs establishments; and with wisely devised tariffs; the



objects of protective duties in large and compact states cannot be



materially impeded by contraband trade。



    So far as regards the mere expenses of the customs system; a



large portion of these would; if it were abolished; have to be



incurred in the collection of revenue duties; and that revenue



duties can be dispensed with by great nations; even the school



itself does not maintain。



    Moreover; the school itself does not condemn all protective



duties。



    Adam Smith allows in three cases the special protection of



internal industry: firstly; as a measure of retaliation in case a



foreign nation imposes restrictions on our imports; and there is



hope of inducing it by means of reprisals to repeal those



restrictions; secondly; for the defence of the nation; in case



those manufacturing requirements which are necessary for defensive



purposes could not under open competition be produced at home;



thirdly; as a means of equalisation in case the products of



foreigners are taxed lower than those of our home producers。 J。 B。



Say objects to protection in all these cases; but admits it in a



fourth case  namely; when some branch of industry is expected to



become after the lapse of a few years so remunerative that it will



then no longer need protection。



    Thus it is Adam Smith who wants to introduce the principle of



retaliation into commercial policy  a principle which would lead



to the most absurd and most ruinous measures; especially if the



retaliatory duties; as Smith demands; are to be repealed as soon as



the foreign nation agrees to abolish its restrictions。 Supposing



Germany made reprisals against England; because of the duties



imposed by the latter on German corn and timber; by excluding from



Germany English manufactured goods; and by this exclusion called



artificially into existence a manufacturing power of her own; must



Germany then allow this manufacturing industry; created at immense



sacrifice; to come to grief in case England should be induced to



reopen her ports to German corn and timber? What folly。 It would



have been ten times better than that if Germany had submitted



quietly to all measures of restriction on the part of England; and



had discouraged the growth of any manufacturing power of her own



which might grow up notwithstanding the English import



prohibitions; instead of stimulating its growth。



    The principle of retaliation is reasonable and applicable only



if it coincides with the principle of the industrial development of



the nation; if it serves as it were as an assistance to this



object。



    Yes; it is reasonable and beneficial that other nations should



retaliate against the English import restrictions on their



agricultural products; by imposing restrictions on the importation



of manufactured goods; but only when those nations are qualified to



establish a manufacturing power of their own and to maintain it for



all times。



    By the second exception; Adam Smith really justifies not merely



the necessity of protecting such manufactures as supply the



immediate requirements of war; such as; for instance; manufactories



of arms and powder; but the whole system of protection as we



understand it; for by the establishment in the nation of a



manufacturing power of its own; protection to native industry tends



to the augmentation of the nation's population; of its material



wealth; of its machine power; of its independence; and of all



mental powers; and; therefore; of its means of national defence; in



an infinitely higher degree than it could do by merely



manufacturing arms and powder。



    The same must be said of Adam Smith's third exception。 If the



burden of taxation to which our productions are subjected; affords



a just ground for imposing protective duties On the less taxed



products of foreign countries; why should not also the other



disadvantages to which our manufacturing industry is subjected in



comparison with that of the foreigner afford just grounds for



protecting our native industry against the overwhelming competition



of foreign industry?



    J。 B。 Say has clearly perceived the contradictory character of



this exception; but the exception substituted by him is no better;



for in a nation qualified by nature and by its degree of culture to



establish a manufacturing power of its own; almost every branch of



industry must become remunerative under continued and powerful



protection; and it is ridiculous to allow a nation merely a few



years for the task of bringing to perfection one great branch of



national industry or the whole industry of the nation; just as a



shoemaker's apprentice is allowed only a few years to learn



shoemaking。



    In its eternal declamations on the immense advantages of



absolute freedom of trade; and the disadvantages of protection; the



popular school is accustomed to rely on the examples of a few



nations; that of Switzerland is quoted to prove that industry can



prosper without protective duties; and that absolute liberty of



international commerce forms the safest basis of national



prosperity。 The fate of Spain is quoted to exhibit to all nations



which seek aid and preservation in the protective system; a



frightful example of its ruinous effects。 The case of England;



which; as we have shown in a former chapter; affords such an



excellent example for imitation to all nations which are capable of



developing a manufacturing power; is adduced by these theorists



merely to support their allegation that capability for



manufacturing production is a natural gift exclusively peculiar to



certain countries; like the capability to produce burgundy wines;



and that nature has bestowed on England; above all other countries



of the earth; the destiny and the ability to devote herself to



manufacturing industry and to an extensive commerce。



    Let us now take these examples more closely into consideration。



    As for Switzerland; it must be remarked in the first place that



she does not constitute a nation; at least not 

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