to labour of home over foreign trade, and of the differences in advantage of various kinds of foreign trade. Indeed, such passages have already been cited; to neglect them is to overlook at least half of the fundamental principles of the Wealth of Nations and considerably more than half of the difficulties. Those who rely only on the argument from cheapness to the consumer are met by arguments from Adam Smith himself, stated with equal vigour, on the advantage of the employment of home labour-and Adam Smith the free trader is confronted by Adam Smith the protectionist. Obviously one of the Adam Smiths must be silenced or the two must be reconciled. The real Adam Smith flattered himself he had effected a reconciliation; he did not feel the discomfort of struggling contradictions. He set himself to prove by an elaborate investigation that the various forms of protection to labour were either useless or hurtful; the great body of the people gained on his view not only as consumers but as producers from the freedom of trade. But as already shown this latter position (and though to a less extent the former also) needs the verification of experience, and from generation to generation experience changes or may change. What we have to show is that in our day, as Adam Smith showed was the case in his day under freedom of trade, the productive powers of the nation (not of the world) will be used to the greatest advantage; that as great a quantity of capital as possible will be employed within the country; that the land will be used to the best advantage; and that the various

forms of labour will be employed in the best manner from the national point of view. And we have to consider also what is the effect on our arguments if for the nation we substitute the empire. In this demonstration no repetition of postulates and axioms can dispense with the appeal to experience.

The monopoly of the home market is only possible through a number of restraints and restrictions imposed by the state. And before an opinion can be formed of the general advantages of intervention, account must be taken of difficulties involved. These difficulties may be summarised under the expression the negative argument for freedom-the subject of the next chapter.

§ 9. Peel and Cobden on Consumers and Producers.

Before proceeding to this topic, the general argument of this present chapter that the interests of both consumers and producers must be considered, may be enforced and illustrated by reference to the two statesmen who had the greatest influence in Parliament and in the country in carrying the repeal of the Corn Laws, namely, Sir Robert Peel and Richard Cobden. The fact that had most influence with Peel was the discovery that for a very long period the agricultural labourer was interested in the price of corn not as a producer but as a consumer.' Peel was a model landlord his yearly tenants refused to accept leases-most interested in the conditions of the people on his estate. Cobden, on

1 See History of the English Corn Laws, by the present writer, p. 101.

the other hand, said of Peel that he took "the least comprehensive and statesmanlike view of his measures when he proposed to lower prices instead of aiming to maintain them by enlarging the circle of exchange."

1

1 Morley's Life of Cobden, vol. i. p. 322.

CHAPTER X

THE NEGATIVE ARGUMENT FOR FREEDOM OF TRADE

§ 1. Sidgwick's Critique of Popular Ideas on Free Trade and Protection.

1

THE subject of this chapter may be introduced by a passage from Henry Sidgwick, who could divide a hair between south and south-west side with greater nicety than any Greek sophist or medieval casuist In his chapter on Protection he states that "the ordinary moderate view on the subject-held by practical persons who wish to avoid both extremes -is a curious perversion of the truth, at least on the practical issue most commonly raised. The moderate view is that all protection is theoretically wrong, so far as purely economic considerations are concerned; but that practically a little protection here and there does more good than harm to industry, owing to influences which abstract theory overlooks. I hold, on the contrary, that when the matter is considered from the point of view of abstract theory it is easy to show that protection, under certain not improbable circumstances, would yield a direct economic gain to the protecting country: but that from the 1 Principles of Political Economy, Book III. chap. v.

difficulty of securing, in any actual government, sufficient wisdom, strength, and singleness of aim to introduce protection only so far as it is advantageous to the community and withdraw it inexorably so soon as the public interests require its withdrawal, it is practically best for a statesman to adhere to the broad and simple rule of 'Taxation for revenue only,'-at any rate in a free community where habits of commercial enterprise are fully developed."

§ 2. Adam Smith on Statesmen and their Advisers.

It is clear from the importance assigned by Adam Smith to the employment of labour and capital in the home country that he, at any rate, cannot proceed at once from the cosmopolitan to the national point of view. More than any other economist, he recognised the supreme importance of national interests; and the exceptions to freedom of importation which he explicitly admits may be easily extended to cover a number of theoretical cases.

1

But before putting theory to practice he took account of the elements conveniently summarised under the modern expression, the negative argument for freedom. Influenced by the appeal to experience he distrusted the wisdom, the strength, and the singlemindedness of the statesman, and still more he distrusted the guidance of those who advised the statesman in matters in which they themselves were interested. His attitude will be at once clear from the following significant passages, some of them 1 See below, Chapter XI.