17. Geographical Direction of Railroads.

18. Some Important Decisions.

19. Short Appendix. Report of Railroad Commissions,

etc.

In any intelligent endeavour to appraise at its true value the merits of any particular sphere of investment, the institutions of any given country are at least as important as its intrinsic resources. If the habits of the people, its social machinery, legislative procedure and jurisprudence be unsettled or unsatisfactory, the value of its internal resources is, from the investor's point of view, indefinitely depreciated and discounted. If there is much that is defective in American institutions, there is also much that is re-assuring. Of course, divergences of opinion on so large a subject must, of necessity, be broad and frequent. But there are data easily accessible to everybody which may be profitably used in the formation of an approximately correct judgment. The following observations are addressed to this view of the subject.

CHAPTER II.

FAIR AND FREE TRADE.

A GOOD deal has of late years been said by the uncompromising champions of free trade about the gross absurdity of the rejection of their doctrines by the American people. No doubt, on both sides of this question, many good arguments might be urged, which it is not the purpose of the present notes to set forth. It may however be said shortly that, in the writer's opinion, it has been a substantial advantage to England that America has not entered into commercial competition with her on the basis of free trade. As a matter of course, every nation which competes in the great commercial race is handicapped by a variety of conditions, which the political economist can formulate with some approach to correctness. Notable among these conditions are internal resources, area, soil and climate, the energy of the people, their law-abiding instincts, and their willingness to give to superior skill and energy the compensation to which it is entitled. Whatever superiority England may have possessed in past times, in respect of the character and habits of its working population, it can scarcely be stated-with any semblance of confidence that this superiority will be permanent. In past times the classes in England who excelled in skill and endurance produced a larger and more valuable output in their respective spheres of industry than any other people in the world.

It was precisely because they did so that they were able to undersell foreign competitors in foreign markets, and especially in newly discovered spheres of enterprise. The policy of free trade, as enunciated by Messrs. Cobden and Bright, was at all events robust in fibre and liberal in aspiration. On their theory, it was to be competent to the consumer to buy whatever he required in the cheapest market. Raw materials for specific industries were to come to him untaxed, and the necessaries of life, which he consumed while converting raw materials into finished products, were to be relatively cheap. But the modern Liberal—or shall we say Socialist ?—school disregards the doctrines of free trade which favour free contract and promote self-help. Contribution in the form of school fees was an important element in the arguments offered in support of compulsory education. Offer the people free education, and you at once diminish the value, in their eyes, of the commodity supplied, and invite them to be wholly dependent, instead of partially self-supporting. Offer the poorer classes of the people a subsidy from the State as a means of livelihood, instead of stimulating the thrift and responsibility underlying the duties of good citizenship, and you sap the morals and weaken the backbone of that very labouring class which it is the delight of the demagogue to flatter and mislead. If the lessons derivable from many years' experience in the imperfect administration of a defective poor-law have failed to convince the Socialist school that its champions are preparing the downfall of England's commercial supremacy, "neither will they be persuaded though one rose from the dead." Limit by statutory enactment the hours of labour, and you reduce, at one stroke, the productive capacity of a community wich is probably,

taken as a whole, the most efficient producer in the world. And what do you get in return for this gratuitous legislative interference? Certainly not an increase in the national wealth. For the German and Belgian artisan will work longer hours for less wages; and, if so, the capitalist who employs him can, with a fair profit, take up contracts which the English employer of labour could not safely touch. You certainly do not benefit the skilled artisan of the highest class. It is his ambition to utilize his superior physique, his great power of endurance, and the valuable skill which enables him to produce more rapidly as well as more effectually than the average workman, for the advancement in life of himself and his family. To limit the hours of labour is to level him down against his will.

It is indeed said that, by authoritatively restricting the hours devoted to production, you will improve the happiness of the people and their physical and material welfare. Nobody doubts that, in a certain limited sense, less work and more play is reasonably desired by every working bee in the great national hive. The Saturday half-holiday, and such additional periods of rest and refreshment as may be voluntarily agreed upon between the employer and employed, are doubtless tonic and wholesome arrangements. But is it quite clear that legislative restriction of the hours of labour will, in the long run, tend to a beneficial result, without involving a serious set-off in point of disadvantage?

Suppose the limitation of production by statutory enactment causes the withdrawal of capital from current enterprise, and the transfer of valuable contracts from English to foreign artisans. You will have compelled an industrious community to work below its maximum

productive power; and you will practically transfer, by legislative enactment, a large portion of the work, which it would gladly have performed, to other producing communities in which supply and demand are permitted to take care of themselves. You will have taught a selfreliant community to look for its prosperity to the State, instead of to its own unassisted energy and skill. Against the improved happiness, which your State socialism confers on its nurselings, you must set off the diminution of vigour which arises from dependence. If the survival of the fittest-subject to certain reasonable and humane limitations-be the law of societies and nations, the least governed is, in the long run, the most likely to survive. Whom then do you benefit by your restrictive legislation? Only the demagogue, who hopes to attain office by the votes of the ignorant whom he has misled, and the officers of his pet organizations, who will be paid liberal salaries for drilling ignorant voters into the acceptance of untenable doctrines. Neither history nor analogy affords sufficient ground for believing that the temporary protection of specific industries tends to demoralize or pauperize a people in the same sense or to the same extent as State socialism. It is not denied by the advocates of protection in this country that the right of the consumer to buy what he needs in the cheapest market is sustained by the general tenour of free institutions. But they argue that other considerations must be taken into account. These may be briefly summarized as follows:

1. The statesman who desires the welfare of the country for which he legislates must have regard to the America, not exclusively of to-day or to-morrow, but to the America of twenty-five, fifty, one hundred years hence. The international competition for the commercial supremacy of the