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 By R. P. Karkaria, E.A., Principal of the New Collegiate 
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 The Free-trade Movement 
 
^ 
 
The 
 
 Free-trade Movement 
 
 And its Results 
 
 By 
 
 G. ARMITAGE-SMITH, M.A, 
 
 Principal of the Birkbeck Institution, and 
 
 Lecturer on Economics for the London Society for the 
 
 Extension of University Teaching 
 
 " Were all nations to follow the liberal system of free 
 exportation and free importation, the different states 
 into which a great continent was divided would so far 
 resemble the different provinces of a great empire." 
 
 —ADAM SMITH. 
 
 UNIVERSITY j 
 
 LONDON 
 
 BLACKIE & SON, Limited, 50 OLD BAILEY, E.G. 
 
 GLASGOW AND DUBLIN 
 
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Preface. 
 
 In a Series dealing with the characteristic features of 
 the Victorian Era it is obvious that the Free-trade Move- 
 ment demands a place, although the literature of the 
 subject is so extensive that it might be thought the last 
 word had been already said. The old controversies, 
 however, still remain, and have in fact been renewed 
 with fresh vigour, partly owing to the persistence of the 
 United States and other countries in a Protective policy, 
 and also to the movement for federation with our Colo- 
 nies, most of which are committed to Protection. The 
 subject has a perennial interest, and there is room for a 
 re-statement both of the historical facts and of the argu- 
 ments. At no time have the arguments of Adam Smith 
 needed to be enforced more than in the present age, 
 when States are vying with one another in attempts to 
 annex markets for their exclusive benefit and to the 
 disadvantage of others. That the welfare of one nation 
 is closely bound up with that of its neighbours is a 
 
 * doctrine that cannot be too strongly emphasized in these 
 days of eager commercial and political rivalries, which 
 
 ^ seem to threaten a renewal of the old mercantile system. 
 
 The aim of the present work is to give in brief compass 
 
 an historic account of the origin of Protection, and of the 
 
 * j!|)rolonged agitation by which it was ultimately over- 
 ■^'/i thrown in this country; to state the economic advan- 
 
 * / tages of the Free-trade doctrine, and to estimate the 
 b effects of the change upon the well-being of Great 
 
vi Preface. 
 
 Britain ; and to discuss the chief grounds on which Pro- 
 tection is upheld in other countries, and still finds some 
 adherents in our own. To accomplish this end it was 
 necessary to trace the rise of the Protectionist idea, as 
 only by understanding the circumstances of its evolution 
 can we fully estimate its value as a doctrine and explain 
 its relation to existing conditions. The first three 
 chapters, therefore, are devoted to matters antecedent 
 to the Victorian Era. 
 
 While I am convinced of the practical wisdom of the 
 policy of the " open door " in commerce, and believe that 
 its adoption by other nations would make for the peace 
 of the world, I have endeavoured to deal with the subject 
 in the scientific spirit of inquiry and explanation, and the 
 conclusions set down are those forced upon me by a 
 careful and long-continued study of the facts. 
 
 On such a subject indebtedness to the work of others 
 is necessarily very great, and it is impossible to do more 
 than make a general acknowledgment : special reference, 
 however, should be made to Leone Levi's History of 
 British Co7n?rierce, the writings of Prentice and Ash- 
 worth upon the history of the Corn-law agitation, and 
 Mr. John Morley's Life of Cobden. I wish also to express 
 my obligations to Mr. H. J. Tozer, M.A., for sugges- 
 tions, and to the Editor of the Series for his valuable 
 criticism and advice. 
 
 G. A. S. 
 
 London, March, 1898. 
 
Contents 
 
 CHAPTER 1 
 
 Page 
 
 Origin of Restrictions on Trading - - - - p 
 
 CHAPTER // 
 Adam Smith and the Decline of Mercantilism - - -?/ 
 
 CHAPTER in 
 Tariff Reform {178^-1838) - - - ' ' ^ ' 39 
 
 CHAPTER IV 
 
 The Agitation for the Repeal of the^ Corn-laws 
 {1838-1846:)^ *- - '61 
 
 CHAPTER V 
 The Economics of Foreign Trade - - - '95 
 
 CHAPTER VI 
 Arguments for Protection^ Reciprocity^ Bounties^ &•€. - no 
 
 CHAPTER VII 
 Fifty Years of Free-trade - - . - - - - 130 
 
 CHAPTER VIII 
 Why Free-trade is not adopted in other countries - - 14J 
 
 CHAPTER IX 
 British Agriculture and Free-trade 164 
 
viii Contents 
 
 CHAPTER X 
 The Reaction against Free-trade ----- j88 
 
 CHAPTER XI 
 Recent British Trade and Foreign Competition - - 204 
 
 CHAPTER XII 
 Imperial Federation ------- 224 
 
 INDEX - - 241 
 
 ^ 
 
The Free-trade Movement. 
 
 Chapter I. 
 Origin of Restrictions on Trading. 
 
 The Free-trade Movement, which had for its aim the 
 aboHtion of artificial restrictions upon commerce, is 
 perhaps one of the most remarkable movements of the 
 nineteenth century, yet one which has been almost con- 
 fined to the British Isles, although its origin is to be 
 referred to the teaching of French economic writers of 
 
 ithe eighteenth century, from whom Adam Smith, the 
 lapostle of Free-trade, derived many of his views. This 
 movement reversed in Great Britain the theories and 
 practical maxims which had governed the commerce of 
 nations for centuries. William Pitt had undoubtedly a 
 strong leaning towards a Free-trade policy. He entered 
 upon a course of economic reforms by a commercial 
 treaty with France (1786) and a reorganization of the 
 customs duties, but the unfortunate war which broke out 
 in 1793 converted Pitt, the financial reformer, into a 
 war minister, and brought about events which renewed 
 and intensified the protective policy he would have 
 modified. The reaction against protection began afresh 
 jabout the year 1820 and was extended over some 
 'forty years, culminating in the Anti-Corn-law agitation 
 (1839- 1 846). With the abolition of the duties on corn 
 and navigation in 1849, the principle of free-trading 
 I was fully established, and by various subsequent reforms 
 I it was carried out completely, until, in i860, all duties of 
 f an avowedly protective character had been removed 
 from the British fiscal system. 
 
le The Free-trade Movement. 
 
 Thus Free-trade came to be adopted as the expres- 
 sion of the correct economic theory of commerce by the 
 greatest manufacturing and commercial nation of fifty 
 years ago. It might with some reason be assumed that 
 a sound theory of international trade would be evolved in 
 an industrial and commercial age when its advantages 
 and necessities became more obvious, rather than during 
 the simpler periods when intercourse was comparatively 
 slight, or in the times when the relations of nations 
 were most frequently of a hostile character. 
 
 When means of communication were few and difficult, 
 when people lived mostly by agriculture and population 
 was small and scattered, natural circumstances and 
 limited knowledge presented almost insuperable ob- 
 stacles to trading. The journey of Jacob's sons into 
 Egypt to fetch corn was an undertaking occasioned only 
 by necessity; the exchanges of Solomon and Hiram for 
 the building of the temple were barter transactions on a 
 scale worthy of being recorded; the visits of the fleets 
 of Venice to Britain in the thirteenth and fourteenth 
 centuries were great commercial enterprises, and the 
 fairs and markets of the Middle Ages were events of 
 importance in the internal trade of the country; yet 
 they appear insignificant when brought into contrast 
 with the wonderfully refined and intricate system of 
 trade by which the familiar daily wants of life are now 
 supplied. 
 
 Trading, like other institutions, is an example of 
 evolution. From elementary exchanges it has developed 
 until the links of commerce now encircle the globe. 
 Illustrations of the various stages of evolution are still 
 to be seen in different parts of the world, and some of 
 them are well marked off by a specific character as local, 
 national, or international, exhibiting a progressive or- 
 ganization. Invention and discovery are continually 
 effecting changes in the methods of commerce, and 
 possibly a century hence present modes of trade may 
 seem antiquated. 
 
 A theory of trade must be relative to the circumstances 
 under which it is evolved, and to the economic ideas 
 prevalent at the time. Thus we may expect the theory 
 
r Origin of Restrictions on Trading. 1 1 
 
 of an earlier period to reflect conditions differing much 
 from those of the present. Modern industry is very 
 com.plex and highly organized; Free-trading claims to 
 [ jbe an expression of the recognition of these facts and of 
 ^ 'their true import. But it is a curious circumstance that 
 while Great Britain, a few of her colonies, and some of 
 the smaller commercial countries of Northern Europe, 
 have adopted the principle of free exchange and have 
 renounced the protective system, other great industrial 
 nations still retain the artificial restrictions on trade 
 which were once general, and some, like the United 
 States, are extending those imposts against other 
 countries, although they have at the same time generally 
 removed all barriers to free-trading within the areas 
 comprised by their political boundaries. The practice 
 of creating obstacles to the full enjoyment of free ex- 
 change beyond the limits of a country, whilst recogniz- 
 ing the advantages gained by the removal of such im- 
 pediments to trade within a country, forms a curious 
 paradox, on which some light is cast by a review of the 
 conditions under which trading was developed. 
 
 In an inquiry into the origin of restrictions on trade 
 and their economic effects, we are naturally led to com- 
 pare the civilization and economic conditions of the 
 present and the past. The first fact that strikes us is 
 the extraordinary complexity of modern life in its inter- 
 ests and its industrial and commercial relations, its 
 interdependence, variety, far-reaching intercourse and 
 cosmopolitan character, when placed in contrast with 
 the simplicity and local independence of more primitive 
 times. The world has in fact become one vast market 
 or economic area. Science, by its marvellous command 
 over the subtle forces of nature, has succeeded in reducing 
 the natural obstacles to intercourse, and in so abbreviat- 
 ing operations of trade that the products of each country 
 can now be distributed with wonderful celerity over the 
 whole globe, and all nations may share in the advan- 
 tages which each can offer. On the one hand, the tele- 
 graph and post have rendered communication quick and 
 constant, and on the other, steam-power has made 
 transport simple and inexpensive. Intercourse between 
 
12 The Free-trade Movement. 
 
 London and Japan or Australia is far easier now than 
 between the extreme north and south of Great Britain a 
 few centuries ago. The natural result has been an 
 enormous interchange of goods, trading on a gigantic 
 scale has been established, and nations have learned to 
 appreciate the advantages to be gained by this enlarge- 
 ment of the field of their economic operations. 
 
 Free-trading, which appeals to the commercial in- 
 stincts, and makes for peace and increased comfort, 
 would seem to be the logical outcome of this close inter- 
 dependence. The reduction of natural impediments to 
 simplicity of trading might be expected to be accompanied 
 by the removal of artificial barriers, and yet the latter 
 are retained. To remove the one and retain the other is 
 an apparent contradiction which calls for explanation. 
 The causes appear to be threefold, and may be summed 
 up briefly as (i) the prejudices derived from ancient esta- 
 blished customs ; (2) the existence of national sentiment, 
 which, on its negative side, is hostile to foreign ideas 
 and jealous of foreign goods; and (3) the individual and 
 class interests which grew up and were nourished under 
 the shelter of the artificial barriers to foreign competi- 
 tion created by those prejudices and jealousies. 
 
 ( For the roots of protection we must look back into 
 
 ; the early history of trading. 
 
 Before the Christian era the Phoenicians are said to 
 have come to Britain for tin. Under the Roman occu- 
 pation of Britain agriculture was developed, corn as 
 well as metals was exported, and London became a 
 port of some magnitude. In Saxon times such com- 
 merce as existed was conducted mainly by foreign mer- 
 chants. English kings endeavoured to stimulate trading, 
 as is proved by the law of Athelstan, that a merchant 
 who thrice crossed the sea in his own vessel should 
 become a thane. Norman rule led to further intercourse 
 with the Continent, and the crusades brought Britain into 
 commercial relations with the city-states of the Mediter- 
 ranean. Trade sprang up, and from 13 17 to the middle 
 of the sixteenth century Italian fleets came to England 
 and the Netherlands with fine cloth, silks, linen and 
 cotton goods, glass, Greek wines, silver, and other 
 
Origin of Restrictions on Trading. 13 
 
 luxuries, which they exchanged for the grain, leather, 
 wool, skins, and metals of England. 
 
 German traders from Hamburg and Liibeck early 
 gained a footing in England, and established here a 
 branch of the Hanseatic League. This was a federation 
 for commercial purposes which became very powerful in 
 the thirteenth and fourteenth centuries, and controlled 
 the trade of the north of Europe. It extended from 
 Bergen to Cologne, and from London and Bruges to 
 Novgorod; by the year 1300 it had factories in about 
 seventy towns. The league gained many privileges, in- 
 cluding immunity from taxes; it organized trade, put 
 down piracy, developed industries, and educated the 
 nations in the art of commerce. To England it brought 
 timber, furs, flax, hemp, fish, copper, &c., in exchange 
 for native produce. 
 
 Customs or customary duties have a very ancient 
 origin; they seem to have been paid from time imme- 
 morial on merchandise entering a district, country, or 
 town. As tolls or transit dues, charges were made for 
 the use of roads, safe passage, and permission to trade. 
 The duty was supposed to fall upon the traders, who 
 were generally foreigners, and it became a source of 
 revenue to the lord or sovereign. In the early custo- 
 mary dues in England there appears no trace of any 
 economic or national aim other than revenue and a 
 charge for the privilege of trading. 
 
 From the twelfth to the fifteenth century the local 
 trade of towns was regulated by the merchant and craft 
 guilds; these institutions served at the time a most useful 
 purpose ; municipal control of trade seems to have been 
 general and beneficial, though at a later period it de- 
 generated into a close monopoly and became the privi- 
 lege of a few. 
 
 Under Henry III. (1216) there was a great influx of 
 foreign merchants, and trade with Flanders increased ; 
 wool was exported and manufactured woollens imported. 
 Under this king was established the system of stapling^ 
 which for several centuries determined the markets for 
 the home and foreign trade in certain staple products, 
 of which wool was the most important. Such goods 
 
14 The Free-trade Movement. 
 
 were required to be sent to certain towns, called staples, 
 for sale. It was thought that trade could be thus more 
 easily supervised and regulated, and the customs duties 
 could be more readily collected. This system flourished 
 through the thirteenth and fourteenth centuries. A 
 statute of Edward III. (1354) enumerates ten staple 
 towns in England, and gives the customs duties payable 
 on the goods there to be sold. These towns paid taxes 
 for the monopoly which they enjoyed. Various foreign 
 staples were appointed for the foreign trade, such as 
 Antwerp, Bruges, and Calais, to which English wool, 
 leather, &c. , were sent. The system declined under the 
 Tudors from the competition of the merchant adven- 
 turers, and practically came to an end with the loss of 
 Calais in 1558. 
 
 Export duties were first regulated by Act of Parliament 
 in 1275 under Edward I., when the duties on wool, 
 leather, and metals were fixed for revenue. This tax 
 was known as *'the great customs". In 1303 the tax 
 was imposed upon both imports and exports at an 
 increased rate, on the ground of the protection afforded 
 to traders, and the rate was fixed at 3^. in the ;£" ad 
 valorem on all kinds of merchandise. A further revision 
 followed in 1376 (Edward III.) when tonnage and pound- 
 age exacted on wines and merchandise (whether im- 
 ports or exports) was granted as a subsidy to the king, 
 and the tax became from this time a regular part of the 
 revenue system. 
 
 Previous to this reign no particular economic dis- 
 tinction seems to have been drawn between taxes on 
 imports and exports; revenue appears to have been the 
 chief aim. But under Edward III. Flemish weavers 
 were encouraged to settle in England and follow their 
 industry; direct attempts were made at fostering home 
 industry, and some restraints on the export of wool 
 began to be adopted. Modifications of the duties made 
 subsequently by Parliament point to the growth of the 
 idea of checking the export of raw materials and limiting 
 the import of manufactured goods. Thus, in 1463, 
 Edward IV. prohibited the importation of wrought 
 goods in the interests of English artificers ; this act was 
 
Origin of Restrictions on Trading. 15 
 
 renewed under Richard III., and, as late as the eighteenth 
 century, was commended as a most beneficent piece of 
 legislation. 
 
 Later still, under the Tudors, duties on imports were 
 increased, and exports were prohibited under penalties. 
 In Elizabeth's reign it was made a capital offence if a 
 man for the second time exported wool or English rams. 
 The preservation of the raw material for home indus- 
 try, and the export of the manufactured article, were 
 coming to be recognized as a distinct policy; the pro- 
 tective idea was gaining ground. Under Charles II. 
 hides and leather were added to the prohibited exports, 
 and the instruments of industry were also placed under 
 like restraint in order not to give to foreign manufac- 
 turers any advantage which might be reserved for the 
 home producer. 
 
 Under these regulations the number of taxed articles 
 had increased greatly, and the system of customs ad- 
 ministration had become very intricate and troublesome 
 to merchants. 
 
 Import duties were originally levied on the declared 
 value of the merchandise, but in 1558 a "Book of Rates" 
 was drawn up, enumerating the articles and specifying 
 how each should be valued for customs purposes. This 
 book, an anticipation of a tariff, was revised on several 
 occasions with a view to increasing the revenue. In 
 1662 the Rate Book enumerated 11 39 articles of import 
 and 2 1 2 of export. 
 
 The regulation of trading by privilege, charter, staple, 
 and prohibition was in accordance with the general 
 ideas of the age, derived from the system of universal 
 control in feudal times, under which most of the economic 
 relations of life were determined by custom and autho- 
 rity. Of the same nature were the interferences with 
 freedom of labour, of which the Conspiracy Act (1304), 
 the Statute of Labourers (1349), and the Apprenticeship 
 Act of Elizabeth (1563), are examples. In other direc- 
 tions the belief in the right and capacity of regulation 
 from above was illustrated. As home-trading increased, 
 a class of middlemen or dealers had been evolved ; and 
 it was thought desirable in the interests of consumers to 
 
i6 The Free-trade Movement. 
 
 limit their operations and restrain the action of com- 
 petition, which was then little understood. Thus by 
 acts ( 1 551-1552) forestallers, regrators, and engrossers 
 were forbidden to buy goods or victuals for resale in the 
 same market or locality. These acts aimed at moder- 
 ating the prices of necessaries, and also the profits of the 
 dealers in corn, fish, wool, &c. 
 
 Money came under legislative control at an early 
 period. Acts were passed forbidding the export of 
 gold and silver, lest there should be an insufficiency of 
 currency, and for fear the royal treasure should suff"er 
 depletion. An act of 1307, prohibiting the export of 
 gold, is said to have led to the introduction of bills of 
 exchange. A later act of Richard II. imposed severe 
 penalties on the export of gold or silver without a license: 
 " For the great mischief which this realm suff'ereth and 
 long hath done, that gold and silver are carried out of 
 the realm, so that in eff'ect there is none left thereof, 
 which thing if it should longer be suff"ered would shortly 
 be the destruction of the same realm, which God pro- 
 hibit". Under Henry VIII. (1512) an act was passed 
 **that all persons carrying over sea any coins, plate, 
 or jewels, shall, on detection, forfeit double their value". 
 
 Trade with Flanders greatly increased in the fourteenth 
 and fifteenth centuries. In 1496 Henry VII. entered 
 into a commercial treaty with the Netherlands (The 
 Intercursus Magnus), which, b)'^ mutual concessions, 
 aimed at freeing and extending the trade between the 
 two countries. The prosperity of the fifteenth century 
 stimulated English merchants to enterprise ; they organ- 
 ized themselves into trading companies, of which The 
 Merchant Adventurers gained a charter in 1501. The 
 energy of these traders brought them into conflict and 
 rivalry with the Hanse traders, and finally led to the 
 withdrawal of the charter of that corporation in 1597. 
 
 This impulse to British enterprise coincides with the 
 rise of a policy which professed to make trading sub- 
 servient to national welfare, by securing native industry 
 and commerce against foreign competition, by increasing 
 national resources and strengthening national industries. 
 A variety of circumstances in the sixteenth century 
 
 (M460) 
 
Origin of Restrictions on Trading. 17 
 
 favoured the growth of the national spirit and desire for 
 national greatness. The discovery of the New World 
 (1492), and of the Cape route to India (1498), opened up 
 larger ideas of commerce and new fields for enterprise. 
 The consolidation of states under more settled govern- 
 ment and institutions, the Reformation movement, and 
 the revival of learning, all tended to awaken new senti- 
 ments of national life. The accession of treasure to the' 
 first conquerors of the New World suggested to others 
 fresh sources of wealth. The sack of Antwerp, in 1585, 
 diverted a portion of her trade to London, and sent over 
 a number of Flemish skilled artisans, to the advantage 
 of British manufactures and trade. 
 
 Thus there grew up in the reign of Elizabeth a feeling 
 from which developed a national policy ; the aim of this 
 policy was to make England great, powerful, and wealthy. 
 This object was to be accomplished by the creation of a 
 strong navy, the acquisition of new territory by planta- 
 tions (or colonies), and the development of national re- 
 sources, and the increase of a treasure in gold and silver 
 for the purpose of defence and warfare. 
 
 A like enthusiasm had seized upon other nations, and 
 patriotism in the circumstances was displayed in hostility, 
 in jealousy, and menaces, in struggles for maritime 
 supremacy and commercial monopoly. The regulations 
 imposing restrictions upon foreign trade were increased, 
 and progressive nations in the seventeenth century all 
 adopted the policy of harassing one another's com- 
 merce. 
 
 Under Elizabeth the spirit of enterprise and monopoly 
 gave rise to the formation of a large number of trading 
 companies, which obtained charters for the purpose of 
 acquiring the sole rights of trading in certain parts. 
 The Russia Company, 1553; the Baltic Company, 
 1579; the Levant Company, 1581; the Guinea Com- 
 pany, 1588; the East India Company, 1600, were all 
 formed on this principle of ** authorized trading". Their 
 charters conferred upon these companies the exclusive 
 privilege of trading in specified districts, and from such 
 parts other traders, called "interlopers", were inter- 
 dicted. The risks incurred in opening up new trade 
 
 (M460) B 
 
i8 The Free-trade Movement. 
 
 formed an argument for these monopolies; they were held 
 to be useful in promoting trade in unsettled and danger- 
 ous parts, as Adam Smith admits, ''by making at their 
 own expense an experiment which the state might not 
 think it prudent to make". The privileges, however, 
 in time became an abuse, they were attacked in the 
 seventeenth century, and were ultimately withdrawn. 
 
 The "national policy" which grew up towards the 
 latter part of the sixteenth century developed a theory 
 of trade known as **the mercantilist theory"; which 
 dominated foreign trade relations in the seventeenth 
 century, and almost to the end of the eighteenth century. 
 This policy was deemed to be an advance upon earlier 
 principles of trading, inasmuch as it professed to be 
 based upon a regard for the commonwealth, and to seek 
 the public good. Its acceptance as a public policy pre- 
 ceded its formulation as an economic theory, and the 
 popularity of the theory, when put forth by Thomas 
 Mun in 1664, was due in some degree to the fact that 
 it seemed to give a scientific explanation of trading in 
 accordance with the popular sentiment of the times. 
 
 The history of the seventeenth and eighteenth cen- 
 turies is largely a record of struggles for commercial 
 supremacy, for the acquisition of new territory and the 
 control of markets. Wherever colonies were planted 
 exclusive trading was established. During the seven- 
 teenth century the Dutch enjoyed the position of the 
 leading commercial nation; they possessed the largest 
 fleet, and had a vast carrying trade. Against them 
 the Navigation Acts of England (1651 and 1660) were 
 directed, with the view of injuring their trade and ex- 
 tending our own maritime power. Notwithstanding the 
 jealousy of Holland, the English copied her methods, 
 and carried on a large trade with her, which amounted 
 in 1703 to ;£^2, 250,000 in exports, mostly of wool. Dur- 
 ing the seventeenth century the English foreign trade 
 increased from ;^4,628,ooo to ;^i 1,170,000. Between 
 France and England protection was rife; under the 
 guidance of the minister Colbert, France in 1664 
 adopted an almost prohibitive tariff, and England in 
 1678 retaliated by prohibiting the import of French 
 
Origin of Restrictions on Trading. 19 
 
 goods, and also the export of wool, raw materials, 
 metals, and implements. 
 
 Under the mercantilist system an exaggerated import- 
 ance was attached to the possession of gold and silver. 
 Money had gained prominence with the increase of trad- 
 ing, but its true functions were not yet clearly under- 
 stood. It was seen that the precious metals were in 
 universal demand, they were always acceptable in pay- 
 ment for goods, and wealth was commonly estimated in 
 terms of money. The countries which were receiving 
 supplies of the precious metals from the New World 
 had increased their trade, and were enabled to purchase 
 commodities from others. Spain and Portugal for a 
 time appeared to be the proprietors of great wealth. 
 Many circumstances favoured the belief that the precious 
 metals were pre-eminently desirable imports; and 
 measures were adopted to promote their acquisition. 
 Had the influx come about by natural causes, it might 
 have been regarded as an index of prosperity, since the 
 precious metals, like other desirable things, flow to 
 countries in which other forms of wealth are abundant; 
 but an artificial accumulation of money could only take 
 place by surrendering other forms of wealth, as the 
 miser adds to his hoards by denying himself more need- 
 ful things. Under the delusion that a country profited 
 by increasing its stock of gold and silver, nations strug- 
 gled to obtain possession of these metals, and their 
 commercial regulations were framed with that object. 
 Exports were encouraged by bounties, imports of useful 
 goods were checked by duties, trading was regarded as 
 injurious to the country if it tended to draw away money, 
 and the advantage of a year's trading to a country was 
 measured, not in the increase of useful commodities 
 gained thereby, but in the increase of precious metals 
 which were gained as a "balance of trade". Exporting 
 was thus regarded as more profitable than importing; 
 the mutual advantage of exchange between countries 
 was obscured, and by directing the attention to the 
 mere instrument or mechanism of exchange the one 
 country was supposed to lose in trading what the other 
 gained. 
 
20 The Free-trade Movement. 
 
 It was also contended that money was a means of 
 employing labour at home, and that the export of 
 bullion was so much money lost as regards that pur- 
 pose. The business of foreign trade was held to con- 
 sist in securing markets, and in exporting thither home- 
 produce, the advantage being measured by the amount 
 of the '* favourable balance" of treasure. A fundamental 
 economic truth did underlie this argument, namely, that 
 the production of native goods by industry is the real 
 source of wealth, but it was accompanied by a great 
 misconception as to the nature of the advantages gained 
 by trading. These arise from the utility of the goods 
 received in the exchange, and not from the acquisition of 
 money, which may even flow in in such quantities as to 
 be in excess of the requirements of the nation. Mer- 
 cantilists have sometimes been represented as holding 
 the vulgar error that money was the only wealth. This 
 was not so ; their error lay in estimating the advantage 
 of foreign trade by the amount of precious metals it 
 introduced, and in neglecting the benefits to be gained 
 by the increase of useful and desirable goods in exchange 
 for their exports. On this point the opinion of John 
 Locke is instructive. He writes: ** Gold and silver 
 being little useful to the life of men in proportion to 
 food, raiment, and carriage, has its value only from the 
 consort of men"; and Boisguillebert, even more dog- 
 matically: **It is very certain that money is not a value 
 in itself, and that its quantity adds nothing to the wealth 
 of a country". 
 
 In a pamphlet published in 1664 by Thomas Mun, 
 called England's Treasure hy Foreign Trade, the mer- 
 cantilist theory of trading is explained **to consist in 
 keeping imports less than exports, thus to secure a 
 favourable balance, and provide an abundance of money 
 which could be drawn upon in time of need". The 
 balance of actual money was advocated in the seven- 
 teenth century mainly as a means of providing a treasure 
 for the purpose of national defence. This argument had 
 some weight in an unsettled and warlike period, when 
 bullion was scarce, and the metals were almost the only 
 means of currency. In the eighteenth century, after the 
 
Origin of Restrictions on Trading. 21 
 
 loaning system had arisen, and it was no longer deemed 
 necessary to put by stores of money for national pur- 
 poses, the balance of trade came to be regarded as the 
 measure of the prosperity of industry. The practical 
 measures urged by Mun to carry out his theory were 
 prohibition of the export of gold and encouragement of 
 its import, encouragement of exports of goods, and dis- 
 couragement of all imports except the raw materials of 
 industry. Systems of tariffs and regulations were de- 
 vised as the machinery to carry into effect this policy, 
 out of which grew up the protective system. Smuggling, 
 as a means of evasion, soon followed, and contraband 
 trade grew into a regular institution. In course of time 
 the encouragement of manufactures became a more 
 deliberate aim, and the system was pursued with the 
 object of maintaining the prohibition of finished goods, 
 of directing consumption at home, and of stimulating 
 new home industries. The principles which directed the 
 commerce of the eighteenth century embodied in a large 
 degree the chief doctrines of protection as it has been 
 advocated in the present century, and the arguments 
 then advanced in its defence are commonly repeated in 
 the proposals of to-day. 
 
 One of the devices of the mercantile system was the 
 promotion of commercial treaties, by means of which it 
 was thought a vent for surplus goods was obtained and 
 some exclusive advantage acquired. England, for ex- 
 ample, in 1703 arranged a treaty with Portugal (called 
 the "Methuen Treaty", after its negotiator) in order that 
 she might secure some of the silver which Portugal was 
 importing from Brazil. England undertook to lower her 
 duties on port-wine on condition that Portugal admitted 
 English woollen goods at lower rates. The treaty was 
 approved in England as much from jealousy of France 
 and the expected increase of bullion by the ** balance of 
 trade" as from anticipated advantages to the woollen 
 trade. England consumed more port and less French 
 burgundy, and the capital of Portugal was directed in a 
 larger degree to the cultivation of the vine. But treaties 
 of this exclusive character always offend some other 
 nation by the diversion of trade, and the Methuen treaty 
 
22 The Free-trade Movement. 
 
 annoyed France by the injury it caused to her wine trade. 
 Less than a century later, with Pitt's treaty of 1786, 
 commercial treaties begfan to be framed on a better 
 basis, and so as to procure a real reduction of duties 
 between the contracting nations without any attempt at 
 injuriously affecting the trade with others. 
 
 When colonization opened up new fields of enterprise 
 to European nations, they applied to the colonies which 
 they acquired the principles of restriction practised in 
 their trade with one another. By the mercantilist 
 statesmen, colonies were treated as the property of the 
 nations which gained them, and their markets and pro- 
 ducts as the exclusive monopoly of the sovereign nation, 
 and they were allowed no commercial intercourse with 
 foreign nations.^ This **sole market" policy, known a^ 
 the colonial system, was adopted by Great Britain in her 
 relations with the American colonies. It impeded their 
 development, though it was argued that the colonies 
 profited by the defence and credit of the mother-country. 
 
 Their industries were regulated so as not to compete 
 with the market for goods which they provided for the 
 home industries, their shipping was controlled, and 
 ships built in the colonies were even required to be 
 equipped with sails from England. Even Ireland was 
 included in the system of industrial and commercial 
 restraint. From the year 1660 the importation of meat 
 and dairy produce from Ireland was prohibited in Eng- 
 land as adverse to English agriculture, and when this 
 discouragement to cattle-farming had led to the sub- 
 stitution of sheep-farming, Irish wool was excluded 
 from English markets. 
 
 This development of the ** national policy" brought 
 its natural fruit in smuggling, and discord with the 
 thirteen American colonies, and finally led to the 
 struggle which secured these colonies their independence. 
 The issue of that conflict, together with the growth of 
 the more enlightened ideas of commerce which had been 
 advanced by Adam Smith, led to the abolition of the 
 colonial system by Great Britain, and, at a later period, 
 
 ^ See Wealth of Nations, book iv. chap. 7, for a full account of the 
 "colonial systeni '. 
 
Origin of Restrictions on Trading. 23 
 
 to the complete commercial independence of her colonies. 
 Other nations (Holland, Spain, and France) did not 
 follow the policy of Great Britain in this respect. 
 
 It has often been advanced as a defence of mercan- 
 tilism that it was a necessary phase in the development 
 of nations ; at a critical period in their growth, it is said, 
 statesmen availed themselves of national sentiment by 
 these means to strengthen national life and give it form 
 and character; and only thus could it have been nur- 
 tured and sustained. Herr SchmoUer, a representative 
 of the historic school of economists in Germany, states 
 this view in his valuable monograph on Mercantilism.^ 
 He says: *'The statesmen who put into form their 
 theories gave the economic life of their people its neces- 
 sary basis of power, and a corresponding impulse to its 
 economic movement, and they furnished the national 
 striving with great aims. At a time when most ad- 
 vanced nations were carrying on the collective struggle 
 for existence with the harshest national egoism, with all 
 the weapons of finance, of legislation, and of force, 
 with navigation laws and prohibitive laws, with fleets 
 and admiralties, with companies, and with a trade under 
 state guidance and discipline, those who would not be 
 hammer would assuredly be anvil." 
 
 The assertion is that mercantilism was in keeping 
 with the spirit of the age. Two questions arise: (i) 
 Was it an unavoidable part of the ''national policy" for 
 making nations strong? and (2) Was it economically 
 beneficial? With regard to the former, it must be 
 granted that when the struggle of nations for individual 
 life, and for security and strength, was intense and 
 critical, and while a very jealous and military spirit was 
 the dominating influence, a system of trading framed 
 upon a peace basis was impossible; and it is probable 
 that, as Herr Schmoller suggests, the nations that would 
 not adopt the methods of the stronger powers would 
 have been crushed by them. Historically, the ** national 
 policy" of strength was an important phase in the 
 growth of nations ; but whether its commercial develop- 
 
 ^ The Mercantile System and its Historical Significance, by Giistav 
 Schmoller. 
 
24 The Free-trade Movement. 
 
 ments were also necessary is a different question. The 
 elaborate system of restrictions and regfulations, the 
 struggle for the possession of money, the rejection of 
 the advantages of exchange, could scarcely have contri- 
 buted either to national life or to national wealth. The 
 fact is, that, at a period when economic investigation 
 had made little progress, the harshness of the struggles 
 for empire and power was transferred to the domain of 
 commerce. Trade was made an instrument of warfare, 
 or was sacrificed to political rivalry. Tariff struggles 
 grew out of national jealousies, and helped to set up a 
 system of international barriers, which in time grew 
 into a protective policy, and came to be regarded as 
 beneficial to the nation. Mercantilism was a product of 
 certain conditions of the age; it was in accord with the 
 general sentiment, and also with the common beliefs, of 
 those times. That its methods were economically pro- 
 fitable to the nation at any time is, to say the least, very 
 doubtful. 
 
 Free-trading may be regarded as a particular case of 
 general freedom of action; and this freedom all history 
 shows to have been of very gradual growth. Sir Henrj- 
 Maine holds that "the evolution of society has been 
 from status to contract". Herbert Spencer states the 
 same fact in another form when he asserts that "pro- 
 gress has been from communism to individualism ". 
 All early history exhibits society graded, regulated by 
 custom, and bound down by habit and tradition. The 
 history of England since the Norman Conquest is a 
 record of progress from serfdom and feudalism to free 
 institutions. 
 
 " Freedom slowly broadening down 
 From precedent to precedent", 
 
 and very slowly did this freedom reach the majority. 
 
 Only after centuries of servitude was the right of self- 
 government attained, but step by step through the 
 centuries political freedom advanced until finally it has 
 filtered down and has become the inalienable heritage 
 of the mass of the people. In religious matters the 
 country long suffered from the domination of the Church, 
 
Origin of Restrictions on Trading. 25 
 
 and it required years of struggling- after the Reforma- 
 tion period before religious freedom and equality were 
 fully admitted and understood. Freedom of opinion — 
 of speech and of the press — was long denied, and was 
 only attained by slow and painful degrees. Freedom of 
 discussion and the formation of public opinion by open 
 debate are constitutional safeguards, for men resort to 
 revolutions only when the privileges of free citizens are 
 denied them in order to bring about reforms. The 
 diffusion of knowledge was a further stage in the advance 
 of freedom. In the Middle Ages learning was the mo- 
 nopoly of monastics and clergy, at a later period the 
 privilege of the richer classes; in modern times educa- 
 tion is the opportunity of all, and it is even forced upon 
 unwilling people. Knowledge has been truly called the 
 greatest leveller ; monopoly and privilege will be doomed 
 when all classes are educated. 
 
 Economic freedom came most slowly of all, and is not 
 yet fully attained. The reason is, that it is dependent 
 upon other forms of freedom, and could not precede 
 them. The fetters of ignorance must be removed, as 
 well as social and political disabilities, that men may 
 understand and exercise their freedom in pursuit of their 
 own interests. It was comparatively easy to perceive 
 the injury and injustice of laws fixing wages and .re- 
 straining men from combining to ask for higher rewards. 
 But it requires a long course of education to make the 
 masses understand that institutions, such as protective 
 tariffs, which they had been accustomed to regard as 
 natural, and which they had been taught to believe 
 beneficial to themselves, are only impediments to liberty 
 and causes of diminished well-being. To effect this 
 
 ( change in public opinion was the special task to which 
 the prime movers in the Anti-Corn-law agitation 
 
 ! devoted themselves ; and it is one of the most notable 
 features of the Free-trade movement that its chief 
 victories were achieved by a small body of thinkers, 
 I who had imbibed large views of constitutional freedom 
 and of personal and economic liberty. They finally 
 succeeded by their persistence in educating, and in con- 
 verting to their opinions, not only manufacturers, factory 
 
26 The Free-trade Movement. 
 
 workers, and agricultural labourers, but even farmers 
 and land-owners, the prime minister and the House of 
 Commons itself. 
 
 ' The repeal of the Corn-laws determined the Free- 
 trade policy of this country, which is commonly dated 
 from 1846, though it was a policy advocated in the 
 previous century by Adam Smith, foreshadowed in the 
 treaty of 1786 by Pitt and by his reforms, actually 
 
 i commenced by Huskisson in 1823, and practically 
 adopted by Peel in the budget of 1842. Since the 
 abolition of the Corn-laws, tariffs have proceeded on 
 Free-trade lines ; the policy of remission of duties was 
 checked for a time by the Russian war, but it was after- 
 wards resumed, and our fiscal system now contains no>^ j 
 protective element, although it raises ;^2 1,000,000 from)— 
 duties on imported goods, mainly tobacco, wine, spirits/ 
 and tea. 
 
 For some years after 1850 there were hopes that a 
 Free-trade policy would be adopted by other countries; 
 but a reaction followed the period of the Franco-German 
 war, and the protective spirit has since been revived 
 amongst most of the leading commercial nations. Our 
 own country has remained firm in its Free-trade prin- 
 ciples, though the wisdom of its isolated policy is often 
 called in question. Up to the present, the great pros- 
 perity which has been so marked since the complete 
 acceptance of the doctrine has been powerfully in its 
 favour; and, though often assailed, the arguments on 
 which free-trading is based have not been overthrown. 
 The following chapters aim at tracing briefly the leading 
 points in the history of the controversy, the results of 
 its adoption, and the present position of Free-trade in 
 
 ' Great Britain and the countries with which she is most 
 
 j intimately connected by commerce. 
 
Adam Smith and Decline of Mercantilism. 27 
 
 Chapter II. 
 
 Adam Smith and the Decline of Mercantilism. 
 
 The overthrow of mercantilism is usually attributed to \ 
 Adam Smith's monumental work, The Wealth of Natio7is ^ .^^ 
 published in 1776; but the revolt against the restraints 
 and regulations which that system imposed upon industry 
 land commerce commenced much earlier. The conditions 
 /under which it had been developed had changed materi- 
 ally by the middle of the eighteenth century; the econ- 
 omic problems then arising were of a different order, 
 and methods of economic inquiry were making some 
 progress. In France, writers of the Physiocratic School 
 of '* Economistes" — its founder Quesnay (1768), and 
 Turgot, minister of Louis XVI. (1774- 1776) — had advo- 
 ^<iated complete liberty both in home and foreign trade; 
 their demands for freedom of competition were a protest 
 against impediments to trade on behalf of those who 
 suffered from the evils of restriction and high prices. 
 The negative principle of laissez -fairer laissez- passer^ 
 which they set up as a scientific maxim, sums up their 
 views of the functions of the State in commercial and 
 industrial matters. Adam Smith owed something to the 
 teaching of the Physiocrats on ** natural liberty", though 
 he criticised their views respecting the origin of wealth. 
 Mercantilism was also being questioned by writers on 
 economic subjects in Great Britain, and the opinion that 
 greater freedom would be beneficial was not confined to 
 theorists ; the idea that the abolition of duties would be 
 good for trade was gaining ground, and found expres- 
 sion also among men engaged in commerce. Sir James 
 Steuart's dictum, "that it is the combination of every 
 private interest which forms the public good, and of this 
 
 ^ The phrase laissez-faire originated in the seventeenth century in the re- 
 action against the attempts of the great French minister Colbert, to foster 
 industry by a system of state regulation and protection against foreign 
 countries. As a policy of non-interference with industry and trade, it was • 
 adopted by the Manchester School of economists and politicians a centur)' 
 later, and became their characteristic doctrine. 
 
28 The Free-trade Movement. 
 
 the public, that is, statesmen, only can judge" contains 
 the germ of Adam Smith's reform in political and econ- 
 omic theory, although it relegates to the politician what 
 is at all events in part the function of the economist. ^ 
 
 In the century prior to Adam Smith, statesmen had 
 given but little attention to the effects of legislation upon 
 individual welfare; their leading idea was to formulate 
 a policy for advancing national greatness and obtaining 
 public revenue; the ultimate end of statecraft was 
 centred in national strength and defence. Hence the 
 importance they attached to a store of treasure and to 
 an increase of money as supplying the sinews of war. 
 The legislature busied itself with measures for increasing 
 the produce of the land as a source of national revenue, 
 with the regulation of commerce, so as to secure a 
 favourable balance of trade and a net importation of gold 
 and silver, and with the encouragement of exports, and 
 the provision of markets for their disposal. The econ- 
 omic aspects of this ** national policy" were rather over- 
 shadowed by the political ; the importance of individual 
 enterprise in creating the fund from which revenue is 
 raised was undervalued. 
 
 It is Adam Smith's peculiar merit that he directed 
 economic legislation towards ** the welfare of individuals 
 and homes". He gave emphasis to the idea of wealth 
 "as a means of plentiful subsistence for the people". 
 To this end he urged that the energies of statesmen 
 should be mainly directed, subordinating thereto the 
 supply of revenue for the public service, of which there 
 would be no lack in a prosperous state. Adopting the 
 view of De Gournay, '* that private interests are identical 
 with public interests", he maintained the rights of indi- 
 viduals to dispose of their labour and its fruits in the best 
 market they can find, and to make, without hindrance, the 
 best bargains they can for themselves in their exchanges. 
 
 *J. Steuart, An Inquiry into the Principles of Political Economy (1767). 
 Daniel Defoe, also, writing in Z-ft^ il/(frra/or at thebeginning of the eighteenth 
 century, had stated very lucidly the real advantages of trading between 
 nations. "Trading", he says, "is a matter entirely independent in its 
 nature, and neither consults other interests nor depends on any interests but 
 what relate to itself." And again, "the language of one nation to another 
 is, I let thee gain by me that I may gain by thee". 
 
Adam Smith and Decline of Mercantilism. 29 
 
 The discovery of a great scientific principle usually 
 takes place only when the time and circumstances are 
 ripe for its revelation, but it requires a mind of excep- 
 tional genius to grasp the situation, to discern the 
 principle involved, and to enunciate the new truth in 
 a manner at once lutid and forcible, in order that it 
 may gain acceptance from a public biassed by old 
 beliefs. 
 
 The doctrine of '^ natural liberty" — that the national 
 welfare depends upon the exercise of personal freedom 
 in the ordinary business of life by the individuals who 
 compose the state — was of the nature of a discovery in 
 the sphere of political thought, and its application to 
 practice has profoundly affected the course of history. 
 To John Locke {Civil Government) the idea of political 
 freedom was mainly due, and Montesquieu (Esprit des 
 Lois) had enforced the same doctrine. Adam Smith 
 grasped its force, and gave it application in the domain 
 of economic relations. From his time economics began 
 to be treated as a distinct branch of science, and inquiries 
 into the nature and causes of wealth and of its distribu- 
 tion came to be regarded as more and more important 
 in promoting the welfare of men, both as individuals and 
 as citizens. 
 
 Locke had already commented upon the importance of 
 labour in the production of wealth, and Gregory King 
 had emphasized the function of capital in providing a 
 fund for employing labour; Adam Smith demanded that 
 both should be freed from trammels. Capital had al- ^ 
 ready gained some degree of liberty; the trading cor- 
 porations were declining; new towns were growing up 
 in which the restraints of the old municipal corporations ^' 
 were absent; the usury laws were becoming obsolete; 
 and monopolies granted in connection with certain in- 
 dustries at home, or conferring special privileges in 
 foreign commerce, were tending to lapse. Labour, how- 
 ever, suffered from many disabilities imposed by com- 
 bination acts, settlement acts, and other impediments to 
 free movement. The whole system of restraints had 
 operated most disastrously for the weaker classes, and 
 the time was ripe for the promulgation of a system of 
 
30 The Free-trade Movement. 
 
 *' natural liberty" in matters affecting trade and industry 
 as set forth by Adam Smith. 
 
 Whether, as is maintained, this point of view was un- 
 attainable at an earlier stage in the growth of nations is 
 a question which scarcely admits of a definite answer; 
 but it is certain that the previous policy had not only 
 impeded industry at home, but had kept up national 
 animosities, and had built up cumbrous systems of com- 
 mercial legislation, which restricted the development 
 and production of wealth. 
 
 By separating the economic problem from the political 
 for purposes of investigation, the conditions favourable 
 to the advance of material welfare were more clearly 
 discerned, and the progress of the masses during the 
 past century has been furthered in no small degree by 
 the practical application of the economic principles thus 
 elucidated. Legislation also became more humanitarian 
 when the idea had been fully grasped that the well-being 
 of the individuals of which the nation is composed is the 
 true aim of government, that national power and national 
 revenue should subserve this end, and that the removal 
 of legislative hindrances to freedom of action was one of 
 the best means for the attainment of human welfare. 
 
 The argument of The Wealth of Natiotis embodied a 
 further idea, which was novel at the time, and which has 
 by no means been universally grasped even yet, namely, 
 that the mutual dependence of nations is a factor in their 
 individual progress, and that exclusiveness is unfavour- 
 able to full national development. This doctrine, a pro- 
 duct of the scientific inquiry into the nature and origin 
 of wealth, had a universal application; it tended to 
 remove some of the causes of international jealousy and 
 rivalry, and to promote more cordial relations among 
 ^ nations by the recognition of common interests. Under 
 the theory of mercantilism, nations were considered 
 necessarily antagonistic to one another; they were al- 
 ways in a state of war or preparing for it,^ and to attack 
 
 ^ ' • Commerce, which ought naturally to be, among nations as among indi-\ 
 viduals, a bond of union and friendship, has become the most fertile source \ 
 of discord and animosity. The capricious ambition of kings and ministers / 
 has not, during the present and preceding century, been more fatal to the / 
 
Adam Smith and Decline of Mercantilism. 31 
 
 or impede the welfare of other peoples was regarded as 
 a chief means of promoting their own. The fiscal policy 
 which these measures entailed injured themselves not less 
 than their rivals. The tendency of the new doctrine was 
 to remove these restraints and burdens, and to foster a 
 spirit of amity in place of the jealousy which prevailed 
 between nations. That the greatest possible liberty of 
 action would conduce to the comfort and progress of the 
 people came to be regarded as an economic maxim, 
 which was progressively adopted by statesmen. The 
 analysis of wealth and commerce performed by Adam 
 Smith made entirely for peace, by exposing fallacies 
 which had been the cause of many conflicts. His atti- 
 tude towards trade was cosmopolitan, but not the less 
 patriotic. He felt that economic advantages are not 
 fully secured within political limits. With scientific in- 
 sight he saw that commerce benefits all mankind, and is 
 not merely a device for obtaining gain for one nation at 
 the expense of others. He recognized that consumable 
 goods were what nations required, and what they could 
 obtain by free exchange, and that gold and silver were 
 only the instruments of this exchange. He perceived 
 also that no special efforts on the part of governments 
 were necessary to procure the precious metals, since, as 
 the instruments of commerce, they would necessarily 
 follow its movements, and that freedom of commerce 
 would lead to an adequate supply of gold and silver in 
 countries which did not produce them.^ 
 , The economic evils of restrictions upon commerce 
 were very forcibly set forth by Adam Smith; they 
 checked the growth of wealth, and tended to impoverish 
 the people by excluding desirable commodities ; bounties 
 upon exports only forced special industries artificially 
 at the cost of the community, while checks on the 
 
 repose of Europe than the impertinent jealousy of merchants and manu- 
 facturers" ( Wealth of Nations, book iv. chap. 3), 
 
 ^ Ricardo states this doctrine very clearly in his Principles of Political 
 Economy and Taxation, 3rd edition, p. 143: — " Gold and silver having been 
 chosen for the general medium of circulation, they are, by the competition 
 of commerce, distributed in such proportions amongst the different countries 
 of the world as to accommodate themselves to the natural traffic which 
 would take place if no such metals existed, and the trade between countries 
 were purely a trade of barter ". 
 
32 The Free-trade Movement. 
 
 export of machinery injured the machine-makings in- 
 dustries, besides destroying the mutual advantages of / 
 exchange. Taxes on food, either home-grown or im- 
 ported, were, as Adam Smith said, *'a curse equal to 
 the barrenness of the earth and the inclemency of the 
 heavens ", and an attempt to destroy or reject nature's 
 free gifts. As he suggests in his criticism of the Corn- 
 laws, " were all nations to follow the liberal system of 
 free exportation and free importation, the different "\ 
 states into which a great continent was divided would 
 so far resemble the different provinces of a great 
 empire".^ But so numerous were the restrictions upony* 
 external trade in his day, so powerful the interests 
 which profited by them, and so deep-rooted the belief 
 in the efficacy and necessity of this State control, that 
 Adam Smith had little expectation that the principles he 
 advocated would ever be realized in practice. In his 
 own words: ''To expect, indeed, that the freedom of 
 trade should ever be entirely restored in Great Britain is 
 as absurd as to expect that an Oceana or Utopia should 
 ever be established in it. Not only the prejudices of 
 the public, but, what is much more unconquerable, the 
 private interests of many individuals, irresistibly oppose 
 it." 2 This quotation substantially expresses the reasons 
 many other nations still refrain from adopting the 
 Free-trade policy. Adam Smith considered that "free- 
 dom of trade should be restored" in such cases **only 
 by slow gradations and with a good deal of reserve and 
 circumspection", since its sudden adoption would destroy 
 the protected industries, and ''deprive all at once many 
 thousands of our people of their ordinary employment 
 and means of subsistence". 
 
 Although the system of protection prevailing when 
 Adam Smith wrote had originated in a measure of 
 public policy, it had fostered mainly the interests of the 
 trading and mercantile classes, for whom it endeavoured 
 to secure a monopoly of markets. Adam Smith himself 
 attributes its rise to "the clamour and sophistry of the 
 merchants and manufacturers ", who had possessed 
 much influence with the Government from the time of 
 
 1 Wealth of Nations, book iv. chap, 5. • Ibid, book iv. chap. a. 
 
 /why 
 V Free 
 
Adam Smith and Decline of Mercantilism. 33 
 
 the Revolution, and had induced a belief among the 
 ruling classes and land-owners that it was in the public 
 interest to check the export of wool and to maintain 
 protective duties.^ As yet agriculture had not gained 
 much from protection. For fifty years prior to 1765 
 Great Britain exported corn; importation then began, 
 but the duty on wheat was reduced in 1773 to only 6d. 
 per quarter when the price rose above 48^. The land- 
 lords of the eighteenth century had devoted themselves 
 energetically to developing the resources of the soil; 
 they had sunk much capital in their estates, and had 
 shown great enterprise in the introduction of new 
 methods and new products from Flanders. The cen- 
 tury was one of great progress in agriculture. It should 
 be remembered that the criticism of Adam Smith upon 
 mercantilism and restrictions generally was not aroused 
 by dearness of food. That aspect of the system came 
 into prominence from the end of the century as a result 
 of bad harvests, the impediments to importation created 
 by the war, and the efforts of the belligerents to destroy 
 each other's commerce ; as a distinct policy for benefit- 
 ing agriculture, protection dates from 181 5. 
 
 In the early periods of interference (from the four- 
 teenth to the end of the eighteenth century) the export 
 of corn had been checked with the idea of maintaining a 
 sufficiency at home, and restrictions on its sale were 
 made with a view of excluding the profit of middlemen 
 rather than with a protective aim. But under Charles 
 II. interference began in the interest of land-owners, and 
 import duties were imposed, which, however, had little 
 eff"ect on prices. After the Revolution a 5^. bounty was 
 given on the export of corn when the price fell to ^Ss. a 
 quarter. This was expected to raise prices, but in 
 reality it stimulated production, and led to inclosures 
 and wider cultivation of corn-land with the object of 
 gaining the bounty, though, as some maintain, at the 
 
 1 " Merchants and manufacturers are the people who derive the greatest 
 advantage from the monopoly of the home market. . . . Country gentle- 
 men and farmers are, to their great honour, of all people the least subject to 
 the wretched spirit of monopoly. The undertaker of a great manufactory is 
 sometimes alarmed if another work of the same kind is established within 
 twenty miles of him" {Wealth of Nations, book iv. chap. 2). 
 
 (M460) C 
 
34 The Free-trade Movement. 
 
 expense of other branches of agriculture. Prices were 
 kept down, and as a fact corn was cheaper by some 
 30 per cent in the first half of the eighteenth century 
 than in the seventeenth, a circumstance which may in 
 some measure have been owing to the impulse given by 
 the new agriculture, though it was undoubtedly mainly 
 due to the bounty, which lowered prices by calling forth 
 an increased supply. 
 
 Though Adam Smith made a general attack upon \ 
 restrictions on commerce, he admitted two important ] 
 exceptions which call for special notice: — (i) When the 
 tax which is placed upon an imported article is balanced 
 by an equivalent duty upon the home product, as in the 
 case of our present duties on spirits and beer; such 
 taxes, being levied purely for revenue purposes, are not 
 protective. (2) The second case is that of national 
 defence, which he maintained was **of much more / 
 importance than opulence", and his support of the 
 famous Navigation Laws rests upon this ground.^ 
 
 The first Navigation Act was passed as early as 1381; 
 when an attempt was made, not very successfully, to 
 develop a navy by requiring merchants to employ 
 English shipping. The patriotic outburst of the Eliza- 
 bethan period, coinciding with a spirit of maritime 
 enterprise and great expansion of trade, did much more 
 to stimulate the formation of a navy. The Navigation 
 Acts of 1 65 1 and 1660, however, exercised great influ- 
 ence in developing England's maritime power, in that 
 they crushed the Dutch carrying trade. Their economic 
 aspect was twofold: on the one hand, they benefited 
 ship-owners and merchants by raising prices and rates ; 
 on the other, they irritated consumers and shippers (who 
 would either have employed the Dutch carriers or bene- 
 fited by their competition with the English), and they 
 offended the colonists by setting up monopolies in their 
 
 1 ' ' When the Act of Navigation was made, though England and Holland 
 were not actually at war, the most violent animosity subsisted between the 
 two nations. National animosity at that particular time aimed at the very 
 same object which the most deliberate wisdom would have recommended— 
 the diminution of the naval power of Holland, the only naval power which 
 could endanger the security of England " ( [Vealth of Nations, book iv. 
 chap. 2). 
 
Adam Smith and Decline of Mercantilism. 35 
 
 trade. The justification of the Navigation Acts is\ 
 political and not economic. Sir Josiah Child's defence 
 of these Acts,^ made in 1690, rests virtually upon the 
 same kind of argument that has been advanced for 
 strengthening the Navy for Imperial purposes during 
 the past few years. He observes: *'This kingdom 
 being an island, the defence whereof has always been 
 our shipping and seamen, it seems to me absolutely 
 necessary that profit and power ought jointly to be 
 considered, and if so, I think none can deny but the 
 Act of Navigation hath, and doth occasion building and 
 employing three times the number of ships and seamen 
 that otherwise we should do ; . . . many ships and 
 seamen being justly the reputed strength and safety of 
 England". In the absence of a formidable national 
 fleet and of regular parliamentary votes for the con- 
 struction and maintenance of ships of war, the Naviga- 
 tion Acts succeeded in providing the stimulus for the 
 creation of a mercantile fleet, which could then supple- 
 ment the national navy and off"er substantial defence for 
 the country in time of war. This is their justification. 
 On purely commercial grounds there is little to be said 
 for them ; 2 competition, coupled with the political events 
 which afterwards completed the misfortunes of Holland, 
 would most probably in time have given Great Britain 
 the first place among maritime nations, without the aid 
 of shipping regulations. 
 
 It will be seen that the Protection of this century 
 differs in many respects from that of the mercantilists. 
 As has been explained, the latter aimed at ** national 
 strength ", and the commercial restraints adopted in the 
 light of the economic ideas then prevailing were imposed 
 primarily as conducing to that end. Some of the errors 
 of that system had received their death-blow. The 
 revolt of the American colonies demonstrated the folly 
 of the ''colonial system" of trade. Adam Smith had 
 exposed the fallacies respecting money, which led to 
 
 '^Discourse upon Trade, by Sir Josiah Child (1690). 
 
 2 "The Act of Navigation is not favourable to foreign commerce, or to 
 the growth of that opulence which can arise from it" {Wealth of Amotions, 
 book iv. chap 2). 
 
36 The Free-trade Movement. 
 
 regulations for securing a balance of the precious 
 metals ; the growth of a system of credit had introduced 
 a new method of meeting extraordinary expenditure by 
 loans, and dispensed with the necessity for accumulating 
 national treasure. The adoption of the principle of 
 ** natural liberty", which aimed at increasing the 
 national wealth by encouraging individual wealth, de- 
 stroyed the policy which treated commerce merely as an 
 instrument for revenue. Also the original aim of the 
 Mercantilists had been partly attained; the nation was 
 becoming consolidated and powerful. Still, the elements 
 of a protective policy survived in established practices 
 and beliefs, and the circumstances of the close of the 
 eighteenth century were peculiarly favourable for reviv- 
 ing and strengthening them in the new form which is 
 the characteristic of nineteenth-century protection. 
 
 Some fallacies lingered on — that the gain of one coun- 
 try in trading involves an equivalent loss to the other; 
 that commerce is a species of warfare, and that to im- 
 port an article which can be produced at home is an 
 injury to the country which imports. These errors, 
 which are at the root of much Protectionist writing at 
 the present day, took their rise in less-settled times, 
 when national animosities and jealousies were easily and 
 frequently aroused, and mercantilism nourished their 
 growth. The struggle with France, that commenced 
 in 1793, during which France returned to strict prohi- 
 bition, and which dragged on until 18 15, was calculated 
 to deepen this doctrine; in fact it gained wide currency 
 at that period. Patriotism was supposed to demand the 
 exclusion of the goods of the hostile country, and to 
 require the nation to encourage its own industries. 
 National sentiment, aroused by threats of invasion, 
 supported the rather loose reasoning, that, as hostile 
 forces must be repelled, so it was equally meritorious to 
 repel " invasions of goods" from hostile countries. In 
 such circumstances it is not difficult to perceive how the 
 conflict of arms led on to a conflict in the commercial 
 arena, and how measures which made for national inde- 
 pendence and self-sufficiency became the popular policy ; 
 and the spirit of bitter antagonism to foreigners en- 
 
Adam Smith and Decline of Mercantilism. 37 
 
 gendered a hatred and fear of dependence upon them 
 for food, with a strong- desire to support those home 
 industries which provided the national sustenance. A 
 third cause co-operated with these to favour the exclu- 
 sion of foreign goods; this was the serious need for 
 revenue for military purposes, which led to taxes being 
 levied upon every available object. The result of this 
 prohibitive policy was that highly-protective duties were 
 imposed upon foreign goods, and especially corn, during 
 a period sufficiently long to establish industries on a 
 protective basis, and to accustom the nation to the pro- 
 tective principle. Out of these various elements the 
 Protectionist policy of the early part of this century was 
 evolved. 
 
 Adam Smith's advocacy of ** natural liberty" has laid 
 him open to the charge of propounding an uncompro- 
 mising laissez-faire theory. As the philosophical leader 
 of a great reaction against excessive state regulation in 
 matters of trade, he has been made responsible by some 
 of the modern advocates of extended state control for 
 the views of those of his followers who, at a later period, 
 pushed the doctrine of non-interference to the extrava- 
 gant length of opposing factory legislation. The im- 
 putation, however, falls to the ground when we consider 
 the circumstances of the times in which he wrote and 
 the industrial conditions which then prevailed. He found 
 economic affairs regulated in every detail ; the task which 
 pressed was that of attacking and overthrowing hurtful 
 restrictions. To Adam Smith ** natural liberty" meant, \ 
 economically speaking, the right to dispose of goods or V 
 labour free from unnecessary restraints and taxation./ 
 The period called for destructive criticism, and he sup- 
 plied it, along with sound economic investigation. 
 Laissez-faire^ as generally understood now, never had 
 existed in England when he wrote ; it was not advocated 
 by Adam Smith, he simply attacked impediments to 
 freedom of commerce and labour, common in his day. 
 It was impossible for him to anticipate the evil of in- 
 dustrial conditions which arose in a new century of 
 mechanical invention, and the limitations which the 
 factory-system and methods of large production have 
 
38 The Free-trade Movement. 
 
 since rendered necessary, in order that labourers may 
 enjoy the liberty of action which he claimed for them, by 
 the removal of disabilities derived from feudal ideas. 
 
