The Problem of the Trading Bodies
The Coal Question: The Problem of the Trading Bodies
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Historical E-Book: The Coal Question: An Inquiry Concerning the Progress of the Nation, and the Probable Exhaustion of Our Coal-Mines
Author: William Stanley Jevons
Edition Used: London: Macmillan and Co., 1866. (Second edition, revised)
First Published: 1865
Chapter XVI
THE position of this country in future years will not be rightly appreciated if we confine our attention near home. Without foreign commerce, but with our coal (The Coal Question: The Problem of the Trading Bodies) , it is possible we might have done much that we have done, but we could never have supported such masses of busy population, enjoyed such a variety of foreign products, or reared such a great system of industry. We should have been a happy ingenious self-dependent people, but not numerous nor rich, and neither endowed with our present world-wide influence, nor subjected to its dangers and responsibilities.
But as we are, unfettered commerce, vindicated by our political economists, and founded on the material basis of our coal resources, has made the several quarters of the globe our willing tributaries. "Though England," it has been truly said, "were one vast rock, where not an acre of corn had never waved, still those four hundred millions of men, whose labour is represented by the machinery of the country, would extort an abundance of corn from all the surrounding states."[1] The plains of North America and Russia are our corn-fields; Chicago and Odessa our granaries; Canada and the Baltic are our timber-forests; Australasia contains our sheep-farms, and in South America are our herds of oxen; Peru sends her silver, and the gold of California and Australia flows to London; the Chinese grow tea for us, and our coffee, sugar, and spice plantations are in all the Indies. Spain and France are our vineyards, and the Mediterranean our fruit-garden; and our cotton-grounds, which formerly occupied the Southern United States, are now everywhere in the warm regions of the earth.
But great as is our own system, it is not the whole. Commerce is undoubtedly making its way by its own subtle force, and is uniting the parts of the globe into a web of interchanges, in which the peculiar riches of each are made useful to all. The sum of human happiness is thus being surely increased, but we should be hasty in assuming that the growth of general commerce ensures for this island everlasting riches and industrial supremacy.
We ought not to forget that the enjoyments of a commercial country are not without probable drawbacks. We are no longer independent. The rise and decadence of other trading nations is no longer a matter of indifference to us. Our profits depend upon comparative not absolute riches, and as an individual nation we may find harm in foreign wealth.
And our anxiety must be indefinitely increased in reflecting that while other countries mostly subsist upon the annual and ceaseless income of the harvest, we are drawing more and more upon a capital which yields no annual interest, but once turned to light and heat and force, is gone for ever into space.
So far indeed as trade is dependent on legislation and social and political conditions, its future must be almost wholly uncertain and beyond the reach of reasoning. The development of history cannot be predicted, for in the "still and mental parts" of a single unborn individual may reside the forces which are to move the world. But industry and riches must have a material basis, and it is in this respect their future course comes somewhat within the grasp of science. The principles of economy have been so far investigated by our own writers, that with given material conditions the tendency of trade may often be certainly inferred. And if we may assume that the spirit of commercial freedom will spread and suffer no serious relapse, it is quite possible to foresee the necessary course of trade.
Taking commerce as the free growth of the instincts of gain, we find it resolved into a case of complex attractions and perturbations, as between several gravitating bodies. Trade between two bodies is a case of simple attraction, each naturally attracting and buying the articles which are made with greater comparative facility and cheapness by the other, paying with its own comparatively cheaper products. There is or should be no competition between them; each state should develop the kinds of industry and sources of wealth opposite to those of the other state. Free interchange of products then raises the economy of labour to its highest pitch.
In proportion, too, as the circumstances or industries of two states are more diverse, will trade between them be more to the advantage of each. Two countries whose circumstances are exactly alike can have no motive to trade with each other. Prices will bear the same proportions in each, and thus will leave no margin of profit on exchange, even to pay the freight. And this result will hold too even if one country were naturally richer in every way than another, provided it were in every particular equally richer. Thus if a man with a given amount of labour could raise both twice as much corn and twice as much wool in Australia as in England, we could have no trade with Australia in these articles. But if the same labour could raise twice as much wool but only just as much corn there as here, profit will evidently be gained on the exchange of wool and corn. To the writings of Ricardo, and especially of John Stuart Mill,[2] we are indebted for the discovery and distinct explanation of these principles.
