There remains one other essential part of the duty we have undertaken to fulfill. It is true that it did not suit the purposes of Mr Cobden to enter himself into any investigation of the comparative profitableness of foreign and colonial commerce, nor did he, doubtless, desire to provoke such an investigation on the part of others. With the cunning of a prejudiced partizan, he was content to skim superficially the large economical question he had not scrupled to raise from the depths of discomfiture and oblivion, in which abandoned by the colonial detractors, his predecessors, who had tried their art to conjure "spirits from the vasty deep," which would not come when they did "call for them." With gross numerical proportions apparently in his favour, but well-grounded convictions that more might be discovered than met the eye, or squared with the desire, should the component elements of those proportions be respectively submitted to the process of dissection, he preferred to leave the tale half told, the subject less than half discussed, rather than challenge the certain exposure of the fallacious assumptions on which he had reconstructed a seemingly plausible, but really shallow dogma. A foreign export trade of thirty-five millions he wished the world to believe must represent, proportionally, a larger amount of profit, than sixteen millions of colonial export trade; that the difference, in fact, would be as thirty-five to sixteen, and so, according to his Cockerian rule of calculation, it should be. But, it is said and agreed, that two and two do not always make four, as in the present case will be verified. We may, indeed, place the matter beyond dispute, by a homely illustration level to every man's capacity. For example, a Manchester banker, dealing in money, shall turn over in discounts and accounts-current, with a capital of L.100,000, the sum of one million sterling per annum. As he charges interest in current-account at the rate of 5 per cent, so he allows the same. His profit, therefore, quoad the interest on current-accounts and balances in hand, is nil; but for the trouble of managing accounts and for discounts, his charge is five shillings per L.100. In lending out his capital, he realises five per cent more upon that. But the return upon capital embarked, say, in the cotton manufacture, is calculated, at the least, at an average of fifteen per cent. What, then, are the relative profit returns upon the same sum-total of operations for the banker and manufacturer?
Manufacturer's Balance Sheet.
On Capital.
Operations, L.1,000,000 Capital, L.100,000 Profit, 15 per cent, L.15,000
Banker's Balance Sheet.
Operations, L.1,000,000 Profit thereon, 5s. per L.100, L.2500
Capital, 100,000 Interest thereon, 5 per cent, 5000
Return on Capital, —————— 7,500
————————
Excess manufacturing profit, L.7,500
That is, double the amount, or, as rateably may be said, 100 per cent greater profit for the manufacturer than the banker. Now, what is true of banking and commerce, may be—often is, true of one description of commerce, as compared with another.
It is not meant to be inferred, however, that applied to colonial trade, as compared with foreign trade, the analogy holds good to all the extent; but that it does in degree, there can be no doubt, and we are prepared to show. It will, we know, be urged, that there can be no two sale prices for the same commodity in the same market, a dictum we are not disposed to impugn; but we shall not so readily subscribe to the doctrine, that the prices in the home and colonial markets are absolutely controlled and equalized by those of the foreign market. This is a rule absolute, not founded in truth, but contradicted by every day's experience. It would be equally correct to assert, that the lower rates of labour in the European foreign market, or the higher rates in the North American, controlled and equalized in the one sense, and in the other opposing, the rates in this country, than which no assertion could be more irreconcilable with fact. Prices and labour rates elsewhere, exercise an influence doubtless, and would have more in the absence of other conditions and counteracting influences, partly arising from natural, partly from artificially created causes. Prices, in privileged home and colonial markets, cannot generally fall to the same level as in foreign neutral markets, or, as in foreign protected markets, where the rates of labour are low. Keen as is the competition in the privileged home and colonial trade among the domestic and entitled manufacturers themselves, it will hardly be denied that larger as well as more steady profits are realized from those trades than from the foreign and fluctuating trade, exposed, as in most cases the latter is, to high fiscal, restrictive, and capricious burdens. These, pro tanto, shut out competition with the protected foreign producer, unless the importer consent to be cut down to such a modicum of price or profit, as shall barely, or not at all, return the simple interest of capital laid out. Such is the position of foreign, in comparison with home trade.
