Free Trade. 'Free Trade' is often used in a loose popular sense as practically equivalent to freedom of contract and laisser-faire; and thus particular kinds of land laws, bimetallism, factory acts, and various regulations affecting labour and manufactures are spoken of as infringements of free trade. Nothing, however, is gained by giving such an extended meaning to a definite expression, perfectly clear and precise in the historical sense. Historically, free trade refers to a particular policy as regards international or foreign trade only, and its principal features are absence of differential duties, and of artificial encouragements, such as bounties, by which the home producer is favoured as compared with the foreigner in the same department. The essence of free trade is equality and uniformity in the financial treatment of home, colonial, and foreign produce of the same kind. Thus the imposition of taxes upon commodities merely for revenue purposes (e.g. the tax on tea in the United Kingdom) is not held to be an infringement of free trade. Similarly the absolute prohibition of the importation of certain articles, supposing that the production at home is equally prohibited (e.g. immoral books), would not offend against free trade in its historical sense.
The economic system opposed to free trade, and the essence of which lies in the preferential treatment of the products of the home country or of certain 'favoured' nations, has received different names according to the objects professedly in view. When Adam Smith advocated the principles of free trade, he attacked the elaborate economic policy known as the Commercial or Mercantile System (q.v.). Of this system, protection to home industries was only a part. At least equal stress was laid upon a favourable balance of trade which was supposed to be indicated by a balance of the precious metals being due to a country. By this principle of a favourable balance a government was guided in framing commercial treaties and in the treatment of its colonies. At a later date, however, the use of the term protection was extended to cover practically the same ground as the expression 'Mercantile System,' which fell into disuse. Still more recently the name 'fair trade' has been invented to describe a mild form of the protective system, in which the basis of economic policy is supposed to be reciprocity or free trade only with such nations as grant similar privileges. Sometimes 'fair trade' is also held to include differential treatment of colonies by the mother-country as against foreigners, and is thus associated with schemes for imperial federation. It is worth noting that up to the beginning of the 19th century fair trade was the polite name for smuggling, and that, according to Adam Smith, 'to pretend to have any scruple about buying smuggled goods would, in most countries, be regarded as a pedantic piece of hypocrisy.'
The principal practical difficulty in deciding whether a tax is really opposed to free-trade principles arises in the case of the possible use of substitutes. If, for example, the cheaper kinds of foreign wines are being taxed avowedly for revenue purposes only, an indirect encouragement may at the same time be given to the production and consumption of beer in the home country. Again, it is difficult in many cases to find a fair common measure for home and foreign articles, and thus to make customs and excise duties really equivalent. In wines and spirits the alcoholic test alone is obviously unfair, but it is difficult to decide how much should be fairly allowed for other qualities. Nor will a simple ad valorem tax be a sufficient guide, because the effect upon demand of a rise in price is different in different cases. It may even be said that all taxation of those foreign goods which, from the nature of the case, cannot be produced at home (such as tropical products in the temperate zones) furnishes an artificial encouragement to home industries. If, for example, tea and coffee are rendered very dear by taxation, the use of aerated waters and home-made wines may be stimulated. The case of drawbacks, in which an excise duty is drawn back upon the exportation of the article taxed, presents similar difficulties. If the drawback really exceeds the tax already paid, it amounts to a bounty; and in fact most of the bounties given upon exportation are disguised in the form of drawbacks.
Taking free trade in this historical if somewhat narrow meaning, it is convenient to examine the general economic theory on which the policy rests before giving actual examples of free-trade policy and its opposite, protection. The question is, 'Why should a nation give no preference to its own subjects over foreigners in the financial treatment of commodities in general, or at least of some particular kinds?' It will be seen at once that the establishment of a universal negative in any question of practical politics is only possible by making very stringent assumptions as to the object or end of political union. Suppose, for example, that we accept the maxim of Adam Smith, that defence is of far more importance than opulence, we at once make out a prima facie case for the encouragement of those industries—e.g. shipbuilding and navigation—which may be assumed indirectly to contribute to national defence; and we understand why Adam Smith considered the Navigation Acts to be the wisest commercial provisions in the statute-book. Similarly various other social or political objects may be thought so desirable that the state ought to use its influence, by adjusting industrial finance, in order to promote these objects. It may be argued, for instance, that the state should look to the conditions under which labour does its work quite as much as to the mere cheapness of the final product; and that a nation ought to consider much more than individuals can be expected to do the remote consequences of certain lines of industrial development. In this way the arguments for protection founded upon a variety of industries, the possible exhaustion of peculiar natural resources, the encouragement of the growth of towns and manufactures in young countries, must be deemed prima facie worthy of consideration; although, of course, it may prove in the sequel that free trade is much more likely than protection to attain these and other important social ends, in addition to cheapness and plenty.
