The law currently in force appears to sanction the fact that it is not true, contrary to what economists say, that when we buy we sell of necessity a corresponding portion of goods. It is obvious that we can buy things, not with our customary products, not with our income, not with the fruit of ongoing production but with our capital, with products that have been accumulated and saved and those used for making more, that is to say, we can spend and dissipate the profits of previous savings, that we can grow poorer and march toward our ruin and that we can consume the national capital in its entirety. This is exactly what we are doing. Each year, we give 200 million to foreigners.”
Well then, here is a man with whom we can agree. His language contains no hypocrisy. The balance of trade is set out clearly. France imports 200 million more than it exports. Therefore, France is losing 200 million a year. And the remedy? To prevent imports. The conclusion is irreproachable.
[print edition page 47]
It is therefore M. Lestiboudois whom we are going to attack, for how can we combat M. Gaulthier? If you say to him, “The balance of trade is a mistake,” he will reply to you, “That is what I have put forward in my introductory remarks.” If you exclaim, “But the balance of trade is a truth,” he will reply to you, “That is what I have stated in my conclusions.” The Economist School4 will doubtless criticize me for debating with M. Lestiboudois. Combating the balance of trade, I will be told, is like tilting at windmills.
Take care, however; the balance of trade is neither as old, nor as sick, nor as dead as M. Gaulthier wishes to tell us, for the entire Chamber, including M. Gaulthier himself, aligned themselves with M. Lestiboudois’s theory through their vote.
However, in order not to tire the reader, I will not go into this theory. I will content myself with subjecting it to the test of facts.
Our principles are constantly being accused of being correct only in theory. But tell me, sirs, do you believe that the account books of businessmen are correct in practice? It seems to me that, if there is anything in the world that has practical authority when it is a question of ascertaining profits and losses, it is commercial accounting. Apparently all the traders on earth have not agreed down the centuries to keep their books in such a fashion that profits are shown as losses and losses as profits. Truly, I would prefer to believe that M. Lestiboudois is a bad economist.
Well, when one of my friends, who is a trader, completed two operations with very contrasting results, I was curious to compare the accounts of the warehouse with those of the customs service, interpreted by M. Lestiboudois with the sanction of our six hundred legislators.
M.T. shipped from Le Havre to the United States a cargo of French goods, in the majority products known as articles de Paris,5 for an amount of 200,000 fr. This was the figure declared to the customs. When it arrived in New Orleans, it was found that the cargo had incurred 10 percent of costs and paid 30 percent in duty, which made it worth 280,000 fr. It was sold at a profit of 20 percent, or 40,000 fr., and produced a total of 320,000 fr., which the consignee converted into cotton. These cotton goods further had to bear 10 percent costs for transport, insurance, commission, etc., so that, when it entered Le Havre, the new cargo was worth 352,000 fr., and this was the figure recorded in the registers of the customs. Lastly, M.T. made another
[print edition page 48]
20 percent profit on this return shipment, or 70,400 fr.; in other words, the cotton goods were sold for 422,400 fr.
If M. Lestiboudois requires it, I will send him an excerpt from M.T.’s books. He will see there under the credits of the profit and loss account, that is to say as profits, two entries, one for 40,000, the other for 70,400 fr., and M.T. is totally convinced that in this respect his accounts are not misleading him.
However, what do the figures that the customs have recorded regarding this operation tell M. Lestiboudois? They tell him that France has exported 200,000 fr. and that it has imported 352,000 fr., from which the honorable deputy concludes “that it has spent and dissipated the profits of previous savings, that it has impoverished itself, that it is marching toward ruin, and that it has given 152,000 fr. of capital to foreigners.”
A short time afterward, M.T. shipped another cargo of nationally produced goods worth 200,000 fr. But the unfortunate ship foundered on leaving the port, and M.T. was left with no alternative but to record in his books two short entries, as follows:
Various goods debited to X for 200,000 fr. for the purchase of various articles shipped by the boat N.
Profit and loss due to various goods 200,000 fr. for the total and final loss of the cargo.
In the meantime, the customs had recorded for its part 200,000 fr. on its export table, and since it will never have anything to record on the imports table, it follows that M. Lestiboudois and the Chamber will see in this shipwreck a clear, net profit of 200,000 fr. for France.
One more consequence has to be drawn from this, which is that according to the theory of the balance of trade, France has a very simple way of doubling its capital at every moment. To do this, once it has passed it through the customs, it just has to throw it into the sea. In this case, exports will be equal to the amount of its capital; imports will be nil and even impossible, and we will gain everything that the ocean has swallowed up.
This is a joke, the protectionists will say. It is impossible for us to say such absurd things. However, you are saying them and what is more, you are doing them; you are imposing them in practice on your fellow citizens, at least as far as you are able.
The truth is that the balance of trade would have to be taken backward and national profit in foreign trade calculated through the excess of imports over exports. This excess, with costs deducted, is the genuine profit. But
[print edition page 49]
this theory, which is the correct one, leads directly to free trade. I hand this theory to you, sirs, like all the others that were the subject of the previous chapters. Exaggerate it as much as you like, it has nothing to fear from such a test. Assume, if that amuses you, that foreigners swamp us with all sorts of useful goods without asking us for anything; if our imports are infinite and our exports nil, I challenge you to prove to me that we would be the poorer for this.6
7. Petition by the Manufacturers of Candles, Etc.
PUBLISHING HISTORY:
Original title: “Pétition des fabricants de chandelles, etc.”
Place and date of first publication: JDE 12 (October 1845): 204–7.
First French edition as book or pamphlet: Economic Sophisms (First Series) (1846).
Location in Paillottet’s edition of OC: Vol. 4. Sophismes économiques. Petits pamphlets I, pp. 57–62.
Previous translations: 1st English ed., 1846; 1st American ed., 1848; FEE ed., 1964.
By the manufacturers of tallow candles, wax candles, lamps, candlesticks, street lamps, snuffers, extinguishers, and producers of tallow, oil, resin, alcohol, and in general everything that relates to lighting
To Honorable Members of the Chamber of Deputies
Sirs,
You are doing all right for yourselves. You are rejecting abstract theories; abundance and cheapness are of little account to
