" THE science of political economy as established in this masterpiece,"
observes Mr. Hirst of The Wealth of Nations, "is inextricably bound up with the doctrine of free-trade." It would be difficult for any one who has read even a tithe of the excellent literature on the subject which the Fiscal con- troversy has called forth to dispute the general truth of this observation, and equally difficult for such a reader to retain the opinion that the Free-trade regime, so largely due to the inspiration of that great work, the methods and conclusions of which are curiously applicable to the changed circumstances of the present day, can be safely tampered with. The appeal of those who are in favour of reform or reaction to the change of circumstances, and especially to the example of foreign it (1) Modern Tariff History. By Percy Ashley. With Preface by the Hight Hon. B. B. Haldane, ALP. London : John Murray. [10s. 6d. net. J—(2) The Free Trails Movement. By W. Cunningham, D.D. London C. J. Clay and Sons. [2s. 6d. net.]—(3) Economic Method and Economic Fallacies. By W. W. Carlile. London : Edward Arnold. [10s. 6d. net:J—(4) Adam Smith. By Francis W. Hirst 4' English Men of Letters?' London Macmillan and Co. [28. net.]—(5) Work and Wages. By Sydney J. Chapman, M.A. With Introduction by Lard Brassey, K.C.B. London; Law:liana and Co. [is. 6d,
countries, gives peculiar value to such a book as that in which Mr. Ashley has sketched for students the development of tariff policy in those States which are most frequently compared with the United Kingdom,—Germany, the United States, and France. One practical result of his inquiry, as Mr. Haldane points out in an admirably terse and weighty introduction, is to show that no analogy presents itself which could usefully be followed by Great Britain from an economic standpoint. "As well might we draw the inference that we should substitute for our own Constitution that of the United States or Germany because they are prosperous under their political arrangements." The story of French tariff policy, how- ever, a "striking illustration of the tendency of a protective system to get the upper hand, and having got it to keep it," has lessons for us which are not so often dwelt upon. To all appearance France has only been saved from economic decline by the possession of an exceptionally fertile soil, for her foreign trade is insignificant and limited to a remarkable degree for a maritime nation with a great seaboard. Mr. Ashley draws an interesting contrast between the progress in this respect which characterised the country during the Free- trade epoch from 1860 to 1870, and the stagnation which has taken its place since 1872. The operation of the Cobden type of commercial treaties has never received sufficient notice from commercial historians. It is not too much to say that under their influence Europe was in a fair way to realise the most optimistic of Cobden's predictions about international Free-trade. Many reasons are given in works like Mr. Ashley's for the Protectionist reaction of the "seventies," but the most serious of them all is never alluded to,—namely, the indifference, and even active hostility, of the British Government, under the influence of Mr. Lowe's dogmatic and insular prejudices, to the treaty policy. It is a singular fact that Mr. Gladstone as Prime Minister should have been brought to acquiesce in the destruction of one of his own most promising and successful undertakings as Chancellor of the Exchequer. Dr. Cunningham, to whose province would properly fall an adequate appreciation of Cobden's treaty policy, devotes very little space to the subject, though be treats at greater length and with more sympathy the reaction against Free-trade which followed in Europe, and more slowly in England, upon its failure. His short history of the Free-trade movement is, however, treated in a thoroughly interesting way, though not altogether in a manner, we should imagine, to satisfy the demands of the Tariff Reform League, under whose banner he has allowed himself to be enrolled. He writes, indeed, with high approval of the mercantile system and its results in the development of England in the eighteenth century, going so far as to attribute to it the triumph of this country in the Napoleonic struggle. Historical students, we believe, would not overlook as he does the effect of Pitt's liberal economic administration before the outbreak of the French Revolutionary War, which enabled the country to recover from the losses of the war of the American Revolu- tion; nor the decline in the naval strength of France, from internal causes, before it was destroyed by Nelson and his Captains. But if the mercantile system was successful in the equal encouragement it gave to vital interests in England before the war, Dr. Cunningham does not explain why it failed so miserably, as he admits it did, after 1815. Another most important admission, coming from such a quarter, is that of the "disastrous failure" of the Corn-law of 1815. "The experiment," he writes, "was crucial ; a highly pro- tective tariff did not and could not render Great Britain self-sufficing ; we must rely on the extension of our commerce and the maintenance of our supremacy at sea for a large portion of the corn which is necessary for our population. That point was settled finally and by experience." Every- thing which Free-traders contend for follows upon such admissions as these. The concluding chapters form a plea for an Imperial system based on preferences, with the usual denunciation of cosmopolitan competition. "Dreamy" is the epithet which best fits these speculations, which are mode- rately expressed, but far from helpful in a practical sense. Cosmopolitanism, Nationalism, Colonialism are convenient terms to fling about, but mean in reality very little. They proceed largely from a mistaken conception of a nation or an Empire as a trading unit. Cobden's internationalism, splendid political ideal as it was, had very little to do with the abiding hold his tariff reforms have taken on the British nation ; nor at large. does the Briton's natural affection for British Colonies or Dependencies influence him greatly in the matter of buying and selling. "Cosmopolitan competition," says Dr. Cun- ningham, " allows each country to exert a deleterious influence on its neighbours ; the strong to depress the weak and the poor to drag down others to its level." Free-trade, he thinks, may tend to the "depression or disintegration of independent political communities," though it is "economically advan- tageous to the world as a whole and to consumers individually at any given moment." The whole theory seems to rest on a quite exaggerated notion of what tariffs can do in the way of protection against such a danger as is here imagined. Until, at all events, we can discover a community which has thus suffered, we may safely dismiss such apprehensions as fanciful. If France was economically weaker than ourselves in 1860, she certainly did not suffer from the freer relations established in that year with Great Britain. If it is asserted that Great Britain herself is beginning to suffer from the devastating effect of competition with stronger and more enterprising nations, we are entitled to ask for some proof of the fact. Dr. Cunningham points to none, except to suggestions of "physical deterioration," and to the decreased value of agricultural land, the remedy for which he has himself declared to be impossible to put again in force.
