•3785 ? - J / ■ /// THE LIBRARY OF THE UNIVERSITY OF CALIFORNIA LOS ANGELES jV" 1 i Y EDITION (OF 10,000 EACH). THE ■■■'■■•■Kna DEPRESSION IN TRADE US CAUSES & REMEDIES. THE " PEARS " PRIZE ESSAYS (OF ONE HUNDRED GUINEAS.) BY EDWIN GOADBY & WILLIAM WATT. IVtth an Introdttctory Paper BY Professor LEONE LEVI. F.S.A., F.S.S. ( One of the Adjudicators), at the British Association for the Advancement of Science, in Aberdeen, September, 1885; M ' ^ o ^-/ LONDON: ClIATTO & WINDUS, PICCADILLY. PR ICE ^iSTE SHILLING. ^ FROM THE "ILLUSTRATED LONDON NEWS." PRIVATE ENTERPRISE IN THE SOUDAN. 25 'HE above Illustration is copied from a photograph and is a proof that certain departments of English private enterprise, in the ubiquitous exercise of modern advertising ingenuity, contrive to make their rnark on the remotest scenes of warfare, and with characters perhaps more enduring than the traces of our public policy in the Soudan. A cluster of rocks, in a somewhat conical form, rises at Otao, on the Souakin and Berber Railway, to the height of loo feet; this eminence, called " The Tower Rock," was used as a post for sentries. Our London readers will not be surprised that, during the presence of our gallant countrymen at that place, an old, well-known and enterprising English house, whose speciality is apjireciated all over the world, took advantage of the smooth surface of the stone, presenting a clear space of 250 square feet, to exhibit in letters 4 ft. 6 in. high the interesting legend that " Pears' Soap is 'I'HK Bicst." It ought to have been accompanied by an Arabic translation, for the benefit of the Soudanese natives, with a reproduction of that famous picture in which they might see how the best of sonps will serve to wash a blackamoor white. " ILLUiiTRATAD LONDON NEWS," 22nd AUG., iSSs. \1 1 [/n retponte to the lub/'oined invitation 69 Hntayi vcere tubmitftd to the Aitjiidlcalort tcko havt awarded the prize to the two Jittaj/t contained in the pretent volumeS^ m J^onboii Morhing lllcii's ^association, 14, F titer Lane, London, E.G. JuvMary 22, 1885. PEARS' PRIZE OF 100 GUINEAS FOR TEE BEST ESSAY O.Y THE TRESENT DEPRESSION IS TRADE. The London Working Meti's Association have the pleasure to intimate that Messrs. Ptars have offered a Prize of One Hundred Guineas for t/ie best Essay on the PRESENT DEPRESSION IN TRADE: Its Causes and its Remedies. Messks. GEORGE BADEX-POWELL, M.A., CM., F.R.A.S., JOIIX GLOVER, F.S.S., PiioFESsoK LEONE LEVI, F.S.S., HAVE KINDLY CONSENTED TO ACT AS ADJUDICATORS. The Essay should not exceed 04 pages, demy octavo, and is to he sent to Mr. George Potter, Presidtnt of the London Working Men^s Associa- tion, li, Fetter Lane, London, E.G., on or before tlie 31 si Manhnext. The Essay to be accompanied tvith an enclosed sealed envelope^ containing the ncime atid address of the icriter, and A motto attached to the Essay, and also the same motto on the face of the sealed envelope. The Adjudicators reserve to themselves the rigid of iclthdrawiny the Prize if they do not find thi Essays to possess absolute merit. By Order, GEORGE POTTER, President. January 22nd, 1885. a^ THE PEESENT DEPEESSION IN TRADE: ITS CAUSES AND REMEDIES. THE "PEARS'" PRIZE ESSAYS (OF ONE HUNDEED GUINEAS) BT EDWIN GO^VDBY and WILLIAM WATT , WITH AN INTRODUCTORY PAPER BT Professor LEONE LEVI; F.S.A., F.S.S., (one of the adjudicatobs) READ AT THE BRITISH ASSOCIATION FOR THE ADVANCEilENT OF SCIENCE, IN ABERDEEN, SEPTEMBER, 1835. TEXTR EDITIOy OF TEA' TROVSAyD EACH. ^ u b « : CHATTO AND WINDUS, PICOADILLY. 1885. [_The right of trantlation it reterted.'] t c t c THE DEPRESSION IN TRADE: ITS CAUSES AND REMEDIES. a |3aper READ AT THE BRITISH ASSOCIATION FOR THE ADVANCEMENT OF SCIENCE, IK ABERDEEN, SEPTEMBER, 1885. BT Professor LEONE LEVI, F.S.A., F.R.G.S., F.S.S., &c., &c. LONCOW : WATBBLOW AND SONS LIUIIBS, fEIlfTBBS, LONCOir ■Wi.LL. f/3 INTKODUCTION. I. — PiiizE Essay ox the Depression of Trade. ^TTTITIIIN tlie last few weets as many as fifty-eiglit Essays '^ ' ' were placed in my liands as one of the adjudicators of a 0= Prize of One Hundred Guineas, generously offered by Messrs. £ PEARS for the Lest Essay on tlie present " Depression of Trade, "* its Causes and its Eemcdios," and from these my colleague, Mr, John Glover, and myselfj much regretting the absence from Eng- land of Mr. George Baden Powell, who consented to act Avithus, selected two Essays, as on the whole the best, one by Mr. Goadby, g^of York, and the other by Mr, Watt, of Aberdeen, to whom 22 we awarded an equal proportion of the Prize. The value of the ^ Essays does not consist in the discovery of any now method for cj the prevention or remedy of such depressions — we did not expect othat, but rather in their presenting a wcll-digestod survey of the circumstances which preceded, and tlie causes which pro- duced the depression. There is nothing very new, indeed, in the occurrence of even a somewhat protracted depression of trade. We have had it before. The periodicity of commercial crises has often been noted. Experience teaches us that seven fat-fleshcd, well- t3 favoured kine — years of plenty — are generally followed o by other seven poor and very lean ill-favoured kine — P years of famine. What may be the causes of it we need not .'JH.'JC.i.'! iv INTRODUCTION. inquire. Some have gone so far as to detect a connection between the solar surface and certain terrestial phenomena, as between sunspots and the price of wheat. As a matter of fact, there has ever been an alternation of prosperity and dulness in trade. Tlie declared value of exports of British produce and manu- facture shows us that the lean years 1845 to 1848 succeeded the fat years 1843 to 1844 ; that the loan years 1854 and 1855 euceeeded the fat years 1849 to 1853; that the lean years 18G0 to 1862 succeeded the fat years 185G to 1859; that the lean yeai*s 1867 and 18G8 succeeded the fat years 1863 to 1866 ; that the lean years 1873 to 1879 succeeded the fat years 1869 to 1872, and that the lean years 1883 and 1884 succeeded the (compara- tively) fat years 1880 to 1882. (See Appendix A.) And thecon- Bcquences of these alternations are always serious, for the economic interests of millions of people, all the world over, are affected by them. 11. — Alleged Causes of the Depression of Trade. The causes of the present depression are variously stated by the different Essayists. Some are described as affecting special branches of industry ; some as particularly bearing on British commerce, and others, of a more general character, as affecting all branches of trade and all countries alike. Amons the causes mentioned are, the diminished production and consequent appre- ciation of gold; the heavy losses in agriculture consequent on several successive bad harvests, accompanied by competition of large foreign imports brought to this country at exceedingly low rates of freight ; over-production in manufacture, shipping, iron, coal, in fact in production of every kind, the effect of improved plant and machinery as well as of larger amount and greater con- centration of capital ; heavy losses of national resources caused by numerous destructive wars, and the large war expenditure yearly incurred by the pnncipal countries of Europe ; extensive specu- lative investments utterly disappointing in their results ; an INTRODUCTION. V excessive expenditure in alcoholic beverages ami the improvi- dence of tlie working classes ; the restrictive tariffs in many States -which intercept the free course of commerce and condemn nations to suffer, either from the exclusion of necessary or useful commodities or from excessive monopoly prices ; the cessation of great discoveries, and the revolution produced by the greater speed in communication. Among the remedies suggested for commerce and manufacture are : the introduction of better machinery and improved processes in manufacture ; the opening of new channels of trade, and greater economy both in production and distribution ; and for agriculture, a cheaper and safer system for the transfer of land, as well as greater stability of tenure. Only one Essay out of fifty-eight was found to advocate fair trade, and to bi'ing forward reasons against the maintenance of our free trade policy. III. — Pkogkess of British Trade, 1805-1885. In order to determine the character and extent of the present depression of trade, if such really existed or exists, not a few writers have taken for their starting-point the years 1 872 and 1873, but those were very exceptional years from a variety of causes. The revival of trade in France and Germany, after its interruption during the war, the eagerness manifested in both countries to recover what they had lost, the illusion formed of unlimited wealth in France, from the facility with which she paid the exacted indemnity to Germany ; the numerous loans contracted by different States, and paid in many instances by the export of produce ; these and other circumstances gave an enor- mous and an unnatural impulse to trade and production in those years, an impulse not justified by the economic condition of the people whose wants they were intended to supply. Do not think that the power to consume is always commensurate with the power to produce. War is a calamity which destroys the ver}' vitals of nations and blights the best sources of wealth. Nothing could be more fallacious than to imagine that France and Germany VI INTRODUCTION. were any the riclier by the terrible war which they waged against one another. Many years of patient industry are required to make up for the waste and destruction thereby caused. Can we wonder that the very high value of the exports in 1872 and 1873 was subjected to a serious diminution in subsequent years. A sound opinion of the condition of trade can only be formed by taking a long period under review, and if we divide the last twenty years into four quinquennial periods, we may better see what progress has been made and what could reason- ably have been expected. Total Trade of the United Kingdom, 1865-1884. Years. Iiaports. 1865-69 286,frll,000 1870-7-1 3 tf;/)67,O0(i 1875-79 ,375,055,0(K) Per bead. Exports. British produce. Per bead. £ 9 10 U 1830-8i '407,687,00011 d. £ 4181,069.000 5 230,720,000 0'201,474,000 6,234,255,000 £ s. d. C 19 7 7 7 6 6 13 10 Foreign and Colonial produce. A 48,615,000 55,453,000 56,52-1,000 63,538,000 Total. 229,68 1,000 Total Trade. £ £ n 6.325,000 17 Per bead. 286,179,000 632,248,000 257,993,000 033,0.53,000 297,793,000 705,380,000 20 18 19 20 So far then from exhibiting any extraordinary declension, theso figures show that the trade of the United Kingdom has been on the whole in a fairly healthy condition. Comparing the period of 1880-1884 with that of 18G5-69, and making allowances for the increase of population, we find an increase in the imports at the rate of 19-57 per cent. ; an increase in the exports of British produce at the rate of 11-76 per cent., and an increase in the total amount of trade at the rate of 19-64 per cent. Such per- centages of increase are certainly not large, but they do not justify the assertions of any extraordinary depression of trade which liavo been so persistently made. The imj)ort3 have increased at a greater ratio than the exports, yet the exports have not stood still. A great part of the imports is paid by the exports, and the nation draws profit from both the one and the other. IXTKODUCTION. Vll lY. — Effect of Prices on the Valuation of Impohts AND Exports. But while the declared value of imports and exports is shown by tho price, tho consuming' power of the people is best seen by the quantities received or sent out. Look at tho shipping returns. The tonnage of British and foreign vessels, cleared at ports in the United Kingdom, with cargoes only, to foreign countries, averaged from 18G5 to 18G9, 14,014,000 tons ; from 1870 to 1874, 18,780,000 tons; from 1875 to 1879, 21,509,800 tons; and fi'om 1880 to 1884, 27,073,000 tons. "While the population of the principal countries may be taken to increase at the rate of about 10 per cent, in ten years, our exports in value in that period have increased at the rate of upwards of 40 per cent., and in quantity at a still gi'eater rate in twenty yoavs. Mr. GiUcn, in his report on recent changes in the amount of the foreign trade of the United Kingdom and the prices of exports and imports, showed that the quan. titles of imports in 1883, declared in value at £427,000,000, would have been worth £512,000,000 if computed at the prices of 1873, or £85,000,000 in excess, and that the quantities ex- ported in 1883, calculated at the prices of 1873, declared in value at £240,000,000, would have been worth £349,000,000, or £109,000,000 more than they were declared to be. "Whence, however, this low range of prices ? Mr. Giflfen, in a paper in the Contemporary Revieio for June, as well as Mr. Goschen, in his speeches at Manchester and elsewhere, have ascribed the low prices to the rise in the value of gold consequent on the great reduction in production in the face of a much- increased demand. But if any change had taken place in the value of the quotient by which all values, all prices, all services are estimated, its effects ought to have been general, and not partial to a certain number of commodities. Wliy, then, is meat dear and bread cheap ? "Wh.y are wages in certain industries well maintained, and wages in other industries via INTRODUCTION. in a declining state ? Although the production of gold •within the last few years has not been so large as it used to be, vre must remember that tlic accumulated stock* of that precious metal is very large, and that the actual use of gold in banking, in commerce, and in the ordinary business of life has been greatly economised by the use of cheques on bankers, 80 perfect is the system of credit now prevailing, not only in the United Kingdom, but in the United States and other countries. A much more satisfactory reason for the fall in prices, I think, was suggested by Mr. Fowler, in the same Contemporary Review, where he ascribed it to the increasing production of the different articles, to improved facilities of communication, lower freights, international telegraphy, and the like. The following quotations of prices, from the returns already named, of the principal articles of food, of raw materials, and of articles of exports in 18G1, 1873 and 1883, will show that the fall has been by no means uniform : — Pkices of Articles of Imports. Articles of Food. 1861. 52-04 1&73. 1883. 1883 t 1861. Bacon B. per cwt. . 40-88 53-09 + Beef s. 34-3.5 39-90 52-91 + iJutter £ „ 4-94 5-C4 5-04 + Cheese £ „ 2-32 7-99 2-72 + Cocoa d. per lb. G-42 2-43 7-97 + Eg?8 d. per dozen 7-80 10-29 8-37 + Currants «. per owt. 22-03 25-73 27-72 + Rice »■ 12-90 9-92 8-20 ^ Sugar s. ,, 34 6.5 3 5-84 27-22 ^^ Tea d. prT lb. 17-02 17-67 12-46 Com — Wheat ». per cwt. 12 72 13-01 9-85 _ Flour '■ 8-14 8-55 7-08 — • Mr. Mulhall gives the increase in the stoclf of gold at from £911,000,000 in 1800, to £1,501,000,000 in 1885. INTRODUCTION. IX Raw Materials. 1661. 1873. 1883. 1883 A 18(ii. Brimstone s. per cwt. , 7-86 6-69 6-52 Cotton, raw £ 3-44 4-01 2-91 . Indigo £> „ 35-82 27-90 24-50 _ Fla^s s. „ 63-13 49-95 39-92 . Palm Oil 3. ,, 42-68 33 67 35-11 .. Leather d. per lb. 18-46 17-58 17-56 ^ Copper Ore £ per ton 15-93 16-54 10-34 — Saltpetre s. per cwt. 32-49 26-30 20-04 — Silk, raw- s. per lb. 17-69 20-97 16-20 — Tallow s. per cwt. . 50-74 41-28 40-48 .. Wood £ i)er load . 3-78 3-24 2-61 _ Wool ». per lb. 15-85 14-75 12-08 ^ Prices of Articles of Exports. 1861. 1873. 1883. 1883 4 lb61. Cotton Yarn d. per lb. 12-54 17-76 12-25 Cotton Piece Goods plain d. per yd. 3-02 3-45 2-61 _ Linen Yarn d. per lb. 13-91 16-51 14-36 + Linen, -white and plain d. per yd. 7-16 7-62 6-95 Woollen Yarn d. per lb. 30-13 37-26 23-41 ^ Wool Cloth d. per yd. 29-81 41-00 38-30 + Sugar, refined s. per cwt 49-24 30-02 21-40 Iron Bar £ per ton 7-53 13-21 6-37 _ Steel £ „ 33-33 37-11 19-10 _ Copper, wrought £ perc-wt. 4-34 4-29 2-59 — Coal «. per ton 9-01 20-49 9-20 + Glass, flint s. per cwt 55-18 57-88 44-94 Y. — Classification of Imports and Exports. A return of the values of imports and exports, according to a classiGcatiuu of the articles into manufactured gocdi!, articles partly manufactured, rf.-\v materials, and articles of X INTRODCCTIOy. food, showed the total value of each class in the three years from 1881 to 1883 to have been as foUows: — Consumption of Foreign PRODrcE and Manufacture. Imports after Deduction of Exports of Foreign and CoLONiAi, Merchandise. Classiflcation . 1831. Per cent. 1882 Per cent. 1883 Per cent. Averag e of 3 years per cent. Manufactured . Partly Manufactured . Raw Materials. Articles of Food . Unclassified . £ 45,676,000 21,835,000 99,858,000 105,773,000 819,000 13-67 6-53 29-89 49-63 28 £ 47,599,000 24,612,000 107,487,000 167,238,000 880,000 13-68 7-07 30-90 48-08 27 £ 48,879,000 24,476,000 107,378,000 179,617,000 906,000 361,256,000 13-53 6-77 29-71 49-72 27 13-63 6-79 30-17 49-14 27 333,961,000 100-00 1 347,816,000 100-00 100-00 100-00 5.) Exports of Britisu Produce and Manufactures. 1881. Per cent. 1882. Per cent, 1883. I p I Average cent °" years ''^^^ I per cent. Manufactured . Partly Manufactured Raw Materials. Articles of Food Unclassified . il78,94t,000, 30,200,000 I 13,522,000 10,315,000: 1,041,000 76-49 183,733,000 12-81 31,177,000 5-77 14,200,000 4-40 10,980,000 0-53 1,312,000 234,022,000 100-00 241,468,000 I i I £ I 76-06183,399,000 12-9l! 29,897,000 5-93' 14,480,000 4-54' 10,485,000 0-56| 1,538,000 76-47; 12-45 6-031 1-37| 08: 76-34 12-72 5-91 4-44 69 100-00 239,799,000 100-00 10000 Here -we have some idea of the character of our exchanges. Manufactured and semi-manufactured, goods figure in the exports of the United Kingdom in the proportion of 89 per cent, of the •whole, and in her imports in the proportion of only 20 per cent. In other words more than seven-eighths of the British exports consisted of produce or merchandise, the fruit of the handiwork, the taste and ingenuity of British artizans. Now, could the INTRODUCTION. 3U United Kingdom, wliicli exjjorts so large a proportion of manufactures, otject to receive about 20 per cent, of the same from foreign countries. Raw materials for manu- facture constituted about 30 per cent, of the British im- ports, and only loss than G per cent, of British exports. Of articles of food there is great need in this country, and therefore they constituted a large portion of the imports, and a very small portion of the exports. It has been advocated that England should not receive from foreign countries, articles which may be produced in this country. But such an exclusive and unjust policy would be most mischievous to our foreign relations, and would be met by corresponding restrictions in foreign countries. It is indeed remarkable that Britain should yearly bo able to receive so large an amount of raw materials, manipulate and manufacture them, and when so converted, re-export the same, in many cases, to the same quarters whence they originally came. Nor is it less wonderful, that, notwithstanding the construction of the Suez Canal, which brought other Continental countries so much nearer India and other producing countries, upwards of £00,000,000 of foreign and colonial produce should still find their way to these distant isles, and be thence distributed to the countiies which need them. There are still a few, and I trust only a few, who lament our increasing dependence on foreign countries for the necessaries of life, who contend that the excessive balance of imports over exports indicates an enormous indebtedness to foreign countries, or an absolute loss in our exchanges with them. In their opinion with a view to the greater employment of the labouring classes at home, and as a matter of simple fairness to the people of this country, we should prohibit or restrict the imports of manu- factured and even semi-manufactured articles, including for in- stance wheat flour. Kay more. What they advocate is that we should do unto others what they do unto us — meet prohibition with prohibition, high duties with high duties, and bounties with countervailing duties. It should bo remembered, however. xii INTRODUCTION. that the increasing imports of articles of food is on the one hand the consequence of the improved condition of the people, •nhich enables them to eat and drink more now than they were able to do in former years ; and, on the other, the result or natural conditions, which determine and limit the productiveness of the soil in the United Kingdom, a fact, which we cannot remedy, and which we can only meet by the importation of foreign produce. The excess of imports over exports does by no means indicate a corresponding amount of indebtedness to foreign nations, for many other items must be taken into account befora the balance of indebtedness can be struck, a large portion of the imports coming to this country in payment of money due upon the investment of British capital abroad, for freight for the employment of British ships on foreign account, &c, "We would commit the greatest possible error were we to attempt to benefit the working-classes by the restriction of the imports, and the reduction of the amount of foreign trade ; any restraint of that character having the effect of benefiting the few at the expense of the many. VI. — Analysis ojf British Exports. I have already remarked that the British exports^ though more than keeping pace with the population, have not exhibited any material increase between the first and the fourth quinquen- nial period at least, in so far as regards the declared value. An analysis of the descriptions of produce and manufacture ex- ported, shows that whilst tbere has been an increase in the exports of some articles, there has been an actual decrease in the exports of other articles. And that whilst the principal staples of British produce and manufacture show only a moderate advance, a greater increase has taken place in the exports of other articles. In truth England sends forth a much greater variety of productions than she used to do. The figures are as follows : — INTUODUCTION. XUl Exponxs OF BiJiTisn Puoduce and Makufactuhe, 18G5-1884, 1865-09. £ 1.3,581,000 53,C:)7.(;00 6,613,000 20,836,000 2,378,000 8,016,0i'0 9 16,00(1 1,188,000 4,7S4,000 l,82i>,00(i 4,180,000 4,950, (XXi 15,.';83 (00 6,068,000 1870-74. u m « ci V It + + + _ + + + -*- + + + -1- -f -1- 1875-77. u o a 1880-92. O e ii Is -f -t- •4- -t- -t- -H •f -t- -+- ■H u m Cotton yam ,, niaiiufaolured ... ■Woollen yarn „ manufactured... Linen yarn ,, niaiiufacturcii Silk thrown ,, manufactured liabeidashcry Kai-tlienware llanhvare Machinery Iron manufactureci Goal £ 15,303,000 59,832,0X1 6,631,000 25,876,000 2,555,000 7,480,000 1,4')4,000 1,934,000 6,018,000 2,050,(KX) 4,410,000 7,851.000 3I.015,(H)0 9,499,000 £ 12,(!54,00o 55,0.55,0( 4,119,0 (1 18,038,000 1,377,000 6,917,001 758,000 1,770,000 3,9-9,000 1,770,000 3,481,000 7,753,000 20,8S1 ,000 8,194,000 £ 13,0.-0,00() 62,>)75,000 3,425,(l(X) 18,522,0(Xi 1 ,053,lX)0 5,ti53,000 767,00(> 2,377,000 3,811,000 2,149,000 3,6.81,000 11,637,000 28,131,000 9,014,000 + -I- -4- -♦■ Principal articles Othtr articles 112,718,000 38,309,000 180,405,000 51,2«1,(X)0 145,822,0(^0 55,053,000 156,675.000 7 7, E 60,000 •4- Toial £ 181,087,000 234,726,000 201,475,000 - 231,265,000 -»- The exports of cotton yarn, woollen yarn and manufacture,, linen yarn and manufacture, haberdashery and hardware, show a decrease. The exports of cotton and silk manufacture, earthenware, machinery, iron manufacture, and coal, show an increase, and if we compare 1865-69 with 1880-84 we find that whilst in the principal articles of export there was an increase of 9"19 per cent., in the exports of other articles tlie increase was as much as 102-12 per cent. Generally, the same features are exhibited in the quantities exported as follows : — h . °^\ o o O oo 1865-69. 1870-71. 1875-79, a J. 00 e! a o 1880-84. 5 (o M >-< Cotton yam, lbs 161,000,000 20,^,000,000 + 232,010,000; + 219.0(.>0,00O -4- ,1. ,, manuf. vards ... 2,6o3,o00,0(H) 3,162,000,00'1 + 3,t82,0llO,0(.O, -1- 4,515,(00.(HH)j ->r -V Woollen Viirn, lbs. 36.000,000 38,000,000 + 31,000 000 - 32,01 0.000| -4- — ,, manuf. yards ... 276,0(»,O(0 349,000,000 + 271,000,0001 - 268,000,0001 - ~ Linen yarn, lbs 34.:<.')0,Oi'0 3-J,00O.OOO - 22,178,000' - 18,000.0001 - — ,, manuf. yanla 227,000, (■()() 218,000,(HX) - 173,0(.X),i 00 - 16(i,000,000 - - Iron and Steel, tons 1,961,000 2,981.100 + 2,l4l,0O() - 3,901,000 ■*■ -4- Coal 10,19J,O0O| 12,748,000 + 15,'i40,000 -1- 19,073,000 -4- -4- XI / INTKODUCriON. VII. — DiSTEIBUTION OF BlUTISH ExPORfS. It can scarcely be said, that the principal countries of the world are less open at this moment, than they were twenty years ago, to the admission of British produce and manufacture. Doubtless, we must lament the prevalence of erroneous economic principles in several countries. Financial exigencies, and more especially the influence of interested parties in the Government, and in the legislature of foreign States, have retarded the practical adoption of principles admitted to be sound and unquestionable. But, no political economist, anywhere, has ever spoken a word in favour of either restrictive tariffs, bounties or prohibitions. Taking the population of the world at 1,600,000,000, and as- suming the population of the British colonies and possessions to be about 2.30,000,000, the exports of British produce within the last five years averaged 6s. 5d. per head to British colonies and posses- sions, and 2s. 3d. per head to foreign countries. The relative progress of exports was as follows : — 1865-69. 1870-74. o i t 9 Si; : 1875-79. go + 1880-84. 'o6 Increase or Deere use, 1884-1865. Foreign Countries. . . Britisa Colonies . . . £ 131,155,000 49,952,000 £ 173,380,000 59,245,000 £ 136,253,000 66,022,000 £ 153,499 OW 80,756,000 + + + £ 181,107,000 232,525,000 + 202,875,000 - 23J,255,000 + + Whilst the exports to foreign countries have increased at the rate of 12'03 per cent., the exports to British colonies and posses- sions have increased at the rate of 6 1 -OS per cent. The disappoint- ing countries are Germany and the United States. To Germany, in the period from 1865-69, the exports amounted to £19,845,000. In the following period, 1870-74, they amounted to £26,308,000 and in the last, 1880-84, they amounted to £17,920,000. To the IXTKODUC'I'ION'. XV United States of America tlio exports in 18G.j-(j9, amounted to £23,522,000. In 1870-74, tlioy were £33,013,000, and in 1880-84, they wero £28,084,000, and this in the face of an enoiinously increasing population. On the other hand, British India is becoming a largo field for British exports. In lH6o-C9 our exports thither amounted to £16,566,000, and in 1880-84, they rose to £30,183,000, And to the Australian colonies, in 1865-09, thero were exported £12,419,000 worth of British produce, and in 1882-84 £22,345,000. There are evident reasons why the exports to Briti.sh colonies and j)ossos?ions should be increasing more lapidly than those to foreign countries. The population of ]]ritish Colonies is increasing very rapidly ; their natural resources, from an almost as yet virgin soil, are being developed with great vigour and with capital without stint ; their colonists, mostly of British race, have a natural preference for British produce and manu- facture, all the more that the produce which they raise, both agricultural and mineral, find the best market in the United Kingdom. In pure geographical order, the exports from the United Kingdom were divided as follows : — • 18C0. Per cent, of the whole. 36-10 2012 6-01 31-3» 714 •15 1870. Per cent. of the whole. 1680. Per cent, of the whole. 1884. Per cent, of the whole. Europe . . . Asia Africa .... America . ... Australia . . . Other countries £ 49,000,000 27,3('O,O0O 6,800,OOJ 42,60(1,(>00 0,700,000 600,000 £ 61,100,000 36,600.000 13,400,000 67,4CO,000 0,800,000 1,300,000 40-65 18-68 67C 2809 4-01 •36 £ 82,000,000 68,000,000 12,600,000 60,100.000 18,900,000 1,500,000 S7-08 2107 6-69 27-18 7-64 •73 £ 90.000,000 46,000,000 11,000,000 61,000,000 24,000,000 1,000,000 38-68 10^74 4^73 26'18 10^30 *44 £ 135,000,000 100-00 109,600.000 100-00 1 241,100,000| 10000 233,000,000 100-00 Thus arranged, wo find that Europe and Asia maintain their place. Not so Africa, notwithstanding the many recent dis- coveries, and the enormous changes in her geographical and political divisions. And what we have lost in America has been gained in Australia. XVI INTROUUCTION. "Vni.— CoiirAiusoN oi- BiiiTisu and Foreign Exports. An imi)res.sion jirevails that, whilst British exports are lagging behind, foreign exports are rapidly increasing. A comparison of the progress of British exports with those of foreign countries Avould be instructive, if classified in the same manner, as indi- cating the amount of power exerted by them in the development of their natural resources, and the success they relatively attain. But when the character of such resources differs essentially, the comparison is of no value, and still less can it be a guide to the question of international competition. The following is the total amount of domestic exports from the principal countries in 1865 and 1883: — Countries. Austria Belgium Franco Holland Italy Eussia Unilcd States United Kinsrdom 1S65. £ 34,400,000 24,000,000 123,500 000 28,000,000 22,000,000 32,000.000 28,500,000 165,800,000 1883. £ 75,000,000 53,700,000 138,000,000 50,900,000 47,200,000 97,800,000 107,000,000 240,000,000 Increase per cent. 116-10 123-83 11-80 103-57 113-63 206-20 496-42 44-75 The domestic exports of the United Kingdom and France thus appear to have made a smaller rate of increase than the exports of many other countries. But the British, as well as the French exports, started from a much larger amount. And it should be observed that France, with her protective policy, stands coa- tjiderably behind Britain with her free trade policy. As regards other countries, other circumstances must be taken into account. In 1865, Russlci had scarcely emerged from the disasters of the Crimean War, Italy was not yet fully consolidated, and the United States were still suffering from the effects of their intes- tine war. If, moreover, the exports of the United States have INTRODUCTIOV. XVH increasod enormously, it is Locauso, wiik an increasing area, they have greatly increased the production of articles of food. Whilst the exports of the United Kingdom consisted of 76 per cent, of manufacture and 24 per cent, of other articles, those of the United States consisted of only 6 per cent, of manufactured and 94 per cent, of other articles, principally raw materials and articles of food. ]Much is said of the success of Belgium and Franco, but a comparison of the exports from these countries of textile materials show that they have suffered much more than the United Kingdom : — IX. — Assessed Amount of Peofits from Trade and Occupations. The most important evidence of the real condition of trade must be sought for in the amount of profits for ■which our mercantile classes consent to be taxed from year to year under Schedule D of the Income Tax, for, although some may under- estimate their income, and others may over-estimate the same, on the whole the amount so assessed may be taken as a fair test of the profits of trade. The following gives a general view of the fluctuations in the princii^al classes of assessments under thia Schedule from 1861-5 to 1882-3 in periodical averages. XVlll INTRODUCTION. 1805-69. 1870-74. 1878-73. 1880-84, Increase per cent. Qnnrries £ 011,000 5,3-19,000 ],Vi9.',000 1,970,000 826,000 18,400,000 I 15,389,000 120,165,000 £ 719,000 7,112,000 3,90S,000 2,578,000 761,000 23,655,000 19,212,000 141,817,030 6,95t<,000 £ i,i32,oro 13,lfiO,000 3,032,.i00 3,3!i8.000 2,4.'G.C00 29,356,003 24,087,000 170.718,000 13,8,i5.CO0 £ 958,000 6,930,000 2 555,000 4,577,000 33,993.000 27,706,003 170,386,000 21,437,000 66-79 Mines 29-72 Ironworks 28-26 Gasworks 13233 Canals, &c Railways 84-14 Public Companies, 1SG7-69 80 03 Trade i Profession Otlier Prolits ... . 41-79 Total 164,702,000 209,611,000 261,764,000 208,551,000 6304 Population 30,200,000 31,80),000 33,20'»,C00 35,300,000 16-88 Per Head & 5-45 6-59 7-83 7-CO 39-44 It thus appears tbat the incomes from these various sources, instead of showing any diminution, exhibit an increase in the proportion of 39-44 per cent, upon the increased population of the United Kingdom. It should be observed, moreover, that in consequence of an increase in the limit of exemp- tion made in 1875-6 from £150 to £200, as much as £20,000,000 income were removed from the assessment. On the other hand, other facts must be borne in mind. A large amount of tlio income so assessed arises from industrial enterprises requiring a considerable investment of capital. The income from railways, in the year ended 31st March^ 1884, amounted to £35,339,000, but the capital invested in them was not less than £785,000,000, and the profits arising therefrom were at the rate of 4-62 per cent. Again, within the last twenty years, a large and an increasing amount of profit has been assessed upon public comjianies of a commercial character. And we know that the income so assessed is divided among an extensive number of shareholders belonging to all classes of society. The concentration of capital which has arisen from the operation of the Limited Liability Acts, has not tended to concentrate the profits of trade, but rather to diffuse them. 8uch profits are larger than they were, and, what is better, ihey are divided among a larger number of participants. INTEODUCTIOX. XIX X. — Assessment of Profits upox Land. A very direct iufluonco is exorcised by the condition of tho agricultnral upon that of the trading interests. A prosperous agricultural population is an important element in the activity of tho liome market. Their wealth or their poverty is reflected in an increasing or diminishing demand for produce and manu- facture. Low wages and increasing economy of labour in agricul- ture have the effect of increasing the competition for labour in the manufacturing districts, and capital withdrawn from land goes to swell its supply in trade. Some idea of the de- pression of agriculture in recent years may be formed from the following relation between the production of wheat per acre- price of wheat, and consequent money return per acre from the same as follows : — Yearp. Avcrajro Tield in Bushels per Acre. Avemgo rrice of Wheat per Imperial Quarter. Value of Produce per Acre. 18(55-69 1870-74 1875-79 1880-84 27-8 27-5 24-0 27-4 S. d. 63 8 55 47 6 42 4 £ B. d. 9 7 9 9 7 2 7 5 But if corn-growing, and especially wheat-growing, lands have suffered considerably from tho low price of wheat, pastoral lands have benefited from tho high prico of moat. Hence the experience of late years differed materially in different counties. In Norfolk and Suffolk there has been a great reduction of rents. Not so in Devon, Cumberl.and, Chester, and Lancaster. I am indebted to Mr. H. C. Newson, a land agent, for a number of facts illu.'