FREE TRADE AND DEPRESSED TRADE.

By A. Williamson,

(From Blackwoad's Magazine, April, 1887.)

Tbe Causes of England's Prosperity Analysed.

The belief that the fiscal policy, begun in 1846 and carried to completion in 1874, of admitting free of duty such imports as come into competition with British pro ducts, and heavily taxing those which do not, has hitherto enabled us to maintain onr commercial supremacy, has been re ceived, even among the educated classes of this country, as an article of unquestioned faith ; for which they have no better reason to give than that, because prosperity fol lowed the adoption of that system, that system must have caueel it. A careful study, however, of " the statistical abstracts " of tho Board of Trade from 1840 downwards, shows that, so far from the repeal of the Corn Laws being entitled to rank with the great factors which after 1850 led to such a vast expansion, not only in the commerce of the United Kingdom, but in that of Europe and the United States,it had no influence on it whatever, nor in causing the advance in wages and value of land so absurdly ascribed to it. Before proceeding to show what that repeal really amounted to, let us see what these great factors were. 1. The rapid development of the railway system, in which we were, save America, greatly ahead of other nations. In 1850 there were 6,621 miles open in the United Kingdom, ngainst, in 18S3, 15,6G8 miles: while Continental nations and the United States,starting with but 17,33(5mi1e3 in 1850, had, in 1883, 216,708 miles. The magnitude of the change is apparent in the fact that during the last fifty years 800 millions have been invested in constructing railways in this country alone. 2. The enormous increase in the use of machinery, in the production of which we were unrivalled. 3. The great increase in the number and size of steamers, which are estimated to have five times the carrying power of sail ing-vessels. 4. The discoveryof gold in California and Australia, which, between ISSO and 1880, added 528 millions sterling to the wealth of the world, and was the main cause of the advance in prices. With such powerful agencies at work to stimulate trade in Europe and America, it was inevitable that we, the great producers of the world, should mainly benefit. The surprise is, not that our import and export trade increased bo j much, but that, situated as we were, it did not, proportionally with other nations, increase much more. Though Europe, between 1850 and 1870, was constantly dis turbed by wars and revolutions, and America during 1862 to 1864 in the throes of her great civil war, by which we greatly pro fited—for at the end of each great struggle there arose a large demand for British pro ducts—we find that while our imports and exports only mo eased 183 per cent., France, Germany, Russia, Austria, Spain, and Por tugal increased theirs on the average 161 ■per cent., and (he United States 170 per cent.* Having tried to realise the vast changes in carrying on trade brought about by the railway taking the place of the stage coach, and the steamer of the sailing-vessel, in enormously quickening and cheapening the means of transport, let us see what tho repeal of the Corn Laws really amounted to.

During the eight years which preceded the abolition in 1849, the total duties levied on corn, meal, and flour only averaged £707,651 per annum. From 1350 to 1869, the registratioffiee of one shilling, charged on each quarter' imported, yielded on the average an annnal revenue of £623,000. In 1869, in order, as the Chancellor of the Exchequer remarked, "to do away with tho la^i; rag of protection," this fee was repealed. Had it been retained, we should, on the 230 millions of quarters imported between 1870 and 1885, have saved ltt mil lions sterling of revenue, or over £700,000 a-year. We say saved, for as we shall later on show, these millions wholly went to swell the profits of the foreign importer. Be tween IS4O and 1849, we imported of corn, meal, and flour in all 41 millions of quarters, from which we derived a gross revenue of £6,817,848, about 3.5. 4d. per quarter. The repeal seems to have had no effect on market value, for though it ruled low in 1851 and 1852, that could not, as we imported 7,000 quarters of wheat loss in those years tlian we did in 1849 and 1850, have been caused by supplies from abroad. The market prices of wheat, as given in " the abstracts," and the contract prices of the 41b. loaf, sup plied to the Seamen's Hospital at Green wich, avei'aged as follows :— Wheat, lib loaf. 1811-jjO .. .. 535. 3d. (i^d. ISSI-C0 .. .. Sis. 7d. 7d. 1861-70 .. .. 51s. Od. o§d. 1871-80 ... .. 51s. Od. 6d. The prices of the loaf here quoted being by contract for large quantities, private con sumers would doubtless have to pay more. We shall assume, therefore, thab from 1841 ---50, when the baker was content with less exorbitant profits, the retail price of the loaf averaged 7Ad. To-day it is 6d. If wo allow two 41b. loaves a-week as the con sumption of a working man, we get 13s. 3d. | he per annum pays less now for his bread than he did from 1841-50. But what is he paying for his meat ? If we refer to the "Farmer's Gazette," we find the Dublin prices of farm produce in 1850 and 1885 were— '■ 1&50. 1885. Two-year-old cattle .. £A 0 0 £7 0 0 Ocie-ycar-old „ ..150 400 First-class milch cows.. 12 0 0 20 0 0 Inferior .000 11 0 0 Vat pigs per owt. .. 1 15 0 2 I) 6 Fat sheep per cwt. .. 2 5 0 3 5 0 Oats per cwt. .. .. 0 5 1} 010 0 Butter per cwt 2 IS 0 1 10 0 Eggs per long hundred 0 4 0 011 3 It is difficult to get at the prices now paid for meat by a working man, but from all we can learn, we believe it is on the average not under 7d. per pound. If we allow him half a. pound per day, this comes to £5 Bs. in the year; while if we take it he did not pay more than 4d. per pound in 1850, the difference shows he pays to*day 465. more for his meat, and 13s. 3d. less for his bread, or net 325. 9d., that he annually now pays more on these two items, without talcing into account the higher rates he pays for butter and eggs. Foreign Imports and Reduced Wages. The- import of manufactured goods into this country, as given in the first report of the Royal Commission on the Depression of Trade, page 130, has been, in millions, as follows :— 1855-59. 1860-61. 1865-69. 11). 18. 27. . 1870-74. 1875-79. 1880-81; 37. IS. 55. If this rapid rate of increase continue, a further serious fall in wages—which has in in the last five years, if we include the working men lately thrown out of employ ment, been on the average not less than 4s a week appears inevitable. As there aro 6& millions of artizans in the United King dom, the fall which has already occurred thus represents an annual loss of spending power of no less than £67,600,000. The decline in wages having in a great measure been caused by the influx of agricultural labourers into large manufacturing districts

