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worth of animal food which we import, and two millions' worth of rice-necessaries of life; and, over and above, there are thirty-six millions' worth of sugar, tea, coffee, wines, &c.—which were luxuries in former times, but which have now become part of the ordinary diet of the people. Next, as to our dependence upon other countries for employment. We annually import about 120 millions' worth of materials, the working up of which, in factories or other workshops, gives employment to probably a million and a half of operatives, many of whom have families dependent on them. This is a startling picture, but it has two sides. In one aspect, it is the greatest eulogy which could be pronounced upon our enterprise and greatness. Our little islands no longer suffice for us. Our energies have far overpassed their limits. There is room for us to live and work here—that is all. These islands are our house and garden, but our farm is detached. Or rather, we have no farm of our own, but draw our supplies from the farms of all our neighbours. We live upon the world. We have made so much money by generations of industry, and we employ our capital so well in trade and in other profitable investments abroad, that we can command supplies of all we want from all parts of the world. On the other hand, what would be the consequences of a blockade? Would it not wither us up at once, as if the national life had been smitten with paralysis? Would not our greatness fare like Jonah's gourd, which perished in a night by the gnawing of a little worm? We say these things not in alarm or despondency. But it is well that a consideration of these things should incite us to renewed zeal in projects which are at present too little regarded. England, if she preserve her greatness, must always

be dependent upon other countries; and, so far as regards trade and employment, that dependence must continue to increase. But at least let us strive to lessen our dependence upon foreign countries for food. Large tracts of ground, now lying waste, may yet be cultivated. Even between London and Southampton, in the finest part of England, there are wide expanses of level moorland, such as in the lowlands of Scotland would quickly be brought into profitable cultivation. The waste of our sewage, which is a disgrace to our civilisation, will ere long, we trust, give place to an economy which will work wonders, and make many a blade of corn grow where none ever grew before. The steam-plough, also, will do something, partly by lessening the cost of working the soil, but still more by working it deeper than is possible with horses. Finally, we ought to take measures to stock all our rivers and lakes amply with fish. A very large portion of the food of China consists of fresh-water fish,-yet in this country it is as rare as if it were a costly luxury, and by millions of our people is not tasted once in the year. Let us hope, then, that the future-among the other good things it may have in store-will see the sewage of our great towns, instead of being wasted in poisoning our rivers, applied in fertilising streams to the soil,-the steam-plough in general use,-our level waste-lands reclaimed,—our lakes and rivers amply stocked with fish,—and the luxury of oyster-beds plentifully established on our coasts. Such measures are called for by the necessities of our position. They are urgently needed to lessen, or at least to arrest the progress of, our perilous dependence upon other countries for food-a dependence which every year is increasing, and which, if the proper measures be not taken, must continue to increase


form of starch must likewise have largely increased and looking to these facts, as well as to the enormous quantity of wheat now annually imported into this country, we cannot but think that Mr Caird's estimate is too low.

with the spread of luxury and the growth of the population.


These are considerations for the Government and for the general community. All that our trading classes have to think of is to extend their operations, and to do so in as profitable a manner as they But they have apprehensions of their own-perils which primarily affect themselves, although the whole community ultimately suffers along with them. The present year has been commercially prosperous almost beyond example: yet shadows, as if of coming calamity, have ever and anon flitted across the sunny scene, and ever and anon our commercial classes have been filled with forebodings. The City of Gold has been troubled. In Tennysonian phrase, "its dreams are bad." The ease with which evil reports find currency is symptomatic of the prevailing nervousness. Only a week or two ago -in the beginning of Septemberthere was a panic on 'Change. The failure of several extensive firms was said to be impending, and the money market was seriously affected. The alarming report was without foundation; in part, at least, it is believed to have been set afloat by some unscrupulous jobbers who were bearing" the market. But the panic which occurred serves to show that the trading community is by no means at its ease. Evil which all men expect, says the proverb, never comes,-all men being on the alert to prevent it. Let us hope that such will be the issue in the present case. But at the same time let us see what are the dangers to which our trade is exposed.


It is a common saying, in some quarters, that the commercial classes in this country go mad every ten years. The great crisis of 1825 was followed by the minor crises of 1837 and '39, these by the crisis of 1847, and that in turn by the grand crash in 1857. Periodical insanity is alleged to be the cause of these calamities. An ever-recurring mania for over-trading is believed to seize


upon the commercial classes, and hurry them into ruin. This is a very bold assumption. A theory which supposes insanity on part of the shrewdest and most practical portion of the community certainly lacks, a priori, the air of probability. That, to the parties who hold this theory, our commercial classes seem to perform acts of insanity periodically, may be true; but may not the appearance of insanity arise from the acts being viewed through a wrong medium? Suppose a person, walking up and down in front of our windows, always as he passed a particular pane of glass appeared to us to be grimacing; would it not be sane on our part, before questioning his sanity, to look whether there were not a flaw in the glass, which made him appear to be grimacing, when in truth he was walking as soberly as usual? The first question, then, which naturally suggests itself is, Is it the fact that the commercial classes of the United Kingdom do actually, and in a manner suicidal for themselves, go mad every ten years?—or is there not something, in the circumstances of the country, which at certain periods gives to their operations a semblance of recklessness, when in reality they have no such character? Before charging the whole commercial and manufacturing classes with fits of insanity in over-trading, we think it right to ascertain whether there be not some element in the case which their libellers have overlooked, and a consideration of which may place their conduct in a very different light.


