THE distinguished political economists, English and foreign, who, in The Financial Review of Reviews, have taken part in the discussion of the question of the "Geographical Distribution of Capital" have, with the single exception perhaps of Mr. Hobson, been adherents of the Old Political Economy of the Schools, and have taken not only their method of approach but the point of view which they have brought with them to the discussion, from its distinctive and peculiar teachings. It is perhaps hardly necessary for me to say here that all the fundamental principles and tenets of this Old Economy of Adam Smith and Stuart Mill have Free Trade as their logical sequence and corollary; or, to repeat what I have so often had occasion to point out elsewhere, that they all end in the belief that whatever benefits trade in any one country necessarily benefits it in each and every other with which that country has international business dealings.

Effect Of National Free Trade

Now, this latter proposition I venture to unhesitatingly deny, and to affirm, on the contrary, that under a universal Free Trade between nations it will only the more certainly be found that an increase of wealth founded on the supremacy of a particular trade in any one country is sure to be followed by a corresponding decline in the same trade in all those other countries which up to then had, by natural or artificial Protection, become rich and powerful by its exercise.

Hamburg's Gain Genoa's Loss

This is a proposition to which universal history, mocking the delusions and hopes of the Old Economists, has in every age of the world borne witness; but at no period perhaps has it focussed itself with so much clearness and pregnancy as in the case of the Hanse towns and of Holland on the ruins of the mercantile trade of Genoa and Venice which followed directly on the discovery of the new Cape route to the East; or of England, in turn, on that of Holland. But it is a proposition as true of manufacturing countries engaged in an international rivalry with the same class of goods as it is in the mercantile and shipping trades. Sooner or later under a universal Free Trade they must come to a hand-to-hand grapple with each other, and the quicker the more free is the trade between them; and then, as in all human things, the strongest will carry off the prize. There is no sharing and sharing alike between the conquerors and the conquered anywhere or in any concern in this world.

Old Economy Versus New Economy

But all this is, indeed, only the natural and necessary deduction from the principles of the New Economy which, in this discussion, I am now to apply to the problem of the Geographical Distribution of Capital, and which I have set forth with a sufficiency of detail in my Wheel of Wealth. Or, to put it differently, a policy of Protection for nations in the present industrial development of the world follows as naturally and by as rigid a logical sequence from the principles of the New Economy as a policy of Free Trade followed from the opposite principles of the Old Economy ; but with this advantage in favour of the New Economy, that it is founded throughout on maxims which every business man recognises, believes in, and acts upon, and not on false abstractions like that of the "economic man" of the Old Economy, or (especially in this age of Trusts, Combines, and Tariffs), on the delusive imagination of an "absolutely free competition," or the now played-out role of laissez-faire - all of which business men have long since thrown on the dead scrap-heap as quite useless either for their instruction or profit.