ILLINOIS LIBRARY 
 iTURBANA-CHAMPAlG? 
 ROOKSTACKS 
 
* PRICE THB^IEPEWCE. 
 
 THE 
 
 ABC OF FREE TRADE 
 
 BY 
 
 EDWARD NORTH BUXTON. 
 
 REVISED EDITION, 1883. 
 
 mm 0. OF I., mNA-CHAMPAifiN 
 
 CAgSELL & COMPANY, Limited: 
 
 LONDON, PARIS, NEW YORK MELBOURNE. 
 [all rights reserved.] 
 
COBDEN CLUB LEAFLETS. 
 
 Supplied in Packets of lOO, price \s. Those marked * 2s. 
 
 }.. The Dog and the Shadow. 
 
 2. What does Reciprocity-Protection propose to do? 
 
 3. The Results of Protection in Germany. ' 
 
 4. The Rt. Hon. John Bright, M.P., on "Fair Trade." 
 
 5. Mr. Arthur Arnold, M.P., on "Fair Trade." 
 
 6. Bread Tax Once More. From "Punch." 
 
 7. A Catechism for "Fair Traders." By Rt. Hon. W. E. Baxter, M.P. 
 
 8. Free Trade and Working Men. By Rt. Hon. W. E. Baxter, M.P. 
 *Fair Trade and Free Trade. By Sir B. Samuelson, Bart., M.P. 
 
 10. Free Trade : What it does for England, and How it does it. 
 
 By George W. Medley. 
 
 11. Facts for Artisans. By Qeorge W. Medley. 
 
 12. Mr. Cobden on " Re-distribution of Seats." 
 
 13. *Protection in France. 
 
 14. *FactS for Iiabourers. By George W. Medley. 
 
 15. *The Farmers and Protection. By Charles Whitehead. 
 
 16. Facts for Farmers. No. I.— Depression in Agriculture. By George 
 
 W. Medley. 
 
 17. The Effects of Protection in America. By Sir W. B. Forwood. 
 
 18. Would Protection remove the present Distress, and Benefit 
 
 the Working Man? By Joseph Arch. 
 
 19. The Newcastle Weekly Chronicle on Cobden Club Leaflets. 
 
 20. Memorial Verses on Kichard Cobden, 1865. 
 
 21. Robbing a Thousand Peters to pay One Paul. By George 
 
 Jacob Holyoake. 
 
 22. Less Free Trade or More : Which Shall it Be ? By J. 
 
 Hampden Jackson. 
 
 23. *Facts for Farmers. No. II.— Depression in Agriculture. By 
 
 George W. Medley. 
 
 24. *Fair Trade: its Impossibility. By Sydney Buxton, M.P. 
 SS. Reciprocity Explained. By George Jacob Holyoake, 
 
 26. "^Words of Warning to Agricultural Labourers and other 
 
 Working Men. By Alfred Simmons, the Leader of the Kent and 
 Sussex Labourers. 
 
 27. *How they Succeed in Canada. (From the Agricultural Gazette, 
 
 January 5th, 1885.) 
 
 28. Free Trade and Fair Trade : What do the Words Mean ? By James 
 
 E. Thorold Rogers, M.P. 
 
 29. *Free Trade v. Protection {alias "Reciprocity," " Fair Trade "). 
 
 By John Noble. 
 
 30. The British Peasant on the Right Hon. J. Lowther's 
 
 Proposition— that he should pay "a farthing a week" on his Bread 
 to benefit the Landed Interest. 
 
 31. The Farmer of Kent. (From the Suffolk Chronicle of forty years ago.) 
 
 32. Will a Five-Shilling Duty on Corn raise the price of Bread . 
 
 or not? 
 
 33. United States Protection v. British Free Trade. By the Right 
 
 Hon. W. E. Baxter, M.P. 
 
 34. The Right Hon. John Bright on "The Safety of the Ballot." 
 
 35. *The Secrecy of the Ballot. 
 
 36. Protection versus Work and Wages. By Edward North Buxton. 
 
 37. The Fair Traders and Reciprocity.. By Edward North Buxton. 
 
 38. *The Death Duties. , 
 
 39. Fair Trade and Retaliation. By Sir T. H, Farrer, Bart. 
 
 40. Land Law Reform. 
 
 41. The Proposed Tax on Sugar. By St. Loe Strachey. 
 
 42. The Good Old Times. 
 
 43. The Bounty on Raw Sugar. 
 
 44. Who Gave the Agricultural Labourer the Vote ? By C. Coppack. 
 
 45. "Richard Cobden. 
 
 46. Protection in New Countries. 
 
 47. *The London Coal and Wine Duties. By Lord .v.' Churchill. 
 
 48. ^'Market Rights and Tolls Restrictive of Trade. By Charles 
 
 Bradlaugh, M.P. 
 
 49. The Rt. Hon. John Bright on Fair Trade. 
 
 50. *.r/j.e DaUy JSexvs on Sugar Bounties. 
 
 51. *Xhe Standard on Fair Trade. \ 
 
THE 
 
 ABC OF FREE TRADE. 
 
 BY 
 
 EDWARD NORTH BUXTON. 
 
 REVISED EDITION, 1888. 
 
 UBRARYU. OF I., URBANA- CHAMPA!^ 
 
 CASSELL & COMPANY, Limited: 
 
 LONDON, PARIS, NEW YORK <b MELBOURNE. 
 [all rights of reproduction reserved.] 
 
I 
 
THE ABC OF FREE TRADE. 
 
 An historian of our own time wrote, three or four years 
 ago, *' There is no more chance of reaction against Free 
 Trade in England than there is of a reaction against the 
 rule of three." This proves again the wisdom of the 
 advice, " Don't prophesy unless you know." A political 
 party, encouraged thereto by the rash and ignorant 
 speeches of some of its leaders, and calling its nostrums 
 now by one fancy name, and then by another, has seized 
 upon the opportunity given by the recent depression to 
 revive the exploded fallacies of forty years back, in the 
 hope of winning here and there an election. 
 