Över-trading" is a charge of recent date. The crisis of 1857 was the first occasion on which it was heard. Previous to that, another cry had been in vogue to account for the recurrence of commercial crises. They were attributed to "over-issues." That was the current theory from the beginning of the century down to 1844. Even in 1847 the old cry was heard in certain quarters, and the Bank


was blamed for not having contracted its issues"-i.e., reduced the amount of its notes in circulation. But that was the last of it. The theory would not hold water, and it was abandoned. Facts were too strong for it, and it became exploded. Judging by the light of subsequent experience, it seems marvellous that the theory kept its ground so long. From the time of the Bullion Committee downwards, "overissues" was the bugbear which constantly haunted the imagination of our currency-doctors, and influenced all our legislation on monetary affairs. Notably, it was the cause of the Bank Acts of 1844-5. The increase of the circulation by a million sterling or so was thought capable of producing the most momentous consequences. It "depreciated" the currency, and was the parent of our recurrent monetary crises. The upholders of the theory, it is true, never condescended to establish it by a reference to facts. They never demonstrated that in any case the currency was depreciated, nor did they show how such depreciation operated in producing our monetary crises. They could not with reason maintain that the convertibility or value of our notes was impaired, for after the Act of 1819, every one who mistrusted the notes could take them to the Bank and get_gold for them; and it is absurd to suppose that the public, with this option open to them, would keep the notes in circulation if they did not maintain their full value in relation to gold. But "over-issues" was the cry of the day; a depreciation of the currency was believed to follow every little increase in the Bank's circulation, and to occasion all our embarrassments. The difficulty is to imagine how such a theory ever originated. What are we to think of it now, when, with an addition of 300 millions sterling of the precious metals to the world's currency, it is still doubted by many authorities whether there has been any depreciation of the value of money at

all? Certainly, so far as regards the value of money on loan, instead of depreciation, there has been a most notable increase.

After the passing of the Act of 1844 these much-dreaded over-issues were held to be no longer possible. Moreover, attention having been given to the subject, it by-and-by came to be seen that the importance which had been attached to fluctuations in the amount of the Bank's circulation was quite groundless. The old cry was abandoned before 1857, and no one dreamt of reviving it when the great monetary crisis of that year occurred. But if the Bank Act had rendered our monetary system perfect, what explanation was to be given of this new calamity? Then it was that the theory of "over-trading" was propounded, and it has become as current as the cry of overissues" used to be. The old cry has become exploded,—has the new one any better basis of support? It does not matter with what parties the cry originated—we need not speculate whether it was the result of an honest belief, or whether it was adopted as a convenient means of shielding from scrutiny our present currency-laws. All that we have to concern ourselves with is, Is it true?


What has been may, and, if not guarded against, will occur again. If over-trading were the cause of the terrible calamity of 1857, the more fully the fact is investigated and exposed the better. If it were not, then the sooner we disabuse ourselves of the idea, the sooner we shall be in a position to discover the real cause of our commercial disasters. We must get off the wrong scent before we can find the right one. The question is of momentous importance to the welfare of our trade, and should be put beyond the influence of haphazard conjectures. In so matter-of-fact a department as trade and commerce, it behoves one to eschew mere assertions and vague generalities. In commercial matters, above all things,

let us have precision. Now, if overtrading were the cause of the disasters of 1857, what was the amount of it, and when did it begin? In the summer of that year-as every one will remember who gives attention to commercial subjects-all parties were agreed as to the soundness and prosperous condition of our trade; and not a whisper was heard of credit being overstrained to support it. Not only the mercantile classes, but our most cool and observant economists held and expressed this opinion. How was it, then, that the trade which was not felt to be excessive in the summer, broke down so utterly at the end of autumn? How was it that the credit-system of the country, which supported that trade buoyantly and prosperously in July and August, proved utterly unable to sustain it in November? Manifestly, in that short interval, there must have been a great change: either Trade must have experienced a great expansion, or Credit must have become suddenly enfeebled. Which of these things was it which happened? In the altered relations between Trade and Credit, which caused trading to become or appear over-trading, was it on the side of Trade or on the side of Credit that the alteration took place? In the brief period that intervened between the height of our prosperity and the depth of our adversity, was it Trade that extended itself, or Credit that became crippled?



