Chapter XXII.

Summing Up.

We have in the course of these pages endeavoured, among other things, to show:—

1.	That balances due by one country to another are paid, directly or indirectly, in commodities, and not in specie, unless occasionally and to an insignificant extent.
2.	That for every export of goods, except what is sent to pay a previous debt, or to create a new one, there must be an import of goods to the same amount, and vice versâ. So that to restrict imports is, to that extent, to restrict exports, and to diminish foreign trade.
3.	That free trade is the only system under which capital and labour find their most natural and permanently profitable fields for employment.
4.	That the protective system transfers capital and labour from natural and profitable into forced and unprofitable employments, artificially raises the cost of commodities, forfeits the advantages accruing from the division of labour, reduces foreign trade, and tends to isolate a country from the rest of the world.
5.	That the reciprocity or retaliatory system, were it practicable (and it is not), would be fraught with all the evils of protection, of which it is the reproduction under a different name.
6.	That the sudden increase of our exports in 1871 and 1872 was caused by the exceptionally large sums which, at that period, we sent abroad by way of loans to divers foreign countries and of other foreign investments; which sums were transmitted, not in specie, but in commodities.
7.	That on the cessation of that exceptional state of things, a reaction took place, and the amount of our foreign trade has been decreasing since 1874.
8.	That while the money value of our foreign trade (combined exports and imports) has declined, the bulk or volume of the goods which we have sent out and received in, has undergone no diminution.page 95
9.	That owing partly to reaction, and partly to diminished gold production, a general fall has taken place in the average price of all commodities, and it has been by far the heaviest on those articles which we import from abroad. The present average price of all British produce is 8 per cent., and the present average price of all foreign produce is 32 per cent., below the average price of the same two classes of commodities respectively in the year 1861.
10.	That the wages of labour have also fallen, but not in full proportion to the fall that has taken place in prices generally, so that the burden of depression has chiefly weighed on the mercantile and middle classes.
11.	That the depression in trade was not confined to England, but was universal, and has been severest in the most protected countries, so that it cannot be ascribed to free trade.
12.	That we have not suffered from foreign rivalry in neutral markets.
13.	That the increased excess of our imports over our exports is the sign of our wealth, not of our decay; and that all prosperous nations import more than they export; while, on the other hand, an excess of exports is a sure sign of indebtedness.
14.	That our recent abstention from foreign investments has produced a larger accumulation in the country of unemployed floating and loanable capital than has perhaps ever been known.

The conclusion to which all these considerations lead us is, that just as the free trade system enabled us to take the utmost possible advantage of the period of prosperity, so it has enabled us to meet the phase of reaction and adversity with less strain on our resources than any of the protected countries; and that any change in, or modification of, our commercial policy would prove in the highest degree inexpedient and disastrous. The present combination of low prices and of abundant capital warrant the expectation that before long there will be a movement towards higher values. As soon as this occurs, business operations will become more profitable, capital will regain confidence and circulate page 96 more freely, commerce will resume its activity, and we shall enter on a fresh cycle of prosperous years. Such periodical oscillations in trade are of never-failing recurrence, and we ought by this time to be prepared for them. But instead of this, when business is brisk and flourishing, we act as if high prices and large profits were the normal condition of trade; while, when prices fall and profits vanish and the "depression" comes on, we sink into gloom and despair, fancy that things never were so bad before, that "this time" trade is past all recovery, and we clutch at any quack nostrum as a "kill or cure" remedy. This same thing has happened every ten years on an average since the commencement of the century, and there is no merchant with some experience who does not remember within his own time two or three "crises," each of them being "the worst that ever before occurred." These alternations are, in regard to their frequency, duration, and intensity, subject to certain laws which it would be useful to study and bear in mind. It may safely be predicted, for instance, that a cycle of prosperous years will be of shorter or longer duration according to the steadiness or the precipitancy of the upward movement. The swifter the pace at which, and the greater the height to which, prices are driven up, the greater will be the corresponding reaction, and the sooner it will occur. The more moderate the rate of progress, the longer will it be before we experience a check, and the less violent will that be when it does come.

But, no doubt, the lessons which we are thus taught will soon be forgotten or unheeded, and when the time of excitement comes, each one of us will push and press on with all his might until prices reach their climax, when reaction will ensue, and another period will supervene of loss, depression, and gloom, similar to that through which we have been passing, and from which we hope and believe that we shall before long emerge.