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The Pamphlet Collection of Sir Robert Stout: Volume 51

Chapter XX. — The Depression in Trade not Confined to England, But Prevalent Everywhere

Chapter XX.

The Depression in Trade not Confined to England, But Prevalent Everywhere.

If, as some assert, free trade be the main cause of the depression in trade that has prevailed in England for the last three or four years, it would follow that those countries that lived under the protective system should, by way of contrast, exhibit great commercial activity, and be revelling in prosperity. If it be from the unwholesome influence of free trade that our commerce is suffering, the commerce of those countries that are free from that influence ought to be healthy and vigorous. But this is far from being the case. The trade of the rest of the world is mostly in a more depressed state than it is here. From every country on the continent of Europe there arise loud cries of distress both from the employers and the sellers of labour; and the shield of protection hangs so uneasily on them that they are asking for it to be shifted, either higher or lower, they hardly know which. As to the United States of America, page 88 the most highly protected country in the world, the condition of the trading and industrial classes is, in spite of their access to abundant, fertile, and cheap land, worse than it is in Europe. Of this conclusive proofs are at hand. In the two years 1872 and 1873, at the highest point of our commercial inflation, when labour was both scarce and dear, 328,000 persons emigrated from the United Kingdom to the United States of America. In 1876 and 1877, when trade here was greatly depressed, the number of emigrants had dwindled down to 54,000 and 45,000 respectively. Indeed, during the latter years, nearly as many returned to England from the United States as went there. Surely the great fall in wages here in 1876 and 1877 ought to have stimulated our working men to leave us for America in very much larger numbers than in 1872 and 1873 when they were getting ample wages, and labour was in great demand. Instead of which, quite the contrary has happened, and emigration has almost come to a stop. How was it possible for this to occur if the protective system was working beneficially for the United States, while free trade was working detrimentally for England? If this should meet the eye of some working man yearning after protection, we beg that he will ponder over that question. The fact is, that while industrial prosperity had declined in England, it had, in spite of all the protection lavished upon it, declined in a far greater degree in the United States. Of this, the working classes here, deeply interested in ascertaining the value of labour in different labour-markets, became so well aware, that they preferred moderately low wages here to idleness or starvation wages in the United States. It is clear, therefore, that free trade cannot be accused of causing a state of things which exists in an aggravated form in countries where the contrary system prevails.

As an instance (and it is an important one) of the comparative results of free trade in England and of protection in the United States, let us look at the relative success of each in securing a share in the carrying trade of the world—a prize worth contending for. Up to 1849, Great Britain "protected" her mercantile navy by the celebrated Naviga- page 89 tion Laws, which created almost a monopoly of our trade for our own merchantmen. In that year we repealed those laws, and boldly threw our trade open to universal competition. Of course, the total downfall of our mercantile navy was confidently predicted by the protectionist party, but their fears were not realised. Instead of decadence came development; our mercantile marine became more pre-eminent than ever; we have become the carriers for the world, and our flag waves in every port where any trade exists at all. This was the effect of discarding protection.

