Xinshun 1730

Chapter 946 Banner Bearer
Historically, Tuke, who argued with Hume, firmly stood for free trade and believed that:

[If the trade with China can be unimpeded, the patent monopoly of the East India Company is banned, and the tariffs on Chinese goods are completely abolished... We have reason to believe that free trade will strengthen England's leadership and make China a market for British industrial products]

The time of debate is about the past few years.

And Hume's reply to Tuke, the meaning is very clear: nonsense, Britain is not worthy of free trade at all.

Hume took out figures, detailed figures, to prove that Chinese goods are of high quality and low price, and that China's per capita silver deposits are lower than those in Europe, which makes China's labor costs lower, so once free trade is liberalized, the result will be [what we have] Everything used will be Chinese].

And this is the conclusion that Hume overestimated China's per capita wages-he inferred that China's wages were 140 pence per capita per month, 1.75 taels of silver.

But in fact, most of them are cottage industries without such high wages.

On the contrary, it is precisely about the monthly household income of a moderate peasant family, not the per capita monthly income.

He forgot to convert the difference in actual purchasing power between the two sides of silver denominated in grain.

Tuke was born as a priest, and he only chanted slogans. He had neither figures nor surveys. He yelled slogans in 1747, thinking that the abolition of the East India Company and customs duties would definitely strengthen England's leading position in trade in the world.

In short, the data did not see a row, and it came to a sentence [In short, we have reason to believe].

Although Hume's data is wrong, at least he has data.

In a painful letter to his friend Oswalt, Hume referred to his dispute with Tuke, who he considered a "good expectant with a deep belief in God's love", but lacked a basic understanding of data.

He also believes that if the distance is not too far, even if the gap in the efficiency of the handicraft industry between the two sides is not considered, the most basic competitiveness of the UK will be until China's per capita silver holdings are the same as that of the UK, that is, China's per capita wage level and The same is true in the UK, with an average monthly salary of 4.5 taels of silver per capita.

However, considering China's population base, Hume expressed despair that even if all the silver from Europe at this time was sent, it would be difficult to achieve this wage balance.

There is a very interesting point in the debate about mercantilism and free trade, and it is also an economic doubt that plagued Hume all his life.

According to the free trade theory at this time, it is believed that under ideal conditions, free competition will bring an equilibrium advantage.

For example, if the British textile industry is defeated by the Chinese textile industry, then British capital will naturally flow to the direction where the British competitiveness is stronger.

Like smelting iron?Like spinning hemp?Like shipbuilding.Do you have to do textiles?Capital will allocate itself.

It’s impossible to say that China can do everything, right?

It is impossible to say that China's textile industry is strong, so is iron smelting strong?There will always be an unsuitable, uncompetitive industry that is just right for us in the UK.

In response to this idea, someone asked a question at the time:
[If the role of the Dutch trade middleman is replaced by other countries, can the Netherlands, which has been engaged in trade and shipping for a long time, find new industries to replace it?]

Of course, in the debate over free trade and mercantilism, the key is "substitution".

What's interesting is that under the reality that Dashun exists at this time, the key is "other countries".

Dashun replaced the Netherlands as a trade middleman between East and West.

This question has actually been pondered by several economic leaders at that time.

When Adam Smith arrived, he still did not forget to think about this question.

And Adam Smith commented on trade with China in this way:
[If it is not for the long distance and extremely high tax rate, China's cotton textiles and other commodities will overwhelm ours]

[If trade develops unrestricted, it is difficult for England's cotton and silk products to compete with the best of the East]

So, the problem arises.

Adam Smith is the patriarch of free trade theory, but the problem is he was a nationalist.

When he was advocating, the productivity level of Britain was higher than that of other European countries, so there was absolutely no problem with his advocacy of free trade.

But after he really learned about the data on trade with China and the tax rate on cotton cloth and tea, he had to admit that if there were free trade, British industry would be doomed.

When faced with the issue of trade with China, someone asked Adam Smith, do you still insist on free trade in the face of Chinese goods?

It is necessary to adhere to his own free trade theory, but also to admit that Chinese goods will have a huge impact on British industry under free trade. Adam Smith gave his own solution:

——[Those nations with insufficient funds, such as China, should invest funds in the development of industry, which is a top priority.And such as export, transshipment, and shipping business, they are handed over to those foreign agents with sufficient capital.They should put money on industries that are being challenged by other countries]

[British capital undertakes the export, transshipment and shipping of Chinese goods]

[Chinese capital should focus on catching up with industry]

[England should be a middleman for trade between China and Europe]

Speaking of this, it has actually reached a dead end.

His theory cannot be wrong.

But as far as this issue is concerned, it is too clumsy to explain the Sino-British trade issue. This is the standard hesitation.

People asked him, it was you who shouted for free trade, so what should you do if Chinese goods have an impact on British industry?
What he replied was that we don't need to cut off the trade with China, but we don't buy Chinese products. Instead, we will be the middlemen of the trade between China and the West, and we will replace the role of the Dutch.

