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The Pamphlet Collection of Sir Robert Stout: Volume 30

Trade Depression, Recent and Present

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Trade Depression,

Recent and Present.

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London, Paris, New York & Melbourne. Cassell & Company, Limited:

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On Trade Depression.

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Chapter I.

The Question Stated and its Solution Set Forth.

What are the causes of the recent and existing depression in certain branches of our trade?

A very natural and very important question! Various answers have been given to it, but it appears to us that the most simple, the most obvious, and by far the most conclusive has not yet been put forward. No doubt that, of the various causes assigned, most of them have concurred, in a certain degree, to produce the result. But they do not nearly cover all the ground, and some far more efficient factor than any hitherto adduced must be sought for.

During the year 1884 there occurred a vast and sudden falling off in our foreign trade in both Imports and Exports. The average Imports and Exports for the four years 1880 to 1883 were £710,293,000,* while in 1884 these sank to £685,147,000, exhibiting a sudden collapse of £25,146,000, of which, as we shall afterwards show, £21,622,000 occurred


Our Imports and Exports were in 1880 £697,615,000
Our Imports and Exports were in 1881 £693,856,000
Our Imports and Exports were in 1882 £718,662,000
Our Imports and Exports were in 1883 £731,041,000
Which divided by 4 gives an average of £710,293,000
Deducting our Imports and Exports in 1884 £685,147,000
Leaves deficiency in 1884 £25,146,000
page 6 in the Imports, and £3,525,000 in the Exports. Note that there had been no gradual decline in our foreign trade since 1880, culminating in 1884. On the contrary, the amount of our foreign trade in 1883 had been greater (viz., £731,041,000) than in any of the previous years, and therefore, the deficiency of 1884 in our Imports and Exports might have been reckoned as much larger (viz., £45,894,000), if we had confined ourselves to a comparison between the years 1883 and 1884. We deem it, however, fairer and safer to take as a standard for comparison the average Imports and Exports of the four years preceding 1884.

How then stand the facts? Thus: that during the year 1884 there occurred a sudden drop in our Imports and Exports of no less than twenty-five millions sterling in value. It will, we think, be readily conceded that in explaining the cause of this falling-off in our foreign trade we are, in fact, explaining the main, if not the sole, cause of the trade depression into which we are inquiring. That cause is not far to seek. The great diminution in 1884 of our Imports, and consequently of our Exports, was the natural and necessary result of the improved and fairly good harvest with which this country was favoured in that year. No doubt, at first glance, and by some persons, this statement will be regarded as a paradox. "What!" it will be said, "are we expected to believe that our trade was bad because our harvest was good? That the blessing of comparative abundance has been a source of evil and distress?" Our reply is that the distress is only partial, and will be temporary, whereas the benefits of a good harvest are a gratuitous boon to the entire community, and moreover that, even if it were not so, our statement will be found, on examination, to be perfectly and logically accurate.

The connection between the good harvest of last year and the simultaneous dimunition of our foreign trade is, we submit, susceptible of easy and conclusive proof. Let us see by how much, in money value, the cereal products raised in the United Kingdom in 1884 exceeded those of the preceding years. page 7 That excess is easily measured by ascertaining how much less of foreign cereal products we imported in 1884 than we had imported in previous years. True that we always do, and shall, require a considerable supply from abroad of wheat and other cereals, but our imports are regulated by our requirements, and the more plentiful our own harvests, the smaller the deficiency that we have to make good by importing. Now the amount of our cereal importations in 1884 was £47,563,000, being £15,719,000 less than the average annual amount of the four preceding years. Here are the figures, taken from the Board of Trade returns, which clearly demonstrate the fact:—
The value of Wheat, Barley, Oats, Peas, Beans, Maize, Flour and Meal imported in 1880 was £62,339,000
The value of Wheat, Barley, Oats, Peas, Beans, Maize, Flour and Meal imported in 1881 was £60,557,000
The value of Wheat, Barley, Oats, Peas, Beans, Maize, Flour and Meal imported in 1882 was £63,195,000
The value of Wheat, Barley, Oats, Peas, Beans, Maize, Flour and Meal imported in 1883 was £67,040,000
Which divided by 4 gives an average of £63,282,000
Whereas in 1884 our imports of the same were £47,563,000
Deficiency in our imports of cereals in 1884 £15,719,000*
It thus appears that in 1884 our foreign supplies of cereals fell short of the average of previous years to the extent of 15½ millions of pounds sterling; and to that extent, therefore,

* It is interesting and instructive to observe how faithfully the fluctuations of our imports of cereals are reflected in those of our total foreign trade. Their close connection and correlation could hardly be more forcibly corroborated. If we take the cereal imports and the total foreign trade for the last five years and compare them, we shall find that, reckoning the amounts in millions of pounds sterling, there were

In 1883 Cereals imported 67, total foreign trade 731, in both, the largest.

