CHAPTER IX.* FREE TRADE. THE circumstances of the world around us-in Germany, in France, in the United States, in Canada, in most of the British Colonies, countries full of men of high intelligence and ability-constitute a strong call for the re-stating and re-arguing of the principles of Free Trade. This is a startling, indeed it may be said, a humiliating fact. Free Trade is the one subject in Political Economy which is susceptible of complete demonstration. The exposition of the argument is one of the chief triumphs of Adam Smith's "Wealth of Nations;" it is the most pre-eminent glory which distinguishes his immortal work. Intellectual writers of all countries have enforced and illustrated this cardinal truth with an ability which has never been surpassed. The contest passed long ago from the world of ideas to the world of facts. Free Trade has been the battle-field of the fiercest political strife. Every impulse which interest or passion could generate has been brought to bear on its discussion. The most distinguished statesmen of our time have taken the most active part in the struggle. The highest and most enduring political reputations have been won in this arena. Mighty interests, strong in wealth and power, have fought against Free Trade with the peculiar This chapter is largely indebted to an article in the "Contemporary Review" of the year 1870. energy which belongs to free countries. Every position has been defended to the utmost; every possible resistance offered to the acknowledgment of the new truth; every statement has been sifted by keen opponents; every argument tested to the utmost; and then, after a war of many years, victory crowned the struggle in England amidst almost universal acknowledgment of the truth of the principle. Yet now, in the latter part of the nineteenth century, whilst so many of the champions who were engaged in this fierce discussion still survive to bear witness to the crushing defeat which error sustained, we are again summoned, not by the brilliant fallacies of some clear thinker, but by the renewed vigour and progress of protection in the practical world, to re-argue the first principles of Free Trade. One is tempted to feel something of that mortification which a mathematician would experience if he were compelled to demonstrate anew the principles of the multiplication table. However, the evil is too serious and the duty to guard the welfare of the greatest of practical truths too urgent, to allow us to linger over our feelings. Protection seems to be indestructible—a weed that no intellectual or social culture can root up-a principle that is a part of human nature itself. The selfishness of individual interests is a force that ever wars on the public good, and can be kept under only by incessant exposure. It compels the truth to be ever re-asserted. This is our task now; and if it imposes on us the necessity of repeating ancient arguments, let us realise the feeling that the work we are engaged in is not on that account the less fresh or the less important. It is essential at the outset to define the meaning of the expression, Free Trade. Great mistakes are caused, and many fallacious reasonings pleaded through a want of a careful distinction of the separate and distinct senses in which the phrase may be used. It may, in the first place, denote a principle which has gained great strength in modern times, to the large advantage of the world-trade left to itself to conduct its own operations -the absence of interference and restriction on the part of governments-the individual energies and intelligence of the traders allowed, in free liberty, to carry on the production and distribution of wealth. But this is not the sense in which the words are used here. Then, again, the expression Free Trade has been applied to a demand for the abolition of custom-houses as interposing impediments to the free movements of goods. This application of the expression Free Trade to the suppression of customs duties is very objectionable and misleading. It is a fallacious appeal to a great truth belonging to a wholly different subject in order to procure the suppression of a particular form of indirect taxation. Those who write and speak in this manner feel that Free Trade denotes, for most minds, a proved and unchallengeable truth; and they thus acquire an advantage in argument to which they are not entitled. The abolition of customs may be a proper measure or it may not; but clearly it has nothing to do with the Free Trade of Adam Smith. What, then, is the Free Trade of this great man and of Political Economy? It is the contradiction of Protection. It came into use as condemning the policy of Protection by the proclamation of its opposite. Its meaning, therefore, must be sought from the sense affixed to Protection. Protection affirms the policy of differences of duties on the same goods. It inquires into the geographical and national origin of these goods; and then, according as they were produced abroad or at home, it imposes different rates of taxation on them, or exempts them from taxation altogether. Free Trade is the direct contradictory of this principle. It asks no question as to where the goods were made; the same goods must be treated all alike—is its doctrine. If a duty is charged, it levies it alike on those made at home as well as on those made abroad; if it exempts the domestic, it equally exempts the foreign products. It is with this principle alone that we are here concerned. Which, then, is the correct policy, Free Trade or Protection? In order to reach the true answer to this question, it is very important to discuss it on the hypothesis that neither of the two policies has as yet been adopted. Practically and historically it has seldom, if ever, been debated on this basis. In almost every instance, Free Trade has been the assailant of a protection already established; the rarer but most startlingly increasing procedure is that of Protection assaulting and overthrowing a pre-existing Free Trade. When Protection has previously occupied the ground, Free Trade has had to encounter the formidable difficulty of interfering with interests, often vast, both of capital and labour, reared up under Protection, and which its success might seriously compromise or even destroy altogether. This very difficulty has often turned aside statesmen, whose convictions were already won to Free Trade, from the political danger of dis turbing industries engaging a considerable part of the population. It is most essential, therefore, to understand clearly that the existence of these interests is a matter wholly foreign to the truth or falsehood of Free Trade. There are two questions here which belong to two different provinces, and must must be carried to two different tribunals for judgment. The one belongs to the department of the Political Economist, the other to that of the practical statesman. One is a problem of knowledge, the other of politics. The truth or falsehood of the doctrine is in no way affected by the injury which its application might work to particular persons or industries. If true, it has the right to demand the enforcement of its principle, even though the industries reared under the wing of Protection should be doomed thereby to disappear. But, on the other hand, it is within the province of the statesman to declare that he must break the suddenness of the process of applying Free Trade to a country deeply committed to Protection. It is within his right to assert that the present benefit of absolute Free Trade would be overbalanced by the mischief of an immediate and rigorous enforcement of its teaching. Knowledge says that the abolition of every protective duty is a policy which promotes the welfare of a people. On the other hand, statesmanship may declare that regard for suffering to ensue may demand that time shall be given for effecting the transition from one kind of occupation to another. Let us assume then, for the purposes of this investigation, that there is no transition period; that the capital and labour employed to-day in a protected industry may without suffering be transferred to another occupa |