It is refreshing to turn to the acute practical reasoning
based on the facts of foreign commerce to be found in Part III. of Mr. W. W. Cadile's Economic Method and Economic Fallacies. He deals very clearly with the evidence of unparalleled prosperity presented by the facts as to the balance between imports and exports properly understood. He sums up the results of Free-trade "as tested by the old
mercantilish or modern business standard "thus :—
"We have accumulated a share of the world's treasure, that is to say of its profit and interest bearing investments, that is in- comparably greater than that of any other European country, and that also appears to be increasing much more rapidly than any of theirs ; and we have achieved this in spite of such handicaps, first, as the withdrawal of labour from production for export by the very fact of our own wealth and prosperity ; second, as our plunge into municipal socialism ; third, as the inordinate power and suicidal policy of our Trade Unions ; and fourth, as our amazing backwardness in the matter of technical education."
Mr. Carlile has some suggestive criticism of the appeal to the consumer, or, rather, of the way of putting that appeal, which is the basis of the Free-trade argument. It is probably
true that the direct appeal to the poor consumer of food is less effective than it was in times when a great part of the population of Great Britain was on the verge of starvation. He feels the force of the Protectionists question, "What is the use of cheap commodities to you if you are out of employ- ment and have no means with which to buy them P" The real answer is that Free-trade, and not Protection, promotes employment in the end ; but though it is essential to establish this point by argument from experience and theory, we do not agree with Mr. Carlile that the answer involves the substitution of production for consumption "as an end." To do so is surely to put the cart before the horse. "Consumption," said Adam Smith, "is the sole end of all production, and the interest of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumer." The violation of this rule must always result in the creation of a privileged class at the expense of the community Mr. Carlile deals very effectively with the "wide markets" argument :—
"The American manufacturer, perhaps we are told, has an assured market of 70 million people ; add to that the English market, which is free to him, of 40 millions, and he has a total population of 110 millions, while the English manufacturer, on the other hand, has only a market of 40 million people altogether, and even in that he is exposed to the competition of the civilised world."
Mr. Carlile gives the reply which explains why, for instance, as a matter of fact, we can more than hold our own with Germany in supplying French markets or with France in supplying German markets, why we are able almost to monopolise the free market of India, why, finally, many of the largest American manufacturers for foreign markets have established their works in this country :—
" There are two ways," he writes, "in which a man may gain in commerce or industry: one is by selling at a high price, and the other by buying or producing at a low price. Profit depends on the margin between the cost and the sale price, and may, of
course, be cut into either from above or from below. Free Trade, as compared with Protection, is liable, it may be held, to allow the margin to be cut into from above, but it is quite overlooked by those who propound the wide markets argument that Pro- tection tends to cause it to be cut into far more disastrously from below!'
Nothing is more certain, as the Duke of Devonshire recently demonstrated with his usual crushing lucidity at Manchester, than that Protection is powerless to assist an export trade ; and we agree with Mr. Cathie in the opinion that, in spite of talk about the superior value of the home trade to a country, it is upon the maintenance of the export trade that the in- dustrial existence of this country mainly depends.
We regret that we have little space in which to speak of Mr. Hirst's eminently readable biography of Adam Smith. His volume brings out very thoroughly not only the greatness of Adam Smith's work, but the personality of the man himself. Nor can we do more than allude to Lord Brassey's introduction to the valuable sequel to his own former work written by Mr. Chapman. He "passes in review all our leading industries, and finds the British workman second to none." If anything is worse than over-confidence, it is the conviction of our approaching decadence which the vehement —we had almost said unpatriotic—outcries of Mr. Chamber- lain have done much to create both at home and abroad.
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