It is marvellous how unanimous in England is the assent to the abstract theory of Free Trade. It is equally marvellous how many of its professed votaries, while they extol that theory, object to its practice. They loudly abjure the name of "Protectionists," but adhere to the thing "Protectionism." They are Free-traders with "ifs" and "buts." This is their plea : "We are doctrinally as thorough Free-traders as that incarnation of the Cobden Club, Thomas Bayley Potter himself; but only under certain circumstances—only if all other countries become Free-traders as well as ourselves." So that, according to these notions, truth is bound to remain in practical abeyance until it is universally acted on! As long as it is not practised by everybody, it must be practised by none! It is most salutary to mankind if all mankind adopt it, but it is most injurious as long as only a portion of mankind adopts it! A curious paradox, showing how the same thing may at the same time be both true and false !

The fact is that these "if" and "but" Free-traders are simply Protectionists under the pseudonyms of Reciprocitarians, Fair-traders, and what not. It is hardly "fair" or them to deny that they are Protectionists. The test that shall draw the line between true Free-traders and sham Freetraders is simple, and of easy application. Free Trade does not allow of any import duties being imposed on such page 8 articles as are likewise produced at home. ^* Protection does. Here is, in a few words, the radical difference between them, and that difference is clear and definite. Free Trade lays down a broad general principle. Under it no protection is given to home industries, the entire amount levied by import duties goes to the revenue, and our market is freely and fully open to foreign competition. Under Protection, the import duties imposed are protective; of the duties levied, part goes to the protected native producer, and only part to the revenue, and foreign competitors are handicapped in our market to the extent of those duties. The distinction is, we think, clear and unmistakable. Which of the two systems is the best is not the question now before us; we have discussed that before, and shall discuss it again. At present we have only to point out the plain line of demarcation that divides Free Trade from Protectionism, and to ask to which of the two does Fair Trade belong. The reply is obvious. The very thing which Fair Trade proposes to do is to impose import duties on some of the foreign articles which are also produced at home. This is also the very thing which Protectionism in its old form did and does; therefore the two are identical.

What those foreign articles are which Protectionism, under the guise of Fair Trade, proposes to tax, its advocates are not agreed, but they are determined to tax something, and the majority seem inclined for a 5s. per quarter import duty on wheat. That is the proposal that "divides them least." Be this as it may, the essential and distinctive programme of the so-called Fair-traders is to impose protective import duties. They are, therefore, to all intents and purposes Protectionists. They may call themselves by another name, but they advocate the same fiscal measures, and adduce the same arguments to advocate them. We shall, therefore, use the old denomination of Protection and Protectionism as embracing all classes of opponents to Free Trade, whether to its principles or to its practice.

It is our intention in these pages to collect and pass under review the most prominent or plausible of those pleas which have been adduced to justify the adoption of a Protective policy and the rejection of Free Trade. We shall endeavour to state them, discuss them, and refute them fairly, freely, and briefly. The Protectionist pleas we shall print in italics, to be followed by our remarks on each.

1. Balances due by one country to another are paid for in specie. Hence, if the balance of trade be against us, we shall be drained of our specie to pay for such balance.

Now, in the first place, there is practically no such thing as a "balance of trade." The trade between two countries entirely consists of a series of commercial dealings between a number of persons in one country and a number of persons in the other; and there can be no national balance of trade, because each dealing (of which the totality is formed) is settled for at the time, and balances itself.

We may, it is true, buy from some countries more than we directly sell to them, but the difference is not paid for in specie; it is paid for by bills on other countries to which we sell more than we buy from them. On the whole, the commercial dealings of a country with the world at large are self-adjusting, and leave no balance to be paid to or from either side. But although there is no such thing as a "balance of trade," most countries do either import more from the rest of the world than they export to it, or vice versâ; and it is this excess, on whichever side it may be, that is ordinarily, though wrongly, termed the balance of trade.

How such excess arises we shall shortly see; here the question is simply whether it be true, as alleged, that if we import more than we export "we shall be drained of our specie to pay" for such excess of imports. Past history and present experience conclusively show that it is not true. Amounts due (from whatever cause) by one country to others are not paid for in specie. In England, our imports have exceeded our exports, year after year, for more than a quarter of a century, by an average of about £50,000,000 a year; and yet throughout all those years, instead of our bullion having been drained from us, our import has largely page 10 exceeded our export of it. This fact is at once so undeniable and so conclusive, that we shall not waste time upon it. If anyone desires fuller details and statistics on the subject, we beg to refer him to Mr. G. W. Medley's recent pamphlet, where it is treated in a masterly manner. ^*

The ebb and flow of bullion between various countries has comparatively a very small range, and depends almost entirely on their respective circulation requirements. Even in wealthy England, the abstraction of a few millions' worth of gold so deranges the circulation as to raise the rate of interest to a point sufficient to bring it back again. How then can any one dream of our sending away 100 millions of it annually to pay for our annual excess of imports? The fact is, that every country possesses and retains as much specie as is required for circulation purposes—sometimes a little less, sometimes a little more, but never much less, nor much more. No country was ever drained of its specie by its foreign commerce. The only way in which it can ever be denuded of specie is by the adoption of an inconvertible paper currency. The circulation requirements being then supplied by paper, the specie becomes surplusage, and is sent abroad where its value is greater.