^trative of the present value of land and fiirms within his own personal handling, and it will bo seen that the lands which have suffered most are the poor wot clay lands XX IKTRODUCTIOK. and land only suitable for growing wLeat. The 40 farms referred to in Mr. Newson's return -wlaich represented an aggregate old rental of about £8,300, had in 15 years been reduced in value at an average of 30 per cent, to the amount of £5,700, and in many cases they were not saleable. (See Appendix B.) The amount of income assessed on land is — first, the landowners' income from rent, tithes, &c. ; and second, the income of farmers derived from the occupation or working of land. There ought to be no difficulty as regards the landowners' income, except that in late years the Income Tax Commissioners were called upon to make consider- able reductions upon the assessments in consequence of the abatements of rent made, and in many cases the non-payment of rent altogether. It is not eas}', however, to arrive at the real income of farmers. The statistical abstract gives the gi'oss amount "assessed" to the income tax under Schedule B, for the year 1882-3 at £65,823,054; and, following this authority, M. Giff"en, at the Jubilee Meeting of the Statistical Society, gave the income of farmers at about £60,000,000, and Mr. Goschen, in his speech in Manchester, gave the united income from land of landowners and farmers at £140,000,000. But this, it seems, is an error, for no special assessment is ever made of the farmers' income. The Commissioners of the Inland Eevenue use the assessments under Schedule A as a means for arriving at the profits of farmers {see letter to the Times, Appendix C.) ; but in order that farmers may not over-pay, half rate is charged in England and Wales, and one-third of the rate is charged in Scotland and Ireland. And thus, calculated in the year 1883-84, the amount of income from land will stand as follows : — Gross Arnount. Income from Occtipation T^f^i Scbedule A. of Land— B. ■^"'^*'* £ £ £ £ £ ^l'^„^«r.A A7o-';nrin^ ^ of 47,810,000=23,905,000 "),, ,,,^ .„„ ->(~-nnn ^"K^^'^d 47,9o5.000 [Assessment in full... iislooo J ^l.l^^O.OOO . .2,0i-metallism has nothing to do with the depression of trade. Money is plentiful. What is wanted are greater diffusion of comforts and more confidenco in political and social tranquillity. Altogether ill-founded are the com- plaints made against Free Trade. The free importation of merchandise into the United Kingdom has not proved to be a deterrent to production. For the increasing supply of articles of food^ let us be devoutly thankful. The nation may perish by scarcity of food. It does not perish by abundance. And if the people consume more, it is because they produce more. We might expect better things in matters of tariff from such enlightened countries as France, Germany, and the United States, but, if these or any other countries prefer sacrificing their national interests in order to benefit any special class or classes^ that is not a valid reason why England should do the same. If the Eoyal Commission, lately appointed on the depression of trade, or any members of the same, are in any expectation, that the facts which may be presented to thom justify either the ro-imposition of the Com Laws, or the introduction of differential duties in favour of the British Colonies and against foreign countries, or a pro- hibitive or restrictive tariff of imports, they will be grievously disappointed. I do not object to an inquiry. It will put an end to much idle talk. It will show on what foundation of sand fair-traders and protectionists are relying. The verdict of the Nation has long been pronounced, and the Royal Commission, summoned if possible to reverse the same will, like Balak of old, not only reject the appeal, but confirm it as irrevocable. Eoyal Commis5!ions cannot improve trade. What we require is to open and not to shut the avenues of wealth. We are all deeply concerned in its increase all over the world. All nations depend on the abundance of their harvests from year to year. Let us praj that their and our garners may be full, affording all manner of fctorc. Commerce will ever be the handmaid of INTRODUCTION. XXlli peace. Let us rebuke the thoughtless, the suicidal mania for a warlike policy ; let us put a check to the ruinous main- tenance of enormous armies. Britain need not fear competi- tion, and there is no reason why her productions sliould bo inferior to those of any other nation in solidity, taste, and economy. She possesses a cheap and abundant supply of coal andiron — she has a climate most conducive to continuous laboiir, and plenty of workers fully apt, would that they had always the will for their work. Wages are not higher hero tlian in other countries, when we take into account the relative power exei-ted on matter, Nor are the limited hours of labour a disadvantage, for labour saved is not lost. She has more capital than any other country, and nowhere the value of money is lower tlian in the United Kingdom. She has almost a monopoly of the carrying trado of the world, and she has the goodwill of a largo and well established custom. By all moans let other nations advance in wealth and industry. There is room for all. Let us only trust for better times, and wo may bo quite sure that any rays of sunshine which may brighten our fellow-labourers in the field in any part of the world will likewise brighten and energise every branch of British Industry. XXIV ArrEXDICE3. APPENDIX A, PROGRESS OF BRITISH EXPORTS. Total Declared Real Value of BRirisn and Irish Produce exported FROM THE United Kingdom. Years. t Value. Increase per cent. Decrease per cent. £ 1840 61,309,000 ■ . . ... 1841 61,545,000 0-38 . . ■ 1842 47,285,000 • * > 8-15 1843 53,206,000 10-36 « •• 1844 58,535,000 12-00 • * • 1845 60,112,000 2-75 • • • 1846 57,787,000 , , , 3-82 1847 68,842,000 0-17 * ■ ■ 1848 52,849,000 • • • 1-02 1849 63,596,000 20-72 • * • 1850 71,368,000 12-26 • • • 1851 74,449,000 8-42 • • • 1852 78,077,000 4-83 • • ■ 1853 98,934,000 25-64 • ■ > 1854 97,185,000 • • • 1-80 1855 95,689,000 • • • 1-64 1856 115,827,000 21-12 • • • 1857 122,063,000 5-35 o • • 1858 116,609,000 . . . 0-44 1859 130,412,000 11-83 *•• 1860 135,891,000 4-14 ... 1861 125,103,000 8-63 1862 123,992,000 • ■• 0-96 1863 146,602,000 18-32 • • • 1864 160,449,000 9-42 • 4* 1865 165,836,000 3-36 ... 1866 188,918,000 13-93 • • • 1867 180,962,000 • •• 4-24 1868 179,079,000 ■ > • 0-72 1869 190,045,000 5-79 ... 1870 199,587,000 5-00 1871 223,066,000 11-79 • • • 1872 256,257,000 10-40 ... 1873 255,165,000 ... 0-77 1874 239,558,000 ... 6-03 1875 22:5,406,000 ... 6-72 1876 200,6:59,000 ... 10-20 1877 198,895,000 ... 0-81 1878 192,8)0,000 ... 2-61 1879 191,532,000 ... 0-66 1880 223,06i',000 16-50 1881 234,023,000 4-84 1882 241,4 07,000 3-11 1883 239,799,000 • • • 0-70 1884 233,025,000 ... 2-82 AlTK.\lJlC£3. xxy APPENDIX B. STATEMENT SHOWING IlEDUCTIONS OF IlENTALS WITHIN THE LAST FIFTEEN YEARS. *?; o e3 . Proportion of Old Rent. Present Bent. County. E-t Arable. Grass. Katuro of Bo;l. Reduc- •3 1 tion. A. A. A. £ 3. £ e. Per cent. 1 Bucks 188 — Ilcavy 250 27 100 11 60 2 100 50 60 ) y 14e 29 50 10 64 3 142 97 45 y y — 71 10 4 134 80 54 )9 175 26 100 15 43 5 143 — fy 241 32 148 20 40 6 105 60 45 jy 210 40 130 25 38 7 140 80 60 }> 240 34 140 ao 43 8 CamLridgo ISO 117 82 »> 413 42 250 25 40 9 Devon, South 1G8 _ Mixed 192 23 173 21 10 10 >> »i 187 — — >t 270 23 250 27 8 11 Lincoln 114 89 25 Fen Clay 285 50 125 22 67 12 t> 80 75 M 170 42 12C 30 30 13 »» 77 72 5 / Upland. \ 138 36 108 28 22 11 >» 71 64 10 \ part clay, f ) part tliin ( [ soil ; 111 30 74 20 33 15 >> 85 81i H- Fon Clay 150 35 82 About 20 45 10 17 >> >» 120 59 110 66 10 3 ( Do. and \ \ part S'ilty j i I'art Up- ] ; land, part \ [ Fen ) 160 128 27 43 120 65 20 22 26 60 18 Norfolk, West 810 510 300 Mixed 1300 32 1000 25 23 19 »> i» 550 424 126 i> 855 31 600 22 30 20 >> M 550 436 114 >f 1000 36 700 25 30 21 Norfolk.South 133 103 30 )> 240 36 200 30 17 22 i> 1) 205 — — Do. part clay 318 31 238 23 25 23 Suffolk, East 265 About g About ij ( Light and \ \ Mixed ] 366 28 263 18 32 24 »> >> 94 74 20 Heavy 141 30 90 19 30 25 >> )» 253 About 2 About 4 ilixed 392 31 250 20 36 2G )» >> 28G 110 70 Heavy 30,3 21 150 10 61 27 »> >) 150 — — » 255 34 150 20 42 2S Suffelk, AVcst 183 — Small part I Part heavy \ } and part | ( mixed j 320 35 106 21 40 XX\1 APPENDICES. Ai'i'ENDix B — continued. .« 1 1 1 o c3 . Proportion of | Old Rent. | Present Rent. County. Total Are Farm Nature o£ Soil. 1 Reduc- tion. Arable, Grass. 75 Per Acre. "5 o Per Acre. A. A. A. £ 8. £ S. Per cent. 29 Suffolk, West 249 :{ Small ) part 1 Do. HeaA-y 311 25 110 11 55 30 47 1) 70 30 47 20 33 31 i> t> 45 — Do. { Partheavv \ 76 34 35 16 50 32 M ff 23G — About I 1 and part , ( mixed ) 396 34 295 25 25 33 >» >) 236 — About \ Do. do. 347 29 250 21 28 34 Somerset 437 170 2G7 1 Mixed, \ \ part clay j 595 27 500 23 16 .35 Suffolk, West 464 362 102 Ileavy 793 34 484 21 39 36 545 453 92 900 33 487 18 46 37 32 28 4 M 54 34 40 25 26 38 148 122 26 J) 291 39 150 20 50 39 278 182 96 J J 566 41 330 24 42 40 )> )) 220 155 G5 Mixed 470 43 330 30 30 NOTES ON TABLE. No. 8. — This farm is now in hand: the best offer I obtained for it last Michaelmai being 20s. an acre, which would have represented a still further reduction ; and if I lei it this Micliaclmn.s, as I intend to do if possible, I doubt if the rent I shall obtain wil be as much as 208. an acre. No. 11. — For this farm I am now taking what I can get. Last year the rent was fixec at 22s. an acre. I believe this property cost about £10,000 ten or fifteen years ago, and my clientt would, I am sure, now sell it for £5,000. No. 13. — Over £1,000 had to be spent on this farm for new buildings and draining before the tenant agreed to stay ; so that the reduction in. rental is really very much more than it shown on the face of the stat< mcnt. No. 14. — A similar remark applies to this farm. No. 15.— And a like r."mark applies to tliis. Nos. 16 and 17. — These two properties ha\o just been foreclosed and the original rents, taking into account all the charges, wore really in excess of the sum shewn in the column under the head fif "Old Kent." Nos. 19 and 20. — The leases at tlie reduced rents run out in a year's lime, and if thing; re main in their present state there will h'j, I should think, at least a further reduction o; 10 or 15 per cent. No. 21. — This farm I have just sold for £3,500, and it cost the late owner about £7,50( some twenty or thirty years ag ). No. 23.— This tai-m has been divided and the reduction in rental would have beer greater Lf it had been re-let as a whole. APPKNDKJKS. XXVll No. 24. — Tilt) tonant now wonts the rent reduced to £70, so that tho reduction will be nearly 60 per cent. No. 2G. — A fiirin close to this one which was rr cently let at 2os. an acre w now in the hands of the owner, who cannot obtain a bettor offer than 53. an acre for it at tho present time. No. 30. — Only last week I agreed to a further reduction c£ this rent, the amount now boin^j £37. No. 32. — Similarly I have agreed to a further reduction in this case, tho future rent to be about £220. No. 35. — The rents shown in the " present rent " column have only been obtainel by dividing tho farm, and I agreed to a further reduction of 6s. an acre on a part of the farm last ween. No. 36. — Tlio greater part of this farm falls vacant at Michaelmas next, and I am I prepared to take los. an aero for it, and shall tako 10s. if I cannot get that. No. 40. — Tliis is a dairy farm, adjoinin": a town, and tho tenant c-annot make ends meet even at the reduced rent ; I fear I shall have to tako 20s. an acre. I am afraid it would not be difficult to obtain you a large number of similar state- ments from other land agents. Devonshire, which up to tho present has been one of tho last counties to feel tho depression, is now beginning to sxiffer, and only a week ago I had a letter from an Agent and valuer who has a largo business in the county, and he states that many tenants are leaving — declining to pay the present rents — and are coming to tho Midland and Eastern Counties, where they can hire farms at from nothing (merely by paying the outgoings) to lOs. or 15s. an acre. Tlio lands which have suffered most are the poor wet clays, and land only suitabK' for ■growing wheat ; and really, at the present time, bad wheat farms are not worth having tent free. Trusting this information may be of some use to you, oven though coming so late. Believe me, my dear Sir, Dr. Leone Levi, 6, Crown Office Row, Temple, E.O. Youi-a very faithfully, n. C. NEWSON. id olifflu tionoi APPENDIX C. THE PROFITS OF AGRICULTURE AND THE NATIONAL INCOME. To TUB Editor op the Times. Sir, — We are greatly indebted to tho Commissioners of Her Majesty's Inland i-levenuo for their full reports on the duties under their management. They might be tontent to publish the barest accounts of tlio amounts received under the several heads, mt incidentally they become possessed of a variety of facts illustrative of tho ecouomic md social condition of tho people, and they publish tho same with much judgment and liscretion. Thus wo have been in the habit i'or many years of looking at tho amount of iroperty and profits assessed to income-tax as one of tho best evidences of the increase nd distribution of wealth. In 18G6 tho late Mr. Ewart obtiunod, at my request, a eturn of the amount of property and profits assessed to income-tax under Schedules A, }, and D— that is, from land, agriculture, and trade in each county in Engl md and ^Valca in the year 181 4-15, and in each county in England, Wales, and Scotland iu jftch of tho years from 1842-3 to 1864-5. Similar returns have been published aubsa- qucntly. extending to IJalfour's return also published xxvin ArPKXDicES. Ireland also ; and this very year wo have had Sir George in continuation of the same, while the totals under each schedule are in the statistical ahstract. The gross emount of property and profits assessed to income-tax can only he taken, under any circumstances, as an approximate and partial indiaxtion of the amount of national income, because it only refers to incomes beyond a certain limit — now £150 a year — and because the gross income is subject to many deductions. Yet statisticians have taken the amount so assessed as, on the whole, the best way of solving a very dillicult economic question, always supposing that the assessments under each schedule faiidy represented the bond fide incomes of the recipients. An error has, however, been clearly made in the appreciation of the am.ount returned under Schedule B — that is, of incomes assessed in rosi>ect of the occupation oi land, for it appears that the returns hitherto made under this schedule, instead of giving the profits of agriculture, have only given the rental paid by farmers for their lands, the same sum, in fact, having boon taken for Schedule B as is given under Schedule A i for the income of landowners. The Commissioners cf the Inland Revenue apparently take the rent of land as their working unit to anive at the profits of farmers, whichi are assumed at half the rent in England and Wales and at one-third the rent in Scotland and Ireland. Hence when the income-tax wiis 5d, in the pound, farmers in England were charged at 2M. in the pound, and in Scotland and Ireland at Ifd. in the pound. But could any one seeing the returns, have ever imagined that the amount o: profits would have been left to be inferred from the rate of the tax? In the last income tax return (233 of 18S5), as well as in the last report of the Commissioners ol the Inland Revenue, a note is appended that the amount assessed represents the full annual value of lands, and that the income, " being the profit," is by law deemed to b( equal to one half or a third, as it may be, and that the tax is adjusted accordingly. Nc such note, however, appeared in previous returns or reports. Doubtless the produce froncj land must at least bo equal to the rent paid. Only what is income for the landowner it payment for the farmer ; his profits, like those of the manufacturer, consisting of the excess of produce over the expense of cultivation, including rent, interest of capital labour, manure, &c. Calculating the profits at the rate indicated, the total amount in 1883-4 would be £29,947,000, instead of £05,511,000. With good reason, therefore, Mr. Willian Fowler, M.P., and Major Graigie called public attention to the excessive amount pu. forth as the produce of land by statisticians of the highest order, on the authority of thu public returns. But, if the amount of farmers' profits must be taken at so much less- the total amount of property and profits assessed to income-tax comes to be considerably less than is given in the official retui-ns. For the year 1883-4 the amount would stanc as follows : — Schedules. A B C D E Official Return. 193,344,924 65,614,180 40,580,574 291,336,955 37,733,560 £628,510,199 Corrected Return. £ 193,344,924 29,946,997 40,580,57,4 291,336,955 37,733,566 £592,943,016 Deduction to be made 35,567,183 APPKXDICES. XXIX It ifl much to be regi'cttcd tliat the corrected return should indicate a sinallor iucomo ,)ian was supprsod. It should be remembered, however, that the cxtiiiHiun of the limit )f cxemptiun in I87G-7 iroiu £100 to XI'jO produced a diilurence of about £20,000,000 in ,he amount ass ssod. And that whativor amount of income is outsiJit the pule of the ncome-tax nmat be otherwise eKtiinatL-d and added to the sum s> aBSessed, whether the ncome obtained l)o from land, fanners' profits, trade and professions, dividends, sala- ■ics, or wagi^s of labour. May I be permitted to add that too much i npoi-tance cannot be attached to the finan- ■ial returns produced from time to time fur either llousis of Parliament, and to the •eports and statements put forth by linancial and other revenue boards. They ought to le not only framed in accord-.inco with the demands of statistical science, but so ex- pressed that every word, such as income, profit, and the like, shall be used in its strict ■ientific meaning. I have the honoiu- to be, sir. Your obedient Servant, LKONE LEVI. 5, Crown Office Row, Temple, Juij/, 1885. THE "PEAES"' PEIZE ESSAYS. THE PRESENT DEPRESSION IN TRADE: ITS CAUSES AND REMEDIES. *'ntnit ©uttite." VT EDWIN GOADBY. KDITOII O? " tns TOBK aSBlLD," ACTHOB 01 "xaa BjraLiso or saiKssFBiitE," ko. THE PEESENT DEPEESSION IN TEADE : ITS CAUSES AND EEMEDIES. CHAPTER I. THE CAUSES. General Remarks as to Trade Depressions and the features of the present one— The Cost of recent Wars — Losses on Foreign Loans and other Investments— Gold and Silver Currencies — Biitish Apricultural Losses— Foreign Competition — Escessive Production — The Limited Liability Principle — Trades Unions and Strikes — Social Changes — Political Agitation — Concluding Observations, TnE Depression of Trade is a convenient and vague phrase, under whicli we commonly Lide onr ignorance of tlio causes that produce a brisk as well as a slack interchange of commodities, a rise as well as a fall in prices. A brisk demand for all kinds of commodities is, in its own way, quite as involved in common obscurity as a fall in the demand. But there is not tho same necessity for explaining it, and any kind of statement respecting it usually suffices. Trade depression, liowever, creates a morbid desire for theorising, which generally lasts until some signal revival is manifest, when we abandon our attempt to account for it, and the task is not resumed until another period of depression arrives. The general public is thus left in ignorance of the elementary principles of trade, in much tho same manner as the laws of personal or national health give us less concern after their interruption has ceased. But were political economists permitted to exercise tho same control over the morbid states of trade as we usually allow to physicians, there would bo an earlier and a surer return to health and vigour. If wo would understand the fall in trade, however, wo must pay some attention to tho rise in trade, the two being so closely connected that "a survey of any considerable period shows us a series of changes 4 THE PRESENT DEPRESSION IN TRADE . resemLling lulls and dales, or the wavy lines of the pulse as recorded by the sphygmograph. Contraction and expansion, buoyancy and depression, may be considered the two laws of trade, and probably they have been so ever since there was any trade in the world at all. Famine and war were undoubtedly the chief causes of the depressions of earlier times. The failure in the supply of food might be due to floods, intense heat or cold, or to the ravages of pestilence upon the cultivators of the soil, or their flocks and herds. Whatever enhances the ]'rice of food, or lessens its sup- ply, will diminish the demand for other articles of trade and commerce, and cause a surplus of products, or a surplus of labour that would otherwise be employed in their manufacture. A settled relation between high food prices, and low prices for other things, cannot now, however, be regarded as having any- thing like the certainty it had in former times, or in quite recent speculations. A more complete and facile distribution has pre- vented a recurrence of the great famines of former ages. The surplus of one Continent is made to meet the deficit of another. Is it not possible, it may be asked, to eliminate trade depression, as a surplus of undemanded labour or products, in much the same way as we have practically averted real famine ? The attemj^t is constantly being made, and, in one vievr of it, international dis- tribution is an effort to equalise advantages, the more successful as it is allowed the greater freedom. The second cause of the older trade crises was — war. Whole populitions abandoned their ordinary pursuits to invade a neighbouring country, carry- ing with them " fire and sword, red ruin, and the breaking up of laws." Largo districts were ravaged, property was seized or destroyed, and whole peoples were enslaved, to labour for their conquerors. Famine and jiestilence often followed war and con- quest. The acquisition of new lands enriched the conquerors, and a period of prosperity and luxury followed. Commercial development was thus constantly associated with war, even though it impoverished the conquered people. In their turn, Bome of the hardier races swept down upon the civilised and enervated nations, and grow rich with the 62:>oil3 of a more settled social and commercial state. The commercial Republics of the Mediterranean afford us another example of the causes at work in producing and hastening the fall of niilitai-y empire. Acting within these larger causes, and reaching down to quite modern times, were two natural forms of action and reaction. The long summer days stimulated production, and when effec- tive moans of artificial lighting did not exist, there was a regular contraction in the wnnter. Communication was also interrupted for several months in the year, and the merry games of winter survive in our traditions as indications of an enforced leisure now rarely enjoyed. Under modem conditions Ave have overcome ITS CAUSES AND nEMEUlEd. famine, wo have successfully Lattlod with darkness, and our m ans of internal and external tratiic are almost indejicndtnt of the weather. But war remains, and it ia not less but more hostile than formerly to orderly and profitablo commercial development. A peaceful state of international relations is a primary cause of good trade. External trade has become so important, that few countries can fence themselves round with an unpierccd wall against the inlet or the outlet of raw or manufactured products. Seas and straits, once the causes of division, are now the means of union and intercourse. The Mediterranean served for Carthage and the conmiercial Republics, as wo now use the larger and formerly untraversed oceans. As a highly organised body is sensitive to slight disturbance in any of its parts, so the commercial world is now affected by all hinds of perturbations, in i-cgions remote from the centre of the greatest activity or the greatest wealth. Lancashire was smitten with a cotton famine, whilst the American Civil "War raged ; our supply of nitrate of soda was diminished during the struggle between Chili and Peru ; and the cigar ti'ade was sutTering as long as Cubans were in revolt against Spain. Capital, again, is always seeking investment where it pays highest interest, and the older countries, where capital is abundant and interest low, are con- stantly lending money to younger or less developed countries, where interest is high because capital is scarce. So many countries in Europe, moreover, are now partly dependent iipou foreign food supplies that we have here another plane of action for the play of sympathetic causes. War, consequently, becomes an increasingly serious disturbance. It may lead to profitable annexations, to the suppression of ])rcdatory tribes, to the settle- ment of disputes inimical to orderly progress, and in these respects prove to be of valuable service. But long periods of peace are necessary to enable us to reap its natural fruits, to extend roads and railways, to develop industries, and to wean the wan-ior races from their unsettled mode of life. Capital is as shy as a gazelle, and it will not rest or range except in quiet and peaceful regions. We might almost say that peace is the only condition of good trade, for many of the jealousies and competitions wliich mar it are either the direct result of war, or spring from the temper which leads to it. Protective taritis fol- lowed the wars of the European revolution, the American Civil AVar, f,nd the war between Germany and France. Colonization by Avar, it maj' be added, is now rarer than it used to be ; we are content to protect commercial enterprise, and the merchant precedes the soldier and the Colonial Governor. The note of our modern trade is its internationalism. At a certain period of development, external trade !)cconies as neces- sary as air is to a growing plant, and it will iucrcaso in an 6 THE PRESENT DEPRESSION IN TRADE: almost equal ratio to domestic trade, unless checked by the various causes which diminish home production or disturb foreign demand. Domestic trade may bo prosperous, and yet foreign trade may suffer, and vice ven-d, but as foreign trade becomes increasingly important, with systematic internal growth, the check to it is certain to inji;riously react upon domestic industries, and the general well-being. Trade is good when a country is busily engaged in making the best of its natural resources, and tho power they give it to work up im- ported materials, and the demand for its products is stable. It will continue so until its domestic condition is affected by bad harvests, by political or social convulsions, by pestilence, or by the increasing cost of raw materials, and until its international relations are affected by similar disturbances in other countries. There is, accordingly, always a large area of uncertainty, and for the play of favourable and adverse forces, without taking into consideration the minor and resulting causes of such things as tariffs, cun-ency difhculties, wild speculations, and the like. A country like Great Britain, with interests in all parts of the world, with so large an amount of the carrying trade of the sea in her hands, and with so much money invested in foreign loans, railways, docks, water-works, mines, and other commercial undertakings, must vibrato quickly to every adverse or favour- able movement. If foreign countries suffer, we usually suffer with them, in the end, though our exports may augment for a time. Whilst they are engaged in killing each other's people, we may acquire a larger share of the world's trade, as we obtained nearly all tho carrying trade of the United States during the civil war ; but, as the increasing prosperity of our neighbours is better for us than their impoverishment, it turns out that a few years of brisk business are but a poor compensa- tion for many succeeding years of feebleness and contraction. Hence, as tho present Lord Derby once said, " the greatest of British interests is the interest of peace." The peculiarity of the present depression, as far as England is concerned, is that it cannot be traced to any single cause. No one can say, with anything like accuracy, that it is wholly due to one event, or to one stream of tendency. A potato famine, or an undue absorption of capital in building railways, or the formation and collapse of bubble companies, or the destruction of some special branch of trade, here or abroad, have been assignable as tho antecedent causes of trade depression in the past. But we cannot be so distinctive with regard to existing troubles. Agricultural calamities at homo will not obviously account for tho decline in tho valuo of our foreign export trade, any more than the excessive cultivation of American wheat, if it may explain low prices in England, will enable us to under- stand the distress in the iron trade, or the laying up of so many ITS CAUSES AND REMEDIES. 7 tons of idle shipping in our cargo ports. Tlio increasingly com- plex character of our trade makes it less possible for us to suffer from a single cause than formerly, unless that cause be war, but it renders us more sensitive to suoli general influences as operate over largo areas, and nip it a little at various points, as a keen frost lessens the rush of flood-water from an upper to a lower valley. As Great Britain does the largest amount of the trade in the world, it becomes a delicate instrument for record- ing variations, and indicating the nature of the influences at work in distant or neighbouring countries. How far these facts will afi"ect our future commerce, cannot bo positively ascertained, but they do not promise us immunity from commercial crises, if there are other facts which warrant us in believing that wo shall pass through them more rapidly and with less suffering. A second most important fact in connection with the present position of affairs is, that we cannot be said to have lost our trade because some other countries have taken it from us. The depression is wide-spread, and it is as keenly felt in America as it is in Europe. One liundred and twenty-one banks failed thero last year, and business failures amounted to 50 millions. Agri- culture is suffering in the United States quite as much as it is in Germany, France, Austria and Russia, if not quite so keenly as it is in England. The American iron trade is no better than our own. The French silk trade is not more prosperous than the English cotton trade, and the same may be said of a large number of other industries. If we look at the large towns, as indexes of miscellaneous industries, or as representing the centres that attract unemployed labour, the same sad tale has to bo told. New York is as badly off as London, Paris and Lyons are, as full of discontent as Berlin and Vienna. The almost uni- versal fall in prices is a revelation to us that general causes are at work, operating over large areas, and not to be explained by a single formula. The first cause we shall find to havo been at work, and to bo still acting, is — The Cost of Eecent Wars. Wo seem to have passed out of a period of comparative peace into one of "wars and rumours of wars." Between 1861 and 1880, more money was spent in war than in the stormy period from 1790 to 1820. The cost of the great revolutionary cam- paigns was £1,250,000,000, and the cost of the wars we can all remember, in tho more recent period, reached a total of £1,329,000,000. Between 1851 and 1861, the war expenditure of the principal States of the world was only £350,000,000. It 8 THE PRESEKT DEPRESSION IN TRADE. is important to bear these facts in mind as affording us tlic tlue to ■what is sometimes conveniently called " the automatic increase of expenditure." Inherited obligations have to be met, and though their burden may be diminishing, the addition of new ones makes us painfully conscious of them. The extra military expenditure of the European Powers, in and out of Europe, from 1870 to the end of 1881, was as follows : — Cost of Wars. Foreign. Franco-German "War £316,000,000 Russo-Turkish War . . . , . 190,000.000 Eusso -Asian War . . . . . 45,000,000 Tunis, Tonquin and Madagascar 6,500,000 British, Franco- German Special Vote 1,451,097 Russo-Turkish Special Vote 3,500,000 Alabama Claims' Payment . . . . 3,196,875 Abyssinian War (Remainder) 205,000 Ashantee War . . . . . . 927,000 Zulu and Transvaal War . . . . 4,821,000 Griqualand and Sekulnini War . 472,000 Egyptian Expedition (1st) . . . . 