1882 Cereals imported 63, total foreign trade 719. in both, the 2nd largest.

1880 Cereals imported 62, total foreign trade 698, in both, the 3rd largest.

1881 Cereals imported 61, total foreign trade 694, in both, the 4th largest.

1884 Cereals imported 48, total foreign trade 685, in both, the smallest.

It is well worth noting how simultaneously the amount of our cereal imports and the amount of our aggregate foreign trade have moved up and down in close sympathy with each other.

page 8 we may infer that the home harvests of 1884 had exceeded in yield the harvests of the previous few years. Here, then, arising out of the improved yield of our crops in 1884, we have a sudden curtailment to an enormous amount in the importation of the single article of cereals. The effect of so vast a deviation from the normal average, over our total Imports, total Exports and foreign trade generally, we shall now proceed to trace.

Chapter II.

Diminution of Imports in 1884—its Effects in Diminishing the Amount of our Exports—Buying from the World Compels the World to Buy from us.

So far we have only examined the decrease in our importations of wheat and other cereals during 1884. Let us now proceed to examine how far the total importations of all articles fell short, in the same year, of the average importations of the four preceding years. Here are the data by which that question may be solved:
Our total importations were in 1880 £411,210,000
Our total importations were in 1881 £396,773,000
Our total importations were in 1882 £412,002,000
Our total importations were in 1883 £425,604,000
Which sum divided by 4 gives an average of £411,397,000
Now our total importations in 1884 were £389,775,000
Showing the defalcation in the 1884 imports to be £21,622,000

Thus it appears that our aggregate Imports of all articles during the year 1884 were £21,622,000 short of the average annual Imports of the preceding four years (1880 to 1883). Now, of this defalcation in our total Imports, no less a sum than £15,719,000 arises, as we have shown at p. 7, from page 9 the defalcation in our Imports of cereals alone. As nearly as possible, three-fourths of the entire falling-off in our total Imports is at once accounted for by the falling-off in our Imports of the single article of cereals. That this falling-off in cereal importations "was the natural and necessary result of the improved and fairly good harvest" of 1884, must we think, be readily admitted, and it thus proves itself to have been by far the most potent factor in causing that depression in foreign trade into which we are inquiring.

It now becomes our business to investigate the effects which this sudden diminution in 1884 of our Imports, to the extent of 21½ millions of pounds sterling, must of necessity produce—(1) on the amount of our exports; (2) on the special industries which are connected with, and dependent upon, our foreign trade; and (3) on the general prosperity of the country. We will take these topics seriatim.

1. That the Imports of a country from the world at large are (excepting those sent to pay interest or to make loans) paid for, not in bullion, but by the export of goods to the same amount, has been so frequently shown, and is now so universally established, that it is superfluous here to do more than state the fact On that principle it is clear that a diminution of 21½ millions in the Imports of 1884 must occasion a corresponding decline in the Exports, and that our sendings abroad must be proportionately curtailed. Let us consult the Board of Trade returns, and see how far this anticipation has, in 1884, been realised by the facts. We may remark, however, that if the diminution of Imports were simultaneously accompanied, or immediately followed, by a corresponding diminution of Exports, we might expect that the 21½ millions diminution of Imports in 1884 was at once met by 21½ millions diminution of Exports within the same year. But, as we shall presently show, some interval necessarily elapses before Imports can act on Exports, and although the cause surely produces the effect, yet a few months must intervene before that effect is fully produced. We now proceed to set page 10 forth the figures which show the actual decrease of our Exports in 1884:
Our total Exports amounted in 1880 to £286,405,000
Our total Exports amounted in 1881 to £297,083,000
Our total Exports amounted in 1882 to £306,663,000
Our total Exports amounted in 1883 to £305,437,000
Which sum divided by 4 gives an average of £298,897,000
Our total Exports in 1884 were £295,372,000
Showing a diminution in 1884 of £3,525,000

