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Trade
Trumps War
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Trade
Trumps War
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"The progress of freedom depends upon the maintenance of peace, the spread of commerce, and the diffusion of education, than upon the labors of cabinets and foreign offices." ~ Richard Cobden1 "Peace is the natural effect of trade. Two nations who differ with each other become reciprocally dependent; for if one has an interest in buying, the other has an interest in selling; and thus their union is founded on their mutual necessities." ~ Montesquieu2 It is now 140 years since an English-French trade treaty helped avert war between these two longtime European enemies. Commerce, not the legally sanctioned murder called war, is the engine of peace, said the MP Richard Cobden, the leader of the Manchester School, a group of radical parliamentarians in Mid-Victorian England. Trade would not only help the English and French to stop killing each other, but these two peoples could learn how to work together to generate a common prosperity, Cobden hoped. The Cobden-Chevalier treaty of 1860 reduced or ended most tariffs between the two nations. The treaty eased tariffs sufficiently "to afford a ready and reciprocal market for British heavy and French light goods on opposite sides of the channel."3 French wines no longer had to be smuggled into England and British woolen clothes became available to many French people who previously had no access to these superior products. More importantly, according to proponents of the Manchester School, the treaty’s benefits would be much more than economic. "They wanted," said John Bright, another leader of the Manchester School, "not that the Channel should separate this country from France: they hoped and wished that Frenchmen and Englishmen should no longer consider each other as naturally hostile nations."4 Much of that was, in fact, accomplished. The treaty led to the waiving of passports for Britons visiting France and cheaper postal rates between the two nations.5 Over the 19 years between 1858 and 1877, English-French trade increased by over 200 percent.6 France’s industries were forced to modernize. Even some of Cobden’s political opponents, a few years later, were proposing various honors for "The International Man."7 Still, there was plenty of opposition on both sides of the channel to the idea of freer markets. Some of the objections to the trade treaty were nationalistic, some political and some economic. France, in the mid 19th century, was a nation with a long history of protectionism going back centuries to the era of Louis XIV and his chief minister, Colbert8 "For when Colbert spoke of the State, he wasn’t thinking of the nation, of the vitality of its trade and industry, its spontaneous and innovative expansion, but of the royal bureaucracy, guiding and controlling all productive activity."9 These policies stifled innovation and retarded industrialization. French industrialists were "bitter"10 in their opposition to Cobden-Chevalier treaty. Opposition in the Corps Legislatif was intense. Napoleon ended up having to bypass the French legislative chamber and exercise his considerable executive powers to approve it. Many French industrialists believed British industry had all the advantages over them. Prior to the Cobden-Chevalier accord, many British articles had been prohibited from the French market. Others carried high tariffs that put them beyond the reach of average citizens. In Britain, in the midst of a period of free trade in the late 1850s, nevertheless, there was opposition to a treaty with France. England had a long history of wars, interventions and war panics. Many involved France, Britain’s traditional enemy. Encouraging trade with France would sacrifice Britain’s national security needs, said British opponents of the treaty. And the nation’s security was very much in jeopardy, they claimed, because France seemed poised to avenge the "wrongs" inflicted on it in the treaty of 1815. Invasion scares, remarkable plots supposedly involving huge French armies that were about to descend on Britain, made the rounds of many British newspapers at the end of the 1850s. The War Panic of 1859Britain and France, two ancient enemies who had gone to war many times, seemed ready to fight again in the winter of 1859-60. Despite an alliance between the two nations during the Crimean War of five years before, France appeared on the brink of attempting European domination, some in Britain believed. England’s belligerent prime minister, Lord Palmerston, was angry about French policy in Italy. The French emperor, Louis Napoleon, Napoleon III, had entered into what had been a secret agreement with Italian nationalists in 1858 to start a war with the Habsburg Empire, a war in which the French would gain territory after the Hapsburgs were defeated. Palmerston had mixed feeling about Italy. He saw the Habsburg Empire as a stabilizing force in Europe, but he supported Italian nationalism. While he wanted the kingdom Sardinia in Northern Italy to expand and continue to be the leading force of Italian nationalism, he nevertheless didn’t want to see France as