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Originally appearing in Volume V11, Page 92 of the 1911 Encyclopedia Britannica.
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JEFFERSON and HAMILTON, ALEXANDER. ' One incidental effect of the failure to secure free trade was that the African slave trade, with West Indies as a depot for supplying the American market, ceased to be remunerative, and the opposition to the abolition of the trade was very much weaker than it would otherwise have been; see Hochstetter, " Die wirtschaftlichen and politischen Motive fur die Abschaffung des britischen Sklavenhandels," in Schmoller, Staats and Sozialwissenschaftliche Forschungen, xxv. i. 37. J. Welsford, " Cobden's Foreign Teacher," in National Review (December 1905).obliged to import a considerable amount of corn. The exceptional weakness, as well as the exceptional strength, of Great Britain, among European countries, made it seem desirable to adopt the principle of unrestricted commercial intercourse, not merely in the tentative fashion in which it had been put in operation by Huskisson, but in the thoroughgoing fashion in which it at last commended itself to the minds of Peel and Gladstone. The " Manchester men " saw clearly where their interest lay; and the fashionable political economy was ready to demonstrate that in pursuing their own interest they were conferring the benefit of cheap clothing on all the most poverty-stricken races of mankind. It seemed probable, in the 'forties and early 'fifties, that other countries would take a similar view of their own interests and would follow the example which Great Britain had set.' That they have not done so, is partly due to the fact that none of them had such a direct, or such a widely diffused, interest in increased commercial intercourse as existed in Great Britain; but their reluctance has been partly the result of the criticism to which the free-trade doctrine has been subjected. The principles expressed in the writings of Friedrich List have taken such firm hold, both in America and in Germany, that these countries have preferred to follow on the lines by which Great Britain successfully built up her industrial prosperity in the 17th and 18th century, rather than on those by which they have seen her striving to maintain it since 1846. Free trade was attractive as an ideal, because it appeared to offer the greatest production of goods to the world as a whole, and the largest share of material goods to each consumer; it is cosmopolitan, and it treats consumption, and the interest of the consumer, as such, as the end to be considered. Hence it lies open to objections which are partly political and partly economic. As cosmopolitan, free-trade doctrine is apt to be indifferent to national tradition and aspiration. In so far indeed as patriotism is a mere aesthetic sentiment, it may be tolerated, but in so far as it implies a genuine wish and intention to preserve and defend the national habits and character to the exclusion of alien elements, the cosmopolitan mind will condemn it as narrow and mischievous. In the first half of the 19th century there were many men who believed that national ambitions and jealousies of every kind were essentially dynastic, and that if monarchies were abolished there would be fewer occasions of war, so that the expenses of the business of government would be enormously curtailed. For Cobden and his contemporaries it was natural to regard the national administrative institutions as maintained for the benefit of the " classes " and without much advantage to the " masses." But in point of fact, modern times have shown the existence in democracies of a patriotic sentiment which is both exclusive and aggressive; and the burden of armaments has steadily increased. It was by means of a civil war that the United States attained to a consciousness of national life; while such later symptoms as the recent interpretations of the Monroe doctrine, or the war with Spain, have proved that the citizens of that democratic country cannot be regarded as destitute of self-aggrandizing national ambition. In Germany the growth of militarism and nationalism have gone on side by side under constitutional government, and certainly in harmony with predominant public opinion. Neither of these communities is willing to sink its individual conception of progress in those of the world at large; each is jealous of the intrusion of alien elements which cannot be reconciled with its own political and social system. And a similar recrudescence of patriotic feeling has been observable in other countries, such as Norway and Hungary: the growth of national sentiment is shown, not only in the attempts to revive and popularize the use of a national language, but still more decidedly in the determination to have a real control over the economic life of the country. It is here that the new patriotism comes into direct conflict with the political principles of free trade as advocated by Bastiat and Cobden; for them the important point was that countries, by becoming dependent on one another, would be prevented from engaging in hostilities. The new nations are ' Compatriot Club Lectures (1905), p. 3o6. determined that