Thus it will be seen that out of the expected decrease of 21½ millions in the Exports to meet the same amount of decrease in the Imports, only 3½ millions are accounted for in the returns for 1884. For the remaining 18 millions we have to look elsewhere. We ought to find them in the returns for the earlier months of the present year, 1885. And true enough, on consulting those returns, we see that, whereas the Exports from the United Kingdom for the first six months (January to June) of 1884, had been £149,440,000, the Exports for the same period in 1885 were only £133,474,000; showing a decrease in our Exports during the first six months of the present year of no less than, £15,966,000. If to these 16 millions we add the 3½ millions decrease realised in 1884, we find that out of the 21½ millions decrease which we had looked for, 19½ millions are already accounted for up to this date (July, 1885). The remaining 2 millions, plus any additional diminution in Imports that may occur in 1885, will have to be met by a corresponding decrease in Exports during the latter six months of that year. If, however, our cereal requirements should prove to be about the same this year as last, we may expect that the decrease in Imports will soon be checked, and that, in sympathy with them after a certain interval, Exports will begin to rise from the low level to which they had been reduced. We shall have enjoyed the notable page 11 benefit of a large increase in our home produce, and have passed through the temporary evil arising from the diminished foreign trade which it occasioned.

As we have already briefly stated, the influence of diminished Imports in proportionately diminishing Exports does not make itself felt immediately. The reason is obvious. The early indications of a probable good harvest in England make corn-merchants pause in their operations; and by the time that those indications are verified, and that it becomes clear that our grain requirements will fall short of those of previous years, the importations have already been checked, and have, to a great extent, adapted themselves to the contracted scale of our wants. On the other hand, it is months before Exports feel the effects, and they meanwhile go merrily on. After a little time, however, as our importations have diminished, bills on England become scarcer. A sensible rise in the rates of exchange (that unerring commercial thermometer) gives the first note of warning. The foreign buyer has to pay for the British goods which he has imported, but from the scarcity of bills and consequent adverse rate of exchange, he has to pay more of his native coins per pound sterling than he had calculated upon. This raises the cost to him of his British goods to such a point that he makes no profit, or possibly loses money, by them, and he accordingly either stops or curtails his operations. Thus do our Exports get checked and diminished until the time comes when the equilibrium between the goods imported by us and the goods exported by us is restored. Then the rates of exchange return to their average parity, and operations in English goods are resumed under normal conditions.

We hope to be pardoned if we parenthetically remark that it is Imports which govern Exports. A country can, at will, buy from the world at large to the extent of its wants or desires, for there are always sellers. But it can only with certainty export to the extent of its purchases, for buyers are not always in the humour. It depends on yourselves how page 12 much you will buy from the world at large; and, to that extent, it depends on yourselves how much they shall buy from you. Every fresh purchase you make compels a fresh purchase from you of the same value. However averse the outer world may be to buying from you, and whatever barriers they may interpose with that object, you at once break through them by the simple process of buying from them. It is only by refusing to sell to you that they can escape buying from you. If they once consent to sell to you, they are utterly helpless; the transaction must of necessity be completed by their making a purchase from you to the same amount. As an old French economist pithily expresses it "Acheter c'est vendre; vendre c'est acheter."

In treating of the foreign trade of a country, it is absurdly fallacious and misleading to look only at its separate dealings with any single other country. We must take its aggregate dealings with the world at large. We must consider not its isolated commercial relations with some particular nation, but the totality of its commercial relations with all nations. What kind of a balance sheet would that be deemed in which the trader omitted his accounts with most of his customers, and only exhibited his accounts with one or two of them? What matters it to you which it is of the hundred different countries of the earth that you may buy from or sell to? For your purpose it is sufficient to know that, by buying goods yourselves from some or all of them, you can irresistibly compel some or all of them to buy goods from you to the same amount in return, whether the sellers and buyers be the same individually or not.

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Chapter III.

Diminution of Foreign Trade in 1884—its Effects on the Special Industries Connected with Foreign Trade.