* Between 1870 and 18S4 these nations, ex cludinir liu«ia and including America, in creased 60 per cent, on tho average ; while we, between 1870 and ISB6, increased less than 3 per cent.-the value of our inniorte and exports m 1870 ha'-tnfr been 547 lhillions, against 561 mil lions in 1SS1;.

in search of employment, the working man is finding that, so far from the repeal in these days proving a boon, it is to him and the nation- the most ruinous measure ever passed by a British Legislature. Disastrous Effect on Agriculture. On agriculture its effect has been vastly more disastrous. In 1856 there were in the United Kingdom 4,213,651 acres under ivheat cultivation, yielding at 3$ quarters to the acre, 14,747,778 quarters, which, calcidated at 545. Id. — the average market tyrice between 1851-60 — gave, a crop of the value of 40^ millions sterling. In 1886, there were only 2,286,000 acres under wheat, yielding a crop at 30*. a quarter, worth only 12 millions — a deficit of over 28 millions sterling.* The political pharisees of the Cobden school, who pose as the friend of the farmer, tell him all this is the result of iniquitous land laws. Give him the land for nothing, what better would he be ? The cost of growing an acre in wheat, exclusive of rent and interest on farmers' capital, obtained by Mr Poynter from 140 returns and 20 counties, was found to average £6 14s. an acre ; or, allow ing 3£ quarters to the acre, 38s. 3d per quarter. Mr Harris, in his evidence before the lloyal Commission on the Depression of Trade, estimated the burdens on agricul tural land at 12s. an acre ; and in America, where no fertilisers are required, and the produce of 5 acres of wheat can be brought from Chicago to Liverpool at less than the cost of manuring an acre of wheat in England, the burdens amount to only 6d. an acre. Under such conditions, it is im possiblo for the farmer to continue wheat cultivation, nor is he likely to take the advice of his freetrading friends that, if wheat won't pay, he must try something else ; for not only, as stated by Mr. Harris, has the homo production of meat in the last three years, as compared with the years 1872-74, fallen off 80 millionst of pounds, but in all kinds of farm produce he is meet ing with the same fierce competition from abroad, as tho following table of imports but too clearly shows :— 1874 1885 Animals .. .. £4,90K.815 48,785,392 Bacon and hams .. 5,902,429' 8,664,365 Other meat.. .. 2,320,608 6,590,776 Poultry, game and lard .. .. 1,154,860 2,259,128 Butter, cheese, and pf?gs .. .. 15,967,086 18,327,512 Appies. vegetables and hops .. 3,073,860 2.918.559 Corn, flour, and meat .. .. 51,070,202 52,749,258 £84,895,860^100,215^200 These figures represent the value. If we take the imports of 1885 at the prices ruling in 1874, at least 20 per cent, higher thai) noM r, we get 120 millions as more correctly indicating the volume of the trade as com pared with 1874. Nor is the milling interest in a better position ; for during the five years 1876-80 the imports of flour aver aged 8,490,353 cwts., against, in tho five years 1881-85, 14,334,448 cwts. When it is considered that the capital employed by farmers is, as estimated by Sir James Cairo, 400 millions, and by landlords 1,600 millions, yielding, according to Mr Giffen, an income of 212 millions, the potency of agriculture as a factor bearing on trade depression be comes apparent. Mr Harris in his evidence, to which we have referred, says he calcu lates there is less food produced in this country to-day by 40 millions than there was twelve or fifteen years ago, and he adds, "There is land wliich is unlet in England, and is going out of cultivation, which, if Droperly cultivated, would grow larger crops of corn than any other country in the world." Dependent on Foreign Countries for our Bread. It was in the teeth of these facts and figures that in 1884 Mr Bright said in his ppeech at Manchester, "In 1846 the peers did not fight for their political lives; they fought for their rents. They put up tho prayer doubtless in their families, and did it by fine clergy in their churches, ' Give us this day our daily bread ;' and yet every day in that House that question came up, speeches were made and votes given that denied to the millions of the people of this country the daily broad for which they prayed." The utter falsity of this infamous accusation is shown by the fact that the average price of wheat during the year 1843 was only 50s. Id. ; in 18-44, 51s. 3d. ; and in 1845, 50s. lOd. In 1885 he had the audacity to write to Mr Medley he hoped the electors at the coming election would remember that he had obtained for them their loaf at half the price it had previously cost them. Little wonder that, when called on to explain a statement so wholly at variance with the facts, he found it more convenient to maintain a discreet silence. It is interesting in the light of present experience to read the prophetic warnings contained in the protest of the peers on the 25th June 1846, which have been verified to the letter : " 1. Make this country dependent on foreign countrf.es for supplies of food. 2. No security or probability of other countries adopting it. 3. May be the coaisc of throwing lands out of cultivation, 4. Unjust to landed interest while subject to exclusive burdens for purposes of general advantage. 0, Because the loss will fall most heavily en tenant-farmers, and through them on agricul tural labourers. 6. Because similar remdts will befall tradesmen who mainly depend on the'custom of those engaged in agriculture." And to contrast therewith the bombastic predictions of Richard Cobden in 1844: " You have no more right to doubt that the sun will rise in the heavens to-morrow, than you have to doubt that in less than ten years from the time when England inaugu rates the gloriousera of commercial freedom, every civilised commercial community will be free-traders to the backbone." Eight years later he declared that " the time was at hand when other nations would .be com pelled, by self-interest and by the reality of our prosperity, to follow our example and adopt free trade." It would be safer to pre dict, " The time is at hand when England will be compelled, by self-interest ana the reality of the prosperity of such nations as America and Germany, to follow their example and adopt protection." At a meeting in 1843, Cobden stated that the farmer would always be protected by the " cost of not merely freightage, but of loading, insurance, landing, commission, interest, and loss," which he estimated at 10s. 6d. per quarter between Dantzic and Liverpool; but the farmer is.no longer protected by the rate of freight, which is now reduced to 2s. or 35., while rares of commission and insurance have also been greatly lowered. There is no doubt the main object of the Anti-Corn Law League was to lower wages by the cheapening of the people's food, in the hope it would assist the manufacturer in keeping a grip of foreign trade; yet Mr- Bright always boasted that the repeal had increased wages, with which, as we have shown, it had as much to do as the man in the moon. Now