3,895,000 Perak War ....... 45,726 Indian Grant for Afghan War . 4,500,000 Alexandria Indemnity 4,000,000 Egyptian Expedition (2nd) and Bechuana- land War 2,647,000 Total £587,260,698 This sum is exclusive of the cost of French operations in Tonquin, and of British operations in Egypt, for the financial year 1885-6. It is an immense total, exceeding by 119 millions the amount spent in war by the civilised countries in the world from 1821 to 1860, given by Mulhall as 468 millions, exceeding by 37 millions the entire annual expenditure of the whole of the Governments of Europe, according to the latest available returns, and only 55 millions short of the amount of the Funded Debt of Great Britain, as it stood last year. We may, it is true, expect a long period of peace after the present military fever has spent itself, but we cannot emerge from it without embarrassed iinances and injured trade. If we pay our way in England, from year to year, France will pro- bably not do so, and Russia flies to paper money when loans cannot be obtained. Virtue in finance, moreover, is very hard when there is the interest on past viciousness to meet, and we ITS CAUSES AND RtMICDlKS. 9 lire sufTerinnf from other cruises of doprfS'-ion. Every warlike outbreak makes it dillicult for us in this couutry to coiitract our army expenditure to the old peace-level. The settled peace level we may take to bo the expenditure of 18G9, when it was a little over 13 millions. For the current year, omitting' extras, Ijord Ilartiiif^tou's eslimato was £17, •'570,000. The hvo great Powers of Europe retain some two millions of men permanently under arms, at an annual expenditure, with the cost of the navies added, of 171 millions. It is not contended, of course, that all this expenditure has no effect upon special trades. It goes in food, clothing, guns, rifles, ammunition, shipping, pay, and other things. For a short time, after the Franco-German war, ihere was a marked infla- tion of prices, such as war almost invariably produced in former times, but it was not so niarked. if perceptible at all, after the Eusso-Turkish war, whilst nearly all our British expenditure has been coincident with, and succeeded by, a period of low prices. A great war, indeed, would seem to have less effect in injuring British commerce, if not directly concerning us, and leaving our raw material untouched, than a series of minor troubles, in several parts of the world, or of cur Empire, calling for comparatively small expenditure, yet fluttering all our Foreign and Colonial relations. The indirect effect of war upon national well-being, however, cannot be shown by a tabulated expenditure, which never represents more than half the cost. The money-waste, in its turn, is only a part of the total loss. The effects persist long after the storm has ceased. Good may be done, but the evil is registered in crippled, domestic, or unremunerative foreign, trade. The costlier military establishments of Franco and Germany tell their own story, and constantly recurring scares show us how unstable is the condition they create or hide. Russia, owing to the poverty of Turkey, has not derived the advantages from the payment of a largo indenmity that Germany did, and her recent condition has been one of chronic financial deficit. In his Budget for 1883, the Finajico Minister Jicknowledged that the scheme of raising more money by augmenting the customs duties had been a failure. Tuikey is visibly poorer, and our trade with her is declining. Afghans and South Africans are taking fewer British goods. Our Cape trade has fallen £'2,r)2o,7SO since 1880. The Tonquiu war has seriously affected Mincing Lane markets, and it is still more likely to do, now rice, contrary to M. Pothier's description of the difference between munitions de guerre and munitions debouche, has been declared contraband of war. Keactionary tariffs have succeeded the recent European wars. Germany and Eussia, and France and Germany, have been playing at diamond cut diamond, and Austria is meditating a 10 THE PRESENT DEPRESSION IN TRADE: hostile tariff, in reply to Germany and France, certain to tax several French goods out of Austria altogether. Eevenue must be had, and trade is therefore "encouraged" by devices that seem to be the logical curse of militarism. Under the plausible pretence of fostering " native industries," wily states- men conceal the cost and soften the direct burden of their armaments. Injured trades are promised help against competing imports, and the nation goes back to an unsoimd fiscal system. Mischief always follows this cosseting of special industries. The constant stream of emigration from Germany to the United States may, -whimsically enough, strike Prince Bismarck as a sign of working-class prosperity, but it impresses eveiy English observer as a sign of the reverse. There is no evidence of any returning savings, as in the case of British emigrants. France is getting poorer, in spite of the toilsome thrift of some of her people. All her industries have suffered under Protective rule. M. Clemenceau has, indeed, in the face of M. Ferry's Govern- ment, carried a motion lor an inquiry in the causes of "the Economical Crisis." The Report will be interesting, when it appears. But, in the meanwhile, thousands of working men are starving, corn and cattle are being more heavily taxed, the yield of the 3 per cent, tax on interest and dividends ominously falls, the direct taxes decline, and financial embarrassments multiply. Moreover, it is not possible to strike a balance and say, til at if the poverty and industiial depression of Germany and France have gravely affected us of late, we reaped so much benefit from the war that, if the extra business done in 1870-4 were spread over the succeeding years of depression, the average would then be about the same as before the -war broke out. As M. Wolouski has pointed out, the French in- demnity had a magical effect upon the German people, throwing them, as under the influence of Zanoni's vapours, into all kinds of rash enterprises and speculations, certain to end like bubbles. Austria caught the enthusiasm, and has not yet recovered as much as Germany has done. Our trade with Austria is less now than it was in 1868, 1SG9, and 1870. The partial revival of trade in 1880-1 plunged France, weary with so much waiting for better times, into a fever of financial speculation. In 1881 new capital was subscribed for undertakings amounting to 93 millions. The crash came, in 1882, with the failure of the Banquc de Lyon et de Loire, followed by the stoppage of the Catholic Legitimist Financial Company, the Union Generate, and the spread of panic to other countries. The reaction from this financial outburst has been intense and ruinous. The persistence of this European, war-created depression, has been a powerful addition to the embarrassments our own military ex- peditions have caused. ITS CAUSES AKD REMKDIR3. 11 Losses on Foreign Loans and Other, Investments. Tlio ahundanco of Capital in England is not unattended with disadvantages. A benevolent desiro to develop backward coun- tries gilds the wish to obtain high rates of interest. Plausible prospectuses tempt men to hand over their money to financial agencies, and, if they receive good interest for a time, they are blind to tho risks they run, and the certainty of ultimate collapse. A good deal of the trade-inflation of 1870-3 was due to tho stimulating effect of English money in several States. The South American Republics enjoyed a fleeting prosperity, as did some of the effete States of Europe, as long as loans could be placed on the London market. Not less than 54 per cent, of these loans were in default at the time the Ilouse of Commons remitted investigation and exposure to the Committee of 1875. For some years prior to 1882, Spain was also a defaulter. The worst cases, however, were the Honduras Loans of 1869-70, the Costa Rica Loans of 1870, and tho Paraguayan Loans of 1871-2. The four Honduras Loans amounted to £5,398,570. No interest has been paid upon them since 1873. The Annual Report of the Corporation of Foreign Bondholders for 188i, presented March 3, 1885, says that, "in order to estimate the chances of a settlement of the (Honduras) Bond- holders' claims, the fact should be borne in mind, that whilst the annual interest on the four loans amounts to about £500,000, the revenue of the Republic has never reached £250,000 per annum." The pitiable plight of the English investors could not bo more graphically described. The Costa Rica loans, amounting to £2,088,000, have paid no interest since 1873, and the overdue 6 and 7 per cent, interest upon them amounts to £2,116,824. The Paraguayan loans, at 8 per cent, amount to £1,505.400, and interest due, and unpaid since 1874, is given at £1,200,000. Besides these, the following arrears of interest on foreign loans are noticeable: — Columbia (1873) £555,692; Ecuador (1868) £310,080; Guatemala (1856-69) £295,951 ; and Peru (1870-2) £217,756; total £1,379,479. No interest has been paid, moreover, on the Mexican debt of £15,106,450 since 1869, or on the Santo Domingo loan of £714,300 since January, 1873. But by far tho most seriotis financial collapse was that of Turkey. The larger part of all tho loans, upon which sho had been living for many years prior to the revolt in tho Herzegovina, was held in England. The upper, professional, middle and commercial classes, had invested their money in civilising tho Ottoman Empire, to compensate us, in part, for our loss in pro- tecting its integrity by arms. The issue prices were tempting,' 12 THE PRESENT DEPRESSION IN TRADE: Between 1854 and 1874 the loans raised had a nominal capital of £223,196,740, the highest issue, in one case only, being 102^- — the 4 per cent, loan of 1855 — and the others varying from 85 to 50. Investors who lent the money were actually receiving from 10 to 11 per cent, on the sums they had advanced. The colLqise of 187 G was most romarkahle in its effects. The London repositories were full of discarded carriages, horses were given up, hunters sold, racers sent to Tattersall's, establishments con- tracted, and men who had fancied themselves ricli found them- selves poor. Tlie retired middle-class sufTered terribly, and many families have never recovered from this sudden contraction of their incomes, caused by an absolute failure in interest which lasted from 1876 to 1882, since which date 1 per cent, has been payable. In a short time after the Turkish collapse, came an Egyptian financial crisis, which ended in the reduction of interest payable in France and England, and a loss, in the gross, of be- tween three and four millions per annum. These losses, upon what were formerly good investments, have very materially alfected a large number of families. Enforced economies of all kinds have had to be practised. The summer visit to a watering-place or health resort has been contracted ; and from all such places comes the same cry — that " the season is shorter than it used to be." Building operations in many of these places, which expanded from 1870 to 1875 in a remai-k- able manner, have ceased, leaving empty houses on hand, and throwing more men on the labour-market. In one case, the Parliamentary Register had recently lost 200 men, fathers of families, in this way. Everywhere a check has been given to the erection of houses for the better sections of the middle classes. Expenditure upon clothing, and upon all articles of luxury, has been rigorously curtailed. These facts, indeed, enable us to understand some of the more obscure aspects of the prevailing depression, which are not to be explained by disser- tations on over-production, or methods of distribution, or the fall in prices. American investments deserve a word or two. In spite of the railway collai)so of 1873, and the Erie Railway crisis of 187;"), there have been large investments of British cajiital in the United States. In one case we know of, an English merchant is making a handsome commission out of moneys he is placing out in American enterprises for his friends in England. Mr. Samuel Pope, Q.C, at the annual meeting of holders of American bonds and shares in England, held March 17, said that, " Of the entire capital invested in American undertakings, it was calculated that not less than £150,000,000 was held in this country." Upon these investments, always fluctuating immensely, there have been heavy losses. Excessive gambling in stocks, the " pooling " of railway hnos, the formation of " rings " to obtain an artificial enhancement of prices, the "booms" which are started when- ITS CAUSES AND REMKDIES. 1* over the outlook brightens, all contribute to a fovorish financial state, bad for iuvostors, bad for trade, and bii'^ for everybod}'. Loss iutimato financial relations with the United States would give more stability to our Stock Exchange and our comnserco. The sudden giving way of public scepticism in England as to the use of electricity was followed by an extraordinary belief in the supersession of coal-gas, and a grave depreciation of gas properties. We have ascertained that, between 1875 and the end of 1883, the amount of capital embarked in electric lighting companies, of various kinds, in Great Britain, was £12,919,264. This is more than double the amount generally believed to have been subscribed, and the effect of so large a sum will be under- stood when we add, that the whole of the money called up on gas-shares in the United Kingdom is under thirty millious sterling. A large temporary depreciation in gas-shares was occasioned by this large commitment, and it was some time before a recovery set in. There is good reason for believing that from seven to eight millions of the money invested in electric light undertakings has been lost. Gold a\d Silveu Currencies. The immense operations in currency of recent years have greatly disturbed trade. Germany has required 84 millions of gold to replace her silver coinage, Italy 16 millions, and the United States 100 millions. In the face of this demaiid for gold there has been a falling off in the supply. In 1852, the gold supply was 36 millions, whereas, in 1883, it fell to about 20 millions, of which it is calculated that 10 millions are annually requii-ed in arts and manufaetui-es. In addressing the Bankers' Institute, in May 1883, Mr. Goschon, no mean authority, put the matter in this way : The demand for 200 millions of gold "will absorb the production not of ten, but of twenty years. That being so, economists will ask themselves what result is a phenomenon of that kind likely to have produced, and I think there is scarcely an economist who would not at once answer, that it was almost necessary, in accordance with the laws and principles of currency, that such a phenomenon must be followed by a great fall in commodities generally. But, in the same wa}' as a large amount of gold poured in Europe in 1852, andtho sub- sequent years, created a great rise in prices, so the counter phenomenon must produce a fall in prices." A series of figures was given to show this fall in ]mces, which might be quoted here if the fall were not so generally known, and the demand were not more for an explanation of the problem tlian a bare state- ment of it li THE PRESENT DEPRESSION IN TRADE: The loss caused by tlio depreciation in tlio value of silver Las been manifest in all our Indian dealings. Prior to the fall in 187G, when it touched 47d. per ounce, two changes had occurred to affect the use of specie. Tho first was the employment of " Council Bills," equivalent to specie, by which traders settled balances due to India without sending silver. After payments on Indian railways ceased to be heavy, about 1870, during which time .specie was exported to India, " Home Charges," as they are called, began to increase, until they rose from 2} millions, in 18G3, to their present level of 12 millions, or more, Mr. R. H. Patterson says : " This charge has been the most powerful of all the causes of the fall of silver. The Council Drafts being equivalent to silver, have correspondingly diminished the re- quirement for that metal, and have prevented the large export and utilization of silver, which would otherwise have occurred in connection with the Eastern Trade, &c., &c. Solely and directly in consequence of the trade with the East," he adds, in expound- ing the older conditions of trade, and the older relations of gold and silver, "as the new gold has flowed into Europe, silver has flowed out, and thus the increased commerce with the East has proved to mankind a double blessing : at onco augmenting employment within the eastern and western worlds, and averting any great change in the value of money " (Contemporary Review, April, 1879). The second cause is the inci'eased payments from Englishmen in India to their relatives in England^ partly due to more troops being employed in India, and partly to the facilities the Suez Canal gives for sending children and invalids to Eng- land. Mr. J. M. Maclean, a witness before the House of Commons' Committee on Indian Finance, in 1873, said that "the amount of the annual earnings of Englishmen connected with India which are transmitted home cannot be less than 20 millions." The fall in the exchange value of the rupee caused a loss of from 48. to 5s. in the pound on all sums so transmitted. The loss to the Indian Government must have been heavy, as it contracts to pay gold for interest, railways, pensions, military services, and tho like. Mr. Ernest Seyd had predicted in 1869 what ruinous conse- quences would ensue from tho dethronement of silver as money. His pamphlet on "The Depreciation of Labour and Property which would follow the Demonetization of Silver " is trium- phantly referred to by the Bi-Metallists as foreshadowing pre- cisely what has taken place. The Liverpool merchants and bankers appointed a committee, in 1879, to investigate the silver question as affecting trade, and its conclusions may bo sum- marised thus : That English investments had fallen in value " in silver using countries " ; that future panics might be expected if eiiver were cut off as an agent of "international liquidation" ; that the micertainties of exchange prevented investments in the ITS CAUSES AND REMEDIES. 15 public funds and various enterprises of silver countries ; that "the friction and harassment now attendin<^ Lusiness " with India, China, Java, Austria, Chile, Mexico, &c., lead merchants " to contract their operations" and "to restrict the employment of English capital"; and that the fall of silver "seriously affects the power of silver-using States to purchase English manufactures, and leads to inci-oascd taxation, thus further curtailing the trade which has hitherto been carried on in English countries." The eflect of the fall of silver upon our eastern trade has been ruinous, and there are no two opinions on the point. British Agricultural Losses. On the heels of the departing prosperity of 1870-3, and before sounder business had been established, came a succession of wet summers, with disastrous effects upon our crops. It seemed as if the sun had lost its powers, and as if there were a blight upon everything. Mr. Bear has displayed the effect of these bad seasons in an eloquent table of crop-yields from 1869 to 1878. " It will be seen," he remarks, "that of the whole ten years only one, 1874, was a strikingly good wheat year, and that only two other years, 1870 and 1878, gave approximately average crops of this cereal. The barley crop has been similarly un- fortunate, having been satisfactory in but three years out of ten. Oats are only credited with two good yields and one indifferent result. Beans do not seem to flourish in this coxintry as they did in old times, possibly owing to the improved drainage of the land. The most remarkable feature of these returns, how- ever, is the recurrence of deficient cereal crops, and that alone is quite sufficient to account for the depressed condition of the arable farming interest" (^Fortnightjy licvuic, February, 1879). The more recent seasons, with the exception of 1884, have only been a shade better. Wheat-growing has not paid since 1874, and the fact is eloquently expressed in the reduction of the wheat acreage from four million acres, in 18G9, to 2,613,000 in 1882. The growth of ]:asture steadily advances in Great Britain, at the rate of 260,000 acres a-j^ear, the increase in seventeen years being 3,504,303 acres. Permanent pasture is increasing three times as fast as clover, and we fear, it must be added, that it has been deteriorating. Continuous wet seasons kiU the more delicate grasses, and large floods spread the seeds of water- grasses, coarse in character, and aggressive in growth. The following table indicates the changes referred to — 16 THE rRESENT DEPRKSSION IN TRADE 1873 18S3 Permanent Pasturo. Com Crops. 41-5 per cent. 4Go „ „ 30-4 per cent. 20-6 „ ,. Green Crops. ll'O per cent. 10-7 „ ,. "With the growth of pasture there has been, a considerable displacement of labour. Eoughly stated, and subject to varia- tions, attributable to machinery, and the like, one labourer is needed for every 25 acres of arable land, and for 125 acres of pasture. Large deductions must evidently be made from these estimates -whRu we examine the census figures as to agricultural labourers and shepherds : — 1S61. 1871. 1831. Labourers and Indoor Servants Shepherds 1,072,702 25,559 898,731 23,323 807,608 22,844 1,098,201 922,054 830,452 That pasture has not meant an increase of female indoor labour, as with more attention to dair}'- products would have oeen the case, is seen by the fall in their numbers from 99,156 inl851,to46,5Cl in 18Gl,andto 24,599 in 1871. In 1881 they are not distinguished. The surplus labour of our farms has flocked into the towns, lowering unskilled wages. During these terrible times, farmers have been paying rents out of caj)ital. The Agri- cultural Commissioners did not think that the rise in rents prior to 1875 had been marked. The weight of evidence is the other way. Mr. John Clay j)ut the increase for 18 years, prior to 1882, as 21 jjer cent. Sir James Caird calculates that, between 18G7 and 1877, English rents rose £5,810,000, or 11 per cent. The following tables are from the Economist, and based on Schedule B ; — The Risk. 1852-3 to lb79-&0. England and 10,468,347—25-4 per cent. Wales. Scotland. . 2,362,243—43-6 „ „ 12,830,590—27-5 „ The Fail. 1879-80 to 18a2-3. 3,356,563—6-5 per cent. 204,054—2-6 „ 3,500,622-6-0 „ „ ITS CAUSES AND REMEDIES. IT Correctod figures for later years, and other amendments, would most likely reduce the rise to 25 per cent., and increase the fall to 10 per cent. The table is useful as illustrating the ri.se which drew so many shopkeepers into farming between 1852-5, and the loss that must have taken place in the in-comings of land- owners, now farming their own farms in many caso«. In East Lothian alone, the Nurth British AgricuUuriiit says, there :iro fifty such farms, and similar figures reach us privately from other counties, especially where there is poor hilly, or old moor land, broken up for wheat in the days of the Corn Laws, and the Uevolutionary wars. Estimates differ as to the loss of farming capital. Lord Beaeonsfield put the loss on the harvest of 1876, alone, as 20 millions. Mr. Shaw Lefevro has worked out the loss on tho wheat crop alone, comparing the six years, 1875-80, with the years 18G9-74, and tho amount roaches £78,000,000, made up as follows: — Reduction of acreage, £31,000,000 ; reduction of produce per acre, £31,000,000 ; reduction of price, £16,000,000, Mr. GiiTen has estimated the harvest deficiency in 1878-9-80, at 12 millions annually, and the annual loss to British farmers during that period at from 14 to 18 milHons. Taking imports as a food basis, Sir James Caird has reached a total of £138,828,000 of farming capital as lost between 1875-80. Unfortunately, tho loss did not cease with 1880. The liver- fluko in sheep was very disastrous between 1880 and 1882. In 1879, there were 28,157,080 sheep in Great Britain, but, iu 1882, tho number had fallen to 24,319,708 — a diminution of 3,837,312. After the liver-fluke came a smart epidemic of foot and mouth disease. The effects of this loss have been widely diffused. Landowners, with settlements and annuities on their land, have been straitened, and are deeply indebted to local banks, whose future cannot be regarded with perfect safety in cpnse- qucnce. The farmers themselves have stopped the purchase of implements, spreading distress over the machine market ; they purchase the lower-priced manures ; they farm poorly, and they contract all domestic outlays. Tradesmen have had to givo longer credit and take fewer orders. Expenditure upon the more costl}' improvements has also ceased. Drainage goe^ on, but farm-buildings are deteriorating, and choked water-courses readily cast up the flood-water on the land. Failures and emigration complete the story of ruin and despair. 18 TlIF, PKESEXT DKPIIESSION IX TRADE : PollElGN CoHrKTiriux. Considoriug how mucli is said about foreign com])etition, it is 4ibtouisliing liow small is the amount of doprcs.siou it will reaiiy explain. At tho worst, it is no new thing, and all our prosperitj iias Leon won in the teeth of it. Tlio phrase readily lends itself to that ringing of the changes which marks ill-informed dis- -coursc about complicated questions. Sometimes, it merely moans, that wo cannot grow all tho wheat we consume, and it becomes a growl about the hunger of 06 millions, who decline to live upon nine loaves of British-flour made bread, Avhen they can add to them sixteen other loaves, made of foreign wheat. At others, it is a kind of apology for indifference, or for surrendering ourselves to circumstanceSj as in tho matter of cheese, butter, and cattle. It is much to bo feared that, occasionally, it is a lialf confession that ^vq are not maintaining our art and skill in parallel linos to the tastes and needs of the time. For the most part, however, the tune shifts from the etfoct of now Continental tariils upon our exports, to tlie importation e-f foreign manufactured goods. Is our trade with other countries less free than it was ? Lord isandon's Eotui-n of the tariffs on our commerce for the years 1860, 1870, 1875, and 1880, is a valuable armoury of answers to the question. It shows that, in 1860, our European commercial treaties jgave us the most favoured nation treatment in eight out of six- teen States, whereas, in 1880, only two countries Avithheld that privilege, and each one was ready to grant it hereafter. Greece and Italy are the hvo Powers refo-rod to. The former xaado several modilications in our faAOur last year, and tho latter, in her present cordial mood, is certain to improve tho existing treal^• when it expires, "^rhc taritls of 1 860 contained :i,l 10 articles; and of this number 106 have been raised, 61 of them on yarns, raw materials, and food, 20 on spirits, 19 on tissues, and ."37 on minor and miscellaneous articles of manu- facture. AVool and yarns are the articles on >\ hich Russia and Germany have Increased tluir tarilis. Of the other articles, 900 Jiavc remained the same, and on 1,101 articles the tariffs liavo been either reduced in amount or abolLshed. Of our nine "Colonics exercising fiscal independence, only two — Canada and Victoria, have protective tariffs, adverse to our goods, but they ■y lis in other lurins, cut away. In the one class, are such things as skins, hides, pigments, turpentiuo ; in the other, raw sugar for refining, sawn timljor, and other matters. Toys, watches, musical instruments, Looks, pictures, millinery (often simply patterns), embruidery, and huv, may ho regarded as iunoecuit articles of import. TJicy amount to alj(jut a million and a lialf a year. Our tabic excludes th<'m, tlio better to deal ^^■itll stapli^Sj in a convenient forni : — !Ma>ui'Actlkki» <«*oods Imi'outku nx ijii; lL\iri;u ivi.NuuuM. 1&73. irt; 1?80. 18ti3. 1*81, <"otton (.-ioods. Silk ,, . Woollen ,, 01:198 ., . I ion . . . ,' 1,G00,000 L', 111, 000 3,109,137 '2,333,089, 2,23o,800 10,200,000 12,;)0'J,000 13,321,935 10,;501,9GG 10,970,830 , .3,1.58.000 7,090,000 9,010,488 8,220,040 9,001,183 1,103,000 1,908,000 1,778,472 1,-508, .579 1,018,824 1,008,000 1,-537, 000, 3,700,271 4,104,210 3.948,928 'J'l)T.M> 19,849,000 2.5,04S,000;31,.583,303 26,728,484 28,.381,. 571 In Woollen, iron, .-unl cotton tlicre are evidences of increased import, but we have to bear in mind; I), that the percentage of manufactures to total imports, Avhieli stood at 7 per cent, from 18(57 to 1S()9, rose to 9 per cent, in 1870, a prosperous j-eav for all our industries, and, after .some changes, remained at 8 per cent, from 1877 to 1880, is )iow, or was last yoar, notwith- standing low prices, as affecting our import values, under 8 j)er cent- ; 2) that from 10 to 12 per cent, of th<>sc imi)orts are lor recxjioi'tation to other countries, aiid so constitute a part of our entrepot trade ; ;3) that all American manufactures for South Afrira ])a-s there viil ]Cngland ; 1) that our own manufactures I'ctain the same proportion to iho rest of our exports as they ) that in the liret two months of the current j'ear, our import of manufm (ured goods exhibits a comparative dicliiie of £9-'), I II, in cori'e-]>ondeiu i> with a decline in our g-Micral industrial activity. Wo liavo been curious to see the eirect of tariff changes on our exports to France, Gi-rmany, aiul IJussia. The followinj table, beginning with the year of transition, and omitting th reactionary years, is useful as disclosing present tendencies : — lO 20 thk present depression in trade : British Exports to Competing Countries. ! 1870. I 1880. 1881. 1S82. 1883. 1884. Trance... Germany liiissia . . . 11,645,000 20,243,000 6,993,000 15,594,000 16,970,025 16,943,000 17,431,439 7,953,000 6,165,077 17,421,212 18,518,024 5,771,847 17,567,512 18,787,635 5,036,014 16,703,063 18,676,923 6,016,793 T0T.\LS 38,881,000 39,489,000 40,566,541 41,711,083 41,391,761 40,390,789 It will be seen that, even with the immensely reduced prices of last year, our export trade to Prance was greater than in 1880 by £1,109,063, and oiir shipments to Grermany greater by £1,733,923. Tliis scarcely looks as if we were being killed by French and German competition in French and German markets. Further, a good deal of German trade passes through Holland. The cotton, iron, and woollen gooda sent by us to Holland in 1883 amounted to £5,108,718, against £3,645,476 in 1880, leaving a balance in our favour of £1,463,242, The inference from these figures is the very common one, that industrial i activity cannot increase in one country witliout developing trade with another. The import of manufactured goods into France has nearly doubled in the last ten years. In 1873, the amount was £15,350,680; in 1883, it was £28,178,000. The increase has been in machinery, iron ships, metal goods, woollens, cottons, and leather. ]5ut the export of manufactured goods has declined. In 1875, the amount was £85,550,280; in 1883, it was £72,550,640 ; and last year it was £68,892,440. In Germany, with a large show of activity, the Chambers of Com- merce say that trade has not been improved by Prince Bismarck's economic heresies, though their reports have now been burked, because the truth was unpleasant. Upon some special industries foreign competition is, however, distinctly traceable and depressing. In the iron and steel wire business, German competition was acute until wages were lowered in this country. In the iron trade, generall}', Germany is pushing her wares in the East. Mr. J. Lowthian Bell, in a paper read at the Industrial Remuneration Conference, stated that formerly we had the iron export trade of the world almost entirely in our hands. In 1882, the exports of pig, malleable iron, steel, and machinery, were as follows : — Great Britain . . . 4,828,803 The Zollverein Belgium Franco United States (estimate) 1,134,104 529,464 137,741 200,000 ITS CAUSES AND RKMKDirS, 21 That is, for evoi-y 100 tons exported by us, 40 tons were exported "by coinpotinjj; cuuutru's. Ijicreasing compotition might bo ex- pected. Belgian iron is more frequently heard of in this country than any other, but it will bo seen how comparatively in- significant was the export in 1882. Neither in Sliefficld nor Birmingham hardware, however, is there any efl'ectivo com- petition. iSeutral markets generally find us in full strength against our iron-making competitors, and most of the railway lines in the United States are built of British rails. Of American competition in cotton goods we hear very hysterical shrieks now and then. Parade is made in Manchester of underselling under the eyes of our cotton kings, and stories of marvellously cheap bargains in drills and sheetings reach us from our Colonies and from the free ports of China. But what is the explanation ? This, — that American cottons are only exported when the American murket is down to zero. An American, Mr. J. Schoenhof, in his book on "The Destructive Influence of the Tariff," ••' writes: "During the bad times, between 187G and 1879, I have seen as many as 8,000, and even 10,000 packages of cotton goods sold at one auction sale. The same process is repeating now in 1883. Auction sales in staples of 10,000 and 15,000 cases. Of course, the goods were sacrificed in order to make room in the storehouses for new goods of the same character, although the home trade had been supplied with goods in advance of the season. The consequence was the same as now, depression constantly increasing. Had they been dumped where the sea is deepest, the result would have been less disastrous to all concerned — manufacturer, jobber, retailer, and working people." The tariff kills export by forcing up prices. Where competition is tried, in neutral markets, as between the United Kingdom and the United States, in Central America, the result, as shown in 1880, comes out as follows :— British cotton goods, 51,235,000 dollars ; American cotton goods, 3,899,400 dollars. What is called the competition in wheat has two sides — the one we see in England, where the farmer cannot supply half tho demand ; the other, seen in the competition between wheat-grow- ing countries to supply us with the remainder. A fuller know- ledge of the latter would lessen our apprehensions respecting the former. Ivural llussia is suffering terribly from wheat com- petition with Boumania, India, and the United States. Tho poor down-trodden peasants are constantly in revolt. In the Western States of America, tho farmers are getting into debt. They must sell their wheat at any ijrice. Competing lines begin a freight war, do a large business at ruinous rates, and then pass, as 40 of them did last j'ear, into the hands of receivers. It * New York Free Trade Club, 1SS4. 