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nations individually concerned in the bargain. The free-trader says, "Both are gainers." But the protectionist retorts, " And so both are losers too."
It is easy to perceive that the grounds of contention are fixed (1) on the number of the inhabitants of each country, and (2) on the quantity of commodities required by either nation, as measured by the ability to pay for them.
If these numbers are unequal in the two countries, and their respective abilities to pay about the same, the smaller nation will gain at the expense of the larger one. For in the latter a whole industry is destroyed, and what is the compensation? Her labour and capital are diverted to the more remunerative occupation. But is all this labour consumed? No. Then, so far as this mutual bargain is concerned, the loss is borne by the nation which has the larger population.1 Her gain refers to consumers alone. As all consume, the benefit may be said to be universal. But observe how the benefit is obtained. By throwing out of employment a certain proportion of her productive classes. The smaller nation, on the contrary, gains both as a consumer and a producer. The result of this transaction is that the wealth of the larger nation diminishes. It has been in such a way, but carried under the principle of protection, that England in former times grew so rich.
But the statesmen who control the internal affairs of the larger nation would see, with dismay, this displace
1 The free-trader attempts to meet this argument by declaring that the nation which loses to another, gains from a third. But he forgets that such happens only under universal free trade, which does not exist. Hence the facts stand as in the text.
ment of their country's wealth. From the consumer's point of view, they would regard this freedom of trade with satisfaction; but from the producer's standpoint, they would see nothing but calamity—the more especially as constantly increasing populations would magnify the disproportion already existing. On general lines, then, the question is reduced to one of choice between producers and consumers. And those nations who are protective have decided that production shall have priority over consumption. In this they have followed what is the natural sequence of events. For amongst the labouring classes production precedes consumption. They earn their daily bread by the sweat of their brow. Any measure, therefore, which injures production, though it favours the consuming class as a whole, they steadily oppose. What would be the reaction of the feeling of the larger nation, when they experienced the phenomenon of their wealth, by this process of free trade, gradually being absorbed by another people ?1 We can readily surmise it; and though we have no account of what did happen after this species of free trade or international trade, we may get some information concerning it from what neighbouring nations have done to prevent the sources of their productive powers from being sapped. For such trade bargainings amongst the manufacturers of two peoples cannot be called an international trade bargain. These latter ought, if irritation and the results of inequality are to be dispensed with, to be framed on the basis of mutual, and, as far as possible, equal advantages. And
1 Yet it was a fundamental argument with Cobden, that free trade would destroy the springs of war.
in so far as the surroundings of every trade and industry are liable to fluctuate, to prevent any one nation from receiving, by a happy accident, too large a proportion of gain from another, it is essential that the "treaty of reciprocity" be limited to a certain period of time. In this manner only can it be expected that anything like commercial equality shall exist between neighbouring nations.
| 35. "Free trade to remove source of wars arising from commercial frictions." In reality, wars are due to impulse of acquisition, and have reference, in the first place, to political objects.—It was the contention of Cobden and the free-traders, that the system of protection, by imposing restraints, increased commercial jealousies. It prevented, they said, the sources of production from being increased. Free trade, on the other hand, by removing impediments, tended to draw nations into a closer commercial union; and thus to destroy at least one source of war—that arising from commercial disputes.
Now it is true that free trade tends to increase production, but unequally; for, obviously, free trade will favour that nation most whose advantages in the most important industry of manufacture are far beyond those of her rivals. England could well afford to say to the nations of the world, "Only take our manufactures, and we will, in return, take your food-stuffs." But this argument on the part of the English manufacturers was a purely selfish argument. It affected their own gains alone. It did not respect the less advantageous conditions of her neighbours. It is equally obvious that free trade, so far as their productions were concerned, instead of increasing would diminish them. The freetraders asserted that protective restrictions were the causes of war. Adam Smith ascribes to commercial irritation the wars of the eighteenth century. But there is danger of falling into error on these important questions. It was not protection but prohibition which led to commercial irritation and retaliation.1 And only too often commercial as well as political disputes were made use of by statesmen to advance the power and prestige of their country. Thus they formed, in the generality of cases, not a primary but a secondary factor in the causation of war. To give an instance of this. It is frequently remarked that the Stamp Act was the cause of the war with our American colonies. That it was the "exciting" cause, no one who is acquainted with the history of events embracing a period of a century antecedent to it will deny. In the progress of those events there will be traced a disposition on the part of some of the colonies to break those ties which united them with the mother country. This disposition grew. And it required but some general source of dissatisfaction to give it expression, and the Stamp Act succeeded in providing this source.
But behind these commercial disputes is to be discerned the march of political ideas and actions. And as the basis of these ideas and actions, you will find some position of a rival likely to become overwhelmingly strong, and therefore to be removed as the source of latent danger; or some weak point of our own which it is incumbent upon us to strengthen, with reference to the future security of the kingdom.
1 As remarked by Huskisson.
We believe that Cobden was wrong in ascribing fundamental importance to commercial disputes. Wars are, or used to be, designed with reference to acquisition. So long as objects of acquisition exist, then war will tend to break out, on a favourable opportunity. But our free-trade policy was supposed to diminish this tendency. It is necessary, therefore, to meet this statement with the actual fact. The war in the Crimea, as already mentioned, intervened between our farming interest and its destruction as a com producer. From a financial point of view, it was not to the interest of Eussia to enter into a conflict with us; for, by thus cutting off her corn communication, that nation lost many millions of pounds. But a more extended commercial union between nations was, in Cobden's narrow view of this matter, to destroy the basis of wars. As the result of that war, let us suppose that Eussia became more aggrandised at the expense of the conquered than she would be by the peaceful arts of commerce, as Cobden called them. And here it must be confessed that the vision of the Eussian statesman extended a little beyond that of the English one. For there are in Europe and Asia objects of acquisition coveted by Eussia. And pretexts will be framed with a view of obtaining them.
The Eussian advance towards the Indian frontier was considered as being of but slight moment to the interests of the British empire. Imbued very probably with this erroneous notion that Eussia would not seek a quarrel with us, because such would immediately result in her commercial disadvantage, the Liberal party, hav