* "What a significant fact that in 1866 our imported wheat and flour amounted to 28,128.609 cwt., and that in ISBS they were 77,331,707; that the value of those imports was £16,780,00) in the former year, and £33,736,358 in the latter! How far afield it is necessary to go to support the artificial fabric of society erected in these islands."—"The Times," Nov. 20,1886.

Why should this country be dependent on a foreign country for its food supplies? In 1856 we produced in the United Kingdom close on 15 million quarters of wheat, and there is no reason, were the cultivation once more to become fairly remunerative, why we should not do so again. In 1885 'we received nearly 5 million quarters from India, Australia, and Canada, one-half of which came from India—a country which, when ilsrailway system is completed, will be able to supply us with any amount. There should therefore be no difficulty in our obtaining, in a few years from our empire the 24 million of quarters of wheat required for the consumption of the United Kingdom.

\Mr Harris says: " Thus, with a decrease of 1,500,000 acres under corn crops, and a supposed increase of 3,000,000 acres of permanent pasture (which too often means permanent weeds) we have an actual decrease in the three years' supply of home-grown meat amounting to 50.000.000 lb., and a decrease to its valuo of £46,000,000, or equal to £15.300,000 per annum out of our farmers'pockets." .

when his system, by the foreign competition it has induced, is causing a serious decline in wa^es, he turns ruthlessly on the working man, and tells him, if trade is leaving his employer, he must be content with less for his labour; but the doctrines of the fetich, he and Cobden set up for the nation to wor ship must not, forsooth, be called m question. A Plenteous Harvest a Misfortune. Ordinary people in the old times held that a good harvest was sure to be followed by c O od trade, but the champions of the Cobden Club have recently started the idea, as comical as original, that the good harvest of 1884 was largely accountable for trade depression, inasmuch as smaller supplies ot food being required from abroad, shipowners and insurers, etc., earned less profits. Appaiently, on this theory, these gentlemen will hail the day when British agriculture is extinguished, and all our food-products are imported from abroad. It is nothing to them that the decrease of £16,000,000 m the import; of cereals, as compared with the average of the preceding four years, were kept at home, benefiting not only agricul turists, but trade generally. No ; it comes to this, that when we happen to be visited by such a misfortune as a plenteous harvest, that means additional trade depression. Can absurdity go further! The vice ot the system lies in onr concentrating our atten tion on foreign and colonial commerce, while we wholly ignore internal trade. It is unfortunate that we have no reliable statistics of the latter ; but if we take the proportion of the production of coals and pig-iron, after deducting the export, and of the goods conveyed from place to place at home, to what is exported to our colonies and foreign countries, we find our home trade exceeds our colonial and foreign ten times. Our colonial trade is more than one third of our foreign ; if we leave it out of the account, the foreign is seen to be less than one-fifteenth of our home trade ! and it is for this insignificant and rapidly decaying j>art of our trade, we, under the cowardly fear of what other nations might do if we employed retaliation, persist in maintaining a system (which attracts to our shores the over-production of the world, to the ruin of our industries and national imi>overishment, on the principle, apparently, that no indus try should be allowed to live in England if another nation can undersell it. The Repeal of tbe Corn Laws and Protection. The evidence we have adduced to show the repeal of the Corn Laws had nothing whatever to do with our commercial pros perity between 1850 and 1870 is, we submit, overwhelming. As that repeal was but an instalment of the present system, let us see how the further removal of duties affected our export trade ; for, let the Cobden school say what it will, it is to the increase in our export, next to that of good homo trade, we must look for industrial success and tho well being of the masses. In addition to the registration fee taken off corn in 1869, duties on ouch imports as come into competU lion with British products were repealed or reduced as follows :— 1850-59 £2,118,029 1800-69, .. .. 4,414,170 1870-74, .. .. 5,120,000 There being no import of this class after 1874 subject to customs duty, the system may therefore be said to have only in that year attained its full completion. If the £530,000 taken off when the Corn Laws were repealed produced the marvellous re sults so falsely ascribed to that measure, vastly greater beneficial results should have flowed from the removal of duties, amount ing to 12 millions sterling, especially after 1874, when we .took farewell of the " last rag " of the system which had brought an easy 12 millions into our exchequer. On referring to " the abstracts," wo find the following startling results as regards our export trade : —

1841-50, increase, 40 per cent. lfs'.-60, n 82 „ 18411-70, „ 59 "„ ---1871 SO, neither increase nor decrease 1881-85, decrease, 9 per cent. While some allowance must here be made for lower values, making the volume of trade appear less than these figures indicate, they but little affect the main result; for by Mr MulhaU's method (' History of Prices,' p. 10), wo find the trade volume to have been:—

1811-50, increase, 40 per cent 1851-60, „ <8 1801-70, „ 314 ~ 1871-80. ~ 5J ~ 1881:85, decrease, * „ Free Trade and Protectionist Countries

Compared.

