Mises Daily Articles
[Included in The Bastiat Collection (2011), this article appeared in Economic Sophisms (1845).]
At a time when everybody is bent on bringing about a saving in the expense of transport — and when, in order to effect this saving, we are forming roads and canals, improving our steamers, and connecting Paris with all our frontiers by a network of railways — at a time, too, when I believe we are ardently and sincerely seeking a solution of the problem of how to bring the prices of commodities, in the place where they are to be consumed, as nearly as possible to the level of their prices in the place where they were produced — I should think myself remiss to my country, to my age, and to myself if I kept any longer secret the marvelous discovery that I have just made.
The illusions of inventors are proverbial, but I am positively certain that I have discovered an infallible means of bringing products from every part of the world to France, and vice versa, at a considerable reduction of cost.
Infallible, did I say? Its being infallible is only one of the advantages of my invention.
It requires neither plans, estimates, preparatory study, engineers, mechanists, contractors, capital, shareholders, or government aid!
It presents no danger of shipwreck, explosion, fire, or collision!
It may be brought into operation at any time!
Moreover — and this must undoubtedly recommend it to the public — it will not add a penny to the budget, but the reverse. It will not increase the staff of functionaries, but the reverse. It will interfere with no man's liberty, but the reverse.
It is observation, not chance, that has put me in possession of this discovery, and I will tell you what suggested it.
I had at the time this question to resolve: "Why does an article manufactured at Brussels, for example, cost dearer when it comes to Paris?"
I soon perceived that it proceeds from this: That between Paris and Brussels obstacles of many kinds exist. First of all, there is distance, which entails loss of time, and we must either submit to this ourselves, or pay another to submit to it. Then come rivers, marshes, accidents, bad roads, which are so many difficulties to be surmounted. We succeed in building bridges, in forming roads, and making them smoother by pavements, iron rails, etc. But all this is costly, and the commodity must be made to bear the cost. Then there are robbers who infest the roads, and a body of police must be kept up, etc.
Now, among these obstacles there is one that we have ourselves set up, and at no little cost, too, between Brussels and Paris. There are men who lie in ambuscade along the frontier, armed to the teeth, and whose business it is to throw difficulties in the way of transporting merchandise from one country to the other. They are called customhouse officers, and they act in precisely the same way as ruts and bad roads. They retard; they trammel commerce; they augment the difference we have noted between the price paid by the consumer and the price received by the producer — that very difference, the reduction of which, as far as possible, forms the subject of our problem.
That problem is resolved in three words: reduce your tariff.
You will then have done what is equivalent to constructing the Northern Railway without cost, and will immediately begin to put money in your pocket.
In truth, I often seriously ask myself how anything so whimsical could ever have entered into the human brain as first of all to lay out many millions for the purpose of removing the natural obstacles that lie between France and other countries, and then to lay out many more millions for the purpose of substituting artificial obstacles, which have exactly the same effect; so much so, indeed, that the obstacle created and the obstacle removed neutralize each other, and leave things as they were before, the residue of the operation being a double expense.
A Belgian product is worth at Brussels 20 francs, and the cost of carriage would raise the price at Paris to 30 francs. The same article made in Paris costs 40 francs. And how do we proceed?
In the first place, we impose a duty of 10 francs on the Belgian product, in order to raise its cost price at Paris to 40 francs; and we pay numerous officials to see the duty stringently levied, so that, on the road, the commodity is charged 10 francs for the carriage and 10 francs for the tax.
Having done this, we reason thus: The carriage from Brussels to Paris, which costs 10 francs, is very dear. Let us expend two or three hundred millions (of francs) in railways, and we shall reduce it by one-half. Evidently all that we gain by this is that the Belgian product would sell in Paris for 35 francs, viz: 20 francs, its price at Brussels, 10 francs duty, 5 francs reduced carriage by railway. Total, 35 francs, representing cost price at Paris.
Now, I ask, would we not have attained the same result by lowering the tariff by 5 francs. We should then have 20 francs (the price at Brussels), 5 francs reduced duty, 10 francs carriage by ordinary roads. Total, 35 francs, representing cost price at Paris.
And by this process we should have saved the 200 millions which the railway cost, plus the expense of customhouse surveillance, for this last would be reduced in proportion to the diminished encouragement held out to smuggling.
But it will be said that the duty is necessary to protect Parisian industry. Be it so; but then you destroy the effect of your railway.
For if you persist in desiring that the Belgian product should cost at Paris 40 francs, you must raise your duty to 15 francs, and then you have 20 francs (the price at Brussels), 15 francs protecting duty, 5 francs railway carriage. Total, 40 francs, being the equalized price.
Then, I venture to ask, what, under such circumstances, is the good of your railway?
In sober earnestness, let me ask, is it not humiliating that the 19th century should make itself a laughingstock to future ages by such puerilities, practiced with such imperturbable gravity? To be the dupe of other people is not very pleasant, but to employ a vast representative apparatus in order to dupe, and double dupe, ourselves — and that, too, in an affair of arithmetic — should surely humble the pride of this age of enlightenment.