Book IV, Chapter II, 2

Merchants and manufacturers gain the greatest advantage from this monopoly of the domestic market. The ban on importing foreign cattle and salted provisions, together with the high duties on foreign grain that amount to a ban in times of moderate abundance, benefit the graziers and farmers of Great Britain far less than similar regulations benefit its merchants and manufacturers. Manufactured goods, especially finer ones, are more easily carried from country to country than grain or cattle. Foreign trade is accordingly employed chiefly in transporting manufactured goods. In manufactures, even a very small advantage enables foreigners to undersell our workmen in the domestic market; in the raw produce of the soil, they would need a very great one. If foreign manufactures could be freely imported, several domestic manufactures would probably suffer, and some might be ruined altogether; much of the stock and industry now employed in them would have to find other work. But even wholly free imports of raw agricultural produce could have no such effect on the country’s agriculture.

If imports of foreign cattle, for example, were made completely free, so few animals could be brought in that British grazing would scarcely be affected. Live cattle are perhaps the only commodity costlier to transport by sea than by land. On land they carry themselves to market. At sea their food and water, as well as the animals themselves, must be carried at considerable expense and inconvenience. The short crossing from Ireland to Great Britain does, indeed, make importing Irish cattle easier. But even if their free importation, recently allowed only for a limited period, became permanent, it could have no substantial effect on British graziers’ interests. All those parts of Great Britain bordering the Irish Sea are grazing country. Irish cattle could never be imported to serve those districts; before reaching their proper market they would have to be driven through these extensive grazing lands, at no small expense and inconvenience. Fattened cattle could not be driven so far. Only lean cattle, therefore, could be imported. Such imports would interfere not with the districts that feed and fatten cattle—to these, a lower price for lean cattle would be an advantage—but only with the districts that breed them. The small number of Irish cattle imported since imports were permitted, and the good price that lean cattle still command, seem to show that even Britain’s breeding districts are unlikely to be much affected by free imports of Irish cattle. The common people of Ireland, indeed, are said sometimes to have resisted the export of their cattle violently. But if exporters had found any great advantage in maintaining the trade, they could easily have overcome this mob opposition with the law on their side.

Moreover, districts that feed and fatten cattle must always be highly improved, while breeding districts are generally uncultivated. A high price for lean cattle, by raising the value of uncultivated land, acts like a bounty against improvement. A country improved throughout would gain more by importing lean cattle than by breeding them. The province of Holland is said to follow this principle today. The mountains of Scotland, Wales, and Northumberland, however, admit of little improvement, and seem destined by nature to breed Great Britain’s cattle. Free imports of foreign cattle could do no more than prevent these breeding districts from exploiting the growing population and improvement of the rest of the kingdom to raise their prices exorbitantly and impose a real tax on all the more improved and cultivated parts of the country.

In the same way, even completely free imports of salted provisions would affect British graziers’ interests as little as imports of live cattle. Salted provisions are not only very bulky; compared with fresh meat, they are inferior in quality and, because they require more labor and expense, higher in price. They could therefore never compete with fresh meat, though they might compete with salted provisions produced at home. They might serve to provision ships on long voyages and for similar uses, but could never become a substantial part of the people’s diet. The small quantity of salted provisions imported from Ireland since imports were freed provides practical proof that our graziers have nothing to fear. There is no indication that these imports have noticeably affected the price of butcher’s meat.

Even free imports of foreign grain would have very little effect on British farmers’ interests. Grain is much bulkier than butcher’s meat. A pound of wheat at a penny is as expensive as a pound of butcher’s meat at fourpence. The small amount of foreign grain imported even in the greatest shortages should assure our farmers they have nothing to fear from completely free imports. According to the very well-informed author of the Tracts upon the Corn Trade, imports average only 23,728 quarters of all kinds of grain from year to year, no more than the five hundredth and seventy-one part of annual consumption. But just as the bounty on grain causes more to be exported in abundant years, it must also cause more to be imported in scarce years than the present state of cultivation would otherwise require. Because of the bounty, one abundant year does not make up for another year’s scarcity; and as it necessarily increases average exports, so, given the present state of cultivation, it must increase average imports. Without the bounty less grain would be exported, and probably less, on average, would be imported than at present. Grain merchants, who carry grain between Great Britain and foreign countries, would have much less business and might suffer considerably; landowners and farmers would suffer very little. Accordingly, I have observed the greatest concern for renewing and continuing the bounty among grain merchants rather than landowners and farmers.