The Cobden Club tell us " figures can be made to prove anything," but that comes with a bad grace from those who have in the past made such a free nse of them when they could be twisted into suiting their purposes. If honestly used, however, and made to cover sufficiently long periods, figures prove nothing but the truth. We leave them to explain the startling fact, that since 1874 the results should bo so strangely in conflict with all their pet theories and prophecies. As ifc is only since that year that under the changed conditions of con ducting the commerce of the world the free trade system, so called, has been on some thing like equal terms pitted against the much-abused protective system of the Con tinent, and an U is only by results they can be, judged, and not by the dicta of the Cobden school, it is of the first importance we should carefully compare the results of the two systems. For this purpose, we shall take two protectionist countries, generally regarded by us in this connection as the greatest sinners—Germany and the United States. In 1874 and 188-1, their exports of home produce compare with oura as follows, in millions of pounds :— 1871. 188*. Germany .. .. 117 160 United States* .. 126 151 United Kingdom .. 239 232 . While we havt decreased 3 per cml, in eleven I years, Germany has increased 37 per cent., and the United Stages 20 per cent. In the same years Germany has increased her pro duction of pig iron from 1,906,000 to 3,572,000 tons, and the United States from 2,401,000 to 4,200,000 tons,t while we have only increased from 6,400,000 to 8,100,000 tons. The Board of Trade Journal points out that between 3561 and 1885 Germany has increased her output of pig-iron seven times, her production of sugar six times, her consumption of jute thirty-two times, and saltpetre nearly seven times. During this period her population increased, not» withstanding the immense emigration, 24 per cent. Between 1880-83 the total pro duction of corn increased from 281,296,559 cwts. to 320,939,000 cwts., wheat from 46,151,721 cwts. to 50,251,837 cwts., the sugar-beet industry from 93 millions of cwts. to 172 millions of cwts., and wine from 11 million gallons to 35 million gallons. The increase between 18G0 and 1882 in savings-banks deposits amounted to 370 per cent, per head, while during the same years they only increased in the United Kingdom 61 per cent. % In national wealth Mr Mulhall shows the United States now stand first among the nations of the world. Between 1865 and 1885 they have reduced their debt from 550 millions to 275 millions, and their internal taxation from 40 millions to 20 millions. The consumption of cotton has increased, since 1875, 68 per cent., while in this country it has only increased 22 per cent. In the States the production of corn

*In 1874 the United States im ports and ex ports were exceptionally large. between 1875, an average year, and 1884, the increase was 3a per cent.

fin 1886 the United States produced 6,685,000 tons>; in 1880, 3,835,191 tons,-en incrcaso of 48 Ser cent. The ' l-Vonomlst' estimates the pro uction of the United Kingdom in 188(5 at 6,750,000 tons, agiuiist 7,250,651 tons in 1885— a decrease of 7 per cent.

* * San?M ß:ba 2 k, s deposits increased in France from &m I in 1850 to $1,200 in 1882; in Germany { °S-^n 00 t0 £lo?.3O0; in Austria from £19,600 to iSo.100; ahd m Italy from £2200 tci £33,600.

increased, between 1881 and 1884, 45 per cent. , ~ We hear it constantly asserted that tne depression in trade is just as great in other countries. Butnotonlyhasthere beenagreat revival in the States, shown by the increase in railway traffics; but if we refer to the report to our Government of Mr Strachey, her Majesty's charge d'affaires at Dresden, on the effects of the raising of the German tariff in 1879, and again in 1885, we fand these words: "Nothing indicates that the burden of protection laid on the population is oppressive, that national impoverishment is in process, or that saving and accumula tion have been arrested. On the contrary, the imperial and local revenue receipts, the estimates of property liable to income-tax, and similar State and municipal returns, are symptomatic of fair public prosperity. In another part of the report, he says: " If it be asked what signs there are in Ger many of that incipient free-trade _ reaction which some of our politicians contrive to dis cern on the continent of Europe—especially m the countries most wedded to protection—there can be no hesitation in replying that there are none. The political constellations of the empire, the highest personal influences, the most powerful industrial and commercial forces-all are on the side of the existing system. The belief is widely diffused that the tariff reform of 1870 saved Germany Jrom a great ruin, and that that empire is now on the road to industrial greatness, perhaps to the succession of that hegemony which Great Britain, it is thought, now with difficulty holds in her hands. Protection is in the national air, and it will not be dissipated by foreign arguments." The fact that only 46,818 emigrants left Ger many for the United States during the first seven months of 1886, against 72,655 in the same months of 1885, goes far to confirm Mr Strachey's report of German prosperity. During the same period 7300 more emigrants left England and Scotland than in 1885. Duties Not Always Paid by the Con sumer. With BUfib facts and figures before us, it appears to be almost a waste of time to attempt an answer to the theories of [)oliticians who, to their eternal disgrace, lave, for political purposes, so cruelly mis led the people of this country. But as some of these appear still, notwithstanding that they are found to be in conflict with the teachings of experience, to be regarded as infallible, we shall proceed to show how fallacious and misleading they are. The contention, no longer, we believe, held by political economists, that " there never was a duty that was not paid by the consumer," is perhaps the most misleading, and, from its appeal to self-interest, the most danger ous ot all. It is, in fact, the kernel ot the whole free-trade question; for if it can be shown that the consumer does not always pay the duty, by as much as he does not do so, the Jorvign producer, and not he, is relieved of a duty rspealed, and to that extent free imports become a tax on the British public. It must be, can-fully kept in view that there are. two distinct classes of imports: 1. Tliose which do not come into competition with British products ; -8. Those which directly do so. At the threshold we are confronted with this curious anomaly—that free-trad ing England, at the present day, levies from import duties more than any other nation in Europe. § The gross receipts from cus toms duties of the chief European nations were in 1884 :— Uni ted Xi ngdoin .. .. £20,558,611 France 13,3515,000 German Empire .. .. 10,4 > 3,000 ltussian Empire .. .. 9,G19,000 Italy U. 534,000 Spain (1882) 3,975,000 Austria 3.727,000 While Germany only levies Customs duties to the extent of 4s. 8d per head of popula tion, and France to the extent of 75., the United Kingdom levies lls. sd. per head. The following table shows the chief imports on which these duties were raised, their declared value, the amount and percentage of duty paid in the year ending 31st March, 1885:-

