WHAT CONSTITUTES REAL FREEDOM OF TRADE?* CHAPTER II. THE reader has seen that the modern English political economy is founded on a basis directly the opposite of that upon which rests the system of Adam Smith, and that the tendency of the two is in a precisely opposite direction. Nevertheless, Nevertheless, both profess to teach the advantage of perfeet freedom of trade. Thus, Mr. McCulloch says of the author of the Wealth of Nations, that he showed "in opposition to the commonly received opinions of the merchants, politicians, and statesmen of his time, that wealth does not consist in the abundance of gold and silver, but in the abundance of the various necessaries, conveniences, and enjoyments of human life; that it is in every case sound policy to leave individuals to pursue their own interest in | their own way; that in prosecuting branches of industry advantageous to themselves, they necessarily prosecute such as are, at the same time, advantageous to the public; and that every regulation intended to force industry into particular channels, or to determine the species of commercial intercourse between different parts of the same country, or between distant and independent countries, is impolitic and pernicious-injurious to the rights of individuals and adverse to the progress of real opulence and lasting prosperity." Nevertheless, while thus agreeing with Dr. Smith as to the advantage of perfect freedom of trade, Mr. McCulloch thought that his + Principles of Political Economy. Introduction. * The following additional extracts from Smith's Wealth of Nations, are necessary to complete the sense of page 137, of article entitled "What Constitutes Real Freedom of Trade?" in the last number (August): The monopoly of the colony trade, besides, by forcing towards it a much greater proportion of the capital of Great Britain than what would naturally have gone to it, seems to have broken altogether that natural balance which would otherwise have taken place among all the different branches of British industry. The industry of Great Britain, instead of being accommodated to a great number of small markets, has been principally suited to one great market. Her commerce, instead of running in a great number of small channels, has been taught to run principally in one great channel. But the whole system of her industry and commerce has thereby been rendered less secure; the whole state of her body politic less healthful than it otherwise would have been. In her present condition, Great Britain resem bles one of those unwholesome bodies in which some of the vital parts are overgrown, and which, upon that account, are liable to many dangerous disorders, scarce incident to those in which all the parts are more properly proportioned. A small stop in that great blood-vessel, which has been artificially swelled beyond its natural dimensions, and through which an unnatural proportion of the industry and commerce of the country has been forced to circulate, is very likely to bring on the most dangerous disorders upon the whole body politic. The expectation of a rupture with the colonies, accordingly, has struck the people of Great Britain with more terror thar. they ever felt for a Spanish armada, or a French invasion, It was this terror, whether well or ill grounded, which rendered the repeal of the stamp act, among the merchants at least, a popular measure. In the total exclusion from the colony market, was it to last only for a few years, the greater part of our merchants used to fancy that they foresaw an entire stop to their trade; the greater part of our master manufacturers, the entire ruin of their business; and the greater part of our workmen, an end of their employment. A rupture with any of our neighbors upon the continent, though likely, too, to occasion some stop or interruption in the employments of some of all these different orders of people, is foreseen, however, without any such general emotion. The blood, of which the circulation is stopt in some of the smaller vessels, easily disgorges itself into the greater, work, "however excellent in many re- conveniences and enjoyments of life," enaspects," still contained "many errors,' "bling the laborer most rapidly to improve and those of "no slight importance." his own condition, and to provide for the "Dr. Smith," he continues, "does not say farther improvement of that of his children, that in prosecuting such branches of indus- and the result of his inquiries was to satisfy try as are most advantageous to themselves, him that the natural tendency of man was individuals necessarily prosecute such as towards agriculture, which could be imare, at the same time, MOST advantageous proved only by bringing the mechanic and to the public. His leaning to the system manufacturer to its aid, the place of exof M. Quesnaya leaning perceptible in change being thus brought to the neighborevery part of his work-made him swerve hood of the place of production. He saw from the sounder principles of his own sys- clearly that when employed at home the tem, so as to admit that the preference same capital might perform many more exshown by individuals in favor of particular changes than when employed at a distance, employments is not always a true test of and that when the farmer and the mechatheir public advantageousness. He consi- nic exchanged on the spot there was a great dered agriculture, though not the only pro- economy of labor, and therefore that what ductive employment, as the most produc- was needed for the improvement of the contive of any; the home trade as more pro- dition of man was that he should be allowed ductive than a direct foreign trade; and to follow the bent of his "natural inclinathe latter than the carrying trade. It is tion," which led inevitably to making maclear, however, that these distinctions are nufactures and commerce the mere handall fundamentally erroneous."