The Pamphlet Collection of Sir Robert Stout: Volume 51
Chapter IX. — What England is to do if she be the Only Nation that Adopts Free Trade
What England is to do if she be the Only Nation that Adopts Free Trade.
It has sometimes been asked, "Of what avail is the adoption of free trade to a country if every other country adheres to the protective system? What is a single free-trading nation like Great Britain to do when every other nation is tightening the bonds of restriction, and isolating itself as much as it can from the rest of the world? What is to become of our foreign trade if all other countries resolve on having as few dealings as possible with each other and, as a necessary consequence, with us?" In the first place, let us observe that this question must proceed from a free trader, and must pre-suppose that the curtailment of foreign trade is an evil. For if it were not so, and if the querist deemed commercial isolation to be an advantage, what room has he for complaint if foreign nations, by carrying the protective system out in its integrity, should force upon us the blessings of isolation? If it really be the final object of sound commercial policy that each country shall supply its own wants (far da sè) and be independent of the outer world, then it must be absurd for us to hanker after foreign trade. Why should we repine at protection indirectly producing the same effects on us as it directly does on its own votaries? If those effects are beneficial to them they must be so to us. It is evident then that the querist is a free trader, only he is scared and shaken by the unanimity with which free trade has so far been scouted by foreign nations. True that all scientific inquirers are in favour of it, but the "still, small voice" of science is drowned in the loud clamour of the interested, while the people not understanding the question are silent and the rulers side with the active and energetic.
That protectionist doctrines and policy do prevail in almost all countries but England, and among the people as page 32 well as among the governing classes, is very true and somewhat strange. Not strange, perhaps, among the people, to whom the old cries, such as, "Keep the balance of trade in your favour"—"Sell much, buy little"—"Do not be dependent on foreigners"—and similar fallacies in the shape of aphorisms have been handed down traditionally as the condensed wisdom of their ancestors. But certainly strange among the governing classes, whose business and duty it is to study and make themselves masters of a subject of such vital importance to the people whose destinies they rule. On the question of the truth or falsity of free trade principles, depends the policy which involves the greater or lesser well-being of many millions of human beings. The statesman who, in his fiscal measures, acts on the protective principle without first examining with the utmost care and conscientiousness whether it be a true and reliable one, or whether it be (as political economists assure us) a false and misleading one, is utterly unjustifiable. A grave responsibility rests on him if he persists in ignoring or neglecting the warnings of scientific experts who have devoted years to the investigation of the subject, and thus stakes the welfare of a nation on the line of policy which they utterly condemn.
It is a remarkable fact that among the eminent men who have made political economy their special study there is not one who does not uphold free trade and pronounce protection to be a disastrous error. In the Index to the Catalogue of the London Library there is a list of seventy-seven authors who have written on that science. Most of their works are written in English and French, but several are in German, Italian, and Russian. Here, then, are seventy-seven professional witnesses, men who have investigated the subject thoroughly, and whose opinion must, therefore, carry great weight. What do they say? By a majority of seventy-five to two (the two being eccentrics of no note), they declare that the protective system is a mistake most injurious to the country that adopts it. What a startling contrast! The scientific men (who have studied the subject) recommend one line of policy; the statesmen (who have not) mostly act page 33 on the opposite. For a statesman to justify to his own conscience the adoption of a protective policy, he must have arrived at a moral certainty that all those men who have scientifically analysed that policy, and have unreservedly condemned it, are utterly mistaken. Their verdict, however, will outlive his action, for the conclusions of eminent thinkers are not to be scornfully ignored, and the Napoleonic contempt for Messieurs les idéologues is a thing of the past.
One thing is certain: there can be no compromise between the two systems. Either the one or the other must be irretrievably bad, and it is almost impossible to adopt the one without totally discarding the other. The fiscal measures requisite to carry out protection are in diametrical opposition to those called for by free trade. The question, therefore, as to which is right and which is wrong is too important to be left in abeyance. It ought to be settled at once and for ever. Scientific men have done their part, and have unanimously decided in favour of free trade. It remains for the people and their rulers to institute a thorough examination of the subject, and to give practical effect to their decision. Symptoms of awakened attention to this all-important matter are now apparent in France, Germany, and the United States. In all these countries the resisting power of vested interests is strong; but, on the other hand, those nations abound in cable men and profound thinkers, and error will not live long under the "fierce light" that they will throw upon the question—a question that has unfortunately been rather neglected abroad, as appearing to be, though in reality not being, too abstract and technical for general discussion.
