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LEGATION OF THE UNITED STATES,
Paris, October 28, 1839. · MONSIEUR LE MARECHAL: When I had the honor to address to you my letter, of the 20th of July last, on the subject of the state of the tobacco-trade between France and the United States, I did not enter into the considerations involved in that question, and which appeared to me to render a change in its principles no less just and expedient on the part of France than desirable to the United States. My object in that communication, as it had been in the personal interview which preceded and led to it, was merely to open the way for the full examination of a subject interesting to my country, and which, for more than fifty years, and in all the phases which the system of tobacco-administration in France has assumed, has been pressed upon the French Government by that of the United States. The suggestion made in that interview, that I should be referred to some confidential person with whom I could have a personal communication, was very acceptable to me, because I was well aware that your time was too much occupied to allow you leisure to enter into the personal examination of the details of this matter; and because, in the view I should be compelled to take of it, many facts would be necessary, which, 1 presumed, I could collect only from official documents of the Government, or from the practical knowledge of the persons employed in the administration of this branch of the public service. And I felt assured that this information could be better procured through some one familiar with the subject, and interested in its examination, than by troubling you with official notes, from time to time, as the progress of the investigation might suggest points for consideration. It appeared to me, also, a more proper object for free personal discussion than for a formal correspondence; especially, being well aware that the restrictions upon this trade were considered in France as financial regulations, adopted with a view to their effect upon the revenue, and not as arguments for the prohibition of a limited introduction of a foreign article, in order to promote the progress of domestic industry. And although their injurious operation upon the trade of the United States would not be changed by the character of the motives which led to them, still I was equally aware that this consideration ought to prevent the Ainerican Government from resorting to such representations as, under other circumstances, commer'cial nations fee. entitled to make.
In my letter, toerefore, of July 20, I confined myself to general observations, merely introductory to the request which, in conformity with your previous suggestion, I had to make, that a person might be designated through whom my replesentations might reach you; and I intended, in the course of my communications with him, to present all the considerations which give to the Unred States just grounds to hope that their efforts will not be fruitless. An, under these circumstances, I awaited, without impatience, the desired nomination ; but I now find that, instead of a reference, which would open to me the opportunity of presenting to the Government of his Majesty the views of that of the United States upon this subject, I have received a communication announcing to me that this system, which bears so heavily upon the American trade, cannot be changed, and giving the reasons which have led to this decision. Had the views which I have been instructed in take been submitted, and this decision then rendered, I should have received it without remark,
considering my task fulfilled, and I should have referred it to my Government for its action. But, under present circumstances, I am satisfied you will appreciate the necessity which exists, that I should lay before you the general considerations, drawn from the state of the commercial intercourse between the two countries, which have led the United States to expect from France the abandonment of this system. And I still indulge the hope that this view may produce another examination of the question, the result of which may be propitious to the continuation and augmentation of the interchange of the products of industry between two nations having so many motives to cultivate the most intimate relations.
I shall not, in this letter, fatigue you with any remarks upon the importance of the most extensive commercial intercourse between nations, and with the policy of gradually removing all unnecessary restrictions which may impede it, and which owe their origin to opinions upon political economy that time and experience have done much to correct. And it would be equally superfluous to advert to considerations which frequently render it expedient to resort to a reduction of taxation with a view to the augmentation of the revenue. The price of the article being lowered, the increased consumption and the diminished temptation to smuggling, generally return to the state a greater amount than the sum relinquished, and much to the advantage of public comfort and public morals. These are views which, as they relate to the bearing of this question upon the internal welfare of France, must have long since occupied the attention of the Government of his Majesty, in the course of its administration, and which it would not, therefore, become me to urge. But the effect which the existing system of tobacco monopoly produces upon the trade between the United States and France, and the want of reciprocity, at the expense of the former, which is one of its principal elements, are legitimate topics of discussion, which I propose to bring under your observation.
I remark, by your letter, that the restrictions imposed upon the trade of tobacco in France, have not been adopted for the purpose of promoting its culture there ; but that, although they produce this effect, their object is merely a fiscal one. But, even were it otherwise, I should not claim for the United States the right to ask of the French Government its reasons for the encouragement of any particular article of agricultural product, whether suited or not to the soil and climate of France. A recollection of what is due to others, as well as to itself, would prevent the American Government from the assertion of such a right. But the interchange of the products of industry between nations is a subject which each has the right to regulate for itself, from a system of perfect exclusion to the most unlimited introduction. In the exercise of this power, every Government will look to certain general considerations, among others, to the relative value of the intercourse, and to the greater or less reciprocity which enters into it. In the existing state of things, were no other motive wanting, the instinct of self-preservation would dictate this course. The natural effort of trade is to abandon avenues of communication where the conditions are unequal, and to seek others where they are more advantageous. And this principle is applicable, in a greater or less degree, to nations as well as to individuals.
