New Shun 1730

Historically, Tooke, who argued with Hume, firmly stood for free trade and believed that:

[If trade with China can be unimpeded, the East India Company's patent monopoly is abolished, and 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 debate lasted for about a few years.

And Hume's reply to Tooke was very clear: nonsense, Britain is not worthy of free trade now.

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 reserves are lower than those in Europe, which makes China's labor costs lower, so once free trade is liberalized, the result will be [everything we use will be Chinese].

And this is the conclusion drawn by Hume who overestimated China's per capita wage - he inferred that China's wage is 140 pence per month, 1.75 taels of silver per person.

But in fact, most of them are family handicrafts, and the wages are not so high.

On the contrary, this is exactly about the monthly family income of a middle-class peasant family, not the per capita monthly income.

He forgot to calculate the actual purchasing power difference of silver in terms of grain on both sides.

Tuke was a pastor who could only shout slogans. He had no figures and no research. He just shouted slogans in 1747, thinking that abolishing the East India Company and tariffs would definitely strengthen England's leading position in the world trade.

In short, he came to the conclusion that "in short, we have reason to believe" without seeing a single line of data.

Although Hume's data was wrong, at least he had data.

Hume mentioned his argument with Tuke in a letter to his friend Oswalt in pain, believing that Tuke was a "good-hearted expectant who firmly believed in God's love", but lacked a basic understanding of the data.

He also believed that if the distance was not too far, even if the difference in the efficiency of the handicrafts on both sides was not considered, it would take until China's per capita silver possession was consistent with that of Britain for Britain to have the most basic competitiveness - that is, China's per capita wage level was consistent with that of Britain, with an average monthly per capita wage of 4.5 taels of silver.

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

There is a very interesting point in the debate about mercantilism and free trade, which is also an economic puzzle that troubled Hume throughout his life.

According to the free trade theory at that time, it is believed that under ideal conditions, free competition will bring a kind of 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 Britain is more competitive.

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

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

It is impossible to say that if China's textile industry is strong, then iron smelting is also strong, right? There will always be an unsuitable, uncompetitive industry that happens to be suitable for our Britain.

In response to this idea, someone asked a question at the time:

[If the role of the Netherlands as a trade intermediary is replaced by other countries, can the Netherlands, which has been engaged in trade and shipping for a long time, find a new industry to replace it?]

Of course, in the debate between free trade and mercantilism, the key is "replacement".

What’s interesting is that under the reality of the existence of Dashun at this time, the key is “other countries”.

Dashun replaced the Netherlands and became the trade middleman between the East and the West.

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

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

And Adam Smith commented on trade with China in this way:

[If it were not for the long distance and extremely high tax rates, China’s cotton textiles and other commodities would overwhelm ours]

[If trade develops without restrictions, then England’s cotton and silk fabrics will be difficult to compete with the fine products of the East]

So, the problem arises.

Adam Smith is the forefather of free trade theory, but the problem is that he is also a nationalist.

When he advocated it, Britain’s productivity level was higher than that of other European countries, so there was no problem for him to advocate free trade.

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

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

Adam Smith had to stick to his free trade theory, but also admitted that Chinese goods would have a huge impact on British industry under free trade. He gave his own solution:

——[Those nations with insufficient funds, such as China, should put their funds on developing industry, which is the top priority. Export, transshipment and shipping business should be handed over to foreign agents with sufficient capital. They should put their funds on industries that are being challenged by other countries]

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

[Chinese capital should focus on catching up with industry]

[England should become the middleman for trade between China and Europe]

At this point, it has actually reached a dead end.

His theory cannot be wrong.

But on this issue, it has been clumsily unable to explain the issue of Sino-British trade. This is a standard way of talking about something else.

What people asked him was that you shouted for free trade, but what if Chinese goods had an impact on British industry?

His answer was that we do not need to cut off trade with China, but we do not buy Chinese goods. Instead, we should be the middlemen in this Sino-Western trade, and we should replace the role of the Dutch.

Have you answered the doubters’ questions?

answered.

Is it really consistent with my own free trade theory?

conform to.

But was it consistent with the reality in Britain at the time?

Nonsense.

His problem is about real free trade, not his clumsy deformation of "we are the middlemen, we don't buy, we sell to others" - there is another key issue that he has also avoided.

That is, are British industrial products sold only to British people? 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 wool to collect ground rent must first give up Adam Smith.

According to him, the future of the UK is for the European market to be ceded to Chinese industry, and for the UK to comprehensively transform its tertiary industry, including shipping, re-export, and service industries?

Of course, later generations proved this to be true.

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

Theory must guide reality, and the reality at that time did not mean that a theory was needed to destroy 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 one I want:

Britain has a more developed industry than Europe and must adhere to free trade.

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

But this kind of answer that 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.

Liu Yu's formulation of Dashun's trade policy "perfectly realized Adam Smith's vision."

The difference is that British capital was not used to develop the shipping industry, but Chinese capital was used to develop the shipping industry.

And he firmly believes that China does not lack capital, and that the industry at this time is neither very developed nor very backward, but that it is not needed at all [China, which lacks capital, must invest in industries that have been surpassed by other countries]

The Jenny machine Dashun cannot be used, it is for cotton, linen and wool blends. Dashun cotton cannot be knitted with the Jenny machine thread. The spindle worsted spinning machine that Dashun wants is still early to come out.

Besides, if you lack capital, you can accumulate it by selling goods. Hang Chi Hang Chi has developed industry, but if you don't come to transport goods, and instead add tariffs, wouldn't that directly implode the small-scale peasant economy?

Historically, from 1775 to 1795, the British East India Company imported a total of 56.6 million taels of goods from China according to its account books.

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

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

Dashun Western Trading Company eats up the profits from transshipment.

With hundreds of millions of taels of silver in twenty years, what can't be built for the industry of this era?

The largest cotton textile mill in the UK at the end of the 18th century, Quarry Bank Spinning Mill (QuarryBank), had an initial investment of 3,000 pounds and 9,000 taels of silver. Is it a lot?

Even if it were doubled 10 times, 90,000 taels of silver would be enough to earn three people in one smuggling trip to South America.

Adam Smith's theory was correct.

History also proves his conclusion:

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

But the era he lived in, and the theory he proposed that free trade essentially serves Britain, made it impossible for him to answer when faced with China's trade issues.

If one is loyal to the theory, then practical needs will negate his theory.

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

So I can only talk about him and Xini.

To implement Adam Smith's vision and Hume's lifelong question of what the Netherlands could do with its transformation, it was precisely by shouting about free trade all day long that he even named the first merchant ship that sailed to Europe. Liu Yu from Free Trade.

The thirty million hard-working working people behind him laid the foundation for him.

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

This provides answers to the many questions surrounding whether Britain should be free trade or mercantilist.

What will the Netherlands do when its east-west shipping industry is replaced by "other countries"?

Obviously, Dashun is doing this experiment and 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 serve as a den for international smuggling syndicates.

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

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.

Adam Smith's theory is basically correct.

It's just wrong data, underestimation and overestimation of reality that lead to wrong conclusions.

This wrong conclusion was put into practice after Dashun replaced the British capital he envisioned.

Therefore, Liu Yu claimed to be the biggest supporter of the free trade theory. And Liu Yu wanted to see how Britain would evaluate the free trade theory after Dashun really broke the British Navigation Regulations.