The Online Library of Liberty

A project of Liberty Fund, Inc.

• Translator's Preface to First Edition.
• Introductory Essay, By J. Shield Nicholson
• Memoir.3
• Some Extracts From the Author's Preface to the First Edition.
• First Book: the History
• Chapter I: The Italians.
• Chapter II: The Hansards.
• Chapter III: The Netherlanders.
• Chapter IV: The English.
• Chapter V: The Spaniards and Portuguese.
• Chapter VI: The French.
• Chapter VII: The Germans.
• Chapter VIII: The Russians.
• Chapter IX: The North Americans.
• Chapter X: The Teachings of History.
• Second Book: the Theory
• Chapter XI: Political and Cosmopolitical Economy.
• Chapter XII: The Theory of the Powers of Production and the Theory of Values.
• Chapter XIII: The National Division of Commercial Operations and the Confederation of the National Productive Forces.
• Chapter XIV: Private Economy and National Economy.
• Chapter XV: Nationality and the Economy of the Nation.
• Chapter XVI: Popular and State Financial Administration, Political and National Economy.
• Chapter XVII: The Manufacturing Power and the Personal, Social, and Political Productive Powers of the Nation.
• Chapter XVIII: The Manufacturing Power and the Natural Productive Powers of the Nation.
• Chapter XIX: The Manufacturing Power and the Instrumental Powers (material Capital) of the Nation.
• Chapter XX: The Manufacturing Power and the Agricultural Interest.
• Chapter XXI: The Manufacturing Power and Commerce.
• Chapter XXII: The Manufacturing Power and Navigation, Naval Power and Colonisation.
• Chapter XXIII: The Manufacturing Power and the Instruments of Circulation.
• Chapter XXIV: The Manufacturing Power and the Principle of Stability and Continuity of Work.
• Chapter XXV: The Manufacturing Power and the Inducement to Production and Consumption.
• Chapter XXVI: Customs Duties As a Chief Means of Establishing and Protecting the Internal Manufacturing Power.
• Chapter XXVII: The Customs System and the Popular School.
• Third Book: the Systems
• Chapter XXVIII: The National Economists of Italy.
• Chapter XXIX: The Industrial System (falsely Termed By the School 'the Mercantile System').
• Chapter XXX: The Physiocratic Or Agricultural System.
• Chapter XXXI: The System of Values of Exchange (falsely Termed By the School, the 'industrial' System)—Adam Smith.
• Chapter XXXII: The System of Values of Exchange (continued)—Jean Baptiste Say and His School.
• Fourth Book: the Politics
• Chapter XXXIII: The Insular Supremacy and the Continental Powers—North America and France.
• Chapter XXXIV: The Insular Supremacy and the German Commercial Union.
• Chapter XXXV: Continental Politics.
• Chapter XXXVI: The Commercial Policy of the German Zollverein.
• Appendices Appendix A.
• Appendix B.
• Appendix C.
• Appendix D.

FOURTH BOOK

THE POLITICS

Chapter XXXIII

THE INSULAR SUPREMACY AND THE CONTINENTAL POWERS—NORTH AMERICA AND FRANCE.

IN all ages there have been cities or countries which have been pre-eminent above all others in industry, commerce, and navigation; but a supremacy such as that which exists in our days, the world has never before witnessed. In all ages, nations and powers have striven to attain to the dominion of the world, but hitherto not one of them has erected its power on so broad a foundation. How vain do the efforts of those appear to us who have striven to found their universal dominion on military power, compared with the attempt of England to raise her entire territory into one immense manufacturing, commercial, and maritime city, and to become among the countries and kingdoms of the earth, that which a great city is in relation to its surrounding territory: to comprise within herself all industries, arts, and sciences; all great commerce and wealth; all navigation and naval power—a world's metropolis which supplies all nations with manufactured goods, and supplies herself in exchange from every nation with those raw materials and agricultural products of a useful or acceptable kind, which each other nation is fitted by nature to yield to her—a treasure-house of all great capital—a banking establishment for all nations, which controls the circulating medium of the whole world, and by loans and the receipt of interest on them makes all the peoples of the earth her tributaries. Let us, however, do justice to this Power and to her efforts. The world has not been hindered in its progress, but immensely aided in it, by England. She has become an example and a pattern to all nations—in internal and in foreign policy, as well as in great inventions and enterprises of every kind; in perfecting industrial processes and means of transport, as well as in the discovery and bringing into cultivation uncultivated lands, especially in the acquisition of the natural riches of tropical countries, and in the civilisation of barbarous races or of such as have retrograded into barbarism. Who can tell how far behind the world might yet remain if no England had ever existed? And if she now ceased to exist, who can estimate how far the human race might retrograde? Let us then congratulate ourselves on the immense progress of that nation, and wish her prosperity for all future time. But ought we on that account also to wish that she may erect a universal dominion on the ruins of the other nationalities? Nothing but unfathomable cosmopolitanism or shopkeepers' narrow-mindedness can give an assenting answer to that question. In our previous chapters we have pointed out the results of such denationalisation, and shown that the culture and civilisation of the human race can only be brought about by placing many nations in similar positions of civilisation, wealth, and power; that just as England herself has raised herself from a condition of barbarism to her present high position, so the same path lies open for other nations to follow: and that at this time more than one nation is qualified to strive to attain the highest degree of civilisation, wealth, and power. Let us now state summarily the maxims of State policy by means of which England has attained her present greatness. They may be briefly stated thus:

Always to favour the importation of productive power,100 in preference to the importation of goods.

Carefully to cherish and to protect the development of the productive power.

To import only raw materials and agricultural products, and to export nothing but manufactured goods.

To direct any surplus of productive power to colonisation, and to the subjection of barbarous nations.

To reserve exclusively to the mother country the supply of the colonies and subject countries with manufactured goods, but in return to receive on preferential terms their raw materials and especially their colonial produce.

To devote especial care to the coast navigation; to the trade between the mother country and the colonies; to encourage sea-fisheries by means of bounties; and to take as active a part as possible in international navigation.

By these means to found a naval supremacy, and by means of it to extend foreign commerce, and continually to increase her colonial possessions.

To grant freedom in trade with the colonies and in navigation only so far as she can gain more by it than she loses.

To grant reciprocal navigation privileges only if the advantage is on the side of England, or if foreign nations can by that means be restrained from introducing restrictions on navigation in their own favour.

To grant concessions to foreign independent nations in respect of the import of agricultural products, only in case concessions in respect of her own manufactured products can be gained thereby.

In cases where such concessions cannot be obtained by treaty, to attain the object of them by means of contraband trade.

To make wars and to contract alliances with exclusive regard to her manufacturing, commercial, maritime, and colonial interests. To gain by these alike from friends and foes: from the latter by interrupting their commerce at sea; from the former by ruining their manufactures through subsidies which are paid in the shape of English manufactured goods.101

These maxims were in former times plainly professed by all English ministers and parliamentary speakers. The ministers of George I. in 1721 openly declared, on the occasion of the prohibition of the importation of the manufactures of India, that it was clear that a nation could only become wealthy and powerful if she imported raw materials and exported manufactured goods. Even in the times of Lords Chatham and North, they did not hesitate to declare in open Parliament that it ought not to be permitted that even a single horse-shoe nail should be manufactured in North America. In Adam Smith's time, a new maxim was for the first time added to those which we have above stated, namely, to conceal the true policy of England under the cosmopolitical expressions and arguments which Adam Smith had discovered, in order to induce foreign nations not to imitate that policy.

It is a very common clever device that when anyone has attained the summit of greatness, he kicks away the ladder by which he has climbed up, in order to deprive others of the means of climbing up after him. In this lies the secret of the cosmopolitical doctrine of Adam Smith, and of the cosmopolitical tendencies of his great contemporary William Pitt, and of all his successors in the British Government administrations.

Any nation which by means of protective duties and restrictions on navigation has raised her manufacturing power and her navigation to such a degree of development that no other nation can sustain free competition with her, can do nothing wiser than to throw away these ladders of her greatness, to preach to other nations the benefits of free trade, and to declare in penitent tones that she has hitherto wandered in the paths of error, and has now for the first time succeeded in discovering the truth.

William Pitt was the first English statesman who clearly perceived in what way the cosmopolitical theory of Adam Smith could be properly made use of, and not in vain did he himself carry about a copy of the work on the Wealth of Nations. His speech in 1786, which was addressed neither to Parliament nor to the nation, but clearly to the ears of the statesmen of France, who were destitute of all experience and political insight, and solely intended to influence the latter in favour of the Eden Treaty, is an excellent specimen of Smith's style of reasoning. By nature he said France was adapted for agriculture and the production of wine, as England was thus adapted to manufacturing production. These nations ought to act towards one another just as two great merchants would do who carry on different branches of trade and who reciprocally enrich one another by the exchange of goods.102 Not a word here of the old maxim of England, that a nation can only attain to the highest degree of wealth and power in her foreign trade by the exchange of manufactured products against agricultural products and raw materials. This maxim was then, and has remained since, an English State secret; it was never again openly professed, but was all the more persistently followed. If, however, England since William Pitt's time had really cast away the protective system as a useless crutch, she would now occupy a much higher position than she does, and she would have got much nearer to her object, which is to monopolise the manufacturing power of the whole world. The favourable moment for attaining this object was clearly just after the restoration of the general peace. Hatred of Napoleon's Continental system had secured a reception among all nations of the Continent of the doctrines of the cosmopolitical theory. Russia, the entire North of Europe, Germany, the Spanish peninsula, and the United States of North America would have considered themselves fortunate in exchanging their agricultural produce and raw materials for English manufactured goods. France herself would perhaps have found it possible, in consideration of some decided concessions in respect of her wine and silk manufactures, to depart from her prohibitive system.