When three states trade with each other, the problem is one of some complexity. A state possessing any peculiar kind of riches may profit and confer profit by trade with each of the other two, and the highest advantage will arise when each devotes its labour exclusively to kinds of industry in which it has comparatively the greatest facilities, or natural riches. If two of the states, however, are of similar circumstances, they cannot trade with each other, but only each of them with the third. And the total trade will have to be shared between the two similar states in some proportion to their absolute capacities of production. For if one had a larger share than this, its powers would be harder pushed and prices somewhat raised, which would at once cause trade to flow more towards the other similar state. If one of these similar states were to grow in absolute powers of production, it must take a greater share of the trade with the third state and positively abstract a portion of the trade between the other two, to the injury not of the third, but of the second similar state.
The question is now sufficiently complex to illustrate our actual position. In reality the countries with whom we trade present a problem of almost infinite complexity, but for simplicity we may form a few great groups according to similarities of condition. Five groups may be made to comprehend all countries with which we have relations of importance to our present subject.
- Great Britain, capable for the present of indefinitely producing all products depending on the use of coal.
- Continental Europe, capable of an indefinite production of artistic, luxurious, or semitropical products, but debarred by comparative want of coal from competition with us.
- Tropical, Eastern, and other regions, capable of supplying food and raw materials, but of climate and other natural conditions wholly different from those of Great Britain.
- Australasian, African, and American colonies, capable of an immense production of raw materials, but endowed with no considerable coal resources.
- United States of North America, capable of an immense production of corn and raw materials, but also possessing coal deposits thirty-seven times as great as our own.
At present Great Britain carries on a growing trade with all the other four bodies. The older nations of Europe, indeed, check the trade by restrictions upon the repeal of which we cannot certainly count. Our trade with Western Europe, too, is of a different character from that we enjoy elsewhere, because as the ancient seat of the arts, and endowed with considerable mineral riches, we find there our own superiors in many finer kinds of manufacture. With respect to France and Western Europe, then, we are mainly producers or traders in raw materials. Towards the Tropical, Eastern, Colonial, and American bodies, in fact to the world generally, we are manufacturers, seeking materials to operate, or food to live upon, and giving in exchange the products of our machine labour.
Suppose trade to spread according to that spirit of progress which seems almost the established order of things. For many years to come our relations will remain of the same kind as at present. Europe will receive more and more crude iron, coal, metals, and other materials, returning food, or elegant articles, while other parts of the world will take more finished products and return their appropriate raw materials. Wherever we trade it will be upon coal, or its more or less refined products. There is no saying that we may not thus progress for the greater part of a century, allowing our manufacturing population to quadruple itself, and our industry to multiply itself many times.
Let us now consider the changes that are going on within the several trading bodies. In Great Britain the agricultural population is about stationary, and its offspring has to find employment in the towns, or else to migrate. So familiar too is emigration becoming to us, so great are the facilities and foreign attractions to it, and so congenial is it to the British character to seek independence and adventure across the seas, that a continuous exodus of our population is already a necessity. Our emigrants either reside as agents and merchants in foreign ports and countries where they powerfully stimulate trade with England, or they settle in the colonies and States of which they increase the productive powers. And we must not forget that the kindred nations of Germany are suffering an exodus almost comparable to our own, and are similarly contributing to the growth of our colonies and the United States.
Supposing protective and restrictive tendencies not to gain ground, we shall continue to grow on the one side as a great manufacturing body, while the colonies and most foreign states will find a source of wealth and advantage in supplying us with raw materials and developing the kinds of industry for which their facilities are almost boundless as compared with ours.
But the growth of production cannot go on ad infinitum; natural limits will ultimately be reached on the side both of the agricultural and of the manufacturing country, even if no political events intervene to check the trade. Suppose some event to occur and prevent our growing population from meeting a corresponding increase of subsistence. From established habits of prosperity and early marriage we shall continue to grow with a certain inertia, but the rising generation will not find the comfort and early independence they were brought up to expect. They will turn to emigration as a congenial resource, and apply their labour to stimulate trade and the production of raw materials in many parts of the world. The corresponding demand for our manufactures will then tend to support or revive the progress of industry at home, and maintain the long existing rate of multiplication.