The foreign glut, in such case, reacts upon the privileged home and colonial markets, no doubt affecting prices in some degree, and if not always the rates of labour, at all events the sufficiency of employment, which is scarcely less an evil. But the reaction presses with nothing like the severity, which in a similar case, and to the same extent only, would follow from a glut in the home privileged markets. The cause must be sought in the general rule, that the inferior qualities of merchandise and manufactures are for the most part the objects of exportation only. Consequently, in case of a glut, or want of demand abroad, as such are not suited by quality for home taste and consumption, the superabundance of accumulated and unsaleable stock, with the depression of prices consequent, affects comparatively in a slight degree only the value and vent of the wares prepared expressly for home consumption. But a different and more modified action takes place in case of over-production of the latter, or upon a failure of demand, arising from whatever cause. For, being then pressed upon the foreign market, the superior quality of the goods commands a decided preference at once, and that preference ensures comparatively higher rates of price in the midst of the piled up packages of warehouse sweepings and goods, made, like Peter's razors, for special sale abroad, which are vainly offered at prime or any cost. These and other specialties escape, and not unaccountably, the view and the calculation of the speculative economist, who is so often astounded to find how a principle, or a theory, of unquestionable truth abstractedly, and apparently of general application, comes practically to be controlled by circumstances beyond his appreciation, or even to be negatived altogether. An example or two in illustration, may render the question more clearly to the economical reader; although taken from the cotton trade, they are not the less true, generally, of all other branches of home manufacturing industry. As we shall have to mention names, a period long past is purposely selected; but although the parties, so far as commercial pursuits, may be considered as no longer in existence, yet they cannot fail to be well remembered. The former firm of Phillips and Lee of Manchester, were extensive spinners of cotton yarn for exportation, and extensive purchasers of other cotton yarns for exportation also; but for home manufacture they never could produce a quality of yarn equally saleable in the home market with other yarn of the same counts, and nominally classed of the same quality. The principal reason was, that they spun with machinery solely adapted for a particular trade, and the production of quantity was more an object than first-rate quality; to these ends their machinery was suited, and to have produced a first-rate article, extensive and expensive alterations in that machinery would have been required. Mr Lee himself, the managing partner, was an ingenious and theoretically scientific man, and often experimentalizing, but in general practically with little success. When, therefore, the export trade in yarns fell off, as, in some years during the war and the continental system of Bonaparte, we believe it was almost entirely suspended, the yarns so described of this firm, and of any others the same, could find no vent—abroad no opening—at home not suited for the consumption. As the firm were extremely wealthy the accumulation of stock was, however, of small inconvenience; time was no object, the Continent was not always sealed. With the great spinner Arkwright the case was entirely different; at home as abroad his yarn products were always first in demand; his qualities unequalled; his prices far above all others of even the first order; his machinery of the most finished construction. If, perchance, home demand flagged, the export never failed to compensate in a great degree.
So with all other subdivisions of the same or other manufactures, more or less. And this may explain the seeming phenomenon why; when the foreign trade has been so prostrate as we have seen it during the last three years, the home trade did not cease to be almost as prosperous as before. Political economy would arbitrarily insist that, repelled from the foreign market, or suffering from a cessation of foreign demand, the manufacturer for exportation had only to direct his attention, carry his stocks to, and hasten to swell competition and find relief in, the home market. In products requiring little skill, such as common calicoes, such efforts might, to some extent, be successful; but there the invasion ends. In all the departments requiring greater skill, more perfect machinery, more taste, and the peculiar arts of finish which long practice alone can give, the old accustomed manufacturer for the home trade remains without a rival, still prospering in the midst of depression around, and whilst secure against intrusion in his own special monopoly of home supply, commanding also a superiority in foreign markets for his surplus wares, in the event of stagnation in home consumption, over the less finished and reputed products of his less-skilled brethren of the craft.
In the enquiry into the advantages relatively of foreign and colonial export trade, it is not pretended literally to build upon the premises here established; the analogy would not always be strictly in point, but the fact resulting of the greater gainfulness of one description of trade over another is incontestable, and in the national sense perhaps much more than the individual. We shall take it for granted that British and Irish products and manufactures enjoy a preference on import into the colonies, over imports from foreign countries, of at least five per cent, resulting from differential duties in favour of the parent state: it may be more, and we believe it will be found more; but such is the preference. This profit must be all to the account of the British exporter; for it is not received by the colonial custom-house, and whatever the reduction of prices by excess of competition, it is clear prices would be still more deranged by the introduction of another element of competition in more cheaply produced foreign products at only equal rates of duty. Take, for examples, Saxon hose, French silks, American domestics, but more especially all sorts of foreign made up wares, clothes, &c. Quoad the foreigner, the preferential duties make two prices therefore, by the very fact of which he is barred out. We shall now proceed to assess the mercantile profits respectively upon the sums-total of foreign and colonial trade by the correct standard; and then we shall endeavour to arrive at a rough but approximate estimate of the value respectively of foreign and colonial export trade in respect of the descriptions of commodities exported from this country, classified as finished or partly finished, in cases where the raw material is wholly or partially of foreign origin, and measured accordingly by the amount of profit on capital, and profit in the shape of wages, which each leave respectively in the country. It will be understood that no more than a rough estimate of leading points is pretended; the calculation, article by article, would involve a labour of months perhaps, and the results in detail fill the pages of Maga for a year, and after all remain incomplete from the inaccessibility or non-existence of some of the necessary materials. There are, however, certain landmarks by which we may steer to something like general conclusions.
