The Online Library of Liberty

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• Preface.
• The Life of Richard Cobden
• Chapter I.: Early Life.
• Chapter II.: Commercial and Mental Progress.
• Chapter III.: Travels In West and East.
• Chapter IV.: The Two Pamphlets.
• Chapter V.: Life In Manchester, 1837–9.
• Chapter VI.: The Foundation of the League.
• Chapter VII.: The Corn Laws.
• Chapter VIII.: Cobden Enters Parliament—First Session.
• Chapter IX.: Cobden As an Agitator.
• Chapter X.: The New Corn Law.
• Chapter XI.: Sir Robert Peel’s New Policy.
• Chapter XII.: Renewed Activity of the League—Cobden and Sir Robert Peel—Rural Campaign.
• Chapter XIII.: The Session of 1844—Factory Legislation—The Constituencies.
• Chapter XIV.: Bastiat—New Tactics—Activity In Parliament—Maynooth Grant—Private Affairs.
• Chapter XV.: The Autumn of 1845.
• Chapter XVI.: Repeal of the Corn Laws and Fall of the Government.
• Chapter XVII.: Correspondence With Sir Robert Peel—Cessation of the Work of the League.
• Chapter XVIII.: Tour Over Europe.
• Chapter XIX.: Election For the West Riding.—Purchase of Dunford.—Correspondence.
• Chapter XX.: Miscellaneous Correspondence On Social and Political Movements.
• Chapter XXI.: The Don Pacifico Debate—The Papal Aggression—Correspondence With Mr. Bright On Reform—Kossuth.
• Chapter XXII.: The Protectionists In Office.
• Chapter XXIII.: The Panic of 1853.
• Chapter XXIV.: The Crimean War.
• Chapter XXV.: Death of His Son.
• Chapter XXVI.: Chinese Affairs—Cobden’s Motion—The Dissolution.
• Chapter XXVII.: The Indian Mutiny—Private Affairs—Second Journey to America.
• Chapter XXVIII.: Return From America.—The New Ministry.
• Chapter XXIX.: The French Treaty.
• Chapter XXX.: Holiday and Return to Paris.
• Chapter XXXI.: The Tariff—The Fortification Scheme.
• Chapter XXXII.: The Policy of the Commercial Treaty.
• Chapter XXXIII.: Miscellaneous Correspondence, 1859–60—Paris—Return to England.
• Chapter XXXIV.: The American War—Fortification Schemes—International Law.
• Chapter XXXV.: Correspondence With Mr. Delane.
• Chapter XXXVI.: The Danish War—Last Speeches In Parliament—Correspondence.
• Chapter XXXVII.: Speech At Rochdale—The Land Question—Correspondence—Last Days and Death.
• Chapter XXXVIII.: Conclusion.
• Appendix
• Note A. (see P. 115).
• Cobden to W. C. Hunt On the Hours of Labour.
• Full Text of the Last Letter Written By Mr Cobden
• Bibliography of Richard Cobden, Based On the British Museum Catalogue
• Biography, Criticism Etc

CHAPTER XXXII.

the policy of the commercial treaty.

It will be convenient to insert here a few short remarks1860.
Æ. 56 on the general character of the work that Cobden had now accomplished. We shall find that under a different form it must still be regarded as an extension of the same principles which had inspired his first great effort. It was one more move in the direction of free exchange. By many prominent men, indeed, at the time, and by many more afterwards, the Treaty was regarded as an infraction of sound economic principles. Some came to this opinion from lack of accuracy, but more from a failure in copiousness of thought. One or two of those who had been with Cobden in the van of the assault on the Corn Laws, now looked askance on a transaction which savoured of the fallacy of reciprocity. Those rigid adherents of economics who insist, in Mill’s phrase, on treating their science as if it were a thing not to guide our judgment, but to stand in its place, denounced the doctrine of treaties as a new-fangled heresy. Even the old Protectionists professed a virtuous alarm at an innovation on the principles of Free Trade.