 People are perhaps beginning to see through this 
 move, but many even now have not had the time or 
 inclination to familiarise themselves with the facts and 
 the arguments which satisfied our forefathers, and to probe 
 the fallacies of Protection whether exhibited in the guise 
 of " Fair Trade," " Reciprocity," or " Fiscal Reform." 
 Thus it seems necessary again to furnish every elector 
 with the reasons against a reaction which, if successful, 
 would be full of misfortune for this country. It is not 
 enough to be Free Traders by tradition ; we must be 
 
4 
 
 Free Traders by conviction, and be able to give a reason 
 for the faith that is in us. We cannot afford to rest on 
 our oars in the matter. The Fair Trade League is an 
 active and aggressive body whose conspicuous offices 
 you may see any day in Trafalgar Square, and the most 
 representative body of Conservatives that has assembled 
 during the year has endorsed their objects.* 
 
 I hope no one will be offended at the title of this 
 pamphlet. No doubt I shall say many things which 
 some of you have heard before; but my object is to 
 speak to those whose lives are so busy that they have no 
 time to read up a subject of this kind in books and 
 lengthy treatises. Before entering on argumentative 
 matter, however, I shall ask you to compare the old 
 Protection days, and the state of things they produced, 
 with the state of things we live under ; and I shall try to 
 account for the reaction which has arisen in these latter 
 days against Free Trade. I shall then seek to furnish 
 you with a few leading principles, upon which, if you 
 once grasp them, you may rely to save you from falling 
 into the traps of those who would lead you astray ; after 
 which I will deal with the allegations and proposals of 
 the Fair Traders. 
 
 Now, I ask you to consider the state of things that 
 prevailed from 1815, when the most stringent Protection 
 Act was passed, to 1846, when Protection was finally 
 swept away. At that time scarcely an article in general 
 
 * The now famous Oxford resolutions were singularly ill-timed, for 
 the returns for 1887 show that, so far from its being true that our trade 
 is perishing under Free Trade, the depression is passing away, and that 
 both our Imports and Exports show a considerable advance, especially 
 in the last month of the year. 
 
5 
 
 use could be imported from abroad without paying a 
 very heavy, and in some instances an almost prohibitive, 
 duty. The price of everything in common use was 
 enormously enhanced ; and the cost of living was im- 
 mensely greater than it is now. One result of this was 
 that people were continually trying to evade the duties 
 by smuggHng. The Custom House machinery had to 
 be kept up at great expense, but, notwithstanding this, 
 smuggling still went on, because nobody thought it very 
 wrong to defraud the revenue ; and many a man was 
 first tempted into crime in this way. Joseph Hume, on 
 one occasion, showed his silk bandana handkerchief to 
 the House of Commons, and said, " Here is an article 
 absolutely prohibited by your tariffs ; yet most of you 
 have one in your pocket." 
 
 Then the importation of corn was absolutely pro- 
 hibited till it reached the price of 80s. a quarter. That 
 means about is. 6d. per quartern loaf ; and if the duty 
 which was paid in 1840 were put on the present import 
 of corn, it would mean an annual tax of something like 
 
 0,000, 000 a year on the people's bread. The 
 scarcity of bread caused constant riots, and the House 
 of Commons had on several occasions to be protected by 
 a large force. 
 
 To judge by the Poor Law returns, what is called 
 " Protection to native industries " certainly failed to do 
 at that time what you are told it would do now — find 
 employment for the masses. In some towns nearly 
 one-fifth of the population were in receipt of poor 
 relief, and everywhere great numbers were constantly out 
 of work. 
 
6 
 
 There were frequent depressions of trade of a most 
 serious character, and, although these laws were main- 
 tained in the supposed interest of agriculture, agriculture 
 suffered as much as any other business; and in the 
 period of which I am speaking there were no less than 
 five Royal Commissions to inquire into the causes of 
 agricultural distress. Wages were far lower than now ; 
 and certainly those who tell you that Protection would 
 increase your wages have yet to show why it did not 
 do so formerly. Thus, to instance a few of the most 
 important handicrafts : carpenters now earn on an average 
 42 per cent, higher wages than they did then, brick- 
 layers 50 per cent., miners 50 per cent, weavers 115 
 per cent., and so on with all the trades. 
 
 It took a long time to eradicate the mistaken views 
 held by many statesmen of that day. They had an 
 idea that the one thing needful was to sell as much as 
 possible to other nations, and to buy as little as possible 
 from them. This is the old exploded notion of having 
 what is called " the balance of trade " in your favour — 
 a notion which even now lingers with some illogical 
 people, and about which I shall have something to say 
 presently. 
 
 The extraordinary thing is that the politicians who 
 were in favour of Protection at that time, and, we may 
 add, some of the present day, did not see that if Pro- 
 tection was a good thing for the country generally, it 
 ought to be a good thing for a county, or even a parish. 
 For instance, in former times a great deal of iron was 
 made in Kent and Sussex. Now, why should they not 
 have put a line of Custom Houses along the Thames, 
 
7 
 
 and imposed' a heavy duty on iron coming from the 
 north? Of course iron in those counties would be 
 enormously dearer; but what of that? They would 
 have "protected native industry." 
 
 But to return to our history. The change was not 
 a sudden one, like a transformation scene, from the 
 evils of Protection to the blessings of Free Trade. Far- 
 seeing men for many years had pointed out the evil of 
 the system. Statesmen had even tinkered at it, and had 
 tried, by sliding scales and half-measures, to mitigate 
 the mischief. Opinion was of very slow growth, but it 
 was sure. The agitation against the Corn Laws is an 
 excellent lesson to those who desire to carry reforms. 
 The leaders of the movement made but little way as 
 long as they only tried to convert the House of Com- 
 mons. When Cobden and Bright got the ear of the 
 constituencies, they had plenty of powder behind them. 
 The Anti-Corn League found out this secret in good 
 time. The laws of which we are speaking could not stand 
 the fierce light of day which was cast upon them by the 
 League. They first crumbled away, then cast off great 
 masses, then came tumbling down, a complete ruin, never 
 to be restored. But it was a long battle. The landowners 
 fought to the death. They knew that the greater the 
 quantity of corn, the less the price the corn-grower would 
 get for it. Whenever an abundant harvest would have 
 helped the people to prosperity, the monopolists cried 
 out that they were in danger. Their interest was opposed 
 to the interest of the people. The protected manufac- 
 turers went with them. Their principle was that if every- 
 body paid more than was necessary for what they wanted, 
 