As early as 1785, Mr. Jefferson, then Minister Plenipotentiary of the
ions of trade selling state the
United States in France, brought this subject of the tobacco-trade between the two countries before the French Government, and in a letter to the Count de Vergennes, called that minister's attention " to the monopoly of the purchase of tobacco in France, as discouraging both to the French and American merchant;" and further urged that “ it is contrary to the spirit of trade and to the dispositions of merchants, to carry a commodity to any market where but one person is allowed to buy it, and where, of course, that person fixes its price, which the seller must receive, or export his commodity, at the loss of his voyage thither." Unfortunately, the march of the system of tobacco-administration in France, since the period when Mr. Jefferson presented his remarks to M, de Vergennes, has been a retrogade instead of a forward one; and, to the peculiar misfortune of the United States, it is almost the only one of the institutions of France impressed with that character. It was a monopoly in 1785. In 1839 it is yet a monopoly; and, besides, owing to a system of forced culture, rendered indispensable by a very limited importation, barely sufficient to impart the necessary good qualities of the American plant to the inferior product of the French soil, and protected and superintended in a mode unknown under other circumstances, the consumption of American tobacco has so signally decreased in France, that it is now less than half of what it was more than fifty years ago. In a memoir presented to M. de Vergennes, in 1785, the value of the consumption was estimated at 10,000,000 of livres, while it appears by the latest tabular statement of the exportations and importations of the United States in my possession (that for 1836), that the supply furnished for that year had reached only the value of $907,000, being little more than 4,500,000 francs.
I beg leave to recall to your observation some of the facts connected with this application of Mr. Jefferson, because they have an important bearing upon the representations 1 am instructed to make upon the same subject, at so long an interval of time, and under circumstances resulting from the relations between the two countries, which give peculiar force to the present appeal.
At that time, the administration of the trade in tobacco, like the other branches of the French revenue, was in the hands of the farmers-general, and when he first brought the subject before the Government, preparations were making for a renewal of the farm. His representations delayed the final action six months; but the other branches of the revenue being included in the same arrangement, reasons of state prevented any further delay, and the contract was closed, but with the usual clause, which gave the Government a control over it upon certain conditions.
Mr. Jeferson placed his application upon the general advantages which would result to both countries from the introduction of the most liberal principles into their commercial intercourse, and from the great extension of which this was capable, to their mutual benefit. His representations seemed, at one time, to have produced a favorable effect upon M. de Vergennes ; and a commission was appointed to consider the matter, and to report what steps the Government would take for the improvement of this trade. M. de Vergennes took such an interest in the subject that he attended the discussions in the commission. A general desire was er. pressed to relieve the trade as much as possible from the effects of the monopoly. The most direct method of attaining this object would have
been by the adoption of Mr. Jefferson's proposition, and by opening the trade at once. But the minister had candidly stated that an interruption of the revenue, if not a diminution, would be the consequence of this measure, and that their finances were not in a condition to bear even an interruption. A radical cure for the evil not being possible, palliatives were sought. A contract had been entered into the preceding year (January, 1785, during the existence of the arrangement with the farmersgeneral, which, when the committee were organized, was about to expire) between M. le Normand, receiver-general of finances, and Robert Morris, of Philadelphia, for the delivery in France of 60,000 hogsheads of tobacco, namely, 20,000 in each of the years 1785, 1786, and 1787.
Under these circumstances, the committee having ascertained that Mr. Morris had made arrangements for the execution of the contract, determined that it ought not to be annulled; but in their report, dated March 24, 1786, they recommend that, after the expiration of that contract, no similar bargains should be made; that the farmers-general should always have a necessary supply for the exercise of their privilege, and that this supply should be secured by remittances made under the Philadelphia contract as well as by what should be procured by means of commerce; that the farmers-general should purchase, during the continuance of the above contract, American tobacco, to be furnished by trade, and brought into France by French or American vessels, to the amount of 12,000 or 15,000 hogsheads every year, at the rates stipulated in the contract with Mr. Morris. · The report contains some minor regulations, adopted to give effect to the above recommendations, but not sufficiently important to require particular notice.
