II. (3)

For my part, when I consider how great are the causes which have lately concurred to derange our trade, I feel exceedingly thankful that we have so easily surmounted crises like those of the cotton famine, and the collapse of 1866. Our own transactions contain ample information to enable anyone to understand our present position, and the real causes of stagnation. I know no one who has ex pounded in so thorough, and, as it seems to me, so sound a manner the causes of commercial fluctuations as Mr. John Mills. His paper on Credit Cycles and the Origin of Commercial Panics shows in the clearest way that these recurrent periods of depression are not due to any artificial causes, nor can they be accounted for by the state and regulations of the currency; they have recurred under a régime of inconvertible paper currency, a régime of free issues of convertible paper, and a régime of regulated issues upon a metallic basis. I may add that in other countries similar panics have occurred where there was a purely metallic currency, and bank notes were unknown. They have also recurred, as I have already mentioned, under every form of tariff which has existed in this country during the present century, or even longer. Mr. Mills has proved that such fluctuations have a deeper cause which we can only describe as the mental disposition of the trading classes. As a fact, there is every ten years or thereabouts au excitement of hope and confidence leading to a profusion of speculative schemes, the incurring of a great mass of liabilities, the investment of a great amount of floating capital, and an intense temporary activity of trade. As we know too well, there follows inevitably a corresponding reaction, and we are now in the third year of what Mr. Mills has so well called the Post Panic Period. I trust that he will before long favour us with a continuation of his admirable paper, pointing out how completely the course of events is justifying his remarks.

There are at present signs of the dawn of commercial activity. The first slight blush of returning day is beginning to show itself. The promoters of companies are beginning again to put forth their proposals in an extremely diffident and deprecatory manner. As there are no unfortunate reminiscences attaching to deep sea cables, they are selected to lead off with, and I do not doubt that before two or three years are over we shall again have occasion to fear the excessive confidence and the occasional want of integrity of projectors. It is a very significant fact that the iron trade, after several years of depression, is now beginning to be active. If masters and men in that trade would only let it take its natural course there would soon be nothing to complain of; and it will be truly unfortunate if a premature advance of wages and prices—for such is thought by many to be the recent decision of the trade in South Staffordshire—should drive their better fortune from them. Prosperity is probably only a question of a short time, and the close connection which exists between the demand for iron and the amount of fixed investment about to be made, seems to render the price of iron the best commercial weatherglass.

What there may be in the trade of this district which is not adequately explained by the recent collapse may surely be due to the lingering effects of the cotton famine. This society has furnished the public, in Mr. E. Helm's Review of the Cotton Trade, during the years 1862–68, with probably the best arranged facts concerning the position of the cotton and some related branches of manufacture. His tables form quite a small hand-book of the subject, and no one can doubt that the disproportion which he proves between the manufacturing power and the supply of cotton is quite adequate to explain the state of things. And we must remember that the general depression of trade profits and employment unfortunately cooperates with the high price of the material at present to restrict the home and foreign demand for cotton goods. The cotton manufacture has thus been beset with every possible disadvantage, and it is absurd indeed to turn round and throw the whole blame upon that freedom of foreign commerce by which alone we can obtain a pound of cotton-wool.

One word upon reciprocity treaties. Those who harp upon this idea, because they have no other to offer, overlook the fact that every act of commerce is a treaty of reciprocity. We cannot import without we export to an equal value, and we cannot export without we import. When we broke down the barriers around our own shores we could not stimulate an inward without also stimulating an outward current. The current would doubtless be stronger were the barriers around other shores removed; but were it our habit to wait until other nations are ready to accompany our steps of progress, we should still be where we stood in 1819.