II. On Disadvantages to Industry through Increasing Import Tariffs (1845)
With enormous effort and astonishing sacrifice, Germany is now building highways, railroads, and steamships. It is directing its chief energies at expanding and facilitating the means of transportation in the interest of industry. Commerce and industry are, in the contemporary view, two inseparable, mutually determining elements. Expanded industry requires facilitated commerce, and from the latter we expect, in turn, an economic upturn for the former in the future.
The question of inhibiting commerce has acquired completely new importance these days. In previous times, when commerce was so greatly restricted by invincible natural barriers, artificial inhibitors, while certainly capable of encumbering the development of industry, could not interfere with the entire system; for industry at the time was not based on wide-ranging commerce; there was a lack of funds to build this kind of foundation. But now, where human energy, with the help of iron and steam, drives the most colossal loads through valley and mountain and ocean with a speed that almost causes distances to disappear, — now, since commerce, so wonderfully liberated from natural shackles, is orchestrating a general reorganization of industry, interference with the natural course of development must have the most widespread and far-reaching consequences. Every facilitated or newly opened transportation route induces a new division of labor, greater centralization and localization of trade, a more advantageous application of the means of production.* Placing large sums of capital in highways, railroads, and steamships only happens with the prospect that one will draw a larger income from the remaining operating funds, through a more advantageous application, than one previously drew from the entire working capital. From the splendor of the applications now made for communication one can measure the size of the changes in all the capital investment undertaken or about to be undertaken. Trade is cut back here, expanded there. Here old branches of industry disappear, there new ones arise; all of industry receives a new foundation with a new division of labor, every branch a new circle of activity; and, accordingly, all of industry has to reorganize its facilities to the broadest extent. One should therefore consider what consequences would follow if one interfered clumsily at a moment like this and blundered, — if one, out of ignorance of the system of industry, or seduced by the deceptive
* Major von Prittwitz demonstrates that sales, from a certain point onward, grow in a square of that ratio in which shipping costs are reduced; because the distance up to which something can be shipped with profit, or the radius of the shipping circle, stands in a reverse ratio to the transportation costs – original footnote.
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