Then also the time had arrived when, as Priestley said of the English navigation laws, it would be just as wise to repeal the English protective system as it had formerly been to introduce it.

The result of such a policy would have been that all the surplus raw materials and agricultural produce from the two hemispheres would have flowed over to England, and all the world would have clothed themselves with English fabrics. All would have tended to increase the wealth and the power of England. Under such circumstances the Americans or the Russians would hardly have taken it into their heads in the course of the present century to introduce a protective system, or the Germans to establish a customs union. People would have come to the determination with difficulty to sacrifice the advantages of the present moment to the hopes of a distant future.

But Providence has taken care that trees should not grow quite up to the sky. Lord Castlereagh gave over the commercial policy of England into the hands of the landed aristocracy, and these killed the hen which had laid the golden eggs. Had they permitted the English manufactures to monopolise the markets of all nations, Great Britain would have occupied the position in respect to the world which a manufacturing town does in respect to the open country; the whole territory of the island of England would have been covered with houses and manufactories, or devoted to pleasure gardens, vegetable gardens, and orchards; to the production of milk and of meat, or of the cultivation of market produce, and generally to such cultivation as only can be carried on in the neighbourhood of great cities. The production of these things would have become much more lucrative for English agriculture than the production of corn, and consequently after a time the English landed aristocracy would have obtained much higher rents than by the exclusion of foreign grain from the home market. Only, the landed aristocracy having only their present interests in view, preferred by means of the corn laws to maintain their rents at the high rate to which they had been raised by the involuntary exclusion of foreign raw materials and grain from the English market which had been occasioned by the war; and thus they compelled the nations of the Continent to seek to promote their own welfare by another method than by the free exchange of agricultural produce for English manufactures, viz. by the method of establishing a manufacturing power of their own. The English restrictive laws thus operated quite in the same way as Napoleon's Continental system had done, only their operation was somewhat slower.

When Canning and Huskisson came into office, the landed aristocracy had already tasted too much of the forbidden fruit for it to be possible to induce them by reasons of common sense to renounce what they had enjoyed. These statesmen found themselves in the difficult position of solving an impossible problem—a position in which the English ministry still finds itself. They had at one and the same time to convince the Continental nations of the advantages of free trade, and also maintain the restrictions on the import of foreign agricultural produce for the benefit of the English landed aristocracy. Hence it was impossible that their system could be developed in such a manner that justice could be done to the hopes of the advocates of free trade on both continents. With all their liberality with philanthropical and cosmopolitical phrases which they uttered in general discussions respecting the commercial systems of England and other countries, they nevertheless did not think it inconsistent, whenever the question arose of the alteration of any particular English duties, to base their arguments on the principle of protection.

Huskisson certainly reduced the duties on several articles, but he never omitted to take care that at that lower scale of duty the home manufactories were still sufficiently protected. He thus followed pretty much the rules of the Dutch water administration. Wherever the water on the outside rises high, these wise authorities erect high dykes; wherever it rises less, they only build lower dykes. After such a fashion the reform of the English commercial policy which was announced with so much pomp reduced itself to a piece of mere politico-economical jugglery. Some persons have adduced the lowering of the English duty on silk goods as a piece of English liberality, without duly considering that England by that means only sought to discourage contraband trade in these articles to the benefit of her finances and without injury to her own silk manufactories, which object it has also by that means perfectly attained. But if a protective duty of 50 to 70 per cent. (which at this day foreign silk manufacturers have to pay in England, including the extra duty103 ) is to be accepted as a proof of liberality, most nations may claim that they have rather preceded the English in that respect than followed them.

As the demonstrations of Canning and Huskisson were specially intended to produce an effect in France and North America, it will not be uninteresting to call to mind in what way it was that they suffered shipwreck in both countries. Just as formerly in the year 1786, so also on this occasion, the English received great support from the theorists, and the liberal party in France, carried away by the grand idea of universal freedom of trade and by Say's superficial arguments, and from feelings of opposition towards a detested Government and supported by the maritime towns, the wine growers, and the silk manufacturers, the liberal party clamorously demanded, as they had done in the year 1786, extension of the trade with England as the one true method of promoting the national welfare.

For whatever faults people may lay to the charge of the Restoration, it rendered an undeniable service to France, a service which posterity will not dispute; it did not allow itself to be misled into a false step as respects commercial policy either by the stratagems of the English or by the outcry of the liberals. Mr. Canning laid this business so much to heart that he himself made a journey to Paris in order to convince Monsieur Villèle of the excellence of his measures, and to induce him to imitate them. M. Villèle was, however, much too practical not to see completely through this stratagem; he is said to have replied to Mr. Canning, 'If England in the far advanced position of her industry permits greater foreign competition than formerly, that policy corresponds to England's own well-understood interests. But at this time it is to the well-understood interests of France that she should secure to her manufactories which have not as yet attained perfect development, that protection which is at present indispensable to them for that object. But whenever the moment shall have arrived when French manufacturing industry can be better promoted by permitting foreign competition than by restricting it, then he (M. Villèle) would not delay to derive advantage from following the example of Mr. Canning.'

Annoyed by this conclusive answer, Canning boasted in open Parliament after his return, how he had hung a millstone on the neck of the French Government by means of the Spanish intervention, from which it follows that the cosmopolitan sentiments and the European liberalism of Mr. Canning were not spoken quite so much in earnest as the good liberals on the Continent might have chosen to believe. For how could Mr. Canning, if the cause of liberalism on the Continent had interested him in the least, have sacrificed the liberal constitution of Spain to the French intervention owing to the mere desire to hang a millstone round the neck of the French Government? The truth is, that Mr. Canning was every inch an Englishman, and he only permitted himself to entertain philanthropical or cosmopolitical sentiments, when they could prove serviceable to him in strengthening and still further extending the industry and commercial supremacy of England, or in throwing dust into the eyes of England's rivals in industry and commerce.

In fact, no great sagacity was needed on the part of M. Villèle to perceive the snare which had been laid for him by Mr. Canning. In the experience of neighbouring Germany, who after the abolition of the Continental system had continually retrograded farther and farther in respect of her industry, M. Villèle possessed a striking proof of the true value of the principle of commercial freedom as it was understood in England. Also France was prospering too well under the system which she had adopted since 1815, for her to be willing to attempt, like the dog in the fable, to let go the substance and snap at the shadow. Men of the deepest insight into the condition of industry, such as Chaptal and Charles Dupin, had expressed themselves on the results of this system in the most unequivocal manner.

Chaptal's work on French industry is nothing less than a defence of the French commercial policy, and an exposition of its results as a whole and in every particular. The tendency of this work is expressed in the following quotation from it. 'Instead of losing ourselves in the labyrinth of metaphysical abstractions, we maintain above all that which exists, and seek above all to make it perfect. Good customs legislation is the bulwark of manufacturing industry. It increases or lessens import duties according to circumstances; it compensates the disadvantages of higher wages of labour and of higher prices of fuel; it protects arts and industries in their cradle until they at length become strong enough to bear foreign competition; it creates the industrial independence of France and enriches the nation through labour, which, as I have already often remarked, is the chief source of wealth.'104

Charles Dupin had, in his work 'On the Productive Powers of France, and on the Progress of French Industry from 1814 to 1847,' thrown such a clear light on the results of the commercial policy which France had followed since the Restoration, that it was impossible that a French minister could think of sacrificing this work of half a century, which had cost such sacrifices, which was so rich in fruits, and so full of promise for the future, merely for the attractions of a Methuen Treaty.

The American tariff for the year 1828 was a natural and necessary result of the English commercial system, which shut out from the English frontiers the North American timber, grain, meal, and other agricultural products, and only permitted raw cotton to be received by England in exchange for her manufactured goods. On this system the trade with England only tended to promote the agricultural labour of the American slaves, while on the other hand, the freest, most enlightened, and most powerful States of the Union found themselves entirely arrested in their economical progress, and thus reduced to dispose of their annual surplus of population and capital by emigration to the waste lands of the West. Mr. Huskisson understood this position of affairs very well. It was notorious that the English ambassador in Washington had more than once correctly informed him of the inevitable consequence of the English policy. If Mr. Huskisson had really been the man that people in other countries supposed him to be, he would have made use of the publication of the American tariff as a valuable opportunity for making the English aristocracy comprehend the folly of their corn laws, and the necessity of abolishing them. But what did Mr. Huskisson do? He fell into a passion with the Americans (or at least affected to do so), and in his excitement he made allegations—the incorrectness of which was well known to every American planter—and permitted himself to use threats which made him ridiculous. Mr. Huskisson said the exports of England to the United States amounted to only about the sixth part of all the exports of England, while the exports of the United States to England constituted more than half of all their exports. From this he sought to prove that the Americans were more in the power of the English than the latter were in that of the former; and that the English had much less reason to fear interruptions of trade through war, cessation of intercourse, and so forth, than the Americans had. If one looks merely at the totals of the value of the imports and exports, Huskisson's argument appears sufficiently plausible; but if one considers the nature of the reciprocal imports and exports, it will then appear incomprehensible how Mr. Huskisson could make use of an argument which proves the exact opposite of that which he desired to prove. All or by far the greater part of the exports of the United States to England consisted of raw materials, whose value is increased tenfold by the English, and which they cannot dispense with, and also could not at once obtain from other countries, at any rate not in sufficient quantity, while on the other hand all the imports of the North Americans from England consisted of articles which they could either manufacture for themselves or procure just as easily from other nations. If we now consider what would be the operation of an interruption of commerce between the two nations according to the theory of values, it will appear as if it must operate to the disadvantage of the Americans; whereas if we judge of it according to the theory of the productive powers, it must occasion incalculable injury to the English. For by it two-thirds of all the English cotton manufactories would come to a standstill and fall into ruin. England would lose as by magic a productive source of wealth, the annual value of which far exceeds the value of her entire exports, and the results of such a loss on the peace, wealth, credit, commerce, and power of England would be incalculable. What, however, would be the consequences of such a state of things for the North Americans? Compelled to manufacture for themselves those goods which they had hitherto obtained from England, they would in the course of a few years gain what the English had lost. No doubt such a measure must occasion a conflict for life and death, as formerly the navigation laws did between England had Holland. But probably it would also end in the same way as formerly did the conflict in the English Channel. It is unnecessary here to follow out the consequences of a rivalry which, as it appears to us, must sooner or later, from the very nature of things, come to a rupture. What we have said suffices to show clearly the futility and danger of Huskisson's argument, and to demonstrate how unwisely England acted in compelling the North Americans (by means of her corn laws) to manufacture for themselves, and how wise it would have been of Mr. Huskisson had he, instead of trifling with the question by such futile and hazardous arguments, laboured to remove out of the way the causes which led to the adoption of the American tariff of 1828.

