The Probert Encyclopaedia of Money

FREE-TRADE

Free-trade is the term applied to national commerce when relieved from such interference as is intended to improve or otherwise influence it; that is, unrestricted by laws or tariffs, and not unduly stimulated by bounties. In all countries it was long held to be of importance to encourage native production and manufactures by excluding from their own markets, and from the colonial markets over which they had control, the competing produce and manufactures of other countries. On this theory the great body of British commercial legislation was founded until 1846, when the policy of free-trade was introduced in grain, and afterwards gradually extended by the repeal of the navigation laws in 1849 and other great measures, until nearly all British commercial legislation has been brought into conformity with it., though Britain was alone in the world in allowing free-trade at the time.

As an economic principle free-trade is the direct opposite to the principle or system of protection, which maintains that a state can reach a high degree of material prosperity only by protecting its domestic industries from the competition of all similar foreign industries. To effect this protecting countries either prohibit the importation of foreign goods by direct legislation, or impose such duties as shall, by enhancing the price, check the introduction of foreign goods. The advocates of what is called fair trade in Britain professed a preference for free-trade were it universal or even common; but seeing that Britain was almost the sole free-trade country in the world, declared that a policy of reciprocity was required for the protection of British traders and manufacturers. Supportes of free-trade cited the progress made by Britain since 1846 as adduced as a striking proof of the wisdom of a free-trade policy, even without reciprocity, however, after the development of other nations following the Second World War, the situation changed with low-cost labour in other countries providing competing goods at a fraction of the price of the domestic equivalent.
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