 Laissez-faire is a doctrine which found favour in Eng- 
 land at a much later period, and it is much more a 
 political maxim than an economic doctrine. It was part 
 of the creed of the politicians of the Manchester School 
 (as they have been called), who made the attainment of 
 a peace-policy their leading aim, and advocated Free- 
 trade, the minimum of state intervention with business, 
 and non-interference with the affairs of other nations as 
 the chief means to that end : they represented the most 
 extreme and abnormal development of the non-interfer- 
 ence principle. But laissez-faire ^ unadulterated or un- 
 alloyed, is not a maxim adopted by economists, least of 
 all by Adam Smith. Ricardo and M'CuUoch, who hav^ 
 been regarded as its chief upholders among economists^ 
 admitted many exceptions to the principle; their suc- 
 cessors, J. S. Mill and Jevons, distinctly repudiated it as 
 an ideal, and indicated many directions in which it is 
 expedient for the state to intervene. 
 
 Adam Smith, writing while factory employment and 
 machine-industry were in their infancy, argued for greater 
 liberty in trade and industry, but his opinions must not 
 be identified with views that were propagated some fifty 
 years later. He exposed the errors of his own day, and 
 assailed definite abuses then existing and working great 
 injury and injustice to the majority of the people. His 
 individualism was a reaction against the extreme forms 
 of restriction from which the country had long been suf- 
 fering, and against the doctrine of state-control, which 
 was the fundamental idea in the moribund mercantilism 
 of his times. It is not surprising if in attacking con- 
 crete evils he propounded some principles which need 
 modification when applied to later circumstances, and to 
 later phases of industrial employment; but his doctrine 
 of Free-trade requires no such revision or re-adaptation, 
 — indeed the conditions of modern production make it 
 more than ever applicable — at least to Great Britain. 
 His belief in the beneficent working of enlightened self- 
 interest, and his conviction that the good of society 
 
Tariff Reform. 
 
 39 
 
 would be best attained by the removal of impediments 
 to individual action, are extremely optimistic, and are 
 not to be taken absolutely, or as true for all circum- 
 stances. Experience shows that men are not all en- 
 lightened as to their real interects, nor are they equally 
 capable of pursuing those interests; natural and un- 
 avoidable differences in opportunity and ability render 
 many restraints necessary upon individual action, if the 
 strong are not to abuse their power and the weak to 
 suffer wrong. The scope of government action is very 
 wide in checking injustice and fraud, in limiting abuses 
 in the employment of power, in aiding and defending 
 those unable to compete fairly in the struggle for exist- 
 ence, and in helping the ignorant and weak to attain 
 knowledge and efficiency. But the character of the in- 
 terferences here indicated is quite in accordance with the 
 spirit of Adam Smith's teaching, and equally at variance 
 with the restrictions which he assailed. Both make for 
 greater freedom of action and opportunity. It was his 
 task to expose the errors of Protection, and of impedi- 
 ments to free labour and free commerce, and to demon- 
 strate the advantages that would accrue by removing 
 the fetters which interfered with the natural and bene- 
 ficial action of men ; it was for a later generation, in the 
 same spirit and with similar enlightened views, to build 
 up new walls against monopoly, and to impose restraints 
 upon fresh abuses, which experience has shown will arise 
 in every age. 
 
 Chapter III. 
 Tariff Reform {1785-1838). 
 
 Towards the end of the eighteenth century mercan- 
 tilism was declining and more liberal ideas were gaining 
 ground ; under the influence of sounder economic doctrine 
 there was a movement towards moderating restrictions 
 on trade. This is seen in the numerous treaties of com- 
 merce between European nations which were framed 
 
4o The Free-trade Movement. 
 
 between 1780 and 1790. An attempt had been made in 
 17 1 3 to arrange a Treaty of Commerce with France, but 
 it was defeated by the jealousy of the English commercial 
 and manufacturing classes engaged in the silk, woollen, 
 and linen trades. After the Peace of Versailles (1783) 
 a better feeling arose, France showed a more liberal 
 spirit and a desire to come into closer trade relations ; 
 and overtures for a commercial treaty were begun by 
 Pitt. Both nations, however, distrusted one another; 
 their suspicions, together with the attempts to get the 
 better of one another, created difficulties in arriving at 
 any agreement on details. After three years of delays, 
 Mr. Eden, who was sent to Paris to represent Great 
 Britain, succeeded in negotiating a treaty, which con- 
 tinued in operation from 1786 until the outbreak of the 
 revolutionary war in 1793 once more roused bitter 
 animosities and renewed commercial hostilities. By the 
 terms of this treaty France undertook to reduce the 
 duties upon British cotton and woollen goods to 12 per 
 cent ad valorem^ and those upon hardware, cutlery, 
 and other goods to 10 per cent ad valorem (the duties 
 had previously been prohibitive); manufactured silks, 
 and goods composed of wool or cotton mixed with silk, 
 were still prohibited. Great Britain reduced the duties 
 on French wines, vinegar, brandy, and oil, on glass and 
 many other manufactures, to less than one-half. The 
 result was beneficial to both. Trade between the two 
 countries doubled in three years, smuggling declined, 
 and a more friendly feeling prevailed. France entered 
 into similar treaties with Holland and Russia, and the 
 liberalizing effect of the policy was seen in a moderate 
 general tariff drawn up by the Constituent Assembly in 
 1791. 
 
 William Pitt, who was much influenced by the writ- 
 ings of Adam Smith, had set himself to carry out a 
 policy of peace, retrenchment, and reform. He wished 
 to remodel the system of taxation, and advanced a stage 
 towards the adoption of Free-trade principles by reduc- 
 ing the duties on imports. He hoped thus to promote 
 commerce and to stimulate the national industry and 
 wealth, to increase the revenue, and put a check upon 
 
Tariff Reform. 41 
 
 the contraband trade which was fostered by the system 
 of high customs duties. As an example of this illicit 
 trading, the duty on tea raised the price 120 per cent, 
 with the result that two-thirds of the tea consumed in 
 the country was smuggled. Pitt lowered the duty to 
 12^ per cent (1784). He endeavoured to strengthen 
 the finances of the nation by economy in administration 
 and improved methods of taxation. By consolidating 
 the customs (1787) and substituting one rate for the 
 various duties imposed on each article, he gained revenue 
 and reduced the cost of collection, while the public 
 benefited from the simplification and the reduction of 
 vexatious duties. Pitt also devised new taxes, and bor- 
 rowed some ideas on direct taxation from the Dutch. 
 He imposed a tax upon inhabited houses, and adopted 
 the succession duty; by reducing the taxes upon some 
 necessaries and increasing those upon personal property, 
 he made a very distinct movement from indirect to direct 
 taxation, and shifted part of the burden of taxation from 
 the poorer to the richer classes. 
 
 The outbreak of war, in 1793, defeated Pitt's cherished 
 hopes of financial reform, put an end to the commercial 
 treaty with France, and plunged the nations again into 
 commercial hostilities; it also created a demand for 
 fresh revenue to meet the increased expenditure. New 
 taxes had to be levied, old ones reimposed ; and it was 
 in the succeeding period of heavy taxation, extending 
 over more than twenty years, that the system of pro- 
 hibition and restrictions thus adopted developed the 
 modern protective principle of fostering home industries. 
 Each year, from 1793 to 1798, the customs and excise 
 duties were augmented; and in 1798 Pitt imposed an 
 income-tax of 10 per cent upon incomes of ;^2oo and 
 upwards, with a graduated scale for incomes down to 
 ;^6o ; this tax was maintained until the close of the war. 
 
 The effects of the war were disastrous to British com- 
 merce and manufactures, and they were accentuated by 
 several years of bad crops (1793-95), ordinary industries 
 received a check, and an impulse was given to military 
 expenditure. Violent fluctuations in prices ensued, com- 
 mercial credit collapsed, followed by a crisis which 
 
42 The Free-trade Movement. 
 
 produced depression and want of employment. The 
 scarcity of food is curiously illustrated by an agreement 
 made between members of both Houses of Parliament 
 in 1796 to reduce their household consumption of wheat 
 by one -third and to recommend the practice in their 
 several localities. At this time a bounty of 21s. per 
 quarter was being offered by the government on wheat 
 from the south of Europe and other distant parts. 
 
 France prohibited the importation of British produce, 
 Britain retaliated by checking the'entrance of food and 
 merchandise into France. Not content with assailing 
 one another's shipping, they interfered with the trading 
 in neutral vessels, and came into collision with other 
 nations. British commerce suffered ; yet with the United 
 States it doubled between 1793 and 1798, partly owing 
 to the export of cotton from the States, which com- 
 menced in 1794, and stimulated the Lancashire trade. 
 The Peace of Amiens (1802) gave a short suspension of 
 hostilities, but the war was resumed in 1803 with greater 
 vigour and determination, and more strenuous attempts 
 by both parties to ruin one another's commerce. Great 
 Britain sought to cut off the trade between France and 
 the colonies carried on under neutral flags, France 
 endeavoured to exclude British goods from the Continent. 
 The decrees of Napoleon (1806-7) ^^^ the British Orders 
 in Council pushed the warfare upon supplies and com- 
 merce to a degree hitherto unknown. Each country 
 sought to cripple the other in resources by the destruc- 
 tion of its commerce. Napoleon ordered British mer- 
 chandise on the Continent to be seized and burned, and 
 employed his troops in its destruction. A clandestine 
 trade meanwhile was carried on by smuggling, and by 
 a system of evasions, at which both parties connived. 
 At home trade was in a miserable condition, employ- 
 ment was scarce, wages low, food expensive, and 
 suffering frequent. The war, though ineffectual in 
 wholly stopping trade, was successful in producing 
 great misery. 
 
 The vast expenditure of the war in the early period had 
 called forth the ingenuity of Pitt to provide resources. 
 From the position of a financial reformer he was driven 
 
Tariff Reform. 
 
 43 
 
 to that of a war minister. The outlay was met by two 
 methods: (i) the extension of the system of public bor- 
 rowing, which built up a huge national debt; and (2) by 
 a large increase of taxation, both direct and indirect. 
 Duties were placed upon almost every article of con- 
 sumption, both of home production and foreign, — food, 
 raw materials, and manufactured goods alike. At the 
 close of the war (181 5) the nation found itself with 
 a debt of ;£"86o,ooo,ooo, and taxation (which was 
 ;£"i 7,000,000 before the war) amounting to ;£"72,ooo,ooo,^ 
 for a population numbering less than 20 millions. Mili- 
 tary expenditure had averaged ;£"36,ooo,ooo over the 23 
 years of war, and increased from ;^4, 250,000 in 1791 
 to ;^6o, 250,000 in 1814. Between ;£'5o,ooo,ooo and 
 ;£'6o,ooo,ooo was paid in subsidies to continental allies. 
 Corn imported in years of scarcity during the war 
 (1796, 1800, 1 80 1, 1802, 1805, 1 810) was estimated at 
 more than ;^2 5, 000,000.2 Rent of land had risen nearly 
 threefold during the war, and the prices of all consum- 
 able goods were high. 
 
 It was hoped that with peace would come prosperity, 
 but the country was exhausted by the war, and its cessa- 
 tion even caused some temporary want of employment. 
 There was great distress among both the manufacturing 
 
 1 Table comparing Public Revenue for four periods in ;^s (omitting 0,000). 
 (First 3 cols, from Newmarch, Statistical Journal.) 
 
 
 Year 
 
 Year 
 
 Year 
 
 Year 
 
 
 1815. 
 
 1825. 
 
 1852. 
 
 1896. 
 
 
 I 
 
 £, 
 
 I 
 
 £ 
 
 Customs, 
 
 10.53 
 
 i6,S5 
 
 20,56 
 
 20,76 
 
 Excise 
 
 26,54 
 
 21,00 
 
 14.84 
 
 26,80 
 
 Assessed Taxes and Land and House Duty, 
 
 6.34 
 
 S.oo 
 
 3.37 
 
 2.50 
 
 Income and Property Tax, ... 
 
 15,28 
 
 
 5.52 
 
 16,10 
 
 Stamps and Death Duties, 
 
 6.37 
 
 7.45 
 
 6.76 
 
 18.95 
 
 Post Office 
 
 1,62 
 
 1,60 
 
 1,02 
 
 11,38 
 
 Telegraphs, 
 
 — 
 
 — 
 
 — 
 
 2,84 
 
 Miscellaneous, 
 
 52 
 
 46 
 
 1.14 
 
 2,64 
 
 Ireland (separate for 1815) 
 
 4.70 
 
 
 
 — 
 
 71,90 
 
 52,06 
 
 53.21 
 
 101,97 
 
 *The Present State of England, Joseph Lowe, 1823. 
 
44 The Free-trade Movement. 
 
 and agricultural classes. No measures were advanced 
 to mitigate the burden of taxation upon the poorer 
 classes, but the House of Commons insisted, in 1816, 
 upon the abolition of the income-tax (as being a war 
 tax), though the ministry, under Lord Liverpool, wished 
 j to reduce it only one-half. The same parliament, com- 
 i posed largely of land-owners, had already passed a bill 
 ; (181 5) which had for its object to maintain the price of 
 corn and keep up rents, while it aimed also at keeping 
 the land under cultivation and providing a sufficient 
 supply of home-grown corn. This law practically pro- 
 hibited the importation of foreign corn. The Baltic 
 Provinces and the United States were quite capable of 
 sending a plentiful supply, and were willing to take our 
 manufactures in exchange, but they were prohibited 
 from doing so. The Navigation Acts also seriously 
 hampered trade ; though some relaxation had been made 
 in 1796 in the case of the United States, and a further 
 relaxation was effected by the commercial treaty of 
 181 5, yet no general modification was adopted until 
 1822.1 
 
 The period of distress which followed the war per- 
 plexed the populace, who could not understand its causes; 
 and it was succeeded by many similar periods during the 
 next thirty years. Various causes contributed to the 
 depression ; foremost amongst them, the enormous war 
 expenditure which had drained the country and produced 
 a system of taxation pressing upon almost every item 
 of household expenditure; the restraints upon commerce 
 checked the manufacturing industries, imposed high 
 duties on materials, and excluded the corn which would 
 at the same time have fed the people and stimulated 
 trade; a demoralizing system of poor-law administra- 
 tion prevailed which was amended only in 1834, ^"^ 
 there were several series of bad harvests and some 
 periods of speculation, followed by commercial crises in 
 I 1825 and 1839, which further disordered trade. The 
 poorer classes suffered great hardships from want ot 
 employment, low wages, and dear food. Riots broke 
 
 ^ Stephen Dowell {History of Taxation^ vol. ii. pp. 248-250) gives the 
 summary of taxation for the year 181 5 as follows: — 
 
Tariff Reform. 
 
 45 
 
 out in 1816, and bread shops were plundered. In the 
 Eastern counties the military were required to repress 
 the disturbances. Incendiarism became frequent, and 
 corn stacks were often destroyed by famishing- men.^ 
 There was a revival in the Midlands of the attacks on 
 
 25,438,259 
 
 GREAT BRITAIN. 
 
 £ 
 Direct Taxes— 
 
 Land Tax, ... ... 1,196,000 
 
 House and Assessed Tax, 6,500,000 
 
 Property and Income, ... ... 14,600,000 
 
 Legacy and Succession, 1,297,000 
 
 Insurance, Auctions, Licenses, Loco- 
 motion and Shipping, 1,845,259 
 
 On Consumption— 
 
 Eatables. 
 
 Salt, Sugar, Currants, &c., ... 5,115,663 
 
 Drinks. 
 
 Beer, Malt, Hops, 9,596,346 
 
 Wine, Spirits, &c., 8,600,772 
 
 Tea, Coffee, 3,868,050 
 
 Tobacco, 
 
 Raw Materials. 
 
 Timber, Coal, Stone, Cotton, Silk, Hemp, &c., 
 Manufactures. 
 
 Leather, Soap, Bricks, Candles, Paper, &c., 
 Stamp Duties, 
 
 Bills, Receipts, &c., 
 
 Total, Great Britain, ... 
 
 IRELAND. 
 Excise, Customs, Stamps, &c., 
 
 Total, United Kingdom, 
 
 27,180,831 
 2,025,663 
 
 6,062,214 
 
 4,080,721 
 
 2,743,000 
 
 67,530,688 
 
 6,258,723 
 73,789,411 
 
 1 " In 1816, at Bideford the mob interfered to prevent the export of a cargo 
 of potatoes ; at Bridport the mob paraded the streets, broke into the bakers' 
 shops, and proceeded to other acts of violence. Strong able-bodied men in 
 Essex were often only able to earn but 6d. a day, and wheat was at from £^ 
 to ;^5 a quarter. Farm buildings, barns, stacks, machinery, business pre- 
 mises were set on fire, and all agricultural property seemed insecure and 
 liable to destruction by incendiaries. At Swanage six people out of every 
 seven were paupers, and the poor-rate amounted to 21J. in the ;^. ... In 
 Stafford the manufacturing poor were reduced literally to starvation. Men 
 were compelled to eat the cabbage stalks in their cottage gardens . . . and 
 27,500 persons out of a population of 84,000 were in receipt of relief in 
 Birmingham." — (Spencer Walpole: History, vol. i. chap, v.) 
 
46 The Free-trade Movement. 
 
 machinery. In some places political demonstrations led 
 to disorder and pillaging" of shops. The distress gave 
 rise in some parts to agitation for parliamentary reform. 
 The farming classes were not exempt from suffering, 
 and many farmers who had broken up land for corn 
 when rents were high, and the price of wheat loos. a 
 quarter, found themselves threatened with ruin in the 
 periods of lower prices and depression which ensued 
 upon the advent of peace. 
 
 The first public movement against the system of 
 Protection was made in 1820, at a time when not only 
 corn but nearly every article of manufacture was pro- 
 * tected. It came from the merchants of London, who 
 presented a memorial (drawn up by Thomas Tooke, 
 author of The History of Prices) to the House of Com- 
 mons, complaining of the ** impolicy and injustice of 
 the restriction system", asking for freedom of trade 
 except as regards revenue, and adopting definitely the 
 position and arguments of Adam Smith. The Edinburgh 
 Chamber of Commerce sent in an equally forcible peti- 
 tion, urging the same enlightened views on trade. Lord 
 Liverpool's reply was ** that the difficulty of the reform 
 of taxation was in the vested interests which had grown 
 up and which would be imperilled if any attempt were 
 made at such a design ". The House of Commons re- 
 ported favourably upon the proposals set forth in the 
 petitions. The years 1823-1825 were comparatively 
 prosperous. Huskisson, who was President of the Board 
 of Trade, then commenced a series of financial reforms 
 extending over four years, and reducing the tariff"- 
 restrictions upon most foreign manufactures. He also 
 succeeded in modifying the Navigation Acts,^ both as 
 
 / 1 The Act of Navigation (1651), which originated in political and com- 
 ( mercial jealousy of the Dutch, declared: (i) that no goods or commodities , 
 whatever of the growth, produce, or manufacture of Asia, Africa, or 
 America should be imported into England or Ireland or any of the planta- 
 tions, except directly in ships belonging to English subjects, and of which 
 the master and greater number of the crew were Englishmen. (2) That no 
 goods of the growth, produce, or manufacture of any country in Europe 
 should be imported into Great Britain, except in British ships or in such J 
 ships as were the real property of the people of the country or place in / 
 which the goods were produced, or from which they could only be, or/ 
 mostly ware, exported. 
 
Tariff Reform. 
 
 47 
 
 they affected the Colonies and foreign countries, and he 
 paved the way for the ultimate abolition of those re- 
 straints on shipping- by passing a measure ** to place the 
 shipping of any foreign state in the ports of the United 
 Kingdom, on a footing of equality with our shipping, 
 provided such states would afford reciprocal privileges 
 in their ports to the shipping of the United Kingdom ". 
 
 Huskisson endeavoured to modify the duties on the 
 import of raw materials, and he succeeded in lowering 
 many ; he also aimed at a tariff on manufactured imports 
 which should not exceed 30 per cent ad valorem^ The 
 duty on wool was reduced from 6^. to \d. per lb., and 
 its export (hitherto prohibited) was permitted; the im- 
 port duty on raw silk was reduced from \d. to \d, per 
 lb., that on thrown silk from 145-. 8^. to 5^. per lb., and 
 manufactured silk, previously prohibited, was admitted 
 at a duty of 30 per cent. 
 
 The silk trade, carried on in Spitalfields, Coventry, 
 and the eastern counties, had enjoyed a monopoly for 
 sixty years, yet the weavers were in a miserable condi- 
 tion, and often engaged in riots, and French silks were 
 smuggled very plentifully into the country. The in- 
 dustry was declining, there was no improvement in its 
 methods: manufacturers complained that an export 
 trade might be created by the help of a drawback equal 
 to the duty on the imported materials. In proposing 
 the reduction of the duty on silk, Huskisson thus states 
 his opinions on the effects of Protection: '*We are far 
 behind other nations in this industry, it (Protection) has 
 a chilling and benumbing effect, men are rendered in- 
 different to exertion by the indolent security of a pro- 
 hibitory system ". 
 
 1 Leading Modifications of Import Duties between 1823 and 1825. 
 
 Silk manufactures prohibition, altered to 30 and 25 jwr cent. 
 
 Cotton „ varying from 50 to 75 per cent, „ 10 ,, 
 
 Linen „ varying from 50 to 180 per cent, „ 25 ,, 
 
 Paper „ prohibition, „ same as excise. 
 
 Woollen ,, so per cent, ,, 15 per cent. 
 
 Leather, 75 per cent, „ 30 ,, 
 
 Iron bar, ^6J^ per ton, ,, Aijiperton. 
 
 Earthenware, 75 per cent „ 15 per cent. 
 
 Olive-oil, AiS, 15J. 7^. per ton, .. „ ;^4,4J.porton. 
 
 Flax, 5</. per cwt, „ \d. per cwt. 
 
 Glass bottles, 8j. per dozen, ,, 4*. per dozen. 
 
 ^ OF xr 
 
48 The Free-trade Movement. 
 
 Huskisson advanced the cause of free commerce, and 
 removed an injustice to Ireland, by abolishing in 1823 the 
 remaining- duties upon her trade with Great Britain, a 
 measure attempted by Pitt in 1785, but then defeated, 
 and not completed at the time of the Union from defer- 
 ence to English interests. He also simplified the admin- 
 istration of the customs and the complicated statutes by 
 which they were regulated.^ His course of enlightened 
 reform was unfortunately checked in 1827 by the death 
 of Lord Liverpool, and the break-up of the ministry. It 
 was, however, highly satisfactory in its results; con- 
 sumption increased, trade and revenue improved, and 
 the principle, already proved by Pitt's budget of 1784, 
 was established, that a reduction of duties, by adding to 
 prosperity and commerce, can become a means of yield- 
 ing greater revenue. 
 
 These reforms had been very tentative and cautious, 
 but were a distinct advance on the lines of free-trading. 
 A beginning had been made. They did not, however, 
 touch the stronger interests; the duties on corn and 
 agricultural produce, which were almost prohibitive, 
 remained, 2 while sugar and timber were also heavily 
 burdened by highly differential or prohibitive duties. 
 
 When the Whigs again resumed office, in 1830, an 
 attempt to continue the reforms in taxation was made 
 by Lord Althorpe. His object was to give relief to the 
 lower classes, and by removing duties which interfered 
 with manufactures to find them employment. In the 
 budget of 1 83 1 he proposed considerable reductions on 
 manufactured goods, but his scheme was not accepted, 
 and he did not accomplish much. Public interest was 
 now becoming absorbed in the question of political 
 reform. The Reform Bill was passed at length in 1832, 
 and many manufacturing towns, for the first time, re- 
 ceived representation in Parliament, and the power of 
 the middle classes was increased. For some years other 
 problems engrossed Parliament. The Poor Law Reform 
 
 ^ When Huskisson commenced his reforms, about 1500 Acts of Parliament 
 regulated the administration of the customs regarding entry, export, and 
 custody of goods ; he reduced these Acts to 11. 
 
 2 The duty on butter was 21J. per cwt., on bacon 28^., on cheese lu., 
 lard Bs., on potatoes 2s, per cwt., salt i$s. per bushel. 
 
Tariff Reform. 49 
 
 (1834), Abolition of West Indian Slavery (1833), Muni- 
 cipal Reform (1835), and Tithe Commutation (1836) were 
 among the useful measures passed ; the monopoly of the 
 East India Company was extinguished in 1833, and 
 Post Office reforms were carried in 1839 which effected 
 a saving on communication equivalent to a reduction of 
 taxation. 
 
 Meanwhile, in 1830, an important contribution was 
 made to the subject of taxation by Sir H. Parnell, who 
 published an analysis of the revenue of 1829, and criti- 
 cised the system of duties in a work on Financial 
 Reform. He showed that taxes on materials were a 
 i loss to industry and to the employment of capital and 
 labour, that export duties on machinery were an injury 
 to industry and the export trade, and that excessive 
 duties diminished revenue by checking imports and en- 
 couraging contraband trade; this irregular mode of 
 importation had become so general as scarcely to be 
 deemed a serious offence; half the foreign goods con- 
 sumed were smuggled, and the illicit trading caused a 
 large expenditure to the country on officers for preven- 
 tion. So bold and open was this contraband trade that 
 smugglers even issued circulars stating the rates they 
 charged for goods by the ** indirect channel". Peel 
 read such a circular in the House of Commons (when 
 advocating his reforms in 1842), in which lace, gloves, 
 and other French goods were offered to a London 
 firm at rates "considerably below your custom-house 
 duties". 
 
 Sir H. Parnell recommended an income-tax on all 
 property and incomes, and pointed to the results of 
 Huskisson's reforms as demonstrating the gains from 
 reduction of taxes on imports. His arguments, which, 
 like Huskisson's, were derived from Adam Smith, had 
 great weight with Sir Robert Peel, who came into office 
 in 1 84 1, and at once entered upon a course of financial 
 reform. In each year from 1837 to 1842 the national 
 balance-sheet had shown a deficit: in 1842 it amounted 
 to two millions, a result for which bad harvests, the 
 speculation and rash trading fostered by the new joint- 
 stock system of banking which ended in the crisis of 
 
 (H460) D 
 
50 The Free-trade Movement. 
 
 1839, together with the defects of the revenue system, 
 were jointly responsible. 
 
 A Parliamentary Committee in 1840, on Import Duties, 
 emphasized the facts set forth by Sir H. Parnell. It 
 exposed the absurdity and wastefulness of the existing- 
 customs system in no ambiguous manner. The tariff 
 oppressed every class, but especially the wage-receivers, 
 to whom an extension of commerce meant employment 
 as well as cheap food. Taxes, levied at about 11 50 
 different rates on all articles and on no common prin- 
 ciple, realized ;^23, 000,000; of this sum ;£'2o,ooo,ooo was 
 raised on 10 articles only, ;^i, 000,000 on 8 other articles, 
 while all the remainder produced less than ;£"!, 000,000, 
 some yielding only a few shillings; many duties were 
 entirely prohibitive and imposed a heavy burden on the 
 consumer in high prices while they yielded nothing to 
 revenue. The duties on food alone were estimated to 
 inflict a loss equal in amount to the whole of the revenue 
 derived from other articles ; the system of custom-house 
 administration was expensive and irritating. 
 
 In 1842 Peel brought in his budget for financial reform, 
 and, in imitation of Pitt, he provided the means for the 
 proposed remission of duties by an income-tax of 7^. in 
 the £f to be levied on incomes of ;^ 150 and upwards for 
 five years, during which period he anticipated that the 
 revenue would overtake the deficiency. His principle 
 was, to reduce the cost of living, to remove all prohibi- \, 
 tive and reduce all protective duties ; to reduce taxes on / 
 raw materials to a nominal amount or abolish them 
 altogether; to lower the rates on partly-manufactured 
 goods, which were really materials of manufacture, and 
 to reduce those on manufactures to a moderate and 
 nearly uniform rate of about 20 per cent. He carried 
 his measure, abolishing and reducing duties on 750 
 articles; but he deliberately left wine and brandy "as 
 instruments of negotiation with a view of effecting a 
 reduction in the duties imposed by other countries on 
 the produce of our country". Peel had previously in- 
 troduced his new sliding-scale^ for corn, and did not on 
 
 » The sliding-scale system of duties was adopted in France in 1819, and 
 was copied by other countries. It was a scheme by which the duty was 
 
Tariff Reform, 
 
 51 
 
 this occasion deal with the corn duties, the Navigation 
 Act monopolies, or the duties on sugar. As a cautious 
 reformer, he preferred to remove first the duties which 
 which were obviously wasteful and vexatious, and to 
 establish the principle and prove its success before pro- 
 ceeding to those cases in which vested interests would 
 offer strong opposition. So far, though very sweeping, 
 his measures were tentative, and calculated to show the 
 advantage of reduction, and to educate the people to a 
 further application of the principle. 
 
 Peel, however, moved too slowly for the Anti-Corn- 
 law League, and his long resistance to their urgent 
 appeals caused him to be generally treated as an opponent 
 of Free-trade until the final stage of that agitation was 
 reached. Yet Peel's finance, from 1841, was entirely in 
 sympathy with Free-trade principles, and his reforms 
 were steps towards a more complete adoption of that 
 policy. As a statesman he knew the difficulties of prac- 
 tical politics; though he moved slowly he was progress- 
 ing surely towards the goal from which, as he explained 
 later, he knew there was no return.^ In the domain of 
 practice many considerations arise, and it is what is 
 possible, not what the desire for strict application of 
 principle would dictate, that has to be adopted. Though 
 leader of the Conservative party. Peel was careful 
 at no time to pledge himself to the maintenance of a 
 protective policy. He clearly defined his own position 
 with regard to the Corn-laws in his speech in the debate 
 on Mr. Villiers's annual motion in 1839, when he said: 
 '* Unless the existence of the Corn-law can be shown to 
 be consistent not only with the prosperity of agriculture 
 and the maintenance of the landlords' interest, but also 
 with the protection and maintenance of the general in- 
 terests of the country, and especially with the improve- 
 ment of the condition of the labouring class, the Corn- 
 regulated automatically to different circumstances. Peel started with a 
 duty of 20s. a quarter on wheat when the average price was 50J. a quarter. 
 As the price rose is. a quarter the duty fell u. a quarter (with a few excep- 
 tions) until at 73J. and upwards it remained at is. a quarter. 
 
 ^ "But who will re-establish the Corn-laws once abrogated, though from a 
 casual and temporary pressure. "—Letter of Sir R. Peel to Lord Heytesbury. 
 {Memoirs of Sir R. Peel, vol. ii. * 
 
52 The Free-trade Movement. 
 
 law is practically at an end". And again in 1842: "I 
 should not consider myself a friend to the agriculturist if 
 I asked for a protective duty with a view of propping up 
 rents, or for the purpose of defending his interest or the 
 interest of any particular class ". And in his Memoirs 
 he writes: ** During the discussion in Parliament on the 
 Corn-law of 1842, I was more than once pressed to give 
 a guarantee (so far as a minister could give it) that the 
 amount of protection established by that law should be 
 permanently adhered to; but although I did not then 
 contemplate the necessity for further changes, I uniformly 
 refused to fetter the discretion of the Government by 
 any such assurances as those that were required from 
 me . 
 
 Peel's part in the repeal of the Corn-laws is reserved 
 for later discussion; here we continue the brief record 
 of his financial reforms. In 1845 he could point to the 
 success of the measures he had introduced, and he then 
 succeeded in obtaining a continuation Of the income-tax 
 for three years in order that he might extend his system 
 of reform. He was thus enabled to further simplify the 
 customs, and to remove 450 duties entirely from the tariff, 
 many of them on raw materials of industries, such as 
 cotton, silk, hemp, flax, hides, &c. Duties on exports 
 were finally abolished; import duties on manufactured 
 articles of cotton, wool, linen, leather, and metals were 
 reduced ; the differential duties on sugar (which varied 
 with the country of origin) were cut down. The latter 
 measures encountered opposition from those who wished 
 to retain some duties for the purpose of negotiating 
 commercial treaties. The remaining alterations in the 
 tariff, completing the Free-trade policy, and reducing 
 the British tariff to one for revenue only, were carried 
 out subsequently by Mr. Gladstone, who, as President of 
 the Board of Trade, had shared very fully the labour 
 involved in the details connected with Peel's remissions 
 of duty. 
 
 Before entering upon the history of the agitation 
 against the Corn-laws, it may be well to notice the 
 general character of the previous interference by govern- 
 ment with the import and export of corn. The great 
 
Tariff Reform. 53 
 
 stniggfle for freedom of trade finally took place upon this 
 interest, and the corn duty is commonly regarded as the 
 central problem of Free-trading, both on account of the 
 severity of that struggle, and because of the extreme 
 importance to this country that attaches to an adequate 
 supply of imported food ; but the principle of free im- 
 portation has almost equal significance for all imported 
 articles which form the materials of British industry. It 
 was mainly to the freeing of these, and to the sim- 
 plification of our customs system, that Sir Robert Peel 
 devoted his efforts for some years before the climax of 
 the Corn-law repeal was reached ; the enormous strides 
 that he made in this direction entitle him to the credit of 
 having accomplished the second considerable stage in 
 the Free-trade movement of this century. 
 
 The corn-trade was subjected to legislative interfer- 
 ence lor many centuries. Regulation may be said to 
 have taken three <^\sXAnct forms: the first wa.s prohibition 
 of export, dating from 1360, while free importation was 
 allowed; up to 1793 regulation was mainly directed to 
 export, although importation also came under control. 
 Following the French war, stringent Corn-laws were 
 imposed in 181 5, which checked free importation to 
 encourage the growth of home supplies. Neither policy 
 succeeded, for in both cases there were great irregulari- 
 ties in supply, and great and sudden variations in price. 
 Finally, in 1846, the policy of interference was reversed, 
 and freedom of trading was substituted, with no regula- 
 tion of either importing or exporting beyond a registra- 
 tion duty of i^. a quarter on wheat, which was removed 
 in 1869., 
 
 Legislation during these six centuries was frequent 
 and variable, a fact which demonstrated that each fresh 
 attempt at regulation was a failure, as it had to be 
 superseded by another. The Act of 1360 was relaxed in 
 1394 to permit exportation to friendly states. In 1436 a 
 limit was placed upon this privilege; in 1463 importa- 
 tion was prohibited until wheat reached 6^. Sd. a quarter. 
 In 1534 exportation of grain was forbidden, except for 
 victualling the English possessions of Calais and Guienne, 
 on the ground that scarcity and high prices ensued at 
 
54 The Free-trade Movement. 
 
 home. This policy also failed to encourage corn-grow- 
 ing in England, for under Edward VI. it was enacted 
 that as much land should be tilled in every parish as had 
 been under the plough since the accession of Henry 
 VIII., and a penalty was imposed for any failure. 
 
 In 1554 exportation was again allowed up to the 
 6s. 8d, limit, the law against it having proved futile; 
 after eight years the limit of price was raised to lay.; 
 under Elizabeth and the Stuarts various modifications 
 were made; in 1670 exportation was checked at 53^. 4^. 
 per quarter, and importation was forbidden until that 
 price was reached, which was practically prohibitive. 
 The idea of the necessity for a steady high price in the 
 interests of agriculture had gained ground, and this idea 
 prevailed until the abolition of the Corn-laws. In 1689 
 the landlords secured a bounty of 5^. per quarter on the 
 export of wheat when it did not exceed 48^. , and propor- 
 tionate bounties on barley and other grain. 
 
 From 1697 to 1765 the average export of corn was 
 500,000 quarters, a large part of which went to Holland. 
 During this period the imports of grain were small. By 
 the Act of 1773 the bounty on exported wheat was 
 altered to begin only when the price fell to 44^. per 
 quarter, and importation was legal with a duty of only 
 6d. a quarter when the price of wheat was not less 
 than 48^. 
 
 This was the most liberal scale during the whole his- 
 tory of the corn restriction, and it was obtained largely 
 by the advocacy of Burke, who pointed out that the 
 landed interest was not distinct from the trading interest, 
 and that *'he who separates the interest of the consumer 
 from the interest of the grower starves the country". 
 
 The limit of import was raised to 54?. in 1791 on the 
 plea that the nation might otherwise become dependent 
 upon foreign countries for food. In 1804 a further change 
 was made in favour of high prices; the lower limit of 
 importation, with a duty of 24^. 3^^., was raised to 63^. 
 per quarter ; between 635. and 66^. the duty was 2s, 6d. , 
 and above 66^-. it was 6d. per quarter. 
 
 For nearly a century prior to 1773 the exportation 
 of corn had been stimulated by the aid of bounties; 
 
Tariff Reform. 55 
 
 between 1773 and 1793 little corn was either exported or 
 imported; from 1793 exporting ceased, and succeeding 
 legislation was directed to checking or regulating im- 
 portation. Towards the end of the century circum- 
 stances were altering; new industries had followed on a 
 period of invention ; a town population was growing up, 
 and the cotton, iron, and coal trades were developing: 
 Great Britain was becoming a manufacturing country 
 and an exporter of cotton goods. During the first 
 twenty years of the nineteenth century wheat averaged 
 98^. a quarter. Violent fluctuations in prices occurred 
 during the whole of the war with France. An excep- 
 tional number of bad seasons made scarcity at intervals, 
 the war created difficulties in obtaining foreign supplies, 
 taxation was extremely heavy, trade was dislocated and 
 uncertain, the poor-law added to the misery by its mis- 
 taken methods, irregularity in employment and violent 
 changes in price created much distress among all classes 
 dependent upon industry. The rise in prices was further 
 increased by the scarcity of labour, as men were with- 
 drawn from agriculture tor military service; and during 
 the last five years of the war prices were further raised 
 by the depreciation of the paper currency. The enor- 
 mous expense of the war and the payment of subsidies 
 (some ;^6o,ooo,ooo) to Continental allies created a 
 scarcity of money, which led to the suspension of cash 
 payments by the Bank of England in 1797, and, after a 
 time, to the over-issue and depreciation of the bank-note. 
 This inflation of the paper currency raised gold to a 
 premium of 20 per cent in 1810, and it increased to 
 29 per cent by 181 3. The influence of the inflation upon 
 prices was considerable, though it seems not to have 
 been understood at the time; every variation increased 
 fluctuation ; the disturbance was most injurious to com- 
 merce, and a source of loss to ordinary consumers. 
 / Owing to the high price of corn which prevailed 
 during the wars, the operation of the Corn-law was 
 slight. Commerce was impeded by the wars, but the 
 deficient harvest of 1809, which raised the price of wheat 
 to ;^5 and £6 per quarter, led to an importation in 
 1810 of ;^7, 000,000 worth. During the succeeding 
 
56 The Free-trade Movement. 
 
 ^ years, when the edicts of Napoleon and the Orders in 
 Council were in force, importation was checked, and the 
 price of wheat in 1812 and 181 3 averaged ;^6 per 
 quarter. 
 
 In 1814, with the prospect of peace, the price of corn 
 fell considerably, and an attempt was made to raise the 
 duties on importation; the agitation and resistance 
 aroused in the country prevented the measure from 
 passing the House of Commons. But in the following- 
 year, notwithstanding many petitions and much opposi- 
 tion, an Act was passed by which corn was excluded 
 until the average price was 80s. per quarter for wheat, 
 40^. for barley, and 26s. for oats. To the British colonies 
 (which, however, sent little corn) the limits of price were 
 675., 32^., and 22^. The measure, thus hurried through 
 Parliament, led to disturbances, and riots took place in 
 London. 
 
 It is interesting to note that a protest against the 
 Corn-law of 181 5 was drawn up in the House of Lords 
 by Lord Grenville, and signed by ten Peers, on the 
 ground that it was a restraint on commerce and an 
 artificial and injurious restriction, adverse to the pros- 
 perity of the nation, and more peculiarly so in the case 
 of that commodity on which depends the existence of a 
 large portion of the community; that the expectations 
 from it were delusive, as it would not contribute to pro- 
 duce plenty, cheapness, or steadiness of price; that, in 
 any case, it would entail a great present evil, giving a 
 bounty to the grower of corn by a tax levied upon the 
 consumer; and that Parliament was wholly uninformed 
 of the causes of public distress. 
 
 The seasons of 1816 and 1817 were unfavourable and 
 the crops deficient; wheat rose to an average of g6s. iid. 
 in 1817, and even reached 112^. Sd. Importation took 
 place at these times, but great privation had arisen 
 before the imports were in any degree proportionate to 
 the demand.^ Under a system which was prohibitive in 
 ordinary years, there could be no regular foreign supply 
 or organized trade in corn, and it was only after the 
 
 *Com was imported in 1817, 1818, 1819, at a cost of ;^2,ooo,ooo (Lowe, 
 State <tf England). 
 
Tariff Reform. 57 
 
 , scarcity-price had been reached and suffering had be- 
 \ come very severe that supplies came in adequately. The 
 ■ imports became most abundant when the period of 
 dearth was coming- to an end, so that they coincided 
 with the increased home-supplies of the good years, and 
 forced down prices. The periods of scarcity starved the 
 labourers with high prices, and years of plenty ruined 
 the farmers with low prices. 
 
 The fears expressed in the petition of the Peers were 
 amply fulfilled. Rents, which had been lowered after 
 the fall in prices in 18 14, again rose, and prices fluctu- 
 ated; in good years the crops realized less than half 
 I that which they produced in bad years. Steady high 
 i prices had been expected as the result of legislation, 
 but they were never attained. It might have been fore- 
 seen that by restricting the supply to the limited area of 
 the country, prices must fluctuate with every variation in 
 the seasons. From 1820 to 1822 there were no less than 
 475 petitions to the House of Commons complaining of 
 the distress and of the exhaustion of agricultural capital, 
 of high rents and rates, and of the poverty of the 
 farmers, whose rents had been based on the assumption 
 of the higher prices to be secured under the Corn-laws. 
 
 Before a Committee of Inquiry of the Lords and 
 Commons (1821-1822) abundant evidence was produced 
 to show that the act had not realized what its promoters 
 had declared, high rents alone excepted, as these had 
 been based upon anticipated high prices. It was stated 
 that the tenants were paying charges and outgoings 
 f from capital and not from profits ; and that prices were 
 ' ruinously low in spite of Protection, which at that time 
 amounted to monopoly, since, with one exception for 
 oats, the ports had been closed against all foreign im- 
 ports for nearly thirty months. Even some land-owners 
 complained that the act was detrimental, because it led 
 to diminished consumption of food. Statistics were pro- 
 duced from some of the large towns — Birmingham, 
 Leeds, Sheffield, — which showed a greatly decreased 
 consumption of meat; while prices fell, the demand 
 diminished still more, for the paralysis of trade caused 
 by the system of Protection had reduced the employment 
 
58 The Free-trade Movement. 
 
 of those who lived by manufactures for export, and their 
 consumption of food was necessarily cut down in the 
 same degree. Multitudes were thrown upon the poor- 
 rates, which, being augmented in towns, spread the bur- 
 den more widely. Between 18 14 and 1820 poor-rates 
 doubled in many parishes. The vicious poor-law system, 
 which gave relief in kind or money in proportion to the 
 price of bread, aggravated the evil. The Report of the 
 Select Committee of 182 1 left no doubt as to the fact of 
 the distress which had overtaken the farmers, and had 
 involved the shopkeeping and other classes. They sug- 
 gested no remedies, but their faith in Protection was 
 shaken, and they expressed *' a doubt whether the only 
 solid foundation of the flourishing state of agriculture 
 is not laid in abstaining as much as possible from inter- 
 ference either by Protection or Prohibition with the appli- 
 cation of capital in any branch of industry ". 
 
 As a result of the inquiry a small modification of the 
 Corn-law was made in 1823 by Lord Liverpool, and the 
 limit of exclusion was reduced from Say. to 70^. for the 
 importation of wheat, with similar reductions for other 
 kinds of grain. As prices did not again rise to this level 
 during the six years the law was in force, the Act was a 
 dead letter, it gave no relief. Fluctuations continued 
 as before. In 1829 further legislation took place; the 
 government of the Duke of Wellington, of which Pitt 
 and Huskisson were members, introduced a new sliding 
 scale based on 64^. as the standard. At 64^. a quarter, 
 a duty of 23^. Sd. was imposed, and the scale was gradu- 
 ated so that at 73^. the duty was only i^. per quarter. 
 This was the scale in operation when the agitation for 
 repeal was commenced. 
 
 No good results accrued from these manipulations of 
 the tariff. Prices fluctuated as before with the seasons, 
 averaging 61^. 8d. for the five years 1829-1833. The 
 distress among farmers increased to such a degree that 
 a further parliamentary committee was appointed in 
 1833 to inquire into the state of agriculture. The evi- 
 dence was most conclusive as to the reality of the farmers' 
 complaints and their inability to meet outgoings ^oni 
 current prices. " Rates had increased, especially poor- 
 
Tariff Reform. 59 
 
 .rates, rents had not fallen with prices, and the savings 
 jof many were gone, their credit failing, and their re- 
 ,^ sources generally exhausted." Numbers of farmers had 
 j been ruined, and their capital was so reduced that the 
 I system of farming had retrograded, and land was going 
 I out of cultivation. Labourers were in like distress, and 
 had resorted to rioting and incendiarism. 
 
 The following copy of a petition to the House of 
 Commons from agriculturalists in Somerset (one of 
 many sent in) describes the condition of that class under 
 the operation of a law designed to foster agriculture : 
 
 ' * We, the gentry, magistrates, clergy, freeholders, and 
 occupiers of land in the district of the once opulent Vale 
 of Taunton most humbly represent to your honourable 
 House that the cruel distress throughout the district in 
 which we reside has arrived at an unparalleled height 
 and is daily increasing to an alarming extent with a 
 progressive decline in the value of all productions of the 
 earth, accompanied by an overwhelming burden of taxa- 
 tion such as was never endured by any country, and has 
 swallowed up the capital of the farmer, and brought the 
 greater proportion of independent yeomen to the brink 
 of ruin which without the most speedy relief must ter- 
 minate in the annihilation of this most excellent and 
 Invaluable body of men ". 
 
 The chief foreign supplies of corn at this time came 
 from Russia and Poland, and a small quantity from the 
 North American colonies. The highest amount of wheat 
 imported in any year was 1,701,885 quarters (in 1830) 
 when the price was 64^. 3^., in some years none at all 
 was admitted; the average from the beginning of the 
 century to the formation of the League in 1837 was 
 about 500,000 quarters. 
 
 Events demonstrated that tariff legislation could not 
 /f determine prices, and that contracts based on any 
 /assumption of a regulation rate were delusive. The 
 depression in agriculture affected other industries; first 
 traders, then producers suffered, until the distress be- 
 came general. The Committee of 1833, after an elabo- 
 rate exammation, conclude their report with the opinion 
 "that hopes of amelioration in the condition of the 
 
6o The Free-trade Movement. 
 
 landed interest rest rather on the cautious forbearance 
 than on the active interposition of Parliament". Nothing 
 was done by Parliament upon this report, and three years 
 later (1836) the continued distress led to a further par- 
 liamentary inquiry. The evidence is of the same nature 
 — ** prices were such that farmers could not recover ex- 
 penses and rent", they declared the Corn-laws a delusion, 
 since they were expected to keep up prices and had not 
 done it. Further help of some kind they wanted from 
 the state, something which would keep prices up to such 
 a level as to give them an assured profit. Here and 
 there in the evidence we find the opinion that freedom 
 and the prosperity of other trades would create a de- 
 mand for farming produce, and that in this direction, 
 with reduced rents, would prosperity for farming alone 
 be guaranteed. The Committee of 1836 did not agree 
 upon any report. 
 
 A bad harvest in 1836 raised the price of corn; this 
 was followed by a commercial disaster which led to 
 serious failures among the trading firms in the north of 
 England, and produced great distress among the labour- 
 ing classes, who suffered simultaneously from loss of 
 employment and a rise in the price of food. An attempt 
 was made to obtain some alleviation by a bill to substi- 
 tute a fixed duty of lay. per quarter on wheat for the 
 sliding-scale. It was supported by 89 members, includ- 
 ing 10 members of the Government, but was defeated by 
 a majority of 134. 
 
 The death of William IV. and the accession of Queen 
 Victoria introduced a new era. Lord Melbourne returned 
 to office, and during the year 1838 was mainly engaged 
 with the Canadian rebellion, the settlement of which 
 took place in 1840. 
 
 The further history of the movement for the repeal of 
 the Corn-laws is identified with the doings of the Anti- 
 Corn-law Association and League. 
 
Agitation for Repeal of Corn-laws, 6i 
 
 Chapter IV. 
 
 The Agitation for the Repeal of the Corn-laws 
 (1838-1846). 
 
 It was the Reform Act of 1832 which rendered the^ 
 repeal of the Corn-laws possible. From 181 5 to 1832 at 
 every great public meeting for reform the Corn-laws were 
 denounced, and thus the agitation for reform came to 
 be regarded as a step towards cheap bread. At the 
 memorable meeting in Manchester in 1819, which led to 
 the Peterloo Massacre, the banners proclaimed both 
 ** No Corn-laws " and " Universal Suffrage ".^ Thus in 
 the minds of the common people the two demands 
 became more or less identified. 
 
 A resolution against the Corn-laws was moved in the 
 House of Commons in the year 1826 by Mr. Joseph 
 Hume, a financial reformer and a member of the new 
 school of philosophical radicalism, but the resolution 
 had no success. In 1833 it was suggested by Mr. 
 Archibald Prentice, editor and proprietor of The Man- 
 chester Times^ and afterwards the historian of the Anti- 
 Corn-law agitation, that the press should educate public 
 opinion on the subject of the Corn-laws. The matter 
 was taken up in the Manchester and Glasgow papers, 
 but the good harvests of 1834 and 1835, and the 
 prosperity following thereon, diminished public interest 
 and postponed the movement. 
 
 In 1834 Mr. Joseph Hume proposed in Parliament 
 that a fixed duty on corn be substituted for the fluctu- 
 ating scale then in operation. He was opposed strongly 
 by the landlords, and Sir James Graham contended that 
 ** such a law would ruin not only landlords but the 
 state itself" ; thus the proposal lapsed. A good harvest 
 in 1835 reduced wheat to 35^. per quarter. Farmers 
 were despondent, and complained that they would be 
 ruined by the plentiful crop, since they could not pay 
 
 1 For detailed account see Rise of Democracy, by J. H. Rose, M.A., 
 in this series. 
 
62 The Free-trade Movement. 
 
 their rents. Labourers, however, profited by the abun- 
 dant and cheap food, and attempts to prove to them that 
 scarcity and high prices were a blessing failed, being 
 met by replies such as that of the old woman who said, 
 ** You'll not persuade me that when there's plenty o' 
 meal puir folk will get less than when it is scarce". 
 
 With the years 1836 and 1837 there began a decline 
 in prosperity : financial trouble followed on speculation ; 
 trade was checked, /employment reduced, and distress 
 among labourers was wide-spread. The commercial 
 crisis was accompanied with a rise in prices. A pro- 
 posal was made in Parliament by Mr. Clay to modify 
 the Corn-laws and to substitute a fixed duty of los. per 
 quarter, but it was defeated. Early in 1837 an Anti- 
 Corn-law Association was started in London, which 
 consisted of seventy-four members. London, however, 
 was not the best centre for such an organization at that 
 time, but it anticipated the later movement in the north. 
 In February, 1838, Mr. Cobden, whose career will 
 shortly be noticed, attempted to induce the Manchester 
 Chamber of Commerce to take up the subject of repeal. 
 The Chamber had already sent in a protest against the 
 law, but no further step was taken at this time. 
 
 In March (1838) Mr. C. P. Villiers brought forward 
 in the House of Commons a motion to inquire into the 
 operation of the Corn-laws, which he repeated annually 
 until the repeal. He scarcely gained a hearing. ^ The 
 House of Commons was not yet prepared to listen ; it 
 was necessary to bring the pressure of public opinion to 
 bear upon the Goverment. When, in the following 
 July, Earl Fitzwilliam presented a petition from Glasgow 
 for repeal of the Corn-laws, the prime minister, Lord 
 Melbourne, replied **that the Government would not 
 move until they were assured a majority of the people 
 were in favour of a change", an admission that the 
 House of Commons would not lead, but would follow 
 public opinion. This doctrine, now so fully admitted, 
 
 ^ Mr. Charles P. Villiers, the last survivor of the rep>ealers, who died on 
 the i6th January, 1898, at the age of 96, was one of the earliest and 
 staunchest advocates of the movement. In Parliament (where Mr. Villiers 
 represented Wolverhampton for more than sixty-three years) he annually 
 
Agitation for Repeal of Corn-laws. 63 
 
 works well with an educated electorate, but in the 
 circumstances of 1838 it amounted simply to shelving 
 the question. 
 
 The agitation for repeal dates from July, 1838, when 
 a lecture on the Corn-laws was given at Bolton by a 
 Dr. Birnie, at which a young medical student, Mr. W. 
 Paulton, who afterwards became a great force in the 
 crusade, made a most effective speech. The following 
 September, Dr. Bowring, who had been abroad en- 
 deavouring to promote free commercial intercourse with 
 European states, and was an enthusiastic advocate of 
 Free-trade, lectured in Manchester to a select assembly 
 of some sixty reformers. He advanced many forcible 
 arguments in favour of complete freedom of exchange. 
 Among them he stated that: (i) **In France there are 
 millions willing to clothe themselves in English gar- 
 ments, and you have millions of hungry mouths to take 
 their corn". (2) '* In Hungary, not being able to sell 
 their corn to England, the people are turning their 
 capital to manufacturing their own cloth." (3) Holland 
 was dependent upon every country ; there were no Corn- 
 laws and no scarcity of food, but high wages and 
 abundant trade. (4) Universal trade was the means 
 of preventing war, for, "who quarrels with his bene- 
 factor — with those who confer benefits and blessings?" 
 (5) The victories of commerce and of peace were far 
 more glorious than any gathered in the fields of blood. 
 
 From this meeting the Anti-Corn-law League derived 
 
 introduced a motion for a Committee to consider and repeal the Corn-laws. 
 The following is a summary of the voting in the House of Commons on 
 Mr. Villiers's motion, and on several other important motions: — 
 
 For. Against. Majority. 
 
 1838. Mr. Villiers's motion 97 
 
 1839. That witnesses should be heard at the bar, 172 361 189 
 
 1839. Mr. Villiers's annual motion, 195 342 147 
 
 1840. ,, ,, , 177 300 123 
 
 1841. Sir R. Peel's vote of want of confi- 
 
 dence in the government, ... 312 311 I 
 
 1842. Mr. Villiers's motion, 90 393 303 
 
 1843. „ ,, 125 381 256 
 
 1844. Mr. Cobden's motion for inquiry into 
 
 agriculture, 153 244 91 
 
 1844. Mr. Villiers's motion, 124 330 206 
 
 1845. ,, ,, 122 254 132 
 
 1846. Sir R. Peel's motion for repeal, ... 327 229 98 
 
64 The Free-trade Movement. 
 
 its origin.^ Other earnest addresses were made by 
 Colonel P. Thompson, author of the Corn-law Catechism^ 
 and by Mr. Prentice. The latter drew attention to the 
 hard circumstances of the hand-loom weavers, who, 
 though scarcely able to afford to buy paper, had sent up 
 a petition with 22,000 signatures in favour of repeal. 
 As a first step, measures were taken to found an Anti- 
 Corn-law Association. Seven enthusiasts for reform 
 met on the 24th September, 1838, and decided to form 
 the association upon a popular basis with a five-shilling 
 subscription. On October 13th a provisional committee 
 of thirty-eight members ^ was advertised, including the 
 names of many who were afterwards prominent speakers 
 in the agitation, and amongst them that of John Bright. 
 Richard Cobden's name was added a week later. The 
 committee engaged Mr. Paulton of Bolton as lecturer. 
 The movement was now fairly started, and in December 
 a request was made to the president of the Manchester 
 Chamber of Commerce to call a meeting for the purpose 
 of petitioning Parliament.^ Ultimately the chamber 
 adopted a petition, as drafted by Mr. Cobden, demand- 
 ing '*the repeal of all laws relating to the importation 
 of foreign corn and other foreign articles of subsistence, 
 and the removal of all existing obstacles to the un- 
 restricted employment of industry and capital", 
 
 The struggle thus commenced, both as regards the 
 characters of the agitators, the methods they pursued, 
 
 1 " Manchester would become identified to all ages with the cause ; just as 
 Jerusalem was with the origin of our faith, and just as Mecca was in the 
 eyes of the Mahometans, so would Manchester be identified in the eyes of 
 historians as the birthplace and the centre of the greatest moral movement 
 since the invention of printing; one which would have a greater effect in 
 the world's history than any struggle that had ever taken place in the annals 
 of civilization. " — (Cobden's speech at Manchester, 23rd December, 1845. ) 
 
 2 The following members of the original Manchester Anti-Corn-law 
 Association were on the Executive Committee when it dissolved in July, 
 1846: Richard Cobden, Archibald Prentice, George Wilson, W. Rawson, 
 W. R. Callendar, W. Evans. 
 
 «Mr. Henry Ashworth, one of the most active members of the League 
 from its foundation, relates in his Recollections of Cobden and the League 
 how this idea had originated with Cobden a year previously, "Going 
 home together one night after a meeting of the British Association, which 
 they attended at Liverpool, Cobden suddenly stopped and said, ' I'll tell 
 you what we will do ; we'll use the Chamber of Commerce for an agitation 
 to repeal the Corn-laws'." 
 
Agitation for Repeal of Corn-laws. 65 
 
 and the ultimate issue, was one of the most remarkable 
 in English history, and one which called for unusual 
 energ-y and determination. It was a deliberate effort to 
 overthrow a system, supposed by its supporters to be 
 not only the bulwark of the agricultural industry, but 
 also necessary to the revenue of the nation, and this 
 system was supported by the richest and most influential 
 classes in the country, who were also directly interested 
 in its maintenance. 
 
 From the beginning, Richard Cobden was one of the 
 most active members of the association, and he was soon 
 recognized as the real leader of the movement, which 
 came to engross the best of his life and energies. In 
 order the better to understand and appreciate the motives 
 and actions of Cobden, it may be desirable to give 
 some account of his early life. He was born in 1804 
 near Midhurst, in Sussex, where his father was a small 
 struggling farmer. He was one of eleven children, and 
 obtained little education at home. His father failed, 
 and he was sent, at the cost of a relative, to a school in 
 Yorkshire for five years, where he received scant instruc- 
 tion and less sympathy. He then entered the office of 
 an uncle in London, who treated him with strictness, 
 but at twenty-one made him his commercial traveller in 
 cotton goods. During this period of hard work and 
 close attention to business the passion for knowledge 
 had developed in Cobden. He educated himself in his 
 leisure hours by assiduous study of the French language, 
 English history and literature; to these at a later time 
 he added mathematics and political economy. His occu- 
 pation gave him opportunities for gaining knowledge of 
 men and of public aff^airs, of which he was an acute 
 observer. After a few years' experience as commercial 
 traveller, he started business with two other young men 
 as commission agents in cotton goods. They afterwards 
 became cotton printers, and Cobden travelled now on 
 his own account. Being successful in business, he was 
 enabled to gratify his passion for the acquisition of the 
 knowledge of other countries and peoples by travel. He 
 visited successively France, Switzerland, America, East- 
 ern Europe, Egypt, and Asia Minor. He thus gained 
 
 (M460) E 
 
66 The Free-trade Movement. 
 
 larger views of life, and also experience of men, both 
 invaluable for the public duties to which his natural crav- 
 ings were soon to direct his energies. At the age of 
 thirty-one he published a pamphlet on England, Ireland, 
 and America, and later, one on Russia. These publica- 
 tions displayed a very wide and accurate knowledge of 
 history, commerce, economics, and politics, and his 
 writings, even at this early period, were stamped by an 
 exceptional command of a clear and forcible style. Re- 
 garding this, we cannot do better than adopt the words 
 of his biographer, Mr. J. Morley, who speaks of him 
 as possessing **a ringing clearness, a genial vivacity, 
 a free and confident mastery of expression which can 
 hardly be surpassed, . . . what is striking in Cobden 
 is, that after a lost and wasted childhood, a youth of 
 drudgery in a warehouse, and an early manhood passed 
 amid the rather vulgar associations of the commercial 
 traveller, he should, at the age of thirty-one, have stepped 
 forth the master of a style which in boldness, freedom, 
 correctness, and persuasive moderation was not surpassed 
 by any man then living." Of his knowledge of public 
 affairs. Prof. Thorold Rogers writes: ** If exact and 
 careful knowledge of history constitutes learning, Cobden 
 was, during the years of his political career, the most 
 learned speaker in the House of Commons; ... his 
 facts, culled from all sources, were judiciously selected, 
 and were never challenged ". 
 
 Cobden had in a very high degree the faculty of 
 assimilating knowledge and of giving it practical appli- 
 cation; his remarks were always peculiarly apposite; 
 and he displayed remarkable persuasiveness, tact, and 
 self-control, equally in his controversies and in his inter- 
 course with men of all classes. 
 
 Sprung from the agricultural class,^ and educated in 
 business, Cobden's training and sympathies gave him a 
 predilection for commercial and industrial questions. 
 