In order to prove to the North Americans how advantageous to them the trade of England was, Mr. Huskisson pointed out the extraordinary increase in the English importations of cotton, but the Americans also knew how to estimate this argument at its true value. For the production of cotton in America had for more than ten years previously so greatly exceeded the consumption of, and the demand for, this article from year to year, that its prices had fallen in almost the same ratio in which the export had increased; as may be seen from the fact that in the year 1816 the Americans had obtained for 80,000,000 pounds of cotton 24,000,000 dollars, while in the year 1826 for 204,000,000 pounds of cotton they only obtained 25,000,000 dollars.

Finally, Mr. Huskisson threatened the North Americans with the organisation of a wholesale contraband trade by way of Canada. It is true that under existing circumstances an American protective system can be endangered by nothing so seriously as by the means indicated by Mr. Huskisson. But what follows from that? Is it that the Americans are to lay their system at the feet of the English Parliament, and await in humility whatever the latter may be pleased to determine from year to year respecting their national industry? How absurd! The only consequence would be that the Americans would annex Canada and include it in their Union, or else assist it to attain independence as soon as ever the Canadian smuggling trade became unendurable. Must we not, however, deem the degree of folly absolutely excessive if a nation which has already attained industrial and commercial supremacy, first of all compels an agricultural nation connected with her by the closest ties of race, of language, and of interest, to become herself a manufacturing nation, and then, in order to hinder her from following the impulse thus forcibly given to her, compels her to assist that nation's own colonies to attain independence?

After Huskisson's death, Mr. Poulett Thompson undertook the direction of the commercial affairs of England; this statesman followed his celebrated predecessor in his policy as well as in his office. In the meantime, so far as concerned North America, there remained little for him to do, for in that country, without special efforts on the part of the English, by means of the influence of the cotton planters and the importers, and by the aid of the Democratic party, especially by means of the so-called Compromise Bill in 1832, a modification of the former tariff had taken place, which, although it certainly amended the excesses and faults of the former tariff, and also still secured to the American manufactories a tolerable degree of protection in respect of the coarser fabrics of cotton and woollen, nevertheless gave the English all the concessions which they could have desired without England having been compelled to make any counter concessions.

Since the passing of that Bill, the exports of the English to America have enormously increased. And subsequently to this time they greatly exceed the English imports from North America, so that at any time it is in the power of England to draw to herself as much as she pleases of the precious metals circulating in America, and thereby to occasion commercial crises in the United States as often as she herself is in want of money. But the most astonishing thing in this matter is that that Bill had for its author Henry Clay, the most eminent and clearsighted defender of the American manufacturing interest. For it must be remembered that the prosperity of the American manufacturers which resulted from the tariff of 1828 excited so greatly the jealousy of the cotton planters, that the Southern States threatened to bring about a dissolution of the Union in case the tariff of 1828 was not modified. The Federal Government, which was dominated by the Democratic party, had sided with the Southern planters from purely party and electioneering motives, and also managed to get the agriculturists of the Middle and Western States, who belonged to that party, to adopt the same views.

These last had lost their former sympathy with the manufacturing interest in consequence of the high prices of produce which had prevailed, which, however, were the result for the most part of the prosperity of the home manufactories and of the numerous canals and railways which were undertaken. They may also have actually feared that the Southern States would press their opposition so far as to bring about a real dissolution of the Union and even civil war. Hence it became the party interests of the Democrats of the Central and Eastern States not to alienate the sympathies of the Democrats of the Southern States. In consequence of these political circumstances, public opinion veered round so much in favour of free trade with England, that there was reason to fear that all the manufacturing interests of the country might be entirely sacrificed in favour of English free competition. Under such circumstances the Compromise Bill of Henry Clay appeared to be the only means of at least partially preserving the protective system. By this Bill part of the American manufactures, viz. those of finer and more expensive articles, was sacrificed to foreign competition, in order to preserve another class of them, viz. the manufacture of articles of a coarser and a less expensive character. In the meantime all appearances seem to indicate that the protective system in North America in the course of the next few years will again raise its head and again make new progress. However much the English may desire to lessen and mitigate the commercial crises in North America, however large also may be the amount of capital which may pass over from England to North America in the form of purchases of stock or of loans or by means of emigration, the existing and still increasing disproportion between the value of the exports and that of imports cannot possibly in the long run be equalised by those means. Alarming commercial crises, which continually increase in their magnitude, must occur, and the Americans must at length be led to recognise the sources of the evil and to determine to put a stop to them.

It thus lies in the very nature of things, that the number of the advocates of the protective system must again increase, and those of free trade again diminish. Hitherto, the prices of agricultural produce have been maintained at an unusually high level, owing to the previous prosperity of the manufactories, through the carrying out of great public undertakings, through the demand for necessaries of life arising from the great increase of the production of cotton, also partially through bad harvests. One may, however, foresee with certainty, that these prices in the course of the next few years will fall as much below the average as they have hitherto ranged above it. The greater part of the increase of American capital has since the passing of the Compromise Bill been devoted to agriculture, and is only now beginning to become productive. While thus agricultural production has unusually increased, on the other hand the demand for it must unusually diminish. Firstly, because public works are no more being undertaken to the same extent; secondly, because the manufacturing population in consequence of foreign competition can no more increase to an important extent; and thirdly, because the production of cotton so greatly exceeds the consumption that the cotton planters will be compelled, owing to the low prices of cotton, to produce for themselves those necessaries of life which they have hitherto procured from the Middle and Western States. If in addition rich harvests occur, then the Middle and Western States will again suffer from an excess of produce, as they did before the tariff of 1828. But the same causes must again produce the same results; viz. the agriculturists of the Middle and Western States must again arrive at the conviction, that the demand for agricultural produce can only be increased by the increase of the manufacturing population of the country, and that that increase can only be brought about by an extension of the protective system. While in this manner the partisans of protection will daily increase in number and influence, the opposite party will diminish in like proportion until the cotton planters under such altered circumstances must necessarily come to the conviction that the increase of the manufacturing population of the country and the increase of the demand for agricultural produce and raw materials both consist with their own interests if rightly understood.

Because, as we have shown, the cotton planters and the Democrats in North America were striving most earnestly of their own accord to play into the hands of the commercial interests of England, no opportunity was offered at the moment on this side for Mr. Poulett Thompson to display his skill in commercial diplomacy.

Matters were quite in another position in France. There people still steadily clung to the prohibitive system. There were indeed many State officials who were disciples of theory, and also deputies who were in favour of an extension of commercial relations between England and France, and the existing alliance with England had also rendered this view to a certain extent popular. But how to attain that object, opinions were less agreed, and in no respect were they quite clear. It seemed evident and also indisputable that the high duties on the foreign necessaries of life and raw materials, and the exclusion of English coal and pig-iron, operated very disadvantageously to French industry, and that an increase in the exports of wines, brandy, and silk fabrics would be extremely advantageous to France.

In general, people confined themselves to universal declamation against the disadvantages of the prohibitive system. But to attack this in special cases did not appear at the time to be at all advisable. For the Government of July had their strongest supporters among the rich bourgeoisie, who for the most part were interested in the great manufacturing undertakings.

Under these circumstances Mr. Poulett Thompson formed a plan of operations which does all honour to his breadth of thought and diplomatic adroitness. He sent to France a man thoroughly versed in commerce and industry, and in the commercial policy of France, well known for his liberal sentiments, a learned man and a very accomplished writer, Dr. Bowring, who travelled through the whole of France, and subsequently through Switzerland also, to gather on the spot materials for arguments against the prohibitive system and in favour of free trade. Dr. Bowring accomplished this task with his accustomed ability and adroitness. Especially he clearly indicated the before-mentioned advantages of a freer commercial intercourse between the two countries in respect of coal, pig-iron, wines, and brandies. In the report which he published, he chiefly confined his arguments to these articles; in reference to the other branches of industry he only gave statistics, without committing himself to proofs or propositions how these could be promoted by means of free trade with England.

