The Franco-Prussian war had ceased, and in France property which had been injured or destroyed had to be replaced or made good; while the Germans, elated with victory, and temporarily flush of money in consequence of the 200,000,000l. indemnity paid to them by the French, purchased and speculated freely. America had recovered from the withering influence of her Civil War and the unrest and discussion which succeeded it, and had turned her attention to the development of her magnificent resources. Capital was invested, land was brought into cultivation, and railways were constructed. English capitalists lent money abroad freely. Foreign States negotiated loans, and foreign companies were floated. All this meant. expenditure and a great rush of business; a great demand for goods and high prices. The demand and the prices stimulated the erection of new works, the sinking of new mines, and the extension of old ones. This, again, increased the demand for goods and labour, and stimulated trade for the time being. It was, however, largely based on an abnormal condition of things, and eventually the relapse came. The extra demand ceased. In France the damage done to property was repaired, and then the people had to be economical and set themselves to recover the loss they had sustained. In Germany the 200,000,000l. was expended, and the works and plant which had been erected to supply the demand caused were without employment. In America more ground was opened up and more railways were constructed than could be profitably employed. Extension ceased, and depression set in. In the countries to which British capital had been lent it was expended, and in many cases the investments turned out utterly worthless. Further advances ceased, and new loans could not be negotiated. The demand for the class of goods which had been purchased with these investments fell off. Throughout the world speculation was at an end, and depression prevailed. The demand for goods had been greater than the supply. Now the means of production exceeded the capacity of the people to purchase. At once the competition for the demand which remained became excessively keen, and prices fell with unprecedented rapidity until the weakest went to the wall, and demand and supply began to balance each other once more. England being the largest manufacturing nation, the demand for our goods was great, and corresponding preparations were made for meeting it. When the collapse came we felt it severely.

The relapse from marvellous prosperity to even the same bulk of trade as prevailed before was, of course, excessively trying, but a thoughtful examination of our present commercial position will show that there is really no cause for undue anxiety in reference to our foreign trade, or our supremacy as a manufacturing nation. In 1870 -the year prior to the extraordinary spurt our exports were 244,080,5771.; last year they were 286,414,4667., showing a bonâ fide increase of 42,333,8891. in the ten years. Even in 1878, when our

exports reached their lowest point, the difference between them then and in 1872 was more one of price than of quantity; and now, although their value is still less than it was in 1872-3, the quantity of goods exported is really greater. The following table, showing the most important classes of goods in which there has been an increase in the quantity exported, will be of interest :

In worsted stuffs and linen goods alone of our staple trades, has there

been a decrease in quantity.

The extent to which prices have fallen may be gathered from the following illustrations :

That is to say, while in 1880 we exported nearly half as much more alkali than we did in 1873, we got 500,000l. less for it. We exported 958 million yards more of cotton goods, and got a mere trifle more We exported 835,000 tons more of iron and steel goods,

for them.

and got 9,000,000l. less for them. And so on; the list might be continued through the greater part of the goods we send abroad. The prices in 1872-3 were excessively high; now they are excessively low. When, therefore, we see that the total value of our exports last year was only about 10 per cent. less than in the palmiest days of prosperity, and we find that prices averaged 25 per cent. less, we may be satisfied that in quantity our trade has not suffered.

It is especially encouraging to find that our total exports have increased in bulk when we remember that one or two countries, with which we formerly did a large trade, have during recent years practically prohibited many of our goods by imposing heavy duties, and that other countries only bought from us with money that we lent them, and that, as we have ceased to lend, they have ceased to buy. The decrease in our exports to these countries was as follows, comparing 1872 with 1880:

The decrease in our export trade to all the world between 1872 and 1880 was only 28,174,3681. So that the decrease to these countries was 17,748,454l. more than the total decrease, which of course implies that so much of what has been lost there has been made up by our increased exports elsewhere. The decrease to the countries named is easily explained. The decrease to Germany and Holland is due to the heavy tariff which Germany has recently imposed. A considerable portion of English exports go to Germany through Holland, and appear in our Government returns as exports to Holland. The value of the goods imported from us by Holland for home consumption was rather more in 1880 than in 1872. The decrease in the gross is the decrease in what went through to Germany. Germany is buying less coal, iron, machinery, and cotton and woollen goods from every one than she did formerly. Canada and the United States have also imposed heavy duties on all imported goods. Egypt, New Granada, Uruguay, and the Argentine Republic are defaulting borrowers. Chili and Peru have been at war with each other, and have bought little from any one. So that even in the case of these countries where we have done less trade, and where the decrease more than accounts for the total difference between last year and our most prosperous times, we have not been beaten by outsiders who have gone in and supplanted us. No one else has got our trade. The people are either supplying themselves or doing without the goods. In neutral markets our supremacy is untouched.