 ^ In his speech in Parliament on the distress of the country, February 1843, 
 Cobden says : " I am the son of a Sussex farmer. My ancestors were all 
 yeomen of the class who have been suffering under this system ; my family 
 suffered under it, and I have therefore as good or better right than any of 
 you to stand up as the farmer's friend, and to represent his wrongs in this 
 House." 
 
Agitation for Repeal of Corn-laws. 67 
 
 His mind was eminently practical, regulated by reason 
 and conviction, and little by sentiment ; he grasped with 
 remarkable clearness and breadth the issues involved in 
 international commerce; he had no sympathy with war 
 and struggles for empire; he might be said almost to 
 have been possessed with the ''fixed idea" of an in- 
 dustrial era of peace, such as he believed free commerce 
 would inaugurate. His patriotism took the form of 
 seeking to promote the welfare of the nation by measures 
 which would increase the efficiency of labour and improve 
 the general standard of living. He conceived that a 
 period of universal peace might be advanced by means 
 of free international intercourse, and that the mutual 
 interests of nations in trade would ultimately cause w^ars 
 to cease. He has been called ^' the international man", 
 a term which fairly describes the cosmopolitan attitude 
 he adopted. Cobden's ideal^a reign of universal peace 
 based upon industry and friendly commercial relations, 
 mutually beneficial to nations — was certainly not ignoble, 
 though it was sneeringly described by the wit of a 
 brilliant woman of fashion as a *' bagman's millennium". 
 But Cobden greatly over-estimated the effects of com- 
 merce upon international relations, and underrated the 
 jealousies and passions of nations, the ambitions and 
 other disturbing factors which opposed the attainment 
 of universal concord ; his instincts, however, were right, 
 his aim was worthy, and his metht)d economically sound. 
 His views on general politics were mainly determined by 
 his dominant idea, and naturally included Free-trade. 
 In his own words: "To prohibit the import of corn, 
 such as is actually the case at this moment, is to strangle 
 infant commerce in its cradle ". 
 
 Cobden fully realized the advantages of free exchange, 
 
 / and he devoted himself to work for its attainment ; his 
 
 / life and speeches for some years, together with those of 
 
 ;his warm friend and colleague, John Bright, form a 
 
 I history of the Free-trade movement. A lucid and close 
 
 'thinker, no one was better able than Cobden to expound 
 
 and illustrate economic principles, or to expose the 
 
 fallacies which clung around the Protectionist doctrine. 
 
 This he did with vigour and straightforwardness, and 
 
 k 
 
68 The Free-trade Movement. 
 
 in simple and forcible language, devoid of rhetoric, and 
 with no attempt at anything but securing conviction by 
 force of argument. Some years after his death, his 
 friend. Bright, described the qualities of his style of 
 speaking as, ** clearness, logic, a conversational elo- 
 quence, a persuasiveness, which, when conjoined with 
 the absolute truth that there was in his eye and in his 
 countenance, it was almost impossible to resist". 
 Cobden's method was based upon appeal to reason and 
 argument; he had enthusiasm and persistence in a high 
 degree, and often displayed much feeling, but he relied 
 upon the understanding of his hearers for their conver- 
 /sion to the cause he championed.^ To his labours the 
 ' success of the Anti-Corn-law agitation was mainly due. 
 It has been charged against the movement that the 
 manufacturers were fighting and providing funds for the 
 League in their own interests. This was true in a 
 certain sense, for their trade was languishing ; but they 
 also pleaded the cause of their workmen, who were 
 starving owing to want of employment, because foreign 
 markets were practically closed by the tax on the com- 
 modity with which foreigners were willing to buy their 
 goods. Further, it was a cause in which all purchasers 
 of food were interested, for the benefits accruing from 
 activity in trade and an abundant supply of food cannot 
 
 * The following extract will serve as an example of his homely and vigorous 
 style: — " We have been told by the right hon. gentleman that his object is 
 to fix a certain price for com; and hearing that proposition from a prime 
 minister, and listening to the debates, I have been almost led to believe that 
 we are gone back to the times of the Edwards, when Parliament was engaged 
 in fixing the price of a table-cloth, or a napkin, or a pair of shoes. But is 
 this House a corn-market? Is not your present occupation better fitted for 
 the merchant and the exchange? We do not act in this way with respect to 
 cotton, or iron, or copper, or tin. But how are we to fix the price of com? 
 ... I will ask the right hon. Baronet, Is he prepared to carry out this 
 principle in respect to cotton or wool? I pause for a reply." (Sir R. Peel: 
 ' ' I have said that it was impossible to fix the price of food by any legislative 
 enactment".) "Then upon what are we now legislating? I thank the 
 right hon. Baronet for that avowal. Will he oblige me still further by not 
 trying to do it? But supposing he will try, all I ask of him is— and again 
 I shall pause for a reply — will he try to legislate to keep up the price of 
 cottons, woollens, silks, and such like goods? There is no reply. Then we 
 have come to this, that we are not legislating for the universal people. Here 
 is the simple, open avowal, that we are met here to legislate for a class 
 against the people. "—(Speech on Mr. Villiers's Motion, Feb. 1842.) 
 
Agitation for Repeal of Corn-laws. 69 
 
 be restricted to any one class or industry ; they concern 
 the nation as a whole. ' In a speech afterwards made in 
 Manchester/ Cobden admitted fully this class-interest in 
 the movement. He said, " I am afraid that most of us 
 entered upon the struggle with the belief that we had 
 some distinct class-interest in the question". As Mr. 
 Morley remarks, however, **The class-interest widened 
 into a consciousness of a commanding national interest. 
 The class-interest of the manufacturers and merchants 
 happened to fall in with the good of the rest of the com- 
 munity. " 
 
 At a meeting of land-owners in London, a defence of 
 the Corn-laws was drawn up; the following were some 
 of the chief propositions advanced: That a heavy 
 national debt required the tax; that one concession 
 would only lead to another; that the farm labourers 
 profited by wheat being at 8o5". to 1005. a quarter, since 
 high prices gave them high wages ; and that the agita- 
 tion was got up by speculators and incendiaries. 
 
 In February 1839, the Association sent up delegates to 
 London to offer evidence and present a petition at the 
 bar of the House of Commons. Mr. Villiers moved 
 that the witnesses should be heard, but his motion was 
 rejected. In March Mr. Villiers repeated his annual 
 motion in the House, but with no success. A like 
 resolution, introduced into the House of Lords by Lord 
 Fitzwilliam, was rejected by 224 votes to 24; Lord Mel- 
 bourne, on that occasion, remarking that to abolish 
 protection of agriculture **was the wildest and maddest 
 scheme that had ever entered into the imagination of 
 man to conceive ". 
 
 The Association was, in March, 1839, formed into a 
 permanent union to be called the National *' Anti-Corn- 
 law League", its objects being to continue the agita- 
 tion by every constitutional means until the end was 
 secured, to diffuse information through the press, by 
 circulars, pamphlets, and lectures, to raise funds, and 
 generally instruct and organize the country in regard to 
 the Corn-laws. 2 The ensuing agitation, which extended 
 
 ^Oct. 19th, 1843. 
 
 2 As Cobden expressed it, "The House had refused to be instructed, but 
 
 
70 The Free-trade Movement. 
 
 over seven years, and which ended in the reversal of pro- 
 tective legislation, is perhaps the most remarkable ex- 
 ample of a persistent, strenuous, and successful movement 
 carried out solely by arguments and appeals to facts; 
 and it should be noted that it was due to, and organized 
 by, men of business almost entirely, and was quite in- 
 dependent of political parties. In their pamphlets the 
 League tried to overthrow the common opinion that the 
 farmers gained by the duty: they endeavoured to set 
 forth the solidarity and mutual dependence of society, 
 and to prove that the real demand for agricultural pro- 
 duce must depend upon the existence of a flourishing 
 body of labourers of all classes, and that the interests 
 of the manufacturing and agricultural workers were in- 
 separable. 
 
 The League encountered much opposition in its propa- 
 ganda. At some places the lecturers were interrupted, 
 abused, and threatened, and disorderly persons broke 
 up the meetings. The Chartists, who looked to drastic 
 political reforms as the only means for gaining improved 
 social conditions, also joined in resisting the Free-traders, 
 and even defended the Protectionist doctrine. At a 
 meeting in Leeds the speakers of the League were vehe- 
 mently attacked by Feargus O'Connor, who posed as a 
 leader of the more violent section of the Chartists. He 
 had an intolerant contempt for an agitation organized 
 merely to secure cheap food, which he said ** would only 
 enable manufacturers to lower wages ". However, the 
 Anti-Corn-law movement appealed more forcibly to the 
 hungry people of Leeds than Chartism, and Leeds be- 
 came a centre of the Association.^ That section of the 
 press which supported the Corn-laws, also indulged in 
 strong language against the League, and denounced its 
 members as ** unprincipled schemers", "swindlers", 
 '* revolutionary emissaries ", "a disloyal faction ", &c. 
 
 A paper called The Anti-Corn-law Circular vjdiS next 
 started to spread the teachings of the League, and soon 
 
 the House must be instructed, and the most unexceptionable and effectual 
 way will be by instructing the nation ". 
 
 1 For details of Chartist Movement see Rise of Democracy, by J. H. Rose, 
 M.A.. in this series. 
 
Agitation for Repeal of Corn-laws. 71 
 
 attained a wide circulation. Finding- no hall in Man- 
 chester sufficiently large for the meetings, Mr. Cobden 
 generously gave an open space of land in St. Peter's 
 Field as a site for a building in which meetings could 
 be held. A temporary pavilion was erected, which was 
 subsequently replaced by the Free-trade Hall, opened in 
 1843. It is an interesting fact that the spot made 
 notorious in connection with political reform by the 
 Peterloo massacre of 18 19, should thus have been de- 
 voted to a reform movement which aimed at obtaining 
 cheap bread for the people. 
 
 Soon after the opening of Parliament in 1840, the 
 delegates of the League waited in deputation upon Lord 
 Melbourne; they described the misery of the starving 
 workmen engaged in the northern industries, explained 
 the causes of their sufferings, and urged the advantages 
 of free commerce, but in vain. The prime minister 
 replied that ** repeal was impracticable". His frequently- 
 repeated objections, which still remain the standing 
 defences of Protection, though their weakness has been 
 often exposed, were, that the general opinion of the 
 world was against Free-trade; that if our ports were 
 free other nations would not relax their protective duties ; 
 and that to negotiate for reciprocal advantages was the 
 proper course. Before leaving London the deputation 
 interviewed the leaders of the Conservative party, but 
 met with no encouragement from them. The motion of 
 Mr. Villiers in the House of Commons was opposed 
 by the ministers. Nothing discouraged, the delegates 
 promptly met and passed a resolution pledging them- 
 selves not to relax their efforts until the grievance was 
 removed, and, setting aside all political aims, to work 
 solely for this end until it was achieved. 
 
 In May, 1840, Mr. Joseph Hume obtained a Select 
 Committee to inquire **into the several duties levied 
 upon imports, and how far those duties were for revenue 
 only or for protection ". This inquiry was most pertinent 
 to the agitation, as it brought out very clearly the dis- 
 tinction between taxation for revenue^ and taxation for 
 protection only, thus removing a source of confusion, 
 and rendering it "plain to all reflective men that the 
 
72 The Free-trade Movement. 
 
 latter species of taxation was a mere burden and a 
 means of diverting- capital and labour to unprofitable 
 channels. The report of this Committee was instru- 
 mental in modifying the budgets of 1841 and of suc- 
 ceeding years. 
 
 During this year the League adopted another plan for 
 spreading their principles. The members of the council 
 themselves went forth as volunteer lecturers. Their 
 earnestness, fulness of knowledge, and influence, suc- 
 ceeded in drawing vast crowds, who were favourably 
 impressed by their arguments. Party politics were 
 entirely put aside by members of the League, who devoted 
 themselves exclusively to the removal of the tax on 
 bread. This was made the election test by repealers. 
 Neither political party gave them any countenance ; the 
 Tories were firm in their support of Protection and the 
 sliding-scale ; the Whigs, who were in office at the time, 
 professed to advocate a "moderate fixed duty", but no 
 measure was introduced. 
 
 The repprt of the Import Duties Committee bore fruit. 
 Lord Jonn Russell, who was unconsciously moving 
 towards the Free-trade position, proposed in his budget 
 for 1 84 1 to replace the sliding-scale by a fixed duty of 
 10 per cent; that is, of 8^. per quarter on wheat, 4^. 6d. 
 per quarter on barley, and 3^. 6^. on oats, and to 
 modify the duties upon sugar and timber. These pro- 
 posals roused a storm of opposition from the Tory party, 
 and gained no strong support from his own side. Sir 
 Robert Peel therefore proposed a vote of want of con- 
 fidence, which was carried by one vote, and the Govern- 
 ment appealed to the country. 
 
 In the succeeding election, August, 1841, Cobden was 
 returned for Stockport, and henceforth led the cause 
 in Parliament. The new Parliament showed a majority 
 against the Government. In the Queen's speech, and 
 in the debate on the address, the Government, by their 
 attitude towards the Corn-laws, made a bid for the 
 support of the Free-traders, but their proposals were 
 regarded by the Free-traders as merely an attempt at 
 compromise in order to retain office; and from the Pro- 
 tectionists, who were in a majority, they received no 
 
Agitation for Repeal of Corn-laws. 73 
 
 favour. The 8s. duty was not acceptable, and the Mel- 
 bourne ministry resigned. 
 
 In this, his first debate, Cobden at once took rank as 
 a parliamentary speaker of the first order, and of a new 
 character. Mr. Morley thus describes him: ** He pro- 
 duced that singular and profound effect which is per- 
 ceived in English deliberative assemblies when a speaker 
 leaves party recriminations, abstract arguments, and 
 commonplaces of sentiment, in order to inform his 
 hearers of telling facts on the condition of the nation. 
 . . . He insisted that the Corn-law was in reality the 
 only matter which, at that moment, was worth debating 
 at all. The family of a nobleman, he showed the House, 
 paid to the bread tax about one halfpenny on every ;£^ioo 
 of income, while the effect of the tax on the family of 
 the labouring man was not less than 20 per cent." 
 
 Cobden made no delay in placing his position clearly 
 before the House. ** I call myself neither Whig nor 
 Tory, I am a Free-trader", he declared, and under 
 this banner he consistently fought until the battle was 
 won. 
 
 Peel came into office in September, 1841, as leader of 
 the Conservative party — a party mainly aristocratic 
 and agricultural, and consisting of avowed defenders of 
 the Corn-laws; he remained in office until he had re- 
 pealed those laws, and he accomplished this with the 
 same Parliament. Yet Peel, in taking office, was cautious, 
 while supporting the graduated scale, "not to pledge 
 himself to plans which, on reconsideration, he might 
 deem it expedient to modify". He had stated that "he 
 was for reforming every institution that really required 
 reform, but he was for doing it gradually, dispassion- 
 ately, and deliberately, in order that the reform might 
 be lasting". The term "Conservative" had been in- 
 vented by Croker as being less objectionable than Tory, 
 since it more distinctly admitted the idea of progress, 
 and it had found favourable acceptance with Peel. Peel 
 was not an economist in the scientific sense, but he was 
 a statesman and a man of sound judgment; he knew how 
 to accept the inevitable, and was open to be educated by 
 the logic of events, and he was capable of leading his 
 
74 The Free-trade Movement. 
 
 party with him. His convictions were deep, if slow in 
 formation, and he was sincere; and, when convinced, he 
 had the courage of his opinions. In finance he was 
 strong and commanded confidence; he had to provide 
 revenue for a country loaded with debt, with a declining 
 income, and a revenue system which had no elasticity. 
 Many of his followers were fanatical believers in Protec- 
 tion; but Peel carried an open mind, and circumstances, 
 together with the arguments of his opponents, moulded 
 his ideas on the practical question with which he had to 
 deal. His mind was progressive, but he needed to be 
 convinced not only of the abstract validity of a doctrine, 
 but of its applicability to the circumstances existing, 
 before he would give his adhesion to it as a principle of 
 practical politics. 
 
 Peel's accession to office took place at a time when 
 the country was entering upon a period of acute suffer- 
 ing. Bad harvests, and a financial crisis which ushered 
 in a long and severe depression in trade, combined to 
 produce a winter of exceptional distress. In the manu- 
 facturing districts of England and Scotland many firms 
 failed, mills were closed, employment almost ceased, 
 and the destitution which ensued was terrible. Statistics 
 give a very inadequate conception of the misery which 
 was general among the working-classes. A few facts, 
 from those gathered by the League and recorded by Mr. 
 Ashworth, aff"ord some assistance in realizing the extent 
 of the disaster. In Manchester, we are told, ii6 mills 
 and many other works were stopped, 2000 families were 
 reduced to such want as to have pawned even their beds, 
 12,000 families were receiving poor relief, and thousands 
 subsisted on charity. Out of 50 mills in Bolton 30 were 
 idle, and 6995 persons, whose average earnings were 
 only i^d. a week, were aided in one month by the Poor 
 Protection Society. In Nottingham 10,580 persons were 
 receiving poor relief. In Leeds 21,000 persons were 
 earning on an average ii^d. a week. In Stockport so 
 many firms had failed that work had practically ceased, 
 and multitudes earned less than 10^. a week. Bury, 
 Rochdale, Wigan, Coventry, Paisley, Glasgow, and 
 many other towns had a similar record of failure and 
 
Agitation for Repeal of Corn-laws. 75 
 
 distress. While the workings-classes were on the verge 
 of starvation, British corn was 65^. a quarter, and the 
 duty on foreign wheat was 24^. 8d. per quarter. The 
 new Government made no sign of relief, and Parliament 
 was not summoned during the winter. 
 
 The League claimed credit for helping to maintain the 
 peace and repress disorder among the starving popula- 
 tion, by the hope which they inspired of better prospects 
 when the repeal of the Corn-law should be accomplished. 
 They increased their efforts and pursued their propa- 
 ganda in the towns and villages by means of meetings, 
 lectures, and pamphlets, trusting that, as the public 
 became enlightened regarding the real operation of re- 
 striction on the import of corn, their success would be 
 assured. The severity of the suffering in those times is 
 reflected in the verses to which they gave rise. Ebenezer 
 Elliott calls for special mention as the poet of the move- 
 ment. In his Corn-law Rhymes and subsequent poems 
 he pours out a fund of indignation mingled with pathos 
 upon the law which he regarded as the chief cause of 
 the repeated distress. A brief specimen must suffice to 
 illustrate their style : 
 
 " Child, is thy father dead? 
 
 Father is gone ! 
 Why did they tax his bread? 
 
 God's will be done ! 
 Mother has sold her bed : 
 Better to die than wed ! 
 Where shall she lay her head? 
 
 Home we have none." 
 
 Meanwhile the distress continued, and all classes 
 anxiously awaited the action of the new Parliament. 
 The Chartists clamoured for political reform as the only 
 remedy. The Free-traders continued to draw attention 
 to the scarcity of home-grown food, the exclusion of 
 foreign supplies, and the decline in the exports of British 
 manufactures by means of which an adequate supply of 
 foreign corn could be obtained. Others attacked the 
 new methods of industry as the cause of the distress, 
 and maintained that machinery was throwing men out 
 
76 The Free-trade Movement. 
 
 of employment and leading to over-production and 
 general depression in trade. 
 
 Cobden replied to this charge by pointing out that 
 the workers in trades like stocking-weaving, in which 
 there had been no change in method for two centuries, 
 were distressed as much as those engaged in cotton 
 spinning and weaving, and that agricultural labourers 
 were almost equal sufferers, although in their trade no 
 machinery had entered. In the cotton trade, again, he 
 showed that the use of machinery had cheapened cloth- 
 ing, increased demand, and gained the trade both at 
 home and abroad, and had for many years supported 
 vast numbers during the time of foreign war and severe 
 taxation. Only after the war was the high protective 
 duty on corn imposed in 1815, and it was able to be 
 tolerated during periods of good harvests. But bad 
 harvests, with a growing population, had raised bread 
 to famine prices; and while the population had been in- 
 creasing, the existing Corn-laws checked the supply of 
 food, and cut away the foreign demand for British manu- 
 factures which would have purchased it. This was the 
 cause which aggravated the distress, though these laws 
 were supposed to be necessary to maintain rents. 
 
 It was in the distressing autumn of 1841 that the 
 exceptional powers and energies of John Bright were 
 enlisted actively in the Free-trade campaign. Bright 
 himself told the story many years after the death of 
 Cobden. He had suffered the deep affliction of the loss 
 of his young wife, and was overwhelmed with grief, 
 when Cobden called to condole with him. Before leav- 
 ing, Cobden said: ** There are thousands of houses in 
 England at this moment where wives, mothers, and 
 children are dying of hunger. Now, when the first 
 paroxysm of your grief is past, I would advise you to 
 come with me, and we will never rest till the Corn-law is 
 repealed." Bright accepted, and henceforth his wonder- 
 ful gifts of eloquence, fervour, and intellectual vigour 
 were devoted to the cause in which he ranks only after 
 Cobden. There was a remarkable contrast in the two 
 men in their temperament and natural endowments, but 
 a common sympathy bound them in the closest friend- 
 
Agitation for Repeal of Corn-laws. 77 
 
 ship throughout the struggle and for the remainder of 
 their life.^ 
 
 Parliament opened in February, 1842, with a sym- 
 pathetic reference in the Queen's speech to the suiferings 
 in the manufacturing districts, and a recommendation 
 *'to consider the laws which affect the imports of corn 
 and other articles". All parties waited with intense 
 excitement for the proposals of the new prime minister. 
 His speech defended the duties on corn as necessary 
 in the interests of agriculture, and to preserve Great 
 Britain from dependence upon other countries. Peel, 
 as he states in his Memoirs^ was at this time under the 
 belief that special burdens were imposed upon agricul- 
 ture, and he was also impressed by a fear of dependence 
 upon other countries for food, — both points on which, 
 subsequently, his opinions were completely changed. 
 He desired to keep wheat between 54^. and 585-. a 
 quarter, as a remunerative price for agriculture, and for 
 this purpose he proposed a modified sliding-scale, com- 
 mencing with a duty of 20^. when wheat was as low as 
 Sij-., and falling to i^. when it reached 735-. The pror 
 posal was received in silence, but Lord John Russell's 
 amendment of a fixed duty was rejected. Mr. Villiers's 
 amendment, "that all duties on importations of corn, 
 meal, grain, and flour do now cease and determine", 
 led to an animated debate extending over five days, in 
 which Cobden spoke with great effect. He effectually 
 exposed the common fallacy that high prices made 
 high wages, and urged that it was a well-fed people 
 alone that could either defend the country or produce 
 wealth. He charged the House "with deteriorating the 
 population and thus spoiling both the animal and the 
 intellectual creature". "It is not", said he, "a potato- 
 fed race that will ever lead the way in arts, arms, or 
 commerce." He demanded that, if corn prices were to 
 be fixed by law, prices of other commodities must also 
 be fixed, and if so, a sliding-scale for wages would be 
 equally just and necessary. 
 
 During this session 2881 separate petitions, signed by 
 
 ^ For the account of Bright s work in the campaign, see the volume in 
 this series on John Bright, by C. A. Vince, M. A. 
 
78 The Free-trade Movement. 
 
 1,540,755 persons, were presented against the Govern- 
 ment measure, or in support of total repeal. The bill 
 y for a sliding-scale became law on the 29th April. Peel's 
 new Income-tax Bill followed; it was estimated that this 
 tax would yield ;£^3, 750,000, which would be sufficient to 
 cover the deficit and allow of customs reforms affecting- 
 750 articles. The new tariff now introduced was benefi- 
 cial, and materially reduced the duties on many articles 
 of consumption. Peel evidently hoped for a return of 
 prosperity with better harvests and the operation of the 
 new tariff. He had not yet got rid of the idea that 
 agriculture, as the leading industry, needed special safe- 
 guards,^ and in his concern about dependence upon 
 foreign countries for food, he forgot that starvation 
 was actually existing, and that on every occasion when 
 prices were at famine-level the country did look abroad 
 for assistance, and imported additional food; but, as 
 there was no regular free market in England for foreign 
 corn, and no uniform demand, it was extremely difficult 
 in circumstances of scarcity to purchase corn, except 
 at prices so high as to give no real relief to starving 
 labourers. A further matter which the ministry had not 
 fully realized was the extent of the large manufacturing 
 industries and the vast population dependent upon them, 
 which found in foreign countries a good market for their 
 produce, while those countries were able to pay for such 
 produce with the food necessary to the support of the 
 labourers in those manufactures. 
 
 All the year (1842) the distress in the country in- 
 creased. Deputations waited upon the prime minister 
 to explain the suffering and its causes, and to demand 
 the removal of the corn duties on grounds of humanity. 
 Peel recognized the suffering and expressed his sym- 
 pathy, but was not yet apparently convinced of the 
 remedy. He was aware that the duties, once repealed, 
 could not be reimposed, and he hesitated. 
 
 The continued depression was, on the whole, borne 
 
 ^ In his Memoirs, part iii. vol. ii. p. 98, Peel writes: " I had adopted at an 
 early period of my public life, without, I fear, much serious reflection, the 
 opinion generally prevalent at the time among men of all parties, as to the 
 justice and necessity of protection to domestic agriculture". 
 
Agitation for Repeal of Corn-laws. 79 
 
 by the suffering classes with remarkable patience. The 
 League continued to educate the people, and to teach 
 them to look for the revival of trade and an increased 
 supply of food from foreign countries consequent on free 
 import. The more advanced Chartist leaders, however, 
 seized the opportunity to urge their political remedies. 
 Soon the effect of their more violent agitation made 
 itself apparent. The half-starved mill-hands of South 
 Lancashire were incited to cease working and to make a 
 demonstration, which threatened a serious disturbance 
 of the peace. The turn-out began in Ashton-under-Lyne, 
 and spread to all the cotton district ; crowds of factory- 
 hands went about compelling the mill-hands in other 
 towns and villages to cease working, and declaring their 
 intention not to return to work until they had gained the 
 Charter and higher wages. 
 
 The disturbance in Manchester was soon suppressed 
 after the reading of the Riot Act, but in other towns of 
 the cotton district the excitement continued for about a 
 fortnight, and caused some alarm. At Rochdale Mr. 
 Bright helped to restore order and quiet by the publica- 
 tion of a very temperate and judicious address to the 
 working-men, in which he calmly discussed the question, 
 explained the causes of the misery, and showed clearly 
 that the Charter was no remedy for their condition, and 
 still less was public disturbance or interference with 
 work; the problem was economic, and could only be 
 settled by economic treatment such as the League pro- 
 posed. In South Lancashire the agitation ended with- 
 out violence, but in Staffordshire and other districts 
 which the Chartists visited serious riots took place, and 
 the troops had to be called out. 
 
 The League now determined to carry the crusade into 
 the agricultural counties, and to teach the farmers and 
 rural labourers that they were interested in the success 
 of manufactures, and had a common cause with the 
 workers in those industries in their need for cheap food 
 and enlarged foreign markets. For this purpose a fund 
 of ;£^5o,ooo was asked. In January, 1843, the spacious 
 Free-trade Hall, built expressly for meetings of the 
 League, was opened with a crowded public meeting, at 
 
8o The Free-trade Movement. 
 
 which the chairman announced subscriptions amounting" 
 to ;£'40,ooo. In February, 1843, Lord Howick (after- 
 wards Earl Grey) moved in Parliament for a committee 
 to inquire into the cause of the distress, but the motion 
 was rejected by 306 votes to 191. The debate acquired 
 an unfortunate tone from an incident which affected the 
 relations of the principal opponents, the premier and 
 Mr. Cobden. Sir R. Peel's private secretary (W. E. 
 Drummond) had been assassinated in the street by a 
 lunatic. It was supposed the blow was intended for the 
 premier, and the rumour was circulated that an attempt 
 on the premier's life had been sanctioned by the 
 Leaguers. No proof was offered, and no direct charge 
 was made, but the movement was discredited by the 
 rumour, which gained some acceptance. 
 
 In the debate in the House Mr. Cobden, with his 
 usual candour, attacked the Corn-law restriction, and 
 expressed himself during his speech as holding the 
 prime minister responsible for the distress and suffer- 
 ing in the country, which could be relieved by the 
 removal of the duty. Sir R. Peel, in reply, agitated 
 and overcome by the painful circumstances of the death 
 of his friend, charged Cobden with making him indi- 
 vidually and personally responsible, and with menacing 
 him by insinuations. The excitement in the House was 
 intense. Mr. Cobden denied indignantly the imputation, 
 or the use of the word personal^ and repudiated any 
 possible meaning but that the prime minister, as such^ 
 was responsible for the policy of the Government. A 
 most painful scene followed. 
 
 In spite of the disclaimer of Cobden, and its ultimate 
 acceptance by Peel, the suggestion was promulgated 
 by the hostile press and by enemies of the League. In 
 his after life Peel made ample amends for the accusation, 
 and admitted the honesty of purpose and the purity of 
 method adopted by the League; but for a time the 
 charge circulated, and the painful feeling generated 
 among the members of the League was not readily 
 removed. 
 
 In March, 1843, the League devoted a week to in- 
 structing the metropolis in Free-trade views. Drury 
 
Agitation for Repeal of Corn-laws. 8i 
 
 Lane Theatre was engaged; vast assemblies crowded 
 to hear the addresses, and, both in numbers and enthu- 
 siasm, the success far exceeded the expectations. Cob- 
 den and Bright spoke with their usual force and 
 persuasiveness. Among the speakers should be men- 
 tioned Mr. W. J. Fox, afterwards member for Oldham, 
 whom Cobden describes as "one of the most dis- 
 tinguished and accompHshed orators of the age". He 
 did good service for the League, and impressed his 
 audience powerfully by his eloquence and passion. 
 
 The movement in the agricultural counties went on 
 vigorously. The lecturers were assisted by leading 
 members, including Cobden and Bright. Lecturers 
 visited every county town from Maidstone to Kelso, and 
 in spite of opposition^ they carried conviction and gained 
 adherents among the tenant farmers and labourers. 
 
 In July, 1843, Mr. Bright was returned as member 
 for Durham. His advocacy henceforth in the House of 
 Commons considerably strengthened the position of the 
 League. 
 
 As the influence of the movement widened, it was 
 decided to raise a fund of ;^ 100, 000, to engage Covent 
 Garden Theatre for fifty nights for a bazaar and demon- 
 stration, and to publish a weekly paper. The League, 
 The paper was started in September, 1843, under the 
 guidance of Mr. Paulton, who had proved himself so 
 powerful and capable a lecturer for the League. Cob- 
 den and Bright wrote constantly for it, and their lucid 
 and trenchant articles, thus widely distributed, were 
 effective in advancing the movement. During this year 
 alone more than 9,000,000 tracts or stamped publica- 
 tions, weighing 100 tons, were distributed, and 650 
 lectures were delivered. Two important gains were 
 made at this stage, which strengthened the League 
 
 ^ Examples of the obstruction they encountered are instructive. At 
 Arundel they were denied the use of the town-hall by the mayor, and of 
 the hotel by the landlord, and one farmer offered a bushel of wheat to any- 
 one who would throw the lecturer into the river. At Petersfield, on return- 
 ing from giving his address, the lecturer was turned out of the inn by the 
 landlord. At Louth, being denied the use of a public building, the lecturer 
 spoke from a gig in the market-place, and was fined by the magistrate for 
 making an obstruction. 
 
 (M460) F 
 
82 The Free-trade Movement. 
 
 with the country people. W. S. Jones-Lloyd (after- 
 wards Lord Overstone) declared himself a convert, and 
 sent a subscription ; and Earl Fitzwilliam not only gave 
 his adhesion and subscription, but attended meetings, 
 and strongly advocated the cause with great ability. 
 
 The TimeSy which had often assailed the movement, 
 in a leader of November i8th, 1843, admitted the grow- 
 ing importance of the League. After recording the 
 subscriptions and the persistence of the agitators, it 
 continued: ** These are facts important and worthy of 
 consideration. No moralist can disregard them, no 
 politician can sneer at them, no statesman can under- 
 value them: he who collects opinions must chronicle 
 them. He who frames laws must to some extent con- 
 sult them. The League may be a hypocrite — a huge 
 Trojan horse of sedition. But the League exists. . . . 
 A new power has arisen in the State, and maids and 
 matrons flock to theatres as though it were but a new 
 translation from the French. . . . We acknowledge 
 that we dislike gregarious collections of cant and cotton 
 men. But we cannot but know that whatever is the 
 end of this agitation, it will expire only to bequeath its 
 violence and its turbulence to some successor." 
 
 On the first day of the New Year (1844) the Duke of 
 Westminster sent a letter, congratulating the League on 
 account of their rapid progress, and inclosing a cheque 
 for ;^500. He added: ** I am satisfied that such would 
 be the prosperity of all classes from the abolition of this 
 impost, such the advantage that would accrue to all the 
 moneyed concerns of the community, that in a very short 
 time the general wealth would be so far augmented that 
 the national revenue would outrun the amount of any 
 duty that has been proposed ". 
 
 The League now turned their attention to pushing 
 their propaganda in Scotland. In Glasgow, at the first 
 meeting, ;£^30oo was raised. Mr. Bright and Mr. Cob- 
 den set out for Edinburgh. At Perth Mr. Cobden spoke 
 with much effect, and Lord Kinnaird, at the same meet- 
 ing, powerfully supported the repeal. "As a landlord," 
 he said, ** I find the Corn-law to be positively hurtful to 
 me instead of an advantage, for it impoverishes my 
 
Agitation for Repeal of Corn-laws. 83 
 
 customers, and consequently has an injurious effect upon 
 my profits.'/' The demand for speakers at meetings in 
 Scotland became so great that Cobden and Bright 
 separated, each with a group of friends. Cobden went 
 east, and Bright took the west. On this Scotch tour 
 Cobden writes : **Our progress has been gratifying in 
 the extreme. Glasgow, Edinburgh, Kirkcaldy, Dundee, 
 Perth, and Stirling, have all presented me with the free- 
 dom of their burghs, and I have no doubt I could have 
 become a free citizen of every corporate town in Scot- 
 land by paying them a visit. All this is due to the 
 principles we advocate." Bright was much impressed 
 by the intelligence of the Scotch, and their keenness in 
 discerning economic fallacies. He comments humor- 
 ously on the popularity of himself and his colleagues, 
 but notes the lack of financial response. Soon after 
 their return, at Wakefield Lord Morpeth (afterwards 
 Earl of Carlisle), a new adherent, appeared on the plat- 
 form, and declared that ''the true and permanent 
 interests of the agricultural, manufacturing, and com- 
 mercial classes are indissolubly united, and their surest 
 basis is in the freedom of trade and industry ". 
 
 At the opening of Parliament in 1844 the prime 
 minister congratulated the country on the improvement 
 in trade and prosperity. Lord John Russell, in reply, 
 attributed whatever improvement had taken place to the 
 fall in the price of bread, but he still argued in favour of 
 a fixed duty on corn for revenue purposes only. Sir 
 R. Peel pointed out that such a duty would have to be 
 applied equally to home-produced corn ; he indicated his 
 preference and adhesion to the sliding-scale on imported 
 corn, and stated that *' he did not contemplate any 
 alteration in the existing law ". 
 
 The belief was, however, growing among the Free- 
 traders that Peel was rapidly approaching the position 
 when he would declare for repeal of the Corn-law, and 
 that he only awaited the suitable opportunity to state 
 his convictions, when this could be done without com- 
 promising the Government. 
 
 During the month of February, 1844, the League 
 conducted a special agitation in London; large public 
 
 I 
 
\A 
 
 84 The Free-trade Movement. 
 
 meetings were held in Covent Garden Theatre. In 
 March, Cobden brought forward in the House of Com- 
 mons a motion for the appointment of a, committee '*to 
 inquire into the effects of the protective duties on the 
 interests of the tenant-farmers and labourers of this' 
 country". He proved the failure of Protection to main- 
 tain farmers' profits or labourers' wages; "many farmers 
 had taken farms after the act of 1815, calculating on 
 selling their wheat at 80^. ; it had fallen to 505-. ; but the 
 rents remained fixed on the basis of the higher price'*. 
 Cobden argued that direct legislation could not regulate 
 the price of commodities and prevent fluctuations; it 
 might increase pauperism and destroy trade, banish 
 capital, and check or expatriate the population ; but it 
 could not keep prices steady and secure the farmer that 
 price on which he had counted when he undertook his 
 rent obligations; farmers had been deceived by such 
 legislation into making contracts which destroyed their 
 profits. He went on to show that the case of the 
 labourers was far worse than that of the farmers, and he 
 produced detailed evidence from many counties to prove 
 their misery and degradation. Humanity and justice to 
 them demanded an inquiry into the working of a system 
 which, while professedly maintained in the interest of 
 agriculture, allowed those who worked upon the land 
 to starve. He concluded an address, convincing by its 
 arguments and descriptions, by moving for a select 
 committee of inquiry, because ** the present system robs 
 the earth of its fertility and the labourer of his hire, 
 deprives the people of subsistence and the farmer of 
 feelings of honest independence".^ Mr. Bright followed 
 with a forcible appeal, and urged that **if the majority 
 thought that the justice of the Corn-laws could be proved, 
 
 ^The following is an extract from this powerful speech: — "The right 
 hon. Baronet opposite (Sir R. Peel) has confessed that he cannot regulate 
 the wages of labour or the profits of trade. Now the farmers are dependent 
 for their prices upon the wages of the labourer and the profits of the trader 
 and manufacturer ; and if the Government cannot regulate these — if it cannot 
 guarantee a certain amount of wages to the one, or a fixed profit to the 
 other — how can it regulate the price of agricultural produce? The first 
 point to which I should wish to make this committee instrumental is to fix 
 in the minds of the farmers the fact that this House exaggerates its power 
 to sustain or enhance prices by direct acts of legislation. The farmer's 
 
Agitation for Repeal of Corn-laws. 85 
 
 they would grant the committee at once". The com- 
 mittee was nevertheless refused. 
 
 In June Mr. Villiers's motion for repeal again came 
 forward. Mr, Villiers attacked the argument for inde- 
 pendence by showing that this country was dependent 
 upon other countries for the materials of its manufac- 
 tures, and thus for the means by which millions of 
 labourers could earn their bread, while it rejected the 
 bread itself, which could only be obtained in sufficiency 
 by selling the produce of that labour in exchange for 
 foreign corn. He dwelt upon the embarrassed condition 
 of farmers, and the low scale of civilization of the 
 labourers — the consequence of their necessitous con- 
 dition. Viscount Howick maintained that the question 
 was purely one of rent, in which farmers and labourers 
 received no consideration. Mr. Cobden examined the 
 defence of the Corn-laws, that they enabled the protected 
 classes to pay taxes. He showed that the incidence of 
 the tax on corn was upon the consumer, and argued, 
 moreover, that it caused an absolute loss ; he also proved 
 from statistics that revenue rose as corn prices fell, and 
 declined as prices rose. 
 
 Mr. Bright attacked the plea of special burdens on 
 land by showing that rents fell when rates were high, 
 that rates fell upon all kinds of industries and property 
 equally with land, and that if it were not so, the proper 
 method was to deal with the particular burden, and not 
 to create another. The motion was lost. 
 
 The depression grew and became more severe among 
 the agricultural labourers, whose wages fell to 7^. and 
 5^. a week in 1844. With wheat at 51J. 3<^. a quarter, 
 labourers were existing on potatoes and meal; their 
 standard of living was so degraded as to approach 
 starvation level. More than one-eighth of the population 
 
 interest is that of the whole community, and is not a partial interest, and 
 you cannot touch him more sensitively than when you injure the manu- 
 facturers, his customers. 
 
 " I do not deny that you may regulate prices for a while — for a while you 
 have regelated them by forcing an artificial scarcity ; but this is a principle 
 which carries with it the seeds of self-destruction, for you are thereby under- 
 mining the prosperity of those consumers upon whom your permanent welfare 
 depends. A war against nature must always end in the discomfiture of those 
 who wage it." 
 
86 The Free-trade Movement. 
 
 of Suffolk and Essex was upon the poor-rates, and the 
 wretched peasantry, prompted by their misery and 
 hunger, once more resorted to incendiarism and set fire 
 to the ricks of corn, — as some of them admitted — to 
 raise the price of wheat, since in their ignorance they 
 had adopted the teaching that *' high prices make good 
 wages ", and sought to give it practical effect. 
 
 The agricultural distress continued through the winter, 
 and on March 13th, 1845, Mr. Cobden moved in the 
 House to appoint a select committee ''to inquire into 
 the causes and extent of the alleged existing agricultural 
 distress, and into the effect of legislative protection upon 
 the interests of land-owners, tenant-farmers, and farm- 
 labourers ". This speech affords perhaps the most per- 
 fect example of Cobden's style of debate. It displays 
 his masterly and comprehensive grasp of the subject ; it 
 is crowded with pertinent facts narrated in an orderly 
 and forcible manner, and the conclusions are enforced 
 by arguments which proved unanswerable. *' How is 
 it", he asks, ''that in a country overflowing with capital, 
 when there is a plethora in every other business — when 
 money is going to France for railroads, and to Pennsyl- 
 vania for bonds — when it is connecting the Atlantic with 
 the Pacific by canals, and diving to the bottom of Mexi- 
 can mines for investment, — it yet finds no employment 
 in the most attractive of all spots, the soil of this countrj' 
 itself?" He answers: "Capital shrinks instinctively from 
 insecurity of tenure, and we have not in England that 
 security which will warrant men of capital investing their 
 money in the soil ". He goes on to maintain that ' ' the want 
 of leases and security deters tenants from laying out their 
 money in the soil." "Tenants therefore are prevented 
 by their landlords from carrying on cultivation properly. 
 They are made servile and dependent, disinclined to im- 
 provement, afraid to let the landlord see that they could 
 improve their farms, lest he should pounce on them for 
 an increase of rent." And he showed from specimens, 
 that when leases were granted, the "covenants were of 
 such a preposterous character that I will defy any man 
 to carry on the business of farming properly under 
 them". He quoted the case of one member of the 
 
Agitation for Repeal of Corn-laws. 87 
 
 House who had been publicly rebuking farmers for not 
 growing flax, while in his own leases there was a clause 
 which prohibited flax-growing. But the most powerful 
 section of this speech is that in which he demonstrates 
 from agriculture the fundamental fallacy of Protection — 
 taxing the whole community for the benefit of a section. 
 Taking clover, beans, oats, hops, cheese, in succession, 
 he showed that for the sake of giving a monopoly to a 
 few districts in each of these products, the whole agri- 
 cultural industry was oppressed and burdened. He 
 stated that many farmers had resented this folly, and 
 had placed their names on the books of the Anti-Corn-law 
 League, ** comprising some of the most intelligent men 
 that are to be found in the kingdom". While linseed, 
 oats, &c., were excluded by duty, fat cattle were im- 
 ported duty free. ** But to eikclude provender for cattle 
 and to admit fat cattle duty'free, was one of the greatest 
 absurdities in legislation that ever was." Turning to 
 the defence that the agricultural classes were large 
 consumers of manufactures, he asks: ''What sort of 
 consumers of manufactures do you think agricultural 
 labourers would be with the wages they get?" ''There 
 are 960,000 agricultural labourers in England and Wales, 
 and each of them does not spend 30^. a year in manu- 
 factures on his whole family, if the article of shoes be 
 excepted." "Then", he goes on, "I would ask what 
 can they pay on 8s. a week to the revenue?" In a 
 powerful peroration he appealed to the gentlemen, the 
 high aristocracy of England, "to play in a mercantile 
 age that noble part which in feudal times had made their 
 ancestors the leaders of the people"; but he adds, "if 
 you are found obstructing that progressive spirit which 
 is calculated to knit natjons more closely together by 
 commercial intercourse ,^if you give nothing but oppo- 
 sition to schemes which almost give life and breath to 
 inanimate nature, and which it has been decreed shall 
 go on, then you are no longer a national body". 
 
 This speech made a marked impression upon Sir 
 Robert Peel. Mr. Morley thus describes it: — "The 
 prime minister had followed every sentence with ear- 
 nest attention ; his face grew more and more solemn as 
 
88 The Free-trade Movement. 
 
 the argument proceeded. At length he crumpled up the 
 notes which he had been taking, and was heard by an 
 overlooker, who was close by, to say to Mr. Sidney 
 Herbert, who sat next him on the bench, *You must 
 answer this, for I cannot*." 
 
 Making use of every legitimate device, the League, in 
 May, 1845, displayed their enterprise and regard for 
 orthodox methods of procedure by organizing a great 
 bazaar in Covent Garden Theatre; by this means they 
 raised £2^,000, gained an immense advertisement of 
 their aims, and secured many adherents to their cause. 
 
 In Parliament Lord John Russell, on May 26th, moved 
 a series of resolutions, in which, while repeating his 
 demand for a fixed duty, he practically admitted the 
 principle of the League, and employed their arguments. 
 The Free-trade doctrine was at length gaining ground, 
 and it was becoming very evident to the leaders of the 
 movement that it was only a question of time. before the 
 premier would be completely convinced and would adopt 
 their views. 
 
 In the autumn wet weather caused a bad harvest and 
 a sudden rise in bread, which created much apprehension 
 among ministers. But a more serious evil was at hand. 
 Ireland had for some time adopted the low diet of pota- 
 toes as her standard food, and in some parts potatoes 
 were almost the only produce of the land, and the sole 
 means of subsistence. In the autumn of 1845 the crops 
 were attacked by blight, and the people were threatened 
 with famine. It was necessary to act promptly if terrible 
 disaster was to be averted. The ministry sent a com- 
 mission to inquire into the state of the food supply in 
 Ireland, and Mansion House Relief Committees were 
 formed in Dublin, which demanded free admission of 
 food to combat the spreading calamity. In Manchester 
 the League held a vast meeting and appealed to the 
 Government to grant relief by opening the ports. The 
 Cabinet met frequently, but could not agree to the large 
 measures for relief proposed by Peel. Lord John Russell 
 seized the moment to renounce his belief in a fixed duty, 
 and in a public letter to the electors of the City he an- 
 nounced his somewhat tardy conversion to complete 
 
Agitation for Repeal of Corn-laws. 89 
 
 Free-trade principles. ** Let us then unite", he said, 
 **to put an end to a system which has been proved to 
 be the blight of commerce, the bane of agriculture, the 
 source of bitter divisions among classes, the cause of 
 penury, fever, mortality, and crime among the people." 
 Other public men followed, including Lord Macaulay. 
 The circumstances of the time by their urgency made 
 many rapid conversions. 
 
 The Cabinet meantime hesitated to adopt the prime 
 minister's plan, until at length the Duke of Wellington 
 declared that he would give Peel his support, and re- 
 commended the rest of the ministers to do the same. 
 This was at the beginning of December, and on the 4th 
 The Times startled the country with the announcement 
 that the Corn-laws were about to be repealed. How- 
 ever, Peel could not overcome the resistance of Lord 
 Stanley and the Duke of Buccleugh, and he felt it his 
 duty to resign office, which he did on the 5th December. 
 He promised Her Majesty to give his personal support 
 to Lord John Russell in carrying the measure of repeal, 
 and she accordingly asked Lord John to form a ministry. 
 He was, however, unable to do so, and Her Majesty 
 speedily recalled Sir Robert Peel and asked him to re- 
 sume office. This he did, replacing Lord Stanley by 
 Mr. Gladstone. His return to office in the altered cir- 
 cumstances left Peel free from past party pledges, except 
 in the opinion of rabid Protectionists like Lord Bentinck. 
 He came back to save the country from the calamity 
 with which famine threatened it, and he proceeded at 
 once to formulate his measure for abolishing the Corn- 
 laws. The League, meanwhile, was actively urging on 
 the counties the necessity for action: a great meeting 
 was' held in the Free-trade Hall on the 23rd December, 
 when it was determined to raise a monster subscription 
 of ;^25o,ooo. Towards this sum ;^6o,ooo was sub- 
 scribed on the spot, and in a few days the amount 
 reached ;^i 50,000, so great was the enthusiasm and the 
 liberality evoked by the critical condition to which the 
 movement had now been brought.^ 
 
 ^ "The Chairman at once announced his readiness to receive the names 
 of subscribers ; and a scene which defies description immediately followed^ 
 
go The Free-trade Movement. 
 
 Without delay Peel now brought in his measure for 
 abolishing the Corn-laws. He proposed that they should 
 cease on ist February, 1849, with the exception of a 
 registration duty of i^. per quarter, and that in the three 
 years' interval the duty on wheat should be los. when 
 the price was u^der 48^., falling to 4^. when the price 
 reached 53^. The same bill proposed to abolish or re- 
 duce duties on 150 other articles of food, raw materials, 
 and manufactures. 
 
 After a lengthened debate, in which the opposition to 
 Peel was led by Mr. Disraeli in a virulent personal attack, 
 the bill was carried in the House of Commons on the 
 1 6th May. It was passed quickly through the Lords by 
 the Duke of Wellington, and became law on the 25th 
 June, on the very day on which Peel was defeated on 
 the Irish Coercion Bill. 
 
 Peel's Corn Bill had passed the third reading by 327 
 votes to 229. The Irish Coercion Bill, on which he left 
 office, was defeated by 294 votes to 219. 
 
 In announcing his resignation of office. Peel made a 
 most eloquent and affecting speech, in which he ascribed 
 to Cobden the chief credit of passing the Corn Bill. He 
 said: **The name that ought to be associated with the 
 success of the measure is the name of a man who, acting, 
 I believe, from pure and disinterested motives, has advo- 
 cated this cause with untiring energy and by appeals to 
 reason ". He concluded with the dignified and memor- 
 able passage: ** I shall leave a name execrated, I know, 
 by every monopolist who would maintain Protection for 
 his own individual benefit. But it may be that I shall 
 leave a name sometimes remembered with expressions 
 of good-will in the abodes of those whose lot it is to 
 labour and to earn their daily bread by the sweat of 
 their brow, when they shall recruit their exhausted 
 strength with abundant and untaxed food, the sweeter 
 because it is no longer leavened by a sense of injustice." 
 
 Peel has been charged with inconsistency. He took 
 
 in which gentlemen were calling out in rapid succession 'j^iooo for me' and 
 '_;^iooo for me ', until no less than twenty-three names had followed one an- 
 other for the like sum. There were twenty-two others who put down ^^500 
 each, and these, together with other smaller sums then announced, amounted 
 to more than ^60,000." — {Cobden and the League, Ashworth, p. 200.) 
 
Agitation for Repeal of Corn-laws. 
 
 office in 1841 as the minister of a party pledged to main- 
 tain the Corn-laws, and he repealed those laws against 
 the wishes of the majority of that party; yet Peel was 
 noted for his sincerity and honesty. The solution of the 
 paradox is in that very sincerity of purpose towards his 
 country. He became slowly but surely, convinced of the 
 error of Protection : he was not a man of impulse ; his 
 mind was moulded under the influence of facts and strict 
 logic. The frequent sufferings of the people were the 
 strongest factor in his conversion; he saw that under 1 
 the existing law it had not been possible for them to j 
 obtain sufficient food; finally, the Irish famine made it a 1 
 pressing necessity that something should be done. As 
 Bright expressed it: ''Famine itself, against which we 
 had warred, joined us ". He could have resigned office 
 and have left the responsibility to his successor, and 
 thus have escaped the charge of dishonesty to his party; 
 but he felt the responsibility of a starving people more 
 than the reproach of a deserted party, and he endeavoured 
 to induce his Cabinet to relax the prohibitions. Failing 
 in this aim, he resigned his office and promised his sup- 
 port to his successor in relieving the pressure of the 
 Corn-laws. When Lord John Russell failed to form a 
 Government, without hesitation Peel obeyed the request 
 to resume office, and accepted a task which he knew 
 would discredit him with his party. He at once candidly 
 explained his position and his intentions. His views 
 had undergone a change; the facts of misery and the 
 menace of famine were the forces that finally convinced 
 him, and he was courageous and magnanimous enough 
 to face all the contumely of a charge of dishonesty to 
 save a nation from starvation and to inaugurate a policy 
 which he was now assured was the only sound and just 
 one. His duty was to his country, and he would fulfil 
 it at any cost. Confident in the consequences of his act, 
 he left the judgment of his conduct to posterity, in the 
 assurance that his name would live associated with one 
 of the most beneficent measures ever passed for the 
 people of this country. And the judgment of posterity^ 
 has not belied his anticipations. Peel ranks as one of - 
 the noblest and truest of British statesmen. The repeal J 
 
92 The Free-trade Movement. 
 
 which he effected is the most permanent of his achieve- 
 ments. Many financiers regard Peel's bill of 1844 as 
 the greatest reform in the theory and practice of bank- 
 ing, and as having been the means of placing our cur- 
 rency upon a sound basis; but his fiscal reforms, of 
 which the repeal of the Corn-law was the climax, be- 
 came the corner-stone of a new edifice of finance built 
 up on principles which started this country on a period 
 of unrivalled prosperity. 
 
 The Corn-law of 181 5 had been passed in the interests 
 of land-owners ; its avowed object was to enable them to 
 maintain rents and meet the burdens which they im- 
 agined to have been unduly placed upon them by the war. 
 It was passed in the interests of a class — an aristocracy 
 of land-owners, and it proved to be inimical to the in- 
 terests of the majority of the people, who in this struggle 
 were represented by the manufacturers, a new and 
 powerful class which had arisen within half-a-century, 
 and between whom and the landed aristocracy a strong 
 jealousy then existed. The manufacturers were them- 
 selves as much interested in the abolition of Protection 
 as were the landlords in maintaining it. There is 
 nothing exceptional in this attempt of *' interested 
 sections " to retain or extend their advantages. Ex- 
 amples are always to be found, and everywhere, — in rail- 
 ways, breweries, trade-unions, manufactures, teachers' 
 associations, &c.; most questions which are settled by 
 the votes of groups are determined almost entirely as 
 they affect the special interests of those groups. 
 
 Protection for agriculture exists in France and Ger- 
 many, where much of the land is held in small portions, 
 and it would probably have been adopted in England, 
 in the same circumstances which existed in 1815, had 
 England been a country of small landholders. In the 
 United States and most of the colonies it is advocated 
 and upheld in the interests of the manufacturing classes. 
 It has been said that the Corn-law question was finally 
 decided as a class question. This is not strictly correct; 
 the agitation began partly as a matter of rival interests, 
 but the larger interest of the community soon outgrew 
 other considerations. It was argued and discussed on 
 
Agitation for Repeal of Corn-laws. 93 
 
 economic grounds; it was debated and carried by the 
 convincing reasoning supplied from Adam Smith, who 
 had written forty years before the duty of 181 5 was im- 
 posed; and it fell because the principle was shown to be 
 unsound, and the practice to be economically a loss and 
 an injury to the community as a whole. 
 
 The work of the League was now virtually accom- 
 plished. A few days after the passing of the Bill a 
 meeting was held at the Free-trade Hall, when Cobden 
 delivered an address, in which he paid a warm tribute 
 to Sir Robert Peel. **If he has lost office," said Cobden, 
 *'he has gained a country. For my part, I would 
 rather descend into private life with that last measure of 
 his, which led to his discomfiture, in my hand, than 
 mount to the highest pinnacle of human power by any 
 other means." Mr. Bright followed with a stirring 
 speech, in which he complimented the House of Lords : 
 ** I must confess that I have a greater respect for the 
 House of Lords, from watching their passing of this 
 Bill, and the manner in which they have passed it, than 
 I ever had at any former period". 
 
 Before separating, the League presented their inde- 
 fatigable chairman, Mr. George Wilson, with a sum of 
 ;£'io,ooo in recognition of the invaluable services which, 
 during seven years, he had performed gratuitously, and 
 with remarkable devotion, tact, and sagacity. The 
 League was then quietly dissolved. It was revived for 
 a brief period in 1852 when Lord Derby and Mr. Disraeli 
 came into office, and an alarm was raised by a speech of 
 Lord Derby's that an attempt would be made to restore 
 a Protectionist policy. 
 
 The removal of the remaining restraints on commerce 
 are soon chronicled. In 1849 the Navigation Laws 
 were finally abolished after a brief struggle with the 
 Protectionists. In 1852 Mr. Gladstone became chancellor 
 of the exchequer, and immediately proceeded to complete 
 the policy of his master in finance. He removed the 
 duties on 123 articles, and reduced those on 133 others, 
 including most of the remaining duties on food. In 
 i860, after an interval disturbed by the Russian war, he 
 resumed the task of simplification, and reduced the 
 
 f^ OF THE ^^-X 
 
 i UNIVERSITT \ 
 
 y 
 
94 The Free-trade Movement. 
 
 number of taxed imports to 48, removing the last duties 
 on manufactures (wool and silk), and all differential 
 duties. A few other reforms have since been effected; 
 the timber duty was abolished in 1866, the shilling re- 
 gistration duty on corn in 1869, and sugar was freed in 
 1875. The English tariff is now • non-protective ; it is 
 simple in principle, being levied on only 15 classes of 
 goods and for revenue only; of these, tobacco, tea, 
 spirits, and wine produce about nine-tenths of the whole 
 customs revenue of ;£'2 1,250,000. 
 
 One other matter calls for notice as being part of the 
 \ direct development of the Free-trade movement. This 
 • was the negotiation of the Treaty of Commerce with 
 France in i^^ by Cobden and Chevalier, with the assist- 
 ance of the Emperor Napoleon III., who, no doubt, was 
 the more inclined thereto from political motives. By 
 this treaty Great Britain agreed, on her side, to lower 
 the duties on French brandy and wine, to complete at 
 once the abolition of duties on manufactures, and not to 
 re-impose an export duty on coal to France. France 
 undertook to abolish prohibition of British goods, to 
 lower the duties of all British staple manufactures of 
 textiles, iron, machinery, tools, leather, glass, &c., to 
 less than 30 per cent ad valorem. The treaty was to be 
 binding for ten years, and to continue afterwards unless 
 denounced. This last event took place in 1872 after the 
 Franco-German war; but the treaty was temporarily 
 renewed, though finally abandoned in 1882. 
 
 The effect of the treaty on the commerce of the two 
 nations was most beneficial. Between 1858 and 1877 
 British exports to France increased from ;^'9,ooo,ooo to 
 ;£'25, 000,000, and French exports to England from 
 ;^i 3,000,000 to ;£^45, 000,000. A further good result 
 followed in the numerous other treaties to which the 
 French treaty gave rise, and in the extension of the 
 principle now adopted of the "most favoured nation", 
 by which negotiations ending in a compact between any 
 two nations may lead to an extension of like advantages 
 to other nations, and thus secure a step towards the 
 removal of obstacles to general free exchange over the 
 whole area of related countries. 
 
The Economics of Foreign Trade. 95 
 
 Chapter V. 
 The Economics of Foreign Trade. 
 
 In the absence of artificial restrictions, such as tariffs, 
 
 j trade between nations will arise naturally when some 
 
 ; advantage is to be derived from it by the nations engag- 
 
 / ing in it, and will only continue so long as this exists. 
 
 Sir Dudley North more than two hundred years ago 
 
 stated this theory of foreign trade: "The whole world 
 
 as to trade is but as one nation or people, therein nations 
 
 are as persons. The loss of a trade with one nation is 
 
 not that only, separately considered, but so much of the 
 
 trade of the world rescinded or lost, for all is combined 
 
 together. There can be no trade unprofitable to the 
 
 public, for if any prove so men leave it ofi^, and whenever 
 
 the traders thrive, the public, of which they are a part, 
 
 thrive also."^ 
 
 The advantages gained by home trade are obvious; 
 some parts of a country are fertile and good for agri- 
 culture, some yield clay or stone, others iron or coal. 
 To develop these resources and interchange the various 
 products of a country benefits all classes. Certain 
 localities are suitable for the manufacture of tools of iron, 
 and others for that of paper, cloth, or chemicals ; prox- 
 imity to water, coal, the nature of the soil, the humidity 
 or dryness, will determine the character of the local in- 
 dustries. The benefits arising from separation of employ- 
 ments and division of labour need no proof. The 
 principle of specialization of functions is admitted as a 
 sign of higher organization in plants and animals; it is 
 equally true of societies. By localization the special 
 advantages of situation are gained; by specialization 
 those of ability, capacity, aptitude, the gifts of nature 
 and the attributes of man are turned to best account, 
 utility is thereby increased, wealth is augmented, and 
 man rises to a higher civilization. It is only savages 
 who do not co-operate at all; they seek individually to 
 
 * Sir Dudley North, Discourses upon Trade, 1691. 
 
96 The Free-trade Movement. 
 
 supply their own wants; their condition is very little 
 above that of the beasts ; they are non-progressive. By 
 contrast, the most advanced and richest nations exhibit 
 most fully the faculty of combination, and display the 
 highest differentiation in employments; the greatest 
 wealth and variety are to be found in the countries where 
 the application of the principles of subdivision and ex- 
 change is adopted; in other words, comfort and wealth 
 increase as men avail themselves of the circumstances 
 which promote the exchange of products and services. 
 