To their great credit, landowners and farmers are less prone than anyone to the wretched spirit of monopoly. The owner of a great manufactory is sometimes alarmed when another of the same kind is established within twenty miles of him; the Dutch proprietor of the woolen manufactory at Abbeville stipulated that no such works should be established within thirty leagues of that city. Farmers and landowners, by contrast, are generally inclined to encourage rather than obstruct the cultivation and improvement of their neighbors’ farms and estates. Unlike most manufacturers, they have no secrets, and are generally eager to share with their neighbors and spread as widely as possible any useful new practice they have discovered. “An honorable livelihood,” says old Cato, “the most secure and the least envied; those occupied in it are least inclined to evil thoughts.” Landowners and farmers, scattered throughout the country, cannot combine as readily as merchants and manufacturers, who gather in towns. Accustomed to the exclusive corporate spirit prevalent there, merchants and manufacturers naturally try to obtain against all their countrymen the same exclusive privilege they commonly hold against the other inhabitants of their own towns. They thus appear to have first devised the restrictions on imports of foreign goods that secure their monopoly of the domestic market. Probably to imitate them and put themselves on an equal footing with those they found disposed to oppress them, the landowners and farmers of Great Britain so far forgot the generosity natural to their position as to demand the exclusive privilege of supplying their countrymen with grain and butcher’s meat. They perhaps did not stop to consider how much less their interests could be affected by free trade than those of the people whose example they followed.

Permanently to prohibit imports of foreign grain and cattle is in effect to decree that the country’s population and industry must never exceed what the raw produce of its own soil can support.

There are, however, two cases in which it will generally be advantageous to place some burden on foreign industry to encourage domestic industry.

The first is when a particular industry is necessary to defend the country. The defense of Great Britain, for example, depends greatly on the number of its sailors and ships. The Navigation Act therefore quite properly attempts to grant British sailors and ships a monopoly over the country’s trade, in some cases by absolute prohibitions and in others by heavy burdens on foreign shipping. Its principal provisions are as follows.

First, ships without British owners and masters and a crew at least three-fourths British are forbidden, on pain of forfeiture of ship and cargo, to trade with British settlements and plantations or engage in the coastal trade of Great Britain.

Secondly, a great variety of the bulkiest imports may enter Great Britain only in ships meeting those British ownership, command, and crew requirements, or in ships belonging to the country where the goods were produced, whose owners, masters, and three-fourths of whose sailors belong to that country. Even when imported in ships of the latter kind, they incur double aliens duty. If imported in ships of any other country, both ship and goods are forfeited. When the act was passed, the Dutch were, as they remain, Europe’s great carriers; this rule entirely excluded them from carrying goods to Great Britain or importing for us the goods of any other European country.

Thirdly, a great variety of the bulkiest imports may not be brought in even aboard British ships from any country other than the one where they were produced, on pain of forfeiture of ship and cargo. This regulation, too, was probably directed against the Dutch. Holland was then, as now, the great marketplace for all European goods; under this rule British ships could not load goods from any other European country there.

Fourthly, all kinds of salt fish, whale fins, whalebone, oil, and blubber not caught and cured aboard British vessels incur double aliens duty when imported into Great Britain. The Dutch, now the principal suppliers of fish to foreign nations, were then the only fishers in Europe attempting that trade. This rule placed a very heavy burden on their supplying Great Britain.

When the Navigation Act was passed, England and Holland were not actually at war, but the most violent hostility prevailed between them. It had begun under the Long Parliament, which first drafted the act, and soon erupted into the Dutch wars under the Protector and Charles II. Some provisions of this famous act may therefore have arisen from national hostility. They are nonetheless as wise as if they had all been dictated by the most careful judgment. At that particular time, national hostility aimed at precisely what careful judgment would have recommended: weakening the naval power of Holland, the only naval power that could endanger England’s security.