It is by a process of this sort that the recent emigration, incited to a great extent by the gold discoveries, has contributed to the late extraordinary increase of wealth. It has encouraged our population to adopt new habits of early marriage. And in America, Australia, Africa, Asia, and the Pacific Archipelago there are open lands and undeveloped natural resources which still admit of a vast extension and continuance of the same process.
Not to speak of the maritime nations, especially the Spanish and the Dutch, who preceded us in extensive colonization, the custom of planting out colonies with us dates back three centuries, to the time of Queen Elizabeth. As early as 1681 an English writer[3] clearly explained that plantations were not an exhausting drain upon the mother country, but rather "a wheel to set most of our other trades agoing."
"The plantations," he said, "do not depopulate, but rather increase, or improve our people," and they "have increast the profitable [[employment]s], not only by building of ships, carrying out our manufactures and products thither, but also by returning theirs hither to supply ourselves, and also a great part of the rest of the world."
When we look either to the trade the colonies carry on with us, to the internal happiness they enjoy, or the benefits which they promise to the world in the future, it is impossible to overvalue the Anglo-Saxon spirit of colonization[4]. But when we follow out a policy of free colonization to its necessary ultimate result, the prospect is more pleasing to a citizen of the world than to a citizen of this small kingdom. For free and voluntary emigration enables and induces our home population to go on multiplying at high rates, otherwise impossible. Not only then have we a growing population, but a growing margin also, who, even in times of the highest prosperity, must seek abroad the subsistence not to be had at home. The longer our prosperity continues unslackened the more necessary a free outlet will become. But the moment to be apprehended is when the first general check to our prosperity and growth at home is encountered. Then the larger part of the rising generation will find themselves superfluous, and must either leave the country in a vast body, or remain here to create painful pressure and poverty. A less active people than the English might endure the latter alternative, and sink by degrees into the stationary condition which characterised some continental nations, and England herself in the early part of the last century. But we may well refuse to look forward to such a change here, so painful must be the disappointment of the best hopes which must accompany it. Nor could we feel sure that our popular institutions could pass unharmed through a period of general pressure and want of employment among a vast artisan population.
The alternative, I say, is wholesale emigration. "The only immediate remedy," says Mr. Senior,[5] "for an actual excess in one class of the population, is the ancient and approved one, coloniam deducere.... It is a remedy preparatory to the adoption and necessary to the safety of every other." We have seen in the Chapter on Population (The Coal Question: The Problem of the Trading Bodies) how our agricultural districts in 1811—31 passed through a period of pauperism and excess of population due to an unwarranted growth of population. The gravest fears for our social soundness were excited, and the evil was only overcome by extensive migration into our towns and colonies. The Scotch Highlands and more lately Ireland have presented still more striking instances of the choice between pressure at home and migration abroad. It is only a question of time when our whole population, including that of our present most progressive towns, will be placed in the same dilemma, and the result must be a vast and continuous exodus.
But now comes the most serious point of all. After a certain period emigration will begin to have a very different effect upon the destinies of this country from that it now exercises. Instead of extending across the seas an agricultural system in harmonious union, with our own manufacturing system, it will develop, or rather complete abroad, systems of iron and coal industry in direct competition with ours. The process will be of a two-sided nature.
It is well known that in spreading over a new country, settlers are naturally apt to exhaust the virgin soil they get so cheap, regardless of manures and agricultural arts by which its fertility might be maintained. Upon a process of this kind the able argument of Prof. Cairnes in his "Slave Power" is founded, but exhaustive agriculture and migration are the necessary results in any country or social system of a boundless supply of rich lands. It must pay better to take the cream off the land when the farmer can freely select new farms of untouched richness. A gradual inland migration is the result, and so rapidly has this gone on in the United States towards the West, that already the settlers in Minnesota, Washington, and Nebraska territories are on the verge of deserts that never can be cultivated. And we cannot but acquiesce in the apparently extravagant estimates of American writers concerning the future constant growth of their population. So long as there is security for life and property left, people will multiply over lands so rich that, as an American orator said, "if you tickle them with a hoe, they will laugh with a harvest."