The discussion of 1860 did little more than reproduce a discussion that had taken place seventeen years before. When Sir Robert Peel entered office, he found four sets of negotiations pending for commercial treaties, between England and France, Portugal, Spain, and Brazil. Those 1860.
Æt. 56.with France were obviously the most important. Affairs in Syria had interrupted them, but Peel resumed the negotiations. He was most anxious for a Tariff Treaty. “I should not,” he said, as Pitt had said before him, and as Cobden and Mr. Gladstone said after him, “estimate the advantage of an extended commercial intercourse with France merely in respect to the mount of pecuniary gain; but I value that intercourse on account of the effect it is calculated to produce in promoting the feelings of amity and goodwill between two great nations. I should regard that mutual intercourse in commercial affairs as giving as additional security for the permanent maintenance of peace.”1 Unfortunately, the negotiations fell through. Guizot said that he could not pass any such measure through the Chambers. Nor was there better success in other quarters.

In 1843, Mr. J.L. Ricardo had introduced a resolution in the House of Commons, declaring the inexpediency of postponing remissions of duty with a view of making such remissions a basis of commercial negotiations. This was a reply from the pure economic party to Peel’s statement already quoted (see above, p. 240), that he did not reduce the wine duties because he hoped to make them the instruments of treaties with foreign countries. Ricardo prefaced his resolution by a speech, which was very able, but which pressed for Free Trade without delay, restriction, or qualification. The only process to which they need resort against hostile tariffs was to open the ports. Mr. Gladstone answered Ricardo by the same arguments that were afterwards used to defend his own policy in 1860. Mr. Disraeli, not at all disclaiming Free Trade as a general policy, supported Mr. Gladstone against the ultra-Free-Traders in a speech remarkable to this day for its large and comprehensive survey of the whole field of our commerce, and for its discernment of the channels in1860.
Æt. 56. which it would expand. On the immediate question, Mr. Disraeli gave a definite opinion in support of the Minister. “In forming connexions with the states of Europe,” he said, “it was obvious that we could only proceed by negotiations. Diplomacy stepped in to weigh and adjust contending interests, to obtain mutual advantages, and ascertain reciprocal equivalents. Our commerce with Europe could only be maintained and extended by treaties.”2

Cobden supported Ricardo’s motion, not on the rather abstract grounds of the mover and others, but because it was a way of preventing a Government “which was the creature of monopoly, from meddling with any of our commercial arrangements.” The envoy to Brazil, he said, had been sent out to obtain the best terms for the West Indian sugar monopolists, and he quoted the description by a Brazilian senator, of the people of Great Britain as the slaves of a corn, sugar, coffee, and timber oligarchy.

Was it fit, Cobden asked, that the executive government should be allowed to go all over the world to seek for impediments to Free Trade abroad, in order to excuse them in resisting the removal of impediments at home? It might be very well to talk of a commercial treaty with Protugal, but abolish the monopolies of sugar, corn, and coffee, and the vast continents of North and South America would be opened to the manufactures of Great Britain. Characteristically enough, he kept close to the immediate and particular bearings of the discussion, and nothing was said by him in 1843 that was inconsistent with his position in 1860. Ricardo, again, in 1844 brought forward a resolution to the effect that our commercial intercourse with foreign nations would be best promoted by regulating our own 1860.
Æt. 56.customs duties as might to be best suited to our own interests, without reference to the amount of duties which foreign powers might think expedient to levy on British goods. The discussion was very meagre, and the House was counted out.