Did you answer the questioner's question?

answered.

Is it really in line with your own free trade theory?
meets the.

But is it in line with the reality of Britain at the time?
Nonsense.

His question is about real free trade, not his clumsy and deformed "we act as middlemen, we don't buy, we sell to others" statement-he also evaded another key issue.

That is, are British industrial products sold only to the British?What about the European market?
Are British industrial products only sold in the UK?

The aristocrats who only rely on Britain's own market and collect land rent on wool have to give Adam Smith first.

According to him, the future of the United Kingdom is to give up the European market to Chinese industry, and the United Kingdom will fully transform the tertiary industry, and transform the shipping, re-export, and service industries?

Of course, later generations proved this to be true.

But obviously, at this time, in the era when the British Industrial Revolution has not yet happened and is about to happen, it is absolutely impossible to be accepted.

Theory should guide reality, and the reality at that time did not mean that a theory was needed to bring about the end of British industry, but to make the world believe in this new religion called economics and ensure British interests.

Because Adam Smith's answer is the standard I want:

Compared with Europe's developed industries, Britain must insist on free trade.

China's well-developed handicraft industry can allow excess British capital to flow into the service industry and shipping industry, but not into the UK, but sold to other European countries.

But this kind of answer I want cannot solve the problem of "Chinese cotton cloth will also have an impact on British industry in the European market".

He avoided it.

And Liu Yu's formulation of Dashun's trade policy is precisely "the perfect realization of Adam Smith's conception."

The difference is that instead of using British capital to develop the shipping industry, it uses Chinese capital to develop the shipping industry.

And he firmly believes that China does not lack capital, and at this time the industry is not very developed, nor is it that it is very backward, but there is no need at all [China lacking capital should invest in industries that are surpassed by other countries]

The Jenny machine Dashun cannot be used, it is made of cotton, linen and wool blends, and the Dashun cotton cloth cannot be woven with the thread of the Jenny machine.The mule spinning machine that Dashun wanted was still a long time ago.

Besides, if you lack capital, you can accumulate it by selling goods.Hang Chi Hang Chi has developed the industry. If you don’t come to transport the goods, you will add a tariff instead. Isn’t that directly imploding the small peasant economy?

Historically, during the 1775 years from 1795 to 20, the British East India Company imported a total of 5660 million taels of goods from China according to the accounts.

This is only the import price, not the selling price, and it is only the British East India Company.Besides the British East India Company, what about Denmark, Sweden, France, Portugal, and the Netherlands?

Dashun handicraftsmen and tea merchants eat up the imported silver at the customs price.

Dashun Western Trading Company eats up the profits from transshipment.

Hundreds of millions of taels of silver in 20 years, how can the industry of this era not be built?

At the end of the 18th century, the largest cotton mill in England, Quarry Bank, had an initial investment of 3000 pounds and 9000 taels of silver. Is it a lot?
Even if it is doubled by 10 times, 9 taels of silver, one smuggling in South America is enough to invest three times.

Adam Smith was right.

History also bears out his assertion:

Britain's destiny is to develop the service industry; if it is not for the long distance and extremely high tax rates, China's cotton textiles and other commodities will overwhelm ours.

But the era he lived in, and the theory he put forward that free trade essentially serves Britain, made it impossible for him to answer the question of China's trade.

Faithful to theory, real needs will negate his theory.

Faithful to reality, his theory cannot solve the problem of how the UK will face the impact of Chinese goods.

So I can only talk about him from left to right, and muddle along.

And to practice Adam Smith's idea, and the question of what Hume can do with the transformation of the Netherlands that has troubled him all his life, it is precisely that he shouted for free trade all day long, and even named the first merchant ship of Dashun to Europe. Liu Yu of Free Trade.

The [-] million hardworking working people behind him laid the foundation for him.

He is the true standard-bearer of free trade in this era.

This brings answers to many questions surrounding whether Britain should be free trade or mercantilism.

What will the Netherlands do when the East-West shipping industry in the Netherlands is replaced by "other countries"?
Obviously, Dashun is doing this experiment, can develop service industry, smuggling and related businesses.

You can open hotels, brothels, and restaurants; you can engage in finance, investment, and auctions; you can be a den for international smuggling groups.

Adam Smith overestimated the advanced level of British industry. At least in his time, British industrial products had no advantage over Chinese products.

Adam Smith underestimated the speed of capital accumulation in China. At least in his time, there was really little money to invest in capable textile factories and the like.

Adam Smith's theory is basically correct.

It's just wrong data, underestimated and overestimated reality, and wrong conclusions have been drawn.

And this erroneous conclusion was put into practice after Dashun replaced the British capital he imagined.

Therefore, Liu Yucai claims to be the biggest supporter of free trade theory.And Liu Yu wants to see, when Dashun really broke the British navigation regulations, how should the UK evaluate the free trade theory?

(End of this chapter)