 The extension of trading to other countries is only an 
 application of the principle of division and co-operation 
 to a larger area. Cobden's saying, *' Free-trade widens 
 the circle of exchange", contains the whole doctrine, 
 and the possibility of economic advantage increases as 
 the area is widened. Nature's bounty has been scattered 
 lavishly, yet with many limitations; every diversity of 
 soil and climate is accompanied with diversity of gifts; 
 metals and minerals are distributed over different lands; 
 agricultural products exhibit an even greater partiality 
 in their distribution ; the successful cultivation of corn, 
 the vine, cotton, coffee, tea, oranges, currants, timber, 
 &c. , depends upon conditions of climate and land ; they 
 do not all flourish in the same country. The only way 
 then in which any one country can enjoy all these pro- 
 ducts is by foreign trade, i.e. by exchange of goods. 
 Each country may part with something it can produce 
 easily, and which costs it little, in exchange for other 
 articles which it could not otherwise obtain at all. This 
 merit of foreign trade was the first to commend itself to 
 early communities. Self-sustaining as regards their 
 necessaries, by trading they obtained comforts and 
 luxuries which their own country did not yield ; merchants 
 came with wares to the nomadic patriarchs in the desert; 
 the villagers in early England purchased their iron and 
 salt at the markets and fairs. The Venetian fleets 
 brought cotton goods, glass, fine leather, silks, and 
 many products of the East to be sold at the English 
 fairs; the strictest Mercantilists and Protectionists bought 
 gold and silver with English produce. By trading, all 
 obtained something which their own district did not yield. 
 
The Economics of Foreign Trade. 97 
 
 But an additional advantage may be obtained by- 
 carrying specialization further, and buying abroad things 
 which can be produced at home, provided that the foreign 
 article is superior in quality or can be produced under 
 more favourable conditions. Two countries may yield 
 the same kinds of commodities, and yet there may be a 
 great gain by mutual trading, provided one nation has 
 some advantage by nature or skill over the other. Tlie 
 climate or soil of the one may be superior, the ability of 
 the inhabitants may be greater, or some circumstance 
 may favour the development of industry in special direc- 
 tions. In such a case it will benefit both nations if trade 
 is set up, the customer-country paying for the commodity 
 thus imported with some goods of its own production, 
 which the other country is willing to take in exchange ; 
 each in fact is customer to the other. 
 
 In this manner each country will devote most labour 
 to producing those things for which it is more specially 
 adapted, and the special aptitudes of the countries and 
 their inhabitants being thus utilized, a larger amount of 
 wealth is created, and both may share in the extra pro- 
 duce. The principle here briefly described is called in 
 economic writings the doctrine of '* comparative cost"; 
 it is applicable alike to individuals, to localities, and to 
 countries; it is a form of specialization on the simple 
 principle that if each individual or country does by pre- 
 ference what each can do best, the general utility is 
 increased. Increase of utility (serviceableness) is the 
 object of work. Voluntary exchange is a process for 
 increasing utility. Men have many wants, and the desire 
 to satisfy new wants is capable of indefinite expansion. 
 Again, the more we have of anything, the less does an 
 addition to our stock of that article add to its utility. It 
 is therefore a gain in utility to part with a portion of that 
 which we have in abundance, in exchange for things of 
 which we cannot easily produce sufficient to satisfy our 
 wants. By this means our pleasure is augmented, and 
 the serviceableness of the goods is increased. Thus 
 ** perfect freedom of exchange tends to the maximizing 
 of utility", to use the expression of Jevons; and since it 
 is its utility which causes a thing to be regarded as 
 
 (M460) G 
 
98 The Free-trade Movement. 
 
 wealth, by free exchange wealth is increased. The 
 inability to see that utility is the criterion of wealth, and 
 that it is augmented by exchange, is a radical error of 
 some writers on socialism, which renders much of their 
 reasoning invalid. The same error underlies methods 
 of taxation which have for their object to prevent the free 
 flow of goods to those quarters where their ingress 
 would add to the total enjoyment of the world. ^ 
 
 The increase of utility derived by specializing pro- 
 duction is regarded by economists as the greatest 
 advantage gained by trading, but protective tariffs 
 prevent this gain by checking the importation of goods 
 which a country can produce for itself though at greater 
 cost. Canada has a sparse population and a soil well 
 suited for the production of corn, fruit, and timber; 
 Great Britain has a dense population, vast capital sunk 
 in machinery, and with her minerals and industrial skill 
 she is specially adapted for manufacturing. If Canada 
 devotes herself by preference to agriculture, and Great 
 Britain to manufactures, by free interchange both 
 countries will be wealthier than if each endeavoured to 
 supply its entire wants in both departments of industry. 
 The gain is obtained by the reduced cost of production 
 arising from the utilization of natural forces. Of 
 course, under perfectly Free-trade some manufactures 
 will flourish in Canada and agriculture in Great Britain ; 
 national conditions alone will determine how far each is 
 profitable. The discovery of better sources of supply is 
 like the invention of a new machine, it is a means of 
 getting an increased amount of wealth from nature with 
 less labour; now the aim of every invention and dis- 
 
 1 No language can state this principle of the efficiency of exchange more 
 simply or forcibly than that of Adam Smith : " It is the maxim of every 
 prudent master of a family, never to attempt to make at home what it will 
 cost him more to make than to buy. The tailor does not attempt to make 
 his own shoes, but buys them of the shoemaker. The shoemaker does not 
 attempt to make his own clothes, but employs a tailor. The farmer attempts 
 to make neither the one nor the other, but employs these different artificers. 
 All of them find it for their interest to employ their whole industry in a way 
 in which they have some advantage over their neighbours, and to purchase 
 with a part of its produce, or, what is the same thing, with the price of a part 
 of it, whatever else they have occasion for. What is prudence in the con- 
 duct of every private family can scarce be folly in that of a great kingdom." 
 — ( Wealth of Nations, book iv. chap. 2). 
 
The Economics of Foreign Trade. 99 
 
 covery is to cheapen and multiply products and con- 
 veniencies, thus foreign trade is in its results precisely 
 of the nature of a new discovery or invention. 
 
 It by no means follows that the production of the 
 article imported will cease altogether in the country 
 importing, it will only be checked at the point at which 
 it is more profitable to import. For example, corn can 
 be grown in Great Britain at a remunerative price on 
 the land best suited to corn, but it can be imported at 
 such a price as to make it unprofitable to grow corn on 
 inferior land. The trade of Australia with Europe 
 between 1851 and 1870 exactly illustrated the case of a 
 new discovery altering the course of industry, and by 
 the agency of foreign trade conferring benefits on both 
 sides. Prior to the gold discoveries Australia was an 
 agricultural colony, supplying its own food, and sending 
 wool, hides, &c., to Europe in exchange for clothing, 
 tools, and other manufactures. The discovery of gold 
 opened up a much more profitable industry to the 
 shepherds and agriculturalists, who went to the mines in 
 such numbers that Victoria not only ceased for a time 
 to export agricultural produce, but did not produce 
 sufficient food for its wants. Labour expended on gold- 
 digging would yield four or five times as much as it 
 could obtain if applied to agriculture, so Victoria ex- 
 ported gold to Europe and obtained thence butter, flour, 
 timber, and leather in exchange, though all these com- 
 modities could have been produced in Australia at much 
 lower prices than they could be imported. To produce 
 gold, however, was more profitable; and the trade, set 
 up naturally, continued until gold-mining became less 
 profitable, when the current was changed and agri- 
 culture again resumed its course. This has continued 
 until, at the present day, Australia is one of the largest 
 exporters of wool and meat, and can even send butter 
 to Great Britain at a lower price than British-made 
 butter. Other examples of trade directed to secure the 
 economic gain of exchange are abundant. Some of the 
 West India Isles send fruit to the United States in 
 exchange for meat and flour. Although they could 
 produce those necessaries cheaply themselves, yet they 
 
loo The Free-trade Movement. 
 
 find their greater advantage in the production of fruits, 
 sugar, and coffee. The Channel Isles, in like manner, 
 could obtain corn from their very fertile soil (and in 
 1844 they exported wheat to Great Britain^), but it pays 
 them better now to grow early potatoes and fruit, such 
 as grapes and tomatoes, and with these to purchase 
 their corn in Great Britain. 
 
 Sufficient has been said to illustrate the nature of the 
 advantages described under the phrase ** comparative 
 cost" in works on economic theory. It amounts to a 
 statement that countries, like individuals, produce most 
 when, in comparing their powers and opportunities in 
 two or more fields of industry, they select for their 
 labour those in which they excel; and with the results 
 of their more efficient labour in those industries they 
 buy the commodities which they themselves are less 
 qualified to produce from countries which, in turn, have 
 some special fitness for the production of those com- 
 modities. The total yield is increased by this method 
 of organized production and exchange — there is an 
 addition to the wealth of the world. It is purely a 
 process of adopting the most efficient mode of pro- 
 duction in the circumstances. 
 
 One great aim of the opportunities for gaining know- 
 ledge offered by technical education and the scholarship 
 system is to enable youths to find the sphere in life for 
 which they are best fitted, and thus to increase the 
 national efficiency by employing those gifts and faculties 
 which they possess in any exceptional degree. It is held 
 that the individual advantage will be a national, and, it 
 might be added, an international advantage; for every 
 faculty utilized and developed, every form of latent 
 ability or force rightly directed, becomes a potential 
 increase of power to the world. If this argument be 
 valid, it is difficult to reconcile it with a policy which 
 places artificial limits to the enjoyment of the fruits of 
 such faculty or natural fertility at the boundaries of a 
 nation's territory. Does an economic advantage cease 
 at an accidental and even variable line on the earth's 
 surface? Does, for example, the transfer of Alsace and 
 
 * See Cobden's speech in the House of Commons, March 12, 1844. 
 
The Economics of Foreign Trade. loi 
 
 Lorraine from France to Germany nullify the economic 
 gain of free-trading between those territories and 
 France? 
 
 It may be objected that a system of universal free 
 exchange tends to restrict the number of industries in a 
 country, and leads to over-specialization, making each 
 country dependent upon others for the majority of its 
 wants. To the first complaint it would be sufficient to 
 point out that in Great Britain, where free exchange 
 has been in operation for fifty years, there is probably a 
 larger variety of employments than in any other country, 
 and that, notwithstanding its manufacturing supremacy, 
 agriculture is still the largest single industry; it is also 
 the best-fed country in Europe, and the general standard 
 of comfort of the inhabitants is higher than that of most 
 countries which strive to promote many industries by 
 protective measures. 
 
 The great specialization of capital and labour presents 
 problems of real difficulty; it is, however, a product of 
 modern civilization, and is equally visible in the United 
 States, Germany, France, and other progressive countries 
 which impose high tariff's. Specialization is the out- 
 come of invention, steam-power, the joint-stock system, 
 the movement towards the organization of production 
 and distribution on a large scale, and it will continue 
 independently of all considerations of tariff's. Specializa- 
 tion of industry has recommendations far too valuable to 
 allow it to be set aside; its danger lies in the readiness 
 with which trade and industry conducted on a vast scale 
 can be deranged. A whole district like South Lancashire 
 may be thrown into idleness by an event such as the 
 civil war in the United States; a strike of dock-labourers 
 or coal-miners may almost paralyse the trade of a nation. 
 These are dangers which arise with the complexity and 
 interdependence of industries, though they originate in 
 moral, political, and social causes, and in the imperfect 
 knowledge of economic laws ; the remedies lie, however, 
 in the direction of removing the causes of wars and 
 strikes and other interruptions to industry, and along 
 with these remedies should be classed the reduction or 
 abolition of tariff's. 
 
I02 The Free-trade Movement. 
 
 The adaptation of demand to supply on so vast and 
 complex a system as trade has now become, presents 
 many difficulties and risks. Disturbances, crises, and 
 depressions in one part of the world produce effects in 
 remote reg^ions : a famine in India, a convulsion in Aus- 
 tralia or Japan, a war between two customer countries, 
 gives a shock to the industries and commerce of England. 
 This is inevitable, but it entails less suffering than did 
 the local failure of crops in times when Great Britain 
 was self-sufficing; and the evil will be much diminished 
 when the economic causes of commercial and industrial 
 depression are more widely understood, and when na- 
 tions are more disposed to settle their differences by 
 arbitration. But the extension of the area of trading- 
 relations has many advantages to set against this liability 
 to disturbance: larger and more numerous sources of 
 supply render scarcity less probable, a contraction in 
 one direction is generally met by compensation from 
 some other quarter, there is a levelling and steadying 
 tendency. In the same manner, a wide and extended 
 area of demand means many markets, and these offer 
 some resistance to disturbing influences, as it is less 
 probable that a large number would fail at one time, 
 and a narrowing in one direction is often balanced by 
 an expansion in another. Add to these the improved 
 means of communication, diffusion of information and 
 quickness of transit, attained by aid of the same huge 
 forces which have rendered large organization possible, 
 and we find, that on the whole, balancing advantages 
 and disadvantages, the tendency to large markets, com- 
 plicated trading, and the specialized production which 
 free-trading fosters, is a great benefit to mankind. 
 
 The system of complex exchange, free enterprise, and 
 natural trading often leads to the creation of industries 
 in parts of the world where civilization had not previously 
 penetrated; indeed commerce is the greatest civilizing 
 power — it finds out new markets, discovers fresh sources 
 of supply, opens up savage countries, and plants colonies 
 in desolate places to develop products which science 
 has found useful to man; free exchange develops the 
 mechanism which carries to these places the con- 
 
The Economics of Foreign Trade. 103 
 
 veniences of the most advanced countries. The nitrate 
 deposits of Chili and the petroleum wells of Baku, the 
 gold-mines of Australia and the Transvaal, have drawn 
 large populations to districts previously almost un- 
 occupied ; by the aid of commerce the various wants of 
 these populations are able to be satisfied from the 
 fruits of their specialized industries as easily as those 
 of the coal-miners of Wales or the^ cotton-spinners of 
 Lancashire. 
 
 There are many natural impediments to trading which 
 are opposed to excessive specialization and the complete 
 appropriation of industries by any country. While there 
 is great disparity in productiveness, yet most countries 
 can produce many things more conveniently than they 
 can import them. Because two countries can produce 
 the same article it does not follow that trade in that 
 commodity will arise whenever one of them has a 
 natural advantage for its production; cost of carriage 
 will always form a kind of natural protection ; distance, 
 mountains, and seas impose obstacles; differences in 
 language, in currency, in manners, and in thought 
 check direct trading; habit and connections tend to keep 
 trade in local channels; while some causes are expand- 
 ing trade others interpose barriers, with the effect that a 
 large number of industries will always of necessity be 
 local, or have a limited market. 
 
 It is sometimes asserted that by permitting complete 
 freedom in commerce a country may be undersold in all 
 its industries. This is, however, an impossibility, since 
 it would imply importing without exporting; but trade 
 is exchange, the nation that buys must sell, the one 
 fact is the correlative of the other. A nation with 
 nothing to offer cannot buy, and if foreign goods come 
 into a country some other articles must go out in ex- 
 change. If goods ''made in Germany" are plentiful in 
 Great Britain, goods **made in Great Britain, or pur- 
 chased with British goods elsewhere ", will correspond 
 to them in Germany; in other words, each nation pays 
 for its imports directly or indirectly with its own pro- 
 duce. Trade depends upon a double demand, each 
 country's exports are supply to others, while to it they 
 
104 The Free-trade Movement. 
 
 are demand for the goods it seeks in exchange. It does 
 not follow that the trade of Great Britain will balance 
 with each country separately. Much trade is circuitous, 
 and the settlement indirect. If Great Britain buys from 
 the United States, the United States from India, and 
 India from Great Britain, their respective debts may be 
 set off against one another ; the fact is, that the whole of 
 a nation's imports are purchased by the whole of its 
 exports, and not that its accounts with each country are 
 separately balanced. Here comes in the service of 
 money, and also the function of bills of exchange, which 
 are part of the machinery of trade. Some persons 
 imagine that in foreign trade goods are purchased with 
 money, i.e. with gold; in the first place, this is not 
 possible, since the gold does not exist in sufficient 
 quantity to transact all exchanges, and if it were pos- 
 sible to obtain the gold the inconvenience and waste of 
 power would prohibit the attempt. The whole of the 
 gold currency in Great Britain would not provide for 
 one-seventh of its foreign trade alone (;£'745, 000,000 for 
 the year 1897), if we disregard entirely the home trade, 
 which is many times greater and much more directly 
 dependent upon the use of metallic money. 
 
 As the United Kingdom does not produce the precious 
 metals, the gold and silver which it employs are im- 
 ported commodities. The total amount of gold which 
 entered this country in 1895 for all purposes was 
 ;^36,ooo,ooo, and about ;£'2 1,300, 000 was exported; of 
 silver about ;£" 1 2,600,000 was imported, and ;^io, 300,000 
 was exported during the year. Gold comes plentifully 
 to Great Britain because of its wealth, its free-trading 
 and vast commerce, and its free market for gold.^ 
 During the fifteen years ending 1895 the import of gold 
 and silver exceeded the export by ^77,000,000.2 Since 
 
 ^ By the Coinage Act (1870) the British Government undertakes to coin 
 freely and gratuitously unlimited gold, at the rate of ;^3, 17J. xoVid. peroz. 
 of standard gold, which is called the mint price. The gold is purchased 
 by the Bank of England, which acts as agent for the mint, charging x%d. 
 per oz. for its trouble. This unlimited free coinage constitutes a free market 
 for gold such as does not exist in any other country. 
 
 ' This flow of gold and silver to and from the United Kingdom is suf- 
 ficiently illustrated by the statistics for five years : — 
 
The Economics of Foreign Trade. 105 
 
 Great Britain receives much more of the precious metals 
 than she parts with, it is manifest that she is not paying 
 for her imports with money, but with goods, in fact 
 she buys her gold with her merchandise. Trading is 
 done in terms of money, that is, in price; gold is the 
 measure and standard, but its transport is avoided as 
 much as possible. And as in the internal trade of the 
 country cheques and bills are estimated to perform some 
 95 per cent of the exchanges of the nation, so in foreign 
 commerce exchanges are effected by means of bills. The 
 operations are refined and technical; the result is that 
 debts for goods are balanced against one another 
 through the agency of credit documents representing 
 money, and by the aid of the machinery of banking. 
 Thus the foreign trade of the world is carried on with 
 comparatively little metallic currency ; goods are bought 
 with goods, imports with exports, balances only being 
 paid in gold. 
 
 Since imports are purchased with exports it might be 
 expected that their values would balance one another, 
 and as far as trading alone is concerned this is the case, 
 but international relations are very numerous and com- 
 plex, and involve many operations besides those of 
 commerce, which give rise to indebtedness. Great 
 Britain is a maritime country, with a large mercantile 
 fleet doing a considerable carrying trade for other 
 nations all over the globe. About one-half the ocean 
 commerce of the world is done in British vessels. This 
 carrying trade creates an element of indebtedness, which 
 
 1891. 
 1892. 
 1893. 
 1894. 
 1895. 
 
 Gold. 
 
 Imports. 
 30,275,620 
 21,583,232 
 24,834,727 
 27.572.347 
 36.005,999 
 
 Exports. 
 24,167,925 
 14,832,122 
 19,502,273 
 
 15.647.551 
 21,369,323 
 
 Imports. 
 
 9.215.598 
 
 10,746,382 
 
 ".913.395 
 11,005,417 
 12,669,662 
 
 Silver. 
 
 Exports. 
 13,060,866 
 14,078,568 
 
 13.589.745 
 12,165,049 
 10.357.436 
 
 1891. 
 1892. 
 1893. 
 1894. 
 1895. 
 
 1891. 
 1892. 
 1893. 
 1894. 
 1895. 
 
 Total. 
 
 Imports. 
 39,591.218 
 32,329,614 
 36,748, 122 
 
 38,577.764 
 46,675,661 
 
 Exports. 
 37,228,791. 
 28,910,699. 
 33,092,018. 
 27,812,600. 
 31,726,759. 
 
io6 The Free-trade Movement. 
 
 is discharged by the debtor-nations in produce. As an 
 example, suppose a British vessel to carry out ;£"iooo 
 worth of coal to San Francisco and fetch back corn. 
 Let the freight each way be ;£^5oo. The export of coal 
 from Great Britain will be set down at ;^iooo, on 
 arrival in America the value, enhanced by cost of car- 
 riage, will be ;^i5oo, and in addition another ;£^5oo 
 must be sent to Great Britain to pay the return freight ; 
 thus ;^20oo of corn will be entered as imports, of which 
 ;^iooo will come in payment for British coal and ;£'iooo 
 will be due for services rendered by British shipping. 
 The additional imports are the earnings of a British 
 industry, the exports do not include the cost of car- 
 riage, while the imports, which must include the goods 
 sent to pay for carriage, will necessarily exceed the 
 exports by that amount. The imports received in return 
 for services of British vessels are estimated at about 
 ;£"6o,ooo,ooo per annum; this service has been signifi- 
 cantly named by Sir Robert Giffen ** invisible exports". 
 Not only in foreign trade, but in the ordinary affairs of 
 life, a large part of what is paid for is ** service"; but, 
 having none of the attributes of matter to obtrude itself 
 upon the senses, service is apt to be forgotten, and to 
 be overlooked as a factor in exchange, and especially is 
 this the case in comparing values of imports and exports. 
 
 Another chief source of the discrepancy between im- 
 ports and exports arises from the practice of investing 
 capital in foreign enterprises. British subjects have 
 lent to foreign countries vast sums, the interest on which 
 is estimated at about ;£" 100,000,000 a year. It is pro- 
 bable that half that amount is reinvested abroad annually; 
 the balance, about ;^5o,ooo,ooo, comes in the form of 
 imports, for which no corresponding export is required. 
 
 It has been maintained that this mass of imports for 
 interest, while it benefits the investor who receives its 
 value, is a loss to British working-men by competing 
 with their products. The facts are, however, exactly the 
 reverse ; at every stage the labourer has shared in the 
 employment and profit afforded by the foreign transac- 
 tion. The original loans were made in the form of goods, 
 such as railway iron, engines, machinery, clothing, &c., 
 
The Economics of Foreign Trade. 107 
 
 all manufactured by British capital and labour, and they 
 were exported in vessels built with British capital and 
 labour. The interest in the form of imports comes home 
 in ships also constructed with British labour; and since 
 these imports consist chiefly of food and material for 
 our industries/ they are also beneficial to the working- 
 classes. The imported food provides cheap necessaries, 
 and augments thereby the real wages of labour, while 
 the raw materials become the means of future employ- 
 ment in the manufacture of goods either for home con- 
 sumption or for re-exportation; in the latter case they 
 again employ the labour of those directly or indirectly 
 engaged in the shipping industry. Since there is no 
 scarcity of capital at home, the overflow, sent out as 
 loans in the form of manufactured goods to develop 
 other countries, is wholly an addition to the producing 
 power of the world, and a source of employment, income, 
 and profit to the British nation ; it is not a displacement 
 of labour, but an addition to industry, and the means of 
 enjoyment which it procures. The right conclusion is 
 that the foreign trade and relations which arise naturally 
 under free competition tend to add to the wealth of a 
 country, and cause industry and capital to flow into the 
 channels which are most lucrative. 
 
 Besides the two instances here given, many other 
 relations give rise to indebtedness between countries; 
 such are foreign travel, tribute, remittances of tempor- 
 ary residents, expenses of soldiers and sailors on foreign 
 stations, of colonial government officials, &c. All the 
 debts which arise out of these transactions, though 
 expressed in terms of money, ultimately tell upon im- 
 ports and exports. Nations do not waste unnecessary 
 power in sending gold and silver to and fro ; goods are 
 the real things remitted, exchanged, and consumed in 
 the long run. These various business relations, how- 
 ever, render the balance-sheet more complex, and 
 obscure the simple truth that imported goods and services 
 are paid for by exported goods and services through the 
 instrumentality of credit documents, and that the pre- 
 
 1 Of British imports about 70 f)er cent consist of food and materials for 
 manufactures. 
 
io8 The Free-trade Movement. 
 
 cious metals, though the basis and measure of value, 
 play a relatively small part in the actual exchange. 
 
 An objection of a different kind may here be con- 
 sidered : it is charged against free-trading that it is in 
 the interests of consumers only, and that producers are 
 left to take care of themselves. The more correct state- 
 ment, however, would be that it leaves both classes 
 absolutely free to pursue their own interests by buying 
 or selling how and where they choose ; it deals out equal 
 measure. Every man is at liberty to produce what he 
 can, and the test of his fitness in the circumstances will 
 be that the community will buy his article in preference 
 to those of other competitors; if its quality and price 
 are such as warrant its success, it will be for the good of 
 the community; if the foreign article is preferred, the 
 principle of comparative cost will show that its produc- 
 tion at home would be an economic loss to the community. 
 Again, if any class might claim special consideration, it 
 would be the consumers, who are the more numerous 
 body, seeing they comprise all, and their interests should 
 considerably outnumber those of any group of producers 
 who desire to foster their industry at the expense of the 
 community; but a system which leaves both classes 
 absolutely free cannot be said to favour either. 
 
 In a country where Free -trade has already been 
 adopted, and matters are adjusted to its working, to 
 set up Protection would be a method of imposing an 
 unfruitful tax upon consumers; and where equal free- 
 dom prevails already no economic ground can be 
 advanced for imposing such a useless burden. The 
 same reasoning applies, only in a less degree, to the 
 proposal to increase a tariff in a country where some 
 degree of Protection exists; this is the case of the 
 United States' tariff (1897), which has considerably in- 
 creased many duties. But to remove a duty in a 
 protective country is a much more difficult task, as the 
 producers of the article will have acquired the right of 
 a vested interest, and can represent that they committed 
 their labour and capital to their industry with faith in 
 the continuance of a system deliberately adopted and 
 authorized by law. This is a chief difficulty in the way 
 
The Economics of Foreign Trade. 109 
 
 of tariff-reform, and one of the reasons why a country 
 once committed to a protective policy continues to up- 
 hold that policy in spite of the great burden which it 
 inflicts upon the consumers. When protection has been 
 adopted for the purpose of starting certain manufactures, 
 a large number of persons in the trades concerned would 
 sufiFer immediate loss of employment and of capital by' 
 the sudden removal of the duties, under the shelter of 
 which the industries were built up such persons are 
 naturally vigorous in their efforts to maintain the duties, 
 and they would have some real cause for complaint if, 
 without compensation, they were sacrificed to a change 
 of policy. So impressed with the strength of vested 
 interests was Adam Smith that he doubted whether 
 Free-trade would ever be adopted in Great Britain. 
 
 The old theory of trade favoured exporting, and aimed 
 at procuring markets; the obstacles to importation led 
 to bounties and other expedients for finding a sale. It 
 is important that a country should be able to dispose of 
 the things which it can most profitably produce ; under 
 mercantilism the notion that gold was the most desirable 
 import restricted trading, for there was a limited amount 
 of gold to be procured, and the impediments placed upon 
 other imports did not assist exporting. The fact is, that 
 since importing and exporting are complementary opera- 
 tions, they mutually assist one another, and free imports 
 stimulate exports. Buying implies selling. A country 
 which is open to easy purchasing is more able to dispose 
 of her own produce, for, since she must pay for her 
 purchases, the countries which sell to her will be more 
 disposed to look in her markets for the goods they are 
 willing to import, and if such a country can offer de- 
 sirable exports they will be more easily accepted. Also, 
 vessels bringing goods to a country which offers a free 
 market will endeavour not to return empty, and will 
 stimulate exporting from such a country by off"ering low 
 freights. Thus it comes that importing determines ex- 
 porting, by making it more easy to find markets; it is 
 perfectly true that exporting implies importing, for the 
 exporter will require payment in some form; but it is 
 the importer who takes the initiative, and who makes 
 
no The Free-trade Movement. 
 
 / 
 / the market in the first place by his willingness to accept 
 
 ~~^he goods. It would be useless to send goods to a 
 /country which would not, or could not, purchase them. 
 
 / Suppose China to determine upon a policy of railway 
 
 / development, and to send a large order to Great Britain 
 for steel rails and steam-engines ; the export of iron from 
 Great Britain would lead to an import of produce from 
 China or some country on which she gave us bills ; but 
 the prime fact in the whole proceeding would be, not 
 exporting from Great Britain, but importing by China. 
 China, desiring iron goods, would import them from Great 
 Britain, and must be able to pay for them with exports 
 of some kind. The transaction therefore would have its 
 origin in China's desire for imports. It is an elementary 
 economic truth that wants create desires, and these 
 stimulate men to labour for their satisfaction ; the funda- 
 mental fact is in the wants; and a country which, to 
 satisfy her wants, is willing to import freely, will thus not 
 only increase her imports, but her opportunities for ex- 
 porting, as a means of paying for them, will be equally 
 augmented. The converse mode of stating the same 
 truth would be that a country which declines imports 
 altogether would sell nothing abroad; every step to- 
 wards prohibition is a step towards abolishing her 
 export trade. The smoothest method of securing 
 markets abroad for home goods is consistent therefore 
 with a policy which offers the freest market to foreign 
 goods for which they may be exchanged. 
 
 Chapter VI. 
 
 Arguments for Protection, Reciprocity, 
 Bounties, &c. 
 
 Regarded historically and in its origin. Protection is 
 not the outcome of a deliberate policy, adopted after 
 careful weighing of economic arguments. It grew out 
 of the restrictions incidental to early forms of society, and 
 
Arguments for Protection, &c. m 
 
 the restraints upon individuals inevitable in the unsettled 
 conditions existing long prior to the modern industrial 
 era; the jealousy of states during the period of their 
 formation and consolidation, the growth of the sentiment 
 of nationality, the need for resources (treasure) to carry 
 on war, and the creation, by means of tariffs, of classes 
 interested in the maintenance of restraints upon com- 
 merce, all helped to develop it. Facts came before 
 theory, and the principle of Protection as a beneficent 
 institution was formulated to explain and support the 
 customs and practices which had grown up. Until 
 late in the eighteenth century Protection was scarcely 
 questioned as a guiding principle of statesmen; objec- 
 tions were raised to special restraints on commerce, or 
 on freedom of individual action, rather than to the general 
 principle. The belief that it furthered the material in- 
 terests of communities sustained the Protective doctrine 
 until Adam Smith changed the stand-point by maintain- 
 ing that the enlightened pursuit of individual interests 
 harmonized with the national well-being. 
 
 In modern times the defence of Protection is under- 
 taken either upon economic, or, more broadly, upon 
 political grounds. Protection is advocated either as 
 promoting some existing branch of national industry 
 and so securing employment for labourers; or as foster- 
 ing some new trade which is expected ultimately to be a 
 source of wealth, although it may involve a temporary 
 loss to consumers and tax-payers; or it is demanded 
 upon patriotic grounds as necessary to make the nation 
 independent of foreigners, that it may be self-supporting 
 in the event of war. Both lines of defence are open to 
 the charge that they are based upon imperfect observa- 
 tion of the whole of the circumstances, and that the 
 conclusions deduced are consequently fallacious. In ex- 
 amining more at length some of the current arguments 
 for Protection, we shall find that they do not form a 
 harmonious system, that some of them contradict others, 
 and that nobody can consistently uphold them all. For 
 example, it is urged that a protective tariff will support 
 the home industry by excluding the foreign article and 
 yet raise revenue; that it will keep up prices and yet 
 
112 The Free-trade Movement. 
 
 benefit the labouring classes, whose real wages it would 
 by that means reduce; that it will prevent fluctuations 
 in trade and prices, by excluding foreign competition, 
 although it thereby creates a monopoly which is a fre- 
 quent cause of fluctuations and high prices ; that while 
 it is desirable to encourage invention in the interests of 
 cheapness, it is also beneficial to keep up prices by 
 tariff's. These and other paradoxes appear on a survey 
 of the diff"erent arguments in favour of Protection. 
 They arise by confining the observation to some limited 
 portion of the industrial field, and identifying its pros- 
 perity with the national interest, while other effects are 
 overlooked. Thus it comes about that a partial or 
 temporary effect is mistaken for the whole, and it is not 
 seen that a benefit in one direction is more than counter- 
 balanced by a greater loss in another direction, flowing 
 from the same cause. 
 
 Protection is said to encourage home industry by pro- 
 viding work for our own labourers in preference to 
 foreigners, and it is therefore claimed to be a patriotic 
 policy. This statement, however, overlooks the fact 
 that imports are paid for with exports, and that there- 
 fore no goods can be imported unless home industries 
 are first employed to produce other goods with which to 
 purchase them. A country with nothing to sell cannot 
 buy. It must employ its labour therefore in producing 
 the wherewithal to purchase foreign commodities, and if 
 that labour be diverted to producing those commodities 
 at home, it will cease to be employed in producing the 
 other articles which were exported in exchange for them. 
 Now where there is no artificial direction, and trade is 
 free, the industries which are most profitable in natural 
 conditions will be those adopted; but the general effect 
 of duties imposed for the purpose of regulating trade 
 will be to direct the labour and capital from more pro- 
 ductive to less productive industries. Labour and 
 capital being then less efficiently employed, the country 
 will suffer loss. 
 
 To take an extreme case as an example: if Great 
 Britain were to insist by means of prohibitive tariffs on 
 making her people grow all their own corn, much labour 
 
Arguments for Protection, &c. 113 
 
 would be diverted to agriculture, and vast portions of 
 inferior land would need to be cultivated. Since all im- 
 ports of corn would now cease, the exports of cloth, 
 machinery, &c. , by which they are at present purchased, 
 would cease also, and the industries which supply them 
 would decline; the mercantile marine, which conducts 
 the trade, would be unemployed, shipbuilding and other 
 subsidiary industries, so far as they depend upon this 
 branch of commerce, would collapse, and a vast army of 
 unemployed artisans, now receiving high wages, would 
 be driven to agriculture to provide a bare subsistence 
 from a niggardly soil, or, what is more probable, they 
 would leave the country in search of a better livelihood. 
 The effect upon home industry would thus be disastrous. 
 
 The principle, as illustrated in the extreme case of 
 prohibition, is equally valid when the attempt to protect 
 agriculture is less complete; and the results would be 
 proportionally hurtful in whatever degree Protection 
 were applied to any other industry. The effect of a pro- 
 hibitive duty is to divert industry from a more profitable 
 to a less profitable channel ; it creates no new capital, and 
 does not add to production ; but it displaces both capital 
 and labour, and it tends therefore, not to increase em- 
 ployment, but rather to diminish employment. The 
 contention that home trade is more profitable than 
 foreign trade, because it employs the capital and labour ( 
 of both industries at home, is answered by means of the \ 
 above reasoning. Home trade is more profitable only 
 when it grows up and goes on naturally, without forcing. 
 But where capital and labour are directed to some 
 special home trade by means of Protection, and an in- 
 dustry is fostered on which there would otherwise be 
 loss, that is, where the article could be imported more 
 cheaply, no economic benefit can accrue. If the cir- 
 cumstances of the country are such that it is cheaper to 
 import than to produce a given article, labour and 
 capital should be permitted to find their way to the pro- 
 duction of other goods by means of which the desired 
 import may be purchased. 
 
 Not infrequently protective duties are advocated as a 
 source of revenue. Protection and revenue are, however, 
 
 (M460) H 
 
114 '^hc Free-trade Movement. 
 
 incompatible aims,^ since, in so far as Protection is suc- 
 cessful, foreign articles are excluded and no revenue is 
 obtained; whereas, if the articles are imported (paying 
 duty), to that extent Protection is not secured. But if any 
 revenue is raised the duty is not truly protective, since it 
 has obviously failed to prevent the goods paying revenue 
 from entering the country. Protection and revenue 
 cannot by the same measure both be secured success- 
 fully. The fallacy arises in two ways: (a) from confusing 
 protective duties with other indirect taxes levied on 
 imports, such as Great Britain places upon tea, wines, 
 tobacco, &c., but these duties are not protective, they 
 foster no home industry, their object is revenue; and 
 (b) because many protective duties are imposed which 
 fail to give complete protection; some goods are im- 
 ported under duties not sufficiently high to exclude them 
 altogether, and then only part of the supply is produced 
 at home. The cost to the consumer is increased on the 
 whole of the supply — on the imported portion by the 
 amount of the duty, on the home-made portion by the 
 excess of the cost of production over the price at which 
 the article could have been imported duty free; some 
 revenue is raised from the imported portion, but none 
 from the home-made portion; the former is not excluded 
 by Protection, the latter raises no revenue; such a duty 
 cannot properly be described as either a protective or a 
 revenue duty, since it accomplishes neither satisfactorily. 
 In young countries indirect taxation levied upon im- 
 ports is generally the most convenient mode of collect- 
 ing revenue, since the population is spread over wide 
 and sparsely-settled areas. In such cases duties levied 
 on many articles, at first for convenience, tend after- 
 wards to become partially protective; that is, industries 
 are commenced in the colony under the shadow of a 
 duty which raises the price of the imported article, and 
 they then supply in part some article which is still also 
 imported subject to the duty. At length the protected 
 industry may grow powerful enough to secure an in- 
 
 * "Taxes imposed with a view to prevent or even to diminish importation 
 are evidently as destructive of the revenue of the customs as of the freedom 
 of trade." — ( Wealth of Nations, iv. a.) 
 
Arguments for Protection, &c. 115 
 
 crease in the tariff sufficient to exclude the article alto- 
 gether Such a duty is prohibitive'^ but it is obvious that 
 a duty may be so high as to check importation, and yet 
 not high enough to prevent it altogether, i.e. it may be 
 partially protective, or protect up to a certain level. In 
 all protective countries many duties imposed are only 
 partially effective, some, but not all the foreign articles 
 being excluded. The effect is to raise the price of the 
 article (whether produced at home or abroad) to the 
 level of the cost of production of the imported article 
 plus the duty. The tax is obtained only from the im- 
 ported goods; on those produced in the country no 
 duty accrues to the exchequer, but the consumer suffers 
 an economic loss as great as if the duty had been levied 
 on the total product. 
 
 Much of the popularity gained by protective proposals 
 seems to be founded upon the prejudice that foreign 
 trade on the side of imports is injurious, and an act of a 
 hostile character initiated by a rival. If this view were 
 correct, what should be said of the export of British 
 goods to other countries? The fallacy survives in many 
 current expressions. ' ' Foreign goods flood our country " ; 
 "Great Britain is the dumping-ground for foreign pro- 
 duce"; *'An invasion of foreign commodities", are a 
 few of these question-begging phrases. Behind these 
 and similar phrases there lurks the belief that the en- 
 trance of foreign products into a country resembles the 
 descent of a foreign foe upon its shores. The false 
 analogy helps to maintain the belief, but the twofold 
 aspect of trade as exchange is forgotten. Trade which 
 arises spontaneously is mutually advantageous; both 
 parties may be presumed to be studying their interests. 
 Imports are demanded to satisfy wants, and, as already 
 shown, they must be paid for by the produce of the im- 
 porting country. No nation will continue the process 
 of exchange unless it is beneficial; foreign goods will 
 not be sold in Great Britain unless they have something 
 to recommend them to British consumers, nor unless 
 British producers can export commodities to pay for 
 them. If foreign goods '* invade" our shores, British 
 goods must in return '' invade" foreign territory. Gain 
 
ii6 The Free-trade Movement. 
 
 must result to both parties from these peaceful inva- 
 sions, or the exchange will not be continued. 
 
 It has been urged as another argument in favour of 
 protective duties, more particularly in the United States 
 and Australia, that such duties are a means of keeping 
 up wages by excluding the products of what has been 
 called the ** pauper labour" of other countries. To this 
 it may be replied, that if money-wages are kept up by 
 this means so also are prices, and the cost of living is 
 proportionally greater; so that real-wages (the commo- 
 dities and comforts earned by a given amount of labour 
 of the same kind) are not higher. Moreover, experience 
 shows that the standard of living in free-trading Britain 
 is not inferior to that of protective countries, but, on 
 the contrary, distinctly higher than that of most such 
 countries. Comparison of real-wages is very difficult, 
 so many elements enter in, and the conditions of labour 
 and of life are so different as regards hours, severity, 
 cost of food and clothing, rent, means of health and 
 rational enjoyment, &c. In young countries the demand 
 for unskilled labour is plentiful, and such labour gets a 
 high reward; but the skilled artisan living in towns, and 
 paying high rents, does not find the same advantage.^ 
 Observation has yielded the empirical law, now generally 
 accepted as an economic truth, that the best-paid labour 
 is usually the most efficient, and that low prices may 
 consequently co-exist with high real-wages. The United 
 States tariff is directed principally against British manu- 
 factures, and yet it cannot be denied that British labour 
 ranks with the best-paid labour in the world; while the 
 high purchasing power of wages is, in no slight degree, 
 owing to our system of free imports, that cheapens the 
 commodities on which a considerable part of the wages 
 of labour must be expended. Protective duties cannot 
 
 ^Mr. Wise writes (Industrial Freedom, p. 306): "Personal inquiries from 
 both masters and men have satisfied the writer that the highest grades of 
 the class are less well paid, even in money wages, in Australia than they are 
 in England; " and again (p. 215), " It is no uncommon thing to find among 
 the passengers of homeward-bound steamers skilled English artisans who 
 are returning to England because they cannot make the high wages that 
 they used to earn in any part of Australia — not even in Protectionist Vic- 
 toria". 
 
Arguments for Protection, &c. 117 
 
 therefore be advocated as being levied in the interests 
 of the real-wages of skilled labour. 
 
 Sometimes it is suggested in support of a proposed 
 tariff, that, if adopted, the foreign exporter will pay the 
 duty. It has been argued, for example, that a duty of 
 5^. a quarter levied upon imported corn would be paid 
 by the exporting country. From the Protectionist point 
 of view this should have nothing to recommend it; for 
 if the duty were paid, and the foreign article admitted, 
 it could afford no protection to the home industry; such 
 a duty becomes a revenue duty and not a protective 
 duty. But the competition of many countries, and of 
 many farmers in corn -producing countries, has long 
 been effective in reducing prices and freights to a very 
 low level, and this far-reaching competition tends to 
 keep prices at a minimum, which leaves the sellers no 
 adequate margin of profit out of which to pay any levy 
 in the form of an import duty. In such circumstances 
 a duty must raise prices, and will ultimately be paid by 
 consumers either in the higher price of the foreign corn, 
 or, if that be excluded entirely, in the increased cost of 
 the home-grown corn which would take its place. It 
 would become in any case a tax upon one of the neces- 
 saries of life, which is one of the worst forms of taxation. 
 No one doubts that the import duties upon tea and 
 tobacco are paid by the consumers of those articles; 
 otherwise the demand for a remission of the tea-duty in 
 the interests of the poorer classes is meaningless. Nor 
 will it be maintained that the British manufacturers pay 
 the high duties upon their goods sent to the United 
 States or to Russia, which are in some cases nearly 
 equal to the cost of the product; such duties are ulti- 
 mately paid by the consumers in those countries. The 
 fact that such goods are imported and are sold, proves 
 that, though thus taxed, they are nevertheless preferred 
 to the home-made articles, owing either to some excel- 
 lence of quality or style which is wanting in the home 
 products, or to the fact that, with the duty, they are 
 as cheap as the home-made article. 
 
 It has been urged as a reason for imposing retaliatory 
 duties, that manufacturers in certain countries are en- 
 
ri8 The Free-trade Movement. 
 
 abled by their protective tariffs to make so much profit 
 on their home business as to permit them to send goods 
 to Great Britain, which can there be offered at prices so 
 low as to undersell British goods. No doubt in many 
 trades there is occasional over-production, and surplus 
 goods, unsaleable at home, are then shipped off to find 
 a market in other countries at any price. But manu- 
 facturers making a large profit at home are scarcely to 
 be credited with organizing their industries so as to 
 secure a permanent loss by steady over-production. 
 The passion for underselling will not lead to a regular 
 business of an utterly unprofitable character. Also, an 
 industry protected by a prohibitive tariff, and making 
 profits so much above the average rate as the contention 
 assumes, would soon create competition in its own 
 country, which would lower profits. The export trade, 
 however, would be impossible on other and more con- 
 vincing grounds ; for if a protective duty is required to 
 enable the producers to force the sale of the native pro- 
 duct in their own countrj', it is obvious that the com- 
 petitor-country, against which the duty is levied, can 
 produce more cheaply. How then can they compete 
 successfully in a country that could undersell them m 
 their own 7narket if they were not sheltered by a tariff? 
 
 There can be little doubt that, as a general rule, the 
 consumer of taxed goods pays the duty. An import 
 duty may in some instances be shifted to the producing 
 country. If the article be a luxury, such as champagne, 
 which the consumer can discontinue, and he is already 
 paying the highest utility price, a fall in the demand 
 would be occasioned by the imposition of a higher duty. 
 The seller might then be induced to forego part of his 
 profit, and pay the tax by reducing the price rather than 
 lose his market. This happens in the case of any taxed 
 monopoly, where the monopolist has been charging the 
 highest price he can secure. Whether the duty can be 
 shifted from the importer to the exporter depends upon 
 the effect of the duty upon the demand, and also upon 
 the conditions of production in the country of supply. 
 It is also possible that part of an import duty may be 
 borne by a country which is compelled to find its market 
 
Arguments for Protection, &c. iiq 
 
 in the taxing country ; but this is not a common case. 
 Further, such a country would soon learn the lesson, and 
 impose retaliatory duties upon the goods sent in pay- 
 ment. The effect of the struggle between the two 
 countries to extract duties from each other would be, 
 that each would be paying higher prices, together with 
 the added cost of the machinery of collection. No real 
 economic advantage would ensue to either. The inci- 
 dence of taxation is sometimes very difficult to trace 
 with absolute certainty, but it seems clear that duties 
 on ordinary imports fall upon the countries imposing 
 them. If such duties are of a protective nature, and 
 are fixed high enough, they will exclude the foreign 
 article entirely, and if the duties protect in any degree, 
 they so far exclude the foreign article, and the consumer 
 pays a higher price to cover the increased cost of pro- 
 ducing the article in his own country. 
 
 It is very necessary to discriminate between the com- 
 petition of nations in a neutral market and the mutual 
 commercial intercourse of two nations; for the former 
 is rivalry while the latter is not. In the former case 
 each seeks to secure the advantage of extending its 
 trade to a new area; each endeavours to sell its own 
 goods for the products of the new country. The suc- 
 cessful competitor will enlarge its trade at the expense 
 of its rival. The competition of Great Britain and Ger- 
 many, for example, in a neutral field like South America 
 or China, is of this nature, and the country which gains 
 the trade will expand its own industries thereby, and in 
 exchange will secure fresh products for itself. The 
 mutual trade relations of Great Britain and Germany, 
 however, are not of this nature ; it is not a condition of 
 advantage to Great Britain that Germany should lose. 
 They exchange the comparatively superfluous for the 
 relatively desirable, thus satisfying one another's wants 
 and increasing the total of utilities ; each is an importer, 
 each an exporter, and both derive advantage. The 
 interchange of produce results in greater concentration 
 upon special industries in the two countries, of much the 
 same kind as that which determines most of the woollen 
 trade to Yorkshire and the cotton trade to Lancashire ; 
 
I20 The Free-trade Movement. 
 
 but as there is no hostility in the trade relations of 
 Yorkshire and Lancashire, so neither can trade between 
 two nations, which consists in the mutual supply of con- 
 veniences, be properly described as hostile, or as other 
 than beneficial. 
 
 A belief that nations trading" with one another are 
 eng-aged in a kind of warfare evidently lies at the root 
 of the desire for ** retaliation", which distinctly suggests 
 the notion of paying back ** blow for blow". The belief 
 finds expression in various forms: "They strike us with 
 their tariffs, let us retaliate"; ** We have thrown away 
 our weapons, and in this warfare we have no guns with 
 which to fight in the commercial struggle of nations"; 
 and, "We have lost our power to bargain for a reduction 
 of tariffs, we have nothing to offer" ; and again, "Others 
 take advantage of our Free-trading policy and give us 
 nothing in return". Lurking behind all such expressions 
 stands the assumption that trading, so far as the pur- 
 chaser is concerned, is a mistake; that its object is to 
 get rid of products, not to obtain them. The fact that 
 the maximum advantage is sought on the easiest terms, 
 which is the prominent feature in individual trading 
 transactions, is ignored when the matter comes to be 
 regarded from a national point of view and in the gross. 
 The object of international, as of individual exchanges, 
 is to obtain the commodities we need, and the goods we 
 part with are merely instruments for gaining as much 
 as possible of those we desire. Now free importation 
 conduces to this end, and its non-adoption by other 
 nations does not preclude Great Britain from gaining 
 its benefits. Great Britain gains by allowing foreign 
 goods to enter without impediment, whether other 
 nations copy her example or not. So long as Great 
 Britain receives in return for her exports a quantity of 
 desirable imports sufficient to cover the cost of produc- 
 tion of her exports, she is a gainer by the trade, since 
 she thus gets goods she requires at less cost than she 
 could produce them herself, and, in fact, she gains much 
 more than this, for she makes profit by trading, and 
 carries on a lucrative business as shipper for both 
 parties. Foreign tariffs may curtail her advantage but 
 
Arguments for Protection, &c. 121 
 
 cannot destroy it, for if loss occurred trade would 
 cease. 
 
 Extreme advocates of reciprocity and so-called Fair- 
 trade ask that we shall only trade with those countries 
 which will accept reciprocal terms, and that we shall 
 punish those who decline by excluding their goods. 
 But while we may regret the methods of other countries, 
 which injure us to some extent by limiting the total 
 trade carried on, we shall not convert them to our views 
 by adopting their methods, and shall only injure our- 
 selves still further by refusing to continue commercial 
 relations which we find profitable even under present 
 conditions. Those who object to the British system of 
 Free-trade as "one-sided Free-trade" fail to recognize 
 the advantages it confers upon both consumers of im- 
 ports and producers of exports, and are still under the 
 influence of the doctrine which regarded exporting as 
 more profitable than importing, or of that other fallacy 
 which seems to assume that exporting without importing 
 is either possible or desirable. 
 
 That we have parted with our means of bargaining 
 for the remission of duties is a matter of little account, 
 when we set against possible petty gains from mutual 
 reduction of duties the enormous advantage of fifty 
 years of free imports, as manifested in the prosperity 
 of the country and in our high standard of living. Com- 
 mercial treaties and diplomacy are indifferent substitutes 
 for the higher advantages of complete freedom ; they are 
 but tentative measures, useful in mitigating the evils of 
 restriction; but which, while securing only partial re- 
 missions, are liable to produce mischief or loss in other 
 directions, owing to the jealousy they excite by the 
 diversion of trade. Such treaties may be expedient in 
 dealing with the countries whence we obtain our imports 
 for revenue — wine and spirits, tobacco, tea, &c. The 
 French treaty of i860, negotiated by Cobden, in which 
 Great Britain lowered the duties on French wines and 
 brandy in return for relaxation of duties on English 
 manufactures, proved that in becoming Free-traders we 
 had not entirely parted with our power of gaining con- 
 cessions by treaties; the lapse of the treaty and re- 
 
122 The Free-trade Movement. 
 
 version by France to a more protective rigime shows 
 equally the want of permanence in such arrangements ; 
 but the higgling for small concessions which treaties 
 involve, with all the troublesome details of tariffs, and 
 the expense attending administration, would be super- 
 seded by the simpler system of general Free-trade with 
 its larger economic advantages. 
 
 All consumers, as such, prefer Free-trade, because they 
 know that, to buyers, open competition secures the best 
 article ; but men are apt to become Protectionists when 
 their view is confined to their own sales. It is then 
 that they desire to monopolize the market for their own 
 special profit and not for the good of the nation. The 
 late Mr. Villiers, in his reply to the address presented 
 to him in June, 1896, on the completion of fifty years of 
 Free-trading, summed up the position in a single 
 sentence: *'The land-owner, the ship-owner, the West 
 Indian merchant, all approve of Free-trade in what they 
 consume, but in the sources of their income and profit 
 there are no more staunch supporters of prohibitive law ; 
 they are always reasoning as if the country were made 
 for them and not they for the country; and in their 
 ignorance they are ev^er blind to the fact that while they 
 seek to profit by the losses of others they are again 
 injured by a like injustice ". 
 
 But retaliation in our case is a vain and futile hope. 
 Great Britain cannot afford to retaliate by taxing food 
 and the raw materials of her industries, which constitute 
 quite 70 per cent of what she imports ;^ she would only 
 starve or ruin herself by such a course, and she would 
 excite increased commercial hostility on the part of 
 nations which are already envious of her prosperity. If 
 it is worth considering, a further objection exists in the 
 difficulty of making retaliation effective. It is not neces- 
 sary that trade should be direct. If French silk were 
 excluded from Great Britain by a high tariff, it might 
 
 *Even most advocates of Protection admit this. Friedrich List, the 
 author of a National System of Political Economy, wrote : — ' ' A nation 
 which has already attained manufacturing supremacy can only protect its 
 own manufacturers and merchants against retrogression and indolence by 
 the free importation of means of subsistence and raw materials, and by the 
 competition of foreign manufactured goods". 
 
Arguments for Protection, &c. 123 
 
 yet enter through Belgfium and Holland, while German 
 goods we might wish to exclude could pass through 
 Holland or Sweden. It is almost impossible to determine 
 the country of origin and to make a workable scheme 
 discriminating against the imports of particular countries; 
 the only resource would be thorough-going Protection, 
 which for us is as impossible as it is undesirable. 
 
 But, it is objected, a manufacturing nation might, at 
 all events, tax the manufactured articles which enter 
 the country. Now, our imports in 1896 were valued 
 at ;^44i,ooo,ooo; of these, food-stuffs amounted to 
 ;^ 1 57,000,000, articles paying duty to ;^3o,ooo,ooo, 
 goods which may be classed as raw materials to another 
 ;£" 1 57,000,000, and goods manufactured or in some stage 
 of manufacture to ;^97,ooo,ooo. Some of these last are 
 finished products, such as clocks, watches, French 
 boots, hats, gloves, &c. ; others are partly-manufactured 
 goods, such as linen yarn, iron bars, leather, straw- 
 plaiting, &c., all of which are utilized as materials for 
 other British industries. The question has been raised 
 as to what is a manufactured article and what is a 
 raw material. Definition does not solve the practical 
 question, it is entirely a matter of degree; for it might 
 be maintained that every import which has passed 
 through the hands of man, such as fleeces or raw cotton, 
 has already passed through one stage of manufacture. 
 Let us take the example of leather, of which we im- 
 ported ;£'7, 500,000 in 1896. On examination we find 
 that leather imports include hides tanned and curried or 
 dressed, and goat and sheep skins dressed. The whole 
 item might be treated as raw material for the purposes 
 of British industry, since it is here converted into boots 
 and shoes, harness, portmanteaus, and numerous other 
 finished articles, of which, beyond her own consumption. 
 Great Britain exports nearly ;^2, 000,000 worth. The 
 tendency is evidently for the rougher early processes of 
 tanning to be carried out in countries where materials are 
 abundant, and for British industry to be limited to the 
 finer processes which call for greater skill and also 
 afford a higher wage. The same remarks apply to 
 timber, which is now generally imported from Canada 
 
124 The Free-trade Movement. 
 
 and Scandinavia sawn into given lengths and sizes, or 
 even advanced a further stage. The complexity of 
 modern production makes far greater subdivision of 
 employments, and this is furthered by the advantages 
 which situation offers for any process. It is thus im- 
 possible always to draw a sharp line between the raw 
 material and the manufactured article, for the latter is 
 the result of evolution progressing by many stages. 
 The finished article of one country or locality becomes 
 the raw material of another, just as bricks are the 
 materials of house-building; pig-iron, yarn, wire, zinc- 
 sheeting, and tin plates are the products of certain 
 industries and the raw materials of others. The country 
 which in this classification performs the final process, 
 becomes the finishing-shop; its work is more refined, 
 less arduous, and better paid ; its skill is greater and its 
 subsistence is gained with less expenditure of toil; and 
 its finished products, when re-exported, pay for its im- 
 ports both of raw materials and other consumable 
 articles. The world-wide organization of industry gives 
 greater eflficiency to the labour of the whole world, and 
 this kind of efficiency is best promoted by the removal 
 of all impediments to trading. ^ 
 
 Among minor advantages alleged to accrue to a 
 nation from a protective duty, it is urged that the 
 protected industries are enabled to employ larger 
 capitals, and thus call into fuller play the law of in- 
 creasing returns; also that Protection permits an in- 
 dustry to be started which, without such aid, would at 
 once be crushed out by the competition of established 
 organizations operating from foreign shores. As abstract 
 arguments these hypotheses are valid, and possibly 
 
 1 No doubt it will be here pointed out that highly-finished machinery is 
 now being imported from the United States and Germany, and that Britain 
 is being attacked in her most vital part. Circumstances favouring foreign 
 competition with our staple industries are discussed in a subsequent chapter, 
 but it may be at once stated that for these Protection affords no antidote. 
 If the British mechanic allows himself to be surpassed in skill, intelligence, 
 or industry by others, or if he permits any restraints upon the full efficiency 
 of his working powers, so that he can no longer compete with foreign 
 industry, not only in the home markets but in the markets of the world, 
 neither Protection nor anything else can avail to maintain the supremacy 
 of British manufactures. 
 
Arguments for Protection, &c. 125 
 
 instances might be adduced of very exceptional circum- 
 stances in which the conditions would obtain. But 
 in dealing broadly with the subject, while we may be 
 prepared to admit the possibilities, we must recognize 
 that the problems of trade are essentially practicaly and 
 cannot be kept within the limits of academic discussion. 
 Capital is very plentiful, and highly-organized machinery 
 exists for lending it; capital is easily tempted abroad, 
 and affords opportunities for large production wherever 
 an Industry can succeed; but large production by the 
 aid of cheap capital Is best illustrated In Free-trading 
 Britain. With regard to the second point, it has not 
 been found that governments have shown either the 
 capacity to discriminate between instances, or the 
 strength to confine their favours to such exceptional 
 cases of Interference; they are prone rather to yield to 
 general demands for interference, and indeed when once 
 the principle has been admitted In any country. Protec- 
 tion has been applied all round without any reference to 
 the conditions in which assistance might possibly afford 
 an ultimate economic advantage to the community. 
 The history of tariffs in young countries endorses the 
 opinion aptly expressed by Professor Nicholson, that 
 *' Free-trade, like honesty, remains the best policy". 
 
 Bounties are a peculiar form of Protection. They 
 were a device of mercantilism to encourage exportation. 
 Under a system of trade which laid stress upon exports 
 and the Importance of securing a favourable balance 
 in gold, bounties or premiums were given on certain 
 branches of home industry to enable them to obtain 
 markets abroad by lowering their prices. The bounty 
 system Is a natural complement to the system of placing 
 duties on Imports; both flourish together. As the 
 latter excludes the cheaper foreign goods in order to 
 protect articles produced at home, so the former subsi- 
 dizes an industry which could not otherwise succeed in 
 the country, the community being taxed for the amount 
 given to the bounty-fed Industry. The French and 
 German sugar bounties are the most notable examples 
 of bounties at the present day. One effect of the 
 bounty-fed sugar industry in France, together with the 
 
126 The Free-trade Movement. 
 
 French prohibition of foreign sugar, is that sugar is 3^. 
 a pound cheaper in Great Britain than in France, while 
 the consumption is 86 pounds per head of population in 
 Great Britain compared with 25 pounds per head in 
 France. Again, the confectionery, biscuit, jam, marma- 
 lade, and sweet-drink trades have received an immense 
 stimulus in Great Britain owing to the advantage 
 arising out of the cheapening of sugar by foreign 
 bounties. Fruit gathered in Southern France is sent 
 to Great Britain in British steamers to be made into jam 
 with cheap French sugar, and such British-made pre- 
 serves are re-imported for French consumption. France 
 also gives a bounty of some 65 francs per ton on iron 
 and steel ships. These vessels could be bought from 
 the United Kingdom and the whole bounty saved ; but 
 for the satisfaction of building them in France the 
 nation is taxed to nearly half their cost, ship-builders 
 alone being the gainers. Yet, according to Lloyd's 
 Register^ in 1895 the United Kingdom launched merchant 
 shipping to the amount of 950,967 tons, while in the 
 same period France launched only 22,000 tons, and in 
 1896 Great Britain completed 1,159,751 tons of merchant 
 shipping, as against 365,000 tons by all other nations. 
 Some writers complain of the ''disabilities under which 
 British shipping labours in competition with the vessels 
 of bounty-paying countries " ; but it requires very slight 
 observation to perceive that the disability lies with 
 France in this matter; France has a natural disability in 
 the matter of materials and resources for ship-building, 
 which renders it more economic for her to purchase 
 than to build ships. If, in the circumstances, she 
 persists in building vessels by the aid of bounties, it 
 must be at the expense of the community which provides 
 the additional cost from taxation. It is a matter of 
 common knowledge that M. Thiers gave his support 
 to the sugar-bounty system with the remark that " he 
 wished to see the tall chimneys smoke". To his 
 imagination these chimneys seemed evidence of manu- 
 facturing prosperity and a sign of increasing wealth to 
 France. The test, however, is not satisfactory when 
 we learn that such prosperity as it indicates is purchased 
 
Arguments for Protection, &c. 127 
 
 at the cost ot heavy taxation to the remainder of the 
 community. Of 3,000,000 tons of sugar produced on 
 the Continent two-thirds are exported by the aid of 
 bounties, the population pays this bounty, and for the 
 remaining" one-third which it consumes it pays more 
 than it receives for all it exports. To find a market 
 for the produce of sugar-refining by selling it to another 
 country at less than cost of production cannot enrich a 
 nation, though the loss may be obscured by the indirect 
 methods of bounties, and the erection of refineries with 
 smoky chimneys may give the appearance of additional 
 employment.^ 
 
 Meanwhile European sugar is practically excluded 
 from the United States by a bounty on home-produced 
 sugar and a 40-per-cent duty on imported sugar. The 
 result is that a syndicate has been formed which controls 
 about 80 per cent of the supply of sugar consumed in 
 the States. It is strong enough to fix its own price, and 
 
 ^The report of the West India Commission (issued October, 1897) gives 
 the latest information about the sugar-bounty system and its effects. 
 