To sum up, the truth is that Balances Due (from whatever cause) by One Country to Another are not Paid for in Specie; and No Country has ever been Drained of its Specie through the Operation of Foreign Trade.

2. Commerce is not the exchange of goods for goods, which would be barter; but of goods for money, which is not barter. It will not, we think, be difficult to show that the exchange of goods for money is virtually as much barter as though the goods were directly exchanged for other goods.

The only possible value of money consists in its purchasing power. Money is only worth what it can buy. Just consider. Of what possible use can money be if it be not used to purchase something with? Whether that "something" be commodities, or land, or labour, &c., matters not; the only worth of money is in its power to purchase such page 11 things. True that it may be melted down and applied to manufacturing purposes, but then it ceases to be money, and becomes only a metal. A dollar may be converted into a pencil-case. In its latter shape it is useful, but has no purchasing power; in the former shape, it is utterly useless except by reason of its purchasing power. Now in all commercial transactions, if the money which the seller of the goods receives for them is ever utilised at all, it can only be by the purchase with it of some other commodities. Hence it follows that, virtually, an interchange takes place between the commodities which that seller has sold for money and the other commodities which he has used that money in acquiring. All trade dealings are inevitably attended by the same process. No sale is made by any person without his making, sooner or later, a corresponding purchase. The goods so sold are, virtually and substantially, bartered for the goods so purchased, and the money merely serves as the medium of interchange. In most cases the barter is not effected either directly or at once, and is only completed when the money received for the goods is made use of for some definite purpose. It may for a time be deposited in a bank, but it will not long remain idle. It may for a time be transferred from one person to another as a loan; but, soon or late (in most cases, soon), it is used as a payment in exchange for something, and that something is the "thing" for which the goods originally sold are ultimately bartered.

Occasionally a long time elapses before the barter is completed; as, for instance, when the receiver of the money, instead of using it at once, puts it in an old stocking and hoards it. The completion of the barter is suspended until the owner takes the money out of the old stocking and utilises it. He may use it, let us say, to pay the wages of labour j in which case the interchange is perfected, and the goods originally sold are bartered for labour. In point of fact, the money paid by the buyer to the seller is equivalent to a ticket authorising the holder to receive, in exchange for the goods which he has sold, other commodities to the same amount, of any kind which he may choose, and at any time that he may think fit. The page 12 moment he utilises that ticket the barter is complete, and the commodities which he receives form the counterpart to the goods which he has sold.

The money which the seller receives for his goods would be little more than so many pieces of broken slate were it not for its purchasing power. The consideration for which his goods have been given is not the mere coins, it really is the commodities which those coins will purchase. The mere money itself is utterly valueless, unless it be, sooner or later, turned into commodities, whatever those commodities may be, whether land or labour, raw materials, or manufactured products. If you purchase wheat, and pay for it in money, that money may perchance be used for purchasing a horse, in which case the horse has been, indirectly but no less truly, bartered for wheat. To put it into a more general form, every sale or purchase is a barter of the commodities so sold or purchased with the commodities on which the seller may expend the money received. If money, as money, had any other value beyond its purchasing power, it might be said that every sale or purchase is a barter between goods and money. But money, as money, has no real but only a representative value. The barter really is between the definite goods given for the money, and the undefined goods which that money represents, and which it may at any moment realise. Just as when you buy a ticket for a concert, the consideration given for your money is not the piece of paste-board of which the ticket itself consists, but the musical performance which the ticket represents.

Let us conclude by an illustration. You buy, we will say, a cargo of wheat from New York. Against the bill of lading, &c., of this shipment you accept a bill drawn on you by the seller, payable in England, and probably you pay for this bill in money before you get possession of the wheat. Now, pray observe. The money which you pay for that bill is not sent over in specie to America. It remains in England, to the credit of the banker in New York to whom the bills drawn on you were endorsed. The usual and natural use which he makes of this credit is to draw bills from New York against it, which bills he will sell in America, for a given page 13 number of dollars, to anyone who wishes to make a remittance to England—perhaps to a man who has ordered some Manchester goods, for which he pays by remitting those bills to Manchester. In such case, it is evident that the specie does not leave England, and that, substantially, the American wheat has been bartered for Manchester goods.

Frequently the process is more indirect and circuitous; but, if analysed, it comes to the same thing. For instance, the bills referred to above, instead of being sent direct to England may be sent to Rio Janeiro to pay for coffee; and sent from Rio Janeiro to England to pay for Sheffield steel-ware bought for Brazil. In this case England gets the American wheat, America the Brazilian coffee, and Brazil the English steel. And thus a double barter—something like Capt. Marryat's triangular duel—has taken place without the slightest displacement of specie. Note, moreover, that this is the regular, normal, and nearly universal practice in mercantile operations. Hardly once in a thousand cases are foreign goods paid for by direct export of specie.

To sum up, the truth is that All Commerce is Barter; for it is an Interchange between the Commodities Sold for Money and the Commodities which that Money will be used in Purchasing.