a champion of Italian nationalism. If France helped unite Italy, Palmerston feared that it would gain territory, prestige and topple the balance of power in Europe by bringing down the Hapsburg Empire,11 which he saw as a stabilizing force. By the end of the war, in 1859, France obtained Nice and Savoy. Payment was in exchange for Napoleon helping to create a new kingdom of Italy, which was run from Turin by King Victor Emanuel and his prime minister, Count Cavour. The Kingdom of Sardinia in Northern Italy, under Napoleon’s tutelage, would lead the way for Italian unification. Palmerston was not only disturbed about the French stealing a march on the British in Italy – many British Whigs such as Palmerston and Lord John Russell, Palmerston’s foreign minister, had considered themselves patrons of the Italian unification movement – he also railed that Britain’s cross-channel rivals were after more territory in Europe. Belgium, a nation carved out of Holland in the 1830s and whose neutrality was guaranteed by Britain among other European powers, was within Napoleon’s sights, Palmerston contended with some justification. Various other territories on the Rhine were also the targets of Louie Napoleon’s imperial aims, Palmerston claimed.12 Actually, Napoleon was interested in all these territories and his clumsy expansionary moves would eventually lead to his clash with Bismarck’s Prussia a decade later. His greater France goals would be confirmed when he wrote a memo indicating that he was interested in swallowing Belgium, a memo skillfully revealed by Bismarck on the eve of the Franco-Prussian War, a war that France had to fight without any allies.13 Palmerston, in the panic of 1859-1860, tried to revive the ghosts of Louis Napoleon’s uncle, Napoleon Bonaparte. But the greatest threat from across the channel, Palmerston said, was France’s attempt to upset the balance of power, a balance that had been maintained for 45 years by England’s great fleet. British governments often used the Royal Navy to enforce a Pax Britannia on Europe and much of the rest of the world. However, Palmerston, who had just become prime minister for the second time in 1859, warned that was all changing. Britain’s advantages were compromised by technological advances. France’s new modern ironclad warships were altering the balance of power. Britain’s ancient rival could and might invade a helpless nation, whose fleet contained many ships that seemed antiquated. Napoleon wanted revenge for his nation and his family, Palmerston said.14 "At the bottom of his heart," Palmerston said of Napoleon during the war panic of 1859, "there rankles a deep and inextinguishable desire to humble and punish England."15 This was a canard. Napoleon had no intention of clashing with the nation that had been instrumental in ending the career of his uncle. Palmerston’s comments puzzled Napoleon, who was an Anglophile16. Napoleon would end his days as an exile in England after the disastrous Franco-Prussian War. Old PamBy 1859, Palmerston had been the leading statesman of early and mid-Victorian England for a generation. His career went back to junior posts in governments during the latter part of the Napoleonic wars. The war scare of 1859-60 was one of many panics that plagued Britain in the last few decades. Cobden noted that none of them ever proved to be true, although he found that military budgets were swelled by these periodic scares.17 Palmerston had made his reputation as a bellicose leader ready to protect British interests by using gunboat diplomacy and who wasn’t particular about asking permission of parliament before he took military action. Palmerston had tried to persuade his great critic Cobden to join his second government, a way of reducing his criticism of British foreign policy. Palmerston used the argument that he could be more effective as part of the government than outside of it. In matters of foreign policy, he told Cobden, the government takes action, then, only after the fact, informs parliament.18 Cobden declined. Although Milner Gibson was named as president of the Board of Trade to represent the Manchester School philosophy in the cabinet.19 Several times foreign minister and twice prime minister, Palmerston’s presence was so important that it could make or unmake governments in Mid-Victorian England. He had helped stir up public hatred of the Russians in the 1850s and later became prime minister during the Crimean War, a war Cobden had called "a crime." This nationalistic Palmerston had gone to the country in the election of 1857 to defend his decision to wage the Opium War. His most famous parliamentary speech had come in the Don Pacifico debate of 1850. In the latter case, he had defended the waging of war against Greece over the contested property claims of one citizen. Palmerston had plenty of ammunition to stir up Anglo-French tensions. Louis Napoleon, after the war against the Hapsburgs, was making noises about expanding on the Rhine, which would hurt German states that had been Britain’s traditional allies. This action would upset Europe’s balance of power, Palmerston argued. This was a doctrine in which no one nation should be allowed to become too powerful, a concept that many British