22 T]IK PRKSENT DEPRKSSIOK IN TRADE: is ioipossiblo tliis luud of competition can last. As to shipping- bounties, tliey mtiy bo ruled out as having no cfteet. They have not iniprovecl American shipping in the least, and now lines cannot stand against British ships. ''If you protect the pro- duction of ships, in so far you limit their u.se," remarks Mr. G. Baden Powell ; "and if you protect the iise of ships, in so far you limit their production." ••• American bounties illustrate the working of eacli phase, and the French bounty is aboui; to do so, in a very ludicrous manner. Tliere is a bounty on French tonnage to incre.'ise distant commerce, but, by recently increased duties on corn and cattle, these yoj'ages will bo less numerous. The ship- owners got a tax on the general community to help them bring in goods (it amounted to £500,000 last 3'ear), and then the goods are taxed in order tliat they may not be brought in ! The Dele- gation from England of the United Society of Boiler Makers and Iron Shipbuilders that was sent to France to report upon ship- building competition last year, found that there was no com- lietition. M. Chaigneau told them that " Nobody in France at present can possibly compete against the shipbuilders in England." They add, as their own opinion, that "the ship- building trade in Franco is about in the same condition as it was in England some 2') years ago.'' The struggle lietwecn cane and beet sugar has now reached a i)oint when both feel it acutely. The cane-croppers have suflfered t-everely, but so have the beet-pi'oducers. A. report on tlie Pomeranian beet-sugar trade has been just issued from Consul Dundas, in which there is much comfox-l; for the cane-planter. Low prices are killing the trade, and tend "to bring down tlie Yirice of beets to such an extent as to render their cultivation ])rofitles.s." The sugar tax, less export bounty, produced less last year than it has done since 1878. Our "West Indian sugar- growers will most likely profit by the proposed lowering of the American sugar duties, and any gain to them would re-act iipon the whole trade. The general consumer in England enjoys the benefit of cheap sugar, chiefly from the Continent, and bounty- fed, whilst our own sugar industries, though not doing much amiss, aro still not advancing as they promised to do some years ago. It is a noteworthy eS'ect of protective duties and bounties that sugar should be twice as dear in France, Germany, and Austria as it is in England, and making no headway, as a food for the people. AVith improved machinery, and better education amongst tho workers, our West Indian sugar-growers have still before them a large field for remunerative and successful com- petition, whilst there is great force in Mr. G. Baden Powell's final deduction, from an exhaustive survey of the sugar-bounty question, that "surveys sugar refiners, despite the real effects of ♦ State Aid and State Interference, p. 07. ITS f'Al'SK.S AND KKMEDIKS. 23 l)ad timos and low jn-Icos, and despite tlio moro suppositioii.H oflects of bountif's, aro doing' far better than tlio roliners of tliOKeen a calamity in many towns. In many cases, the keeping up of appeaianccs has been a terrible strain. At first, the capitalists were the sufferers, then the middle classes, and now the wage-earners are reached. According to a supplementary note to his conclusions about tho 32 TIIB PRESENT DEPRESSION IN TRADE : earnino-s of tlie working classes, puLlislicd by Professor Leoni Levi (Times, March 27th), the fall in wages since the middle of 18S4 maybe estimated at 15 per cent, of a money income of £70,000,000. The loss to capitalists in this country since 1876 cannot have been less than half this amount every year, or, say,. 80 millions, mounting up to £2-10,000,000. CHAPTER II. THE REMEDIES. General Eemaiks — The Peace Prospect — Better Investments — The Silver Question— The Improvement of Agriculture—" Fair Trade "—Production and Distribution— Labour and Capital— Technical Education and its Promises- New Uses for Iron and Steel— New Markets, Customs' Unions, and Commercial Treaties— Miscellaneous Remedies — Conclusion. Behind and above the existing causes of trade depression, are- some large movements we cannot overlook. In all the^ older and more developed countries, population is aggregating in the towns, and declining in the rural districts. In 18G1, the urban population in England and Wales was 63 -3 per cent., and the rural 36-7 per cent. ; but, in 1881, the former percentage had grown to 67-9, and the latter had fallen to 32-1 per cent. The same thing is going on from the Baltic to the Mediteranean. It is the expression of deeper facts ; namely, that by the aid of machinery and science, human labour is becoming more effica- cious ; that fewer persons are needed to produce the food that can be conveniently gi-own in any country ; that occupations are increasing in variety, and are carried on better in the towns ; and that manufactures are produced to meet external as well as internal wants, and in an extending ratio. It is a curious result of this shifting of population, with what is of equal importance, a brisker rate of increase, that what we may call the European wheat-zone is getting more and mpre easterly. The countries least touched by the manufacturing spirit are most occupied in the production of wheat. All the manufacturing countries in western Europe are now wheat- importing countries. It seems not unlikely that we may have to add, corn-taxing countries, too. The volume of industrial energy in Europe is thus always tending to grow. Perhaps this- ITS CAUSES AND REMEDIliS. 33 fact will expLiiu a parado.x aiul a puzzle. 'L'ho .sliglit ivvival of Protection in (jeruiany, France, and one or two other countries, is an acute sign that British prosperity is envied, that competi- tion will bo keener in tlie future, and that larger views of Imperial and Colonial dovL'loimient will have to iu.spire us at lionio. The i)uzzlo is, that the great military Powers are all pushing out of their ordinary and natural boundaries. Russia, though not a strictly manufacturing country, in the Engli.sh sense, is rapidly advancing to China, on the right wing, and to India, on the left. Austria has her Peter the Great's idea of more seaboard, and aims at Salonica. Italy, with her eyes on Tripoli and the Red Sea, has suddenly become an emigrating country, sending annual contingents to South America. France has added Tunis to Algeria, and is "developing" herself in Tonquin and Formosa. Germany, ring-fenced by nature and treaties, is sending out scientific and mercantile expeditions, planting flags, and spending money on Colonies. Even Great Britain, always a great eartli-hungry power, has annexed Egj'pt •" by mortgage," as M. Lemoinno has it, and finds Empire and Colonies thrust upon her by the logic of events. There are displacements of trade, due to the lessening of old and the growth of new demands. Mr. Giffcn has given somo interesting percentages showing these changes. Pekcextage to Tot^\x Exports. Decline. Rise. 18 to. 18S3. ]3W. 1S33. Cotton 33 per cent. Linen 6 ,, Woollen 10 „ 21 per cent. 7 .» Coal ... 1 per cent. Iron o ,, Machinei y , , Miscel- laneous 5 ,, 4 per cent. 12 M r 1 10 .. "In all these cases of staple manufactures," Mr. Gilfen says {Times, December 20, 1884), "though the amounts have largely increased (for we exported £.31,000,000 only in IS 10 against £210,000,000 at the present time, so that a smeller percenfago of the total gives a larger amount now than a larger percentage of the total did in 1840), yet tlio rate of increase has been slower than in the case of our exports generally. In other words, the direction of trade has shifted a little." Every shifting ia attended with a dislocation of labour until a more stable con- dition is attained. A new invention of any magnitude, chemical 01' mechanical, involving a new industry, cr the modification of 3 & 34 THE PRESENT DEPRESSION IN TRADE : an old one, means unsettlement. A new tax miglit have a similar elFect, or the abolition of an impost, as in the case of the paper duty. A new enterjirise, like the Suez Canal, has caused narrower ships to he built, with less provision and coal-room ; it has involved a quicker transport, a change in a trade current. The rapid peopling- up of Canada and AVostorn America has deflected the direction of much skilled and unskilled labour, and not a little capital. Displacement is seen in towns, on a smaller scale, where and when any one industry is brisk. The smaller centres give off contingents of labourers, and after a time, when rents rise and land is scarce or dear, out-detachments are driven back to neighbouring towns and villages. In dull times there is the same centripetal tendency. There are no openings for labour in the rural districts. The chances of casual employment are greater in the towns. A correspondent has just been writing to the Times to let the clergy know, in order that they may inform others, that " London streets are not paved with gold." Wealth is a magnet ; the hut nestles under the castle. By these means our large towns become delicate instruments for indicating the amount and nature of trade depression. At every stage of transition, at every effort made to adjust trade to new con- ditions, at every change in the direction of capital or in its contraction, there will be some distress, and our large towns will show it. The present crisis may develop new proportions in our staple and miscellaneous industries, and perhaps issue in a return of more labour and capital to food-production, as well as in new enterprises, such as an energetic peojile will always institute when capital is awaiting profitable investment. There is no lack of remedies for bad trade. They are thick as the leaves in the "vales of Vallambrosa." Some of them are only noticeable for their wildness. Their authors believe in them, however, with a faitli that would move mountains, if political economy were a region for the play of warm feelings, or a science in which explosive experiments could be made, as in a chemistry class for children. Single remedies cannot, in the nature of things, cure a malady which is not due to a single cause. The extinction of rent would not cure poverty, or create a Paradise. Purely direct taxation would not end in Govern- ments existing witliout war. Co-operative industry would not generate a splendid succession of foreign orders. Socialistic schemes could not avert currency troubles. The remedies we need must cover the whole ground of our home and foreign trade. They must be based upon sound business principles. They must not begin by an undemonstrated argument for a vast economical revolution, certain to produce a dej^ression of its own, by a violent displacement of capital and labour, and the destruction of social stability. In fine, we cannot abandon our settled principles, even if other countries seem disposed to go ITS CAUSES AND REMF.DIES, 35 into tho Mildcrness. Our oxporienco is our truest guide. " Nature is made belter by no mean, but nature makes that mean." The PjiAce PnosrEcr. A period oi military disturbance must always bo abnormal in modem civilization. It can only bo a path to a new order. In our time, a new Power lias arisen in Germany, and the centre of political g:ravity has shifted from Paris to Berliji. Tem- porarily, perhaps, German dominance means a revival of militarism. Before long', however, in tho fever of her manu- facturing development, the dead tissue of Chauvinism will disappear. An immense military and a successful manufacturing power cannot co-exist in one country. A Ituge military system means debt, a revenue raised by tariffs, wasted labour, escaping emigration. The military spirit, as it has manifested itself in Europe, is an intrusive revival, thrusting itself into our industrial democracies. M. Comte has pointed out that, as long as war was tho chief source of national prosperity, the direction of affairs -was in the hands of a military party, and industry, occupying a subaltern position, was " oi^ly used as an instru- ment." But, when experience had convinced nations that " the only road to riches lies through peaceful activity, or works of industr}-, the direction of affairs properly passes to the industrial capacity," and military force, in its turn, becomes a passive power, "in all probability destined to become finally useless."* This consummation is yet a long way off, but, in England, at any rate, if not in France, and partially in the United States, the best administrators, and the directing minds, belong to the "industrial capacity " as antagonistic to the militarj-. Commercial intercourse, industrial progress, social well-being, are powerful agents in favour of peace. Europe is suffering now from a nearly spent war-fever. A long term of peaceful activity is assured when the fever is over. In all countries there is great anxiety as to tho immediate return of tho aims and hopes of 1851. Tho standing armies of German}- and France, if retained, will outweigh the advantages of the better technical education of the Germans and the artistic lissomness of the French. In coming competitions, where profits will turn on small percentages, and in-oduction has to be harmonized with social claims, England Avill have new advantages, not less signal than those she has hitherto enjoyed. But her policy must not be adventurous and restless, though it can still be large and * Pcsltivo Polity, vol. lY., p. 000. 3G THE PRESENT DEPRESSION IN TRADE : imperial in spirit. Arbitration, by courts, is possible, as in the case of tlie Alabama claims. But the best and safest Court of Appeal is that formed by an enfranchised and an enlightened people. Better Investments. Capitalists learu by experience, as well as other people, and they will avoid the kind of ventures already described. The pleasures of 8 per cent, cannot be had without more pains than l)elong to 5 per cent. M(jney, is like true happiness ; it hath "no localities, no tones provincial, no peculiar garb." But it must have a reasonable security for a reasonable interest. In this countiy, there has been growing up of late a clearer idea of expansion, as involving commerce as well as empire, and it will lead to better investments within the Empire itself. In spite of our pardonable elation about the flag and our commerce, the Empire is a huge undeveloped agglomeration. Our Colonies need our help in many ways ; they are growing rapidly, and the rate of their growth depends as much upon English capital as Colonial energy and enterjirise ; their interests are our own, their markets are our own, their political future is our own. Dictatorships do not flourish on their soil, and re^tiudiation is not the financial weakness of a ]>ritish-born people. Mr. G. Baden Powell pithily writes — "It needs to insist upon the strange fact that while England is maintaining at great efi'ort a precarious and utterly untrustworthy commercial connection with foreign States, the average public seems doggedly to shut its eyes to the opportunities afforded by England's extensive Empire. It is true this unaccountable error disappears when we look to that main but silent current of industrial endeavour which runs its course fed by every streamlet and font of individual interest and enterprise in the true direction oi" success. This current has long ago recognised that within the frontiers of its own Empire the lively productive enterprise of the English race has plenty of scoj^e for the profitable exercise of all its powers. There are long years, long centuries of work before these ample resources shall be all of them opened out. The Au.stralias by themselves are equal in area and natural capacity'- to the whole of Europe. In the Canadas and the districts of South Afiica the English race possesses yet another potential Europe, and in India and the various outlying Colonies possesses surface and wealth of resources equalling those of Europe. The nation owns, then, an extent of surface and a variety of natural resources equal to three Europes conjoined. Here, then, we have a field not altogether insufllcient for ITS CAUSES AND liF.MKDlES. 37 employing the best energies of a nation of 50,000,000, and for providing unlimited soopo for an unlimiti'd increase of this nation." — {Nhiettcidh Centunj, July, IBBl.j Our Colonies took from us last year twenty millions of capital. They will hereafter need more. Patriotism and profit may go hand in hand, with no danger of the kind now menacing Europe — that of bondholders' politics. In India, we have an immense field. The labour is there in abundance. Calcutta and Bombay are the creations of British wealth and energy. Seven millions of India's merchandise go to pay yearly interest on money already invested. " India can supply the cheapest and most dexterous manufacturing labour in the world," says Dr. Hunter. " England can supply the cheapest capital in the world. The household manufactures, wliich were crushed by the co-operation of coal, labour, and capital in England, are now being revived by the co-operation of coal, labour, and capital in India. I believe we are there at the commencement of a period of manufacturing enterprise wliich will form an epoch in the history of commorce " (" England's Work in India," p. 82). Land investments in India pay 7 per cent., and there are many districts that could be profitably reclaimed. " It is conceivable," Dr. Hunter thinks, "that such facilities might be given as would make it profitable for capitalists and land companies to fuund agricultural settlements in Assam and the Central Provinces. If the landowners of Bengal were thus to turn captains of industry, they would vindicate their position, and render it inexpugnable." There is room for a limitless amount of capital in India and the adjacent Colonies of our Eastern Empire. The Silvek Question. The controversy on this question has not attained anything like a truce. But it seems to us that, gradually and silently, the advocates of the rehabilitation of silver are gaining ground. On the one side, we have the simple upholders of the legislation of 181 6 ; on the other, we have several kinds of silver advocates, pure bi-metallists, and simply silver advocates, with no settled policy. But the need for action is as strong as ever, if action can be of service. The rupee is worth only Is. Sd., and the French (ive-frane piece, out t)f France, is only worth four francs, forty centimes. The Latin Union Treaty of 1878 expires on the 31st of December next, and the ]\Ionetary Conference, to meet on the 15lh of April, must re-examine the expedients suggested at the Paris Congress in 1881. A small step, firmly taken, would be better than unsettling discussion without any ,'5H;j(i2 1 33 TJIE PRESENT DEPRESSION IN TRADE: practical result. The following points seem to us wortli con- sideration : — 1. As there is always more wealth in the world tliau there is mone}', any change in tlie quantity or character of a standard in use over a large area, involving the par of exchange between it and another standard elsewhere, must be too serious to bo left unremedied. 2. With coin and bullion estimated to consist of 750 millions of gold and GoO millions of silver, it must be injurious to try and keep up the currency in commercial countries by the standard of gold alone, in the face of immemorial usage. 3. The su])ply of gold is lessening. Dr. Suess, in his work on " The Future of Gold," has elaborately sliown why gold is so limited in quantity, and why it is decreasing. Epitomizing his results, M. de Laveleye writes — "From all these facts Dr. Suess concludes that the desire to make gold everywhere the only coinage, to the exclusion of silver, is pure madness. Geology opposes it. There does not exist in the world gold enough for the purpose. The true money metal is silver. . . Bagehot expressed the same opinion before the Silver Commission of 187G (Question 1,389), 'Silver is the normal currency of the world'" [N'ine- teenth Century, September, 1881). 4. M. Laveleye adds, that Dr. Suess's book, has " convinced some of the most able economists that it is essential to restore to silver its attribute of money, of which it ought never to have been deprived." 5. Mr. S. Jevons maintains that gold and silver " have both pro- gressively decreased in i)urcliasing power, but that silver has decreased in value more than gold." As a general statement, this may bo true. What the currency for the East requires, however, is that the ratio of silver to gold, of 15 to 1, existing prior to 1870, should be restored. 6. If gold, as such, be decreasing, is it lair to assume that silver will speedily become less liable to fluctuations of value, and so the one desirable money standard ? The Improvement of Agriculture. We may divide this question into two parts — what the State can do, and what the farmers can do. The State can do every- thing, says A ; it can do nothing, retorts B. Similar assertions are made about landowners and farmers. Our position is an eclectic one — we think the State can do something, but not much, and that landowners and farmers can do more for them- selves than can be done for them by others. 1. It is something to have the saying corrected, that the English system is law made and law sustained. Other land systems are the same. The objectionable features of our ITS CAUSES AND REMEDIES. 39 system admit of easy modification, wiLliout revolutionary jdan.s. Tiio tying n]> of laud by entail ami settlements re(|uire3 modi- fication. A Parliamentary title is wanted for land — short, cheap, and quick. Tenants' and lahonrors' interests require the pre- .sumi)lion of law to bo more in their favour. Extraordinary tithe must go. Allotments must be extended. I'Vee farming, leases, and valuation on entry, are needed. Drastic legislation to artificially create cultivating ownership is not, in our opinion, to bo desired. Give facilities, and let methods of cultivation, sizes of farms and the like, settle themselves, as they very soon will do, when existing fetters are removed. 2. British farming has not yet become a real science. It will have to bo so — chemical, geological, botanical. The happy-go- lucky^ "tickle mo with a hoe and I laugh with a harvest" notion, has been killed by competition. Farming, conducted by a quick-witted man, resolves itself into throe questions — AVhat can I grow best ? What can I sell best or easiest ? "What will pay me best ? An it is, there is a lesson for him in his covenant, as if he were a schoolboy, and yearly tenancies keep this covenant between the farmer's eyes and the light of heavou. Moro experimentation, more enterprise are needed. Loau- raising against growing crops docs not seem very sound or very promising. It would tie iip the tenant almost as luuch as tho life owner is tied up at the present time. 3. Every farmer in his heart would like a wheat-duty. Tho policy of such a duty will bo dealt with presently. The real meaning is that the farmer has learnt how to grow the crop, and it is an easy croj) to grow. He does not want crops requiring much patience, time to look after, and novel information. So he ridicules market gardening, fruit-farming, bee-keeping, and all such schemes. Ho is a beef and mutton and corn grower — that is all. If wheat will not paj', however, ho must grow something else. When American prairie land is run out, and Manitoba sends wheat to feed her neighbours over the border, there will bo only Eussian and Indian competition to fear; and India, Mr. O'Conor says, can only export freely when there is a combiiuition of four things — abundant crops, low crops else- where, low freights, and low rates of exchange. 4. "Nature," remarks Sir James Caird, "has given us a climate more favourable to tho production of meat and milk, vegetables and grass, than that of any other European State, These, in proportion to their value are the less costly in labour, and therefore tho least affected by the rise in wages." Yet, look at the figures' In 1878, the home consumiition of meat was 88 "3 7 per cent, of British to 16-03 per cent, of foreign ; in. 1883, tho foreign hid risen to 19-79, and the home had fallen to 80-21. Allowing for the etlect of cattle diseases, such figures xeveal grave defects in our system of meat-production. Experienco 40 THE PRESENT DEPRESSION IN TRADE! shows that animals must bo brought to tlie butcher earliei , that animals feed faster up to two years than after that age ; and that mere fat production, with higiily spiced and costly foods, is unprofitable. Covered yards, and a more extensive use of ensilage, with maizo-growing for the purpose, as at Merton, an escape from the money-wasting attractions of the pedigree-book, a little more thought to tho sheep's wool as well as his carcase, and attention to horse-breeding, would soon improve the outlook. 5. Last year we imported butter and butterine worth £12,526,293, and cheese worth £1,997,894, which we might jnako at home. Butter, milk, and cheese factories are much wanted. Even-quality in foreign butter is due to making in factories. Such butter fetches Is. lOd. per lb. in London, against the Is. 3d. and Is. 5d. obtained by farmers frona agents. iMilkpays a farmer 8d. a gallon in summer and lOd. in winter, to deliver at a London station. A factory would give at least a Id. a gallon more, and, managed, by farmers, on tho associative, profit-sharing principle, would pay well. More attention to vegetables is also needecl. Eailway companies could materially stimulate homo production by more generally providing crates and hampers, and making special rates, as is done with Cornish brocoli and Jersey potatoes. The imported vegetables last year reached £3, 1 28, 305. It is a blot upon our farming that these im- portations should grow as they do. Happily, the agricultural returns show that orchards and market gardens are sensibly increasing. 6. Good poultry fai-ming pays. It requires trouble, that is all. The art of winter-laying, by selecting food and housing the fowls, is now bettor understood. Our American friends are a long way ahead of us in this respect, and most of the practical hints given by our agricultural journals are taken from American ])apers. Our poultry import was valued at £501,307, in 1883 — an increase from £171,518, in 1871. The imported eggs last year reached £3,908,927. The number of poultry in Great Britain and the Channel Islands was given last year as 28,944,249; in France it was 50,019,130. The annual value of British poultry, is not estimated by Mr. P. L. Simmonds. (" The Annual Food Resources of Difi"erent Nations," p. 150), but he gives that of poultry in France as £22,879,21 1. Here, then, is a fine opening for British farm wives and farm-maids. 7. More enterprise. Paying crops, such as chicory in East Yorkshire, averaging £18 an acre, and flax, worth £14 10s. an acre, have almost ceased because they entailed trouble. A license to grow in place of tlio present excise restriction on chicory -roasting, and tho establishment of paper-mills, to which tho farmer can deliver the flax-straw, would be great improve- ments. It is believed that carraway seeds can be grown in ITS CAUSES A\D REMEDIES. 41 England at £15 an acre, Mr. AVoods, at Morton, has grown from 28 to 30 tons of maizo per aero as fodder. " Hence," ho says, " I cannot regard niaizo as iui nncortuin clement in the farmer's calculations." ("A Ilevolution in Farming," p. 23). Practico with science is not sufTicicntly cultivated. The agricul- tural journals are too political, too crowded with news in tho form of reports and speeches, instead of being full of shrewd practical advice, pithy articles, and notes. An illustrated monthl}-, after tho stylo of The American Agriculturist, which is printed in German and I'liglish, would be better than the quarterly and half-yearly reports of the larger societies. 8. Mr. Aubcron llorbert, who cannot bo accused of wild views on tho land question, writing in tho Pall Mall Gazette, of March 25th, says : '♦ Great as arc the openings for largo land companit s at the present, tho landowner can still do more to transform than anybod}' else, if Heaven will ins[)irehim to do so. He has tho means of knowing the steady and trustworthy men, and to all these ho can offer land on terms of gradual repay- ment." A small experiment ho and others are nuiking will be anxiously watched. Lord Carrington's experiment with allot- ments at High Wycombe has been a sjilendid success. Fair Trade. The advocates of compulsory education in Fair Trado principles, or the amelioration of tariflFs by trick and trick, are not political economists, and have not cai)turod even a solitary one of note. Manufacturers of precarious industries, country gentle- men, unconverted Protectionist sinners, and political fence- sitters, constitute its champions. A full examination of its fictions cannot be given here, but it is important to show that it is no remedy for trade depression, and that, if "practical" men believe in it, tliey do so ignorantly. Fiction one is, that by taxing foreign goods you can make " the foreigner " contribute to local and general taxation. The advocate says, our burdens are heavy, and so we cannot compete. He wins cheap applause. Even shrewd thoiightful men talk about taxing tho foreigner. Mr. J. S. Mill might have been clearer as to this matter than ho is. Tho ans\\"t'r is, that you cannot tax the foreigner if you try. Taxing his goods as they enter England, is taxing tho l">nglish purchaser, and not tho foreign maker. In buying a loaf you pay tho farmer, tlio cornfactor, and the miller, as well as the baker, their respective shares. It is so with tho duties. Tobacco costs from Gd. to 8d. per 11). with the duty unpaid, and the Gd. or 8d. per lb. is all the tobacco growers got. The duty is paid in England on the arrival of ■12 TUE PRE.SENT DEPRESSION IN TRADE : the bales, or wliGn tliej' aro taken out of bond. If vro can afford to smoke tobacco at 6d. and 8d. a lb. plm a dut}'^ from 3s. 4d, to 4s. 4d., the foreigner gets or gives no fraction of the duty. Ho is content with 6d. or 8d. a lb., and we pay the remainder. The second fiction is, that as our markets are being " flooded" with foreign manufactured goods, a 10 jier cent, duty would arrest the flow and help us. A committee of the British Association has calculated that the consumption of manufactured articles in the United Kingdom is 50(3 millions a year. We import about 30 millions, or one-seventeenth of what wo consume. A 10 per cent, duty would realise £3,000,000 per annum, or less than the customs on rum and brand}', on tea, or upon tobacco or suiiff. IIow would that relieve trade ? We have already seen what are the manufactured articles we import. By taxing 30 millions of imports we should make " the foreigner" put a 1 per cent, duty on our own exports. We should get £'3,000,000 and lose £4,000,000, perhaps more. Austria's Customs Bill, a reply to Germany and France, should be borne in mind as a bit of retaliation. Articles dc FarishaxQ gone up 100 and 150 per cent., on the principle that when you must hit, there is nothing like hitting hard. The third fiction is, that "one-sided" Free Trade is bad. Experience is the other way. Free imjoorts enable us to obtain what we want, at the lowest price. Even tarifls for revenue increase consumption with every reduction, so that we are realis- ing a steady income of 20 millions from Customs, whilst the American revenue from the same sources has fallen from 37 millions in 1809 to 27 millions in 1879. Cheap food has cheapened manufacturing jiroduction, and enabled us to compete with the foreigner in his own markets. For forty years we have been one-sided Free traders — and these are the results : — an increase of general prosperity, an increase of imports and exports, which is the trading evidence of the same thing, and an increase of our carrying-trade from 33 shljis out of every 100 to 55. The fourth fiction is, that " the balance of trade " is against us. We import more than wo export. In 40 years Great Britain has imported 1,600 millions more than she has exported, and so she ought, according to the Fair Traders, to be 1,600 millions poorer ! If we aro not, as every sensible person knows we are not, the method must bo wrong. Professor Leone Levi, examining this question,>has laid down the incontestable proposi- tion, that an increasing balance of trade is associated with an increase of wealth. lie says ; — " The best way of testing whether the balance of trade was really favourable or unfavour- able was to see whether the nation was becoming j)Oorer or richer by its policy." Putting the balance of trade, and the amount of income as.sesscd to the Income Tax, side by side, the following was the result: — IT.} CAUSES AND REMEDIES. 43 lR.5r).63 18Gi-73 1871-83 Unlaiioc of Tnuk-. 39 millions. 113 Increa«;o per cent. 41 lOJ Amount of lucomc. 329 millions. 