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314

CHAPTER XV.

PARTIAL FREE TRADE AND THE LABOURING CLASSES THE

POLITICAL POSITION OP THE INCOME - TAX - PAYING
CLASSES.

"But it may "be that I shall leave a name sometime remembered with expressions of goodwill, in those places which are the abode of men whose lot it is to labour and to earn their daily bread by the sweat of their brow —a name remembered with expressions of goodwill, when they shall recreate their exhausted strength with abundant and untaxed food, the sweeter because it is no longer leavened with a sense of injustice."

—Sir Robert Peel (1850).

RAILWAY RATES AND THE EXISTING DEPRESSION—THE DEPRECIATION OF SILVER AND ITS RELATION TO DISTRESS—BIMETALLISM NOT A LASTING REMEDY—THE APPEARANCE OF A NEW POWER IN THE STATE—THE INCOME-TAX-PAYING CLASSES—UNSOUND CHARACTER OF EARLY REFORMS EFFECTED THROUGH CONVERSION OF FIXED INTO FLOATING CAPITAL—MONEY NOW A DRUG IN THE MARKET BECAUSE THE SOURCES OF THE REMUNERATION OF CAPITAL ARE CONTRACTED—THE RELATIONS OF THE CAPITALIST AND LABOURER TO (1) PRODUCTION, AND (2) CONSUMPTION — THE PROSPERITY EFFECTED BY FREE-TRADE CHEAPENING OF COMMODITIES A MUSHROOM PROSPERITY—ITS FOUNDATIONS INSECURE.

§ 37. The bimetcellists and the cause of depression.— There is one other consideration of this question of depression, which is not always regarded with that respect which seems to be its due. It is the analysis of the collateral effects of depression. The reader will recollect the importance ascribed to high railway rates by free-traders, in the causation of manufacturing depression. Admit that these rates are excessive. Eeduce them by Act of Parliament. What does the freetrader say to this interference with the course of trade by the State? What difference is there between the interference on the part of the railway shareholder and that coming from a foreign rival? And if you check one, why, on broad principles, should you not diminish the other?

But these rates are reduced (let us suppose)!1 And it appears that even free-traders are not altogether free from protective propensities, when such assist either their cause or their party. What follows? The foreigner was able to compete favourably with us before the lowering of railway rates. He succeeded in underselling our merchants, who, by free trade, strove to blight his prospects. He did so by the assistance of a principle, where needed, which is still in operation. It is a principle which is capable of extension or contraction, according to the requirements of each particular industry. It is but the same policy which this country practised when she was protective. But, if it may be so stated, England has grown out of this principle. It did not, according to the free-traders, satisfy her conditions.2 What valid objection can we possibly make to a former policy of

1 A bill was under the consideration of Parliament in the course of last year's session; but, like many others, was transferred to the present one.

2 If it satisfies the conditions of other nations, on what grounds can we object to it? They cannot be economical, but they may be political.

ours, followed in the present day by growing nations? Is not Germany doing now just what England did a century, or even half a century ago?

If, therefore, railway rates being lowered, the position of the British manufacturer is improved in neutral markets, the conclusion will be jumped at, " The cause of depression has been isolated and counteracted—we are prosperous once more." And free-trade economists will run about and cry that with cheapness there will be increased demand and further production. But they will, it is certain, conveniently ignore the fact that they are not dealing with economical phenomena as they existed under protection, but with a new and altered set of conditions, induced by our partial free-trade policy. Under protection it might have been asserted that, by cheapening the price of an article, you would increase the demand for it within certain limits. But under free trade surrounding circumstances are not so stable as they used to be, when protection governed our commercial progress.1 We do not dispute that there may be some increase of mercantile activity, as the result of lowering railway rates. But what we affirm is, that such an increase will be but temporary, and that its assumed recurrence will but blind many to the nature of the true depressing cause.

It will be temporary, because the causes which depress our manufactures are yet in operation; and they

1 Our partial free-trade system has so deranged previously existing relations, that it is impossible to use the economic truths which obtained under protection in free-trade arguments. And yet this is what the free-traders are guilty of. They adduce protective phenomena to prove their free-trade conclusions.

will be improved, to meet this new condition in the struggle for manufacturing supremacy.

Now there is another result of free trade which is essential to be observed. It is the displacement of labour from productive to unproductive industries. As the consequence of this, we are producing less. The annual income of the country is thus encroached upon. There is, therefore, not only relatively but absolutely less money in circulation amongst the lower classes of society. Prices are in consequence lowered. But against this tendency is to be set the depreciation of silver, arising from our monometallic standard. When demand declines, owing to the inability to acquire, the greater bulk and production of silver has a reactionary influence upon the almost stationary amount of gold. Silver becomes cheaper. There is, therefore, accruing from the appreciation of gold, a tendency for silver prices to rise. In this way do we find the first endeavour on the part of the producer to maintain his income. What he loses by his contracting markets he gains by a rise in silver prices. But such a position is not one of stable equilibrium. It is brought about originally by the forcible displacement of British labour, and the consequent contraction of our markets. As one of the ultimate products of this derangement, we get a depreciated silver currency.

Now it is argued by some—and it is worthy of the reader's closest attention—that all the troubles from which we are now suffering are due to this depreciation of silver.1

1 But if the view just stated be correct, and the depreciation of silver be the result of two factors, then to ascribe the present distress

And the remedy which bimetallists propose for the present depression is the exchange of our gold for a gold and silver standard.

By this means they assert that that gold would circulate more freely which now tends to be hoarded. With silver raised by Act of Parliament to the level occupied alone by gold, the volume of our circulating medium would be greatly increased, and prices would rise. Exchanges would thereby be multiplied and enterprise stimulated. The pressure of capital from above would open up the smallest channels of labour below. There would be greater activity, and therefore a more extended prosperity.

If such a scheme as this is only designed to tide over present difficulties, it is not improbable but what it might be attended with success.

It is likely, therefore, to commend itself to all those whose free-trade propensities are derived from prejudice or a fatal necessity. But it is clear to all who take more than a limited view of the course of this "increased circulation" that it can only be temporary. By a slight stimulus you are merely deferring the evil day; for, instead of destroying the outside sources of depression, you are rashly increasing the vigour of declining internal forces. We say rashly, because a change of standard will not be, if effected, an unmixed blessing. It will be accompanied by evils of its own creation—in short, it will just act like free trade, as a moral agent, operated. We shall witness, in the first

to depreciation is to ascribe the remote effect to an intermediate effect, and not, as it ought to be, to the initial source of both the intermediate and remote effects.

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