8 
 
 every one was richer all round. They played into one 
 another's hands. They said in effect : " If you give me 
 a little more than the market price for my corn, I can 
 afford to pay more for your machinery and cloth." A 
 similar compact seems to be reproduced in our own time, 
 and it is again the landowners and manufacturers who 
 are parties to it. In those days the League, or rather 
 the truth which the League proclaimed, was too much for 
 them, and Peel, who was appointed Minister in 1841 to 
 uphold the Corn Laws, himself repealed them in 1846. 
 As Mr. Bright said afterwards, " Famine itself, against 
 which we had warred, joined us." By the time the 
 Repeal year was reached the change could not have 
 been long delayed, because the people had found out 
 what they wanted. But no doubt it was a series of 
 bad harvests and famine years that finished the busi- 
 ness, because it set men inquiring. Bad times have 
 again in our day set men inquiring, and the result will 
 be to confirm them in the wisdom of the decision of 
 their fathers. 
 
 And now let us turn to the bright side, and examine 
 into the results of this great reform. There is no sign 
 so sure of continuous prosperity as a rapid increase of 
 population, and there has been a great increase. If 
 things had been left as they were, if we had the same 
 restrictive laws, if we had had to feed ten millions more 
 people on the same quantity of food, we should all have 
 been fighting among ourselves long ago. Instead of that, 
 other countries have poured in the corn, the tea, the 
 sugar, and all the other commodities that we chiefly require, 
 in such quantities, and at so cheap a rate, that every man. 
 
9 
 
 woman, and child was able to consume four times as 
 much last year per head as forty years ago. 
 
 No doubt along with this prosperity there is much 
 misery, but far less than there was in the Protection 
 time. Notwithstanding the great increase of population, 
 there are fewer paupers. There is far less crime. There 
 were 34,000 convictions in 1840; in 1886 there were 
 only 14,000. You will agree with me that saving habits 
 in the people is a thing worth encouraging ; and also 
 that if you find people learning to save, it is a sign that 
 they are tolerably well off. The deposits in Savings 
 Banks have risen from ^24,000,000 to four times as 
 much. If people tell you that the country is going to 
 the bad, ask them to look at the state of the Funds 
 which have been higher lately than they have ever been 
 before ; so that those who deal in our National Securities 
 do not seem to have lost faith in the old country. Some 
 people will tell you that all this is owing to steam and 
 electricity. Steam and electricity have done much for 
 us ; but other countries have had these advantages, and 
 we do not find that they can show the same signs of 
 advance as Free Trade England. People point to 
 France and Germany j but you will find that we are 
 ahead of them all in the progress that we have made 
 in these forty years. 
 
 If, then, there has been this enormous expansion of 
 prosperity, how is it that people are to be found who 
 cry out against our system ? It is due to the prolonged 
 and grievous depression in trade since 1874. Let us 
 look into this depression, and see how it arose. The 
 Fair Traders will tell you that it is due to the heavy 
 
lO 
 
 tariffs of other countries ; but that is at once disposed 
 of, because the tariffs remain precisely the same as they 
 were in 187 1-2-3, the most prosperous years we ever 
 knew. It is a curious fact that in America, where the 
 depression prevailed to at least as great an extent, and 
 where they Hve under Protection, large numbers of 
 people begin to complain of Protection and to attribute 
 their losses to it. They are much more nearly right 
 than our Fair Trade friends here, and the recent 
 message of the President shows that a different policy 
 will soon be adopted there. Now the chief reason for 
 this depression is to be sought in the feverish and un- 
 wholesome increase of trade in 187 1-2-3, or rather in 
 the reaction which followed it. We were in a very great 
 hurry to get rich in those years. Our trade increased 
 by leaps and bounds. It would have been much better 
 for us if we had been content with the moderate but 
 steady yearly increase which we had made up to that 
 time. In that case our trade would now stand at a 
 higher figure than it does. 
 
 The Franco-German war was partly responsible for 
 the inflation. Those nations took large quantities of 
 goods from us which, being too busy in kiUing one 
 another, they were unable to make themselves. Then 
 other countries were eager to borrow of us, and we 
 were not less anxious to lend, and we did lend them 
 vast sums. These sums went abroad, not in coin, for as 
 a matter of fact, more coin came in than went out in those 
 years, but in goods. But at last capitalists got frightened, 
 and ceased to lend. Trade went down, and prices 
 dropped too, so that what trade we did was less profitable. 
 
II 
 
 But if, as the Fair Traders say, this great depression, 
 out of which we are only now beginning to emerge, is 
 due to our Free Trade poHcy, how is it that Protec- 
 tionist countries have suffered quite as much as we 
 have? From 1873 all countries have been seriously 
 depressed ; and though America recovered rather more 
 quickly than we did, that is due to the fact that, while 
 we had three very bad harvests, she had exceptionally 
 good ones, and has profited by our losses, as she has 
 had to supply our needs ; but that the depression existed 
 there in an equal or greater degree is notorious. 
 
 America, owing to her boundless resources, to the 
 limitless extent of new land ready to be occupied almost 
 for the asking, to the streams of able-bodied labourers 
 who are poured into her borders from this side of the 
 Atlantic, to her small standing army, to her varied 
 mineral wealth, and the genius of her people, cannot 
 but make great strides. But it is in spite of Protection, 
 not in consequence of it. Then you must always re- 
 member that she enjoys absolute Free Trade throughout 
 her vast dominions, and that is as if all the countries of 
 Europe enjoyed Free Trade among themselves. Never- 
 theless, her Protection policy has almost killed her 
 foreign trade— always excepting the enormous quantity 
 of corn and grain of all kinds, as well as cotton, which, 
 thanks to our open ports, she sends to us, and which 
 has so largely tended to the well-being of our people. 
 While we export 200 millions of manufactured articles, 
 America only exports a tenth of this amount. 
 