It is necessary, then, in order to understand the purely economic theory of free trade, to omit provisionally, for the sake of simplicity, not only many possible objects of financial policy, but also various considerations of great social and moral importance. We must begin by regarding the primary object aimed at as the present acquisition of the means of satisfying material wants at a minimum real cost—that is to say, the question must first of all be considered from the point of view of the consumer for the time being. With this narrow view of the subject it is easy to establish the case in favour of free trade. For with freedom of competition no foreign commodity would be imported unless it could be sold at least as cheaply as when produced at home, and the natural result of competition would be to lower the price; hence, to discourage importation by differential taxation would be to raise prices by restraining competition. Again, to artificially encourage exportation by means of a bounty may by diminishing the supply in the home-market raise the price; and, if an increased supply can only be obtained at an increasing cost, this must be the result. But although free trade may result, as just shown, in present maximum cheapness, it may be objected that all cheapness is relative to the means of purchase—i.e. to income—and that, if the former is promoted by free trade, the latter is augmented by protection. And at first sight it seems plausible to argue that if a certain policy increases employment it increases earnings, and that employment must be increased by encouraging home industry at the expense of foreign. The refutation of this fallacy in its grossest form is one of the greatest triumphs of the so-called orthodox political economists. Bastiat, for example, in his famous petition of the candle-makers against the sun, in which it is ironically shown how much encouragement would be given to all the industries directly and indirectly concerned in the production of artificial light by shutting up windows, &c., has made clear the error involved in 'making work,' or in increasing obstacles in order to encourage employment. Again, whilst it is allowed by free-traders that protection to any particular industry may turn more labour and capital into that channel, and thus increase the gross earnings of those employed in it, it is maintained that on the whole, from the national point of view, there is a loss. In the first place, the very object of protection is to raise the price above what it would be if foreign imports were admitted freely, and thus the large body of consumers (including other labourers) are taxed for the benefit of the small class of producers. Secondly, the labour and capital of the country are drawn from the channels into which they would naturally flow, and are thus on the whole less advantageously employed; in other words, the gross annual produce of the land and labour of the society is less than it otherwise would have been. If, for example, by the exclusion of foreign corn the price is raised, not only are consumers taxed by the rise in price, but the labour and capital devoted to the production of corn are drawn from other employments, in which more commodities might have been produced, and on balance exchanged for more corn. We thus arrive at the great maxim of free-traders, that imports are paid for by exports, and 'if you take care of the imports the exports will take care of themselves'—in other words, if foreign labour is encouraged by the free admission of foreign goods, still, ipso facto, the home industry must be equally encouraged, because goods to an equal value must be made to be exported to pay for these imports. In fact, it is maintained that the home industry is more encouraged than otherwise would be the case, because there is less waste of labour, capital, and natural resources. A certain quantity of labour and capital devoted to the more careful cultivation of land would raise more agricultural produce, but if devoted to some kind of export, this export might obtain by exchange far more corn raised at much less expense on virgin soil.
To the statement, however, that a country need regard only its exports, preliminary objection may be raised on the same ground on which the above maxim itself is really founded—viz. that all trade is reciprocal, and that ultimately imports and exports are a form of barter. For it may be said that, unless a country's exports are sent by the best route to the best market, they cannot purchase so great a quantity of imports, and it is quite as reasonable to regard the export trade as active, and the import trade as passive, instead of the converse. Suppose, for example, to take an extreme case, all other nations effectually prevented the importation of English manufactures, England would be unable to pay for its imports, and imports must cease. And, without going so far, it may still be maintained (as by Adam Smith) that distant and roundabout trades are not so advantageous to a country as near and direct trades.