they will not allow other countries to have such control over their economic condition, as to be able to exercise a powerful influence on their political life. Each is determined to be the master in his own house, and each has rejected free trade because of the cosmopolitanism which it involves. Economically, free trade lays stress on consumption as the chief criterion of prosperity. It is, of course, true that goods are produced with the object of being consumed, and it is plausible to insist on taking this test; but it is also true that consumption and production are mutually interdependent, and that in some ways production is the more important of the two. Consumption looks to the present, and the disposal of actual goods; production looks to the future, and the conditions under which goods can continue to be regularly provided and thus become available for consumption in the long run. As regards the prosperity of the community in the future it is important that goods should be consumed in such a fashion as to secure that they shall be replaced or increased before they are used up; it is the amount of production rather than the amount of consumption that demands consideration, and gives indication of growth or of decadence. In these circumstances there is much to be said for looking at the economic life of a country from the point of view which free-traders have abandoned or ignore. It is not on the possibilities of consumption in the present, but on the prospects of production in the future, that the continued wealth of the community depends; and this principle is the only one which conforms to the modern conception of the essential requirements of sociological science in its wider aspect (see SOCIOLOGY). This is most obviously true in regard to countries of which the resources are very imperfectly developed. If their policy is directed to securing the greatest possible comfort for each consumer in the present, it is certain that progress will be slow; the planting of industries for which the country has an advantage may be a tedious process; and in order to stimulate national efficiency temporary protection—involving what is otherwise unnecessary immediate cost to the consumer—may seem to be abundantly justified. Such a free trader as John Stuart Mill himself admits that a case may be made out for treating " infant industries " as exceptions;' and if this exception be admitted it is likely to establish a precedent. After all, the various countries of the world are all in different stages of development; some are old and some are new; and even the old countries differ greatly in the progress they have made in distinct arts. The introduction of machinery has everywhere changed the conditions of production, so that some countries have lost and others have gained a special advantage. Most of the countries of the world are convinced that the wisest economy is to attend to the husbanding of their resources of every kind, and to direct their policy not merely with a view to consumption in the present, but rather with regard to the possibilities of increased production in the future. This deliberate rejection of the doctrine of free trade between nations, both in its political and economic aspects, has not interfered, however, with the steady progress of free commercial intercourse within the boundaries of a single though composite political community. " Internal free trade," though the name was not then current in this sense,was one of the burning questions in England in the 17th century; it was perhaps as important a factor as puritanism in the fall of Charles I. Internal free trade was secured in France in the 18th century; thanks to Hamilton,' it was embodied in the constitution of the United States; it was introduced into Germany by Bismarck; and was firmly established in the Dominion of Canada and the Commonwealth of Australia. It became in consequence, where practicable, a part of the modern federal idea as usually interpreted. There are thus great areas, externally self-protecting, where free trade, as between internal divisions, has been introduced with little, if any, political difficulty, and with considerable economic advantage. These cases are sometimes quoted as justifying the expectation that the same principle is likely to be adopted sooner or later in regard to external trading relations. There J. IS. Mill, Principles of Political Economy, book v. chapter x. § 1. 2 F. S. Oliver, Alexander Hamilton, 142. is some reason, however, for raising the question whether free trade has been equally successful, not only in its economic, but in its social results, in all the large political communities where it has been introduced. In a region like the United States of America, it is probably seen at its best; there is an immense variety of different products throughout that great zone of the continent, so that the mutual co-operation of the various parts is most beneficial, while the standard of habit and comfort is so far uniform3 throughout the whole region, and the facilities for the change of employment are so many, that there is little injurious competition between different districts. In the British empire the conditions are reversed; but though the