 So far we have seen that during the Protectionist 
 period England was far poorer and suffered far more 
 
12 
 
 from depressed trade than she has ever done since. 
 After changing her policy she has advanced greatly in 
 wealth and prosperity ; and though there have been 
 seasons of depression, each wave of good times has 
 mounted higher than the last. The progress has been 
 continuous. It is also a fact that while other nations 
 have made progress, they have not done so in the same 
 proportion as we have, or so rapidly as they would 
 have done under wiser fiscal laws. 
 
 Before proceeding to discuss the allegations of the 
 Fair Traders, I want you to take in one or two simple 
 propositions which must be grasped before the rights of 
 the question are understood. Without them you are 
 lost ; but these once mastered; you can defy and de- 
 molish all the Fair Traders in the kingdom. No doubt 
 these propositions are familiar to nine-tenths of those 
 who have thought out the matter, but I do not apolo- 
 gise for repeating them, because my business is not to 
 convince those who are already convinced, but to con- 
 firm those who are doubting. 
 
 The first proposition is that all goods bought from 
 other countries are paid for, not with gold, but by other 
 goods which are sent back to them. 
 
 The second is that duties on goods are paid for by 
 the people who consume those goods, and not by the 
 people who produce them — by the importing, not by 
 the exporting country. 
 
 The first proposition is easily proved. The fallacy 
 we have got to get rid of is this— that all commodities 
 are paid for in gold, and if you can only get in more 
 gold than you pay out you must get richer. But the 
 
13 
 
 truth is, that the goods we buy from other countries are 
 paid for, not in gold, but in goods that we send to 
 those countries. An account is kept of all the bulUon 
 that passes from one country to another, which, as a 
 matter of fact, is quite insignificant in amount. In the 
 case of the enormous indemnity which France paid to 
 Germany, hardly any specie was transferred. Again, in 
 the years 1871, 1872, and 1873, we lent to other coun- 
 tries about 400 millions, but during that period not only 
 did no gold leave the country, but the balance was 
 slightly the other way ; and if you think a m^oment this 
 result must always ensue. We keep just as much of 
 the precious metals as we require for currency and 
 for ornamental purposes, and no more. A very small 
 withdrawal of gold from the currency of the country 
 raises the rate of interest, and this at once tempts back 
 what has gone out. 
 
 It follows that the export of goods is paid for by the 
 import of goods. If it were not so, consider what would 
 happen. Suppose we were able to export largely and 
 import nothing, and were to be paid in gold, there 
 would presently be too much gold— more than we wanted 
 —and the only effect of that would be that everything 
 would be dearer. The baker would get more for his 
 bread, but he would have to pay more for his meat ; and 
 so on all round, so that no one would be a bit the richer. 
 Everything would be so much dearer here that the 
 foreigner would cease to buy from us, and we should 
 lose our export trade as well as our import, and that is 
 all we should get by our move, supposing it to be possible. 
 Thus, goods that you buy must be paid for by goods 
 
VI4 
 
 that you sell, and if you limit your imports by imposing 
 duties, you limit your exports as well. All trade is 
 barter. If you sell your goods, and with the money buy 
 other goods, you in effect exchange your own goods for 
 those you want. 
 
 No doubt some one may say, " How is it then that 
 some nations import much more than they export, and 
 that the contrary is the case elsewhere?" The answer is 
 that if a country exports more than it imports it is because 
 it has previously borrowed from other countries, and has 
 to repay the debt, or the interest on the debt, in goods. 
 In the same way, if a country imports more than it ex- 
 ports, like England, it is because other countries stand 
 indebted to it. If it were the case that the difference is 
 paid for in gold, we in England should have to pay out 
 more than loo millions a year, and we should very soon 
 get to the end of every scrap we have got either in 
 circulation or in use ; so that you could not do it even 
 if you sacrificed every sovereign and wedding-ring and 
 silver thimble in existence. Now I hope you know, 
 if you did not know before, that goods are paid for, not 
 with gold, but with other goods. 
 
 The second fallacy that we have got to get rid of is 
 this — that if we impose duties on any article from abroad, 
 the people who send us the article will pay the duty and 
 not we. One would think that we need only appeal to 
 the universal experience of commercial men to refute 
 this. It is always the case that if a country imposes a 
 duty, the price of the article on which the duty is im- 
 posed is enhanced. But let us prove it by taking a 
 simple case. Supposing there is some article which is 
 
produced here and sells in our markets for £20 a ton. 
 It is made at a fair profit, because competition between 
 manufacturers prevents any one making an excessive 
 profit. Now suppose that some other country imports 
 from us some of that article, and puts on a duty of a 
 ton. Do you suppose that that article will still sell m 
 the other country for ;£20? Certainly not. The duty 
 will be added to the cost there, because competition is 
 such that the manufacturer here already takes as little as 
 he can afford, and if he took less he would make no 
 profit, but a loss. The other day I noticed the foUowmg 
 paragraph A new trade has sprung up between Scot- 
 land and America-that of ' Champion ' potatoes. These 
 are shipped at Aberdeen at 36s. a ton. They are subject 
 to a duty of £^ per ton, and are expected to realise £\ 
 to £^ los. in New York." But if the Fair Traders are 
 right, this last anticipation would not be fulfilled. Accord- 
 ing to them, the shipper on this side would, in some 
 mysterious way, have to pay the £^ duty out of his 36s. 
 If that be so, the "Champions" would be amazingly 
 cheap. If that instance does not satisfy you, what do 
 you say to those articles of which there are some ex- 
 ported from this country to America which have to pay a 
 duty there of 100 per cent.? In that case the merchants 
 on this side of the water must absolutely give away the 
 goods, according to the theory of the Fair Traders. John 
 Bull, we know, is a long-sufi-ering and generous person, 
 but he is not quite so meek as that. 
 
 Now I hope you have taken hold of those two prime 
 articles of faith. Armed with them, let us go forth 
 and do battle with the revived Protectionists. Let us 
 
examine fairly, without prejudice, the allegations which 
 are brought out after forty years, and rubbed up to 
 look new. 
 