—Ibid. maids of agriculture-the transporter, the converter, and the exchanger, being the aids, and not the masters, of the producers. In his school, Commerce was not King. Unhappily for the followers of Dr. Smith, of the modern English school, this "fundamental error" is the base on which rests his whole free-trade system, and in the effort to substitute another they totally lose sight of real freedom of trade. The author of the Wealth of Nations sought to discover what was the mode of employing labor and capital that tended most to facilitate the acquisition of "the necessaries, Comparing this natural system with that of England, he saw that the whole tendency of British policy was that of making agriculture "subsidiary" to commerce and manufactures, driving labor and capital from the profitable employment of producing commodities to be exchanged, to the without occasioning any dangerous disorder; but, when it is stopt in any of the greater vessels, convulsions, apoplexy, or death, are the immediate and unavoidable consequences. If but one of those overgrown manufactures, which, by means either of bounties or of the monopoly of the home and colony markets, have been artificially raised up to any unnatural height, finds some small stop or interruption in its employment, it frequently occasions a mutiny and disorder alarming to government, and embarrassing even to the deliberations of the legislature. How great, therefore, would be the disorder and confusion, it was thought, which must necessarily be occasioned by a sudden and entire stop in the employment of so great a proportion of our principal manufacturers? "Some moderate and gradual relaxation of the laws which give to Great Britain the exclusive trade to the colonies, till it is rendered in a great measure free, seems to be the only expedient which can, in all future times, deliver her from this danger: which can enable her, or even force her, to withdraw some part of her capital from this overgrown employment, and to turn it, though with less profit, towards other employments; and which, by gradually diminishing one branch of her industry, and gradually inereasing all the rest, ean, by degrees, restore all the different branches of it to that natural, healthful, and proper proportion, which perfect liberty necessarily establishes, and which perfect liberty can alone preserve. To open the colony trade all at once to all nations, might not only occasion some transitory inconvenieney, but a great permanent loss, to the greater part of those whose industry or capital is at present engaged in it. The sudden loss of the employment, even of the ships which import the eightytwo thousand hogsheads of tobacco, which are over and above the consumption of Great Britain, might alone be felt very sensibly. Such are the unfortunate effects of all the regulations of the mercantile system. They not only introduce very dangerous disorders into the state of the body politic, but disorders which it is often difficult to remedy, without occasioning, for a time at least, still greater disorders. In what manner, therefore, the colony trade ought gradually to be opened; what are the restraints which ought first, and what are those which ought last, to be taken away; or in what manner the natural system of perfect liberty and justice ought gradually to be restored, we must leave to the wisdom of future statesmen and legislators to determine." that is inconsistent with the secure employment of the rights of property, while preventing the natural increase in the number of artizans in other countries, to the discouragement of their agriculture, the diminution of their productive power, and consequent diminution of their power to maintain trade. Dr. Smith was right or he was not. If the former, then was Great Britain bound to abolish the system which he denounced, as tending to prevent improvement in the condition of both laborer and capitalist, and in case of her failure so to do, her colonies and the independent nations of the world owed it to themselves to resist the further continuance of such a system.Colonists, bound by English laws, might, far less profitable one of transporting and exchanging those produced in other lands, the great domestic trade being valued as merely "subsidiary" to a comparatively trivial foreign one, and that in the effort to carry into effect this erroneous system of policy his countrymen had been led to the commission of acts of great injustice. Their fellow subjects of Ireland, and of the colonies, had been deprived of the exercise of "the right of employing their stock and industry in the way they might judge most advantageous for themselves," in "manifest violation of the most sacred rights of mankind," with "great discouragement" to their agriculture, and to the diminution of their power of producing commodities with which to trade. Fellow subjects at home had also been heavily taxed for the pay-in perfect accordance with his views, assoment of bounties on the importation of various articles of raw produce, to "the great discouragement" of British agriculture, upon the improvement of which depended the power to increase the production of commodities to be given in exchange for those foreign ones required for the maintenance and improvement of their own condition. He saw clearly that this system was in opposition to man's "natural inclination," and that its direct effect was to produce an unnatural distribution of population, both at home and abroad, and a diminution every where of the productive power of labor and capital. He therefore urged a change of system tending to permit the return of both to the great and profitable home market, regarding that as being the mode in which production might be increased, and the acquisition of the necessaries and comforts of life facilitated-and also as the mode in which the people of Great Britain would be rendered less liable to be affected by convulsions in other portions of the world. He thought the farm more productive of commodities than the ship. This it is that is denounced by Mr. McCulloch and the whole of the school he represents, as "fundamentally erroneous," and they advocate what they call freedom of trade, with the express view of carrying out the system which Dr. Smith denounced as being "fit only for a nation of shopkeepers," because calculated to make Great Britain "the workshop of the world," thereby rendering her dependent on the movements of foreign nations to an extent ciate for the purpose of refusing to parchase the commodities thus attempted to be forced upon them, and ultimately even take up arms with a view to throw off their dependence on the mother country, and thus place themselves in a position to assert "the most sacred right of mankind,” that of exchanging their labor and its products at home instead of submitting to be compelled to seek a market abroad. Sach in fact, were the measures adopted by these colonies, and to their adoption is due the fact that they have prospered while all the other dependencies of Great Britain have been ruined. Non-importation agreements long preceded resort to arms, and when at length independence was established, some of the measures first adopted had special reference to this question. Laws for the protection of manufactures against the power of Great Britain, were then regarded