LORD ROSEBERY'S ECONOMIC DESPAIR.
ORD ROSEBERY assisted mankind a few days ago by succumbing before the pons asinorum of economics. The occasion was the opening yesterday week of a technical institute and art school at Epsom,. and the circumstances called for a speech of cheerful congratulation in the light vein which best suits his. lordship's oratory. But Lord Rosebery, like the Lowland idiot-boy whose lot seemed so Arcadian to. the English tourist, was " sair trodden doon by the bubblyjock," and his bubblyjock was the expansion a German trade. The ex-Premier has been reading some statements about the figures of English and German trade, and draws conclusions from them which are a little surprising as coming from a fellow-country- man of Adam Smith. There are, he says, three "heads of the indictment" against ourselves. Firstly, the propor- tion per head of exported British produce was £8 is. in 1872, but had sunk to £5 us. 3d. in 1894. "You may say," remarks our new economist, "that reduced prices account for some part of this, but I do not think you will find that decreased prices do account for it, when you observe the broad features of the balance of trade," &c. We should like to have heard more about these said. broad features, for on no subject is the amateur economist more entertaining than on that of the balance of trade. The balance of trade, whatever the dimensions of its features, is merely a reassertion of the wise maxitn, "Nothing for nothing, and precious little for six- pence." It was once believed that a nation must export more than it -imports if it would prosper ; the notion was based on the long-exploded mercantile theory which assumed wealth to be not goods but coins ; for a. nation which sends away more goods than it brings in, must either give the balance away, or owe it for capital lent or services rendered, or receive metals in return, and thus inflate its currency without adding to its welfare. A moment's thought is enough to convince us that if it were really true that other nations contribute far more goods and services to us than we do to them, we should have good reason to chuckle over the position instead of being alarmed by it ; and another moment's thought proves that such a position is impossible in this nothing- for-nothing life. It is true that the world sends more goods into England than we send out, but by far the greater part of this excess is paid to us as interest on the enormous outlay of English capital by which the whole earth has been developed, fertilised, and quickened into commercial activity, and the rest of the excess is the consideration for the services that we render by doing other people's carrying trade and acting as their banker and bill-broker. Thus we restore the balance—the only "balance of trade" that is not moonshine—and every quid has its pro quo. As to the decrease of the value exported per head from a is. to £5 us. 3d. between 1872 and 1894, these figures are sensational enough as stated without explanation, but on examination they are found to be rather reassuring than otherwise, and the decline in value is more than accounted for by the fall in prices. Mr. Sauerbech's index number of the prices of 45 representative commodities rose to 110 in 1872, and had fallen to 63 in 1894. A simple arithmetic sum proves that if we had exported the same amount per head in 1894 as in 1872, the value would have fallen, on the basis of the index number, to £4 12s. 2-0. per head. As it was, the value per head in 1894 was lie. 3d., or some 19s. per head better, which, in a population of forty millions, is worth considering. More- over, 1873 was a year of activity and inflation, towards the end of the railway mania in America, while 1894 was memorable for stagnation and depression. And it will not do to reply that it is no use for us to export a greater number of goods if we are paid less for them ; because, owing to this fall in prices, which has been more severe in raw materials than in manufactured articles, we are able to exchange our goods and services for a greater propor- tion than ever of the world's output.
Secondly, the imports of German manufactured goods into Great Britain rose from £16,630,000 in 1883, to £21,630,000 in 1893. In other words, with regard to our trade with Germany we are five millions a year better off than we were ten years ago. There has been no drain of our gold to Germany ; on the contrary, the Bank of England's vaults are stuffed to bursting-point. But it has come about that in settling the international accounts, which are a world-wide business, Germany—on behalf of herself or of some creditor of hers who owes us money— sends us five millions' worth more of goods than she did in 1883. This is indeed a serious indictment, and we cannot wonder that John Bull waxes fat and drowsy. The strange thing is that well-educated observers should be convinced that owing to the increase of his diet he must be starving.
The third shaft from the alarmist's quiver is the fact that "the total imports into Great Britain declined in value £22,000,000 between 1883 and 1893 in gross, but the imports of manufactured articles increased by over -C13,000,000." These, thinks Lord Rosebery, are "grave and striking facts." It would have been much more grave and striking if anything else had happened. England, the creditor country, must receive goods of a certain value every year, or else some of her debtors must declare them- selves defaulters. Owing to the decline in the value of raw materials it is no longer possible for the world at large to pay its annual debt in them, and therefore England now takes a certain proportion of what is owed to her in manufactured articles. And Lord Rosebery, instead of seeing that we are all the better off for it, alludes almost tearfully to the fact that this country once believed that "it had almost a monopoly of supplying the world with manufactured goods." Does he believe that we have the right to expect that our island is to be the only workshop, and that humanity could fairly be asked to do without manufactured articles until England was ready to supply all its needs ? Such economics sound like an echo of the Dark Ages, when financially minded Kings spent their time in devising means by which they might entice all the bullion out of their neighbours' territories.
German trade is undoubtedly making great strides. The German nation has taken a new lease of life since the war with France, and has all the eagerness and desire to go fast of a twenty-five years' old people. There is, it is true, a seamy side to its commercial activity. Much of it is far from genuine, being galvanised into unhealthy vigour by the artificial stimulus of bounties, cheap freights for exports, and other such measures by which the German taxpayer is bled so that the trader may supply other nations with cheap goods. Moreover, much of this trade is carried on at an infinitesimal profit or even at a loss, in the hope of driving competitors out of the market. Hence it is that the Germans, in spite of the expanding figures of their commerce, remain a poor people, and hence their politics are a series of unseemly squabbles for State assistance for various industries. These considerations are not without importance, but they were entirely over- looked by Lord Rosebery. On the other hand, we certainly have much to learn from the go-ahead energy of the German, the care with which he ascertains the wants of his customers and then sets himself to supply them, and the patient diligence with which he educates himself for his task. English traders, too much inclined to grow fat on past profits and let their business take care of itself, may well observe closely these qualities of our neighbour, without grudging him any prosperity that befalls him, — for bankers and merchants cannot hope to do good business unless they have rich customers at hand to trade with, and so far from being alarmed at the commercial expansion of Germany, we ought to welcome it with satisfaction. Let us learn what the Germans have to teach us, instead of getting nervous and clamouring for an " inquiry,"— that first and last refuge of a politician who has lost his bearings. If our merchants and manufacturers are so fast asleep that they cannot see for themselves what, if anything, is amiss, no Parliamentary inquiry will open their eyes.
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