440 580 Per cent, of Increase. .33 31 The war disturLanccs of tlio last fuAV years, ami the other causes already mentioned, will account fur the diminished volume of trade, and the lessened percentage, without iu any way vitiating the method, or affecting the principles involved. International trade is mainly Ly barter or by bill. Our imports pay us for goods e.xportcd, for interest on capital invested abroad, for commissions, and for freights. Our national profit comes to us in this foim, and makes us instead of killing us. If imports were less than exports, freights would rise, cargo- ships would return in ballast, trade would lessen, and manu- facturing bankruptcy begin. Fiction five is, that a 10 per cent, duty on foreign corn would not hurt the consumer, but would stimulate Colonial trade and benefit the British farmer. (a) The consumer would, however, have to pay the duty, and the interest on the 10 per cent, more capital required by the corn importer, the factor, and the miller, and possibly the 25 or 30 per cent, more demanded by the baker. The result would be really a 12 per cent. duty, (b) The American corn growers would find it less profitable to invest capital in farming, and it would pass into manufactures. Prior to 1842, we taxed foreign corn coming to us from Saxony, and the supply ceased. Saxony then began to throw her energies into manufactories, and has now, aliL'O in educated taste and finished goods, become one of our great competitors on the Continent. Are wo to kill off a number of our profitable industries because farmers will grow wheat when it does not pay? (o) We require 25 million quarters of wheat annually, and as wo cannot apjiarently grow more than nine or ten, wo import the remainder. Out of every 100 loaves we consume CI are made of foreign wheat, or ^ths of every one of our 4 lb. loaves. The importance of the foreign supply is therefore obvious, (d) If wo obtained the IG million quarters from India, or our Colonies, the farmer would not bo benefited a jot, because the so-called competition would bo the same. (e) The arable farmer gains 2s. a bushel on straw, and tlio dairy farmer and grazier has the advantage of cheap feeding ceivals he would lose if corn duties were resumed. (/') Cheap fond is the basis of our manufacturing and general prosperity. The present crisis would have been 4 4 THE PRESKXT DEPRESSION IN TRADE: ten times more acute if wlieat had been taxed. The cost of piiupcrisni, as well as its amount, rises with the prices of food. I'iction six is, that retaliation would be educative, and cause no loss, or only for a time. Our experience is against anything of the kind. A Free Trade example is better than a Fair 'J'rade or Protective war. Mr. Eckroyd's method reminds us of Carlyle's description of Jesuitism, as an attempt " to serve God by taking the devil into partnership." As Mr. G. Baden Powell shows, there must be economic loss, and the chance of success is pro- blematical. He truly adds, " we must either impose them (retaliating duties) for a term of years, or wait until their object can be accomplished. A term of years will be taken, especially by the more obstinate ojiponents, to be a term of waiting. Wo should bind ourselves, in self-contradiction, to tljat very policy which we were seeking to overthrow." (" State and State Interference" p. 267.) The only part upon which the Fair Traders have a case, and even then they bungle over it, as we shall presently see, is as to Colonial Trade. Their general remedies are a libel on our intelligence. For do they not ask us, because trade is not so brisk as it was, to resume the old method by the abandon- ment of which we obtained the prosperity whose absence they lament ? Production and Distribution. Industrial progress is seen in two phrases — increased pro- duction, and diminished cost. The former is no evil, unless artificially stimulated, and whenever it is so stimulated it becomes relatively dear. Production, is most healthy when it is freest. Markets and profits impose healthy limitations upon it, whereas export bounties, and tlie like, make a call upon the general taxj)ayer to compensate the manufacturer. There are trade reformers whose remedy for depression is ever the same — limit production. If the market demand were represented by 10, they would n gard 8 as the healthy ratio of production. The effect of this would be that associations outside the "ring," or foreign countries where imports are free, would enter into competition for the difference, and get it, forcing down prices to an open market level. In ordinary states of trade, production is governed by the present and the probable market, and time-contracts will always depend upon nice calcula- tions as to the latter. Excess in production, more frequently than not, is due to misreading of the signs of the times, and miscalculations as to " futures." One of the greatest problems of modern industry is distri- ITS CAUSES AND RLMi.DIF.S. J.'j Inition, not prcxluc-tion. How are wo to briii^' prouucf-r and consumer nearer tog-otlier? Producing and con.suniiiig localities are always coming- nearer, in time, owing to railways, stcam- sliips, and telograplis. But l;etwecn thorn are intervening classes, nuiking extensive jirofits in liandling tlie articles in transit. Milk, carriage-paid to a London station, costing from 8d. to lOd. a gallon, is sold to the consumer at 20d. a gallon, the cost of distribution exceeding the combined cost of pro- duction and transit. Cork butter passes from the producer to the local dealer, to the Cork buyer, to the Cork exporter, to the English factor, to the cheeseman, and then to the consumer. Here arc six profits. Meat, cottons, woollens, carpets, lace, groceries and the like, pass through the hands of a series of luiddlemen. Profit is tlius a series of percentages, increasing downwards, in the I'orm of a jjyramid. In fact, wo may hold iL to be a law of our present system of distribution that, as trans- actions diminish in quantity, they increase in rate of profit. Probably, the law is sound cnouijh, but the stages of distributiulation of 1871 than on the present occasion." The commercial class is reckoned at one million in round numbers, and Professor Leoni Levi, wlio is more strict to the returns, gives the earnings of the 900,000 at 47 millions, against 364 earned by the industrial classes. The distributors proper would bo much larger than 900,000, wo fear, and other figures are given that make them two millions. In any case, we have about one distributor to every four pro- ducers. A needlessly complex system of distribution injures tho manufacturer, the workjieople, and the consumer. A singular example in East Lancashire occurs to us, in w])ich tho smaller manufacturers are mere tenants-at-will of cloth agents, who use them and ruin them, if profits cannot be otherwise obtained, to cut down the larger manufacturers, and to make cotton pro- duction a gambling concern. Co-operation has announced itself as solving tho problem of production and consumption, lias it duue so, or promised to 46 THE PRESENT DEPRESSION IN TRADE : do SO ? AVe are not convinced that it lias. The annual returns for 1883 show an averag'e profit of 28 per cent, in industrial co-operative societies, tlio English ones turning over their capital three times in a j^ear, and the Scotch societies four-and- a-half times. They show us, comjiared with the 4 or 6 per cent, of other companies, what a large amount of money must pass into the Lands of distributors. The Manchester District Co-operative Association earned, in 1883, less than 5 per cent, on its capital in production, 4 per cent, in wholesale distribution, and 32 per cent, in retail distribution. Surely, somewhat similar proportions might follow any fair system of distribution, whatever was the principle of associa- tion. The Oldham Cotton Buying Company is a good example of the kind of business likely to become more common in future. It was designed to do away with middlemen. Tho last return wo have of its operations showed it to be paying 7^ per cent, on a quarter's business for its share capital, 7s. per £100 on business done, and returning a commission equal to lOd. a bale on American cotton. Associations for the purchase of raw material would reduce the middlemen. Profit-sharino: is, in fact, capable of extension all round, and upon many systems. In Portland Town, in the Metropolis, a society has been formed to do away with middlemen collectors from the AVest-end shoe shops. " Such firms," says Mr. A. K. Connell {Pall Mall Gazette, Pebruary 22, 1 885) ' 'employ the services of a middleman collector, who takes the repairing work to the East-end, pays there a sweating wage, returns tho work, and absorbs the profits." It is being tried to combat the plan by a profit-sharing society. In the fish trade, buyers at the poi-ts and salesmen at the London markets, similarly absorb the profits, and regulate prices. The true scheme of distribution should fit into any system of production, and perhaps it would take the form of a central agency for each trade, or variety of trade, with direct com- munication with retailers for all large districts or sub-divisions of the kingdom. Manchester, Glasgow, Bristol, and many other largo places, would be in direct touch with the manufacturer, on the one side, and tho retailer, on tho other. No doubt, an idea of this kind is traceable in the more direct forms of dis- tribution already existing, but it has been obscured, if not lost, in their working. Tlie textile trades were formerly carried on by piecc-halLs, to which makers took their goods and buyers resorted. Tho maker now goes on 'Change, and the first customer is an agent who begins the distributive work. In our foreign trade, we believe, tho order goes direct to the maker. Formerly, the Leeds woollen makers were visited by buyers, for whose appearance they had to wait, and upon whom they were dependent. They now employ commercial travellers to go direct to the warehousemen with their samples. Trade has ITS CAUSES AND RRMFIDIES. 47 been improved Ly tho change. Tlio next stop vrouUl bo to form a distributive agency of their own. It Avould be a revo- lution, abnost, but it woukl pay. Agriculturists need a better distributive system. They ought to organise butter and clieese factories, and to form dairy associations, in every largo centre, for miscellaneous distribution. It would pay thorn as well as it pays tho Aylesbury Dairy Association, to sell meat, bacon, eggs, poultr}-, and butter pro- ducts in this way. Tho market system, as it formerly worked, and as it still works in some districts, was a much healthier system than a congeries of retail traders, often working through a buyer, competing with consumer.^? in tho same market, and requiring large proiits. In retail business generally, the division of labour has boon carried too far. A ro-combination is very much required of such trades as ironmonger, tinman, jilumber, gas-fitter ; tailor, draper, and hosier ; and others that will readily suggest themsolves as convenient. In our small towns and villages, one or two good general shops would do well whero a dozen or two do ill. The shop of tho future is " the store," where, as the American joke runs, " you can get anything from a baby's cradle to a bower-anchor." Dislocation of trade might ensue for a time — and all such changes can only bo gradual — but a country that has " found room in 80 years for 20 millions of new people," as Mr. GitTen phrases it, need not be alarmed at finding work for a million or so of disengaged distributors. Labour axd Capital. If we could discover the scientific unit of wages, in every form of trade in which large numbers are employed, and arrange for its variation under tlie changes to which that trade is exposed, we should terminate all labour confiicts. It is sincrular that political economists cannot throw more light upon this subject than they do. For example, say, wo take the unit of wages in any trade as 15s. a week, that being the lowest remuneration in any of its active branches, wo miglit add to it so much for tho time required to attain a certain standard of etficiency, so much for risk or insurance, and we should reach the true wago for skilled labour, at the lowest rate of pay, and should then require a margin for Huctuations, at some proportionate profit for the rate of interest upon working capital, justly due to the employer, in accordance with market prices. That is, if the minimum for skilled labour were assessed at 253. a week, tliere should be an addition to that sura, in accordance with the general profits made. The variable element would then bear some more true relation to capital invested, to tho state of the market, and to tho gross profits made. Probably, the annual bonus system 43 THE PRESENT DEPRESSION IN TEAD2 : would then come into more extensive operation. There seems to U3 to bo considerable room for the play of scientific thought in thus adjusting a sliding-scale of wages in all our staple industries. Roughly speaking, it may be said that this is attempted in "market-price," but that is a clumsy expedient for adjusting what surely admits of more careful settlement. Apart from the number of individuals teeking "work in any branch of business, at any time, there really is a true rate of remuneration. If five medical assistants offered their services, and only one had really first-class qualifications, no economist can contend that the other four would beat down the rate of remuneration simply because, numericall}', they "were four to one. That is, skilled labour has a market-rate of its o'wn. Boards of conciliation are engaged in endeavouring to prevent labour disputes by that impalpable thing called " knowledge of the trade." Such boards cannot be too numerous. But "we can see no reason to doubt that in future it may be found desirable to call in experts, not resident in the district, and paid by fee. The art of -wage-adjustment is as likely to become a profession, some time or other, as the art of deciding legal controversies, and though the professors may be fewer they •will be of quite as much service. The future of ■wages, moreover, depends upon the number of intermediaries. The reduction iu the cost of production requires, as its logical complement, a reduction in the cost of distribution, and until it is attained we shall never reach the true method of in- dustrial remuneration, in the form already suggested. Until ■we materially modify our plan of adding to pi-ime cost in iucreasing ratios, we shall have to face what is now being dis- cussed as highly probable— a fall in the rate of interest or profit upon capital The profit upon productive capital has been falling of late, and it must at all times be adjusted to the range of variation. A food or clothing business, for esamplo, where demand is steady, can bear a lower rate of profit on capital than, say, the iron, steel, or coal trade, certain to be affected by spurts and depressions in enterprise, at home and abroad. Capital is still awaiting investment in spite of waste. There is a waste- limit to capital, if we could only find it, as there is a waste-limit in the human bodj', in proportion to weight. Let it be exceeded, and we have panic and crisis ; let it he not readied, and we shall pity the unfortunate, and find our prosperity undisturbed. As far as we can judge, the line of quietude is difi'erent for foreign and domestic investments, for Avholesale and for retail trade. The losses in America last year, in liquidations, reached 50 millions ; in England they would barely touch 10. There is capital still amongst ns, in sjite of depression ; there is more, in fact, because there are fewer calls for it. The capital com- mitments last year in England alone readied £91,520,207, and in England and elsewhere £17, 5 11, 005, and upon the two sums the ITS CAUSES AND RRMKDIES. 49 actual calls wcro £109,603,500. The smaller States of Europe would bo iinpoverislied to raiijo as niuch floating capital, and yet England, so men say, is depressed, declining, ruined ! Tlio enterprises "^^ere for the Colonies, for homo and Indian railways, land and mortgage companie?<, mining projects, and niiscoUaneous commercial undertakings. For tho live years ending in 1881 the capital embarked was £455,003,000, against £23'J, 500,000 for the five years ending in 1879. A gradual revival of confidence is therefore apjiaront in the moneyed classes. Steam has done so much for us, and promises to do so much more, that instead of profits tending to a minimum, us Mr. J. S. Mill suggested, wo are inclined to think, with Mr. Clitf Leslie, that such a theory " has no claim to the character of a law of social progress, ignoring as it docs, some of the chief results of that progress, and its chief cause, tho constant improvement of the human faculties. Profit may uniformly fall from its first high level in now countries, liko the Western States of America, j'et may not continuously declino in old countries. The rate will probably vary from time to time in the future as it has done in the past " {Fortnighthj Review, November, 1881). Even in such a common- place investment as land drainage at home, there is room for £150,000,000. The Panama Canal is the natural successor to the Suez Canal, and its effect upon trade with the Pacific, and the orderly development of Central America, must be immense. C-analisation means cheapened transit, Cjuicker distribution, economy in coal. Ship canals from sea to Manchester, and from the Solway Firth to tho Tyne, are in the immediate future, in common with other projects. In the improvement of our harbours and fisheries, there is ample scope for capital. The use of capital in stimulating enterprise has been recently brought out by the inquiries of a committee of the Dublin Corporation on banking advances in England, Scotland, and Ireland. It was found that, in Ireland, there had not been tlie same libera lit}' in making advances to foster industry as in Scotland and England, with consequences that need no demonstration. Tecunical Education axd its Promises. Two deliverances on this subject may be cited, as we cannot traverse the whole question. Mr. E. Atkinson, an American jtoli- tical economist, quoted by Schoenhof (The Destructive Infiucnce of the Tariii; p. 69), says : " Other things being equal, high wages, coupled with low cost of production, are the necessary result of the most intelligent applie-ation of machinery to the arts, ])yovided the education of the operative keeps pace with the improve- ment of the maehiner)/." Without technical training this pace is 4 50 THE PRESENT HErRESSIOK IN TRADE : impossible. !Mr. Mundellii, sj^eakin;^ at Soutli Kensington recently, said : "If to all our great industries art "svas applied to the extent to which it might be applied, if people were properly trained to the proper application of art to industry, and if it were extended to all our manufactures, we should hear much less of the depression which prevailed in trade than we did at present." The City and Guilds of London Institute, in its Report, dated March 25, says : '•' 6,396 persons are studying 34 subjects in 263 classes in various parts of the United Kingdom." We are not sleeping, therefore, if we commenced somewhat awkwardly in giving a commercial education in our elementary schools, based upon a narrow theory, and forgetful of visible and sur- rounding facts. School education, technical education, and workshop education cannot proceed simultaneously, but, after a certain age, theory, and practice may be advantageously com- bined. Drawing has now become a code extra, and its import- ance in many trades will be as promptly recognised as chemistry is in others. But University training must follow in some of the classes that can aflford it, if we are to apply taste and skill to industrial processes and discoveries. The chemists, who do so much to open out new industries in "Grermany, are all highly trained. There is in chemistry, in fact, for the sons of the well-to-do, or for the shop-keeping class, likely to suffer by a better system of distribution, a splendid and lucra- tive opening. The science degree of the London University is worth any man's winning. A colour firm at Hochst, in Ger- many, has in its employ 51 chemists, and 15 trained engineers and managers. Some of the chemists are wholly engaged in making researches. Hence the German colour-trade is gradu- ally equalling our own, and will, unless wo mend, speedily supersede it. The costly training required in the higher branches of education will always maintain some social distinction. The scope for activity is large, and the need great. Touch, taste, colour-sense, nicety of proportion, and the human as opposed to the conventional side of art, ought to command our cultivation. AVe have patience, wealth and wide empire. All we need may be summed up in two words — art and science. As to promises, the field is immense. Take the question of )-esiduals in gas-making, as showing the utilisation of waste, and the new industries that chemistry has made possible. The ammoniacal liquor, yielded more abundantly by cannel than by any other coal, is one of our main sources of sulphate of ammonia, and our annual product of this valuable agricultural salt is worth j£2, 000,000, The saving in gas-making comes out as follows (we quote the case of York with which we are familiar) : — ITo CAUSES AND REMEDIES. 51 Value of Reniduah per Ton of Coal CarhoniaeJ. 1855. 1885. s. (1. s. d. Coko . . 4 8 3 10 Tar . . . . 9 1 G Ammoninrnl liriuor . 1-80 1 386 G-80 6 7-8G Witii coal, and therefore coke, at the price of 1885, tlic In- creased value per ton would have beea more considerable. The tar-products offer a brilliant illustration of chemical results. Dr. Perkin has developed a new industrj-, the coal-tar colour trade, hy his researches as to the properties of benzol, the basis of aniline and other dyes. Tn addressing the Chemical Society last year, he asked : " AYhat do we see as the result cf the employment of high-class chemists in Germany ? First, we notice that chemical industries are developing and increasing: there more than in any other country ; and, secondly, that manufacturers are able to make their products in a very cc(niomical manner, and, as a consequence, sujiply them at alow price." The development of an alkaloid from coal-tar, called quino- line, by Emil Fischer, with febrifuge qualities almost equalling quinine, is another splendid triumph of German chemistry. The Technical Commissioners truly say of this instance that it points to the " immense importance to the human race of researches in purely scientific organic chemistry, which at one time appeared to have no practical value or possible application." Since the failure of the guano deposits in South America, the supply of ammonia for manures has been drawn from ammoniacal liquor, as already mentioned. In 1879, it was .£20 a ton, and blast furnaces and coko ovens, formerly wasting their ammonia, were utilised in producing it. It is now i.'1'J a ton, and the supply increases. Our coals, shales, and peats are full of it. -Mr. Bcelby, in a paper read at the Society of Arts last month, detailed some useful and profitable experiments in producing ammonia from Broxburn shale, in the process of making oil. Up to 1870 the spent shale was " sent to the refuse heap as of no value." Mr. W. Young and Mr. Ceelby set to work, however, and the result of their experiments was to increase the yield of sulphate of ammonia 11 lbs. per ton of shale, ami to earn, on the same gross outlay, .£-10,870 more per annum {Lon, March 13, 18S5). — Nitrate of soda will probably be as larg-'ly developed by similar processes when the natural supply fails. 62 Tnii: pkesext depression in trade : ShoclJy waste is now being converted into a manurial agent, ami cotton waste lias long been made into a saponaceous com- pound. In making steai'ine candles, glycerine was first pro- duced in any quantity in this country. It is now an important product ; and whereas, formcrl}', Lighly-cliarged potash refuse from white and yellow soaps was coloured, highly scented, and sold as fancy soap to the multitude, with injurious consequences to hands and faces, we have in Messrs. Pears' elegant and pure preparation an efficient and healthy article, beaten by nothing in the market. In making pig-iron, the residual product of one ton ranges from 28 to 30 cwt. of slag, according to the nature of the stone employed. The huge, melan- cholj'' slag-heaps in our iron-smelting regions should all be labelled, " Material and money wasted by bad science." Bricks, •blocks and ornaments are made of it, but not in any quantity. It is also oecasioually used as an adulterant to Portland cement. Put it is time the slag-creators became the slag-utilisers. lu ihe south of England, walls, houses, and churches are built of tiints. Why should not slag be utilised in the same wa}', in the smoky rc":ions where it abounds ? The utilisation of fish-offal (1) as guano, in a desiccated state ; (2) in extracting oil therefrom, necessary in drying for manure ; (3) in making gelatine from the bones ; and (4) in the ]>roduc- tion of phosphtite of lime, is strongly advocated by Mr. W. Anderson Smith, in one of the Prize Essays resulting from the International Fisheries Exhibition at Edinburgh, in 1882 ("Fish iiud Fisheries," pp. 200-G.) He calculates that 10,000 tons of fish-offal should yield 4,000 tons of fish-oil, at £15 a ton, and 5,000 tons of manure, at £o a ton, orX7o,000 in all. The manurial value of utilisable British fish-garbage is put by him at £300,000, most of which is lost, or wasted, by bad management. English fish-guano, finely ground, is now worth £0. 12s. a ton, and Norwegian, the best, is £d. 15s. Mr. Anderson Smith suggests that fishing steamers might " utilise their engine power in the fishing ports for the purpose of removing the oil from the garbage, desiccating or drying, and then condensing the remainder, and thus arriving with a cargo of oil and manure, each ready for the market." It is a standing re j) roach to us and our scientific attainments that v/e make so little use of our sewage, not only wasting it, but polluting good water in the process. Mr. Bailey Denton has recorded his experiences on intermittent filtration in a prac- tical volume. The sewage from five million persons, he con- tends, at ^d. a ton, applied to land by his method, would " amount to upwards of £300,000 a year." Dr. Munro has recently published an account of experiments made by him witli filter pressed sewage sludge (Mark Lane Exjwess, March 2, 1885), from which it appears that five tons of sewage sludge, upon plots ITS CAUSES AND HEMKD1K3. 63 of an ficro each, in poor chalky soil, yicUled from 9 tons l cwt. to 10 tons 4 cwt. of roots, against l.'J tons IH cwt. per acre from 10 tons of famiyard mannro and 11 tons 2^ cwt. from 4 cwt. of supcrpho.sphatc, the unmaniircd acre yielding 5 tons 18 cwt. Tho compressed shidgo costs to mako and huy os. per (on, and, if freed from moisture so as to make it move portable, it should become a valuable product. New Uses for Irox axd Steel. The cure for excessive production in iron and .steel is best to Le found in two ways — in newer and cheaper methods of steel- making, and in newer uses for iron and steel. Tho Bessemer process requires a special kind of ore, only found in this country in Cumberland and tho north of Laucasliire. Very large im- jiortations of Sjianish ore take place for this method of steel- making. The "basic" process deals with hematite ores, of ■which we have large supplies. But it has not paid to work these inferior ores of late, and use the process extensively, and hence the depopulation of the hematite ore districts of recent years. A rise in prices or freights would be of material advan- tage in many parts of England, and jiroduce a remarkable revival. The supersession of iron by steel rails, which gave trade a fdlip for a time, has become a serious matter. The life oi' an iron rail is ten year?, and of a steel rail, thirty years. About half the existing lines remain to be transformed, and then the demand for renewals will steadily decline. The con- version of .ships from iron to steel has only just commenced, and is confined to passenger vessels. A steel vessel, tonnage for tonnage, has 20 per cent, more carrying capacity. The first steel ship launched on tho Tees was not inaptly christened '• Transition." Steel-shipping has not much clu.uce, however, in tiie present glut of vessels, liailway extensions are probable in India, Canada, South Africa, possibly from Zanzibar to the lakes, and also along the Congo. China may yet become a rail-buying country. Branch lines in England do not promise much work. It is possible we may hereafter substitute steel sleepers for wood, in -which case the weight required per mile would be the same as that for rails, viz., 210 tons per mile for double lines. Iron and steel telegraph posts are also recommended. In constructive and ornamental arr, there is still an immense field for iron. The Sion and Bellinzona balconies Mr. Ivuskin has reproduced {Tico P'ldi's frontispiece), are fine exanij)les of work in new fields for British artisans. The burst of inventive power which has marked tho new Patent Act should bo of service to the iron and steel trade, as well as a revival of agricultural and manufacturing activity. 5-t THE PRESENT DEPRESSION IN TRADE : New Markkts, Customs' Unions, and CommeroixVl Treaties. A desire for now markets is veiled in a good deal of wliat passes for r new imperial spirit. We feel the force, as an expanding nice, of Bacon's pitliy saying, tliat " It was not the Eomans that spread \ipon the world, but the world that spread iij)on the Uomans." A desire to civilise is a desire to trade, to benefit inferior races, and to sustain British interests. But it may bo asked, how near are we to the end of the j^rocess ? A table of the world's population, showing the immense preponderance of the uncivilised over the civilised races, is a sufficient answer to any doubts as to primary wants, leaving the more civilised wants oat of the question. Under the surface of our present depression, it is hopeful to trace new markets asserting them- selves. Trade with Algeria, Morocco, and all parts of Western Africa, is increasing. The French possessions in Western Africa took £124,636 more goods from us last year than in 1883, and the Portuguese possessions, in the same quarter, £378,042 more. There was also a marked improvement in exports to Hayti and St. Domingo, to Peru, Uruguay, and the Argentine Eepublic. In Central Asian markets, Russia will push us out if she can. A correspondent with the Prontier Commission writes {Standard, March 16, 1885): "All these Afghan (Tlugara or otherwise) ■cloths are warmer than ordinary English warm clothing. English warm cloth, as sent to the Indian markets, is not thick enough, and has been too much compressed. I have observed that in Kusan, Khosk, and the Bala Murgab, the white cotton goods , are English, and the coloured prints all Russian. The piece goods of English make are in much regard and demand, and they sell for ab( ut twice the price they command in Bomba}-. The English goods all bear Manchester marks." He thinks the 'extension of the Quetta railway to Candahar would increase our trade with Afghanistan and Central Asia. Can we do any good by Customs' Unions ? M. de Molinari, the French economist, has suggested a Pree Trade Customs' Union between England, Holland and Belgium. He thinks that a common tariff is possible. The Verviers Chamber of Corn- ea erce has for 20 years advocated the abolition of customs' .duties, in the interest of its woollen industry. Ghent, the cotton .centre, remains Protectionist, but a Customs' Union might de- .velop weaving as a compensation. " An Anglo-Dutch-Belgian vunion," he says, " would comprise three countries whose foreign ;trade amounts to about £1,000,000,000, and forms nearly two- fifths of the foreign trade of Continental and insular Europe. United, these Free-Trade countries would have great power of expansion, and be capable of confronting Protectionist countries. ITS CAUSES AND nEMEDIliS. 