The Navigation Act does not favor foreign commerce or the growth of the wealth that can arise from it. In its commercial dealings with other nations, a nation’s interest is like a merchant’s interest in dealing with different people: to buy as cheaply and sell as dearly as possible. It is most likely to buy cheaply when perfect freedom of trade encourages every nation to bring it goods it wishes to purchase; for the same reason, it is most likely to sell dearly when its markets attract the greatest possible number of buyers. The Navigation Act, it is true, imposes no burden on foreign ships arriving to export the products of British industry. Even the old aliens duty, once payable on all goods exported as well as imported, has been removed from most exports by several subsequent acts. But if foreigners are prevented from coming to sell by prohibitions or high duties, they cannot always afford to come to buy: sailing without cargo, they lose the freight they might have earned from their country to Great Britain. By reducing the number of sellers, then, we necessarily reduce the number of buyers, and are likely not only to buy foreign goods more dearly but also to sell our own more cheaply than under freer trade. Defense, however, matters far more than wealth; the Navigation Act is perhaps the wisest of all England’s commercial regulations.

The second case in which a burden on foreign industry will generally be advantageous in encouraging domestic industry arises when a tax is placed at home on the latter’s products. It then seems reasonable to impose an equal tax on similar foreign products. This would neither give domestic industry a monopoly of the home market nor divert more of the country’s stock and labor into a particular employment than would naturally flow there. It would merely prevent some of what would naturally flow there from being driven by the tax into a less natural direction, leaving competition between foreign and domestic industry as nearly as possible on the same terms after the tax as before it. In Great Britain, however, when domestic goods are so taxed, it is usual at the same time to impose a much heavier duty on imports of foreign goods of the same kind, to quiet the loud complaints of merchants and manufacturers that foreign rivals will undersell them at home.

Some people argue that this second restriction of free trade should generally extend far beyond the precise foreign goods that could compete with those taxed at home. If a country taxes the necessities of life, they claim, it is proper to tax not only similar necessities imported from abroad but every kind of foreign good that could compete with any domestic product. Such taxes, they say, necessarily raise the cost of subsistence, and the price of labor must always rise along with the cost of supporting the laborer. Thus every domestically produced commodity, although not directly taxed, becomes dearer because the labor that makes it becomes dearer. Taxes on necessities, they say, therefore amount in effect to a tax on each commodity produced at home. To place domestic industry on equal terms with foreign industry, they conclude, it is necessary to impose a duty on every foreign commodity equal to the increase in price of the competing domestic commodities.

Merchants and manufacturers benefit most from this monopoly of the home market. The ban on importing foreign cattle and salted food, along with high duties on foreign corn that amount to a ban when supplies are moderately plentiful, helps Great Britain's graziers and farmers much less than similar rules help its merchants and manufacturers. Manufactured goods, especially finer ones, are easier to transport between countries than corn or cattle. Foreign trade therefore mainly involves carrying manufactured goods. With manufactured goods, even a small advantage lets foreigners sell for less than our workers, even in our home market. They would need a very large advantage to do the same with raw farm produce. If foreign manufactured goods could be imported freely, several domestic industries would probably suffer, and some might collapse entirely. Much of the stock and industry now employed in them would have to find other work. But even completely free imports of raw farm produce could not have that effect on the country's agriculture.

For example, however freely foreign cattle could be imported, so few would come in that British grazing would be little affected. Live cattle may be the only commodity more expensive to transport by sea than by land. On land they walk themselves to market. At sea, their food and water must also be carried, at considerable cost and inconvenience. The short crossing between Ireland and Great Britain does make importing Irish cattle easier. But even if the recently permitted imports, allowed only for a limited time, were made permanent, British graziers would not be significantly affected. The British regions bordering the Irish Sea are all grazing regions. Irish cattle could not be imported for use there. They would have to be driven through those extensive regions, at considerable cost and inconvenience, before reaching the right market. Fat cattle could not be driven so far. Only lean cattle could therefore be imported. Such imports would not hurt regions that feed and fatten cattle. By lowering the price of lean cattle, they would actually help those regions. Only regions that breed cattle might be affected. Since imports were permitted, few Irish cattle have been imported, and lean cattle still sell at a good price. This seems to show that even Britain's cattle-breeding regions are unlikely to suffer much from free imports of Irish cattle. Ordinary people in Ireland are said to have sometimes violently opposed the export of their cattle. But if exporters had found much profit in continuing the trade, they could easily have overcome this mob opposition with the law on their side.

