The term "free trade" was used in many different senses in contemporary literature and practice, but scarcely at all in its modern sense. It was applied to the freedom of intercourse be tween states as secured by treaty, to privileges granted to alien traders by which they were put on equal terms with the denizens of the country. It sometimes suggested illegality, piracy and un fair avoidance of established regulations; it was applied to the "interlopers" who carried on free trade with no regard to the regulations of the chartered companies, and to the smugglers who escaped the payment of duties levied by the state. In modern times free trade does not necessarily involve the meaning applied to it in England, but the policy of free exchange, and the levelling up of conditions by means of a tariff or other regulations to se cure equality of competition between the countries concerned. Free importation in the modern English sense is peculiar to Eng land, just as in England the term protection has come to be restricted in its application to the imposition of duties. It is also to be noted that the role played by the colonies under the mercantile system was roughly that which Cobden and his fol lowers expected both colonies and foreign countries to play when the United Kingdom adopted free importation, and if the mer cantilists sometimes imposed special regulations to direct colonial trade into channels considered favourable for the development of the mother country, the adherents of the Manchester school not infrequently used the power and influence of England to keep the economic activities of neutral and eastern countries in a stage considered favourable to the interests of British industry and to prevent the due expansion of those countries on lines more in accordance with the wishes of the people and the national resources of those countries.
There is a further distinction between the older system and Cobdenism. Both were forms of "national" as distinct from "im perial" policy, but under the former the colonies had a great part to play. They were in a position entirely different from that of foreign countries, in relation to the United Kingdom; and the system of preferences which then existed would have lent itself to the building up of the empire. Under the Cobdenite system the colonies had no part to play at all different from that of foreign countries, and the "interests of the consumer" took the place of the "interests of the commonwealth" as the basis of public policy. The older system looked forward, as it were, to the establishment of a great empire. Cobdenism was not really internationalism viewed from the point of view of British policy, but nationalism in a narrow, insular sense and the policy of England under its influence was based upon the economic monopoly secured by the rapid progress of invention. The influence of the new industrial ism broke the cautious continuity of British policy. Walpole and Pitt revised the fiscal system by removing duties on raw material and reducing other duties with the view of increasing revenue. Huskisson revised the fiscal system in much the same spirit. The measures throughout this period were more in accordance with the cautious and statesmanlike line of Adam Smith's Wealth of Na tions rather than with the later economists. If this movement had not been interrupted England would probably have retained the means of conducting international negotiations for consolidating the empire and providing a wide basis for revenue without any violent changes, but under later influences the policy of free im portation was carried to extremes. People pursued the logical consequences of free trade rather than the practical interests of the country. The free traders on the one hand and the protec tionists on the other were in violent and direct opposition on grounds of abstract theory rather than practical policy. But
there is no important economist of the free trade school who does not admit important exceptions to the doctrine of free importation. The idea that all economists of that school were Cobdenites is without foundation. Reference has been made above to Adam Smith and his cautious attitude, but the great classical economists fairly generally admitted cases in which duties on imported manu factures might be desirable. Allowing therefore for the very dif ferent philosophical conceptions which were the basis of economics at that time as compared with our own, and the very different economic conditions which prevailed, there is not so much to distinguish the attitude of the writers of the early part of the nineteenth century from those of our own day in regard to practical policy as may be thought from manifestations of feeling during the fiscal controversy. The views of economists must be distinguished from the use made of them by political and social controversialists. The Ricardian theory of rent, the high prices arid the practical difficulties of the times gave such people mag nificent opportunity for working up a crusade against landlords, and the free trade movement which at first had been a most reasonable and proper effort to get rid of tiresome obsolete re strictions, became in the hands of extremists an instrument of social and political revolution. It is in England especially that the free trade movement was directed mainly against the landlord class and later on the capitalists, and it has grown by natural stages into the socialistic movement of modern times, while pro tectionism in all its branches has been more identified with methods of creating an industrial and commercial state of the modern type.
The qualifications of the free trade doctrine admitted by John Stuart Mill went far to undermine the whole basis of the doc trine. His famous admission in regard to infant industries of a new country could be made to cover a very large proportion of the protectionist expedients adopted in modern countries. The eco nomic conditions and the rapid growth of the United States in the 19th century naturally made an immense impression. It was necessary to work out an explanation for such progress under an economic policy so different from that of England. But his torically speaking, analogies to the development of the United States policy could be found all the world over. The word "new" in regard to industry cannot be confined in its application to the historic position of a country or an industry. It must apply to the stage of organisation of particular industries and if it is once admitted that a high tariff is justified from that point of view, the tariff policy of Europe during the nineteenth century finds much justification from the writings of the economists. But the admission could easily be extended to cover many other important steps of policy. The case may be taken of the country whose in dustries have been actually devastated by war or destroyed in the sense that the existing organisation for production had broken up, markets lost by the diversion of great works into activities for which they were not built and where vast works of reconstruction are required to bring them back to the peace efficiency which they once had. On Mills' admission it is difficult to deny the claim for protection while reorganisation is being carried out. The question becomes a matter of practical expediency, when we have to con sider whether in given circumstances duties should or should not be imposed as an instrument of organisation. Obviously the policy to be pursued cannot be decided on purely abstraft grounds.