Dr. Bowring acted in precise accordance with the instructions given to him by Mr. Poulett Thompson, which were framed with uncommon art and subtlety, and which appear at the head of his report. In these Mr. Thompson makes use of the most liberal expressions. He expresses himself, with much consideration for the French manufacturing interests, on the improbability that any important result was to be expected from the contemplated negotiations with France. This instruction was perfectly adapted for calming the apprehensions respecting the views of England entertained by the French woollen and cotton manufacturing interests which had become so powerful. According to Mr. Thompson, it would be folly to ask for important concessions respecting these.

On the other hand, he gives a hint how the object might more easily be attained in respect of 'less important articles. These less important articles are certainly not enumerated in the instruction, but the subsequent experience of France has completely brought to light what Mr. Thompson meant by it, for at the time of the writing of this instruction the exports of linen yarn and linen fabrics of England to France were included in the term 'less important.'

The French Government, moved by the representations and explanations of the English Government and its agents, and with the intention of making to England a comparatively unimportant concession, which would ultimately prove advantageous to France herself, lowered the duty on linen yarn and linen fabrics to such an extent that they no longer gave any protection to French industry in face of the great improvements which the English had made in these branches of manufacture, so that even in the next few years the export of these articles from England to France increased enormously (1838, 32,000,000 francs); and that France stood in danger, owing to the start which England had thus obtained, of losing its entire linen industry, amounting to many hundred millions in value, which was of the greatest importance for her agriculture and for the welfare of her entire rural population, unless means could be found to put a check on the English competition by increasing the duties.

That France was duped by Mr. Poulett Thompson was clear enough. He had already clearly seen in the year 1834 what an impulse the linen manufacture of England would receive in the next few years in consequence of the new inventions which had been made there, and in this negotiation he had calculated on the ignorance of the French Government respecting these inventions and their necessary consequences. The advocates of this lowering of duties now indeed endeavoured to make the world believe that by it they only desired to make a concession to the Belgian linen manufactures. But did that make amends for their lack of acquaintance with the advances made by the English, and their lack of foresight as to the necessary consequences?

Be that as it may, this much is clearly demonstrated, that it was necessary for France to protect herself still more, under penalty of losing the greater part of her linen manufacturing for the benefit of England; and that the first and most recent experiment of the increase of freedom of trade between England and France remains as an indelible memorial of English craft and of French inexperience, as a new Methuen Treaty, as a second Eden Treaty. But what did Mr. Poulett Thompson do when he perceived the complaints of the French linen manufacturers and the inclination of the French Government to repair the mistake which had been made? He did what Mr. Huskisson had done before him, he indulged in threats, he threatened to exclude French wines and silk fabrics. This is English cosmopolitanism. France must give up a manufacturing industry of a thousand years' standing, bound up in the closest manner with the entire economy of her lower classes and especially with her agriculture, the products of which must be reckoned as chief necessaries of life for all classes, and of the entire amount of between three and four hundred millions, in order thereby to purchase the privilege of exporting to England some few millions more in value of wines and silk manufactures. Quite apart from this disproportion in value, it must be considered in what a position France would be placed if the commercial relations between both nations became interrupted in consequence of a war; in case viz. that France could no more export to England her surplus products of silk manufactures and wines, but at the same time suffered from the want of such an important necessary of life as linen.

If anyone reflects on this he will see that the linen question is not simply a question of economical well-being, but, as everything is which concerns the national manufacturing power, is still more a question of the independence and power of the nation.

It seems indeed as if the spirit of invention had set itself the task, in this perfecting of the linen manufacture, to make the nations comprehend the nature of the manufacturing interest, its relations with agriculture, and its influence on the independence and power of the State, and to expose the erroneous arguments of the popular theory. The school maintains, as is well known, that every nation possesses special advantages in various branches of production, which she has either derived from nature, or which she has partly acquired in the course of her career, and which under free trade compensate one another. We have in a previous chapter adduced proof that this argument is only true in reference to agriculture, in which production depends for the most part on climate and on the fertility of the soil, but that it is not true in respect to manufacturing industry, for which all nations inhabiting temperate climates have equal capability provided that they possess the necessary material, mental, social, and political qualifications. England at the present day offers the most striking proof of this. If any nations whatever are specially adapted by their past experience and exertions, and through their natural qualifications, for the manufacture of linen, those are the Germans, the Belgians, the Dutch, and the inhabitants of the North of France for a thousand years past. The English, on the other hand, up to the middle of the last century, had notoriously made such small progress in that industry, that they imported a great proportion of the linen which they required, from abroad. It would never have been possible for them, without the duties by which they continuously protected this manufacturing industry, even to supply their own markets and colonies with linen of their own manufacture. And it is well known how Lords Castlereagh and Liverpool adduced proof in Parliament, that without protection it was impossible for the Irish linen manufactures to sustain competition with those of Germany. At present, however, we see how the English threaten to monopolise the linen manufacture of the whole of Europe, in consequence of their inventions, notwithstanding that they were for a hundred years the worst manufacturers of linen in all Europe, just as they have monopolised for the last fifty years the cotton markets of the East Indies, notwithstanding that one hundred years previously they could not even compete in their own market with the Indian cotton manufacturers. At this moment it is a matter of dispute in France how it happens that England has lately made such immense progress in the manufacture of linen, although Napoleon was the first who offered such a great reward for the invention of a machine for spinning cotton, and that the French machinists and manufacturers had been engaged in this trade before the English. The inquiry is made whether the English or the French possessed more mechanical talent. All kinds of explanations are offered except the true and the natural one. It is absurd to attribute specially to the English greater mechanical talent, or greater skill and perseverance in industry, than to the Germans or to the French. Before the time of Edward III. the English were the greatest bullies and good-for-nothing characters in Europe; certainly it never occurred to them to compare themselves with the Italians and Belgians or with the Germans in respect to mechanical talent or industrial skill; but since then their Government has taken their education in hand, and thus they have by degrees made such progress that they can dispute the palm of industrial skill with their instructors. If the English in the last twenty years have made more rapid progress in machinery for linen manufacture than other nations, and especially the French, have done, this has only occurred because, firstly, they had attained greater eminence in mechanical skill; secondly, that they were further advanced in machinery for spinning and weaving cotton, which is so similar to that for spinning and weaving linen; thirdly, that in consequence of their previous commercial policy, they had become possessed of more capital than the French; fourthly, that in consequence of that commercial policy their home market for linen goods was far more extensive than that of the French; and lastly, that their protective duties, combined with the circumstances above named, afforded to the mechanical talent of the nation greater stimulus and more means to devote itself to perfecting this branch of industry.

The English have thus given a striking confirmation of the opinions which we in another place have propounded and explained—that all individual branches of industry have the closest reciprocal effect on one another; that the perfecting of one branch prepares and promotes the perfecting of all others; that no one of them can be neglected without the effects of that neglect being felt by all; that, in short, the whole manufacturing power of a nation constitutes an inseparable whole. Of these opinions they have by their latest achievements in the linen industry offered a striking confirmation.

Chapter XXXIV

THE INSULAR SUPREMACY AND THE GERMAN COMMERCIAL UNION.

WHAT a great nation is at the present day without a vigorous commercial policy, and what she may become by the adoption of a vigorous commercial policy, Germany has learnt for herself during the last twenty years. Germany was that which Franklin once said of the State of New Jersey, 'a cask which was tapped and drained by its neighbours on every side.' England, not contented with having ruined for the Germans the greater part of their own manufactories and supplied them with enormous quantities of cotton and woollen fabrics, excluded from her ports German grain and timber, nay from time to time also even German wool. There was a time when the export of manufactured goods from England to Germany was ten times greater than that to her highly extolled East Indian Empire. Nevertheless the all-monopolising islanders would not even grant to the poor Germans what they conceded to the conquered Hindoos, viz. to pay for the manufactured goods which they required by agricultural produce. In vain did the Germans humble themselves to the position of hewers of wood and drawers of water for the Britons. The latter treated them worse than a subject people. Nations, like individuals, if they at first only permit themselves to be ill-treated by one, soon become scorned by all, and finally become an object of derision to the very children. France, not contented with exporting to Germany enormous quantities of wine, oil, silk, and millinery, grudged the Germans their exports of cattle, grain, and flax; yes, even a small maritime province formerly possessed by Germany and inhabited by Germans, which having become wealthy and powerful by means of Germany, at all times was only able to maintain itself with and by means of Germany, barred for half a generation Germany's greatest river by means of contemptible verbal quibbles. To fill up the measure of this contempt, the doctrine was taught from a hundred professorial chairs, that nations could only attain to wealth and power by means of universal free trade. Thus it was; but how is it now? Germany has advanced in prosperity and industry, in national self-respect and in national power, in the course of ten years as much as in a century. And how has this result been achieved? It was certainly good and beneficial that the internal tariffs were abolished which separated Germans from Germans; but the nation would have derived small comfort from that if her home industry had thenceforth remained freely exposed to foreign competition. It was especially the protection which the tariff of the Zollverein secured to manufactured articles of common use, which has wrought this miracle. Let us freely confess it, for Dr. Bowring105 has incontrovertibly shown it, that the Zollverein tariff has not, as was before asserted, imposed merely duties for revenue—that it has not confined itself to duties of ten to fifteen per cent. as Huskisson believed—let us freely admit that it has imposed protective duties of from twenty to sixty per cent. as respects the manufactured articles of common use.