Regions that feed and fatten cattle must also always be highly improved, while breeding regions are generally uncultivated. A high price for lean cattle raises the value of uncultivated land and acts like a bounty against improvement. A country that was highly improved everywhere would do better to import lean cattle than breed them. The province of Holland is said to follow this rule now. The mountains of Scotland, Wales, and Northumberland, however, cannot be improved much. Nature seems to have made them Britain's cattle-breeding regions. Completely free imports of foreign cattle would merely prevent those regions from exploiting the growing population and improvement of the rest of the kingdom. They could not raise their prices excessively and effectively tax all the more developed and cultivated regions.

Likewise, completely free imports of salted food would affect British graziers as little as imports of live cattle. Salted food is bulky. Compared with fresh meat, it is also worse in quality and more expensive because it takes more labor and expense to prepare. It could never compete with fresh meat, though it could compete with domestically produced salted food. It could provision ships on long voyages and serve similar purposes, but could never make up much of the people's diet. Since imports were freed, only a small amount of salted food has come from Ireland. This is practical proof that our graziers have nothing to fear. Its imports do not appear ever to have noticeably affected the price of butcher's meat.

Even free imports of foreign corn would hardly affect British farmers. Corn is much bulkier than butcher's meat. A pound of wheat at a penny is as expensive as a pound of butcher's meat at fourpence. Even during the worst shortages, little foreign corn is imported. This should assure our farmers that completely free imports pose no threat. According to the very well-informed author of the Tracts upon the Corn Trade, imports average only 23,728 quarters of all kinds of grain from year to year. That is no more than one five hundred and seventy-first of annual consumption. The bounty on corn causes more exports in plentiful years. It must therefore also cause more imports in scarce years than would otherwise occur at the present level of cultivation. Because of the bounty, one year's abundance does not make up for another year's shortage. It necessarily raises average exports and, at the present level of cultivation, must also raise average imports. Without the bounty, less corn would be exported. Probably less would also be imported from year to year than is imported now. Corn merchants, who transport corn between Great Britain and other countries, would have much less business and could suffer considerably. But landowners and farmers would suffer very little. Accordingly, I have seen the most concern for renewing and continuing the bounty among corn merchants rather than landowners and farmers.

To their great credit, landowners and farmers are less prone to the miserable spirit of monopoly than anyone else. The owner of a large factory is sometimes alarmed if a similar business opens within twenty miles. The Dutch operator of the woolen manufacture at Abbeville demanded that no similar business be set up within thirty leagues of the city. Farmers and landowners, by contrast, generally want to encourage their neighbors to cultivate and improve their farms and estates, not stop them. Unlike most manufacturers, they have no secrets. They usually like sharing a useful new practice with neighbors and spreading it as widely as possible. Old Cato says farming is “a respectable way to earn a living, the most secure and the least resented; those engaged in it are the least likely to think ill of others.” Landowners and farmers are spread around the country and cannot join forces as easily as merchants and manufacturers. The latter gather in towns and grow used to the exclusive spirit of the corporations there. They naturally try to win against all their countrymen the same exclusive privilege they usually have against the other inhabitants of their own towns. They seem to have invented the original restrictions on foreign imports that give them a monopoly of the home market. British landowners and farmers probably imitated them to put themselves on an equal footing with people they saw as intent on oppressing them. In doing so, they forgot the generosity natural to their position and demanded the exclusive right to supply their countrymen with corn and butcher's meat. Perhaps they did not stop to consider that free trade could harm their interests far less than those of the people they followed.

A permanent ban on importing foreign corn and cattle is effectively a law that the country's population and industry must never grow beyond what its own raw farm produce can support.

There are, however, two situations in which placing some burden on foreign industry to encourage domestic industry will generally be useful.

