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 the pons asinorum, or "asses' bridge" of the Fair Trade controversy. Gentlemen, I reiterate that assertion, and, with your permission, we will endeavour to pass over this bridge, hand in hand, as it were.

The Fair Traders say something like this:—John Bull buys of the foreigner 411 million pounds' worth of goods, and sells him only 286 million pounds' worth, and they deduce from this that there is a balance of trade against him of 125 millions, which is a loss to him, by which he is so much the poorer; and that he is thus losing his wealth to the benefit of the foreigner, who has the best of the trade. And they maintain further that John Bull is getting poorer and poorer; that if the system goes on it must end in his ruin; and that all this is the genuine and unavoidable outcome of one-sided Free Trade. The Free Trader, as I have said, ridicules this view. He asks, in the first place, why the bare fact of our importing more than we export should be held to involve a loss—seeing that to get in more than one gives out appears to ordinary minds the only way of realising a profit.

And for the following reasons:—

In my pamphlet I asked this question—If a merchant export £100 worth of goods, and in exchange for them, imports goods worth only £100, how can he do otherwise than make a dead loss under the heads of freight, insurance, interest, and profits? Let us suppose the goods cost him £100 at Liverpool. He exports them to some foreign country, and, of course, has to pay freight and insurance. Let us say this comes to 10 per cent. On arrival at the foreign market the goods must therefore be worth £110. They must be sold, of course, and let us suppose the proceeds re-invested in goods for importation here. Again comes in the charge for freight, another 10 per cent., which, added to the £110, makes the goods worth £121 on arrival at our ports, independently of interest on the money used, and what our merchant may lay on as profit.

And so the £100 of exports comes back as £121, at least, of imports, and must do so as long as trade is carried on.

In further illustration, let me quote from Mr. J. K. Cross's speech in the House on the 12th of August. He