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The National System of Political Economy (3)

Chapter 3

The Netherlanders

In respect to temperament and manners, to the origin and
language of their inhabitants, no less than to their political
connection and geographical position, Holland, Flanders, and
Brabant constituted portions of the German Empire. The more
frequent visits of Charlemagne and his residence in the vicinity of
these countries must have exercised a much more powerful influence
on their civilisation than on that of more distant German
territories. Furthermore, Flanders and Brabant were specially
favoured by nature as respects agriculture and manufactures, as
Holland was as respects cattle-farming and commerce.

The National System of Political Economy (2)

Chapter 2

The Hansards

The spirit of industry, commerce, and liberty having attained full influence in Italy, crossed the Alps, permeated Germany, and erected for itself a new throne on the shores of the northern seas, the Emperor Henry I, the father of the liberator of the Italian municipalities, promoted the founding of new cities and the enlargement of older ones which were already partly established on the sites of the ancient Roman colonies and partly in the imperial domains.

The National System of Political Economy (1)

Chapter 1

The Italians

At the revival of civilisation in Europe, no county was in so favourable a position as Italy in respect to commerce and industry. Barbarism had not been able entirely to eradicate the culture and civilisation of ancient Rome. A genial climate and a fertile soil, notwithstanding an unskilful system of cultivation, yielded abundant nourishment for a numerous population. The most necessary arts and industries remained as little destroyed as the municipal institutions of ancient Rome. Prosperous coast fisheries served everywhere as nurseries for seamen, and navigation along Italy’s extensive sea-coasts abundantly compensated her lack of internal means of transport. Her proximity to Greece, Asia Minor, and Egypt, and her maritime intercourse with them, secured for Italy special advantages in the trade with the East which had previously, though not extensively, been carried on through Russia with the countries of the North. By means of this commercial intercourse Italy necessarily acquired those branches of knowledge and those arts and manufactures which Greece had preserved from the civilisation of ancient times.

The National System of Political Economy (36)

Chapter 36

The Commercial Policy of the German Zollverein

If any nation whatever is qualified for the establishment of a national manufacturing power, it is Germany; by the high rank which she maintains in science and art, in literature and education, in public administration and in institutions of public utility; by her morality and religious character, her industry and domestic economy; by her perseverance and steadfastness in business occupations; as also by her spirit of invention, by the number and vigour of her population; by the extent and nature of her territory, and especially by her highly advanced agriculture, and her physical, social, and mental resources.

The National System of Political Economy (35)

Chapter 35

Continental Politics

The highest ultimate aim of rational politics is (as we have shown in our Second Book) the uniting of all nations under a common law of right, an object which is only to be attained through the greatest possible equalisation of the most important nations of the earth in civilisation, prosperity, industry, and power, by the conversion of the antipathies and conflicts which now exist between them into sympathy and harmony. But the solution of this problem is a work of immensely long duration. At the present time the nations are divided and repelled from one another by manifold causes; chief among these are conflicts about territory. As yet, the apportionment of territory to the European nations does not correspond to the nature of things. Indeed, even in theory, people are not yet agreed upon the fundamental conditions of a just and natural apportionment of territory. Some desire that their national territory should be determined according to the requirements of their metropolis without regard to language, commerce, race, and so forth, in such a way that the metropolis should be situated in the centre and be protected as much as possible against foreign attacks. They desire to have great rivers for their frontiers. Others maintain, and apparently with greater reason, that sea-coasts, mountains, language, and race, constitute better frontiers than great rivers. There still are nations who are not in possession of those mouths of rivers and sea-coasts which are indispensable to them for the development of their commerce with the world and for their naval power.

The National System of Political Economy (34)

Chapter 34

The Insular Supremacy and the German Commercial Union

What a great nation is at the present day without a vigorous commercial policy, and what she may become by the adoption of a vigorous commercial policy, Germany has learnt for herself during the last twenty years. Germany was that which Franklin once said of the State of New Jersey, ’a cask which was tapped and drained by its neighbours on every side.’ England, not contented with having ruined for the Germans the greater part of their own manufactories and supplied them with enormous quantities of cotton and woollen fabrics, excluded from her ports German grain and timber, nay from time to time also even German wool. There was a time when the export of manufactured goods from England to Germany was ten times greater than that to her highly extolled East Indian Empire. Nevertheless the all-monopolising islanders would not even grant to the poor Germans what they conceded to the conquered Hindoos, viz. to pay for the manufactured goods which they required by agricultural produce. In vain did the Germans humble themselves to the position of hewers of wood and drawers of water for the Britons. The latter treated them worse than a subject people. Nations, like individuals, if they at first only permit themselves to be ill-treated by one, soon become scorned by all, and finally become an object of derision to the very children. France, not contented with exporting to Germany enormous quantities of wine, oil, silk, and millinery, grudged the Germans their exports of cattle, grain, and flax; yes, even a small maritime province formerly possessed by Germany and inhabited by Germans, which having become wealthy and powerful by means of Germany, at all times was only able to maintain itself with and by means of Germany, barred for half a generation Germany’s greatest river by means of contemptible verbal quibbles. To fill up the measure of this contempt, the doctrine was taught from a hundred professorial chairs, that nations could only attain to wealth and power by means of universal free trade. Thus it was; but how is it now? Germany has advanced in prosperity and industry, in national self-respect and in national power, in the course of ten years as much as in a century. And how has this result been achieved? It was certainly good and beneficial that the internal tariffs were abolished which separated Germans from Germans; but the nation would have derived small comfort from that if her home industry had thenceforth remained freely exposed to foreign competition. It was especially the protection which the tariff of the Zollverein secured to manufactured articles of common use, which has wrought this miracle. Let us freely confess it, for Dr Bowring(1*) has incontrovertibly shown it, that the Zollverein tariff has not, as was before asserted, imposed merely duties for revenue — that it has not confined itself to duties of ten to fifteen per cent as Huskisson believed — let us freely admit that it has imposed protective duties of from twenty to sixty per cent as respects the manufactured articles of common use.