There is a mistaken notion afloat in the minds of some of our neighbours that of two countries that trade together one gets a larger profit than the other, and that England, for instance, in her mercantile transactions with other nations, reaps from them more advantage than do those she trades with. But a little consideration shows that this is impossible. The act of trading, whether by sale, purchase, or barter, is a purely voluntary one, and unless page 34 it suited both parties it would not take place. A man buys because he prefers the article that he purchases to the money which he gives for it, and he sells for the converse reason; but that preference is spontaneous, and he yields to his own wish, not to compulsion. When two persons interchange commodities, each is actuated by the belief and expectation that he reaps a benefit from it. National trade is but the aggregate of individual mercantile operations, just as national profit is only the aggregate of individual gains; and individual traders have so keen a perception of, and so eager a desire for, lucrative traffic, that they may safely be trusted only to do business when they see a fair prospect of gain. And if they gain, what matters it if the parties they deal with gain too? It is of the very essence of commerce that buyers and sellers, importers and exporters, should all be benefited. In fact, were it otherwise, no interchange of commodities would take place at all; for who would buy were it only profitable to sell? And who could sell if there were no buyers? For a government, therefore, to restrain its subjects from buying because the seller is benefited, or from selling because the buyer is benefited, cannot be deemed a rational policy. If England has profited largely by her foreign trade, it has not been because her percentage of gain has been over the average (for it could easily be shown that it has generally been below it), but simply because of, and in proportion to, the enormous dimensions to which it has reached.
Of this enormous expansion of her foreign commerce, England owes the greatest part to her adoption of free trade. The development of her commercial intercourse with the rest of the world since the repeal of the Corn Laws in 1846, and of the Navigation Laws in 1849, is marvellous. In 1840 our combined exports and imports were £172,000,000; in 1878 they were £611,000,000. True that in most countries some increase of foreign trade has taken place within the same period, but in many cases it has only been slight, and in no instance has it progressed in anything like the same ratio. It is open to all nations to obtain similar results by page 35 the adoption of the same commercial policy. That free trade causes an increase of imports is admitted by its opponents, and, indeed, forms the very ground of their complaint, and since increased exports follow as a necessary consequence, there must ensure a proportionate development of foreign trade.
And that all nations will sooner or later adopt the free trade system there is not, we think, the slightest room for doubt. How slow the world is in recognising and acting upon scientific truths there is many a precedent to show. Almost every improvement has had to make its way through a long period of neglect, of misconception, of prejudice, and, where "old interests" were encroached upon, of positive and obstinate resistance. A theory may be slighted, misrepresented, pooh-poohed, and even persecuted for a time, but if it possesses the vitality of truth, the day will come when it will pierce through all opposition, and triumph in universal recognition. So will it be with free trade. It has become a scientific truth, and has gone through the ordeal of the most critical examination. All who have seriously studied it have become converts. It is neglected, not confuted. It is as a policy, not as a theory, that it has opponents. This discrepancy, however, cannot long prevail. Practice has a slow but steady tendency to conform to principle. The mass of the people do not yet clearly see how injuriously they are affected by a protective policy, because the tax which it inflicts on them is paid indirectly, and as it were imperceptibly, in the shape of the enhanced prices that they have to give for the protected articles. If that tax were collected from them directly and avowedly, their eyes would quickly be opened. They would begin to inquire why they should be asked to subscribe so much a year in order that A B & Co., and C D & Co., should be enabled to make money out of a losing business. And when the process of inquiry is once entered on, discussion and analysis will lay bare the truth, and a general reaction will take place in favour of free trade.
Meanwhile, all that England needs to do is to pursue her way unmoved, trade with other nations as much as they will page 36 let her, be ready to multiply dealings with them when they are ready, and open up new markets when opportunities offer. As to trying to force our intercourse upon others by raising our tariffs against them, we have already shown that all such retaliatory measures are much worse than useless, and have for effect merely to willfully abridge our own foreign trade, in order to spite those who refuse to increase theirs.