Now let us look at the working of the opposite system (protection) on the carrying trade of the United States. Previously to 1860 the American mercantile marine competed stoutly with our own as carriers of merchandise from one part of the world to another, and they obtained a considerable share of that lucrative employment for capital and labour. Nearly three-fourths of the goods that were sent from, or brought to, their own shores were conveyed in United States vessels, and the Stars and Stripes were constantly found alongside the Union Jack in the principal trading ports of the world. The unfortunate Civil War between North and South put a temporary stop to this competition, for with the characteristic spirit of the Anglo-Saxon race, all the energies of the American people were concentrated on that fierce struggle. But after the close of the war there was apparently nothing to prevent the American shipowners from resuming their rank among the mercantile navies of the world. One thing, however, had occurred meanwhile which destroyed all their chances of success. The protective system had assumed formidable dimensions. The ruling party carried it out to an unprecedented extent, and by the imposition of excessive import duties shut out cheap foreign goods, to be replaced by dear native ones. Prices were raised thereby to such a point that it became no longer possible for America to construct and equip merchant ships (whether sailers or steamers) on terms that would allow the owners to compete with British merchantmen, and the latter have accordingly had the carrying trade almost to themselves ever since. The page 90 United States, nevertheless, possess a large and very fine mercantile navy, but its operations are in great measure restricted to their extensive coasting and internal trade. Owing to her immense sea-board bathed by [two vast oceans, the Atlantic and the Pacific—to the noble rivers that afford navigable access to the very heart of the country—to the great expanse of her lakes, or rather inland seas—owing, above all, to the free trade system that prevails between state and state, and to the skill and enterprise with which it is utilised in the extension of trade between one part of the huge continent and the other, a very large tonnage is required to meet that internal demand. But when we come to the external relations of the United States, in which free trade is abolished and replaced by protection, American shipping is so heavily handicapped that it is distanced by some even of the minor states of Europe. From her own ports her own produce is now carried away mostly in foreign bottoms. We have before us a recent number of a publication (Dombusch's "Floating Grain Cargoes List") in which the names and nationalities are given of 107 vessels which were then loading grain for England at San Francisco, California, and Portland, Oregon. Of these 107 vessels, most of them of large size, 84 were British, 9 were German, 2 were French, and only 12 were American. Without having similarly precise statistics, our inquiries lead us to believe that in the eastern ports of the United States the proportion of foreign tonnage employed in conveying American produce to Europe is equally large. Such are the effects of discarding free trade.

It is curiously typical of the two systems adopted in the two countries respectively, that while we in the United Kingdom take three-fourths of the total American exports, the United States barely take one-twelfth of the total of ours. Some are shocked at the contrast, and think that it means a heavy loss to us. No such thing! How can it be a loss to us to obtain what we require? It would really be a loss if wanting a thing we could not get it, but how we lose by getting it is not easy to understand. If, indeed, it were forced upon us, that might be objectionable; but, no! page 91 our purchases are quite spontaneous. Some people talk as though it were an act of great kindness and condescension on our part to buy largely from the Americans, and that they ought to be very grateful to us for it. This is a delusion. If we import cotton or wheat from the United States, is it out of love and regard for our American cousins? Do we do so in order to confer upon them so great a favour that it entitles us to ask them in return to alter their fiscal system in order to please us? Not a bit of it! We buy their commodities out of selfish motives, because it suits us to do so, and it entitles us to no gratitude whatever. The very men who tell us that we ought to discourage the importation of American produce, encourage it by eating bread made from American wheat and wearing garments made from American cotton. If it is so wrong to buy from Americans because they do not choose to buy from us, why then do we do it? "Oh!" it will be said, "they inundate us with their wheat and maize, and once here what can we do?" Now, it is a great though a common mistake to say that the Americans inundate us with their grain. Far from that being the case, the Americans do not send us as much as one ship-load of grain in the course of the whole year. Many years ago the Americans used to consign a little wheat and maize to Liverpool for sale, but of late years none at all. There are not 100,000 qrs. of grain of all kinds imported in a year for American account. The whole of the large importations into the United Kingdom of American wheat, maize, &c., are purchases made in New York, Baltimore, &c., by English millers and dealers, which are shipped there for English account, at English risks, and paid for by the English buyer before he gets possession of the goods. This is a very different thing from sending the grain over to seek a sale for it here. Nor does it look as if the Americans were foisting their produce on us. They are not pedlars who bring their goods to your door and ask you to buy. They keep an open shop where you may go and make purchases if you choose. If it is such a grand favour to them and such a bad thing for you to buy their grain and their page 92 bacon and their cotton, why do you do it? There is no compulsion. The fact is that you do it for your own sake, not for theirs; and it suits you to buy quite as much as it suits them to sell. As to their being ungrateful because they prefer making their goods themselves at a heavy cost instead of buying them cheaply from you, that is nonsense. It may be a mistaken policy of theirs (and we are sure that it is) to restrict their dealings with the rest of the world when they might expand them threefold or more by adopting free trade; but, after all, it is their own affair, and while you may have a right to feel surprise or regret, you have none to express indignation.