statesmen had held it was their nation’s duty to uphold. It was under these circumstances that several of Cobden’s friends suggested this was the time to counteract these tensions with a trade treaty. Pam’s government ended up working at cross-purposes. While Cobden, with the approval of the cabinet, was attempting to negotiate a treaty, Palmerston was, in effect, trying to sabotage it.20 He insisted that parliament make a supplementary appropriation for more forts because of the danger of attack from France.21 "The committee," Palmerston told a parliamentary committee reviewing the plan for more military spending, "knows that in the main I am speaking of our immediate neighbors across the Channel, and there is no use disguising it." Palmerston’s comments were also having their effect outside of parliament. Said Meyer Rothschild, an MP in 1860, "There is one universal feeling of mistrust of Louis Napoleon."22 Stopping a WarThe Manchester School went on a peace offensive. A trade treaty between the British and French had been discussed off and on for close to a decade. Now, with the possibility of war, seemed a good time to use economic forces to neutralize nationalistic prejudices. The Manchester School’s philosophies – labeled as hopelessly idealistic by its critics – were multi-faceted. Take nations that had been mortal enemies, drop the tariff barriers between them and try to bring their economies as closely together as possible. Integrate their economies through free trade and two cultures would blend together.23 After that, think about joint citizenship. Make war unthinkable even for the most belligerent nationalistic politicians. Make war an economic disaster that would benefit neither nation. The key to accomplishing this was a maximum of relations between people, but a minimum of intercourse between governments, an idea that had been mentioned in George Washington’s farewell address and that today is sneeringly referred to in most major media outlets as "isolationism." The policy goals of the Manchester School were the integration of various peoples. But, for these goals to be achieved, they required governments to do less and less; to get out of the way and let people work with each other. "I utterly despair of finding peace and harmony in the efforts of governments and diplomatists," Cobden wrote Chevalier after he had discussed the proposed treaty with some members of Palmerston’s cabinet. "The people of the two nations must be brought into mutual dependence by supplying each other’s wants. There is no other way of counteracting the antagonism of language and race. It is God’s own method of producing an entente cordiale, and no other plan is worth a farthing."24 Richard Cobden’s Analysis of British HistoryTo Richard Cobden, who had opposed the Crimean War, and had been driven out of parliament because of his relentless opposition to this initially popular war, the balance of power was a ridiculous doctrine. It was an excuse for Britain to interfere in all sorts of wars. It led to an endless cycle of political intrigues and military interventions as well as formal, protracted wars because Britain had become the self-appointed policeman of Europe. "Our history during the last century," Cobden wrote early in his career in the late 1830s, "may be called the tragedy of British intervention in the politics of Europe; in which princes, diplomats, peers and generals have been the authors and actors – the people the victims; and the moral will be exhibited to the latest posterity in 800 millions of debt."25 Where would the wars and inventions all end? Cobden believed that, as long as the balance of power doctrine was a staple of British foreign policy, they could on forever; that if Britain were to maintain a balance of power she would have to act as Europe and the world’s policeman. In a later era, another astute critic of playing world policeman would call the policy of persistent interventions "globaloney."26 In short, Cobden warned that Britain could never have peace because the Manchester School could never be completely successful in stopping every war scare. It had failed to make an effective case at the outset of the Crimean War. It had toppled Palmerston’s government in 1857 over the issue of the Opium War, only to see Palmerston come back stronger than ever after elections. Cobden once told a colleague that, once the war fever was unleashed, it was useless to make a case for peace until the fever broke. But Cobden held that there was an alternative to the balance of power, to waiting until a war-mad public had recovered its sanity. With the prospect of another war before him in late 1859, Cobden was also encouraged by the French economist Michel Chevalier,27 a friend and ally of Napoleon III. He encouraged Cobden to take the initiative and try to negotiate a trade treaty with France. This might be the way to prove that the two nations had much in common. The war talk might be diffused if Britain and France were to enter into a trade treaty. Cobden, whose campaign to end taxes on foreign grains had made him an international celebrity with the defeat of the Corn Laws in 1846, had the reputation and credibility to negotiate such a treaty if the British government would