Imports. Value. Duties paid. Percent Tobacco ..£2,715,806 £9,277,058 312 Tea .. .. 10,491,953 4,795,786 15 CoiTee .. 3.750,413 205,046 5J Spirits .. 2,0r7,209 4.31K.039 2f>B Wines .. 5,311,117 1,233,998 23

■ It may be conceded that, as a rule, the consumer pays tbe greater portion of the duties on these imports ; but if we bear in mind that supply and demand between them alone fix price, and, therefore, unless a duty imposed curtail the supply, it cannot affect market value, it is quite conceivable that when a duty is raised, and an attempt in consequence made to enhance prices, con sumption is at once checked, and the im porter, rather than lose his market, con tents himself with a smaller profit, without materially reducing the quantity he had previously sent. Let us suppose that the duty on tea is raised from 45 to 55 per cent. The Chinese and Indian merchants, finding their margin of profit reduced 10 per cent., offer less to the tea-planters for the next crop ; as they cannot hold, but must realise to meet thenextseason's outlay, they have no alternative but to accept the best price they can get. Unless, therefore, the additional duty sweeps away all their profit, they will produce as much as they did before, for diminished production means increased cost of each pound of tea. Some curtailment of supply, from weak growers getting in volved, or from shipments being diverted to other markets, there might and probably would occur, and to the extent that diminu tion in supply affected prices, the consumer would pay no more. The difference between that advance in price and the excess duty imposed clearly falls on the producer. As regards the second class of imports, the case is widely different, more particu larly in recent years, when production has so greatly exceeded consumption, for foreigners only send us iheir surplus stocks, and must sell for what they can get. It has been calculated that the incidence of a duty falls in the relative proportion of the consumption to the quantity imported. Thus, if the con sumption of wheat is 24 millions of quarters and we import 15 millions, the consumer's portion of a duty of 10s. a quarter is found to be by the following formula: as 24 millions, the consumption, is to 15 millions, the quantity imported, so is 10s. to 6s. 3d.

But even this amount would not fail to be paid by him. The imposition of a 10s. duty would cause a fall in price in the countries which send us wheat, a rise in prices here in anticipation of smaller supplies, and an increase in .wheat cultiva tion, especially if the revenue derived from the duty were applied-to relieving agricul ture of a portion of the taxation it now has to bear. This, increase in home production would in some measure make up for the shorter supplies from abroad; and to the extent it did so, it would check the rise in value. The fact stated by Mr Harris, that after the repeal of the Corn Laws there waa a sudden advance in the price of land in near corn-growing countries, shows they felt the repeal had relieved them, in whole or in part, of a burden they had previously paid.

If it be true that a duty is always paid by the consumer, and that it is iniquitous to tax the people's food, on Avhat. principle is every quarter of \vheat grown in this country made to contribute to the revenue 3s. 6d. ? If the consumer pays in the one case he must pay in the other; and if, as Mr Gladstone so absurdly contended in Edinburgh, a duty of ss. would raise the price all round 55., it inevitably follows wheat is in this country to-day 3s. Gd. dearer than, but for the tax, it otliarwise would be. In the name of common-sense, why don't we take it off the land and put it on imported grain ?

§ Why this country selects for the purpose of taxation only imports which do not come into competition with her products, is inexplicable. It cannot be bcoaust she regards these as luxuries; for she acnuully adniits free silk manufactures to the value of 10 millions. It almost looks as if the Method of levying customs duties had been specially devised for the pur pose of ruining Britislj industries—anyhow, that is the effect it is hiving on our Bills manu factures.