 Germany pays an export bounty of 25J, a ton, and has a protective 
 customs duty of ;^io a ton. France gives a bounty of 90J. a ton, and has a 
 protective duty of ^24 a ton. In both countries there is an excise duty 
 equal to the amount of the customs duty, which, under the monopoly, the 
 producers recover in the price. The effect is that on the Continent sugar is 
 3^. or 3}id. a lb. dearer than in England. 
 
 It is calculated that the cost to consumers from the continental system 
 in Germany, France, and Austria amounts to ;/^47,ooo,ooo a year, and 
 that those countries pay in bounties ^^5, 000,000 a year. Deducting from 
 the total cost the excise of ;^20,ooo,ooo, this leaves a loss of ^^32,000,000 
 for the three countries. 
 
 Between 1882 and 1896, the period during which the continental bounty 
 system has been in full operation, the world's production of sugar has 
 increased from 3,799,284 to 7,474,000 tons, and prices have fallen quite one- 
 half. The fall is explained as mainly due to reduced cost of production, 
 and in British Guiana, where the latest improvements have been adopted, 
 the price of cane-sugar has fallen from ^16 a ton to ^^8 and £g a ton. But 
 these improved methods are not generally adopted throughout the West 
 Indies. Of the total exports (;^6, 106,000) of the West Indies, one-half 
 (;^3, 250,000) consists of cane-sugar, and this is threatened by the conti- 
 nental competition of beet-sugar. The commissioners reject the proposal 
 to give a bounty on West Indian sugar, and two out of three reject also the 
 proposal of countervailing duties, while the third recommends a duty of 
 one halfpenny per lb. This, on the average consumption of 80 lbs. per 
 person in the United Kin^^dom, would mean y. ^d. per head of population, 
 or j^6,5oo,ooo a year. (Dther suggestions point to more direct aid in en- 
 couraging other industries in the West Indies and to developing the other 
 resources of these colonies. 
 
128 The Free-trade Movement. 
 
 has made a profit of about ;£'5, 000,000 a year. In such 
 stupendous monopolies we have a natural fruit of Protec- 
 tion. In Great Britain, however, owing to her Free- 
 trade system, these syndicates have had little success in 
 raising prices They have to encounter, sooner or later, 
 the consequence of the large area of supply which open 
 competition creates, and which responds to the certainty 
 of a free market. The area is too vast to be readily 
 brought under the control of a single combination in the 
 case of a necessary of life. Trusts exist in Great Britain, 
 but their tendency is to steady production and effect 
 economy and cheapness by the organization of the in- 
 dustry and the distribution of the product on a larger 
 scale. The safeguard is in free competition. A similar 
 economy, accompanied by a fall in price, is claimed for 
 the American Standard Oil Trust, which has, however, 
 to compete with all other illuminants, and finds a large 
 market in Europe only by its cheapness. 
 
 The working of the bounty and protective system has 
 recently been illustrated in Argentina. Following the 
 lead of other countries, Argentina imposed a heavy duty 
 on imported sugar, amounting to some ;^i8 a ton. 
 Consequently sugar-planting received a great impulse, 
 so that the production soon began to exceed the home 
 consumption. It was necessary then to find a fresh 
 market, and the experiences of France were repeated 
 almost exactly. The Government placed an internal 
 duty upon sugar, and gave a drawback on its exporta- 
 tion which amounted to a bounty. This was a further 
 influence favourable to planting, and production again 
 went on rapidly until it was found to have greatly ex- 
 ceeded the consumption. The sugar manufacturers are 
 now (1897) attempting to form a trust to deal with the 
 surplus, to force sales abroad (of course at a loss) and 
 to check production at home. Such are the difficulties 
 which arise when the natural progress of industry is 
 interfered with to foster a special trade. 
 
 It is often maintained that Great Britain ought to 
 ** countervail" the bounties of other countries by impos- 
 ing duties equal to the bounties, and frequent efforts 
 have been made to secure this kind of legislative inter- 
 
Arguments for Protection, &c. 129 
 
 ference on the grounds that our industries are unfairly 
 opposed by assisted competition. The attempt of this 
 mode of retaliation, if made, would most probably not 
 be successful, for the bounties might easily be augmented, 
 and it is exceedingly difficult to ascertain their exact 
 amount and actual effect on trade. 
 
 But a fatal objection to countervailing duties is, that we 
 cannot draw a clear distinction between them and pro- 
 tective duties; all aim at raising prices by state interven- 
 tion. Countervailing duties are a form of retaliation 
 upon bounties in favour of some other source of supply. 
 
 Bounties, tariffs, differential duties, and countervailing 
 duties are all alike interferences with production or con- 
 sumption. If England adopted countervailing duties 
 against continental sugar bounties, she would enter once 
 more into the conflict of adjusting tariffs — an expensive 
 and disturbing process, and there would be no limit to 
 the attempts to exclude foreign goods on some pretext 
 or other. In fact, the principle of non-intervention being 
 surrendered, the path would be opened for the re-introduc- 
 tion of all kinds of interference. If, for example, this 
 kind of protection were afforded to the British sugar in- 
 dustry against French and German bounties, the farmers 
 might reasonably demand like treatment for corn against 
 the low rates of American railways, or '*the unfair fer- 
 tility" of superior foreign soil. Many similar claims could 
 easily be sustained, for bounties are given in a variety 
 of forms, the natural and artificial shade into one another, 
 and cannot be clearly discriminated. Some countries 
 give bounties in money, some in drawbacks or exemption 
 from taxation, some in free grants of land; in some 
 countries the state undertakes the organization of an 
 export, as in the case of Australian butter ; some give 
 subsidies to steamship companies and to railways, which 
 reduce the cost of transport. All in some degree, diffi- 
 cult to estimate, tell upon the price of the goods exported, 
 and so far cheapen them to the importing country at the 
 expense of the exporting country. 
 
 The principle of Free-trade is easily grasped ; it inter- 
 feres neither with producer nor consumer ; its merits are 
 obvious and can be followed; the perplexities of the 
 (MI60) I 
 
130 The Free-trade Movement. 
 
 tariff system are endless, and the injuries it inflicts are 
 too serious to admit of any trifling with schemes which 
 would lead to the possibility of their recurrence. Move- 
 ments in that direction, however plausible, are only 
 Protection in disguise. 
 
 Chapter VII. 
 Fifty Years of Free-trade. 
 
 The essence of the Protectionist contention is that 
 articles excluded by tariffs will be produced at homey and 
 thus home industries will be encouraged. The weakness 
 of this contention, so far as it fails to recognize the ad- 
 vantage obtained from the exchange of products in 
 foreign trading, is examined in the previous chapter. 
 We shall deal with only one question here. Did the 
 protective system, during the thirty years of its applica- 
 tion to agriculture, feed the people of this country? The 
 labourer who exclaimed, '* I be protected and I be starv- 
 ing!" summed up the results of the Corn-laws on this 
 point. The history of the thirty years from 181 5 to 1845 
 is a continuous record of distress; periods of scarcity 
 and privation, fluctuating prices alternately starving 
 labourers and ruining farmers, bread riots and disturb- 
 ances, in manufactures uncertainty and loss. At length 
 a famine in Ireland, following closely upon manufactur- 
 ing depression and starvation in Great Britain, termi- 
 nated the system devised to secure an abundant home- 
 supply of food at steady and profitable prices. No 
 principle could have received a fuller trial, and none 
 could have failed more completely. With a population 
 less than half the present population of Great Britain, 
 the condition of the people was such that multitudes, 
 daily employed in the occupation of rearing cattle and 
 growing corn, rarely tasted any meat except bacon, and 
 many could not earn sufficient bread to maintain their 
 own families in health and energy. 
 
Fifty Years of Free-trade. 131 
 
 The test of a principle is in its total effects^ not in 
 any partial or peculiar advantage to individuals; every 
 monopoly benefits the holder, but it does this at the 
 expense of others; and if we inquire into the results of 
 the Corn-laws, we find they were a cause of great misery, 
 want, and suffering* to a large proportion of the com- 
 munity, and of loss and injury to many others.^ The 
 abolition of the restrictions gave immediate relief, an 
 era of prosperity began, and fifty years of free-trading 
 show no such instances of suffering and distress as those 
 which preceded it. On the contrary, the progress of the 
 nation in comfort and material well-being has been con- 
 tinuous and marvellous. Fluctuations have accompanied 
 the advance; the Crimean War, the American Civil 
 War, and other misfortunes have imposed checks, but 
 the outcome of the change is that Great Britain is the 
 best-fed country on the globe, although it is the country 
 which produces the smallest proportion of its own food. 
 Common observation reveals the fact that the lot of the 
 working-man has entirely changed, and that his eco- 
 nomic condition in the present day would be an enviable 
 one to those circumstanced as were the labouring classes 
 of the early forties. Statistics of wages and prices show 
 that, with easier work and shorter hours, a labourer gets 
 now about 65 per cent, factory operatives 75 per cent, 
 and a skilled mechanic 90 per cent more of necessaries 
 than he did fifty years ago. Sir R. Giffen has stated 
 that nearly the whole of the economic advantage of the 
 last fifty years has gone to the working-classes, that is, 
 their position has not only changed absolutely as regards 
 the comforts of life, but relatively as regards other 
 classes in their share of the general prosperity. 2 
 
 1 As already stated (chap, iii.), various causes of distress operated during 
 the first forty years of the century — bad harvests, the war, with its burden 
 of taxation and debt, the Poor-law, which, until 1834, fostered an idle and 
 inefficient population — the rapid changes in manufactures also dislocated 
 industry. The Protective system accentuated all the evils arising from these 
 various causes, created scarcity of food, and prevented the means of profit- 
 able employment. 
 
 2 " Hence, while capital has increased, the income from capital has not in- 
 creased in proportion. The increase of earnings goes exclusively, or almost 
 exclusively, to the 'working-classes'". . . . "What has happened to the 
 working-classes in the last fifty years is not so much what may be called an 
 
132 The Free-trade Movement. 
 
 This wonderful transformation is of course not to be 
 assigned exclusively to the Free-trade movement; the 
 marvellous progress of science, the conquest of man 
 over the forces of nature, and their subjection to his 
 purposes, are features of the century which need no 
 detailed enumeration to remind us of their vast import. 
 But the reform of 1846 and the subsequent fiscal changes 
 were factors of the deepest importance in the scientific 
 development and industrial progress of this country; and 
 the Free-trade movement may be credited with rendering 
 possible the freest application of scientific discovery and 
 invention, so as to lead the nation to a standard of life 
 hitherto inconceivable. 
 
 As a self-supporting country Great Britain must have 
 continued to devote the chief part of her labour and 
 capital to obtaining food from her soil; and we have 
 seen what was the average of comfort when that was 
 attempted. Her population must have remained smaller, 
 and her resources in other industrial directions could not 
 have been utilized. Under Free-trade she was enabled 
 to give full play to her mechanical and manufacturing 
 genius and reap the full advantage of her mineral wealth, 
 relying upon an abundant supply of cheap food in ex- 
 change for her other products. The abolition of hin- 
 drances to trade gave to the nation fresh possibilities, 
 and called into activity the energy and skill by which 
 they could be realized. The scientific discoveries and 
 wonderful inventions which have enriched Great Britain 
 through her various industries, and have even made agri- 
 culture a mechanical industry to some extent, could never 
 have found an opening in this country; the vast indus- 
 tries of coal, iron, machinery, of cotton and wool, &c., 
 could never have been developed under a system which 
 compelled the country to produce its own food, and ex- 
 cluded the agricultural products which are now pur- 
 chased by means of these industries. Free-trade was 
 therefore a necessity prior to the full and profitable ex- 
 improvement as a revolution of the most remarkable description." — ("On 
 the Progress of the Working Classes" — Financial Essays, vol. ii.) See also 
 Labour in the Longest Reign, pp. 9-16, by Sidney Webb, for similar testi- 
 mony as regards men in organized trades. 
 
O* TBn: 
 
 Fifty Years of Free-trade?^ i?^" 133 
 
 pansion of those industries which have enriched Great 
 Britain during the last fifty years. The industrial re- 
 volution, with its mechanical inventions, factory-system, 
 and the steam-engine, began its operation more than 
 fifty years earlier, but the masses were, notwithstanding, 
 poor and half-starved until the advent of Free-trade. 
 
 The Free-trade movement really involved at root much 
 more than the revoking of the Corn-laws and the reform 
 of our fiscal system, though these were the actual matters 
 about which it was definitely fought out and decided. 
 It meant the adoption of the idea of enlarged opportunity 
 for enlightened individual action, and for true freedom 
 of contract, both as regards trade and labour, on the 
 largest and fullest scale possible. Adam Smith had 
 advocated ** natural liberty" in this sense; he contended 
 for the removal of all restrictions which operated in- 
 juriously, he urged the justice of workmen's combina- 
 tions and the necessity for education as a means of 
 conferring higher freedom and opportunity, as well as 
 the removal of protective tariffs and bounties on food. 
 Errors sometimes arise in regard to Free-trade among 
 its most ardent devotees owing to a too narrow inter- 
 pretation of its doctrine. Having for its aim the pro- 
 motion of the wealth of nations, in principle it would 
 apply to any measure, which, by removing obstacles to 
 trade in any direction, makes for that end. Commercial 
 treaties (in the absence of fuller measures) are consistent 
 with the spirit of Free-trade, which is one of peace and 
 good-will, displacing jealousy and warfare by means of 
 friendly business relations. Arrangements between na- 
 tions, involving ** give and take " of many kinds, recog- 
 nize mutual interests; in various ways the world is 
 being educated to appreciate the advantages of improved 
 intercourse and enlarged markets. International com- 
 munication (through telegraph, post, travel, newspapers, 
 and financial relations) all point to the advantages of 
 diminished friction. It is difficult to believe that artificial 
 obstacles to the full enjoyment of nature's products can 
 be permanently maintained. So long as the pressure is 
 not felt acutely the burden may be tolerated, but there 
 are many evidences that sections of other nations smart 
 
134 '^^^ Free-trade Movement. 
 
 under a consciousness of the injury inflicted upon them 
 by tariffs on foreign merchandise. 
 
 Great Britain, with her growing population, found the 
 pressure of tariffs upon food intolerable in a time of 
 scarcity, and the lesson of the economic advantage of 
 free exchange was brought home to her by the most 
 impressive kind of teaching that could be conceived. 
 No other country has had the principle enforced in the 
 same manner, and those who in protective countries 
 fully realize its worth are confronted with the difficulty 
 of dealing with interests which would suffer loss if the 
 tariff-fed manufactures of those countries were suddenly 
 placed in competition with the products of other coun- 
 tries. But the trend of events is towards universal 
 trading. The boundaries of race and nation are being 
 effaced in the operations of exchange, and gradually the 
 economic area will expand to comprise the whole pro- 
 ductive world. Science cannot continue to bring nations 
 nearer together, bestowing fresh gifts of wealth and 
 power upon all, without at length the fact dawning upon 
 them that to resist nature's generosity, by imposing arti- 
 ficial limits upon the acceptance of her lavish productive- 
 ness, is much the same as to refuse to enjoy the use of 
 steam-power, or to deny themselves the fruitful dis- 
 coveries of electricity. 
 
 Statistics of wealth, commerce, rates of wages, sav- 
 ings, consumption of food, &c., of shipping, revenue, 
 and of the expansion of the great staple trades, give 
 indubitable evidence of the vast advance in comfort of 
 the nation since the abolition of the protective regime. 
 In considering these figures we must remember that 
 though young countries, like the United States and 
 Australia, rich in natural gifts, and fed with streams of 
 emigrants from Great Britain, have advanced rapidly 
 during the past fifty years, their progress starts from a 
 comparatively recent date, while that of Great Britain is 
 the growth of a more mature and relatively populous 
 country. To compare their progress in some respects 
 with that of Great Britain would be to compare the 
 growth of the child with that of the man. Taking note 
 of like circumstances, no country has made the same 
 
Fifty Years of Free-trade. 135 
 
 relative progress as Great Britain during the past fifty 
 years. 
 
 In 1840 the population of the United Kingdom was 
 26^ millions, it is now nearly 40 millions, living at a 
 vastly higher level of comfort. The population had 
 grown rapidly from 1800 to 1840 under the stimulus of 
 the new factory industries and under the influence of the 
 Poor-laws, which practically gave a bounty on births, but 
 the standard of living had not advanced; with the re- 
 moval of restrictions on trade, improvement began, and 
 it has proceeded at an accelerated rate. Meanwhile the 
 nation has supplied the Colonies and the United States 
 with some millions of its able-bodied offspring as emi- 
 grants, and has further provided hundreds of millions of 
 capital from its savings to enable them to develop the 
 newer regions in which they have settled. Although 
 the population of Great Britain increased 50 per cent 
 (from 12^ millions to 18^ millions) between 181 1 and 
 1 84 1 the export trade made no progress : it declined 
 from 181 5 to 1836, and had barely recovered by 1844.^ 
 In 1845 our total foreign trade (imports and exports) 
 only amounted to ;^ 160, 000, 000, or less than £c^, 15^. 
 per head of the population, and the exports were greater 
 in value than the imports. The effect of the repeal of 
 the Corn-laws was an immediate increase in our foreign 
 trade; the exports for the twenty-five years following 
 1845 were nearly three times those of the preceding 
 twenty-five years, though some of this increase must be 
 attributed to the effects of the gold discoveries. By 1854 
 this commerce amounted to ;^268,ooo,ooo, and the im- 
 ports exceeded the exports by ;£"32,ooo,ooo. In 1896 the 
 total foreign trade had grown to ;^738,ooo,ooo, being 
 ;^i8, 10^. per head of the population, and the imports 
 were in excess of the exports by ;£" 130, 000, 000. This 
 large surplus, which has been annually increasing for 
 
 1 See Porter's Progress of the Nation, pp. 361-362. 
 
 Declared Value of Exports of the United Kingdom. 
 
 1815, ... ;^5i.632.97i 
 
 1821, 38,870,851 
 
 1831 47,020,658 
 
 1844, 58,584,292 
 
136 The Free-trade Movement. 
 
 more than forty years, is practically all profit to Great 
 Britain, arising from interest on foreign investments, 
 profits on trading, earnings of British vessels, &c. 
 
 The increase in money values of our foreign trade 
 does not fully represent, however, its real magnitude; 
 the general fall in prices during the last quarter of a 
 century should be taken into account, in which case the 
 business would need to be estimated at probably some 
 50 per cent more. A better idea, perhaps, of the magni- 
 tude of our foreign trade is gained from the statement 
 that it is more than the total foreign trade of Germany 
 and the United States together, and that while it 
 amounts to £18 per head of the British nation, the 
 foreign trade of Germany is only £y per head of its 
 population, and that of the United States is £4, los. It 
 must be remembered that in this immense trade 70 per 
 cent of the exports are manufactures, and an equal pro- 
 portion of the imports consists of agricultural produce 
 (food and raw materials), and that the industrial inter- 
 change has been stimulated by the removal of impedi- 
 ments to free exchange. Great Britain possesses about 
 30 per cent of the commerce of the world in manufac- 
 tures, while France and Germany jointly control about 
 an equal amount. 
 
 Consequent upon this enormous growth of business 
 with distant parts, and under the same stimulus of free 
 enterprise, another vast source of wealth has grown up 
 in our ship-building and carrying trade. Great Britain 
 owns more than half the tonnage of the mercantile ship- 
 ping on the globe, and does more than half the convey- 
 ance of goods by sea. During the last fifty years her 
 carrying power has grown fourteen-fold, her sailing ton- 
 nage (2,189,000 tons) is only slightly greater than that 
 of 1840, but her steam tonnage has been developed from 
 an insignificant amount to more than 10,213,000 tons, 
 about 55 per cent of the steam tonnage of the world. 
 Her ships employ a quarter of a million of seamen, 
 ship-building has become one of her most thriving and 
 highly-paid industries, and during the last fifteen years 
 has annually added to her mercantile sea power some 
 600,000 tons. It will be seen that this great expansion 
 
Fifty Years of Free-trade. 137 
 
 has taken place since the repeal of the Navigation Acts 
 in 1849, and it is under the system of free competition 
 that the United Kingdom has become the general carrier 
 of the world, and that her commercial navy has grown 
 in so remarkable a degree. Meanwhile under protective 
 tariffs the United States shipping has declined, until 
 only 23 per cent of her foreign trade is carried in her 
 own vessels. Out of a total tonnage on the globe of 
 25,907,451 tons the United Kingdom and her Colonies 
 possess 13,482,876 tons, the United States comes next 
 with 2,326,838 tons, Germany has 2,029,912 tons, and 
 France with bounties on both ship-building and freights 
 possesses only 1,162,382 tons.^ 
 
 Railway development and home trade have run paral- 
 lel with that of iron ship-building and foreign commerce. 
 Railways were in their infancy when Queen Victoria 
 ascended the throne. In 1845 only 2400 mil^s had been 
 laid in the United Kingdom, fifty years later this had 
 increased to 21,174 miles. The enormous traffic is one 
 further proof of the prosperity of the nation; in 1896 the 
 passengers conveyed numbered 981,603,296, the goods 
 amounted to 356,468,009 tons. The British railways, 
 created by voluntary enterprise, represent wealth valued 
 at more than ;^ 1,000, 000, 000. No doubt the railways, 
 roads, canals, may be said to be concerned with the 
 internal development of the country; they have been 
 necessitated, however, by the manufacturing expansion 
 which received so strong an impulse from the new con- 
 ditions of trade. Internal transport is a needful acces- 
 sory to commercial development, with its elaborate 
 specialization and localization of industry, and the extent 
 of the machinery of transport is an indication of the 
 degree to which this differentiation has been carried. 
 
 If we next glance at the textile trades (cotton, wool, 
 flax, silk, hemp, and jute), we find our factories employ- 
 ing more than one million operatives, and manufacturing 
 one-fourth of the raw materials produced in the world. 
 Thus we provide about one-fourth of the clothing of 
 civilized races from materials which, with the exception 
 
 1 Statistics from Lloyd's Register of British and Foreign Shipping, 1897-8, 
 quoted in Whitaker, p. 728. 
 
138 The Free-trade Movement. 
 
 of wool and flax, are entirely imported from other 
 countries. In the interval since 1846 these various in- 
 dustries have increased not only in extent and value, but 
 in efficiency and output per man. During- the last fifty 
 years the total value of the manufactured products of all 
 the textile trades has grown from some ;^^90,c>oo,ooo to 
 about ;^i90,ooo,ooo per annum. Between 1854 and 
 1895 the import of raw wool increased from 104*9 to 
 771 million lbs. The cotton trade alone daily pays in 
 wages ;£^ioo,oc)0 and turns out 14,000 miles of cotton 
 cloth. At present we consume at home a little more 
 than half the cotton goods manufactured and export the 
 remainder.^ With some vicissitudes due to various 
 causes, such as the American Civil War (which checked 
 the supply of cotton), to the construction of mills in 
 India, to the natural development of the cotton industry 
 in other countries, and to the fluctuations arising from 
 the dictates of fashion in dress materials, &c., this large 
 section of our staple employments has gone on increasing 
 its consumption and advancing- in value and importance. 
 Wages have risen, the standard of living of the artisans 
 employed has considerably improved, and there have 
 been no such periods of depression as that of 1842, when 
 half the spinners of Stockport failed, and thousands of 
 operatives were standing in the streets. The cotton 
 famine of 1862- 1863 has been the sole serious inter- 
 ruption, and this was due to a definite cause, beyond 
 the reach of economic foresight. ^ 
 
 The great expansion of the manufactures of Great 
 Britain has been accompanied by a proportionate devel- 
 opment of her industries in coal and iron, as in turn the 
 prosperity of the manufactures are dependent upon these 
 natural resources. It is by means of their joint results 
 that payment is made for the enormous amount of food- 
 stuffs which annually enters the kingdom. In 1840 the 
 output of coal was about 30 million tons; in 1896 about 
 195 million tons were raised, this output being valued 
 at ;^57,23i,ooo. The whole mineral wealth produced 
 
 * For some interesting statistical details of progress see Mulhall's Na- 
 tional Progress in the Queen s Reign. 
 2 Consumption of raw cotton by Great Britain in average periods of five 
 
Fifty Years of Free-trade. 139 
 
 was worth ;^76,6oi,ooo, and 838,000 men were employed 
 in its extraction. More than 40 million tons of coal are 
 now exported yearly. The production of iron has in- 
 creased between 1835 and 1896 from ^ million tons to 
 8]/2 million tons. Great Britain exports annually about 
 4 million tons of iron and steel goods. The annual 
 value of iron and steel manufactures is ;^ 115,000,000, 
 and the increase in value continues in spite of the 
 enormous reduction in cost which has been caused by 
 recent inventions and new processes. Machinery, cut- 
 lery, tools, steel rails, eng^ines, and apparatus of various 
 kinds form a considerable part of our exports, as well 
 as of the provision for the demands of home industries, 
 and employ skilled artisans at several times the amount 
 they could possibly earn in agriculture if Great Britain 
 were a self-supporting* country. The only extensive 
 industry which has not advanced during the Victorian 
 era is agriculture; the causes of this exception are of 
 sufficient interest and importance to call for discussion 
 in a separate chapter. 
 
 years, and exports of piece-goods and yarns, from Ellison's Annual Review 
 of the Cotton Trade for 1895 : — 
 
 Consumption by Great Britain. 
 
 
 
 
 Export of Piece-goods. 
 
 1841-45. 
 
 521,300,000 lbs. 
 
 1840. 
 
 790,600,000 yards. 
 
 1856-60. 
 
 947,300,000 ,, 
 
 1850. 
 
 1,358,200,000 „ 
 
 1861-65. 
 
 628,600,000 ,, 
 
 1870. 
 
 3,252,800,000 ,, 
 
 1871-75. 
 
 1,228,600,000 ,, 
 
 1890. 
 
 5,124,200,000 ,, 
 
 1881-85. 
 
 1,444,100,000 ,, 
 
 1895. 
 
 5,033,400,000 ,, 
 
 1891-95. 
 
 1,579,400,000 ,, 
 
 1896. 
 
 5,218,248,000 ,, 
 
 
 Wool. 
 
 
 Raw Wool Imported. 
 
 
 Export of Yarns. 
 
 1854. 
 
 104, 900,000 lbs. 
 
 1840. 
 
 118,500,000 lbs. 
 
 1870. 
 
 259,400,000 ,, 
 
 1850. 
 
 131,400,000 ,, 
 
 1880. 
 
 461,000,000 „ 
 
 1870. 
 
 187,700,000 ,, 
 
 1890. 
 
 629,200,000 ,, 
 
 1890. 
 
 258,400,000 „ 
 
 1895. 
 
 771,000,000 ,, 
 
 1895. 
 
 252,100,000 ,, 
 
 
 United 
 
 Kingdom 
 
 [. 
 
 
 Coal Raised. 
 
 
 Pig-iron Produced. 
 
 1870. 
 
 110,431,000 tons. 
 
 1870. 
 
 5,963,000 tons. 
 
 1880. 
 
 146,969,000 ,, 
 
 1880. 
 
 7,749,000 ,, 
 
 1890. 
 
 181,614,000 ,, 
 
 1890. 
 
 7,904,000 „ 
 
 1895- 
 
 189,661,000 ,, 
 
 1895. 
 
 7,703,000 „ 
 
 1896. 
 
 195,400,000 ,, 
 
 1896. 
 
 8,660,000 ,, 
 
140 The Free-trade Movement. 
 
 There are many other proofs of the national pros- 
 perity and progress during the fifty years, that can easily 
 be made visible by the use of statistics, a few of which 
 may be indicated. It is computed by official statisticians 
 that the capitalized wealth of the United Kingdom has 
 increased since 1840 from about ;£"4,ooo,ooo,ooo to 
 ;£" 1 1,806,000,000; that is, from ;£^i55 to £2g^ per head 
 of the population, and many facts tend to show that the 
 wealth is widely diffused. The value of house property 
 alone has increased nearly fourfold ; and since the 
 character of its housing is a very real test of the com- 
 fort of a people, it is of interest to observe that the 
 proportion of houses rented at sums above ;£^20 has 
 increased from 7 to 20 per cent of the whole in the same 
 period. The income-tax, reimposed by Sir Robert Peel 
 in 1843 as a means of remitting taxes on commodities, 
 was then assessed on property and incomes valued at 
 ;£'25o,ooo,ooo, and each penny then yielded ;^8oo,ooo 
 of taxation. In 1895 it was assessed on ;£'7oo,ooo,ooo, 
 and each penny produced ;^2, 200,000. 
 
 Increase of business calls for an enlargement of the 
 special machinery for effecting exchanges and payments. 
 The expansion of banking thus forms an excellent index 
 of the growth of commerce ; the deposits and capital of 
 the banks of the United Kingdom have advanced between 
 1840 and 1895 from ;^i 32,000,000 to ;£^i, 11 1,000,000; 
 that is, from £^ per head to ;^28 per head of the 
 population. In the same period the accounts settled 
 by the Bankers* Clearing House have advanced from 
 ;^95o,ooo,ooo to more than ;£^7, 000,000,000. With this 
 great development of general banking there has been a 
 corresponding addition to Savings-bank deposits ; these 
 increased between 1841 and 1897 from ;£"24, 500,000 to 
 ;;^ 1 76,000,000. In 1861 Post-office Savings-banks were 
 devised to carry thrift to the doors of all classes, and 
 there are now some eight million depositors in Savings- 
 banks of all kinds in the United Kingdom. Meanwhile 
 other openings for investments have been brought with- 
 in the range of the working-classes, not only in building 
 clubs, co-operative, trade, and friendly societies (the 
 deposits in which, together with the Savings-banks 
 
Fifty Years of Free-trade. 141 
 
 deposits, amount to more than ;^28o,ooo,ooo), but the 
 system of joint-stock enterprise with limited liability, 
 which has proved a most potent instrument for convert- 
 ing labourers into capitalists, has enabled large numbers 
 of workmen to become owners of shares in municipal 
 stock, gas and water companies, railway companies, and 
 various industrial enterprises. 
 
 In the budget speech of 1897 the chancellor of the 
 exchequer stated that during the Queen's reign the 
 National Debt had been reduced by ;£" 175,000,000, while 
 the revenue had risen from ;!^5 2, 000, 000 to ;!^ 11 2, 000, 000; 
 meanwhile taxation had been so reduced and its inci- 
 dence rearranged, that, while a labourer earning i^s. 2.d. 
 a week paid 43^. 3^. a year in taxes in 1841, he would 
 now pay only 12^. 3^^. a year. 
 
 Perhaps in no way can the advance in the material 
 condition of the masses be indicated with more assur- 
 ance than by their consumption of necessaries. As the 
 rich may be assumed to have had always a sufficiency 
 of necessaries, a reduction in prices would affect only 
 their consumption of luxuries, and not of necessaries; 
 any increase in the average consumption of ordinary 
 commodities therefore has arisen from a larger con- 
 sumption by those classes who formerly had an inade- 
 quate supply; the addition, though spread over the 
 whole population by an average, is really in the lower 
 grade of incomes. Between 1840 and 1895 ^^® average 
 consumption of wheat, corn, and flour in the United 
 Kingdom has grown from 290 to 360 lbs. per head, of 
 meat from 75 to no lbs. (and meat in 1840 was to the 
 labouring classes mainly bacon), of sugar the consump- 
 tion rose from 15 to 88 lbs., of tea from i^ lbs. to 
 5^ lbs., of tobacco from '86 lbs. to 17 lbs. If Ireland, 
 which only consumes 40 lbs. per head of meat, be 
 omitted, the consumption of meat by Great Britain 
 becomes 120 lbs. per head, which is far in excess of 
 that of any other European country: Germany con- 
 suming 75 lbs., France 70 lbs., and Belgium 56 lbs. per 
 head. The consumption of imported butter, bacon, 
 cheese, and eggs has been multiplied tenfold in the 
 fifty years. If diet, as asserted by medical authorities, 
 
142 The Free-trade Movement. 
 
 be a chief determining factor in the endurance and 
 efficiency of labour, there can be no doubt as to the 
 advantage possessed by British workmen of to-day over 
 those of the protective era, and also over the labourers 
 of most other European countries at the present time. 
 
 It was on January ist, 1840, that the penny post was 
 introduced, taxes on advertisements were abolished in 
 1853, and on newspapers in 1855, the duty on paper was 
 removed in 1861, the Education Act for England was 
 passed in 1870. It is difficult to realize the full benefits 
 of these measures, all of a character removing restrictions 
 upon knowledge and communication, and all steps in 
 the development of individual freedom. There was no 
 daily paper published outside London in 1841, now the 
 daily issue of papers in the United Kingdom is about 
 seven millions. The average number of letters per head 
 of population in the United Kingdom was in 1839 only 
 three, and in 1895 '^ ^^^^ risen to fifty-three, for England 
 alone it was eighty per person. The mass of cheap 
 literature, which now appeals to a reading public, speaks 
 both for education and for leisure. A free press, un- 
 taxed papers and advertisements, free education, and 
 means of extending those opportunities for gaining 
 knowledge, which have formed so considerable an ele- 
 ment in the progress of the nation, have removed some 
 of the most effectual barriers between different classes, 
 and have tended to promote a feeling of the common 
 claims of humanity. 
 
 Among other significant changes, which have followed 
 upon the improvement in material condition, is the steady 
 diminution in crime, convictions having latterly fallen to 
 about one -third of the number in 1840, although the 
 population has increased fifty per cent ; pauperism has 
 also been reduced one -half. Better food, improved 
 dwellings and sanitation, and reduction in the severity 
 of labour under modern conditions have told favourably 
 upon health and the duration of life; the death-rate has 
 fallen materially, sickness is diminished, and human life 
 has been prolonged. Very real evidences of the sub- 
 stantial improvement in the condition of the masses are 
 to be found in the abbreviation of the hours of labour 
 
Fifty Years of Free-trade. 143 
 
 (for British labourers work fewer hours than those of 
 any other country), in the increase of holidays and 
 excursions, and the dress and manners of the people. 
 We read, for example, in a recent Oldham newspaper: 
 ** Holiday club subscriptions for seaside, &c., amounted 
 this year to ;!^i 50,000. Nearly every factory and public- 
 house has its club, and the average takings are ;^75o a 
 year ". The contrast with the descriptions of the same 
 district in 1842 is very significant. The multiplication 
 of free public libraries and newsrooms, of which there 
 are now more than 200 in the country, is a further 
 addition to the comfort and well-being of the industrial 
 classes. 
 
 Hospitals and dispensaries for the free treatment of 
 disease have increased, and subscriptions for their sup- 
 port, received from all classes, indicate not only the 
 growth of sympathy and social sentiment, but the exist- 
 ence of a surplus upon which the benevolent feelings 
 can operate. The Metropolitan Hospital Sunday Fund 
 alone has raised for this purpose some ;^90o,ooo in 
 twenty-five years. In Burdett's Hospitals and Charities 
 for 1897 we read that the working-men of Wigan con- 
 tributed ;£"58'24 per 1000 of the population to their 
 hospital, Wolverhampton ;£^4i*73, Birmingham and 
 Sunderland each ;£^30*i. These are suggestive facts 
 indicative alike of material progress, regard for health, 
 and the increase of that consideration and sympathy 
 with suffering which mark an advance in refined feeling. 
 
 The amount expended by the working-classes upon 
 athletics is a proof of a different kind, but a forcible 
 one, that they have both energy, time, and money to 
 spare. A starving people has neither the spirit nor the 
 means for sport. During the first half of this century 
 our working-classes had little to spend on amusements. 
 The healthful pleasures of football, cricket, cycling, and 
 boating are no monopoly of the rich in this country ; and 
 indeed the very extensive industries called into existence 
 by cycling alone are sufficient to demonstrate that a very 
 large proportion of the community is able to secure, not 
 only the necessaries, but some share in the luxuries of 
 life and in its amusements. Again, theatres and con- 
 
144 T^c Free-trade Movement. 
 
 cert-rooms multiply at a very rapid rate, especially those 
 which cater for the working-classes. We learn from 
 statistics that while, during- the last fifteen years, 
 teachers have increased 15 per cent, shopkeepers 27, 
 bank-clerks 30, commercial clerks 34 per cent, the class 
 of public entertainers has been augmented 50 per cent. 
 
 Thus in every field of observation there is most con- 
 vincing evidence of the great and general advance in 
 material prosperity, which has been made since the 
 policy of restriction on commerce was abandoned. That 
 the problem of poverty yet remains, and that there is a 
 residuum of helpless, shiftless poor in our large towns, 
 and that many classes are yet ignorant and struggling 
 for a wretched subsistence, hidden away in back streets 
 and alleys, — these, and facts like these, only prove that 
 there are weighty social questions still unsolved, and 
 that moral and economic reforms have to penetrate to a 
 much lower level. Vicious propensities and ignorance 
 are not eradicated by fiscal legislation. Free-trade is 
 not an idol, nor is its adoption a charm to cure social 
 diseases; there is neither fetish-worship nor miracle- 
 working in the recognition of a sound economic principle. 
 The whole doctrine is summed up in the liberty and 
 opportunity for men to employ their labour and expend 
 their earnings to the best advantage without let or 
 hindrance. But liberty of purchasing will not make the 
 ignorant skilled nor the idle industrious; it will not 
 prevent the waste which arises from drunkenness or 
 gambling, nor save a uian and his family from the con- 
 sequences of vice or imprudence. These evils demand 
 other remedies ; many efforts are being made to combat 
 them and to reduce these dark spots on the social 
 horizon. The progress of the last fifty years lends hope 
 that the comforts and advantages which have been 
 extended to so large a proportion of the community will, 
 in time, penetrate to these lower strata also ; meanwhile, 
 to no class is cheap food a greater boon than to the 
 struggling workers on the verge of bare subsistence. 
 
Protection in other Countries. 145 
 
 Chapter VIII. 
 
 Why Free-trade is not adopted in other 
 Countries. 
 
 One of the most frequent objections brought against 
 the Free-trade policy of Great Britain is that other 
 countries have not adopted it. It is said, "We stand 
 alone, and it is presumptuous to think that we are wiser 
 than all other nations", "The verdict of the world is 
 against us". Much attention has been drawn to the 
 sanguine but unfortunate prediction of Cobden that if 
 England led the way other European nations, convinced 
 by her example, would follow within five years. ^ But 
 fifty years have now passed, and not only have the 
 European nations failed to follow the example of Great 
 Britain, but some have increased their tariffs, while the 
 United States have advanced still further on the lines of 
 Protection, and even most of our Colonies have rejected 
 the policy of the mother-country in its favour. This 
 constitutes apparently a weighty expression of opinion 
 against the Free-trade doctrine, and calls for some 
 examination. 
 
 In the first place, however, Cobden did not rest the 
 argument for this policy upon its adoption by others. 
 His prediction was no more than an expression of his 
 own firm conviction that the merits of a doctrine, so 
 clearly grasped by his own mind, would be brought home 
 with equal force to others when its actual operation in 
 Great Britain afforded visible evidence of its advantages. 
 But he did not make sufficient allowance for difference 
 of circumstances or for interested opposition. Adam 
 Smith had been more awake to these difficulties when 
 he wrote; John Bright also had no expectation of the 
 sudden conversion of Europe ; and Peel distinctly stated 
 
 ^ Speech in the House of Commons, Jan. 15th, 1846: "I believe that if 
 you abolish the Corn-laws honestly, and adopt Free-trade in its simplicity, 
 there will not be a tariff in Europe that will not be changed in less than five 
 years to follow your example". 
 
 (M460) K 
 
146 The Free-trade Movement. 
 
 that his action rested on the conviction, slowly and 
 surely attained, of the necessity of Free-trade for Great 
 Britain, and not upon any anticipation of its becoming 
 the policy of other countries. Scientific doctrines are 
 not settled by votes, and new^ principles have ever to 
 fight their way to general acceptance; and when their 
 application in practice proves adverse to the interests of 
 particular classes there can be less hope of their speedy 
 adoption. Moreover, as the circumstances of all coun- 
 tries are different, special reasons can be advanced to 
 show why Protection has taken root so firmly in many 
 countries. Yet it is not strictly true that Great Britain 
 has no followers. In Europe several of the vigorous 
 and flourishing smaller countries — Switzerland, Holland, 
 Belgium, Denmark, and Norway — are all but Free- 
 trading, and New South Wales has always been a 
 staunch supporter of the policy of the mother-country. 
 
 Nor must we forget the nature of the trade of other 
 countries. Great Britain is unable to provide herself 
 with sufficient food; raw materials and food-stuffs to- 
 gether account for nearly 75 per cent of her imports, 
 while manufactured goods are about 75 per cent of her 
 total exports. This is the case with no other country. 
 It is true that France and Germany both import some 
 corn,^ but their chief imports, and almost the entire 
 imports of most other protective countries, consist of 
 manufactures, materials for manufactures, and luxuries, 
 on which the pressure of duties is less severely felt than 
 would be the case if they were levied upon the immediate 
 necessaries of life. While, then, different circumstances 
 have fostered the protective principle in Europe, the 
 United States, and the Colonies, in all of them the facility 
 for collecting revenue by the customary method of 
 duties on imports gave it an easy footing; and in all it 
 has been maintained by the sentiment of supporting 
 home industry, and the fallacy that more employment is 
 found for labour in the country by excluding foreign 
 competition. 
 
 The circumstances that have favoured the growth of 
 
 1 France imported 99 million bushels of grain in 1894, 43 millions in 1895, 
 and 35 millions in 1896. 
 
Protection in other Countries. 147 
 
 Protection in the United States are its vast extent and 
 large resources, great variety of climate, fertile soil, and 
 abundance of minerals. While richly endowed by nature 
 with a multiplicity of products, it has been supplied by 
 Europe with vigorous labourers, and with abundant 
 capital. Each such adult immigrant to the States from 
 Great Britain, endowed with average strength and skill, 
 has been estimated as equivalent to a gift of ;^200 in 
 his personal capital. A unique concurrence of favouring 
 conditions in the United States has made for wealth, in 
 spite of the impediments raised by legislation, and has 
 enabled the nation to maintain a high standard of living, 
 and to bear its burden of taxation. It must further be 
 remembered that the states comprising the Union, trade 
 freely with one another, and this freedom extends over 
 51 states and territories differing so widely as New York 
 and Texas, Florida, and California. The United States 
 covers an area of 3,500,000 square miles, and includes 
 almost every variety of climate and every kind of pro- 
 duct. Were it severed from the rest of the world, 
 its people might live in comparative affluence, and miss 
 very few of the comforts and luxuries found elsewhere. 
 It is not remarkable that they should be able to uphold 
 a system of Protection in these circumstances. In no 
 sense, however, can that system be said to be the pro- 
 duct of healthy conditions. In its origin it was a reaction 
 against the oppressive ''colonial policy" and ''sole- 
 market theory" of Great Britain, which helped to pro- 
 voke the War of Independence; partly in retaliation and 
 partly for revenue purposes the American colonists 
 began to tax our exports. In 1789 Presid£iai.Jianiilian 
 advanced the plausible principle that "infant industries" 
 should be protected as a temporary expedient in order 
 to enable them to become firmly established, and that 
 when they no longer required this safeguard, the duty 
 would be abolished. With this object duties of 8^ per 
 cent were adopted for seven years. The war between 
 Great Britain and France led to complications with the 
 United States, which then increased its tariff as an 
 act of hostility. Reduced in 1815, it was again raised 
 in 1816, and from that time its fluctuations have been 
 
148 The Free-trade Movement. 
 
 frequent. Between 1847 and i860 reduced tariffs were 
 followed by a period of great prosperity. Then came 
 the Civil War, and the need for revenue led to greatly 
 increased import-duties, which rose to 47 per cent. 
 Some relaxation followed the war, but from that time 
 the tariff has been the sport of financiers and political 
 parties. With every increase of duty fresh vested in- 
 terests have been created, and tariff-fed industries call 
 for yet further aid. What has happened to the ** mfant 
 industries " of a hundred years ago? Without the help 
 of duties, ranging from 40 to 100 per cent, they are still 
 unable to compete with Great Britain, and the tariff is 
 perpetually under manipulation. A "national policy" 
 was advanced by Mr. M^Kinley in 1890, by which duties 
 were still further augmented; the avowed aim of this 
 policy was "to encourage home industries", "to keep 
 money in the country", and "to exclude goods made 
 hy pauper labour^*. With all its natural gifts and ex- 
 tensive territory, the United States has, in consequence 
 of its inflated prices, become a most expensive country 
 to live in; yet American workmen apparently fail to see 
 that high prices do not necessarily mean high real-wages. 
 The bounty of nature is counteracted by measures which 
 end in the creation of monopolies and millionaires, while 
 labour troubles are frequent, and the contrasts of wealth 
 and poverty, sufficiently glaring in Old-world cities, are 
 enormously magnified in the New. 
 
 Tariffs have become recognized instruments for creat- 
 ing vested interests, politics are rendered corrupt, and 
 the newspapers complain that politicians combine in 
 log-rolling and in reciprocal voting with the object of 
 securing an increased share in the plunder of the com- 
 munity. If the principle of stimulating infant industries 
 into striving and energetic adult industries ever had an 
 opportunity for fair trial it has surely been in the United 
 States, with all its magnificent natural resources; and 
 yet the duties, adopted for a brief seven years a century 
 ago, are still in existence, while the rate is enormously 
 increased and the period of operation is unlimited. 
 
 It might be expected that the cotton manufacture 
 would become a successful industry where the raw 
 
Protection in other Countries. 149 
 
 material is a natural product and so many other causes 
 are favourable, yet the whole export of manufactured 
 cotton by the United States is less than ;^3, 000,000, 
 while that of Great Britain, which fetches the raw 
 material 3000 miles, is ;^6o,ooo,ooo. In the States the 
 cotton manufacture has been a protected industry since 
 1816, when a duty of 25 per cent was imposed; yet, 
 after eighty years of fostering, this industry is protected 
 by a tariff ranging from 30 to 60 per cent ad valorem. 
 The iron industry is an even more telling example against 
 *'the infant industry theory". It was protected in its 
 early development by a duty fixed at 20 per cent in 18 16; 
 yet, in order to avoid the competition of English iron 
 goods, the duty has been augmented by the Dingley 
 tariff to 60 per cent ad valorem^ under the plea of the 
 ** national policy", which is adopted now that the '* in- 
 fant industry " theory is no longer tenable. If the iron 
 industry can compete successfully with British goods, 
 legislation imposing a duty of 60 per cent to exclude the 
 latter is surely superfluous. 
 
 The effect of the tariff of 1890 upon woollen goods was 
 to render them nearly three times the price of the same 
 article in Great Britain. Mr. M'Kinley sustained his 
 protective doctrine with the remarkable dictum that 
 "cheap goods were a badge of poverty", and he found 
 a strong supporter in Mr. Jay Gould, the millionaire, 
 who supplied the additional argument that **high prices 
 would teach working men thrift ". Nor is the doctrine 
 entirely extinct in the United States, that commerce 
 between nations is war. Only a few years ago Senator 
 Evarts declared in the United States that ** trade be- 
 tween nations stands for war in a sense never to be 
 overlooked and never to be misunderstood". President 
 M'Kinley's message on the occasion of his accession to 
 office takes somewhat different ground, and seeks to 
 combine the conflicting aims of securing high prices, 
 increasing employment by high tariffs, and ''checking 
 deficiencies in revenue by protective legislation which is 
 always the firmest prop of the Treasury"; and yet these 
 ends are to be secured *'by extending the reciprocity 
 law of 1890 under which a stimulus was given to our 
 
150 The Free-trade Movement. 
 
 foreign trade ". This combination of aims will no doubt 
 recommend the policy to different groups of Protec- 
 tionists, but it displays an amount of confusion and 
 contradiction which is almost hopelessly bewildering. 
 
 The tariff will no doubt succeed in creating high 
 prices by the exclusion of foreign manufactures, but it 
 strikes a blow at American farming so far as the latter 
 depends upon foreign consumption for markets. In 
 1895, out of a total of ;^ 158,000,000 of exports from 
 the United States, agricultural produce amounted to 
 ;^i 10,000,000. If the United States renders payment 
 for its exports difficult or impossible in foreign goods, 
 the British corn -importing trade will naturally move 
 towards freer markets. Argentina affords just such a 
 market, and she is becoming a rival to the United States 
 in the supply of wheat to Great Britain in exchange 
 for British manufactures.^ No measure could be more 
 favourable to the extension of commercial relations with 
 our Colonies also than that the United States, by pur- 
 suing a policy of isolation, should make it less easy to 
 dispose of her wheat in Great Britain ; and if at such a 
 stage, the Colonies, following the example of Canada, 
 reduce their tariffs to the mother-country, her trade will 
 naturally flow to their shores, while the tide of emigra- 
 tion, both of labour and capital, will tend to set strongly 
 in the same direction. 
 
 The duties on linen and sewing-thread supply another 
 illustration of the waste and expense caused by the pro- 
 tective system in America. A duty of 35 per cent on 
 linen has long existed, but the new tariff raises this duty 
 by various additions ranging from 50 to more than 100 
 per cent. The duty on sewing-thread is also increased 
 from 40 to 67 per cent. On the linen duties the New 
 York Journal of Commerce thus comments : — ** There is 
 practically no linen industry in this country, and there 
 
 1 Imports of Wheat (Grain and Flour) into the United Kingdom. 
 
 
 From United States. 
 
 From Argentine Republic. 
 
 Total Imports. 
 
 
 Cwts. Per cent. 
 
 Cwts. Per cent. 
 
 Cwts. 
 
 I88I. 
 
 45.699.956 ... 64 
 
 31 ... — 
 
 71.344.659 
 
 I88S. 
 
 39,709.567 ... 48 
 
 335.635 - -04 
 
 82.331,552 
 
 1890. 
 
 33.903.563 •• 41 
 
 2.848,771 ... 3- 
 
 82.381.591 
 
 1895. 
 
 45,322,801 ... 42 
 
 11,432,721 ... II- 
 
 107.261.636 
 
Protection in other Countries. 151 
 
 probably never will be. The conditions of our climate 
 do not favour the growing- of flax, even in parts of the 
 country which seem best suited for it ; and the industrial 
 habits of our people do not favour attention to the mass 
 of tedious and toilsome details that go to the preparation 
 of this fibre for the loom. " The loss incurred by forcing 
 an industry in such circumstances is obvious. 
 
 The moral of the tariff system in the United States is, 
 that the benefit to be derived from imposing a tempo- 
 rary protective duty is a delusion, — the weakly infants 
 do not grow up to independence, but are always requir- 
 ing additional nourishment. As in opium-taking, the 
 doses have to be increased to maintain the unhealthy 
 system. The tendency of the new tariff" is towards pro- 
 hibition, but the President's message also contemplated 
 an extension of markets for American produce, although 
 the fundamental fact in trading is that a nation cannot 
 sell without buying. It is of the manufactures of Great 
 Britain that the United States is most jealous. The 
 tariff is not levied so much against the labour of inferior 
 races as against the highly-productive labour of Great 
 Britain. Through blindness to the fact that the object 
 of trading, as of all work, is to satisfy wants, the tariffs 
 of the United States are being pushed more and more 
 towards a point where much of the labour of the country 
 will be employed at an economic loss. Waste cannot 
 increase wealth, and misdirection is a species of waste, 
 since it causes capital and labour to be employed with 
 a loss of efficiency. 
 
 New and unexpected difficulties are arising out of 
 tariffs in America; both South and West are calling for 
 Protection for their infant industries against the East. 
 So long as they were agricultural and mining only, they 
 adhered to the ** national policy" ; but some of the San 
 Francisco papers now urge that the plea for protection 
 against foreign products holds good equally against 
 those from other parts of their own country. Consumers 
 in California are advised to give the preference to the 
 products of their own States, and to reject those of 
 the Eastern States. Thus the fallacious principles so 
 long upheld in international relations are beginning to 
 
152 The Free-trade Movement. 
 
 be applied at home between state and state. This is 
 consistent but serious, and should it be maintained it 
 promises to put an end either to protection against 
 foreign countries, or to the free-trading between the 
 States. The latter alternative would raise very weighty 
 problems. The latest alterations in the United States 
 tariff endeavour to give some of the privileges of mono- 
 poly to the wool-growers of the West ; but no protective 
 duty can help the grain and meat farmers, who are 
 taxed heavily on every article of their consumption. So 
 also a duty has been demanded on imported long-staple 
 cotton by the cotton-growers of the South, and both 
 West and South are urged to fight for protection for 
 their young manufacturing industries. The Western 
 farmer has hitherto been too weak to resist Protection, 
 which has always told against him. Will the Western 
 manufacturer be sufficiently strong to carry it to its 
 logical conclusion of protecting every state and district 
 from every other, and if so, how will it affect the Federa- 
 tion? 
 
 In the Australian self-governing Colonies Protection 
 grew out of the system under which duties were levied 
 upon imported goods for revenue purposes. These 
 duties were, after a time, extended to foster infant in- 
 dustries, on the representation that temporary and 
 moderate duties would soon accomplish the firm estab- 
 lishment of manufactures, and give a desirable diversity 
 of employment. The duties have more recently been 
 advocated as a means of producing higher wages. The 
 Colony of Victoria has taken the lead in the protective 
 movement. It deliberately adopted Protection in 1865, 
 and duties of 10 per cent were then levied upon clothing, 
 furniture, boots, and woollen goods. As in other cases, 
 the duties, once commenced, were afterwards increased 
 to sustain the vested interests created, and the period 
 of operation was extended. But after thirty years of 
 Protection, Victorian industries, with duties of 30 per 
 cent, are as far from independence as at the beginning. 
 
 J. S. Mill's unfortunate, though somewhat guarded, 
 admission, that temporary Protection might be adopted 
 in a young colony to start new industries, is often 
 
Protection in other Countries. 153 
 
 quoted in justification of such attempts. Mill, however, 
 contemplated only a very brief period of support to 
 enable an industry, in the success of which there were 
 strong grounds for belief, to be started on a scale suffi- 
 ciently great to overcome initial difficulties, and to pre- 
 vent it from being crushed at the outset by the rivalry 
 of old-established competitors. This policy might be 
 theoretically sound, on the assumption that governments 
 are omniscient, and can foresee what industries will soon 
 be thus established so as to stand alone. In practice, 
 however, this state of things is not realized. Govern- 
 ments are not endowed with this prescience, nor are 
 political parties proof against the representations and 
 demands of their supporters. The experience of a 
 centuiy of the '* young industry" policy in the United 
 States, and of more than thirty years in Australia, bears 
 out what might have been anticipated — that such aid 
 cannot be restricted to industries sure to succeed, and 
 proves that the academic exception to free-trading has 
 no practical application. Cobden in this matter showed 
 more insight into the facts of politics than the philoso- 
 pher. Sir Louis Mallet reports a conversation with him 
 only a few days before his death, in which Cobden said 
 with peculiar earnestness: "I believe that the harm 
 which Mill has done to the world by the passage in his 
 book on Political Economy in which he favours the 
 principle of Protection in young communities has out- 
 weighed all the good which may have been caused by 
 his other writings".^ Without endorsing this remark 
 as regards the impossible estimate of the value of Mill's 
 writings, it must be admitted that the theoretical con- 
 ditions contemplated in Mill's defence of Protection for 
 young colonies do not seem really to exist, since in 
 practice it is impossible either to predict what industries 
 will become self-supporting, or to resist the claims 
 which are made for the application of the principle of 
 temporary succour to other fresh industries, or the plain- 
 tive appeal for further aid to save from ruin those already 
 established by the aid of tariffs. 
 
 ^ Quoted in a letter of Sir Louis Mallet, given in the Appendix to Mr. 
 Gowing's admirable Life of Richard Cobden (Cassell & Co.). 
 
154 The Free-trade Movement. 
 
 The argument that it is desirable to stimulate ** diver- 
 sity of employment" in young countries is one which 
 seems at first sight to contain some force. It is un- 
 doubtedly desirable that the varied capabilities of every 
 country and people should all find useful application 
 and scope for development. Nor is economic gain to 
 the community the sole consideration; there are many 
 social advantages which may be well purchased at some 
 sacrifice of wealth. But, on examination, it does not 
 appear either that Free-trading hinders this diversity, 
 or that Protection encourages it. New South Wales is 
 not behind Victoria either in the number and diversity 
 of its industries, or in its social development and educa- 
 tional advantages. Great Britain and Holland are both 
 remarkable for the great variety of their industries and 
 their social institutions, and they are not excelled in 
 these respects by protective Germany or France. It has 
 been shown that Protection has a cramping and narrow- 
 ing tendency from its artificial methods and its want of 
 enterprise. A country, by using its powers to best 
 advantage, will inevitably soon develop towns, ports, 
 and markets, with their special characteristics and many 
 varieties of trades and employments ; and such a country 
 is able to afford (as New South Wales has done) both 
 time and endowment for education and the higher aims 
 of life. In a large number of cases the natural circum- 
 stances determine the chief local industries, such as 
 mining, fishing, and shipping; again, many trades are 
 subsidiary to others, and must be carried on in or near 
 to definite centres, distance and cost of conveyance 
 limiting the power of outside competition. In countries 
 like Victoria and South Africa, where the discovery of 
 valuable mineral deposits has led to rapid development 
 and much wealth, many considerable industries inevit- 
 ably spring up quickly near the seat of the prime industry, 
 and civilization soon takes an advanced form. Building 
 and repairing trades, printing of newspapers, &c., must 
 of necessity be local, and numerous industries are thus 
 bound to arise in any country with an intelligent popu- 
 lation, which has the means of sustaining life in any 
 degree of comfort. Experience suggests that extension 
 
Protection in other Countries. 155 
 
 of freedom has been more fruitful in promoting* diversity 
 of powers and variety of products than special and arti- 
 ficial stimulation. Under a protective system some 
 industries have even declined; of this result, ship-building 
 in the United States is a forcible illustration. The con- 
 ditions are too onerous; it has been found more econo- 
 mical to purchase ships in Great Britain, or to hire their 
 services, than to build them in the States. It is some- 
 times urged that immigrants desire to practise in their 
 new homes the skilled trades acquired in the country 
 whence they came; but it by no means follows that 
 healthy diversity is gained by artificially aiding them to 
 do this. As openings occur, men of capacity or enter- 
 prise will utilize their acquired skill. There is always a 
 favourable field for exceptional talent in a young and 
 growing community; but it is not incumbent upon such 
 a community to find employment in his own trade for 
 every artisan -immigrant who comes from a country 
 differing in development and character. 
 
 If we study Protection on the Continent we find many 
 reasons to account for its survival. The older com- 
 mercial nations, like Great Britain, inherited the belief, 
 handed down from *'the mercantile period", that in 
 commerce between nations there was a hostile element, 
 and that in trading one country gained at the expense 
 of another. In France, Colbert's efforts in the seven- 
 teenth century to create a system of state-directed in- 
 dustry and commerce accentuated this belief, until 
 reaction provoked from a leading merchant the retort 
 of, ^^ Laissez-faire ^ laissez-aller'\ At the close of the eigh- 
 teenth century restrictions became universal and tariff 
 wars were constant. The military spirit generated by 
 Napoleon increased them by arousing national jealousy 
 and hostility. Gradually more moderate views prevailed, 
 and an advance was made towards unshackling com- 
 merce between 1850 and 1873. Duties were reduced, 
 and the commercial tariff of i860 between Great Britain 
 and France gave great hopes of better relations. The 
 Franco -German war shattered these prospects; the 
 military spirit was revived; the cost of the war and 
 subsequent military defences caused immense expendi- 
 
156 The Free-trade Movement. 
 
 ture in both countries. Revenue was required to meet 
 
 it, and the method of indirect taxation was adopted, as 
 being least offensive and least easily perceived by the 
 taxpayers. On the pretence of assisting native industries 
 protective duties are levied, which curtail the foreign 
 trade and raise only a small revenue from the diminished 
 imports. This is a wasteful and expensive system, but 
 has the advantage of not being very obvious, while it 
 gains some popularity from its apparent encouragement 
 of home industry. These duties do not press heavily 
 upon food, since Continental nations are mostly self- 
 supporting as regards necessaries.^ They do not there- 
 fore awaken the strong opposition which the duties on 
 corn did in England. 
 
 The case of Continental countries thus differs somewhat 
 from that of Great Britain, though Protection is not an 
 advantage to them any more than it was to this country. 
 The economic objections to Protection are equally cogent 
 in either case, but its real effects are not widely under- 
 stood, and vested interests in the protected trades and 
 in the industries aided by the sugar and other bounties 
 support it; some revenue is realized from the system, 
 but at a great economic loss to the nation. 
 
