DISCUSSION on MR. NEWMARCH'S PAPER.

MR. MUNDELLA, M.P., said that Mr. Newmarch was always lucid, forcible and interesting. He had heard many good things from him, but perhaps he had never produced anything of greater service to the community than the paper he had read that night. He was doubtful whether anybody would have the courage, after the force and demonstration displayed by Mr. Newmarch in his arguments, to get up and advocate the exploded doctrines of reciprocity. If so, he was quite sure that there would be many gentlemen present who would be ready to answer them. He believed with Mr. Newmarch that the depression of the last three or four years was fully accounted for by the causes set forth in his paper. Any one acquainted with what was going on in manufacturing countries, would agree with him that those countries who attempted to be our rivals, and who attempted to build a Chinese wall of import duties around this country, were the countries which, at this moment, were plunged into the deepest distress. They would all regret what was then going on in Lancashire. The suffering was very great, and no doubt the manufacturers had been working at great disadvantages, without profit, and in some instances at a loss for some months past. The condition of the American cotton manufacture was quite deplorable. The latest news from Massachusetts revealed a state of things which, in the worst periods of depression in this country, had never been known. America had carried on cotton manufactures for a hundred years; and, stimulated by her high duties, she had increased her power of production beyond her power of consumption, and she had, as a matter of necessity, exported in order to raise money in the depôt market on the best terms she could raise it. During the past year about 2,000,000l. worth of cotton goods had been exported. It was really sad that after all the wonderful results of free trade in this country, other countries should still be found clinging to these exploded doctrines, and above all, that the colonies should be so foolish, as some of them had been found to be, in their determination to be manufacturers at any sacrifice. He had recently inspected the colonial department in the French exhibition. It was very pleasant to see the excellent display made by the colonies in Paris; but nothing could be more deplorable than to find the great colony of Victoria making dear and bad tweeds to compete with Hawick and Yorkshire, and manufacturing dear and bad ginghams, to compete with England. It was a matter of regret that that colony, which had such immense resources, almost entirely undeveloped, and which required its capital and labour to be applied to their development, should be sending that capital and labour into wrong channels. He thought no better service could be done to the colonies than to point out those errors, and to show them what mischief they were doing to themselves. The fact was that New South Wales and South Australia, would shake hands behind Victoria, which would

VOL. XLI. PART II.

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be left out in the cold, and prove to be a miserable failure of a colony merely through the bad management of her trade.

Mr. R. H. PATTERSON thought that it was not healthy for the Society that any theory or doctrine should be held up as unimpeachable, and that any one who ventured to assail it should beforehand be considered a fool. For his own part, he did not question that free trade was the best for this country. We were a nation of consumers, and free trade is pre-eminently suitable for such a country; but he certainly did not see any proof that all the rest of the world was wrong, not merely a few individuals in the Society, in thinking that economic laws ought to be influenced more or less by the circumstances of each country. He also ventured to doubt whether a country in which the great power was that of consumption, was necessarily in a more enduring condition of prosperity than one in which, like France and the United States, the great growth is in production. If the increase of commerce in France, the United States, and England were contrasted, it would be found that the great increase of the commerce of the United States and of France was in exports, the productions of the country. The great increase of trade in England was in the imports, articles of consumption; and these did not appear to be transmuted into an equal increase in the articles manufactured from that consumption. They were not represented to an equal extent in the exports. He did not think that the figures presented by the author were so very flattering. Unquestionably they showed a downward course for the last four years. Moreover all the figures in Table VIII are against us; and even in the imports, the materials of textile manufacture have declined, and the chief increase has been simply in provisions, food for our people. In regard to France, a protectionist country, bear in mind that the system of free trade in this country was fully established in 1851, and then, taking fifteen years after 1851 of the trade of this country and the trade of France, what did they find? That the foreign trade of France was trebled in those fifteen years, and the trade of this country was not doubled. As to the accumulation of wealth of this country in recent years being a proof of the super-excellence of free trade, looking at the figures absolutely they no doubt seemed astounding; but if they were regarded relatively, and as a percentage upon the amount of pre-existing capital, it would be found that there was nothing very remarkable about them. He had taken the figures given in Mr. Giffen's able paper, and he found, beginning with the present century, that the annual increase of capital reckoned as a percentage upon the pre-existing capital from 1800 to 1815 was 1 per cent.; during the next period, from 1815 to 1843, the annual average increment given as a percentage on the pre-existing capital was 23 per cent. Then came the period of free trade. From 1843 to 1853 the percentage of increment on capital was less than a half per cent., being only 43. From 1855 to 1865 it would be found that this increase of capital reckoned in the same way was 2.1 per cent.; and from 1865 down to 1875, it was 26, or exactly the same as it was in the period between Waterloo and the beginning of free trade. He confessed there were