To return to the Treaty of 1860. Cobden, unable to be present to defend his measure in the House of Commons, took up the points of the case against it in a letter to Mr. Bright:—

“I observe that some of the recent converts to Free Trade, who gave you and me so much trouble to convert them, are concerned at our doing anything so unsound as to enter into a Commercial Treaty. I will undertake that there is not a syllable on our side of the Treaty that is inconsistent with the soundest principles of Free Trade. We do not propose to reduce a duty which, on its own merits ought not to have been dealt with long ago. We give no concessions to France which do not apply to all other nations. We leave ourselves free to lay on any amount of internal duties, and to put on an equal tax on foreign articles of the same kind at the Custom House. It is true we bind ourselves, for ten years, not otherwise to raise such of our customs as affect the French trade, or put on fresh ones; and this, I think, no true Free Trader will regret.

“And here I may suggest, that if you observe the members on the Opposition side averse to parting with the power of putting on higher customs duties on these articles of French origin, it may be well to read them a lesson on the impossibility of their being able to lay any further burdens on commerce in future, and to remind them that if they sanction higher expenditure, they must expect to pay it in a direct income tax. Public opinion, without any French Treaty, is daily tending to this result.

“There being no objection on the ground of principle, there are, and will be, many specious arguments resorted to by those who really at heart have no sympathy for a cordial union between the two nations, for defeating or marring the1860.
Æt. 56. projected Treaty. Of course these fallacies you will easily deal with. I observe they often answer themselves. For instance, in the same breath, we are told that we have emptied our budget and given everything to France already, and then that we are going now to give everything and receive nothing. Then we are told that it is very wrong to reduce the duties on French wines, because France is going to lower the duties on British iron; and in the same breath are reproached for including Spain and Portugal in our ‘Concessions,’ without obtaining anything in return! I am really half inclined to share your suspicions that there are influences at work, hostile to any policy which shall put an end to the present state of armed hostility and suspicion between France and England. God forgive me if I do any body of men the injustice of attributing to them wrongfully such an infernal policy. It is, perhaps, hardly consciously that anybody would pursue such a course.

“But surely, if people wished to see the relations of the two countries improved, they would never attempt to impede the only sure means of attaining that end by such frivolous objections. These people seem to think that Free Trade in France can be carried by a logical, orderly, methodical process, without resorting to stratagem, or anything like an indirect proceeding. The forget the political plots and contrivances, and the fearful adjuncts of starvation, which were necessary for carrying similar measures in England. They forget how Free Trade was wrested from the reluctant majorities of both our Houses of Parliament. Surely Louis Napoleon has as good a right, and may plead as strong motives of duty, for cheating (if I may use the word) the majorities of his Senate into an honest policy, as Peel had in dealing with the House of Lords. The Emperor of the French was elected by the whole people, not only to ad minister1860.
Æt. 56. their laws, but to legislate for them. They do not expect, as we do in England, to initiate reforms. They look for amelioration from above. When speaking with the Emperor, he observed to me that the protected interests were organized, and the general public was not; and, therefore, the contest was as unequal as between a disciplined regiment and a mob. The answer was obvious: ‘Your Majesty is the organization of the masses.’ And I am earnestly of opinion that he is now acting under this impulse and conviction.”

The direct effects of the Treaty upon the exchange of products between England and France have been too palpable to be denied. In 1858 the total exports from England to France amounted to no more than nine million pounds, and the imports from France to thirteen millions. Nineteen years later, in 1877, the British exports and re-exports had risen from nine to twenty-five million pounds, and the imports from France to forty-five millions.

