14. England has not prospered under Free Trade, and is living on her former capital.

Both statements are the reverse of true. As to the first, the marvellous expansion of England's prosperity and wealth within the last thirty years is so notorious, and has been so clearly, amply, and conclusively shown by statistical records, that it is mere waste of time to dwell upon it. The great wonder to us is that any man should be found so blind as not to recognise, or so bold as to deny, the fact. As to the second, the only ground on which the statement is based is the permanent excess of our imports over our exports—a fact which, far from proving, effectually disproves the statement that England "is living on her former capital." For, as we have before put it, how can receiving a hundred millions per annum more from abroad than we send away be a cause of impoverishment? Or, rather, how can it be other than a splendid accession to our wealth and capital?

It is said that this excess of imports has been partly paid for by the redemption of American Government bonds, and that consequently the indebtedness of the world to England is to that extent less. Let us examine this assertion. It is quite true that the United States have paid off a portion of their national debt, some of which was held in England; and all honour be to them for it! But how can the creditable liquidation of their debts prove page 41 a source of impoverishment and diminution of capital to us? "They now owe us less," is your feeble moan. Why not? How can it be a loss and a grievance to you that a high-minded debtor should take the earliest opportunity of repaying what he owes you? If it be an injury to you to have solvent debtors, then long live the Turks and Egyptians! As regards them, you will ever be free from the nuisance of having the world's indebtedness to you diminished. But how the repayment of a loan can injure a creditor passes conception. Because our Anglo-Saxon brethren in the other hemisphere have repaid a portion of their national debt, does it follow that the aggregate indebtedness of the world to you (on which you lay such stress) has diminished? Not at all. Both in financial circles and on the Stock Exchange (the best, and indeed the only, authorities on the subject) the verdict is (1) that a larger sum than has been repaid to us by the United States in one form has, during the same period, been invested by us in other American securities, and (2) that, in addition, England has been, year by year, making fresh loans to, and large investments in, other countries (chiefly her own colonies). The result is—and it will relieve the fears of our timorous friends to know it—that the present indebtedness to England of the world at large is greater than it has ever been before. Paying us off is a very rare operation; borrowing from us a very frequent one.

There are also other proofs patent to everyone who looks around him that, far from England's living on her capital, that capital is yearly increasing at a rapid rate; for it is accumulating before his eyes. Every year the fixed capital of the country is, visibly and tangibly, receiving a vast accession by the construction of new dwelling-houses, new ships, new factories, new railways, new harbours, new docks, new warehouses, &c., &c., of which the aggregate value is enormous. Every year vast sums are invested in new commercial enterprises, both at home and abroad. Every year our population increases at the rate of about 1,000 a day; while food, clothing, lodging, &c., are more easily and abundantly supplied to them than ever, for pauperism has decreased 19 per cent, since 1870. And it is in the page 42 face of these facts that we are told that England is living on her capital! Out of what fund, then, if not from our annual savings (excess of income over expenditure), does the money come to provide these enormous annual additions to our national wealth? To sum up, the truth is that Under Free Trade we have Accumulated Wealth with Unprecedented Rapidity, and are Yearly making Very Large Additions to our Capital.

15. England has no doubt prospered, but that prosperity is due, not to Free Trade, but to the gold discoveries in California and Australia.

If, instead of California and Australia, the gold discoveries had been made in Yorkshire or Cornwall, one might more easily understand how England would have specially benefited by them; but that the decay of England should have been arrested by, and the huge fabric of her prosperity have been erected upon, the discovery, thirty years ago, of auriferous deposits in territories thousands of miles distant, is an assertion that bears on the face of it the stamp of absurdity. The effects of that increased production of gold have been much over-rated. They no doubt did enrich the people of America and Australia; just as the discovery of new copper mines or petroleum wells enrich the people who own them. But the profits on gold production are by no means excessive. The labour which it absorbs is abstracted from the production of wealth in another form, and the average net result is not considerable. No doubt, the consequent increase in the world's stock of gold tended to arrest the general fall of prices, and even in some degree to enhance them. It thus, for a short time, gave some stimulus to the trade of the world. But such effects, limited as they were in extent and transitory in duration, were common to all countries. England merely shared that influence with others, and derived from it no special or exceptional advantage. We should hardly have adduced for confutation so weak a plea as the above, but that some Protectionists (not many) have, from some peculiar turn of mind, considered that there was something in it. To sum up, the truth is that England Shared with the Rest of the World the Beneficial Influence, such as it was, of the Gold Discoveries in page 43 California and Australia, but Derived from them no Advantage Special to herself.

16. By threatening to impose import duties on foreign commodities we shall induce foreign countries to reduce, or remove, their present import duties on ours.