some extraordinary appearances in those percentages, relating to the estimates of the accumulated capital of the country, and which he did not profess to explain. At all events they were suggestive of consideration.

Mr. CRICKMAY made a few remarks adversely criticising several of the points contained in the paper.

Mr. STEPHEN BOURNE said that having concluded the importance of the subject would secure an adjournment, he had not prepared himself to speak on the subject at hand. It seemed to be assumed by Mr. Newmarch and Mr. Mundella that there could be no causes in existence tending to a lack of prosperity or a prospect of decay in this country, excepting those which were attributed to free trade, or otherwise to protection. He had on former occasions given figures to prove that there would be a great and growing evil, pregnant with the most disastrous consequences to the country if persisted in, and it had been assumed that therefore he was opposed to free trade. Perhaps he was the greatest free trader in the room; but he maintained that there were causes in the country entirely and totally different from and independent of free trade, which were worthy of the deepest consideration as to whither they were tending. There was no use speaking of the large amount of imports as a source of prosperity upon the assumption which seemed to pervade Mr. Newmarch's paper, that in any given year or series of years, it necessarily followed that the goods received from abroad were absolutely paid for either by the goods exported or by the income accruing to this country from other sources. He took exception altogether to that line of argument. In one passage Mr. Newmarch spoke with exultation of forcing the foreigner to give a larger proportion of goods than he did before. If it could be proved that these were paid for by the exports of the year or the earnings of the year elsewhere, then, he held, that the very extent of the excess of the imports would be the gauge of the extent of our prosperity; but the argument he held was that we were not paying at this moment for the imports received either by the goods or manufactures given in exchange, or by the income which accrued to us from abroad; and he thought this was distinctly proved by the fact that the rapid increase of our imports over our exports had been concurrent with an acknowledged diminution of the profits from trade abroad, and the income received from them, combined with a clear diminution of the amount of goods sent out of the country. If, at the present time, when we were importing so largely above our exports we were in a state of unexampled prosperity, we must have been in a state of far greater prosperity when we had no occasion to pay for so much. It seemed to him to be essential that Mr. Newmarch should prove that each year since 1872 (when the decline first took place), during which the excess of imports had been larger than it was before, that from some source or another the means to pay for this had increased, either that our goods sent abroad, valued here at a nominal price, had sold at an extravagant price abroad, or that from our foreign investments we had derived greater incomes, and that