The indirect effects of the Treaty were less plainly visible, but they cannot be left out of account if we seek to view the Treaty policy as a whole. England cleared her tariff of protection, and reduced the duties which were retained for purposes of revenue on the two French staples of wine and brandy. France, on her part, replaced prohibition by a system of moderate duties. If this had been all, it might have been fair to talk about reciprocity, though even then, when it is reciprocity in lowering and not in raising duties, the word ceases altogether to be a term of reproach. But the matter did not end here. The Treaty with France was not like the famous Methuen Treaty with Portugal (1703), an exclusive bargain, to the specified disadvantage of a nation outside of the compact. In 1703 we bound ourselves to keep our duties on French wines one-third higher than the duty on the wines of Portugal. This was the type of treaty which Adam Smith had in his mind1860.
Æt. 56. when he wrote his chapter on the subject. Pitt’s Treaty with France (1786) was of a different and better kind; and his motive in making it was not diplomatic or political, as had been the case in the old-fashioned treaties of commerce, but truly economical and social. He wished to legalize the commerce which was carried on illegally, and to an immense extent, by smuggling, always the spontaneous substitute for free trade; and he boldly accepted, moreover, the seeming paradox that reduction of duties may lead to increase of revenue.3 Neither party stipulated for any peculiar advantages. Still, the benefits of the Treaty were confined to the two nations who made it. In 1860 England lowered her duties, not only in favour of French products, but in favour of the same products from all other countries. The reforms which France and England now made in favour of one another, in the case of England actually were, and in the case of France were to be, extended to other nations as well. This was not reciprocity of monopoly, but reciprocity of freedom, or partial freedom. England had given up the system of differential duties, and France knew that the products of every other country would receive at the English ports exactly the same measure and treatment as her own. France, on the other hand, openly intended to take her Treaty with England as a model for Treaties with the rest of Europe, and to concede by Treaty with as many Governments as might wish, a tariff just as favourable as that which had been arranged with England. As a matter of fact, within five years after the negotiations of 1860, France had made 1860.
Æt. 56.Treaties with Belgium, the Zollverein, Italy, Sweden and Norway, Switzerland, and Austria.

In these, and in the treaty made afterwards by England with Austria, Sir Louis Mallet reminded its opponents in later years, that each of them had a double operation. Not only does each treaty open the market of another country to foreign industry; it immediately affects the markets that are already opened. For every recent treaty recognized the “most favoured nation” principle, the sheet-anchor of Free Trade, as it has been called. By means of this principle, each new point gained in any one negotiation becomes a part of the common commercial system of the European confederation. “By means of this network,” it has been excellently said by a distinguished member of the English diplomatic service, “of which few Englishmen seem to be aware, while fewer still know to whom they owe it, all the great trading and industrial communities of Europe. i.e., England, France, Holland, Belgium, the Zollverein (1870), Austria, and Italy, constitute a compact international body, from which the principle of monopoly and exclusive privilege has once for all been eliminated, and not one member of which can take off a single duty without all the other members at once partaking in the increased trading facilities thereby created. By the self-registering action of the most favoured nation clause, common to this network of treaties, and tariff level of the whole body is being continually lowered, and the road being paved towards the final embodiment of the Free Trade principle in the international engagement to abolish all duties other than those levied for revenue purposes.”

In face of unquestioned facts of this kind, nothing can be less statesmanlike than to deny that the treaties since 1860 have helped forward the great process of liberating the exchange of the products of their industry among the nations of the world. It is amazing to find able men so overmastered by a mistaken conception of what it is that economic generalization1860.
Æt. 56. can do for us, as to believe that they nullify the substantial service thus rendered by commercial treaties of Cobden’s type to the beneficent end of international co-operation, by the mere utterance of some formula of economic incantation. If the practical effect of the commercial treaties after 1860, as conceived and inspired by Cobden, has been, without any drawback worth considering, to lead Europe by a considerable stride towards the end proposed by the partisans of Free Trade, then it is absurd to quarrel with the treaties because they do not sound in tune with the verbal jingle of an abstract dogma. It is beside the mark to meet the advantages gained by the international action of commercial treaties, by the formula, “Take care of your imports, and the exports will take care of themselves.” The decisive consideration is that we can only procure imports from other countries on the cheapest possible terms, on condition that producers in those countries are able to receive our exports on the cheapest possible terms. Foreign producers can only do this, on condition that their governments can be induced to lower hostile tariffs; and foreign governments are only able, or choose to believe that they are only able, to lower tariffs in face of the strength of the protected interests, by means of a commercial treaty. The effect of a chain of such treaties—and the chain is automatically linked together by the favoured nation clause—is to lower duties all round, and lowering duties all round is the essential and indispensable condition of each country procuring for itself on the lowest possible terms imports from all other countries.