2. We have now to consider the effect of diminished Imports and Exports on those special industries which are connected with, or dependent upon, foreign trade. A moment's reflection makes it plain that the shipping interest must necessarily be the chief and the earliest sufferers. Here are, in the course of a few months, some 43 millions worth of merchandise less to carry to and fro between the United Kingdom and the rest of the world; 21½ millions of Imports less to bring in, and 21½ millions of Exports less to take out. This is an enormous quantity, and must make a big hole in our carrying trade. Let us try to frame a rough and approximate estimate of the number of shiploads which 43 millions worth of merchandise may represent, and of the consequent diminution it must effect in the demand for mercantile shipping. For this purpose we will take as a criterion the easily ascertainable diminution in bulk of our cereal Imports in 1884, and from this calculate the number of cargoes less of grain alone, that must have been brought to the United Kingdom during that year, than the annual average of the preceding four years. In a foot-note * page 14 will be found the data and the calculations from which we collect that, of cereals alone, we had, in 1884, imported into the United Kingdom 1,315 shiploads less than the average of previous years. Now, these 1,315 shiploads only represent £15,700,000 out of the total £43,000,000 short imported and exported in 1884. If we take the remaining £27,300,000 of miscellaneous goods, to represent a proportionate number of shiploads, we shall arrive at an additional number of 2,286, making, with the 1,315, a total of 3,601 shiploads less carried during the year 1884 than during previous years.

Something, however, will have to be deducted from that total as affecting British shipowners, because foreign ships have some share (though but a small one) in the ocean-carrying trade, and some share, proportionately small, of the depression would fall upon them.

It is evident that, after making all reasonable allowances, our shipowners have had from 2,500 to 3,000 fewer cargoes to carry during 1884 than the average of previous years. To what extent so sudden a collapse must have injuriously affected shipowners may be vaguely imagined, but can never be accurately assessed. A number of their vessels must have remained totally unemployed, and have been laid up in expensive idleness. But this disaster forms only a part of the losses which accrued to the shipowners. A still greater loss to them resulted from the very reduced rates of freight to which they were compelled to submit. The demand for ships having largely fallen off, the keenest competition ensued among owners to secure what freights there might be offering. One would bid against the other until the rates were cut down to the lowest endurable point. Owners are naturally very reluctant to incur the great loss and inconvenience of laying up their ships, and keeping them like unemployed horses in a stable, that "eat their heads off." In preference, they in many instances accepted unremunerative and even losing freights. How much less money was actually received for freight by shipowners in 1884, as compared with 1883, who can tell? page 15 But it is certain that, what with some of their ships earning no money at all, and the rest barely paying their expenses, their cash receipts last year must have shown a lamentable falling off from those of previous years. We think that it has now been made quite clear why, and in what way, shipowners were heavy sufferers by the suddenly diminished foreign trade of 1884.

Among other cognate interests which also suffered extensively from the same causes, the ship-builders stand prominently forward. For several years previous to 1884, our shipbuilding yards, in England and Scotland, from the Thames to the Clyde, had enjoyed unprecedented prosperity. They could hardly supply ships fast enough to meet the demand, and good profits and good wages made both masters and men happy. But when, from causes which we have already explained, early in 1884, first Imports and then Exports suffered a great decline, the demand for ocean conveyance declined in similar proportion. Ships became redundant, orders for building new ones ceased to flow in, and the yards, which had lately presented such a busy scene of industry, became comparatively silent and desolate. Heavy losses fell on the master-builders which, however, their solid wealth from previous accumulations enabled them to bear, while the working shipwrights, the wage receivers, thrown out of employment by no fault of their own, underwent severe distress during the gradual displacement of their labour into other channels of employment.

As a natural consequence, the diminished construction of ships (in which the consumption of iron enters so largely) occasioned a proportionate falling off in the demand for that metal, so that (other concurrent causes assisting) the wave of depression extended to the iron trade, and then spread to the closely connected coal producing industries and others which they influence more or less directly.

Moreover, it would necessarily follow from there being between 2,500 and 3,000 fewer cargoes to load and unload at our page 16 chief ports, London, Liverpool, Glasgow, &c., that there would be less demand for persons living by that kind of labour, so that a number of dock-labourers of all sorts would be thrown out of work, and. would have to endure much privation till reabsorbed into other openings for their labour.

We have now enumerated, not indeed all, but the chief industries which might, a priori, have been expected to sutler by the diminished Imports and Exports, three-fourths of which diminution arose directly, and much of the remainder indirectly, from the increased produce of our harvest in 1884. Let us now see how these forecasts tally with the actual facts as they occurred. On examination we find that the industries which really did most suffer during the "recent and present "depression are precisely those which we have enumerated above. The loudest and most justifiable complaints of distress have proceeded from the ship-owning interest, the ship builders and their artisans, the iron and coal industries, the dock-labourers, and a few other classes more or less dependent on foreign trade. From the great manufacturing districts there came but few complaints. The agricultural classes were better off than usual. The retail traders throughout the country, a large and sensitive class, were in a flourishing state; the miscellaneous labour-sellers, with the few exceptions to which we have referred, were well employed and well paid; and the general prosperity of the country was unimpaired. How it came to pass that so large a diminution, within so small a space of time, as 43 millions in our foreign trade, should have produced so little derangement in our internal economy as it did, will form the subject of our next chapter.