Apart from this objection the position of free-traders appears to be sound under the assumptions usually made. These assumptions, however, require careful statement. In the first place, it is assumed that labour and capital can without loss or difficulty be turned from a decaying into a thriving industry, and that, if any home product is displaced by foreign competition, 'something else' will be made with the same labour and capital. But it may be objected that every industry requires a certain amount of specialised capital and peculiar skill and training which cannot be transferred to other employments; capital and labour, for example, formerly used in agriculture cannot without great loss be turned into the manufacture of cotton goods. There is some force in this objection, and Adam Smith placed it under the possible exceptions to a general free-trade policy which he considered worthy of consideration. At the same time, as he points out, there is a tendency to exaggerate the difficulty of absorbing any surplus labour set free from an old industry, and at any rate the argument is one not for absolute protection, but for partial protection during a limited transition period, whilst labour and capital are being withdrawn. There is, however, a more serious objection to this assumption of the perfect mobility of labour and capital from one industry to another. A merchant, as Adam Smith said, is a citizen of no particular country, and if capital and labour are supposed to move without any difficulty within the limits of one country, their migration from country to country cannot be considered, especially in modern times, to offer any insuperable difficulty. Thus, it is theoretically possible that under the stress of foreign competition agriculturists might take their labour and capital from the United Kingdom to the United States, instead of to the cotton-mills of Lancashire or the coal-mines of Northumberland. The result would be that a trade formerly conducted between the rural and the manufacturing districts of England would now be conducted between the latter and the western states of America. Nor is this migration of industries a pure theory; we find many examples in history not only of the transference of industries from one part of the same country to another, but also from one country to another. Whether this transference would have been prevented by protection is, of course, a matter for further inquiry; the point at issue at present is simply the possi- bility of the free-trade assumption, that any displaced capital and labour will find employment within the country, not being realised. The importance of the exception is seen from a popular argument, often used as a rough and ready proof of free trade—viz. that if protection is a good thing for one country against another, it must be good for one district, county, town, &c. against others in the same country. But the answer is obvious, that, although from the national point of view the migration of industries within the country is a matter of indifference, it is a matter of supreme importance to the districts affected; and historically it may be noted that in England, as in other countries during the medieval period, the towns adopted stringent protective measures against one another; and, although this parochial patriotism has disappeared to a great extent, the commercial rivalry of nations is as strong as ever.
It is worth observing that Adam Smith always emphasised the importance to a country of employing its capital, so far as possible, within its own borders, and if it were employed out of the country he ranked the relative advantages according to the nearness of the foreign locality and the frequency of the returns. And, in his view, it was not a question of profit, for he expressly says that greater profits may be earned in distant than in near trades, and in foreign countries than at home. But the point is that if the capital is employed at home the labour of the country finds employment at home, and the home country enjoys the things produced. Suppose, for example, that a large quantity of British capital is exported to make harbours, railways, &c. in a foreign state; greater profits may be earned, but so far there will be less employment for British labourers whilst the works are being made, and when they are finished the benefits of use will be enjoyed by the foreigner. Many of the successors of Adam Smith, in their eagerness to give free trade the simplicity of an axiom, have omitted from their argument the element of nationality, and have forgotten that there is a question of 'somewhere else' as well as of 'something else.' The great merit of Adam Smith is that he fully recognises at every stage of his reasoning the difficulties which spring from territory being of the essence of the modern nation; and instead of arguing simply (but illogically) that, because universal free trade would be good for the world at large, therefore it would be equally good for every part of it, he maintains that, taking everything into account, and giving due weight to the principle of nationality, the interest of a particular nation would be advanced by free trade and retarded by protection or artificial management on the part of government. At the same time, however, it may be admitted that in some respects Adam Smith's argument needs development, because no economist would now feel justified in laying so much stress as he did upon reasons drawn from a peculiar view of natural theology and an optimistic mode of regarding the operations of nature. No matter how strong may be the belief in the beneficent guidance of an 'invisible hand' which leads the individual, whilst pursuing his own interest, to promote that of the public, it is necessary to give more specific grounds, and of a more purely economic character, in deciding between two methods of taxation and two methods of conducting international trade. Certainly, too much reliance must not be laid on the general argument derived from a survey of life as a whole in an age in which nature has come to be regarded as 'red in tooth and claw,' and as working out its ends by a prodigal waste of suffering and misapplied effect. It will be found, however, that the principal result of Adam Smith's natural theology has been negative omission rather than positive error.