It is an economic error to confine our view to the imports or exports of our own country. In the case of England, these are intimately connected with, and dependent upon, the great circulating system of the whole world’s trade. 1860.
Æt. 56.Nobody has fully grasped the bearings of Free Trade, who does not realize what the international aspect of every commercial transaction amounts to; how the conditions of production and exchange in any one country affect, both actually and potentially, the corresponding conditions in every other country. It is not Free Trade between any two countries that is the true aim; but to remove obstacles in the way of the stream of freely exchanging commodities, that ought, like the Oceanus of primitive geography, to encircle the whole habitable world. In this circulating system every tariff is an obstruction, and the free circulation of commodities is in the long run as much impeded by an obstruction at one frontier as at another.4 This is one answer to an idea which has been lately broached among us, under stress of the temporary reaction against Free Trade. It has been suggested that though we cannot restore Protection in its old simplicity, yet we might establish a sort of National Imperial Customs Union among the English dominions. The territory over which the flag of Great Britain waves, is so enormous and so varied in productive conditions, that we could well afford, it is urged, to shut ourselves within our own walls, developing our own resources, and consolidating a strong national sentiment, until the nations who are now fighting us with protective tariffs come round to a better mind. The answer to this is that the removal of the restriction on the circulation to a more distant point would not affect the vital fact that the circulation would still be restricted and interrupted. To induce our colonies and dependencies to admit our goods free, would of course be so much gained; just as the freedom of interior or domestic commerce, which was one of the chief causes of the early prosperity of Great Britain, was by so much a gain over the French system, which cut off province from province by customs barriers during the same period.1860.
Æt. 56. But freedom of internal commerce, whether within an island or over a wide empire, is still not the same thing as universal freedom of exchange. An interruption, at whatever point in the great currents of exchange, must always remain an interruption and a disadvantage. England is especially interested in any transaction that tends to develop trade between any nations whatever. We derive benefit from it in one way or another. The mother country has no interest in going into a Customs Union with her colonies, with the idea of giving them any advantage or supposed advantage in trading with her over foreign countries.

It is not enough, therefore, to remove our own protective duties, though Peel may have been right under the circumstances of the time in saying that the best way of fighting a hostile tariff is by reforming your own. It is the business of the economic statesman to watch for opportunities of inducing other nations to modify duties on imports; because the release of the consumers of other nations is not only a stimulus to your own production for exportation, but has an effect in the supply of the imports which you declare to be the real object of your solicitude.

This was the conception at the bottom of the Commercial Treaty of 1860. “A treaty with France,” said Mr. Gladstone, “is even in itself a measure of no small consequence; but that which gives to a measure of that kind its highest value is its tendency to produce beneficial imitation in other quarters. It is the fact that, in concluding that Treaty, we did not give to one a privilege which we withheld from another, but that our Treaty with France was, in fact, a treaty with the world, and wide are the consequences which engagements of that kind carry in their train.”

[1]April 25.1843.

[2]Feb. 14, 1843. “Sign the treaty of commerce with France,” Mr. Disraeli cried, “that will give present relief.”

[3]“Only 600,000 gallons of French brandy were legally imported in a year, while no less than 4,000,000 of gallons were believed to be every year imported into England. And since there was a total prohibition of French cambrics, every yard of them sold in England must have come in by illicit means.”—Lord Stanhope’s Life of Pitt, i. 316–17.

[4]This is worked out with vigour and acuteness in the admirable pamphlet published by the Cobden Club in 1870, entitled Commercial Treaties: Free Trade and Internationalism. Four Letters by a disciple of Richard Cobden