To such a threat the foreigner might probably reply to this effect, "You urge Free Trade on us, gentlemen! Good. But do you urge it upon us as being a benefit or an injury? If you really and sincerely deem Free Trade to be a benefit, then you certainly will not carry out your threat of adopting Protection if we decline your proposal. If, on the other hand, you believe it to be an injury, then your proposal is—well, self-answered." We cannot just now find the proper repartee to this. Meanwhile, the Protectionists may exclaim, "It is not fair for foreign nations to saddle our productions with Customs' duties while we admit their free." Why not? When we adopted Free Trade it was with a view to our own interests, and not in order to please or favour foreigners. On what plea, then, can you ask them to discard their own policy (good or bad) in order to please or favour you? We can imagine the foreigner answering you thus, "If you, O Englishmen! prefer Free Trade, be it so. We do not seek to control you. We do not come to you, and threaten that unless you adopt Protection we will lower our import duties and become Free-Traders. That would be casting a stigma on the sincerity of our belief in Protection. Like the fox in the fable, you have cut off your tail, and you now want us also to cut off our own; but the very urgency with which you press us begets the suspicion that you yourselves repent the operation. If you do repent having Free Trade, your remedy is easy—replace your tail—re-enact Protection; but do not be so inconsistent as to threaten us that unless we participate with you in what you assert to be the benefits of Free Trade, you will participate with us in what you assert to be the evils of Protection."

This is all very fine," you will say, "but this Free Trade of ours is one-sided. We buy freely at the world's shop, while the world refuses to buy at ours." Divest yourself of this error. The world buys of you just as much, neither more nor less, as you buy of the world. No trade can pos- page 44 sibly be one-sided. The essence of trade is to give and take. All commerce is barter. If you buy freely from the world, the world is compelled, from the very nature of things, to buy just as freely from you. It cannot help itself. The goods you buy will and must be paid for, directly or indirectly, in the goods you sell. The debts due to or by a country by or to other countries, whether for goods, or loans, or interest, or anything else, are not—never were—and cannot be—paid in gold. But this has been demonstrated so repeatedly and so clearly before that we need not further dwell on it.

What Protection does is, not to sell more to us than we sell to the protected world (for that is impossible), but to prevent each protected nation from selling as much to the rest of the world (by preventing it from buying as much from the rest of the world) as it would do under Free Trade. International exchanges, which constitute foreign commerce, and by which both parties would profit, are discouraged, checked, and curtailed. The loss of that profit is not one sided but two-sided. The protected nation and the rest of the world are both equal losers; and the evil is due to Protection, not to Free Trade. The curtailment of those mutually beneficial international exchanges would become all the greater if we ourselves adopted Protection. By so doing we should no doubt punish the protected countries, but we should punish ourselves in the same degree. We should diminish their foreign commerce, but at the same time diminish our own. Surely the very worst way of increasing international exchanges must be to adopt the very system which we complain of in others as curtailing them.

As to what are the foreign articles that are to be taxed, in the improbable case of the Fair Traders, alias Protectionists, getting their own way, they are by no means agreed among themselves; and no wonder. The people at large decidedly object to have their food taxed, the manufacturing classes decidedly object to have their raw materials taxed, and the general consumers decidedly object to have the miscellaneous articles taxed. What is to be done? Well, as the general consumers are a long- page 45 suffering and patient race, let us suppose that they are sacrificed, and miscellaneous articles of foreign manufacture are to be selected for taxation in order to constrain foreign countries "to reduce or remove their present import duties on our commodities." But here comes another difficulty. The amount of foreign manufactures imported by us from each country is too small to afford the required leverage. They consist of about 2,000 various articles, coming from about fifty different countries, and ranging in amount and importance from silks down to sarsaparilla. They constitute in value about one-tenth of our total importations; or, as some make it, by rating such things as confectionery, and works of art as manufactures, about one-eighth : it matters very little which. The aggregate value of these 2,000 foreign taxable articles is from £40,000,000 to £50,000,000 annually, which amount is cut up into small portions, not only by its distribution among a multiplicity of articles, but by its further subdivision as coming from various countries. The idea of frightening foreign nations into making a change in their fiscal policy by taxing, or threatening to tax, such comparative trifles, is sublimely ridiculous.

The Protectionists also talk of introducing differential duties, to be less on the productions of some countries and more on those of others; and these would occasion fresh subdivisions and complications which it would require an army of Custom-house clerks and revenue officers to detect and apportion. The practical difficulties of assessing and collecting duties on these fragmentary objects of minute taxation would bewilder the greatest financier of the age, Mr. Gladstone himself; and the Fair Traders, alias Protectionists, would have to evolve a Chancellor of the Exchequer of 10-Gladstone-power to cope with them. To sum up, the truth is that To Threaten Foreign Countries that we shall Adopt their Fiscal Policy Unless they Adopt ours, is to leave to the Decision of others whether we are (Rightly or Wrongly) to Adhere to Free Trade or Revert to Protection.