The Effet of taking the World's Surplus • Stocks. It is most important, as bearing on this question, and more especially on the pre sent depression of trade, we should try and realise what our standing alone, with open ports to receive the surplus stocks of the world means. It means increased cost_ of home, and decreased coat of foreign production. Let us take, for instance, pianos, which come largely from Germany. We shall suppose a manufacturer to have turned out 500 pianos annually, for which, before it was invaded by those of German make, he had found a ready sale in the home market. He no longer does so, and has, in con sequence, to reduce his production to 350. As his rent, taxes, &c, remain the same, each piano he now turns out costs more. In other words, decreased production means: increased cost of each article produced. But the mischief does not end here, for the home pro ducer is additionally handicapped by therates and taxes he has to pay, while the foreigner, from whose market he is excluded, not only escapes these, but has his cost of production decreased by having the additional market he is so generously provided with by our system. Suppose the right conceded to Birmingham and Sheffield of imposing, as against each other, a duty of 25 per cent. ; and further, let us suppose that Birming ham imposed the duty and that Sheffield refused to do so. Birmingham, safe from the competition of Sheffield wares, would manufacture not only what she required for the wants of her people, but having the Sheffield market open to her as well, she would manufacture largely to supply it. Birmingham would thus have her cost of production decreased ; conversely, that of Sheffield would be increased. How long would Sheffield trade flourish under such circumstances? We have here, in a nut shell, precisely the position of German and British trade at the present time. It is no answer to say, the manufacturer of pianos can reduce his establish ment and take smaller premises; for that involves dismissal of workmen, who are thrown oat of employment, the consequent loss, as we shall presently see, of net in come not only to them, but all with whom the employees and they have dealt, and a deterioration in the quality of work, en tailed by the folly of, at no matter what cost to the country, cheapening everything to the uttermost. Cheap work means bad work. That there has been generally a lowering of that standard of excellence in workmanship for which this country has hitherto been celebrated, is notorious. If anyone doubts it.let him read the consular reports. * Facts Proving that tbe Consumer Does Not Fay all tne Duty. Our contention that the consumer does not pay the whole of tho duty, and not un frequently, when the rate is low, no portion of it-abundantly proved by the evidence of eminent manufacturers in tho reports of the Royal Commission on the Depression of Trade —i 3to those who have been en gaged in foreign or colonial commerce an almost self-evident proposition; but as it may not be so to those who have not had such experience, and whose minds are still saturated with Cobdenite fallacies, we shall give a few facts in illustration. During the Mutiny, the Indian Govern ment, in 1858, raised the duty on Man chester manufactures from five to ten per cent. This did not affect market value, be cause the Manchester production, which had to come, Jorward, being fully up to Indian requirements, the increase in duty did not diminish the supply. When, years afterwards, the rate was reduced to five per cent, again the market was not affected. Here, then, is an instance in which clearly the five per cent, of added duty was not paid by the consumer, but by the pro ducer.

A similar case is furnished by the repeal of the registration-fee on corn in 1869, but not finally taken off till 1870. As there was no other nation in the world standing with open ports to receive foreign surplus stocks, and as—thanks to the load of taxation laid on land in this country—the foreign pro ducer's margin of profit was large, it would be the height of absurdity to contend that his having to pay this fee caused him to keep back one quarter of grain, or that the relieving him of it .led him to send more than, but for it, he otherwise would have sent, which is in a measure proved by the fact that the price of wheat rose from 46s lOd in 1870 to 56s 8d in 1871, to 57s 8d in 1872, and 58s 8d in 1873. Mr Mulhall shows that the average prices of wheat in three European countries, from 1851 to 1880, were, as compared with the United Kingdom, as follows : —United Kingdom, 51s 4d ; France, 51s 4d; Ger many, 48s 8d ; Austria, 4Ss. Last April we saw the rate quoted at 30s lOd in France, against 30s lid in the same month in this country. Here, then, is a case in which clearly the French consumer did not pay the duly. For the shipper of wheat to England and France, getting the same price in both markets, found his French ac count sales debited with a duty of 6s on each quarter ; and as the prices have averaged the same for thirty years, this one fact is of itself decisive of the. question. France, which in 18S4 imported over 8,000,000 quarters of grain and flour, wisely puts into her ex chequer the value of the duty she imposes ; while we hand over to our rivals the millions of pounds which, if retained, would enable us to greatly reduce imperial and local taxa tion.

MrHepworth, of Dewsbury, at the meeting of the York Chamber of Agriculture, stated, that " when the United States tariffs were increased, and again increased, his firm, in order to compete, had to decrease, and still again to decrease, its prices to retain its custom." Does this look as though the American consumers were paying the im port duties?

Mr Vickers, in his evidence before the Royal Commission (second report, page 10), after stating that the trade of his firm in bar and sheet steel with America had fallen from £83,000 in 1864 to £4,000 in 1885, and during the same period in railway material from £100,000 to £1,000, says, in answer to the inquiry as to whether the consumer paid the American duty on steel manufac tures —" Certainly not; they do not pay anything like the amount that is repre sented by the duty, because the works have been established, and their proprietors must now manufacture at a low price, in order to keep the works going : they do not manufacture at a large profit." Asked, " Is the effect of the American tariff to keep your goods out without raising the price in America to the consumer to anything like the amount represented by the duty ? That is so now ; it was not so in the past." Mr Porter, member of the United States Tariff Commission, in his report on the working of the free-trade system in Eng land and the protection system of the Con tinent, says : " I was assured by a score of manufacturers, when travelling in Lanca shire and Yorkshire, that the recent increase in the French tariff came out of their pockets, and not the consumers of France ; that they are compelled to sell their goods in France at the same price as before the increase of duty. In Germany I found pre cisely the same state of things."