allow it. The Corn Laws were import duties on various grains, taxes that drove up the price of bread. At a time of bad harvests in the 1840s, these taxes were very expensive for many Britons, who in the so-called hungry forties were paying a high percentage of their income for expensive grains. Looking for Allies – Pam’s Divided GovernmentCobden hoped that he could use his reputation to make a case to the French that it was in their interests to drop trade barriers. He consulted with the government’s foreign minister, Lord John Russell, asking his permission to negotiate on behalf of the British government. Russell was not enthusiastic about the idea.28 He had often supported Palmerston in his war policies. He, also, was distrustful of Louis Napoleon.29 But, after speaking with the strongest man in Palmerston’s cabinet, William Gladstone, Cobden was encouraged to enter into negotiations with the French. Gladstone’s blessing was important. Cobden had obtained a powerful supporter in the government, a government that was often divided between Gladstone, who was backer of many of the measures of the Manchester School, and Palmerston, who thought the principles of this radical group were madness, which would someday result in British defeat and disgrace. Said Bright: "He (Palmerston) did all he dared to make the treaty miscarry."30 Palmerston had backers in the cabinet who agreed that the treaty was a bad idea. He persuaded many of the newspapers of the same, but, perhaps, his most important allies were his "nominal"31 bosses, Queen Victoria and the normally pacific Prince Albert. The Queen’s greatest fear was that the treaty might be a success: "if…the effect which such a treaty is to have upon the feeling of this Country were to be really what Mr. Cobden anticipated it would be a great national misfortune, arresting as it would our preparations for self-defense."32 Selling coals and iron to the French without tariffs might give them the weapons to wage war against Britain and rob the nation of vital revenues it would need for military spending. Prince Albert feared it might be "perverted into a means of keeping down the warlike spirit of the nation."33 The Peace PartyWhat were the principles of Cobden’s group that would be embodied in this treaty? Cobden and his associates were aiming for more than a favorable balance of trade or the capture of markets for their nation. They believed that market forces could be used to bring about peace. That, under the right circumstances, trade would help people to at least tolerate former enemies and that eventually enemies might become friends.34 But, most importantly, they would stop killing each other. Men would think twice about cutting the throats of men who helped to feed them, Manchester School supporters believed.35 "Free trade," writes one economist reviewing the principles of the Manchester School, "means much more than a particular way of dealing with questions of foreign trade. In fact, it could be argued that this is the least important aspect of it and that a man might be a free trader even if he thinks little of the purely economic case for free trade, per se."36 But most of all the Manchester School hated war. Even in the case where strong economic ties had not been developed, the Manchester School held that nations should not go to war. Only self-defense would be a justification for waging war. In the case of irreconcilable differences, it was the responsibility of two governments to submit their claims to an arbitration panel. A war panic, something most Americans have experienced many times in the last century of conflict and near-conflict, was about to envelope the United Kingdom. Britons were warned by their leading politician that their defenses were inadequate; that the modern French navy could sweep aside the Royal Navy and invade Britain. Still, Cobden said Britain was actually spending twice as much on its navy as the French, although he conceded that Britain’s admiralty was an administrative disaster, with money unaccounted for and business procedures that, if used in the private sector, would have led to bankruptcy.37 Palmerston complained that the French still wanted revenge, even though Waterloo was some 45 years in the past. Napoleon III feared the two countries might blunder into war. This was one reason why he was receptive to Cobden’s proposal. Napoleon gave his formal approval in early 1860s. Cobden said that the reasons the emperor supported the treaty were "nine-tenths political rather than political economical."38 This small Manchester group, with a few MPs and a few sympathetic members of the cabinet, advocating free trade, minimal government and the use of arbitration instead of war to settle disputes, was going to win its main point. Cobden believed opening French markets to British goods and vice versa was the way to bring people together, thrusting aside the nationalistic hatreds that politicians exploited. "The French government have entered upon their new commercial policy not for the benefit of England," Cobden said, "but from an enlightened appreciation of the advantages it would confer on the people of France…The present treaty will inaugurate a new era in the commercial intercourse of France