 First and foremost, it is said : that our imports largely 
 exceed our exports — which is quite true. But it is not 
 true to go on and say that we are therefore wasting our 
 substance, and living on our capital, like a spendthrift 
 who is spending more than he gets in. In the first 
 place, it is a great mistake to suppose that all this heap 
 of imports is spent and consumed and wasted. On the 
 contrary, it represents, as Dr. Johnson said, "a bound- 
 less potentiality of wealth." A very large part of it is 
 raw material, which is worked up here into manufactured 
 articles, and goes abroad again at a vastly increased 
 value. Cotton, for instance, comes here in the rough 
 and leaves us again at, weight for weight, hundreds of 
 times the value ; and in the meanwhile our workmen, 
 who are creating the wealth, are fed and clothed out of 
 these imports which frighten some people so much. 
 
 People who tell you that we are buying more than 
 we sell, and therefore must be getting poorer, evidently 
 have got hold of the notion, which I have already shown 
 you to be a mistaken one, that commodities are paid for 
 in gold. They fancy that because we import goods to 
 the value of loo millions a year more than we export, 
 this TOO millions leaves the country in the shape of gold; 
 but so far from this being the case, on an average of 
 years rather more bullion comes into the country than 
 goes out of it. Let us then examine why it is that we 
 get into the country so much more of goods than we 
 send out, and whether this is a sign of impoverishment 
 
17 
 
 or wealth. Upon this hinges the whole question between 
 us and the Fair Traders, and if you master this you have 
 mastered the most difficult part of the problem. The 
 Fair Traders say that we buy of the foreigner 362 
 million pounds' worth of goods, and sell him only 221 
 millions' worth, and the balance is so much loss to us 
 and gain to the foreigner. The Free Trader, on the 
 other hand, says it is not a question of buying and selling 
 at all, but of exchange ; and if we get in four or five 
 pounds' worth for every three we send out, that shows 
 we are doing a profitable business. And it is this ques- 
 tion of profit which accounts for a large part of the ex- 
 cess of imports. If a merchant sent abroad goods worth 
 a given sum to him, and got back in exchange goods 
 worth only the same amount, it is clear that he would 
 have made, not only no profit, but a dead loss, because 
 he would have had to pay for freight and insurance. 
 Take an instance close at home. Corn-dealers some- 
 times do a httle trade in artificial manures. Suppose a 
 corn-dealer at Romford to purchase twenty quarters of 
 wheat at home for ;^3o. He sends it to London, and 
 sells it for With the money he purchases artificial 
 
 manure, which he brings home and sells for £^0 in 
 Romford. His import into Romford would exceed his 
 export by £10, and yet it would not be an unprofitable 
 transaction. It would be very unprofitable indeed if 
 his imports only balanced his exports. But now sup- 
 pose he employs a fellow-townsman to do his ' carting 
 for him at so much a load. Whatever this might 
 amount to, by so much would the town of Romford be 
 the richer. And this brings me to the second item 
 
i8 
 
 which accounts for the difference between exports and 
 imports — that of Freight and Insurance. Owing to the 
 great advantage which Free Trade gives us, of the total 
 ocean- carried trade of the world about one-half is carried 
 in British ships. It has been calculated that about 60 
 millions a year is earned in this way by England. This 
 is not included in the exports, but is included in the 
 imports. So here we have another heavy item to account 
 for the difference of the two, and the whole of it goes 
 to add to the wealth of the country. But then there is 
 another item more important still, which represents the 
 indebtedness of other nations to us. It is calculated 
 that about 50 millions a year are paid to us for interest — 
 not in cash, but in goods. And even if we could suddenly 
 stop all exports to other countries, this debt must be dis- 
 charged to us, and must be sent to us in the form of goods. 
 Here we have, then, three items quite big enough to ac- 
 count for the difference between our exports and imports. 
 
 Now let us look at it from another point of view. If 
 the contention of the Fair Traders, that we are living 
 on our capital, and that this excess of imports means 
 wasting our substance, is true, how is it that we have 
 not long ago been ruined? If you take the last forty 
 years, you will find that this excess of imports amounts 
 to no less a sum than 1,600 millions. If it is true that 
 this is so much loss to the country, we must long ago 
 have been bankrupt. This fact alone is enough to refute 
 and reduce to an absurdity the notion that these balances 
 are paid for in gold ; but, as a matter of fact, during 
 these forty years we have imported rather more specie 
 than we sent out — a sum amounting on an average to 
 
19 
 
 about one million a year. Does any one suppose that 
 we owe this enormous amount to foreign nations ? On 
 the contrary, during these forty years we have increased 
 our investments abroad by about i,ooo millions. So 
 far, then, is it from being true that we are growing 
 poorer, owing to the excess of imports over exports, it is 
 demonstrable that we have grown enormously richer 
 while it has been going on. And the great increase of 
 our investments abroad has not been made by drawing 
 upon our wealth at home. On the contrary, while it 
 has been going on, our wealth has been largely increas- 
 ing. If you doubt this, look at the Income Tax returns. 
 
 And now, if you want further confirmation of what I 
 have stated, that the excess of imports is to a large 
 extent due to accumulated wealth, look at other nations 
 whose position is the reverse of ours, and who export 
 more than they import, and you will invariably find that 
 it is the nations who have been heavy borrowers in the 
 past who are in this position. 
 
 There is one very instructive instance of a country 
 which for a time exported more than it imported, and 
 has since reversed the process. That country is France, 
 and the period when its exports were in excess — a state 
 of things that the Fair Traders tell you is a sign of such 
 prosperity — was in the four years immediately following 
 the Franco-German war, and it was caused by the enor- 
 mous indemnity which France had to pay out to Ger- 
 many. Thus, if our Fair Trade friends want to stop our 
 excess of imports, all they have got to do is to engage in 
 a good long European war. Then they must take care 
 to get well beaten, and saddled with the payment of 200 
 
20 
 
 or 300 millions indemnity, and you will have the result 
 at once. 
 