65 After being too long on the defensive, would not Free Trade in those three united countries ho a wedge driven into the worm- •eaten trunks of Continental Protection '? " {Ivnes, January 23, 1885). The oljjections to such a union are obvious. It would be war; hostilu customs' unions would follow; and restrictions would begin, all round. There is no need for any aggressive pact. As commerce follows the line of least resistance, Holland andBelgium have only to lower theirtariffs, and coi)your example, to obtain any extension of trade that free imports would give. A closer union between England and her Colonies is a much more important matter, as the Colonies are relatively less developed, and have consequently greater powers of absorption than countries like Holland and Belgium. Mr. G. Baden Powell has so exhausted this part of the question that littlo room is left for anything but his results. He shows that our European is not increasing in proportion to our Colonial trade, that our trade with Australia equals that with France, that a large inter-Colonial commerce is growing up, that only two out of eight self-governing Colonies have lapsed from Free Trade, that young countries, sparsely populated, are best engaged in producing raw materials, and that the English nation, "if it remains in close commercial union, is only in the infancy of its ■career. All that is necessary," he adds, " is that by the direct means of the spontaneous action of enlightened local govern- ment, the vai-ious communities of the British Empire may come to subscribe, each in its own degree of autonomous action, to an agreement to keep its tariffs low." A future of •' un- precedented prosperity" would follow. (State Aid, p. 170.) The mistake we made in allowing self-governing Colonies to have ix free fiscal policy must not be repeated, Hong-Kong, Singa- pore, and Gibraltar, are free and thriving entrepots, and such other Colonies as act under imperial taritis extend and prosper. Closer commercial union would keep the stream of emigration within the Empire. How great a gain this would be, may bo seen in two ways ; by the value to the Colonies of the labour and capital sent out to America, and elsewhere, whicli !Mr. Graham has averaged at 35 millions a year since 1837, and by the home- remittances, put at £19,800,000, between 1810 and 1878. A commercial treaty, like the old town charters of feudal times, is a truce. Since 18C0, we have come to sec tliat these bargains have not all the advantages popularly attributed to them. Regidation is still restrictive ; the true principle of inter- national dealing is perfect freedom. The next best is that of the most-favoured nation clause, which we are happy to say was the basis of the long-pending [but now unfortunately rejected] modus Vivendi with Spain. iSuch a basis would give us a virtual Customs' Union of the best type. 56 the present depression in trade : Miscellaneous Eemedies. Economic national administration, even if our aggregate wealtli may grow, is always to be desired. The more money that is left, as Sir Robert Peel said, " to fructify in the pockets of the people," the better. Our expenditure lias increased at the rate of 6s. per head since 1873. Economy in Imperial affairs is nearly always coincident with prosperity, though it is noteworthy that, when wo are on the top of the wave, we are apt to relax our notions of economy, and assume new burdens, to fmd getting rid of them no easy matter in duller times. Mr. Gladstone has, in his finance, employed the income-tax as the means of keeping up revenue, whilst lie liberated the springs of industry. An equitable adjustment of indirect taxes is still wanted, as the direct ones bear a large share of the burden. It is suggested, for example, that if we abolished Customs, wliich cost us Si per cent, to collect, against 2 per cent, for direct taxation, and we increased and re- adjusted, tbe house duty, we might easily raise six millions a 3'ear more than Customs bring us, and enormously extend trade. Local taxation needs to be completely overhauled, along with local self-government. Mr. Edwin Chadwick contends [TJie Fariuers' Almanack, 1885) that we might save three millions by improved local administration, eight millions by putting our liighwaj's under scientiiie engineering management, and half-a- million by consolidating the Police Force. The assumption by local authorities of complete control over the gas and crater supply would also show gains similar to those in Birmingham and Manchester. Our Chambers of Commerce, instead of busying themselves so much with trade-administration, might turn more of their attention to trade development, new industries, and general advancement. A better system of Consular Reports on trade, on the lines adopted in the United States, would also be advantageous. An increase of thrift, better protection for Eriendly Societies, and from insolvent trading, are needed. The late Mr. T'awcett has shown us how much good may be done through the Post Office in promoting small investments. A careful system of emigration has yet a fine field before it. CojrCLTTSION. The general results of our survey must be considered en- couraging. There is nothing in the causes of existing depression to suggest the obstinate decline, or permaiient enfeeblement of our trade, and whether a revival be near or not, gradual and general, or quick and partial, the remedies we have suggested should be useful as helps to progress, upon old as well as new lines. A time of depression is one of stock-taking, and it compels ITS CAUSES AND nKMEDIES. 57 US to study the working and inter-^vorl> ''^peto iWeltova. Br WILLIAM WATT, 27, NORTH ALBERT STREET, ABERDEEN. THE PRESENT DEPEESSION OF TRADE: ITS CAUSES AND REMEDIES. Inxroducioky. The gi-eati'i' movements iu trade are now commonly regarded as cyclical in tlieii- character. Tlioy present a certain analogy to the tides ; there are great general movements upward and down- ward, accompanied by constant but subordinate undidations. First there comes an expansive upward movement, then a pause, then it is found that the culminating point has been passed, and a persistent backward movement sets in, which is followed by a period of dulness and depression. This is the ebb, and ultimately the s3'mptom3 of a new flow begin to appear. A normal trade-cj-cle is supposed to occiii)y ten or eleven years. Many facts can be adduced in support of this theory, but even if wo grant its validity we are not thereby absolved from the necessity of inquiring into the condition of trade and industry at anj- given time, or into the circumstances of each "depression," "revival," "inflation" and " duluess," as particular parts or phases of the cycje are named. These circumstances differ not a little, just as one depression or in- flation diflers from another iu intensity and duration. Another preliminary remark seems called for. With our extended commerce the cyclical economic movements have become world- wide in their manifestations. Countries are much more inter- connected by commercial relations than they used to be. Not only is there a greater division and subdivision of employ- ments in manufacturing countries, but all countries are being more and more drawn into cue vast co-02>crativo system, iu 62 THE PRESENT DEPRESSION IN TRADE: wliicli any powerful influence affecting one part is apt to spread over a wide area, and even to extend to the extremities. Not only is England tlie workshop of the world, and as such interested in the " purchasing power " or economic welfare and prosperity of the world, but it has large investments of capital in its Colonial possessions and in foreign States — in American railways and land, mortgage and cattle companies, as well as mines ; in loans to South American governments for the construc- tion of railways and other public works, and to Eussia, Turkey and Egj-pt — ostensibly for similar purposes and for the develop- ment of resources lying dormant from want of capital; in banking concerns in many parts of the world ; in mercantile enterprises still more widely spread abroad ; and, lastly, in a mercantile marine which carries a very large proportion of the world's transport trade, and whose prosperity depends on the extent to which nations have marketable commodities to exchange for the marketable commodities of other nations. The prosperity or unprosperity of Colonial and foreign countries affects not only their " purchasing power " and demand for the products of British manufacture, but it also affects the carrying trade in which this country is so largely interested, and the return upon British investments abroad. Circumstances _ temporarily in- fluencing the economic condition of some particular part of the ^vorld — a failure of the Indian monsoon, for instance, or a failure of the fertilizing overflow of the Nile, or adverse meteoro- logical conditions affecting the crops of any extensive tract of the earth's surface at a critical stage — not only make all the difference between prosperity and the want of it in food and fibre-producing countries, but react on all places with which those countries have commercial relations, and on the industries that produce the goods for which, in ordinary seasons, the surplus food and the full crop of fibre are exchanged. The cyclical movement is thus subject to considerable modification from local and temporary causes. Other agencies of disturbance, such as wars and blockades, financial crises, and discredit, though localised in particular areas, are similarly prejudicial to the general prosperity. A famine, a war, or a financial breakdown, may indeed, through creating an exceptional demand for the commodities which nations not within its range have to sell, or by encouraging the transfer of capital to those nations, contri- bute to their gain. But the gain, like the loss, is local ; it is gain at the expense of the nations within the area of the disturb- ance. These great periodical movements of trade may be con- veniently illustrated by the statistics of the external trade of the United Kingdom. The following table, which is derived from the official figures of "The Statistical Abstract," shows (in millions) the amount of the imports and exports of this country ITS CAUSES AND REMEDIES. 63 during each of the last twenty 3-oars, with tlie uliole external trade and its ratio to population : — Imports. Exports. Together, Per head of Popul. Million £. Million £. Million £. £ fl. rt. 18C6 271 219 490 16 8 2 1866 295 239 534 17 5 2 1867 275 226 501 16 1 3 1868 294 228 522 17 1 3 1869 295 237 532 17 4 6 1870 303 244 547 17 10 in 1871 331 283 614 19 10 1 1872 355 314 669 21 6 1873 371 311 682 21 4 1874 370 298 t:68 20 11 10 1875 374 281 655 20 4 1876 375 257 632 19 1 11 1877 304 252 646 19 6 9 1878 369 245 614 18 3 6 1879 363 249 G12 17 18 3 1880 411 286 697 20 4 10 1881 397 297 691 19 17 5 1882 413 307 720 20 7 10 1883.. .. 427 oSO .-105 295 732 20 11 3 1884 685 (19 1 1) From those figurcR it appears that in the course of the twenty years to wliich they relate there has been one tDmplotc cycle of trade, preceded by the termination of another, and followed by the beginning of a third. A period of depression reached its lowest point in 18C7, or possibly in the early part of 1868 ; and from the low-water mark of that time a continuous rise took place till 187;), when the culmination took place, and recession again began. The backward movement then continued for live or six years. In 1879 the tide once more turned, and there -w.^s a rapid advance in 1880, then a pause, followed by a further great expansion, and, too soon, the inevitable reaction, of which it is to be feared we have not j-et seen the end. In the month of February recently closed, our imports were 19^ per cent, less in value than those for February, 1884, while the exports showed for the same period a falling-otl" of about 11 per cent. Wo shall deal later on with the statistical data in relation to some of our leading industries ; but here we have the broad result that our export trade has been undergoing 64 THE PRESENT DEPRESSION IX TRADE : a rapid bhriukag'e. Slirinking- trade means want of profit, losses and difficulties, general depression, and scarcity of employment in the industries concerned in the manufacture of the products iu connection ■uith which the depression is manifested. For trade and industry are inseparably linked together. The tahle shows a period of twelve years, counting by annual periods, between two stages of gi'eatest depression, and of ten years between the two culminating points of good trade. As a reflex of the actual state of trade, however, the figures cannot be regarded as more than approximately correct. In the early part of the period of reaction and shrinkage, especially, the statistical results are apt to follow sluggislily in the wake of the real economic movement. Prices fall, but the quantities of goods dealt with may even increase. And when the reaction is in full progress, the faUing- off in total value is due either to shrinkage of prices, or shrinkage in the volume of trade, or more commonly to both causes together but in very unequal proportions. Thus in 1884 there M-as a relapse of nearly 3G millions in the value of the imports into the United Kingdom, of which about one-third was due to diminution of quantity, and two-thirds to fall of price. With regard to exports a different order of things is presented. Here the decline iu value is ten millions, but in the quantity of goods exported there is an increase of nearly two millions' worth, so that the fall of price really comes to about twelve millions.* I. — TuE Causes. Iu considering the causes of the present depression of trade^ it is necessary to examine, in some little detail, the earlier course of the cycle. The expansion began in the second half of 1879. It originated in an impulse that came from America, in the form of an active demand for various kinds of manufactured goods, and especially for raih'oad iron and iron generally. In response to this demand, a gieat rise in the price of pig-iron took place in the autumn, and the prices of many other kinds of products rose in sympatliy. The harvest in this country had been unpropitious almost beyond all precedent, but in spite of this highly adverse circumstance, a new life, as if by magic, was imparted to trade. Shipbuilding, which had for several jears been in a languishing condition, suddenly sprang into activity. There was a rise in the produce markets, in textile goods, in chemicals, on the Stock Exchange. Everybody thought that things were going to improve, and by so thinking everybody helped to bring about the improvement. Applications See Economist, Jan. 21 and 31, 1885, pp. 99 and 129. ITS CAUSES AND RKMEOIE3. 65 1883 1884 707 455 6,333 4,672 for capital by promoters of joint-stock companies became numerous, and were freely responded to by the public. Specu- lation ran high in America as well as hero. In 1880 more than 7,000 miles of new railroads were constructed in the United States, and next year the additional mileage was greater still. For the construction and equipment of these lines, the iron-producing power of the United States themselves was strained to the utmost, and large orders continued for a time to bo ])laced in this country. The effect upon the British iron trade of this extraordinary demand for iron on American account can bo gathered from the returns of — The Quantities and Values of our Exports of Iron to tub United States during each of the undermentioned Years. (In thousands — OOO's omitted.) 1879 1880 1881 1882 Quantity, Tons 721 1,370 1,175 1,212 Value, £'8 5,192 10,047 8,576 9,068 Railroad construction in the States was carried much too far in 1880, 1881, and 1882. In the course of the last of these three years, this form of speculation collapsed. Investors became less confiding, iind the requisite capital could no longer be raised. Thereupon the exports from this country fell-otf to a great extent. The British, iron-trade, which had received a great stimulus from the keenness of the American demand, began to experience a certain amount of reaction the moment that demand began to slacken. The recent history of shipbuilding is still more instructive in relation to our present subject. An enormous expansion of this industry took place about five years ago. In 1881 a greater tonnage was built than had ever been built before in any single year, and still larger additions were made to the register in 1882 and 1883; besides which there were many vessels built in this country to foreign orders. So great, indeed, was the demand for ships that rivctters on the Clyde were earning as much as 25s. a day. The out-turn of new tonnage from the shipbuilding yards of the United Kingdom during the last six years liafl been as follows : — (In thousands of tons — OOO's omitted.) 1879 1880 1881 1832 1883 1834 570 796 1,013 1,241 1,330 820 In 1883 the reaction began, and, once begun, it soon passed 6 G6 THE PRESENT DEPRESSION IN TRADE : into deep depression. The supply of ships had run far ahead of the requirements of commerce. Many large vessels had been huilt for the cai-riage of corn, and last year, owing to the good harvest in this country, the importation of cereals was 1^- million tons less than it had been in 1883 — in I'ound numbers, a reduction from 7h to 6 million tons, or 20 per cent. This alone was sufficient to make a serious difference to the shipping trade. But building had run far in advance of actual require- ments, and when the new tonnage was greatest, trade was beginning to shrink. Many vessels have had to be temporarily laid up, and the freight-market is so depressed that much of the trade carried on is not remunerative. It was reported lately that the transport of stores from this country to Suakim had been contracted for at the rate of 17s. 6d. per ton, as com- pared with 28s. for the shorter distance to Egypt in 1882. The depression in shipping is manifestly due to the two-fold influence of overbuilding and the shrinkage of trade. How great the augmentation of carrying-power in recent years has been is partly shown by the following table, derived from a statement prepared by the North of England Steamship Owners' Associa- tion,* of Eecent Additions to the Steam Tonnage of the United Kingdom. Added to Register. Removed. Net Additions. No. Gross Tons. No. Gross Tons. No. Gross Tons. 1880 1881 1882 1883 1884 406 465 643 678 537 493,000 608,000 801,000 902,000 600,000 182 217 247 237 284 168,000 212,000 259,000 265,000 209,000 224 248 296 441 253 325,000 456,000 542,000 637,000 391,000 This increase of carrying power is mitigated to some extent })y a decrease in the number of sailing vessels. Still, on a comparison with ten years ago, our mercantile marine has in- creased to a prodigious extent in working capacity. The comparison is as follows : — 1873 1883 British sailing vessels . Tons, 4,091,000 3,514,000 steam „ „ 1,714,000 3,728,000 » Neiveastle Chronicle, February 13th, 1885. ITS CAUSES AXD RKMKDIKS. 67 Some authorities say that in the course of a year four tons of a sailing vessel are equal for carrying eflicicn<'y to one ton of a steamer, and others put tlie advantage in favour of the steamer not quite so high. Much, of course, depends on the trade. Following the example shown by Mr. Williamson, M.P., him- self a sliipownor, in a recent article in one of the reviews, let us regard tlio carrying power of steamers as only three times that of sailing vessels. The true increase of carrying power can then be shown by converting the steamers into terms of sailing tonnage. Thus — 1873 1883 Sailing vessels as above . Tons, 4,091,000 3,514,000 Steamers, multiplied by 3 „ 5,142,000 11,184,000 Total carrying power „ 9,233,000 14,698,000 This is an increase of no less than 59 per cent, in a single decade — an increase quite out of proportion to the growth of commerce. Mr. Williamson mentions the case of a steamship company which has come into existence within the last few years, and has launched a fleet which would measure about two miles in length if the vessels were placed end on end ;* and he justly remarks that " not only has ill-advised enterprise of this description been most unprofitable to those concerned, but it has spread dismay among all the other companies with which its necessities have compelled it to enter into competition." In view of the foregoing statistics, and of facts of this kind, it becomes easy to iinderstand how the shipping industry has been brought into its present depressed condition. There has been an excessive production of ships — an increase ofca^-rying power out of all proportion to the n6eds of commerce ; and now that the volume of commerce has been imdergoing one of its periodical contractions, the grip of adversity has fallen with all its force on British shipping. From the same cause shipbuilding equally suffers. It vras greatly overdone two or three years ago, as we have seen, and now it has to bear the brunt of extreme depression. Few firms or companies are in want of ships ; what they want is rather employment for those they already possess. And there are very many ships for sale, which renders shipbuilding all the more unnecessary in the meantime. There is, indeed, the temptation of cheapness, and as soon as people are con\'inccd that the lowest point has been reached, and that revival is in immediate prospect, activity of building will be resumed. But the large amoiint of tonnage unemployed does not encourage too sanguine views just yet. • Fortni;jhthj SeviexVy January, 1885, p. 76. <)8 THE PRESENT DEPRESSION IX TRADE : The interdependence of industries is manifest from these con- siderations. Shii)Luilding depends upon shipping — on the state and supposed prospects of the freight market. Shipping is brisk or llat according to tlie general state of commerce and the volume of commodities to he moved from place to place ; and upon shipbuilding a number of industries are more or less dependent, including the iron trade, in several of its leading branches, and the coal trade. When shipbuilding and railroad- construction were in full swing the production of iron was in full and prosperous activity. The following figures show the number of furnaces in blast and the quantities of pig-iron made in the United Kingdom during each of the last five years : — 1879 1880 1881 1882 1883 1884 Furnaces in blast . . . No., 458 590 525 562 506 45G Pig-iron made. Thousand tons, 6,009 7,721 8,377 8,493 8,490 7,529* The extraction of coal, which had shown no appreciable increase for several years, rose from 134 million tons in 1879 to nearly 147 million tons in 1880, 154 million tons in 1881, and 156^ million tons in 1882, which rate of extraction has been maintained, and even slightly increased, owing in part, at least, to an increased exportation of coal. The textUe trades are suffering from depression, but it ia manifested in a fall of prices, and not in a contraction of volume. The declared value of our exports of textiles in 1884 was 110 millions, wliich was a decrease of 1|^ millions on the figures for 1883. But had the quantities for 1884 been valued at the prices of 1883, instead of a decrease of value there would have been an increase of nearly 2| millions, so much greater were the quantities in the later year. The decline of money value on the quantity of textile goods exported in 1884, as compared with the prices of 1883 was therefore about four millions instead of the million and a half shown in the returns. The volume of trade increased, but prices shrank to this serious extent. Of British produce and manufactures altogether there was exported last year an increased quantity, which, at the prices of 1883, would have brought in about three million pounds more than the exports of that year did, or an increase of 1 1^ per cent. ; but instead of this there was a decreased value of nearly 10 million pounds, or 4|- per centf This slirinkage of value must have told heavily some- where. To a certain extent, no doubt, it had been mitigated by savings on the cost of raw materials, but after this has been fully allowed for a large margin must remain. Falling markets are • Economist, " Commercial Historj' and Review" of 1884, pp. 29-32. t Economist, January 31et, 1885, p. 129. ITS CAUSES AND REMEDIES. (J9 not favouraltlo to the making of profits, and may easily lead to most serious loss. In ])oiut of fact, tlio greatest of textile industries, the cotton trade, has not been very prosperous for a number of years. A variety of causes have contributed to this result. There has been, for one thing, a great increase of cotton-manufacturing machinery in America and on tlie conti- nent of Europe ; and in this country tliere has also been a vast gro^vth of productive power both through improvements in machinery and tlirough the multiplication of mills and looms. This increase of productive power and of competition contributes to such results as that to which attention has just been directed, namely, increase of production in the face of declining markets. Then, again, any slight improvement of trade is immediately met by an increased outturn, so that the markets are sated and flooded before the improvement has time to make much progress. Seldom, nowadays, are our productive resources utilised to an}i;hiDg like their full extent. The working-day has been shortened, and the industrial machine — capital as well as labour — lies idle during a greater proportion of the twenty-four hours. In the keen competition of the time the large factory, with its greater economies in buildings, motive power, and superinten- dence, tends more and more to crush out the smaller; new machinery, with all the latest improvements, works at an advantage over machinery that has become antiquated. But the small factory and the antiquated machinery maintain a lingering existence. They are forces in reserve, and when trade is good they can be worked to profit. In their degree they are effective in keeping production fully abreast of the requu-ements of the markets, and in warding off such a pressure of demand as would lead to a great rise of prices. They are instrumental, among other agencies, in maintaining trade in a condition falling short of extravagant prosperit}'. Two or three years ago the outturn of the manufactories, mines, and workshops of the United Ivingdom was greater than ever it had been before; nevertheless it was not up to the full limit of our actual and obvious pro- ductive power. The extraction of minerals fell far short of the possible output from the mines opened ; the iron trade was prosperous ou the whole, yet there were furnaces out of blast ; the textile industries were active, but in the great seats of textile production some mills were closed and many looms were silent The knowledge that a great increase of production could take place almost immediately, discourages speculation, prevents the accumulation of stocks during cheap times, and tends to protract the cheapness and sluggishness indefinitely. The sum and substance of the depression of trade may be expressed by saying that the production of great classes of commodities has outstripped the cash demand for those commodities. This proposition involves two distinct matters, the excess of 70 THE PRESENT DEPRESSION IN TRADE: production and the falling sliort of this " cash demand " or purchasing power. Certain of the facts concerning over-production have already engaged our attention, but one fact of a fundamental character has still to be discussed. Production is excessive in particular departments because too much fixed capital is applied to it in those departments. Floating capital can he diverted to a more profitable channel as soon as depression sets in, but fixed capital does not admit of this ready transferability. Buildings, espe- cially large factories, are not readily adapted to new_ purposes ; furnaces can be nothing but furnaces ; machinery suited to one kind of manufacture is quite unsuited to another. When depression comes, fixed capital for which there is no employ- ment has to lie idle. Floating capital may be either wasted away in a losing trade or, more probably, is in part temporarily withdrawn for other use, or to lio dormant in swelling the banking ''reserve." This withdrawal of capital that has not become fixed at once diminishes production ; the labour which it formerly emj)loyed and remunerated is left unemployed, and all the distressful s^nnptoms attending the contraction of industry are brought about. Skilled labour in these days, when employ- ments are so much divided and subdivided, is nearly as difficult to transfer into some fresh department of activity as fixed capital is ; and in times of severe depression there is little advantage to be got, in general, by migration or emigration to other seats of the same industry. Our modern trade depressions are very wide in their scope. Complaint is made, and not without some reason, that the depression of trade is aggravated by the action of joint-stock companies, under limited liability, engaged in productive industry. A joint-stock company with many sharebolders cannot withdraw any portion of its capital in bad times, but is under what practically amounts to compulsion to go on producing on the old scale. It has a etafi" of ofiicials, whose counsels, in accordance with their interests, will be to carrj' on as before the over-production began ; a board of directors who look for their fees ; and a body of shareholders who may have little influence on the management, and who individually have other sources of income and are able to comfort themselves with the thought that, after all, their liability is limited, and that even if this company should collapse they will not be ruined. In this way the tide of production flows on, and fresh accumulations of unsaleable goods are thrown upon the already overstocked markets to aggravate and prolong the depression ; whereas, some little slackening at an earlier stage all over the range of the particular trade would have kept the over-supply within bounds, and shortened the interval that must elapse before prosperity revives. Under the Limited Liability Acts there is a ITS CAUSES AND REMEDIES. / 1 too ready inflow of capital into mamifacturingindustrieB, and too little elasticity in n^octing' adversity. Jn private enterprise, no doubt, the first impulse of the capitalist, when he finds his profits falling-ofF, is to increase production and so to earn his old income by a greater overturn with a smaller margin of g^in ; and this increases the mischief. But the comparative irre- sponsibility of limited liability companies leads to far greater, because more persistent, evils of the same kind, thougli some- what different in the form of their manifestation, and in the causes to which they are due. So much for over-production. Tlien, as to the other aspect of the case — the falling short of what we have called the " cash demand," that is, of pui'chasing power or consumption — tho first remark wo have to make is tlie obvious one that this demand is lessened when from any cause the resources of consumers become contracted. One of the causes of this contraction of resources is traceable to the interdependence of industries already briefly noted.* Tho dulness in one trade makes dulness in others ; depression in one country causes depression in other countries with which it has extensive commercial relations. As the greatest of manufacturing and. carrying nations, tho United Kingdom has a stake in tho prosperity of nearly every part of the world. Wherever prosperity prevails, British trade and shipping participate in that prosperity. On the other hand, adversity can hardly exist anywhere in tho world without im- mediately reacting on British commerce and manufacture. Tlie shipping trade manifestly depends upon tho quantities of com- modities which different nations have to export, and the quantities of other commodities of British and foreign origin which they are willing to purchase with their surplus. As wealth andpopulation increase in foreign countries, those countries tend more and more to become competitors with the United Kingdom in its special domain of manufacturing industry, and they may entirely cease to be importers of particular products. But it does not follow that the trade of those countries will thus be lessened. If they no longer import the cotton or woollen fabiics they require, they may perhaps increase their imports of machinery, or of coal, or of hardwares. New coimtries have not many industries, and are devoted mainly to the production of raw produce. The first settlers betake themselves to agri- cultural, pastoral, or mining pursuits — to what are conveniently called the " extractive" industries. There is little manufacture beyond the simple handicrafts dependent upon the prevailing occupations, and inseparable from them. Such manufactured commodities as these young communities require have nearly aU to be imported. There is much raw produce to exchange — cora, *Supra, p. 68. 72 TUE PRESENT DEPRESSION IN TRADE : meat, -vrool, hides, fuvs, timber, cotton, sugar, or metals, as tlie case may Le. In all probability a considerable part of the raw produce exported by such communities will represent the payment of interest on loans and investments embodied in railways, land improvements, plantations, and the like ; but part will be virtually, though not ostensibly, the purchase price of imported commodities. For all international trado is in i-eality barter obscured by the intervention of credit documents. Any circum- stance atrecting prejudicially any of the staple industries of a raw produce country, atFect no less its external trade. Crops may fail, or cattle and sheep perish, because a season has been exceptionally cold and stormy, or exceptionally hot and dry ; timber or metals may so fall in price on account of the depression of trade in foreign countries as no longer to bear the cost of extraction and transport. Then again, when a new country is being opened up and colonized, much capital is laid out in such a way that it cannot be recalled. It is sunk in mines and their machinery, in the reclamation of land, in cotton or sugar plantations, in cattle or sheep farming, in railways and other permanent works; and much of the land is probably mortgaged. For a time there is the appearance and probably the reality of prosperity. Shiploads of emigrants arrive, and the whole atmosphere is instinct with progress and enterprise. Presently a cloud appears ; the sky becomes overcast ; prices fall ; produce cannot be sold at such a price as will pay expenses. Then comes financial trouble, or perhaps it has preceded, the fall of prices ; discredit prevails ; loans are called up and new ones cannot be obtained; some mortgages are foreclosed. The process of ex- ploitation has been overdone, and the penalty is being paid — not alone by the new country itself, but by the British industries that were stimulated into feverish activity by its demands for railway materials and other goods. This description is applicable more or less to recux-ring passages in the history of the United States and Canada, of the Australian Colonies, and even of the South American countries with which British relations are less intimate, but where, never- theless, a good deal of British capital is employed. Alternating activity and depression are the order of nature in all these countries; and both the activity and the depression are aggra- vated by the great rapidity of exploitation, and by a too free use of borrowed capital. The present depression began with the collapse of the railway mania in America in 1882. Excessive production of ships continued to go on for a year or two longer, but that, too, in time came to an abrupt termination. A main factor, recently, apart from financial troubles in America and in the East, has been the excessive production of wheat, which has lowered the purchasing power of all wheat-exporting countries, though it has ITS CAUSES AM) RKMEDIKS. 