Neutral commerce

“ In a world of tariffs, trade barriers, empire or domestic preferences, and various forms of parochialism from which we are by no means free, I think a rule that it is restraint of trade to enter a foreign market through a separate subsidiary of limited scope is virtually to foreclose foreign commerce of many kinds. ”

“ The relations of a group of men to the outside world ought, whenever possible, to be controlled by a neutral authority. It is here that the state is necessary for adjusting the relations between different trades. The men who make some commodity should be entirely free as regards hours of labor, distribution of the total earnings of the trade, and all questions of business management. But they should not be free as regards the price of what they produce, since price is a matter concerning their relations to the rest of the community. ”

“ We recognize the necessity and propriety of the honest cooperation of capital to meet new business conditions, and especially to extend our rapidly increasing foreign trade, but we condemn all conspiracies and combinations intended to restrict business, to create monopolies, to limit production, or to control prices, and favor such legislation as will effectively restrain and prevent all such abuses, protect and promote competition, and secure the rights of producers, laborers, and all who are engaged in industry and commerce. ”

“ That freedom from restraint is calculated to give the utmost extension to foreign trade, and the best direction to the capital and industry of the country.
That the maxim of buying in the cheapest market and selling in the dearest, which regulates every merchant in his individual dealings, is strictly applicable as the best rule for the trade of the whole nation. [Pg 699]
That a policy founded on these principles would render the commerce of the world an interchange of mutual advantages, and diffuse an increase of wealth and enjoyments among the inhabitants of each State. ”

“ That the countries which are the least favored by nature are those which profit most by mutual exchange.
1. Equalizing the facilities of production is to attack the foundations of mutual exchange. The equalizing of the facilities of production, is not only the shackling of certain articles of commerce, but it is the attacking of the system of mutual exchange in its very foundation principle. ”

“ We turn, then, to the next question, Whether it may be possible to find a firm basis for the maintenance of our commercial and Imperial position in our trade with the other foreign countries?—those which are classed by the Board of Trade, not in all cases correctly, as 'neutral' markets. ”

“ It cuts your commerce like a two-edged sword, involves your neutrality, and prevents your own merchants from going to the same market, the profit [462] on which ultimately centres in Great Britain. There are at this moment British agents in two of your commercial cities, and I suppose more in other parts of the United States as well as in Europe, for they swarm on the industry of all nations. They are acting in concert to carry on this licensed trade with the Spanish colonies, their enemies jeopardizing your neutrality, to the manifest injury of the real American merchants. ”

“ It proves that a balance of trade in imported commodities, excites industry by increasing enjoyments, and by furnishing a surplus for re-exportation; and that it augments wonderfully both national wealth and strength. The abundance of commodities invited by a freedom of commerce, enables the re-exporting merchant to make up cargoes fitted for their destination, more speedily and cheaply, than in ports stripped of variety by commercial restrictions ”

“ This being so, it might obviously be for the mutual advantage of countries to exchange with one another what they could produce against what they could not produce at all or only with difficulty, and not merely thus secure many things which otherwise they must go without, but also greatly increase the total effectiveness of their industry by applying it to the sorts of production best fitted to their conditions. ”

“ Abolish customs duties, and national industry suffers, as we have already seen in the case of sesame; maintain the duties without granting premiums for exportation, and national commerce will be beaten in foreign markets. ”

“ Prices would of course be raised, and the consumer of these foreign goods would either buy less of them, or he would have to pay more for what he wants of them. In the first case, production on the part of the foreigner is checked, and he either gives up his manufacture, and thus loses his purchasing power in the world's markets, and you lose him as a customer—directly or indirectly, as I shall show you presently; or else, being baffled in your market, he turns his attention to neutral markets, competes with and injures you there, and perhaps drives you out of them. ”

“ We invite those merchants and corporations in neutral countries who are importing goods bona fide for their own country's consumption, and not for re-export to our enemies, to sign an agreement to that effect. ”

“ The vulgar theory disregards this benefit, and deems the advantage of commerce to reside in the exports: as if not what a country obtains, but what it parts with, by its foreign trade, was supposed to constitute the gain to it. An extended market for its produce—an abundant consumption for its goods—a vent for its surplus—are the phrases by which it has been customary to designate the uses and recommendations of commerce with foreign countries. ”

“ Other countries showed but a languid desire for the products which were then our staple exports, and we had great need of the foreign wares composing our509 imports. We could not afford even to discriminate against the importation of manufactured goods, with an idea of protecting native manufactures; our manufactures were then so weak that a policy of high protection, to exclude foreign wares, would have caused serious distress to the consumers at home. ”

“ Commerce will regulate itself! But is it not the duty of wise governments to watch its course, and, beforehand, to provide against even distant evils, by prudent legislation stimulating the industry of their own people, and checking the policy of foreign powers as it operates on them? The supply, then, of the subjects of foreign commerce, no less than the supply of consumption at home, requires of us to give a portion of our labor such a direction as will enable us to produce them. ”

“ In order, however, that the people of the respective countries should actually derive this advantage or any advantage from foreign exchange, it would be necessary that the exchanges should be carried on in the general interest for the purpose of giving the people at large the benefit of them, as is done at the present day, when foreign commerce, like other economic undertakings, is carried on by the governments of the several countries. ”