 Another contention of the Fair Traders is that to put 
 duties on our imports would be to multiply industries at 
 home, and increase the rate of wages. The direct con- 
 trary is the fact ; and if it were not so, how is it that 
 wages are at least 50 per cent, higher than they were 
 forty years ago ? It is perfectly true that wages in Pro- 
 tectionist America are higher than they are here, but 
 then it is also true that wages in Protectionist France are 
 lower than they are here ; and it is a curious fact that 
 while our opponents sometimes appeal to America as 
 showing what Protection does for wages, they not less 
 frequently appeal to the low wages in France, and call 
 out for Protection against the competition which is 
 caused by the low wages and long hours of labour in that 
 country. They cannot use both arguments ; one must 
 be wrong. The fact is, that the rate of wages is chiefly 
 governed by supply and demand, and in a new country, 
 where labour is scarce and commerce active, whether it 
 is Free Trade or Protectionist, wages will rule high. At 
 the same time, other things being equal, wages will rule 
 higher in a Free Trade country than in a Protected one, 
 because Free Trade promotes commerce, and commerce 
 creates a demand for labour which raises the price. But 
 then, our opponents say. Protection fosters fresh indus- 
 tries which would not otherwise have existed, and there- 
 fore improves trade. It may foster fresh industries ; but 
 if it does, it is at the expense of other industries which 
 need no fostering. What it does is not to create addi- 
 tional work, but to divert capital from work that is 
 
2 I 
 
 naturally profitable to work that is not profitable, and 
 which can only be made so by artificial means. What 
 we should aim at is division of labour—to sell as much 
 as we possibly can of the things which we can make 
 cheapest and best, and that will enable us to buy the 
 equivalent of things which the foreigner can make 
 cheapest and best. If we take the opposite advice, and 
 foster protected industries, it is as if a skilled artisan, 
 earning high wages, were to say to himself, "Why 
 should I buy all the goods I want for the use of my 
 family? Why should I not grind my own corn, and 
 bake it ; and make my own boots and coats, and my 
 wife's dresses ? " The effect of such a policy would be 
 to divert the greater part of his time from what paid him 
 well to what paid him badly, and his commodities would 
 be badly made into the bargain. This would be " pro- 
 tecting native industry " with a vengeance ; but though 
 it may be thought an extreme case, it is a fair illustration 
 of what happens when the same thing is done on a large 
 scale. 
 
 But to return to the question of wages. I do not 
 for a moment contend that there has not been in some 
 . cases a heavy fall in wages during the depression in 
 trade which we have experienced. What I say is, that 
 this is due to temporary causes, and in no way to Free 
 Trade. On the contrary. Free Trade has enabled us 
 to bear the fall in a way which would not have been the 
 case if it had not been for the access which it gave us 
 to cheap food. Even during the depressed period 
 pauperism has steadily diminished, emigration has 
 steadily diminished, crime has steadily diminished, and 
 
22 
 
 the Excise returns have steadily increased. The fact is, 
 the well-being of the people depends, not only on the 
 absolute amount of the wages they earn, but also on 
 the purchasing power of those wages. Almost every 
 important article used by working-men is cheaper than 
 it used to be. Thus, to take an example or two : bread 
 was 50 years ago is. 2d. per 4 lb. loaf; to-day it is 4d. ; 
 sugar, then 8d. a lb., is now 2d. ; Calico, then 6d. a 
 yard, is now 3d. In consequence of this cheapness far 
 more of articles of common use is consumed by them. 
 Thus, the consumption of sugar is one- half as much 
 again per head as it was twelve years ago ; and if you 
 go further back, the difference is still more marked, 
 being now four times as great as it was in 1840. You 
 will find the consumption of tea to have increased in 
 much the same proportion. 
 
 This complaint about the fall of wages being due to 
 Free Trade does not often come from working-men. 
 The Trades Union Congress, which may be taken to 
 represent the opinion of the working classes, emphatic- 
 ally and indignantly repudiated these pernicious doc- 
 trines. 
 
 Another allegation of the Fair Traders is that we 
 have been driven out of the neutral markets of the 
 world. It is, no doubt, perfectly true that as to six 
 countries of the world our trade has been reduced. The 
 six are— America, . Germany, Russia, Holland, Egypt, 
 and the South American republics. In the case of the 
 first four, this is primarily due to their increased import 
 duties. In the case of Egypt and South America, it is 
 due to the fact that for a considerable period we lent 
 
23 
 
 these countries large sums of money. Those loans 
 went to them, of course, in the form of goods, but we 
 have found that our debts are not likely to be repaid 
 in that or any other form ; and as the burnt child dreads 
 the fire, so we have ceased to lend them any more. 
 That is why our exports to these two countries have 
 diminished. But even including these six countries 
 where our trade has diminished, and taking the year 
 1879, which was one of the worst of the depressed 
 years, our total trade far exceeded that of any other 
 nation. It was 611 miUions in that year. That was 
 our total trade, with our 35 millions of population. 
 Germany, with 40 millions of people, did 370 millions 
 of trade; the United States, with 50 millions of people, 
 did only 238 millions; and so on. So that you see 
 we can afford to lump these two great Protectionist 
 countries together, and still beat them in the gross 
 amount of trade we do, and, man for man, do three 
 times as much. If you look at our exports alone, they 
 tell the same story. In spite of Protection we send to 
 nearly every country in the world more goods than any 
 other nation does. So that the allegation that we are 
 beaten is not even true in protected countries, still less 
 is it true in neutral markets. Wherever we meet other 
 sellers on fair and equal terms, there is no comparison at 
 all between us; we are far away ahead. Throughout 
 the continents of Asia, Africa, and AustraUa, other 
 countries cannot hold a candle to us. For instance, 
 over that great area our Trade is sixteen times that of 
 the United States. The iron trade is frequently cited as 
 one in which we are being overhauled by Belgium, but 
 
24 
 
 the exports of Belgium in this staple are less than one- 
 tenth of ours. 
 