73 also mitigated tho efiects of the duprcs.'iiijn by lowering liouse- hold expondituro. Tho extension of -wlioat-growing of late years has Lcen exceedingly rapid. In tho Australian Colonies in 18G7 tho breadth of laud under wheat did not much exceed a million acres. By 1 872 it had increased to a million luid a half, by 1877 to nearly 2^, and by 1882 to .3^ millions — thus showing an increase of 200 per cent, in fifteen years. The United States had in 1878 100 million acres under grain crops, and in 1883 130 millions. Another important increase is shown by Canada, including the recently opened North-West, where, in IManitoba alone, tho production of wheat M'as fivo million busliels in 1883 as compared with one million in 1881. In India the exportation of wheat increased by more than a million quarters within four year.s. To this last-montioned fact, together with tho circumstanco that in 1884 a good harvest was obtained in nearly all countries, our own inclnded, is to be attributed tho unprecedentedly low price to which wheat has recently fallen. The imports of wheat and flour into this country in 1884, were equal to about two million quarters less than the average of the preceding five years — so much better was our homo harvest. Thus it has come about that over-production, tho result of the increased acreage sown, and of an excoptiouably favourable season, has had an effect that might even bo called disastrous in some of the wheat- growing countries, aggravating previous depression and trouble, lessening their purchasing power and tho volume of their trade and diminishing their attractiveness to emigrants. So likewise in sugar — the great increase of production has established an unprecedentedly low range of prices. Thirty years ago 1^- million tons of sugar sufficed for the wants of the world. Twenty years ago the consumption reached two million tons, and ten years ago it was about three millions ; but tho production now exceeds four million tons per annum, and under this pro- digious increase of production the markets have been showing manifestations of surfeit. The cheapness of wheat, sugar, and other articles of general consumption is of great advantage to all classes in their character of consumers. To persons in receipt of fixed incomes, or whoso incomes are not lowered by the depression of trade, it is an unmixed advantage. The prevailing cheapness makes a time of comparative depression in trade more favourable than a time of trade-activity and high prices to the special interests of very many members of tho community. But this is subject to one all-important condition — that their income is fixed not only in amouut, but also as regards certainty of payment ; and unfortunately trade- depressions do not last long without bringing slackness of employment and depression of wages in their train. And while, in relation to consumption, low prices of tho staples of food are a mitigating agency in adverse times, they ai-e also, 74 THE PRESENT DEPRESSION IX TRADE : as we liave seen, instrumental in adding to tlie depression by dimiuisliing tlio purchasing power of tlio ])roducers. If the ]irices of all commodities, with equal rapidity, and without disturbing their ratios of value one to anothei', underwent a uniform shrinkage, then the fall would be merely nominal. A smaller quantity of gold or of silver would be required for the purpose of discharging the functions of a medium of exchange ; and that would be a convenience rather than otherwise. 'There would be one serious disadvantage, indeed, inasmuch as debts would have to be discharged in terms of the currency, without reference to the new range of prices. Debtors would suficr and creditors would get more than was really their due. But tho movements of prices do not proceed in tliis uniform way. There is always a veiy general fall of prices in times of trade depression, but in relation to some commodities the fall is much greater than it is in relation to others. Thus in the present depression, the fall in wheat and copper has been much greater than that in butchers' meat and cotton-goods. But while some trades, from special causes, suffer much more than others, a fall of prices invariably accompanies depression of trade. We have heard much of late about "appreciation of gold " as a factor in the present depression. It is quite possible that to this cause some little infiuenoe may be justly attributable ; but appreciation of gold and fall of prices are interchangeable terms ; there cannot be a fall of prices where gold is the standard of currency without an appreciation of gold ; tho two things are simply phases or sides of one phenomenon. They are a " double-faced unity." A useful discussion of the relations of the supply of the precious metals to tho prices of commodities would carry us much too far afield, and probably we should not be able, after all, to arrive at con- clusions of much importance in their bearing upon the subject of this Essay. There is a serious fall of prices, and it is largely if not exclusively due to over-production of certain commodities, and to the disorganisation of trade which we have been dis- cussing. So far, at least, it is a normal phenomenon of the state of trade. In one respect, however, this lowness of prices has a practical cfl&cacy in aggravating the depression. When prices are falling, merchants, in order to avoid loss, keep their stocks of goods as small as possible. People are disinclined to buy wlien they think there is a prospect of greater cheapness. Warehouses at such times are not so well filled as when prices are expected to rise. The demand upon the productive resources of factories and workshops is from this cause less keen than at other times. Thus falling prices checlc purchases, stop speculation, whicli is an important element in business, and still further contract the volume of trade. ITS CAUSES AND RKMEDIES. (0 As regards cost of production, tooj the full of prices Las a prejudicial effect. The money value of the outturn of a manu- factory or mine is lessened in exact proportion to the full of price. There is that proportion less to meet the cost of raw materials, the interest on fixed and floating capital, and the remuneration of labour. The item of rent undergoes no re- duction when prices fall ; the intercut on fixed capital may also he regarded as uuii'rm in gcod years and in bad. In bad years, however, these fixed charges absorb a higher ratio of the proceeds than in good years ; and the case is so much the worse if the productive power of the establislnnent ceases to be used to its full extent. Wages, being less rigidly fixed, invai-iably suffer ; and in protracted and severe depressions, the ranks of skilled labour pay a most onerous tribute, througli reductions of wages and scarcity of employment, to tho economic re- adjustment that prepares tho way for a new inQation. The reductions of wages may in certain cases bo only an accommo- dation to the new range of prices, leaving the purchasing power of the wage-earner unimpaired ; but this happy state of things does not last long in days of depression, for oven if wages fall no further it is found that increasing numbers of workmen fall out of employment.* From the workmen's point of view, the greatest possible advantage would flow from such a change of policy on tho part of merchants, manufacturers, and capitalists as would tend to lessen the fluctuations of trade, and maintain a steadier if less eventful course of progress and growth. Hostile tariffs exert a potent influence in restricting trade, but they are not included among the special causes of the present depression. In some cases, no doubt, tarifl"s havo been raised within the last few years, but in others they have been reduced, and on balance there is no great change in the severity of their operation. On the whole, the markets of tlie world are not less fi-ee of access to British products than they were before the present cycle began, and accordingly the consideration of this part of our subject may be suitably deferred until we proceed to discuss the remedies for the depression. Another influence having some bearing upon tho depression, though not, strictly speaking, ono of its causes, must also be mentioned. Tho process of distribution is now much more economically effected than it was in formcr'days. The opening of tlie Suez Canal has greatly shortened tho passage from England to tho East. The transit from London to Calcutta does not now exceed a month, as compared with three or four months by the Capo route and the old-fashioned steamers. There is thus a very great saving in tho stocks of goods in transit. And not only aro ships swifter now, but they caiTy * See also page 7S, infra, ct scq. 76 THE PRESENT DEPRESSION IN TRADE : mucli more, because tliey are loss Lurdened -n-itli fuel — first, by the shortening of the voyage, and, secondly, because an absolute increase of power is obtained from a smaller expenditure of coal per da}'. Fewer ships are therefore required in proportion to the work done ; and not only is there a saving on the volume of goods in transit, but, by the extension of the telegraj^h, it has become possible to diminish the stocks warehoused at distant ports. Any new demand springing up in the distant East, can now be met from England in a few weeks, or from another Eastern port in perhaps a few days. The capital invested in stocks of goods no longer lies dormant, as of old, in antici- pation of the requirements of the market, but is much more actively circulated. At the same time, smaller c[uantities of goods are i-equired to moot the necessities of business, and the tendency to lay in stocks for which there is no immediate demand has ceased to operate, to the same extent as formerly, in keeping mills and factories going in a dull time. Some of the chief causes of the present depression have now been briefly passed in review. The discussion has been far from exhaustive, though it has perhaps encroached unduly on the space that pro])erly belongs to the i:)ractical question of remedies. In connection with this question, upon which we are about to enter, some deficiencies in the exposition of causes will be incidentally removed. Our attention has been chiefly con- fined to those causes that are of a general character, and are more or loss operative in all depressions of trade, and to the broad special conditions out of which the present depression has arisen. The consideration of remedies, however, will bring prominently into view some other agencies of a subordinate kind that have an intimate bearing on the whole question. II. — The Eemediks. In passing on to deal with the question of remedies, the first remai'k we shall make is that there is no political or economic witchcraft, no philoso])hcr's stone or wishing-ca}), by which " bad times " can be instantaneously banished from existence and good times summoned into their place. Nevertheless, there is not a little that lies within the sphere of united human effort even in relation to the goodness or badness of trade ; and nature and the lapse of time bring about remedial measures of their own. ITS CAUSES AND RKMEDIES. 77 Nature's processes are often roiigli, but tliey are always worthy of our moat painstakiug unci unwcuriod study. When they are clearly aud accurately apprehended, the knowledge of them is of supremo value. Though they may not bo evaded, or miti grated in their stringency — for Nature's ways are without variableness — wo can, nt least, bend and obey. Nay more, wo can predict results, and so shape our action that those results shall be least harmful to us, or most beneficial. One fundamental proposition respecting trade-depression and its remedies is that bad times prepare conditions that help to Iriny good times lack ac/aifi. The production of commodities in relation to which the depression is most severely felt becomes less, and under the inlluenco of this restriction of production tlie stocks already produced cease to accumulate. An equilibrium between production and consumption is thus established. By-and-byo the accumulations of unsold products begin to decrease, and ultimately it is found that consumption has shot ahead of pro- duction, whereupon the industry at once revives. This, in brief oxitline, is the process of Nature, leaving out of account its de- plorable accompaniments — the losses of manufacturers, merchants, and shipowners, the want of employment, and the repeated falls of wages that press so heavily on the working-classes. Nature works her cure, it is true ; but we could wish for such human arrangements as would lessen the inconvenience and privation duo to these adjuncts of the curative process. It is desirable also that we should be able to anticipate nature, and, if possible, to ward off depressions of such severity as to entail these dire con- sequences. Before proceeding to deal with remedies in detail let us follow out a little more closely the course of a well-marked depression. There is a fall of prices — first of the finished product, and then of the raw material. The price of the finished product falls because the markets have become over-stocked; that of the raw material becatise manufacturers sooner or later lessen production and are disinclined to buy extensively in a falling market. Pro- duction, because it is checked, becomes cheaper. Haw materials are cheaper because there is no great demand for them. Then capital is withdrawn, and workers are ihrown out of employ- ment. As disposable capital increases the rate of interest falls ; and disposable capital increases partly because some of that hitherto employed in industrial enterprise is withdrawn, and partly because thci-e are not, in times of trade-depression, many eligible openings for the savings which persons having fixed or steady incomes accumulate at such times — all the more rapidly because of the prevalence of low prices. Prices fall more rapidly than wages. During the dulness of the past year there was an increase of nearly four millions in the deposits of the savings banlts of the United Ivingdom, this increase being half as much 7S THE PRESENT DEPRESSION IN TRADE: again as that of 1S81, wlien traclo and industry were far more brisk, and more tlian double the average increase for each of the three years 1878-80, when the previous depression had exerted its full influence on wages. At the beginning of a period of depression — before production is much reduced and employment becomes slack — the earners of wages, in common with the pro- fessional and salaried classes, may be, on the whole, better off tlian they uere before the depression began, and are certainly bettor oS than they will be should the depression continue long. Money having a higher purchasing power, while emoluments are not much reduced in nominal amount, there are opportunities of saving which do not exist in times of high prices or of greatly reduced earnings. Then as the contraction of trade and shrinkage of values proceed, many people find it necessary to lowertheir scale of expenditure. Luxuries are dispensed with, economies are practised, retx-enchment is everywhere the rule, and under this regime savings are made. Cost of production is also lessened in various ways — by savings on the cost of raw materials, of renewals or additions to plant, of fuel and other accessories, and of labour. Unless all these items in the cost of production came within the scope of the general fall of prices— or " appreciation of gold " — they would be not only relatively but also absolutely high(;r than they were before the depression set in ; but, in point of'^fact, they do invariably participate in the fall. So long as wages do not decline in a higher ratio than the general fall of prices, the wages element in the cost of production is as great as it was before the fall of prices began, and any lowering of the nominal rate of wages is only an approximation to the old ratio — a necessary approximation if that ratio was normal and not the result of some temporary disturbing cause. But when the de- pression is very severe and protracted, the lessening of production becomes so great that very many of the working-classes are thrown out of employment, and the proportion of the wages element may be altered to the real as well as the nominal dis- advantage of the labourer. For in this state of things more and more capital is di-awn fi-om unprofitable enterprise, the wages- fund is thereby contracted, and the labourers have to compete against each other for a smaller dividend. Another fact of high practical moment is that at such times the state of credit is low. On the Stock Exchange only the most unimpeachable securities command the confidence of investors. The home funds, Colonial and Indian Government securities, and the better classes of debentures and preference stocks are sought after, but stocks or shares that are subject to wide fluctuations are not in keen request, and few now issues find acceptance in the market. The result is that money accumulates in the hands of bankers, waiting for more favourable opportunities of investment — that there is, in other words, a vast amount of loanable capital and very little ITS CAUSES AND THMEDIES. 79 effective demand for it. Entorpriso is in a state of liybornation ; trade languishes and stagnates. Altogether the atmosphere is surcharged with gloom ; tinancial troiibles are either breaking out or aro not far off, and great inconvenienco, if nob even privation, is suffered by many people. Alter a time — through the ordeal of a financial crisis, it may be — the worst is reached and passed, and presently the gloom "will break and ra3's of coming revival begin to appear. Unsound business has been gradually cleared away ; much weakness, instability, and abuse of credit have been brought to an end. Tho operation may bo a severe one, and many people may suffer in it losses not duo to any fault of their own. JNIuch of the evil that has now to be shaken away and got rid of has resulted from tho preceding inflation of trade and tho overdone specula- tion that was its accompaniment and principal cause. And all this is part of the curativo process of nature — a preparation of tho conditions for a return of prosperity and a start forward on the ascending side of the cj'cle. One thing only is still wanted, and that one thing is confidence — confidence to lay out capital, confidence to purchase. This comes when the possessors of disposable capital satisfy themselves that the lowest point in the depression has been reached, and that henceforth there will bo improvement in prices. As a matter of experience, it is found that some special stimulus marks the turning-point and leads on the revival. The low range of prices offers an induce- ment to increased consumption. Perhaps it occurs to some people in America and elsewhere that, as railway-iron is so cheap the time has come when new lines, to open up certain hopeful-looking districts, might advantageously be made. Perhaps there is a very good harvest somewhere, which is putting money into people's hands and diffusing a spirit of hope and enterprise. From some cause or other the impression gains ground that better times aro now at hand, and people become increasingly forgetful of the dead past, and increasingly inclined to take advantage of the opportunities of making good investments that appear to bo presenting themselves. A demand springs up for some leading commodity, say for railway-iron on American account, as in the revival of 1879. No sooner i» confidence re-established than prices become firm and rise. An impulse has been imparted which rapidly spreads. Industry after industry is galvanised into new life. Enterprise suddenly revives. Tho feeling that better times aro at hand quiekL-ns speculation and causes merchants to "go into stock" before prices shall have risen too far. A new spirit prevails on all sides. Producing power is more fully exercised. There is life again in the stock markets, and ai> upward movement takes place in whole classes of securities, such as the ordinary stocks of railways and tho shares of banks and of industrial and commercial 60 THE PRESENT DEPRESSION IN TRADE : companies, wliicli are expected to benefit by the revival of trade. I'romoters again begin to find the times auspicious, and many new ventures are floated. In the inflation-period of 1871-73 a number of foreign loans vrcre brought out — many of them destined to prove of little profit to the lenders. During the revival of 1879-81 a crowd of quite as bad speculations found acceptance among the confiding public. There were whole broods of companies for opening and working imaginary gold mines in India, for applying electricity to purposes of lighting and motive power, for extending railways at home and abroad where no groat need for railways existed, for extracting timber from Canadian forests, and for rearing and grazing cattle on the American prairies. All went on merrily for a time. Amid a good deal that was Quixotic there was also a great extension of legitimate enterprise. Many of these companies were feasible and proper in every sense. At the same time the whole circle of industries flourished anew. The iron trade, the coal trade, shipbuilding, the hardware trades, the textile trades — all shared in the general access of prosperity. Much fixed capital was laid down. The building trades were busy, and both for artisans and unskilled labourers there was full employment. Credit revives with trade. There is a disposition to trust. The loanable capital that has accumulated in the preceding depression comes into use and helps on the expansive movement. In general, too, this is a time when profits rule high. Kaw materials and labour do not rise in price so fast as the finished product, and while in the earlier stages of depression the labouring classes have some advantage from the fall in prices preceding the fall in wages, the capitalist has a corresponding advantage when trade is improving and prices are rising. Industrial resources are now more adequately utilised ; capital no longer lies idle, and labour ceases to be unemployed. The Avhole industrial machine is in full working order, and all is bright and cheerful. There is an immense outturn from mines, furnaces, foundries, factories, and workshops. Activity is contagious. E ail way traffic expands, and imports and exports increase by leaps and bounds. Prices rise all round ; it is now a " depreciation " of gold. Much of the new prosperity is more apparent than real, but it puts money into the pockets of a great many people. There is apt to be too much speculation not x'esting on a solid basis. The outburst of productive energy may not be well-directed at all points, and some things may be produced in excessive abundance. Then, again, the rise of prices is to a certain extent delusive ; in so far as it is general there is no real change in the lelative purchasing power of commodities. We have therefore to exercise some caution in dealing with statistics founded on values. It has been shown in a preceding part of this Essay that the present depression has ITS CAUSES AND REMEDIES. 81 hitlierto been mueli more a depression of prices tlian a falling- off in the volume of trade. So, at another stage of the cycle, prices shoot ahead of the real improvement in trade, and in statistical tables exaggerate that improvement. Such are some of the consequences of a return of confidence after trade has been severely dei^ressed. The most solid remedy for depression is an increase of purchasing power, such as arises sometimes from, an exceptionally good liarvest, or from the opening of new markets. Attention has already been directed to the great interest wo have in tlic prosperity of otlier nations, but wo must now consider whotlior the true remedy for the present depression, and tho groat palliative of future depressions, is not to be in the cultivation of more intimate and sound commercial relations with diflercnt parts of tho world, and esi)ccially with those parts of it comprehended within the bounds of that Empire whereon the sun never sets. Tho British Empire contains within itself the conditions of an expansion in power and wealth far beyond anything the world has ever seen. At home we have abundant capital and abund- ant labour, as well as the skill and energy of a race fitted by nature to gain the victories of jioace and to rule in tho realm of industry. We have also our coalfields — not inexhaustible, perhaps, but not showing as yet any of the economic symptoms of approaching exhaustion. And wo have a mercantile marine of transcendent magnitude. Out of IH million tons of ocean-going sailing tonnage in the world, no less than 3^- million tons bear the British flag, or about 30 per cent, of tho whole. But how do wo stand in relation to steam tonnage ? The steam tonnage of tho world amounts to about 4^ million tons, and of this the enormous preponderance of 3^ million tons, or more than 70 per cent, is owned within the United Kingdom and its Colonies. Our industrial and carrying power is practically limited only by the moans and desires of tho countries of the globe with which we hold commercial intercourse. Then how stands the matter with oiir Colonies? On the Australian continent, which is wholly a British possession, there is a potentiality of growth of which we can hardly as yet form any just estimate. Tho area of land exceeds three million square miles, and if the present population were evenly distributed over this area it would be found that for each individual, man, woman, and child, there would be about one square mile of land. In Victoria, the most fully occupied Colony, tho population is only about ten to the square mile. To show what this means, it may be mentioned that tho most sparsely populated country in Europe, Eussiu, has 39 inhabitants to tho square mile, that tho United States have on an average 14, that France has 184, the United Kingdom 288, and Belgium 487. The development of the Australian Colonies has boon very rapid, but there is still 6 82 TJIK PRESENT DEPRESSION IN TRADE almost limitless room for furtlicr expansion. They might, for instance, have fourteen times their present population, and the land would still bo no more fully occupied than that of the United States with their great cattle ranches and mountain wildernesses. And still the density of the population would be only one-third of that of Russia in Europe, and one-sixth of that of such thinl}' jioopled countries as Bulgaria, Greece, and Spain. The rapidity of the growth of Australia in the past can be shown with the satisfactory definiteness of statistics ; and from the experience of the past the prospects of the future can bo in some degree anticipated and foretold. The following sets of figures are derived from the official " Statistical Abstract of the Colonial and other Possessions of the United Kingdom." Not the least significant criterion of the progress of new countries is the growth of population. The first table shows the population of the several Australasian Colonies at the last three census enumerations, viz : — Jn thousands — 000' s omitted.) 1861. 1871. 1881. New South Wales . 358 504 751 Victoria . 540 732 862 South Australia 127 186 280 Western Australia . 16 25 30 Tasmania 90 102 116 New Zealand . 99 256 490 Queensland Total . 35 120 213 1,265 1,925 2,742 The mileage of railways open for traffic is another valuable index. The first year for which complete returns of mileage are available is 1873: — 1873. 1878. 1882. New South Wales .... miles Victoria ,, South Australia . . . . ,, Western Australia .... ,, Tasmania ,, New Zealand ..... ,, iiucensland ,, 401 458 202 30 45 145 218 733 1,052 454 68 172 1,070 428 1,268 1,355 945 95 167 1,374 867 Total . , , , 1,499 3,977 6,071 ITS CAUSES AND REMEDIES. 83 Of telegrapli lines there were open in the whole of Australasia 16,527 miles at the end of 1873, 23,080 miles in 1877, and 30, 7G7 miles in 1882. The tonnage of vessels entered and cleared, exclusive of coasting trade, shows the foDowing pro- gress : — (In thousands of tons — OOO's omitted.) New South Wales Victoria . South Australia Western Australia Tasmania . New Zealand . Queensland Total Of which British 1807. 1,374 1872. 1877. 1,688 2,238 1,210 1,361 1,875 344 347 673 101 138 151 200 205 319 618 586 789 295 292 957 4,142 4,517 7,002 3,841 4,107 6,394 18S2. 3,297 2,691 1,337 344 417 900 1,881 10,867 For the same period the progress of the import trade has been as follows : — (In thousands of £'8— OOO's omitted.) 18G7. 1872. 1877. 1882. New South Wales Victoria . South Australia Western Australia Tasmania . New Zealand . Queensland £6,600 11,674 2,506 204 856 5,345 1,748 £8,587 13,691 2,801 227 807 5,143 2,176 £14,606 16,362 4,625 363 1,309 6,973 4,069 £21,281 18,748 6,703 509 1,671 8,609 6,318 To tal . • £28,933 £33,432 £48,307 £63,844 And the growth of export trade has been : — 1867; 1872. 1877 1882. New South Wales . Victoria . South Australia Western Australia Tasmania . New Zealand . Queensland £6,881 12,724 3,165 174 790 4,645 2,199 £8,005 13,871 3,739 209 911 5,191 2,035 £13,126 15,158 4,627 373 1,417 6,327 4,057 £16,717 16,194 5,360 6S3 1,587 6,658 3,534 To tal » > • £30,677 £34,561 £45,085 1 £50,633 84 THE PRESENT DEPRESSION IN TRADE The imports and exports together, forming the entire external trade of the Australian Colonies as a whole, have been as follows : — (In millions of £'s— 000,000's omitted.) 1867. 1872. 1877. 1882. £59 £68 £93 £114. It is convenient in this place to complete our statistical data with the following table of the public debts of the Colonies, which have been incurred almost exclusively for railways and other " reproductive " purposes. The progress of the public debts of these Colonies since 1867 has been as follows : — (In thousands of £'s— OOO's omitted.) 1867. 1872. 1877. 1882. New South "Wales . Victoria .... South Australia Western Australia • Tasmania New Zealand . Queensland £6,918 9,481 1,078 1,019 5,781 3,344 £10,773 11,985 2,284 35 1,412 9,985 4,548 £11,725 17,011 4,737 161 1,590 20,691 7,685 £18,721 22,103 12,473 511 2,051 30,236 13,125 Total . £27,621 £41,022 £63,600 £99,220 In addition to the large sum of one hundred millions — it is now considerably more, indeed — borrowed by the Colonies chiefly from the mother country (for the amount raised within the Colonies themselves is inconsiderable) they have also the use of a large mass of British capital through municipal loans, land mortgage and agency companies, and banking establishments. The following are the principal figures for other Colonies : — Canada. Cape. West Indies, Ceylon. 1861, 1881. 1861. 1881. 1861, 1881. 1861. 1881. Population (in thousands) Railways (miles open) Imports (in thousands, £) Exports ,, „ Public Debt „ ,, Tonnage entered and cleared (in thousand tons) 3,291 ('74)4,002 33,670 10,894 14,382 6.737 4,504 7,530 23,374 22,106 32,655 8,748 682 (•73)64 3,035 2,004 615 542 1,250 1,060 11,700 6,192 14,893 2,990 934 (•74)61 5,386 5,773 1,728 1,457 1,213 90 7,608 8,269 2,023 4,653 1,892 ('71)74 3,663 2,706 100 837 2,758 178 4,147 3,392 1,911 3,070 ITS CAUSES AND REMEDIES. 