* In the Board of Trade returns for December, 1884, we find that the total quantity (in weight) of cereals (wheat, flour, maize, barley, &c.) imported during the year 1884 was 118,407,000 cwts., and that the value thereof was £47,563,000. On this basis we find, by the rule of three, that £15,700,000 (the amount deficient in 1884 from previous average) represents 39,400,000 cwts. of cereals—equivalent to 1,970,000 tons. There would therefore be this enormous weight less to transport from foreign countries to the ports of the United Kingdom. How many shiploads does that represent? Taking an average cargo of grain to be 7,000 qrs., and the average weight per quarter of the grain to be 480 lbs., we find that the weight of each cargo will be 1,500 tons. Now, if we divide the above 1,970,000 tons by 1,500 we find that in 1884 we imported, of cereals, 1,315 cargoes, of 7,000 qrs. each, fewer than we had annually imported during the four preceding years.

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Chapter IV.

Diminution in our Foreign Trade Amply Made up by the Good Harvest of 1884 and the Consequent Expansion of our Home Trade—Effects of this Substitution on the General Prosperity of the Country.

3. We have now to consider the effects which the good harvest of 1884, and the consequent decline, in that and the present year, of our foreign trade, produced on the general condition of the country. It will easily be made clear that the partial evil which the improved harvest caused by diminishing foreign trade, was more than counterbalanced by another and far happier effect of the same cause, viz., an active and prosperous home trade. The £15,700,000 worth of cereals, which we in 1884 raised at home instead of importing from abroad, were still exchanged (as they would have been in the latter case) for various commodities, the produce of British labour and capital, but with this difference: that the exchange now took place between the British manufacturers and the British agriculturists at home, instead of taking place between the British manufacturers and the agriculturists of America, India, Russia, &c. That large sum chiefly went to improve the condition and to increase the purchasing power of the agricultural classes, while the manufacturing classes obtained a home market for their wares, to at least the same extent as they would if those wares had been sent abroad to pay the foreigner for his grain, instead of remaining at home to supply the increased demand from the agriculturists. This sum of £15,700,000 was, in both cases, spent in paying British wages of labour and profits of capital, with the great additional advantage of its, at the same time, relieving the burdens and contributing to the comforts of the land-cultivators, on whom a succession of bad harvests had pressed so heavily. page 18 Moreover, to manufacturers and dealers it afforded the advantage of selling at home what they otherwise would have sold abroad. To them the home is always preferable to the foreign trade, because, in the former, transactions are more rapidly closed, and the risks from fluctuating markets, bad debts, political complications, &c., are very much less. Thus it is clear that, on the whole, the good harvest of 1884 has proved a blessing all round, as indeed all increase of production from the same expenditure of capital and labour must ever prove, in every branch of wealth-creation.

Of course there were exceptions to this general state of well-being. All improvements, while beneficial to the entire community, must of necessity cause to some, a displacement of labour and capital, and therefore entail partial loss and temporary suffering. We have already pointed out the classes which have mainly been affected by the abrupt falling-off in our foreign trade. Ship-owners, ship-builders, iron-masters, &c., and the artisans and labourers connected with these, have, in the present conjuncture, had to bear the chief brunt. To these we might here properly add another class whose case is less pressing, but is not less pressed, whose losses are comparatively much smaller, but whose impatience of them are quite as great. We mean those foreign merchants, brokers, and agents through whom Imports and Exports percolate, and those bankers, money dealers, &c., whose business is curtailed by the curtailment of foreign trade. These are mostly well-to-do persons who can, without much inconvenience, await the return of the tide, which has, for the moment, receded from them. It is, however, from the capitalists and extensive traders who largely constitute the upper middling class, that the cry of "bad times" most loudly proceeds. The comparative prosperity of the less wealthy classes is hardly a consolation to them for the slower accumulation of their own wealth.

