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Quotations about Liberty and Power

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One has to admire McCulloch’s directness and simplicity. Who would have thought that so intractable problem like smuggling could be solved by one stroke of the pen? Adam Smith, Jean-Baptiste Say, Frédéric Bastiat, John Stuart Mill, Herbert Spencer, perhaps?

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11 May, 2009

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John Ramsay McCulloch argues that smuggling is “wholly the result of vicious commercial and financial legislation” and that it could be ended immediately by abolishing this legislation (1899)

Read the full quote in context here.

The advocate of Ricardian economics, John Ramsay McCulloch (1789-1864), argued that smuggling was caused by poor legislation, and that it resulted in the corruption of the law courts and the sending of troops into the field

This crime, which occupies so prominent a place in the criminal legislation of all modern states, is wholly the result of vicious commercial and financial legislation. It is the fruit either of prohibitions of importation, or of oppressively high duties. It does not originate in any depravity inherent in man; but in the folly and ignorance of legislators. … To create by means of high duties an overwhelming temptation to indulge in crime, and then to punish men for indulging in it, is a proceeding completely subversive of every principle of justice. It revolts the natural feelings of the people; and teaches them to feel an interest in the worst characters—for such smugglers generally are—to espouse their cause, and avenge their wrongs. … The true way to put down smuggling is to render it unprofitable; to diminish the temptation to engage in it; and this is not to be done by surrounding the coasts with cordons of troops, by the multiplication of oaths and penalties, and making the country the theatre of ferocious and bloody contests in the field, and of perjury and chicanery in the courts of law; but by repealing prohibitions, and reducing duties, so that their collection may be enforced with a moderate degree of vigilance; and that the forfeiture of the article may be a sufficient penalty upon the smuggler.

The full passage from which this quotation was taken can be be viewed below (front page quote in bold):

Origin and Prevention of Smuggling. This crime, which occupies so prominent a place in the criminal legislation of all modern states, is wholly the result of vicious commercial and financial legislation. It is the fruit either of prohibitions of importation, or of oppressively high duties. It does not originate in any depravity inherent in man; but in the folly and ignorance of legislators. A prohibition against importing a commodity does not take away the taste for it; and the imposition of a high duty on any article occasions a universal desire to escape or evade its payment. Hence the rise and occupation of the smuggler. The risk of being detected in the clandestine introduction of commodities under any system of fiscal regulations may be always valued at a certain average rate; and whenever the duties exceed this rate, smuggling immediately takes place. Now, there are plainly but two ways of checking this practice: either the temptation to smuggle must be diminished by lowering the duties, or the difficulties in the way of smuggling must be increased. The first is obviously the more natural and efficient method of effecting the object in view; but the second has been most generally resorted to even in cases where the duties were quite excessive. Governments have almost uniformly consulted the persons employed in the collection of the revenue with respect to the best mode of rendering taxes effectual; though it is clear that the interests, prejudices and peculiar habits of such persons utterly disqualify them from forming a sound opinion on such a subject. They can not recommend a reduction of duties as a means of repressing smuggling and increasing revenue, without acknowledging their own incapacity to detect and defeat illicit practices; and the result has been, that, instead of ascribing the prevalence of smuggling to its true causes, the officers of customs and excise have almost universally ascribed it to some defect in the laws, or in the mode of administering them, and have proposed repressing it by new regulations, and by increasing the number and severity of the penalties affecting the smuggler. As might have been expected, these attempts have, in the great majority of cases, proved signally unsuccessful. And it has been invariably found, that no vigilance on the part of the revenue officers, and no severity of punishment, can prevent the smuggling of such commodities as are either prohibited or loaded with oppressive duties. The smuggler is generally a popular character; and whatever the law may declare on the subject, it is ludicrous to expect that the bulk of society should ever be brought to think that those who furnish them with cheap brandy, geneva, tobacco, etc., are guilty of any very heinous offense. “To pretend,” says Adam Smith, “to have any scruple about buying smuggled goods, though a manifest encouragement to the violation of the revenue laws, and to the perjury which almost always attends it, would, in most countries, be regarded as one of those pedantic pieces of hypocrisy, which, instead of gaining credit with anybody, serve only to expose the person who affects to practice them to the suspicion of being a greater knave than most of his neighbors. By this indulgence of the public the smuggler is often encouraged to continue a trade which he is thus taught to consider as, in some measure, innocent; and when the severity of the revenue laws is ready to fall upon him, he is frequently disposed to defend with violence what be has been accustomed to regard as his just property; and, from being at first rather imprudent than criminal, he at last too often becomes one of the most determined violaters of the laws of society.” (“Wealth of Nations,” p. 406.) To create by means of high duties an overwhelming temptation to indulge in crime, and then to punish men for indulging in it, is a proceeding completely subversive of every principle of justice. It revolts the natural feelings of the people; and teaches them to feel an interest in the worst characters—for such smugglers generally are—to espouse their cause, and avenge their wrongs.

A punishment which is not proportioned to the offense, and which does not carry the sanction of public opinion along with it, can never be productive of any good effect. The true way to put down smuggling is to render it unprofitable; to diminish the temptation to engage in it; and this is not to be done by surrounding the coasts with cordons of troops, by the multiplication of oaths and penalties, and making the country the theatre of ferocious and bloody contests in the field, and of perjury and chicanery in the courts of law; but by repealing prohibitions, and reducing duties, so that their collection may be enforced with a moderate degree of vigilance; and that the forfeiture of the article may be a sufficient penalty upon the smuggler. It is in this way, and in this way only, that we must seek for an effectual check to illicit trafficking. Whenever the profits of the fair trader become nearly equal to those of the smuggler, the latter is forced to abandon his hazardous profession. But so long as prohibitions or oppressively high duties are kept up, or, which is in fact the same thing, so long as high bounties are held out to encourage the adventurous, the needy and the profligate to enter on this career, we may be assured that armies of excise and customs officers, backed by the utmost severity of the revenue laws, will be insufficient to hinder them.

[More works by John Ramsay McCulloch (1789 – 1864)]