85 The meaning of all these figures is abundantly clear. The possibility of rapid development in tho Britisli Colonies is not a matter of theory merely. Great and rapid progress has been made during tho last quarter of a century, and we have seen how great is tho scope and room for furtlior, almost illimitable, progress. Nearly eleven million tons of shijiping are annually entered and cleared in the Australian Colonies with their present very moderate development. Their trade may soon bo doubled. This would give employment for twice the amount of tonnage required for carrying that trade, and there would be a corre- sponding increase in the demand for products of British industry for consumption in Australia. They cannot, for many years to come, become manufacturing countries, for this would mean that they threw away the advantages given them by nature and refused to participate, through interchange of commodities, in the advantages enjoyed elsewhere. The tariff' barriers which some of the Colonies have set up have a certain effect of this kind, but however injurious and impolitic they may be they are not imi)assable barriers. In connection with the cpestion of Protective tariffs it has to be remembered that there is no true rivalry between the United Kingdom and its Colonial possessions. Its economic conditions and productions differ entirely from theirs. The mother-country has capital enough and to spare ; the Colonies require and can afford to pay for the use of much more capital than their own people possess. So far as its external trade is concerned tho United Kingdom is purely and exclusively a manufacturing country; raw produce and specie are the staple Colonial exports. The Australian Colonies supply us with wool, mutton, wheat, sugar, cotton, tin, copper, and specie ; Sjuth Africa with wool ; Canada with timber, corn, and other agricultural pro- ducts ; the East and West Indies with sugar, coffee, tea, indigo, spices, cotton, jute, rice, and hides. These several Colonies receive from us in exchange all sorts of textile fabrics, iron manufactures, machinery, hardwares, and cutlery. The proper and mutually beneficial economic relation between the Colonies and the mother country is that of a great co-partnersliip— the greatest manufacturing and maritime nation working hand-in-hand with raw-produce countries peopled by its own children, developed largely by means of its capital, giving employment to its mills, factories and shipping, and supplying it with many of the prime articles of consumption and materials of manufacture. It is quite within the power of Governments and Legislatures to impair and restrict this beneficent co-operation. Ilitherto, on the whole, their influence on trade has been more in the way of hindrance than of help ; and yet in this case help is much easier than hindrance, and consists for the most part in standing aside and leaving it in perfect freedom. Free trade 86 THE PRESENT DEPRESSION IN TRADE: is now a settled and Irrevocable part of British policy. Our manufacturers "svill never bo persuaded that an import duty oa cotton or flax could be otherwise than a grievous injury to trade ; and though a new corn-law would enhance the rent of agricultiiral land, we need be under no apprehension that this is an object which the mass of electors who have to buy their bread will bo at all inclined to promote by such a measiire. Some of the Colonies cling tenaciously to a Protective policy — partly because they hope by means of it to establish "native industries," and partly because it enables them to elude the irksomeness of direct taxation. "Whatever advantages Protec- tionism may ofPer in these respects they are advantages pur- chased at a heavy cost. A discussion of the question would be irrelevant here, and I content myself with directing attention to the figures, in the foregoing tables of imports and exports, for the Free Trade Colony of New South "Wales and the Protec- tionist Colony of Victoria respectively. The British Government by itself can do little to extend trade with the Colonies. It has given freedom at all its ports for many years, and to restrict that freedom would be to restrict trade. The Colonies, for their part, have self-government, and in its exercise some of them have set up tariff-barriers against the trade of the mother-country. Still there are some hopeful symptoms. There has been of late a gi'owing rapprochement not only between the Colonies themselves, but also between the Colonies and the mother-country. Eepresentatives of the several Australian Colonies have met together in council for the discus- sion of objects of policy, and their respective legislators have agreed to provide funds for the fulfilment of the terms of the convention that was the outcome of these deliberations. This was the first step towards a closer federal union. Then at home we have our Colonial Institute and Federation League, and our consultations on matters of policy between the Minister who presides at the Colonial Office and the authorised representatives of the Colonies. Colonial federation and Imperial union, accom- panied by the establishment of a consultative body for dealing with Colonial questions as they emerge, could not fail to be of signal advantage to the common interests of the whole Empire. There would be opportunities of persuasion such as have not hitherto existed. "When the Colonies begin to take counsel together on questions of common interest they will necessarily take into consideration the old grievance of border-duties ; and the increase of population and commerce will render these artificial restrictions on commercial intercourse more and more irksome. The colonists in the borderland between Yictoria and New South 'Wales are quite alive to the evils and inconveniences created by the customs cordon. Of late years, indeed, there has been an agitation not in that quarter merely, but among the ITS CAUSES AND REMEDIES. 8^ colonists generally, in favour of low tariffs throughout th(? Empire. This agitation will roceivo a now impetus from tho movement in favour of federation, and tho probability is strengthened tliat no long time will elapse before it loads to some kind of practical action. Free commercial intercourse i^hould be of the very essence of the connection between the Colonies and the 'mother-country, as well as between adjacent colonies and each other. As between such Colonies as Canada and New Zealand it is probably a matter of no great importance whether interchange of products is hampered by tariffs or not ; but the case is entirely different with contiguous Colonies, as well as between commu- nities so completely eq^uipped for ministering to the needs of each other as tho United Kingdom and its colonial possessions. They are not rivals but countei-parts. Their great economic function should be to supply each other's deficiencies, and in doing this each part would contribute to tho greatest good of the whole. Wo are now in a position to appreciate with clearness the vital relation of commercial geography to British economics. There is much to hope for from the development of the Colonies ; but over all the habitable parts of Asia and Africa, as well as tliroughout most of South America, there are possibilities of commercial expansion of the utmost importance in relation to the prospects of British trade. The agricultural and mineral resources of these continents are still very far from being fully turned to account. In South America the conditions resemble those pre- vailing in our own^ Colonies, though with important political differences. There are largo areas of unoccupied land waiting for settlers, and ready to contribute largely to the wealth of the world. Political instability may retard colonisation and develop- ment, but nature is bountiful even where human institutions are bad ; and nature endures while human institutions fade and perish. Tho vast empu-o of Brazil enjoys a moderately strong and stable government, and from its situation, its magnificent forests, the richness of much of its soil, its great navigable river and innumerable smaller streams suitable for lumbering opera- tions and as waterways for small craft, its cotton, sugar, and coffee plantations, and its extending railways, is a State of enormous productive capacity and natural attractiveness, though as yet but sparsely inhabited. Tho countries of the Plate Eiver and its tributaries are among tho best stock-raising lands in the world. Political distractions have impeded their progress, but in spite of these they are rapidly growing in c(jmmercial im- portance. In 1873 tho foreign trade of the Argentine Eepublic amounted to 24 millions sterling ; in 1883 it came to 29 millions. An increase of 22 per cent, in ton years is certainly far below tho rate of progress which under better political conditions, aud in the hands of an energetic colonising race, might be expected ; 88 THE PRESENT DEPRESSION IN TRADE '. but still it is a very substantial gain. South America as whole, including the western seaboard, as well as the forest lands, the plains and pampas, east of the Andes, has in it potentialities that are certain to become increasingly efficacious in extending the trade of tlie world. The limits at my disposal prevent a full discussion of this topic in the light of statistical data ; neither can I dwell on the economic consequences of the opening up of the African continent. On that continent there is a large indigenous population, hardy and strong enough to live and grow in contact with European civilisation and its attendant vices. Within the last two or three months some very important steps have been taken towards oi^ening-up this continent to European commerce — steps that may be expected to give an impetus to our textile and hard- ware trades, and especially to the cotton-trade of Lancashire. The Congo basin has been erected into a great free State, open to the trade of all nations without tariff barriers or artificial impediments of any kind, and with a freedom of access practically secure from liability to be interfered vi^ith by native wars or other disturbances. Another great area towards the east coast, from the Zambesi northward, has also been made over to commercial freedom ; while the Niger Valley, and the accesses from the Niger to the populous countries round Lake Tchad, are to be commercially free and under British supervision. What may come out of the present troubles on the Ui)per Nile is a problem on which it were bootless to speculate ; but with Italian influence firmly established at the southern end of the Eed Sea, and the desolating barbarity of the slave traffic suppressed, we may look for a gradual upgrowth of commerce in the regions now given over to war and fanaticism under the standard of the Mahdi. From this cursory survey let us pass on to consider a field of commercial extension of a different kind, but perhaps not less full of promise for the early future. The Chinese Empire, including China proper and its dependencies, covers an area of 4 J million square miles, or half as large again as that of Australia. Oiiina proper is about 1,350,000 square miles in extent, or half the size of Europe ; and its population is estimated at 300,000,000. The most thickly populated provinces have 800 inhabitants to the scj^uare mile, and the average, deducting uninhabitable mountain tracts and the spaces covered by water, is about 260 to the square mile, or nearly the same as that of the United Kingdom with its vast aggregations concentrated in the manufacturing districts. The density of population in China is most extreme along the great watenvays by which the country is intersected. The com- plete opening-up of this most poj)ulous of Oriental nations is a work of the future, but even a small beginning would afford an effective remedy for the present depression of trade. Let us consider what the oponing-up of China would mean. The Chinese ITS CAUSES AKD REMEDIES. 89 foreign and coasting trade in 1882 amounted to 17,390,000 tons, 61 per cent, of -which was borne by British vessels, 2G per cent, by Chinese vessels, and 13 per cent, by the vessels of other countries.* In value the foreign trade in that year was as follows : — Imports . . . £22,550,000 Exports . . . 19,560,000 Together. . . . £42,110,000 And the coasting trade in- wards .... 42,160,000 and outwards . . 36,100,000 Together .... 78,260,000 making in all . . . . £120,370,000 The comparative insignificance of Chinese trade, and especially of Chinese foreign trade, is thus manifest. India, with its smaller area and population, imported in 1882 merchandise and treasure to the value of GO millions sterling, and its exports were 83 millions — together 143 millions, or more than three times the amount of the imports and exports of China. Tlio principal articles of Chinese export are tea and silk, but other staple articles produced are rice, wheat, cotton, and sugar. In the order of their respective values the imports are opium (about eight millions), cotton goods (seven millions), metals (one-and-a-half million), and woollens (one million). Except as regards opium these imports are entirely out uf proportion to the magnitude and capacity of China. India, though it has exten- sive cotton manufactures of its own, imports about 25 millions' worth of yarn and piece-goods per annum from this country, or three-and-a half times the quantity taken by China, whoso necessities ought to bo much greater than those of India. It is a fact of some significance in relation to the subject of this Essay, as will presently appear, that population in China i^ densest in the parts of the country most accessible to commerce, namely on the sea-coast and along the valleys of the great rivers. The extreme and unrelenting jealousy with which tho Chinese rulers have resisted all kinds of commercial intercourse between their subjects and foreigners is well known. There are now nineteen " Treaty ports " open to foreign vessels — five of them on the Yangtsekiang, some little distance inland, and the other fourteen on the seaboard. The greater part of the country * A. R. Colquhoun, " The Opening of China," p. 21. 90 THE PRESENT DEPRESSION IN TRADE : is still completely closed. Until within the last few 3'ears there ■was a great annual fair at Bhamo, in Upper Biirmah, to which large quantities of cottons and other goods found their way from R.angoon ; and from this fair they were distributed over the province of Yunnan in the south-west of China. The recent troubles in Burmah, however, are understood to have nearly put an end to this trade. Since Yunnan thus became practi- cally closed the French have been endeavouring to gain access to it by way of the Songkoi, or Red Eiver of Tonkin, with the result that instead of peaceful commerce being promoted, a wasteful and protracted war is being waged. China and the world would gain in material prosperity, civilisation would also gain, and the general interests of mankind would be promoted if this great and populous region were made accessible to a free interchange of its products for the products of other countries which are suitable to the requirements of its people. But there is an antecedent necessity. China, as has been said, requires to be "opened to the Chinese." The navigation of the rivers, which has drawn the population to their banks, requires to be supplemented by the construction of great trunk lines of railway, with branches to connect important places with the highways of land and water carriage. Railways are among the western innovations against which the Chinese ruling-classes have hitherto set their faces. Times, however, are changing even in China ; and the residence of the Marquis Tseng and other influential men in foreign countries must contribute in no small degree to the breaking down of old exclusive traditions, and to bringing China into line with the great nations of the earth. Already the powerful statesman and successful soldier, Li Hung Chang, has been urging that railways should be intro- duced, and his representations, though not yet acted upon, have not been without a backing by other men of position and authority. In 1880 when war between Russia and China seemed not unlikely to break out, Li Hung Chang memorialised the throne for the construction of a line from Tientsin to the capital, to be ultimately extended to Monkdin and the Yangtse : and in 1881 the Commissioner of Tientsin expressed himself to this effect, as quoted by Mr. Colquhoun : — " Although the railway is not yet in China an accomplished fact, like the telegraph, one may predict that it is not far off ... . The discussion which took place last year proves suflBciently that China knows that to-day she must also follow the movement of other nations in order to maintain her place. The discussion has ceased, it is tnxe, for the instant, but certain signs of its early revival manifest themselves, and, once resumed, it will lead to action." Mr. Colquhoun also remarks that the adoj^tion of steamers along the coast and on the Yangtse has paved the way for the railway. Much more has yet to be done by steamers ; but the railway is ITS CAUSES AND REMEDIES. 91 the true and efficacious means of opening China to itself and tho world. According to Mr. Cohj^uhoun, who has studied the question in China itself and with an unsurpassed amplitude of practical knowledge, there is no great trade-route of importance, with tho exception of tho eleven hundred miles of the Yangtseliiang now navigated Ly steamers, where a railway would not pay. The country has a great deal of internal traffic caiTied on in tho most primitive fashion, the agencies of transport being men's backs, caravans of mules or ponies, and " tho rudest of carts and wheel-barrows." Within tho limits of China there are some cotton and other manufactures, and it is well endowed with coalfields and other mineral resources. When railways are once introduced its commerce may be expected suddenly to undergo a great expansion, its mines to yield their wealth, and its manufactures to grow and flourish. Old prejudices will necessarily vanish. The railways will succeed, as those of India have done, in spite of all vaticinations of failure. Already the telegraph, the telephone, and tho electric light are acclima- tised in China, and it is certain that the railway cannot be far behind. We come now to tho point to which all this leads up. "WTien- ever the Chinese Government resolves on the creation of a railway system, the trade of the world, and especially that of this coTintry, will receive a fresh stimulus and impulse. In the first place tho demand for rails, chairs, sleepers, locomotives, wheels and axles of carriages and trucks, and the thousand and one appliances required for the full equipment of a railway, will in all probability fall cliiefly upon the British iron trade, though some orders may be placed abroad, and some attempt will doubtless be made to manufacture the requisite supplies within China itself. Xor is tho demand at all likely to be tran- sitory. The most important lino, according to ^Ir. Colquhoun, would be one, some thirteen or fourteen hundred miles long, to connect Tientsin and the north with the great cotton and gxaiu growing regions and the central and southern provinces. This in itself would be an undertaking which, if carried out at all rapidly, would make a very great difference to the iron trade and its related and dependant industries and occupations. Such a trunk line would immediately require to be supplemented by branches, and as soon as the advantages of railway communi- cation begin to be apparent, not ono nor two but several trunk lines would be required. When inland communication is opened on a suitable scale, not only will the latent wealth of China in mines and coalfields be brought into activity, but the tradi- tionary political and fiscal obstacles to internal and external trade will of necessity pass away. Tho west of China and the great unknown country of Tibet will be brought within the circle of tho world's commerce. Hitherto the inland customs 92 THE PRESENT DEPRESSION IN TRADE : duties of China have been largely instrumental in stifling the movement of merchandise, hut as soon as railways are made through the country, the exaggerated and anti-national home- rule oi the mandarins will have to give place to free intercourse and broadening conceptions of interest and policy. The provinces of the interior would not, under a system of improved com- munication, tolerate the existence of customs barriers between them and the coast. Customs cordons between province and province woidd inevitably vanish away, and new countries, more populous than foremost European nations, would begin to partici- pate in and swell the volume not only of Chinese but of inter- national commerce. Reference has been made in a preceding page to the development of the Indian wheat-trade as the most important fact in the recent economic history of India. This is a development for the most part due to and rendered possible by the Indian railways, the chief wheat-growing regions being situated far from the coast and not directly connected with it by canal or river navigation. So it must be in China. Immense areas of fertile uplands that have slumbered on from age to age ■will waken into life and energy as soon as the electrifying con- tact with the outward world reaches them, and the area of the commercial world will be augmented by the inclusion within it of new tracts of settled country containing a larger number of the human race than the whole American continent. It may occur to the reader that however well-founded this cheering prospect may seem to be, there is yet the fatal objection to it that China is not financially able to furnish itself with a network of railways, or even with a few great lines. The real question, however, is whether the traffic prospects are sufficiently good, because in that event there would be no difficulty in obtaining abundance of foreign money. Mr. Colquhoun's view is that the basis of a Chinese railway system must be Imperial loans for reproductive purposes at such a rate of interest as would attract capital from Europe and yet leave a profit to China. Apart from direct profit the gain to China from the traffic would be incalculable, and ought to be an adec[uate inducement, when the waning prejudices have ceased to ob- struct, to lead to rapid progress in the construction of railways by means of the capital of foreign investors, somewhat after the principle on which the Indian railways have been made though probably a slightly higher rate of interest would be necessary. Were the capital largely raised in Europe, that is to say, in London, it would doubtless be transported to the East, in great part, in the form of railway iron and equipments, and would thus bo instrumental, in the first jdace, in quickening and rewarding British industry, and in giving additional employment to the British mercantile marine, as it \Yould bo efficacious, permanently, in afi'ording the means of transit to commodities that at anotlier ITS CAUSES AND REMEDIES. 93 etage of their journey would be reckoned as British imports or exports. China is the greatest by far of the countries still unopened to commerce, and when the process of opening it once fairly begins we are not likely for some time to see another severe depression of trade. Other countries may also contribute in an analogous fashion to the advantage of Britisli industry in the almost imme- diate future. One of those countiies is Burmah, the connecting link between India and South-western China. It is in a dis- turbed political condition, betokening early and perhaps radical chauge. With tlie ostaMishment of tran(juil and stable rule and reasonable freedom of intercourse the river navigation, by means of which a considerable commerce has been carried on, might be supplemented by a railway that would be serviceable not only for the Burmese local trade, but as a means of access to the Chinese province of Yunnan. This again would have to be eflFccted by means of British capital, the earnings on which would con- tribute to the elasticity of the freight market and add to tho volume of imports and to the tribute which British capital is increasingly levying from all parts of tho world. Tho interest on British investments abroad and tho earnings of British ship- ping for both the outward and the inward voyage are brought to this country in the form of imported merchandise or specie, and the greater tho volume of these investments the greater will be the mass of commercial business which they serve to set in motion. It has been estimated by competent statisticians tliat tho British capital employed abroad in trade, shipping, and per- manent investments cannot be less than from 1,500 to 2,000 millions. The public debts of the Australian colonies, the bonds of which are chiefly held in this country, now exceed a hundred millions ; and the debt of India in England is about seventy and in India itself about ninety millions, nearly all of which is transferable on tho London market. I3razil and the South American Eepublics, Jiussia, Turkey, Egypt and various other countries have also borrowed much money in this country. All our greater Colonies, in addition to their public debts, have also, as already observed, received large sums of British capital in the form of municipal loans, railway investments, banking funds, loans through land mortgage companies, and the resources of private traders and speculators. Of this capital, by far the greater part has liccn highly beneficial to British as well as to Colonial trade. Besides tho capital directly invested in railways and other reproductive works in tho Colonies and in foreign countries, much of the State-borrowings have left this country, not in the form of bullion, but in that of iron and other manu- factured products. There is always a danger of overdoing those investments — of 94 THE PRESENT DEPRESSION IX TRADE ; overstepping the reasonable requirements of the country and districts receiving the benefit of them ; but in a growing State, where they are jiidiciously and not prematurely or too rapidly laid out, they are not only of immense advantage to British ex- port trade at their initial stage, but they ever afterwards contri- bute to the benefit of British import trade, both in the shii^ments necessary to meet tlie interest on the investments themselves and, more generally, through the increase of trade due to the exploitation of the borrowing country. The risk lies in allowing these artificial stimuli — if as such they may be regarded — to be carried to excess ; and this risk is made all the greater by the distance between the capitalist and his investment. There is, however, a very extensive field for the fruitful application of capital in new countries, and many errors of judgment are remedied in the end by that natural growth of population, industry, and commerce, which, through the influx of emigrants, often proceeds at an amazing rate. The United States have had not a few financial storms, accompanied by serious depressions of trade and industry, but they have always shown a wonderful recuperative power, and, after the lapse of a few years, their needs have more than overtaken the premature provision for them. It is desirable, as far as possible, to avoid the extremes of infla- tion and depression, and if these are inevitable it would be well, in the interest of British trade, that they should not occur in many parts of the world at one and the same time. To talk of regulating the cyclical movements of trade may seem not much less absurd than to talk of regulating the seasons and sunshine. For fluctuations in the produce of -agriculture, which are contingent on the operation of forces of nature, there is no available remedy. But the disastrous consequences of these fluctuations can be mitigated by human contrivance and fore- sight. AVo suffer still from too great addiction to wheat-growing, and go on importing twenty millions' worth of dairy produce per annum. " The production of bread and meat within these islands," wrote Sir James Caird some years ago, " appears to have nearly reached its limit. The dairy and market-garden system, fresh milk and butter and vegetables, and hay and straw are every year enlarging their circle around the seat of increasing populations. These are the articles which can least bear distant transport, and therefore are likely longest to withstand the in- fluence of foreign competition." * Yet for butter, cheesO; eggs and poultry brought into this country from abroad we last year paid the large sum of twenty millions. The produce of wheat in Great Britain is about ten million quarters per annum, which, at forty shillings a quarter — a much higher price than has prevailed since last haiwest — would be of the same value as the dairy pro- * " The Landed Interest and the Supply of Food," p. 113. lis CAUSES AND REMEDIES. 95 duce we import. Sixteen millions vrorth of livo and dead meat was imported last year. Whether much of this part of our supply might not Lo jiroduced at homo is a question which I shall content myself with merely suggesting. This at least is clear, tliat there are alternatives to wheat-growing in tliese islands, and some of those alternatives are held l»y so high a practical authority as Sir James Caird to oftbr a far better pros- pect of profitable results. Losses upon our agriculture, such as have been so frequent and so great of late years, on account, first of bad seasons and now of low prices, are prejudicial to trade to tlie extent to which they reduce the purchasing power of the classes interested in land. The importance of agriculture, though relatively much less than it was, is still far from small. The cultivation of laud is still the greatest of British industries, and it is to the interest of all classes that agriculture should prosper. One remedy for the present depression of agriculture is to be found in directing it more to the production of milk, which is not likely ever to be imported in largo c[uantity, and for which our town populations afford a market that might be immensely developed. Increase of dairy produce means increase of pasturage and green crops, and diminution of corn crops. Another remedy will be provided by tlie operation of natural laws. Seasons will not be invariably so productive as last season was, and the lowness of price will be found this year to have diminished the acreage under wheat. Nothing good is to be hoped for from legislative contrivances for the improvement of trade. Protection aggravates instead of diminishing depression. In the United States, under the blessings of Protectinn, fluctuations and depressions are much greater than in this country ; and according to recent reports from twenty-two different States, chiefly in the north, an average of 13 per cent, of the industrial classes were out of employment. The Protective system, by diverting the energies of a country' from their natural channels, necessarily lessens the volume of its trade ; for the products of industries that require Protection are, by the fact of their requiring it, in- capable of competing successfully in neutral markets. In another of its aspects Protection is a refusal to take advantage of the bounty of nature. To refuse Hungarian, or Kussian, or Cali- fornian wheat because we can get wheat from Oude, South Australia, or Manitoba would not bo an act of rational judgment, but would partake rather of the character of fanciful eccentricity. If foreign wheats, from whatever country they come, can be brought in as an adjunct to the general supply, that supply must be all the better by reason of them. But those countries, it may be said, do not treat us fairly, and impose tarills against our manufactures. No doubt, and it is to be regretted. Still unless they are to be so generous as to make us a present of the wheat 96 TUE PRESENT DEPRESSION IN TRADE : — in which case wo should have no reason to complain — they must take something in exchange for it. The price is ours, not theirs ; it is the price ruling in our market. It is beyond our province to decide for them how the price is to bo paid. In the last resort they can bo paid in bullion, but only a quite insignifi- cant proportion of our indebtedness to other nations is so met. There is no coxmtry from which we import commodities that does not take commodities from us in exchange ; and the more we find it suitable to our interests to import, the better able shall we bo to compete successfully in the markets of the world. It is our prerogative to decide what wo shall buy ; we can in no degree decide for other nations what they will buy in return, but with our manufacturing supremacy unimpaired we can tempt them with commodities, and their ability to supply us in compe- tition with the world is so far an aid to the maintenance of that sujiremacy. To close our ports against even the most refractory of Protectionist nations would therefore be bad policy on our part. Their very Protectionism, however, by imposing upon them needless burdens, restricts their power of successful competition against free-trade communities, even in regard to those articles in the production of which they enjoy the greatest natural advantages. What is most to be desired is a natural and on the whole progressive growth of commerce. Not spurts and spasms, but healthy and well-ordered vitality is the condition at which we ought to aim. The establishment of this condition will be promoted as economic knowledge increases, and is more and more acted upon in industrial and mercantile affairs. It is highly necessary that trustworthy information should be accessible as to the state and prospects of trade and credit in foreign countries. Sound economic teaching is more than ever necessary in these days if the earth is to yield her increase, and the greatest material good to be enjoyed by her inhabitants. To a basis of sound knowledge of principles should be added the most complete statistical data that can be collected from year to year. In this country statistical inquiry has been carried to a high state of efficiency, but we do not know nearly enough as yet of the condition of foreign countries, and much of the statistical in- formation we obtain regarding them arrives too late to be of much practical use in relation to the movements of trade. Correct statistical data, promptly obtained, and disseminated and popularised by an efficient journalism would serve in no small degi'ee to mitigate extremes of depression and inflation. Then as to policy, there should be the gi-eatest possible liberty of action, without artificial nursing or avoidable interference of any kind. Of technical education and industrial skill we cannot have too much. Moral qualities also come into play ; idleness, ITS CAUSES AND UEMKUIKH. 97 ihniiilvcunoss and crimo ;iro sins against the whole common wealth. Economy In private lit'i' augments the general capital and the standard of well-heing. A fair distribution of the pro- iceds of industry is necessary : and wlicn industry is directed with luller knowledge and ■wiser prevision, so that the loss and waste of trade-depressions shall be avoided as far as possible, the average of these proceeds will be greater, and the lot of all concerned will be sweeter and luippier. Then we may liopo for a gradual diminution of tlie waste and misery of war, for an abatement of Avai'-expenditure in time of peace, and for the re])lacing of unnecessary armanu'nts by the instruments of pro- ductive enterprise. Instead of tlio rivalries of dynasties, and the game of " high politicH," with armed hosts in the back- ground, wo may hope for an increasing co-operation of peoples in useful industry-. In the meantime, and without stretching forward into an ideal future, tliere is much to })e expected from the binding of our British Empire more closely together in the bonds of mutual goodwill and industrial reciprocity. SUM.MAKY AND CoXCLUSIOXS. i n this too fragmentary treatment of a wide and profound ques- tion wo have given some account ;, ^