 If it were true that other countries could beat us 
 in neutral markets, they could also beat us here at home. 
 But that certainly is not the case. We import hardly 
 any manufactures from other countries, and when people 
 tell you our home market is flooded with foreign manu- 
 factures it is simply untrue. What we do import is chiefly 
 food, and the raw material which we work up into 
 finished manufactures and sell again at a great profit. 
 Seven-eighths of our imports consists of these, and only 
 one- eighth of manufactures ; but when you look at what 
 we send abroad, you find that 90 per cent, of that consists 
 of manufactured articles. And these wonderful results 
 are no miracle ; they are the direct consequence of the 
 fact that all commodities are cheaper here than they are 
 elsewhere. Our workers carry on the competition on 
 the best possible conditions. They are fed, and clothed, 
 and housed at the lowest rate, and far better than else- 
 where. Thus they can produce more cheaply, and they 
 can afford to undersell the Protectionists even in Pro- 
 tectionist countries — very often with goods which are 
 taxed to the extent of 50 or 100 per cent. 
 
 I do not think I need dwell very long, after what I 
 have already said, on the next allegation of the new 
 school of Protectionists, that one-sided P ree Trade 
 is bad for this country." A more straightforward way 
 of putting the complaint would be to say, ' No bread ' 
 is better than 'half a loaf.'" It is founded on the 
 fallacy that we buy what we want as a favour to other 
 countries ; whereas the truth is we buy these things 
 
25 
 
 because we want them, and because we must, from the 
 nature of things, receive them in payment for the huge 
 total of goods which we send abroad, for the ocean- 
 carrying which we do for other nations as well as our- 
 selves, and, lastly, in payment of interest on the enor- 
 mous debt which other countries have contracted to this 
 country. 
 
 I now come to the remedies which are proposed by 
 the Fair Traders for the state of things of which they 
 complain. They suggest Reciprocity, or rather Retalia- 
 tion on the foreigner. We are to put duties on the 
 goods we import from them, in the hope that they will 
 take off the duties they impose on ours j that is to say, 
 we are to injure ourselves at the same time that we 
 injure them, in the hope that they will abandon their 
 policy, which we know injures both them and us. We 
 are to become Protectionists in the hope of persuading 
 them to become Free Traders. We might just as 
 well say to the Jews, "Unless you will embrace our 
 faith we will adopt yours and become Jews." Would 
 not foreigners at once say, "You seem to have very 
 little faith in your own principles. Either Free Trade is 
 a good thing or a bad thing. If it is good, why do you 
 abandon it ? If it is bad, why do you ask us to adopt 
 it ? " We hope that some day other countries will see 
 that their Protectionist policy is good neither for them- 
 selves nor us, but such an argument as that would cer- 
 tainly retard the change. The course they would prob- 
 ably take would be to retaliate still further upon us j 
 and here we encounter the chief difficulty in the way of 
 Retahation. Foreigners could retaliate with far more 
 
26 
 
 effect against us than we can against them, because our 
 imports of their manufactures are far less than their 
 imports of ours. I will go into that matter presently, 
 but in the meanwhile I want you to consider what the 
 effect would be upon ourselves. Whether other coun- 
 tries increase their duties against us or not, there is no 
 doubt about the effect which taxing our imports would 
 have on our own trade. It would at once diminish 
 those imports, and it follows that our exports would 
 diminish also, because they pay for one another. If we 
 limit our purchases from other countries, we also limit 
 their power of purchasing from us. The country would 
 be impoverished by the reduction of our foreign trade ; 
 and at the same time the prices of commodities would 
 be raised at home. 
 
 Well, then, I want to know whether we are to levy 
 these duties against all other countries alike, or are we to 
 single out particular countries, and tax their commodities 
 only ? If we are going to treat all alike, that will be 
 making no distinction between those who treat us well 
 and those who treat us badly ; so that is out of the ques- 
 tion. If, on the other hand, you are going to pick out 
 the countries that tax our goods, there is this practical 
 difficulty. What security have you that the country 
 against which you raise the barrier would not invade it 
 by sending their goods through another country against 
 which it does not exist ? For instance, if we put a duty 
 on French silks, what is to prevent their being sent here 
 through Belgium ? 
 
 Then, again, these measures of Retaliation— are they 
 to be permanent, or temporary ? If they do not have the 
 
27 
 
 desired effect of coercing other countries— which they 
 certainly would not— are we to advance further on the 
 downward path, or to recede ? If we were to enter on 
 that path, we should probably be unable to help going 
 further, because those who did not happen to be in- 
 terested in the particular articles protected would soon 
 get tired of paying higher for them, and would call out 
 for Protection for the articles they themselves produce. 
 But supposing, as the more reasonable Fair Traders 
 would no doubt say, it is intended to be a temporary 
 measure, you would for a few years have diverted capital 
 into trades which could not stand alone, and then, 
 having fostered them in this way, have left them in the 
 lurch. The effect of that would be ruin and disaster to 
 those whom you had tempted out of other branches of 
 trade, where they needed no such bolstering. 
 
 But now comes the question. Upon what imports do 
 you propose to put a duty? Is it to be upon raw 
 materials, or manufactured articles, or food ? We may 
 leave raw materials out of the question. No one 
 seriously proposes it. The manufacturers who ask for 
 Protection, know too much to propose that the raw 
 material which they purchase should be raised in price. 
 There remain, then, duties on manufactures and on food. 
 Which is it to be ? Judging by recent experience, it is 
 to be one thing in one place and another thing in 
 another. The Fair Trade candidate who stands for a 
 county goes in boldly for a duty on corn, to please the 
 agriculturists; but this would never do in the towns, 
 where people eat bread but do not grow it ; so another 
 candidate in that case tries to please the manufacturers. 
 
28 
 
 But the Fair Trade League consists of both these classes, 
 and it has therefore to adopt a poHcy combining both 
 programmes. No doubt what the manufacturers would 
 like best would be duties on manufactured goods ; but 
 they see the hopelessness of proposing this without allies, 
 so they hold out a tempting bait to the agriculturists to 
 join them, and go in with a light heart for a duty on 
 corn as well. 
 