The National System of Political Economy (33)

Chapter 33

The Insular Supremacy and the Continental Powers — North America and France

In all ages there have been cities or countries which have been pre-eminent above all others in industry, commerce, and navigation; but a supremacy such as that which exists in our days, the world has never before witnessed. In all ages, nations and powers have striven to attain to the dominion of the world, but hitherto not one of them has erected its power on so broad a foundation. How vain do the efforts of those appear to us who have striven to found their universal dominion on military power, compared with the attempt of England to raise her entire territory into one immense manufacturing, commercial, and maritime city, and to become among the countries and kingdoms of the earth, that which a great city is in relation to its surrounding territory. to comprise within herself all industries, arts, and sciences; all great commerce and wealth; all navigation and naval power — a world’s metropolis which supplies all nations with manufactured goods, and supplies herself in exchange from every nation with those raw materials and agricultural products of a useful or acceptable kind, which each other nation is fitted by nature to yield to her — a treasure-house of all great capital — a banking establishment for all nations, which controls the circulating medium of the whole world, and by loans and the receipt of interest on them makes all the peoples of the earth her tributaries. Let us, however, do justice to this Power and to her efforts. The world has not been hindered in its progress, but immensely aided in it, by England. She has become an example and a pattern to all nations — in internal and in foreign policy, as well as in great inventions and enterprises of every kind; in perfecting industrial processes and means of transport, as well as in the discovery and bringing into cultivation uncultivated lands, especially in the acquisition of the natural riches of tropical countries, and in the civilisation of barbarous races or of such as have retrograded into barbarism. Who can tell how far behind the world might yet remain if no England had ever existed? And if she now ceased to exist, who can estimate how far the human race might retrograde? Let us then congratulate ourselves on the immense progress of that nation, and wish her prosperity for all future time. But ought we on that account also to wish that she may erect a universal dominion on the ruins of the other nationalities? Nothing but unfathomable cosmopolitanism or shopkeepers’ narrow-mindedness can give an assenting answer to that question. In our previous chapters we have pointed out the results of such denationalisation, and shown that the culture and civilisation of the human race can only be brought about by placing many nations in similar positions of civilisation, wealth, and power; that just as England herself has raised herself from a condition of barbarism to her present high position, so the same path lies open for other nations to follow: and that at this time more than one nation is qualified to strive to attain the highest degree of civilisation, wealth, and power. Let us now state summarily the maxims of State policy by means of which England has attained her present greatness. They may be briefly stated thus:

The National System of Political Economy (32)

Chapter 32

The System of Values of Exchange (Continued) — Jean Baptiste Say and his School

This author on the whole has merely endeavoured to systematise, to elucidate, and to popularise, the materials which Adam Smith had gathered together after an irregular fashion. In that he has perfectly succeeded, inasmuch as he possessed in a high degree the gift of systematisation and elucidation. Nothing new or original is to be found in his writings, save only that he asserted the productiveness of mental labours, which Adam Smith denied. Only, this view, which is quite correct according to the theory of the productive powers, stands opposed to the theory of exchangeable values, and hence Smith is clearly more consistent than Say. Mental labourers produce directly no exchangeable values; nay, more, they diminish by their consumption the total amount of material productions and savings, and hence the total of material wealth. Moreover, the ground on which Say from his point of view includes mental labourers among the productive class, viz. because they are paid with exchangeable values, is an utterly baseless one, inasmuch as those values have been already produced before they reach the hands of the mental labourers; their possessor alone is changed, but by that change their amount is not increased. We can only term mental labourers productive if we regard the productive powers of the nation, and not the mere possession of exchangeable values, as national wealth. Say found himself opposed to Smith in this respect, exactly as Smith had found himself opposed to the physiocrats.

The National System of Political Economy (31)

Chapter 31

The System of Values of Exchange (Falsely Termed by the School, The ’Industrial’ System) — Adam Smith

Adam Smith’s doctrine is, in respect to national and international conditions, merely a continuation of the physiocratic system. Like the latter, it ignores the very nature of nationalities, seeks almost entirely to exclude politics and the power of the State, presupposes the existence of a state of perpetual peace and of universal union, underrates the value of a national manufacturing power, and the means of obtaining it, and demands absolute freedom of trade.

Adam Smith fell into these fundamental errors in exactly the same way as the physiocrats had done before him, namely, by regarding absolute freedom in international trade as an axiom assent to which is demanded by common sense, and by not investigating to the bottom how far history supports this idea.

The National System of Political Economy (30)

Chapter 30

The Physiocratic or Agricultural System

Had the great enterprise of Colbert been permitted to succeed — had not the Revocation of the Edict of Nantes, the love of splendour and false ambition of Louis XIV, and the debauchery and extravagance of his successors, nipped in the bud the seeds which Colbert had sown — if consequently a wealthy manufacturing and commercial interest had arisen in France, if by good fortune the enormous properties of the French clergy had been given over to the public, if these events had resulted in the formation of a powerful lower house of Parliament, by whose influence the feudal aristocracy had been reformed — the physiocratic system would hardly have ever come to light. That system was evidently deduced from the then existing circumstances of France, and was only applicable to those circumstances.