Thus, then, did there, in 1884, spring out of the soil an addition of £15,700,000 to the wealth of this country, as page 19 compared with the soil's produce during preceding years; and thus were we well able to endure the consequent falling off in our foreign trade. How different would be the effects of diminished Imports and Exports were they caused, not by the bounty of Nature, but by the artificial restraints of man! In the latter case, the good would be eliminated and only the evil would remain An import duty would cause no increase of production from the same amount of labour and capital, but would simply constitute a poll-tax on every bread-eater, that is, on every man, woman, and child in the country, with the result of increasing landlords' rents. Against such a poll-tax innumerable Wat Tylers would arise.

The foregoing considerations account for the curious contrasts and apparent anomalies which Mr. Goschen and others have noticed when comparing the collapse of our foreign trade with the simultaneous prosperity of our home trade. In 1883 our total foreign trade (Imports and Exports) was £731,041,000. In 1884 that foreign trade suddenly fell to £685,147,000—a diminution in the course of a few months of no less than £45,894,000! Such a drop as this from one year to another never before occurred in the history of British commerce. Even in 1878, a year of universally great commercial and agricultural prostration, our Imports and Exports only exhibited a decrease from the preceding year 1877, of 35 millions, viz., from £646,000,000 to £611,000,000. In proportion, then, we might have expected that the prosperity of the country would have received a far ruder check in 1884 than it did in 1878. But such has not been the case. On the contrary, the Income Tax returns show that the profits, both from trade and from agriculture, had increased, the increase being greater, as a percentage, on small than on large incomes. The savings of the people have continued to accumulate; pauperism has declined, and the consuming power of the country has been as great as ever except in the article of alcoholic liquors; and who is there that will repine at that exception? Labour, save in the few and partial page 20 instances that we have pointed out, has been in better demand and has obtained, on the whole, better remuneration than before, while the retail traders of the country have enjoyed special prosperity. When have the masses, the labour-sellers, the pith and marrow of the nation, been so well off? The improvement in their diet, their dress, their education, their habits, their tastes, and their self-respect, must deeply impress those who remember the condition of the same classes some thirty, forty, or fifty years ago.

At first sight it appears difficult to reconcile this general well-being with the fact that its existence was simultaneous with an enormous falling-off in our foreign trade between the years 1883 and 1884. But further reflection shows us that the good harvest of 1884, as it was the direct and chief cause of our diminished foreign trade, so it also was the redeeming circumstance which counteracted the injurious effects of that diminution. Indeed, it not only cured the wound it made, but it also infused fresh strength and vigour into the social frame. True that some few suffered, but, through the impulse given to the home trade, its beneficial effects were widely diffused among the less affluent and more numerous classes of the country.

Chapter V.

Inferences as to the Future—Summing up and General Remarks.

It now remains to inquire what are the inferences as to the future that may be drawn from the facts and reasonings that precede? Of course, the immediate future, as far as this inquiry is concerned, must depend on the nature of the harvests in the United Kingdom during the next two or three seasons. These may prove to be (1) about the same as that of 1884, or (2) inferior to it, and only about equal to the average of those of 1880-1-2-3. Or (3) they may be abundant and in excess of page 21 the harvest of 1884 to the extent, say, of 10 to 15 millions of pounds sterling in value. Let us take each of these hypothetical cases in turn.

And, first, we will assume what is perhaps the most probable of the three suppositions, viz., that the harvests of the United Kingdom for the next three years will be about equal on the average to that of 1884. If that be so, we shall, in the course of 1885, require an importation of cereals, about equal to that which we required in 1884, and therefore, from that source, there will be no further decline in our importations. We shall want as much and take as much grain from abroad as in 1884, but no more. There is, on the other hand, a certain natural and normal annual increase in our Imports, corresponding to our natural and normal annual increase in population and wealth, as well as to our growing productive and consumptive power. We may, therefore, expect that instead of Imports continuing to decrease, they will begin to increase. As a natural consequence, we may in due time look for a proportionate expansion in our Exports, but not quite so quickly. For, as we have before shown at p. 11, our Exports, being, not immediately, but only after a certain interval, influenced by the course of our Imports, the former have not up to this time (July, 1885) suffered a diminution corresponding to that of the Imports, and, therefore, some further diminution in them must be looked for. To sum up, we may infer that, under the hypothesis that the harvest of 1885 will be about equal to that of 1884, there will in the latter part of this year be a gradual increase, month by month, in our Imports, accompanied, for some months, by a decrease in our Exports, but followed after that time by a proportionate increase in them. In other words, we may anticipate, under the given hypothesis, that for the next few months, Imports will gradually increase, while Exports will diminish. But that the turning-point for Exports will shortly have been reached, and after that, not only will the Imports continue to increase, but the Exports will also follow that increase in due proportion.

