Money is not capital, but an adequate supply of a sound and stable medium of exchange is essential to industrial and commercial progress. Twice in the history of the world the discovery of large supplies of the precious metals has given a great impetus to industry and trade: once, in the sixteenth century, when the Spanish galleys brought to Europe rich treasure from the silver mines of America; and again, in the middle of the nineteenth century, when the rich finds of gold were made in Australia and California. The very rapid increase in the commerce of the United States and of the world at large, which began about 1850, was in no small degree the result of the rising prices which followed the discoveries of gold. The closing decade of the century is witnessing a similar occurrence. For many years prices declined rapidly; the demands made upon the world’s gold supply were rapidly increased at a time when the annual output was declining. From 1850 to 1870 the annual output of gold averaged over $130,000,000; it then declined so rapidly that it amounted to only a little over $100,000,000 a year, in 1885 and 1886. It was only $118,848,700 in 1890; but the present annual production is nearly $300,000,000, and the fall in prices has been cheeked for a while at least. The very rapid enlargement in commerce during the past two years must have been facilitated by the recent increase in the annual production of gold.
A second general cause accounting for the world’s progress in commerce is political—the commercial policy followed by the leading nations of the world. Up to the nineteenth century, practically every country strove to promote its trade, navigation interests, and its power as a nation by means of the mercantile system,—a system of strict and detailed regulation of foreign trade by means of tariffs and navigation laws. Each country strove to determine the nature of its international trade, and endeavored to carry on its commerce in its own ships. In the case of one country, at least, the mercantile system was eminently successful. Great Britain entered the great Napoleonic wars with a powerful naval and merchant marine, and emerged from that struggle the unquestioned mistress of the ocean. Her industries also, as well as her ships, were stronger than those of other countries; and she soon concluded that both her foreign trade and her shipping would profit by doing away with the restrictions of the mercantile system, and adopting the policy of entire commercial freedom. She made no mistake, for her industries and commerce have wonderfully prospered.
The success of free trade and freedom of commerce in the United Kingdom had much influence upon other countries, and, during the third quarter of the nineteenth century, several countries began to move cautiously in the direction that the United Kingdom had taken. They soon found, however, that for them free trade and shipping meant British trade and shipping, because of their inability to compete successfully with their powerful rival; and, during the last quarter of the century, the dominant commercial and maritime policy outside of the British Isles has been one providing for the regulation of trade by tariffs, and for the promotion of the mercantile marine by postal payments and bounties. At the present time, the two most powerful commercial rivals of the United Kingdom are the United States and Germany; and their trade policy is one of regulation instead of freedom. It would seem, therefore, judging by results, that both the United Kingdom and her competitors have acted wisely, and that in both cases the means adopted were such as conditions demanded.
The third cause of the world’s commercial progress during the past century has been colonial expansion. Germany, France, and other countries, influenced by the great success of the United Kingdom, have established colonies in different parts of the world, and assumed control over uncivilized peoples, until there are now 125 colonies, protectorates, and dependencies. These 125 regions comprise two fifths of the land surface of the globe, and contain one third of its population. These colonies and protectorates import annually over $1,500,000,000 worth of commodities, and of this large sum more than forty per cent is bought from mother countries. The last nation to adopt the policy of colonial expansion is the United States, her principal colony, the Philippine Islands, having been made a part of her possessions because of our desire to secure a larger share of the trade of the Orient.
IX. THE TWENTIETH CENTURY PROSPECT.
The world is entering upon the twentieth century with the nations of the earth bound to each other by much closer relations than existed a hundred years ago, and chief among the forces that draw the countries of the world together is commerce. It is commerce, more than anything else, that has brought about the existing organization of industry in which each nation is dependent upon every other.
The nations of the world are mutually dependent, but their interests are not identical. In the future, as they have done in the past, nations will compete with each other, each striving to secure for itself a maximum of economic advantage; and this competition will continue to take the form of commercial rivalry. The great international struggles of the present day are being carried on to secure trade advantages; and at no time in the past have those contests been more earnest than they now are. The conflicts of the twentieth century will be commercial struggles, and they will be intense.
In the centuries when Phœnicia, Greece, Carthage, Rome, and Venice were successively powerful, the Mediterranean was the theatre of commercial activity and international rivalry. The navigators and explorers, whose exploits closed the mediæval period and inaugurated the modern era, carried the world’s commerce from the Mediterranean to the Atlantic and transferred the centres of national greatness from the southern to the western and northern nations of Europe. The great industrial countries of the present are those of Europe and America adjacent to the North Atlantic. These countries originate the larger part of the world’s commerce; and the main streams of international trade are those which connect these countries with each other and with those regions of the earth less highly developed industrially.
The Isthmus of Suez, just north of the Tropic of Cancer, and the Isthmus of Panama, a short distance south of that line, were the only barriers which nature placed across an otherwise continuous water route around the earth in the northern hemisphere. These barriers diverted the lines which the world’s largest volume of traffic tends to follow far to the south around Africa and South America, or did so until 1869, when Europe overcame the barrier of most consequence to her by the construction of the Suez Canal. Since the opening of that waterway Europe has enjoyed advantages for international trade superior to those enjoyed by our country. Our regions most highly developed industrially are tributary to the Atlantic and Gulf of Mexico. To the east of us lies Europe, a region of great industrial advancement, demanding little more than our surplus food products and raw materials; to the south are the countries of the South Atlantic lying along the line of the world’s secondary commercial routes; countries, moreover, whose trade we can secure only in direct competition with Europe, which has already forestalled us at many points. In pushing their trade westward the industrial States of the United States—and they are found in the eastern half of our country—find that the possibilities of a traffic by land are restricted within narrow bounds by the heavy costs of a long haul over the elevated Cordilleran Mountain ranges, while shipments by water have to take the circuitous and expensive route around South America. Until an isthmian canal is constructed the United States will be handicapped in its competition with Europe for the trade of all countries bordering the Pacific Ocean.