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gradually　to　produce　them　itself。



　　　　Bounties　are　objectionable　as　permanent　measures　to　render　the



exports　and　the　competition　of　the　native　manufactories　possible



with　the　manufactories　of　further　advanced　nations　in　neutral



markets；　but　they　are　still　more　objectionable　as　the　means　of



getting　possession　of　the　inland　markets　for　manufactured　goods　of



nations　which　have　themselves　already　made　progress　in



manufactures。　Yet　there　are　cases　where　they　are　to　be　justified　as



temporary　means　of　encouragement；　namely；　where　the　slumbering



spirit　of　enterprise　of　a　nation　merely　requires　stimulus　and



assistance　in　the　first　period　of　its　revival；　in　order　to　evoke　in



it　a　powerful　and　lasting　production　and　an　export　trade　to



countries　which　themselves　do　not　possess　flourishing　manufactures。



But　even　in　these　cases　it　ought　to　be　considered　whether　the　State



would　not　do　better　by　making　advances　free　of　interest　and



granting　special　privileges　to　individual　men　of　enter　prise；　or



whether　it　would　not　be　still　more　to　the　purpose　to　promote　the



formation　of　companies　to　carry　into　effect　such　primary



experimental　adventures；　to　advance　to　such　companies　a　portion　of



their　requisite　share　capital　out　of　the　State　treasury；　and　to



allow　to　the　private　persons　taking　shares　in　them　a　preferential



interest　on　their　invested　capital。　As　instances　of　the　cases



referred　to；　we　may　mention　experimental　undertakings　in　trade　and



navigation　to　distant　countries；　to　which　the　commerce　of　private



persons　has　not　yet　been　extended；　the　establishment　of　lines　of



steamers　to　distant　countries；　the　founding　of　new　colonies；　&c。







Chapter　27







The　Customs　System　and　the　Popular　School







　　　　The　popular　school　does　not　discriminate　（in　respect　of　the



operation　of　protective　duties）　between　natural　or　primitive



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　int