Chapter XVI.

Competition in Neutral Markets.

In 1872 our exports amounted to £314,000,000. In 1877 they had sunk to £252,000,000. To what extent was that decline in our exports due to the successful competition in neutral markets of our foreign rivals? An interesting and page 63 important question, which the detailed information afforded us by the Board of Trade returns will enable us to solve without difficulty. On examination, we find that the deficiency of £62,000,000 in the exports of 1877 as compared with those of 1872, is entirely made up of the decline of our exports to six only out of the 56 countries enumerated in table at page 48, with which we trade. Here are the figures, the accuracy of which are beyond all dispute.

Exports in Millions and Tenths of Millions (00,000's Omitted).

which is (within a fraction) the deficiency on our exports to the six states named.

It is quite clear, therefore, that the large diminution referred to in the amount of our exports in 1877 arose entirely out of, and is fully accounted for by, our dealings with the six States indicated. To the rest of the world we have exported as much in amount in 1877 as in 1872, and, taking into consideration the fall in prices, at least page 64 25 per cent more in quantity. Taking the average of the other fifty markets which we supply with goods, these, in 1877, took from us 25 per cent, more in weight, measure, and bulk than they did in 1872, when, in consequence of high prices, the amount of our exports reached the highest point. To put it in another way, if we leave out the six countries we have named, then, to the rest, that is to the fifty neutral markets, our exports in 1872 at the high prices, amounted to £175,000,000, whereas in 1877, had the same prices existed, they would have amounted to £219,000,000. We have taken 1877 as the basis of calculation because the reports of that year were complete, but our remarks and inferences are quite as applicable to 1878, as the exports were then within two per cent, of the former year, and for that difference we have amply allowed by taking the fall of prices at 25 per cent., which is less than the reality.

It is also deserving of notice that as we admit foreign manufactures free of duty we should, if we were undersold by them at all, be undersold in our own country nearly as effectually as in neutral markets; yet what is the fact? Of page 65 our total imports 91 percent, consist of raw materials and articles of food, and barely 9 per cent, consist of manufactured articles; while of this fraction, fully half consists of silks and woollen fabrics, which we have always been in the habit of importing. In contrast to this, 92 per cent, of our exports consist of manufactured goods, and only 8 per cent, of raw produce, of which latter two-thirds consist of coal, coke, and pig iron.

Let us now examine our position with regard to the six countries to which our exports in 1877 were £62,000,000 less than in 1872. Is this serious diminution the result of foreign competition, and have we been supplanted in those six countries by our rivals? Not at all! The real causes are obvious. In the case of the United States, it is increased import duties that have excluded our goods from their markets. It is protective tariffs that have curtailed both their and our foreign trade. If the Americans prefer a policy of commercial isolation, that is not our fault, and it proves anything but our inferiority in the art of cheap production. Our exports to Germany (direct and through Holland) received a sudden and enormous expansion in 1872 and 1873, chiefly owing, no doubt, to the increased spending power of that country resulting from the French war indemnity, but the trade soon subsided to its previous level. In the case of Egypt and the three South American republics, they have bought less from us recently because we have lent them less. In 1872 we sold them large quantities because they paid us out of our loans to them. In 1877 we sold them much less because they then had to pay us out of their own resources. As to Russia, the deficiency is slight, and is accounted for by the state of her political relations with us.

It may perhaps be said that the two years that we have selected for comparison, viz., 1872 and 1877, might happen to furnish data exceptionally favourable to our views. We have therefore taken the average of the three years, 1871 to 1873, to compare with the average of three later years, 1875 to 1877, and we find that they yield the same result. Here are the figures:—

Exports, in Millions and Tenths of Millions.

The decline in the exports to Holland arises chiefly from a diminution in the sendings to Germany in transit through Holland.