and England, and it will only require a few years to develop that state of mutual dependence which forms the solid basis for the peace and happiness of nations."39 Palmerston CounterattacksNevertheless, Palmerston fought it out even when it appeared the treaty was going to win approval. Pam, along with his many allies in parliament and the backing of the Times, argued that Napoleon’s moves in Italy along with the expansion of his military proved that he had become a dangerous rival. Allies of the prime minister insisted that a new appropriation for forts be made to prepare for the threat from across the channel. Palmerston clashed in the cabinet with Gladstone, who said the fortifications scheme was part of a war panic.40 Palmerston wrote that "It is…a mistake to say that this Scale of Expenditure has been forced upon Parliament or upon the Government, and it is still a greater Mistake to accuse the Nation as Cobden does of having rushed headlong into Extravagance under the Impulse of Panic. Panic there has been none, on the Part of any Body."41 Cobden produced naval figures to show that – ironclads included – Britain retained a huge lead over France. And he also recounted how the panic of 1860 was similar to the panic that Palmerston had inspired some eight years before when he argued that the French were also on the verge of waging war against Britain.42 Palmerston Victorious. Palmerston Defeated.The supplementary defense appropriation was approved. Pam got his forts. Britain "defenseless" condition was reversed. However, the adoption of the Cobden-Chevalier Free Trade Treaty of 1860 was also approved by Palmerston with great reluctance. The rest of the cabinet basically forced him into it. Palmerston, who said the French hated the British, had to fight much of his cabinet over the trade treaty, especially Gladstone, his Chancellor of the Exchequer and Milner Gibson, the Board of Trade President, who were for the trade accord, which eventually became a great success. Britain and France turned away from threats of violence to integrating their economies. Both nations greatly benefited from lowering their tariff walls against each other. And, even though Britain’s economy seemed to gain more business, there was an unusual aspect to the aftermath of Pam’s war scare. France bailed out Britain. In late 1861 and early 1862, the year Cobden says the war panic with France ended, Britain had a war panic with the United States, in the midst of a civil war and with American jingoists talking about taking Canada from the British Empire. The British Army temporarily found itself short of boots with no domestic supplier ready to provide the huge amounts needed in a short time. Where did Palmerston’s government go to obtain these vitally needed supplies? Across the channel to the nation Palmerston had been claiming, just a few months before, was making preparations to invade Britain.43 Despite differences of language, culture and political philosophy, the two nations saw the mutual benefits of peace. Why had the Manchester School won? The Manchester School in HistoryThe trade treaty represents the beginning of the high point of Manchester influence on British foreign policy. For the next decade or so, this was a period when Britain still talked about intervening in various major wars but usually pulled back at the last minute. She was close to becoming involved in the American Civil War, but did not. Palmerston had assured the Danes that there would be no settlement of the Schleswig-Holstein question – which had been the cause of war in 1848 – without Britain’s approval. When war broke out again in 1864 – in part because the Danes took Palmerston at his word that Britain would intervene on its side – the cabinet and parliament stopped British intervention. Again, it was in part because of the Manchester School’s influence.44 Another important factor in the success of the treaty with France as well as Britain’s non-intervention decisions in this period was the power of Gladstone. He arguably occupied the second most important post in the cabinet: Chancellor of the Exchequer in the last Palmerston government. He was also a rising star of British politics who was assumed by many to be the elderly Palmerston’s successor. Even though Palmerston’s forts were built, Manchester ideas were on the rise. The war scare was soon forgotten. Defense budgets eased, with Gladstone cutting taxes and holding a tight rein over military spending. Gladstone had accepted a principle of David Ricardo who had written that "If you want peaceful governments, reduce their budgets."45 But there was more than just peace and trade with France. England, in the 1860s, was less willing to intervene in Europe. Little-Englander influence had become so effective that, during the controversy over the Schleswig-Holstein War of 1864, Palmerston and Russell had given several indications that they wanted to intervene, but, in the end, had to back off. One of the reasons for the volte-face was Britain’s army was so small and disperse that it is questionable that she would have been able to send significant numbers of soldiers to the Danes in time to make a difference.46 But, more importantly, the will to intervene didn’t exist