Taking the world as a whole at any particular time, we can easily see that free trade would give the most advantageous employment of labour and capital, because everything would be produced under the most favourable conditions; but the difficulty is to show that free trade is the best policy for a country which adopts Adam Smith's fundamental position as to the relative advantage of keeping capital and labour employed within its own borders. On this view it is not enough to show that under free trade the consumer would obtain maximum cheapness and the capitalist maximum profits, but we must also show that the nation makes the best use of its resources for its own members. The arguments relied upon by Adam Smith are partly positive and partly negative, the former being based on the power of the self-interest of individuals, and the latter on the weakness of governmental control. Every person, he says, naturally prefers to employ his capital in the support of domestic industry, but then this qualifying clause is added, 'provided always that he can thereby obtain the ordinary, or not a great deal less than the ordinary, profits of stock.' This leaves the position open to the attack that, by supporting foreign in place of home industry, the individual may obtain more profits; or more generally that profit, as Adam Smith himself often points out, is not synonymous with national advantage. But the objection is not so serious as at first sight appears. For, in the first place, if capital when employed at home does not obtain ordinary profits, a check will be placed on accumulation, and it is certainly more advantageous for a nation to employ some of its surplus capital abroad, or in encouraging foreign industries, than to have no surplus through forcing it to stay at home; secondly, it must be noted that most of those who support a protectionist policy, on the ground of encouraging home industry, estimate the encouragement given by the profit earned, and would to the last disapprove of any policy which would lead to less than the ordinary rate being obtained.
It may, however, be further objected that by protection to home industries, and by the prevention of the admission of certain kinds of foreign goods, more capital may be employed at home at the ordinary rate of profit. The usual answer is that this capital must be drawn from other more advantageous industries also at home; but in an old country in which profit is at a minimum and capital overflowing its channels this answer does not hold good. It is true that the consumers of the protected article lose so much by the rise in price, but it may be rejoined that to the nation this loss is more than compensated by the increase in the field for employment. Again, take a simple hypothetical case. Suppose that a new country yields only agricultural produce, and exchanges part of this for manufactures. If it imposes protective duties on manufactures, and if it can provide, through the growth of wealth and population, the necessary labour and capital without diminishing the amount of agricultural produce, the result is that its agricultural labour supports its own instead of foreign cities. Under the supposition made, the agriculturists will obtain less home manufactures than they would have done from abroad, at least for a time, but it is possible that the diversion of labour and capital may ultimately result in more wealth. In the ordinary argument for free trade sufficient allowance is not made for the growth of capital and population, nor for the advantages to be gained from employing them within the country. The question is regarded exclusively from the point of view of the consumer, under the hypothesis of a fixed amount of labour and capital already fully employed in the most advantageous manner.
The theoretical exception to free trade which has just been considered may be strengthened by the argument drawn from the stimulus given to production by a variety of industries, and by promoting trade directly between the towns and the neighbouring country districts, a consideration which was the basis of Wakefield's scheme of colonisation. It is urged, especially in the case of new countries, that, unless towns are encouraged by the protection of manufactures, there will not be a ready market for all the by-products of agriculture.
At this stage it may be well to note the other principal exceptions which have been taken to free trade from the nationalist standpoint. It is said that every nation should retain for the benefit of its own people any peculiar natural resources, and if possible also any inventions and artificial means of production. In the United Kingdom, for example, one of the principal causes of commercial supremacy is always said to be the close proximity of excellent coal and iron fields. But coal and iron are exhaustible, and the more they are exported so much the sooner will the point of exhaustion be reached. It is maintained that in the interests of posterity we should sacrifice the profits of a present trade and restrain the exportation. Carey even argues that the continuous exportation of all raw produce is practically equivalent to the exportation of the soil. In former times the wool of England was supposed (though, as is shown in Smith's Memoirs of Wool, probably without good cause) to be much superior to that of other countries, and accordingly, after being for some centuries the great staple of export, the exportation was later on forbidden under most severe penalties, and similar penalties were imposed on the exporters of sheep and rams. The same policy was carried out in reference to machinery and the instruments of production generally, including 'the living instrument' man. The answer made to this case of protection on the part of free trade is that it is impossible to tell, as regards the remote future, whether the peculiar advantage attaching to natural resources will continue (e.g. coal with the development of electricity from other forms of energy), and that, as regards instruments, they can be copied and imitated although the actual exportation is prevented. It is also argued that restraints upon the production of machinery by limiting the market will tend to check the progress of invention.
Another exception to free trade has been made on the ground of national independence. As already noted, it was on this ground that Adam Smith approved of the Navigation Acts. Recently the increasing dependence of the United Kingdom upon foreign nations for its food-supplies (see FOOD) has attracted much attention, and has led to proposals for differential duties in favour of the colonies. The same argument was the principal one used in the long agitation which resulted in the repeal of the Corn Laws. The answer is that cheap food is of such importance to the masses of the people that nothing which would raise its price would be assented to, and that indirectly through the growth of wealth and population under the stimulus of cheap food the nation has become much stronger than it would have been if it had tried to preserve its independence. Further, it is said that the dependence is really mutual, and that the food-growing countries rely upon selling their food to obtain clothes and other necessaries just as much as the importers of food rely upon them.