At page 19 of the final report of the Royal Commission on the Depression of Trade (74), after stating that the value of our exports to the principal protectionists countries was larger in proportion to our population in the years 1880-84.than in the three previous quinquennial periods, wo

There is also evidence that in respect of certain classes of products the reputation of our workmanship does not stand so high' as it formerly did. The intensity of the competition for markets, while in many respects it haa legitimately diminished the cost of production has also tended to encourage the manufacture or low-priced goods of inferior quality which have npt only failed to give satisfaction them selves, but have a'so affected the reputation of other classes of goods to which no such ex ception could betaken."—Final Report of Roval Commission, page 23. J

find this admission : " But notwithstanding this increase, there can be little doubt that the ohslruction to our trade, caused by the grow ing stringency of the commercial policy of thoie countries, tends to make it far less profit able:'

This, from tlie free-trade majority who signed that report, is remarkable. We have understood them to hold, as an indis putable axiom, that there never was a duty which was not paid by the consumers. Here is a candid admission, that while the trade is larger the profits are less, owing to the growing stringency of the commercial policy —in other-words, ihe importer has to pay more for the privilege of competing in the foreign market. He. pays the duty and not the con sumer. Even if we grant that the latter is at present benefited by free imports, he is not in the end likely to be so. Take the case of sugar. The bounty system is rapidly bringing about the ruin of this industry here and in the West Indies ; when foreign countries find it extinguished, the bounties will be dropped, and the higher prices the British consumer will then have to pay will more than recoup these countries the sacri fices they are now making. But, we are told, they are taxing themselves for our benefit —that, in fact, these bounties are simply a gift to us. If this be so, how is it the British Government is constantly striving by diplomacy to obtain their abolition 1 If high tariff* so cruelly handicap onr rivals in the great industrial race, why do our manu facturers so bitterly complain of them? Be cause experience is showing them that our so-called free-trade system is based on nothing but a bundle of exploded fallacies. The Consumer Vitally Interested in Home Protection. But who is the consumer for whom his country makes such great sacrifices ? If a mere drone, who consumes but produces nothing, he is unworthy of consideration. In a great industrial community like ours, producers are in an enormous majority. Working men, by the labour they contri bute, estimated to amount to one-third of the cost of production, are much more pro ducers than consumers. The investor in home railways, tramways, water-works, gas-works, mines, or any other kind of home stocks, is a producer; all, in fact, who earn from work done or capital em ployed in this country are producers, who would gain more in income by a general rise in prices than they would lose as con sumers. The exceptions are those whose incomes are fixed, and the investor whose capital has gone abroad to assist the foreigner in crippling British trade, to whose care we may safely leave him. The vast majority of the community, therefore, being much more producers than consumers, it requires but little reflection to see that a higher level of prices, induced by a judicious system of protection, would be a distinct benefit to the greatest num ber. As a question of fact, trade never was so prosperous as when wheat was about 50s. The body politic is like the human body when one member suffers all the others suffer with it. If such an important mem ber of the body politic as its agriculture is suffering, is it possible the other members can escape suffering with it ? Our ex chequer would benefit by a largely in creased revenue, one-half of which at least would be paid by the foreigner. Revenue must be paid somehow, and it seems but fair that the importer should be made to bear his share of the taxation at present levied from home producers. • A Stock Free Trade Cry Exposed. The injunction to " buy in the cheapest and sell in the dearest market,'' in itself admirable, did our system admit of our act-' ing on it, is quite as misleading as the term free by which we persist in describing our fiscal policy, but which it would be more accurate to term, a system devised for the protection of the foreign producer. By it we are enabled to buy in the cheapest mar ket, but at what a cost! We must sell be fore we can buy, either the merchandise we produce or the labour we contribute to wards that production. By our thoughtful care for the consumer and cruel disregard of the producer, we have not only reduced the latter's profitg to the smallest possible margin, but we have, as we have ehcuvn, materially enhanced his cost of production by curtailing his market. It is nothing | short of mockery to tell him to sell in the dearest market, when by your system he is compelled to sell not in the dearest but the cheapest market. The case is thus stated by the writer in a pamphlet recently published, "Free Trade so called tested by Facts " — " To buy in the cheapest and sell in the dearest market is a perfectly sound recom mendation, provided always it is in the power of a nation to do both. If not in its power to sell in the dearest market, by which we understand one from which a profit can be derived, what advantage does the producer derive from cheapness, when forced to sell, not in the dearest, but the cheapest market ? This is precisely the position of the producer in the country, Shut out from foreign markets by high tariffs, he has to sell in the cheapest, and that his oicn, mad© so by fierce competition from abroad. ' Cheapness,'' for which apparently one-sided traders think we should sacrifice everything, is an alluring term ; but; if we carefully consider it, we find it not only ambiguous but misleading. Cheapness may be caused by an excess in the supply of commodities generally (in tensified, as we see at present, by our system of free imports, attracting to our markets the over-production of the world); but inasmuch as it entails a diminution in incomes generally and less employment, it is not cheapness ; for if the working man ceases to earn wages, of what use to him are the low prices of commodities he has no longer the means of paying for ? In other words, the cost of living is to be measured not by what we pay for the articles we con sume, but by the amount of income we possess out of which the payment has to come. If it declines more proportionately than the prices of the commodities, they are dearer, not cheaper." The less price of commodities, the lower must be the rates of wages, and tholess the capacity of the masses to consume : a labourer has but his labour to sell, but our policy is to destroy his market.* Local Production and Exchange Replaces Two Distinct Capitals. It has hitherto been contended by the Cobden school that " British commodities are always paid for by foreign commodities, therefore the purchaser of foreign com modities encourages British industry as much as the purchaser of British com modities," and " that every export of goods must be balanced by an import of goods." If by this is meant that a nation shall ex change that which it produces for something it docs not produce, and were it as a ques tion of fact true that British commodities exported are always paid for by foreign commodities, we take no exception to it; but whatever M'Cullough may hpve in tended, we know this is not the meaning of the latter-day Cobdenite. His theory is, that if by exchanging a commodity pro duced at home for one produced abroad— whether the latter is a product of this coun try or not—you can do so on better terms than if you exchanged it for a commodity grown or manufactured at home, it is as great an encouragement to British indus try as if you exchanged it for the produce of domestic industry. Lotus hear what Adam Smith says in ' Wealth of Nations, book ii, chapter v. :—

•Mr Harris has shown us, in the ' Economist of 29th January last, tnat from l«Sf* *°? annual consun\ption per head of population 01 wheut and flour averaged 3371b, costing *.i«^ 4d, against in 1881-83, 351 lb, costing £1 us W, from which it appears, if we take the average population of these periods, this country pa a during the last £14.185.645 less for its wheat ana flour, of which £2,138,348 was duo to o"1"1"?"^ consumption. These figures are reinarkaoie as indicating the decreased spending ppwor ot me working classes, and that in reality they do not benefit by " the cheap loaf" they hare no longer the means of paying for as of old.