To appreciate the growth of the American people we need only look upon the results of the American census.
| POPULATION OF THE UNITED STATES. | |||
|---|---|---|---|
| Year. | Population. | Numerical Increase. |
Rate per cent. of increase. |
| 1790 | 3,922,827 | ||
| 1800 | 5,305,937 | 1,383,110 | 35 |
| 1810 | 7,239,814 | 1,933,877 | 36 |
| 1820 | 9,638,191 | 2,398,377 | 33 |
| 1830 | 12,866,020 | 3,227,829 | 33 |
| 1840 | 17,069,453 | 4,203,433 | 33 |
| 1850 | 23,191,876 | 6,122,423 | 36 |
| 1860 | 31,445,080 | 8,253,204 | 36 |
If we compare the above with the corresponding results for our population,[6] it will be seen that we have scarcely anything here to equal the rate of American increase in constancy or amount. The general rate of growth in America is double our highest rate (18 per cent.) for the country as a whole, and is just equal to the rate of progress of Glamorgan at present, or of our manufacturing towns at their period of most rapid increase.
The very emigration which checks the rapidity of our growth contributes to maintain that of America, and nothing is more probable in political matters than that their population will grow both by internal multiplication and by vast and ceaseless increments from Europe. It is not an extravagant estimate of the Superintendent of the American Census, that the population of the States will number 100 millions of persons before the year 1900.[7]
With such a growth of population agriculture must soon be carried to its first limits. Within a century the choicest lands will have been taken up, and the second and third rate must be settled, or the old exhausted lands revived by more diligent culture. Agriculture will begin to lose its extremely easy and profitable character in the States.
On the other hand, coal, yet to be had at the mere cost of quarrying, will offer more and more tempting employment comparatively to agriculture. In other words, labour no longer drawn away by the superior attractions of agriculture will become abundant in manufacture, and at last a sound system of metallurgical industry will grow up on the banks of the Ohio, capable of almost indefinite extension.
It is this decadence of agriculture joined to the rise of a manufacturing system which most distinctly threatens our commercial position. Corn will be growing dearer in the States, while coal and iron are growing dearer here. The industrial conditions of England and the States will thus approximate to equilibrium, and the advantages of trade will diminish. We shall neither buy corn from them, nor sell iron articles to them. And at the same time America will tend to supplant us in the European market for iron and other crude materials, and in all parts of the world in the market for textile and useful manufactured articles in general.
Then, if not before, the continuous multiplication of our home population and industry will receive a check, and a definitive choice of wholesale emigration or a change of habits will be presented to us. And it must be further observed that by the time in question our consumption of coal will certainly be several times as great as at present. Our total available stores of coal divided by the annual consumption will give a proportionately shorter period of even stationary duration. And while our colonial states will be growing in the vigour of youth, receiving our whole offspring, and establishing new currents of trade far from our shores, our strength will tend to fail continuously.
Of course at the worst we shall not be devoid of many resources. Our position, "anchored by the side of Europe," and close to the terrestrial centre of the globe, gives us a claim to the carrying and trading business of the world, which previously belonged to our close neighbours the Dutch. And our manufactures, though they must diminish in size and importance, may improve in finish and artistic merit. Our work will be that of the trinket and the watch rather than that of the Herculean engine—handiwork rather than machine work. We shall probably approximate to the manufacturing condition of Western Europe, and the extreme elegance of our earthenware, glass, and many small manufactures raises the hope that we may attain a high rank in artistic manufactures.
But excellence in such smaller matters can ill compensate the loss of our supremacy in the elements of engineering and maritime success. When navigation and the construction of a fleet is a pure question of coal mining and iron metallurgy, it is hard to see how we can insure that invincibility on the seas which is essential to the safety of an insular nation dependent on commerce for its very bread.
The rate of our progress and exhaustion must depend greatly upon the legislation of colonies and foreign states. Should France revert to a less enlightened commercial policy; should Europe maintain or extend a prohibitory system; should the Northern States succeed in erecting a permanent Morrill tariff for the benefit of Pennsylvanian manufacturers; and should the tendency of all our colonies towards Protection increase, the progress of trade may indeed be vastly retarded. Under these circumstances the present rapid rate of our growth may soon be somewhat checked. The introduction of railways, the repeal of the Corn Laws, the sudden settlement of our Australian colonies, may prove exceptional events. Then, after a period of somewhat painful depression, we may fall into a lower rate of progress, that can be maintained for a lengthened period, passing out of sight.