 Nor can it be maintained that, in the endeavours to 
 extend their commerce and find a market for their pro- 
 ducts, these nations derive any assistance from their 
 protective system. Their efforts to develop an export 
 trade encounter at every point the difficulties created by 
 the limitations upon their imports, and also suffer from 
 the increased cost of production which is caused by a 
 protective system. Their attempts at colonizing and at 
 securing a colonial trade suffer from the same exclusive 
 methods. In commenting upon the very meagre results 
 to French trade, which have followed upon the immense 
 expense incurred in the acquisition of Tonquin and its 
 maintenance under French rule, M. Cl^menceau lately 
 said that ** France was paying 50,000,000 francs a year 
 to find a market for Manchester". France has colonies, 
 
 ^Though France imports some corn she grows an immense amount of 
 wheat, averaging nearly 35,000,000 quarters per annum ; while the average 
 produce of the United Kingdom is less than 8,000,000 quarters. 
 
Protection in other Countries. 
 
 157 
 
 dependencies, and protectorates with an area of 3^ 
 million square miles. Her total trade with them in 1894 
 (excluding Algeria and Tunis) amounted to ;^8,5oo,ooo, 
 while Great Britain's trade with these French posses- 
 sions amounted to ;^ 1,7 50, 000. Germany has about one 
 million square miles of colonial territory, and her total 
 colonial trade amounts to only ;^5oo,ooo; the trade of 
 Great Britain with her Colonies exceeds ;^ 170, 000, 000. ^ 
 The colony of the Straits Settlements offers a very 
 instructive illustration of the beneficial effects of Free- 
 trading. These British possessions, comprising Singa- 
 pore, Penang, Wellesley, and Malacca, less than 1500 
 square miles in extent, and with a population of little 
 more than half a million, have few natural products of 
 any commercial value ; but there are no customs-duties 
 whatever, and the freedom of the commerce, combined 
 with the advantages of the situation as a convenient 
 emporium for eastern trade, has stimulated enterprise, 
 which has built up in fifty years a vast transit -trade 
 amounting to ;^40,ooo,ooo a year. The Settlements 
 receive from the Dutch East Indies numerous products 
 for re-exportation, notwithstanding the Dutch restrictions 
 on that trade, and they form a centre for the collection 
 and redistribution of the commodities of the East, coming 
 from China, Japan, Australia, New Zealand, and the 
 East Indies. The policy of Free-trade has created this 
 flourishing entrepot out of a small fishing village, and 
 the trade of the Eastern Archipelago gravitates there 
 because it can be carried on without hindrance. If the 
 results of this experiment in Free-trading be contrasted 
 with those obtained under the restrictions practised by 
 the Dutch in their settlements, and by the French with 
 even greater stringency in their attempts to develop and 
 
 1 Total Foreign Trade (1895). 
 
 
 
 Imports. 
 
 Exports. 
 
 Total. 
 
 France 
 
 Germany, 
 
 United States, 
 United Kingdom, ... 
 
 £ 
 
 148,725,000 
 212,305,000 
 156,944,934 
 416,689,658 
 
 £ 
 
 134,480,000 
 171,215,000 
 172,640,097 
 285,832,407 
 
 „ £ 
 283,205,000 
 383,520,000 
 329,585,031 
 702,522,065 
 
158 The Free-trade Movement. 
 
 monopolize the trade of their territory in Cochin China, 
 an object-lesson is provided from which the conclusion 
 is inevitable, that in trade, as in the domain of physical 
 science, movement follows the line of least resistance. 
 
 There is little weight, therefore, in the objection that 
 neither the leading commercial nations of Europe, the 
 United States, nor our own Colonies copy the example 
 of Great Britain in free-trading. Their proceedings are 
 explained by various circumstances, some of which are 
 peculiar to each ; and though the reasons for their policy 
 are not economically sound, they are sufficient to account 
 for their adherence to a system to which they have com- 
 mitted themselves, and their apparently slight appreci- 
 ation of our policy forms no argument for condemning 
 it, or for inducing us to modify it in imitation of the 
 methods of our commercial rivals. 
 
 It has been noted in connection with the arguments 
 first considered, that Protection has a tendency to stereo- 
 type the industries of a country and to check its natural 
 development. A trade once established under the 
 shelter of legislation has a claim to its continuance. It 
 is shut in from the healthy play of competition, from the 
 invigorating influence of new ideas, and from the necessity 
 for keeping pace with the growth of science and the 
 industrial advances of other countries. But the law ot 
 progress is one of change. A country inclosed by 
 mountains, or shut out from the world by a species of 
 Chinese isolation, does not display the most advanced 
 forms of social or industrial life, and restrictions upon 
 trade are apt to produce like results. 
 
 In all times there have been natural movements and 
 changes in industry, although the forces which created 
 them operated slowly in more primitive conditions. The 
 family system of spinning and weaving in homes gave 
 place to more complex production in factories. Village 
 manufactures ceased and passed to towns; thus agri- 
 cultural labourers lost their various other employments 
 which had been subsidiary, but had now become special- 
 ized. Industries have frequently changed their localities. 
 Norwich, Suffolk, and the valleys of Somerset and 
 Gloucester have ceased to be the great centres of the 
 
Protection in other Countries. 159 
 
 woollen industry, which moved to the coal-fields of the 
 North with the invention of machinery and the steam- 
 engine. Similarly the iron industry left the forests of 
 Sussex for the coal-fields of Yorkshire, Lanark, and 
 other counties. Coventry, once the leading centre of 
 the silk industry, turned to watch-making ; and when the 
 American machine-made watch destroyed the trade, with 
 ready adaptation it took up the bicycle industry, and is 
 now much more prosperous than at any previous period. 
 Under a protective system the silk industry might have 
 remained its staple trade, and we might still be having 
 distress among protected weavers instead of a prosperous 
 and increasing population of mechanics. Paper-making 
 and printing have found suitable settlements at certain 
 rural towns in Buckinghamshire and Kent, within easy 
 distance of the metropolis. Great Britain about 1770 
 was exporting corn to the Colonies and to Russia; a 
 century later she is dependent upon them for part of her 
 own supply; in the interval their agriculture and her 
 manufactures have been developed. India has long 
 been one of the most considerable markets for Lan- 
 cashire cotton goods. She is now setting up cotton 
 mills, and is creating a demand for English machinery 
 and the products of Yorkshire ironworks. 
 
 A few extracts from a recent speech by the Japanese 
 minister in London pointedly illustrate the effects of 
 progress upon the character of industry and commerce 
 from the case of a country which has been open to the 
 influences of Western civilization, science, and commerce 
 only some forty years. After alluding to the alterations 
 in the industrial aspects of the country wrought by the 
 introduction of machinery, and referring to the great 
 progress of the manufacture of silk piece-goods and of 
 cotton-spinning. His Excellency remarked, that ** what- 
 ever Manchester might lose would be more than made 
 up by Oldham, Birmingham, or Sheffield; the British 
 nation, taken as a whole, would thus have nothing to 
 regret in the industrial development of Japan. Woollen 
 fabrics were unknown to the Japanese until foreign com- 
 merce introduced them, no sheep having been reared in 
 Japan; but the army, the navy, and the police force 
 
i6o The Free-trade Movement. 
 
 were now clothed in wool, and many civilians now wore 
 raiment of the same material. The industry was as yet 
 in its infancy, but in all probability it would become an 
 important one in spite of the fact that all the raw material 
 had to be imported. This afforded an opportunity for 
 Australian wool-growers. The production of iron is 
 exceedingly limited, and the bulk of iron and steel re- 
 quired was obtained from abroad. . . . Great Britain 
 had an excellent customer in Japan in these commodities, 
 and would have for many years, provided Japanese 
 demands were met in an intelligent manner. . . . 
 Foreign trade, which was valued in 1886 at yen 81 ,000,000 
 rose in 1896 to yen 289,000,000. Comparatively large 
 as the commerce of Japan was already, it was sure to 
 grow rapidly, and the country might assuredly be re- 
 garded as full of hopes for Western manufacturers and 
 merchants." 
 
 These examples are sufficient to show that it is a 
 natural law that industries tend to move to, and flourish 
 in, the localities best adapted to their requirements ; and 
 that owing to discoveries, the spread of science, and the 
 rise of new conditions, this locus is not permanent, but 
 is ever changing to take advantage of more favourable 
 circumstances. By artificial obstructions, such as pro- 
 tective tariffs, we may attempt to direct and retain 
 industries, but only at a considerable loss, and waste 
 of natural productiveness. Progress is a product of the 
 combination of the two universal laws of unity and 
 variety — of persistence and change. Free commerce 
 avails itself of both; restraints on commerce tend to 
 destroy some of the advantages to be derived from 
 change, and so far retard national progress. 
 
 Although, for reasons adduced. Free-trade has not 
 been adopted by other countries or by most of the Colonies, 
 yet there is strong indirect evidence for the soundness 
 of the principle of commercial freedom in the internal 
 fiscal arrangements of large states and federations of 
 states. In all cases of the extension of the boundaries 
 of a country, or the inclusion of a new member, fiscal 
 federation is adopted. The United States place no 
 restrictions on the trade between the several states, and 
 
Protection in other Countries. i6i 
 
 every new territory admitted to the Union is placed on 
 the same footing-; the same principle is adopted in the 
 Dominion of Canada, and in Russia and Germany. But 
 if Protection has any economic advantage, its virtue 
 would not cease with the political inclusion of a territory 
 in a country; the local industries should require the same 
 defence as formerly. It is found, however, that the larg-er 
 the country the gfreater is the gain from the removal of 
 these restraints. The reason is plain, the field of com- 
 mercial intercourse is greater, and there is a nearer 
 approximation to complete free-trading. If a country is 
 of vast extent and its climate and products very varied, 
 and if it possesses minerals as well as abundance of land, 
 such a country is most favourably situated for industrial 
 independence, for it has within itself resources of all kinds, 
 and it will suffer less than others from attempts at being 
 self-sufficing. On the other hand, the smaller the coun- 
 try and the more specialized its products, the greater is 
 the advantage which it gains from contact with others. 
 Relations of mutual interchange with countries diff"ering 
 economically from themselves become essential to small 
 and populous countries, and such in an eminent degree 
 is the case of Great Britain. 
 
 Under a natural system of trade, industries adapt 
 themselves to wants ; under Protection they are apt to 
 be either abnormally stimulated and to over-produce, as 
 is the case with the sugar industry in France ; or the 
 privilege tends to develop them into strong monopolies, 
 often sufficiently powerful to completely control an in- 
 dustry. In all protective countries the interests of some 
 classes thus become an obstacle to the adoption of Free- 
 trade, a difficulty seen very clearly by Adam Smith. 
 In free-trading Great Britain few syndicates have suc- 
 ceeded in maintaining high prices ;^ foreign competition, 
 sooner or later, comes in and defeats attempts at arti- 
 ficial monopoly rates. The United States, the country 
 in which Protection has had its strongest hold, have 
 become the home of trusts and corners. There are 
 
 * This is true at all events of necessaries and articles of general consump- 
 tion; no doubt the prices of some articles (diamonds, iodine, quicksilver, 
 &c.) with a very limited supply are controlled by monopolies. 
 
 (M460) L 
 
i62 The Free-trade Movement. 
 
 some twenty of such gigantic trusts, many of them 
 erected upon the exclusion of foreign competition, which 
 control the most extensive industries and fix prices at 
 monopoly rates. The sugar trust has already been 
 mentioned; a glass trust flourishes under the shelter of 
 a duty of 120 per cent on foreign window-glass, while 
 another trust in mother-of-pearl buttons is protected by 
 1400 per cent tariff against foreign competition. The 
 iron, copper, nickel, and tin industries are all monopolies 
 in the United States, and have become mines of wealth 
 to their proprietors. The latest of these is the tin 
 monopoly, which was created by the M*Kinley tariff, 
 not only to the great injury of the British tin industry, 
 but also of some other American trades.^ Minerals 
 could be worked at a reasonable profit in the States, 
 but the effect of the monopoly created by a tariff is, 
 that under the plea of developing the home industry 
 and national resources, syndicates are formed which 
 secure duties almost prohibitive, and enable the owners 
 to obtain exorbitant prices and profits.^ 
 
 A further serious evil attaches to the tariff system as 
 regards the internal trade of a country. Tariffs are at 
 best a clumsy machinery for regulating trade, but their 
 frequent alterations make them most potent instruments 
 for disturbing trade and creating depressions and crises. 
 It is now understood in the industrial and commercial 
 world that steadiness is a desideratum of healthy business, 
 and that violent fluctuations, however created, lead only 
 to uncertainty and injury in the long run. The latest 
 tariff bill in America illustrates the action of such inter- 
 ference with trade. From the time it was proposed it 
 
 i"The Ruckel Company are large dealers in iron and tin. They have 
 just reduced the wages of their workmen by five per cent. Messrs. Sher- 
 man S. Jewett & Co. are among the largest stove manufacturers in the 
 United States. They employ in Buffalo upwards of a thousand men. 
 They have just given notice to their men of a reduction of wages, owing to 
 the increase of the duty on tin-plates, of which the firm use hundreds of 
 tons yearly". — Note from American Correspondent oi Pall Mall Gazette. 
 
 ' The proprietor of the nickel monopoly has become a millionaire, and 
 has founded a Chair of Finance and Economy at Philadelphia to teach 
 Protection ; by the deed of gift the professor has to show how by suitable 
 tariff legislation a nation may keep its productive industry alive, cheapen 
 the cost of commodities, and oblige foreigners to sell to it at low prices. — 
 See Mr. Wise's Industrial Freedom, pp. 283-293 (Cassell & Co.). 
 
Protection in other Countries. 163 
 
 created disturbance and dislocation ; speculations based 
 on its probable results disordered the markets, some 
 imports were vastly increased in anticipation of its pro- 
 hibitive effects, while other industries held back to await 
 its promulg-ation. The bill was frequently altered to 
 meet the demands of the representatives of different 
 trades.^ During" the whole period it was under considera- 
 tion the utmost uncertainty prevailed, business hesitated, 
 industry languished, and trade was stagnant. Many 
 interests were involved, and none could forecast the 
 issue. And this gratuitous injury to trade is a conse- 
 quence of a system which professedly organizes trade 
 for the benefit of the community. 
 
 While, then, various reasons can be adduced for the 
 maintenance of the protective system in other countries, 
 it is plain that the strongest impediment to its abolition 
 is self-interest — a principle which finds abundant illus- 
 tration everywhere, but which, in the case of protected 
 industries, is enlisted very widely in a cause economically 
 injurious to the community as a whole. By a mistaken 
 policy many industries have been started in those 
 countries, which can only flourish through the exclusion 
 of competition afforded by the tariffs ; those interested 
 fight therefore for the maintenance of the tariffs, and their 
 influence is great in the Legislature. The principle, being 
 admitted, gains wider application, monopolies are built 
 upon it, and interests are created embracing powerful 
 sections of the community, hence its abolition is difficult ; 
 strong defences are sought and plausible arguments 
 created on its behalf. In Great Britain the repeal of the 
 
 1 An interesting side-light is thrown upon the working of the protective 
 system by the indignation and protests against the Dingley Tariff in the 
 United States coming from Americans visiting Europe, This latest fiscal 
 device has not only intensified the ordinary effects of Protection, but repre- 
 sents the American Government as agent of a "New York Tradesmen's 
 League", composed mainly of tailors and milliners. The Act prohibits 
 Americans from bringing home more than $ioo worth of personal effects, 
 all excess being charged at about 60 per cent duty. The measure inflicts 
 annoyance and inconvenience upon some 60,000 or 70,000 American citizens 
 who visit Europe in the year, and is calculated to yield some _^5o,ooo excess 
 duty, while it entails increased expense in customs-officials, and has created 
 a system of spies on board ship and detectives in the Custom-house in 
 the interest of the so-called "Merchants' Board of Trade".— See The 
 Times, 19th October, 1897. 
 
164 The Free-trade Movement. 
 
 Corn-laws was opposed by only one large interest, and 
 its resistance was weakened by the allies of famine and 
 misery which came at a critical moment to join its op- 
 ponents. It was a question of food and sustenance in 
 Great Britain which drove home the economic argument; 
 the like conditions do not exist in any other country. 
 
 Chapter IX. 
 British Agriculture and Free -trade. 
 
 The problem of the relation of our Free-trading system 
 to British agriculture is of such importance as to merit 
 separate consideration. In most countries the demand 
 for protective duties comes more especially from manu- 
 facturing industries, but in Great Britain protection has 
 chiefly been invoked during this century on behalf of 
 agriculture. The explanation is, that other countries are 
 for the most part self-supporting as regards food; in 
 this respect the case of Great Britain is exceptional. In 
 the United States and most of the Colonies the farmers 
 are Free-traders, and the Protectionists are manufac- 
 turers, who wish to keep out British competition. In 
 Great Britain the manufacturers are mostly Free-traders; 
 it is the agricultural interest that is most desirous of 
 excluding foreign competition. In 1896 our imports 
 were valued at ;^44 1,807, 000, of which ;£"i54,3i5,ooo, 
 or 35 percent, was on account of agricultural produce in 
 competition with British farming. The table (on page 
 165), from the Board of Trade returns, indicates the 
 nature of these imports. 
 
 Farming has been undoubtedly the least progressive 
 of our great national industries during the past fifty 
 years. In 1846 agriculture employed 3^ millions of 
 labourers in the United Kingdom, while in 1895 only 
 2^ millions found work upon the soil. Agricultural 
 capital, which increased up to 1879, ^^^ since fallen to 
 nearly the same value as in 1846. The introduction of 
 
i895. 
 
 1896. 
 
 £ 8,966,000 
 
 ^10,438,000 
 
 23,762,000 
 
 24,753,000 
 
 49,723,000 
 
 52,792,000 
 
 25,480,000 
 
 26,926,000 
 
 4,025,000 
 
 3,440,000 
 
 2,033,000 
 
 2,728,000 
 
 3,144,000 
 
 2,874,000 
 
 605,000 
 
 605,000 
 
 26,026,000 
 
 24,958,000 
 
 4,618,000 
 
 4,801,000 
 
 British Agriculture and Free-trade. 165 
 
 Imports. 
 
 Animals living (for food), 
 
 Meat (for food), ... 
 
 Wheat, Flour, and other Cereals, 
 
 Butter, Cheese, and Eggs, 
 
 Lard and Milk, 
 
 Fruit and Hops, ... 
 
 Potatoes, Onions, and other Vegetables, 
 
 Poultry and Game, 
 
 Wool (sheep and lambs), 
 
 Other Articles, ... ... 
 
 ;^i48,382,ooo £is\,zis,ooo 
 
 machinery into farming, by which means two men can 
 do as much as three formerly, accounts for some reduc- 
 tion in the amount of labour; but the fact remains that 
 a large part of our food supply is now obtained from 
 abroad in exchange for our manufactured goods ; farm- 
 ing has become less profitable than other industries, and 
 has during the past twenty years tended to decline. The 
 question we have to consider is whether Protection would 
 provide a remedy for depressed agriculture. 
 
 After the repeal of the Corn -laws until about 1876 
 agriculture flourished, more land was brought under 
 cultivation, farmers prospered, and rents rose; increas- 
 ing population, thriving manufactures, and growing 
 commerce created a greater demand for agricultural 
 produce; the standard of living advanced considerably, 
 and classes who had subsisted mainly on bread and 
 vegetables became comparatively large consumers of 
 meat, milk, butter, and cheese. The repeal of the Corn- 
 laws did not operate injuriously to agriculture; the 
 thirty years which succeeded were a period of excep- 
 tional prosperity for the agricultural classes, and falsified 
 all the predictions of the opponents of Free -trade. 
 Between 1853 and i860 Mr. Gladstone removed the 
 import duties on butter, cheese, &c., and on half- 
 manufactured goods, and further, considerably reduced 
 the taxes on imported commodities, leaving only forty- 
 eight dutiable articles. The railway mania and crisis 
 of 1847 retarded progress for a time; the general up- 
 heaval in 1848, the year of revolutions, turned men's 
 minds to political rather than to social reform, and 
 
 OF TS%i '■' y- V 
 
i66 The Free-trade Movement. 
 
 Chartism once again became temporarily a disturbing 
 force; but trade progressed, the harvests were good, 
 and the farmers had a prosperous period until about 
 1862, due mainly to the improved standard of living of 
 the industrial classes. Meanwhile food, especially wheat, 
 came in abundance from other lands, yet rents rose 
 steadily to 1873, and land values increased 27 per cent. 
 The cotton famine, which threw Lancashire into idleness, 
 checked the general prosperity somewhat, and the disas- 
 trous commercial crisis of 1866 marked an epoch of 
 severe trial for trade, yet agriculture flourished. The 
 impulse to foreign trade gained by the opening of our 
 ports, and the gold discoveries which developed Australia 
 gave an unwonted period of activity. Agricultural im- 
 ports increased during the seventies, but demand kept 
 pace, and, excepting corn and wool, prices did not fall 
 materially for some years. 
 
 In 1879, however, severe depression set in, and from 
 that time agriculture has not recovered. A series of 
 bad harvests culminated in 1879 in failure of crops, but 
 the more enduring causes of the decline in agriculture 
 are to be found in an intensity of foreign competition 
 previously unknown. Prices fell with the influx of all 
 kinds of food, rents were gradually reduced, but not 
 until much farming capital had been lost and farms were 
 going out of cultivation in some counties. It is perhaps 
 not remarkable that agriculturists should have turned to 
 the State to relieve their distress. Two facts only were 
 patent to them; prices had fallen to an unprofitable 
 level, and the importation of foreign food at low prices 
 was becoming immense.^ Farmers, unable to meet their 
 expenses or obtain sufficient relief from lower rents, 
 sought aid from a rise of prices, or something which 
 would remove the intensity of the competition which 
 oppressed them. They also began an agitation for a 
 modification of burdens upon land, that is, for a reduc- 
 tion of local rates. This last has been granted. It 
 
 * Estimated value of agricultural produce of the United Kingdom in 1891 : 
 ;^222,9i5,ooo. From the same quantities, at prices of 1874, the estimated 
 value would be: ;^298, 997,000, showing a decline in money values of 
 ;^76, 082,000, or 25 per cent. 
 
British Agriculture and Free-trade. 167 
 
 cannot be doubted that the act of 1896, which made this 
 remission, will confer no permanent advantage upon 
 farmers. If rates are a deduction from rent, as has 
 been argued from both sides of the House of Commons, 
 the gain must accrue ultimately to the rent-receiver, 
 although this will not be accomplished until the compe- 
 titive principle has had time to work out the adjustment. 
 Of the various remedies proposed for the restoration 
 of agriculture none have been regarded with more 
 hopefulness than Bimetallism and Protection. The 
 former of these involves questions much too large and 
 intricate to be here discussed, but its special bearing 
 upon agricultural prices may be touched upon briefly. 
 Prices of agricultural produce have fallen generally, 
 though not equally in all the different products ; meat 
 has fallen least of all, while poultry has actually risen. ^ 
 The fall in prices is not, however, peculiar to agri- 
 culture, it applies equally to most other articles of 
 general consumption. The comparison of prices by 
 means of the index -number system, taking forty-five 
 articles of ordinary use, shows that the buying power 
 of money as regards those articles has changed during 
 the last quarter of a century, so that ;£^62 will now 
 purchase as much as ;£'ioo would have bought of these 
 commodities at the former period. This means that 
 where money earnings have been constant their pur- 
 chasing power has increased about 50 per cent ; as just 
 stated, this applies to manufactured articles as well as 
 to food. Now a cause which is general, that is, one 
 which would act upon all prices in much the same 
 manner — such as an alteration in the standard of value — 
 would be as potent in its influence upon the prices of 
 articles on which the farmer spends his earnings as upon 
 the price of corn or other produce he has to sell. It 
 
 1 A comparison of the prices of agricultural products (1893- 1896) with the 
 prices which ruled (1865-1875) when they were exceptionally high, shows a 
 fall as follows : — 
 
 
 Per cent. 
 
 Per cent. 
 
 Per cent 
 
 Wheat, ... 
 
 ... SO 
 
 Butter 10 
 
 Mutton, ist quality, 8 
 
 Barley, ... 
 
 ... 32 
 
 Hay 16 
 
 2nd ,, 15 
 
 Oats, ... 
 
 ... 25 
 
 Beef, ist quahty, x(i% 
 
 3rd ,, 20 
 
 Wool, ... 
 
 ... 26 
 
 ,, and ,, ... 19 
 
 Straw nil. 
 
 Cheese,... 
 
 ... 15 
 
 M 3rd 28 
 
 Poultry, rise7i. 
 
i68 The Free-trade Movement. 
 
 could only be in money-payments of rents or fixed 
 charges that he could reap a benefit by an alteration in 
 the standard. Would it affect the competition of other 
 corn-producing countries? Now our chief imports of 
 corn are from the United States, Russia, Argentina, 
 and Canada, and not from silver-using countries. Out 
 of ;^5o,ooo,ooo worth of cereals imported, only about 
 ;;^3, 000,000 worth, that is, 6 per cent, came from silver 
 countries in 1895, ^^^ ^ large proportion of this was 
 from India. It is asserted that the divergence between 
 silver and gold places India at an advantage in export- 
 ing grain. There are, however, other special reasons 
 why India should be expected to become an exporter of 
 grain. For some forty years past the policy of develop- 
 ing the resources of India by British capital has been 
 powerfully advocated, both in the interests of the natives 
 and also as a means of increasing our commerce. It 
 was maintained that India would thus become a pro- 
 ducer of corn, tea, and other valuable crops, and would 
 yield a profitable return on the capital sunk in her 
 development, while she would also become a purchaser 
 of British manufactures. This has now been partially 
 achieved ; British capital flowed to India for both public 
 and private undertakings. Roads, railways, irrigation, 
 planting, and cultivation have followed. By these 
 means, and under a strong and capable government, 
 India has enjoyed peace and prosperity. The antici- 
 pated results have only been partially realized as yet. 
 But India has become an exporter of tea and of grain, 
 for labour there is cheap and transport is now easy ; ^ 
 railways, steamships, and the Suez Canal (opened in 
 1873) put Indian produce on British markets at low 
 rates ; yet the wheat exports fluctuate greatly and the 
 average is small. Between 1872 and 1891 the export of 
 wheat to Great Britain rose from 394,000 cwts. to 
 30,000,000 cwts ; but it fell to only 7,000,000 cwts. in 
 1894, and owing to the triple disasters of drought, 
 
 *In 1868 the United Kingdom consumed 107,000,000 pounds of tea, of 
 which it obtained 100,000,000 from China and 7,000,000 from India. In 
 1896 the consumption was 227,000,000 pounds, of which 203,000,000 came 
 from India and Ceylon, and 24,000,000 from China. 
 
British Agriculture and Free-trade. i6g 
 
 famine, and plague, was almost a nominal quantity in 
 1896. Without entering, therefore, upon the diffi- 
 culties of the currency controversy, sufficient reasons 
 can be adduced to show why India should tend to 
 become a producer of grain and a rival of the British 
 farmer in the market for wheat. It seems useless, then, 
 to look to bimetallism as a remedy for agricultural 
 depression. British farming is affected only in a limited 
 degree by the competition of silver-using countries. 
 Of these India is the most important, and its capacity 
 to send wheat to Great Britain has been determined 
 much more by the circumstances just narrated than by 
 any influence of the currency. 
 
 We turn next to the other remedy — Protection. It 
 is in the highest degree improbable that any statesman 
 will venture to propose the renewal of tariffs upon the 
 necessaries of life; for good or for evil Great Britain 
 has become dependent upon imported wheat to the 
 extent of more than 70 per cent of her consumption. ^ 
 Cheap food is essential to her industrial supremacy, and 
 only by free importation can an adequate supply be 
 obtained. Under thirty years of exceptionally strong 
 Protection food was dear, and at the same time the 
 farming classes complained frequently and bitterly. It 
 is a remarkable fact that during these thirty years of 
 systematic effort to protect agriculture there were no 
 less than five parliamentary inquiries into agricultural 
 distress; and at those times, we read, both operatives 
 in towns and agricultural labourers were half-starved, 
 workhouses were crowded, farmers were ruined in 
 numbers, and the burden of poor-rates was overwhelm- 
 ing. Other causes contributed to the distress, but the 
 
 1 For the Year 1895 the Wheat 
 
 Wheat Imported 
 
 1893-1895. 
 
 Supply was : 
 
 
 
 From 
 
 Bushels. 
 
 From 
 
 Per cent 
 
 United Kingdom, 
 
 ... 51,000,000 
 
 Russia 
 
 ... i6-6 
 
 United States, 
 
 ... 87,000,000 
 
 Other European countries, 47 
 
 Russia, 
 
 ... 46,000,000 
 
 United States, 
 
 ... SO'3 
 
 Argentina, 
 
 ... 23,000,000 
 
 Canada, 
 
 - 1*0 
 
 India 
 
 ... 17,500,000 
 
 India, 
 
 ... 6-8 
 
 Canada, 
 
 9,500,000 
 
 Argentina, ... 
 
 ... no 
 
 Other countries, 
 
 ... 26,500,000 
 
 Other countries, ... 
 
 ..- 5'4 
 
 
 260,500,000 
 
 100 
 
170 The Free-trade Movement. 
 
 evidence as to the operation of the protective laws upon 
 the supply of necessaries proved conclusively the failure 
 of the system. From 1846 to the present time there 
 have been but two inquiries (1880 and 1893) into agri- 
 cultural depression, both subsequent to a series of bad 
 seasons; meanwhile the country has been constantly 
 advancing in comfort, and the agricultural decline did 
 not set in until some thirty years after Protection had 
 been abolished. 
 
 Agriculture presents four distinct interests or aspects 
 for consideration: namely, as it concerns the labourer, 
 the farmer, the landlord, and the consumer. We have 
 seen that at no time has the last and largest class 
 (which also in a sense comprises all the rest) been so 
 favourably situated as at present. Low prices rule, and 
 the consumer's table is loaded with abundance and 
 variety. Let us turn to the condition of the agri- 
 cultural labourer, the second largest class. According 
 to the reports of the Royal Commission on Labour in 
 1894 the money- wages of agricultural labourers have 
 risen generally, though not equally, and least in corn- 
 growing districts ; but the buying power of their wages 
 has everywhere vastly increased, and altogether there is 
 an estimated improvement of about 40 per cent in the 
 cost of living of this class during the last thirty years ; 
 meanwhile free education for their children, and allot- 
 ments have indirectly added to the material comfort of 
 the labourers.^ 
 
 ^From an analysis of the reports upon thirty-four districts, Mr. Little 
 shows that money-wages (exclusive of harvesting) averaged: In 1867-1870, 
 J2S. yl. a week ; in 1879, 13J. gd. a week ; and 1892-1893, 135. 3<a?. a week ; 
 with harvesting the average wages in 1892-1893 amounted to 15J iid. a 
 week. The average cost to a labourer's family of five persons in flour, 
 butter, cheese, tea, sugar, is stated by the same authority to be : — 
 
 1860-1867= 50 •4K/. 
 1868-1875=48-4. 
 1876-1883 = 36-21. 
 1884-1891=31-62. 
 1892-1894=29-2. 
 
 Writing hi 1878, Sir James Caird (Landed Interest) estimated that the 
 wages of the agricultural classes had risen 60 per cent since the repeal of the 
 Corn-laws; and Sir Robert Giffen, in a paper on The Progress of the Work- 
 ing Classes, read before the Statistical Society in December, 1883, made a 
 similar statement. 
 
British Agriculture and Free-trade. 171 
 
 Mr. Little, who summarized the reports of the com- 
 missioners, concludes: ** It is no exaggeration to say- 
 that in the last quarter of a century a great economic 
 revolution, accomplished with little aid from legislation, 
 has transferred to the labourers from one-third to one- 
 fourth of the profits which the land-owners and farmers 
 previously received from the cultivation of the land ". 
 
 One commissioner reports: '*The agricultural la- 
 bourers were never so well off as they have been during 
 the last few years in spite of the depression which has 
 caused serious distress to most of their employers ". 
 
 Another writes : * ' The labourers are better off than 
 they were; all things taken into account, their wages 
 are higher, cottages more commodious, hours of work 
 shorter, and resting time longer". Again: ** Women 
 no longer go into the fields as formerly, excepting a 
 little in harvest or fruit time; children are at school 
 getting a free education, which is an indirect addition to 
 wages ; young women go to service or regular occupa- 
 tions; and altogether the lot of the I?bouring class has 
 been vastly improved ; its chief drawback being the lack 
 of rational recreation ". 
 
 At the same time several commissioners speak of the 
 decline in the efficiency of the labourers. One says: 
 "They are less interested in their work and far less 
 skilled than the older men who are dropping off; modern 
 conditions unsettle them; they look less to agriculture 
 as their life work, and take less trouble to acquire the 
 special arts connected with it ". 
 
 Turning next to landlords, we find that during the 
 war (1793-18 1 5) rents were more than doubled, and the 
 Corn-law of 181 5 raised them still higher. Immediately 
 on the repeal there was a fall, but this was followed in a 
 few years by a rise, which continued until about 1878.^ 
 
 1 Sir James Caird, in The Landed Interest, gives the following table for 
 
 England : — 
 
 
 1770. 
 
 1850. 
 
 1878. 
 
 Rent 
 
 Labourers' wages, ... 
 
 s. d. 
 13 
 7 3 
 
 s. d. 
 
 27 
 
 9 7 
 
 s. d. 
 30 
 14 
 
172 The Free-trade Movement. 
 
 From that time rents have declined in amounts estimated 
 in different parts at from lo to 50 per cent. The fall has 
 been greatest in the corn districts, and in some parts of 
 Essex corn-land has gone out of cultivation. The fall is 
 least in districts where cattle, butter, and cheese form 
 the chief products. Over a large part of the country 
 the landlord -interest has suffered considerable loss: 
 land-owners large and small, corporations, and all insti- 
 tutions which were dependent upon rents, in the parts 
 most affected — i.e. where it has become unprofitable to 
 continue corn-growing — have experienced a serious dimi- 
 nution in their finances. This has been strongly exem- 
 plified in the case of some of the Oxford and Cambridge 
 colleges, whose revenues are derived from land in the 
 eastern counties, and also by instances like that of Guy's 
 Hospital, the income of which fell one-half from depre- 
 ciation in land values. Clergy dependent upon the rent 
 of glebe-land or upon tithes, which have fallen with the 
 price of corn, have suffered acutely. The Duke of Bed- 
 ford's book, The Story of a Great Agricultural Estate^ 
 proves conclusively that purely agricultural outlay has 
 in some cases yielded only loss in recent years; and if 
 rent be regarded as the return to capital invested in im- 
 provements during the past twenty years, it has in such 
 cases proved a bad investment. Estates purchased about 
 1873, when rents were about the maximum, have been 
 offered for much less than half the amount given for them. 
 
 To rent-receivers, then, the fall in prices of agricultural 
 produce has yielded a serious loss of income, and the 
 contraction of the spending power of this class has 
 affected industries and classes which were dependent 
 upon their expenditure. Local employment has suffered, 
 and local institutions have lost some of the support 
 which was accorded from this source. 
 
 As pointed out, the fall in agricultural rents is very 
 irregular, and has been determined by the character of 
 the soil and products. Pastoral counties like Cheshire 
 have suffered little; and in many districts, where town 
 population has been increasing, the net result to rents of 
 land from all sources has been an increase, owing to the 
 extension of building. 
 
British Agriculture and Free-trade. 173 
 
 While money-rents have fallen, the same general fall 
 in prices, which has benefited all consumers, must be set 
 against the fall in the matter of ordinary expenditure of 
 incomes derived from rent. A fact of great importance 
 in some cases as an off-set to the fall in agricultural 
 rent, is the increase in ground-rents of houses, shops, 
 and manufactories. The growth of population and of 
 industries has created a steady demand for building land, 
 thus augmenting the incomes derived from land which 
 is diverted from agriculture to building, while house-rent 
 has formed an increasing item of expenditure for all 
 classes of the population. Agricultural rental in the 
 United Kingdom is estimated at about ;jf 50,000,000,^ and 
 the ground-rental of houses, &c., at a somewhat larger 
 and increasing amount. Professor Marshall writes: 
 * ' Taken altogether the money rental of England's soil 
 is probably twice as high, and its real rental three or 
 four times as high as it was when the Corn-laws were 
 repealed ".2 The rise in ground-rents and the fall in 
 agricultural rents are both in conformity with the eco- 
 nomic principle that rent is a surplus profit, and varies 
 with price under the play of free competition. ^ 
 
 1 The Reports of the Commissioners of Inland Revenue give the gross 
 annual value of lands (including tithes) for Great Britain as follows : — 
 
 
 Gross Annual Value. 
 
 Decrease. 
 
 England, 
 
 Wales, 
 
 Scotland, 
 
 Great Britain, 
 
 1879-80. 
 
 48,533.340 
 
 3,265,610 
 
 7.769.303 
 
 1893-4. 
 
 36,999,846 
 
 3,065,985 
 
 6,251,898 
 
 Amount. 
 11.533.494 
 199,625 
 1,517,405 
 
 Per cent. 
 
 237 
 
 6-1 
 
 19-5 
 
 59.568.253 
 
 46,317,^29 
 
 13,250,524 
 
 22*2 
 
 2 Principles of Economics, book vii., chap. 13, first edition, 722, note. 
 
 3 Under free competition rent follows, and is determined by price ; the 
 poorest soil worth cultivating pays no rent, since it only just recovers the 
 expenses of cultivation; all land superior to this "marginal land" pays 
 rent in proportion to its superiority. The working of the theory, however, 
 depends on perfect competition ; in actual fact many farmers go on paying 
 a customary rent, and rent is often treated in practice as if it were a first 
 claim upon the land and part of the cost of production, instead of a surplus 
 profit dependent upon price (rising and falling with it). Rent, as surplus 
 profit, measures what is left from average farming after all average expenses 
 
174 T^c Free-trade Movement. 
 
 Coming last to the farmers, the only remaining interest, 
 profits have undoubtedly fallen with prices, especially in 
 districts devoted to corn ; of this the decline in agricul- 
 tural capital, and the failures and withdrawals from 
 farming, are proof only too apparent. The Report of 
 the Royal Commission on Agriculture, 1897, finds, that 
 ** the farmers whose accounts have been furnished have 
 for twenty years past received on an average only 60 per 
 cent of the sum which was in past days considered an 
 ordinary and average profit. The chief explanation is 
 found in the vast influx of food from Western America, 
 produced under conditions of nature more favourable 
 than those which prevail at home, and transported by 
 the aid of modern science at trivial cost.^ South America 
 also is becoming a serious rival in wheat; in 1896 from 
 Argentina and Chili alone we received wheat valued at 
 ;^2, 000,000. Rich virgin soil, a fine climate, cheap 
 labour, low freights, and quick transit seem to promise 
 indefinite and almost limitless possibilities of supply from 
 these new sources for many years to come. 
 
 In the matter of British corn-production the change 
 in the last twenty-five years has been marked. In the 
 year 1871 there were 11,833,243 acres under corn and 
 22,525,761 acres under pasture in the United King- 
 dom. In 1895 corn covered only 8,865,338 acres, while 
 27,831,117 acres were devoted to pasture. The reduc- 
 tion was mainly in wheat, the price of which fell from 
 57 J. a quarter in 1872 to 22s. lod. in 1894, though it 
 rose again to 26^. 2d. in 1896, and to 335. 4^. in Septem- 
 ber, 1897. The home-grown wheat in 1895 was worth 
 ;£'8,4oo,ooo, the imported ;£"30, 700,000. The decline of 
 arable land, and the increase of pasture, point to an 
 
 are paid. In practice many special circumstances modify this principle in 
 particular cases. The theory is very visible in the case of ground-rents, 
 which notoriously rise with the superiority of the site. 
 
 1 At the present time (1897) wheat comes from the United States to 
 London at a cost of 3J. 2d. per quarter (of 480 lbs. ), but 2s. is considered a 
 fair freight, and corn has been sent to Liverpool as ballast at 20 guineas for 
 2000 quarters ; that is, at 2%d. a quarter. To put the matter simply, the 
 transport of the flour in a 4-lb. loaf from the Western States of America to 
 London costs about one halfpenny. In his speech in the House of Commons, 
 i2th March, 1844, Cobden stated that the average cost of transit from Dantzig 
 over ten years was loj. 6d. a quarter. 
 
British Agriculture and Free-trade. 175 
 
 important change which is taking place in agriculture.^ 
 British farming, not for the first time, is undergoing an 
 experience common to all industries when new dis- 
 coveries and inventions modify the methods of produc- 
 tion and disturb either supply or demand ; something of 
 the nature of an agriculture revolution has taken place 
 since 1877, comparable in importance to that which took 
 place in the period of enclosures (1790-1820), or to the 
 transition from tillage to sheep-farming in the sixteenth 
 century. Manufactures have been revolutionized in 
 Great Britain by successive scientific discoveries yielding 
 new mechanical appliances or powers; each occasion 
 has called for some fresh adaptation, and has given a 
 shock to some old-established method of industry. But 
 while there has been dislocation there has been also 
 constant advance ; and the gains, not only to society 
 but to industry, if intermittent, have been permanent 
 and sure. The changes in ship-building from wood to 
 iron and steel, and in artificial lighting from candles to 
 gas and electricity, the transformations in industry 
 effected by steam, electricity, and chemistry will serve 
 to illustrate the benefits to society from the rapid ad- 
 vances of science. Wages have gone up, improved cir- 
 cumstances have followed ; new products, new modes of 
 transport, and fresh industries have arisen, while the 
 development of the engineering trades and of the iron 
 and coal trades has been enormous ; though these rapid 
 evolutions may have brought loss to some, who are 
 crushed out by the advance in special industries, they 
 
 ^Total area of United Kingdom and Channel 13165=77,671,319. 
 Area under Cultivation in United Kingdom. 
 
 1 1870. 
 
 189s. 
 
 1897. 
 
 Corn, ... 
 Pasture, 
 
 Green crops, ... 
 Other crops, ... 
 
 11.755.053 
 22,085,295 
 
 5. 107. 135 
 7,550,740 
 
 8,865,338 
 
 27,831,117 
 
 4.399.949 
 
 8,514.198 
 
 8,890,092 
 
 27,924,710 
 
 4.327.568 
 
 6,726,183 
 
 Total, ... 
 
 46,498,223 
 
 49,610,602 
 
 47.868,553 
 
 During the period the largest area under corn was in 1871, under green 
 crops in 1871, under pasture in 1897, other crops in 1893. 
 
176 
 
 The Free-trade Movement. 
 
 have conferred greatly increased comfort upon the 
 nation as a whole, and especially upon the classes of 
 manual labourers. 
 
 In agriculture a similar transition is going on. 
 Science has modified the conditions of production and 
 exchange very greatly during the past twenty years, 
 and success in this sphere of industry now demands 
 knowledge of the most recent scientific and business 
 methods, and a readiness to profit by the latest informa- 
 tion. It is probably due to slowness in these respects, 
 and to an adherence to old-fashioned ideas and methods, 
 that British farming has been outstripped in some direc- 
 tions by its younger competitors in the States and in the 
 Colonies, and even nearer home. 
 
 The fact must be admitted that wheat-farming has 
 suffered a decline in Great Britain. Notwithstanding a 
 temporary revival in prices, we cannot compete in cereals 
 with the rich virgin soils of the almost boundless plains 
 of North and South America. Ultimately, no doubt, 
 these countries will consume their own crops, but for a 
 considerable period we may count on large and cheap 
 supplies from their fertile soils, which will undersell corn 
 from the inferior lands in Great Britain. In 1895 there 
 were in the United Kingdom^ only i^ million acres 
 under wheat, ^ while oats occupied 4}^ million acres, and 
 
 ^ The latest official figures attainable are as follows : — 
 
 Areas under Corn Crops in the United Kingdom 
 IN 1897 AND IN 1896. 
 
 
 
 
 1897 compared with 
 
 Crop. 
 
 1897. 
 
 1896. 
 
 1896. 
 
 
 
 
 Increase. 
 
 Decrease. 
 
 
 Acres. 
 
 Acres. 
 
 Acres. 
 
 Acres. 
 
 Wheat, 
 
 1,938.956 
 
 1,734.118 
 
 204,838 
 
 
 Barley or here, 
 
 2,213.529 
 
 2,285,933 
 
 — 
 
 72.404 
 
 Oats, 
 
 4,226,231 
 
 4.303.697 
 
 — 
 
 77.736 
 
 Rye. 
 
 89,621 
 
 88,634 
 
 987 
 
 
 Beans, 
 
 230,429 
 
 252.983 
 
 
 22,554 
 
 Peas 
 
 191,326 
 
 196,973 
 
 — 
 
 S.647 
 
 ■France has 17,000,000 acres under wheat, and also imported 35,000,000 
 bushels of grain in 1896. 
 
British Agriculture and Free-trade. 177 
 
 barley 2^ million acres. Cattle-rearing and dairying 
 are taking the place of wheat-growing. Pasturage has 
 increased 6 million acres since i868, and there is an 
 addition to cattle of 2^ millions. Horses and pigs are 
 more numerous, while sheep have decreased in number. 
 It is obviously more profitable to provide for increased 
 demands for meat and dairy produce than to grow corn. 
 But even here competition has arisen. Improved transit 
 brings cattle from America in greater numbers; the 
 tinned-meat trade, which grew up some thirty years 
 ago and threatened rivalry from Australia and South 
 America, was followed later by the discovery of a 
 process by which frozen mutton was shipped from New 
 Zealand. 1 No fall in meat, however, took place until 
 1884. It was feared that these imports would be a 
 serious blow to British farming, but the most marked 
 effects have been a great increase in the consumption of 
 meat and of trade with the Colonies, which take our 
 manufactures in payment for food. The cheaper and 
 more abundant supply of meat rendered possible a better 
 standard of living among some classes, while the demand 
 for the superior British meat has remained as strong as 
 ever.^ It cannot be said that foreign beef displaces 
 British beef, for the Royal Commission reports there is 
 no diminution in the absolute quantity of meat produced 
 in the United Kingdom ; and though the wholesale price 
 of British meat has declined 30 to 40 per cent, the price 
 of superior British meat has not fallen appreciably to 
 buyers in retail markets. ^ 
 
 In yet another direction has the farmer found himself 
 tried by modern progress. Butter, cheese, and eggs to 
 the value of ;^26,oc)o,ooo are imported annually. The 
 factory system of making cheese, which was quickly 
 adopted in the United States, introduced a serious com- 
 
 ^ Quite recently a vessel has been built for the Australian trade with cold 
 storage for 90,000 carcasses of sheep, besides accommodation for other cargo 
 and passengers. 
 
 2 Imports of meat (live and dead) into the United Kingdom have increased 
 from 22 lbs, per head in 1876-78 to 40 lbs. per head in 1893-95. 
 
 » The Duke of Bedford writes [Story of a Great Estate) : " A recent Blue 
 Book shows that the profits of the grazier are principally absorbed by the 
 middleman and the railways ". 
 
 (M460) M 
 
178 The Free-trade Movement. 
 
 petition with English cheese; this was followed by the 
 application of the freezing process and cold-storage 
 system to butter, which, combined with the co-operative 
 system of dairying, have led to large exports from 
 Australia in ships specially constructed for the purpose. 
 The co-operative dairy system was speedily copied in 
 other colonies. Meanwhile in Europe, Denmark and 
 Sweden had turned to dairy-farming and the co-opera- 
 tive system of butter-making with great success. These 
 countries have adopted the most recent improvements in 
 the methods of production and in the organization of the 
 sale, with the result that they are underselling Great 
 Britain in her own markets. Butter worth ;£"6, 250,000 
 came from Denmark alone in the year 1896. At the 
 International Congress on Technical Education, held in 
 London in June, 1897, Sir William Windeyer of New 
 South Wales read a paper in which the following 
 remarks occur: — 
 
 "As a visitor to England I have been somewhat 
 surprised at the absence amongst English farmers of 
 that co-operative organization in the dairying industry 
 which is so conspicuous amongst the farmers of New 
 South Wales, and which enabled the Australian Colonies 
 in 1896 to send you, at a profit to themselves, 17,000 
 tons of butter; whilst the dairying industry of England 
 seems to me to be languishing for want of the diffusion 
 of that scientific teaching of the best methods of pro- 
 ducing a uniform quality of butter which has given 
 Denmark and other countries so large a control of the 
 English market ".1 
 
 This extract points to one serious cause of the depres- 
 sion in British agriculture, namely, that it is falling 
 behind other countries in scientific and technical know- 
 ledge and in business organization. Whilst farming is 
 being conducted in other countries on the most modern 
 business principles, and with the utmost skill in the 
 application of science and economic methods, it is being 
 
 1 In 189s there were 155 butter and cheese factories in Victoria, which 
 exported 21,000,000 lbs. of butter. The Government has given no bonus 
 since 1893-94, but the butter may be stored in the Government refrigerating 
 works free. There is a bonus on exported cheese of 3^/. a lb. 
 
British Agriculture and Free-trade. 179 
 
 pursued in England far too much on the old traditional 
 lines. British farmers have a natural protection in the 
 expense of carriage from distant parts; and, with the 
 application of the highest science to their industry, and 
 of the principle of combination to the disposal of the 
 product, they ought to be able to hold their own in 
 matters like dairying against the world. There is no 
 remedy for this defect but progress, and it is useless to 
 ask for prohibition or restriction, which would only 
 encourage greater inefficiency. Large production has 
 been a great factor in the success of manufactures, and 
 it is secured in the matter of butter and cheese in a 
 country of small farmers like Denmark by co-operation. 
 The same system, if adopted here in conjunction with 
 the most approved methods of manufacture, would 
 secure the pre-eminence of home-made butter, for there 
 is a natural prejudice in favour of home products. ^ 
 
 The British Dairy Farmers' Association was founded in 
 1866 to promote this kind of knowledge by conferences, 
 exhibitions, and experiments. It has established a Dairy 
 Institute and Dairy Farm, Schools, and Colleges, it 
 encourages butter factories and creameries. Yet its 
 representatives admit that they make converts very 
 slowly, and they complain bitterly of the want of 
 technical education and of interest among those most 
 deeply concerned — both farmers and labourers. 
 
 Cattle and dairy farming, supplemented by the rear- 
 ing of fowls, would seem to be at present the most 
 paying side of British farming, and in all these branches 
 British produce is admittedly superior to foreign pro- 
 
 1 The small French-Canadian farmers adopt the same system of co-opera- 
 tion for dairying and other matters. The writer, when visiting Canada, 
 noticed on the roadside not many miles from Quebec stone slabs projecting 
 from the walls in front of each little farm; on inquiry he was informed that 
 the peasants placed on these their cans of milk, which were then collected by 
 a common cart and carried to the butter factory. Contrast the economy of 
 this joint action with the perverse individualism of the British farmers, who 
 persist in making their own butter in the old-fashioned way, and finding 
 their own market, and also in sending their individual milk-cans to the rail- 
 way-station. The writer once asked a small East Anglian farmer why he 
 and his neighbours did not make some attempt at co-operation ; the reply 
 was, that ' ' he had once suggested it, but without success ; they were all 
 jealous of one another, and each supposed the other wanted to make some- 
 thing out of it ", 
 
i8o The Free-trade Movement. 
 
 duce, while the same cannot be said of corn. It is a 
 question of expense and method, and improvements in 
 the latter will diminish the former. If Great Britain 
 falls behind the United States and Germany in efficiency, 
 or in the knowledge of chemical and other sciences, she 
 pays the penalty in injury to her manufactures ; the same 
 applies to the agricultural industry. It is necessary 
 that those engaged in agriculture shall be made familiar 
 with the best that is known respecting their art, and all 
 that the sciences of chemistry and mechanics, that com- 
 mercial and economic methods, can contribute, be re- 
 garded as essential to its success. The plain fact is, 
 that the conditions under which agriculture can be 
 successfully carried on have been transformed by 
 modern science, and the only mode of meeting the com- 
 petition of those who have adapted themselves to the 
 changed circumstances, is to adopt the same or superior 
 methods. 
 
 Experts in agricultural matters and in the science of 
 farming are loud in their lamentations over the apathy 
 of practical farmers, and the want of co-operation and 
 mutual trust which would enable them to emulate their 
 rivals in methods which depend largely upon union. We 
 read that farmers trust too much to experience, often 
 gained personally at much loss and labour, although it 
 is out of date in the presence of ever-advancing science ; 
 they have much manual skill, but little technical know- 
 ledge; only a minority avail themselves of the opportuni- 
 ties offered for acquiring the principles of their art.^ 
 Labourers are not as a rule skilled except in routine 
 work ; they are wanting in observation and, above all, in 
 knowledge of the scientific basis of their work ; and they 
 require more training in the principles of agriculture. 
 Some technical agricultural schools in this country 
 afford encouragement by their results, but those who 
 attend them constitute, as yet, a very small percentage 
 
 1 A young intelligent farmer known to the writer (and son of a farmer 
 who was a strong Protectionist), after attending lectures given by the 
 County Council completely changed his practice and views, and has become 
 convinced that he can make farming a success, yet he cannot succeed in 
 inducing other farmers to attend the lectures ; a typical reply being that of 
 one of them, who said of the lecturer, "What I don't know he can't tell me". 
 
British Agriculture and Free-trade. i8i 
 
 of the classes interested in the industry. When the 
 knowledge has penetrated so as to reach all small 
 farmers and labourers, market-gardeners, and allotment- 
 holders, there will be a revival in the affairs of agricul- 
 ture, and much produce now imported may be expected 
 to be plentifully supplied at home. In short, there is a 
 great consensus of opinion among experts that scientific 
 knowledge is more backward in farming than in other 
 industries, and that among the large body of practical 
 agriculturists the prevalent adherence to traditional 
 methods is adverse to the success of the industry under 
 the conditions of modern competition. 
 
 As a minor branch of agricultural industry, the rearing 
 of fowls has been much neglected in this country in 
 comparison with continental countries where peasant 
 farming prevails. There seems no reason why it should 
 not rank higher and form at all events a valuable supple- 
 ment to other branches of farming. Recent experiments 
 in Sussex, where fowl-farming and feeding have been 
 systematized, appear to prove that it has peculiar diffi- 
 culties where it constitutes the sole industry, but as an 
 addition to small dairy farms it demands more attention 
 than it receives. The revenue to be derived is not a 
 negligible quantity, since the demand for eggs in every 
 town and village is constant, and good prices are obtain- 
 able. If it pays to import eggs and poultry of the value 
 of ;^4,75o,ooo, it would certainly pay to raise more at 
 home. Facilities are now being provided by some of 
 the principal railways to send farm-produce to towns on 
 easy terms in a convenient manner and in small quanti- 
 ties. A century and a half ago, according to Defoe, the 
 rearing of geese and turkeys was a considerable industry 
 in East Anglia; the birds were then driven to town on 
 foot from remote parts of Norfolk and other eastern 
 counties, often in droves of a thousand or more. The 
 system of capitalistic farming, which began to grow up 
 in the eighteenth century, has driven out fowl-farming 
 among large farmers, who have been trained to look to 
 corn, cattle, and roots as their sole produce. The Corn- 
 laws are largely responsible for this, since they incul- 
 cated the doctrine that Great Britain should be self- 
 
i82 The Free-trade Movement. 
 
 supporting as regards bread, and that the chief end of 
 farming should be the production of corn. Statistics of 
 consumption, however, prove that the demand for eggs, 
 fowls, and rabbits is such as would find employment for 
 a considerable rural population. There is no presump- 
 tion in arguing from the above facts that a section of 
 the agricultural community might find in the smaller 
 products a profitable adjunct to the other branches of 
 their industry, one which would involve no great capital 
 or risk, and which would at the same time satisfy a 
 constantly-increasing demand. The difficulties of transit 
 are being removed, and business organization, which 
 would dispose of the produce without handing over the 
 profits to middlemen, seems to be the chief thing want- 
 ing to enable considerable additions to be made to the 
 incomes of many small farmers from this source. 
 
 The Report of the Royal Commission on Agriculture, 
 issued in the autumn of 1897, gives no support to Protec- 
 tion as a remedy for low prices. It points out that 
 agricultural depression is general all over the world, and 
 is even felt severely in the countries which, like the 
 United States, are large exporters of corn. The con- 
 clusion of the Commission is, that for some time past 
 there has been general over-production of corn. Rapid 
 increase in the conveniences for cheap transport has 
 brought more distant lands under cultivation, and has 
 over-stimulated production, especially of wheat; and 
 until supply and demand have adapted themselves there 
 will be excess in production and unprofitable prices. 
 Though prices fluctuate with each year's total harvest, 
 or expected supply, on the whole there is little hope 
 of any material permanent rise in prices for the present, 
 in the face of the extraordinary fertility and extent of 
 corn-land in Argentina, and the slight cost at which she 
 can raise wheat and send it to Europe. The direct 
 remedy for the farmer is in a reduction of rent, which, 
 however, comes but slowly, and transfers the loss to the 
 land-owner; other palliatives are in the direction already 
 indicated. On this report Sir Robert Giffen has put 
 forth an interesting speculation, based upon comparative 
 statistics of British consumption of meat and corn. He 
 
British Agriculture and Free-trade. 183 
 
 finds that while the consumption of meat has vastly in- 
 creased, that of wheat has fallen off. He concludes 
 that improved resources have converted bread -eaters 
 into larger meat-consumers, and have thus reduced the 
 demand for bread. The over-production of corn is thus 
 translated into a falling off in demand: ''cereals have 
 been subjected to a new indirect competition of meat". 
 This fact is matter of congratulation to the community, 
 as it bespeaks a higher standard of living, but it presses 
 hard meanwhile on the producer of corn. No doubt 
 both events have occurred, i.e. the supply of wheat is 
 increased from new districts, and the demand relatively 
 to the population has yielded to meat; in any case it is 
 by the adjustment of supply and demand that the price 
 is fixed, and the temporary conditions affecting supply 
 and demand have yielded a low average price. 
 
 The whole official inquiry supports the conclusion 
 already arrived at in this work, that in the immediate 
 future the success of British agriculture must be looked 
 for rather in the supply of superior meat, dairy produce, 
 vegetables, and fowls, &c. , than in the growth of cereals. 
 
 One matter concerning markets possibly calls for 
 regulation in the farmers' interest: this is the question 
 of railway rates, which are said to operate seriously to 
 the disadvantage of British agricultural producers. The 
 transit of produce from some rural parts to markets is 
 difficult, and the cost is in excess of that from foreign 
 countries, which succeed in negotiating low ''through- 
 rates". No doubt the railway companies find difficulties 
 as regards the smaller quantities forwarded, irregularity 
 of supply, and imperfect packing, all of which could be 
 removed by some system of organization and co-operation 
 on the part of farmers. But the grievance calls for in- 
 vestigation, and some arrangement by which British 
 industry shall not suffer to the advantage of a foreign 
 rival. This is probably a proper subject for Government 
 inquiry and intervention. It would not be a case of 
 artificial aid ; for the protection, if any, is on the side of 
 the foreigner. At all events, in the interests of British 
 agriculture it is necessary that the railway companies 
 and farming interests should combine their powers and 
 
184 The Free-trade Movement. 
 
 arrive at some satisfactory solution. Doubtless both 
 would ultimately profit by such a scheme of rates and 
 such an organized trade as would materially increase the 
 facilities for placing British produce in British markets.^ 
 Many other questions enter into the complicated pro- 
 blem of agricultural decline. Such are the conditions of 
 land-tenure, and the expense and difficulties of land- 
 transfer. Free-trade in produce did not bring Free- 
 trade in land, and in this country there are still many 
 obstacles attending the sale and transfer of land that do 
 not apply to other forms of wealth, and that do not exist 
 in the countries which are its rivals in agricultural pro- 
 duction. Competent writers on this subject have long 
 pointed out much-needed reforms affecting ownership, 
 transfer, and tenure. These should tend to direct capital 
 to the land as a commercial venture, and enable it to 
 be easily acquired by those most desirous and able to 
 develop it; they should give greater security to agricul- 
 tural capital, and stimulate various kinds of investment 
 that would utilize the land most profitably in different 
 
 1 By the courtesy of the secretary of the Great Eastern Railway Company, 
 I am enabled to state the results of an experiment commenced by that Com- 
 pany on ist December, 1895, for forwarding farm and dairy produce to 
 London and other towns at low rates. The railway company supplies boxes 
 of various sizes for a few pence at the stations, and charges at the rate of ^d. 
 for 20 lbs. weight, including delivery in town. The Company also has 
 collected, and distributes gratis, a list of iioo farms from which produce can 
 be obtained. During the thirteen months ending Christmas i8g6, the Com- 
 pany carried 61,412 boxes; in the eight months to end of September, 1897, 
 this was increased to 82,000 boxes. The contents of the boxes are valued 
 at an average of 7s. per box ; this gives in the last eight months a value of 
 ;^28,70o of farm-produce transmitted by the Company direct from farmer to 
 consumer at a very cheap rate. The result is most encouraging, and doubt- 
 less co-operation and a little organization by farmers may carry the economy 
 and profit still further. The farmers obtain by this means about double the 
 price for eggs which they receive when they are collected by middlemen. 
 On the other hand, it should be stated that an attempt to introduce a some- 
 what similar system by the London & North-western Railway Company was 
 not successful. The Company sent out agents, who interviewed 1000 farmers, 
 and endeavoured to induce them to combine so as to guarantee truck-loads 
 of not less than 2 tons at low rates. The official report states that the move- 
 ment met with scant encouragement, and that (a) the number in favour of 
 combination was exceedingly small, {d) that more that one-half showed 
 absolute indifference, (c) that generally there does not appear to be any really 
 acute depression in the farming industry in their district, and {d} most of the 
 farmers did not seem to look to railway rates as a cure for any depression 
 there might be. 
 