But what has been the operation of these protective duties? Are the consumers paying for their German manufactured goods twenty to sixty per cent. more than they formerly paid for foreign ones (as must be the case if the popular theory is correct), or are these goods at all worse than the foreign ones? Nothing of the sort. Dr. Bowring himself adduces testimony that the manufactured goods produced under the high customs tariff are both better and cheaper than the foreign ones.106 The internal competition and the security from destructive competition by the foreigner has wrought this miracle, of which the popular school knows nothing and is determined to know nothing. Thus, that is not true, which the popular school maintains, that a protective duty increases the price of the goods of home production by the amount of the protective duty. For a short time the duty may increase the price, but in every nation which is qualified to carry on manufacturing industry the consequence of the protection will be, that the internal competition will soon reduce the prices lower than they had stood at when the importation was free.

But has agriculture at all suffered under these high duties? Not in the least; it has gained—gained tenfold during the last ten years. The demand for agricultural produce has increased. The prices of it everywhere are higher. It is notorious that solely in consequence of the growth of the home manufactories the value of land has everywhere risen from fifty to a hundred per cent., that everywhere higher wages are being paid, and that in all directions improvements in the means of transport are either being effected or projected.

Such brilliant results as these must necessarily encourage us to proceed farther on the system which we have commenced to follow. Other States of the Union have also proposed to take similar steps, but have not yet carried them into effect; while, as it would appear, some other States of the Union only expect to attain prosperity solely by the abolition of the English duties on grain and timber, and while (as it is alleged) there are still to be found influential men who believe in the cosmopolitical system and distrust their own experience. Dr. Bowring's report gives us most important explanations on these points as well as on the circumstances of the German Commercial Union and the tactics of the English Government. Let us endeavour to throw a little light on this report.

First of all, we have to consider the point of view from which it was written. Mr. Labouchere, President of the Board of Trade under the Melbourne Ministry, had sent Dr. Bowring to Germany for the same purpose as that for which Mr. Poulett Thompson had sent him to France in the year 1834. Just as it was intended to mislead the French by concessions in respect of wines and brandies to open their home market to English manufactured goods, so it was intended to mislead the Germans to do the same by concessions in respect of grain and timber; only there was a great difference between the two missions in this respect, that the concession which was to be offered to the French had to fear no opposition in England, while that which had to be offered to the Germans had first to be fought for in England herself.

Hence the tendency of these two reports was of necessity of quite a different character. The report on the commercial relations between France and England was written exclusively for the French; to them it was necessary to represent that Colbert had accomplished nothing satisfactory through his protective regulations; it was necessary to make people believe that the Eden Treaty was beneficial to France, and that Napoleon's Continental system, as well as the then existing French prohibitive system, had been extremely injurious to her. In short, in this case it was necessary to stick closely to the theory of Adam Smith; and the good results of the protective system must be completely and unequivocally denied. The task was not quite so simple with the other report, for in this, one had to address the English landowners and the German Governments at one and the same time. To the former it was necessary to say: See, there is a nation which has already in consequence of protective regulations made enormous advances in her industry, and which, in possession of all necessary means for doing so, is making rapid steps to monopolise her own home market and to compete with England in foreign markets. This, you Tories in the House of Lords—this, you country squires in the House of Commons, is your wicked doing. This has been brought about by your unwise corn laws; for by them the prices of provisions and raw materials and the wages of labour have been kept low in Germany. By them the German manufactories have been placed in an advantageous position compared to the English ones. Make haste, therefore, you fools, to abolish these corn laws. By that means you will doubly and trebly damage the German manufactories: firstly, because the prices of provisions and raw materials and the wages of labour will be raised in Germany and lowered in England; secondly, because by the export of German grain to England the export of English manufactured goods to Germany will be promoted; thirdly, because the German Commercial Union has declared that it is disposed to reduce their duties on common cotton and woollen goods in the same proportion in which England facilitates the import of German grain and timber. Thus we Britons cannot fail once more to crush the German manufactories. But the question cannot wait. Every year the manufacturing interests are gaining greater influence in the German Union; and if you delay, then your corn-law abolition will come too late. It will not be long before the balance will turn. Very soon the German manufactories will create such a great demand for agricultural produce that Germany will have no more surplus corn to sell to foreign countries. What concessions, then, are you willing to offer to the German Governments to induce them to lay hands on their own manufactories in order to hinder them from spinning cotton for themselves, and from encroaching upon your foreign markets in addition?

All this the writer of the report was compelled to make clear to the landowners in Parliament. The forms of the British State administration permit no secret Government reports. Dr. Bowring's report must be published, must therefore be seen by the Germans in translations and extracts. Hence one must use no expressions which might lead the Germans to a perception of theirtrue interests. Therefore to every method which was adapted to influence Parliament, an antidote must be added for the use of the German Governments. It must be alleged, that in consequence of the protective system much German capital had been diverted into improper channels. The agricultural interests of Germany would be damaged by the protective system. That interest for its part ought only to turn its attention to foreign markets; agriculture was in Germany by far the most important productive industry, for three-fourths of the inhabitants of Germany were engaged in it. It was mere nonsense to talk about protection for the producers; the manufacturing interest itself could only thrive under foreign competition: public opinion in Germany desired freedom of trade. Intelligence in Germany was too universal for a desire for high duties to be entertained. The most enlightened men in the country were in favour of a reduction of duties on common woollen and cotton fabrics, in case the English duties on corn and timber were reduced.

In short, in this report two entirely different voices speak, which contradict one another like two opponents. Which of the two must be deemed the true one—that which speaks to the Parliament, or that which speaks to the German Governments? There is no difficulty in deciding this point, for everything which Dr. Bowring adduces in order to induce Parliament to lower the import duties on grain and timber is supported by statistical facts, calculations, and evidence; while everything that he adduces to dissuade the German Governments from the protective system is confined to mere superficial assertions.

Let us consider in detail the arguments by which Dr. Bowring proves to the Parliament that in case a check is not put to the progress of the German protective system in the way which he pointed out, the German market for manufactured goods must become irrecoverably lost to England.

The German people is remarkable, says Dr. Bowring, for temperance, thrift, industry, and intelligence, and enjoys a system of universal education. Excellent polytechnic schools diffuse technical instruction throughout the entire country.

The art of design is especially much more cultivated there than in England. The great annual increase of its population, of its head of cattle, and especially of sheep, proves what progress agriculture there has achieved. (The report makes no mention of the improvement in the value of property, though that is an important feature, nor of the increase in the value of produce.) The wages of labour have risen thirty per cent. in the manufacturing districts. The country possesses a great amount of water power,as yet unused, which is the cheapest of all motive powers. Its mining industry is everywhere flourishing, more than at any previous time. From 1832 up to 1837 the imports of raw cotton have increased from 118,000 centners to 240,000 centners; the imports of cotton yarn from 172,000 centners to 322,000 centners; the exports of cotton fabrics from 26,000 centners to 75,000 centners; the number of cotton-weaving looms in Prussia from 22,000 in 1825 to 32,000 in 1834; the imports of raw wool from 99,000 centners to 195,000 centners; the exports of the same from 100,000 centners to 122,000 centners; the imports of woollen articles from 15,000 centners to 18,000 centners; the exports of the same from 49,000 centners to 69,000 centners.

The manufacture of linen cloths contends with difficulty against the high duties in England, France, and Italy, and has not increased. On the other hand, the imports of linen yarn have increased from 30,000 centners in 1832 to 86,000 centners in 1835, chiefly through the imports from England, which are still increasing. The consumption of indigo increased from 12,000 centners in 1831 to 24,000 centners in 1837; a striking proof of the progress of German industry. The exports of pottery have been more than doubled from 1832 to 1836. The imports of stoneware have diminished from 5,000 centners to 2,000 centners, and the exports of it increased from 4,000 centners to 18,000 centners. The imports of porcelain have diminished from 4,000 centners to 1,000 centners, and the exports of it have increased from 700 centners to 4,000 centners. The output of coal has increased from 6,000,000 Prussian tons in 1832 to 9,000,000 in 1836. In 1816 there were 8,000,000 sheep in Prussia; and in 1837, 15,000,000.

In Saxony in 1831 there were 14,000 stocking-weaving machines; in 1836, 20,000. From 1831 to 1837, the number of manufactories for spinning woollen yarn and of spindles had increased in Saxony to more than double their previous number. Everywhere machine manufactories had arisen, and many of these were in the most flourishing condition.

In short, in all branches of industry, in proportion as they have been protected, Germany has made enormous advances, especially in woollen and cotton goods for common use, the importation of which from England had entirely ceased. At the same time Dr. Bowring admits, in consequence of a trustworthy opinion which had been expressed to him, 'that the price of the Prussian stuffs was decidedly lower than that of the English; that certainly in respect of some of the colours they were inferior to the best English tints, but that others were perfect and could not be surpassed; that in spinning, weaving, and all preparatory processes, the German goods were fully equal to the British, but only in the finish a distinct inferiority might be observed, but that the want of this would disappear after a little time.'

It is very easy to understand how by means of such representations as these the English Parliament may at length be induced to abandon its corn laws, which have hitherto operated as a protective system to Germany. But it appears to us utterly incomprehensible how the German Union, which has made such enormous advances in consequence of the protective system, should be induced by this report to depart from a system which has yielded them such excellent results.

