The Mercantile System has often been noticed as a regime which was developed and established amongst the growing nations of the modern world and which flourished until the late eighteenth century, when certain changes in economic conditions and the thoughts of men led to its decline and fall. But, in point of fact, Mercantilism, though it has had its ebbs and flows, has never been a spent force. It is true that the expansion of credit and banking, the Industrial Revolution, and the teaching of the Physiocrats and Adam Smith caused a movement towards freer commerce, that the pronouncements of the Congress of Vienna upon the slave trade, the navigation of rivers, and the rights of aliens, seemed to indicate that the powers of Europe, however limited their conceptions in some respects, were in others out-growing the narrowness of Mercantilism, 1 and that the example of England in throwing the system overboard assisted and stimulated a liberalizing tendency in the commercial regimes of other countries. But these effects were only partial and temporary. Of all the great States, England alone has turned her back, and kept it turned, upon the Mercantilist doctrine for any lengthy period, and in the form of protectionism a new Mercantilism became established in most States in the latter part of the nineteenth century. We have already remarked that this nation and that entered into the movement, but have said little as to its general causes and aspects, and these may be considered briefly now. 2

There came about a natural reaction against the extreme doctrine of laissez-jaire, and a conviction revived that far more functions were properly assignable to the State than what were allowed to it under that teaching. In England itself, even during the period in which she was changing over from protection to free trade, the force of interventionist ideas in regard to conditions of labour was sufficient to procure the passing of the first general Factory Act. The Industrial Revolution, which converted England to free trade, was attended in England and in other countries with excesses, abuses, and distresses that provoked the rise of a movement for the transformation of social conditions, a movement which in what may be described as its constitutional form looked to securing its end by means of legislative measures. The spread of socialistic ideas amongst the new industrial classes undoubtedly assisted the cause of State intervention in industry and commerce. Socialism and neo-Mercantilism, with all their dissimilarities, were alike in being reactions against laissez-jaire and in the spirit of protectionism as to the interests with which they were primarily concerned. 3 The nee-Mercantilism of Bismarck illustrates his sense of the parallel in its combination of a policy of national protection with one of State Socialism. The appeal made to the workers by the "pauper labour " argument in the United States, Canada, and Australia, and the support of protection on terms by the Labour parties in the dominions, furnish a definite point of contact between the two sets of interests. 4 Emphasis on the State as power reached

its highest pitch in Germany ; the idea of State authority has had a strong hold in France ; and in other countries the tendency has been generally towards increased government activity. ·

Along with the reaction against laissez-jaire, the ventures of the spirit of nationality, stimulated by the French Revolution and the Napoleonic attacks upon the European system, which found their most striking triumphs in the establishment of the kingdoms of Belgium, Greece, and Italy, the preservation of the American Commonwealth from disruption, the foundation of the German Empire, and the dissolution of the dual monarchy of NorwaySweden, contributed to the formation or re-formation of a policy of national protection alike in the more and the less democratic States. The present protectionist system of the United States was practically founded, as we have seen, during the war for the preservation of the union, and in Europe the new German Empire became the leading representative of nee-Mercantilism.