great self-governing colonies have withdrawn from the circle, in the hope of building up their own economic life in their own way, free trade is still maintained over a very large part of the British empire. Throughout this area, there are very varied physical conditions; there is also an extraordinary variety of races, each with its own habits, and own standard of comfort; and in these circumstances it may be doubted whether the free competition, involved in free trade, is really altogether wholesome. Within this sphere the ideal of Bastiat and his followers is being realized. England, as a great manufacturing country, has more than held her own; India and Ireland are supplied with manufactured goods by England, and in each case the population is forced to look to the soil for its means of support, and for purchasing power. In each case the preference for tillage, as an occupation, has rendered it comparatively easy to keep the people on the land; but there is some reason to believe that the law of diminishing returns is already making itself felt, at all events in India, and is forcing the people into deeper poverty.' It may be doubtful in the case of Ireland how far the superiority of England in industrial pursuits has prevented the development of manufactures; the progress in the last decades of the 18th century was too short-lived to be conclusive; but there is at least a strong impression in many quarters that the industries of Ireland might have flourished if they had had better opportunities allowed them.' In the case of India we know that the hereditary artistic skill, which had been built up in bygone generations, has been stamped out. It seems possible that the modern unrest in India, and the discontent in Ireland, may be connected with the economic conditions in these countries, on which free trade has been imposed without their consent. So far the population which subsists on the cheaper food, and has the lower standard of life, has been the sufferer; but the mischief might operate in another fashion. The self-governing colonies at all events feel that competition in the same market between races with different standards of comfort has infinite possibilities of mischief. It is easy to conjure up conditions under which the standard of comfort of wage-earners in England would be seriously threatened. Since the 9th edition of the Encyclopaedia Britannica was published it has become clear that the free-trade doctrines of Bastiat and Cobden have not been gaining ground in the world at large, and at the opening of the loth century it could hardly be said with confidence that the question was " finally settled " so far as England was concerned. As to whether the interests of Great Britain still demanded that she should continue on the line she adopted in the exceptional conditions of the middle of the 19th century, expert opinion was conspicuously divided ;6 but there remained no longer the old enthusiasm for free trade as 3 The standard is, of course, lower among the negroes and mean whites in the South than in the North and West. ' F. Beauclerk, " Free Trade in India," in Economic Review (July 1907), xvii. 284. A. E. Murray, History of the Commercial and Financial Relations between England and Ireland, 294. 6 For the tariff reform movement in English politics see the article on CHAMBERLAIN, J. Among continental writers G. Schmoller (Grundriss der allgemeinen Volkswirtschaftslehre, ii. 641) and A. Wagner (Preface to M. Schwab's Chamberlains Handelspolitik) pronounce in favour of a change, as Fuchs did by anticipation. Schulze-Gaevernitz (Britischer Imperialismus and englischer Freihandel), Aubry (Etude critique de la politique Commerciale de l'Angleterre a regard de ses colonies), and Blondel (La bolitique Protectionnaste en Angleterre un nouveau danger pour la France) are against it. the harbinger of an Utopia. The old principles of the bourgeois manufacturers had been taken up by the proletariat and shaped to suit themselves. Socialism, like free trade, is cosmopolitan in its aims, and is indifferent to patriotism and hostile to militarism. Socialism, like free trade, insists on material welfare as the primary object to be aimed at in any policy, and, like free trade, socialism tests welfare by reference to possibilities of consumption. In one respect there is a difference; throughout Cobden's attack on the governing classes there are signs of his jealousy of the superior status of the landed gentry, but socialism has a somewhat wider range of view and demands "equality of op{r,ortunity " with the capitalist as well. 1'3IBLIOGRAPHY.-Reference has already been made to the principal works which deal critically with the free-trade policy. Professor Fawcett's Free Trade is a good exposition of free-trade principles; so also is Professor Bastable's Commerce of Nations. Among authors who have restated the principles with special reference to the revived controversy on the subject may be mentioned Professor W. Smart, The Return to Protection, being a Re-statement of the Case for Free Trade (2nd ed., 1906), and A. C. Pigou, Protective and Preferential Import Duties (1906). (W. Cu.)
End of Article: JEFFERSON
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