The storm came upon us from America but when it was raging on the other side of the Atlantic, the journals which are the most observant critics of commercial affairs the 'Times' and the 'Economist'—were unhesitating in their assertions that a similar disaster would not extend to this country, so firm and healthy was the condition of our trade. So late as the 7th November, after several large failures had occurred. -including the exceptionally bad ones of Macdonald and Monteith in Glasgowthe 'Economist' continued to reiterate unhesitatingly its testimony to

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the sound and prosperous character of British trade. "That this country is intrinsically better off, as regards its obligations and financial position,” it said, "there can be no doubt." In another editorial article in the same number upon our Imports, it was remarked, that " "one of the great sources of loss which have attended former periods of commercial pressure, has been the large accumulation of foreign products in our warehouses-the consequence of extensive and improvident importations, stimulated by high prices, and the necessary reaction which took place at such times;" but that "this cannot be said, at the present time, of any of the chief raw materials, if we except the single one of silk.” Again, in a leader upon our Exports, in the same number, the editor put and answered the following decisive questions:-"Is there any evidence that the export trade of this country during the last year has been of a forced character? Has there been any glut in the home market, either of raw materials or of manufactured goods, which could have led to such a trade? Has there not, on the contrary, been a great scarcity of raw materials and a continually rising price, caused by an extending demand? The mere fact that failures have taken place in the United States, which have led to heavy losses in this country, in no way affects the general argument-unless it can be shown that those failures have been caused by losses directly resulting from the imports from this country. such proof exists. On the contrary," &c. And in the same article, as if the real soundness of our trade could not be too often or too explicitly stated, it was said :—“ Unlike the crisis of 1847, we have in the present year, in common with all Europe and the United States, instead of scarcity and famine, one of the most abundant harvests ever known; and, unlike the crisis of 1847, when we had obligations to the extent of more than £150,000,000 in the shape of railway-calls im



pending over the country, our commercial classes are now more free from such demands upon their resources than they have been for many years."


These are weighty statements. Here is a writer a recognised authority-carefully considering the whole subject, and speaking with all the official returns and private trade-circulars before him. Here is a man who, in the presence of a great danger, anxiously scans all parts of our position, to see if there are any weak points, and can find none. Again and again, the Times' expressed a similar opinion. For example, on the 9th October, when the Bank began to raise the rate of discount, the leading journal in its City article remarked: "As regards the broad trade of the empire, it is impossible to discern the cause of fear. Month by month our commercial payments increase in magnitude, and yet are met with a punctuality never surpassed. All the leading bankers will testify that thus far there is an absence even of those premonitory symptoms which invariably warn them of the possibility of a coming struggle, long before the community at large have become awakened to it. Hence the belief may be confidently indulged that, although with our universally diffused transactions we must necessarily participate in every shock that occurs elsewhere, our commercial prosperity is destined still to continue a marvel to the world." The 'Times' and Economist' were right in these statements as to the soundness of our trade. What, then, caused their anticipations to be so lamentably falsified by the issue? Instead of remaining a marvel to the world," what caused our trade to break down utterly, covering the country with wrecks and mis


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6 The Times' and 'Economist' erred in their calculations simply because they looked only to the state of trade, and overlooked the effect which the American panic would produce upon our monetary system. It was the failure

of the latter which occasioned the failure of the former. The cause of the crisis of 1857 was not bad trade, but a defective currency-law. It was not the fault of our commerce, but of our monetary system. After the crisis had done its work, indeed, the impression became general that our commerce had been running wild; and the numerous bankruptcies and suspensions were appealed to as showing that such must have been the case. This was an ex post facto argument of a most inconsequential kind. That thirty thousand soldiers died in a week's time that week having witnessed a battle-is certainly no proof that the army to which they belonged was in a frightfully bad sanitary condition. Doubtless the ailing soldiers of an army are sure to be knocked over in a hand-tohand fight, but the proportion of such cases is insignificant; and thousands more perish who, but for the battle, might have lived in health and strength for the natural term of existence. The country knows to its cost that the failures and suspensions in 1857 were disastrously numerous; but the question remains, What was the cause of them?

The supporters of the cry of overtrading founded their charge against the commercial classes on the fact that the export trade in 1857 was greater than it had ever been before. It had increased six millions above the highest amount in any previous year. True, in some of the previous years, there had been an increase not only as great, but three times greater. That was undeniable: but, said the supporters of the overtrading theory, that does not matter: it is now obvious that our merchants and manufacturers have carried trade beyond the limits which the capital of the country can support. The amount of the increase on the year may have been only six millions, but these six millions have been an excess. An export-trade of 122 millions, they said, is a forced and inflated trade, beyond the requirements of the world,

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