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junction with other forces operated to effect that sudden rise which characterised the year 1850, and which was maintained with but slight variation till 1866. What proportion of this increase was due to the stimulating influence of the free-trade principle? For it is now abundantly clear that not all this remarkable addition was caused by free trade.

How did free trade effect an increased circulation in the markets of this country, and those of foreign ones as well? Was this "increase" to the normal trade circulation of the nation liable to be checked by external forces, capable of being called into existence by surrounding States? And if so (and subsequent events have proved that such an assumption, entertained by the protectionists during the free-trade agitation, was no trivial and unfounded one), as the principle of free trade, partially carried out by this country, is thus shown to be well within the sphere of other forces, over which our Government cannot possibly have any control, under its present commercial code,—as the principle of free trade, therefore, from these circumstances tends to fluctuate in its action, it becomes a very interesting question from the scientific view of the problem, but a very vital one from the national point, to settle what determines that it shall be beneficial; whether surrounding conditions have so altered since the prosperous period alluded to above, as to oppose a successful barrier to its power of continuing that prosperity; and whether, if this partial application of free trade to international commerce in the face of a commercial depression 1 which is assuming symptoms of an increasingly

1 "The depression in trade has ceased to be a mere oscillation, and chronic character, is proved to be the immediate consequence of its adverse operation, any means to elude its disastrous influence are to be discovered in the fiscal system which presides over, or rather leaves uncontrolled, our trade and commerce with other nations?

But the true explanation of this rapid rise in the export trade of the country, appearing so soon after the introduction of free trade by the people—it was a national movement, said the free-traders, and so powerfully did they conceive themselves to be supported, and so just and righteous was their "cause," that they arrogantly or in defiance menaced the ruling classes with revolution, if they continued to oppose the measure which was to bless the labouring part of the community with cheapness and plenty—is not to be found in the action of free trade alone. This principle, as it was partially apphed by us—and the free-traders did not shrink from acknowledging that it was to the national interest so to adapt it1—was the undoubted means of increasing the trade activity of our markets. And it is the opinion of many who have given much attention to the subject, that this "additional increase" was, in the very means which brought it about, beset with dangers. It was an artificial increase; it was not in the ordinary or the normal2 course of trade activity; it did not facil

has assumed (1886) some symptoms of a more chronic character."—Sir T. H. Farrer in preface of 'Free Trade v. Fair Trade,' third edition. Compare this admission with what Cobden said free trade would effect for our agriculture and commerce—it was to make them permanently prosperous.

1 Cobden's Speeches—" If free trade is a good thing for us, we will have it; let others take it if it is a good thing for them."

* Cf. Cobden, p. 7: "From 1831-1836, the increase of our exports compared with our imports amounted to £20,000,000 official value. itate the transit of goods from the producer to the consumer; it did not directly stimulate the circulation of the markets. It did nothing of these things. And if free trade in its unequal operation had acted alone, we should have seen it limited, in the first instance, to one phenomenon—that of increased production. But this increased production, without the means of its rapid exchange, and a stimulus to the flow of the medium by which that exchange is effected, must very soon have declined from the want of requisites to nourish it. And those requisites are—

1. Increased facilities in carrying off goods, so that they shall be within the range of the consumer in a shorter time than before; and

2. Additions to the currency, so that the whole amount of coin in circulation shall be largely increased.1

But all these goods were sent to America, where they were neither sold nor consumed, but despatched in exchange for bank and railway shares and State bonds. This is not legitimate trade; it is over-speculation: the goods are not paid for. . . . This was a fictitious prosperity. . . . Can Sir Robert Peel raise up a real prosperity, or if not, a fictitious one? In the latter case it will only lead to a recoil which will be infinitely more disastrous than that under which wc are now suffering.''

But the exports of 1850-1866 were not paid for by imports, and as no money passed, according to the late Professor Bonamy Price, they must have been exchanged for the stock of the indebted countries. Hence, according to Cobden, this prosperity was fictitious.

It is evident that Cobden did not distinguish minutely enough between fictitious and real prosperity. He called that "fictitious" which, in reality, was a normal prosperity. But then it was his part to denounce the protective system. He never alludes to commercial depression with stationary exports; for this unfortunate association never occurred during protection. He might have asked himself the question, '' Can a nation be said to be involved in serious danger when exports are not only constantly increasing, but increasing proportionately to the increment of population?"

1 It had been held that an influx of gold would have an extravagant

Now it so happens that just before the Corn Laws were repealed, and our tariff was in process of becoming a free-trade tariff, there were two factors which might have been portrayed, and their consequences considered by some of those who advocated free-trade doctrines, and who had, as we know many of them had, the interests of their country solely at heart. One of these was certainly within the grasp of any one who had taken the trouble to look around him, and observe not merely what was going on, but also to revolve what might possibly be the consequences of such a change in the ordinary commercial transactions of his time. This was the rapid extension of the railway system, which of itself, by facilitating transit, by placing the producer and consumer in greater propinquity, would assuredly act in the direction of increasing supplies. As the demand before was unsupplied, it would now tend to become satisfied, so that, by thus shortening the time of transit, the more durable articles of the manufacturer would gain a larger market, supposing their individual consumption to remain the same; while the less durable goods, coming under the tendency of a larger consumption, would still be produced in larger proportion than

influence upon prices. But this was erroneous. Cf. Ncwmarch, quoted from Barbour in his 'Theory of Bi-metallism,' pp. 74, 75: "After a short time, the extension of commerce, the stimulus given to invention and enterprise by fresh markets, and the consequent infinite multiplication of transactions far exceeding any previous experience, would prevent before long any undue rise of prices, by mere force of increased quantity on the side of the new gold; that most emphatically the end to be feared was not that the new supplies of gold would continue, but that by any possibility they might fall away or cease; and, in short, that the world ought to rejoice if a new gold-field could be discovered every few years."

the former: the increase in their consumption being simply explained by the fact that exchange is stimulated by an increase in the rapidity of transit.

But the time of the appearance of the other factor was not within the means of human calculation; though its influence when in existence ought, it should seem to us, to have been taken into consideration. The gold discovery of 1850 was unforeseen; and its power of stimulating enterprise did not at once enter into the estimates of the free-trade causation of prosperity. Like many other causes, it had to bide its time. It would, then, only take its place when, by reason of the fact that commercial prosperity was beginning to decline, attention was impartially turned to the question. It thus became apparent that the sudden rise in the export trade of 1850 was out of all proportion to that increase which had already begun to mark our exports under the combined operation of our railway system and free trade. To account for that sudden rise, for that additional increase to our already increased and increasing exports under free trade1 and railway extension, we look for another cause. For the causes then in operation were not adequate, according to a subsequent analysis, to effect the result to be accounted for. P>ut no sooner had the gold-mines of California and Australia been discovered than the phenomenal rise began to take effect. The question, therefore, which remains for discussion is the following one—When you

1 The reader must, at the outset, carefully distinguish between the "moral" and "material" influence exercised by free trade. It will bo shown afterwards that the influence of free trade at this time was purely a moral one.

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