by 1864 as Palmerston and Russell would find to their displeasure.47 But possibly Cobden’s greatest contribution was peace between his nation and France. Cobden was a Franophile who hated all war. Britain and France should be natural friends and economic partners, Cobden believed. Even Napoleon Bonaparte’ threat to England had been overblown, Cobden held in one of his pamphlets. The treaty of 1860 would confirm this. While Britain’s exports rose, France’s previously protected economy modernized, said Chevalier.48 Britain and France’s closer economic relations precluded war just as Britain’s smaller military establishment narrowed its intervention options. Gladstone, in the midst of his first prime ministry in 1872, was pushed by American nationalists over the Alabama claims. Many on both sides of the Atlantic were ready for war. But Gladstone, who was clearly influenced by Manchester ideas at this point in his career, did not want war. That’s even though he didn’t always follow Little Englander principles. In a move that likely would have been applauded by Cobden, who had died in 1865, Gladstone submitted the American claims to an arbitration panel. Its decision to assess damages against the British was followed. War, once again, had been averted. Manchesterism DefeatedSlowly, in the mid 1870s, Britain turned away from the principles of Manchesterism. The process began with the slow retreat from laissez-faire economics. It then continued with the popularity of Disraeli’s "Tory Democracy," which included a renewed interest in the British Empire, something the Manchester School had favored breaking up. Disraeli bested Gladstone in the election of 1874. Disraeli, at least in his belligerent foreign policy, has been described as a follower of Palmerston. Gladstone had hoped to abolish the income tax if he had defeated Disraeli in 1874. That wouldn’t happen under a Tory government that was committed to empire, social reform and the end of laissez-faire.The decline of Manchesterism meant more government spending and many more imperial wars against the Zulus and Afghans, among others. The ideological winds had shifted away from Manchesterism. And, by the time Gladstone, who had formerly worked with Cobden so profitably, came back into power in 1880, even he spoke favorably about the British Empire. And even this "Grand Old Man" – so complex and brilliant – would eventually resign as prime minister in 1894 because of his opposition to huge new requests for naval spending. He had helped to carry out many of the ideals of Manchesterism through his vital support of the Cobden-Chevalier treaty and he had spared his nation the possibility of another terrible war with the United States in 1872, yet, in 1882, he ordered British forces to intervene in Egypt. That was a move that caused the elderly John Bright, who had been Chancellor of the Duchy of Lancaster in the second Gladstone ministry, to resign. Little Englanderism was no longer fashionable by the 1880s. And what of the heritage of Cobden-Chevalier across the channel? France’s attraction to economic liberalism – along with Britain’s temporary interest in Manchesterism – was reversed in the 1880s and 1890s as the Third Republic – pursuing a new empire in Asia and Africa and looking for revenge against Germany for her dismemberment of Alsace Lorraine in the Franco-Prussian War – put up tariff barriers again and returned to her traditional economic policies. The rest of the continent was following suit. A protectionist, well-armed Europe would drift into a general war in August 1914, a war that would have horrified and sickened Cobden and a war in which his opposition might have led to even greater consequences than his parliamentary defeat in the Crimean War.49 Most of the principles of Manchester School were renounced, but the ideas of Richard Cobden remain as important today as a century and a half ago. Nations that trade with each other, that develop intimate economic relations, are unlikely to go to war, even if they have a history of enmity. France and Germany, the two greatest European rivals of the last 130 years, over the past half-century have traded with one another. The two peoples remain wary of each other, but it is inconceivable today that they will ever go to war again. Trade, the German moral philosopher Immanuel Kant had written, can be used to bring peace. "It is the spirit of commerce which sooner or later takes hold of every nation. For since the money power is perhaps the most reliable among all the powers subordinate to the state’s power, states find themselves impelled (though hardly by moral compulsion) to promote the noble peace and try to avert war by mediation whenever it threatens to break out anywhere in the war."50
This was the immediate significance of the Cobden-Chevalier Treaty. Britain and France avoided another tragic war and two peoples developed a tolerance if not "a noble peace." That model can and has been used several times since then and it is one effective weapon in the quest of honorable human beings for peace. Notes
Gregory Bresiger, a business writer and editor in Kew Gardens, New York, has written for The Free Market, The Journal of Libertarian Studies, The Freeman, and LewRockwell.com. |