But on the whole Free Trade is likely to extend itself on the Continent. Our colonies after a brief experience may see through their mistaken and highly prejudicial views; and the Americans will hardly succeed in their apparent object of rendering their continent a self-contained Chinese-like Empire, unknown to European trade and intercourse. And in other parts of the world—Africa, Asia, and South America—there is sure to be a general and perhaps a very great opening for future trade.
It may reasonably be questioned whether a great and continuous increase of our industry is desirable in a national point of view. But for those colonies and countries which trade with us it is an unalloyed benefit. Corn would be a drug in North America, animal products in South America, and wool in Australia, but for the market we offer; and were not political economy a rather rare and difficult study, the inhabitants of the States, and of our colonies generally, would be aware that the development of the pastoral and agricultural powers of a new country is the first and most appropriate source of riches. It is the very profits thus gained that render wages high, and labour, as it is said, too scarce for manufactures to exist. To receive the products of a mature system of labour, like that of England, in return for the raw products of the soil, is the true mode of creating a rich and populous colony. When the soil is fully occupied it will be time to think of imitating and competing with older countries.
But manufacturers are always the first, as Adam Smith and Sir Robert Peel remarked, to desire artificial restrictions. Colonial manufacturers constantly aver that the overflowing pauper population of the old world enables it to undersell the productions of a colony. And they seize upon a paragraph in Mr. Mill's Political Economy,[8] in which that eminent writer cautiously recommends Protection as a convenient mode of giving a first impulse to a branch of manufacture. Mr. Mill can hardly know the evil which his words are working, misapplied and distorted in meaning as they are for interested purposes.
It is indeed a reproach constantly hurled upon England, even by her own offspring, that she only removed her restrictions—her navigation laws, her prohibition of the export of machinery, and of the import of continental manufactures—when they were no longer necessary. It is, however, quite doubtful whether we derived any real benefit from the navigation laws; there is no doubt that the other restrictions were a great injury to our progress, and in no way assisted the rise of our arts. The attempted strict exclusion of continental manufactures greatly conduced to our stationary condition in the first half of last century, and I am wholly unable to see how it the least forwarded those great inventions in metallurgy and mechanism which did cause our rise. Yet we continually meet in foreign authors such remarks as these: "The requisite skill and development of the mineral resources have been obtained by a century of experience, when foreign competition was religiously excluded by prohibitory duties, until England could make iron cheaper than all the world, and since then domestic competition has cheapened the processes, and reduced the cost to the lowest practicable limit."
The falsity of the statement as regards the point in view is apparent. From the very same writer I have already quoted the statement that about the middle of last century England imported fourth-fifths of the iron she consumed.[9] The high price of iron had long retarded, not forwarded, the progress of the engine, the railway, and the mechanical works generally by which alone our manufacturing system could be adequately developed.
Our growth has been nourished by freedom, not by restrictions; and if kindred colonies and nations and foreign states wish to raise the world into the earliest and highest state of wealth, they will push trade to its utmost without jealousy of the immediate wealth it confers upon us, in virtue of our coal resources and our well-developed skill.
Any attempt on the part of foreign nations to cripple the development of our trade injures them far more than us. The Morrill tariff almost wholly recoils upon the nation which submits to it. The effect upon us is seen in a temporary and inconsiderable check to one or two of our branches of industry. Its effect upon America is to cut it off from intercourse with the rest of the civilized world, to destroy its maritime influence, and to arrest, as far as human interference can arrest, the development of a great state. No doubt it enables a manufacturing interest to grow half a century or more before its time; but just so much as one interest is forcibly promoted so much are other interests forcibly held back. And no system of industry thus requiring the unnatural stimulus of government protection can compete with foreign systems stimulated by natural circumstances. When manufacture is naturally more profitable in America than in Britain we shall be supplanted, and not before then. The advent of that period can be hastened only by freedom of industry and trade, not by legislative devices.
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