The profits on exports, as on all other trade, exceptional cases apart, which cannot impeach the general rule, are measured to a great extent by the distance of the country to which the exports take place, and therefore the length of period, besides the extra risk, before which capital can be replaced and profits realized. Within the compass of a two months' distance from England, we may include the Gulf of Mexico west, the Baltic and White Seas north, the Black Sea south-east, the west coast of Africa to the Gulf of Guinea, and the east coast of South America to Rio Janeiro. We come thus to the limits within which the smaller profits only are realized; and all beyond will range under the head of larger returns. It is not necessary to determine the exact amount of the profit in each case, the essential point being the ratio of one towards the other. An average return in round numbers of seven and a half per cent many, therefore, be taken for the export commerce carried on within the narrower circle, and of twenty per cent for the voyages à long cours, say those to and round the two Capes of Good Hope and Horn. It is making a large allowance to say that each shipment to Holland, France, or even the United States, for example, realizes seven and a half per cent clear profit, or that the aggregate of the exports cited yields at that rate. Twenty per cent on exports to China and the East Indies, in view of the more than double distance, and increase of risk attendant, does not seem proportionally liable to the same appearance of exaggeration. Under favourable circumstances returns cannot be looked for in less than a year on the average, and then the greater distance the greater the risk of all kinds. Classifying the exports upon this legitimate system, we find that, in round numbers, not very far from eight-ninths of the total amount of foreign trade exports come under the denomination of the shorter voyage. Thus of these total exports of thirty-five millions, less than four millions belong to the far off traffic. The account will, therefore, stand thus:—
Foreign trade profit of 7-1/2 per cent on L.31,000,000, — L.2,325,000
Do. 20 do. 4,000,000, — 800,000
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Total mercantile profit, L.3,125,000
The quantities colonial would range thus: —
Colonial trade profit, long voyage, of 20 per cent
on L.8,820,000 L.1,764,000
Colonial trade profit, short voyage, of 7-1/2 per cent
on L.7,180,000 538,000
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Total colonial profit, L.2,302,000
Truth, like time, is a great leveller—a fact of which no living man has had proof and reproof administered to him more frequently and severely that Mr Cobden himself. As culprits, however, harden in heart with each repetition of crime, until from petty larceny, the initiating offence, they ascend unscrupulously to the perpetration of felony without benefit of clergy; so he, with effrontery only the more deeply burnt in, and conscience the more callous from each conviction, will still lie on, so long as lungs are left, and vulgar listeners can be found in the scum of town populations. How grandiloquent was Mr Cobden with his "new facts," brand new, as he solemnly assured the House of Commons, which was not convulsed with irrepressible derision on the announcement! How swelled he, "big with the fate" of corn and colony, as the mighty secret burst from his labouring breast, "that the whole amount of their trade in 1840 was, exports, L.51,000,000; out of that L.16,000,000 was (were) exported to the colonies, including the East Indies; but not one-third went to the colonies. Take away L.6,000,000 of the export trade that went to the East Indies, and they had L.10,000,000 of exports," &c. Oh! rare Cocker; 10 not the third of 16; "take away" one leg and there will only be the other to stand upon. Cut off, in like manner, the twenty-one millions of exports to Europe, and what becomes of the foreign trade? "An eye for an eye, and a tooth for a tooth," is the old lex talionis, and we have no objection to part with a limb on our side on the reciprocal condition that he shall be amputated of another. We engage to wage air battle with him on the stumps which are left, he with his fourteen millions of foreign against our ten millions of colonial trade, like two razées of first and second rates cut down. Before next he adventures into conflict again—better had he so bethought him before his colonial debut in the House last June—would it not be the part of wisdom to take counsel with his dear friend and neighbour Mr Samuel Brookes, the well-known opulent calico-printer, manufacturer, and exporting merchant of Manchester, who proved, some three or four years ago, as clearly as figures—made up, like the restaurateur's pain, at discretion—can prove any thing, that the larger the foreign trade he carried on, the greater were his losses, in various instances cited of hundreds per cent; from whence, seeing how rotund and robust grows the worthy alderman, deplorable balance-sheets notwithstanding, which would prostrate the Bank of England like the Bank of Manchester, it should result that he, like another Themistocles, might exclaim to his family, clad in purple and fine linen, "My children, had we not been ruined, we should have been undone!"