“ The same rule which regulates the relative value of commodities in one country, does not regulate the relative value of the commodities exchanged between two or more countries.
Under a system of perfectly free commerce, each country naturally devotes its capital and labour to such employments as are most beneficial to each. This pursuit of individual advantage is admirably connected with the universal good of the whole. ”

“ Statesmen and people do not yet comprehend the vastness of the commercial interests, nor have the merchants and capitalists yet learned how to combine to prevent the legislative follies of past ages. Commerce is destined to be the great bond of peace between nations, and they will be compelled soon to organize a league to administer international justice, and to protect the vast interests involved in their trade. ”

“ Regulations for the trade of the country, adopted by a foreign Parliament, are enforced without our consent. We are thus confined to certain markets, and are deprived of the power of extending our commerce to all parts of the world when the markets of Britain are unfavorable to our produce, whereby our commercial enterprise is crippled and paralyzed. ”

“ Instead of regarding International Trade as something akin to a force of nature which would always obey certain natural laws regardless of man's interference, the people of the sixteenth and seventeenth centuries tried to regulate their commerce by the help of official decrees and royal laws and financial help on the part of the government. ”

“ Beyond a certain point, the greater the power of trade, the worse it is for commerce. It is nevertheless true that there are certain natural obstacles to direct commerce which can be surmounted only by some kind of intermediate agency ”

“ The government could then oversee the trade more easily, could collect its dues, insure good quality, and protect merchants more readily, and it could also make better use of trade as a weapon of policy, directing the stream of goods where it pleased, and so rewarding or punishing other states. ”

“ The amount of internal trade was small, even in proportion to the scanty population. The people were forced into foreign commerce by the necessities of their condition. They were as yet unable to supply the needs of civilization by wares of their own production. They had as yet developed no resources which assured their economic position in commerce with European powers, and in their political and military position they were so weak that they must beg as favors rather than demand as rights the opening of markets which were essential to their commercial growth. ”

“ On the other hand, there are imports so entirely of foreign origin, and so free from considerations of competition with domestic industry, that a large revenue may be raised upon them in the custom-house, without disturbing the freedom or equity of international trade. ”

“ The first thought of a wise business man is for his markets, and you as a great trading nation are bound to think of your markets, not only your markets of to-day but of to-morrow and the day after to-morrow.
The Free Trade theory was the birth of a time when our imports were practically all supplemental to our exports, all indispensable to us, and when, on the other hand, the whole of the world was in need of our goods, far beyond our power of supplying it. ”

“ For this purpose, a system which could not make treaties of commerce without leaving it in the power of thirteen States to break them by retaliation, which could not prevent one or all of these States from utterly prohibiting the import or export of such commodities as they chose, and which left the people powerless to induce or compel advantages from foreign commerce, while it was even more helpless in regard to domestic commerce—for this purpose such a system was absolutely useless. ”

“ Yet might they easily be amended by enforcing the observation of such good laws as are strictly practised in other Countries against the said excesses; where likewise by commanding their own manufactures to be used, they prevent the coming in of others, without prohibition, or offence to strangers in their mutual commerce. ”

“ Nor can it be properly concluded, that, because the products of domestic enterprise in agriculture or manufactures, or in the arts, may ultimately become the subjects of foreign commerce, that the control of the means or the encouragements by which enterprise is fostered and protected, is legitimately within the import of the phrase foreign commerce, or fairly implied in any investiture of the power to regulate such commerce. ”

“ It is the inevitable counterpoise to the right of the neutral merchant to continue trading, even in contraband, in spite of war. The importance of this trading right to the neutral merchant is the measure of the importance of this defensive right to the belligerent. ”

“ They imagine that foreign commerce will not be injured, by restricting it in an extensive degree, to exportation; and that domestick commerce will be encouraged by disemboweling it of its essential principle, and converting it into an instrument for effecting unequal exchanges, to enrich monopolists. Whether this novel system of political economy, will impair or nourish commerce, either foreign or domestick, or whether it has been the true cause of the evil days upon which we are fallen, may be illustrated by a further consideration of the nature of money. ”

“ Yet as soon as goods come from a foreign country, we are asked to believe that we suffer a terrible injury in purchasing them. No one remembers that it is by means of goods exported that we purchase them. But in the country to which we export, it is the goods we send which are thought dangerous, and the goods we buy are forgotten. The whole conception of trade, which has been forced upon us by manufacturers who dreaded foreign competition, by trusts which desired to secure monopolies, and by economists poisoned by the virus of nationalism, is totally and absolutely false. ”

“ The principle they proposed was the disclaiming all desire for monopoly, and the advocacy of such moderate and just protection to all interests as would admit of foreign competition, so far as might be sufficient to stimulate to the utmost domestic energies, but, at the same time, would limit this competition within such bounds as to prevent domestic energies from being crushed in the struggle. ”

“ In these days of commercial rivalry, when foreign nations are competing with us in every neutral market in the world, when Europe and North America are being closed against our goods by prohibitive tariffs, and the Royal Commission appointed on the late depression of trade has placed on record its opinion that over-production has been one of the prominent features in the course of trade of recent years, and has urged us to display greater activity 415in searching for and developing new markets, we cannot afford to neglect any advantage we possess for the extension of our trade. ”