 Let us, then, examine what the effect of these two 
 proposals would be. A duty on manufactures is a very 
 dangerous weapon for us to use, and more likely to ex- 
 plode backwards than forwards, for our manufactures are 
 that part of our trade in which we are most vulner- 
 able. Our imports of manufactures are 45 millions, but 
 our exports are 200 millions ; so you see that if we 
 once begin the game of Retaliation there is no doubt 
 which side can hit hardest. If I were to fight a duel 
 with the smallest man I could find, it is clear that he 
 would have a great advantage over me, because he 
 would have so much more to shoot at. In the same 
 way we are open to attack all over the 200 millions, and 
 can only impose duties on 45 millions, and, indeed, in 
 practice that total would have to be largely reduced, as 
 it includes many items which practically could not be 
 taxed, because, though nominally manufactures, they 
 must be regarded as raw materials, as they are further 
 worked up here. Take a particular case — that of 
 America, which is certainly the greatest sinner, and 
 therefore the nation whom the Fair Traders are most 
 anxious to attack. We send to America twenty-four 
 millions of manufactures, but we take from her only a 
 
29 
 
 little over four millions. With what prospect of success 
 should we go to them and say, " We will tax your four 
 millions unless you untax our twenty-four milHons." 
 They would say, Do so, if you like ; it will have the 
 smallest possible effect on us. We shall be happy to 
 put on another lo per cent, on your twenty-four millions." 
 In such a war of tariffs as that we should be fighting 
 against enormous odds, and should inevitably be 
 worsted. 
 
 True, it is sometimes said, "But why not put a 
 tax on luxuries ? " only the worst of it is the doctors 
 differ as to what are luxuries. For instance, a leading 
 Conservative defined luxuries upon which he would put 
 duties as beef, mutton, and the crops." I don't know 
 whether he would go so far as to say that, being 
 luxuries, working-men could very well do without them. 
 But we may fairly suppose that silk and wine are the 
 luxuries intended. There is, of course, far less objection 
 to this than to some of the other proposals, and, as a 
 brewer, I ought rather to encourage the tax on light 
 wine being increased; but there is this objection even 
 to this proposal. For every pound's worth of silk and 
 wine that we import we must export somewhere a 
 corresponding value of goods; and if you Umit our 
 import you limit our export as well. Our total of trade 
 is thereby diminished, and some one here in England 
 earns less. 
 
 The alternative proposal is for a duty on corn, and 
 some people even go so far as to assert that such a 
 duty would be paid, not by the people who buy the 
 corn, but by those who sell it to us on the other side 
 
30 
 
 of the Atlantic. That is to say, that if we put on a 5 s. 
 duty, corn will not be any dearer here, but growers will 
 accept 5s. a quarter less in America. But if that were 
 possible, they would prefer to sell it at the market price 
 at home. It is not to be supposed that growers who 
 send their corn here would continue to do so for bene- 
 volent motives when they could get 5s. a quarter more, 
 if that were the amount of the duty, by selling it for 
 home consumption. But perhaps it will be even asserted 
 that the effect would be to cheapen all corn in the 
 United States by 5 s., whether consumed there or ex- 
 ported. How very grateful the Americans would be 
 to us ! But not for long. Every grower of corn culti- 
 vates that crop because it pays him better than any 
 other. To some, no doubt, it pays much better; to 
 others the difference is slight — is., 2s., 3s., as the case 
 may be. To knock down the price 5 s. would thus 
 at once destroy the profit of growing corn over a large 
 area. If this impossible reduction in price were effected, 
 other crops would be substituted, or, in the case of the 
 distant West, where the farmers are handicapped by 
 long railway carriage, land might go out of cultivation. 
 The supply of corn would be diminished, and the price 
 would rise at least to its former level in America ; and 
 as the duty must be paid by some one, it must come 
 out of the consumers' pockets. 
 
 Then, again, there is a suggestion that we should, 
 while putting this duty on American-grown corn, accept 
 it free from our North American Colonies. But if 
 Canada cannot at present compete with the United 
 States in the price they can afford to take for their corn, 
 
it is because it costs them more to grow it and transport 
 it; so in this case again we should have to pay the 
 higher price. Then, what is to prevent the Americans 
 sending their corn through Canada, and so avoiding the 
 duty? The Canadians, it is true, might also impose 
 tL'^ duty, as against their neighbours, but would they 
 be prepared to bear the enormous cost of Custom 
 Houses to prevent smuggling over the thousands of 
 miles of land frontier ? Besides, it is assumed that we 
 are to make me^e concessions to Canada in return for 
 free access to her ports; but is there any reason to 
 think that the Canadians would be more willing to grant 
 them than the Americans are ? 
 
 But do the Fair Traders really think that duties 
 would not have the effect of increasing the price? If 
 they are of this opinion, why do they object to taxing 
 raw materials? If it is true that the exporters pay the 
 duty in one case, it must be true in the other. Then, 
 again, what do the League mean by such a remark as 
 this : " They would do equal justice to the classes in- 
 terested in agriculture, who are entitled to the same 
 treatment as those connected with manufactures " ? If 
 there would be no enhancement of price, where is the 
 " equal justice " to the agriculturist ? 
 
 To most people, at any rate, it is clearer than day 
 that if you impose the duty at all it will have the effect 
 of enhancing the price of bread here; and, once con- 
 vinced of that fact, no patriotic Englishman would pro- 
 pose it. Of course, I should not for a moment accuse 
 the Fair Traders of want of patriotism, only that they 
 are so mentally colour-blind that they fail to see what 
 
32 
 
 is obvious to ninety-nine out of every hundred who have 
 thought out the question. 
 
 I have tried to compress into a few pages the leading 
 arguments of the case against a rash meddling with the 
 freedom of importation which we enjoy, and if the wage- 
 earners, who are the great consumers, will take tne 
 trouble to think out these simple propositions, 7. have 
 no fear of their verdict. It will be an emphatic deter- 
 mination that the comfort of their homes, ana the well- 
 being of all Englishmen, shall not be ligr^Uy sacrificed 
 to the exigencies of party strife. 
 
 Printed by Cassell & Company, Limited, La Belle Sauvage, 
 London, E.C.