A favourite exception to free trade is that a nation ought to consider principally, not the cheapness of goods to the consumer, but the effect of the conditions of labour upon the producer. No nation would be content with being the heaver of wood and drawer of water to the rest of the world, and the more a nation is composed of highly-skilled workers engaged in healthy, pleasant, and energising occupations, so much the better. It is assumed that, if by protective or prohibitive duties foreign wares of the higher class be excluded, they will be produced at home by native artists and craftsmen. It is, however, more probable that many of the articles would not be produced at all, and that in any case the absence of the foreign stimulus would eventually check the higher industrial development. If, for example, foreign paintings were excluded from a country to encourage painting, and engravings to encourage engraving, and so on, it is more than probable that the art of the country in question would lose not only in quality but in quantity. It may also be pointed out that the best way to promote the higher forms of industry is not by the simple process of exclusion, but rather by an elaborate system of technical and artistic education. The protectionist is always in danger of forgetting that it is not enough to show that certain ends are worthy of attainment, but that he must also prove that the rough and ready device of excluding foreign competition is the best means to adopt.
At this point it is convenient to complete the positive argument in favour of free trade. Hitherto the question has been regarded on the free-trade side mainly from the point of view of cheapness to the consumer, whilst abundant and varied employment for the producer and other important social aims have only been considered as possible grounds of exception to a free-trade policy. But Adam Smith, especially, and many of his successors have supported free trade with these objects professedly aimed at by protectionists always in view. Freedom of action and freedom of movement free-traders hold to give the greatest encouragement to the development of enterprise, and to the progress of invention, and thus indirectly at least to the employment of labour in a variety of industries. The natural result of free trade is to increase the efficiency of labour and capital through the stimulus of open competition, whilst the natural result of protection is to establish routine methods. Here it is important to observe that the practical abandonment of the wages-fund theory, according to which wages were supposed to be paid simply out of pre-accumulated capital, for the theory that wages are paid out of the price of the produce of labour, renders the usual statement of the theory of free trade, from the standpoint of capital only, incomplete and one-sided. The new theory of wages adds, however, much force to the position that the efficiency of labour is, on the whole, increased by free trade and diminished by protection. Again, under free trade an industry which ceases to be profitable, and to satisfy consumers, on the opening up of foreign markets is soon abandoned with a loss only to those engaged in it at the time, whilst under protection vested interests are created, and the loss is perpetuated. It must, however, be allowed that this argument from the absence of the stimulus of competition under protection loses force in proportion to the area, wealth, and population of the country to which it is applied. In the United States, for example, there is abundant scope for competition, and the same remark applies to a possible federation of the colonies and dependencies of the British empire.
On the whole, then, so far as the positive arguments are concerned, by which free trade is generally supported, it must be allowed that it is easy from the national standpoint to discover hypothetical exceptions, which might be thought, to adopt
Smith's language, 'worthy of deliberation.' And, contrary to the popular opinion in England, most economists of repute have allowed theoretically that under certain circumstances a country might gain by stepping aside from a general policy of free trade. Adam Smith, in addition to the exceptions already noted, approves of retaliation, if by that means a great market might be secured for exports; Ricardo points out a mode by which a country might gain by the monopoly of its colonial trade, and J. S. Mill allows that the Navigation Acts, though economically disadvantageous, were politically expedient, and also supports the argument derived from Adam Smith in favour of temporary protection, with a view to the more speedy development of industries for which a new country seems naturally adapted. The latest systematic English writer on the subject, Professor Sidgwick, expressly says 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 it must always be remembered that the positive argument in support of a general free-trade policy is only part, and probably the least important part, of the case. It is one thing to allow that, provided a government is perfectly wise and able at once to change its policy according to the variations of industry, it might use its power in such a manner as to direct the capital and labour of the country into more advantageous channels than those of pure free trade; but it is quite another thing to admit that any government would be capable of managing the industries of a great nation in this way. Those who quote Adam Smith for his theoretical exceptions forget that he always laid most stress on the negative side of the argument—that is to say, on the weakness and incapacity of governments. 