British Agriculture and Free-trade. 185 
 
 localities. Some improvements in this direction have 
 been effected by Lord Cairns's Act, the Agricultural 
 Holdings Act, the Allotments Act, and others; but these 
 measures have not yet accomplished that degree of free- 
 dom which is essential to the fullest development of the 
 soil. This is not the place for a discussion of these sug- 
 gested reforms, they can only be alluded to as essential 
 factors in a complete investigation into the complicated 
 question of the backwardness of agriculture in a country 
 progressing so rapidly in other directions. The tendency 
 of the reforms already made supports the conclusion 
 that it is the removal of restrictions to the free applica- 
 tion of capital, knowledge, and skill, and not any reim- 
 position of restraints, that is required to advance this 
 most important branch of national industry and source 
 of national wealth. Protection can afford no remedy, 
 and could only intensify the evils which existed before 
 its abolition. 
 
 In connection with the agricultural problem, a few 
 words may be devoted to the question of rural depopu- 
 lation, i.e, the tendency for country labourers to flock 
 into towns, and for urban population to increase while 
 rural population is diminishing. The phenomenon is 
 visible in all progressive countries — the United States, 
 France, Germany, and the Colonies — though in a less 
 degree than in Great Britain. Several causes contribute, 
 and chief amongst them that progress in science and its 
 applications which have enabled man to be fed at less 
 cost and to devote more labour to manufacturing in- 
 dustries. Owing to discoveries and improvements in 
 the methods and tools of agriculture, to the application 
 of machinery (steam-plough and thrasher, self-binding 
 reaper, &c.), fewer labourers are required to supply the 
 demand for food, and a large number are set free to 
 minister to other wants. In our own country the im- 
 portation of corn, and the conversion of arable land 
 into pasture, have had an additional effect.^ Meanwhile 
 the growth of manufactures and the spread of railways 
 
 ^ The Duke of Bedford writes: " For every 200 acres of arable land con- 
 verted into pasture, we may assume that five labourers are displaced". — 
 {Story of a Great Agricultural Estate, p. 196.) 
 
i86 The Free-trade Movement. 
 
 find employment at higher wages for a continually in- 
 creasing number. Improved education, newspapers, 
 post, cheap travelling, open up new possibilities and 
 more attractive industries to villagers, and the sons of 
 agricultural labourers become artisans earning much 
 higher wages than their parents. The railways and 
 police draw away many vigorous young men. Others 
 find employment as carters, porters, &c., in towns, 
 where their superior strength often displaces weaker 
 town-bred labour. From Mr. Booth's investigations in 
 East London we learn that these countrymen usually go 
 to places provided for them by friends in towns, and 
 that in the ** submerged tenth" are to be found very few 
 genuine country labourers. Again, modern progress has 
 accentuated the attractiveness of towns, and brought it 
 into contrast with the dulness which often characterizes 
 the village life of the labourers. Thus intelligent and 
 enterprising young men seek towns to improve their 
 chances in life, and to enjoy the greater interests which 
 towns off"er them. Further, with the growth of machine- 
 industry, by-employments for women and the children 
 of rural labourers have declined; for their daughters, 
 service in town is the only field, while towns provide 
 subsidiary employment by which the incomes of families 
 may be augmented. 
 
 Thus the movement of population is largely explained 
 by those forms of progress which have effected econo- 
 mies in the methods of producing food, which have 
 made communication easy, and which have called into 
 existence innumerable kinds of new industries — the ad- 
 vent of steam, railways, mechanical inventions, &c. — it 
 is one of the effects of the transition to a mechanical age 
 of large industry. To the labourer it means generally 
 higher wages and other advantages, together with the 
 stir and excitement of town life. Important questions 
 arise as to the influence of town life upon the stamina 
 of the nation, and its future effects, which are more 
 speculative. It is not improbable, however, that with 
 further scientific advances, especially in the direction of 
 applying electricity for the distribution of motor-force 
 and for lighting, many industries may establish them- 
 
British Agriculture and Free-trade. 187 
 
 selves in country towns and villages, and again restore 
 the balance. Much has been written on the subject of 
 drawing the agricultural labourer back to the land. The 
 problem is partly one of the system of farming and of 
 land-tenure. Where the peasant -property system ob- 
 tains, the country is covered with small farms; and in 
 earlier times, when agriculture was the principal occupa- 
 tion in this country, and the peasants had large allot- 
 ments with their cottages, they could live in comfort 
 on the land according to the standard then prevailing. 
 But the industrial revolution has changed all that; it 
 has found other and more profitable employments for 
 labourers, it has introduced machinery into agriculture, 
 and farming is now an affair of large capital, large pro- 
 duction, and fewer labourers. 
 
 To revert to a system of small farming is not easy if 
 it be found desirable, and it would demand a large out- 
 lay upon farm premises; the only means of keeping men 
 upon the soil is to give them some interest in its culti- 
 vation, either by purchase or by hire, so that they shall 
 be encouraged to look to it as a means of profit and not 
 merely of wages. ^ 
 
 The Allotments and Small Holdings Acts have done 
 something to foster this idea; but market-gardening, 
 allotment and small farming, on any considerable scale, 
 would demand great changes in land-tenure, and many 
 primary difficulties must be met in providing houses 
 and farm -buildings, in securing markets, and in or- 
 ganizing the industry on a different plan. Still, much 
 might be accomplished by such a system, especially on 
 suitable land within easy reach of a town population 
 affording an assured market for produce. There must 
 be a great potentiality of success for such a class of 
 agriculturalists within some zone surrounding large 
 towns. It has been questioned whether a century of 
 mechanical industry has not diverted the genius of the 
 British nation from agriculture; but it may be urged 
 that there is much versatility in the race, and its abilities 
 
 * In France 17,500,000 persons are employed in agriculture; in England, 
 by the census of 1891, there were 1,360,000 persons engaged in agriculture; 
 in the United Kingdom, 2,500,000. 
 
i88 The Free-trade Movement. 
 
 are soon applied to that which is proved profitable; also 
 there is a large agricultural population still to be retained 
 upon the soil; and it is highly desirable for many reasons, 
 social as well as economic, that facilities should be made 
 abundant, and encouragement given to every possible 
 form of cultivation, which can succeed by natural 
 methods and the application of the fullest knowledge, 
 so as to obtain the maximum advantage from the culti- 
 vation of our own soil. 
 
 Chapter X. 
 The Reaction against Free -trade. 
 
 In recent years there has appeared a kind of reaction 
 against the Free-trade doctrine, which was so strenuously 
 upheld during the first thirty years following the repeal 
 of the Corn-laws. This seeming desire for a return to 
 protective legislation is manifested in various ways — by 
 the growth of Fair-trade societies, occasional motions in 
 the House of Commons of a protective character, various 
 proposals for measures to provide against scarcity of 
 food, such as bounties on land under wheat cultivation, 
 demands for countervailing duties against foreign boun- 
 ties, attacks upon Cobden and his political views, articles 
 dilating upon the progress of other countries, and so 
 forth. 
 
 Several causes have lately conspired to give a certain 
 vitality to this retrograde tendency. The expectations 
 of those who believed that an era of universal free-trad- 
 ing was at hand have not been realized; France and 
 Germany have both gone back upon the lines of national 
 protection ; the United States has extended and increased 
 its tariffs ; and most of our Colonies continue the policy 
 of promoting the encouragement of "infant industries ". 
 The apparent isolation of Great Britain in her commercial 
 policy has caused some wavering on the part of those 
 who conceive that a doctrine, if sound, must gain 
 
The Reaction against Free-trade. 189 
 
 general adhesion. The truth of scientific doctrines is, 
 however, not determined by popular majorities, and still 
 less by a majority of countries, in each of which there 
 may be a large minority of the opposite opinion; the 
 value of such principles must rest upon evidence. Nor 
 is political practice always the exact counterpart of con- 
 viction ; a nation might be convinced of the wisdom of 
 Free-trade and yet hesitate to adopt it because of the 
 practical difficulties in dealing with the vested interests 
 which have been created by the existing system. In 
 every protective country there is a free-trading party, 
 but it is generally less powerful in politics than its 
 opponents. 1 Again, only a limited number of any com- 
 munity gives any time or thought to the question, fully 
 understands its bearings, and takes an active part in 
 deciding upon it as a public policy ; the majority has no 
 economic conviction on the subject, but is swayed by 
 considerations of narrower interests and by prejudices. 
 
 It cannot be said, therefore, with truth that the public 
 opinion of other nations is entirely adverse to Free- 
 trade; the utmost that can be maintained is that a 
 majority in each protective country is, in existing cir- 
 cumstances, opposed to the change. In a previous 
 chapter the economic and other reasons why most 
 nations do not adopt Free-trade are separately discussed, 
 and are shown to have no weight towards reversing the 
 
 ^ It is a common practice to ignore this fact, and assume that the whole 
 of the people of France, Germany, &c., are in favour of Protection be- 
 cause the government has adopted it. Mr. M'Kinley's speech of February 
 i2th, 1891, affords an illustration of this mode of argument, though he was 
 constrained to admit that some Americans were Free-traders. He denounced 
 these as wanting in patriotism on that account. "The weight of nations 
 is overwhelmingly on our side. Which is right— the British Government 
 whose Colonies and dependencies, with two exceptions, have protective 
 tariffs, applicable not alone to other nations but operative against England 
 itself; or all the rest of the civiUzed world? Let us call over the roll of 
 nations. Which are for Protection? Germany, France, Italy, Spain, 
 Mexico, Canada, South America, Portugal, Denmark, most of Australasia, 
 Switzerland, Austria-Hungary, Sweden and Norway, and the United States. 
 Which are against Protection? England, New South Wales, New Zealand. 
 It will be noted that tariff for revenue only, or tariff reform, is almost 
 exclusively English. But how stand the people of the world on this question f 
 At least 430,000,000 people are m favour of Protection, while against it there 
 are 38,000,000 of Britons, to whom must be added those Americans, whose 
 numbers are not known, who, living under our flag, seem to follow another. 
 This is how the jury stands." 
 
190 The Free-trade Movement. 
 
 British policy; little therefore remains to be added with 
 regard to that particular objection. 
 
 The reaction in Germany and France arose after the 
 Franco-German war; both countries previously looked 
 favourably towards Free-trade. Influenced by the suc- 
 cess of the repeal of the Corn-laws in Great Britain, and 
 the treaty of i860 with France, Prussia made a similar 
 treaty with France in 1865, and also with Britain, both 
 of a very liberal character. After the successful issue 
 of the war in 1871, Germany further imitated Britain in 
 finance by copying her banking system and her com- 
 mercial law, and by adopting a gold currency. The 
 expenses following upon the war, and the increased 
 expenditure upon armaments and naval equipments, 
 called for fresh revenue; meanwhile a fall in prices and 
 incomes, consequent on a general depression, made 
 demands for further taxation burdensome. A reaction 
 then set in ; it was found easier to raise taxes by indirect 
 means, and the protective system gained favour with 
 some classes because it appealed to their particular in- 
 terests or appeared to support national industry. Prince 
 Bismarck, who was perhaps at the time the greatest 
 political force in Europe, cast his influence into the Pro- 
 tectionist scale, and this determined the national policy 
 in Germany. New duties were imposed upon agricul- 
 tural produce and upon iron goods, machinery, railway 
 plant, and manufactures. The sugar industry received 
 special encouragement by bounties, and the nation gave 
 itself again to a protective policy. The successor of the 
 great chancellor endeavoured to return to more moderate 
 measures, and by commercial treaties to modify the 
 severity of the Protectionist reaction, and to a slight 
 extent he succeeded. 
 
 German example told upon her military rival France. 
 Similar circumstances called for great expenditure upon 
 military equipment and made demands for increased 
 taxation, and France began again to pursue a policy 
 inimical to Free-trade. The commercial treaty with 
 Great Britain was not renewed, increased tariffs were 
 adopted, and the bounty system for aiding the sugar 
 and shipping industries was strengthened. 
 
The Reaction against Free-trade. 191 
 
 In political and social movements there has been dis- 
 cerned something- of an epidemic character. The action 
 of two powerful neighbours could not be without effect 
 upon Great Britain ; and, both from a tendency to imita- 
 tion and a desire for retaliation, a revival of protective 
 sentiment was awakened. The depression in British 
 agriculture, and the injury wrought to cane-sugar refin- 
 ing by the continental sugar bounties, aided the reaction 
 among certain classes, and a demand arose for counter- 
 vailing duties on continental sugar. An ineffectual 
 attempt was made by the British Government to induce 
 the continental nations to abandon their system of 
 bounties ; but it was not easy to throw aside a system 
 in which so many interests had been created under the 
 stimulus and practical guarantee of the State. 
 
 The Protectionist feelings in Great Britain thus excited 
 has adopted the form of a demand for '* Fair-trade" or 
 Reciprocity, and since we cannot succeed in inducing 
 our neighbours to abandon their policy, we are urged 
 to follow their example. It is clear that the revival of 
 Protection on the Continent is due mainly to the expense 
 caused by a military and aggfressive spirit, which has 
 led to large unproductive outlay, and that it has no 
 economic raison d'etre other than that protective duties 
 are the most convenient form of disguising the evils 
 which an increased burden of taxation involves. 
 
 Probably the most powerful cause of the revival of the 
 Protectionist feeling in Great Britain, however, is the 
 depression which has overtaken agriculture during the 
 past twenty years, and which has been indicated by 
 a considerable fall in prices of agricultural produce, in 
 rents and in farmers' profits; at all events the largest 
 expression of Protectionist sentiment comes from those 
 interested in this industry, and they are both numerous 
 and influential. Further, the losses incurred by land- 
 owners and farmers make themselves felt in their ex- 
 penditure, and are thus in part transmitted to other 
 classes — the traders and those who in various ways are 
 dependent upon the expenditure of the agricultural 
 section of the community ; hence there is a large amount 
 of sympathy with the sufferers. Agriculturalists look to 
 
192 The Free-trade Movement. 
 
 a rise in prices as the only means of recovery; they 
 see no hope for a permanent restoration in the face of 
 the extensive and ever-growing competition of other 
 countries, and they naturally revert to the traditional 
 ** exceptional treatment of the land", and call for 
 "moderate duties" and other modes of making their 
 industry lucrative through a rise in price. 
 
 The whole community is profoundly interested in the 
 problem of an adequate supply of food, and many per- 
 sons seem to see cause for alarm as well as regret at 
 the alleged decline of our oldest and largest industry. 
 Sentiment also attaches to agriculture in a manner 
 which no other industry awakens ; hence many are pre- 
 pared to hold that this industry should be maintained 
 at any cost, and that some sacrifice by the nation would 
 be worth making to prevent its decay. Others have 
 maintained that special burdens attach to land, and that 
 these should be met by special legislation. From many 
 quarters, then, arise demands for some intervention to 
 improve prices. The various methods suggested resolve 
 themselves generally into some form of protective duty, 
 or into changes in the system of currency. The bi- 
 metallic remedy does not admit of adequate discussion 
 in the limits of this book, nor does it properly come 
 within the scope of a work on Free-trade. The appli- 
 cation of the protective method to agriculture is discussed 
 in another chapter, where some of the causes of agri- 
 cultural depression and its remedies are set forth. It 
 remains only to deal with some special points which 
 have lately been prominently put forward. 
 
 Some advocates of Protection express great concern 
 as to our dependence on foreign countries for food, in 
 which they foresee the possibility of great disaster in 
 case of war. We are told that other European nations 
 are increasing their armaments and naval forces, and 
 that this constitutes a menace to the very existence of 
 Great Britain; should they combine against her they 
 could stop her supplies of provisions and starve her into 
 surrender in a few weeks. Other nations, it is said, 
 are, or can be, self-supporting; Great Britain alone is 
 dependent on external supplies. The remedies sug- 
 
The Reaction against Free-trade. 193 
 
 gfested take various forms-: (a) a deliberate return to 
 Protection ; (b) bounties on land under corn to stimulate 
 the production of grain; (c) preferential treatment of 
 our Colonies to enable them to provide our external 
 supplies of food, &c. 
 
 A bounty on land under corn differs in no sense from 
 a protective duty except in the mode of protection. It 
 would amount to a tax on the community to enable land 
 to grow corn which cannot at present do so, and would 
 become an element in the cost of the corn, that is, a tax 
 upon necessaries. The dependence of Britain upon other 
 countries for food is undoubtedly a fact, but a review of 
 the history of the past fifty years and of our present 
 naval standing does not seem to give any occasion for 
 fear as to the failure of foreign supplies, but rather to 
 indicate that we are in a stronger position to secure 
 them than at any previous time. In no circumstances 
 known at present could this country feed her enormous 
 population of 40,000,000 people at their existing standard 
 of subsistence; to be self-sufficing as regards food, a 
 portion of the population would need to emigrate, and 
 of the remainder, the majority must betake themselves to 
 agricultural pursuits. Is the nation prepared to put 
 back its progress and revert to that position in order 
 that it may be self-sustaining, when by means of free 
 exchange it is able easily to maintain its vast population 
 in considerable comfort? 
 
 Our dependence upon other countries has a counter- 
 I part; if we take food from them, they take from us 
 manufactured goods ; they seek our products as eagerly 
 as we desire their grain, and in case of war they would 
 be no less desirous to dispose of their produce, which 
 would directly or indirectly reach our shores. The 
 decrees of Napoleon did not put a stop to the trade 
 between Great Britain and the Continent; French mer- 
 chants sent their corn to Great Britain, while French 
 soldiers were clad in English woollens. A world-wide 
 free commerce now brings us abundant and cheap food 
 from all quarters, and even a deficient harvest at home 
 causes no suffering. Many countries compete to gain 
 our markets for grain, and in all quarters of the globe 
 
 (M460) N 
 
194 '^^^ Free-trade Movement. 
 
 vast quantities of corn are annually grown for British 
 consumption, for which no market could be found if we 
 ceased to provide one; and so suitable are many newly- 
 accessible districts for corn-growing- that there seems to 
 be little cause for anxiety as to the supply, provided that 
 Great Britain is capable of protecting the food in transit. 
 In the case of such an undesirable event as a war with 
 any country which sends us food, the rise in price would 
 call forth additional supplies from all other countries 
 capable of increasing their export. One conclusion is 
 very obvious — an island nation must depend ultimately 
 upon her naval defences ; to such a people a powerful fleet 
 is as essential for national existence as for the protec- 
 tion of commerce. We may then rest with more assur- 
 ance upon obtaining adequate supplies of food from 
 other countries than upon our own capacity to produce 
 them, and ironclads are more efficient for that end than 
 bounties on land growing corn at an economic loss. 
 To attempt to provide our own food-supply from British 
 soil would, with our present population, only precipitate 
 the very evil of famine the alarmists dread. France 
 affords an example of the folly of excessive precaution; 
 she spends nearly three-quarters of a million annually 
 to provide her own salt, for fear there should be a defi- 
 ciency in case of war. The greater part of this outlay 
 would be saved by purchasing her salt abroad. 
 
 The remaining suggestion is that the Colonies should 
 be encouraged by preferential duties to supply our wants. 
 The objections to such a course are discussed in a later 
 chapter. Canada has set an example of giving prefer- 
 ential duties to the home -country in return for the 
 defence she affords, and this without making any claim 
 for special treatment of Canadian exports : by this step 
 Canada will secure greater advantages from the home 
 trade, and we may hope to see much further development 
 on these lines. The Colonies may be expected to provide 
 a continually-increasing proportion of our food-supply. 
 It is highly desirable that this should be the case, and 
 so far as it can be promoted without any departure from 
 Free-trade principles it should be encouraged. But, to 
 a Protectionist, food from the Colonies must appear to 
 
The Reaction against Free-trade. 195 
 
 be a very inadequate and unsatisfactory solution of the 
 problem of dependence. Further, the Colonies are very 
 remote, and whatever danger a war with European 
 powers could create to food for Great Britain crossing 
 the ocean, would apply to food coming from distant 
 Colonies. National defence by powerful fleets would 
 still be a matter of the first importance to Great Britain, 
 and it is to this that she is constrained to look, as much 
 on account of her insular position and the wide separ- 
 ation between the various parts of her empire as by the 
 necessity for securing an adequate supply of food. 
 
 It has been already pointed out that the intercourse, 
 relations, and interests, which are created by mutual 
 trading, constitute a powerful argument in favour of 
 peace. In every trading community a large section 
 becomes interested in the maintenance of markets and 
 supplies. It is a fallacy to start with the assumption 
 that hostility is a permanent attitude of trading nations, 
 and that nations arming for defence are necessarily 
 preparing for offensive operations. This is not implied 
 by the precautions of Great Britain and the increase of 
 her navy, though other nations might suspect it; why 
 then should it be necessarily assumed to be the object 
 of other nations? The old maxim, Sivis pacemparabellum, 
 implies that possible dangers are reduced by powerful 
 defences. But defences are not necessarily threats; if 
 so, British fleets have long threatened the peace of 
 Europe. The aim of a commercial nation should rather 
 be to encourage a better understanding between nations, 
 to settle international difficulties by arbitration and con- 
 cert, to increase the amity of nations, and decrease the 
 probabilities of war. Mutual economic relations, which 
 imply an extension of the principle of the division of 
 labour, mean co-operation, progress, increase of wealth. 
 But some risks must attend the application of this 
 principle, whether among nations or in communities. 
 For example, some 5,000,000 of people pursue their 
 daily avocations in the metropolis without any anxiety 
 as to the means by which they will be satisfied with food 
 and other necessaries on the morrow. They each rely 
 upon the co-operation of others, whose interest it is to 
 
196 The Free-trade Movement. 
 
 serve them, and they are not disappointed. It was in 
 this sense that Adam Smith recognized the identity of 
 public and private interests. Governments should rather 
 seek to reduce the risks contingent upon trading and 
 mutual dependence than, by placing restraints upon the 
 operations of exchange, to lose the advantages and con- 
 veniences which they confer, or to diminish the good 
 feeling they promote. 
 
 The Protectionist reaction has received some coun- 
 tenance from a very different quarter. If agricultural 
 profits have fallen, so also have business profits (both 
 industrial and commercial) declined during the last 
 quarter of a century, and among the classes dependent 
 upon this source of income much discontent has arisen. 
 This finds ready publicity with the capitalist class. 
 Without very profound investigation of the causes of 
 the decline in profits, some of the sufferers fall in with 
 the suggestion offered on behalf of agriculture, that 
 Protection may provide a remedy by stimulating home 
 industry. 
 
 Various circumstances have contributed to the decline 
 in profits. If, as has been maintained, the chief cause 
 be an alteration in the standard of value. Protection can 
 provide no remedy. Two other factors, however, enter 
 unmistakably into the explanation of low profits: (i) 
 the great increase in the supply of capital which has kept 
 pace with the prosperity of the country, and which, 
 being more rapid in its growth than the demand, has 
 forced down the rate of interest; and (2) the sharper com- 
 petition of foreign countries in the markets formerly held 
 by British produce, which has sprung up of late years. 
 
 Formerly capital was saved only by the rich landed 
 classes from rents, and by the merchant traders. The 
 industrial revolution brought in new wealthy classes, 
 the manufacturer and dealer, to whom the term capitalist 
 came to be applied. These made fortunes rapidly, and 
 accumulated wealth. Time has wrought great changes 
 in this field also. The joint-stock system, banking, and 
 all the machinery of modern investment stimulated sav- 
 ing among the professional and middle classes, and 
 opened up new sources of income. As education and 
 
The Reaction against Free-trade. 197 
 
 prosperity extended, capital was augmented from the 
 thrifty shopkeeper and artisan class; the openings for 
 fresh investments were made easily available to all classes 
 by new developments of the loaning and company system, 
 so that the term ** capitalist" is no longer capable of 
 restriction to any particular class. The joint - stock 
 system is tending in some industries to drive out the 
 private employer, and capital is brought into the reser- 
 voirs of trade from tiny rivulets of saving over the whole 
 field of industry. Two events have followed, which are 
 specially relevant to the present matter. Although the 
 field of loaning has been enlarged so as to cover the 
 whole industrial world, capital has increased so much 
 more rapidly than fresh openings for its investment that 
 the rate of interest has declined; and owing to the 
 facility with which it can be borrowed the competition 
 of employers of capital has been greatly intensified by an 
 accession to the class of controllers of industry, of men 
 who live, not on their own capital, but by the skilful 
 employment of borrowed capital. Both facts have tended 
 to depress profits. 
 
 Another not less potent influence in the fall of profits 
 is the increased knowledge and power of the working- 
 classes, who now, with better capacity for bargaining 
 and strength gained through their trade-unions, succeed 
 in obtaining a larger share of the product than formerly, 
 while legislation on behalf of labour tends to throw 
 greater expense upon the employer. Meanwhile keener 
 competition among employers hands over, in reduced 
 prices, an increasing portion of the commodity to the 
 consumers of their products, and tends to keep down 
 profits by ''cutting rates". On all sides circumstances 
 seem to have been combining to reduce ordinary profits; 
 fortunes are rarely made now with the rapidity of bygone 
 times; men have to remain longer in business, and be 
 content to earn a living instead of making a fortune. 
 While the general standard of comfort has advanced 
 and prosperity has been more widely diffused, capital 
 has suff'ered a reduction in value. The so-called de- 
 pression of trade in recent years would seem to be more 
 correctly described as a fall in the value of investments 
 
198 The Free-trade Movement. 
 
 and capital employed in industry ; it is a genuine depres- 
 sion as regards capital and profits, but wages on the 
 whole have advanced, and goods have been cheapened. 
 From business men complaints of dulness in trade have 
 been frequent. The real fact is, that trade has been quieter 
 but steadier than formerly; while there have been no 
 periods of violent excitement and huge profits, com- 
 mercial crises, once frequent and very acute, have been 
 fewer and less disastrous in their effects during the past 
 twenty -five years, and the interference with industry 
 from these causes has been diminished. Profits, how- 
 ever, have steadily declined, and among the numerous 
 causes to which this has been attributed, our free-trad- 
 ing system has, without any reason, been included. If 
 profits were determined by Free-trade, the fall should have 
 commenced from its adoption, but the contrary was the 
 case ; profits rose and were maintained for thirty years 
 after 1846. The decline has taken place during the last 
 twenty years, and must therefore be accounted for by 
 causes which have made themselves felt in that period. 
 
 The other factor contributing to the fall of profits is 
 the competition of other countries, which has lately 
 become so keen and intense. On this account some 
 persons favour protective proposals as a species of re- 
 taliation or defence. Our rivals have gained a firmer 
 footing in neutral markets, and their rivalry has reduced 
 prices. Time was when Great Britain had sole command 
 of many markets, she was in the van of mechanical 
 invention, and early succeeded in spreading the products 
 of her industries over the globe ; but she could not hope 
 to retain this monopoly. There is no ** corner" in 
 scientific knowledge or industrial skill; other nations 
 are rapidly developing their powers and extending their 
 industries, and their commercial activity is increasing; 
 their competition is inevitable, and has hereafter to be 
 recognized and reckoned with. Its tendency is, how- 
 ever, to lower profits. This fact has naturally excited 
 some concern ; it is not the sole, nor yet the chief, cause 
 of the fall; profits, as we have seen, have fallen from 
 causes at home which are independent of foreign com- 
 petition. But it is the commonest of errors to mistake 
 
The Reaction against Free-trade. 199 
 
 a part of the cause for the whole ; and since in this case 
 self-interest seems opposed to foreign interests, undue 
 emphasis is placed upon this factor. Many persons 
 dependent upon interest on capital have suffered from 
 reduced incomes without understanding the economic 
 grounds for the reduction ; such persons are naturally 
 attracted by any proposal which promises a remedy; 
 they cannot demonstrate the effects of that exclusion of 
 foreign goods from which they are told to anticipate a 
 revival of vigorous trade and large profits, but join in 
 the demand for Protection, in the vague hope that it may 
 resuscitate their business profits and restore the pros- 
 perity of a past period. There is, however, no basis for 
 any such expectation by the method of trade regulation. 
 
 Prediction is dangerous; but the course of events 
 seems to justify the inference that a low rate of profit is 
 likely to prevail in the future, unless the present system 
 of industry should undergo some very radical change. 
 The growth of intelligence and skill, the increased habit 
 of thrift, better means of communication, higher refine- 
 ments in the machinery of finance and commerce, all 
 point rather to an increase of competition and of the 
 forces which have been lowering profits. 
 
 Another cause of the apparent relapse towards com- 
 mercial restriction is probably to be found in the change 
 which has come over public opinion as to the proper 
 scope of governmental activity, and the enlarged views 
 now prevalent in regard to the general functions of the 
 State. A considerable reaction has taken place on this 
 subject during the past fifty years. Many duties are 
 now undertaken by the community which were formerly 
 left to private enterprise, while the active interference of 
 the State on behalf of the industrial classes by Factory 
 and Mine legislation. Truck and Shipping Acts, Com- 
 pulsory Education, Employers' Liability, Compensation 
 for Injury, and many other measures, has tended to 
 create a belief in the omnipotence of governments, and 
 has led to a more distinctly socialistic kind of legislation. 
 The extension of the functions of government by judicious 
 regulations, imposing beneficial restraints in certain 
 directions, has been misconstrued as a return to a general 
 
200 The Free-trade Movement. 
 
 faith in Government control. There are, however, dif- 
 ferent kinds of restraints, and they need discrimination ; 
 one class may be compatible with freedom, and another 
 with its loss. It is not always perceived that the char- 
 acter of modern interference differs entirely from that 
 which was attacked by Adam Smith; that while the 
 intervention in former centuries imposed disabilities, the 
 aim of modern legislation has been to remove them, and 
 to secure the greater freedom of the majority by curbing 
 the power of minorities (whether individuals or classes); 
 that the protection that is secured by Acts regulating 
 mines and machinery is different in kind from that which 
 conferred a monopoly upon a favoured industry; and 
 that compulsory education is an interference which gives 
 benefits to many, while protection for native industries 
 takes something from all. To place restraints on 
 adulteration, or on the power to enslave young children 
 in mills, is not the same thing as to prevent a nation 
 from buying its food at a cheaper rate. 
 
 The problem of the proper functions of Government is 
 a standing topic for each generation of politicians, and 
 a fertile field of debate. No absolute solution is attain- 
 able ; much depends upon the nature of the government, 
 and much upon the governed. But the stage of develop- 
 ment, the standard of education, the material prosperity 
 of the nation, the degree of political freedom, the capa- 
 city for organization, the morality of the people, are all 
 factors in the problem. The meaning and nature of true 
 liberty is open to various interpretations ; opinions have 
 fluctuated from the pole of an extreme individualism, 
 which would leave to Government nothing beyond the 
 protection of life and property, to that of an advanced 
 and absorbing sociaHsm in which the individual is totally 
 merged in the citizen. The movement of public feeling 
 in the direction of socialistic legislation has distinctly 
 aided the Protectionist reaction by its exaggerated beliefs 
 in the power of the State to remove economic evils, and 
 its tendency to substitute State action for individual 
 enterprise, and to refer many questions to Government 
 which can only be ultimately resolved by the conduct of 
 men themselves. There is an element of confusion both 
 
The Reaction against Free-trade. 201 
 
 as to the field in which Government intervention can 
 avail, and as to the characteristics of the intervention 
 which is beneficial ; but this confusion has, for the time, 
 contributed to uphold the wave of Protectionist senti- 
 ment. 
 
 A cause somewhat related to that last considered, and 
 yet differing- from it, may also have assisted the reaction. 
 This is the attempt occasionally made to identify the 
 economic doctrine of Free-trade with a general policy of 
 laissez-faire and with the political opinions of some of 
 the early advocates of Free-trade. This is unjust. Peel 
 certainly did not adopt Free-trade as part of a larger 
 measure of non-interference ; he was seriously convinced 
 of its specific application to the facts of the time, and he 
 was very earnest in his desire to reform taxation. Cob- 
 den's views on general politics and foreign affairs were 
 widely at variance with those of Peel, and they are not 
 germane to the question of Free-trade, though they are 
 often dragged in to its prejudice, as if the Free-trade 
 doctrine were Cobden's peculiar invention, and summed 
 up all his political ideas. To attack his general politics 
 or his business capacity is not to overthrow the validity 
 of his arguments against the system of protective 
 tariffs upon commerce. 
 
 Although, however, such a method of controversy is 
 illogical, it is probable that public opinion on the Free- 
 trade policy has been affected by the circumstance that 
 its chief exponents and ardent advocates, between 1839 
 and 1846, were mainly men engaged in manufactures, 
 who were personally interested in the issue of the agita- 
 tion, since the removal of the Corn-laws would increase 
 their export trade, and would also provide cheap food for 
 their employees; while its chief opponents were land- 
 owners equally interested in maintaining high rents and 
 high prices. Of course the true judgment upon the 
 merits of the case is unaffected by the interests of either, 
 and depends upon the effects of the policy upon the 
 welfare of the people as a whole. From this stand-point 
 the manufacturers were on the right side in advocating 
 Free-trade, as their opponents were equally in the right 
 when they supported factory legislation. It is interesting 
 
202 The Free-trade Movement. 
 
 to note that both conflicts worked out to the advantage 
 of the people. The resistance of the ** Manchester 
 school" of politicians to factory legislation has, however, 
 been employed to bring discredit upon the Free-trade 
 measure, which they were mainly instrumental in passing, 
 by suggesting that it was their private interests alone 
 which they were pursuing in both cases. 
 
 The two questions are, however, distinct, and there 
 was even no absolute identity between their supporters ; 
 some large land-owners were Free-traders, and some 
 manufacturers were amongst the factory reformers ; and 
 it ought also to be remembered that Cobden gave it as 
 his opinion and desire ''that no child should be allowed 
 to work in a cotton-mill earlier than thirteen years of 
 age". Also, with whatever motives the agitation against 
 the Corn-laws was originated, — and there can be little 
 doubt that depression in the cotton trade was the fact 
 which first suggested it, — the movement developed into 
 a great national movement for a reform which benefited 
 most of all the poorer classes, and which exacted immense 
 service, devotion, and sacrifice from those who conducted 
 it. 
 
 The views of Cobden on India and the Colonies, and 
 on foreign relations generally, are no part of the fiscal 
 doctrine under consideration; we are not concerned with 
 the whole of his opinions. He doubtless had his limita- 
 tions; his political horizon was probably narrowed by 
 his experience, and by a tendency to look at public 
 affairs rather from a commercial point of view. There 
 was possibly a lack of grandeur in his political philosophy 
 and conceptions, quite out of sympathy with the imperial 
 idea, now so easy of acceptance after fifty years of colo- 
 nial expansion. It was difficult then to foresee the 
 rapid development of the Colonies, and their possible 
 future consolidation. Our only considerable experience 
 of colonization had been in America, where a policy of 
 intervention had entailed disastrous consequences. It 
 was not unnatural that with such a warning some well- 
 meaning persons should push to an extreme the opposite 
 principle of non-interference. Cobden, moreover, had 
 exaggerated notions of the effects of commerce in pro- 
 
The Reaction against Free-trade. 203 
 
 ducing universal peace, and in his continual attacks on 
 the expense of the army and navy he seemed to forget 
 that it was **the strong man armed that keepeth his 
 goods in safety", though on one occasion he stated that 
 he would not object to an expenditure of ;^ioo,ooo,ooo 
 on a navy if Free-trade were adopted. ^ He was un- 
 consciously influenced by the prejudices of his class and 
 occupation, and though his patriotism was sincere, it 
 was perhaps not sufficiently comprehensive to embrace 
 all the important factors of national greatness. There 
 was not an equal breadth of view in his treatment of 
 questions relating to land and manufactures. He could 
 see the injustices relating to the one industry more dis- 
 tinctly than those relating to the other. But nothing of 
 this detracts in any degree from Cobden's treatment of 
 the Free-trade question. He was honest, candid, and 
 clear-headed ; he grasped the doctrine of free commerce 
 in all its bearings, and he devoted the best years of his 
 life to the removal of a national grievance, with a tena- 
 city of purpose and ungrudging self-sacrifice which 
 deserve the fullest gratitude of all, whether or not they 
 adopt his views on general politics, or join in his opti- 
 mistic anticipations of an era of universal peace. After 
 fifty years of rapid development it may be as easy to 
 criticize the colonial views of Cobden as it is to discern 
 the defects of the colonial policy of a previous century, 
 but this is altogether beside the question of Free-trade, 
 which rests for its validity upon the soundness of its 
 economic principles and the tests which half a century 
 have applied to their adoption in practice. At a time, 
 however, when our social institutions are being scruti- 
 nized with no reserve, when laissez-faire ideas are spe- 
 cially unpopular, and the opinions of the ** Manchester 
 School" find little favour, undiscriminating criticism 
 has succeeded in identifying the political views of this 
 school with Free-trade doctrines, in creating confusion 
 as to the real meaning of the Free-trade movement, and 
 in raising some doubt as to its beneficial tendencies in 
 the minds of those who do not clearly grasp the issue, 
 
 1 Speech at Rochdale, June 26th, 1861. 
 
204 The Free-trade Movement. 
 
 or who have not studied the history and effects of re- 
 strictions upon commerce.^ 
 
 Chapter XI. 
 Recent British Trade and Foreign Competition. 
 
 The progress in manufactures made by toreign coun- 
 tries, and especially by Germany and the United States, 
 has been so marked in recent years as to arouse concern 
 in some quarters about the future of British industry 
 and commerce. The manner in which attention is some- 
 times drawn to this fact seems to assume that these 
 countries are outstripping us in our national industries, 
 that their progress has been aided by their tariffs, and 
 that the Free-trade policy of Great Britain is somehow 
 responsible for their success. It is suggested that Ger- 
 man goods in particular are taking the place of British 
 in many foreign markets, and are even ** flooding our 
 country" to such a degree that things *'made in Ger- 
 many" are the chief articles of common use, and that 
 meanwhile our produce is being excluded from their 
 markets. Hence a very gloomy forecast is made as to 
 the future of British trading. It is necessary to examine 
 the value of these opinions in order to determine whether 
 the progress of other countries in industry and commerce 
 does in any way modify the free-trading position of this 
 country. 
 
 The questions of comparative trade in neutral markets, 
 and of the progress of other countries relatively to our 
 own, with the causes thereof, are so important as to 
 have elicited public inquiry ; and we have the advantage 
 
 ^See •' Cobden and the Manchester School" in Mr. A. J. Balfour's Essays 
 and Addresses, which may be regarded as the counterblast to Mr. Morley's 
 eulogium on Cobden. In this essay Mr. Balfour passes many strictures 
 upon Cobden as a political philosopher, but fully admits all that is neces- 
 sary for this argument — his merit m bringing about " the change in our 
 fiscal policy, which was the most important work of his public life, and with 
 which his name will for ever be connected ". 
 
British Trade and Foreign Competition. 205 
 
 of recent official reports and statistics on this subject. 
 Early in the year 1897 the Board of Trade, in response 
 to a request from Parliament, issued a lengthy Memo- 
 randum gfiving" comparative statistics of our home and 
 foreign trade, and those of some leading foreign countries, 
 and in the autumn an important Blue Book was issued 
 by the Colonial Department on the growth of foreign 
 competition in our Colonies. From these documents, 
 consular reports, and other public sources reliable facts 
 can be gathered. 
 
 The advance in manufactures made by other countries 
 in the last quarter of a century is indisputable : in Ger- 
 many the progress in population, industry, and commerce 
 since the consolidation of the empire has been very 
 great. Eleven millions have been added to the popula- 
 tion since 1872, and the increase has been mostly in 
 towns and manufacturing localities; meanwhile the 
 United Kingdom has increased 8 millions, France only 
 2 millions, and the United States 31 millions. The 
 population of Germany now exceeds that of the United 
 Kingdom by 12 millions, while the population of the 
 United States is estimated at 70 millions. All these 
 countries have now reached a much more advanced in- 
 dustrial position than that which they occupied thirty 
 years ago. It was the good fortune of Great Britain to 
 attain a high level in manufacturing industries at a 
 much earlier date; the products of her mines and fac- 
 tories long held the markets of the world with ease, 
 since she had practically no serious rival, and under the 
 regime of Free-trade her commerce expanded rapidly. 
 More recently other nations have been developing their 
 resources of coal and other mineral wealth, and have 
 been increasing their scientific knowledge and mechani- 
 cal skill ; and they are now well equipped as competitors 
 in many of the fields of manufacture and of commerce. 
 It is not remarkable that their relative progress should 
 appear rapid in comparison with that of a country which 
 attained industrial maturity at an earlier period, and 
 that it should even give rise to erroneous views as to 
 its real nature and magnitude, and the causes to which 
 it should be ascribed. It is inevitable that, at an earlier 
 
2o6 
 
 The Free-trade Movement. 
 
 stage, growth may proceed at a greater pace, but it 
 does not necessarily follow that the absolute increase is 
 really greater, or even that it is an amount of vital sig- 
 nificance. If a business earning ;£'5c>oo a year increases 
 ID per cent, while a younger rival earning ;^5oo a year 
 increases 20 per cent, the absolute increase of the first 
 (;£'5oo) is five times the increase of the latter (;^ioo), 
 although the relative progress of the latter is greater. 
 Statistics prove that, for the present. Great Britain re- 
 tains her pre-eminence as the leading manufacturing 
 and commercial country. ^ Other countries are advanc- 
 ing, but as yet they have not overtaken British foreign 
 trade. 
 
 Value of Exports of Domestic Products per Head of 
 Population over Two Quinquennial Periods.^ 
 
 I870-I874. 
 1890-1894. 
 
 United Kingdom. 
 
 Germany. 
 
 France. 
 
 United States. 
 
 I s- d. 
 
 7 7 3 
 6 2 II 
 
 £ s. d. 
 
 2 16 7 
 
 329 
 
 C s. d 
 
 3 15 
 3 " 4 
 
 £ s. d. 
 2 9 II 
 2 19 
 
 
 Similar Table for Domestic Imports. 
 
 
 CO 00 
 00 00 
 
 924 
 9 7 3 
 
 4 6 3 
 422 
 
 3 15 8 
 
 480 
 
 2 18 7 
 
 2 II II 
 
 From these figures it appears: (a) That the imports 
 and exports of the United Kingdom, per head of popu- 
 lation, are nearly double those of any one of the three 
 great progressive countries; (b) That British imports 
 per head have increased in money values, while the ex- 
 ports have fallen slightly in value in the twenty-five 
 years; that German exports have increased, but the 
 imports have diminished in the same period (a general 
 fall in prices has taken place since 1873, but, since it 
 affects all the countries, it can be ignored for purposes 
 of comparison); (c) The most important conclusion, 
 
 * For comparative total foreign trade see Chapter VIII. 
 
 2 "Comparative Statistics of Population, Industry, and Commerce in the 
 United Kingdom and some leading Foreign Countries", Memorandum 
 by Board of Trade, January, 1897. 
 
British Trade and Foreign Competition. 207 
 
 however, to be drawn from the tables, is that while a 
 change in the magnitude of the trade is clearly going 
 on, Great Britain retains her leading position. Germany, 
 for example, with a larger population and a much 
 greater extent of country, exports a little more than 
 half as much per head as the United Kingdom, and 
 receives in return, as imports, less than half the amount 
 per head received by Great Britain. 
 
 Following up the comparison between Great Britain 
 and Germany, two points — (a) the trade between Britain 
 and Germany, and {h) their competition in neutral mar- 
 kets — require fuller illustration; and these two points, 
 as involving diiferent considerations, must be taken 
 separately. As to {a) we learn from the Board of 
 Trade Memorandum that the imports of Great Britain 
 from Germany between 1880 and 1895 increased from 
 ;^24,40o,ooo to ;^27,ooo,ooo,^ while the exports of Great 
 Britain to Germany in the same period grew from £i6'g 
 millions to ;£"20*6 millions. This means that the two 
 nations have been doing a larger business with each 
 other, a fact indicative of increased prosperity to both. 
 That the imports and exports do not balance is a matter 
 of no importance, since much trade is indirect and can- 
 not therefore be assigned; indeed, a considerable amount 
 of German trade passes through Holland and Belgium. 
 There is also a certain amount of transit-trade which 
 creates discrepancies in different statistics. The figures 
 are sufficient, however, to dispose of the statement that 
 German goods are displacing home manufactures in 
 Great Britain, and are crushing out our industries. 
 The trade is mutual, each takes more from the other 
 than formerly. While the intercourse between the 
 countries has grown ''there has been no material dis- 
 placement of home manufactures in our home market 
 by Germany " ; indeed, as the Memorandum continues, 
 ''on the figures of 1896 we seem to be increasing our 
 market in Germany more rapidly than Germany is in- 
 creasing her market here ". 
 
 By limiting the comparison to selected industries, and 
 
 * It is worth noting that of this sum sugar amounted to ;^9,393,89o. 
 This is bounty-paid, and is sold to Great Britain at a loss on production. 
 
2o8 The Free-trade Movement. 
 
 by ignoring the total amount of trade, it may be made to 
 appear that one country is encroaching upon the indus- 
 tries of another, and some alarm has been created by 
 applications of this method. Countries, however, like 
 localities, specialize in their manufactures when it is 
 found that they can do so successfully. Special adap- 
 tation to circumstances enables one industry to develop 
 in one country, another in another. Germany has thus 
 made great advances in certain trades, of which dyes, 
 paper, chemicals, and electrical machinery are the pro- 
 minent examples; in these industries she has been 
 employing much scientific research, and has made im- 
 portant discoveries. Other nations purchase these com- 
 modities from her with their manufactures, and thus 
 German progress in these arts becomes a gain to the 
 world. To represent such new developments as injurious 
 to British manufactures as a whole is to misunderstand 
 the nature of progress as well as of trade. With every 
 new development, whether at home or abroad, some in- 
 dustries are disturbed until matters have been adjusted 
 to the new conditions of improved efficiency: this is a 
 factor in progress and not an injury to mankind. 
 
 Localization of trades on a large scale leads to 
 great economies in production, and yields a natural 
 advantage which is expressed scientifically by the Law 
 of Increasing Return. All the important industries in 
 our own country have been thus localized, and this 
 association of an industry with a particular district has 
 been regarded not only as a sign of its success, but also 
 as a factor contributing to its general development. 
 The economic advantage to the world is in like manner 
 much increased when the specialization is spread over 
 a larger area and embraces diff"erent countries. Dyes, 
 paper, glass, alkalies, and musical instruments have 
 thus come to be included among the leading industries 
 of Germany; but if Britain buys dyes, &c., from 
 Germany, she pays for them with machinery, yarns, and 
 other manufactured goods (which are the products of 
 her own specialized industries), as the figures already 
 quoted demonstrate, and both countries profit by the 
 
■ui> 
 
 British Trade and Foreign Competition. 209 
 
 Countries may also go on adding to their production 
 of articles in general demand without necessarily en- 
 croaching upon one another's foreign trade. Their own 
 wants absorb an increasing supply, and there are also 
 possibilities of indefinite expansion in the demands of 
 other countries. The coal and iron industries of the 
 United States and Germany have advanced enormously 
 since 1870, and yet the output of Great Britain is greater 
 than ever. 
 
 Coal Production (Board of Trade Mem.). 
 
 
 Annual average, 
 1870-1874. 
 
 Million tons. 
 
 Annual average, 
 1890-1894. 
 
 Million tons. 
 
 Increase 
 per cent. 
 
 United Kingdom , 
 
 France, 
 
 Germany, 
 
 United States, 
 
 120 
 42 
 
 180 
 26 
 
 73 
 153 
 
 SO 
 73 -3 
 
 I28'I 
 
 264-3 
 
 Pig-iron Produced (Board of Trade Mem.). 
 
 
 Annual average, 
 1870-1874. 
 
 Million tons. 
 
 Annual average, 
 1890-1894. 
 
 Million tons. 
 
 Increase 
 per cent. 
 
 United Kingdom, 
 
 France, 
 
 Germany, 
 
 United States, 
 
 6-4 
 
 1-2 
 
 1-8 
 
 2*2 
 
 7-3 
 
 2-0 
 
 4*9 
 8-1 
 
 172-2 
 268-2 
 
 It will be noticed that the output of the United States 
 and Germany has increased much more than that of 
 Great Britain. This is not wonderful; their industrial 
 development began later, and their mineral wealth is at 
 the base of their manufacturing progress. Whether 
 these countries will ultimately take the lead in manu- 
 factures remains yet to be seen: the probable future 
 seat of many industries will be affected, among other 
 causes, by recent scientific discoveries, such as the appli- 
 cation of electrical agency derived from water-power. 
 Both in the matter of coal and water-power the United 
 
 (M460) o 
 
2IO 
 
 The Free-trade Movement. 
 
 States promise to become a much more formidable 
 rival than Germany. However, the present point is 
 whether our foreign trade has been injured by the 
 progress of other nations, and if so, whether Protection 
 can help to maintain our supremacy or arrest the advance 
 of rivals. 
 
 Following up the comparison with Germany, it is 
 obvious that her home industries will consume an in- 
 creasing amount of her coal and iron, and though her 
 exports have increased, there is no evidence that this 
 has been at the expense of the trade of Great Britain 
 the total amount of the iron export of Germany is about 
 one-fourth that of Great Britain. Yet it is growing, 
 and the causes and methods of this increase afford 
 matter for reflection. 
 
 Total Exports of Iron and Steel 
 Goods. 
 
 Total Exports of Machinery of 
 
 ALL Kinds. 
 
 United Kingdom, 
 Germany, 
 
 Million tons. 
 
 United Kingdom, 
 Germany, 
 
 Millions of ;^s. 
 
 1884. 
 
 1894. 
 
 1882. 
 
 1894. 
 
 'I 
 
 2-6 
 
 •9 
 
 11-9 
 31 
 
 142 
 3-9 
 
 The table shows a decline in the export of British iron 
 in the less highly manufactured form, and an advance 
 of 25 per cent in the value of exports of machinery, 
 which is the form involving the largest amount of 
 skilled labour. 
 
 Because a country is developing her natural resources, 
 adding to her skill and efficiency, and extending her 
 manufactures, it is not to be inferred that she is of 
 necessity driving other manufacturing nations out of the 
 field, for there is room for great industrial expansion in 
 a progressive world. No fallacy is more misleading 
 than that the growing prosperity of one country is 
 necessarily a menace or an injury to the trade of others.^ 
 
 * "The sneaking acts of the underling tradesmen are thus erected into 
 political maxims for the conduct of a great empire. By such maxims as 
 these nations have been taught that their interest consisted in beggaring all 
 their neighbours. Each nation has been made to look with an invidious 
 
British Trade and Foreign Competition. 211 
 
 If foreign trade is to exist at all it can only be carried on 
 among nations that can afford to purchase one another's 
 goods, that is, which have products to offer, and the 
 amount of their trade will be determined by their 
 prosperity. No trader desires his clients to be poor if 
 he himself wishes to attain success in business. So, 
 too, if nations increase their wealth by new industries, 
 they can afford to purchase the products of their 
 neighbours. Australia, when settled by industrious 
 whites, became a productive country and a profitable 
 market for British goods, and South Africa is now 
 undergoing a similar transformation. The prosperity 
 of these colonies has been reflected in that of Great 
 Britain. The truth, which is so obvious in the case of 
 new and distant colonies, loses none of its import when 
 applied to near and more highly-developed countries. 
 Since trade consists in exchange, and the capacity to 
 exchange depends upon the power to purchase, any 
 increase in this power must come from increased pros- 
 perity. The progress of any nation in civilization gives 
 rise to the demand for the products of other nations; 
 such we have seen to arise from the recent develop- 
 ment of Japan, which has created a considerable trade 
 with Great Britain, while in some directions the Japanese 
 have become competitors with British producers. It 
 is quite as possible to contemplate a simultaneous ad- 
 vance in the wealth of different nations as in that of 
 the different members of the same community. Jealousy 
 of the progress of other countries is as foolish economi- 
 cally as it is ineffective : we cannot stay their advances, 
 while if our own progress is real, we may by commerce 
 participate in their increased productiveness and power 
 to purchase our commodities. 
 
 That German progress (which is very real) has not 
 been inimical to the mutual relations of the two countries 
 is illustrated by the following table (from the Board of 
 Trade Memorandum), which shows the proportion of our 
 total foreign trade with four of the leading commercial 
 nations. 
 
 eye upon the prosperity of all the nations with which it trades, and to con- 
 sider their gain as its own loss " ( Wealth of Nations, book iv. chap. 3). 
 
212 The Free-trade Movement. 
 
 Proportion of British Imports from 
 
 1880. 
 1895. 
 
 Germany. 
 
 France. 
 
 Holland. 
 
 United States. 
 
 'e^l 
 
 10*21 
 
 11-39 
 
 6-82 
 
 26*04 
 
 20*77 
 
 Proportion of British Exports 
 
 TO THOSE Countries 
 
 1880. 
 1895. 
 
 7-6o 
 9-II 
 
 6-99 
 614 
 
 Vd 
 
 1383 
 12*37 
 
 Whence we see that the relative amount of our trade 
 with Germany increased during- this period of fifteen 
 years, and that exports to Germany increased more than 
 imports from Germany. 
 
 Statistics relating to a particular trade, or selected 
 for a particular area or period, may be very misleading 
 if no explanation be offered of the circumstances neces- 
 sary for their interpretation and for a true comparison : 
 such an example is afforded by the wool trade between 
 Great Britain and Germany. 
 
 It has been pointed out as a proof of decline of the 
 British woollen industry in consequence of German com- 
 petition, that the total British exports of woollen manu- 
 factures have fallen in the ten years ending 1895 from 
 ;£'273,ooo,ooo to ;£"242,cxx),ooo. In the interval German 
 woollen goods have been much in evidence in Great 
 Britain in the form of Jaeger underclothing, and also as 
 ready-made jackets for women, &c., whence it has been 
 concluded that German woollens are ousting British 
 products in the home market. But what are the facts? 
 Neglecting the decline in money values, which alone is 
 sufficient to explain the fall in export values, we find 
 that our imports of raw wool in the last twenty years 
 have increased from 342,000,000 to 475,000,000 lbs.; 
 and the employees in woollen mills from 234,000 to 
 297,000. Wool has become much more fashionable, 
 and its consumption has greatly increased at home. 
 French and German woollen cloths of special make, as 
 well as British cloth, are consumed in Great Britain, 
 but a large quantity of the yarn used for the manu- 
 
British Trade and Foreign Competition. 213 
 
 facture of German worsted cloths is spun in Bradford, 
 and the export trade of Bradford in yarns has flourished 
 greatly since the German demand sprang" up. In such 
 matters as Jaeg^er underclothing we have a new invention 
 which has added greatly to the comfort of mankind; it 
 can scarcely be said to displace any other branch of the 
 woollen trade, and it has called into existence similar 
 industries in Scotland and England, which promise to 
 become permanent and increasingly successful rivals of 
 the German product. And while in 1895 Great Britain 
 received from Germany wool and woollen manufactures 
 valued at j^"!, 676,000, Germany received from Great 
 Britain wool, yarn, and manufactured woollens worth 
 ;^5,ooo,ooo. 
 
 It should be observed that many imported articles, 
 such as tin-plates, sheet-metal, wire, alkali, nail-rods, 
 and paper, are rather the raw materials of other indus- 
 tries than finished manufactures ; they represent a stage 
 in the operations, and illustrate that mutual dependence 
 of nations which is daily becoming more apparent. The 
 quickness and cheapness of transport render it easy to 
 distribute the operations of production over several 
 countries, and to promote co-operation among nations 
 on a scale not possible until recent times; and such 
 international joint -production is one form of that 
 specialization in industry which adds to its total effi- 
 ciency. To such co-operation tariff" restrictions upon 
 trading only create hindrances; they place limits to the 
 advantages that can be realized when several countries 
 contribute, as each best can, to secure the maximum 
 utility by conducting diff'erent branches or stages of 
 production. We may ask, In what sense could pro- 
 tective duties which excluded German goods avail to 
 increase British industry? So far as these were effectual, 
 they could only yield a loss to both countries by dim- 
 inishing their total trade and reducing the advantages 
 which both gain from the higher efficiency of each in 
 some special direction favoured by the interchange of 
 goods. The fallacy has a twofold origin : it arises from 
 limiting the observation to special industries and ignor- 
 ing the total effect, and it also assumes that German 
 
214 'The Free-trade Movement. 
 
 goods would be sent to Great Britain without an equiva- 
 lent in British produce. 
 
 Turning next to competition in neutral markets, there 
 can be no doubt that other countries (and Germany in 
 particular) are making great efforts to gain new markets 
 for their manufactures, and are displaying much enter- 
 prise and energy in pushing their wares both in British 
 colonies and in foreign lands. To all this Great Britain 
 can offer no resistance except the competition of her 
 own enterprise and efficiency: no form of Protection is 
 of the least avail. Great Britain is in the position of an 
 old-established firm which has for a long time experi- 
 enced little competition, but has now to encounter the 
 opposition of a young and enterprising rival. To retain 
 her predominance in such circumstances she will have 
 to rely upon her skill and efficiency, business capacity 
 and energy; she will need to be vigilant, skilful, enter- 
 prising, and active to meet the desires of her customers 
 and anticipate their wants. She can afford to neglect 
 no form of economy that arises from improvement or 
 discovery either in mechanism or in processes of manu- 
 facture; she must adopt the most efficient commercial 
 methods, and study the requirements of different 
 countries. 
 
 The competition of progressive countries in many 
 branches of manufacture is very real, and will become 
 more acute as each year adds to their skill and capital. 
 Great Britain cannot retain permanently the advantage of 
 her earlier start, inasmuch as there is a general levelling 
 up of capacity and effectiveness, and a tendency towards 
 assimilation of the circumstances governing both labour 
 and capital in progressive countries. The contest has 
 begun, and it will become increasingly keen in the 
 future. Whilst it is necessary to recognize this fact as 
 a comparatively new element affecting British commerce, 
 there is no occasion for despondency, and still less 
 rational would be recourse to measures of a retaliatory or 
 hostile character, which could only lead to further dis- 
 location. 
 
 As yet Germany has not encroached very seriously 
 upon the markets which our goods find in India and our 
 
British Trade and Foreign Competition. 215 
 
 Colonies, though she is pushing steadily in that direc- 
 tion.^ The proportion of German export trade with 
 British possessions is, according to recent statistics : — 
 
 To India, Gennany /i to jC^S from the United Kingdom. 
 
 To Australasia, ... „ ;^i to 2"30 ,, „ „ 
 
 To Canada, ... „ ;^i to ;^ii „ „ „ 
 
 Total British ) y- j. 
 
 possessions, { ••• " AiiOA^o „ „ „ „ 
 
 The Memorandum previously quoted concludes "that 
 the greater portion of the trade in non-European coun- 
 tries, and in British possessions everywhere, is carried 
 on with the United Kingdom. Germany runs us close 
 in some European countries, and especially in Russia 
 or Northern Europe, but with this exception our pre- 
 ponderance is manifest." 
 
 There is nothing, then, in the facts to indicate that 
 Germany, France, and the United States have been 
 assisted in their industrial development or foreign com- 
 merce by the protective reaction of the last twenty 
 years. Their progress can be traced to very different 
 causes, and has been attained rather in the face of dis- 
 advantages imposed by their tariifs and bounties, both 
 of which are a tax upon the whole community wherever 
 they are imposed. A report published in Berlin in 1882, 
 embodying the views of eighty-five chambers of com- 
 merce on the new tariff, found it ** a cause of depres- 
 sion", *'an injury to the working-classes", and a '* bur- 
 den upon national labour". In the trade with neutral 
 countries, tariffs (with the exception of the recent 
 Canadian tariff) which do not differentiate between 
 
 1 From a Foreign Office Parliamentary paper, prepared by the secretary 
 to the British embassy at Berlin, and published October, 1897, we learn 
 that in the whole of the German colonies (which have an extent of 
 1,000,000 square miles) the German population numbers 1803 persons, of 
 whom one-half are officials and soldiers, and the non-German white popula- 
 tion is 1778; that the cost of these colonies is estimated at ;^402,ooo, and 
 that since the German colonies were founded iji million German emigrants 
 have settled in non-German countries. The exports from Germany to her 
 colonies in 1896 were ^{,"337, 150, and the imports from her colonies _^230,25o. 
 The trade of the United Kingdom with her colonies and possessions was in 
 1896: imports from colonies, ;^93,2o8,ooo; exports to colonies, ;^90,650,ooo. 
 As German trade is practically nil in her own colonies, it naturally seeks an 
 outlet in British colonies and neutral markets. 
 
3i6 The Free-trade Movement. 
 
 countries, are not an important factor in determining 
 the proportions of trade secured by Britain and the rival 
 manufacturing nations. Tariffs are obstructions in all 
 cases, and while commercial treaties and favoured-nation 
 arrangements secure small gains by their bargainings, 
 they may involve indirectly greater losses through their 
 restrictions. In the long run the competition with rivals 
 in foreign commerce must depend upon the methods 
 indicated in the Memorandum: "The commercial posi- 
 tion of the United Kingdom has been attained and must 
 be kept up by the untiring zeal and energy of the 
 industrial community. The work of seeking out cus- 
 tomers, providing commodities that customers will buy, 
 exploiting new markets, and elaborating new methods, 
 rests with the individual. What Government can do is 
 to facilitate the supply of accurate and carefully-collected 
 information." 
 
