The National System of Political Economy

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.

If any nation whatever has a right to anticipate rich results from a protective system adapted to her circumstances, for the progress of her home manufactures, for the increase of her foreign trade and her navigation, for the perfecting of her internal means of transport, for the prosperity of her agriculture, as also for the maintenance of her independence and the increase of her power abroad, it is Germany.

Yes, we venture to assert, that on the development of the German protective system depend the existence, the independence, and the future of the German nationality. Only in the soil of general prosperity does the national spirit strike its roots, produce fine blossoms and rich fruits; only from the unity of material interests does mental power arise, and only from both of these national power. But of what value are all our endeavours, whether we are rulers or subjects, nobles or simple citizens, learned men, soldiers, or civilians, manufacturers, agriculturists, or merchants, without
nationality and without guarantees for the continuance of our nationality?

If we import raw cotton from Egypt, Brazil, and North America, we in that case pay for it in our own manufactured goods; if, on the other hand, we import cotton yarn from England, we have to pay the value of it in raw materials and articles of food which we could more advantageously work up or consume ourselves, or else we must pay for it in specie which we have acquired elsewhere, and with which we could more advantageously purchase foreign raw materials to work up for ourselves, or colonial produce for our own consumption.

In the same way the introduction of spinning linen yarn by machinery offers us the means not only of increasing our home consumption of linen, and of perfecting our agriculture, but also of enormously increasing our trade with tropical countries.

For the two above-named branches of industry, as well as for the manufacture of woollens, we are as favourably circumstanced as any other nation, by an amount of water power hitherto not utilised, by cheap necessaries of life, and by low wages. What we lack is simply and solely a guarantee for our capitalists and artisans by which they may be protected against loss of capital and want of work. A moderate protective duty of about twenty-five per cent. during the next five years, which could be maintained for a few years at that rate and then be lowered to fifteen to twenty per cent., ought completely to accomplish this object. Every argument which is adduced by the supporters of the theory of values against such a measure, has been refuted by us. On the other hand, we may add a further argument in favour of that measure, that these great branches of industry especially offer us the means for establishing extensive machine manufactories and for the development of a race of competent technical instructors and practical foremen.

But it is not yet the case in reference to our trade with Holland, which country supplies us with enormous quantities of her colonial produce, but only takes in return disproportionately small quantities of our manufactured goods.

At the same time Holland is naturally directed to the market of Germany for the disposal of the greater part of her colonial produce, inasmuch as England and France derive their supplies of such produce for the most part from their own colonies and from subject countries (where they exclusively possess the market for manufactured goods), and hence they only import small quantities of Dutch colonial produce.

Holland has no important manufacturing industry of her own, but, on the other hand, has a great productive industry in her colonies, which has recently greatly increased and may yet be immeasurably further increased. But Holland desires of Germany that which is unfair, and acts contrary to her own interests if rightly understood, inasmuch as she desires to dispose of the greater part of her colonial produce to Germany, while she desires to supply her requirements of manufactured goods from any quarter she likes best. This is, for Holland, an only apparently beneficial and a short-sighted policy; for if Holland would give preferential advantages to German manufactured goods both in the mother country and in her colonies, the demand in Germany for Dutch colonial produce would increase in the same proportion in which the sale of German manufactured goods to Holland and her colonies increased, or, in other words, Germany would be able to purchase so much the more colonial produce in proportion as she sold more manufactured goods to Holland; Holland would be able to dispose of so much more colonial produce to Germany as she purchased from Germany manufactured goods. This reciprocal exchange operation is, at present, rendered impracticable by Holland if she sells her colonial produce to Germany while she purchases her requirements in manufactured goods from England, because England (no matter how much of manufactured goods she sells to Holland) will always supply the greater part of her own requirements of colonial produce from her own colonies, or from the countries which are subject to her.

The above-named policy would constitute the most effective means of inducing Holland to join the German Zollverein.

As matters now stand, Germany has no reason for sacrificing her own manufactories of beetroot sugar to the trade with Holland; for only in case Germany can pay for her requirements of this article by means of her own manufactured goods, is it more to her advantage to supply that requirement by an exchange trade with tropical countries, than by producing it herself at home.