'The statesman,' he writes, 'who should attempt to direct private people in what manner they ought to employ their capitals, would assume an authority which could safely be trusted not only to no single person, but to no council or senate whatever.' The clearest illustrations in support of this position are found in the commercial history of England. Even in the middle ages, when changes were comparatively slow and competition was fettered in all directions by custom and routine, the government was unable to carry out the objects which it had in view in protecting certain native industries. It is worth noting also that several important manufactures took their rise through imitation of foreign wares, under the guidance of foreign workmen, in direct opposition to the supposed interests of home producers. It is a curious fact that precisely that part of the old commercial system which was most approved of by Adam Smith—viz. the Navigation Laws—was the first to be seriously attacked on the ground of the practical difficulties involved. These acts naturally induced foreign nations to retaliate, and the attempt to obviate this difficulty by means of reciprocity treaties led to still further complications with other countries. Apart from the peculiar practical difficulties that arise in particular cases, certain general reasons may be given why protection is likely to fail when everything is taken into account. The taxation for protective purposes of any product necessarily involves the taxation of substitutes; and since in general a duty so far as it is protective is not productive of revenue, for the main object of protection is to exclude the foreign product, there is the expense of supervising and guarding against the evasion of a number of unproductive taxes. Apart from these indirect evils, the real incidence of import duties is extremely difficult to determine. Again, in every industry there are always a certain number of producers and traders on the margin of bankruptcy, and they ascribe their failure to the insufficiency of the duties. Thus a duty which at first might have been proposed as a temporary expedient tends not only to become perpetual, but to increase. It is well known, for example, that under the old Corn Laws there was a constant demand for increasing protective duties. Those actually engaged in any industry at the time when protection is given may gain immediately through obtaining a practical monopoly of the market, and exceptional profits and wages may be obtained until they are reduced by competition. But when those employed in other industries see this apparent advantage obtained by the favoured industry, they also naturally clamour for protection, and thus the interference of government once begun spreads with increasing rapidity, a fact which has found illustration in every protectionist country. The insuperable practical difficulty is not only to decide on national grounds what industries should be protected, but afterwards to persuade those engaged in other employments that they do not require protection. Hence it is easy to understand why under the old system England and other countries were practically compelled to impose a general duty upon all foreign manufactures not specially taxed. Thus the general result of protection is to stifle foreign trade, and indirectly, by curtailing the market for exports, to fetter home industries. To render the negative argument in support of free trade complete, it would be necessary to take into account also the more general arguments advanced in support of natural liberty as against governmental interference—e.g. the increasing burdens of the necessary functions of government with the progress of civilisation, the dangers of the increase of power by increasing the functions of officials, the evils of restraints upon individual liberty, &c., which obviously have an important bearing upon the particular case of protection, but which are too general to be more than indicated in a special article. When on the one side the simplicity of free trade is considered, and on the other a complete survey is made of the practical difficulties involved in protection, compared with the doubtful advantages to be gained in the exceptional theoretical cases noted, and when it is borne in mind that the objects avowedly aimed at by protectionists—e.g. variety, skill, national independence, &c.—are much more likely to be obtained by other social methods under the system of natural liberty than by the simple device of imposing heavy taxes on foreign goods, a strong case is made out on balance for adopting free trade as the general rule of industrial policy; and in all probability free trade would have been more generally adopted, if the economical arguments had not been overshadowed by political prejudices, resting on very different foundations.
The question of Free Trade and Protection is discussed at length in all the text-books on political economy; and to PROTECTION we ourselves devote a special article. The introductory essay in Macculloch's edition of the Wealth of Nations (1828; new ed. 1857), still the great storehouse of facts and theories, gives a good account of the literature of the subject previous to Adam Smith. The principal subsequent addition to the arguments for free trade is the theory of foreign trade in Ricardo's Principles (1817), developed by J. S. Mill, Cairnes, and more recently by Professor Bastable, and criticised somewhat adversely by the French mathematician and economist Cournot, and by H. Sidgwick. Popular expositions of free-trade principles are well represented by Chevalier's Examination of the Commercial System known as Protective, Bastiat's Sophismes économiques (Eng. trans., Popular Fallacies regarding General Interests, 1846), Sir Thomas H. Farrer's Free Trade versus Fair Trade (1885), Fawcett's Free Trade and Protection (1878; 6th ed. 1885).
The history of the free-trade movement in England is given in John Morley's Life of Cobden (1881). The best-known writers on the protectionist side are the American economist Carey, in Principles of Social Science (1858–59), and the German economist List, in National Systems of Political Economy (1841; 7th ed. 1884). A judicial account of the principal arguments on both sides is given in the article on 'Trade' by Professor Lexis, in the German Handbook of Political Economy, edited by Schönberg (2d ed. 3 vols. 1885–86).