the earnings of the civil and other services abroad had increased. So far from there being any increase from any one of these sources during the last seven years, there had been a decrease. Another argument had been used which was, that in the years which had been apparently those of prosperity, we were lending money largely to foreign countries at a disadvantage. There was no doubt this was the case, and that a large amount of the exports from the year 1868 to 1872, must be attributed to that cause. But on the other hand, Mr. Mundella, the other night, had said that we were now increasing very largely our investments in the colonies. If this was the case he was very glad to hear it; but it must be borne in mind that the only mode of investing money in the colonies was by exports, or by the retention of the money abroad which must otherwise come to this country. Unless it were proved that there was now more money to be invested in the colonies than before, or unless it could be proved that we were exporting more goods, it was quite clear that our investments there could not be sufficiently profitable. The imports which we received from abroad were paid for first by our exports and then by our earnings. We were receiving an immense quantity of goods from the United States, and we had been paying for them by returning their bonds. This was the money that we had lent to America in former times; we had taken their bonds and they were now paying us off with the wheat they were sending to us--in fact we were parting with the securities we held upon their property. If this was not living upon capital he did not know what was. It stood to reason that if there was so little going out of the country in the shape of goods, we must be paying for the excess of imports in some way or another, and if not in income, it must be by the withdrawing of capital from abroad. Our mercantile operations were in many places being contracted, and the obligations of foreign countries to us were being worked off to a very considerable extent, and therefore our income from these sources must be decreasing. Mr. Newmarch had assumed throughout a position which was quite untenable, namely, that in each year or series of years we had paid for what we had got by what we sent away, or by what was accruing to us from abroad. This, he thought, Mr. Newmarch had failed to prove; and if so, we could not congratulate ourselves in getting from abroad a large amount over what we were sending.

The Rev. Mr. DOXSEY said he was a free trader, and agreed in the main with Mr. Newmarch; but he thought that at this juncture of the affairs of this country it was of the last importance that the paper should receive the most thorough and searching criticism which the acutest men on the other side of the question could bring to bear upon it. In regard to the percentage tables he asked Mr. Newmarch how it was that the percentages when added together did not number 100. He supposed that some minor errors has crept into the tables, some made 97, 98, and 99, and some over 100. [It was explained that this was on account of the fractions.] He presumed it would be so; but it would make to some extent a difference in the calculations if this were rectified.

Mr. WALFORD moved the adjournment of the debate to the next meeting.

This was agreed to.

The PRESIDENT said there was one table in Mr. Newmarch's valuable paper which he wished to call attention to. Mr. Newmarch, in giving a list of the countries who had tariffs hostile to this country, had, he thought, rather unfairly included Sweden, Norway, Denmark, Holland, and Belgium. Some time ago he had to consider that special point; and he thought the tariffs of those five countries were much more favourable than those of other European countries, and he thought they were worthy of a different heading. Comparing the trade of those five countries with France, Germany, Austria, and Italy, he had found that since 1859 our import and export trade with those five countries had increased 300 per cent., while with the four non-protectionist countries it was only 100 per cent. The exports and imports of those countries increased in the same proportion, whereas the imports with the four countries increased 150 per cent., and the exports of this country only increased 75 per cent. He only mentioned this to show that it might be well to analyse our returns more completely with those of other countries, and the more they were analysed the more apparent would the advantages of free trade become. The tariff of Belgium was not a hostile one at all; it was generally a free trade tariff in respect of the trade of this country; and he found that the total trade between this country and Belgium amounted to 6. per head of the population of this country, whereas our trade with France amounted to 21. per head. He believed the more the trade of this country with the other countries of Europe was analysed, and the more completely those countries which had a hostile tariff towards this country and those which had a comparatively free trade tariff were separated, the more apparent would be the arguments in favour of free trade to those countries who were favourable to it. If one looked at the paper from the point of view of foreign protectionists, he was not quite so sure that it would be so conclusive to their minds as it was to our own. Taking, for instance, France, Austria, and Russia, he would apply to them the same principle which Mr. Newmarch had applied to this country, namely, compare their export and import trade for the last fifteen years. The import and export trade of those countries had increased from 326,000,000l. to 612,000,000l., which was nearly 100 per cent. This was a very great increase, and was also in fact proportionately somewhat greater than the increase of trade of our own country, and would present itself to those who had antagonistic views, that that was extremely satisfactory. He did not for a moment say that that was an argument to be brought against free trade. He thought, however, that it was not fair to ascribe the whole of the enormous increase of trade in this country to free trade, because other causes had been at work in other countries, and the increase in those countries had been very great indeed. No doubt it would have been infinitely greater if there had been free trade; but it was very great in itself.