Hence the attention of Germany should be at once chiefly directed to the extension of her trade with Northern, Central, and South America, and with the free markets of the West Indies. In connection with that, the following measures, in addition to that above adverted to, appear desirable: the establishment of a regular service of steamships between the German seaports and the principal ports of those countries, the promotion of emigration thither, the confirmation and extension of friendly relations between them and the Zollverein, and especially the promotion of the civilisation of those countries.

Through the increase of the means of intercourse of Germany with the above-named countries, the emigration of Germans to those countries and their settlement there as citizens would be no less promoted; and by that means the foundation would be laid for future increase of commerce with them. For this object the states of the Zollverein ought to establish everywhere consulates and diplomatic agencies, by means of which the settlement and undertakings of German citizens could be promoted, and especially to assist those states in every practicable way in giving stability to their governments and improving their degree of civilisation.

Still less dependence can be placed on an active intercourse between Germany and the German emigrants to the west of North America. The first settler is always compelled by necessity to make for himself the greater part of his articles of clothing and utensils; and these customs, which originated from mere necessity, continue for the most part to the second and third generation. Hence it is that North America itself is a country which makes powerful efforts in manufacturing industry, and will continually strive more and more to gain possession of her home market for manufactured goods, for her own industry.

On the other hand, we would on that account by no means maintain that the American market for manufactured goods is not a very important one, and well worthy of regard, especially for Germany. On the contrary, we are of opinion that for many articles of luxury and for manufactured articles which are easy of transport, and in which the wages of labour constitute a chief element of the price, that market is one of the most important, and must from year to year, as respects the articles above named, become more important for Germany. What we contend is only this, that those Germans who emigrate to the west of North America give no important assistance in increasing the demand for German manufactured goods, and that in reference to that object emigration to Central and South America requires and deserves very much more direct encouragement.

A vigorous German consular and diplomatic system ought to be established in these quarters, the branches of which should enter into correspondence with one another. Young explorers should be encouraged to travel through these countries and make impartial reports upon them. Young merchants should be encouraged to inspect them—young medical men to go and practise there. Companies should be founded and supported by actual share subscription, and taken under special protection, which companies should be formed in the German seaports in order to buy large tracts of land in those countries and to settle them with German colonists—companies for commerce and navigation, whose object should be to open new markets in those countries for German manufactures and to establish lines of steamships—mining companies, whose object should be to devote German knowledge and industry to winning the great mineral wealth of those countries. In every possible way the Zollverein ought to endeavour to gain the good-will of the population and also of the governments of those countries, and especially to promote by that means public security, means of communication, and public order; indeed, one ought not to hesitate, in case one could by that means put the governments of those countries under obligation to us, also to assist them by sending an important auxiliary corps.

A similar policy ought to be followed in reference to the East—to European Turkey and the Lower Danubian territories. Germany has an immeasurable interest that security and order should be firmly established in those countries, and in no direction so much as in this is the emigration of Germans so easy for individuals to accomplish, or so advantageous for the nation. A man dwelling by the Upper Danube could transport himself to Moldavia and Wallachia, to Servia, or also to the south-western shores of the Black Sea, for one-fifth part of the expenditure of money and time which are requisite for his emigration to the shores of Lake Erie. What attracts him to the latter more than to the former is, the greater degree of liberty, security, and order which prevails in the latter. But under the existing circumstances of Turkey it ought not to be impossible to the German states, in alliance with Austria, to exercise such an influence on the improvement of the public condition of those countries, that the German colonist should no longer feel himself repelled from them, especially if the governments themselves would found companies for colonisation, take part in them themselves, and grant them continually their special protection.

Especially, nothing is so desirable as that the Zollverein and Austria at a later period, after the industry of the Zollverein states has been better developed and has been placed in a position of greater equality to that of Austria, should make, by means of a treaty, reciprocal concessions in respect to their manufactured products.

After the conclusion of such a treaty, Austria would have an equal interest with the states of the Zollverein in making the Turkish provinces available for the benefit of their manufacturing industry and of their foreign commerce.

In anticipation of the inclusion in the Zollverein of the German seaports and Holland, it would be desirable that Prussia should now make a commencement by the adoption of a German commercial flag, and by laying the foundation for a future German fleet, and that she should try whether and how German colonies can be founded in Australia, New Zealand, or in or on other islands of Australasia.