as essentially necessary to the improvement of agriculture and the prosperity of the agricultural interest, and were especially favored by the middle, and most agricultural, states. It was believed that they tended to increase the power to produce, and consequently to increase the power to trade, by bringing the consumer to the side of the producer, and thus emancipating the great internal trade from English interferences, such as had been denounced by Dr. Smith. If he was right, so must have been the men by whom such measures were advocated. If Dr. Smith was not right, and he certainly was not if there is any truth in the theory upon which rests the modern English system, then the interests of the colonists should have led them to devote themselves to agriculture, to the entire exclusion of all other pursuits. So far, indeed, were English laws from being "a violation of the rights of mankind," that their only effect would have been that of compelling them to do that which, had those laws never existed, their own interests would have led them voluntarily to do. The land of England was to be regarded as a machine of constantly decreasing power, while from the abundance of rich soils and the scarcity of population in the colonies, there could there exist no necessity for cultivating any but those which were most fertile, for which reason the most profitable course for the colonists would be to apply themselves exclusively to cultivation, remaining all producers on one side of the ocean, and thus aiding to bring about the conversion of the whole people of the other side into artizans, consumers of their products. They would, as do now the people of Canada and of India, use the ships of England for transporting their food and their wool, to feed the men and supply the looms of England. The more perfectly her prohibitory laws were enforced, and the more exclusively they could be compelled to devote themselves to agriculture the larger would be the return to labor. We have thus two systems, the antipodes of each other in every respect. The course of policy which they would dictate is directly opposite, and cannot by any possibility produce the same results. To determine which is right, we must see the foundations on which they rest, and follow them upwards, step by step. That done, we may be qualified to determine what constitutes real freedom of trade, and why it is that the advocates of the system now known as "free trade," are so generally obliged to depend upon their memories for their arguments, and their imaginations for their facts. The modern system is based upon the theory of Mr. Ricardo in relation to the occupation of land, which may be stated as follows: First: That in the commencement of cultivation, when population is small and land consequently abundant, the best soils, those capable of yielding the largest return, say one hundred quarters, to a given quantity of labor, alone are cultivated. Second: That with the progress of population, land becomes less abundant, and there arises a necessity for cultivating that yielding a smaller return; and that resort is then had to a second, and afterwards to a third and a fourth class of soils, yielding respectively ninety, eighty and seventy quarters to the same quantity of labor. Third: That with the necessity for applying labor less productively, which thus accompanies the growth of population, rent arises; the owner of land No. 1 being enabled to demand and to obtain, in return for its use, ten quarters, when resort is had to that of second quality: twenty when No. 3 is brought into use, and thirty when it becomes necessary to cultivate No. 4. Fourth That the proportion of the landlord tends thus steadily to increase as the productiveness of labor decreases, the division being as follows, to wit: Sixth That every such improvement tends to retard the growth of rent, while every obstacle to improvement tends to increase that growth; and that, therefore, the interests of the landowner and laborer are always opposed to each other, rent rising as labor falls, and vice versa. every state of society, be productive of similar results. A theory which is inconsistent with a uniform and constant fact must be erroneous." The "uniform and constant fact" is directly opposed to the theory upon which is built his whole system, while it is in perfect accordance with the views of Dr. Smith. The first poor cultivator invariably begins with poor machinery, and as invariably does it improve with every step in the pro The necessary consequence of all this is that while the landlord is enriched, the laborer is supposed to experience constantly increasing difficulty in obtaining the necessaries and comforts of life, and the great-gress of wealth and population. The man er the tendency to association, the less must be the power of production, and the less the power to maintain trade. Population becomes daily more and more superabundant, and men are more and more compelled to fly from each other, seeking abroad the subsistence that is denied to them at home, and the greater the tendency to fly from each other, the greater must be the power to produce and the power to trade. Arrived abroad, they are supposed to commence the work of cultivation on fertile soils, and to be enabled to obtain large wages, while those who remain at home are forced to waste their labor upon poor soils, yielding small returns, for which reason it is deemed highly advantangeous that the latter should employ themselves at the loom and the anvil while the former confine themselves to the plough, the former becoming all consumers, and the latter remaining all producers. Thus it has been that the political economists of England have been enabled to satisfy themselves that the fundamental doctrines of Adam Smith were erroneous," and that free trade instead of indicating the adoption of measures tending to the localization of manufactures in the various countries of the world, looks to the adoption of measures tending to promote the centralization and monopoly of machinery in the island of Great Britain, a course of policy regarded by Dr. Smith as tending to diminution in the productiveness of labor and capital, abroad and at home. "To arrive at a well-founded conclusion in this science," says Mr. McCulloch, "it is not enough to observe results in particular cases, or as they affect particular individuals; we must further inquire whether these results are constant and universally applicable-whether the same circumstances which have given rise to them in one instance, would in every instance, and in who has no cup takes up water in his |