It is very well for Dr. Bowring to assure us that the home industry of Germany is being protected at the expense of the agriculturists. But how can we attach any credence to his assurance, when we see, on the contrary, that the demand for agricultural produce, prices of produce, the wages of labour, the rents, the value of property, have everywhere considerably risen, without the agriculturist having to pay more than he did before for the manufactured goods which he requires?

It is very well for Dr. Bowring to give us an estimate showing that in Germany three persons are engaged in agriculture to every one in manufactures, but that statement convinces us that the number of Germans engaged in manufacturing is not yet in proper proportion to the number of German agriculturists. And we cannot see by what other means this disproportion can be equalised, than by increasing the protection on those branches of manufacture which are still carried on in England for the supply of the German market by persons who consume English instead of German agricultural produce. It is all very well for Dr. Bowring to assert that German agriculture must only direct its attention to foreign countries if it desires to increase its sale of produce; but that a great demand for agricultural produce can only be attained by a flourishing home manufacturing Power is taught us not alone by the experience of England, but Dr. Bowring himself implicitly admits this, by the apprehension which he expresses in his report, that if England delays for some time to abolish her corn laws, Germany will then have no surplus of either corn or timber to sell to foreign countries.

Dr. Bowring is certainly right when he asserts that the agricultural interest in Germany is still the predominant one, but just for the very reason that it is predominant it must (as we have shown in former chapters), by promoting the manufacturing interests, seek to place itself in a just proportion with them, because the prosperity of agriculture depends on its being in equal proportion with the manufacturing interest, but not on its own preponderance over it.

Further, the author of the report appears to be utterly steeped in error when he maintains that foreign competition in German markets is necessary for the German manufacturing interest itself, because the German manufacturers, as soon as they are in a position to supply the German markets, must compete with the manufacturers of other countries for the disposal of their surplus produce, which competition they can only sustain by means of cheap production. But cheap production will not consist with the existence of the protective system, inasmuch as the object of that system is to secure higher prices to the manufacturers.

This argument contains as many errors and falsehoods as words. Dr. Bowring cannot deny that the manufacturer can offer his products at cheaper prices, the more he is enabled to manufacture—that, therefore, a manufacturing Power which exclusively possesses its home market can work so much the cheaper for foreign trade. The proof of this he can find in the same tables which he has published on the advances made by German industry; for in the same proportion in which the German manufactories have acquired possession of their own home market, their export of manufactured goods has also increased. Thus the recent experience of Germany, like the ancient experience of England, shows us that high prices of manufactured goods are by no means a necessary consequence of protection.

Finally, German industry is still very far from entirely supplying her home market. In order to do that, she must first manufacture for herself the 13,000 centners of cotton fabrics, the 18,000 centners of woollen fabrics, the 500,000 centners of cotton yarn, thread, and linen yarn, which at present are imported from England. If, however, she accomplishes that, she will then import 500,000 centners more raw cotton than before, by which she will carry on so much the more direct exchange trade with tropical countries, and be able to pay for the greater part if not the whole of that requirement with her own manufactured goods.

We must correct the view of the author of the report, that public opinion in Germany is in favour of free trade, by stating that since the establishment of the Commercial Union people have acquired a clearer perception of what it is that England usually understands by the term 'free trade,' for, as he himself says, 'Since that period the sentiments of the German people have been diverted from the region of hope and of fantasy to that of their actual and material interests.' The author of the report is quite right when he says that intelligence is very greatly diffused amongst the German people, but for that very reason people in Germany have ceased to indulge in cosmopolitical dreams. People here now think for themselves—they trust their own conclusions, their own experience, their own sound common sense, more than one-sided systems which are opposed to all experience. They begin to comprehend why it was that Burke declared in confidence to Adam Smith 'that a nation must not be governed according to cosmopolitical systems, but according to knowledge of their special national interests acquired by deep research.' People in Germany distrust counsellors who blow both cold and hot out of the same mouth. People know also how to estimate at their proper value the interests and the advice of those who are our industrial competitors. Finally, people in Germany bear in mind as often as English offers are under discussion the well-known proverb of the presents offered by the Danaidæ.

For these very reasons we may doubt that influential German statesmen have seriously given grounds for hope to the author of the report, that Germany is willing to abandon her protective policy for the benefit of England, in exchange for the pitiful concession of permission to export to England a little grain and timber. At any rate public opinion in Germany would greatly hesitate to consider such statesmen to be thoughtful ones. In order to merit that title in Germany in the present day, it is not enough that a man should have thoroughly learned superficial phrases and arguments of the cosmopolitical school. People require that a statesman should be well acquainted with the powers and the requirements of the nation, and, without troubling himself with scholastic systems, should develop the former and satisfy the latter. But that man would betray an unfathomable ignorance of those powers and wants, who did not know what enormous exertions are requisite to raise a national industry to that stage to which the German industry has already attained; who cannot in spirit foresee the greatness of its future; who could so grievously disappoint the confidence which the German industrial classes have reposed in their Governments, and so deeply wound the spirit of enterprise in the nation; who was incapable of distinguishing between the lofty position which is occupied by a manufacturing nation of the first rank, and the inferior position of a country which merely exports corn and timber; who is not intelligent enough to estimate how precarious a foreign market for grain and timber is even in ordinary times, how easily concessions of this kind can be again revoked, and what convulsions are involved in an interruption of such a trade, occasioned by wars or hostile commercial regulations; who, finally, has not learned from the example of other great states how greatly the existence, the independence, and the power of the nation depends on its possession of a manufacturing power of its own, developed in all its branches.

Truly one must greatly under-estimate the spirit of nationality and of unity which has arisen in Germany since 1830, if one believed, as the author of the report does (p. 26), that the policy of the Commercial Union will follow the separate interests of Prussia, because two-thirds of the population of the Union are Prussian. But Prussia's interests demand the export of grain and timber to England; the amount of her capital devoted to manufactures is unimportant; Prussia will therefore oppose every system which impedes the import of foreign manufactures, and all the heads of departments in Prussia are of that opinion. Nevertheless the author of the report says at the beginning of his report: 'The German Customs Union is an incarnation of the idea of national unity which widely pervades this country. If this Union is well led, it must bring about the fusion of all German interests in one common league. The experience of its benefits has made it popular. It is the first step towards the nationalisation of the German people. By means of the common interest in commercial questions, it has paved the way for political nationality, and in place of narrow-minded views, prejudices, and customs, it has laid down a broader and stronger element of German national existence.' Now, how does the opinion agree with these perfectly true prefatory observations, that Prussia will sacrifice the independence and the future greatness of the nation to a narrow regard to her own supposed (but in any case only momentary) private interest—that Prussia will not comprehend that Germany must either rise or fall with her national commercial policy, as Prussia herself must rise or fall with Germany? How does the assertion that the Prussian heads of departments are opposed to the protective system, agree with the fact that the high duties on ordinary woollen and cotton fabrics emanated from Prussia herself? And must we not be compelled to conjecture from these contradictions, and from the fact that the author of the report paints in such glowing colours the condition and the progress of the industry of Saxony, that he himself is desirous of exciting the private jealousy of Prussia?

Be that as it may, it is very strange that Dr. Bowring attaches such great importance to the private statements of heads of departments, he an English author who ought to be well aware of the power of public opinion—who ought to know that in our days the private views of heads of departments even in unconstitutional states count for very little if they are opposed to public opinion, and especially to the material interests of the whole nation, and if they favour retrograde steps which endanger the whole nationality. The author of the report also feels this well enough himself, when he states at page 98 that the Prussian Government has sufficiently experienced, as the English Government has done in connection with the abolition of the English corn laws, that the views of public officials cannot everywhere be carried into effect, that hence it might be necessary to consider whether German grain and timber should not be admitted to the English markets even without previous concessions on the part of the German Union, because by that very means the way might be paved for the admission of the English manufactured goods into the German market. This view is in any case a correct one. Dr. Bowring sees clearly that the German industry would never have been strengthened but for those laws; that consequently the abolition of the corn laws would not only check the further advances of German industry, but must cause it again to retrograde greatly, provided always that in that case the German customs legislation remains unchanged. It is only a pity that the British did not perceive the soundness of this argument twenty years ago; but now, after that the legislation of England has itself undertaken the divorce of German agriculture from English manufactures, after that Germany has pursued the path of perfecting her industry for twenty years, and has made enormous sacrifices for this object, it would betoken political blindness if Germany were now, owing to the abolition of the English corn laws, to abstain in any degree from pursuing her great national career. Indeed, we are firmly convinced that in such a case it would be necessary for Germany to increase her protective duties in the same proportion in which the English manufactories would derive advantage from the abolition of the corn laws as compared with those of Germany. Germany can for a long time follow no other policy in respect to England than that of a less advanced manufacturing nation which is striving with all her power to raise herself to an equal position with the most advanced manufacturing nation. Every other policy or measure than that, involves the imperilling of the German nationality. If the English are in want of foreign corn or timber, then they may get it in Germany or where else they please. Germany will not on that account any the less protect the advances in industry which she has made up to this time, or strive any the less to make future advances. If the British will have nothing to do with German grain and timber, so much the better. In that case the industry, the navigation, the foreign trade of Germany will raise their heads so much the quicker, the German internal means of transport will be so much the sooner completed, the German nationality will so much the more certainly rest on its natural foundation. Perhaps Prussia may not in this way so soon be able to sell the corn and timber of her Baltic provinces at high prices as if the English markets were suddenly opened to her. But through the completion of the internal means of transport, and through the internal demand for agricultural produce created by the manufactories, the sales of those provinces to the interior of Germany will increase fast enough, and every benefit to these provinces which is founded on the home demand for agricultural produce will be gained by them for all future time. They will never more have to oscillate as heretofore between calamity and prosperity from one decade to another. But further, as a political power Prussia will gain a hundred-fold more in concentrated strength in the interior of Germany by this policy than the material values which she sacrifices for the moment in her maritime provinces, or rather invests for repayment in the future.

