Free trade refers to the government's policy of not using tariffs, quotas, or other forms to interfere in international trade. Free trade refers to the trade policy in which the state abolishes restrictions and obstacles to import and export trade, cancels various preferential treatment and privileges for domestic import and export commodities, does not interfere with and restricts import and export commodities, and enables free import and export of commodities and free competition in the domestic market. It is the symmetry of "protecting trade". This does not mean that the management and tariff system of import and export trade should be completely abandoned, but that domestic and foreign products should be placed on an equal footing in the market and that free competition and trade should be carried out in accordance with foreign trade laws and regulations, that is, relevant trade treaties and agreements.

The empire's current economic policy was in the initial stage of free trade, that is, the opening of free trade markets for labor-intensive goods such as textiles, grain, saltpeter and rubber from South America. In contrast, the import and export tariffs on industrial machinery in the empire at this stage were maintained at 70% to 87%, in order to protect the development of domestic industrial manufacturing, and the imperial light and heavy industry imported machinery from Europe and the United States between 1840 and 1856 reached 67.4%, that is, more than half of the machinery used in domestic factories at that time was imported from abroad. After 1861, with the advancement of industrialization and the rapid development of the machinery manufacturing industry, this value once fell to 9.3%, and since then this value has remained at about 10%. In 1869, the Imperial Congress passed the Industrial Machinery Import and Export Act, marking the beginning of tariff barriers to industrial machinery in China. In order to promote the development of the imperial manufacturing and machinery industries, at the end of 1870, the Imperial Diet passed a series of protection bills, such as the Law on the Encouragement of Machinery Production and Export, and the Law on Manufacturing Subsidies.

In fact, according to the current economic model and productivity of the empire, it is completely possible to close the country again and set up a super-high tariff barrier, because with the vast territory and population of the empire, it is completely possible to construct an economic circulation model internally, in fact, the current situation of the empire is similar. The economies of Europe and the United States from 1840 to 1860 were happy, because China bought from the world during these two decades the products that could enable its own development, whether it was food or industrial machinery. However, after 1860, the cabinet began to establish industrial protection policy tariffs, which led to the sale of grain and raw materials for industrial production to China in the past decade. Europe and the United States have nothing to do about it, China's exports of industrial products to the outside world are basically zero, so it is meaningless to charge high tariffs on China's exports of industrial products (the empire is the export of capital, not the export of products), on the contrary, China has been consuming grain on the world market, which is the main market of the United States and South American countries, and the American countries do not care at all about the high tariffs on industrial products implemented by China, in fact, what the Americans are doing now. The real damage was to British and French industrial production, and in the past ten years, a large number of British and French industrial products were unsalable because they could not enter the Chinese market, which eventually led to a large number of bankruptcies of industrial enterprises. However, Britain and France had no choice but to raise tariffs on Chinese tea, porcelain, silk, and spindles of raw silk, and Chinese goods had always been bestsellers in the European and American markets.

The world economic crisis of 1873 did not initially affect or cause much damage to the imperial economy. But this year, 1875, the Empire's economy began to show bad signs. In October 1875, the Shanghai Textile Company, which monopolized the production of raw silk for three percent of China's spindles, declared bankruptcy protection. Subsequently, a large number of enterprises exporting abroad declared bankruptcy. Most of the light industry companies in Shanghai's stock market are at record lows. In addition, a large number of colonial companies listed on the Shanghai Stock Exchange, such as the Nanyang Development Corporation, the North American Development Education Corporation, and the East Africa Company, were protected from bankruptcy.

In the article "Analysis of the Current Economic Crisis", submitted by the Ministry of Industry and Commerce, it was pointed out that the reason for the bankruptcy of a large number of light industrial companies in the empire at present was the large number of low-priced overseas goods that appeared on the domestic market. But the article also pointed out that the world economic crisis is an economic crisis of overproduction, the production of goods greater than the market demand, resulting in a sharp reduction in commodity prices, and eventually lower than the cost, yes, many businessmen would rather let the goods rot in the warehouse than sell, this economic crisis stems from the overproduction of heavy industry, in fact, think about it, China is also a major murderer of this economic crisis, high tariffs will keep European industrial products out, only pig iron, steel and the like can enter China, and other markets tend to be saturated and can not be digested, eventually leading to the outbreak of the crisis.

However, capital seeks advantages and avoids disadvantages, and the Chinese market rejects heavy industrial products but not agricultural products and light industry, and China is still the world's largest textile and agricultural consumer market. A large amount of European and American factory capital was diverted to agriculture and light industry production, and in 1874 the development of world agriculture reached a new high, for example, the production of sugar beet in Europe tripled in 1870, and its sugar production exceeded for the first time the sugar cane production of the imperial Hawaii Province that year, which had been accounting for about 70% of the world's sugar production. By 1875, a large number of the world's agricultural products began to pour into the Chinese market, followed by light industrial goods. Previously, in order to ensure the quality of life of its citizens, the empire encouraged the empire's grain companies to buy agricultural products from all over the world, and even subsidized grain imports. In 1875, China's agricultural market, which was not protected by tariffs, collapsed first. The influx of cheap agricultural products has made the people happy, and they can buy one and a half kilograms of rice with the money they used to buy for one kilogram and a half, but in reality the Chinese market is also limited, and it is impossible to absorb the agricultural products produced at full capacity all over the world. Although the production subsidies of the government and the royal family were there, the light industrial products could not stop the huge amount of overseas goods, especially the economy of the colonies suffered huge losses during the year, and the agricultural production of the North American colonies basically came to a standstill, and the market was flooded with international industrial and commercial products, but not domestic industrial products. A large number of spice and cream companies (butter and camel milk) in the East African colonies went bankrupt because of the loss of European and American markets. But worse than the colonies were the empire's two remaining vassal states, Korea and Siam. The small peasant economies of the two countries further disintegrated in that year and in the years that followed, as dumping grounds for imperial goods, and were accompanied by endless rebellions in the two vassal states.

The end result was that the world economic crisis had once again spread to light industry and agriculture, and a large number of the empire's light industrial factories and agricultural production had been declared bankrupt or bankrupt. The empire's economy was devastated, and in order to avoid the expansion of the crisis, the imperial cabinet had to use tariff barriers to refuse foreign goods.

In the midst of the crisis, especially in the period of overproduction in agriculture and light industry, we should see that the people of the colony and the homeland can buy better and more goods at cheaper prices than in the past. In the midst of this economic crisis that affected the light industry and agriculture of the empire, the people of the empire consciously completed the value revolution, and the people began to pursue low prices instead of the "supporting domestic products" advocated by the government.

"General History of the World: The Economy - The Crisis of 1873" by Mo Yan