 A complaint may here be discussed, that Great Britain 
 has aided the competition of other countries by the free 
 export of her machinery ; and it has been suggested that 
 a prohibition of, or restraint upon, such exports would 
 retain the manufacture of machinery as a monopoly for 
 Great Britain. For example, it has been urged on be- 
 half of the cotton industry, that we have created rivals 
 in Germany and India by supplying them with British 
 machinery, which they now employ to the detriment of 
 the Lancashire trade. Scarcely anyone, however, would 
 be found deliberately to maintain that a country can, in 
 these days, reserve to itself the monopoly of any art or 
 process, which other countries have capacity to practise 
 and utilize. The scheme, moreover, has been tried, and 
 without success; for export duties on machinery were 
 levied early in the century as a kind of protection, and 
 with the idea of preventing the development of foreign 
 industry. The result was, that machines were smuggled 
 out ot the country, and that skilled artisans were 
 tempted over to other countries to make the machinery 
 there, and start industries which became our rivals. 
 Thus attempts to monopolize an industry resulted in 
 setting up opposition elsewhere. It was under this 
 system that the famous firm of Cockerill at Liege, and 
 
British Trade and Foreign Competition. 217 
 
 others in France were founded by Englishmen. The 
 law which prohibited the export of instruments of in- 
 dustry was found to be futile, and was repealed in 1844. 
 Fifty years have not made it more possible to monopolize 
 skill and knowledge. Capital and talent flow easily to 
 any country, enterprise is ever seeking new openings, 
 and these forces only require security for their applica- 
 tion. Great Britain imports both machinery and ideas 
 from other countries at the present day; and she owes 
 the establishment of many of her staple industries, like 
 wool, silk, glass, hats, and paper, to the circumstance 
 that Flemings, French Huguenots, and other foreign 
 artisans were either invited to settle in this country, or 
 found an asylum here when exiled from their own land. 
 It is idle therefore to imagine that foreign competition 
 could in these days be affected by any such restraints, 
 though it was characteristic of the Protective period that 
 the attempt should be made. But what would be the 
 result if a measure prohibiting the export of machinery 
 for the cotton industry could be effective? At the present 
 time the manufacture of cotton-spinning machinery for 
 export employs about 30,000 British artisans, not in- 
 cluding the large number engaged in the subsidiary 
 industries of coal and iron. These are skilled workmen, 
 earning good wages in the pursuit of a lucrative indus- 
 try. To check this machine trade by destroying its 
 market would throw these men out of employment and 
 drive the industries to other countries, which would 
 eagerly seize the opportunity of developing them. The 
 foreign demand for machinery would be met from other 
 sources, our own cotton-spinning industry would receive 
 no new impulse, and we should only have handed over 
 a valuable industry to another nation by ruining it here. 
 If other countries are able to set up cotton-mills, nothing 
 that we can do will prevent them, but we can profit by 
 their orders for machinery. British mills may still com- 
 pete with the foreign mills by their superiority, or there 
 may be sufficient demand for the products of all, as 
 population and civilization are constantly increasing; 
 but it would benefit no branch of British industry or 
 commerce that an embargo should be placed upon a pro- 
 
2i8 The Free-trade Movement. 
 
 fitable industry for which we have a special fitness, and 
 for the products of which there is a real demand. 
 
 Whatever inroads are being made upon British com- 
 merce by continental competition may be explained by 
 two circumstances unconnected with tariffs. The first 
 is the rapid advance of foreign countries in scientific 
 knowledge and research, together with their highly- 
 organized systems of technical education, which have 
 been developed within the last quarter of a century. 
 The second circumstance is the superior energy and 
 enterprise of their merchants and commercial agents, 
 who are sparing no effort in their eagerness to gain 
 markets for their products. On the latter subject the 
 recent Blue Books, dealing with foreign and colonial 
 trade, give very conclusive evidence. From the Austral- 
 asian Colonies the opinion is unanimous as to the apathy 
 **and indifference on the part of British traders to the 
 wishes of their customers and a disregard for sugges- 
 tions ", while ** foreigners are willing to comply with 
 the wishes of even small buyers". ** British manufac- 
 turers are unwilling to alter their patterns or styles, 
 their manner of packing, and their terms, or to make 
 concessions in their inflexible rules, and the foreign 
 competitor reaps the benefit." Abundant evidence of 
 these defects will be found also in the reports of our 
 consuls abroad. The British makers of tools (axes, 
 hammers, saws, &c.) and agricultural implements will 
 not, we are told, modify the styles of their strong and 
 heavy products, and hence the trade goes to the United 
 States and Germany, which offer * Might, well-finished 
 articles, more suitable to the circumstances, and at a 
 lower price". In South America the German traveller 
 is everywhere able to speak the language of the people, 
 to present samples and offer goods in terms of weight, 
 measure, and currency of the country. He studies the 
 taste and convenience of the customer in every way. 
 The push, initiative, and energy, and the accommodating 
 methods of the newer competitors are making way 
 against the obstinacy of English merchants, who are 
 less complaisant, adhere to old-fashioned methods, and 
 are prone to dictate to their customers the kind of goods 
 
British Trade and Foreign Competition. 219 
 
 they should buy. The conservative element in British 
 commerce, which adopts **the take it or leave it" form 
 of business, is, according to all these authorities, a factor 
 favourable to foreign competitors. British commercial 
 travellers able to speak the language of foreigners are 
 few, while Germans are producing trade -lists even in 
 Japanese and Chinese.^ 
 
 The other serious charge against British industry is 
 that it is not keeping pace with continental countries in 
 the application of science to industrial ends, and that 
 the technical training of our workmen is inferior. In 
 some departments of chemistry and electrical engineer- 
 ing, we are told that continental nations are far in 
 advance of Great Britain, and that we must go now to 
 Germany or the United States for the latest appliances 
 and the best machinery for certain purposes. A Com- 
 mission of Inquiry by British experts brings home a like 
 complaint against our inferior equipment in science, and 
 the smaller esteem in which scientific research is held 
 by our manufacturers. Trained experts are largely em- 
 ployed at great cost by foreign manufacturers in their 
 works, and the highest scientific knowledge is thus 
 devoted to their service. Sir Henry Roscoe states, for 
 example, that **he visited a colour works near Frank- 
 furt where 100 trained chemists were employed, many 
 of whom had devoted years to original research with a 
 view to making discoveries. One of these men, who 
 received ;£"iooo a year, had worked for several years 
 without producing any result, but' eventually made a 
 discovery which repaid the firm ten times over, and 
 placed an entirely new branch of manufacture in their 
 hands." Nothing of this kind is to be found in Great 
 Britain.^ 
 
 Public and private encouragement of research as a 
 commercial speculation is asserted to be a chief factor 
 in the success of these continental industries. This 
 competition seems to be literally a competition in the 
 
 ^ See also Trade of the World, by Charles H. Gastrell. 
 
 '^ At the General Congress of Engineers held in Germany in 1896, many 
 British engineers expressed. themselves as surprised at the superiority of the 
 German processes and methods. 
 
220 The Free-trade Movement. 
 
 application of scientific knowledge to industry, and in 
 business aptitude for commercial operations. The field 
 of Government action in these matters is limited but 
 important, its aid can only be indirect. The State can- 
 not secure markets, for purchasers must be tempted 
 and cannot be coerced. 
 
 It is by the encouragement of science, by technical 
 training, and by the diffusion of knowlege that the 
 Government can best aid private enterprise. It can 
 also help by procuring full and accurate information, 
 some of which is constantly being published in the 
 Consular reports, as to the needs of Colonies and foreign 
 countries, and by issuing such information in a cheap 
 and accessible form, — a kind of knowledge which is 
 especially lacking in regard to the Colonies. The con- 
 sular agents of other countries are said to be particu- 
 larly active in informing their governments on all matters 
 of price, fashion, demand, freights, &c., such as will 
 aid business men in adapting their operations to the 
 special circumstances of the markets for which they are 
 competing. Great Britain is very inadequately repre- 
 sented in this respect in many countries. 
 
 There are minor ways in which Government can assist 
 trade, as by relaxing administrative rules where they 
 impede some desirable end, and where the modification 
 would conflict with no established principle. The follow- 
 ing case will illustrate this : — Alcohol is taxed for revenue 
 in this country, and whether it is imported or home- 
 produced there is no drawback on its consumption for 
 scientific purposes. In Germany, however, the duty is 
 reduced to a trifling sum in such circumstances, the con- 
 sequence being that is. will purchase as much pure alcohol 
 /or experimental purposes in Germany as 6^. 6^. in Great 
 Britain, to the manifest advantage of chemical research 
 in Germany. Other examples may be found where the 
 working of an inflexible administrative rule operates so 
 as to sacrifice a greater good for the sake of depart- 
 mental convenience or stereotyped system. 
 
 Sensational alarms as to the decay of British industry 
 and commerce have been seen to be baseless, but suffi- 
 cient ground exists for anxiety that the nation should 
 
British Trade and Foreign Competition. 221 
 
 realize the nature of the competition to which it will in 
 future be subjected, and that it should recognize its own 
 defects. Continued success has a tendency to dull effort, 
 while competition sharpens it by enforcing- the need for 
 alertness and energy. 
 
 There are other dangers to our trade and manufactur- 
 ing supremacy which originate nearer home. These 
 are the industrial conflicts that from time to time check 
 production, paralyse industry, and dislocate the export 
 trade, thus giving an opening to foreign competitors. 
 The complete stoppage of a great industry, such as coal 
 or ship-building, or the interference with trade caused 
 by a vast railway or dock strike, or an engineering dis- 
 pute, presents far more serious difficulties and grounds 
 for concern than the competition with foreign skill and 
 energy. These conflicts, when they reach the stage of 
 industrial warfare, are a calamity of the first magnitude; 
 they inflict suffering and loss at home, and not infre- 
 quently end by losing the foreign market and handing 
 it over to a rival producer. No other country has suf- 
 fered so disastrously from these industrial wars as Great 
 Britain, though their tendency has been seen in the 
 United States, Belgium, and even in Australia. This 
 is not the place to discuss the remedies, but the import- 
 ance of the subject cannot be overrated in its bearing 
 upon trade and foreign competition. A break in con- 
 tinuity of supply may be fatal to a business connection. 
 The complexity of modern trade is so vast and delicate 
 that large issues depend upon the steady working of its 
 machinery. The economic aspects of industry are as 
 vital as the strictly scientific and technical. The losses 
 to the nation incurred by these struggles of labour and 
 capital are apt to be lost sight of in the heat of a conflict. 
 The dangers from this quarter are only to be averted by 
 the exercise of great forbearance, and by an appeal to 
 the common-sense of those directly concerned. If British 
 industry be made thoroughly efficient, it may hold its 
 ground against the world, but both workmen and em- 
 ployers cannot be too fully impressed with the fact that 
 their skill, ingenuity, and industry are now pitted against 
 those of the most intelligent and progressive nations in 
 
222 The Free-trade Movement. 
 
 the same classes of employment, and that there is no 
 form of Protection which can avail them in the struggle 
 for superiority. 
 
 Yet one other complaint against foreign competition 
 remains to be considered. It is said that the products 
 of foreign ** sweated labour" compete unfairly with those 
 of English labour and tend to drive them out of the 
 market. It is difficult to come to particulars, and 
 identify the kind of commodity which can be properly 
 labelled ** sweated" in our imports. So many circum- 
 stances control the rates of wages and standards of 
 living in different countries that a common standard for 
 comparison cannot be obtained. The corn exported 
 from India is raised by labour paid at only a fraction of 
 the British rate, and yet it cannot be termed sweated ; 
 it is the rate customary in a backward and populous 
 country among natives apparently contented with their 
 standard of living. The same objection might be raised 
 to the importation of Turkey and Persian carpets in 
 competition with Axminster, &c. It is inevitable that 
 so long as the conditions of life and production are so 
 various there can be no uniform standard of wages over 
 the whole globe, and that a cheap article by no means 
 implies a sweated industry. In like circumstances higher- 
 paid labour is the more efficient, and can easily maintain 
 its ground. In Great Britain wages and efficiency have 
 advanced together. The best-paid labour is found in 
 the superior factories and shops, and inferior workmen 
 gravitate to the lower class of workshops. British 
 miners show a larger output per hour than lower-paid 
 workmen on the Continent, and British workmen boast 
 that their production is greater than that of lower-paid 
 labour abroad. It may be taken as an established fact, 
 that sweated labour will not permanently compete with, 
 and undersell better-paid labour in the production of the 
 same class of goods; nor will inferior goods drive out 
 superior if the capacity to purchase be not diminished ; 
 indeed the converse of this statement has been so widely 
 accepted as to have been generalized into an economic 
 law, with only one exception; this is money, which, as 
 the standard of value, occupies a peculiar position. In- 
 
British Trade and Foreign Competition. 223 
 
 ferior goods may co-exist with superior when they appeal 
 to different classes of consumers; they are then not 
 really in competition at all; and goods, such as Indian 
 and English carpets, produced by labourers existing in 
 wholly different circumstances, may both find a market 
 owing to qualities and style peculiar to themselves ; but 
 it does not follow that their competition is in any sense 
 unfair. 
 
 The problem of the competition of British produce with 
 that of other countries, whether in our own or neutral 
 markets, is finally one oi skill and efficiency ^ of adaptation 
 to circumstances, and of wise economic arrangements; 
 but it is not a matter which Government interference or 
 regulation by tariffs can determine in our favour. ^ 
 
 ^ The seven months* strike of the engineers {1897-1898) has revealed an- 
 other serious danger to British industry. If the evidence which it has called 
 forth be true, the restraints imposed by trade-unions upon the efficiency of 
 labour in this country are able more than any foreign tariffs to destroy 
 British supremacy in manufacturing, and to render British labour less efficient 
 and more expensive in competition with the United States and Germany — 
 countries almost free from these ruinous methods. 
 
 The chief points alleged are, that these countries are gaining upon Great 
 Britain in engineering trades in consequence of the better and fuller employ- 
 ment of machinery and the absence of trade-union interference with the 
 full exercise of each man's skill and powers. In the Engineering Magazine 
 for December, 1897, Mr. Hiram Maxim writes: " It was only a few years 
 ago that any one equipping a machine-shop obtained the gn'eater part of his 
 metal-working machinery from England, but to-day the obsolete, awkward, 
 and comparatively highrpriced English tools have been completely driven 
 out of the market by the German-made American tools ". From a large 
 Russian dealer he learns that, "Formerly nearly everything came from 
 England, but at the present time all the rough and coarse tools we make 
 for ourselves. Moderately good tools come from Germany ; very fine instru- 
 ments of precision, such as squares, scales, micrometers, lathe-chucks, twist- 
 drills, &c., from America." "It may be said that the greatest bugbear in 
 England, the labour question, is practically non-existent among the manu- 
 facturers of high-class metal work in the eastern part of the United States. 
 I do not believe that one per cent of the highly-skilled mechanics in the great 
 workshops of New England belong to any sort of a trade-union." "The 
 pay of the American metal-worker is about one-third more per hour than 
 that of the English. Nevertheless a great variety of the better class of 
 metal work can be produced in the United States at a considerably lower 
 price than in England," "The American workman commences work at seven 
 o'clock in the morning, promptly on the stroke of the bell ; he works steadily 
 until twelve o'clock, recommences at one, continuing until six. On Saturdays 
 he leaves off at one." 
 
 Mr. A. Basil Wilson, M.I.C.E., M.I.M.E., writes to The Times:— "Ai 
 works in Elsass, now engaged on a contract for delivery of machinery in 
 Great Britain, one man receiving zy. per week of 60 hours attends to eight 
 machines, producing a special article largely used in spinning machinery. 
 
224 T^^ Free-trade Movement. 
 
 Chapter XII. 
 Imperial Federation* 
 
 The principle of Free-trade has, within the last few 
 years, come up for reconsideration in a new and in- 
 teresting connection. The movement for the federation 
 of Great Britain and her Colonies in a close and firm 
 union which shall at once strengthen the empire in its 
 defences, call forth a closer sympathy between the inha- 
 bitants of the scattered regions of which it is composed, 
 and advance their industrial and commercial interests, 
 is one which has grown very rapidly and has been 
 occupying much of public thought. The grounds on 
 which the movement rests are political, sentimental, 
 and economic. Community of kindred, language, tra- 
 ditions, religion, and free institutions unites the Colonies 
 with the mother country by ties of mutual sympathy; 
 the possible encroachments of military and ambitious 
 nations impress the importance of a closer union for 
 common defence and security upon a nation largely 
 dependent upon her commerce with remote parts of an 
 oceanic empire; while the purely economic advantages 
 to Great Britain and her Colonies to be gained by in- 
 creased trading are in themselves sufficient to furnish 
 an argument for any practicable form of union which 
 will promote those advantages in the interests of all. 
 The idea of forming some kind of federation has taken 
 strong hold of the popular imagination, and the problem 
 seems to be coming within the range of practical politics. 
 It is a hopeful sign for peace and the development of 
 
 Each machine completes one artiale in 2 Ji hours; the wages of the attendant 
 come therefore to approximately i}^cl. a piece. In this country, making the 
 same article one man works 54 hours per week, and attends to one machine 
 only, thereby naturally turning out the article at a very much enhanced price." 
 Free-trade cannot guarantee to a nation advantages which may not be 
 destroyed by other causes. If the supremacy of British labour yields to that 
 of other countries, it is obvious to what causes it will be due, and for this 
 there is no remedy in any kind of Protection. Great Britain is dependent 
 upon foreign markets for the sale of her goods; if her efficiency declines, her 
 exports must decline also. 
 
Imperial Federation. 225 
 
 free institutions. The question is, on what basis the 
 desired consolidation of the empire can be secured, and 
 whether it is possible at all upon purely commercial and 
 fiscal lines. 
 
 It has long been a dream of some statesmen that a 
 Customs Union, or common system of taxation of imports, 
 might at some distant time prevail throughout the em- 
 pire. There are many obstacles, however, to this pro- 
 ject, arising out of the very different fiscal systems 
 adopted by the Colonies, most of which involve Protec- 
 tion against the mother country and one another. A 
 simple Customs Union based upon the existing British 
 system of taxation for revenue only would be an immense 
 advantage; but such a scheme would necessitate the 
 adoption of Free-trade by the Colonies, and for this they 
 are not yet prepared. Another suggestion, based on the 
 protective idea, is that Great Britain and her Colonies, 
 following the examples of the German "Zollverein" 
 and the United States, should adopt Free-trade within 
 the empire, with a common protective tariflf against the 
 other nations. This policy, as involving the adoption 
 of the protective principle by Great Britain, is open to 
 the same objections on her part as the former proposal 
 was on the part of the Colonies. 
 
 As a middle course, it is proposed that **some 
 arrangement should be made for placing trade within 
 the empire on a more favourable footing than that which 
 is carried on with foreign countries"; in other words, 
 that the Colonies should reduce their tariffs on imports 
 from the mother country, and that she in return should 
 place high differential duties upon all goods from foreign 
 countries which the Colonies are able to produce. This 
 policy also rests upon the application of the protective 
 idea in a modified form by the mother country. It will 
 be seen that all the schemes for commercial federation 
 involve difficulties in detail. 
 
 The federal sentiment is a natural evolution of the 
 civilization and circumstances of the nineteenth century; 
 it is abundantly illustrated in other countries, and its 
 success in the Dominion of Canada suggests its appli- 
 cation more widely to British Colonies. The case of 
 
 (M 460) p 
 
226 The Free-trade Movement. 
 
 Great Britain and her Colonies presents peculiar aspects 
 and difficulties, but with corresponding advantages fore- 
 shadowed. Time has wrought great changes in the 
 relations of the Colonies to Great Britain and to one 
 another. The mercantilist conception of last century 
 regarded Colonies merely as a source of profit to the 
 mother country, to be kept in due subordination, and 
 exploited for its own purposes. The war of American 
 Independence demolished that idea, and led to a re- 
 action. This time public opinion went to the opposite 
 extreme, and on the false analogies that as ripe fruit 
 falls from the tree, and that as children grown to man- 
 hood become independent and leave their home to found 
 another, so it was held that Colonies, following the 
 example of the American States, would separate them- 
 selves from the mother country when they had attained 
 the vigour of maturity. 
 
 At the time of the Corn-law repeal, when Cobden's 
 hopes of universal peace as a result of free commerce 
 were high, this separatist doctrine was widely prevalent. 
 Fifty years' experience of colonial expansion, and of 
 unbroken good relations between the Colonies and the 
 mother country, has led public opinion to form a very 
 different and much grander conception of the destiny of 
 the empire. The policy which made the experiment of 
 placing the Colonies upon a footing of equal rights and 
 liberties with the mother country has been attended with 
 the most salutary results, and has justified the wisdom 
 of its principles. Responsible government was conferred 
 upon the larger Colonies as they grew to be capable of 
 its exercise — it was first accorded to Canada in 1840, to 
 most of the Australasian Colonies between 1850 and i86o, 
 and to the Cape Colony in 1872. Legislative self-rule 
 carried with it the control of their own fiscal arrange- 
 ments. The extent of this liberty is measured by the 
 fact that, with the exception of New South Wales, all 
 the Colonies adopted systems of taxation, which, though 
 differing in details, agreed in involving Protection against 
 the mother country. 
 
 Under the stimulus given to their enterprise by free- 
 dom, the Colonies have in fifty years made rapid progress 
 
Imperial Federation. 227 
 
 in wealth, in population, in commerce, and in import- 
 ance. Their trade with the mother country is now very 
 considerable. Great Britain forms the chief market 
 for their exports of raw produce and food, and they 
 take a large return in her manufactures;^ indeed, the 
 Colonies and British possessions jointly obtain 77 per 
 cent of their imports from Great Britain, and less than 
 10 per cent from France, Germany, and the United 
 States together, although the States, by reason of 
 their easy access, naturally do the largest trade with 
 Canada. 
 
 Our trade with the Colonies only amounts to about 
 25 per cent of our whole external trade; but per head 
 of population their trade with Great Britain is vastly 
 greater than their trade with other countries. While 
 Germany and France each take from Great Britain less 
 than 10^. per head of their population, Australia imports 
 from Great Britain ;£^8, South Africa £;^, and Canada 
 £2 per head of population. 
 
 Financially also. Great Britain is deeply interested in 
 the Colonies, and they have found a convenient loan- 
 market in the mother country. The public debt of 
 Australia to Great Britain is about ;^20o,ooo,ooo, of 
 Canada some ;^6o,ooo,oc)o, while India has borrowed 
 ;^35o,ooo,ooo, and the remaining parts of the empire 
 ;^ 100,000,000. Thus intimate business relations of 
 many kinds between the various parts of the empire 
 constitute a bond of common interest, and a factor 
 favourable to consolidation. There are circumstances 
 outside the British Empire that indicate the desirability 
 of some closer political union. Germany has become a 
 powerful empire, and the ** Zollverein ", or commercial 
 union of small German states, commenced by Prussia in 
 1834, has been extended to comprise the whole of Ger- 
 many. As the United States have expanded their terri- 
 tory, they have maintained their fiscal union so as to 
 confer Free-trade over the whole of their extensive 
 federation, and they have sought, though unsuccess- 
 fully, by commercial relations to bring Canada within 
 
 1 In the year 1896 imports from the British Colonies and possessions 
 amounted to ;^93, 208,000, and exports to ;^9o,65o,ooo. 
 
228 The Free-trade Movement. 
 
 the scope of their fiscal union. ^ On the other side of 
 the globe the movement for federation is growing, and 
 there is little doubt that the whole seven colonies of 
 Australasia will at no very distant date be brought under 
 some common scheme of political and financial union. 
 Meanwhile the federation of the South African colonies 
 has been postponed indefinitely by recent unfortunate 
 events. 
 
 Federations are formed between countries from various 
 motives, but in all cases of federation, projected or 
 accomplished, the advantages to be gained from the 
 extension of the area of trading have been prominent 
 amongst the benefits, either anticipated, or claimed as 
 having accrued from the union. The fact is a strong 
 indication of latent discontent with the system which 
 imposes limitations. It constitutes a kind of protest 
 against the unreasonable restrictions which the protec- 
 tive system creates, and betrays an unconscious leaning 
 to the Free-trade principle. . The countries joining such 
 unions look for some additional outlet to their export 
 trade, and they find it unattainable except upon terms 
 of mutual concession. They seek by treaties and federa- 
 tions to escape from the consequences of their self-im- 
 posed limitations. The whole of such expedients are a 
 condemnation of the protective principle. The policy of 
 Canada since 1867, and especially in the year 1897, 
 gives ground for hoping that intercolonial federation 
 will generally tend towards a more liberal commercial 
 policy. 
 
 The notion of an imperial inter-trading federation with 
 a zoUverein appeals strongly to those who feel the strain 
 of an ever-increasing competition with progressive rivals. 
 A feeling of resentment against those nations that, by 
 their increasing tariffs, threaten to reduce our export 
 trade, provokes a desire for retaliation, which seems to 
 
 1 The denunciation of their treaty with Canada in 1864 amounted to an 
 attempt by commercial pressure to bring her within their political union. 
 
Imperial Federation. 229 
 
 find possible satisfaction in the exclusiveness of a British 
 and Colonial prohibitive tariff scheme. 
 
 It is argued that an empire on which the sun never 
 sets is capable of yielding almost every species of pro- 
 duct, and of becoming self-sustaining and self-contained. 
 It is also maintained that the consequent internal de- 
 velopment would compensate for any losses which might 
 be incurred by narrowing down the limits of commerce 
 to the boundaries of the empire, while the political and 
 other advantages of consolidation would count as con- 
 siderable assets in the balancing of accounts. It should 
 be observed that the latter part of this argument assumes 
 (what requires proof) that commercial union can be a 
 satisfactory basis of federation, and also that it will yield 
 the political and other advantages alluded to. Some 
 supporters of federation lay stress upon the importance 
 of federation for defence, and consider that fiscal 
 autonomy is quite consistent with such an arrangement. 
 On the other hand, it is argued that a policy which would 
 convert Great Britain and her Colonies into a self-sufficing 
 empire is merely a return to an earlier stage of civiliza- 
 tion, with an amplification of the area occupied by the 
 State; that it is retrogressive, and entirely antagonistic 
 to that principle of evolution which has developed the 
 commerce of modern times; and that it is opposed to 
 the progress of science, which, by enormously reducing 
 geographical distance and the cost and time of transport, 
 tends to make the products of the whole globe accessible 
 to every nation. 
 
 The common proposal is, that Great Britain shall meet 
 the Colonies half-way and effect a compromise by placing 
 differential duties upon the goods of other countries, in 
 order to give preferential trade to the Colonies, in return 
 for which they are to reduce their tariffs on British 
 goods. 
 
 Now British trade with the Colonies and India amounts 
 to about one-third of her total commerce with foreign 
 
230 The Free-trade Movement. 
 
 countries. From the United States alone we took 
 goods to the value of 106^ millions sterling in 1896, 
 an amount equal to our imports from the whole of the 
 Colonies (93)^ millions in 1896), although the proportion 
 of trade with the United States has been diminishing, 
 while that with the Colonies has been increasing. The 
 total of British imports in 1896 amounted to ;^44 1,808, 904. 
 The effect therefore of this proposal would be to tax 
 75 per cent of our imports, in the hope that these may 
 be ultimately supplied from colonial instead of foreign 
 sources. This would raise the price of these commodi- 
 ties to all British consumers, who would accordingly 
 suffer loss, and it would be equally disastrous to British 
 industry by raising the cost of raw materials. A further 
 effect would be to reduce our exports to those foreign 
 countries, and to injure the industries which manufacture 
 those exports. As an act of commercial warfare, dis- 
 ordering trade and damaging foreign industries, it would 
 call forth unfriendly feelings, and perhaps even acts of 
 political hostility. The tendency of modern times has 
 been by foreign trade and exchange to increase mutual 
 dependence, friendly intercourse, and good relations. 
 Many of our industries depend upon other countries for 
 their half- manufactured materials, while they find in 
 those countries the largest markets for their finished 
 products. The complexity which has grown up in manu- 
 facturing and trading is immense. All this established 
 order would be dislocated. The policy of isolation, if 
 achieved, would leave us equally liable to attack; and 
 foreign nations would have less occasion to consider us, 
 when their commercial interests were severed from ours, 
 and one of the forces making for international peace 
 would be removed. As regards the proposal for pre- 
 ferential duties, it should be remarked that, had Great 
 Britain in the past retaliated upon all who placed hostile 
 tariffs on her goods, the Colonies would have been among 
 the chief sufferers ; and it is unreasonable now to expect 
 
Imperial Federation. 231 
 
 Great Britain to impose duties in their favour by which 
 she would incur loss, while they are free to tax her 
 goods and to buy in other markets. Equally difficult 
 is it for the Colonies to abolish their duties against Great 
 Britain. In fact the prime difficulty in the way of any 
 form of commercial union resolves itself into a conflict 
 of commercial interests. The Colonies are mainly pro- 
 ducers of food and raw materials; they send to Great 
 Britain vast quantities of corn, beef, mutton, butter, 
 cheese, &c., and it is desired that they should increase 
 these exports until they become our chief external sources 
 of supply. This form of progress, however beneficial to 
 the country, is in competition with British agriculture, 
 which desires protection against external supplies; and, 
 to the British farmer who believes in that means of sus- 
 taining his industry, it will be no consolation to know 
 that the supplies come from the Colonies. On the other 
 hand, the Colonies have nearly all adopted protective 
 tariffs against manufactured goods, with the aim of 
 establishing manufactures in their own lands. They are 
 committed to the principle, and the duties are in full 
 operation; capital and labour have been diverted to 
 manufactures dependent upon duties. Preferential 
 treatment on both sides will therefore require that the 
 duties imposed by the Colonies on manufactured articles 
 shall be reduced in order to admit the goods of the 
 mother country, which are already the chief competitors 
 of the colonial goods. Are the colonists engaged in 
 these fostered trades willing to make such a sacrifice, to 
 reduce their manufactures, and betake themselves to agri- 
 culture in order to improve (as it is assumed they would) 
 the relations of the empire? 
 
 Again, if Great Britain is to take from the Colonies 
 exclusively all the commodities they can produce, by 
 placing prohibitive duties upon like articles from foreign 
 countries, she must continue to pay the Colonies for 
 them by means of her manufactures; she will have no 
 
a3a The Free-trade Movement. 
 
 other means of quittance, since circular trading through 
 other countries will be cut off or greatly hampered ; yet 
 it is to this method of payment that colonial manufac- 
 turers are opposed, so far as it interferes with their in- 
 dustries and profits. The difficulty of a common basis 
 for trading in such circumstances is a great stumbling- 
 block ; it has arisen out of Protection on the part of the 
 Colonies, and cannot be remedied by a return to Pro- 
 tection on the part of Great Britain, however it may be 
 disguised. It is not easy to reconcile the interests of 
 consumers and producers at home with those of manu- 
 facturers in the Colonies. 
 
 The Australian Colonies recognize the difficulty, and 
 while recently demonstrating their loyalty and attach- 
 ment to the mother country, some of them have, through 
 their premiers, declared their adhesion to Protection, and 
 laid stress upon the impossibility of its speedy discon- 
 tinuance. The remarks of Sir G. Turner, Premier of 
 Victoria, on this subject show no ambiguity: "Victoria 
 is a heavily protected colony, and I do not suppose our 
 people are prepared to give up Protection. . . . We 
 cannot afford to relinquish our duties, because we derive 
 two millions annually, principally from ad valorem duties." 
 So the Premier of South Australia: ** In South Australia 
 they do not believe in Free-trade; it is contrary to the 
 established industries, which rest upon Protection ". 
 
 Great Britain already possesses the greater part of 
 the colonial trade, and it is only by expansion of the 
 colonial mining and agricultural industries that trade 
 can be increased. But the colonies are not content to 
 grow merely in agriculture, they wish manufacturing 
 industries to develop, and their policy has been directed 
 towards this end. As time goes on, they are unlikely to 
 have a surplus of agricultural produce equal to our 
 wants, because their growing town population will con- 
 sume an increasing part of their agricultural produce. 
 In 1896 Great Britain imported wheat and flour worth 
 
Imperial Federation. 333 
 
 nearly ;^3i,<xx),ooo, of which the Colonies supplied only 
 ;^2, 500,000, or 8 per cent, Russia 16*7 per cent, and the 
 United States 55 per cent. If the Colonies are to supply 
 Great Britain with food and raw materials they must 
 alter their policy and modify their industries, they must 
 cease to give artificial encouragement to manufactures, 
 and devote themselves to the development of their 
 natural resources, i.e. they must gradually drop Protec- 
 tion, which artificially directs capital and labour towards 
 manufactures, and give full play to those forces which 
 would make naturally for a supply of the produce re- 
 quired by the home country. 
 
 Had they never adopted protective measures in the 
 desire to foster their own manufactures they would now 
 be supplying a much larger proportion of our wants in 
 food and raw materials. For with free play and open 
 competition it would have been only worth while to 
 develop the industries which were profitable without 
 artificial aid. It is by agriculture and mining that 
 their wealth has been obtained; their natural course 
 of development is in that direction, and it is only by 
 following it that they can increase their commercial 
 intercourse with Great Britain. 
 
 We may conclude therefore that neither Great Britain 
 nor the Colonies can without considerable injury to 
 many interests suddenly adopt the principle of prefer- 
 ential trading. It is the exclusive and fostering policy, 
 unfortunately begun in the Colonies under a mistaken 
 idea, which has raised impediments. If the tariffs 
 aimed at British manufactures be gradually modified, 
 more British goods will go to the Colonies and will be 
 paid for of necessity by colonial produce. The same 
 movement towards natural development will cause the 
 trend of colonial industry to be towards the development 
 of the soil, and there will be a consequent flow of capital 
 and labour to the land. The credit of the Colonies will 
 advance, and British capital will flow by preference to 
 
 '^e£SE L/er,^ 
 
 ^H 
 
234 '^^c Free-trade Movement. 
 
 their safe investments. These are the forces which 
 incline in the direction of the desired commercial union 
 by natural means, and they would involve no violent fiscal 
 change or departure from sound principles of trading-. 
 
 Canada has indicated the line of safe procedure and 
 sure progress by lowering the tariffs on British goods, 
 and her action has excited warm reciprocal feeling in 
 Great Britain, which will tell upon commercial relations 
 and upon the development of Canadian soil. 
 
 Adoption of preferential duties by Great Britain would 
 amount to a departure from the principle of Free-trade, 
 which was adopted only gradually and after much con- 
 sideration, which has stood the test of long experience, 
 and more than fulfilled the anticipations of its effects. 
 It could not be without strong reasons that a policy so 
 deliberately developed and so successful in its issues 
 would be reversed. The injury to industry and to the 
 community at large would alienate vast numbers in the 
 home country and excite feelings adverse to the Union. 
 Neither can the Colonies be expected to abolish their 
 protective tariffs at once, for such a course would ruin 
 the industries built up by such extraneous aid, and 
 would raise bitter antagonism from all those adversely 
 affected by their abrogation. 
 
 Even the sacrifice of trade and commercial interests 
 might, however, be justified to secure the stability of the 
 empire or maintain its integrity. When the existence of 
 the country is threatened, or her destiny is at stake, all 
 considerations give place to those of national security. 
 But no such critical juncture has arisen, and there is 
 no evidence that the safety or stability of the empire 
 would be strengthened by exclusive trading between its 
 scattered parts. 
 
 To enforce a Customs Union would be a violent pro- 
 ceeding, which would inflict grave injury, and cause 
 much discontent and possible reaction. No man can see 
 why his particular interests should be sacrificed for an 
 
Imperial Federation. 335 
 
 idea. Very gradual and tentative measures may possibly 
 lead up to the application of some common fiscal system 
 in time, but it can be attempted only very gradually, if 
 it is not to provoke strong resistance. 
 
 The federation of a group of Colonies, such as the 
 Australasian, with a common tariff, would be a consider- 
 able step towards further federation. It presents the 
 same difficulties on a smaller scale. The tariff of each 
 colony differs from others in its details, and the various 
 tariffs range from the revenue tariff of New South 
 Wales to the highly protective tariff of its neighbour 
 Victoria. To assimilate these systems and reduce them 
 to one acceptable to all is no simple undertaking; public 
 revenue will be affected and private interests will incur 
 loss by any plan which secures uniformity. To balance 
 these interests, and devise the most expedient system, is 
 a difficult task; much more so is the construction of a 
 scheme which will embrace an empire. 
 
 Federation on a fiscal basis seems to be impracticable, 
 and likely to be defeated by the resistance of the 
 interests concerned. Australia has declared against it 
 in the words, '*No hope that way; interests too weighty 
 against it". The Melbourne Argus y writing on behalf of 
 Protectionist Victoria, holds that * * federation on a Pro- 
 tectionist basis is outside the range of practical politics". 
 Some other basis, therefore, must be sought for. 
 
 So vast and various, then, are the interests involved 
 in any attempt at a common tariff that the project must 
 be indefinitely postponed. A common principle might 
 be adopted, that, so far as possible, the Colonies should 
 gradually modify their tariffs in favour of the mother 
 country. As Sir Wilfrid Laurier said, **She has given 
 all, she imposes no tariffs on our goods, and it is for us 
 to draw nearer commercially by seeking her markets 
 and the reciprocal advantages which will ensue from her 
 trade"; and again, '' A Zollverein must mean Protection, 
 and Protection is the greatest of all mistakes". 
 
236 The Free-trade Movement. 
 
 Canada has vast territories undeveloped, and great 
 potentialities for the production of all the requirements 
 of life. There is no better market for her products than 
 the home country. Canada wants population, and her 
 chief future source of wealth is in agriculture. Great 
 Britain can take Canadian products, and can supply her 
 with labour, capital, and manufactures; this is recipro- 
 city in the best sense. Her premier summed up the 
 whole doctrine of free exchange in a sentence, **We 
 know that, buying more goods from England she will 
 buy more from us, and so develop trade, and thus 
 Canada will be benefited". The United States seem to 
 offer a nearer and more natural market, but the tariff 
 shuts out Canadian produce, and the States have their 
 own agricultural interests, which, under a Protective 
 system, claim first consideration. Meanwhile Canada 
 finds in Great Britain an easy and sure market, and 
 many advantages are gained by her closer union with a 
 strong naval power and a rich commercial country, 
 which offers no barriers to trade, and is able to pay 
 with manufactures which Canada can consume. Sir 
 Wilfrid Laurier says: ** There are parties who hope to 
 maintain the British Empire upon lines of restricted 
 trade. If the British Empire is to be maintained, it can 
 only be upon the most absolute freedom, political and 
 commercial. In building up this great empire, to 
 deviate from the principle of freedom will be to so much 
 weaken the ties and bonds which now hold it together." 
 
 Difficulties have been anticipated on account of the 
 commercial treaties made by Great Britain with Belgium 
 in 1862, and with Germany in 1865. These have pro- 
 perly been denounced as inconsistent with the fiscal 
 freedom which the Colonies have long enjoyed, and as 
 involving results never contemplated. Further, by this 
 step no injustice is done to those countries, since a like 
 reduction of tariffs is offered by Canada to them on the 
 same terms as to Great Britain. If they accept, it will 
 
Imperial Federation. 237 
 
 be a step in the direction of Free-trading, and can only 
 help forward a more general adoption of the principle. 
 The denunciation of the treaties is perfectly in harmony 
 with the spirit of Free-trade. 
 
 There is yet another argument. The Colonies owe 
 something to Great Britain for what they have cost her 
 in the past. The great war of the eighteenth century 
 for colonial expansion ended in the possession of Canada 
 and other vast territories, which have become the fields 
 for British emigration, and the home of English-speaking 
 people living under her free institutions. The existence 
 of the Colonies is mainly due to large national outlay 
 both in blood and treasure. Great Britain has defended 
 them with her army and navy, and has protected their 
 commerce. They received self-government and free 
 institutions, and they have profited by their relation 
 with Great Britain, by her supplies of labour and capital, 
 and her open markets. In many matters they even now 
 influence the foreign policy of Great Britain, since in 
 various ways they are open to attack and injury : foreign 
 nations are their near neighbours, — Germans in New 
 Guinea, French in Newfoundland, all the European 
 powers in Africa, — and their contact raises many delicate 
 and difficult problems for the home Government. Not 
 only is there some gratitude due from the Colonies to 
 Great Britain for past services, but their future destinies 
 are intimately interwoven with hers. It is to the interest 
 of all to maintain this unity, and consolidate the imperial 
 strength. Self-preservation demands it, and it concerns 
 the future of civilization and progress. 
 
 The gift proffered by the premier of Cape Colony to 
 the mother country of a fully-equipped man-of-war for 
 imperial defence is a splendid recognition of these facts, 
 and that so substantial a contribution to imperial de- 
 fence should be voted spontaneously and unanimously by 
 the Cape Parliament argues well for imperial federation 
 on a basis of common defence and unity of interests. 
 
238 The Free-trade Movement. 
 
 The almost simultaneous action of Canada and the Cape, 
 coming at a moment when the sentiment of loyalty to 
 the sovereign and the principle of free government which 
 she represents found a unique opportunity for its dis- 
 play, have not only intensified the sympathy between 
 the remote parts of the empire, but have suggested the 
 lines on which federation can be firmly and surely 
 accomplished. 
 
 It is beyond the limits of this work to discuss the 
 methods by which it has been proposed that imperial 
 federation should be carried out; but in considering the 
 present position of Free-trade the subject of commercial 
 union is necessarily discussed, since it has been sug- 
 gested that the federation should be made upon a com- 
 mercial basis, and since at the Ottawa conference on 
 the subject of colonial federation preferential duties by 
 Great Britain were advocated. The difficulties and 
 dangers of that course have been pointed out. There 
 are few, however, in the careful and tentative step taken 
 by Canada. The Cape policy points to the more pressing 
 aspect of the question. The immediate need for federa- 
 tion is on grounds of defence of the empire, and its 
 interests in every quarter of the globe. Federation, so 
 far as it concerns a common political policy in our re- 
 lations to foreign nations, and a system of representation 
 by a supreme council, and the duties which it should 
 undertake, are matters which need not wait for the 
 solution of the commercial question. The latter is not 
 insuperable, but it is a question not to be precipitated, 
 and many present difficulties will disappear with the 
 natural development of the resources of the Colonies. 
 Under conditions drawing them into closer relations 
 trade will increase, especially if the Canadian precedent 
 be adopted; and in time the difficulties will be so dimin- 
 ished that the problem may be approached in a way not 
 at present possible. 
 
 Free-trade was attained only late in the history of our 
 
Imperial Federation. 239 
 
 own country. It should not be prematurely forced upon 
 the Colonies in their present circumstances, but its 
 evolution may be anticipated. Federation on any basis 
 must not curtail the liberty of the Colonies, and it must 
 interfere as little as possible with existing interests; 
 changes must be gradual, and must be demonstrated 
 to yield advantages lasting and more than sufficient to 
 compensate for the temporary losses they may inflict. 
 A guarantee for peace having been secured by a power- 
 ful combination, and a strong motive for increasing 
 intercourse having been established, a way is opened 
 for progress and development of resources, which will 
 tend to work out the problem of commercial relations. 
 
 If self-taxation be retained (and both Australia and 
 New Zealand seem firm on that point) a Customs Union 
 is not possible, and inherent differences in the conditions 
 of production of Great Britain and the different Colonies 
 render it desirable, if not necessary, that each should 
 arrange the details of its own tariff. Unity does not 
 always imply uniformity in detail, but adherence to 
 common binding principles, the application of which 
 may vary with local circumstances, and may permit of 
 much elasticity. 
 
 One distinction between Great Britain and the Colo- 
 nies is most marked. In an old and densely-peopled 
 country with much accumulated wealth the tendency is 
 to make direct taxation contribute more and more of the 
 revenue; in an agricultural and scattered community 
 living upon the produce of its labour direct taxation is 
 less possible, and revenue must be raised upon commo- 
 dities in a larger degree. The difficulty of propounding 
 an equitable common system for the two sets of circum- 
 stances is practically insurmountable. 
 
 The scheme of an Imperial Zollverein on any basis 
 thus appears to bristle with difficulties. But imperial 
 federation based on a closer political organization of the 
 numerous elements of the scattered empire is not a 
 
240 The Free-trade Movement. 
 
 Utopian idea. There are indications that consolidation, 
 on defensive and political grounds, and on the basis of 
 many common interests and sympathies, is a possibility 
 of the near future. The fiscal problem can wait. There 
 have been various forms of federation in the past; but 
 the federation of the British Empire presents a problem 
 unparalleled in history. The case of a vast oceanic em- 
 pire has never before arisen : the magnitude of the con- 
 ception, the variety of the conditions, and the difference 
 in the character of the elements to be combined, the 
 peculiar and sporadic nature of the whole, all render the 
 problem as interesting as it is unique. But while the 
 circumstances are exceptional, the ideal is the natural 
 result of the evolution of a great empire built upon the 
 foundation of free institutions; and the principle of 
 liberty which has guided its development may encourage 
 us to look forward with confidence to its final consum- 
 mation. 
 
Index. 
 
 Abolition of West Indian slavery, 49. 
 Advertisement tax, 142. 
 Agricultural Holdings Act, 185, 187. 
 Agriculture, protection for, 33, 139. 
 Agriculture, rents, 171-172. 
 Agriculture and Free-trade, chap, ix. 
 Allotments Act, 185, 187. 
 Althorpe, Lord, 48. 
 American Standard Oil Trust, 128. 
 Anti-Corn-law agitation, 9, 25, chap. 
 
 iv. 
 Anti-Corn-law Association, 62. 
 Anti-Corn-law League, 63, 6g. 
 Antwerp, 14, 17. 
 Apprenticeship Act, 15. 
 Ash worth, Henry, Recollections of 
 
 Cobden and the League, note 64, 
 
 74, note 89, 90. 
 Athelstan, 12. 
 Athletics, 143. 
 Australian Colonies, 152, 
 Authorized trading, 17. 
 
 Balfour, A. ]., Essays and Addresses, 
 
 note 204. 
 Baltic Company, 17. 
 Banking, 140. 
 Bank of England, 55. 
 Bedford, Duke of. Story of a Great 
 
 Agricultural Estate, 172, 177, note 
 
 185. 
 Bentinck, Lord Charles, 89. 
 Bergen, 13. 
 Bills of exchange, 16. 
 Bimetallism, 167-169. 
 Birnie, Dr., 63. 
 Bismarck, Prince, 190. 
 Board of Trade, 205-216. 
 Boisguillebert, 20. 
 Book of rates, 15. 
 Booth, Charles, 186. 
 Bounties, chap. vi. , 125. 
 Bowring, Dr., 63. 
 Bright, John, 64, 67, 76, 79, 81, 82, 
 
 83, 84. 85, 91, 93, 145. 
 British Agriculture and Free-trade, 
 
 chap. ix. 
 
 (M460) 
 
 British Dairy Fanners' Association, 
 179. 
 
 British trade and foreign competi- 
 tion, chap. xi. 
 
 Bruges, 13, 14. 
 
 Buccleugh, Duke of, 89. 
 
 Burdett , Hospitals and Charities, 143. 
 
 Burke, Edmund, 54. 
 
 Caird, Sir James, Landed Interest, 
 note 170, 171. 
 
 Cairns, Lord, Act, 185. 
 
 Calais, 14. 
 
 Cape route, 17. 
 
 Capitalist, 196. 
 
 Carlisle, Earl of, 83. 
 
 Cattle-rearing, 177. 
 
 Charities, 143. 
 
 Charles H., 15, 33. 
 
 Chartists, 70, 75, 79, 165. 
 
 Chevalier, Mons. Michel, 94. 
 
 Child, Sir Josiah, Discourse upon 
 Trade, 35. 
 
 Clay, Mr. William, 62. 
 
 Clemenceau, Mons., 156. 
 
 Coal industries, 138-139. 
 
 Cobden, Richard, 62, note 64, 65-68, 
 69, 72, 73, 76, 'jj, 80-81, 82, 83, 84, 
 85, 86-87, 93> 94> 9'^' ioo> 121-122, 
 145,153, noteij^, 201,202-203,226. 
 
 Cockerill, 216. 
 
 Coinage Act, note 104. 
 
 Colbert, Mons. J. B., 18, note 27, 155. 
 
 Cologne, 13. 
 
 Colonial system, 22-23. 
 
 Commerce, Treaty of, 94. 
 
 Commercial depression, 41-42. 
 
 Company, Baltic, 17. 
 
 Company, East India, 17, 49. 
 
 Company, Guinea, 17. 
 
 Company, Levant, 17. 
 
 Company, Russia, 17. 
 
 Comparative cost, 97, 100. 
 
 Conservative, 73. 
 
 Conspiracy Act, 15. 
 
 Consumer, agricultural, 170. 
 
 Co-operative organization, 178-179. 
 Q 
 
242 
 
 The Free-trade Movement. 
 
 Corn- law Rhymes, by Ebenezer 
 
 Elliott, 75. 
 Corn-laws, 26,52-60,69,135, chap. iv. 
 Com production, 174-176. 
 Corn trade, 52-60. 
 Cotton industry, 148-149. 
 Countervailing duties, 128-129. 
 Covent Garden Theatre, 81, 84, 88. 
 Coventry, 47, 159. 
 Craft Guilds, 13. 
 Crime, 140. 
 Croker, Richard, 73. 
 Currency, 104, 190. 
 Customs or customary dues, 13. 
 Customs union, 225, 239. 
 
 Daily papers, 142. 
 Dairy Farming, 177-179. 
 Defoe, Daniel, 28, 181. 
 De Gournay, 28. 
 Derby, Lord, 93. 
 Differential duties, 129, 225. 
 Dingley tariff, 149. 
 Disraeli, Benjamin, 90, 93. 
 Dowell, Stephen, History of Taxa- 
 tion, 44. 
 Drummond, W. E., 80. 
 Drury Lane Theatre, 80-81. 
 Duties for export, 15. 
 
 East India Company, 17, 49. 
 Economics of foreign trade, chap. v. 
 Eden Treaty, 40. 
 Edinburgh Chamber of Commerce, 
 
 46. 
 Education Act, 142. 
 Edward L, 14. 
 Edward III., 14. 
 Edward IV., 15, 53. 
 Elizabeth, Queen, 17, 54. 
 Elliott, Ebenezer, 75. 
 Ellison, Annual Review of Cotton 
 
 Trade, note 138. 
 Engrossers, 16. 
 Evarts, Senator, 149. 
 Exchange, bills of, 16. 
 Export duties, 14. 
 Exports, 14-15. 
 
 Fair-trade, 121, 191. 
 
 Farmers, 170, 174-176. 
 
 Fitzwilliam, Earl, 62, 69, 82. 
 
 Flanders, 16, 
 
 Foreign competition and British 
 
 trade, chap. xi. 
 Foreign Office Parliamentary paper, 
 
 note 215. 
 
 Foreign trade, i8. 
 
 Foreign trade, economics of, chap, v., 
 
 135-136. 
 Forestallers, 16. 
 Fox. W. J.. 81. 
 France, 92. 
 
 Free-trade, Fifty Years of, chap. vii. 
 Free-trade, reaction against, chap. 
 
 xi. 
 Free-trade and British agriculture, 
 
 chap. ix. 
 Free-trade and Foreign Countries, 
 
 chap. viii. 
 Free-trade Hall, 71, 79, 89, 93. 
 Free-trade Movement, 9, 12. 
 
 Gardening, market-, 187, 188. 
 Gastrell, Ch. H., Trade of the 
 
 World, 219. 
 Giffen, Sir Robert, 106, 131, note 
 
 170, 182-183. 
 Gladstone, W. E., 52, 89, 93, 165. 
 Glasgow, 62. 
 Gold, 16, 19, 55, 99, 104-105, 109, 
 
 165, 190. 
 Gold currency, 104. 
 Gould, Jay, 149. 
 
 Government interference, 199-200. 
 Gowing, R., Life of Richard Cobden, 
 
 153- 
 Graham, Sir James, 61. 
 Great customs, 14. 
 Great Eastern Railway, note 184. 
 Grenville, Lord, 56. 
 Grey, Earl, 80. 
 Ground rents, 173. 
 Guilds, Merchant and Craft, 13. 
 Guinea Company, 17. 
 
 Hamburg, 13. 
 
 Hamilton, President, 147. 
 
 Hanseatic League, 13. 
 
 Henry III., 13. 
 
 Henry VII., 16. 
 
 Henry VIII., 16, 53. 
 
 Herbert, Sidney, 88. 
 
 Heytesbury, Lord, note 51. 
 
 Holland, 18. 
 
 Hospitals, 143. 
 
 House rents, 173. 
 
 Howick, Lord (Earl Grey), 80, 85. 
 
 Hume, Joseph, 61, 71. 
 
 Huskisson, William, 26, 46-48, 49, 58. 
 
 Imperial federation, chap. xii. 
 Imports, 14-15. 
 Income-tax, 41, 50, 140. 
 
Index. 
 
 243 
 
 Infant industries, 147, 151-153, 188, 
 
 Interc\irsus Magnus, 16. 
 
 Interlopers, 17. 
 
 Invisible exports, 106. 
 
 Ireland, 48. 
 
 Iron industries, 138-139, 149. 
 
 Italian fleets, 12. 
 
 Jaeger woollen goods, 212, 213. 
 Jevons, Stanley, Prof., 38, 97. 
 Joint-stock system, loi, 141. 
 Jones-Lloyd, W. S. (Lord Overs- 
 tone), 82. 
 
 King, Gregory, 29. 
 Kinnaird, Lord, 82. 
 
 Labourers, agricultural, 170-171. 
 
 Labourers, Statute of, 15. 
 
 Laissez-faire, 27 and note, 37-38, 
 155, 201, 204. 
 
 Landlord, agricultural, 170-172. 
 
 Land tenure, 184. 
 
 Laurier, Sir Wilfrid, 235-236. 
 
 League, The (a newspaper), 81. 
 
 Levant Company, 17. 
 
 Limited liability, 141. 
 
 Linen duties, 150-151. 
 
 List, Friedrich, National System of 
 Political Economy, note 122. 
 
 Little, Mr. William, 170, 171. 
 
 Liverpool, Lord, 44, 46, 48, 58. 
 
 Lloyd's Register, 126, 137. 
 
 Locke, John, 20, 29. 
 
 London, 13, 46, 83-84. 
 
 London and North-Western Rail- 
 way, note 184. 
 
 I-ords, House of, 56. 
 
 Louis XIV., 27. 
 
 Lowe, Joseph, State of England, 
 
 43. 56. 
 Lubeck, 13. 
 
 Macaulay, Lord, 89. 
 M'Culloch, J. R., 38. 
 M'Kinley, President, 148, 149, note 
 
 189. 
 Maine, Sir Henry, 24. 
 Mallet, Sir Louis, 153. 
 Manchester, 61, 62, 64, 79. 
 Manchester School, 27, 38, 201-204. 
 Marginal land, note 173. 
 Market-gardening, 187-188. 
 Marshall, Prof. Alfred, Principles of 
 
 Economics, 173. 
 Massacre, Peterloo, 61, 71. 
 Maxim, Hiram, note 223. 
 
 Melbourne, Lord, 60, 62, 69, 71. 
 Mercantilists, 18, 19-20, chap, ii., 
 
 35, 96, 109, 125, 226. 
 Mercator (a newspaper), 28. 
 Merchant Adventurers, 16. 
 Merchant Guilds, 13. 
 Merchants of London, 46. 
 Methuen Treaty, 21. 
 Mill, J. S., 38, 152-153. 
 Montesquieu, Esprit des Lois, 29. 
 Morley, John, Life of Cobden, 66, 
 
 73, 87, 204. 
 Morpeth, Lord, Earl of Carlisle, 83 
 Mulhall, M. G., National Progress, 
 
 note 138. 
 Mun, Thomas, England's Treasure 
 
 by Foreign Trade, 18, 20. 
 Municipal Reform, 49, 
 
 Napoleon I., 42, 56, 155, 193. 
 
 Napoleon III., 94. 
 
 National debt, 43, 141. 
 
 Natural liberty, 27, 29, 36, 37, 133. 
 
 Navigation Adts, 18, 34, 44, 46 and 
 
 note, 93. 
 Necessaries, 141. 
 Netherlands, 16. 
 Newmarch, William, 43. 
 Newspaper tax, 142. 
 New World, 17. 
 Nicholson, Prof., 125. 
 North, Sir Dudley, Discourses upon 
 
 Trade, 95. 
 Novgorod, 13. 
 
 O'Connor, Feargus, 70. 
 Overstone, Lord (Jones-Lloyd), 82. 
 
 Parnell, Sir Henry, 49-50. 
 
 Pasturage, 177. 
 
 Paulton, W., 63, 64, 81. 
 
 Peel, Sir Robert, 26, 49-51, 52, 72, 
 73. 77 • 78 and note, 80, 83, 87, 90, 
 91, 140, 145, 201. 
 
 Penny post, 142. 
 
 Peterloo massacre, 6r, 71. 
 
 Phoenicians, 12. 
 
 Physiocrats, 27. 
 
 Pitt, William, 9, 22, 26, 40-41, 48, 58. 
 
 Poor Law, 44, 48-49. 
 
 Population, 135. 
 
 Porter, G. R., Progress of the Na- 
 tion, 135. 
 
 Post-office reform, 49. 
 
 Poundage, 14. 
 
 Preferential duties, 194. 
 
 Prentice, Archibald, 61, 64 and note. 
 
244 
 
 The Free-trade Movement. 
 
 Profits, 196. 
 
 Prohibition, example of, 112-113. 
 
 Protection, 12, 35, 58, 87, 92, chap. 
 
 vi., 114, 167, 169-170, 182. 
 Protection and Socialism, 200-201. 
 
 Quesnay, Mons. Fran9ois, 27. 
 
 Railways, 137. 
 
 Railway rates, 183-184, note 184. 
 
 Rates, book of, 15. 
 
 Real wages, 107, 116. 
 
 Reciprocity, chap, vi., 117-121, 191. 
 
 Reformation, 19. 
 
 Reform Bill, 48. 
 
 Regrators, 16. 
 
 Retaliation, 120. 
 
 Revenue, protection, 114. 
 
 Ricardo, David, note 31, 38. 
 
 Richard III., 15, 16. 
 
 Rochdale, 74. 
 
 Rogers, Prof. Thorold, 66. 
 
 Roscoe, Sir Henry, 219. 
 
 Rose, J. l^(S^2iXv6., Rise of Democracy , 
 
 notes 61 and 70. 
 Rural depopulation, 185-188. 
 Russell, Lord John, 72, 79, 83, 88-89. 
 Russia Company, 17. 
 
 Salt, 194. 
 
 Schmoller, Gustav, The Mercantile 
 
 System, 23-24. 
 Sewing-thread duties, 150-151. 
 Shipping trade, 126, 136. 
 Silk, 47. 
 
 Silver, 16, 19, 104-105. 
 Sliding scale, 50 and note, 58, 83. 
 Smith, Adam, 9, 18, 22, 26, chap. 
 
 ii., 40, 46, 49, 93, 98, 109, III, 
 
 note 114, 133, 145. 161, 196, 200, 
 
 note 216. 
 Smuggling, 21, 42. 
 Socialism, 98. 
 
 Socialism and Protection, 200-201. 
 Spencer, Herbert, 24. 
 Spitalfields silk, 47. 
 Stanley, Lord, 89. 
 Stapling, 13-14. 
 Statistical Journal, 43. 
 Statistics, tables of various, 43, 45, 
 
 47, 63, 105, 13s, 139, 150. 157. 
 
 165, 167, 169, 170, 171, 173, 17s, 
 176, 206, 209, 210, 212, 215 
 
 Steuart, Sir James, 27-28. 
 
 Strikes, 221, note 223. 
 
 Sugar, bounty-fed, 126-128, note -xyj. 
 
 Sweated labour, 222. 
 
 Syndicates, 161. 
 
 Tariff, 21, 94. 
 
 Tariff, reform of, chap. iii. 
 
 Technical education, 218. 
 
 Tenure of land, 184-185. 
 
 Textile trades, 137-138. 
 
 Thiers, Mons., 126. 
 
 Thompson, Colonel P., 64. 
 
 Times, The (newspaper), 82, 89, 
 
 7tote 163. 
 Tin, 12. 
 
 Tithe commutation, 49. 
 Tolls, 13. 
 Tonnage, 14. 
 Tooke, Thomas, History of Prices, 
 
 46. 
 Trade, authorized, 17. See also 
 
 Board of Trade. 
 Treaty of Commerce, 94. 
 Trusts, 161-162. 
 Turgot, Mons., 27. 
 Turner, Sir George, 232. 
 
 United States of America, 146-147. 
 
 Vested interests, 108-109. 
 
 Victoria, Queen, 60. 
 
 Villiers, Charles P., 51, 62, 69, 71, 
 
 77, 85, 122. 
 Vince, C. A., John Bright, note 77. 
 
 Walpole, Spencer, History of Eng- 
 land, 45. 
 
 Wealth, 28, 140. 
 
 Webb, Sidney, Labour in the Longest 
 Reign, note 132. 
 
 WeUington, Duke of, 58, 89, 90. 
 
 Westminster, Duke of, 82. 
 
 William IV., 60. 
 
 Wilson, George, note 64, 93. 
 
 Windeyer, Sir William. 178. 
 
 Wise, B. R., Industrial Freedom, 
 notes 116 and 162. 
 
 Zollverein, 225, 227. 235. 
 
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