The object of the English ministry in this report is clearly to obtain the admission into Germany of ordinary English woollen and cotton fabrics, partly through the abolition or at least modification of charging duties by weight, partly through the lowering of the tariff, and partly by the admission of the German grain and timber into the English market. By these means the first breach can be made in the German protective system. These articles of ordinary use (as we have already shown in a former chapter) are by far the most important, they are the fundamental element of the national industry. Duties of ten per cent. ad valorem, which are clearly aimed at by England, would, with the assistance of the usual tricks of under declaration of value, sacrifice the greater part of the German industry to English competition, especially if in consequence of commercial crises the English manufacturers were sometimes induced to throw on the market their stocks of goods at any price. It is therefore no exaggeration if we maintain that the tendency of the English proposals aims at nothing less than the overthrow of the entire German protective system, in order to reduce Germany to the position of an English agricultural colony. With this object in view, it is impressed on the notice of Prussia how greatly her agriculture might gain by the reduction of the English corn and timber duties, and how unimportant her manufacturing interest is. With the same view, the prospect is offered to Prussia of a reduction of the duties on brandy. And in order that the other states may not go quite empty away, a five per cent. reduction of the duties on Nüremberg wares, children's toys, eau de Cologne, and other trifles, is promised. That gives satisfaction to the small German states, and also does not cost much.

The next attempt will be to convince the German governments, by means of this report, how advantageous to them it would be to let England spin cotton and linen yarns for them. It cannot be doubted that hitherto the policy adopted by the Union, first of all to encourage and protect the printing of cloths and then weaving, and to import the medium and finer yarns, has been the right one. But from that it in nowise follows that it would continue to be the right one for all time. The tariff legislation must advance as the national industry advances if it is rightly to fulfil its purpose. We have already shown that the spinning factories, quite apart from their importance in themselves, yet are the source of further incalculable benefits, inasmuch as they place us in direct commercial communication with the countries of warm climate, and hence that they exercise an incalculable influence on our navigation and on our export of manufactures, and that they benefit our manufactories of machinery more than any other branch of manufacture. Inasmuch as it cannot be doubted that Germany cannot be hindered either by want of water power and of capable workmen, or by lack of material capital or intelligence, from carrying on for herself this great and fruitful industry, so we cannot see why we should not gradually protect the spinning of yarns from one number to another, in such a way that in the course of five to ten years we may be able to spin for ourselves the greater part of what we require. However highly one may estimate the advantages of the export of grain and timber, they cannot nearly equal the benefits which must accrue to us from the spinning manufacture. Indeed, we have no hesitation in expressing the belief that it could be incontestably proved, by a calculation of the consumption of agricultural products and timber which would be created by the spinning industry, that from this branch of manufacture alone far greater benefits must accrue to the German landowners than the foreign market will ever or can ever offer them.

Dr. Bowring doubts that Hanover, Brunswick, the two Mecklenburgs, Oldenburg, and the Hanse Towns will join the Union, unless the latter is willing to make a radical reduction in its import duties. The latter proposal, however, cannot be seriously considered, because it would be immeasurably worse than the evil which by it, it is desired to remedy.

Our confidence in the prosperity of the future of Germany is, however, by no means so weak as that of the author of the report. Just as the Revolution of July has proved beneficial to the German Commercial Union, so must the next great general convulsion make an end of all the minor hesitations by which these small states have hitherto been withheld from yielding to the greater requirements of the German nationality. Of what value the commercial unity has been to the nationality, and of what value it is to German governments, quite apart from mere material interests, has been recently for the first time very strongly demonstrated, when the desire to acquire the Rhine frontier has been loudly expressed in France.

From day to day it is necessary that the governments and peoples of Germany should be more convinced that national unity is the rock on which the edifice of their welfare, their honour, their power, their present security and existence, and their future greatness, must be founded. Thus from day to day the apostasy of these small maritime states will appear more and more, not only to the states in the Union, but to these small states themselves, in the light of a national scandal which must be got rid of at any price. Also, if the matter is intelligently considered, the material advantages of joining the Union are much greater for those states themselves than the sacrifice which it requires. The more that manufacturing industry, that the internal means of transport, the navigation, and the foreign trade of Germany, develop themselves, in that degree in which under a wise commercial policy they can and must be developed in accordance with the resources of the nation, so much the more will the desire become more vigorous on the part of those small states directly to participate in these advantages, and so much the more will they leave off the bad habit of looking to foreign countries for blessings and prosperity.

In reference to the Hanse Towns especially, the spirit of imperial citizenship of the sovereign parish of Hamburg in no way deters us from our hopes. In those cities, according to the testimony of the author of the report himself, dwell a great number of men who comprehend that Hamburg, Bremen, and Lubeck are and must be to the German nation that which London and Liverpool are to the English, that which New York, Boston, and Philadelphia are to the Americans—men who clearly see that the Commercial Union can offer advantages to their commerce with the world which far exceed the disadvantages of subjection to the regulations of the Union, and that a prosperity without any guarantee for its continuance is fundamentally a delusion.

What sensible inhabitant of those seaports could heartily congratulate himself on the continual increase of their tonnage, on the continual extension of their commercial relations, if he reflected that two frigates, which coming from Heligoland could be stationed at the mouths of the Weser and the Elbe, would be in a position to destroy in twenty-four hours this work of a quarter of a century? But the Union will guarantee to these seaports their prosperity and their progress for all future time, partly by the creation of a fleet of its own and partly by alliances. It will foster their fisheries, secure special advantages to their shipping, protect and promote their foreign commercial relations, by effective consular establishments and by treaties. Partly by their means it will found new colonies, and by their means carry on its own colonial trade. For a union of States comprising thirty-five millions of inhabitants (for the Union will comprise that number at least when it is fully completed), which owing to an annual increase of population of one and a half per cent. can easily spare annually two or three hundred thousand persons, whose provinces abound with well-informed and cultivated inhabitants who have a peculiar propensity to seek their fortune in distant countries, people who can take root anywhere and make themselves at home wherever unoccupied land is to be cultivated, are called upon by Nature herself to place themselves in the first rank of nations who colonise and diffuse civilisation.

The feeling of the necessity for such a perfect completion of the Commercial Union is so universally entertained in Germany, that hence the author of the report could not help remarking, 'More coasts, more harbours, more navigation, a Union flag, the possession of a navy and of a mercantile marine, are wishes very generally entertained by the supporters of the Commercial Union, but there is little prospect at present of the Union making head against the increasing fleet of Russia and the commercial marine of Holland and the Hanse Towns.' Against them certainly not, but so much the more with them and by means of them. It lies in the very nature of every power to seek to divide in order to rule. After the author of the report has shown why it would be foolish on the part of the maritime states to join the Union, he desires also to separate the great seaports from the German national body for all time, inasmuch as he speaks to us of the warehouses of Altona which must become dangerous to the warehouses of Hamburg, as though such a great commercial empire could not find the means of making the warehouses of Altona serviceable to its objects. We will not follow the author through his acute inferences from this point; we will only say, that if they were applied to England, they would prove that London and Liverpool would increase their commercial prosperity in an extraordinary degree if they were separated from the body of the English nation. The spirit which underlies these arguments is unmistakably expressed in the report of the English consul at Rotterdam. 'For the commercial interests of Great Britain,' says Mr. Alexander Ferrier at the end of his report, 'it appears of the greatest possible importance that no means should be left untried to prevent the aforesaid states, and also Belgium, from entering the Zollverein, for reasons which are too clear to need any exposition.' Who could possibly blame Mr. Ferrier for speaking thus, or Dr. Bowring for speaking thus, or the English ministers for acting as the others speak? The national instinct of England speaks and acts through them. But to expect prosperity and blessing to Germany from proposals which proceed from such a source as that, would appear to exceed even a decent degree of national good nature. 'Whatever may happen,' adds Mr. Ferrier to the words above quoted, 'Holland must at all times be considered as the main channel for the commercial relations of South Germany with other countries.' Clearly Mr. Ferrier understands by the term 'other countries, merely England; clearly he means to say that if the English manufacturing supremacy should lose its means of access to Germany or the North Sea and the Baltic, Holland would still remain to it as the great means of access by which it could predominate over the markets for manufactured goods and colonial produce of the south of Germany.