A suppositious parallel case will illustrate the point sought to be established. If in a town of medium size a large tract of building ground was brought into the market and built upon, say by a company formed for the purpose or by the owner of the estate, that would cause a large expenditure of money and stimulate trade there. Many workmen would be employed, large quantities of material would be used, and tradesmen would be busy meeting the requirements of the contractors and their men. For the time the town would be in a very flourishing state. The demand for everything would be great, and corresponding preparations would be made to meet it both by residents and new comers who would be attracted to the place. But when the ground was covered and the work completed, the town would return to its normal condition and everything would appear to be very quiet. There would be a relapse; workingmen would leave the district; the demand for materials and provisions would fall off, and competition amongst the tradesmen who qualified themselves for doing the larger business would be very keen. Nevertheless, if the trade of the town never went below what it was before the special work began, but year by year showed a gradual increase until even the returns of the specially busy times were nearly equalled, no one who thoroughly understood the facts of the case would say that the town was going to the bad. And that is just the position of this country. The spurt of 1871-3 was special, and then for five years there was a falling off in our returns year by year. But at the very lowest point they were a little in excess of the returns of 1870, the year prior to the great advance.

The most serious feature of the depression through which we are now passing is the condition and prospects of agriculture. A succession of bad harvests has entailed a far greater loss than all the competition of other nations in manufactured goods. The loss involved in the failure of crops through adverse circumstances during the last five years has been variously estimated, but it is generally agreed by the best authorities that it cannot have been less than 150,000,000l. The country is the poorer in consequence, and the demand for goods in the home trade is so much the less. The serious effect of this agricultural depression is usually overlooked by those who seek to explain the condition of our manufacturing trade by declaring that we are outstripped by foreigners. The falling off in the demand for goods has been at home rather than abroad. The excessive competition amongst our own makers for the trade there has cut down prices until there is little or no profit left, and that, again, has curtailed the purchasing power of manufacturers and merchants. When manufacturers and merchants are doing badly, tradesmen find their businesses falling off, and they are unable to purchase as before, and thus the depression acts and reacts.

What is the remedy for agricultural depression, beyond fine

weather, it would be beyond the scope of this article to discuss. Certain it is that the land laws will have to be reformed and tenants put on a better footing of security and independence. Landowners cannot prevent that by agitating for a duty on corn. The working classes will not put up with a tax on food. If dearer food means higher wages, our foreign trade in manufactured goods will be crippled. If it does not mean higher wages, working-men will never consent to have the cost of living raised by artificial means. It would be impoverishing Peter to pay Paul, and Peter would decline to submit to it.

Un

Some people are very seriously troubled when they see by the Board of Trade returns that our imports exceed our exportsthat is, we receive more goods into the country than we send out. They say we are buying more than we are selling, and that we must therefore be drawing upon our capital and impoverishing the country to pay for goods supplied to us by foreigners. questionably we do import more than we export. Last year our imports were 411,229,5657., and our exports 286,414,4667.—an excess of imports of 124,815,099. But that is by no means a bad sign. In fact in the present condition of things it would be ominous indeed if we did not import more than we export. To understand this question of imports and exports it is necessary to have a clear appreciation of the various items which swell our import returns. Our imports consist of three main items:—

1. Goods in payment for goods exported by us.

2. Goods in payment for the freightage of goods carried in British vessels.

3. Goods in payment of interest on our investments abroad.

Large sums of money are due to us every year from other countries under these heads, and if in payment of them we only received as much as or less than the total value of our exports, we should indeed be going to the bad.'

One result of England's free trade policy and her natural advantages, is that we are the largest owners of shipping in the world. The British merchant navy comprises about one-half of the world's carrying power by sea, and three-sevenths of the goods which pass from one country to another by sea are carried in British vessels. The earnings of our merchant vessels in all parts of the world are estimated at about 60,000,000l. a year. A small portion of that sum will be spent at foreign ports by the crews, and in repairs, renewal of stores, harbour dues, and the like, but the bulk of it will come to this country in goods.

The way in which this shipping works in relation to our Board of Trade returns, will be made clear by a simple illustration drawn from affairs on land. At a village ten miles from a town or a railway station there are lime-kilns. A carter in the town buys a ton