In a letter, dated October 22, 1786, from M. de Calonne, comptrollergeneral of the finances, the substance of this report was communicated to Mr. Jefferson, and he was informed that the recommendation had been approved, and that the farmer-general had been required to purchase the maximum quantity mentioned, to wit, 15,000 hogsheads annually. M. de Calonne adds that a project had been communicated by a member of the committee in conformity with the views submitted by Mr. Jefferson in the memoir already alluded to, which he transmitted to M. de Vergennes, and which advocated a relinquishment of the monopoly of tobacco, with an entire free trade in that article. But, continues M. de Calonne, considerations connected with the revenue derived from tobacco, which amounts to 28,000,000 of livres, render this change hazardous.
Permit me to remark, M. le Maréchal, that in a conversation between Mr. Jefferson and M. de Vergennes, the latter placed the then existing arrangement for the purchase, manufacture, and sale of tobacco in France upon the ground of the amount which it yielded to the treasury, being the same reason which you have done me the honor to communicate, as operating at this time to retain the plan of culture and administration now in force. M. de Vergennes declared that the Government was unwilling to change an ancient institution, that of the farmers-general, for fear of the effect upon the revenue, and that it would be “ a dangerous experiment.” But time has swept away that system, and left, I believe, a free competition to private industry in all parts of France, except in this very article of tobacco. And, certainly, the fears expressed by M. de Vergennes, of the effect of a change in the management of the revenue, has not been justified by the result. Let it be permitted to me to hope, that if the system of free trade were completed, and tobacco restored to its natural situation with other commodities, internal and external, the apprehension now expressed of the injurious effect of this change upon the treasury, might prove equally groundless. And I indulge this hope the more readily when I look at the product of this tax in 1786, and the circumstances which bore upon it, and when I look at its prodact and similar circumstances in 1839. The amount which it then returned to the treasury, as estimated by M. de Calonne, was 28,000,000 of livres. Mr. Jefferson, in the memorial already quoted, calculated the cost of manufacture at 7,200,000 livres, and the benefit to the farmers-general, and to those possessing under them the right to sell, at 25,200,000. Considered, therefore, simply under a fiscal point of view, as the system was then and yet is, a tax of 28,000,000 of livres for collecting nearly an equal sum, deducting only a fair allowance for the profits of sale.
At that period the population of France did not exceed 25,000,000, while at present it probably amounts to 34,000,000, and its resources and revenue have increased in a still greater proportion than its numbers. Assuming that the present system of tobacco-administration returns to the state 50,000,000 of francs annually, it does this by the employment in the hands of the régie of a capital of an equal amount, which, like other mercantile capitals, is liable to losses, and, by a method of protection of culture and of sale not in unison with the opinions of the age, and forming an exceptional system, liable to many objections. It is difficult to conceive that by delivering this trade to free competition, its fiscal product could not be made, in 1839, by a wise course of administration, together with the increased consumption and the diminished temptation to smuggling, which lower prices, consequent on free competition, would not fail to introduce, to equal the amount which the present system pays to the treasury. And this conclusion is strongly fortified by the example of England, which, with a population not much exceeding twothirds of that of France, collects an annual revenue of more than 80,000,000 of francs from [this source), although her system is liable to strong objections, and many of her statesmen believe that a reduction of the rate of taxation would, in this instance, as in many others in her financial history, augment the amount received by the state.
I venture to call your attention to a remarkable circumstance in the progress of the intercourse between the two nations, and that is the comparative value of the trade between France and the United States at the present time and in 1786, when Mr. Jefferson brought the subject forward for consideration. The tabular statements, published by the Government, of the exportations and importations of France, show that the whole export trade from the kingdom to the United States in 1787, the earliest year given in the tables in my possession, amounted only to 2,000,000 of livres ; and Mr. Jefferson, examining the relations between the two countries, and looking at the capacity of the United States to purchase and supply, estimated “twenty-five millions of livres as marking the extent of the commerce of exchange (including both imports and exports), which is at present practicable between us.” In 1836, this « commerce of exchange” between the two nations had reached the enormous amount of 348,000,000 of francs, of which the value of the French exportations was 232,000,000. Another fact will place this wonderful