But we from a national point of view say and maintain that Holland is in reference to its geographical position, as well as in respect to its commercial and industrial circumstances, and to the origin and language of its inhabitants, a German province, which has been separated from Germany at a period of German national disunion, without whose reincorporation in the German Union Germany may be compared to a house the door of which belongs to a stranger: Holland belongs as much to Germany as Brittany and Normandy belong to France, and so long as Holland is determined to constitute an independent kingdom of her own, Germany can as little attain independence and power as France would have been enabled to attain these if those provinces had remained in the hands of the English. That the commercial power of Holland has declined, is owing to the unimportance of the country. Holland will and must also, notwithstanding the prosperity of her colonies, continue to decline, because the nation is too weak to support the enormous expense of a considerable military and naval power. Through her exertions to maintain her nationality Holland must become more and more deeply involved in debt. Notwithstanding her great colonial prosperity, she is and remains all the same a country dependent on England, and by her seeming independence she only strengthens the English supremacy. This is also the secret reason why England at the congress of Vienna took under her protection the restoration of the Dutch seeming independence. The case is exactly the same as with the Hanse Towns. On the side of England, Holland is a satellite for the English fleet—unite it with Germany, she is the leader of the German naval power. In her present position Holland cannot nearly so well derive profit from her colonial possessions as if they became a constituent part of the German Union, especially because she is too weak in the elements which are necessary for colonisation—in population and in mental powers. Further than this, the profitable development of her colonies, so far as that has hitherto been effected, depends for the most part on German good nature, or rather on the nonacquaintance of the Germans with their own national commercial interests; for while all other nations reserve their market for colonial produce for their own colonies and for the countries subject to them, the German market is the only one which remains open to the Dutch for the disposal of their surplus colonial produce. As soon as the Germans clearly comprehend that those from whom they purchase colonial produce must be made to understand that they on their part must purchase manufactured goods from Germany under differentially favourable treatment, then the Germans will also clearly see that they have it in their power to compel Holland to join the Zollverein. That union would be of the greatest advantage to both countries. Germany would give Holland the means not only of deriving profit from her colonies far better than at present, but also to found and to acquire new colonies. Germany would grant special perferential privileges to the Dutch and Hanseatic shipping, and grant special preferential privileges to Dutch colonial produce in the German markets. Holland and the Hanse Towns, in return, would preferentially export German manufactures, and preferentially employ their surplus capital in the manufactories and the agriculture of the interior of Germany.

Holland, as she has sunk from her eminence as a commercial power because she, the mere fraction of a nation, wanted to make herself pass as an entire nation; because she sought her advantage in the oppression and the weakening of the productive powers of Germany, instead of basing her greatness on the prosperity of the countries which lie behind her, with which every maritime state must stand or fall; because she sought to become great by her separation from the German nation instead of by her union with it; Holland can only again attain to her ancient state of prosperity by means of the German Union and in the closest connection with it. Only by this union is it possible to constitute an agricultural manufacturing commercial nationality of the first magnitude.

Dr. Bowring groups in his tables the imports and exports of the German Customs Union with the Hanse Towns and Holland and Belgium all together, and from this grouping it clearly appears how greatly all these countries are dependent on the English manufacturing industry, and how immeasurably they might gain in their entire productive power by union. He estimates the imports of these countries from England at 19,842,121l. sterling of official value, or 8,550,347l. of declared value, but the exports of those countries to England (on the other hand) at only 4,804,491l. sterling; in which, by the way, are included the great quantities of Java coffee, cheese, butter, &c. which England imports from Holland. These totals speak volumes. We thank the Doctor for his statistical grouping together—would that it might betoken a speedy political grouping.

Chapter XXXV

CONTINENTAL POLITICS.

THE highest ultimate aim of rational politics is (as we have shown in our Second Book) the uniting of all nations under a common law of right, an object which is only to be attained through the greatest possible equalisation of the most important nations of the earth in civilisation, prosperity, industry, and power, by the conversion of the antipathies and conflicts which now exist between them into sympathy and harmony. But the solution of this problem is a work of immensely long duration. At the present time the nations are divided and repelled from one another by manifold causes; chief among these are conflicts about territory. As yet, the apportionment of territory to the European nations does not correspond to the nature of things. Indeed, even in theory, people are not yet agreed upon the fundamental conditions of a just and natural apportionment of territory. Some desire that their national territory should be determined according to the requirements of their metropolis without regard to language, commerce, race, and so forth, in such a way that the metropolis should be situated in the centre and be protected as much as possible against foreign attacks. They desire to have great rivers for their frontiers. Others maintain, and apparently with greater reason, that sea-coasts, mountains, language, and race, constitute better frontiers than great rivers. There still are nations who are not in possession of those mouths of rivers and sea-coasts which are indispensable to them for the development of their commerce with the world and for their naval power.

If every nation was already in possession of the territory which is necessary for its internal development, and for the maintenance of its political, industrial, and commercial independence, then every conquest of territory would be contrary to sound policy, because by the unnatural increase of territory the jealousy of the nation which is thus encroached upon would be excited and kept alive, and consequently the sacrifices which the conquering nation would have to make for retaining such provinces would be immeasurably greater than the advantages accruing from their possession. A just and wise apportionment of territory is, however, at this day not to be thought of, because this question is complicated by manifold interests of another nature. At the same time it must not be ignored that rectification of territory must be reckoned among the most important requirements of the nations, that striving to attain it is legitimate, that indeed in many cases it is a justifiable reason for war.

Further causes of antipathy between the nations are, at the present time, the diversity of their interests in respect to manufactures, commerce, navigation, naval power, and colonial possessions, also the difference in their degrees of civilisation, of religion, and of political condition. All these interests are complicated in manifold ways through the interests of dynasties and powers.

The causes of antipathy are, on the other hand, causes of sympathy. The less powerful nations sympathise against the most powerful, those whose independence is endangered sympathise against the aggressors, territorial powers against naval supremacy, those whose industry and commerce are defective sympathise against those who are striving for an industrial and commercial monopoly, the half-civilised against the civilised, those who are subjects of a monarchy against those whose government is entirely or partially democratic.

Nations at this time pursue their own interests and sympathies by means of alliances of those who are like-minded and have like interests against the interests and tendencies which conflict with theirs. As, however, these interests and tendencies conflict with one another in various ways, these alliances are liable to change. Those nations who are friends to-day may be enemies to-morrow, and vice versâ, as soon as ever some one of the great interests or principles is at stake by which they feel themselves repelled from or drawn towards one another.

Politicians have long felt that the equalisation of the nations must be their ultimate aim. That which people call the maintenance of the European balance of power has always been nothing else than the endeavours of the less powerful to impose a check on the encroachments of the more powerful. Yet politics have not seldom confounded their proximate object with their ultimate one, and vice versá.

The proximate task of politics always consists in clearly perceiving in what respect the alliance and equalisation of the different interests is at the moment most pressing, and to strive that until this equalisation is attained all other questions may be suspended and kept in the background.

When the dynastic, monarchic, and aristocratic interests of Europe allied themselves against the revolutionary tendencies of 1789, disregarding all considerations regarding power and commerce, their policy was a correct one.

It was just as correct when the French Empire introduced the tendency of conquest in place of that of revolution.

Napoleon sought by his Continental system to establish a Continental coalition against the predominant naval and commercial power of England; but in order to succeed, it was necessary for him, first of all, to take away from the Continental nations the apprehension of being conquered by France. He failed, because on their part the fear of his supremacy on land greatly outweighed the disadvantages which they suffered from the naval supremacy.

With the fall of the French Empire, the object of the great alliance ceased. From that time forth, the Continental powers were menaced neither by the revolutionary tendencies nor by the lust of conquest of France. England's predominance in manufactures, navigation, commerce, colonial possessions, and naval power, had, on the other hand, enormously increased during the conflicts against the Revolution and against the French conquest. From that time forth, it became the interest of the Continental powers to ally themselves with France against the commercial and naval predominance. Solely from fear of the skin of the dead lion, the Continental powers did not heed sufficiently the living leopard who had hitherto fought in their ranks. The Holy Alliance was a political error.

This error also brought about its own punishment through the revolution of Italy. The Holy Alliance had unnecessarily called into life a counter force which no longer existed, or which at least would not for a long time have revived again. Fortunately for the Continental powers, the dynasty of July contrived to appease the revolutionary tendency in France. France concluded the alliance with England in the interests of the dynasty of July and of strengthening the constitutional monarchy. England concluded it in the interest of the maintenance of her commercial supremacy.

The Franco-English alliance ceased as soon as ever the dynasty of July and the constitutional monarchy in France felt themselves to be sufficiently firmly established; but, on the other hand, the interests of France in respect of naval power, navigation, commerce, industry, and foreign possessions came again more to the front. It is clear that France has again an equal interest with the other Continental powers in these questions, and the establishing of a Continental alliance against the naval predominance of England appears to be becoming a question of the day, provided the dynasty of July can succeed in creating perfect unity of will between the different organs of State administration, also to thrust into the background those territorial questions which are excited by the revolutionary tendencies, and entirely to appease in the minds of the monarchical Continental powers the fear of the tendencies of France towards revolution and aggression.

Nothing, however, at this time so greatly impedes a closer union of the continent of Europe as the fact that the centre of it still never takes the position for which it is naturally fitted. Instead of being a mediator between the east and the west of that continent, on all questions of arrangement of territory, of the principle of their constitutions, of national independence and power, for which it is qualified by its geographical position, by its federal constitution which excludes all apprehension of aggression in the minds of neighbouring nations, by its religious toleration, and its cosmopolitical tendencies, and finally by its civilisation and the elements of power which it possesses, this central part of Europe constitutes at present the apple of discord for which the east and the west contend, while each party hopes to draw to its own side this middle power, which is weakened by want of national unity, and is always uncertainly wavering hither and thither.

If, on the other hand, Germany could constitute itself with the maritime territories which appertain to it, with Holland, Belgium, and Switzerland, as a powerful commercial and political whole—if this mighty national body could fuse representative institutions with the existing monarchical, dynastic, and aristocratic interests, so far as these are compatible with one another—then Germany could secure peace to the continent of Europe f