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Secondly, let us assume that the harvest of 1885, instead of being equal to that of 1884, shall prove to be only equal to the average of the years 1880 to 1883. It is clear that we shall then have to import cereals of the annual value of about £15,700,000 more than we imported in 1884, and as a necessary consequence, there will be a renewed and sudden demand for shipping to convey to our shores additional cereals to that amount from abroad. Ship-owning, ship-building, and all the other interests specially connected with foreign trade, will receive a fresh impetus, and revive into fresh activity, in which, with close sympathy, our Export trade will participate. On the other hand, our home trade will proportionately suffer from the deficient productiveness of our agricultural labour and capital. There will be more interchanges between ourselves and the world at large, and fewer between the various members of bur own community.

And thirdly, let us take the supposed case of the harvests of 1885 or 1886 proving so abundant that we shall require still smaller importations of cereals than we did in 1884, say from 10 to 15 millions of pounds sterling in value less. Under those circumstances, our foreign trade would again fall off by that amount, less any normal increase which might meanwhile have accrued. Shipping, &c., and the industrial interests cognate thereto, would again suffer temporary depression, while the home trade proportionately improved, and the fresh addition to our national wealth would conduce to the welfare of the people and the general prosperity of the country.

Pity, no doubt, that the blessings of an abundant harvest should not prove an unalloyed good, and that while contributing to the general benefit, it should bring with it transient evil to certain classes. But every change in human affairs, however much for the better it may be, has for immediate effect to transfer demand away from certain forms of labour and capital on to some other newer forms thereof. Thus, all scientific discoveries and labour-saving inventions, while productive of page 23 the greatest permanent benefit to mankind, temporarily displace labour and capital from some of their accustomed channels. They occasion local and temporary suffering until the displaced labour and capital get re-absorbed into the fresh and more fructifying channels which these discoveries and inventions open to them. Instances of such displacement are constantly occurring, and must ever recur unless means were found of arresting all change and of, as it were, stereotyping the existing form of human affairs. A consummation as devoutly to be deprecated, as it is impossible of attainment; for, while it would prevent decadence, it would also stop all improvement, and would condemn mankind to final acquiescence in its present incomplete and unsatisfactory status.

It may be observed that throughout these pages we have taken as basis of comparison the value and not the volume of our Imports and Exports. We fully recognise the action on prices of the varying relations between merchandise, &c., the represented, and gold, the representative; whether those variations arise from the constantly increased volume of the former, or from the falling-off in the production of the latter, or from both combined. But that action is slow, uniform, and gradual, and totally inadequate to account for the sudden and abrupt catastrophe of 1884. It is like the irresistible, but silent and imperceptible, advance of the glacier which has no causal connection with the sudden fall of the avalanche. The gradual declension of prices had not prevented the gradual advance of our Imports and Exports to £731,000,000 in 1883, the highest point that they ever reached. How then could it possibly cause the sudden collapse to £685,000,000 in 1884?

We have now completed to the best of our ability the task which we had undertaken. If, as we hope, we have succeeded in pointing out the real causes of the "recent and present" depression of trade, we may then venture to remark how superfluous it must be to appoint Royal Commissions or Parliamentary Committees to search for causes that are already ascertained. It is like employing expensive, cumbersome, and page 24 slow-moving machinery to dig deep into the soil in order to get at objects that lie on the surface.

In obedience to the inevitable law of correlation between Imports and Exports, an immense national blessing has caused some partial and transient trade disturbances. But if, as maybe hoped, we shall for a cycle of some few years, be favoured with fair average harvests, not only will our home trade flourish, but our foreign trade will gradually, through the normal and legitimate growth that it will derive from our ever-growing population, wealth and industry, speedily rally from the low point to which it will have been reduced. In this way, while the agricultural classes will be freed from the depression which successive bad harvests had inflicted on them, our Imports and Exports will also, year after year, expand; not, let us hope, by "leaps and bounds" swiftly leading to ruinous reaction, but in that steadily progressive course which is the straightest, surest, and safest road to national prosperity.

Forest Hill, S.E.