The first is when a particular industry is needed to defend the country. The defense of Great Britain, for instance, depends heavily on its number of sailors and ships. The act of navigation therefore rightly tries to give British sailors and ships a monopoly of their country's trade. In some cases it does this through outright bans and in others through heavy charges on foreign ships. These are the act's main provisions.

First, Ships whose owners, masters, and three-fourths of their sailors are not British subjects may not trade with British settlements and plantations or carry goods along the British coast. The penalty is forfeiture of the ship and cargo.

Secondly, many of the bulkiest imported goods may enter Great Britain only in ships of the British kind just described or in ships from the country that produced the goods. In the latter case, the owners, masters, and three-fourths of the sailors must belong to that country. Even goods brought in by those ships pay double aliens duty. Goods brought in ships of any other country cause the ship and goods to be forfeited. When the act was passed, the Dutch were, as they still are, Europe's major carriers. This rule excluded them entirely from carrying goods to Great Britain or bringing us goods from any other European country.

Thirdly, many of the bulkiest imported goods cannot be brought in from anywhere but their country of production, even in British ships. Otherwise the ship and cargo are forfeited. This rule too was probably aimed at the Dutch. Holland was then, as it is now, the main trading center for all European goods. The rule kept British ships from loading other European countries' goods in Holland.

Fourthly, any salt fish, whale fins, whalebone, oil, and blubber not caught and cured aboard British vessels pay double aliens duty when imported into Great Britain. The Dutch are still the chief European fishers supplying other nations. At the time they were the only ones trying to do so. This rule put a very heavy burden on their supplies to Great Britain.

When the act of navigation was passed, England and Holland were not at war, but the two nations deeply hated each other. The hostility had begun under the long parliament, which first drafted the act. It soon led to the Dutch wars during the governments of the Protector and Charles II. Some provisions of this famous act may therefore have grown out of national hostility. Still, they are as wise as if careful thought had produced every one. At that time, national hostility sought exactly what careful thinking would have advised: reducing the naval power of Holland, the only naval power that could threaten England's security.

The act of navigation does not help foreign commerce or the wealth it can produce. In dealing with other nations, a nation's interest is like a merchant's interest in dealing with other people: buy as cheaply and sell as dearly as possible. The best way to buy cheaply is to allow fully free trade, encouraging every nation to bring the goods it needs to buy. For the same reason, it is most likely to sell dearly when its markets attract the most buyers. The act of navigation does not charge foreign ships that come to export the products of British industry. Later acts have even removed the old aliens duty on most exported goods. That duty used to be paid on all goods, exported as well as imported. But when bans or high duties keep foreigners from coming to sell, they cannot always afford to come and buy. Arriving without cargo would mean losing the freight earnings on the voyage from their country to Great Britain. Reducing the number of sellers therefore also reduces the number of buyers. We are likely to pay more for foreign goods and receive less for our own than we would under freer trade. But defense matters much more than wealth. The act of navigation may therefore be the wisest of all England's commercial regulations.

The second situation in which a burden on foreign industry generally helps domestic industry arises when the domestic industry's products are taxed at home. It then seems reasonable to put an equal tax on similar foreign goods. This would not give domestic industry a monopoly of the home market. Nor would it draw more of the country's stock and labor into that industry than would go there naturally. It would merely keep the domestic tax from pushing some of that stock and labor away into less natural uses. Competition between domestic and foreign industry would remain as nearly as possible on the same terms as before the tax. In Great Britain, however, when domestically produced goods are taxed, a much heavier duty is usually placed on all imports of the same kind. This is meant to silence the loud complaints of our merchants and manufacturers that foreign competitors will undersell them at home.

Some people say this second limit on free trade should usually go much further than the particular foreign goods that compete with the taxed domestic goods. When a country taxes necessities, they argue, it should tax not only similar imported necessities but every kind of foreign good that competes with any domestic product. Such taxes, they say, necessarily make it more expensive to live. Wages must rise along with the cost of workers' subsistence. Consequently, every domestically produced commodity becomes more expensive even if it is not taxed directly, because the labor that produces it costs more. They say taxes on necessities are therefore effectively taxes on every particular product made at home. To put domestic and foreign industry on the same terms, they think every competing foreign good must bear a duty equal to this increase in the price of its domestic counterpart.