" The capital which is^ZT^^ iitllt them to continue that smmortft enabW which sends ScotehmanuTct'^SpS and brings back Encash m!^*o^ corn to£dinb U rgL|ece S^, Ufactn^ which had both beenemploSt^ cufee or manufacture £$£fts*M "The capital employed S n^ foreign goods for home consuls? this purchase is made 3h£ "' ** domestic industry.^T^^N such operation, two diS! as quick as those of the CteSi capital employed in it willSeS^ HALF THK ENCOURAGEMENTS S« Iwe^Sy^^^ can produce an article for £100 2 import it for £95. IfweimpoS^ to, and though we pay for it wi J olrS manufactures we lose £100 of wealth V 2 we might have created less the £5,3 JS loss of £95, which we might have «aiß producing both commodities at '2? Suppose hosiery to the value of fffl produced-annually in BiminghaivS exchanged for lace produced Liv« Nottingham to the amount of £300 H all classes engaged in the product^ k! Birmingham and Nottingham'^ benefit}, to the extent of £600,000. But if BlrS ham exchange its hosier/ for lace madeb'i baxony, Nottingham will have £300 OOOW to spend; for let it be carefully noted tk it is not only the profit Nottingham 1» for the entire value of the domestic proS would have been net income to its peonS benefiting bakers, grocers, butchers, tsiS shoemakers, and others." ' Take the question of labour only: if fty modern free-trade contention means in* thing, it means that when we payfj labour expended abroad instead of at home, the wages fund of this country is quite J much benefited as that of the W country! ! ":n

How Foreign Goods are Paid for, We have only to refer to: the abstracts t» see how utterly untenable is the asserts that "British commodities are slvari' paid for by foreign commodities." We exported in the three years 1883*,! merchandise to the value of 872 mfc, and received of importe 1,191 millions,! we add to these 872 millions 10 per cent for freight, insurance, shipping charges, &c, we get 959 millions, leaving a balamje,! were the assertion true, of 232 millions as net profits earned on the 872 millions. But foreign countries have not only to pay m for the merchandise we send them, Jrattls interest on loans, and dividends on Brifeli investments in foreign countries, estimated at 60 millions; and as of course, they do not do so in specie, the excess of theirs port over what we send them, plus tto charges and profit, if any, is merely are-1 mittance in payment of a debt due for something else. Driven from*theirpoiiffoa by such figures as these, one-sided, free traders contend that, let that be as it nay,. 'the growing excesis of the import over lie export, inasmuch as it shows fywjfiU Win tries are getting more andmofeindeW to us, only points to increased natioinl wealth. Is this certain ? Is- there tiotftm; reason to believe that we have, as lli1 Medley appears to admit in his controrosy with Lord Penzance, been recently-paifiiig with foreign securities? but wa«r or not, it is not with the aociimnlatfon^of wealth in the hands of a few wears to, concerned, but with industrial progress aw the wellbeing of the masses. Lord Pep>: ance, in his reply to Mr Medley info ' Nineteenth Century' of last September, shows the absurdity of our trying_to per suade ourselves that accumulation of wealtt (if indeed it be- accumulating) from such sovrices is indicative of increased national prosperity. He says; - ' ~, w,, . "Imports ai-eDaid for, he (MrMedfey) says, either by tk export of merchant or by securities. Be it so. h the^orl 'security' he includes, I. presume,-:hUi«, exchange, which I haveshown^beW; ordinarymethod. of payment m p»»W*Jj and then what does it all come to! »«ft nothing but this; that imports ai-e paid io, somehow, either by goods or secunte «, something of value. All this u> pto«J, simple enough as a matter of.reaso« and experience, but.let me m^^. of things which will illustrate it nug tical light. Suppose the great Amenj Sonfire Mr Tanderbilt. ha^ Iheen * and willing to buy the mj^jg and built himself a palace there, WMJ to prevent'his spending &»*»£* the purchase of foreign impor^, inffl exporting a single bale of.g^^ his way by bills drawn on ffi^fo senting the earnings of the^ew i Central Railroad? Diminished Employment for «« Wor&meo. Havxngrega^th?^^ ing classes-, what does the decrease export, andiapid increase m toJPj^ manufactured goods, >?* *~JJg&n to ? It points to diminished wrktor That America for ***;*s£%& protective system, k , capital, the interest e^^^llas enormous importations di ßg^j, manufactures, .^^iyW* for herself much she &ri but is sending, f.ff^gj* double what we, do for «£*;£ & « turesto compete with ours,^g,. cessfully, in our home and W & A startling and flat contra to^^,, dictum of aeCobden school, imposed 'tefo.V«^ l s***'i import over the export is a ffi^t* the greater the ( sxcess,tg| *„&&* be the amount of *^f|e >>* <JJ shall only have attorned tw prosperity whenweS£ a broad Jf £nd import all we ; nqo« W „£* "that every expo* °Jf, m by an inpmt of goods 1 utK^ff^SSj

important &&#*•

THE AUCKLAND EVENING STAB. FRIDAY, AUGUST 26, 1887.

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