FREE TRADE, in current use restricted to mean the interchange of commodities between countries politically independent, without ob stacles specifically intended to restrict the trade. All taxes on imports, which form a large part of the revenue of most civilized governments to that extent impede the freedom of trade; but the essence of the free-trade sytem is, that they shall not be arranged to °protect" the cor respondent home production, or, as free-traders would put it, to divert capital into otherwise unprofitable channels at the expense of the con sumer.' This is accomplished by selecting arti cles not possible to produce at home (as tropi-• cal products in a temperate country); by for bidding their production at home (as tobacco in England), foregoing certain new home in dustries for the sake of sparing existent ones; or by laying corresponding internal taxes.
That free trade was never even formulated as a theory till a few generations ago, nor adopted as a policy till within two generations, that it is even now practised in its fulness by only one country, and nearly so by only two more, and that the former, its chief exponent, is at this moment rent by a fierce struggle to re sume its old protective system, indicates some thing more back of this question than the mere state of economic enlightenment. The truth is, free trade is a matter of business, and all states have prior interests which business only subserves, and to which it is sometimes par tially antagonistic. National existence always comes first, national prestige usually, national rivalry and jealousy frequently. In the Middle Ages war was the normal condition of most countries and the constant liability of the rest; hence everything had to be subordinated to di versified resources in war, whence a nation's supplies might be suddenly shut off. As the age of neutrality and the localization of wars has supervened, this danger has practically passed; but masses of capital and of labor se each country, which its rulers cannot politically disregard, can still be injured by the hostile tariffs which are the modern substitutes for fleets and armies of conquest. The problem at issue is, whether these injure the target as much as the marksman; free-traders have one answer, protectionists another. But the pro tectionist interest is always much more concen trated and effective than the free-trade: it is that of masses of capital embarked in certain enterprises and fighting for life, with all the masses of people behind it whom it maintains, and who would be temporarily injured by a readjustment. Protection is led by those who are interested in terms of millions, free trade mostly by those who are interested relatively in terms of pennies. The contest is so unequal that it is only wonderful that any circumstances have ever given the latter even a temporary victory.
In Europe till the 17th century, and in most parts of that till the 18th, the only way the bounds of free trade were extended was by conquest; and even that did not always effect it, old provinces and feudalities retaining their rights to separate custom-houses — primarily an octroi, but used for Most coun tries were cut up by dozens of these vexatious boundary lines, crippling all internal trade, and making each little district a special and self subsistent world. Under Louis XIV Colbert (1665-83) swept away many of these old pro vincial barriers, to the enormous development of French industry and trade, and consequently revenue; but he could not touch the chief portion. Already in 1623 De la Croix had pro pounded the theory of free trade; and in Eng land it was urged in 1696 by Nicholas Barbon, one of the founders of the life-insurance sys tem. But about the middle of the 18th century it sprung into life at once in two quarters, the lesser influence at the time having been vastly more potent in the end: with the French "Phys iocrats" and Adam Smith. The theory of the former —whose founder was Cantillon and the chief heads Quesnay and De Gournay— was enthusiastically taken up by a group of able thinkers and men of affairs, and in 1774 put partially in practice by Turgot, in free trade for grain throughout France. Their method of ap
proach was curious : they held that as com merce does nothing but transfer from hand to hand wealth already existing, without creating new, the gains of the trading class are at the expense of the only real wealth, the products of the earth; it is therefore to the community's interest that they should be as small as possible, and to this end commerce should take the shortest and most natural channels, as this leaves the 'net product') of society the highest. Meantime in 1752-63, Adam Smith, a professor of moral philosophy at the University of Glas gow, had been working out a theory of the social progress of nations; and, as one branch of it, he investigated the causes of their material well-being. He was anything but a man of business, but he had a Scotch intellect which reasoned truly, and his society included many keen and able merchants and importers of the day. From them and his own mind he pro duced and fortified the theory that dams in a stream could never create water, but only force it into other channels. He visited France and met the Physiocrat leaders, and received doubt less new arguments and fresh facts. In 1775 he published his 'Wealth of Nations,) perhaps the most epoch-making single book of all time; for it created political economy as a science and free trade as a practical system. He took separately each kind of protective duty in use or advocated, and proved that each did harm in the very line it was supposed to do good. But he saw no hope of free trade ever coming about in England, so dominating was the influence of invested capital and of °furious and disappointed monopolists)) But a curious change in indus trial affairs inverted the position of his friends and enemies. His views had been favored by the landed interest and disfavored by the manu facturers; but the course of business made the agriculturists eager to keep up the duties on grain, which gave them immense profits; while the manufacturers began to be irked by the duties on raw material, which checked their coming dominance of the textile market under the splendid English inventions. The ablest statesmen were on the same side: Shelburne and the younger Pitt were convinced free-traders, and the latter tried to put Irish free trade into the act of Union in 1800. Two decades later the adherents were numerous: Ricardo's 'Politi cal had reinforced Smith's, with greater weight because he was a successful Jewish banker; and London merchants were petitioning to have the shackles taken off trade. The first great success was making William Huskisson president of the board of trade in 1823; he was ignominiously driven from the Cabinet by the Duke of Wellington, but had induced Parliament to free some articles and lighten the duty on others. Thrust aside by more pressing politics, the reform stood still till 1836, when a failure of crops made it once more a burning question. Never was an issue so sharply marked out: the people were sacking the towns for bread while grain was taxed to enrich the landlords. Meantime manufacturers, increasingly the chief reliance of the national revenues, were kept out of foreign markets by having to pay higher for raw materials and more for wages. Local Anti-Corn-Law Asso ciations from 1837 on were fused into the Na tional Anti-Corn League in 1839; at its head were Richard Cobden and John Bright, both partners in Manchester calico-printing works; whence the term 'Manchester School') for sup posed believers in various doctrines mistakenly attributed to Cobden. The struggle convulsed England, and almost broke the bonds of social order; but the final blow to the old system was the Irish potato famine in 1845. This shortage made food still higher; and Sir Robert Peel, who had taken office expressly to resist the repeal of the Corn Laws, remained in it to re peal them himself, 26 June 1846—most of the duty at once, the rest by a sliding scale within three years.